TORONTO, ONTARIO--(Marketwired - Aug. 15, 2016) -
This press release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained within this press release.
Dream Unlimited Corp. (TSX:DRM)(TSX:DRM.PR.A) ("Dream", "the Company" or "we") today announced its financial results for the three and six months ended June 30, 2016. Basic earnings per share ("EPS") for the three months ended June 30, 2016 were $0.29, down from $1.12 for the three months ended June 30, 2015. On a more comparable basis, basic EPS was up over 90% from $0.15 for the three months ended June 30, 2015, excluding the one-time gain of $0.97 per share on the reorganization of an asset management agreement. At June 30, 2016, the Company's total equity increased to $779.2 million ($6.91 per share), up 9% from $716.8 million ($6.33 per share) in the prior year.
Michael Cooper, President & Chief Responsible Officer of Dream commented: "Our second quarter results were significant, with strong financial results from our condominium developments in downtown Toronto and from our development and other asset management activities. Historically, a large proportion of our income has been driven by our Western Canadian land development business and while we expect this will be the case over the long term, our financial results demonstrate the benefit of operating a diverse business. Our Toronto condominium business is strong. We continue to look to grow this business, directly and through new development partnerships. We continue to make progress on getting our lands in Western Canada approved, which will continue to make our lands more valuable. We expect to have a significant financial year in 2016, despite some short-term market concerns in Western Canada."
A summary of our results for the three and six months ended June 30, 2016 is included in the table below.
Three months ended June 30, |
Six months ended June 30, |
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(in thousands of Canadian dollars, except per share amounts) | 2016 | 2015 | 2016 | 2015 | ||||||||
Revenue | $ | 96,391 | $ | 65,538 | $ | 197,687 | $ | 113,689 | ||||
Net margin(1) | $ | 31,662 | $ | 17,988 | $ | 64,931 | $ | 26,697 | ||||
Net margin %(1) | 32.8 | % | 27.4 | % | 32.8 | % | 26.1 | % | ||||
Earnings before income taxes | $ | 45,644 | $ | 149,725 | $ | 73,647 | $ | 154,215 | ||||
Earnings for the period | $ | 32,912 | $ | 125,795 | $ | 51,887 | $ | 129,260 | ||||
Basic earnings per share(2), (4) | $ | 0.29 | $ | 1.12 | $ | 0.46 | $ | 1.15 | ||||
Diluted earnings per share | $ | 0.29 | $ | 1.07 | $ | 0.45 | $ | 1.09 | ||||
Basic earnings per share (ex. prior year gain on reorg.) (4) | $ | 0.29 | $ | 0.15 | $ | 0.46 | $ | 0.19 | ||||
Net margin by major business segment before eliminations | ||||||||||||
Land development(3) | $ | 374 | $ | 11,732 | $ | 23,644 | $ | 11,253 | ||||
Housing development(3) | $ | (999 | ) | $ | 1,835 | $ | (2,437 | ) | $ | 1,741 | ||
Condominium development | $ | 4,597 | $ | (811 | ) | $ | 6,175 | $ | (818 | ) | ||
Investment and recreational properties | $ | 3,397 | $ | 2,833 | $ | 8,894 | $ | 6,232 | ||||
Asset management and management services | $ | 24,980 | $ | 4,098 | $ | 29,876 | $ | 13,819 | ||||
Earnings (losses) from equity accounted investments | $ | 20,649 | $ | 3,000 | $ | 20,251 | $ | (3,103 | ) | |||
Total assets | $ | 1,564,621 | $ | 1,403,511 | $ | 1,564,621 | $ | 1,403,511 | ||||
Total liabilities | $ | 785,388 | $ | 686,745 | $ | 785,388 | $ | 686,745 | ||||
Total equity | $ | 779,233 | $ | 716,766 | $ | 779,233 | $ | 716,766 |
(1) | Net margin (see "Additional IFRS Measures" on page 38 of our management's discussion and analysis ("MD&A") for the quarter ended June 30, 2016) represents revenue less direct operating costs and asset management and advisory services expenses; including selling, marketing and other operating costs. |
(2) | Basic EPS is computed by dividing Dream's earnings attributable to owners of the parent by the weighted average number of Dream Subordinate Voting Shares and Dream Class B shares outstanding during the year. |
(3) | Net margin (see "Additional IFRS Measures" on page 38 of our management's discussion and analysis ("MD&A") for the quarter ended June 30, 2016) results are shown before eliminations of internal lot sales to our housing division, as the homes have been sold to external customers during the period. Net margin of $0.7 million for the three months ended June 30, 2016 (three months ended June 30, 2015 - $1.7 million) have been eliminated on consolidation. For additional details, please refer to the discussion on pages 11 & 12 of our MD&A for the quarter ended June 30, 2016. |
(4) | Included in earnings in the three and six months ended June 30, 2015 is a gain of $127.3 million ($110.0 million after tax) from the reorganization of the Dream Office REIT asset management contract. For further details refer to page 22 of our MD&A for the quarter ended June 30, 2016. |
Key Results Highlights: Development
Dream does not issue specific annual guidance for its external lot, acre or housing sales. Given the current environment in Western Canada, we are continuously reviewing our land supply to ensure the inventory we bring to market is paced with demand. Additionally, as we execute on our strategy to participate in more of the market share within our new communities by developing more single family homes, retail and commercial properties ourselves, our external lot and acre sales volumes are expected to gradually decline from prior years. As we build out and sell, lease or rent these properties, we intend to capture the development profit on both the land and building components and add to our recurring income sources by holding any income properties developed. Currently, we are focusing on building out our existing communities and strategically evaluating when servicing should commence in new communities. Given these factors, we anticipate having less sales volume overall in 2016, as compared to the prior year. However, with the undeveloped acre sales that occurred during the six months ended June 30, 2016, our overall net margin for the land division in fiscal 2016 is expected to generally meet that of the prior year, assuming consistent market conditions in Western Canada.
