Dream Residential REIT Reports Q2 2025 Financial Results

TORONTO--(BUSINESS WIRE)--DREAM RESIDENTIAL REAL ESTATE INVESTMENT TRUST (TSX: DRR.U, TSX: DRR.UN) (“Dream Residential REIT” or the “REIT” or “we” or “us”) today announced its financial results for the three and six months ended June 30, 2025 (“Q2 2025”).

HIGHLIGHTS

• Comparative properties net operating income (“comparative properties NOI”)¹ was $6.4 million in Q2 2025, a 1.1% increase from Q2 2024. Net rental income was $8.2 million in Q2 2025 or $0.2 million higher than the prior year comparative quarter mainly due to an increase in investment properties revenue.

• Diluted funds from operations (“FFO”) per Unit² was $0.18 for Q2 2025, consistent with Q2 2024, comprising a slight increase in comparative properties NOI, offset by a decrease in interest and other income and an increase in interest expense on debt.

• Portfolio occupancy increased to 95.2% as at June 30, 2025, from 93.3% at the end of Q1 2025, with the Greater Oklahoma City region at 94.8%, Greater Dallas–Fort Worth region at 94.8% and Greater Cincinnati region at 96.3%. During the quarter, we completed renovations on six units in the Greater Cincinnati region.

• Average monthly rent at June 30, 2025 was $1,186 per unit compared to $1,182 per unit at March 31, 2025.

• Maintaining conservative balance sheet and financial flexibility. Net total debt-to-net total assets³ was 33.1% as at June 30, 2025, compared to 33.0% as at December 31, 2024. Total mortgages payable were $124.4 million, consisting of nine fixed rate mortgages with a weighted average contractual interest rate of 4.0%. Total amounts outstanding on the revolving credit facility were $16.0 million. Total assets (per condensed consolidated financial statements) were $410.2 million as at June 30, 2025. Total assets comprised primarily $399.1 million of investment properties and $6.7 million of cash and cash equivalents.

• Strategic Review. The REIT’s strategic review process (the “Strategic Review”) to identify, evaluate and pursue a range of strategic alternatives with the goal of maximizing unitholder value remains ongoing.

Dream Residential REIT has not established a definitive timeline to complete the Strategic Review process nor any transaction and no decisions have been reached at this time. As such, the process is subject to unknown variables, including the costs, structure, terms, timing and outcome. There can be no assurance that the Strategic Review will result in any transaction or initiative or, if a transaction or initiative is undertaken, the terms or timing of such a transaction or initiative and its impact on the financial condition, liquidity, and results of operations of the REIT. The REIT does not intend to disclose further developments in connection with the Strategic Review until it is determined that disclosure is necessary, appropriate or required.

“The REIT delivered solid operational and financial performance in Q2 2025,” said Brian Pauls, Chief Executive Officer of Dream Residential REIT. “Dream Residential REIT continued to make incremental gains by growing rents and net operating income. We are encouraged by the REIT’s performance through the first half of 2025 and will continue to operate the portfolio with a focus on prudent capital allocation, operational efficiency and maintaining a conservative balance sheet.”

• Q2 2025 net income for the three months ended June 30, 2025 was $0.8 million, which comprises net rental income of $8.2 million, fair value adjustments to investment properties of $(1.2) million and fair value adjustments to financial instruments of $(2.3) million, primarily from the revaluation of Class B units of DRR Holdings LLC, a subsidiary of the REIT (“Class B Units” – together with the units of the REIT (“Trust Units”, “Units”)). Other income and expenses totalled $(3.9) million.
• Total equity (per condensed consolidated financial statements) was $230.1 million as at June 30, 2025, compared to $240.5 million as at December 31, 2024, driven by the year-to-date net loss and distributions paid and payable.
• Net asset value (“NAV”)⁴ per Unit was $13.44 as at June 30, 2025, compared to $13.39 as at December 31, 2024.
• The REIT declared distributions totalling $0.105 per Unit during Q2 2025.

FINANCIAL HIGHLIGHTS

Net income for Q2 2025 was $0.8 million compared to $3.3 million in Q2 2024 and comprises fair value adjustments to investment properties of $(1.2) million and fair value adjustments to financial instruments of $(2.3) million. FFO for Q2 2025 and the prior year comparative quarter was consistent year-over-year at $3.5 million. Q2 2025 diluted FFO per Unit was $0.18, consistent with the prior year comparative quarter.

Net rental income for Q2 2025 was $8.2 million and compares to $8.0 million in the comparative quarter. The increase in net rental income from the comparative quarter was largely driven by an increase in investment properties revenue. Comparative properties NOI for Q2 2025 was $6.4 million and consistent with the comparative quarter. Comparative properties NOI margin for Q2 2024 was 51.9%, compared to 52.6% in the comparative quarter. Q2 2025 comparative properties NOI includes comparative investment properties revenue of $12.4 million, which increased by $0.3 million from the comparative quarter. The increase was driven by positive blended lease trade-outs and rental premiums from our value-add program. Investment properties operating expenses were $6.0 million for Q2 2025, and $5.7 million for the comparative quarter when excluding the impact of IFRIC 21, “Levies” (“IFRIC 21”), as a result of increased property taxes and utilities, generally offset by lower property insurance expenses.

