Dream Impact five-year plan includes 49 Ont., Quayside

Mr. Michael Cooper reports DREAM IMPACT TRUST PROVIDES A BUSINESS UPDATE Dream Impact Trust has provided a general business update on liquidity, development and strategic initiatives. Over the past 90 days, the trust has made significant progress, furthering its business plan and preserving and adding value to the trust. Strategic business plan The board of trustees has approved a five-year strategic plan which focuses on developing 49 Ontario and Quayside, which are its two milestone projects, in addition to continuing to develop Zibi and Brightwater. The plan includes crystallizing value on almost all of the trust's commercial assets and passive investments and selling certain multifamily assets as needed for liquidity. The goal is for the trust to eventually own approximately 2,300 residential rental units (at share) by 2030, with the multifamily segment comprising approximately 90 per cent of the trust's value, approximately 72 per cent of its debt being Canada Mortgage and Housing Corp. affordable construction loan program financing, and another 9 oer cent being MLI Select CMHC financing. These CMHC financings are valuable as they tend to have long terms and government insurance, which facilitates refinancing. "In 2025, we made significant progress in supporting the trust's value. Pursuant to our business plan, we expect the portfolio to be 90 per cent multifamily in Toronto and the National Capital Region by 2030 with stable and low-cost government financing and one of the most attractive multifamily rental portfolios in the industry," said Michael Cooper, portfolio manager. "We have commenced construction of 49 Ontario with low-cost 20-year financing, [and] we have significantly advanced the predevelopment of Quayside, dramatically increased occupancy in our recently completed purpose-built rentals, reduced our land debt substantially and secured long-term corporate debt resulting in a better positioned business as 2025 ended. We expect to build on this momentum throughout 2026." 49 Ontario 49 Ontario is a 1,226-unit, two-tower purpose-built rental development, including 308 affordable units. Demolition on the site commenced in November, and the trust has closed on the previously announced government-affiliated financing, locking in a 20-year term. On Jan. 5, it completed the sale of a 10-per-cent interest in the project to its co-developer and long-term partner, CentreCourt, which will also act as construction manager. CentreCourt's proven record of delivering quality residential projects in a cost-efficient and timely manner strengthens execution certainty and aligns long-term interests across the partnership. With many of the components of the development in place, the trust is able to demonstrate the strong achievements to date. It has benefited from the federal government's waiver of HST on apartment projects as well as the City of Toronto's waiver of development charges for certain affordable housing projects under the rental housing supply program. To date, construction tendering and pricing have been encouraging, and management is optimistic that significant project savings will be realized. 49 Ontario is a significant and strategically derisked investment for the trust. While interest rates have increased over the past three years, the project's 20-year debt materially mitigates financing and refinancing risk. With no refinancing required until 2046, the loan's principal balance is expected to decline by approximately 13 per cent over the term. Assuming annual rental growth of 2.5 per cent (which is well below the historical 20-year average of 3.4 per cent), net operating income is expected to increase by approximately 63 per cent over the loan term. Combined with the principal reduction, growth in net operating income and a government guarantee, these factors should result in a substantially lower loan to value ratio at maturity and are expected to facilitate future refinancing requirements. While the construction costs, the development charge waiver and the HST waiver are permanent, the decline in rents is not. Currently, the decline in immigration and the new supply of condominiums are reducing demand and increasing supply, though the new supply of multifamily units in Toronto is expected to decline substantially over the next few years. Following the sale of the 10-per-cent project interest for $6.5-million, the trust's remaining equity value in the development is $58.5-million, and the trust will also recover $4.9-million of predevelopment costs. In addition, it owns surplus land at the site that is not required for the development, which it intends to sell in 2026. "With the support of the federal and provincial governments and the City of Toronto, 49 Ontario is well positioned as we have realized significant development savings that offset current lower rental rates. With this condo cycle coming to an end and a return to historic immigration growth, we anticipate a more constructive rental rate environment during the development period of our new buildings, which ultimately results in a fair return to our unitholders, while also providing new housing adjacent to public transit and over 300 affordable units," said Mr. Cooper. Quayside The trust is making the progress it anticipated at Quayside and estimates that it is about nine months behind the development start of 49 Ontario, subject to various approvals and continued final negotiations. Quayside is also expected to benefit from the HST waiver, development