Toronto-based Dream has provided its investors with a lot to unpack this week in the financial reports of its various entities and partnerships, from a strategic review at its residential REIT to a major Greater Toronto Area industrial acquisition and an update on the challenges facing its office REIT.

Many of its subsidiary entities reported their financials this week. Dream Unlimited, its parent company, is to report on Feb. 25.

One of the most significant announcements came Thursday, when Dream Residential REIT (DRR-U-T) announced it is undergoing a strategic review due to the ongoing disconnect between asset values and its unit trading prices.

“There continues to be a disconnect between our trading price and the intrinsic value of Dream Residential’s portfolio,” Brian Pauls, Dream Residential REIT’s CEO, said during its investor call on Thursday. “With our year-end results we have announced that the REIT has commenced a strategic review process with a goal to maximize value for our unitholders.”

Dream’s units have been trading mainly between US$6 and US$8 over the past year, vaulting from US$6.76 to US$7.85 yesterday on the announcement of the review. In 2022, the units had been trading well above US$11.

Its NAV per unit as of Dec. 31 was US$13.39.

Dream Residential REIT

The trust owns a portfolio of 15 apartment properties in three U.S. markets, the greater Dallas-Forth Worth, Cincinnati and Oklahoma City areas. They comprise 3,300 rental units and were valued at slightly over US$400M at year-end.

Net income for Q4 was US$4.2 million and for the year US$6.4 million, compared to a year-end loss of US$14.9 million in 2023. Most of the difference is attributable to fair value adjustments on the properties and trust financial instruments.

Funds from operations were largely flat, at approximately US$13.9 million.

Pauls told investors and analysts on the call that while the review takes place, management intends to operate on a status-quo basis: “We’re looking at everything, we’re looking at the entire company. The goal is to narrow the gap between where we trade and what our intrinsic, or NAV value, is. We believe that gap is too wide.”

No properties are currently listed for sale.

“We are continuing to run the business. We continue to evaluate opportunities in light of our liquidity and basically run the business as normal. So as we’re normally watching markets, watching transactions, looking for opportunities . . .”

He said if management opts to pursue sales of its properties, the market is “very healthy”.

“There is lots of capital that wants to be in this asset class, it’s very defensive. It’s very safe, the markets are nuanced meaning there is certain capital that wants to be in Texas, or Oklahoma, or Ohio. So there’s different levels of transactions and cap rates but there certainly continues to be transactions and interest in our types of properties, and our properties specifically, and in portfolios,” Pauls explained.

No timeline has been established for the review.

Dream industrial: Major GTA acquisition

Dream Industrial REIT’s (DIR-UN-T) report this week revealed a major industrial acquisition of seven properties, comprising 998,000 square feet, in the Greater Toronto Area. The properties were acquired for $258 million as part of the Dream Summit joint venture. Its partner in the JV is Singapore-based GIC.

The portfolio is a mix of single and multi-tenant buildings along the Highway 401 corridor.

“With relatively low site coverage and over 21 acres of excess land, the portfolio offers upside opportunities through a combination of sales and IOS (industrial outdoor space) activation, as well as intensification or redevelopment potential,” the announcement states.

Dream holds a 10 per cent interest in the Dream Summit JV.

The announcement came on the heels of two other major industrial acquisitions in recent weeks: 

• a 27.5-acre waterfront property in Metro Vancouver which includes 210,000 square feet of existing buildings plus a large IOS footprint, for $143 million (by the Dream Summit JV); and
• a 32-acre infill site next to the existing Stellantis vehicle manufacturing facility in Brampton (Greater Toronto Area), for $80 million in partnership with a “sovereign wealth fund”. It is shovel-ready for up to 680,000 square feet of new industrial development, with the current plan showing a two-building layout.

Dream Industrial reported increases in net income ($259.6 million in 2024, compared to $104.9 million a year earlier) and funds from operations ($288.9 million, up from $274.6 million in 2023). FFO per unit was flat at 70 cents during 2024.

The trust holds interests in 335 properties comprising 71.8 million square feet of space and valued at approximately $7 billion as of Dec. 31. The portfolio is down slightly from 344 properties at the end of 2023. In-place and committed occupancy was 95.8 per cent. 

Dream Office REIT

Dream Office (D-UN-T) continues to feel the effects of challenges in the sector, according to its Q4 2024 financials released Thursday.

The trust’s portfolio at year-end 2024 was 24 active properties (two less than Q4 2023), valued at approximately $2.2 billion. Committed occupancy declined from 84.4 per cent to 81.1 per cent year-over-year.

On the upside, however, Dream has executed just over a million square feet of leases thus far in 2025.

“We continue to manage our business in a very uncertain environment with a focus on reducing risk, improving liquidity and increasing our occupancy,” Michael Cooper, Dream Office REIT’s CEO, said in its financial announcement. “The announced sale of 438 University is an attractive transaction for the trust that will immediately reduce debt and increase liquidity. 

“Our proposed plan to convert 606-4th Ave. in Calgary from an office building to a new residential rental building will mitigate future office leasing risk in a very challenging market, diversify the trust’s source of income and improve the average quality of our portfolio.”

438 University Ave. in Toronto has been sold for $105.6 million, or approximately $327 per square foot, and is expected to close in the coming weeks. Proceeds will repay a $68.9-million mortgage, with the balance being allocated to credit facilities to reduce debt.

The trust’s debt level (net total debt to net total assets) rose from 50 per cent at the end of 2023 to 53.9 per cent as of Q4 2024, and available liquidity dropped from $187.2 million to $138 million in the same period.

Dream Office reported a $19.1-million net loss in Q4, compared to a $42.4-million loss in Q4 2023.