Release Date: February 19, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Dream Impact Trust (DDHRF, Financial) has made significant progress on its Canary District project, with two buildings completed and the third expected to finish this year.
- The trust is making headway in paying down debt, particularly with the upcoming start of construction on Block 206 in Ottawa, which will result in the repayment of CAD 6 million in land loans.
- The exemption from development charges for the 40 on Ontario project is expected to add over CAD 2 per share in value.
- The trust has successfully refinanced CAD 170 million of maturing debt and repaid CAD 100 million of construction debt from condo closing proceeds.
- Dream Impact Trust (DDHRF) is seeing strong leasing activity in its new developments, with Maple House and Alto 2 approaching stabilization at 80% leased.
Negative Points
- The trust reported a net loss of CAD 8.3 million for the fourth quarter, although this was an improvement from the previous year's loss.
- Higher interest expenses have impacted earnings, driven by the timing of completed multi-family rentals.
- The commercial block at Zibi experienced an CAD 8.4 million fair value loss due to extended lease timelines and higher terminal cap rates.
- The Toronto condo market is currently experiencing its lowest sales in 30 years, impacting the trust's ability to sell and finance new developments.
- The trust is facing challenges with slower-than-expected leasing activity in some of its new buildings, partly due to competition from newly finished condos.
Q & A Highlights
Q: How do you see the housing demand and supply evolving in Toronto and Ottawa over the next three to five years, and how does that impact your plans for Dream Impact Trust?
A: Michael Cooper, President, Chief Responsible Officer, Non-Independent Director, explained that the housing market in Toronto is currently challenging, especially for condos, due to high supply and low sales. However, after 2026, condo deliveries are expected to decrease significantly, which should improve the rental market. The single-family housing market remains stable. Cooper anticipates positive policy changes post-election that could further stabilize the market.
Q: What are your liquidity and refinancing targets for this year and next, outside of 49 Ontario?
A: Michael Cooper stated that Dream Impact Trust has been successful in renewing billions of dollars of debt over the past year. They are in close contact with lenders and expect to manage upcoming land loans effectively. The company is not overly concerned about refinancing and has exceeded its budget on paydowns.
Q: Where do you see occupancy in the same property portfolio stabilizing over the next 24 months?
A: Michael Cooper noted that their value-add portfolio is well-leased with minimal turnover. New buildings are leasing up, and they expect to reach 95-96% occupancy in a stabilized portfolio. Meaghan Peloso, CFO, added that recent changes were due to seasonality.
Q: Can you provide details on the transaction for Block 204 at Zibi and the expected proceeds?
A: Michael Cooper explained that the land is appraised at about CAD 13-14 million with CAD 11 million of debt to be paid down. The Impact Trust is expected to receive around CAD 2 million. The transaction aims to maintain liquidity while continuing development.
Q: Is there any timeframe for reinstating the dividend?
A: Michael Cooper stated that reinstating the dividend is not currently a focus. The company is concentrating on managing challenges in the downtown Toronto housing market and aims to stabilize operations by 2028.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