charge waivers and construction savings that have benefited 49 Ontario. Quayside is a two-tower development on Toronto's waterfront due south of the Distillery district. It will have over 1,100 market rental units as part of a public-private partnership with Waterfront Toronto and the City of Toronto, and will also include over 500 affordable housing units that are not owned by Dream Impact. Dream Impact is expected to own 25 per cent of the development. It expects to provide significant updates on Quayside over the next 90 days. Reducing land loans At the beginning of 2025, the trust had $237-million of land loans, at the trust's share, for projects that were not under development. Over the course of the year and through early 2026, the trust has reduced its land loan exposure to $144-million. Further, in 2026, th trust expects to reduce its land loans by an additional $56-million related to Scarborough Junction, Quayside, Forma West and Lakeshore East. This will reduce land loans on projects not yet started to $87-million, which primarily comprises Lakeshore East and Forma West. The trust expects land loans to be reduced by over 60 per cent from the beginning of 2025 to the end of 2026. Dream loan upsize The trust previously announced a $15-million loan from Dream Asset Management Corp., its asset manager, demonstrating DAM's continued support for Dream Impact. In early 2026, it expects that the facility will be upsized to $50-million and will bear interest at a rate equal to the higher of 10 per cent or 6 per cent above the Canadian overnight repo rate average. The facility matures in five years, and is secured by general and continuing collateral over certain of the trust's assets. 2026 asset management fee Since 2019, the management fees payable to DAM, the trust's asset manager, have been settled by the delivery of units of the trust, which has supported the trust's overall liquidity objectives. The current arrangement to satisfy these fees expired on Dec. 31, 2025, and the trust and DAM have agreed, subject to necessary Toronto Stock Exchange, regulatory and unitholder approvals, to settle the 2026 management fee through the issuance of approximately $3.6-million of unsecured convertible debentures. The debentures will be on similar terms to the trust's existing 5.75 per cent convertible unsecured subordinated debentures that mature on Dec. 31, 2027. The reduced asset management fee and payment in convertible debentures in lieu of cash preserves liquidity for the trust provide it with further financial flexibility to execute on its strategic initiatives and demonstrate DAM's strong alignment with the trust's overall strategy. In aggregate, DAM and its joint actors own 39.3 per cent of the trust as at Jan. 7, 2026. Information on the proposed fee arrangement will be included in the trust's management information circular for its coming 2026 annual meeting. 2026 debentures extension The trust announced today that it has closed on its previously announced agreement to extend and amend certain terms of the trust's 5.50 per cent convertible unsecured subordinated debentures due July 31, 2026. All of the debentures are beneficially owned by certain controlled affiliates of Fairfax Financial Holdings Ltd. The maturity date of the 2026 debentures has been extended from July 31, 2026, to July 31, 2031. In addition, the interest rate of the 2026 debentures will change from 5.50 per cent to 6.50 per cent for periods commencing on Feb. 2, 2026, and the conversion price of the debentures has been adjusted to $2.75 per unit. Under the amended terms of the 2026 debentures, the trust has the right at its sole option to satisfy any conversion request in cash in lieu of delivering units of the trust that would otherwise be issuable on conversion of the 2026 debentures. The 2026 debentures will be redesignated as 6.50 per cent convertible unsecured subordinated debentures following the coming Feb. 2, 2026, interest payment date. "The steps taken to reduce our land debt, extend our convertible debt for five years and increase the loan from DAM are improving our financial position," said Derrick Lau, chief financial officer. "The commencement of new developments and leasing of recently completed purpose-built rental projects continue to support and add value to our portfolio. While we still have much work to do to achieve the plan, given the swift and significant negative changes to the housing market, the steps taken in 2025 and the recently approved strategic business plan provide a road map for a stronger business in the future." Board update The trust also announces that Karine MacIndoe is retiring from the board of trustees of Dream Impact to focus on other ventures and commitments, and has also retired from the board of Dream Office REIT. The trust wishes her success in these endeavours. About Dream Impact Trust Dream Impact is an open-ended trust dedicated to impact investing. Dream Impact's underlying portfolio is composed of exceptional real estate assets reported under two operating segments: development and recurring income, that would not be otherwise available in a public and fully transparent vehicle, managed by an experienced team with a successful record in these areas. The objectives of Dream Impact are to create positive and lasting impacts for stakeholders through its three impact verticals: environmental sustainability and resilience, attainable and affordable housing, and inclusive communities, while generating attractive returns for investors. We seek Safe Harbor.