q1 2020 - dream · 2020. 5. 12. · q1 2020. letter to shareholders i management’s discussion and...

2020Q1

Letter to Shareholders i

Management’s Discussion and Analysis 1

Condensed Consolidated Financial Statements 23

Notes to the Condensed Consolidated Financial Statements 28

Table of Contents

i

Letter to Shareholders

Over the last year we have generated approximately $700 million in cash for Dream including the sale of Dream Global REIT, the sale of a partial interest in our Glacier Ridge development in Calgary and our agreement to sell our renewable power assets, which has made our platform that much safer. While accomplishing this, we have made further investments in, and continue to develop, our best-in-class assets. Construction continues to progress on our first affordable rental building in our West Don Lands development in Toronto and we are achieving important milestones at Zibi, our waterfront development in the Nation’s Capital, which will be one of Canada’s most sustainable communities.

By diversifying our balance sheet over the last four years, we successfully repositioned our portfolio, focusing on high-quality assets located in core markets, and reducing our exposure to Western Canada. We have placed an even greater emphasis on the quality of earnings and cashflow from recurring income generating assets which allows us to cover the fixed operating costs of our business. Over time, our recurring income sources will grow as we further invest and build out our development pipeline. We have invested in Dream Alternatives and Dream Office REIT on an opportunistic basis and have a 24% and 29% ownership in each entity, respectively. Across the Dream group we have 9.7 million square feet of retail and commercial GLA in fully stabilized assets or in our development pipeline and over 12,200 residential units (at project level) primarily located across the GTA and Ottawa. Our Toronto developments we hold today do not require a significant amount of capital, which provides us with additional financial flexibility. We ended the quarter with over $430 million in cash on hand or through funds available under our operating facilities, while maintaining a conservative debt position at 27.4%. Considering our high-quality assets and solid liquidity, Dream is in its strongest position to weather the current global environment we are facing.

The COVID-19 pandemic continues to have a significant impact on our lives and will for at least the near term. We remain focused on taking care of our people, tenants, communities and shareholders through these unprecedented times and are prudently managing our capital to make the best decision for the company and to emerge as an even stronger business.

Although cautious, we are looking forward to how we can grow and continue to make the company safer. We are excited to announce the expansion of our asset management business with our private investment division, Dream Equity Partners. Building off our recent success with the sale of Dream Global and our lengthy track record of value creation, we believe there will continue to be strong demand for the global allocation of capital to real estate. Throughout Dream’s history, we have effectively navigated through challenging times and the launch of Dream Equity Partners will provide an additional platform for us to capitalize on opportunities in a post COVID-19 environment.

We thank you for your continued support.

Sincerely,

“Michael Cooper”

Michael Cooper President and Chief Responsible Officer May 12, 2020

Management’sDiscussionandAnalysis

TheManagement’sDiscussionandAnalysis("MD&A")isintendedtoassistreadersinunderstandingDreamUnlimitedCorp.(the"Company"or"Dream"),its business environment, strategies, performance and risk factors. ThisMD&A should be read in conjunctionwith the audited consolidated financialstatements ("consolidated financial statements") of Dream, including the notes thereto, as at and for the year ended December 31, 2019 and thecondensedfinancialstatementsasatandforthethreemonthsendedMarch31,2020,whichcanbefoundintheCompany’sannualfilingsontheSystemforElectronicDocumentAnalysisandRetrieval("SEDAR")(www.sedar.com).ThefinancialstatementsunderlyingthisMD&A,including2019comparativeinformation,havebeenpreparedinaccordancewithInternationalFinancialReportingStandards("IFRS").Certaindisclosuresincludedhereinarenon-IFRSmeasures.Refertothe"Non-IFRSMeasures"sectionofthisMD&Aforfurtherdetails.

AlldollaramountsintableswithinthisMD&AareinthousandsofCanadiandollars,unlessotherwisespecified.Unlessotherwisespecified,allreferencesto"we","us","our"orsimilartermsrefertoDreamanditssubsidiaries.ThisMD&Aisdatedasof,andreflectsallmaterialeventsupto,May12,2020.

The“Forward-LookingInformation”sectionofthisMD&AincludesimportantinformationconcerningcertaininformationfoundinthisMD&Athatcontainsorincorporatesstatementsthatconstituteforward-lookinginformationwithinthemeaningofapplicablesecuritieslaws.Readersareencouragedtoreadthe“Forward-LookingInformation”and“RiskFactors”sectionsofthisMD&Aforadiscussionoftherisksanduncertaintiesregardingthisforward-lookinginformationasthereareanumberoffactorsthatcouldcauseactualresultstodiffermateriallyfromthosedisclosedorimpliedbysuchforward-lookinginformation.

BusinessOverview

DreamisaleadingdeveloperofexceptionalofficeandresidentialassetsinToronto,ownsstabilizedincomegeneratingassetsinbothCanadaandtheU.S.,and has an established and successful asset management business, inclusive of $9 billion of assets under management across three Toronto StockExchange ("TSX") listed trusts andnumerouspartnerships.Wealsodevelop landand residential assets inWesternCanada for immediate sale.Dreamexpectstogeneratemorerecurringincomeinthefutureas itsdevelopmentpropertiesarecompletedandheldforthelongterm.Dreamhasaproventrackrecordforbeinginnovativeandforourabilitytosource,structureandexecuteoncompellinginvestmentopportunities.Acomprehensiveoverviewofourholdingsisincludedinthe"SummaryofDream'sAssets&Holdings"sectionofthisMD&A.

Fromtheoutset,wehavesuccessfullyidentifiedandexecutedonopportunitiesforthebenefitofthebusinessandshareholders,includingthecreationofDreamAssetManagementCorporation("DAM")in1996asapubliccompany,itssubsequentprivatizationin2003andreorganizationin2013,thecreationofDreamOfficeREITin2003,theestablishmentofourassetmanagementbusiness,thecreationofDreamGlobalREIT,DreamIndustrialREITandDreamHardAssetAlternativesTrust("DreamAlternatives"or"DAT")in2011,2012and2014,respectively,andthesaleoftheassetsandsubsidiariesofDreamGlobalREITin2019.

DreamUnlimitedCorp.–March31,2020|1

SummaryofResults–FirstQuarterof2020

TheCOVID-19outbreakhashadapervasiveimpactonoureconomyandcommunities.InresponsetoCOVID-19,governmentmandateshaverequiredusto cease construction on certain development sites and close operations of Arapahoe Basin, our ski hill in Colorado. In addition, a number of ourrestaurants, non-essential retail businesses and hotel have either closed or significantly reduced their operating hours. Some of these temporaryrestrictionshavenowbeenliftedandwearecontinuingtoassessthelong-termimplicationsonourbusiness.WeareworkingcloselywithourtenantswhohavebeensignificantlyimpactedbyCOVID-19,assessingrentdeferralsonacase-by-casebasis.Asoftoday,over85%ofAprilrenthasbeencollectedfromtheCompany’sinvestmentpropertytenants.

Oureffortsoverthelastfiveyearstodiversifyourportfolioandshifttohigh-qualityassetslocatedincoremarketshaveallowedustobewell-positionedamidtheuncertaintythispandemichascreated.ThesaleoftheassetsandsubsidiariesofDreamGlobalREITin2019generatedsignificantcashproceeds,whichwereusedtorepaydebtandimprovethesafetyofourbalancesheet.AsatMarch31,2020,theCompanyhad$174.7millionofcashaswellas$261.1millionoffundsavailableunderitsWesternCanadaoperatinglineandmarginfacility.OurdebttototalassetratioasatMarch31,2020was27.4%.Themajorityofdebtmaturingin2020isprojectspecificandwillbefundedthroughproceedsgeneratedfromcondominiumunitclosings.SubsequenttoMarch31,2020,weexecutedonanamendmenttoouroperatingline,extendingthematuritydatetoJanuary31,2023andprovidinganadditional$29.4millionofliquidityfortheCompany.

RecurringIncome

InthethreemonthsendedMarch31,2020,ourrecurringincomesegmentgeneratedrevenueandnetoperatingincomeof$36.6millionand$16.3million,respectively,comparedto$48.6millionand$24.3millionintheprioryear.ThedecreasewasdrivenbytheaforementionedclosureofArapahoeBasinandreducedcontributionsfromDreamAlternativesduetoassetdispositionsandrepaymentsonitslendingportfoliointheprioryear.Atthispointintime,itremainsuncertainwhetherArapahoeBasinwillremainclosedfortheremainderoftheskiseason,whichtypicallyendsmid-June.

Included in recurring income are fees generated from our asset management contracts. In the three months ended March 31, 2020, total assetmanagementanddevelopmentmanagementfeesgeneratedfromcontractswithDreamIndustrialREIT,DreamOfficeREITandourpartnershipswere$5.7million.Weexpectthesefeestogrowovertimeandareactivelypursuingnewassetmanagementopportunities,capitalizingonourpastsuccessfromtheDreamGlobal REIT transaction in 2019. Fees earned on the assetmanagement contractwithDreamAlternatives are eliminated from the Company’sconsolidatedfinancialresults.

AcrosstheDreamgroupplatform,whichincludesassetsheldthroughtheCompany,DreamAlternativesandDreamOfficeREIT,wehaveapproximately6.7millionsquarefeet(“sf”)ofgrossleasablearea(“GLA”)instabilizedretailandcommercialproperties,inadditiontoourrecreationalproperties.AsatMay11,2020,theCompanyhada24%interestinDreamAlternativesanda29%interestinDreamOfficeREIT.Forfurtherdetailsbyassetclassandgeography,refertothe“SummaryofDream’sAssets&Holdings”sectionofthisMD&A.

InthethreemonthsendedMarch31,2020,theCompanyenteredintoabindingagreementwhichwillresultinDreamindirectlydisposingofitsinterestinarenewablepowerportfolio,expectedtoclosemid-2020pendingregulatoryapprovals.Onclose,weexpecttogenerateapproximately$60.0millioninnetafter-taxproceedsforDream,whilealsoeliminatingapproximately$150.0millionoftermdebt,associatedwiththerenewablepowernonrecoursecreditfacilities.Thetransactionproceedswillbeusedtoincreaseourliquidityandpaydowndebt.

SubsequenttoMarch31,2020,theCompanyclosedontheacquisitionoftheGladstoneHotel, indowntownToronto’swestend.The37-roomhotel isknown for its vibrant and dynamic environment and will undergo a revitalization programwhile preserving the hotel’s historical significance. DreamacquiredtheGladstoneHotelina50/50partnershipwithStreetcarDevelopments,ourco-developeroftheBroadviewHotel.

Development

Across the Dream group platform, we have approximately 5.2million sf of GLA in retail or commercial properties and over 12,300 condominium orpurpose-builtrentalunits(attheproject level) inourdevelopmentpipeline.Forfurtherdetailsbyassetclassandgeography,refertothe“SummaryofDream’sAssets&Holdings”sectionofthisMD&A.

InthethreemonthsendedMarch31,2020,ourdevelopmentsegmentgeneratedrevenueandnetmarginof$139.8millionand$43.9million,respectively,upby$131.4millionand$47.7millionfromtheprioryear.TheseincreaseswereprimarilydrivenbycondominiumunitoccupanciesatRiversideSquare,BTTownsandKanaalatZibi,aswellasa480acresale inCalgary,Alberta, inwhichweindirectlyretaineda27%interest.Earningsfromequityaccountedinvestmentswere$5.0million in thequarter due to condominiumunit occupancies at CanaryBlock,withno comparable activity in 2019.Due to theimpact of COVID-19, final closings at Riverside Square, BT Towns, Kanaal and Canary Block have been temporarily delayed. At this point in time,weanticipatefurtheroccupancyincometoberecognizedfortheremainingunitsin2020.

InthethreemonthsendedMarch31,2020,215units(attheprojectlevel)wereoccupiedinPhase1ofRiversideSquare,a5acre,two-phase,mixed-usedevelopmentlocatedinToronto’sdowntowneastendonthesouthsideofQueenStreetEastandimmediatelyeastoftheDonValleyParkway.Dreamhasa32.5%interestintheprojectalongsideitspartners.Thefirstphaseoftheprojectconsistsof688residentialcondominiumunits,astate-of-the-artmulti-levelauto-plexandapproximately20,000sfofretailGLA.Thesecondphaseisplannedtoconsistofapproximately36,000sfofmulti-tenantcommercialspacewithaproposedgrocery-anchoredcomponenttogetherwith227condominiumunits.


InthethreemonthsendedMarch31,2020,122units(attheprojectlevel)tookoccupancyinCanaryBlock(previouslyBlock16)withintheCanaryDistrict.CanaryBlockisa187-unitbuildingonourStage2Canarylands,locatedindowntownToronto'seastend,developedina50/50partnershipwithKilmerVanNostrand Co. Ltd. This area is a significant development hub for Dream, as it includes the 35 acre Canary District, the adjacentWest Don Lands andDistilleryDistrictdevelopmentassets, inadditiontothefutureLakeshoreEastsite. Inaggregate, thisarearepresentsover60acresofdevelopmentbyDreamanditspartnersandincludesover2,000residentialunitsbuilttodatebyDreamanditspartners,withanadditional741,000sfofretail/commercialspaceandnearly4,800condominiumandpurpose-builtrentalunitsinourdevelopmentpipeline.Forfurtherdetailsbyblock,refertothe“SummaryofDream’sAssets&Holdings”sectionofthisMD&A.FuturebuildingswithintheStage2 landsoftheCanaryDistrict includeCanaryCommons(Block12),Block13andBlock10.

Zibi is a 34 acre mixed-use waterfront development along the Ottawa River in Gatineau, Quebec and Ottawa, Ontario. The project is a multi-phasedevelopmentthatincludesover4millionsfofdensityconsistingofover1,800residentialunits(inclusiveofpurpose-builtrentalunits),over2millionsfofcommercialspaceandnearly8acresofriverfrontparksandplazas.ZibiwillbeoneofCanada'smostsustainablecommunitiesandthecountry'sfirstOnePlanet community. In partnershipwith a utility company,we have developed theDistrict Thermal Energy System, the first post-industrialwaste heatrecoverysysteminamaster-plannedcommunityinNorthAmerica,whichwillprovidenet-zeroheatingandcoolingforalltenants,residentsandvisitorsatZibi.

Land servicing onboth theOntario andQuebec lands continues and construction is underwayon theproject's first commercial and residential rentalbuildings.Intotal,thereisover630,000sfofresidentialrental,retailandcommercialspaceinvariousplanning/developmentstagesatZibi,ofwhich83%oftheretailandcommercialspacehasbeenpre-leasedasofMarch31,2020.KanaalisthefirstcondominiumunitbuildingontheOntariolands.InthethreemonthsendedMarch31,2020,over50%ofthe71-unitbuildingwasoccupiedwith10%oftheremainingunitspre-sold.

In the threemonths endedMarch 31, 2020, the Company entered into a partnershipwithQualico to develop the 480 acre Glacier Ridge residentialcommunityinCalgary,withDreamretaininga27%interestinthedevelopment.Inconnectionwiththistransaction,wereceived$23.9millionincashonclosing,withtheremaining$50.4millioninavendortake-backmortgagetoberepaidequallyoverthenextfouryears.

ShareRepurchaseActivityandReturntoShareholders

InthethreemonthsendedMarch31,2020,10.7millionSubordinateVotingShareswerepurchasedforcancellationbytheCompanyatanaveragepriceof$11.75underasubstantialissuerbid("SIB")andtheongoingnormalcourseissuerbid("NCIB")fortotalproceedsof$125.4million(yearendedDecember31,2019–2,041,004SubordinateVotingSharesatanaveragepriceof$8.07).

OnFebruary25,2020,theCompanyannouncedanincreasetotheannualdividendfrom$0.10to$0.12perSubordinateVotingShareandClassBcommonshare("ClassBShare").Dividendsof$2.8millionweredeclaredandpaidonitsSubordinateVotingSharesandClassBSharesinthethree-monthperiod(March31,2019-$2.7million).


OurOperatingSegmentsandStrategy

Asanassetmanager,owneranddeveloperofrealestate,ourobjectivesareto:• Developbest-in-classpropertiesandcommunitiesthatattractexceptionalbusinesses,residentsandvisitors;• Ownournewlydevelopedincomeproducingassetsforthelong-term;• Maintainaconservativebalancesheetandliquidityposition;• Workwithexceptionalpartnersandstakeholderstomaximizethevalueofourassetsanddevelopments;• Manageourassetmixandprofiletomaximizelong-termvaluetoshareholders;and• Generatesolidreturnsforourshareholdersoverthelongterm.

Wehaveachievedourgoals in thepastasa resultofourexpertiseandhigh-qualityassetbase,combinedwitha track record inourability tosource,structure and execute on compelling investment opportunities whilemaintaining conservative debt levels. Over the last few years, we have activelyfocusedondifferentiatingourassetbasebygrowingassets thatcontributetorecurring incomeand investing indevelopmentassetsandrealestate inToronto,withthegoalofimprovingthesafety,valueandearningsqualityofourbusiness.InclusiveofassetsheldbyDreamAlternativesandDreamOfficeREIT,ourportfoliototalsover12,300residentialunitsand11.9millionsfofcommercial/retailGLAasatMarch31,2020at100%projectlevel.

Commencinginthefirstquarterof2020,weredefinedourreportingsegmentinformationtobetterreflecthowwemanageourbusiness,includingDreamAlternatives.Comparativeinformationhasbeenreclassifiedinaccordancewithournewsegmentpresentation.

TheCompany'sreportingsegmentsnowconsistofthefollowing:• Recurringincome:

• ComprisedofourassetmanagementanddevelopmentmanagementagreementswithDreamIndustrialREIT,DreamOfficeREITandvariousdevelopmentpartners,a29%equity interest inDreamOfficeREIT,DreamAlternatives' lendingportfolio,andour stabilizedincomeproducingassetsintheGreaterTorontoArea("GTA"),WesternCanadaandColorado.

• Development:• Comprised of mixed-use developments in the GTA and Ottawa/Gatineau, land, housing and retail/commercial development in

SaskatchewanandAlberta,andDreamAlternatives'investmentintheHardRock/VirginHotelinLasVegas.

Recurringincomeisimportanttoourbusinessasitprovidesstablecashflowsinordertofundourongoinginterest,fixedoperatingcostsanddividends.Thisprovidesenhancedstabilityandfinancialflexibilityaswecontinuetoexecuteonourdevelopmentpipeline.Assetsthatcontributetorecurringincomeincludeourassetanddevelopmentmanagementcontracts,our29%equityownershipinDreamOfficeREITandourstabilizedincomegeneratingassets,suchastheDistilleryDistrict inTorontoandArapahoeBasin,ourskihill inColorado.Ourfuturerecurring incomepropertieswill includethosethatarecurrentlybeingdevelopedwithinourmixed-usedevelopmentsinTorontoandOttawa.

Ourdevelopmentassets,comprisedofresidential,commercialandretailbuildings,andrawland,arelocatedacrossToronto,OttawaandWesternCanada.We believe our development pipeline includes exceptional assets thatwill contribute to income and cash flow over time as they are developed andcompleted. Income and cash flow generated from these assets can vary from period to period, due to a variety of factors including the timing ofconstruction, availability of inventory, achievement of project milestones, timing of completion and end customer occupancy. As we execute oncompletingourdevelopmentproperties,weanticipateourrecurringincomeassetswillincreaseovertime.

Whilenotconsideredan individual reportablesegment,corporateandother includes:corporate-levelcashandotherworkingcapital, consolidatedtaxbalancesandexpense,ourtermfacilityandrelatedinterestexpense,generalandadministrativeexpensesnotallocatedtoaparticularsegmentandtheliabilityandfairvalueadjustmentstoDreamAlternativestrustunitsheldbyotherunitholders.Refertothe"AdditionalInformation-ConsolidatedDream"sectionofthisMD&Aforsegmentedassetsandliabilitiesandthesegmentedstatementofearnings(loss).

SelectedKeyOperatingMetricsbySegmentForthethreemonthsendedMarch31,2020

(inthousandsofdollars,exceptoutstandingshareamounts) Recurringincome(1) Development Corporateandother Total

Revenue $ 36,633 $ 139,822 $ — $ 176,455

%oftotalrevenue 20.8% 79.2% —% 100.0%

Netmargin $ 14,678 $ 43,949 $ — $ 58,627

Netmargin(%)(2) 40.1% 31.4% n/a 33.2%

AsatMarch31,2020

Segmentassets $ 1,155,850 $ 1,605,261 $ 144,636 $ 2,905,747

Segmentliabilities 247,882 505,722 654,427 1,408,031

Segmentshareholders'equity(3) 907,968 1,073,716 (509,791) 1,471,893

Totalissuedandoutstandingshares 94,790,595


ForthethreemonthsendedMarch31,2019

(inthousandsofdollars,exceptoutstandingshareamounts) Recurringincome(1) Development Corporateandother Total

Revenue $ 48,573 $ 8,384 $ — $ 56,957

%oftotalrevenue 85.3% 14.7% —% 100.0%

Netmargin $ 22,708 $ (3,740) $ — $ 18,968

Netmargin(%)(2) 46.8% n/a n/a 33.3%

AsatDecember31,2019

Segmentassets $ 1,133,201 $ 1,546,373 $ 354,459 $ 3,034,033

Segmentliabilities 255,863 444,407 901,154 1,601,424

Segmentshareholders'equity(3) 877,338 1,080,317 (546,695) 1,410,960

Totalissuedandoutstandingshares 105,318,501

(1)AssetmanagementrevenueandnetmarginfromDreamAlternativesareeliminateduponconsolidationwithinthissegment.

(2)Netmargin(%)isanon-IFRSmeasure.Refertothe"Non-IFRSMeasures"sectionofthisMD&Aforfurtherdetails.(3)Shareholders'equityforthedevelopmentsegmentexcludes$25.8millionofnon-controllinginterestasatMarch31,2020($21.6millionasatDecember31,2019).

TimingofIncomeRecognitionandImpactofSeasonalityThe Company’s housing and condominium operations recognize revenue at the time of occupancy and, as a result, revenue and direct costs varydependingon thenumberofunitsoccupied inaparticular reportingperiod.TheCompany’s landoperations recognize revenuegenerallywhena15%deposit has been received from the third-party purchaser, ultimate collection of the full purchase price is reasonably assured and certain otherdevelopmentmilestonesaresubstantiallymet.Revenuefromlandisdeferreduntiloccupancybyathirdpartycustomer,whenthelandissoldaspartofahomeconstructedbyourhousingdivision.Certainmarketingexpensesforcondominiumsandhomesareincurredpriortotheoccupancyoftheseunitsand accordingly arenot tied to thenumberof units occupied in a particular period as they are expensed as incurred. Commissions are capitalized ascontractassets,andexpensedwhencondominiumandhousingrevenueisrecognized.

Basedonourgeographiclocation,mostofourdevelopmentactivityinWesternCanadatakesplacebetweenAprilandOctoberduetoweatherconstraints,whilesalesordersvarydependingontherateatwhichbuildersworkthroughinventory,whichisaffectedbyweatherandmarketconditions.Traditionally,ourhighestsalesvolumequarterforourlandandhousingdivisionshasbeenthefourthquarter,whileourlowesthasbeenthefirstquarter.Asaresult,theCompany’sresultscanvarysignificantlyfromquartertoquarter.


KeyFinancialInformationandPerformanceIndicators

SelectedFinancialInformationForthethreemonthsendedMarch31,

(inthousandsofdollars,exceptpershareandoutstandingshareamounts) 2020 2019

Revenue $ 176,455 $ 56,957Grossmargin $ 68,322 $ 29,269Grossmargin(%)(1) 38.7% 51.4%Netmargin $ 58,627 $ 18,968Netmargin(%)(2) 33.2% 33.3%Earnings(loss)beforeincometaxes $ 232,779 $ (36,591)Earnings(loss)fortheperiod $ 185,830 $ (33,524)Basicearnings(loss)pershare(3) $ 1.89 $ (0.31)Dilutedearnings(loss)pershare(3) $ 1.86 $ (0.31)Weightedaveragenumberofsharesoutstanding,basic 98,287,304 107,171,336

Totalissuedandoutstandingshares 94,790,595 107,109,405

Totalearnings(loss)fortheperiodattributableto:

Shareholders(4) $ 185,556 $ (33,752)

March31,2020 December31,2019Totalassets $ 2,905,747 $ 3,034,033Totalliabilities $ 1,408,031 $ 1,601,424Totalequity $ 1,497,716 $ 1,432,609Totalissuedandoutstandingshares 94,790,595 105,318,501

(1)Grossmargin%(anon-IFRSmeasure)representsgrossmarginasapercentageofrevenue.Foradditionaldetails,refertothe"Non-IFRSMeasures"sectionofthisMD&A.(2)Netmargin%(anon-IFRSmeasure)representsnetmarginasapercentageofrevenue.Foradditionaldetails,refertothe"Non-IFRSMeasures"sectionofthisMD&A.(3)SeeNote23oftheCompany’scondensedconsolidatedfinancialstatementsforthethreemonthsendedMarch31,2020forfurtherdetailsonthecalculationofbasicanddilutedearnings(loss)

pershare.(4)Totalearningsattributabletoshareholdersexcludestheportionallocatedtonon-controllinginterests.

TheCompanyevaluatesitsdevelopmentsegmentusingnetmargin.TheCompany'srecurringincomesegmentisevaluatedusingnetoperatingincome.Statedasapercentagetoevaluateoperationalefficiency,thesemetricsareusedasfundamentalbusinessconsiderationsforupdatingbudgets,forecastsandstrategicplanning.

OverviewofResultsExcluding fair value adjustments taken onDreamAlternative units held by other unitholders, earnings before income taxes for the periodwas $58.6million,anincreaseof$33.3millionrelativetotheprioryear.Theincreasewasprimarilyduetothesaleof480acresinGlacierRidge,occupancyincomefrom our condominium projects in Toronto and Ottawa, partially offset by certain non-recurring transactional costs. In addition, prior period resultsincludedfairvaluegainsanddistributionincomefromourpreviouslyheldDreamGlobalREITunits,withnocomparableactivityinthecurrentperiod.

InthefirstquartertheCompanyrecognizedearningsof$185.8million,relativetolossesof$33.5millionintheprioryear.Inadditiontoouroperationalresults,theincreaseof$219.4millioninconsolidatedearningswasduetotheimpactoffairvaluechangesontheDreamAlternativestrustunitsheldbyotherunitholdersof$236.1million.

DreamAlternativestrustunitsheldbyotherunitholdersaretreatedasaliabilityonthecondensedconsolidatedstatementsoffinancialpositionofDreamandarefairvaluedeachperiodunderIFRS,generatinglosses(gains)asDreamAlternatives’unitpriceincreases(decreases).FairvaluegainsontheDreamAlternativestrustunitswere$174.2millioninthecurrentperiod(asaresultoftheimpactoftheunitpricedecreasingto$4.37atMarch31,2020from$7.75atDecember31,2019),comparedtoalossof$61.9millioninthepriorperiod(asaresultoftheimpactoftheunitpriceincreasingto$7.17atMarch31,2019fromS6.24atDecember31,2018).


SummaryofDream'sAssetsandHoldingsThefollowingtableincludessupplementaryinformationonourportfolioasatMarch31,2020.

Project/Property EntityDream

ownership(1) Status

Totalresidentialunitsat

completion(2)

Totalcommercialand

retailGLA(2)

In-place/committedoccupancy

Occupancy/stabilization

date

RECURRINGINCOMESEGMENTDowntownToronto&GTACommercial:AdelaidePlace DreamOfficeREIT 29.0% Incomeproperty — 658,000 98.4%50&90BurnhamthorpeRoadWest(SussexCentre) DreamOfficeREIT/DAT 64.5% Incomeproperty — 655,000 90.4%2200-2206EglintonAvenueEast&1020BirchmountRoad DreamOfficeREIT 29.0% Incomeproperty — 442,000 60.4%

StateStreetFinancialCentre DreamOfficeREIT 29.0% Incomeproperty — 414,000 100.0%DistilleryDistrict Dream 50.0% Incomeproperty — 395,000 98.4%438UniversityAvenue DreamOfficeREIT 29.0% Incomeproperty — 323,000 100.0%655BayStreet DreamOfficeREIT 29.0% Incomeproperty — 301,000 98.4%74VictoriaStreet/137YongeStreet DreamOfficeREIT 29.0% Incomeproperty — 266,000 98.9%720BayStreet DreamOfficeREIT 29.0% Incomeproperty — 248,000 100.0%36TorontoStreet DreamOfficeREIT 29.0% Incomeproperty — 214,000 98.2%330BayStreet DreamOfficeREIT 29.0% Incomeproperty — 165,000 90.5%20TorontoStreet/33VictoriaStreet DreamOfficeREIT 29.0% Incomeproperty — 158,000 98.5%250DundasStreetWest DreamOfficeREIT 29.0% Incomeproperty — 122,000 98.9%VictoryBuilding DreamOfficeREIT 29.0% Incomeproperty — 101,000 79.7%49Ontario DAT 100.0% Redevelopment — 88,000 91.5%425BloorStreetEast DreamOfficeREIT 29.0% Incomeproperty — 83,000 100.0%212KingStreetWest DreamOfficeREIT 29.0% Incomeproperty — 73,000 100.0%10LowerSpadina DAT 100.0% Incomeproperty — 61,000 100.0%100SteelesAvenueWest Dream/DAT 50.0% Redevelopment — 59,000 97.1%360BayStreet DreamOfficeREIT 29.0% Incomeproperty — 58,000 96.2%67&69RichmondStreetWest DreamOfficeREIT 29.0% Incomeproperty — 54,000 88.1%6AdelaideStreetEast DreamOfficeREIT 29.0% Incomeproperty — 53,000 96.7%350BayStreet DreamOfficeREIT 29.0% Incomeproperty — 53,000 97.4%366BayStreet DreamOfficeREIT 29.0% Incomeproperty — 36,000 54.3%PlazaImperial DAT 40.0% Incomeproperty — 35,000 100.0%349Carlaw DAT 100.0% Incomeproperty — 34,000 100.0%56TemperanceStreet DreamOfficeREIT 29.0% Incomeproperty — 32,000 100.0%CanaryDistrict-Stage1retail Dream 50.0% Incomeproperty — 32,000 87.0%PlazaBathurst DAT 40.0% Incomeproperty — 24,000 100.0%QueenandMutual DAT 9.0% Incomeproperty — 24,000 84.4%220KingStreetWest DreamOfficeREIT 14.5% Incomeproperty — 22,000 83.4%OtherGTAretail Dream 18.0-50.0% Incomeproperty — 105,000 79.0%Other:TheBroadviewHotel Dream 50.0% Incomeproperty — —TotalDowntownToronto&GTA — 5,388,000 93.0%

U.S.ArapahoeBasinskihill,Colorado Dream 100.0% Incomeproperty — n/a12800FosterStreet,Kansas DreamOfficeREIT 29.0% Incomeproperty — 185,000 100.0%TotalU.S. — 185,000 100.0%

WesternCanadaResidentialandMixed-Use:Kensington,Saskatoon Dream 100.0% Incomeproperty 48 —Commercial:444-7thBuilding,Calgary DreamOfficeREIT 29.0% Incomeproperty — 261,000 85.7%SaskatoonSquare,Saskatoon DreamOfficeREIT 29.0% Incomeproperty — 228,000 62.7%PrincetonTower,Saskatoon DreamOfficeREIT 29.0% Incomeproperty — 134,000 45.5%606-4thBuilding&BarclayParkade,Calgary DreamOfficeREIT 29.0% Incomeproperty — 126,000 85.5%Tamarack,Edmonton Dream 100.0% Incomeproperty — 119,000 100.0%KensingtonHouse,Calgary DreamOfficeREIT 29.0% Incomeproperty — 78,000 95.7%ShopsofSouthKensington,Saskatoon Dream 100.0% Incomeproperty — 72,000 96.4%PrestonCentre,Saskatoon DreamOfficeREIT 29.0% Incomeproperty — 62,000 78.5%234-1stAvenueSouth,Saskatoon DreamOfficeREIT 29.0% Incomeproperty — 10,000 66.8%Other:Willows,Saskatoon Dream 100.0% Incomeproperty — n/aTotalWesternCanada 48 1,090,000 78.3%

TotalRecurringIncome 48 6,663,000 90.8%


Project/Property Type EntityDream

ownership(1) Status

Totalresidentialunitsat

completion(2)

Totalcommercialand

retailGLA(2)

In-place/committedoccupancy

Occupancy/stabilization

date

DEVELOPMENTSEGMENT

DowntownToronto&GTAResidentialandMixed-Use:RiversideSquare Buildtosell Dream 32.5% Inoccupancy 325 210,000 65.6% 2019-2020CanaryBlock(Block16) Buildtosell Dream 50.0% Inoccupancy 11 7,000 84.7% 2020CanaryCommons(Block12) Buildtosell Dream 50.0% Underconstruction 401 15,000 100.0% 2021CanaryBlock13 Buildtohold Dream 50.0% Planning 470 8,000 TBDCanaryBlock10 Various Dream/DAT 33.0-50.0% Planning 445 25,000 TBDWDLBlock8 Buildtohold Dream/DAT 33.0% Underconstruction 770 4,000 2023WDLBlock3/4/7 Buildtohold Dream/DAT 33.0% Planning 834 37,000 2025WDLBlock20 Buildtohold Dream/DAT 33.0% Planning 272 280,000 TBDDistilleryDistrict-31AParliament Buildtohold Dream 50.0% Planning 500 340,000 32.9% TBDLakeshoreEast TBD Dream/DAT 50.0% Planning 1,100 32,000 TBDFrankGehry Buildtosell Dream/DAT 25.0% Planning 1,500 260,000 TBDEmpireLakeshore Buildtosell DAT 80.0% Inoccupancy 106 55,000 100.0% 2019-2020Brightwater Buildtosell Dream/DAT 31.0% Planning 3,000 400,000 2023-2032Seaton Buildtosell DAT 7.0% Planning TBD TBD TBDOther Buildtosell Various Various Various 739 26,000 TBDCommercial:357BayStreet Buildtohold DreamOfficeREIT 29.0% Redevelopment — 65,000 100.0% 2020TotalDowntownToronto&GTA 10,473 1,764,000 56.4%Zibi(Ottawa/Gatineau):Kanaal Buildtosell Dream/DAT 80.0% Inoccupancy 30 8,500 2020Block2-3 Buildtohold Dream/DAT 80.0% Underconstruction — 55,000 79.7% 2020Block208 Buildtohold Dream/DAT 80.0% Underconstruction — 34,000 75.8% 2020Block10 Buildtohold Dream/DAT 80.0% Underconstruction 162 1,500 2022Block211 Buildtohold Dream/DAT 80.0% Underconstruction — 185,000 85.4% 2021Futureblocks Various Dream/DAT 80.0% Planning 1,558 2,226,000 TBDTotalZibi(Ottawa/Gatineau) 1,750 2,510,000 83.1%U.S.LasVegasindustrialsite Buildtohold Dream 10.0% Planning — 438,000 TBDHardRock/VirginHotel,LasVegas Buildtosell DAT 10.0% Underconstruction — TBD 2023TotalU.S. — 438,000WesternCanadaResidential:BrightonVillageCentre,Saskatoon Buildtohold Dream 100.0% Underconstruction 121 — 2022Commercial:BrightonMarketplace,Saskatoon Buildtohold Dream 50.0% Underconstruction — 223,500 80.1% 20221900SherwoodPlace,Regina Buildtohold DreamOfficeREIT 29.0% Redevelopment — 210,000 100.0% 2021HarbourLanding,Regina Buildtohold Dream 100.0% Underconstruction — 41,000 71.7% 2021HamptonHeights,Saskatoon Buildtohold Dream 100.0% Underconstruction — 27,500 72.4% 2021Montrose,Calgary Buildtohold Dream 100.0% Underconstruction — 24,500 78.7% 2020TotalWesternCanada 121 526,500 86.9%

TotalDevelopment 12,344 5,238,500 72.1%

TotalDreamplatform 12,392 11,901,500 87.4%(1)DreamandDATholdingsatfullyconsolidatedownership.DreamOfficeREITat29.0%ownershipasofMarch31,2020.(2)ResidentialunitsandGLAareat100%projectlevelandincludeplannedunitsandGLA,whicharesubjecttochangependingvariousdevelopmentapprovals.Plannedresidentialunitsmaybedevelopedascondominiumunitsor

purpose-builtrentalsassupportedbymarketdemand,targetedstudiesandreturnobjectives.Forprojectscurrentlyinoccupancy,residentialunitsreflectremainingunitsininventorytobeoccupiedinfutureperiods.

WesternCanadaLandHoldings

City AcreEquivalents

Calgary 1,888Edmonton 856Saskatoon 3,127Regina 3,302Total 9,173

SummarybyGeography

Location CurrentGLAFutureGLAunder

development(2)

In-placeandcommittedoccupancy

Residentialunitsatcompletion(2)

DowntownToronto&GTA 5,453,000 1,699,000 88.8% 10,473Ottawa/Gatineau — 2,510,000 83.1% 1,750U.S. 185,000 438,000 100.0% —WesternCanada(3) 1,300,000 316,500 81.1% 169Total 6,938,000 4,963,500 87.4% 12,392(3)Dream'sacreequivalentsinWesternCanadarepresentanestimated15,000residentialunitsthatweplantobuildoutovertime.


RecurringIncome

Asummaryofthemajorassettypeswithinourrecurringincomesegmentisincludedbelow.

AssetManagementandEquityOwnershipinDreamOfficeREITWeprovideassetmanagementanddevelopmentmanagementservicestoDreamIndustrialREITandDreamOfficeREIT, respectively,andonbehalfofvariousinstitutionalpartnerships/third-partyrealestate.AssetmanagementfeesearnedfromDreamAlternativesandour16.1millionunitsheldinDreamAlternativesareeliminatedonconsolidation.AsofMarch31,2020,weheldanaggregateof17.6millionunitsinDreamOfficeREIT,representinga29%interest, which generatemonthly cash distributions for Dream. It is important to note that fees earned on transactional activity in a period are notrecurringinnatureandaccordinglywillimpactrelatedmargins.Feesrelatedtodevelopmentactivitiesandpartnershipsincludedwithinthissegmentmayfluctuate depending on the number of active projects and on Dream achieving certain milestones as the development manager. We expect thatdevelopmentandothermanagementfeeswillcontinuetoincreaseinfutureyearsasourexistingdevelopmentsprogressthroughconstructionmilestones.

Ourassetmanagementandmanagementservicesteamconsistsofrealestateandenergy/infrastructureprofessionalswithbackgroundsinarchitecture,urbanplanning,engineering,developmentandredevelopment,construction, finance,accountingand law.The teambringsexperience froma rangeofmajororganizationsinCanada;isactivelyinvolvedwithinternaltrainingopportunities;andhasexpertiseincapitalmarkets,structuredfinance,realestateinvestmentsandmanagementacrossabroadspectrumofproperty types indiversegeographicmarkets.Wecarryoutourownresearchandanalysis,financialmodelling,duediligence,andfinancialplanning,andhavecompletedapproximately$35billionofcommercialrealestateandrenewablepowertransactions.Wealsoactasleadorco-leaddeveloperonbehalfofDreamOfficeREIT,DreamAlternativesandourthird-partypartnerships.

AsatMarch31,2020,Dreammanagedassetswithatotalvalueofapproximately$9billion(December31,2019–$9billion),includingfeeearningassetsundermanagementofapproximately$4billion(December31,2019-$4billion).

StabilizedIncomeGeneratingAssetsDreamownsanumberofincomegeneratingassets,whicharekeycontributorstooursourcesofrecurringincome.TheseassetsincludeArapahoeBasin,ourskihill inColorado,andincomeproducingassetsinTorontoandWesternCanada,thelargestbeingtheDistilleryDistrict.AsofMarch31,2020,weheldover6.7millionsfinGLAofretail,residentialandmixed-usepropertiesacrosstheDreamplatformandweexpectassetsinthissegmenttogrowovertime,asweintendtoholdstabilizedinvestmentpropertiesthataredevelopedbyDreaminthecoremarketsinwhichweoperate.

LendingPortfolioDreamAlternativesinvestsinmortgagesandloanssecuredbyalltypesofresidentialandcommercialrealestatepropertythatrepresentanacceptableunderwritingrisk.Workingwithin theseriskparameters,DreamAlternativesalso invests inhigher-yieldingdevelopmentandconstruction loans,bridgeloansandmezzanineloans,wherewearecomfortablewiththeunderlyingsecurity,guaranteesandcovenantsoftheborrower.

SelectedSegmentKeyOperatingMetricsForthethreemonthsendedMarch31,

(inthousandsofdollars,unlessotherwisenoted) 2020 2019Revenue $ 36,633 $ 48,573Netoperatingincome(1) 16,277 24,252Netmargin 14,678 22,708Netmargin(%)(1) 40.1% 46.8%

Fairvaluechangesininvestmentproperties $ (643) $ (2,622)

Shareofearningsfromequityaccountedinvestments 545 6,718(1)Netoperatingincomeandnetmargin(%)arenon-IFRSmeasures.Refertothe"Non-IFRSMeasures"sectionofthisMD&Aforfurtherdetails.

ResultsofOperationsInthethreemonthsendedMarch31,2020,revenueandnetoperatingincomederivedfromrecurringincomesourcesdecreasedby$11.9millionand$8.0million, respectively, from the comparative periodprimarily due to reduced contributions fromDreamAlternatives due to asset dispositions and loanrepayments in the prior year, as well as reduced revenue and net operating income from Arapahoe Basin due to the aforementioned governmentmandatedclosureonMarch15,2020.

Revenueandnetoperatingincomefromourassetmanagementbusinesswasrelativelyconsistentwiththepriorperiod,astheimpactofreducedrevenuefromDreamGlobalREITduetothetransactionin2019wasoffsetbytransactionalactivityatDreamIndustrialREITandaone-timetransitionservicesfeefromBlackstoneinrelationtotheDreamGlobalREITtransaction.InthethreemonthsendedMarch31,2020,totalassetmanagementanddevelopmentmanagementfeesgeneratedfromcontractswithDreamIndustrialREIT,DreamOfficeREITandourpartnershipswere$5.7million.

Earningsfromequityaccountedinvestmentsdecreasedby$6.2millionfromtheprioryearduetolowerearningsfromourrenewablepowerinvestmentasa result of unfavourableweather conditions relative to the prior year and a non-recurring transactional charge. Thiswas partially offset by increasedearningsfromDreamOfficeREITasourownershipinterestincreasedfrom23%asatMarch31,2019to29%asofMarch31,2020.


Development

Anoverviewofourdevelopmentsegmentbygeographyisincludedbelow.

UrbanDevelopment-Toronto&OttawaOururbandevelopmentassetsarecomprisedofexceptionaldevelopmentopportunities invariousplanningandconstructionphasesacrossToronto&Ottawaandarecomprisedofcondominium,purpose-builtrentalandmixed-usedevelopments.Alargeproportionofassetscarriedwithinthissegmentareheldatcostandwill contributemeaningfully to theCompany'searnings in futureperiodsaspropertiesaredevelopedandcompleted. Inaddition,throughourequityownershipinDreamAlternativesandDreamOfficeREIT,wehaveindirectinvestmentsinhigh-qualityassetslocatedintheGTAwithsignificantre-developmentpotential.

Over the last five years,wehave significantly expandedour investmentpipeline in this segment.Anumberof these investmentswere acquiredon a25/75%basiswithDreamAlternatives includingBrightwater,WestDon Lands, the FrankGehrydevelopment and the Lakeshore East development, inwhichDreamistheco-developeralongsideitspartnersforeachofthesesites.Pleaserefertothe"SummaryofDream'sAssets&Holdings"sectionofthisMD&AforacomprehensiveoverviewofourUrbanDevelopmentholdings.

Thedevelopmentsthatweholdtodaydonotrequireasignificantamountofcapitalinjectionandarefinancedprimarilythroughproject-specificdebtandinclude both land loans and construction financing, providing us with additional financial flexibility. In cases where we are developing investmentpropertiesforhold,fairvaluegainsarerecognizedaskeymilestonesareachievedthroughthedevelopmentperiodoverthetimeframetostabilizationand/orcompletion.Developmentmarginfromtheseassets isearned inperiodswherewehave inventoryavailableforoccupancies incondominiumorinvestmentproperties.WiththerepositioningofourdevelopmentportfolioawayfromWesternCanadatotheGTA,weanticipatealargerproportionofourincometobederivedfromthissegmentinfutureyears.

AsatMarch31,2020,ourGTAandOttawapipelineacrosstheDreamportfolioiscomprisedofover12,200residentialunitsandapproximately4.3millionsfofcommercial/retailGLA.

Wedeveloporco-developalloftheprojectsbelowwithexceptionalpartners:

Project Partners Partnersince

DistilleryDistrict Cityscape 2004

RiversideSquare,BTTownsandothermixed-usedevelopments Streetcar,otherprivateinvestors 2007

CanaryDistrict-Blocks12,13,16 KilmerVanNostrandCo.Ltd. 2011

CanaryDistrict-Block10 KilmerVanNostrandCo.Ltd.,TriconCapitalGroup 2019

Zibi TheiaPartners 2014

LakeshoreEast GreatGulfResidential 2016

Brightwater KilmerVanNostrandCo.Ltd.,DiamondCorp.,FRAM+Slokker 2017

FrankGehrydevelopment GreatGulfResidential,otherprivateinvestors 2017

WestDonLands KilmerVanNostrandCo.Ltd.,TriconCapitalGroup 2018

100SteelesAvenueWest WestdaleConstructionCo.Ltd. 2018

WesternCanadaCommunityDevelopmentDream’sWesternCanadacommunitydevelopment is comprisedof land,housing,multi-familyand retail/commercialassetswithinourmaster-plannedcommunitiesinSaskatchewanandAlberta.Wecurrentlyownover9,100acresoflandinWesternCanada,ofwhichnearly8,700acresareinninelargemaster-plannedcommunitiesatvariousstagesofapproval.Withourlandbank,marketshare,liquiditypositionandextensiveexperienceasadeveloper,weareabletocloselymonitorandhavetheflexibilitytoincreaseordecreaseourinventorylevelstoadjusttomarketconditionsinanyyear.AsatMarch31,2020,ourWesternCanadapipelineacrosstheDreamportfolioiscomprisedof121purpose-builtrentalunitsand0.5millionsfofcommercial/retailGLA.

Buildingonourownlanddelaystherecognitionofrevenue,asthelandsaleisnotrecognizeduntilthepropertyisoccupiedbyathird-partypurchaserortenant.Incomparison,whensellinglandtoathirdparty,revenueisgenerallyrecognizedonreceiptofa15%depositfromthelandbuyerandwhenthereissubstantialcompletionoftheundergroundservicingwork.DuetotheeconomicconditionsinWesternCanada,wemaynotmakenewinvestmentsinundevelopedlandatthesamerateasinpastyearsunlessmanagementconsidersthelandstobestrategictoexistinglandpositionsalreadyownedbytheCompany.WithcontinuedchallengingmarketconditionsinWesternCanadaandtheimpactofCOVID-19onglobaloildemandanddecliningprices,wearecloselymonitoring the fair valuesofour investmentpropertiesunderdevelopment, customerdemand,pricing trendsand inventory supply across thedivision.Nevertheless,weexpectthatwewillgenerateprofitsfrombuildingonourownlandinthefutureuponmarketstabilization.

Landdevelopment is financedthroughouroperating line,which is securedbyour lands inWesternCanadaandassociatedtradereceivables.Housing,retail,commercialandmulti-familydevelopmentisfinancedthroughproject-specificconstructionfinancing.

With the intent of diversifying our business, over the last few yearswe have focused on repatriating capital out ofWestern Canada and redeployingproceedstoourTorontodevelopmentsandhavewithdrawn$110.0millionofcapitaloverthelastthreeyears.


SelectedSegmentKeyOperatingMetricsForthethreemonthsendedMarch31,

(inthousandsofdollars,exceptunitandacreamounts) 2020 2019DIRECTLYOWNEDRevenue $ 139,822 $ 8,384Grossmargin 52,045 5,017Netmargin 43,949 (3,740)Condominiumoccupancyunits(projectlevel)-Toronto&Ottawa 269 2Condominiumoccupancyunits(Dream'sshare)-Toronto&Ottawa 119 2Acressold-WesternCanada 505 —

EQUITYACCOUNTEDINVESTMENTSShareofearningsfromequityaccountedinvestments $ 4,978 $ 271Condominiumoccupancyunits(projectlevel)-Toronto&Ottawa 122 —Condominiumoccupancyunits(Dream'sshare)-Toronto&Ottawa 61 —

ResultsofOperationsInthethreemonthsendedMarch31,2020,wegeneratedrevenueandnetmarginof$139.8millionand$43.9million,respectively,upby$131.4millionand $47.7 million from the prior year. These increases were primarily driven by acre sales in Western Canada, including Glacier Ridge, as well ascondominiumunit occupancies at Riverside Square, BT Towns andKanaal at Zibi,with limitedoccupancy activity in the comparativeperiod. Similarly,earningsfromequityaccountedinvestmentsincreasedby$4.7millionovertheprioryearduetocondominiumunitoccupanciesatCanaryBlock.

InthethreemonthsendedMarch31,2020,landandcondominiuminventorydecreasedby$41.2millionand$15.3million,respectively,asaresultoftheaforementionedsalesandoccupancies.Overthesameperiod,accountsreceivableandotherfinancialassetsincreasedbyanaggregateof$102.5millionforsimilarreasons.Uponfinalclosingofcondominiumunits,theassociatedconstructionfacilityisrepaidandoutstandingreceivablesarecollected.

DuetotheimpactofCOVID-19,finalclosingsatRiversideSquare,BTTowns,KanaalandCanaryBlockhavebeentemporarilydelayed.Atthispointintime,weanticipatefurtheroccupancyincometoberecognizedfortheremainingunitsin2020.

ProjectsinOccupancyZibiZibi is a 34-acre mixed-use waterfront development along the Ottawa River in Gatineau, Quebec and Ottawa, Ontario. The project is a multi-phasedevelopmentthatincludesover4millionsfofdensityconsistingofover1,800residentialunits(inclusiveofpurpose-builtrentalunits),over2millionsfofcommercialspaceand8acresofriverfrontparksandplazas.ZibiwillbeoneofCanada'smostsustainablecommunitiesandthecountry'sfirstOnePlanetcommunity. Inpartnershipwithautilitycompany,wehavedevelopedtheDistrictThermalEnergySystem,thefirstpost-industrialwasteheatrecoverysysteminamaster-plannedcommunityinNorthAmerica,whichwillprovidenet-zeroheatingandcoolingforalltenants,residentsandvisitorsatZibi.

Land servicing onboth theOntario andQuebec lands continues and construction is underwayon theproject's first commercial and residential rentalbuildings.Intotal,thereisover630,000sfofresidentialrental,retailandcommercialspaceinvariousplanning/developmentstagesatZibi,ofwhich83%oftheretailandcommercialspacehasbeenpre-leasedasofMarch31,2020.KanaalisthefirstcondominiumunitbuildingontheOntariolands.InthethreemonthsendedMarch31,2020,over50%ofthe71-unitbuildingwasoccupiedwith10%oftheremainingunitspre-sold.

RiversideSquareRiversideSquare isa5acre, two-phase,mixed-usedevelopment located inToronto’sdowntowneastendon the south sideofQueenStreetEastandimmediatelyeastoftheDonValleyParkway.Dreamhasa32.5%interestintheprojectalongsideitspartners.Thefirstphaseoftheprojectconsistsof688residentialcondominiumunits,astate-of-the-artmulti-levelauto-plexandapproximately20,000sfofretailGLA.Thesecondphaseisplannedtoconsistofapproximately36,000sfofmulti-tenantcommercialspacewithaproposedgrocery-anchoredcomponenttogetherwith227condominiumunits. InthethreemonthsendedMarch31,2020,215units(attheprojectlevel)wereoccupiedinPhase1.

DowntownToronto'sEastEndInthethreemonthsendedMarch31,2020,122units(attheprojectlevel)tookoccupancyinCanaryBlock(previouslyBlock16)withintheCanaryDistrict.CanaryBlockisa187-unitbuildingonourStage2Canarylands,developedina50/50partnershipwithKilmerVanNostrandCo.Ltd.locatedindowntownToronto’seastend.Thisarea isa significantdevelopmenthub forDream,as it includes the35acreCanaryDistrict, theadjacentWestDonLandsandDistilleryDistrictdevelopmentassets, inadditiontothefutureLakeshoreEastsite. Inaggregate, thisarearepresentsover60acresofdevelopmentbyDreamanditspartnersandincludesover2,000residentialunitsbuilttodate,withanadditional741,000sfofretail/commercialspaceandnearly4,800condominium and purpose-built rental units in our development pipeline. For further details by block, refer to the “Summary of Dream’s Assets &Holdings”sectionofthisMD&A.


OtherItems

InterestExpenseInthethreemonthsendedMarch31,2020,interestexpensewas$6.2million,adecreaseof$3.7millionfromthecomparativeperiodprimarilyduetoadeclineininterestrates,andareductioninmortgagesandtermdebtduetoDreamAlternatives'dispositionsin2019.

IncomeTaxExpenseTheCompany's effective income tax ratewas20.2% for the threemonths endedMarch31, 2020 (threemonths endedMarch31, 2019–22.1%). TheeffectiveincometaxrateforthethreemonthsendedMarch31,2020islowerthanthestatutorycombinedfederalandprovincialtaxrateof26.5%mainlyduetothenon-taxableportionofcapitalgains,partiallyoffsetbyacombinationofnon-deductibleexpensesandotheritems.

WearesubjecttoincometaxesinCanada,bothfederallyandprovincially,andtheUnitedStates.Significantjudgmentsandestimatesarerequiredinthedeterminationof theCompany's tax balances.Our income tax expense anddeferred tax liabilities reflectmanagement's best estimateof current andfuturetaxestobepaid.TheCompanyissubjecttotaxauditsfromvariousgovernmentandregulatoryagenciesonanongoingbasis.Asaresult,fromtimetotime,taxingauthoritiesmaydisagreewiththeinterpretationandapplicationoftaxlawstakenbytheCompanyinitstaxfilings.

LiquidityandCapitalResources

Ourcapitalconsistsofdebtfacilitiesandshareholders’equity.Ourobjective inmanagingcapital istoensureadequateoperatingfundsareavailabletofunddevelopmentcosts;tocoverleasingcosts,overheadandcapitalexpendituresforincomegeneratingassets;toprovideforresourcesneededtofundcapitalcallsforexistingdevelopments;togenerateatargetrateofreturnoninvestments;andtocoverdividendpayments.TherehavebeennomaterialchangesinfuturecontractualobligationssinceMarch31,2020.

Asummaryofourworkingcapitaland financialassetsand liabilitiesasatMarch31,2020andDecember31,2019 ispresentedbelow.Project-specificinventoryanddebtbalancesareexcludedfromthetablebelow.

March31,2020 December31,2019

Lessthan12months

Greaterthan12months

Non-determinable Total

Lessthan12months

Greaterthan12months

Non-determinable Total

Cashandcashequivalents $ 174,697 $ — $ — $ 174,697 $ 388,521 $ — $ — $ 388,521

Accountsreceivable 195,556 40,583 — 236,139 164,105 38,053 — 202,158

Otherfinancialassets 24,651 173,958 — 198,609 11,365 118,091 — 129,456

Lendingportfolio 44,199 13,802 — 58,001 51,216 13,489 — 64,705

EquityaccountedinvestmentinDreamOfficeREIT — — 462,493 462,493 — — 433,373 433,373

Subtotalassets 439,103 228,343 462,493 1,129,939 615,207 169,633 433,373 1,218,213

Accountspayableandaccruedliabilities 89,729 28,718 42,716 161,163 132,748 23,289 50,243 206,280

Incomeandothertaxespayable 53,905 — — 53,905 154,361 — — 154,361

Provisionforrealestatedevelopmentcosts 38,801 — — 38,801 36,853 — — 36,853

Corporatedebtfacilities — 224,208 — 224,208 — 224,105 — 224,105

DreamAlternativestrustunits — — 231,790 231,790 — — 411,078 411,078

Subtotalliabilities 182,435 252,926 274,506 709,867 323,962 247,394 461,321 1,032,677

Netexcess(deficiency) $ 256,668 $ (24,583) $ 187,987 $ 420,072 $ 291,245 $ (77,761) $ (27,948) $ 185,536

Debttototalassetsratio(1) 27.4% 23.0%(1)Debttototalassetsratioisanon-IFRSmeasure.Refertothe"Non-IFRSMeasures"sectionofthisMD&Aforfurtherdetails.

AsatMarch31,2020,therewereadequateresourcestoaddresstheCompany’sshort-termliquidityrequirements.Certainfinancialinstrumentsthatarecallableordueondemandarepresentedasduewithin12months,whichisinconsistentwiththerepaymenttimingexpectedbymanagement.Duetothenatureofourdevelopmentbusiness,inadditiontotheaboveresources,theCompanyexpectstofundaportionofourcurrentliabilitiesthroughsalesofhousing,condominiumandlandinventories,whichcannotbeclassifiedandaccordinglyarenotpresentedabove.Managementcontinuouslyreviewsthetimingofexpecteddebtrepaymentsandactivelypursuesrefinancingopportunitiesastheyarise.Inaddition,asatMarch31,2020,wehadupto$261.1millionofundrawncreditavailabilityonDream’sWesternCanadaoperatingline,DreamAlternatives'operatinglineandthemarginfacility.

CashRequirementsThenatureoftherealestatebusinessissuchthatwerequirecapitaltofundnon-discretionaryexpenditureswithrespecttoexistingassets,aswellastofundgrowththroughacquisitionsanddevelopments.AsatMarch31,2020,wehad$174.7million incashandcashequivalents (December31,2019–$388.5million).Ourintentionistomeetshort-termliquidityrequirementsthroughcashonhand,cashfromoperatingactivities,workingcapitalreservesandoperatingdebt facilities.AsatMarch31,2020,ourdebtmaturing in2020 isproject-specificand isexpectedtobe fundedthroughproceeds fromcondominiumunitclosings.Inaddition,weanticipatethatcashfromoperationsandrecurringincomewillcontinuetoprovidethecashnecessarytofundoperatingexpensesanddebtservicerequirements.


DebtAs atMarch 31, 2020, total debtwas$795.6million (December 31, 2019 – $699.0million). A breakdownof project-specific debt and corporate debtfacilitiesisdetailedinthetablebelow.

Balance Weightedaverageinterestrate

(inthousandsofCanadiandollars) March31,2020 December31,2019 March31,2020 December31,2019

Operatingline-WesternCanada $ 65,638 $ — 4.32% 4.64%

Constructionloans 237,219 217,341 4.48% 4.79%

Mortgagesandtermdebt 268,502 257,509 4.18% 4.23%

Totalproject-specificdebt $ 571,359 $ 474,850 4.32% 4.41%

Non-revolvingtermfacility 224,208 224,105 4.67% 5.08%

Totalcorporatedebtfacilities $ 224,208 $ 224,105 4.67% 5.08%

Totaldebt $ 795,567 $ 698,955 4.42% 4.63%

As atMarch 31, 2020, $221.2million (December 31, 2019 – $106.8million) of aggregate development loans and term debtwere subject to a fixed,weightedaverageinterestrateof4.15%(December31,2019–4.47%)andwillmaturebetween2020and2025.Afurther$574.4million(December31,2019–$503.1million)ofrealestatedebtwassubjecttoaweightedaveragevariableinterestrateof4.53%(December31,2019–4.91%)andwillmaturebetween2020and2023.Includedwithintotaldebtis$180.5millionofvariabledebtthattheCompanyhashedgedthroughfixedinterestrateswaps.

ContractualObligationsOurliquidityisimpactedbycontractualdebtandleasecommitmentsasfollows:

2020 2021 2022 2023 20242025andthereafter Total

Project-specificdebt(1) $ 143,703 $ 231,037 $ 86,728 $ 39,665 $ 9,484 $ 60,742 $ 571,359

Corporatedebtfacilities(1) — — 224,208 — — — 224,208

$ 143,703 $ 231,037 $ 310,936 $ 39,665 $ 9,484 $ 60,742 $ 795,567(1)Theamountspresentedareshownconsistentwiththecontractualtermsofrepayment,whichmaybedueondemand.

In addition to the commitments above, we may be required to fund capital to our development projects as part of the Company's normal courseoperations.

Shareholders’EquityDreamisauthorizedtoissueanunlimitednumberofSubordinateVotingSharesandanunlimitednumberofClassBShares.AsatMarch31,2020,therewere91,675,747SubordinateVotingSharesand3,114,848ClassBSharesoutstanding(December31,2019-102,203,590SubordinateVotingSharesand3,114,911ClassBShares).

OnFebruary25,2020,theCompanyannouncedanincreasetotheannualdividendfrom$0.10to$0.12perSubordinateVotingShareandClassBShare.TheincreasewaseffectivewiththedividendpaidtoshareholdersonMarch31,2020.

InthethreemonthsendedMarch31,2020,theCompanydeclareddividendsof$2.8milliononitsSubordinateVotingSharesandClassBShares(threemonthsendedMarch31,2019-$2.7million).

ShareRepurchasesTheCompanyreneweditsNCIB,whichcommencedonSeptember20,2019,underwhichtheCompanyhastheabilitytopurchaseforcancellationuptoamaximumnumberof6,604,023SubordinateVotingSharesthroughthefacilitiesoftheTSXatprevailingmarketpricesandinaccordancewiththerulesandpoliciesoftheTSX.TheactualnumberofSubordinateVotingSharesthatmaybepurchased,andthetimingofanysuchpurchasesasdeterminedbytheCompany,are subject toamaximumdailypurchase limitationof15,029 shares,exceptwherepurchasesaremade inaccordancewithblockpurchaseexemptionsunderapplicableTSXrules.

InconnectionwiththerenewaloftheNCIB,theCompanyhasestablishedanautomaticsecuritiespurchaseplan(the“Plan”)withitsdesignatedbrokertofacilitate the purchase of Subordinate Voting Shares under the NCIB at times when the Company would ordinarily not be permitted to purchase itsSubordinateVotingSharesduetoregulatoryrestrictionsorself-imposedblackoutperiods.PurchaseswillbemadebytheCompany'sbrokerbasedontheparametersprescribedbytheTSXandthetermsoftheparties’writtenagreement.Outsideofsuchrestrictedorblackoutperiods,theSubordinateVotingSharesmayalsobepurchased inaccordancewithmanagement’sdiscretion.ThePlanwaspre-clearedbytheTSXandwill terminateonSeptember19,2020.

InthethreemonthsendedMarch31,2020,theCompanycompletedaSIBandpurchasedforcancellation10.0millionSubordinateVotingSharesatapriceof $11.75per share for aggregateproceedsof $117.5million. In addition, in thethreemonthsendedMarch31, 2020, 0.7million SubordinateVotingShareswere purchased for cancellation by the Company under its NCIB at an average price of $11.82 (year endedDecember 31, 2019 – 2.0millionSubordinateVotingSharesatanaveragepriceof$8.07).

IncludingtheSubordinateVotingSharesofDreamandClassBSharesheldorcontrolleddirectlyorindirectly,thePresidentandChiefResponsibleOfficer("CRO")ownedanapproximate40%economicinterestand86%votinginterestintheCompanyasatMarch31,2020.


Off-BalanceSheetArrangements,CommitmentsandContingencies

We conduct our real estate activities from time to time through joint arrangements with third-party partners. A discussion of our off-balance sheetarrangements,commitmentsandcontingencies is included inNote24of thecondensedconsolidated financial statements for thethreemonthsendedMarch31,2020.

TransactionswithRelatedParties

TheCompanyhasagreementsforservicesandtransactionswithrelatedparties,whichareoutlinedinNote25ofourcondensedconsolidatedfinancialstatementsforthethreemonthsendedMarch31,2020.

CriticalAccountingEstimates

Thepreparationofthecondensedconsolidatedfinancialstatements inconformitywith IFRSrequiresmanagementtomakeestimatesandassumptionsthat affect the reported amounts of assets, liabilities, revenue and expenses and the related disclosure of contingent assets and liabilities. Criticalaccountingestimatesrepresentestimatesmadebymanagementthatare,bytheirverynature,uncertain.Weevaluateourestimatesonanongoingbasis.Suchestimatesarebasedonhistoricalexperienceandonvariousotherassumptionsthatwebelievearereasonableunderthecircumstances,andtheseestimatesformthebasisformakingjudgmentsaboutthecarryingvalueofassetsandliabilitiesandthereportedamountofrevenueandexpensesthatarenotreadilyapparentfromothersources.Actualresultsmaydifferfromtheseestimatesunderdifferentassumptionsorconditions.AdetailedsummaryofthesignificantjudgmentsandestimatesmadebymanagementinthepreparationandanalysisofourfinancialresultsisincludedinourAnnualReportfortheyearendedDecember31,2019.

During the threemonths endedMarch31, 2020, theWorldHealthOrganizationdeclaredCOVID-19 a global pandemic, and theensuing responsesbygovernmentsincludingtheclosureofnon-essentialbusinessesandsocialdistancingrequirementshasincreasedthelevelofuncertaintyintheeconomyandcausedsignificantdisruptionstoallbusinessesanddailylife.TheCompanyassessedthisimpactonitsbusiness,includingrecoverabilityofitslendingportfolio,recoverabilityofaccountsreceivable,netrealizablevalueofinventoriesincludinglandinWesternCanada,carryingvaluesofequityaccountedinvestmentsincludingDreamOfficeREIT,timingandamountofrevenuerecognizedfrominvestmentproperties,thefairvalueofcertainloaninvestmentsclassifiedasfairvaluethroughprofitandloss("FVTPL"),investmentproperties,participatingmortgagesandinvestmentholdings.

Thesignificantglobaluncertaintyhasimpactedtheavailabilityofreliablemarketmetricsandaccordingly,theCompanyperformedadditionalrisk-basedprocedurestoassessthefairvalueofitsparticipatingmortgagesandinvestmentholdings,investmentpropertiesandcertainloaninvestmentstoensuretheCompanyappliedsoundjudgmentwithrespecttothevariousassumptionsimpactingthevaluation.TheCompanytookintoconsiderationthemarketconditionsexistingatthereportingdate.Theadditionalrisk-basedproceduresincludedscenariotestingtoevaluatedownsiderisk,reviewingriskprofilesofitstenantbase,borrowers'creditworthinessandriskcharacteristicsofitsunderlyingdevelopments.

TheCompanyassessedthepossibilityandamountofanyimpairmentlossorwritedownasitrelatestoamountsreceivable,equityaccountedinvestments,recreational properties and the lending portfolio. The estimates and judgments primarily relate to the timing and amount of future cash flows. Indeterminingwhether theCompany's financialassets requireaprovision for impairment, theCompanyreviewed itsExpectedCreditLoss ("ECL")modelincludingthefollowingvariousfactors:theborrowers'creditrisk,termtomaturity,statusoftheunderlyingprojectandmarketrisk.

Theamountsrecorded inthecondensedconsolidatedfinancialstatementsarebasedonthebestestimateatthereportingdate.However,uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamountoftheaffectedassetorliabilityinthefuture.

InternalControloverFinancialReporting

AsatMarch31,2020,thePresidentandCRO(the"CertifyingOfficer"),alongwiththeassistanceofseniormanagement,havedesigneddisclosurecontrolsandprocedurestoprovidereasonableassurancethatmaterialinformationrelatingtoDreamismadeknowntotheCertifyingOfficerinatimelymannerand information required to be disclosed by Dream is recorded, processed, summarized and reported within the time periods specified in securitieslegislation,andhavedesignedinternalcontrolsoverfinancialreportingtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationofthecondensedconsolidatedfinancialstatementsinaccordancewithIFRS.

TherewerenochangesintheCompany’sinternalcontroloverfinancialreportinginthethreemonthsendedMarch31,2020thathavemateriallyaffected,orarereasonablylikelytomateriallyaffect,theCompany’sinternalcontrolsoverfinancialreporting.


AccountingStandardsAdoptedDuringthePeriod

Thecondensedconsolidatedfinancialstatementshavebeenpreparedusingthesamesignificantaccountingpoliciesandmethodsas thoseused in theCompany'sannualconsolidatedfinancialstatementsfortheyearendedDecember31,2019,exceptfornewstandardsadoptedduringthethreemonthsendedMarch31,2020andrelatedaccountingpoliciesasdescribedbelow.

TheCompanyhasadoptedthefollowingneworrevisedstandards,includinganyconsequentialamendmentsthereto,fortheperiodeffectiveJanuary1,2020.ChangesinaccountingpoliciesadoptedbytheCompanyweremadeinaccordancewiththeapplicabletransitionalprovisionsasprovidedinthosestandardsandamendments.

IFRS3,“BusinessCombinations”IFRS3 setsout toemphasize that theoutputofabusiness is toprovidegoodsandservices tocustomers,whereas thepreviousdefinition focusedonreturnsintheformofdividends,lowercostsorothereconomicbenefitstoinvestorsandothers.TheamendeddefinitionofabusinesswaseffectiveonJanuary1,2020andappliestotheCompany'sfuturebusinesscombinations.

RiskFactors

Weareexposedtovariousrisksanduncertainties,manyofwhicharebeyondourcontrolandcouldhaveanimpactonourbusiness,financialcondition,operatingresultsandprospects.Shareholdersshouldconsiderthoserisksanduncertaintieswhenassessingouroutlookintermsofinvestmentpotential.ForadiscussionoftherisksanduncertaintiesidentifiedbytheCompany,pleaserefertoourAnnualReportfortheyearendedDecember31,2019andourmost recent Annual Information Form filed on SEDAR (www.sedar.com). For a discussion of the risks and uncertainties identified specific to DreamAlternatives,pleaserefertotheDreamAlternativesAnnualReportfortheyearendedDecember31,2019andthemostrecentAnnualInformationFormfiledbyDreamAlternativesonSEDAR.

Exceptasdisclosedbelow,theCompany'sriskexposureshavenotchangedsignificantlysinceDecember31,2019.

Creditriskrelatedtoinvestmentpropertiesandcertaininvestmentholdingsarisesfromthepossibilitythattenantsmaynotfulfilltheirleaseorcontractualobligations.TheCompanymitigates itscredit risks from its tenantsbyattracting tenantsof sound financial standingandbydiversifying its tenantmix.COVID-19andthemeasurestocontain ithavecreatedsignificantuncertainty inthegeneraleconomy.Adeterioration intheeconomymay impacttheabilityof tenants tomeet theirobligationsunder their leasesor contractsdue to thenegative impactof theoutbreakofCOVID-19.TheCompanyhasassessedtheeffectofthecurrenteconomicconditionsonthecreditriskofourtenantsandcounterparties,whichincludedthereviewoftheriskprofilesofitstenantbase.SubsequenttoMarch31,2020,theCompanyreceived85%ofitsAprilrentalrevenuefromtenantsrelatedtoitsinvestmentproperties.

CreditriskmayalsoarisefromaborrowerthatmaynotbeabletohonouritsdebtcommitmentsasaresultofanegativechangeinmarketconditionsthatcouldresultinalosstotheCompany.CreditriskrelatedtofinancialguaranteesprovidedbytheCompanyarisesfromthepossibilitythatcounterpartiesdefault on their financial obligations. The Companymitigates these risks by activelymonitoring themortgages/loan receivables, loan investment andfinancialguarantees,andinitiatingrecoveryprocedures,inatimelymanner,whenrequired.TheCompanyassessedvariousscenariosthatwouldimpactthelendingportfoliothroughitsECLmodelandnotednofurtherprovisionrequiredasatthereportingdate.

Creditriskmayalsoarisefromacustomerthatmaynotbeabletoclosefinancingonalandlotorcondominiumunitpreviouslyoccupiedandrecognizedinrevenue. TheCompanymitigates this riskby requiringdeposits on signing,mortgagepre-approvals on initial deposit, activelymonitoring collectionofinterimoccupancypayments,workingcloselywithproject-specificmortgagebrokers,whereapplicable,retainingtitletotheunderlyinglandorunituntilfinalclosing,andinitiatingrecoveryprocedureswhenrequired.

Themaximumexposure tocredit riskatMarch31,2020was the fairvalueof theCompany'saccounts receivable frompreviously recognized landandcondominiumrevenue,participatingmortgages,loansreceivableandthecontractualvalueofitslendingportfoliowhich,includinginterestreceivable,was$344.9million(December31,2019-$254.2million).TheCompanyhasrecourseundertheseinvestmentsintheeventofdefaultbytheborrower,inwhichcase,theCompanywouldhaveaclaimagainsttheunderlyingcollateral.

TheCompanyisexposedtothevariabilityinmarketinterestratesonmaturingdebtpayabletoberenewed.AsatMarch31,2020,28%oftheCompany'soutstandingdebtonourcondensedconsolidatedstatementsoffinancialpositionwasfixed.

Liquidity risk is the risk that theCompanywill encounterdifficulty inmeeting its financial obligations as theybecomedue.As atMarch31, 2020, theworking capital balancewas $256.7million, which includes cash of $174.7million. Additionally, the Company has $261.1million available under theWesternCanadaoperatingline,marginfacilityandDreamAlternativesoperatingline.AsatMarch31,2020,theCompanyhassufficientcashavailabletocoverobligationsastheybecomedue.

Althoughwebelievethattheabove-notedriskfactorsalongwiththeriskfactorsdescribedinour2019AnnualReportandinour2019AnnualInformationFormarethemostmaterialrisksthatwewillface,theyarenottheonlyrisks.Additionalriskfactorsnotpresentlyknowntousorthatwecurrentlybelieveare immaterialcouldalsomateriallyadverselyaffectour investments, futureprospects,cash flows, resultsofoperationsor financialconditionandourabilitytomakedividendpaymentstoshareholdersandtherebyadverselyaffectthevalueofourSubordinateVotingShares.Theoccurrenceofanyofsuchriskscouldmateriallyandadverselyaffectourinvestments,futureprospects,cashflows,resultsofoperationsorfinancialconditionandourabilitytomakedividendpaymentstoshareholders.


Forward-LookingInformation

Certain informationhereincontainsor incorporatesstatementsthatconstitute forward-looking informationwithinthemeaningofapplicablesecuritieslegislation, including, but not limited to, statements regarding our objectives and strategies to achieve those objectives; our beliefs, plans, estimates,projectionsandintentions,andsimilarstatementsconcerninganticipatedfutureevents,futuregrowth,expectednetproceedsfromsalesortransactions,resultsofoperations,performance,businessprospectsandopportunities,acquisitionsordivestitures,tenantbase,futuremaintenanceanddevelopmentplansandcosts,capitalinvestments,financing,theavailabilityoffinancingsources,incometaxes,vacancyandleasingassumptions,litigationandtherealestate industry in general; as well as specific statements in respect of our ability to weather the COVID-19 pandemic and resulting disruptions; ourdevelopmentplans,proposalsanddevelopmenttimelinesforfutureretailandcondominiumandmixed-useprojectsandfuturestagesofcurrentretailandcondominiumandmixed-useprojects,includingprojectedsizes,density,usesandtenants;anticipatedcurrentandfutureunitsalesandoccupanciesofourcondominiumandmixed-useprojects;ouranticipatedownershiplevelsofproposedinvestments;anticipatedlevelsofdevelopment,assetmanagementandothermanagement fees in future periods; expectations that recurring income assetswill increase over time; expectations that distributions fromDreamOffice REIT andDreamAlternativesmay increase over time; expectations of future profit contributions fromWestern Canada; andour overallfinancialperformance,profitabilityandliquidityforfutureperiodsandyears.

Forward-lookingstatementsgenerallycanbeidentifiedbywordssuchas"objective","may","will","would","expect","intend","estimate","anticipate","believe", "should", "could", "likely", "plan", "project", "continue" or similar expressions suggesting future outcomes or events. Forward-lookinginformationisbasedonanumberofassumptionsandissubjecttoanumberofrisksanduncertainties,manyofwhicharebeyondtheCompany’scontrol,whichcouldcauseactualresultstodiffermateriallyfromthosedisclosedinorimpliedbysuchforward-lookinginformation.Theassumptions,whichmayprove tobe incorrect, include,butarenot limited to, thevariousassumptions set forthhereinaswell asassumptions relating to: thatnounforeseenchangesinthelegislativeandoperatingframeworkfortherespectivebusinesseswilloccur;thatwewillmeetourfutureobjectives,prioritiesandgrowthtargets;thatwereceivethelicences,permitsorapprovalsinnecessaryconnectionwithourprojects;thatwewillhaveaccesstoadequatecapitaltofundourfutureprojects,plansandanypotentialfutureacquisitions;thatourfutureprojectsandplanswillproceedasanticipated;thatweareabletoidentifyhigh-quality investmentopportunities; thatwe findsuitablepartnerswithwhich toenter into jointventuresorpartnerships; thatwedonot incuranymaterialenvironmentalliabilitiesandthatfuturemarket,demographicandeconomicconditionswilloccurasexpected;andthenatureofdevelopmentlandsheld and thedevelopmentpotential of such lands, our ability tobringnewdevelopments tomarket, anticipatedpositive general economic andbusinessconditions,includinglowunemploymentandinterestrates,positivenetmigration,oilandgascommodityprices,ourbusinessstrategy,includinggeographicfocus,anticipatedsalesvolumes,performanceofourunderlyingbusinesssegmentsandconditionsintheWesternCanadalandandhousingmarkets.

Alltheforward-lookingstatementscontainedinthisMD&Aarebasedonwhatwebelievearereasonableassumptions;therecanbenoassurancethatactualresultswillbeconsistentwiththeseforward-lookingstatements.Factorsorrisksthatcouldcauseactualresultstodiffermateriallyfromthosesetforth in the forward-looking statements and information include, but are not limited to, adverse changes in general and local economic andbusinessconditions,uncertaintiessurroundingtheCOVID-19pandemic,employmentlevels,regulatoryrisks,mortgageratesandregulations,environmentalrisks,consumer confidence, seasonality, adverse weather conditions, reliance on key clients and personnel and competition and other risks and factorsdescribedfromtimetotimeinthedocumentsfiledbytheCompanywiththesecuritiesregulators.

Allforward-lookinginformationisasofMay12,2020.Dreamdoesnotundertaketoupdateanysuchforward-lookinginformation,whetherasaresultofnew information, future events or otherwise, except as required by applicable law. Additional information about these assumptions and risks anduncertaintiesiscontainedinourfilingswithsecuritiesregulators.Certainfilingsarealsoavailableonourwebsiteatwww.dream.ca.


AdditionalInformation-ConsolidatedDream

SegmentedAssetsandLiabilitiesMarch31,2020

Recurringincome Development

Corporateandother

ConsolidatedDream

Less:DreamAlternatives(1)

Less:Consolidationandfairvalueadjustments(1)

Dreamstandalone(1)

Assets

Cashandcashequivalents $ 17,619 $ 24,989 $ 132,089 $ 174,697 $ 101,746 $ 747 $ 72,204

Accountsreceivable 7,932 221,887 6,320 236,139 1,836 (1,064) 235,367

Otherfinancialassets — 198,609 — 198,609 130,308 (95,415) 163,716

Lendingportfolio 58,001 — — 58,001 58,001 — —

Housinginventory — 37,379 — 37,379 — — 37,379

Condominiuminventory — 276,024 — 276,024 — 15,351 260,673

Landinventory 890 496,551 — 497,441 — — 497,441

Investmentproperties 469,914 114,579 — 584,493 202,573 15,811 366,109

Recreationalproperties 50,753 — — 50,753 — — 50,753

Equityaccountedinvestments 541,955 192,423 — 734,378 181,262 (50,111) 603,227

Capitalandotheroperatingassets 8,786 42,820 6,227 57,833 1,180 7,107 49,546

Intangibleasset — — — — — (43,000) 43,000

Totalassets $ 1,155,850 $ 1,605,261 $ 144,636 $ 2,905,747 $ 676,906 $ (150,574) $ 2,379,415

Liabilities

Accountspayableandotherliabilities $ 37,409 $ 106,035 $ 17,719 $ 161,163 $ 13,574 $ 22,783 $ 124,806

Incomeandothertaxespayable — — 53,905 53,905 7 — 53,898

Provisionforrealestatedevelopmentcosts — 38,801 — 38,801 — — 38,801

Debt 210,473 360,886 224,208 795,567 88,791 45 706,731

DreamAlternativestrustunits — — 231,790 231,790 — 231,790 —

Deferredincometaxes — — 126,805 126,805 5,745 30,823 90,237

Totalliabilities $ 247,882 $ 505,722 $ 654,427 $ 1,408,031 $ 108,117 $ 285,441 $ 1,014,473

Non-controllinginterest — 25,823 — 25,823 — (51,647) 77,470

Shareholders'equity $ 907,968 $ 1,073,716 $ (509,791) $ 1,471,893 $ 568,789 $ (384,368) $ 1,287,472

Totalequity $ 907,968 $ 1,099,539 $ (509,791) $ 1,497,716 $ 568,789 $ (436,015) $ 1,364,942(1)Refertothe"Non-IFRSMeasures"sectionofthisMD&AforthedefinitionofDreamAlternatives,consolidationandfairvalueadjustmentsandDreamstandalone.


December31,2019


Corporateandother

ConsolidatedDream



Dreamstandalone(1)

Assets

Cashandcashequivalents $ 11,518 $ 31,327 $ 345,676 $ 388,521 $ 117,787 $ 1,244 $ 269,490

Accountsreceivable 11,093 188,555 2,510 202,158 4,179 (2,240) 200,219

Otherfinancialassets — 129,456 — 129,456 119,887 (94,249) 103,818

Lendingportfolio 64,705 — — 64,705 64,705 — —

Housinginventory — 38,607 — 38,607 — — 38,607

Condominiuminventory — 291,304 — 291,304 — 15,129 276,175

Landinventory 786 537,785 — 538,571 — — 538,571

Investmentproperties 419,991 98,433 — 518,424 201,624 15,786 301,014

Recreationalproperties 48,779 — — 48,779 — — 48,779

Equityaccountedinvestments 520,284 188,556 — 708,840 186,713 (41,651) 563,778

Capitalandotheroperatingassets 6,956 42,350 6,273 55,579 1,188 8,196 46,195

Intangibleasset — — — — — (43,000) 43,000

Assetsheldforsale(2) 49,089 — — 49,089 — — 49,089

Totalassets $ 1,133,201 $ 1,546,373 $ 354,459 $ 3,034,033 $ 696,083 $ (140,785) $ 2,478,735

Liabilities

Accountspayableandotherliabilities $ 52,413 $ 136,154 $ 17,713 $ 206,280 $ 35,087 $ 22,926 $ 148,267

Incomeandothertaxespayable — — 154,361 154,361 (58) — 154,419

Provisionforrealestatedevelopmentcosts — 36,853 — 36,853 — — 36,853

Debt(2) 203,450 271,400 224,105 698,955 88,988 24 609,943

DreamAlternativestrustunits — — 411,078 411,078 — 411,078 —

Deferredincometaxes — — 93,897 93,897 4,515 6,985 82,397

Totalliabilities $ 255,863 $ 444,407 $ 901,154 $ 1,601,424 $ 128,532 $ 441,013 $ 1,031,879

Non-controllinginterest — 21,649 — 21,649 — (43,297) 64,946

Shareholders'equity $ 877,338 $ 1,080,317 $ (546,695) $ 1,410,960 $ 567,551 $ (538,500) $ 1,381,910

Totalequity $ 877,338 $ 1,101,966 $ (546,695) $ 1,432,609 $ 567,551 $ (581,797) $ 1,446,856(1)Refertothe"Non-IFRSMeasures"sectionofthisMD&AforthedefinitionofDreamAlternatives,consolidationandfairvalueadjustmentsandDreamstandalone.(2)Debtassociatedwithassetsheldforsaletotalling$30.1millionisclassifiedascurrentwithindebtasatDecember31,2019.


SegmentedStatementofEarnings(Loss)ForthethreemonthsendedMarch31,2020


Corporateandother

ConsolidatedDream



Dreamstandalone(1)

Revenue $ 36,633 $ 139,822 $ — $ 176,455 $ 5,888 $ (798) $ 171,365

Directoperatingcosts (20,356) (87,777) — (108,133) (2,150) (431) (105,552)

Grossmargin 16,277 52,045 — 68,322 3,738 (1,229) 65,813

Selling,marketing,depreciationandotheroperatingcosts (1,599) (8,096) — (9,695) — (168) (9,527)

Netmargin 14,678 43,949 — 58,627 3,738 (1,397) 56,286

Fairvaluechangesininvestmentproperties (643) (549) — (1,192) — (149) (1,043)

Investmentandotherincome 2 1,792 591 2,385 805 (2) 1,582

Interestexpense (2,160) (1,219) (2,833) (6,212) (791) (20) (5,401)

Fairvaluechangesinfinancialinstruments (92) 4,421 — 4,329 4,421 — (92)

Shareofearningsfromequityaccountedinvestments 545 4,978 — 5,523 (910) (271) 6,704

Netsegmentearnings(loss) 12,330 53,372 (2,242) 63,460 7,263 (1,839) 58,036

Generalandadministrativeexpenses — — (4,888) (4,888) (880) 1,138 (5,146)

AdjustmentsrelatedtoDreamAlternativestrustunits — — 174,207 174,207 — 174,207 —

Incometaxexpense — — (46,949) (46,949) (1,231) (23,837) (21,881)

Netearnings(2) $ 12,330 $ 53,372 $ 120,128 $ 185,830 $ 5,152 $ 149,669 $ 31,009



Corporateandother

ConsolidatedDream



Dreamstandalone(1)

Revenue $ 48,573 $ 8,384 $ — $ 56,957 $ 13,882 $ (2,775) $ 45,850

Directoperatingcosts (24,321) (3,367) — (27,688) (5,860) (483) (21,345)

Grossmargin 24,252 5,017 — 29,269 8,022 (3,258) 24,505Selling,marketing,depreciationandotheroperatingcosts (1,544) (8,757) — (10,301) — — (10,301)

Netmargin 22,708 (3,740) — 18,968 8,022 (3,258) 14,204

Fairvaluechangesininvestmentproperties (2,622) 2,519 — (103) — (211) 108

Investmentandotherincome 1,107 1,736 315 3,158 640 515 2,003

Interestexpense (4,373) (1,443) (4,100) (9,916) (2,308) 75 (7,683)

Fairvaluechangesinfinancialinstruments 11,683 (343) 60 11,400 (343) — 11,743

Shareofearningsfromequityaccountedinvestments 6,718 271 — 6,989 (444) 380 7,053

Netsegmentearnings(loss) 35,221 (1,000) (3,725) 30,496 5,567 (2,499) 27,428

Generalandadministrativeexpenses — — (5,216) (5,216) (4,179) 2,701 (3,738)

AdjustmentsrelatedtoDreamAlternativestrustunits — — (61,871) (61,871) — (61,871) —

Incometaxrecovery(expense) — — 3,067 3,067 (674) 8,965 (5,224)

Netearnings(loss)(2) $ 35,221 $ (1,000) $ (67,745) $ (33,524) $ 714 $ (52,704) $ 18,466(1)Refertothe"Non-IFRSMeasures"sectionofthisMD&AforthedefinitionofDreamAlternatives,consolidationandfairvalueadjustmentsandDreamstandalone.(2)Includesearningsattributabletonon-controllinginterest.


CondensedConsolidatedStatementsofCashFlowsThreemonthsendedMarch31,

(inthousandsofCanadiandollars) 2020 2019

Operatingactivities

Earningsfortheperiod $ 185,830 $ (33,524)

Adjustmentsfornon-cashitems:

Depreciationandamortization 1,780 3,739

Fairvaluechangesininvestmentproperties 1,192 103

Shareofearningsfromequityaccountedinvestments (5,523) (6,989)

Deferredincometaxrecovery 32,685 (9,620)

Otheradjustments (15,831) (13,735)

Changesinnon-cashworkingcapital (160,517) 5,620

Acquisitionofcondominiuminventory,netofacquiredcashandworkingcapital (4,513) (1,531)

Saleofhousinginventory,netofdevelopment 900 (2,076)

Saleofcondominiuminventory,netofdevelopment 19,793 (23,359)

Advancesforconstructionloan,netofrepayments 19,726 778

Acquisitionoflandinventory — (3,244)

FairvalueadjustmentonDreamAlternativestrustunits (179,517) 55,838

Developmentoflandinventory,netofsales (8,942) (4,254)

Netcashflowsusedinoperatingactivities (112,937) (32,254)

Investingactivities

Acquisitionsandadditionstoinvestmentpropertiesandassetsheldforsale (18,131) (8,491)

Additionstorecreationalpropertiesandrenewablepowerassets,net (70) (845)

Investmentsinequityaccountedinvestments (23,720) —

Contributionstoequityaccountedinvestments (8,247) (5,596)

Distributionsfromequityaccountedinvestments 6,274 4,163

Advancestoequityaccountedinvestments (4,934) —

Distributionsfromanddisposalsoffinancialassetsandotherassets,netofacquisitions 300 667

Proceedsondispositionofassets,net — 15,323

Loansreceivableadvances,netofrepayments (7,983) —

Lendingportfoliorepayments,netofadvancesandlenderfees 7,778 3,387

Netcashflowsprovidedby(usedin)investingactivities (48,733) 8,608

Financingactivities

Borrowingsfrommortgagesandtermdebtfacilities 11,432 9,918

Repaymentsofmortgagesandtermdebtfacilities (1,025) (6,277)

Advancesfromoperatinglines,netofrepayments 66,000 24,000

Contributionstonon-controllinginterest,netofdistributions — 414

DreamAlternativestrustunitsrepurchasedfromotherunitholders (303) (10,275)

Dividendspaid (2,845) (2,677)

Sharesrepurchased (125,413) (1,545)

Netcashflowsprovidedby(usedin)financingactivities (52,154) 13,558

Changeincashandcashequivalents (213,824) (10,088)

Cashandcashequivalents,beginningofperiod 388,521 64,293

Cashandcashequivalents,endofperiod $ 174,697 $ 54,205


RevenuebyGeographicRegionTheCompany’srevenuesegmentedbygeographicregion,netofeliminations,isasfollows:

ForthethreemonthsendedMarch31,

2020 2019

WesternCanadaAlberta $ 87,066 49.4% $ 4,752 8.3%BritishColumbia 417 0.2% 889 1.6%Saskatchewan 7,797 4.4% 5,034 8.8%

$ 95,280 54.0% $ 10,675 18.7%

Ontario 55,908 31.7% 15,112 26.6%Quebec 351 0.2% — —%EasternCanada — —% 1,725 3.0%

Canada 151,539 85.9% 27,512 48.3%UnitedKingdom — —% 822 1.4%UnitedStates 14,783 8.4% 18,645 32.7%Non-segmented(assetmanagement) 10,133 5.7% 9,978 17.6%Total $ 176,455 100.0% $ 56,957 100.0%

NetMarginbyGeographicRegion TheCompany’snetmarginsegmentedbygeographicregionisasfollows:


2020 2019

WesternCanadaAlberta $ 43,209 73.7% $ 1,528 8.1%BritishColumbia 417 0.7% 889 4.7%Saskatchewan 170 0.3% (3,447) (18.2%)

$ 43,796 74.7% $ (1,030) (5.4%)

Ontario 5,677 9.7% 5,288 27.9%Quebec 48 0.1% — —%EasternCanada — —% 1,097 5.8%

Canada 49,521 84.5% 5,355 28.3%UnitedKingdom — —% 122 0.6%UnitedStates 4,864 8.3% 7,777 41.0%Non-segmented(assetmanagement) 4,242 7.2% 5,714 30.1%Total $ 58,627 100.0% $ 18,968 100.0%

QuarterlyBusinessTrendsAsummaryofrevenue,earnings(loss),andbasicanddilutedearnings(loss)pershareforthepreviouseightquartersispresentedbelow.

(inthousandsofdollars,exceptpershareamounts)

Mar31,2020

Dec31,2019

Sep30,2019

Jun30,2019

Mar31,2019

Dec31,2018

Sep30,2018

Jun30,2018

Revenue $ 176,455 $ 383,360 $ 64,069 $ 76,044 $ 56,957 $ 153,955 $ 64,497 $ 61,600

Earnings(loss)fortheperiod 185,830 349,191 27,167 (11,089) (33,524) 56,622 15,279 (26,906)

Basicearnings(loss)pershare 1.89 3.32 0.26 (0.11) (0.31) 0.52 0.14 (0.25)

Dilutedearnings(loss)pershare 1.86 3.21 0.25 (0.11) (0.31) 0.50 0.14 (0.25)

Non-IFRSMeasures

InadditiontousingfinancialmeasuresdeterminedinaccordancewithIFRS,webelievethatimportantmeasuresofoperatingperformanceincludecertainfinancialmeasuresthatarenotdefinedunderIFRSand,assuch,maynotbecomparabletosimilarmeasuresusedbyothercompanies.ThroughoutthisMD&A, thereare references tocertainnon-IFRSmeasures, including thosedescribedbelow,whichmanagementbelievesare relevant inassessing theeconomicsofthebusinessofDream.WhiletheseperformancemeasuresarenotdefinedbyIFRS,donothaveastandardizedmeaningandmaynotbecomparablewith similarmeasures presented by other companies,we believe that they are informative and provide further insight as supplementarymeasuresofearningsfortheperiodandcashflows.

"Assets undermanagement (“AUM”)" is the respective carrying value of total assetsmanaged by the Company on behalf of its clients, investors orpartnersunderassetmanagementagreementsand/ormanagementservicesagreements.Assetsundermanagementisameasureofsuccessagainstthecompetitionandconsistsofgrowthordeclineduetoassetappreciation,changesinfairmarketvalue,acquisitionsanddispositions,operationsgainsandlosses,andinflowsandoutflowsofcapital.


"Consolidationandfairvalueadjustments"representscertainIFRSadjustmentsrequiredtoreconcileDreamstandaloneandDreamAlternativesresultstothe consolidated results as at and for the threemonthsendedMarch31, 2020and2019.Consolidationand fair valueadjustments relate tobusinesscombination adjustments on acquisition of Dream Alternatives on January 1, 2018 and related amortization, elimination of intercompany balancesincludingtheinvestmentinDreamAlternativesunits,adjustmentsforco-ownedprojects,fairvalueadjustmentstotheDreamAlternativesunitsheldbyotherunitholders,anddeferredincometaxes.

"Debt to totalassets ratio" represents theCompany's financial leverageand is calculatedasdebtasapercentageof total assetsper thecondensedconsolidatedfinancialstatements.Areconciliationofthedebttototalassetsratiocanbefoundbelow.


Debt $ 795,567 $ 698,955

Totalassets 2,905,747 3,034,033Debttototalassetsratio 27.4% 23.0%

"Dreamstandalone"representstheresultsofDream,excludingtheimpactofDreamAlternatives'consolidatedresults.Refertothe"SegmentedAssetsandLiabilities"and"SegmentedStatementofEarnings"sectionsofthisMD&AforareconciliationofDreamexcludingDreamAlternativesresultstothecondensedconsolidatedfinancialstatements.

“Fee-earning assets undermanagement” represents assets undermanagement that aremanaged under contractual arrangements that entitle theCompanytoearnassetmanagementrevenue.

“Grossmargin%” is an importantmeasureofoperatingearnings ineachbusiness segmentofDreamand representsgrossmarginasapercentageofrevenue.Grossmarginrepresentsrevenue,lessdirectoperatingcosts,excludingselling,marketing,depreciationandotheroperatingcosts.

“Netmargin%”isanimportantmeasureofoperatingearningsineachbusinesssegmentofDreamandrepresentsnetmarginasapercentageofrevenue.Thisnon-IFRSmeasureisanimportantmeasureinevaluatingtheCompany'sperformance;however,it isnotdefinedbyIFRS,doesnothaveastandardmeaningandmaynotbecomparablewithsimilarmeasurespresentedbyotherissuers.

“Netoperatingincome"representsrevenuelessdirectoperatingcosts.Netoperatingincomelessgeneral,administrativeandoverheadexpenses,andamortization,isequaltonetmarginasperNote27ofthecondensedconsolidatedfinancialstatements.NetoperatingincomefortherecurringincomesegmentforthethreemonthsendedMarch31,2020and2019iscalculatedasfollows:


2020 2019

Revenue $ 36,633 $ 48,573

Less:Directoperatingcosts (20,356) (24,321)Less:Selling,marketing,depreciationandotherindirectcosts (1,599) (1,544)Netmargin $ 14,678 $ 22,708

Add:Depreciation 1,188 1,136Add:Generalandadministrativeexpenses 411 408

Netoperatingincome $ 16,277 $ 24,252

AdditionalInformation

Additional information relating to Dream, including the Company's annual information form and condensed consolidated financial statements andaccompanyingnotes,isavailableonSEDARatwww.sedar.com.TheSubordinateVotingSharestradeontheTSXunderthesymbol“DRM”.


CondensedConsolidatedStatementsofFinancialPosition(unaudited)

(inthousandsofCanadiandollars) Note March31,2020 December31,2019AssetsCashandcashequivalents 26 $ 174,697 $ 388,521Accountsreceivable 236,139 202,158

Otherfinancialassets 5 198,609 129,456Lendingportfolio 6 58,001 64,705Housinginventory 37,379 38,607Condominiuminventory 7 276,024 291,304Landinventory 8 497,441 538,571Investmentproperties 9 584,493 518,424Recreationalproperties 50,753 48,779Equityaccountedinvestments 10 734,378 708,840Capitalandotheroperatingassets 11 57,833 55,579Assetsheldforsale 12 — 49,089Totalassets $ 2,905,747 $ 3,034,033

LiabilitiesAccountspayableandotherliabilities 13 $ 161,163 $ 206,280Incomeandothertaxespayable 53,905 154,361Provisionforrealestatedevelopmentcosts 38,801 36,853Debt 14 795,567 698,955DreamAlternativestrustunits 15 231,790 411,078Deferredincometaxes 16 126,805 93,897Totalliabilities 1,408,031 1,601,424

Shareholders’equitySharecapital 17 1,069,225 1,193,562Reorganizationadjustment (944,577) (944,577)Contributedsurplus 22 12,310 11,410Retainedearnings 1,322,878 1,140,179Accumulatedothercomprehensiveincome 12,057 10,386Totalshareholders’equity 1,471,893 1,410,960Non-controllinginterest 18 25,823 21,649Totalequity 1,497,716 1,432,609Totalliabilitiesandequity $ 2,905,747 $ 3,034,033

Seeaccompanyingnotestothecondensedconsolidatedfinancialstatements.Commitmentsandcontingencies(Note24)Subsequentevents(Note30)

OnbehalfoftheBoardofDirectorsofDreamUnlimitedCorp.:

"MichaelJ.Cooper" "JoanneFerstman"MichaelJ.Cooper JoanneFerstmanDirector Chair


CondensedConsolidatedStatementsofEarnings(Loss)(unaudited)


(inthousandsofCanadiandollars,exceptforpershareamounts) Note 2020 2019

Revenue 19 $ 176,455 $ 56,957Directoperatingcosts (108,133) (27,688)Grossmargin 68,322 29,269

Selling,marketing,depreciationandotheroperatingcosts (9,695) (10,301)Netmargin 58,627 18,968

Otherincome(expenses):Generalandadministrativeexpenses (4,888) (5,216)Fairvaluechangesininvestmentproperties 9,12 (1,192) (103)Shareofearningsfromequityaccountedinvestments 10 5,523 6,989Investmentandotherincome 2,385 3,158Interestexpense 20 (6,212) (9,916)AdjustmentsrelatedtoDreamAlternativestrustunits 15 174,207 (61,871)

Fairvaluechangesinfinancialinstruments 4,329 11,400Earnings(loss)beforeincometaxes 232,779 (36,591)Incometaxrecovery(expense) 16 (46,949) 3,067Earnings(loss)fortheperiod $ 185,830 $ (33,524)

Totalearnings(loss)fortheperiodattributableto:Shareholders $ 185,556 $ (33,752)Non-controllinginterest 18 274 228Earnings(loss)fortheperiod $ 185,830 $ (33,524)

Basicearnings(loss)pershare 23 $ 1.89 $ (0.31)Dilutedearnings(loss)pershare 23 $ 1.86 $ (0.31)

Seeaccompanyingnotestothecondensedconsolidatedfinancialstatements.


CondensedConsolidatedStatementsofComprehensiveIncome(Loss)(unaudited)

ForthethreemonthsendedMarch31,(inthousandsofCanadiandollars) Note 2020 2019Earnings(loss)fortheperiod $ 185,830 $ (33,524)Othercomprehensiveincome(loss)Reversaloflossesoninterestratehedgereclassifiedtonetincome,netoftax — 30Unrealizedlossoninterestratehedge,netoftax (3,639) (1,516)

Unrealizedgain(loss)fromforeigncurrencytranslation(reclassifiedtoearningsonpartialorfulldisposalofforeignoperation) 3,063 (147)

Shareofothercomprehensiveincome(loss)fromequityaccountedinvestments 2,247 (145)Totalothercomprehensiveincome(loss) 1,671 (1,778)Totalcomprehensiveincome(loss) $ 187,501 $ (35,302)

Totalcomprehensiveincome(loss)fortheperiodattributableto:Shareholders $ 187,227 $ (35,530)Non-controllinginterest 18 274 228Totalcomprehensiveincome(loss) $ 187,501 $ (35,302)



CondensedConsolidatedStatementsofChangesinEquityForthethreemonthsendedMarch31,2020and2019(unaudited)

(inthousandsofCanadiandollars)

Dreamsharecapital

(Note17)Contributed

surplusReorganization

adjustmentRetainedearnings

Accumulatedother

comprehensiveincome

Totalshareholders'

equity

Non-controlling

interest Totalequity

Balance,January1,2020 $ 1,193,562 $ 11,410 $ (944,577) $ 1,140,179 $ 10,386 $ 1,410,960 $ 21,649 $ 1,432,609

Earningsfortheperiod — — — 185,556 — 185,556 274 185,830

Othercomprehensiveincomefortheperiod — — — — 1,671 1,671 — 1,671

Sharesrepurchased(Note17) (125,413) — — — — (125,413) — (125,413)

Dividendspaid(Note17) — — — (2,845) — (2,845) — (2,845)

Share-basedcompensation(Note22) 1,076 900 — (12) — 1,964 — 1,964

Contributionsfromnon-controllinginterests(Note18) — — — — — — 3,900 3,900

Balance,March31,2020 $ 1,069,225 $ 12,310 $ (944,577) $ 1,322,878 $ 12,057 $ 1,471,893 $ 25,823 $ 1,497,716

(inthousandsofCanadiandollars)

Dreamsharecapital

Contributedsurplus

Reorganizationadjustment

Retainedearnings

Accumulatedother

comprehensiveincome

Totalshareholders’

equity

Non-controlling

interest Totalequity

Balance,January1,2019 $ 1,209,819 $ 8,049 $ (944,577) $ 818,581 $ 11,379 $ 1,103,251 $ 16,329 $ 1,119,580

Earnings(loss)fortheperiod — — — (33,752) — (33,752) 228 (33,524)

Othercomprehensivelossfortheperiod — — — — (1,778) (1,778) — (1,778)

Sharesrepurchasedundernormalcourseissuerbid (1,545) — — — — (1,545) — (1,545)

Dividendspaid — — — (2,677) — (2,677) — (2,677)

Share-basedcompensation — 592 — — — 592 — 592

Distributionstonon-controllinginterests — — — — — — (586) (586)

Contributionsfromnon-controllinginterests — — — — — — 1,000 1,000

Balance,March31,2019 $ 1,208,274 $ 8,641 $ (944,577) $ 782,152 $ 9,601 $ 1,064,091 $ 16,971 $ 1,081,062



CondensedConsolidatedStatementsofCashFlows(unaudited)

ThreemonthsendedMarch31,(inthousandsofCanadiandollars) Note 2020 2019OperatingactivitiesEarningsfortheperiod $ 185,830 $ (33,524)Adjustmentsfornon-cashitems:Depreciationandamortization 1,780 3,739Fairvaluechangesininvestmentproperties 9,12 1,192 103Shareofearningsfromequityaccountedinvestments 10 (5,523) (6,989)Deferredincometaxrecovery 16 32,685 (9,620)Otheradjustments 26 (15,831) (13,735)

Changesinnon-cashworkingcapital 26 (160,517) 5,620Acquisitionofcondominiuminventory,netofacquiredcashandworkingcapital 7 (4,513) (1,531)Saleofhousinginventory,netofdevelopment 900 (2,076)Saleofcondominiuminventory,netofdevelopment 7 19,793 (23,359)Advancesforconstructionloan,netofrepayments 14 19,726 778Acquisitionoflandinventory 8 — (3,244)FairvalueadjustmentonDreamAlternativestrustunits 15 (179,517) 55,838Developmentoflandinventory,netofsales 8 (8,942) (4,254)Netcashflowsusedinoperatingactivities (112,937) (32,254)InvestingactivitiesAcquisitionsandadditionstoinvestmentpropertiesandassetsheldforsale 9,12 (18,131) (8,491)Additionstorecreationalpropertiesandrenewablepowerassets,net (70) (845)Investmentsinequityaccountedinvestments (23,720) —Contributionstoequityaccountedinvestments (8,247) (5,596)Distributionsfromequityaccountedinvestments 6,274 4,163Advancestoequityaccountedinvestments (4,934) —Distributionsfromanddisposalsoffinancialassetsandotherassets,netofacquisitions 300 667Proceedsondispositionofassets,net 9,12 — 15,323Loansreceivableadvances,netofrepayments (7,983) —Lendingportfoliorepayments,netofadvancesandlenderfees 7,778 3,387Netcashflowsprovidedby(usedin)investingactivities (48,733) 8,608FinancingactivitiesBorrowingsfrommortgagesandtermdebtfacilities 14 11,432 9,918Repaymentsofmortgagesandtermdebtfacilities 14 (1,025) (6,277)Advancesfromoperatinglines,netofrepayments 14 66,000 24,000Contributionstonon-controllinginterest,netofdistributions 18 — 414DreamAlternativestrustunitsrepurchasedfromotherunitholders 15 (303) (10,275)Dividendspaid 17 (2,845) (2,677)Sharesrepurchased 17 (125,413) (1,545)Netcashflowsprovidedby(usedin)financingactivities (52,154) 13,558

Changeincashandcashequivalents (213,824) (10,088)Cashandcashequivalents,beginningofperiod 388,521 64,293Cashandcashequivalents,endofperiod 26 $ 174,697 $ 54,205



1.Businessandstructure

DreamUnlimitedCorp.("Dream"or"theCompany"),throughitswhollyownedsubsidiary,DreamAssetManagementCorporation(“DAM”),isaleadingdeveloper of exceptional office and residential assets in Toronto, owns stabilized income generating assets in both Canada and the U.S., and has anestablishedandsuccessfulassetmanagementbusiness,inclusiveofassetsundermanagementacrossthreeTorontoStockExchange("TSX")listedtrustsandnumerouspartnerships.TheCompanyalsodevelopslandandresidentialassetsinWesternCanadaforimmediatesale.

TheprincipalofficeandcentreofadministrationoftheCompanyis30AdelaideStreetEast,Suite301,StateStreetFinancialCentre,Toronto,Ontario,M5C3H1.TheCompanyislistedontheTSXandisdomiciledinCanada.

2.Basisofpreparation

The condensed consolidated financial statements are prepared in compliance with International Financial Reporting Standards, as issued by theInternational Accounting Standards Board ("IASB"), and are in accordance with International Accounting Standards ("IAS") 34, "Interim FinancialReporting" ("IAS34"),onabasis consistentwith theaccountingpoliciesdisclosed in theaudited consolidated financial statements for theyearendedDecember 31, 2019, except for new standards adopted during the threemonths endedMarch 31, 2020 as described in Note 3. Accordingly, certaininformationandfootnotedisclosuresnormallyprovided inannualconsolidatedfinancialstatementsprepared inaccordancewith IFRS,as issuedbytheIASB,havebeenomittedorcondensed.

The condensed consolidated financial statements should be read in conjunctionwith themost recently issuedAnnual Report of the Company,whichincludesinformationnecessarytounderstandtheCompany'sbusinessandfinancialstatementpresentation.

AlldollaramountsdiscussedhereinareinthousandsofCanadiandollars,unlessotherwisestated.

The condensed consolidated financial statements for the threemonths endedMarch 31, 2020were approved by the Board of Directors for issue onMay12,2020,afterwhichdatetheymaybeamendedonlywiththeBoardofDirectors’approval.

3.Summaryofsignificantaccountingpolicies

Thecondensedconsolidatedfinancialstatementshavebeenpreparedusingthesamesignificantaccountingpoliciesandmethodsas thoseused in theCompany'sannualconsolidatedfinancialstatementsfortheyearendedDecember31,2019,exceptfornewstandardsadoptedduringthethreemonthsendedMarch31,2020andrelatedaccountingpoliciesasdescribedbelow.

AdoptionofRecentAccountingPronouncements

IFRS3,“BusinessCombinations”IFRS3 setsout toemphasize that theoutputofabusiness is toprovidegoodsandservices tocustomers,whereas thepreviousdefinition focusedonreturnsintheformofdividends,lowercostsorothereconomicbenefitstoinvestorsandothers.TheamendeddefinitionofabusinesswaseffectiveonJanuary1,2020andappliestotheCompany'sfuturebusinesscombinations.

4.Criticalaccountingestimates,judgmentsandassumptions

Thepreparationofthecondensedconsolidatedfinancialstatementsrequiresmanagementtomakejudgments,estimatesandassumptionsthataffecttheamounts reported.Management bases its judgments and estimates on historical experience and other factors it believes to be reasonable under thecircumstances,butwhichareinherentlyuncertainandunpredictable,theresultofwhichformsthebasisofthecarryingamountsofassetsandliabilitiesandtherecognitionofrevenuesandexpenses.However,uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterial adjustment to the carrying amount of the affected asset or liability and the recognition of revenues and expenses in the future. The criticalaccountingjudgments,estimatesandassumptionsappliedduringthethreemonthsendedMarch31,2020areconsistentwiththosesetoutinNote4oftheCompany'sauditedannualconsolidatedfinancialstatementsfortheyearendedDecember31,2019.

During the threemonths endedMarch31, 2020, theWorldHealthOrganizationdeclaredCOVID-19 a global pandemic ("COVID-19"), and the ensuingresponsesbygovernmentsincludingtheclosureofnon-essentialbusinessesandsocialdistancingrequirementshasincreasedthelevelofuncertaintyinthe economy and caused significant disruptions to all businesses and daily life. The Company assessed this impact on its business, including therecoverabilityofitslendingportfolio,recoverabilityofaccountsreceivable,netrealizablevalueofinventoriesincludinglandinWesternCanada,carryingvaluesofequityaccountedinvestmentsincludingDreamOfficeREIT,timingandamountofrevenuerecognizedfrominvestmentproperties,thefairvalueof certain loan investments classified as fair value through profit and loss ("FVTPL"), investment properties, participating mortgages and investmentholdings.

NotestotheCondensedConsolidatedFinancialStatements(inthousandsofCanadiandollars,exceptnumbersofsharesandpershareamounts)(unaudited)______________________________________________________________________________________________________________________________________________


Thesignificantglobaluncertaintyhasimpactedtheavailabilityofreliablemarketmetricsandaccordingly,theCompanyperformedadditionalrisk-basedprocedurestoassessthefairvalueofitsparticipatingmortgagesandinvestmentholdings,investmentpropertiesandcertainloaninvestmentstoensuretheCompanyappliedsoundjudgmentwithrespecttothevariousassumptionsimpactingthevaluation.TheCompanytookintoconsiderationthemarketconditionsexistingatthereportingdate.Theadditionalrisk-basedproceduresincludedscenariotestingtoevaluatedownsiderisk,reviewingriskprofilesofitstenantbase,borrowers'creditworthinessandriskcharacteristicsofitsunderlyingdevelopments.

TheCompanyassessedthepossibilityandamountofanyimpairmentlossorwritedownasitrelatestoamountsreceivable,equityaccountedinvestments,recreational properties and the lending portfolio. The estimates and judgments primarily relate to the timing and amount of future cash flows. Indeterminingwhether theCompany's financialassets requireaprovision for impairment, theCompanyreviewed itsExpectedCreditLoss ("ECL")modelincludingthefollowingvariousfactors:theborrowers'creditrisk,termtomaturity,statusoftheunderlyingprojectandmarketrisk.

Theamountsrecorded inthecondensedconsolidatedfinancialstatementsarebasedonthebestestimateatthereportingdate.However,uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamountoftheaffectedassetorliabilityinthefuture.

5.Otherfinancialassets

Otherfinancialassetsconsistedofthefollowing:

Note March31,2020 December31,2019Participatingmortgages $ 66,210 $ 66,210Investmentholdings 54,628 50,206Loansreceivable 72,474 8,088Otherinstruments 5,297 4,952

21 $ 198,609 $ 129,456

ParticipatingMortgagesParticipatingmortgagesrelatedtotwolong-termdevelopmentloanssecuredbyrealpropertycomprisingtworesidentialassets.RefertoNote21forthevaluationmethodologyusedtodeterminethefairvalueoftheparticipatingmortgages.

LoansReceivableLoansreceivableareamountsowingtotheCompanypertainingtodevelopmentpartnershipsinTorontoandWesternCanada.InthethreemonthsendedMarch31,2020,theCompanyprovideda$50,400vendortake-backmortgage("VTB")relatingtothesaleof480acresatGlacierRidgeinCalgarytoanequityaccountedinvestmentinwhichtheCompanyretaineda27%interest.TheVTBhasaninterestrateof5%perannumandamaturitydateofMarch31,2024.

6.LendingportfolioMarch31,2020 December31,2019

Balance,beginningofperiod $ 64,705 $ 144,095

Add(deduct):

Lendingportfolioadvances — 119

Provisionforlendingportfoliolosses — (2,350)

Interestcapitalizedtolendingportfoliobalance 1,074 5,029

Other 248 1,024

Principalrepaymentsatmaturityandcontractualrepaymentsandprepayments (8,026) (83,212)

Balance,endofperiod(1) $ 58,001 $ 64,705(1)Includedisaloanof$7,488thatisclassifiedasFVTPL(December31,2019-$7,301).

ThetablebelowprovidesasummaryoftheCompany'slendingportfolio:


Weightedaverageeffectiveinterestrate(period-end) 9.4% 9.1%

Securityallocation(1stmortgages/other) 40.2%/59.8% 47.7%/52.3%

Maturitydates 2020-2025 2020-2025

Balanceofaccruedinterest $ 146 $ 130

Loanswithprepaymentoptions 31,803 30,877



DuringthethreemonthsendedMarch31,2020,aloaninvestmentclassifiedasFVTPL,aggregating$7,488(December31,2019-$7,301),wasmeasuredatfairvalueusingadiscountedcashflowmethod.Thefairvaluewasdeterminedbydiscountingtheexpectedcashflowsoftheloanusinganinterestrateof17.5% (December 31, 2019 - 17.5%),which took into consideration similar instrumentswith correspondingmaturity datesplus a credit adjustment inaccordancewiththeborrowers'creditworthiness,aswellastheriskprofileoftheunderlyingsecurities.Generally,underthismethod,adecreaseinthemarketratewillresultinanincreasetothefairvalueandanincreaseinthemarketratewillresultinadecreasetothefairvalue.Iftheweightedaveragemarketrateweretoincreaseby25basispoints("bps"),thefairvalueoftheloaninvestmentswoulddecreaseby$100.Iftheweightedaveragemarketrateweretodecreaseby25bps,thefairvaluewouldincreaseby$100.

DuringtheyearendedDecember31,2019,an increase intheexistingprovisionforthe lendingportfolioresulted ina lossof$2,350.Thefullprovisionrelated to one loan, the value of which was determined based on the net realizable value of the underlying real estate properties, net of relatedtransactioncostsbasedoninternalvaluations.TheprovisionforimpairmentonthisloanwasestablishedbasedonthecreditadjustedapproachECLmodelwhichresultsinexpectedcreditlossescalculatedconsideringanestimateofdefaultoverthelifeoftheasset.InthethreemonthsendedMarch31,2020,theECLmodelwasreassessedandtherewerenofurtherprovisionsrecordedonthelendingportfolio.

7.Condominiuminventory

Themovementincondominiuminventoryisasfollows:



Acquisitions 4,513 47,467

Development 21,842 85,168

Condominiumunitsoccupied (41,635) (41,452)

Transferstoinvestmentproperties(Note9) — (39,500)

Balance,endofperiod $ 276,024 $ 291,304

8.Landinventory

Themovementinlandinventoryisasfollows:



Acquisitions — 4,875

Development 3,336 32,878

Writedownoflandheldfordevelopment — (23,159)

Lotandacresales(1) (44,794) (39,937)

Transfersfrom/(to)housinginventory 328 (3,560)

Transferstoinvestmentproperties(Note9) — (8,422)

Balance,endofperiod $ 497,441 $ 538,571(1)Includedinthelotandacresalesis$38,619relatingtoour480acreGlacierRidgesite.TheCompanyhasretaineda27%interestintheunderlyingdevelopment,recordedinotherdevelopment

investmentswithinequityaccountedinvestments.

9.Investmentproperties

Themovementininvestmentpropertiesbysegmentisasfollows:

Recurringincome DevelopmentTotal

March31,2020Total

December31,2019Balance,beginningofperiod $ 419,995 $ 98,429 $ 518,424 $ 412,771

Additionstoandtransfersto/frominvestmentproperties:

Acquisitions — — — 8,339

Landandbuildingadditions 1,435 16,696 18,131 46,092

Transfersfrominventory(Notes7and8) — — — 47,922

Transfersfromassetsheldforsale(Note12) 49,089 — 49,089 5,708

Dispositions — — — (44,340)

Gains(losses)includedinearnings:

Fairvaluechangesininvestmentproperties (643) (549) (1,192) 43,389

Amortizationandother (248) (13) (261) (1,761)

Changeinstraight-linerent 286 16 302 304

Balance,endofperiod $ 469,914 $ 114,579 $ 584,493 $ 518,424



IncludedintherecurringincomesegmentasatMarch31,2020isaright-of-useassetforthe100Steelesleaseholdinterestof$10,420(December31,2019-$10,493).

FairValueofInvestmentPropertiesFairvaluesofinvestmentpropertiesaredeterminedusingvaluationspreparedbymanagementusinginputsthatareLevel3onthefairvaluehierarchy.Tosupplementtheassessmentoffairvalue,managementobtainsvaluationsofselectedinvestmentpropertiesonarotationalbasisfromqualifiedexternalvaluationprofessionalsandverifiestheresultsofsuchvaluationswiththeexternalappraisers.AsatMarch31,2020noexternalappraisalswereobtained.AsatDecember31,2019investmentpropertieswithatotalfairvalueof$345,369wereexternallyappraisedatavalueof$366,569.

Thediscount rate isbasedontheweightedaveragecostofcapitalof theCompanyand isusedtodeterminethenetpresentvalueofcash flows.Theterminalcapitalizationrateisbasedonthelocation,sizeandqualityoftheinvestmentpropertyandtakesintoaccountanyavailablemarketdataatthevaluationdate.Theterminalcapitalizationrateisusedtoestimatethevalueofapropertyattheendoftheholdingperiod.

Thefollowingarethesignificantassumptionsusedunderthediscountedcashflowmethod:• Terminalcapitalizationrate–takingintoaccountassumptionsregardingvacancyratesandmarketrents• Discountrate–reflectingcurrentmarketassessmentsoftheuncertaintyintheamountandtimingofcashflows

SignificantunobservableinputswereasfollowsforMarch31,2020andDecember31,2019:

March31,2020 December31,2019Input Range Weightedaverage Range Weightedaverage

RecurringincomeDiscountrate 5.25%-7.25% 6.4% 5.25%-7.25% 6.3%Terminalcapitalizationrate 4.50%-6.75% 5.7% 4.50%-6.50% 5.6%

DevelopmentDiscountrate 6.00%-7.00% 6.6% 6.00%-7.00% 6.6%Terminalcapitalizationrate 5.25%-6.50% 5.9% 5.25%-6.50% 5.9%

Fairvaluesofinvestmentproperties,whichincludecommercial,retailandotherpropertiesheldforthelongterm,arecalculatedusingadiscountedcashflow(“DCF”)model,generallyoveranaverageperiodoftenyears,plusaterminalvaluebasedontheestimatedcashflowinthefinalyear.TheDCFmodelincorporates,amongotherthings,expectedrentalincomefromcurrentleases,assumptionsaboutrentalincomefromfutureleasesandimpliedvacancyrates,generalinflationandprojectionsofrequiredcashoutflowswithrespecttosuchleases.ThesignificantunobservableinputsforthefairvalueoftheCompany’sinvestmentpropertiesareprovidedabove.AsatMarch31,2020,theCompanyassessedallinputstotheDCFmodelbyproperty,includingcashflowassumptions,andnotednomaterialchangestothefairvalueofitsinvestmentproperties.

Fair values of the Company's investment properties are most sensitive to changes in the terminal capitalization rates. An increase in the terminalcapitalizationratewillresultinadecreaseinthefairvalueofaninvestmentpropertyandviceversa.Ifthecapitalizationrateweretoincreaseordecreaseby25bps,thevalueofinvestmentpropertieswoulddecreaseby$16,667andincreaseby$18,544,respectively,asatMarch31,2020.

Investmentproperties, includingequityaccountedinvestmentswithafairvalueof$466,084asatMarch31,2020(December31,2019-$420,457),arepledged as security formortgages and term debt. Investment properties, including equity accounted investmentswith a fair value of $163,801 as atMarch31,2020(December31,2019-$143,496),arepledgedassecurityforconstructionloans.

10.Equityaccountedinvestments

TheCompanyhasenteredintocertainarrangementsintheformofjointlycontrolledentitiesforvariousmixed-usedevelopments,aswellasrenewableenergy investments.Thesearrangements includerestrictionsontheabilitytoaccessassetswithouttheconsentofallpartnersand includedistributionconditionsoutlinedinpartnershipagreements.Thesearrangementsareaccountedforundertheequitymethod.TheequitymethodofaccountingisalsoapplicabletoinvestmentsincommonstockinwhichtheCompanyisdeemedtobeabletoexercisesignificantinfluenceovertheinvesteecompany.AsatMarch31,2020,thecarryingvalueofthesearrangementswas$734,378(December31,2019-$708,840).

InthethreemonthsendedMarch31,2020,theCompanyenteredintoabindingagreementwhichwillresultinDreamindirectlydisposingofitsinterestinarenewablepowerportfolio.Uponclosing,theCompanyexpectstogenerateapproximately$60,000innetafter-taxproceedsforDream.



The following tables summarize the Company’s proportionate share of assets and liabilities in equity accounted investments (segregated betweendevelopmentandrecurringincomeinvestments)asatMarch31,2020andDecember31,2019.

March31,2020

AtDream'sshareOwnership

interest Assets Liabilities Netassets

Differencebetweennetassetsand

deemedcostofinvestments(1) Total

Developmentinvestments

BrightonMarketplace 50% $ 36,490 $ (23,881) $ 12,609 $ (2,286) $ 10,323

CanaryDistrict 33%-50% 122,118 (98,247) 23,871 — 23,871

FrankGehry 25% 90,894 (69,548) 21,346 8,334 29,680

Brightwater(2) 31% 88,294 (34,251) 54,043 — 54,043

LakeshoreEast(2) 50% 48,251 (15,271) 32,980 — 32,980

Otherdevelopmentinvestments(3) 7%-78% 85,291 (43,765) 41,526 — 41,526

Totaldevelopmentinvestments $ 471,338 $ (284,963) $ 186,375 $ 6,048 $ 192,423

Recurringincomeinvestments

DreamOfficeREIT 29% $ 835,924 $ (357,180) $ 478,744 $ (16,251) $ 462,493

FirelightInfrastructurePartnersLP 20% 184,085 (140,801) 43,284 — 43,284

Otherrecurringincomeinvestments 9%-50% 60,990 (25,449) 35,541 637 36,178

Totalrecurringincomeinvestments $ 1,080,999 $ (523,430) $ 557,569 $ (15,614) $ 541,955

Total $ 1,552,337 $ (808,393) $ 743,944 $ (9,566) $ 734,378(1)The difference between net assets and the deemed cost of investments is due to the Company's proportionate share of the joint venture's net assets being either higher or lower than the

Company'scostoftheinvestmentattheendoftheperiod.(2)TheCompany'sdeemedcostofthis investmentincludesfairvalueadjustmentsrelatingtotheconsolidationofDreamAlternativesandasaresult,maynotreflecttheCompany'sproportionate

shareofprojectlevelnetassets.(3)DuringthethreemonthsendedMarch31,2020,theCompanyrecorded$17,215 indistributionsrelatedtothecompletionoftheAxisCondominiumsproject,whichhadbeenreceivedascash

advancesin2019.

December31,2019

AtDream'sshareOwnership

interest Assets Liabilities Netassets

Differencebetweennetassetsanddeemedcostofinvestments(1) Total

Developmentinvestments

BrightonMarketplace 50% $ 34,807 $ (22,273) $ 12,534 $ (2,286) $ 10,248

CanaryDistrict 30%-50% 106,239 (92,086) 14,153 — 14,153

FrankGehry 25% 89,999 (68,372) 21,627 8,334 29,961

Brightwater(2) 31% 87,807 (34,150) 53,657 — 53,657

LakeshoreEast(2) 50% 48,226 (15,267) 32,959 — 32,959

Otherdevelopmentinvestments 7%-78% 88,771 (41,193) 47,578 — 47,578

Totaldevelopmentinvestments 7%-50% $ 455,849 $ (273,341) $ 182,508 $ 6,048 $ 188,556


DreamOfficeREIT 27% $ 792,253 $ (345,680) $ 446,573 $ (13,200) $ 433,373

FirelightInfrastructurePartnersLP 20% 189,405 (145,533) 43,872 — 43,872

Otherrecurringincomeinvestments 9%-50% 68,153 (24,933) 43,220 (181) 43,039

Totalrecurringincomeinvestments $ 1,049,811 $ (516,146) $ 533,665 $ (13,381) $ 520,284

Total $ 1,505,660 $ (789,487) $ 716,173 $ (7,333) $ 708,840(1)The difference between net assets and the deemed cost of investments is due to the Company's proportionate share of the joint venture's net assets being either higher or lower than the

Company'scostoftheinvestmentattheendoftheperiod.(2)TheCompany'sdeemedcostofthisinvestmentincludesfairvalueadjustmentsrelatingtotheconsolidationofDreamAlternativesand,asaresult,maynotreflecttheCompany'sproportionate

shareofprojectlevelnetassets.



The following tables summarize the Company’s proportionate share of revenue, earnings (losses) and earnings (losses) before depreciation in equityaccountedinvestmentsforthethreemonthsendedMarch31,2020and2019.


AtDream'sshare Ownershipinterest Revenue Earnings(losses)Earnings(losses)

beforedepreciation

Developmentinvestments(1) 7%-78% $ 29,832 $ 4,978 $ 4,986


DreamOfficeREIT 28% 14,823 7,129 7,244

FirelightInfrastructurePartnersLP 20% 6,129 (588) 2,467

Otherrecurringincomeinvestments(2) 9%-50% 3,137 (5,996) (5,803)

Totalrecurringincomeinvestments $ 24,089 $ 545 $ 3,908

Total $ 53,921 $ 5,523 $ 8,894(1)EarningsfromdevelopmentinvestmentsinthethreemonthsendedMarch31,2020relateprimarilytotheCompany'sshareofearningsfromCanaryDistrictoccupanciesintheperiod.(2)LossesfromotherrecurringincomeinvestmentsinthethreemonthsendedMarch31,2020relateprimarilytotransactioncosts.


AtDream'sshare Ownershipinterest Revenue Earnings(losses)Earnings(losses)

beforedepreciation

Developmentinvestments 7%-78% $ 202 $ 271 $ 272


DreamOfficeREIT 23% 15,017 5,198 5,309

FirelightInfrastructurePartnersLP 20% 5,714 466 2,723

Otherrecurringincomeinvestments 9%-50% 3,236 1,054 1,236

Totalrecurringincomeinvestments $ 23,967 $ 6,718 $ 9,268

Total $ 24,169 $ 6,989 $ 9,540

11.Capitalandotheroperatingassets

Capitalandotheroperatingassetsconsistedofthefollowing:

March31,2020 December31,2019Restrictedcash $ 15,128 $ 13,876Goodwill 13,576 13,576Prepaidexpenses(1) 11,117 11,884Capitalassets 9,992 9,716Right-of-useassets 3,286 3,914Other 4,734 2,613Totalcapitalandotheroperatingassets $ 57,833 $ 55,579

March31,2020 December31,2019Capitalassets $ 20,459 $ 19,607Accumulateddepreciation (10,467) (9,891)Totalcapitalassets $ 9,992 $ 9,716

(1)IncludedinprepaidexpensesasatMarch31,2020is$4,857ofcapitalizedsalescommissionsrelatingtohousingandcondominiumsalestoberecognizedinfutureperiods(December31,2019-$6,371).

RestrictedcashrepresentscashadvancedbytheCompanytosecurelettersofcreditprovidedtovariousgovernmentagenciestosupportdevelopmentactivity,certaincustomerdepositsonland,housingandcondominiumsalesrequiredforspecificstatutoryrequirementsbeforeclosing,andcashheldassecurity.

Right-of-useassetsThemovementinright-of-useassetsrelatingtopropertyandequipmentisasfollows:

March31,2020

BalanceasatJanuary1,2020 $ 3,914

Depreciation (628)

BalanceasatMarch31,2020 $ 3,286

RefertoNote9forright-of-useassetsrelatingtoinvestmentproperties.



12.Assetsheldforsale

AsatMarch31,2020,managementhadnocommittedplansfortheimmediatesaleofcertainproperties.Asaresult,thesepropertiesweretransferredfromassetsheldforsaletoinvestmentproperties.

Assetsheldforsale March31,2020 December31,2019


Transferstoinvestmentproperties(Note9) (49,089) (5,708)

Transferfromrenewablepowerassets — 151,619

Transferofotherassetsassociatedwithrenewablepower — 7,248

Changeinotherassetsassociatedwithrenewablepower — 4,303

Assetssoldduringtheperiod — (178,493)

Additionstoassetsheldforsale — 420

Changeinstraight-linerentandother — (459)

Fairvaluechangesininvestmentpropertiesclassifiedasassetsheldforsale — (2,428)

Balance,endofperiod $ — $ 49,089

13.Accountspayableandotherliabilities

Thedetailsofaccountspayableandotherliabilitiesareasfollows:

Note March31,2020 December31,2019

Accruedliabilities $ 49,088 $ 101,467Customerdeposits 42,716 50,243

Tradepayables(1) 46,124 33,907Leaseobligation 14,142 14,450Deferredrevenue 5,453 6,213Interestrateswaps 3,640 —

$ 161,163 $ 206,280(1)Includedintradepayableswerebankoverdraftbalancesof$2,525asatMarch31,2020(December31,2019-$2,170).

LeaseObligation

March31,2020

Maturityanalysis-contractualundiscountedcashflows

Lessthanoneyear $ 1,874

Onetofiveyears 5,704

Morethanfiveyears 11,222

TotalundiscountedleaseobligationasatMarch31,2020 $ 18,800

Discountedusingthelessee'sincrementalborrowingrateasatMarch31,2020 (4,658)

TotaldiscountedleaseobligationasatMarch31,2020 $ 14,142

Currentportionofleaseobligation 2,217

Non-currentportionofleaseobligation 11,925

Totalleaseobligation $ 14,142

TherearenofuturecashoutflowstowhichtheCompanyispotentiallyexposedthatarenotreflectedinthemeasurementofleaseobligations.



14.DebtDebtconsistedofthefollowing:

Weightedaverageeffectiveinterestrates Debtamount

March31,2020 December31,2019 March31,2020 December31,2019

Project-specificdebt

Operatingline-WesternCanada 4.32% 4.64% $ 65,638 $ —

Constructionloans 4.48% 4.79% 237,219 217,341

Mortgagesandtermdebt 4.18% 4.23% 268,502 257,509

Totalproject-specificdebt 4.32% 4.41% $ 571,359 $ 474,850

Corporatedebtfacilities

Non-revolvingtermfacility 4.67% 5.08% $ 224,208 $ 224,105

Totalcorporatedebtfacilities 4.67% 5.08% $ 224,208 $ 224,105

Totaldebt 4.42% 4.63% $ 795,567 $ 698,955

OperatingLine-WesternCanadaTheCompany's revolving termcredit facility (the"operating line") isprimarilyused to finance landservicingactivity inSaskatchewanandAlberta.Theoperatinglineisavailableuptoaformula-basedmaximumnottoexceed$290,000,withasyndicateofCanadianfinancialinstitutions.

AsatMarch31,2020,fundsavailableunderthisfacilitywere$147,385,asdeterminedbytheformula-basedmaximumcalculation,with$45,229oflettersofcreditissuedagainstthefacility(December31,2019-$259,004,with$46,162oflettersofcreditissuedagainstthefacility).

SubsequenttoMarch31,2020,theCompanyamendedtheoperatingline,extendingthematuritydatetoJanuary31,2023,andrevisingcertaincovenantsofDAM.Additionally,theCompanyrepaid$33,000ontheoperatinglinesubsequenttoMarch31,2020.

OtherProject-SpecificDebtConstructionloansrelatetohomeorproject-specificfinancingandlandservicingandholdsecurityagainsttheunderlyingproperty.Certainloansmaybedueondemandwithrecourseprovisions.Mortgagesandtermdebtareprovidedbyavarietyoflenders.

Non-RevolvingTermFacilityIn the threemonthsendedMarch31, 2020, theCompanyexecutedonanamendment to its $225,000non-revolving term facilitywith a syndicateofCanadianfinancialinstitutions,extendingthematuritydatetoFebruary28,2022andrevisingcertaincovenantsofDAM.

OperatingLine-DreamAlternativesDream Alternatives has a revolving term credit facility available, up to a formula-based maximum not to exceed $50,000, with a Canadian financialinstitution.AsatMarch31,2020,nofundsweredrawnontherevolvingcreditfacility(December31,2019–$nil)andfundsavailableunderthisfacilitywere$5,139(December31,2019–$8,894),netof$360(December31,2019–$360)oflettersofcreditissuedagainstthefacility.

InterestRateSwapsTheCompanyisexposedtointerestrateriskprimarilythroughitsvariableratedebtobligations.Excludingtheoperatingline-WesternCanadaandmarginfacility,variableratedebtrepresented72%(December31,2019-72%)oftheCompany'stotaldebtobligationasatMarch31,2020.Inordertomanagetheinterestrateriskoncertainvariableratedebt,theCompanyhasenteredintointerestrateswapsasdetailedbelow:

Maturitydate DebtfacilityNotionalamount

hedged FixedinterestrateFinancialinstrument

classificationFairvalueofhedging

instrument

January14,2023 Termdebt $ 5,539 3.69% FVTPL $ (84)

February28,2022 Non-revolvingtermfacility 175,000 4.51% Cashflowhedge (3,640)

InthethreemonthsendedMarch31,2020,theCompanyenteredintoaninterestrateswaptoeffectivelyexchangethevariableinterestrateon$175,000ofthe$225,000non-revolvingtermfacilityforafixedrateof4.51%perannumthroughtheuseofforward-purchasecontractsthatmatureonFebruary28,2022.TheCompanyhasappliedhedgeaccountingtothisrelationship,wherebythechangeinfairvalueoftheeffectiveportionofthehedgingderivativesis recognized in accumulated other comprehensive income. Settlement of both the fixed and variable portions of the interest rate swap occurs on amonthlybasis.ThefullamountofthehedgewasdeterminedtobeeffectiveasatMarch31,2020asallcriticaltermsmatchedduringtheperiod.



15.DreamAlternativestrustunits

The Company accounts for the 77% interest in Dream Alternatives trust units held by other unitholders as a financial liability measured at FVTPL(December31,2019-77%).AsatMarch31,2020,thetrustunitshadafairvalueof$231,790basedonthetradingpriceontheTSX.ThemovementinDreamAlternativestrustunitsisasfollows:


Units Total Units Total

Balance,beginningofperiod 53,042,384 $ 411,078 60,454,099 $ 377,234

UnitsacquiredbytheCompanyintheperiod — — (2,820,155) (21,049)

Unitsissuedtootherunitholdersthroughdistributionreinvestmentplan — — 142,818 940

UnitsrepurchasedandcancelledbyDreamAlternatives (69,291) (303) (4,876,984) (38,053)

DeferredunitsexchangedforDreamAlternativestrustunits 67,985 532 142,606 1,075

Fairvalueadjustment — (179,517) — 90,931

Balance,endofperiod 53,041,078 $ 231,790 53,042,384 $ 411,078

InthethreemonthsendedMarch31,2020,theCompany,throughDreamAlternatives,declaredcashdistributionsonthetrustunitsof$5,310owingtootherunitholders(yearendedDecember31,2019-distributionsof$22,581,ofwhich$21,641waspaidincash).

In the threemonths endedMarch 31, 2020, the Company recognized a gain related to DreamAlternatives trust units of $174,207 in the condensedconsolidated statementsof earnings (loss), comprisinga fair valuegainof $179,517,due todecreases inDreamAlternatives' trustunit tradingprices,offsetbydistributionstootherunitholdersof$5,310(threemonthsendedMarch31,2019-lossof$61,871,comprisingdistributionstootherunitholdersof$6,033andafairvaluelossof$55,838duetoincreasesinDreamAlternatives'trustunittradingprices).