Key Advancements & Updates in Western Canada
Approvals in Western Canada:
Retail Development Partnership Formed to Develop Brighton Marketplace, a 234,000 SF Shopping Centre within Brighton in Saskatoon, Saskatchewan:
Commenced Construction of the Shops of South Kensington in South Kensington, Saskatoon:
Asset Management:
Investment and Recreational Properties
Capital Structure & Financing
Select financial operating metrics for the three and six months ended June 30, 2016 are summarized in the table below.
Three months ended June 30, |
Six months ended June 30, |
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(in thousands of dollars, except average selling price and units) | 2016 | 2015 | 2016 | 2015 | ||||||||
LAND DEVELOPMENT | ||||||||||||
Lot revenue | $ | 6,426 | $ | 12,565 | $ | 11,530 | $ | 19,791 | ||||
Acre revenue(1) | $ | 2,432 | $ | 12,225 | $ | 41,386 | $ | 13,073 | ||||
Total revenue(1) | $ | 8,858 | $ | 24,790 | $ | 52,916 | $ | 32,864 | ||||
Gross margin(1) | $ | 4,044 | $ | 14,589 | $ | 30,278 | $ | 16,590 | ||||
Gross margin (%) | 45.7 | % | 58.9 | % | 57.2 | % | 50.5 | % | ||||
Net margin(1) | $ | 374 | $ | 11,732 | $ | 23,644 | $ | 11,253 | ||||
Net margin (%) | 4.2 | % | 47.3 | % | 44.7 | % | 34.2 | % | ||||
Lots sold | 55 | 102 | 94 | 171 | ||||||||
Average selling price - lot | $ | 117,000 | $ | 123,000 | $ | 123,000 | $ | 116,000 | ||||
Undeveloped acres sold | 4 | - | 176 | 45 | ||||||||
Developed acres sold | - | 17 | - | 17 | ||||||||
Average selling price - acres | 640,000 | 719,000 | 235,000 | 210,000 | ||||||||
HOUSING DEVELOPMENT | ||||||||||||
Housing units occupied | 24 | 62 | 44 | 106 | ||||||||
Revenue(1) | $ | 8,798 | $ | 25,360 | $ | 16,354 | $ | 42,246 | ||||
Gross margin(1) | $ | 1,697 | $ | 5,211 | $ | 3,041 | $ | 7,680 | ||||
Gross margin (%) | 19.3 | % | 20.5 | % | 18.6 | % | 18.2 | % | ||||
Net margin(1) | $ | (999 | ) | $ | 1,835 | $ | (2,437 | ) | $ | 1,741 | ||
Net margin (%) | (11.4 | %) | 7.2 | % | (14.9 | %) | 4.1 | % | ||||
Average selling price - housing units | $ | 367,000 | $ | 409,000 | $ | 372,000 | $ | 402,000 | ||||
Average selling price - per square foot for units occupied | $ | 269 | $ | 288 | $ | 276 | $ | 281 | ||||
CONDOMINIUM DEVELOPMENT | ||||||||||||
Attributable to Dream, including equity accounted investments | ||||||||||||
Condominium occupancies - units | 326 | - | 413 | - | ||||||||
Revenue | $ | 115,204 | $ | 950 | $ | 146,013 | $ | 2,018 | ||||
Gross margin(2) | $ | 28,078 | $ | 889 | $ | 32,784 | $ | 1,954 | ||||
Gross margin (%) | 24.4 | % | n/a | 22.5 | % | n/a | ||||||
Net margin | $ | 21,070 | $ | (1,201 | ) | $ | 21,759 | $ | (1,638 | ) | ||
Net margin (%) | 18.3 | % | n/a | 14.9 | % | n/a | ||||||
Average selling price of condominiums occupied | ||||||||||||
Per unit | $ | 331,000 | $ | n/a | $ | 338,000 | $ | n/a | ||||
Per square foot | $ | 505 | $ | n/a | $ | 497 | $ | n/a | ||||
ASSET MANAGEMENT AND MANAGEMENT SERVICES | ||||||||||||
Fee earning assets under management(4) | $ | 5,144,000 | $ | 4,946,000 | $ | 5,144,000 | $ | 4,946,000 | ||||
Revenue | $ | 27,862 | $ | 6,109 | $ | 34,984 | $ | 17,565 | ||||
Net margin(4) | $ | 24,980 | $ | 4,098 | $ | 29,876 | $ | 13,819 | ||||
Net margin (%) | 89.7 | % | 67.1 | % | 85.4 | % | 78.7 | % | ||||
INVESTMENT INCOME EARNED ON INVESTMENTS IN LISTED FUNDS | ||||||||||||
Dream Office REIT | $ | 887 | $ | 2,384 | $ | 3,511 | $ | 3,039 | ||||
Other distributions from listed funds | $ | 613 | $ | 535 | $ | 1,124 | $ | 1,063 | ||||
Interest and other income | $ | 1,074 | $ | 704 | $ | 1,862 | $ | 1,479 | ||||
Total | $ | 2,574 | $ | 3,623 | $ | 6,497 | $ | 5,581 | ||||
INVESTMENT AND RECREATIONAL PROPERTIES | ||||||||||||
Attributable to Dream, excluding equity accounted investments | ||||||||||||
Revenue | $ | 12,648 | $ | 13,131 | $ | 29,154 | $ | 26,290 | ||||
Net margin(3) | $ | 3,397 | $ | 2,833 | $ | 8,894 | $ | 6,232 | ||||
Net margin (%) | 26.9 | % | 21.6 | % | 30.5 | % | 23.7 | % |
(1) | Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenue and net margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to pages 11 & 12 of this MD&A. |
(2) | Gross margin (refer to "Additional IFRS Measures" on page 38 of our MD&A for further details) for condominium operations include interest expense, which is capitalized during the development period and expensed through cost of sale as units are occupied. |
(3) | Net margin (refer to "Additional IFRS Measures" on page 38 of our MD&A for further details) for investment and recreational properties includes depreciation expense. |
