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01:13 Thank you, operator, and good morning. Welcome to Dream’s second quarter Conference call.

I am with Deb Starkman, our CFO. Now, once we finish our presentation, we would be happy to answer your questions.

01:27 As George [ph] used to say when he was leading the A-team, “I love it when a plan comes together.” Over the last few years, we have concentrated our assets and our efforts on owning and developing higher, higher quality properties and a higher and higher quality portfolio.

01:45 With a higher percentage of our income, being recurring, our pipeline of income properties under development and our acquisition of existing properties is building our company rapidly. At Zibi, we have about sixty thousand square feet of office properties completed in the last year.

In addition, we started leasing our first apartment in Brighton in December twenty twenty. The building is about one hundred thousand square feet and we already stabilized with one hundred and twenty of the one hundred and twenty one units leased, and the remaining unit uses a marketing center.

02:21 Upon completion, the building is generating a six point two five percent return on cost, and that's based on including land at fair market value. So, the last year we completed one hundred and sixty thousand square of income properties, and we're keeping them.

In the next ninety days, we're completing one hundred and eighty five thousand square foot office building with one hundred percent of the office component leased to the federal government for fifteen years. 02:48 And then in early twenty twenty two, we'll will complete one hundred and sixty two unit apartment building in Gatineau, which is approximately one hundred and thirty five thousand square feet.

On July second, the Federal Government had a press conference at this site to announce their sixty million dollars construction loan and a ten million dollar innovation loan for this building and others. The first block of West Don Lands will commence leasing next summer, it will have seven seventy units, and it will be about six thirty square feet in total or two hundred and ten thousand square feet for the Dream group share.

03:24 We also started building fifteen purpose-built rental properties and built rental townhouses in Brighton. They will be finished by year end and we will get a clear indication of the desirability and profitability of this product type.

If it is successful, we can commence building another one hundred and fifteen town houses for rent next year. 03:47 In addition, we’ve also started the sister building to our first department building in Brighton.

So, over the next eighteen months, from July twenty twenty one to the end of twenty twenty two, in Toronto, the National Capital Region in Saskatoon, we're expecting to complete one hundred and eighty five thousand square feet commercial income properties and four sixty seven rental units or about five hundred thousand square feet of income properties at the dream share, which is a total of about three hundred million dollars of properties again in our share. 04:19 And for the following eighteen months from then from January twenty twenty three to June twenty twenty four, in Zibi we are under construction of block eleven, a one hundred and forty six unit apartment building that will be approximately seventy one million dollars.

Block two zero six is a two hundred and seven unit apartment building for about one hundred and eleven million dollars in Ontario. And Block two zero seven is a seventy six thousand square foot office building also in Ontario.

04:48 During the same time, in Saskatoon, we'll be building about another three hundred units of apartments about seventy million, and based on the success of our Canada's rental program, it could be much more. Altogether, it is about two ninety four million dollars of income properties to cost.

And then for the following eighteen month period, we're already under construction of the Indigenous Hub apartment building in Downtown Toronto. Blocks three four seven of West Don Lands is another eight fifty five apartment units.

05:18 And we’ll likely build another four hundred thousand square feet in the National Capital region and likely a similar amount in Saskatoon, but in Saskatoon and the Brighton development, we're looking at Willows, and in Alpine Park, we're getting ready to build there, and that's what we used to call Providence. And hopefully in Regina and Edmonton, we will find some opportunities to build apartments as well.

05:43 Effectively, it seems like we're finishing about two hundred million dollars per year of income properties at about a five point five cap rate on average. The properties in Zibi have tremendous first nation’s [ph] benefits.

They are net zero heating and cooling and is a very inclusive community with six public parks, six privately owned public spaces, and many other community benefits as we build out the community for five thousand people. 06:08 And Toronto, we are building affordable and sustainable buildings in the West Don Lands in the Canary district and generally in that area.

We've also recently agreed to acquire about nine hundred apartment units in Toronto, which we will asset manage to create some affordable housing in addition to some market rate units, and we will reduce green gas house -- we will reduce greenhouse gas emissions by at least fifteen percent. These commitments are helping us create very significant [ph] financing, which will allow us to do good while also generate fair returns.

06:41 Over the next few years, the addition of the income properties will make our income and value safer and more predictable and cement our position as a leader in sustainable community building. In addition to growing our recurring income to the addition of income properties, we have made significant strides in growing our asset management business in both assets under management and expanding our sectors and geography.

07:04 The Industrial REIT has grown tremendously on a per unit basis as well as by total size as we've been able to add to our assets in Canada and created a pan-European portfolio. With the European strategy in place and to scale, we’ve been able to reduce our borrowing cost by sixty percent in the last eighteen months as the majority of our debt is now in euros.

This strategy hedges our currency risk and reduce our cost of debt. As an example, in June, we financed eight hundred million dollars for five years at a total five year cost of thirty five basis points.

With the current valuation of the company and the opportunities that we are seeing, we expect the business will continue to grow rapidly. 07:50 Dream Impact Trust has become an exciting business and very much in-demand sector.

While the stock prices increased significantly, we are still trading at a discount and we'll make this one of our key priorities going forward to reduce our cost of capital. Our prior projects and additional impact projects are proving out.

Our asset management fees are based on the assets at cost, and as we develop buildings, the income grows as the buildings are built. Since the end of the second quarter, we agreed to hire -- acquire one third of nine hundred apartment in Toronto as discussed a moment ago.

And we issued the first ever convertible impact debenture to fund the trust share of this purchase. We are pleased to welcome Fairfax Financial as a strategic partner for us, and we expect that this partnership has the opportunity to continue to grow.

08:47 With the acquisition of two office properties and existing apartments, we were able to increase the proportion of recurring income much faster than through development alone. We expect that investors will recognize the additional value growing our recurring income so quickly.

After Labor Day, We expect to be marketing the company to both real estate investors as well as responsible investors globally to improve our cost of capital. 09:14 Dream Impact Trust is an exceptional company that is designed to generate competitive returns working within our communities and with governments to make our communities more accessible, inclusive, and cleaner.

If we can improve our cost of capital, we are well positioned to provide our investors strong returns, while we make communities healthier and fair by creating more affordable housing, interesting and exciting commercial properties, and all of that will be more environmentally friendly and inclusive. 09:42 Our asset management business includes the two public funds, but over the last twelve months, we’ve begun to grow our private business.

In March, we closed the first thirty six million dollars of our perpetual life impact fund. We have made a lot of progress under our terms of looking superior to what we had promised.

10:00 Last month, we created an Institutional U. S.

Industrial Fund seeded with two fifty million dollars of equity being the U.S. Assets in the Industrial REIT.

The commitments for the fund are about four eighty million dollars from Dream industrial and fifteen other institutional investors. And with the commitments already made, we can grow the size of the U.

S. Portfolio from five hundred million dollars to one billion dollars.

We have also been active with an institutional investor buying apartments to fix and sell in the Southern U.S. So far, we have bought or have under contract three thousand three hundred units with a value of about five hundred million dollars.

We believe that we can grow this strategy with our current partner and with other investors as well. 10:47 In addition, we have contracted to acquire a thirteen percent interest in the assets and a forty seven percent interest in a general partner of a two fifty million dollar apartment fund started by Paul’s Corp.

This vehicle focuses on buying and holding of apartments, and we believe that we can close this business over the next few years. 11:08 Our private management business is producing cash flow.

However, the real cash flow and value would not be created until our platform grows to scale. We have assembled the team to service the institutional business, which includes fund raising, compliance, reporting, and portfolio management.

Over the next twelve months, our focus will be to grow our private management business. We expect our recurring income segment to go rapidly from the development and acquisition of income properties on our balance sheet and increasing our assets under management.

It is interesting to me that between twenty sixteen and twenty nineteen, we sold eleven billion dollars or about seven billion dollars of assets. 12:05 Hi there, as I think we lost Michael for a little bit, I’ll cover for him for [multiple speakers].

I'm back. I'm back.