16.Incometaxes

InthethreemonthsendedMarch31,2020,theCompanyrecognizedanincometaxexpenseof$46,949(threemonthsendedMarch31,2019–incometaxrecoveryof$3,067),themajorcomponentsofwhichincludethefollowingitems:

ThreemonthsendedMarch31,2020 2019

Currentincometaxes:

Currentincometaxeswithrespecttoprofitsduringtheperiod $ 6,890 $ 5,758Otheritemsaffectingcurrentincometaxexpense 7,374 795

Currentincometaxexpense 14,264 6,553Deferredincometaxes:

Originationandreversaloftemporarydifferences 33,204 (9,540)Impactofchangesinincometaxrates (519) (80)

Deferredincometaxexpense(recovery) 32,685 (9,620)Incometaxexpense(recovery) $ 46,949 $ (3,067)

Due to non-coterminous tax years of the Company’s partnership and trust interests, income of approximately $16,732 for the three months endedMarch 31, 2020 (three months endedMarch 31, 2019 – $1,393) relating to such partnership and trust interests will be included in computing theCompany’staxableincomeforits2021and2020taxationyears.

Theincometaxexpenseamountonpre-taxearningsdiffersfromtheincometaxexpenseamountthatwouldariseusingthecombinedCanadianfederalandprovincialstatutorytaxrateof26.5%,aspresentedinthetablebelow.CashpaidforincometaxesforthethreemonthsendedMarch31,2020was$108,542(threemonthsendedMarch31,2019–$383).

ThreemonthsendedMarch31,

2020 2019

Earnings(losses)beforetaxatstatutoryrateof26.5%(2019-26.7%) $ 61,686 $ (9,770)Effectontaxesof:

Non-deductibleexpenses 302 481Adjustmentinexpectedfuturetaxrates (519) (80)Non-taxableportionofcapitalgains (22,968) 5,531Non-recognitionofthebenefitofthecurrentperiod'staxlosses 1,600 227Otheritems 6,848 544

Incometaxexpense(recovery) $ 46,949 $ (3,067)



ThemovementinthedeferredincometaxesinthethreemonthsendedMarch31,2020andtheyearendedDecember31,2019,andthenetcomponentsoftheCompany’snetdeferredincometaxliabilities,arepresentedinthefollowingtable:

Asset(Liability)Accountsreceivable

Realestateandassetsheldfor

sale

Non-coterminous

taxyear

Financialinstruments/

equityaccountedinvestments

Losscarry-forwards Total

Balance,January1,2019 $ (8,680) $ (37,006) $ (3,547) $ (53,037) $ 8,131 $ (94,139)

(Charged)creditedto:

Loss(earnings)fortheyear 2,371 (22,403) 3,250 20,049 (2,329) 938

Gainonsaleofassetsheldforsale — 143 — — — 143

Othercomprehensiveincome — (128) — (711) — (839)

Balance,December31,2019 $ (6,309) $ (59,394) $ (297) $ (33,699) $ 5,802 $ (93,897)

(Charged)creditedto:

Loss(earnings)fortheperiod (3,378) 698 (4,101) (25,888) (16) (32,685)

Othercomprehensiveincome(loss) — 116 — (339) — (223)

Balance,March31,2020 $ (9,687) $ (58,580) $ (4,398) $ (59,926) $ 5,786 $ (126,805)

AsatMarch31,2020,theCompanyhadtaxlossesof$16,840(March31,2019–$16,613)thatexpirebetween2025and2040andnetoperatinglossesof$5,278(March31,2019-nil).Deferredincometaxassetshavenotbeenrecognizedinrespectoftheselosses,asitisnotprobablethattheCompanywillbeabletoutilizeallofthelossesagainsttaxableprofitsinthefuture.

17.Sharecapital

TheCompanyisauthorizedtoissueanunlimitednumberofSubordinateVotingSharesandanunlimitednumberofClassBShares.HoldersofSubordinateVoting Shares and Class B Shares are entitled to one vote and 100 votes, respectively, for each share held. The Class B Shares are convertible intoSubordinate Voting Shares on a one-for-one basis at any time. Holders of Subordinate Voting Shares and Class B Shares are entitled to receive andparticipateequallyastodividends,shareforshare,asandwhendeclaredbythedirectorsoftheCompany. Intheeventofa liquidation,dissolutionorwindingupoftheCompany,holdersofSubordinateVotingSharesandClassBShareswillbeentitledtotheremainingpropertyandassetsoftheCompany.


Issuedandoutstanding Numberofshares Amount Numberofshares Amount

SubordinateVotingShares 91,675,747 $ 1,030,443 102,203,590 $ 1,154,779ClassBShares 3,114,848 38,782 3,114,911 38,783

94,790,595 $ 1,069,225 105,318,501 $ 1,193,562

ThefollowingtablesummarizesthechangesintheSubordinateVotingSharesissued:


Numberofshares Amount Numberofshares Amount

Issuedandoutstanding,beginningofperiod 102,203,590 $ 1,154,779 104,215,841 $ 1,171,034

ClassBSharesconvertedintoSubordinateVotingShares 63 1 253 2

StockoptionsandPSUsexercised,netofwithholdingtaxes 141,797 1,076 28,500 221

SubordinateVotingSharesrepurchased (10,669,703) (125,413) (2,041,004) (16,478)

Issuedandoutstanding,endofperiod 91,675,747 $ 1,030,443 102,203,590 $ 1,154,779

ThefollowingtablesummarizesthechangesintheClassBSharesissued:

March31,2020 December31,2019Numberofshares Amount Numberofshares Amount

Issuedandoutstanding,beginningofperiod 3,114,911 $ 38,783 3,115,164 $ 38,785

ClassBSharesconvertedintoSubordinateVotingShares (63) (1) (253) (2)

Issuedandoutstanding,endofperiod 3,114,848 $ 38,782 3,114,911 $ 38,783



ShareRepurchasesIn the threemonths endedMarch 31, 2020, the Company completed a substantial issuer bid and purchased for cancellation 10,000,000 SubordinateVotingSharesatapriceof$11.75pershareforaggregateproceedsof$117,500.

TheCompany renewed itsnormal course issuerbid ("NCIB"),which commencedonSeptember20, 2019,underwhich theCompanyhas theability topurchaseforcancellationuptoamaximumnumberof6,604,023SubordinateVotingSharesthroughthefacilitiesoftheTSXatprevailingmarketpricesandinaccordancewiththerulesandpoliciesoftheTSX.TheactualnumberofSubordinateVotingSharesthatmaybepurchased,andthetimingofanysuchpurchasesasdeterminedbytheCompany,aresubjecttoamaximumdailypurchaselimitationof15,029shares,exceptwherepurchasesaremadeinaccordancewithblockpurchaseexemptionsunderapplicableTSXrules.

InconnectionwiththerenewaloftheNCIB,theCompanyhasestablishedanautomaticsecuritiespurchaseplan(the“Plan”)withitsdesignatedbrokertofacilitate the purchase of Subordinate Voting Shares under the NCIB at times when the Company would ordinarily not be permitted to purchase itsSubordinateVotingSharesduetoregulatoryrestrictionsorself-imposedblackoutperiods.PurchaseswillbemadebytheCompany'sbrokerbasedontheparametersprescribedbytheTSXandthetermsoftheparties’writtenagreement.Outsideofsuchrestrictedorblackoutperiods,theSubordinateVotingSharesmayalsobepurchased inaccordancewithmanagement’sdiscretion.ThePlanwaspre-clearedbytheTSXandwill terminateonSeptember19,2020.

In thethreemonthsendedMarch31,2020,669,703SubordinateVotingShareswerepurchased forcancellationby theCompanyunder itsNCIBatanaveragepriceof$11.82(yearendedDecember31,2019–2,041,004SubordinateVotingSharesatanaveragepriceof$8.07).

DividendsInthethreemonthsendedMarch31,2020,theCompanyannouncedanincreasetotheannualdividendfrom$0.10to$0.12perSubordinateVotingShareandClassBShare,effectivewiththedividendpaidtoshareholdersonMarch31,2020.InthethreemonthsendedMarch31,2020,theCompanydeclareddividendsof$2,845onitsSubordinateVotingSharesandClassBShares(threemonthsendedMarch31,2019-$2,677).

18.Non-controllinginterest

Themovementinnon-controllinginterestisasfollows:



Earnings(loss)fortheperiod 274 (501)

Distributionstonon-controllinginterests — (1,879)

Contributionsfromnon-controllinginterests 3,900 7,700


19.Revenue

Revenueconsistedofthefollowing:

March31,2020 March31,2019

Revenuefromcontractswithcustomers $ 168,645 $ 46,577

Revenuefromothersources-rentalincome 6,324 6,844

Revenuefromothersources-lendingportfolio 1,486 3,536

Totalrevenue $ 176,455 $ 56,957

RevenuefromContractswithCustomersThefollowingtabledisaggregatesrevenuebymajorrevenuestreamandtimingofrevenuerecognition:


LandHousingandcondominium

Investmentproperties

Recreationalproperties Assetmanagement Total

Revenue $ 89,726 $ 53,035 $ 3,240 $ 15,630 $ 11,171 $ 172,802

Less:Intercompanyrevenue (1,318) (1,800) — — (1,039) (4,157)

Revenuefromexternalcustomers $ 88,408 $ 51,235 $ 3,240 $ 15,630 $ 10,132 $ 168,645

Timingofrevenuerecognition

Atapointintime $ 88,408 $ 51,235 $ — $ 12,699 $ 2,707 $ 155,049

Overtime — — 3,240 2,931 7,425 13,596

$ 88,408 $ 51,235 $ 3,240 $ 15,630 $ 10,132 $ 168,645




LandHousingandcondominium

Investmentproperties

Recreationalproperties

Assetmanagement

Renewablepower Total

Revenue $ 3,684 $ 6,066 $ 4,031 $ 19,777 $ 12,935 $ 4,322 $ 50,815

Less:Intercompanyrevenue — (1,281) — — (2,957) — (4,238)

Revenuefromexternalcustomers $ 3,684 $ 4,785 $ 4,031 $ 19,777 $ 9,978 $ 4,322 $ 46,577

Timingofrevenuerecognition

Atapointintime $ 3,684 $ 4,785 $ — $ 16,613 $ 1,869 $ — $ 26,951

Overtime — — 4,031 3,164 8,109 4,322 19,626

$ 3,684 $ 4,785 $ 4,031 $ 19,777 $ 9,978 $ 4,322 $ 46,577

20.Interestexpense

Interestexpenseconsistedofthefollowing:

March31,2020 March31,2019Interestonproject-specificdebt $ 6,013 $ 6,916Interestoncorporatedebtfacilities 2,634 4,235DividendsonPreferenceshares,series1 — 502Amortizationofdeferredfinancingcostsandaccretionofeffectiveinterest 487 517Project-specificinterestcapitalizedtorealestatedevelopmentprojects (2,922) (2,254)

Total $ 6,212 $ 9,916

21.Financialinstrumentsfairvalueandriskmanagement

TheCompanypreviouslydiscloseditsriskexposuresintheCompany’sannualconsolidatedfinancialstatementsfortheyearendedDecember31,2019.Exceptasdisclosedbelow,theCompany'sriskexposureshavenotchangedsignificantlysinceDecember31,2019.

Creditriskrelatedtoinvestmentpropertiesandcertaininvestmentholdingsarisesfromthepossibilitythattenantsmaynotfulfilltheirleaseorcontractualobligations.TheCompanymitigates itscredit risks from its tenantsbyattracting tenantsof sound financial standingandbydiversifying its tenantmix.COVID-19andthemeasurestocontain ithavecreatedsignificantuncertainty inthegeneraleconomy.Adeterioration intheeconomymay impacttheabilityof tenants tomeet theirobligationsunder their leasesor contractsdue to thenegative impactof theoutbreakofCOVID-19.TheCompanyhasassessedtheeffectofthecurrenteconomicconditionsonthecreditriskofourtenantsandcounterparties,whichincludedthereviewoftheriskprofilesofitstenantbase.SubsequenttoMarch31,2020,theCompanyreceived85%ofitsAprilrentalrevenuefromtenantsrelatedtoitsinvestmentproperties.

CreditriskmayalsoarisefromaborrowerthatmaynotbeabletohonouritsdebtcommitmentsasaresultofanegativechangeinmarketconditionsthatcouldresultinalosstotheCompany.CreditriskrelatedtofinancialguaranteesprovidedbytheCompanyarisesfromthepossibilitythatcounterpartiesdefault on their financial obligations. The Companymitigates these risks by actively monitoring themortgage/loan receivables, loan investment andfinancialguarantees,andinitiatingrecoveryprocedures,inatimelymanner,whenrequired.TheCompanyassessedvariousscenariosthatwouldimpactthelendingportfoliothroughitsECLmodelandnotednofurtherprovisionrequiredasatthereportingdate.

Creditriskmayalsoarisefromacustomerthatmaynotbeabletoclosefinancingonalandlotorcondominiumunitpreviouslyoccupiedandrecognizedinrevenue. TheCompanymitigates this riskby requiringdeposits on signing,mortgagepre-approvals on initial deposit, activelymonitoring collectionofinterimoccupancypayments,workingcloselywithproject-specificmortgagebrokers,whereapplicable,retainingtitletotheunderlyinglandorunituntilfinalclosing,andinitiatingrecoveryprocedureswhenrequired.

Themaximumexposure tocredit riskatMarch31,2020was the fairvalueof theCompany'saccounts receivable frompreviously recognized landandcondominiumrevenue,participatingmortgages,loansreceivableandthecontractualvalueofitslendingportfoliowhich,includinginterestreceivable,was$344,856(December31,2019-$254,169).TheCompanyhasrecourseundertheseinvestmentsintheeventofdefaultbythecounterparty,inwhichcase,theCompanywouldhaveaclaimagainsttheunderlyingcollateral.

TheCompanyisexposedtothevariabilityinmarketinterestratesonmaturingdebtpayabletoberenewed.AsatMarch31,2020,28%oftheCompany'soutstandingdebtonourcondensedconsolidatedstatementsoffinancialpositionwasfixed.

Liquidity risk is the risk that theCompanywill encounterdifficulty inmeeting its financial obligations as theybecomedue.As atMarch31, 2020, theworkingcapitalbalancewas$256,668,which includescashof$174,697.Additionally, theCompanyhas$261,136availableunder theWesternCanadaoperatingline,marginfacilityandDreamAlternativesoperatingline.AsatMarch31,2020,theCompanyhassufficientcashavailabletocoverobligationsastheybecomedue.



FairValueofFinancialInstrumentsThe following table categorizes financial assetsor liabilitiesmeasuredordisclosedat fair valueby level according to the significanceof inputsused inmakingmeasurements.QuotedmarketpricesrepresentaLevel1valuation.Whenquotedmarketpricesarenotavailable,theCompanymaximizestheuseof observable inputs. When all significant inputs are observable, the valuation is classified as Level 2. Valuations that require the significant use ofunobservableinputsareconsideredLevel3.


Fairvaluehierarchy Carryingvalue Fairvalue Carryingvalue Fairvalue

Recurringmeasurement

Financialassets

Participatingmortgages Level3 $ 66,210 $ 66,210 $ 66,210 $ 66,210

Investmentholdings Level3 54,628 54,628 50,206 50,206

Otherinstruments Level3 5,297 5,297 4,952 4,952

Lendingportfolio Level3 7,488 7,488 7,301 7,301

Financialliabilities

DreamAlternativestrustunits Level1 231,790 231,790 411,078 411,078

Interestrateswaps Level3 3,724 3,724 — —

Fairvaluesdisclosed

Leaseobligation Level3 14,142 14,142 14,450 14,450

Lendingportfolio Level3 50,513 50,425 57,404 57,195

Constructionloans Level3 237,219 236,902 217,341 217,257

Mortgagesandtermdebt Level3 268,502 273,262 257,509 257,126

Operatingline-WesternCanada Level3 65,638 66,000 — —

Non-revolvingtermfacility Level3 224,208 225,000 224,105 225,000

Thefairvaluesofcashandcashequivalents,accountsreceivable,loansreceivable,deposits,restrictedcashandcertainfinancialinstrumentsincludedinaccountspayableandotherliabilities,withtheexceptionofleaseobligations,arecarriedatamortizedcost,whichapproximatestheirfairvaluesduetotheirshort-termnature.

The fair value of the DreamAlternatives trust units is based on the listedmarket price on the TSX as atMarch 31, 2020 of $4.37 per share for the53,041,078outstandingtrustunitsnotheldbytheCompany.

Level3FairValueMeasurementsTheCompanyusedthefollowingtechniquestodeterminethefairvaluemeasurementscategorizedinLevel3:

ParticipatingMortgagesThefairvalueofparticipatingmortgagesisdeterminedusingadiscountedcashflowanalysis.Thediscountedcashflowmodeliscalculatedbasedonfutureinterest and participating profit payments and the projectmanagers’ estimates of unit sales proceeds and/or net operating incomeof the underlyingdevelopment. In determining the discount rate, the Company considered market conditions, time to completion of the development, the marketcapitalizationrate,thepercentageofspaceleasedonunitssoldandotheravailableinformation.ThesignificantunobservableinputasatMarch31,2020isthediscountrateof7.0%-8.0%.

Generally,anincreaseinanticipatedproceedsfromunitclosingsoranincreaseinstabilizednetoperatingincomewillresultinanincreaseinfairvalues.Anincreaseinthecapitalizationratesorinthediscountrateswillresultinadecreaseinfairvalues.Thecapitalizationratemagnifiestheeffectofachangeinstabilizednetoperatingincome,withalowerrateresultinginagreaterimpacttothefairvaluethanahigherrate.Anychangeintherevenueorcostingestimatesordevelopmenttimelinecouldhaveasignificantimpactonthevalueofthedevelopmentandinvestmentholdings.

Ifthediscountratesappliedforparticipatingmortgagesweretoincreaseby1%,thefairvalueoftheparticipatingmortgageswoulddecreaseby$300.Ifthediscountrateweretodecreaseby1%,thefairvaluewouldincreaseby$300.

InterestRateSwapsThefairvaluemeasurementsoftheinterestrateswapswerevaluedbyqualifiedexternalvaluatorsbasedonthepresentvalueoftheestimatedfuturecashflowdeterminedusingobservableyieldcurves.

LendingPortfolioTherearenoquotedpricesinanactivemarketforthelendingportfolioinvestments.TheCompanydeterminesfairvaluebasedonitsassessmentofthecurrent lendingmarket for lending portfolio investments of the same or similar terms in consultationwith CanadianMortgage Servicing Corporation("CMSC"),themanagerandservicerofthelendingportfolio,andotheravailableinformation.ThefairvalueofthelendingportfolioasatMarch31,2020wasdeterminedbydiscountingtheexpectedcashflowsofeachloanusinganassessmentofthemarket interestraterangingfrom5.0%to17.5%.The



market interest rates were determined taking into consideration similar instruments with corresponding maturity dates, plus a credit adjustment inaccordancewiththeborrower'screditworthinessaswellasconsideringtheriskcharacteristicoftheunderlyingdevelopment.Forcertainloans,thefairvaluewasdeterminedbasedonthenetrealizablevalueoftheunderlyingrealestatepropertyandrelatedtransactioncostsbasedoninternalvaluations,whichusedthemostappropriatevaluationmethodologydeterminedforeachunderlyingdevelopmentonahighestandbestusebasisconsistentwiththeincomepropertiesvaluationmethodology.

CorporateDebtFacilitiesThe fair valuemeasurement of the non-revolving term facility,margin facility and DreamAlternatives operating line approximates the carrying valueexcludingunamortizedfinancingcostsgiventheirvariablerate.

Project-SpecificDebtandLeaseObligationThe fair value of the operating line - Western Canada, construction loans, mortgages and term, debt and lease obligation has been calculated bydiscountingtheexpectedcashflowsofeachloanusingadiscountratespecifictoeachindividualloanorobligation.Thediscountrateisdeterminedusingthebondyieldforsimilarinstrumentsofsimilarmaturityadjustedforeachindividualproject’sspecificcreditrisk.Indeterminingtheadjustmentforcreditrisk,theCompanyconsiderscurrentmarketconditionsandotherindicatorsoftheCompany’screditworthiness.

ValuationProcessTheCompany’s financedepartment is responsible for performing the valuationof fair valuemeasurements or reviewing the fair valuemeasurementsprovidedbythird-partyappraisers.Onaquarterlybasis,managementwillreviewthevaluationpolicies,proceduresandanalysisofchangesinfairvaluemeasurements.RefertoNote6foracontinuityoftheCompany'slendingportfoliobalance.

TheCompanyrecognizestransfersintoandtransfersoutoffairvaluehierarchylevelsasatthedateoftheeventorchangeincircumstancesthatcausedthetransfer.

Investmentholdings Interestrateswaps Participatingmortgages

Balance,December31,2019 $ 50,206 $ 12 $ 66,210

Totalgainsorlossesfortheperiodincludedinnetearnings:Changeinfairvalue — (96) —Foreigncurrencygain 4,422 — —

Includedinothercomprehensiveincome:

Changeinfairvalue — (3,640) —Balance,March31,2020 $ 54,628 $ (3,724)$ 66,210

22.Share-basedcompensation

StockOptionPlanTheCompanyhasastockoptionplanunderwhichkeyofficersandemployeesaregrantedoptionstopurchaseSubordinateVotingShares.EachoptiongrantedcanbeexercisedforoneSubordinateVotingShare.


OptionsWeightedaverage

exerciseprice OptionsWeightedaverage

exerciseprice

Optionsoutstanding,beginningofperiod 2,012,942 $ 8.31 1,898,100 $ 8.39

Granted 84,291 12.47 149,175 7.18

Exercised (101,667) 7.97 (28,500) 7.76

Forfeited — — (5,833) 7.76

Optionsoutstanding,endofperiod 1,995,566 $ 8.50 2,012,942 $ 8.31

Optionsexercisable,endofperiod 1,546,793 $ 8.66 1,394,147 $ 8.64

AsatMarch31,2020,1,995,566optionswereoutstandingunder the stockoptionplan collectively. The fair valueof the stockoptionsgranted in theperiodendedMarch31,2020wasestimatedonthehistoricalgrantdateusingtheBlackScholesoptionpricingmodelwiththefollowingweightedaverageassumptions:

Risk-freeinterestrate 1.2%

Estimatedvolatility(1) 21.5%

Expectedlife 6.5years

Contractuallife 10years

Expecteddividendyield 1.0%(1)EstimatedvolatilityisbasedonablendedrateofmarketcomparablesandtheCompany'shistoricalvolatility.



In thethreemonthsendedMarch31,2020, theCompanyrecognized$82 (threemonthsendedMarch31,2019–$109)ofshare-basedcompensationexpenserelatedtostockoptionsingeneralandadministrativeexpense.