ORGANIC GROWTH

Weighted average monthly rent as at June 30, 2025 was $1,186 per unit, compared to $1,182 per unit at March 31, 2025. Rental rates increased 1.3% in the Greater Cincinnati region, remained consistent in the Greater Oklahoma City region and decreased 0.4% in the Greater Dallas–Fort Worth region since March 31, 2025.

During Q2 2025, blended lease trade-outs averaged 1.5% compared to 0.4% in Q1 2025. This comprises an average increase on renewals of approximately 3.7% (March 31, 2025 – increase of 4.0%) and an average decrease on new leases of approximately 1.3% (March 31, 2025 – decrease of 4.3%). As at June 30, 2025, estimated market rents were $1,235 per unit, or an average gain-to-lease for the portfolio of 4.1%. The retention rate for the quarter ended June 30, 2025 was 57.4% compared to 57.5% for the three months ended March 31, 2025.

Value-add initiatives

During Q2 2025, renovations were completed on six suites in the Greater Cincinnati region, with an additional five suites under renovation as at June 30, 2025. For the three months ended June 30, 2025, the average new lease trade-out on renovated suites was $90 per unit higher than expiring leases, or a lease trade-out of 7.3%.

“Occupancy has improved by 190 basis points since Q1 2025, driven by our emphasis on tenant retention and ongoing leasing efforts,” said Scott Schoeman, Chief Operating Officer of Dream Residential REIT. “We are pleased with the REIT’s leasing momentum with blended lease trade-out accelerating from Q1 2025.”

FINANCING AND CAPITAL INFORMATION

As at June 30, 2025, net total debt-to-net total assets⁽⁴⁾ was 33.1%, total debt was $140.4 million and total assets were $410.2 million. The REIT ended Q2 2025 with total available liquidity⁽⁶⁾ of approximately $60.7 million, comprising $6.7 million of cash and cash equivalents and $54.0 million available on its undrawn revolving credit facility.

Total equity of $230.1 million decreased from December 31, 2024 by $10.4 million, primarily due to the year-to-date net loss and distributions paid and payable. As at June 30, 2025, there were approximately 16.0 million Trust Units and 3.7 million Class B Units.

NAV per Unit as at June 30, 2025 was $13.44 compared to $13.39 as at December 31, 2024.

OTHER INFORMATION

Information appearing in this press release is a select summary of financial results. The condensed consolidated financial statements and management’s discussion and analysis for the REIT will be available at www.dreamresidentialreit.ca and under the REIT’s profile on www.sedarplus.com.

Dream Residential REIT is an unincorporated, open-ended real estate investment trust established and governed by the laws of the Province of Ontario. The REIT owns a portfolio of garden-style multi-residential properties, primarily located in three markets across the Sunbelt and Midwest regions of the United States. For more information, please visit www.dreamresidentialreit.ca.

Non-GAAP financial measures, ratios and supplementary financial measures

The REIT’s condensed consolidated financial statements are prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”). In this press release, as a complement to results provided in accordance with IFRS, the REIT discloses and discusses certain non-GAAP financial measures and ratios, including FFO, diluted FFO per Unit, comparative properties NOI, comparative investment properties revenue, NOI, comparative properties NOI margin, net total debt-to-net total assets ratio, net total debt, net total assets, adjusted earnings before interest, taxes, depreciation, amortization and fair value adjustments (“Adjusted EBITDAFV”), trailing 12-month adjusted EBITDAFV, trailing 12-month interest expense on debt, interest coverage ratio (times), available liquidity, total equity (including Class B Units) and NAV per Unit as well as other measures discussed elsewhere in this press release. These non-GAAP financial measures and ratios are not defined by or recognized under IFRS Accounting Standards and do not have a standardized meaning under IFRS Accounting Standards. The REIT’s method of calculating these non-GAAP financial measures and ratios may differ from other issuers and may not be comparable with similar measures presented by other issuers. The REIT has presented such non-GAAP financial measures and ratios as management believes they are relevant measures of the REIT’s underlying operating and financial performance. Certain additional disclosures such as the composition, usefulness and changes, as applicable, of the non-GAAP financial measures and ratios included in this press release are expressly incorporated by reference from Management’s Discussion and Analysis of the financial condition and results of operations of the REIT as at and for the three and six months ended June 30, 2025, dated August 6, 2025 (the “Q2 2025 MD&A”) and can be found under the section “Non-GAAP Financial Measures and Ratios” and respective sub-headings labelled “FFO and diluted FFO per Unit”, “NAV per Unit”, “Comparative properties NOI and comparative properties NOI margin”, “Adjusted earnings before interest, taxes, depreciation, amortization and fair value adjustments (Adjusted EBITDAFV)”, “Trailing 12-month adjusted EBITDAFV”, “Trailing 12-month interest expense on debt”, “Available liquidity”, “Total equity (including Class B Units)”, “Interest coverage ratio (times)” and “Net total debt-to-net total assets”. In this press release, the REIT also discloses and discusses certain supplementary financial measures, including tenant retention ratio and weighted average number of Units. The composition of supplementary financial measures included in this press release is expressly incorporated by reference from the Q2 2025 MD&A and can be found in the section “Supplementary Financial Measures and Other Disclosures”. The Q2 2025 MD&A is available on SEDAR+ at www.sedarplus.com under the REIT’s profile and on the REIT’s website at www.dreamresidentialreit.ca under the Investors section. Non-GAAP financial measures and ratios should not be considered as alternatives to net income, net rental income, investment properties revenue, cash flows generated from (utilized in) operating activities, cash and cash equivalents, total assets, non-current debt, total equity, or comparable metrics determined in accordance with IFRS Accounting Standards as indicators of the REIT’s performance, liquidity, cash flow and profitability.