12:18 Sorry about it. What I was saying was that In addition to the five hundred million dollars of apartments that we've acquired in the U.

S. for the buy and hold strategy, we also are co-general partners in a fund that has two fifty million dollars of assets in a buy and hold strategy, and we expect to grow that business as well.

12:43 Over the next year, our expectation is to continue to build out our private management business and we think we have great prospects. We expect our recurring income to grow rapidly from our development of income properties, acquisitions of income properties, and the general growth of our asset management business.

13:04 And between twenty sixteen and twenty nineteen, we sold eleven billion dollars of assets in total, but about seven billion dollars net because we're also building [ph] in other areas. Just in twenty twenty one, we've so far acquired three point six billion dollars of assets with more under contracts, so we're really seeing opportunities to grow now.

13:26 At Arapahoe Basin, we've had quite a good year. It's representing more and more of our EBITDA this year, which was not a good year, it was poor snow.

There was serious [indiscernible] due to COVID, and we should expect to produce about ten million dollars of EBITDA during the ski season. Our hope is that for the twenty one, twenty two ski season, we'll get closer of fifteen million dollars and that will be growing over future years if we can execute on our plan.

So, it's a significant asset for us. 13:59 Dream office is also an important asset for us.

We own thirty two percent which works out to be about one billion dollars of assets on a proportionate basis. Now the office market right now is uncertain, but we're very pleased only that it’s over the long term as it is an extremely high quality portfolio and the assets individually are desirable in one of the most attractive markets in North America.

14:23 We continue to be pleased with our development progress. We are achieving our approvals on balance sheet and managed developments.

Our construction is generally on time and our profits are better than budget. In addition to the development of assets to keep as discussed above, our development of assets to sell are going well as well.

We also have many projects we haven't started yet and it is great to have a large pipeline of development sites to work on over the years to come. 14:51 We're completing block 12 in the Canary district with occupancies beginning at the end of this year.

The building would be very profitable. The last site to build on in the Canary district is block thirteen, which is almost six hundred thousand square feet.

It will be our biggest block and will be our most profitable ever. 15:10 Brightwater, which is our largest development in Port Credit is now about eighteen percent sold, as we sold five fifty units out of three thousand and the profit margins are well in excess of our underwriting.

We are also on the short list and in request for proposal for Quaysid, which is the former Sidewalk Labs site, which joins our Victory silo [ph] site. 15:33 We are also on the shortlist for [indiscernible] in Ottawa, which adjoins our Zibi site.

These are very exciting opportunities that provide tremendous impact. There's no assurance of our success that these public/private partnerships are becoming a more significant share of development in Canada.

And Dream is well positioned with our impact focus on our extensive track record meeting government expectations and public/private partnerships. 15:58 As you can see from the list of assets in the MD&A, we have over twenty thousand residential units to build, which will keep us busy for a long time.

However, we are also seeing that our pace of development is picking up, and we'll be able to convert the land into income properties or maximize profits through development and sale more quickly than before. 16:19 In Western Canada, we are very pleased with the recovery.

We had a twenty year low, three thirty five lots that were sold in twenty twenty. And this year, we expect to sell over nine hundred, and that looks to be our new run rate.

We are expanding in Brighton. We started Alpine Park.

We're beginning expansion to Willows. We are commencing with our three seventy one acre community just south of Edmonton in Elan, and we're working on starting a new community in Regina.

We have basically run out inventory and need to reinvest to continue our sales. 16:53 This is the major change in the tone of the market.

In addition, we've had a good take up of our retail properties, and we are looking to grow our income by developing residential properties release. We expect that a recurring income in Western Canada will become increasingly meaningful in the future.

On the capital side, we've been investing more this year than in prior years. We also recently completed this year's normal course issuer bid, so we have now reduced our shares outstanding from the peak by about twenty five percent.

We expect to continue to reduce our shares outstanding with cash generated from our operations or so long the trading value is well below our view of fair value. 17:33 Notwithstanding our investments developing our assets -- notwithstanding our investments into developing our assets, making new investments and reducing shares outstanding, we are continuing to maintain ample liquidity as there continued to be uncertainty.

But we are balancing that with trying to achieve the returns that are available from the opportunities we are identifying and creating. The last half -- last eighteen months have been scary, demanding, and uncertain.

Our businesses thrived in this period, Our success is due to the commitment of our entire management team, the support of our Board, advisors, and customers. We thank them all for continued excellent contributions and also thank our patient investors.

Deb?

18:22 Thank you, Michael, good morning. For the three and six months ended June thirty in twenty twenty one, earnings before income taxes after adjusting for fair value gains and losses taken on dream impact trust units held by other unit unitholders was twenty two point seven million dollars and thirty five point five million dollars respectively.

18:41 Compared with a loss of six point two million dollars and earnings of eight point five million dollars in twenty twenty after adjusting for the sales of our renewable power portfolio in Glacier Ridge in the prior year. The change year over year is primarily due to our growing asset management base, inclusive between industrial REITs expansion into Europe, strong results from A-Basin, and fair value gains on our investment properties.

In addition, the company benefited due to low interest expense as a result of reduced interest rate as well as lower debt levels. 19:17 In the midst of an unusual [ph] twenty twenty one, we maintained strong liquidity and managed risk with four zero six million dollars in liquidity and a conservative leverage ratio of twenty eight percent.

I will now go through a brief overview of results by operating segments. 19:34 In the second quarter, our recurring income segment generated revenue and net operating income of twenty eight point eight million dollars and twelve point five million dollars respectively compared to nineteen point eight million dollars and four point two million dollars in twenty twenty.

For the six months ended June thirty, twenty twenty one, our recurring income segment generated revenue and net operating income of fifty point seven million dollars and twenty six point seven million dollars respectively, an increase of three point five million dollars and six point four million dollars. The change was primarily driven by improved results in A-Basin with all capacity restrictions lifted at the end of March and higher asset management fees from non-Dream industrial REIT’s acquisition activity.

20:21 Inclusive of retail in Western Canada, Dream’s average monthly rent collection in Q2 twenty twenty one exceeded ninety five percent. Included in revenue for the three months ended June thirty is ten point nine million dollars related to asset management and development contracts with Dream industrial REIT, Dream office REIT, and our partnerships, up from five point eight million dollars in twenty twenty.

We expect these revenues to grow over time as we actively pursue new asset management opportunities. 20:50 On June twenty four, twenty twenty one, Dream industrial REIT closed on the acquisition of shares of a corporation that owns a portfolio of thirty one institutional quality, logistics properties across Europe.

The purchase price for the acquisition was approximately eight fifty million dollars. The total value of the real estate in connection with the acquisition is approximately one point three billion dollars.

In second quarter, our development segment generated revenue and net margin of fifty point eight million dollars and one point seven million dollars respectively compared to forty two point three million dollars and three point four million dollars in the prior year. 21:29 Twenty twenty one results were largely driven by sale of the multi-level auto-plex at Riverside Square development, while twenty twenty results included condominium occupancies at Riverside Square, BT Towns, and Kanaal at Zibi.

Year to date revenue and net margin for development segment was down from the prior year and twenty twenty results included the sale of Glacier Ridge in Western Canada as well as one hundred and sixty six condominium occupancies at Dream Share. In twenty twenty, we achieved three thirty five lot sales, one hundred and seven housing occupancies and five twenty five acre sales inclusive of Glacier Ridge.

22:10 We expect to end the year with nine hundred to nine fifty lot sales in sixteen acre sales, one hundred and seventy lot sales and five acre sales are recorded to date, and the remaining lots and acres are predominantly secured through deposits. Twenty twenty one could be our highest lot sales since twenty thirteen, and we are seeing positive momentum in the division.

We also began pre-selling for next year’s sales and we are seeing good initial success. 22:36 It is worth mentioning that in three and six months ended June thirty, twenty twenty one, we received government assistance through the Canadian Emergency Wage subsidy of two million dollars and four point six million dollars respectively.

Given the gap between our view of NAV and share price, we believe that continuing to buy back stock is an attractive use of capital and a driver for value creation. 22:58 Year to date, we purchased one point six million subordinate voting shares for cancellation for total proceeds of thirty seven million dollars.

We also hold interest in both Dream Office REIT and dream impact trust at thirty two and twenty seven percent respectively. During the six months ended June thirty, twenty one, we received twelve point three million dollars in distributions from the trust.

As of August eleventh, the market value of our interest in the trust is five ten million dollars which is approximately forty four percent of Dream’s current market cap. We remain committed to a conservative debt position and may use excess liquidity to purchase additional units in Dream office and Dream impact trust as opportunities arise, fund potential new investments and ongoing share repurchases as part of our NCIP.

I will now turn the call back over to Michael.

23:50 Thanks, Deb. At this time, Deb and I would be happy to answer your questions.

24:25 Thanks. Hi everyone.

Michael, you went through in detail many different projects that the company is involved in, a lot of development projects. Is it reasonable to expect that share buybacks will have to be put on the sidelines over the next year or two with so much going on?

I realize that it hasn't been a dramatic focus the past couple of years, but there's been consistent buyback of shares?

24:52 I'm insulted [ph] Mark. Firstly, We completed our NCIB for the period that started last September.

We completed about two weeks ago. So, we completed as much as we could buy on the NCIB.

Here, we consider the NCIB, and in addition to that, we did a five million units substantial issuer bid. So, we've been pretty committed to it and we expect that we will be just as active on the NCIB over the next twelve months as we've been in the last twelve months, number one, Number two, every project we're talking about is already funded.

So, there's no -- I don't think any of the project we talked about require additional capital. If Deb or Jose has a different view, let me know, but I mean, if there is any capital, it's really inconsequential.

25:42 Okay great. I guess, I meant since the SIB, but I take your point then and that’s helpful.

As far as the land development business in Western Canada, obviously, this is a good year and it's kind of a unique year also, obviously. How do you think about this business over the next few years?

Obviously, there were a few soft years leading into this. Do you think we’ve turned the corner and this is going to be sustainable, maybe talk about just what you're seeing looking into twenty twenty two?

26:11 Yes. So, we've already got commitment for a lot of lot sales for next year.

We expect we'll go into twenty twenty two with a similar amount of contracts to sell lots for twenty two as we did going into twenty twenty one, and we expect that more or less we'll have the same number of sales in twenty twenty two as we currently have -- in twenty twenty one. So, we think that twenty one and twenty two will be great years.

Beyond that, it's a little hard to tell, but we are seeing some success with our retail and apartments, so I think that's going to build as well in terms of a way to generate income and value out of our lands. So as an example, when I spoke about building the first apartment of Brighton at a six and a quarter percent cap rate, it uses a little less than two acres of land, and that six point two five percent cap rate is after valuing the land it is built on at a million dollars per acre.

So, we're making some money on the land as well as making it from building. So I think we're going to be pretty well that way.

So I think it's pretty exciting. I think it's going to be okay.

27:15 Okay, great. Thanks so much.

27:17 Thank you.

27:31 Thanks. Good morning everybody.

27:34 Good morning Dean.

27:36 Michael, George [ph] said I love it when a plane comes together, Mr. T said, I pity the fool, so here is the fool.

On the asset management business and certainly third party AUM is going to be a focus going forward. You have a lot of internal infrastructure at Dream now, how big could you grow that business before you have to start bolstering that out?

And what level do we start to see a bit of margin impact there? And I am assuming the next couple of billion dollars could be handled with what you've got and there's a lot of earnings to that, but you'll hit a capacity limit.

Can you give a sense of where that is?

28:23 We've got a big infrastructure that's very supportive for the real estate component whether that's buying assets, operating asset, managing assets, we’re in great shape. Deb led the project to become a registered investment advisor in the state.

She's also dealt with all the compliance required to manage money for pension funds in the U. S.

So we've already created a lot of the infrastructure to support the private fund business. We’ve hired very capable people to help us raise funds internally.

So that's in place. And the part that has to be scaled, it's the extensive portfolio managers and the asset managers as we grow, but that's a relatively inexpensive component than its variable cost because you need to only hire the people when you get the assets.

So and what we're looking at aside from additional asset managers and portfolio managers, we could look at growing the two billion dollars or three billion dollars of equity without greatly increasing our overheads. And that's what I saying earlier which is we've now set up four different platforms and we're going to make some money out of the way it is now, but we don't make real money until we scale it up, so that'll be a focus for the whole asset management platform.

29:44 Perfect, that's great. I'll hand it back.

Thanks Michael.

29:48 Thank you.

29:58 Thanks and good morning, everyone. Just to start off, back to the question on funding.

I understand you've got commitments on the construction side to complete most everything you've got underway, but just more from a balance sheet leverage perspective between the asset growth coming from various -- numerous avenues as well as perspective further share buybacks, how should we think about balancing the equity against the asset growth?

30:32 I would say that generally we look at our internal net asset value to determine the equity that we have and determine the debt to total value. And secondly, I would say we're doing a lot of work with governments where we get quite high leverage on what we think of as effectively infrastructure assets, apartments that have a lot of affordable – we think they're going to stay full.

We actually think they're going to trade at higher prices than assets that don't have a social impact component. So when we get debt from governments, we think that's a lot less risky than other debt.

So right now, we're not using any of our corporate lines, we have a term loan. Other than that, we have project loans on various developments.

And I'm not sure of the number, but I think we're around twenty percent debt to value, and I think we're very, very comfortable there and don't see get coverage as a concern for a long time.

31:33 So fair to say given the limits of IFRS accounting that just from an accounting basis, the leverage probably will tick up over the next few years?

31:44 Well, yeah, from an IFRS basis, we've got a lot of equity accounting investments which don't pick up the debt at all. So you can do a proportionate [ph] that you’ve got to take out the impact trust.

If you look at it that way, then we'll start to see some increasing gains on income properties. So a lot of the stuff we're doing now is income properties, they will be fair valued.

So that will help us when we look at our debt ratio, at least [ph] asset management contracts in A-Basin and our land in Western Canada, they really are undervalued on our balance sheet. So, I could see us having some increasing debt the way the accounting statements show it.

I'm not sure because I don't pay that much attention to them. But I still think we're modestly leveraged.

32:35 Okay, That's helpful. You mentioned A-Basin.

Were those prospective EBITDA estimates, U. S.

Dollars are Canadian?

32:43 Those were Canadian at this point, and our expectation is they'll become U. S.

Dollars.

32:50 Perfect. Always good to under promise.

So just with the asset management strategies you've talked about adding your sort of like strategies in Europe, just wondering what you're seeing and what we can expect with that platform beyond industrial over the next say, six months or twelve months?

Yeah. We are looking at other things we can do in Europe.

I mean, we built Dream Global from one billion dollars to six billion dollars. We sold all of our assets in Europe, and then had to rebuild from scratch.

I think internally, we decided we definitely won’t be doing that again. So now, it is the industrial platform through the public REIT and we're looking at other opportunities in [indiscernible] some development and we hope to expand in Europe and other asset classes over twenty twenty two.

33:46 Okay. Final one for me just on the Brightwater Mason project, it says ninety nine percent sold.

Is that on all one hundred and sixty two units being released? And how is the pricing versus expectations?

34:00 Yeah, that was on what was released. And I mean, you can see the repetition that’s just about everything we are developing is sold in both Ontario and Western Canada.

When we bought Brightwater, our expectations were much lower prices, I think we probably stated about a thousand dollars of foot for the recent condos, no it is higher than a thousand. Yeah, I think I think it was --

Twelve fifty.

Thank you. At least one thousand two fifty dollars a square foot.

34:45 That's great. Thank you very much.

35:10 I want to thank everybody for the continued interest in the company and their support. We're very excited about how the company has weathered through the last couple of years.

And we think that the future looks great. Please don't hesitate to call us if we can help you underwrite the business or have any questions for us generally.

Once again, thank you very much for your time. Be well.