PerformanceShareUnitPlanPerformanceshareunits("PSUs")maybegrantedtocurrentemployeesandaresubjecttoeithertimevestingonly,ortimeandperformancevesting.PSUssubjecttoperformancevestingprovidetheholderwithaminimumof0andamaximumof1.5SubordinateVotingSharesbasedontheachievementofpredetermined Company performance goals. In lieu of receiving Subordinate Voting Shares on vesting, PSU holders have the right to request a cashpaymentequaltothefive-daytrailingweightedaveragesharepriceoftheCompany’sSubordinateVotingSharesonthevestingdateorsettlementdate,whenapplicable;however,theformofpaymentonvestingisultimatelythedecisionoftheCompany.


UnitsWeightedaveragefair

valueatgrantdate UnitsWeightedaveragefair

valueatgrantdate

Unitsoutstanding,beginningofperiod 984,412 $ 7.08 634,252 $ 7.03

Granted 247,315 12.83 338,930 7.18

PSUsaddedbyperformancefactor 33,119 6.60 — —

Reinvested 4,094 8.19 11,230 7.08

Exercised (57,116) 6.60 — —

Unitsoutstanding,endofperiod 1,211,824 $ 8.19 984,412 $ 7.08

In the threemonths endedMarch 31, 2020, compensation expenseof $1,067 (threemonths endedMarch 31, 2019 – $366) related to this planwasrecognizedingeneralandadministrativeexpense.

ThefairvalueofPSUsgrantedintheperiodendedMarch31,2020wasestimatedonthehistoricalgrantdatewiththefollowingassumptions:

Risk-freeinterestrate 1.3%

Expectedlife 3years

Contractuallife 10years

Expecteddividendyield 1.0%

DeferredShareUnitPlanThe Company has a deferred share unit incentive plan pursuant to which deferred share units ("DSUs") may be granted to eligible directors, seniormanagementandcertainserviceproviders.AsatMarch31,2020,therewere389,574unitsoutstanding(December31,2019–375,610unitsoutstanding).In the threemonths endedMarch 31, 2020, compensation expense of $117 (threemonths endedMarch 31, 2019 – $117) related to this plan wasrecognizedingeneralandadministrativeexpense.


Unitsoutstanding,beginningofperiod 375,610 273,839

Grantedandreinvested 13,964 101,771

Unitsoutstanding,endofperiod 389,574 375,610

Thenetchangesincontributedsurplusrelatingtoshare-basedcompensationforthestockoptionplan,PSUplanandDSUplanwereasfollows:



Grantedandaddedbyperformancefactor 1,266 3,328

Dividendsreinvested 12 33

Exercised (378) —




23.Earningspershare

BasicearningspershareiscalculatedbydividingtheCompany’searningsattributabletooutsideshareholdersoftheCompanybytheweightedaveragenumberofsharesoutstandingintheperiod.

Dilutedearningsper share is calculatedbydividing theCompany’searningsattributable to theoutside shareholdersof theCompanyby theweightedaverage number of shares outstanding after the dilutive effect of the stock options, performance share units and deferred share units. The dilutedweightedaveragenumberofsharesusedinthedilutedearningspersharecalculationisdeterminedbyassumingthatthetotalproceedsreceivedfortheconversionofsuchunits isusedtorepurchaseSubordinateVotingSharesattheaveragesellingpriceofsuchpubliclytradedunitsoverthetermofthecalculation.

Thefollowingtablesummarizesthebasicanddilutedearningspershareandtheweightedaveragenumberofsharesoutstanding:


2020 2019

Earnings(loss)attributabletotheoutsideshareholdersoftheCompany,basicanddiluted $ 185,556 $ (33,752)

Weightedaveragenumberofsharesoutstanding:

DreamSubordinateVotingShares 95,172,422 104,056,257DreamClassBShares 3,114,882 3,115,079

Totalweightedaveragenumberofshares 98,287,304 107,171,336Effectofdilutivesecuritiesonweightedaveragenumberofsharesoutstandingattheendoftheperiod:

Share-basedcompensation(1) 1,615,391 —

Totalweightedaveragenumberofsharesoutstandingafterdilution 99,902,695 107,171,336

Basicearnings(loss)pershare $ 1.89 $ (0.31)Dilutedearnings(loss)pershare $ 1.86 $ (0.31)

(1)ForthethreemonthsendedMarch31,2020,254,998stockoptions(includingPSUs)wereconsideredanti-dilutive(threemonthsendedMarch31,2019–2,613,520stockoptions(includingPSUs)and3,837,131Preferenceshares,series1).

24.Commitmentsandcontingencies

LettersofCreditandSuretyBondsThe Company is contingently liable for letters of credit and surety bonds that have been provided to support land developments, equity accountedinvestmentsandotheractivitiesintheamountof$81,318(December31,2019–$82,627).TheCompanyisalsocontingentlyliableforbondsthathavebeenprovidedtosupportcertainurbandevelopmentcondominiumpartnershipsthatexpireattheendofaspecifiedwarrantyperiod.

The Company is committed to pay levies in the future of up to $1,170 (December 31, 2019 – $1,170) relating to signed municipal agreements oncommencementofdevelopmentof certain realestateassets.Additionaldevelopmentcostsmayalsobe required to satisfy the requirementsof thesemunicipalagreements.

JointOperations,Co-ownerships,JointVenturesandAssociatesTheCompanymayconductitsrealestateactivitiesfromtimetotimethroughjointoperationsandjointventureswiththird-partypartners.TheCompanywascontingentlyliablefortheobligationsoftheotherownersoftheunincorporatedjointoperationsandjointventuresintheamountof$103,656asatMarch31,2020(December31,2019–$88,612).TheCompanywouldhaveavailabletoittheotherco-venturers’shareofassetstosatisfyanyobligationsthatmayarise.

InthethreemonthsendedMarch31,2020,theCompany,throughasubsidiaryofDreamAlternatives,continuedtoprovideaguaranteeforupto$45,000pursuanttotherequirementsofaseniorconstructionloanassociatedwithaparticipatingmortgage.Theguaranteewillbeinplaceforthetermoftheconstructionloanandwillproportionatelyscaledownastheconstructionloanisrepaidasunitclosingsbegintooccur.AsatMarch31,2020,theCompanyiscontingentlyliableunderguaranteesthatareissuedoncertaindebtassumedbypurchasersofincomepropertiesuptoanamountof$2,696(December31,2019-$2,729).

LegalContingenciesTheCompanyand itsoperatingsubsidiariesmaybecome liableunderguarantees thatare issued in thenormalcourseofbusinessandwithrespect tolitigationandclaimsthatarisefromtimetotime.Intheopinionofmanagement,anyliabilitythatmayarisefromsuchcontingencieswouldnothaveamaterialadverseeffectonthecondensedconsolidatedfinancialstatementsoftheCompany.



25.Assetmanagementandmanagementservicesagreementsandrelatedpartytransactions

DreamIndustrialREITIn the threemonthsendedMarch31,2020and2019, theCompanyearned/recovered the followingamountspursuant to theassetmanagementandsharedservicesagreementswithDreamIndustrialREIT:


2020 2019

AssetmanagementfeeschargedbyDream(1) $ 4,423 $ 3,210

CostrecoverieschargedbyDream 541 179(1)IncludedinassetmanagementfeeschargedtoDreamIndustrialREITforthethreemonthsendedMarch31,2020and2019wereincentivefeesof$nil.IncludedinaccountsreceivablearebalancesduefromDreamIndustrialREITrelatedtoassetmanagementagreementsandcostsharingagreementsof$1,305(December31,2019-$935).

DreamOfficeREITAmountsearned/recoveredunderthesharedservicesagreementduringthethreemonthsendedMarch31,2020and2019areasfollows:


2020 2019

CostrecoverieschargedbyDreamtoDreamOfficeREIT $ 583 $ 578

CostrecoverieschargedbyDreamOfficeREITtoDream 2,257 1,516

FeeschargedbyDreamtoDreamOfficeREIT 588 —

FeeschargedbyDreamOfficeREITtoDream 57 —

TheamountowingfromDreamOfficeREITasofMarch31,2020was$1,906(December31,2019–amountowedtoDreamOfficeREITwas$263).

DistributionsEarnedfromInvestmentsTheCompanyearneddistributionsfromDreamOfficeREIT(Note10).

OtherTransactionsIn theyearendedDecember31,2019, theCompany,alongwithDreamIndustrialREIT,entered intoapartnership,RangeRoad, todevelopan incomepropertyinLasVegas,Nevada.TheCompanyowns10%andDreamIndustrialREITowns80%withtheremainderheldbyathirdparty.Theinvestmentisincluded in other development properties in equity accounted investments. As atMarch 31, 2020, the Company had funded $1,041 into RangeRoad(December31,2019-$1,016).

IntheyearendedDecember31,2018,theCompany,alongwithDreamOfficeREIT,enteredintoastrategicpartnership,AlatePartners,focusedonthepropertytechnologymarket.TheCompanyandDreamOfficeREITeachholda25%interestinAlatePartners,includedwithinotherdevelopmentinterestsinequityaccountedinvestments.AsatMarch31,2020,theCompanyhadfunded$5,619intoAlatePartners(December31,2019-$4,616).

26.Supplementarycashflowinformation

Componentsofotheradjustmentsinclude:


DreamGlobalREITdeferredtrustunits $ — $ (351)

Accruedinterestonloansreceivableandotherexpenses (988) (1,239)

Share-basedcompensationexpense 900 592

Fairvaluechangesinfinancialinstruments (4,329) (11,400)

Non-cashacquisitionofproperties,net — (3,580)

Non-cashcontributiontoequityaccountedinvestment (8,950) —

Other (2,464) 2,243

$ (15,831) $ (13,735)



Componentsofchangesinnon-cashworkingcapitalinclude:


Accountsreceivable $ (32,869) $ 5,770

Accountspayableandotherliabilities (26,010) (4,003)

Incomeandothertaxespayable (100,456) 6,936

Provisionforrealestatedevelopmentcosts 1,948 (3,111)

Deposits (1,983) (189)

Restrictedcash (1,252) (1,091)

Inventory,prepaidexpensesandotherassets 105 1,308

$ (160,517) $ 5,620

Thebreakdownofcashandcashequivalentsisasfollows:


Cash $ 174,513 $ 388,337

Moneymarketfunds,termdepositsandGICs 184 184

$ 174,697 $ 388,521

27.Segmentedinformation

DuringtheperiodendedMarch31,2020,theCompanyhasreviewedandreassesseditssegmentreportingtakingintoconsiderationhowtheCompanypresents information for financial reporting and management decision making. The Company has determined that a change in reportable operatingsegmentswasrequiredandhasretrospectivelyappliedthebelowsegmentpresentationforallyearspresented.

TheCompany'snewoperatingsegmentsareasfollows:• Recurringincome:

• ComprisedofourassetmanagementanddevelopmentmanagementagreementswithDreamIndustrialREIT,DreamOfficeREITandvariousdevelopment partners, a 29% equity interest in Dream Office REIT, Dream Alternatives' lending portfolio, and our stabilized incomeproducingassetsintheGreaterTorontoArea("GTA"),WesternCanadaandColorado.

• Development:• Comprised of mixed-use developments in the GTA and Ottawa/Gatineau, land, housing and retail/commercial development in

SaskatchewanandAlberta,andDreamAlternatives'investmentintheHardRock/VirginHotelinLasVegas.

Whilenotconsideredan individual reportablesegment,corporateandother includes:corporate-levelcashandotherworkingcapital, consolidatedtaxbalancesandexpense,ourtermfacilityandrelatedinterestexpense,generalandadministrativeexpensesnotallocatedtoaparticularsegmentandtheliabilityandfairvalueadjustmentstoDreamAlternativestrustunitsheldbyotherunitholders.

Management has determined the operating segments based on how the President and Chief ResponsibleOfficer and seniormanagement review thebusinessandmanagerisk.Grossmarginrepresentsrevenue,lessdirectoperatingcosts,excludingselling,marketingandotheroperatingcosts.Netmarginrepresentsgrossmargin,asdefinedabove,includingselling,marketingandotheroperatingcosts.Usedasapercentageofrevenuetoevaluateoperationalefficiency, thesemarginsareemployedas fundamentalbusinessconsiderations inupdatingbudgets, forecastsandstrategicplanning.Theallocationofothercomponentsofearningswouldnotassistmanagementintheevaluationofthesegments’contributionstoearningsandarecategorizedasCorporateandother.



SegmentedStatementofEarnings(Loss)SegmentedrevenueandexpendituresforthethreemonthsendedMarch31,2020and2019areasfollows:

March31,2020

Recurringincome Development Corporateandother ConsolidatedDream

Revenue $ 36,633 $ 139,822 $ — $ 176,455

Directoperatingcosts (20,356) (87,777) — (108,133)

Grossmargin 16,277 52,045 — 68,322

Selling,marketing,depreciationandotheroperatingcosts (1,599) (8,096) — (9,695)

Netmargin 14,678 43,949 — 58,627

Fairvaluechangesininvestmentproperties (643) (549) — (1,192)

Shareofearningsfromequityaccountedinvestments 545 4,978 — 5,523

Investmentandotherincome 2 1,792 591 2,385

Interestexpense (2,160) (1,219) (2,833) (6,212)

Fairvaluechangesinfinancialinstruments (92) 4,421 — 4,329

Netsegmentearnings(loss) $ 12,330 $ 53,372 $ (2,242) $ 63,460

Generalandadministrativeexpenses — — (4,888) (4,888)

AdjustmentsrelatedtoDreamAlternativestrustunits — — 174,207 174,207

Incometaxexpense — — (46,949) (46,949)

Netearnings(1) $ 12,330 $ 53,372 $ 120,128 $ 185,830(1)Includesearningsattributabletonon-controllinginterest.

March31,2019


Revenue $ 48,573 $ 8,384 $ — $ 56,957Directoperatingcosts (24,321) (3,367) — (27,688)

Grossmargin 24,252 5,017 — 29,269

Selling,marketing,depreciationandotheroperatingcosts (1,544) (8,757) — (10,301)

Netmargin 22,708 (3,740) — 18,968

Fairvaluechangesininvestmentproperties (2,622) 2,519 — (103)

Shareofearningsfromequityaccountedinvestments 6,718 271 — 6,989

Investmentandotherincome 1,107 1,736 315 3,158

Interestexpense (4,373) (1,443) (4,100) (9,916)

Fairvaluechangesinfinancialinstruments 11,683 (343) 60 11,400

Netsegmentearnings(loss) $ 35,221 $ (1,000) $ (3,725) $ 30,496

Generalandadministrativeexpenses (5,216) (5,216)

AdjustmentsrelatedtoDreamAlternativestrustunits (61,871) (61,871)

Incometaxrecovery 3,067 3,067

Netearnings(loss)(1) $ 35,221 $ (1,000) $ (67,745) $ (33,524)(1)Includesearningsattributabletonon-controllinginterest.



SegmentedAssetsandLiabilitiesSegmentedassetsandliabilitiesasatMarch31,2020andDecember31,2019wereasfollows:

March31,2020


Assets

Cashandcashequivalents $ 17,619 $ 24,989 $ 132,089 $ 174,697

Accountsreceivable 7,932 221,887 6,320 236,139

Otherfinancialassets — 198,609 — 198,609

Lendingportfolio 58,001 — — 58,001

Housinginventory — 37,379 — 37,379

Condominiuminventory — 276,024 — 276,024

Landinventory 890 496,551 — 497,441

Investmentproperties 469,914 114,579 — 584,493

Recreationalproperties 50,753 — — 50,753

Equityaccountedinvestments 541,955 192,423 — 734,378

Capitalandotheroperatingassets 8,786 42,820 6,227 57,833

Totalassets $ 1,155,850 $ 1,605,261 $ 144,636 $ 2,905,747

Liabilities

Accountspayableandotherliabilities $ 37,409 $ 106,035 $ 17,719 $ 161,163

Incomeandothertaxespayable — — 53,905 53,905

Provisionforrealestatedevelopmentcosts — 38,801 — 38,801

Debt 210,473 360,886 224,208 795,567

DreamAlternativestrustunits — — 231,790 231,790

Deferredincometaxes — — 126,805 126,805

Totalliabilities $ 247,882 $ 505,722 $ 654,427 $ 1,408,031

Non-controllinginterest — 25,823 — 25,823

Shareholders'equity 907,968 1,073,716 (509,791) 1,471,893

Totalequity $ 907,968 $ 1,099,539 $ (509,791) $ 1,497,716



December31,2019


Assets

Cashandcashequivalents $ 11,518 $ 31,327 $ 345,676 $ 388,521

Accountsreceivable 11,093 188,555 2,510 202,158

Otherfinancialassets — 129,456 — 129,456

Lendingportfolio 64,705 — — 64,705

Housinginventory — 38,607 — 38,607

Condominiuminventory — 291,304 — 291,304

Landinventory 786 537,785 — 538,571

Investmentproperties 419,991 98,433 — 518,424

Recreationalproperties 48,779 — — 48,779

Equityaccountedinvestments 520,284 188,556 — 708,840

Capitalandotheroperatingassets 6,956 42,350 6,273 55,579

Assetsheldforsale 49,089 — — 49,089

Totalassets $ 1,133,201 $ 1,546,373 $ 354,459 $ 3,034,033

Liabilities

Accountspayableandotherliabilities $ 52,413 $ 136,154 $ 17,713 $ 206,280

Incomeandothertaxespayable — — 154,361 154,361

Provisionforrealestatedevelopmentcosts — 36,853 — 36,853

Debt 203,450 271,400 224,105 698,955

DreamAlternativestrustunits — — 411,078 411,078

Deferredincometaxes — — 93,897 93,897

Totalliabilities $ 255,863 $ 444,407 $ 901,154 $ 1,601,424

Non-controllinginterest — 21,649 — 21,649

Shareholders'equity $ 877,338 $ 1,080,317 $ (546,695) $ 1,410,960

Totalequity $ 877,338 $ 1,101,966 $ (546,695) $ 1,432,609



28.Classificationofitemsincondensedconsolidatedstatementsoffinancialposition

Asummaryoftheclassificationbetweencurrentandnon-currentassetsandliabilitiesispresentedbelow.

March31,2020

Lessthan12monthsGreaterthan12

months Non-determinable Total

Assets

Cashandcashequivalents $ 174,697 $ — $ — $ 174,697

Accountsreceivable 195,556 40,583 — 236,139

Otherfinancialassets 24,651 173,958 — 198,609

Lendingportfolio 44,199 13,802 — 58,001

Housinginventory — — 37,379 37,379

Condominiuminventory — — 276,024 276,024

Landinventory — — 497,441 497,441

Investmentproperties — 584,493 — 584,493

Recreationalproperties — 50,753 — 50,753

Equityaccountedinvestments — — 734,378 734,378

Capitalandotheroperatingassets 12,452 45,381 — 57,833

Totalassets $ 451,555 $ 908,970 $ 1,545,222 $ 2,905,747

Liabilities

Accountspayableandaccruedliabilities $ 89,729 $ 28,718 $ 42,716 $ 161,163

Incomeandothertaxespayable 53,905 — — 53,905

Provisionforrealestatedevelopmentcosts 38,801 — — 38,801

Debt(1) 224,220 571,347 — 795,567

DreamAlternativestrustunits(2) — — 231,790 231,790

Deferredincometaxes — 126,805 — 126,805

Totalliabilities $ 406,655 $ 726,870 $ 274,506 $ 1,408,031(1)Theamountspresentedareshownconsistentwiththecontractualtermsofrepayment,whichmaybedueondemand.(2)DreamAlternativestrustunitsmayberedeemedattheoptionoftheholderwithnoexpirydate.



December31,2019

Lessthan12monthsGreaterthan12

months Non-determinable Total

Assets

Cashandcashequivalents $ 388,521 $ — $ — $ 388,521

Accountsreceivable 164,105 38,053 — 202,158

Otherfinancialassets 11,365 118,091 — 129,456

Lendingportfolio 51,216 13,489 — 64,705

Housinginventory — — 38,607 38,607

Condominiuminventory — — 291,304 291,304

Landinventory — — 538,571 538,571

Investmentproperties — 518,424 — 518,424

Recreationalproperties — 48,779 — 48,779

Equityaccountedinvestments — — 708,840 708,840

Capitalandotheroperatingassets 13,081 42,498 — 55,579

Assetsheldforsale 49,089 — — 49,089

Totalassets $ 677,377 $ 779,334 $ 1,577,322 $ 3,034,033

Liabilities

Accountspayableandaccruedliabilities $ 132,748 $ 23,289 $ 50,243 $ 206,280

Incomeandothertaxespayable 154,361 — — 154,361

Provisionforrealestatedevelopmentcosts 36,853 — — 36,853

Debt(1) 161,411 537,544 — 698,955

DreamAlternativestrustunits(2) — — 411,078 411,078

Deferredincometaxes — 93,897 — 93,897

Totalliabilities $ 485,373 $ 654,730 $ 461,321 $ 1,601,424(1)Theamountspresentedareshownconsistentwiththecontractualtermsofrepayment,whichmaybedueondemand.(2)DreamAlternativetrustunitsmayberedeemedattheoptionoftheholderwithnoexpirydate.

29.Comparativefigures

Certain comparative balances have been reclassified from the condensed consolidated financial statements previously presented to conform to thepresentationofthe2020condensedconsolidatedfinancialstatements.RefertoNote27fordetailsoftheCompany'snewreportableoperatingsegments.

30.Subsequentevents

Subsequent toMarch31, 2020, theCompanyexecuted an agreement topurchase a 50% interest in theGladstoneHotel, a historic boutiquehotel inToronto.



Corporate Information

HEAD OFFICEDream Unlimited Corp.State Street Financial Centre30 Adelaide Street East, Suite 301Toronto, Ontario M5C 3H1Phone: 416.365.3535Fax: 416.365.6565Website: www.dream.ca

INVESTOR RELATIONSPhone: 416.365.3535 Toll free: 1 877.365.3535 Email: [email protected] Website: www.dream.ca

TRANSFER AGENT(for change of address, registration or other unitholder enquiries)

Computershare Trust Company of Canada100 University Avenue, 8th FloorToronto, Ontario M5J 2Y1Phone: 514.982.7555 or1 800.564.6253Fax: 416.263.9394 or1 888.453.0330Website: www.computershare.comEmail: [email protected]

AUDITORPricewaterhouseCoopers LLPPwC Tower, 18 York Street, Suite 2600 Toronto, Ontario M5J 0B2

CORPORATE COUNSELOsler, Hoskin & Harcourt LLPBox 50, 1 First Canadian Place, Suite 6200Toronto, Ontario M5X 1B8

STOCK EXCHANGE LISTINGThe Toronto Stock ExchangeListing Symbols:Subordinate Voting Shares: DRMSeries 1 Preferred Shares: DRM.PR.A

For more information, please visitwww.dream.ca

Corporate Office

State Street Financial Centre 30 Adelaide Street East, Suite 301 Toronto, Ontario M5C 3H1 Phone: 416.365.3535 Fax: 416.365.6565 Website: www.dream.caEmail: [email protected]

q1 2020 - dream · 2020. 5. 12. · q1 2020. letter to shareholders i management’s discussion and...

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