(4) | Assets under management and fee earning assets under management are non-IFRS measures used by Management in evaluating operating performance. Please refer to the cautionary statements under the heading "Non-IFRS Measures" in this press release. Refer to "Additional IFRS Measures" on page 38 of our MD&A for further details on gross margin and net margin. |
Other Information
Information appearing in this press release is a select summary of results. The financial statements and MD&A for the Company are available at www.dream.ca and on www.sedar.com.
Conference Call
Senior management will now host semi-annual conference calls. It's next conference call will be on August 16, 2016 at 9:00 am. (ET). To access the call, please dial 1-888-465-5079 in Canada and the United States or 416-216-4169 elsewhere and use passcode 7552 747#. To access the conference call via webcast, please go to Dream's website at www.dream.ca and click on the link for News and Events, then click on Calendar of Events. A taped replay of the conference call and the webcast will be available for 90 days.
About Dream Unlimited Corp.
Dream is one of Canada's leading real estate companies with approximately $14.5 billion of assets under management in North America and Europe. The scope of the business includes residential land development, housing and condominium development, asset management for four TSX-listed trusts, investments in and management of Canadian renewable energy infrastructure and commercial property ownership. Dream has an established track record for being innovative and for its ability to source, structure and execute on compelling investment opportunities.
Non-IFRS Measures
Dream's condensed consolidated financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS"). In this press release, as a complement to results provided in accordance with IFRS, Dream discloses and discusses certain non-IFRS financial measures, including: internal rate of return (IRR), assets under management, fee earning assets under management and debt-to-total assets as well as other measures discussed elsewhere in this release. These non-IFRS measures are not defined by IFRS, do not have a standardized meaning and may not be comparable with similar measures presented by other issuers. Dream has presented such non-IFRS measures as Management believes they are relevant measures of our underlying operating performance and debt management. Non-IFRS measures should not be considered as alternatives to comparable metrics determined in accordance with IFRS as indicators of Dream's performance, liquidity, cash flow, and profitability. For a full description of these measures and, where applicable, a reconciliation to the most directly comparable measure calculated in accordance with IFRS, please refer to the "Non-IFRS Measures" section in Dream's MD&A for the three and six months ended June 30, 2016.
Forward-Looking Information
This press release may contain forward-looking information within the meaning of applicable securities legislation, including, but not limited to, statements regarding expected GLA of retail developments, timing of leasing or commencement of future retail developments, as well as expected development yield, timing of condominium occupanices, future residential and commercial densities, development plans of future stages of the Canary District and performance of the land development, retail development and housing development divisions. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream's control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These assumptions include, but are not limited to: the nature of development lands held and the development potential of such lands, our ability to bring new developments to market, anticipated positive general economic and business conditions, including low unemployment and interest rates, positive net migration, oil and gas commodity prices, our business strategy, including geographic focus, anticipated sales volumes, performance of our underlying business segments and conditions in the Western Canada land and housing markets. Risks and uncertainties include, but are not limited to, general and local economic and business conditions, employment levels, regulatory risks, mortgage rates and regulations, environmental risks, consumer confidence, seasonality, adverse weather conditions, reliance on key clients and personnel and competition. All forward looking information in this press release speaks as of August 12, 2016. Dream does not undertake to update any such forward looking information whether as a result of new information, future events or otherwise, except as required by law. Additional information about these assumptions and risks and uncertainties is disclosed in filings with securities regulators filed on SEDAR (www.sedar.com).
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