Forward-looking information

This press release may contain forward-looking information within the meaning of applicable securities legislation. Such information includes statements regarding future market conditions; our expectations regarding our Strategic Review process and the results thereof, including our ability to pursue strategic alternatives; that the Strategic Review will result in any transaction or initiative and our expectations regarding timing, structure, costs, terms and outcome thereof, including on the financial condition, liquidity and results of operations of the REIT; that we will continue to make incremental gains by growing rents and net operating income; our ability to operate the portfolio with a focus on prudent capital allocation, operational efficiency and maintain a conservative balance sheet; our ability to complete suites under renovation including in the Greater Cincinnati region; and our expectations regarding leasing momentum and expected results thereof. Forward-looking information generally can be identified by the use of forward-looking terminology such as “will”, “expect”, “believe”, “plan” or “continue”, or similar expressions suggesting future outcomes or events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond Dream Residential REIT’s control and could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, risks inherent in the real estate industry; financing risks; inflation, interest and currency rate fluctuations; global and local economic and business conditions; risks associated with unexpected or ongoing geopolitical events; changes in law; tax risks; competition; environmental and climate change risks; insurance risks; cyber security; risks related to the imposition of duties, tariffs and other trade restrictions and their impacts; and uncertainties surrounding public health crises and epidemics. Our objectives and forward-looking statements are based on certain assumptions, including that the general economy remains stable; that there are no unforeseen changes in the legislative and operating framework for our business; that we will have access to adequate capital to fund our future projects and plans and that we will receive financing on acceptable terms; that inflation and interest rates will not materially increase beyond current market expectations; that future market and economic conditions will occur as expected; and that geopolitical events, including disputes between nations or the imposition of duties, tariffs, quotas, embargoes or other trade restrictions (including any retaliation to such measures), will not disrupt global economies. All forward-looking information in this press release speaks as of the date of this press release. Dream Residential REIT does not undertake to update any such forward-looking information whether as a result of new information, future events or otherwise, except as required by law. Additional information about these assumptions, risks and uncertainties is contained in Dream Residential REIT’s filings with securities regulators, including its latest Annual Information Form and Management’s Discussion and Analysis. These filings are also available on the REIT’s website at www.dreamresidentialreit.ca.

Appendices

Reconciliation of FFO to net income

The table below reconciles FFO to net income for the three and six months ended June 30, 2025 and June 30, 2024:

Reconciliation of NOI and comparative properties NOI to net rental income

The table below reconciles NOI and comparative properties NOI to net rental income for the three and six months ended June 30, 2025 and June 30, 2024:

Reconciliation of adjusted EBITDAFV to net income

The table below reconciles adjusted earnings before interest, taxes, depreciation, amortization and fair value adjustments to net income for the three and six months ended June 30, 2025 and June 30, 2024:

Reconciliation of available liquidity to revolving credit facility

The table below reconciles available liquidity to cash and cash equivalents as at June 30, 2025 and December 31, 2024:

Trailing 12-month adjusted EBITDAFV and trailing 12-month interest expense on debt

Interest coverage ratio (times)

Reconciliation of total equity (including Class B Units) and NAV per Unit to total equity

The table below reconciles total equity (including Class B Units) and NAV per Unit to total equity as at June 30, 2025 and December 31, 2024:

Reconciliation of net total debt to non-current debt and net total assets to total assets, and calculation of net total debt-to-net total assets

The following table reconciles net total debt to non-current debt and net total assets to total assets, and calculates net total debt-to-net total assets as at June 30, 2025 and December 31, 2024: