DreamMDA Q3 2015 … · Q3 2015 Dream Unlimited Corporation. Table of Contents ... of the business...

Q3 2015Dream Unlimited Corporation

Table of Contents

Letter to Shareholders iManagement’s Discussion and Analysis 1Condensed Consolidated Financial Statements 39Notes to the Condensed Consolidated Financial Statements 44Corporate Information IBC

LETTER TO SHAREHOLDERS

Our third quarter and year to date financial results are quite strong, despite headwinds as a result of low oil prices, poor cropquality in Saskatchewan, general political and economic uncertainty and continued lower growth expectations for Canada.Nevertheless, we are optimistic about our business, our assets, the outstanding people that work for Dream and our future growthprospects in both the near and long term. We have great, diversified assets that are holding their value and producing incomeand 2015 is expected to be a record year of earnings for our Company. In addition, we are making progress in achieving developmentapprovals for our lands in Western Canada and our urban development projects in Toronto and Ottawa are progressing well, andwe are pleased with the continued success and value creation by our new retail division, Dream Centres. We remain focused onwhat we do best - making prudent business decisions, managing risk, and perhaps most importantly, excelling operationally toextract the highest and best value from our assets.

There have been several notable achievements within our business to date which will add significant financial value to our company,both in the near and long term, some of which are noted below.

We have contracts in place for over 90% of the revenue associated with the $800 million Pan Am Athletes’ Village/Canary Districtdevelopment in downtown Toronto, which also includes 810 market condominium units. When the development is completeand ownership is transferred to its future owners and tenants, Dream will own lands for another 1,000 market condominium unitsand 20,000 square feet of retail, in addition to the 30,000 square feet already developed. For the second stage of development,we will have the advantage of being able to market the project with the very exciting Canary District being open and accessibleto the public.

We recently received unanimous approval from the Calgary Planning Commission for 650 acres in the Providence Area StructurePlan and 320 acres in the Glacier Ridge (Panorama) Area Structure Plan. These plans are scheduled for Calgary City Councilapproval in December 2015, which, when achieved, will represent a significant planning milestone for our company.

We also remain in active negotiations with Alberta Infrastructure for the transfer of 172 acres of land required to construct theSouthwest Calgary Ring Road. The expected date of the transfer will be in early 2016.

We believe these initiatives will add significant value to our business, both in the near and long term.

So much of our business relates to working with government and cities. We need to bring the best ideas and values for citybuilding to get the support we need to create our communities. The way our business is structured, we have ample liquidity, weproduce good cash flow on an annual basis, we have untapped opportunities to grow our profits from activities within our ownassets and we have the resources to improve our capabilities to realize these returns. While many of the current external factorsare negative, I think we have already adjusted our business to them. We are seeing more value in the assets we own and havebeen increasing our capacity to realize it. We have spent 20 years accumulating valuable assets while maintaining a solid capitalposition.

On a final note, it has become clear to me that my priority at Dream is to take responsibility for our business - both inside andout. With that in mind, I have decided to change my title to Chief Responsible Officer in order to better reflect my role and remindme and everyone, both inside and outside our company, what it is I do. Attracting the best people to our business is key to oursuccess. Having a very clear vision of who we are, how we lead and how we make communities better will lead to a bettercompany, more opportunities and the highest financial returns. As always, I thank you for your continued interest in our company.

Sincerely,

Michael Cooper President and Chief Responsible Officer

Dream Unlimited Corp. – September 30, 2015 | i

Management’s Discussion and Analysis

The Management’s Discussion and Analysis (“MD&A”) is intended to assist readers in understanding Dream Unlimited Corp. (the “Company” or “Dream”), itsbusiness environment, strategies, performance and risk factors. This MD&A should be read in conjunction with the consolidated financial statements of Dream,including the notes thereto, as at and for the year ended December 31, 2014 and the three and nine months ended September 30, 2015. The financialstatements underlying this MD&A, including 2014 comparative information, have been prepared in accordance with International Financial Reporting Standards(“IFRS”). Certain disclosures included herein are Non-IFRS measures. For further details, see page 38 of this MD&A.

All dollar amounts in tables within this MD&A are in thousands of dollars, unless otherwise specified.

Unless otherwise specified, all references to “we”, “us”, “our” or similar terms refer to Dream and its subsidiaries.

This MD&A is dated as of November 5, 2015.

Business Overview

Dream is one of Canada’s leading real estate companies with approximately $15 billion of assets under management in North America and Europe. The scopeof the business includes residential land development, housing and condominium development, asset management for three TSX-listed real estate investmenttrusts and one TSX-listed diversified hard asset alternatives trust, investments in and management of Canadian renewable energy infrastructure and commercialproperty ownership. Dream has an established track record for being innovative and for its ability to source, structure and execute on compelling investmentopportunities.

From the outset, we have successfully identified and executed on opportunities for the benefit of the business and shareholders, including the creation ofDundee Realty Corporation (“Dundee Realty”) in 1996 as a public company, its subsequent privatization in 2003, the creation of Dream Office REIT (formerlyDundee REIT) in 2003, the sale by Dream Office REIT of substantial assets in 2007, the establishment of our asset management business, and the creation ofDream Global REIT (formerly Dundee International REIT), Dream Industrial REIT (formerly Dundee Industrial REIT) and Dream Hard Asset Alternatives Trust(“Dream Alternatives”) in 2011, 2012 and 2014, respectively.

On May 30, 2013, we became a publicly traded company following a reorganization whereby Dundee Corporation transferred its 70.05% interest in DundeeRealty to Dream. In January 2014, Dundee Realty changed its name to Dream Asset Management Corporation (“DAM”).

The chart below illustrates the structure and diversity of our business:

*See further details on the reorganization of the Dream Office REIT asset management agreement under "Asset Management and Management Services".

Dream Unlimited Corp. – September 30, 2015 | 1

Business Update - Third Quarter 2015

Occupancy of Toronto Condominium ProjectsDuring the third quarter of 2015, occupancies commenced at The Carlaw and The Carnaby, which together comprise 750 units (325 units at Dream's shareincluding equity accounted investments). As at September 30, 2015, The Carnaby and The Carlaw, were 98% and 99% sold, respectively. During the threemonths ended September 30, 2015, 476 units were occupied (196 units at Dream's share including equity accounted investments), which resulted in revenuesof $62.7 million and net margin of $11.5 million. These projects are expected to continue to occupy to the second quarter of 2016. For additional details pleaserefer to page 20 of this MD&A.

Retail and Multi-Family Residential Development in Western CanadaIn the nine months ended September 30, 2015, Dream achieved approximately 52,000 square feet of retail occupancies within its Tamarack North East andSouth East development sites within the community of the Meadows in Edmonton, Alberta, where Dream has been actively developing over 1,400 acres ofresidential land since 1997. Including Tamarack North, which achieved its first tenant occupancy subsequent to September 30, 2015, these three propertiesare expected to comprise 184,300 square feet of gross leasable area (“GLA”) upon completion. As at October 31, 2015, Dream has committed leases forapproximately 67% of the aggregate GLA with a weighted average lease term of approximately 12 years. It is management's view that the properties are ontrack to be fully leased by their expected completion dates in 2017 and 2018.

The Company recognized non-cash fair value gains in the three and nine months ended September 30, 2015 amounting to $0.4 million and $10.1 million,respectively as a result of the occupancies within Tamarack South East and Tamarack North East in the statement of earnings. See the Retail Developmentsection on page 17 of our MD&A for further details.

Lot Sales in Western CanadaDuring the nine months ended September 30, 2015, the Company achieved 456 lot sales in Western Canada. The lot sales were mainly attributed to sales inour Harbour Landing and the Meadows communities in Regina and Edmonton, respectively. In Harbour Landing, there were 152 lots sold during the ninemonths ended September 30, 2015, which contributed $18.5 million to revenue. Harbour Landing consists of over 780 acres, which are expected to bedeveloped through 2016. The Meadows had 217 lot sales during 2015, which contributed $35.2 million to revenue. At September 30, 2015, Dream has 195acres left to develop in the Meadows.

Advancements and Updates in Western CanadaSubsequent to the third quarter of 2015, Dream completed its formal public engagement sessions with respect to its ownership of 650 acres in the ProvidenceArea Structure Plan and 320 acres in the Glacier Ridge (Panorama) Area Structure Plan in Calgary, Alberta. Both of these significant Area Structure Plansreceived unanimous approval at Calgary Planning Commission and are scheduled for Calgary City Council approval in December 2015, which when achieved,will represent a significant planning milestone for the Company.

Dream recently established homebuilding capacity in Alberta, having hired a regional lead, and supported by additional senior hires in the areas of architecture,procurement and marketing. The division will focus on commencing the Company’s Alberta housing operations, by optimizing and leveraging the existingplatform and resources in Saskatchewan. Dream is currently in the planning process for approximately 70 initial internal housing starts in Calgary and is targetingto achieve its first housing occupancies in 2016.

Interest Rate Swap for Non-Revolving Term FacilityDuring the nine months ended September 30, 2015, the Company established a new three year non-revolving term facility amounting to $175 million with asyndicate of Canadian financial institutions (“non-revolving term facility”). The non-revolving term facility is secured by a general security agreement and afirst charge on various real estate and other financial assets of the Company. The loan bears interest at the Company’s option, at a rate per annum equal toeither the bank’s prime lending rate plus 1.50% or at the bank’s then prevailing bankers’ acceptance rate plus 2.75%, payable monthly. The principal balanceis due on its maturity date of June 30, 2018. On July 17, 2015, the Company entered into an interest rate swap to effectively exchange the variable interestrate for a fixed rate of 3.65% per annum through the use of forward purchase contracts, which commenced on August 6, 2015. The interest rate swap wascontracted for approximately 3 years and effectively hedges 100% of the principal outstanding under the non-revolving term facility until its maturity. Seepage 32 of this MD&A for further details on the non-revolving term facility.


Strategy and Business Focus

We intend to continue growing our business by seeking out new opportunities where we can use our experience and expertise, relationships and capital toachieve attractive risk-adjusted returns. Historically, we have sought new areas of investment that look attractive. Traditionally, we invest small amounts ofcapital and, as we develop expertise in an industry we find attractive, we invest more capital. We will actively seek other opportunities to grow our businessby employing our expertise and capital to create high returns and, where appropriate, increasing our returns by co-investing with others. We expect that ourgrowth will be driven by several factors, some of which are discussed below.

More Land in Production in High-Growth MarketsA large part of our land development and housing asset base is located in Saskatoon, Regina, Calgary and Edmonton, which are four of Canada’s fastest growingcities. We own and have under contract approximately 10,000 acres of land in Western Canada, of which over 9,100 acres are in 10 large master-plannedcommunities at various stages of approval. We estimate that, when approved, these master-planned communities will supply lots for the next 25 to 35 years.We are working to increase the number of lots that we develop in each of these markets. Annually, we estimate that we consume approximately 3–4% of ouracres that we have available for development, to generate gross margin from land development activities. We plan to continue to leverage our expertise todevelop phased, master-planned communities.

Continue Acquiring and Developing Land in Key Markets We are continuously looking to increase and/or develop more of our land inventory and intend to reinvest a significant portion of our profits from residentialdevelopment into our core business.

Build More on Our Owned Lands and Further Diversify Revenue Streams We will increase our profitability by increasing the amount of development on our owned lands. Historically, we have sold all multi-family sites, retail sitesand commercial sites to third parties and have only constructed single family homes in Saskatoon and Regina. Over time, the development approval processhas become increasingly difficult, making approved land scarcer, and also more valuable. We have expanded our operations to include development on ourowned lands by i) increasing homebuilding activities in Saskatoon and Regina and have newly established homebuilding capabilities in Calgary; ii) employingour experienced multi-family development group in Toronto to work with our Saskatoon and Regina housing teams to develop multi-family housing inSaskatchewan; and iii) developing income producing retail properties within our master-planned communities.

In 2015, Dream and Canadian Pacific ("CP") entered into an agreement to form a joint venture, which will allow Dream to identify and develop CP real estateassets.

Asset Management, Management Services and Equity Interests in Related PartiesAs the asset manager of four publicly listed funds and numerous development projects, we are on the front line and well-positioned to observe, in real time,the impact of economic trends on the drivers of demand for real property, such as demand for space, urbanization trends and employment levels in each ofthe markets in which we operate our development business. This access to real-time economic data may provide us with a competitive advantage over otherdevelopers. Our asset management and management services business also includes hard asset, alternative investments, such as renewable power; real estateloans and mortgages; and mixed use, residential and retail development projects. It also includes the management of partner interests and asset managementover our 100% owned assets. Investors in Dream and the listed funds whose assets we manage benefit from our team of experienced professionals overseeingthe different portfolios. Altogether, in 2015 year to date, Dream has overseen $185.4 million in acquisitions, $165.8 million of dispositions, and leasing of 6.3million square feet of commercial space.

The Company expects to continue to grow its asset management business by providing value to the listed funds’ investors and growing the listed funds toincrease the value per unit for their respective investors. Dream earns ongoing fees for asset management services provided and in addition benefits fromthe appreciation in the net asset value of the listed funds through its asset management services agreements, as well as its equity interests. Refer to page 22for details regarding the Dream Office REIT management reorganization.

Dream will continue to be proactive in seeking out other opportunities to independently manage third parties and/or create new, unique investment vehiclesthat provide investors with retirement income and the potential for capital appreciation. The growth of assets under management is expected to increaseprofitability.

Development LifeIt will take time to see the results from our strategy outlined above, as it takes longer to achieve results from building on owned land than from selling it to athird party. It will also take us time to ramp up as we can only develop our land when it is approved for development. Building on owned land delays therecognition of revenue as the land sale is not recognized until the home being built on the lot is occupied by the buyer. In comparison, when selling land to athird party, the revenue is recognized on receipt of a 15% deposit from the land buyer and there is substantial completion of the underground servicing work.Nevertheless, we expect that we will generate significant returns from building on our owned land in the future.

These are only some of the levers through which we expect to generate higher profitability within our Company going forward. Our management team isstrong and experienced. Dream has a proven track record of creating value. We believe that as a public company we benefit from increased profile awareness,which will lead to even more opportunities for profitability and growth in the periods ahead.


Description of Our Operating Segments

Land DevelopmentDream actively develops land in Saskatoon, Regina, Calgary and Edmonton. Land development involves the conversion of raw land to the stage where homesand commercial buildings may be constructed on the land. This process begins with the purchase or control of raw land, generally known as land held fordevelopment, and is followed by the entitlement and development of the land. Once the process of converting raw or undeveloped land for end use hasbegun, that portion of the land that we conduct activity on is generally known as land under development.

Each year we try to maintain flexibility to increase or decrease the number of lots we produce to meet demand. Lots and acres are brought to market throughoutthe year, a process through which we offer fully serviced lots and acres to third-party developers who then construct, market and sell residential (single ormulti-family) and commercial properties. We also retain a portion of lots and acres to build houses, multi-family and retail commercial space, which aremarketed for sale to end customers by our team. Housing DevelopmentWe currently have housing operations in Saskatoon and Regina and have recently established home building capacity in Calgary. Residential homebuildinginvolves the construction of single family houses and multi-family buildings, such as townhouses. Each dwelling is generally referred to as a “unit”. A plannedcommunity typically includes a number of “lots” on which single family units will be situated, as identified in the neighbourhood plan. Construction time fora residential home depends on a number of factors, including the availability of labour, materials and supplies, weather, and the type and size of home.

Condominium DevelopmentOur core high-rise condominium development business consists of operations in Toronto, where we have approximately 2,344 condominium units (996 unitsat Dream’s share) in various stages of pre-construction or active development. High-rise condominium development typically does not commence until asubstantial number of units have been pre-sold. A few months after substantial completion and customer occupancy of the building, the developer obtainsall necessary approvals and the building is registered, purchasers pay the balance of the purchase price and title is transferred.

Retail DevelopmentWe recently achieved first tenant occupancies with two retail developments on our owned land. In many cases, the construction is not overly complex andthe demand for retail is created by our development of the master-planned community. Dream Centres, our internal retail development division, hasapproximately 18 acres of active retail projects under construction, which will result in over 180,000 square feet of GLA upon completion. We are activelydeveloping an additional 137 acres in Western Canada that are in various stages of approvals. Our development and leasing team is also evaluating the potentialof retail development on an additional 250 acres of land currently owned by Dream. See the Retail Development section on page 17 of this MD&A for furtherdetails.

Asset Management, Management Services and Equity Interests in Related PartiesOur asset management and management services team consists of real estate and energy/infrastructure professionals with backgrounds in propertymanagement, architecture, urban planning, engineering, construction, finance, accounting and law. The team brings experience from virtually all of the majororganizations in Canada, as well as being internally trained, and has expertise in capital markets, structured finance, real estate investments, renewable powerand management across a broad spectrum of property types in diverse geographic markets. We carry out our own research and analysis, financial modeling,due diligence and financial planning, and have completed approximately $20 billion of commercial real estate and renewable power transactions over thepast 20 years.

We provide asset management and management services to four listed funds, our renewable power business and various partner/third-party real estate anddevelopment assets. The majority of our fee and investment income is derived from providing asset management and management services and/or havingequity interests in the following listed funds: Dream Office REIT (TSX: D.UN), Dream Global REIT (TSX: DRG.UN), Dream Industrial REIT (TSX: DIR.UN) and DreamAlternatives (TSX: DRA.UN).

Investment and Recreational PropertiesOur investment properties include interests in commercial and retail properties consisting of approximately 550,200 square feet of GLA, excluding parking,which includes The Distillery District in downtown Toronto and jointly controlled entities. Our recreational properties include a ski area in Colorado and interestsin Toronto’s King Edward Hotel and Broadview Hotel.

Renewable PowerWe are the co-manager of a closed-ended renewable energy infrastructure fund, Firelight Infrastructure Fund LP ("Firelight"), with a major Canadian pensionfund. We own 20% of the renewable power fund, which is included in our equity investments. The fund invests in and manages renewable power projectswith a focus on wind and solar projects. Dream intends to pursue growth in the renewable power industry through Dream Alternatives in the future.

OtherOur other assets include investments in Dream Office REIT, Dream Hard Asset Alternatives Trust and Dream Global REIT units. We participate in numerousmezzanine loans and equity investments on an opportunistic basis and invest in and manage Dream CMCC Capital Funds I and II.


Key Financial Information and Performance Indicators

Selected Financial Information – Balance SheetA substantial part of the Company’s future cash flows will be derived from the Company’s land inventory. As a result, management regularly reviews theCompany’s land holdings, to determine each acre's best use in order to maximize the value of our inventory.

September 30, 2015 December 31, 2014Land held for development $ 442,896 $ 383,751Land under development 145,314 143,209Housing inventory 49,359 71,588Condominium inventory 83,870 75,515Investment properties 134,459 94,072Recreational properties 33,055 26,970Other financial assets 177,043 70,645

$ 1,065,996 $ 865,750

Dream also carries investments in the development of the Canary District and the King Edward Hotel, all in Toronto, Zibi – a master planned community inOttawa/Gatineau and, in a renewable energy infrastructure fund, Firelight. These investments are excluded from the amounts above. For further details, seeEquity Accounted Investments on page 27 of this MD&A.

Selected Financial Information – Income Statement

Three months ended September 30, Nine months ended September 30,(in thousands of dollars, except per share amounts) 2015 2014 2015 2014Revenue $ 130,350 $ 77,704 $ 244,039 $ 261,246Gross margin(1) $ 34,327 $ 21,690 $ 78,287 $ 85,748Gross margin (%) 26.3% 27.9% 32.1% 32.8%Net margin(2) $ 25,935 $ 14,411 $ 55,632 $ 65,606Net margin (%) 19.9% 18.5% 22.8% 25.1%Earnings before income taxes $ 23,193 $ 9,272 $ 175,504 $ 55,587Earnings for the period $ 26,085 $ 7,825 $ 153,704 $ 39,072Basic earnings per share(3) $ 0.23 $ 0.07 $ 1.36 $ 0.35Diluted earnings per share(3) $ 0.22 $ 0.07 $ 1.29 $ 0.35

Total earnings for the period attributable to: Shareholders $ 18,254 $ 5,480 $ 107,822 $ 27,064 Non-controlling interest $ 7,831 $ 2,345 $ 45,882 $ 12,008

(1) Gross margin (see Additional Items) represents revenue less direct operating costs and asset management and management services expenses, excluding selling, marketing and other operatingcosts.

(2) Net margin (see Additional Items) represents gross margin, as defined above, net of selling, marketing and other operating costs.(3) See Note 35 of the Company's condensed consolidated financial statements for the three and nine months ended September 30, 2015 for further details on the calculation of basic and diluted

earnings per share.

The Company evaluates its land, housing, and condominium development results using gross and net margin, as defined in the notes to the table above. Theasset management and management services segment and recreational properties segment are evaluated using net margin. Investment properties areevaluated using both net operating income and net margin for the segment. Stated as a percentage to evaluate operational efficiency, these margins are usedas fundamental business considerations for updating budgets, forecasts and strategic planning.


Quarterly Business Trends

A summary of the revenue, earnings and basic earnings per share for the previous eight quarters is presented below.

(in thousands of dollars, except per share amounts)

Sep 30, 2015

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Mar 31, 2014

Dec 31, 2013

Revenue $ 130,350 $ 65,538 $ 48,151 $ 127,169 $ 77,704 $ 99,618 $ 83,924 $ 148,504Earnings for the period 26,085 124,548 3,071 38,384 7,825 17,620 13,627 31,551Basic earnings per share 0.23 1.10 0.03 0.34 0.07 0.16 0.12 0.30

Timing of Income Recognition and Impact of SeasonalityThe Company’s housing and condominium operations recognize revenue at the time of delivery (generally occupancy), and as a result, revenues and directcosts vary depending on the number of units occupied in a particular reporting period. The Company's land operations recognize revenue when a 15% deposithas been received from the buyer and certain other development milestones are substantially met when selling to a third party, and revenue is deferred untiloccupancy when the land is sold as part of the home constructed by our housing division. In addition, marketing expenses for condominium and housing areincurred prior to the occupancy of these units and accordingly are not tied to the number of units occupied in a particular period. These costs are expensedin income as they are incurred and accordingly reduce reported net margin.

Based on our geographic location, most of our development activity in Western Canada takes place between April and October due to weather constraints,while sales orders vary depending on the rate at which builders work through inventory, which is affected by weather and market conditions. Traditionallyour highest sales volume quarter for our land and housing divisions has been the fourth quarter, while our lowest has been the first quarter.

As a result of the above, the Company’s results can vary significantly from quarter to quarter. The Company has segregated the net margin from condominium,housing and land operations from the Company's remaining activities. The Company has identified the net margin from asset management and managementservices, investment and recreational properties and other as recurring. A summary has been presented below.

Growth in Asset Management Services and Investment IncomeFee revenues generated within our asset management operations are generally contractual in nature and, excluding the impact of the reorganization of DreamOffice REIT, our base level fees have increased over the past eight quarters primarily due to growth in our fee earning assets under management. It is importantto note that fees earned on acquisition activity in a period are not recurring in nature and will impact related margins. The reorganization on April 2, 2015effectively eliminated the revenue and net margin earned on asset management services provided to Dream Office REIT in exchange for 4,850,000 units. TheCompany expects that the reduction in net margin will be largely offset by the distributions earned on its additional investment in Dream Office REIT units.

Contribution of Net Margin by Business Segment

(in thousands of dollars, except per share amounts)

Sep 30, 2015

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Mar 31, 2014

Dec 31, 2013

Land development(1) $ 13,127 $ 11,732 $ (479) $ 32,229 $ 3,854 $ 9,844 $ 6,357 $ 43,823Housing development(1) 1,596 1,835 (94) 1,779 2,459 2,277 1,231 2,834Condominium development 10,538 (811) (7) (1,533) 1,485 9,492 8,802 (506)

25,261 12,756 (580) 32,475 7,798 21,613 16,390 46,151

Investment and recreational properties(2) (1,976) 2,833 3,399 903 (1,390) 1,933 3,093 1,191Asset management and management services(3),(4) 4,543 4,098 9,721 8,807 9,436 5,131 5,010 4,173

2,567 6,931 13,120 9,710 8,046 7,064 8,103 5,364Total $ 27,828 $ 19,687 $ 12,540 $ 42,185 $ 15,844 $ 28,677 $ 24,493 $ 51,515Income amounts included below net marginFirelight Infrastructure Partners LP(5) $ 1,755 $ 3,179 $ (5,851) $ (703) $ 1,304 $ 2,205 $ 291 $ (776)Investment income earned from listed funds $ 1,320 $ 1,443 $ 755 $ 553 $ 649 $ 598 $ 658 $ 693

(1) Results include land net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the periods presented. Net marginresults recognized in both the land and housing divisions have been eliminated on consolidation.

(2) The decline in net margin during the September quarter end periods are due to the closure of the Arapahoe resort, which generally closes ski operations from July – September.(3) The Company disaggregated total operating costs into direct operating costs; asset management and management services expenses; selling, marketing and other operating costs; or general and

administrative expenses, resulting in lower asset management and management services expenses subsequent to the first quarter of 2014.(4) The decline in net margin during the three months ended June 30, 2015 is due to the reorganization of the asset management contract with Dream Office REIT. (5) The decline in net margin during the March and December quarter period ends is due to the seasonality of the renewable energy projects. The net margin for the three months ended March 31,

2015 includes a $6.0 million impairment for Xeneca. For additional details please refer to page 29 of the MD&A.


Selected Operating Metrics

For the three months ended September 30, For the nine months ended September 30,

(in thousands of dollars, except average selling price and units) 2015 2014 2015 2014

LAND DEVELOPMENT

Lot revenue $ 34,974 $ 18,459 $ 54,765 $ 38,178Acre revenue(1) $ 5,993 $ 7,225 $ 19,066 $ 31,515Total revenue(1),(2) $ 40,967 $ 25,684 $ 73,831 $ 69,693Gross margin(1),(2) $ 15,558 $ 6,582 $ 31,849 $ 26,859Gross margin (%) 38.0% 25.6 % 43.1% 38.5%Net margin(1),(2) $ 13,127 $ 3,854 $ 24,380 $ 20,055Net margin (%) 32.0% 15.0% 33.0% 28.8%Lots sold 285 163 456 336Average selling price – lot units $ 123,000 $ 111,000 $ 120,000 $ 113,000Undeveloped acres sold — — 45 —Developed acres sold 7 7 24 40Average selling price – undeveloped acres $ — $ — $ 19,000 $ —Average selling price – developed acres $ 850,000 $ 966,000 $ 759,000 $ 786,000

HOUSING DEVELOPMENT

Housing units occupied 62 67 168 160Revenue(1),(2) $ 25,269 $ 29,051 $ 67,515 $ 68,837Gross margin(1),(2) $ 4,795 $ 5,580 $ 12,176 $ 14,135Gross margin (%) 19.0% 19.2% 18.0% 20.5%Net margin(1),(2) $ 1,596 $ 2,459 $ 3,337 $ 5,966Net margin (%) 6.3% 8.5% 4.9% 8.7%Average selling price – housing units $ 408,000 $ 434,000 $ 402,000 $ 430,000Average selling price per square foot for occupied units $ 282 $ 280 $ 282 $ 281

CONDOMINIUM DEVELOPMENT

Attributable to Dream, excluding equity accounted investmentsCondominium occupancies – units 172 12 172 169Revenue(3) $ 54,727 $ 8,430 $ 56,745 $ 70,857Gross margin(4) $ 12,277 $ 1,981 $ 13,005 $ 21,854Gross margin (%) 22.4% 23.5% 22.9% 30.8%Net margin $ 10,538 $ 1,485 $ 9,720 $ 19,779Net margin (%) 19.3 % 17.6% 17.1% 27.9%

Average selling price of condominiums occupiedPer unit $ 304,000 $ 517,000 $ 304,000 $ 377,000Per square foot $ 470 $ 559 $ 470 $ 503

ASSET MANAGEMENT AND MANAGEMENT SERVICES

Total assets under management – listed funds $ 11,687,946 $ 11,844,327 $ 11,687,946 $ 11,844,327Fee-earning assets under management – listed funds 4,947,195 11,844,327 4,947,195 11,844,327Revenue $ 7,030 $ 11,600 $ 24,595 $ 28,903Net margin $ 4,543 $ 9,436 $ 18,362 $ 19,577Net margin (%) 64.6% 81.3% 74.7% 67.7%

INVESTMENT INCOME EARNED ON INVESTMENTS IN LISTED FUNDS(5)

Dream Office REIT $ 909 $ 227 $ 2,044 $ 681Other distributions from listed funds 411 422 1,474 1,224Interest and other income 902 626 2,381 2,717Total $ 2,222 $ 1,275 $ 5,899 $ 4,622

INVESTMENT AND RECREATIONAL PROPERTIES

Revenue $ 7,412 $ 7,111 $ 33,702 $ 33,177Net margin(6) $ (1,976) $ (1,390) $ 4,256 $ 3,636Net margin (%) (26.7%) (19.5%) 12.6% 11.0%

(1) Results for the nine months ended September 30, 2015 include revenue and gross margin of $0.8 million and $0.2 million, respectively relating to 45 acres of undeveloped land sold to the Ministryfor $0.8 million. See Results of Operations – Land for Regina on page 16 of this MD&A for further details.

(2) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenueand net margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to page 9 of this MD&A.

(3) Comparative condominium revenue results include a reclassification of guarantee fees income, previously included in investment and other income.(4) Gross margin for condominium operations include interest expense, which is capitalized during the development period and expensed through cost of sales as units are occupied. (5) Distributions earned from the REITs relate to the portion allocated as investment income and are not total cash distributions received. See Investment and Other Income on page 24 of this MD&A

for further details.(6) Net margin for investment and recreational properties includes depreciation expense.


Segmented Financial Position

The Company's segmented financial position is as follows:

As at September 30, 2015

Landdevelopment

Housingdevelopment

Condominiumdevelopment

Assetmanagementand advisory

services

Investmentand

recreationalproperties Total

Inventory $ 588,210 $ 49,359 $ 83,870 $ — $ — $ 721,439Properties — — — — 167,514 167,514Total real estate assets(1) $ 588,210 $ 49,359 $ 83,870 $ — $ 167,514 $ 888,953Intangible asset — — — 43,000 — 43,000Non-segmented assets(2) 514,489Total assets $ 1,446,442

Provision for real estate development costs $ 41,867 $ 1,929 $ 13,714 $ — $ — $ 57,510Customer deposits 2,754 1,125 23,178 — 465 27,522Construction loans — 37,487 64,888 — 20,139 122,514Mortgages and term debt — — 10,314 — 52,889 63,203Total segmented liabilities $ 44,621 $ 40,541 $ 112,094 $ — $ 73,493 $ 270,749Non-segmented liabilities(3) 455,983Total liabilities $ 726,732

As at December 31, 2014

Landdevelopment

Housingdevelopment



services

Investmentand


Inventory $ 526,960 $ 71,588 $ 75,515 $ — $ — $ 674,063Properties — — — — 121,042 121,042Total real estate assets(1) $ 526,960 $ 71,588 $ 75,515 $ — $ 121,042 $ 795,105Intangible asset — — — 43,000 — 43,000Non-segmented assets(2) 385,093Total assets $ 1,223,198

Provision for real estate development costs $ 50,053 $ 2,048 $ 2,935 $ — $ — $ 55,036Customer deposits 1,942 2,746 16,969 — 1,084 22,741Construction loans 6,171 41,408 41,065 — — 88,644Mortgages and term debt 33,752 — 7,469 — 30,873 72,094Total segmented liabilities $ 91,918 $ 46,202 $ 68,438 $ — $ 31,957 $ 238,515Non-segmented liabilities(4) 392,850

Total liabilities $ 631,365(1) Real estate assets exclude investments in jointly controlled entities.(2) Included in non-segmented assets are cash, accounts receivable, other financial assets, equity accounted investments and capital and other operating assets, which include balances not directly

attributable to a specific operating segment.(3) Included in non-segmented liabilities are certain amounts of accounts payable and other liabilities, income and other taxes payable, operating line, non-revolving term facility, Preference shares,

series 1 and deferred income taxes, which are not directly attributable to a specific operating segment. (4) Included in non-segmented liabilities are certain amounts of income and other taxes payable, operating line, due to a shareholder, Preference shares, series 1 and deferred income taxes, which are

not directly attributable to a specific operating segment.


Segmented Results of Operations

The Company's segmented results of operations are as follows:

For the three months ended September 30, 2015

Landdevelopment(1)

Housingdevelopment(1)



services

Investmentand

recreationalproperties Eliminations(1) Total

Revenues $ 40,967 $ 25,269 $ 54,727 $ 7,030 $ 7,412 $ (5,055) $ 130,350Direct operating costs (25,409) (20,474) (42,450) — (8,365) 3,162 (93,536)Asset management and advisory

services expenses — — — (2,487) — — (2,487)

Gross margin 15,558 4,795 12,277 4,543 (953) (1,893) 34,327Selling, marketing and other operating

costs (2,431) (3,199) (1,739) — (1,023) — (8,392)

Net margin $ 13,127 $ 1,596 $ 10,538 $ 4,543 $ (1,976) $ (1,893) $ 25,935Net margin (%) 32.0% 6.3% 19.3% 64.6% (26.7)% 37.4% 19.9%Fair value changes in investment

properties — — — — 119 — 119

Investment and other income 315 283 71 1,553 — — 2,222Gain on reorganization of asset

management agreement — — — — — — —

Earnings before the following: $ 13,442 $ 1,879 $ 10,609 $ 6,096 $ (1,857) $ (1,893) $ 28,276 General and administrative expenses (3,811) Share of earnings from equity accounted investments(2) 3,315 Gain on derivative financial instruments (54) Interest expense (4,533) Gain on settlement of debt — Income tax recovery 2,892Earnings for the period(3) $ 26,085


Landdevelopment(1)




services

Investmentand




Gross margin 6,582 5,580 1,981 9,539 (559) (1,433) 21,690Selling, marketing and other operating

costs (2,728) (3,121) (496) (103) (831) — (7,279)

Net margin $ 3,854 $ 2,459 $ 1,485 $ 9,436 $ (1,390) $ (1,433) $ 14,411Net margin (%) 15.0% 8.5% 17.6% 81.3% (19.5)% 34.3% 18.5%Fair value changes in investment

properties — — — — 368 — 368

Investment and other income 476 — 11 788 — — 1,275Earnings before the following: $ 4,330 $ 2,459 $ 1,496 $ 10,224 $ (1,022) $ (1,433) $ 16,054 General and administrative expenses (2,895) Share of losses from equity accounted investments(2) 832 Gain on derivative financial instruments (220) Interest expense (4,499) Income tax expense (1,447)Earnings for the period(3) $ 7,825

(1) Results include housing land sales to external customers, which are recognized in both the land and housing divisions and eliminated on consolidation.(2) Results from operations through jointly controlled entities are excluded from gross and net margin and are included in share of earnings from equity accounted investments.(3) Includes earnings attributable to non-controlling interest.


For the nine months ended September 30, 2015

Landdevelopment(1)




services

Investmentand




Gross margin 31,849 12,176 13,005 18,362 7,318 (4,423) 78,287Selling, marketing and other

operating costs (7,469) (8,839) (3,285) — (3,062) — (22,655)

Net margin $ 24,380 $ 3,337 $ 9,720 $ 18,362 $ 4,256 $ (4,423) $ 55,632Net margin (%) 33.0% 4.9% 17.1% 74.7% 12.6% 35.8% 22.8%Fair value changes in investment

properties — — — — 9,823 — 9,823

Investment and other income 1,247 367 335 3,950 — — 5,899Gain on reorganization of asset

management service agreement — — — 127,313 — — 127,313

Earnings before the following: $ 25,627 $ 3,704 $ 10,055 $ 149,625 $ 14,079 $ (4,423) $ 198,667 General and administrative expenses (12,619) Share of earnings from equity accounted investments(2),(3) 212 Gain on derivative financial instruments 1,570 Interest expense (14,574) Gain on settlement of debt 2,248 Income tax expense (21,800)Earnings for the period(4) $ 153,704


Landdevelopment(1)




services

Investmentand




Gross margin 26,859 14,135 21,854 20,429 5,878 (3,407) 85,748Selling, marketing and other

operating costs (6,804) (8,169) (2,075) (852) (2,242) — (20,142)

Net margin $ 20,055 $ 5,966 $ 19,779 $ 19,577 $ 3,636 $ (3,407) $ 65,606Net margin (%) 28.8% 8.7% 27.9% 67.7% 11.0% 33.3% 25.1%Fair value changes in investment

properties — — — — 7,326 — 7,326

Investment and other income 1,483 123 202 2,814 — — 4,622Earnings before the following: $ 21,538 $ 6,089 $ 19,981 $ 22,391 $ 10,962 $ (3,407) $ 77,554 General and administrative expenses (10,882) Share of losses from equity accounted investments(2),(3) 1,608 Gain on derivative financial instruments 140 Interest expense (12,833) Income tax expense (16,515)Earnings for the period(4) $ 39,072

(1) Results include housing land sales to external customers, which are recognized in both the land and housing divisions and eliminated on consolidation.(2) Results from operations through jointly controlled entities are excluded from gross and net margin and are included in share of earnings from equity accounted investments.(3) Results include an impairment charge of $7.0 million related to Firelight Infrastructure Partners LP, see Equity Accounted Investments on page 29 of the MD&A. (4) Includes earnings attributable to non-controlling interest.


Revenue by Geographic Region

The Company's revenue segmented by geographic region, net of eliminations, is as follows:

For the nine months ended September 30, 2015 For the nine months ended September 30, 2014Revenue % Revenue %

Saskatchewan Saskatoon $ 43,379 17.8% $ 42,845 16.4% Regina 54,241 22.2% 62,895 24.1%

97,620 40.0% 105,740 40.5%Alberta Edmonton 35,617 14.6% 25,124 9.6% Calgary 1,213 0.5% 1,630 0.6%

36,830 15.1% 26,754 10.2%Ontario Toronto 67,020 27.5% 85,919 32.9%

Canada 201,470 82.6% 218,413 83.6%United States 17,974 7.3% 13,930 5.3%Non-segmented (asset management) 24,595 10.1% 28,903 11.1%Total $ 244,039 100.0% $ 261,246 100.0%

Net Margin by Geographic Region

The Company's net margin segmented by geographic region are as follows:

For the nine months ended September 30, 2015 For the nine months ended September 30, 2014Net Margin % Net Margin %

Saskatchewan Saskatoon $ 9,279 16.7 % $ 834 1.3 % Regina 6,512 11.7 % 10,876 16.6 %

15,791 28.4 % 11,710 17.9 %Alberta Edmonton 6,433 11.6 % 11,311 17.2 % Calgary(1) (1,145) (2.1)% (1,125) (1.7)%

5,288 9.5 % 10,186 15.5 %Ontario Toronto 11,903 21.4 % 21,620 33.0 %

Canada 32,982 59.3 % 43,516 66.4 %United States 4,288 7.7 % 2,513 3.8 %Non-segmented (asset management) 18,362 33.0 % 19,577 29.8 %Total $ 55,632 100.0 % $ 65,606 100.0 %

(1) The Company had minimal inventory available for sale during the nine months ended September 30, 2015. For full details refer to page 16 of the MD&A.

Refer to page 37 for risk factors impacting the Company including the prominence of the oil and gas industry in the Provinces of Alberta and Saskatchewan.


Land Development

Real estate assets include inventory of land held for development and land under development.

Raw land is usually unentitled property without the regulatory approvals that would allow the construction of residential, industrial, commercial and mixeduse developments. Acquiring and developing raw land requires significant time and capital expenditures and has associated carrying costs related to theapproval process. Once substantial development work is underway (such as grading, installation of water and sewer services, and provision of roads, powerand landscaping), the land is referred to as land under development. Where our land discussion includes references to acres, this is a gross acre measure,which includes both developable and non-developable land. Examples of non-developable land include roads, parks, and municipal and environmental reserveswhich may not be identified until after the land is purchased and subsequently approved.

At September 30, 2015, our land portfolio, including land held for development and land under development, consisted of 9,161 acres and 808 lots in variousstages of development. This represents 9,285 acre equivalents. Dream also has commitments to purchase an additional 710 acres, for a total of 9,995 acres.

(in thousands of dollars, except lots and acres) As at September 30, 2015Land held for development Land under development

Cost Acres Cost per acre Cost Acres LotsCost per acre

equivalent Total

Saskatoon $ 72,868 2,542 29 $ 56,459 149 255 284 $ 129,327Regina 159,015 2,896 55 32,929 53 358 353 191,944Calgary 170,270 2,524 67 22,173 58 99 268 192,443Edmonton 39,294 859 46 32,627 64 96 416 71,921Other 1,449 2 n/a 1,126 14 — 80 2,575Total inventory $ 442,896 8,823 50 $ 145,314 338 808 361 $ 588,210Land under commitment $ 23,098 710 33 $ 23,098

A summary of the changes in land inventory during the nine months ended September 30, 2015 is included below:

(in thousands of dollars) Nine months ended September 30, 2015Land held fordevelopment

Land underdevelopment Total

Balance, December 31, 2014 $ 383,751 $ 143,209 $ 526,960Acquisitions 56,112 — 56,112Development 4,413 75,415 79,828Lot and acre sales (1,466) (40,194) (41,660)Transfers (995) 995 —Transfers to housing inventory 940 (7,680) (6,740)Transfers to investment properties — (24,589) (24,589)Transfers to condominium inventory — (1,842) (1,842)Other 141 — 141Balance, September 30, 2015 $ 442,896 $ 145,314 $ 588,210

The carrying value of our land portfolio increased to $588.2 million at September 30, 2015 from $527.0 million at December 31, 2014, representing a netincrease of $61.3 million.


Breakdown of Land under CommitmentDream has entered into various agreements to purchase land, as outlined below. Until the final payment is made, this land does not form part of our landheld for development inventory.

Remaining commitments

(in thousands of dollars, except for acres)Total

commitmentAcquisition

depositsRemaining

commitment Acres(1) 2015 2016 2017 TotalLand purchase deposits and future commitments $ 23,098 $ 10,370 $ 12,728 710 $ 6,362 $ 4,990 $ 1,376 $ 12,728

(1) Acres under commitment are in Saskatoon are adjacent to lands already owned by the Company.

A summary of the changes in the land under commitment is presented below.

Totalcommitments

Acquisitiondeposits Acres

Opening balance, December 31, 2014 $ 78,476 $ 45,598 1,341Deposits made — 7,671 —Additional commitments 734 734 10Deposits transferred to land inventory upon final payment (56,112) (43,633) (637)Closing balance, September 30, 2015 $ 23,098 $ 10,370 710

(1) A remeasurement occurred in the nine months ended September 30, 2015.


Selected Operating Metrics – LandA summary of selected operating metrics for the land divisions is below:

(presented in thousands of dollars, except for average selling prices and acre / lotstatistics) For the three months ended September 30, For the nine months ended September 30,

2015 2014 2015 2014Land revenue(1)

Saskatoon $ 5,259 $ 3,068 $ 17,896 $ 16,587Regina(2) 7,223 16,962 19,351 25,601Calgary 1,213 1,500 1,213 1,630Edmonton 27,272 4,055 35,371 25,124Other — 99 — 751

Total $ 40,967 $ 25,684 $ 73,831 $ 69,693Land net margin(1)

Saskatoon $ 1,639 $ (4,131) $ 11,294 $ 461Regina (2) 3,383 7,422 6,309 9,129Calgary (381) (464) (1,145) (1,125)Edmonton 8,514 1,016 7,950 11,311Other (28) 11 (28) 279

Total $ 13,127 $ 3,854 $ 24,380 $ 20,055Net margin (%)(1)

Saskatoon 31.2% (134.6)% 63.1% 2.8%Regina(2) 46.8% 43.8 % 32.6% 35.7%Calgary n/a n/a n/a n/aEdmonton 31.2% 25.0 % 22.5% 45.0%Other n/a n/a n/a n/a

Total 32.0% 15.0 % 33.0% 28.8%Lots sold(1)

Saskatoon 39 27 77 69Regina 78 112 152 171Calgary 10 — 10 1Edmonton 158 24 217 94Other — — — 1

Total 285 163 456 336Lot revenue(1)

Saskatoon $ 5,259 $ 3,068 $ 9,521 $ 7,682Regina 7,223 11,336 14,653 16,975Calgary 1,213 — 1,213 130Edmonton 21,279 4,055 29,378 13,071Other — — — 320

Total $ 34,974 $ 18,459 $ 54,765 $ 38,178Average lot selling price(1)

Saskatoon $ 135,000 $ 114,000 $ 124,000 $ 111,000Regina 93,000 101,000 96,000 99,000Calgary 121,000 — 121,000 130,000Edmonton 134,000 157,000 135,000 136,000Other — — — 321,000

Total $ 123,000 $ 111,000 $ 120,000 $ 113,000Acres sold

Saskatoon — — 13 17Regina(2) — 6 49 9Calgary — 1 — 1Edmonton 7 — 7 12Other — — — 1

Total 7 7 69 40Acre revenue(1)

Saskatoon $ — $ — $ 8,375 $ 8,905Regina(2) — 5,626 4,698 8,626Calgary — 1,500 — 1,500Edmonton 5,993 — 5,993 12,053Other — 99 — 431

Total $ 5,993 $ 7,225 $ 19,066 $ 31,515Average acre selling price

Saskatoon $ — $ — $ 644,000 $ 540,000Regina(2) — 918,000 96,000 926,000Calgary — 1,200,000 — 1,200,000Edmonton 850,000 — 850,000 1,002,000Other — — — 431,000

Total $ 850,000 $ 966,000 $ 275,000 $ 786,000(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenue

and net margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to page 9 of this MD&A.(2) Results for the nine months ended September 30, 2015 include revenue and gross margin of $0.8 million and $0.2 million, respectively, relating to 45 acres of undeveloped land sold to the Ministry

for $0.8 million. See Results of Operations – Land for Regina on page 16 of this MD&A for further details.


Results of Operations – LandThe results of operations for our land development division in Saskatoon, Regina, Calgary, Edmonton and other are as follows:

For the three months ended September 30, For the nine months ended September 30,2015 2014 2015 2014

Lot revenue $ 34,974 $ 18,459 $ 54,765 $ 38,178Acre revenue $ 5,993 $ 7,225 $ 19,066 $ 31,515Total revenue $ 40,967 $ 25,684 $ 73,831 $ 69,693Gross margin $ 15,558 $ 6,582 $ 31,849 $ 26,859Gross margin (%) 38.0% 25.6% 43.1% 38.5%Net margin $ 13,127 $ 3,854 $ 24,380 $ 20,055Net margin (%) 32.0% 15.0% 33.0% 28.8%Lots sold 285 163 456 336Average selling price – lots $ 123,000 $ 111,000 $ 120,000 $ 113,000Undeveloped acres sold — — 45 —Developed acres sold 7 7 24 40Average selling price – undeveloped acres — — 19,000 —Average selling price – developed acres $ 850,000 $ 966,000 $ 759,000 $ 786,000

A breakdown and discussion of each of our four major regions is below.

Saskatoon, Saskatchewan


Lot revenue $ 5,259 $ 3,068 $ 9,521 $ 7,682Acre revenue $ — $ — $ 8,375 $ 8,905Total revenue $ 5,259 $ 3,068 $ 17,896 $ 16,587Gross margin $ 2,279 $ (3,592) $ 13,100 $ 1,821Gross margin (%) 43.3% (117.1%) 73.2% 11.0%Net margin $ 1,639 $ (4,131) $ 11,294 $ 461Net margin (%) 31.2% (134.6%) 63.1% 2.8%Lots sold 39 27 77 69Average selling price – lots $ 135,000 $ 114,000 $ 124,000 $ 111,000Acres sold — — 13 17Average selling price – acres $ — $ — $ 644,000 $ 540,000

In the nine months ended September 30, 2015, net margin was generated primarily by sales within two developments in Saskatoon: Stonebridge and HamptonVillage. We are winding down our remaining inventory in both developments and the majority of inventory held will be constructed upon by our housingdivision. Starting in the fourth quarter of 2015, we expect lot sales to commence within Brighton, a neighbourhood within the Holmwood community.

For the three months ended September 30, 2015, total revenue increased by $2.2 million over the prior year, primarily due to a higher volume of lot salesand higher average selling prices. The increase in the average selling price during the three months ended September 30, 2015 is due to a higher proportionof lots sold from later phases of development, which generally yield a higher price per lot. Over the same period, gross and net margin increased by $5.9million and $5.8 million, respectively, due to the higher average selling price per lot and the prior year results including a $3.9 million expense for prior periodprofit participation costs.

For the nine months ended September 30, 2015, total revenues increased by $1.3 million over the prior year, primarily due to an increase in lot sale volumes.Over the same period, gross and net margin increased by $11.3 million and $10.8 million, respectively, due to the profit participation costs included in theprior year, $4.3 million of favourable cost recoveries relating to the release of contingencies at the end of development phases in the second quarter of 2015and a higher gross margin on the acre sales achieved in 2015 relative to prior year.


Regina, Saskatchewan


Lot revenue $ 7,223 $ 11,336 $ 14,653 $ 16,975Acre revenue $ — $ 5,626 $ 4,698 $ 8,626Total revenue $ 7,223 $ 16,962 $ 19,351 $ 25,601Gross margin $ 3,980 $ 8,427 $ 8,164 $ 11,410Gross margin (%) 55.1% 49.7% 42.2% 44.6%Net margin $ 3,383 $ 7,422 $ 6,309 $ 9,129Net margin (%) 46.8% 43.8% 32.6% 35.7%Lots sold 78 112 152 171Average selling price – lots $ 93,000 $ 101,000 $ 96,000 $ 99,000Undeveloped acres sold — — 45 —Developed acres sold — 6 4 9Average selling price – undeveloped acres $ — $ — $ 19,000 $ —Average selling price – developed acres $ — $ 918,000 $ 963,000 $ 926,000

Revenue and net margin was generated primarily by lot sales within our Harbour Landing development in the nine months ended September 30, 2015. HarbourLanding is expected to remain active through to 2016, with inventory also expected to be constructed upon by our housing division.

For the three months ended September 30, 2015, total revenue decreased by $9.7 million relative to the prior year due to a reduction in lot revenue drivenby fewer lot sales, a reduction in related average selling prices and a reduction in acre sales revenue. Gross and net margin also decreased by $4.4 million and$4.0 million, respectively, mainly due to the aforementioned reasons.

For the nine months ended September 30, 2015, total revenue decreased by $6.3 million relative to the prior year due to a reduction in both lot and developedacre sales. The reduction in acre revenue was primarily due to fewer developed acres sold partially offset the sale of 45 undeveloped acres to the SaskatchewanMinistry of Highways and Infrastructure for $0.8 million for the development of road infrastructure. This is not in the normal course of business to sellundeveloped land acres, outside of infrastructure requirements by provincial or other government authorities. Gross and net margin decreased by $3.2 millionand $2.8 million, respectively, mainly due to the aforementioned reasons.

Calgary, Alberta


Lot revenue $ 1,213 $ — $ 1,213 $ 130Acre revenue $ — $ 1,500 $ — $ 1,500Total revenue $ 1,213 $ 1,500 $ 1,213 $ 1,630Gross margin $ 245 $ 206 $ 967 $ 694Gross margin (%) 20.2% 13.7% 79.7% 42.6%Net margin $ (381) $ (464) $ (1,145) $ (1,125)Net margin (%) n/a n/a n/a n/aLots sold 10 — 10 1Average selling price – lot units $ 121,000 $ — $ 121,000 $ 130,000Acres sold — 1 — 1Average selling price – acres $ — $ 1,200,000 $ — $ 1,200,000

There were 10 lot sales in High River during the three and nine months ended September 30, 2015, which had been serviced in prior periods, attributable toincreased demand from one builder. There were no lot sales in the comparative period. We continue to expect servicing and sales to increase in High Riveronce the market is ready to absorb higher volumes of new inventory.

In the nine months ended September 30, 2015, the Company incurred a negative net margin of $1.1 million due to overhead costs incurred with limitedrevenue generated in the current period. This was in line with the Company's expectations as our acreage in Calgary is either in the planning or developmentstages. The Company has commenced development of Crossfield, north of Airdrie, and expect sales to commence in 2016. We continue to work closely withthe city of Calgary to advance the development of Providence and Panorama, both considered longer term lands.

Subsequent to September 30, 2015, Dream completed its formal public engagement sessions with respect to its ownership of 650 acres in the ProvidenceArea Structure Plan and 320 acres in the Glacier Ridge (Panorama) Area Structure Plan in Calgary, Alberta. Both of these significant Area Structure Plansreceived unanimous approval at Calgary Planning Commission and are scheduled for Calgary City Council approval in December 2015, which when achieved,will represent a significant planning milestone for the Company.


Edmonton, Alberta


Lot revenue $ 21,279 $ 4,055 $ 29,378 $ 13,071Acre revenue $ 5,993 $ — $ 5,993 $ 12,053Total revenue $ 27,272 $ 4,055 $ 35,371 $ 25,124Gross margin $ 9,054 $ 1,525 $ 9,618 $ 12,624Gross margin (%) 33.2% 37.6% 27.2% 50.2%Net margin $ 8,514 $ 1,016 $ 7,950 $ 11,311Net margin (%) 31.2% 25.1% 22.5% 45.0%Lots sold 158 24 217 94Average selling price – lot units $ 134,000 $ 157,000 $ 135,000 $ 136,000Acres sold 7 — 7 12Average selling price – acres $ 850,000 $ — $ 850,000 $ 1,002,000

The Meadows is our active development in Edmonton with multiple areas that we expect to remain involved in through 2022.

Total revenue and net margin in the three months ended September 30, 2015, increased by $23.2 million and $7.5 million, respectively compared to prioryear due to a higher volume of lot and acre sales within our Meadows community. One of the Meadows' sub-division approvals was obtained in the currentquarter, which resulted in increased lot demand. Acre sales in the third quarter of 2015 were to an external developer for a future multi-family site.

In the nine months ended September 30, 2015, lot revenue increased by $16.3 million from the prior year, due to a higher volume of sales. Acre revenuedecreased in 2015 relative to the comparative period due to fewer sales.

Net margin decreased by $3.4 million in the nine months ended September 30, 2015 compared to prior year due to an additional $2.3 million of reservestaken at the end of development phases in the second quarter of 2015 and a lower net margin realized on acre sales. The lower net margin on acre sales in2015 was the result of higher direct costs relative to the prior year.

Retail Development

In the nine months ended September 30, 2015, Dream achieved approximately 52,000 square feet of retail occupancies within its Tamarack North East andSouth East development sites within the community of the Meadows in Edmonton, Alberta, where Dream has been actively developing over 1,400 acres ofresidential land since 1997. Including Tamarack North, which achieved its first tenant occupancy subsequent to September 30, 2015, these three propertiesare expected to comprise 184,300 square feet of GLA upon completion. Management expects that the properties are on track to be fully leased by theirexpected completion dates in 2017 and 2018. Dream recognized fair value gains in the amount of of $0.4 million and $10.1 million for the three and ninemonths ended September 30, 2015, respectively, which resulted from a change in use of the under under IFRS from inventory (held at cost) to investmentproperty (held at fair value) on achievement of first tenant occupancies. Subsequent to the quarter Dream secured additional lease commitments in Tamaracktaking total commitments to 67% of estimated GLA at completion from 61% at September 30, 2015.

The achievement of first tenant occupancy within our properties under development, demonstrates a change of intent in use of the land, which resulted ina change in classification under IFRS from land inventory (held at cost) to investment properties (held at fair value). As a result, Dream recognized a non-cashfair value gain on its Tamarack North East and Tamarack South East sites in the three and nine months ended September 30, 2015 within fair value changesof investment properties in the statement of operations. The fair value gains were recognized by transferring the carrying value of land under development(representing the accumulated costs of land and development costs) to investment properties and recording the gain to increase the total carrying value ofthe retail development to its fair value. Dream expects to recognize similar gains, if achieved, on future developments constructed on its own land when theinitial occupancy occurs for retail tenants. Further changes in the fair value of the Tamarack North East and Tamarack South East developments, and otherfuture developments subsequent to initial recognition will be treated in a consistent manner.

Valuation Methodology: The fair value of retail properties under development is determined by management on a property-by-property basis using adiscounted cash flow valuation methodology. Within the discounted cash flow, the significant unobservable inputs include: forecasted net operating incomebased on the location, type and quality of the property, supported by the terms of actual or anticipated future leasing, current market rents for similarproperties, adjusted for market allowances; discount rates based on market terms at the valuation date, adjusted for property specific risks; costs to completebased on internal budgets, terms of construction contracts, management experience and market conditions; expected completion dates; development andleasing risks specific to the property; and the status of approvals and/or permits. For additional disclosures on valuation methodology, refer to Notes 3 and10 of the financial statements for the period.

As at September 30, 2015, $18.3 million of construction loans, bearing interest at the banker's acceptance rate plus 2% were outstanding with respect toactive retail projects under construction. The financing has been established with maximum credit available of $52.7 million to be used for internal servicingof the project land, project costs and the development of the three Tamarack retail development projects and to provide letters of credit to municipal andother government authorities.


Highlights of Dream's active retail development projects under construction as at September 30, 2015 are shown in the table below. In addition to activeprojects under construction, Dream Centres, our internal retail development division, is actively developing 137 acres in Western Canada that are at variousstages of approvals. Our development and leasing team is also evaluating the potential of developing retail on an additional 250 acres of land currently ownedby Dream.

Active Retail Projects under Construction

Balance sheetclassification as atSeptember 30, 2015

Measurementfor

accountingpurposes

Estimatedacres todevelop

EstimatedGLA at

completionCommitted

leases(1)

Weightedaverage

lease term(2)

EstimatedStabilized

NOI atcompletion(3)

DevelopmentYield

on Cost(3)

Estimatedcompletion

date

EdmontonTamarack North East Investment properties Fair value 5.6 62,600 24,400 14.8 2018Tamarack North Land under development Cost 3.2 24,900 7,959 20.0 2017Tamarack South East Investment properties Fair value 9.1 96,800 79,705 10.8 2017

17.9 184,300 112,064 12.3 $ 4,800 8.4%

(thousands of dollars, except per square foot) Major tenants

Estimated costof development,including land(3)

Costsincurred to

date

Estimatedcosts to

complete(3)

Estimatedvalue upon

completion(3)

Estimatedcost per

square foot

Estimatedvalue per

square footupon

completion

EdmontonTamarack North East GoodLife Fitness $ 18,300 $ 8,967 $ 9,333 $ 25,000 $ 292 $ 399Tamarack North Petro Canada, McDonald's 6,700 2,873 3,827 11,600 269 466Tamarack South East Michaels, Sport Chek, Shoppers Drug

Mart, Tim Hortons, Liquor Depot31,600 20,921 10,679 40,100 327 414

$ 56,600 $ 32,761 $ 23,839 $ 76,700 $ 307 $ 416(1) Committed leases represent the GLA under an agreement to lease between a tenant and the Company as at September 30, 2015. (2) The weighted average lease term is from the commencement date of the committed lease and excludes renewal options.(3) Refer to page 38 for definitions of Non-IFRS Measures for the Estimated Cost of Development, Estimated Costs to Complete, Estimated Value Upon Completion, Development Yield, and Estimated

Stabilized NOI.

Housing Development

At September 30, 2015, our housing inventory consisted of 370 units, under various stages of construction and lots held for future development, inSaskatchewan, Canada. The carrying value of our housing inventory decreased by $22.2 million or 31.1% at September 30, 2015 from $71.6 million atDecember 31, 2014, due to unit occupancies, partially offset by development activities throughout the period.

(in thousands of dollars, except units) Nine months ended September 30, 2015

Saskatoon Regina Total

No. of units Cost No. of units Cost No. of units Cost

Balance of inventory, December 31, 2014 143 $ 25,304 287 $ 46,284 430 $ 71,588Acquisitions 1 365 — 165 1 530Transferred from land development 12 977 96 5,763 108 6,740Development — 6,337 — 11,695 — 18,032Housing units occupied (70) (17,304) (98) (29,636) (168) (46,940)Other (1) (591) — — (1) (591)

Balance of inventory, September 30, 2015 85 $ 15,088 285 $ 34,271 370 $ 49,359

Breakdown of Housing under ConstructionThe total housing units under construction by city is summarized in the following table:

(number of units) September 30, 2015 December 31, 2014Saskatoon 53 109Regina 67 161Total units under construction 120 270Total units held for future construction 250 160Total units in inventory 370 430


Results of Operations – Housing


Housing units occupied 62 67 168 160Revenue(1) $ 25,269 $ 29,051 $ 67,515 $ 68,837Gross margin(1) $ 4,795 $ 5,580 $ 12,176 $ 14,135Gross margin (%) 19.0% 19.2% 18.0% 20.5%Net margin(1) $ 1,596 $ 2,459 $ 3,337 $ 5,966Net margin (%) 6.3% 8.5% 4.9% 8.7%Average selling price – housing units $ 408,000 $ 434,000 $ 402,000 $ 430,000Average selling price per square foot foroccupied units $ 282 $ 280 $ 282 $ 281

(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenue andnet margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to page 9 of this MD&A.

A breakdown and discussion of our results for the two active housing regions is below.

Saskatoon, Saskatchewan


Housing units occupied 31 28 70 71Revenue(1) $ 12,370 $ 11,828 $ 28,076 $ 28,650Gross margin(1) $ 2,586 $ 2,630 $ 5,853 $ 6,417Gross margin (%) 20.9% 22.2% 20.8% 22.4%Net margin(1) $ 948 $ 1,398 $ 1,829 $ 3,312Net margin (%) 7.7% 11.8% 6.5% 11.6%Average selling price – housing units $ 399,000 $ 422,000 $ 401,000 $ 403,000Average selling price per square foot foroccupied units $ 280 $ 279 $ 281 $ 274

(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the period. Revenue (andnet margin) results of $3.5 million ($1.4 million ) and $7.8 million ($3.1 million) in the three and nine months ended September 30, 2015 and $3.1 million ($1.1 million) and $7.3 million ($2.5 million)in the same period in the prior year, recognized in both the land and housing divisions, have been eliminated on consolidation. For more details please refer to page 9 of this MD&A.

During the three and nine months ended September 30, 2015, net margin was primarily generated within our Stonebridge, Hampton Village and Blairmore(Kensington) housing developments.

Revenue for the three months ended September 30, 2015 increased $0.5 million, relative to prior year due to an increase in the number of occupancies,partially offset by a reduction in the average selling price. Over the same period, net margin decreased by $0.5 million primarily due an increase in marketingexpenses.

During the nine months ended September 30, 2015, revenue decreased by $0.6 million primarily due to a reduction in the average selling price of housingunits occupied. Net margin decreased by $1.5 million due to an increase in marketing expenses. In 2015, the Company externalized its sales team in Saskatoonto proactively address recent housing sales trends in the market, resulting in higher selling and marketing costs in the current period.

We expect occupancies in 2015 and 2016 will occur within our Stonebridge and Blairmore (Kensington) developments.

Regina, Saskatchewan


Housing units occupied 31 39 98 89Revenue(1) $ 12,899 $ 17,223 $ 39,439 $ 40,187Gross margin(1) $ 2,209 $ 2,950 $ 6,323 $ 7,718Gross margin (%) 17.1% 17.1% 16.0% 19.2%Net margin(1) $ 648 $ 1,061 $ 1,508 $ 2,654Net margin (%) 5.0% 6.2% 3.8% 6.6%Average selling price – housing units $ 416,000 $ 442,000 $ 402,000 $ 451,000Average selling price per square foot foroccupied units $ 287 $ 280 $ 282 $ 286

(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the period. Revenue (andnet margin) results of $1.5 million ($0.4 million) and $4.5 million ($1.3 million) in the three and nine months ended September 30, 2015 and $1.1 million ($0.4 million) and $2.9 million ($0.9 million)in the same period in the prior year, recognized in both the land and housing divisions, have been eliminated on consolidation. For more details please refer to page 9 of this MD&A.


In the third quarter of September 30, 2015, net margin was primarily generated within housing developments in Harbour Landing, Westhill Park, and theCreeks.

The decrease in revenue and net margin of $4.3 million and $0.4 million in the three months ended September 30, 2015, relative to prior year was attributableto fewer occupancies, lower average selling prices and an increase in selling and marketing costs. The decrease in revenue and net margin of $0.7 million and$1.1 million in the nine months ended September 30, 2015 resulted from a decline in the average selling price. During the nine months ended September 30,2015, there was an increase in the number of occupancies, offset by a lower average selling price compared to prior year due to smaller homes sold. Theaverage selling price per square foot remained relatively stable over the prior year.

Condominium Development

At September 30, 2015 our condominium inventory consisted of 1,874 units in projects under and/or in pre-construction, with 923 units held through directownership (389 units at Dream’s share) and 951 units held through equity accounted investments (452 units at Dream’s share).

The changes in condominium inventory at Dream's share within direct ownership and equity accounted projects are summarized below.

(in thousands of dollars, except units) Nine months ended September 30, 2015

Direct ownershipEquity accounted

investments(1) Total

Balance of inventory, December 31, 2014 $ 75,515 $ 283,610 $ 359,125Acquisitions 330 — 330Development 47,890 13,876 61,766Condominium units occupied (41,744) (6,268) (48,012)Cost recoveries, net of tax and holdbacks — (194,500) (194,500)Transfers from land inventory 1,842 — 1,842Other 37 — 37Balance of inventory, September 30, 2015 $ 83,870 $ 96,718 $ 180,588

(1) The inventory balance of $96.7 million is included within Dundee Kilmer Developments Limited described on page 28 of this MD&A.

For the nine months ended, September 30, 2015, the carrying value of the directly owned condominium inventory increased by $8.4 million as a result ofdevelopment spending on projects under construction, net of occupancies that commenced at The Carlaw and The Carnaby.

In the nine months ended September 30 2015, Dundee Kilmer Developments Limited, a 50% owned partnership between Dream and Kilmer Van NostrandCo. Limited, reported under equity accounted investments, completed the transfer of the Toronto 2015 Pan/Parapan American Games Athletes’ Village tothe Province of Ontario and received $393.0 million ($196.5 million at Dream's share) from the Province of Ontario, which was primarily used to repayconstruction debt that was drawn to fund the cost of development.

Results of Operations – CondominiumsA summary of the results of operations for the condominium division is presented below.

For the three months ended September 30, 2015 For the three months ended September 30, 2014

Attributable to DreamDirectlyowned

Equityaccounted

investments TotalDirectlyowned

Equityaccounted

investments Total

Revenue $ 54,727 $ 7,928 $ 62,655 $ 8,430 $ 66 $ 8,496Gross margin(1) $ 12,277 $ 1,660 $ 13,937 $ 1,981 $ 18 $ 1,999Gross margin (%) 22.4% 20.9% 22.2% 23.5% 27.3% 23.5%Selling, marketing and other indirect costs (1,739) (684) (2,423) (496) (390) (886)Net margin $ 10,538 $ 976 $ 11,514 $ 1,485 $ (372) $ 1,113Net margin (%) 19.3% 12.3% 18.4% 17.6% n/a 13.1%Condominium occupancies (units) 172 24 196 12 — 12Per unit(2) $ 304,000 $ 310,000 $ n/a $ 517,000 $ 388,000 $ 516,000Per square foot $ 470 $ 470 $ n/a $ 559 $ 702 $ 560


For the nine months ended September 30, 2015 For the nine months ended September 30, 2014

Attributable to DreamDirectlyowned

Equityaccounted

investments TotalDirectlyowned

Equityaccounted

investments Total

Revenue $ 56,745 $ 7,928 $ 64,673 $ 70,857 $ 180 $ 71,037Gross margin(1) $ 13,005 $ 1,660 $ 14,665 $ 21,854 $ (26) $ 21,828Gross margin (%) 22.9% 20.9% 22.7% 30.8% (14.4)% 30.7%Selling, marketing and other indirect costs (3,285) (1,504) (4,789) (2,075) (1,066) (3,141)Net margin $ 9,720 $ 156 $ 9,876 $ 19,779 $ (1,092) $ 18,687Net margin (%) 17.1% 2.0% 15.3% 27.9% n/a 26.3%Condominium occupancies (units) 172 24 196 169 — 169Per unit(2) $ 304,000 $ 310,000 $ n/a $ 377,000 $ 529,000 $ 377,000Per square foot $ 470 $ 470 $ n/a $ 503 $ 667 $ 503

(1) Gross margin for condominium operations includes interest expense, which is capitalized during the development period and expensed through cost of sales as units are occupied. (2) Average selling price per unit is based on prices excluding non-unit sources of ancillary revenue, such as recoveries and upgrades.

In the three and nine months ended September 30, 2015, revenue of $54.7 million and $56.7 million, and net margin of $10.5 million and $9.7 million wasgenerated primarily from occupancies at The Carnaby and The Carlaw. As at September 30, 2015, these projects were 85% and 48% occupied, respectively,with the remainder of units expected to occupy through to the second quarter of 2016.

When compared to the Gooderham project in the Distillery District in downtown Toronto, which was in occupancy during the nine months ended September30, 2014, The Carlaw and The Carnaby have lower average selling prices due to smaller unit sizes, as a result of relative neighbourhood location and buildingamenities. The overall net margin achieved in the three months ended September 30, 2015 is within management expectations and are in line with net marginsgenerated from past condominium projects in downtown Toronto.

Owned Condominiums and Results of Pre-Sale Activity for CondominiumsThe results of our sales or pre-sales activity for condominium projects, which are in the marketing, development or construction phases is summarizedbelow. These exclude condominiums, which are in pre-development. Included in our development pipeline below are 1,874 units in inventory atSeptember 30, 2015, (841 at Dream's share).

Project Ownership StatusDream

Ownership % Development# Units (at

Project Level)% Units Sold or Pre-Soldat September 30, 2015

Expected Closing

The Carnaby DirectIn Occupancy/Construction 50% Toronto Condo 437 98% 2016

The Carlaw Direct/Equity Accounted In Occupancy 25% Toronto Condo 313 99% 20151220 Dundas Direct Construction 25% Toronto Condo 96 96% 201620 Gladstone Direct Construction 50% Toronto Condo 113 94% 2016646 Kingston Road Direct Pre-Construction 50% Toronto Condo 108 55% 2017Canary District Equity Accounted Construction 50% Toronto Condo 810 78% 2016Sub-total, condominium projects closing before 2017 1,877 87%

Other projects Direct/Equity Accounted Pre-Construction 25% to 100%W. Canada &Toronto Condo 467 78% 2016 – 2019

2,344 85%


Asset Management and Management Services

We provide asset management and management services to four listed funds, our renewable power business and various partner/third-party real estate anddevelopment assets. At September 30, 2015, Dream managed assets with a value of approximately $15.0 billion (December 31, 2014 – $14.6 billion).

Reorganization of Asset Management Agreement with Dream Office REITOn April 2, 2015, the Company and Dream Office REIT announced a reorganization where the Company received 4,850,000 LP Class B Units, Series 1, of DreamOffice LP, a subsidiary of Dream Office REIT, which are exchangeable for 4,850,000 Dream Office REIT Units. In return, the annual management fee, acquisitionfee and capital expenditure fee payable by Dream Office REIT to Dream under its asset management agreement were eliminated. These units were recordedat their fair value of $127.3 million based on the closing price of the Dream Office REIT units on the Toronto Stock Exchange on April 2, 2015 with a correspondinggain on the statement of earnings.

The Company and Dream Office REIT have entered into a Management Services Agreement effective April 2, 2015, pursuant to which the Company will continueto provide certain management services, including services of a Chief Executive Officer to Dream Office REIT as requested. The Company will be reimbursedfor out-of-pocket costs and expenses incurred in connection with performance of the management services and costs incurred. This agreement will continueuntil it is terminated by either party in accordance with the termination provisions of the agreement.

The Company continues to be entitled to receive an incentive fee subject to the termination provisions of the Management Services Agreement. The incentivefee is determined in accordance with a formula based on 15% of Dream Office REIT’s aggregate adjusted funds from operations, including the net gain on thesale of any properties during the term of the agreement, and the deemed sale of the remaining portfolio upon termination in excess of $2.65 per Dream OfficeREIT unit. The Company has not accrued any incentive fees payable as at September 30, 2015.

Asset Management and Management Services AgreementThe majority of income earned from our asset management and management services segment for the three months ended September 30, 2015 was generatedfrom three publicly listed Trusts. Asset management (for which base fees are generated) includes the overall management of the listed funds’ businesses,including the provision of a Chief Executive Officer and Chief Financial Officer and overseeing the operations of accounting and property management. As theasset manager, Dream also provides acquisition and disposition personnel and, on a cost recovery basis, oversees debt and equity financing. Dream has notreached benchmarks to earn incentive fees as at September 30, 2015. Details of the fee structure for Dream Global REIT and Dream Industrial REIT are includedbelow.

• Base management fee of 0.25% (Dream Industrial REIT) and 0.35% (Dream Global REIT) on historical cost of assets.• Acquisition fee equal to: (a) 1.0% of the purchase price of a property on the first $100 million of properties acquired in each fiscal period; (b) 0.75%

of the purchase price of a property on the next $100 million of properties acquired in each fiscal period; and (c) 0.50% of the purchase price onproperties acquired in excess of $200 million in each fiscal period.

• Financing fee equal to 0.25% of the debt and equity of all financing transactions completed, subject to adjustment on an annual basis equal to theamount of actual expenses incurred by Dream in supplying services relating to financing transactions.

• Incentive fees of 15% of AFFO (adjusted funds from operations) earned above a benchmark. The benchmarks vary by fund and increase by 50% ofthe increase in the relevant consumer price index.

• Capital expenditure fees equal to 5.0% of all hard construction costs incurred on each capital project with costs in excess of $1.0 million, excludingwork done on behalf of tenants or any maintenance capital expenditures.

Dream receives revenues in respect of services to Dream Alternatives, which include:

• Base annual management fee calculated and payable on a monthly basis, equal to 1.0% of the gross value of assets.• Acquisition/origination fee equal to: (a) 0.40% of the principal amount of any loan originated by Dream Alternatives or a subsidiary having an expected

term of less than five years; (b) 1.0% of the principal amount of any loan originated by Dream Alternatives or a subsidiary having an expected termof five years or more; and (c) 1.0% of the gross cost of any asset acquired or originated by Dream Alternatives or a subsidiary represented by allother investments, assets or projects.

• Disposition fee equal to 0.25% of the gross sale proceeds of any asset (including all indebtedness) sold by Dream Alternatives or any subsidiaryrepresented by loans, investments, assets or projects disposed of during the fiscal year, including any part of the initial assets except for the dispositionof individual loans having a term to maturity of 12 months or less, and excluding the regular and scheduled repayment of loans.


Breakdown of Fees EarnedThe following table summarizes the types of fees included in asset management and management services revenue, including those further described in Note37 of the Company's condensed consolidated financial statements as at September 30, 2015:


Base asset management fees – cash $ 5,355 $ 8,630 $ 19,729 $ 22,768Base asset management fees – deferred units(1) 322 499 1,010 1,543Acquisition fees 714 2,019 2,626 2,749Expense recoveries relating to financing arrangements 100 388 691 1,205Other income 539 64 539 638

$ 7,030 $ 11,600 $ 24,595 $ 28,903(1) The consideration received for a portion of the asset management services provided to Dream Global REIT is received in deferred trust units of Dream Global REIT. The deferred trust units carry a

five year vesting condition from the date of grant. As a result, the deferred trust units are recorded, when earned, at a discount to the publicly traded price. This discount fluctuates each periodbased on observable inputs and as a result, the amount of revenue recognized by Dream will fluctuate year over year based on the changes in the discount rate applied. The inputs used to determinethe discount applied to the deferred trust units is outlined in Note 33 of the condensed consolidated financial statements for the three and nine months ended September 30, 2015.

Other income in the three and nine months ended September 30, 2015 primarily relates to fees earned on development projects under management, includingprojects from jointly controlled entities, previously reported under condominium revenues.

Breakdown of Asset Management and Management Services Expenses Incurred to Generate Net MarginThe types of asset management and management services expenses are detailed in the following table:


Salary and other compensation $ 1,743 $ 1,821 $ 3,930 $ 7,742Corporate, service and professional fees 728 131 1,552 351General office and other operating costs 16 212 751 1,233

$ 2,487 $ 2,164 $ 6,233 $ 9,326

Asset management and management services expenses were $2.5 million in the three months ended September 30, 2015, up from $2.2 million in the prioryear, due to increased headcount, partially offset by costs recovered under the management services agreement with Dream Office REIT. Included in assetmanagement expenses during the three and nine months ended September 30, 2015 are personnel costs relating to our joint venture with Canadian Pacific(TSX/NYSE: CP), called Dream Van Horne Properties ("Dream VHP").

In the nine months ended September 30, 2015, asset management expenses decreased by $3.1 million primarily due to the reorganization of the Dream OfficeREIT asset management contract on April 2, 2015. For additional details on the reorganization of the Dream Office REIT asset management contract, pleaserefer to Note 37 of the condensed consolidated financial statements for the period ending September 30, 2015. Results of Operations – Asset Management and Management Services


Revenue $ 7,030 $ 11,600 $ 24,595 $ 28,903Net margin $ 4,543 $ 9,436 $ 18,362 $ 19,577Net margin (%) 64.6% 81.3% 74.7% 67.7%

During the three months ended September 30, 2015, revenue and net margin decreased by $4.6 million and $4.9 million respectively, due to the reorganizationof the asset management agreement with Dream Office REIT, discussed above, and lower acquisition fee revenue.


Investment and Other Income

A summary of the components of Investment and Other Income is presented below.


Investment income related to listed funds $ 1,320 $ 649 $ 3,518 $ 1,905Interest income on receivables 733 544 1,683 1,690Other income(1) 169 82 698 1,027

$ 2,222 $ 1,275 $ 5,899 $ 4,622(1) Includes investment income from the condominium, land, housing, recreational, and retail.

Breakdown of Investment Income

The breakdown of investment income is as follows:

For the three months ended September For the nine months ended September 30,2015 2014 2015 2014

Investment income earned on investments in listed fundsDream Office REIT $ 909 $ 227 $ 2,044 $ 681Dream Global REIT 252 280 784 840Dream Global REIT, deferred trust units 152 142 662 384Dream Hard Asset Alternative Trust 7 — 28 —

$ 1,320 $ 649 $ 3,518 $ 1,905

The above mentioned investments in listed funds are included within other financial assets on the Company's statement of financial position. Any changes inthe fair value of the investments are recognized through other comprehensive income.

Dream Office REIT (TSX: D.UN) is an unincorporated real estate investment trust and operates high-quality, affordable business premises in key markets acrossCanada. It is focused on owning, acquiring, leasing and managing urban and suburban office properties in Canada. Dream Global REIT (TSX: DRG.UN) is anunincorporated, open-ended real estate investment trust that provides investors with the opportunity to invest in commercial real estate exclusively outsideof Canada. Dream Alternatives (TSX: DRA.UN) is a mutual fund trust focused on hard asset alternative investments including real estate, real estate lendingand infrastructure and renewable power. Refer to Note 6 of the condensed consolidated financial statements for the period ending September 30, 2015 formore information.

Investments in Listed Funds

Details of the Company's investments in listed funds is presented below.


(In thousands of dollars, except unit andper unit amounts)

CurrentAnnual

Distributionper unit

Current annualpre-tax cash

flow

Investment incomeearned in ninemonths ended

September 30, 2015 UnitsMarket Price as at

September 30, 2015 Fair Value

Dream Office REIT $ 2.24 $ 2,593 $ 577 1,157,762 $ 21.20 $ 24,544Dream Office REIT LP B $ 2.24 $ 10,864 $ 1,467 4,850,000 $ 21.20 $ 102,821Dream Global REIT $ 0.80 $ 2,240 $ 784 2,800,000 $ 8.84 $ 24,752Dream Global REIT, deferred trust units $ n/a $ n/a $ 662 1,679,562 $ n/a $ 10,125Dream Hard Asset Alternatives Trust $ 0.40 $ 206 $ 28 515,900 $ 5.97 $ 3,080

$ 15,903 $ 3,518 $ 165,322

Refer to Note 33 of the condensed consolidated financial statements for the period ending September 30, 2015 for details on the fair value measurementapproach for the Dream Global REIT deferred trust units.


Investment and Recreational Properties

Our investment properties include interests in commercial and retail properties consisting of approximately 550,200 square feet of GLA, excluding parking,which include the Distillery District, Western Canada retail developments and jointly controlled entities. Recreational properties include a ski resort in Colorado,a golf course in Saskatoon, and a hotel in operation and a hotel in development in Toronto. These properties are held to generate rental income and for capitalappreciation.

Summary of Combined ResultsThe following table shows a continuity of the carrying value of real estate assets and the operating results for the investment properties and recreationalproperties division:

Nine months ended September 30, 2015

(in thousands of Canadian dollars)Investmentproperties

Recreationalproperties Total

Balance, December 31, 2014 $ 94,072 $ 26,970 $ 121,042Additions 30,600 5,820 36,420Fair value adjustments 9,823 — 9,823Amortization (36) (1,812) (1,848)Other — 2,077 2,077Balance, September 30, 2015 $ 134,459 $ 33,055 $ 167,514


Revenue $ 7,412 $ 7,111 $ 33,702 $ 33,177Net margin $ (1,976) $ (1,390) $ 4,256 $ 3,636Net margin (%) (26.7)% (19.5)% 12.6% 11.0%

Investment Properties The fair value of investment properties is summarized below.

Nature of Business Location September 30, 2015 December 31, 2014Distillery District(1) Historical heritage district Toronto $ 90,502 $ 90,468Thornhill Woods Land and housing Toronto 1,986 1,981Carlaw Rental office building Toronto 1,943 1,623Tamarack North East and South East Retail Western Canada 40,028 —

$ 134,459 $ 94,072(1) Includes retail space in our condominium developments and parking space.

September 30, 2015 December 31, 2014Number of commercial properties(1) 18 16Total commercial area (sq. ft.)(1),(2) 550,200 534,000Total parking stalls 484 556Weighted average terminal capitalization rate 5.5%–6.5% 5.50%–7.70%

(1) The above includes 52,000 square feet of GLA related to the portion of the Company's retail development in Western Canada, which has been occupied by tenants. The Company will include theadditional 107,000 square feet of GLA at Tamarack North East and Tamarack South East as it is constructed and completed. See Retail Development on page 17 of this MD&A for further details.

(2) The above excludes GLA for any of the Company's investment properties utilized for parking. These income producing parking stalls have been included in the number of parking stalls statistics.

The carrying value of our investment property assets increased to $134.5 million at September 30, 2015 from $94.1 million at December 31, 2014. The increaseof $40.4 million was primarily attributable to the transfer of our Tamarack North East and Tamarack South East retail developments from land under development(held at cost) to investment properties (held at fair value) in the first two quarters of 2015, and their subsequent fair value adjustments. For details of thetransfers, refer to page 17 of this MD&A.


The operating results of investment properties are summarized below.

For the three months ended September 30, For the nine months ended September 30,

TorontoWesternCanada 2015 2014 Toronto

WesternCanada 2015 2014

Revenue $ 2,564 $ 205 $ 2,769 $ 2,058 $ 7,061 $ 246 $ 7,307 $ 6,042

Distillery District 1,463 — 1,463 871 3,967 — 3,967 2,674 Other investment properties 118 (97) 21 49 248 (56) 192 34Total net operating income 1,581 (97) 1,484 920 4,215 (56) 4,159 2,708Net operating income % 61.7% n/a 53.6% 44.7% 59.7% n/a 56.9% 44.8%

Total net margin $ 964 $ (552) $ 412 $ 436 $ 2,574 $ (1,517) $ 1,057 $ 1,780Net margin (%) 37.6% n/a 14.9% 21.2% 36.5% n/a 14.5% 29.5%Fair value changes ininvestment properties

$(306)

$425

$119

$368

$(316)

$10,139

$9,823

$7,326

Net segment earnings $ 658 $ (127) $ 531 $ 804 $ 2,258 $ 8,622 $ 10,880 $ 9,106

In the three and nine months ended September 30, 2015, net operating income from investment properties increased by $0.6 million and $1.5 millionrespectively due to increases in base rent and occupancy at the Distillery District. Western Canada retail properties are under development and will not befully income producing until their estimated completion dates in 2017 and 2018. For further details see table on page 18 of the this MD&A.

Overall, net margin as a percentage of revenue has decreased in the three and nine months ending September 30, 2015 due to higher overhead costs incurredfrom growth and added capabilities in our retail division.

Recreational PropertiesThe carrying value of recreational properties is summarized below.

September 30, 2015 December 31, 2014Operational recreational properties:

King Edward Hotel (Ontario) $ 6,567 $ 5,710Willows Golf Course (Saskatchewan) 2,888 2,852Arapahoe Basin ski hill (Colorado) 17,134 14,553

Recreational properties under development:Broadview Hotel (Ontario) 6,466 3,855

Total recreational properties $ 33,055 $ 26,970Total debt related to recreational properties $ (9,642) $ (6,304)

The carrying value of recreational properties increased to $33.1 million at September 30, 2015 from $27.0 million at December 31, 2014, primarily due tocapital additions at Arapahoe Basin, related to the construction of a new Kids Centre, and Broadview Hotel related to development spend.

Dream has a 50% ownership interest in the Broadview Hotel in a downtown east neighbourhood in Toronto. The hotel is located in close proximity to severalof the Company's urban development projects including the Canary District, Distillery District and Riverside Square. The hotel is currently in the process ofbeing fully renovated and repositioned into a 56 room heritage boutique hotel. Hotel amenities will also include an extensive food and beverage offeringlocated on the first and second floors as well as a year round rooftop patio. The hotel and amenities are expected to commence operations in Q2 2016.

Ownership interest

Current status

Last season opening date

Last season closed date

King Edward Hotel (Ontario) 9% Full period Full period Full periodWillows Golf Course (Saskatchewan) 100% Open 15-Apr-15 26-Oct-14Arapahoe Basin ski hill (Colorado) 100% Closed 29-Oct-15 14-Jun-15Broadview Hotel (Ontario) 50% Under development n/a n/a


The operating results of recreational properties is summarized below.


Revenue $ 4,643 $ 5,053 $ 26,395 $ 27,135Net margin(1) $ (2,388) $ (1,826) $ 3,199 $ 1,856Net margin (%) (51.4)% (36.1)% 12.1% 6.8%

(1) Included in net margin for recreational properties is depreciation of $0.8 million and $2.5 million in the three and nine months ended September 30, 2015 (three and nine months ended September30, 2014 – $0.3 million and $2.0 million).

In the three and nine months ended September 30, 2015, $4.6 million and $26.4 million of revenue was earned primarily from Arapahoe Basin, which hadfavourable weather conditions during the 2014/2015 season. In the three and nine months ended September 30, 2015, net margin decreased by $0.6 millionand increased by $1.3 million, respectively. The decrease in net margin was due to higher maintenance costs at Arapahoe Basin than in the comparativeperiod. The increase in net margin for the nine months ending September 30, 2015, was due to higher snow levels and increased visitors at the resort inColorado.

Results from Arapahoe Basin are subject to seasonality and the third and fourth quarters are seasonally lower periods of income generation.

Equity Accounted Investments

The Company has entered into certain arrangements in the form of jointly controlled entities, primarily for the development of condominium and investmentproperties and for renewable energy investments. These entities include restrictions on the ability to access assets without the consent of all partners andthrough distribution conditions outlined in partnership agreements. These arrangements are accounted for under the equity method. Our share of earningsfrom equity accounted investments is included in earnings for each period. Earnings from each of the equity accounted investments may fluctuate significantlydue to the nature of their operations, and may depend on market forces or other operating conditions that may not necessarily be under our direct control.The carrying value of our equity accounted investments increased to $100.1 million at September 30, 2015, compared with $90.8 million at December 31,2014.

During the three and nine months ended September 30, 2015, the Company recognized its share of earnings of $3.3 million and $0.2 million from thesearrangements (three and nine months ended September 30, 2014 – earnings of $0.8 million and $1.6 million). The following tables summarize the Company’sproportionate share of revenues, earnings (losses) and cash flows from operations in other equity accounted investments for 2015 and 2014.


Dundee KilmerDevelopments

LP

FirelightInfrastructure

Partners LPDistillery

Restaurants LPDream

Windmill

DreamCMCC Funds

I and II Other Total

Dream ownership % 50% 20% 50% 50% 9%–8% 18%–78%Attributable to Dream:

Revenues $ 7 $ 9,251 $ 4,332 $ — $ 8,148 $ 375 $ 22,113Earnings (losses) (508) 1,755 181 — 1,695 192 3,315Cash flows from operations(1) (508) 5,222 346 — 1,695 196 6,951

(1) Cash flow from operations excludes amounts incurred for the servicing of debt.



LP



Restaurants LPDream CMCCFunds I and II Other Total

Dream ownership % 50% 20% 50% 9%–18% 18%–78%Attributable to Dream:

Revenues $ 149 $ 5,288 $ 4,088 $ 80 $ 634 $ 10,239Earnings (losses) (355) 1,304 416 15 (548) 832Cash flows from operations(1) (355) 2,649 579 15 (477) 2,411





LP



Restaurants LPDream

Windmill

DreamCMCC Funds



Revenues $ 47 $ 23,041 $ 10,900 $ — $ 8,427 $ 1,397 $ 43,812Earnings (losses) (1,224) (917) 38 — 1,951 364 212Cash flows from operations(1) (1,224) 12,565 419 — 1,951 373 14,084




LP





Revenues $ 149 $ 14,053 $ 8,260 $ 80 $ 3,278 $ 25,820Earnings (losses) (914) 3,800 132 15 (1,425) 1,608Cash flows from operations(1) (914) 7,758 521 15 (1,241) 6,139


The following tables summarize the Company’s proportionate share of assets and liabilities in equity accounted investments as at September 30, 2015 andDecember 31, 2014.



LP



Restaurants LPDream

Windmill

DreamCMCC Funds


Dream's interest 50% 20% 50% 50% 9%–18% 18%–78% Assets $ 112,747 $ 210,917 $ 5,142 $ 26,560 $ 19,253 $ 21,922 $ 396,541 Liabilities (100,763) (164,132) (2,732) (10,051) (10,305) (8,445) (296,428) Net assets $ 11,984 $ 46,785 $ 2,410 $ 16,509 $ 8,948 $ 13,477 $ 100,113



LP




Dream's interest 50% 20% 50% 9%–18% 18%–78% Assets $ 303,953 $ 196,657 $ 5,316 $ 11,486 $ 23,417 $ 540,829 Liabilities (290,744) (140,885) (2,944) (6,046) (9,389) (450,008) Net assets $ 13,209 $ 55,772 $ 2,372 $ 5,440 $ 14,028 $ 90,821


Firelight Infrastructure Partners LPDream has an investment in Firelight, which has funded $324.6 million for renewable energy projects (of which Dream’s portion is $64.9 million). Equity inactive operations includes the carrying value of the Company's investment in Firelight and the value of any letters of credit guaranteed by Dream whichamounted to $10.5 million and $10.9 million at September 30, 2015 and December 31, 2014, respectively. A complete list of projects is provided below.

Project Energy source Province Status Completion MWDalhousie Mountain Wind NS Operational Q1 2010 51.0Amherst Wind NS Operational Q2 2012 15.4Erie Ridge Ground-mount Solar ON Operational Q3 2011 4.3Sandhurst Ground-mount Solar ON Operational Q2 2012 10.0Norfolk Bloomsburg Ground-mount Solar ON Operational Q1 2013 10.0Rutley Ground-mount Solar ON Operational Q1 2012 10.0Firelight Solar Rooftop Solar ON Operational 2011–2014 17.8Ontario Wind Wind ON In Development 2016–2017 26.0Hwy 2 Ground-mount Solar ON Operational Q4 2013 10.0Odessa Ground-mount Solar ON Operational Q4 2013 10.0Alfred Ground-mount Solar ON Operational Q4 2013 10.0Unity Ground-mount Solar ON Operational Q1 2014 10.0Welland Ground-mount Solar ON Operational Q3 2014 10.0Ray Ground-mount Solar ON Operational Q4 2014 10.0Newboro 4 Ground-mount Solar ON Operational Q4 2014 10.0South Stormont Ground-mount Solar ON Operational Q1 2015 10.0Nova Scotia Wind Wind NS Operational Q4 2014 15.4Total 239.9

Dream’s investment in Firelight generated $0.9 million of equity losses and $12.6 million of operational cash flows on $46.8 million of equity in active operationsfor the nine months ended September 30, 2015 (nine months ended September 30, 2014 – $3.8 million of equity income and $7.8 million of operational cashflows on $34.6 million of equity in active operations). Included in the results for the nine months ended September 30, 2015, are impairment losses of $7.0million, primarily due to Xeneca Limited Partnership (“Xeneca”), a subsidiary of Firelight, with various waterpower electricity projects in the pre-developmentstage. After pursuing alternate strategies, the board of directors of the general partner of Xeneca approved an operational reorganization plan to suspenddevelopment of Xeneca’s waterpower electricity projects and pursue a sale of assets. As a result, the Company reduced the value of its investment in Xenecato its estimated recoverable amount of $0.5 million and recorded an impairment charge of $6.0 million in the Company’s share of income (losses) from equityaccounted investments in the statement of operations. The estimated recoverable amount was determined using the fair value of net assets less costs ofdisposal. Excluding the impairment charges, earnings for the period would have been $6.1 million, $2.3 million higher than prior year related to incomegenerated from projects put into operation in 2015. The increase in normalized earnings and operational cash flows, were primarily due to the increase inprojects operational in 2015.

Excluding a one time charge of $1.0 million in the third quarter of 2015, Firelight earnings would have been $1.5 million higher than prior year, as a result offour projects becoming operational subsequent to the third quarter of 2014. The impairment charges recorded during the three and nine months endedSeptember 30, 2015 have no impact on the remaining renewable energy investments within Firelight.

The decrease in net assets to $46.8 million of Firelight at September 30, 2015 from $55.8 million at December 31, 2014 was mainly due impairment losses,as discussed above.

Dundee Kilmer Developments LPDream has a 50% interest in Dundee Kilmer, which is a partnership between Dream and Kilmer Van Nostrand Co. Limited for the purpose of developing theCanary District and the Toronto 2015 Pan/Parapan American Games Athletes’ Village. This site is anchored at Front and Cherry Streets by Waterfront Toronto’snew 18-acre Don River Park. Built as a temporary home for the athletes of the 2015 Pan/Parapan American Games, the village will evolve into a vibrant mixeduse neighbourhood known as the Canary District, comprising 810 market condominium units, 253 affordable housing units, an 82,000 square foot YMCA anda 500-bed George Brown College student residence. Net losses in the current period and the prior periods relate to marketing expenses for the condominiumportion of the development. As at September 30, 2015, the market condominiums were 78% pre-sold and together with the sale of the other componentsto third parties, over 90% of the revenue is contracted. Sales of the condominiums continue to progress well and we expect to be substantially sold out whenconstruction is complete in mid-2016.

During the nine months ended September 30, 2015, Dundee Kilmer Developments LP ("Dundee Kilmer"), completed the transfer of the Toronto 2015 Pan/Parapan American Games Athletes’ Village to the Province of Ontario and received a $393.0 million payment ($196.5 million at Dream's share) that wasprimarily used to repay construction debt. On September 15, 2015, the Province of Ontario returned the Athletes' Village to Dundee Kilmer following thecompletion of the Pan/Parapan American Games, at which point the conversion of the units to market condominiums commenced.


Windmill Green Fund LP VDuring the nine months ended September 30, 2015, Windmill Green Fund LP V ("Dream Windmill"), which is a partnership between Dream and WindmillDevelopment Group Ltd., acquired 22 acres of land located on the former Domtar lands along the Ottawa River in Gatineau, Quebec for the purpose ofdeveloping a mixed-use master planned community to be marketed under the name "Zibi". Dream Windmill has an additional 15 acres of directly adjacentlands under contract, which it expects to acquire in 2016, pending certain approvals. The project concept plan, inclusive of all 37 acres, includes over 3 millionsquare feet of density, that consists of over 2,000 residential units and over 1 million square feet of commercial space. In June 2015, the project launched itsfirst building, which is a six-storey condominium project in Gatineau with 65 units and a ground floor retail component, marketed under the name "O". As atSeptember 30, 2015, the project was over 50% pre-sold.

During the nine months ended September 30, 2015, the Company contributed $14.3 million to Dream Windmill and exercised its rights to convert a $2.2million loan to equity in Dream Windmill. In addition, Dream Windmill established a two year credit facility amounting to $15.0 million with a CanadianSchedule I bank, which bears interest at a rate per annum equal to the bank’s prime lending rate plus 1.50% or at the bank's then prevailing bankers' acceptancerate plus 3.0%.

Dream CMCC Capital FundsDream CMCC Capital Fund I and II (“the Funds or Fund I and Fund II”) were investment vehicles formed through the collaboration of Dream and its partner,Canadian Mortgage Capital Corporation, to provide an opportunity for investors to invest with partners who are market leaders in developing, managing andfinancing real estate development projects. Fund I was incepted in June 2011 with $25.0 million of capital raised from high net worth investors and Fund IIwas formed in September 2014 with $65.0 million of capital, raised through the same channel. Dream has approximately $7.5 million of its own equity investedin both Funds. Fund I is expected to return the invested capital to investors and, based on the anticipated performance of the Fund’s current developmentinvestments, deliver an estimated internal rate of return (IRR) of approximately 22%, net of expenses. Fund II is fully committed and is expected to generatean IRR of approximately 16%, net of expenses, from underlying residential, commercial development and mezzanine financing investments. As a co-manager,Dream is entitled to base management fees and a percentage of profits above a preferred return upon realization of investment proceeds within the Funds.Fund II is expected to generate fee income for Dream between 2016 and 2024, subject to the performance of the underlying investments. Dream will continueto seek opportunities to leverage its track record to create additional investment funds and opportunities for asset management in the future.

Other Items

Other Financial AssetsRefer to the Investment and Other Income section of the MD&A for further information on investments in Dream Office REIT, Dream Global REIT and DreamHard Asset Alternatives Trust.

Accounts ReceivableAt September 30, 2015, the carrying value of accounts receivable was $184.7 million compared to $134.0 million at December 31, 2014. Approximately 85%(December 31, 2014 – 85%) of accounts receivable represents amounts receivable under contracted sales of land under development or under housing andcondominium sales contracts. Accounts receivable may fluctuate from period to period, reflecting the cyclical nature of the completion and closing of large-scale real estate projects. The increase in accounts receivable from the prior period is primarily due to the condominium occupancies for the nine monthsended September 30, 2015.

General and Administrative ExpensesThe increase of $0.9 million and $1.7 million in the three and nine months ended September 30, 2015 compared to prior year in general and administrativeexpenses are attributable to increased headcount and corporate transactional activity costs.

Interest ExpenseDuring the three and nine months ended September 30, 2015, interest expense was $4.5 million and $14.6 million respectively (three and nine months endedSeptember 30, 2014 – $4.5 million and $12.8 million). Included in interest expense for the nine months ended September 30, 2015 were non-recurring dischargefees of $1.25 million for the early repayment of certain mortgages related to investment properties and for the early repayment of certain land mortgages.



Project-specific and general debt interest $ 4,632 $ 3,095 $ 12,587 $ 8,816Cancellation fees paid on early repayment of mortgages — — 1,250 —Interest on amounts due to a shareholder — 587 859 1,967Dividends on Preference shares, series 1 643 681 2,001 2,184Amortization of deferred financing costs 318 349 907 718Interest capitalized to real estate development projects (1,067) (246) (3,056) (991)Accretion of effective interest 7 33 26 139Interest expense $ 4,533 $ 4,499 $ 14,574 $ 12,833Add (deduct): Interest capitalized 1,067 246 3,056 991 Amortization of deferred financing costs (318) (349) (907) (718) Accretion expense (7) (34) (26) (139) Mark to market adjustment — (320) (202) (1,147) Accrued interest 14 1,335 143 438Cash interest paid $ 5,289 $ 5,377 $ 16,638 $ 12,258

Income Tax ExpenseThe effective income tax rate was (12.5%) and 12.4% for the three and nine months ended September 30, 2015 (three and nine months ended September30, 2014 – 15.6% and 29.7%). The effective income tax rate for 2015 is lower than the statutory combined federal and provincial tax rate of 26.6% due to non-taxable revenues and the difference between tax rates on income and capital gains. In the three and nine months ended September 30, 2014, the effectiveincome tax rate of 15.6% and 29.7% was higher than the statutory rate of 26.6% due to deferred income tax assets not being recognized.

The Company has modified its estimates of with respect to uncertain tax positions, which has resulted in a recovery of approximately $9.2 million throughincome tax expense for the three and nine month period ending September 30, 2015.

Debt and Preference Shares

At September 30, 2015 total debt was $483.4 million (December 31, 2014 – $395.8 million), which included $36.7 million of Preference shares, series 1(December 31, 2014 – $38.7 million).

A breakdown of interest bearing debt and Preference shares, series 1 is detailed in the table below:

(in thousands of Canadian dollars) Nine months ended September 30, 2015

Constructionloans

Operatingline(1)

Mortgagesand term

debtNon-revolvingterm facility(2)

Due to ashareholder

Preferenceshares,series 1 Total

Balance, December 31, 2014 $ 88,644 $ 136,000 $ 72,094 $ — $ 60,328 $ 38,746 $ 395,812Borrowings 70,143 76,000 45,480 175,000 — — 366,623Repayments (36,273) (126,000) (54,638) — (58,939) — (275,850)Redemption of Preference shares — — — — — (2,116) (2,116)Other — — 267 — (1,389) 26 (1,096)Balance, September 30, 2015 $ 122,514 $ 86,000 $ 63,203 $ 175,000 $ — $ 36,656 $ 483,373

(1) Excludes deferred financing costs offset against the balance of $1,885.(2) Excludes deferred financing costs offset against the balance of $1,091.

Refinancing of Distillery District PropertiesIn the nine months ended September 30, 2015, the Company successfully refinanced its interest in the Distillery District through an $85 million ($42.5 millionat Dream's share) ten-year mortgage bearing interest at 3.9%, with certain of the Distillery District properties mortgaged as security. The Company received$21.0 million of net proceeds from this financing, net of $1.1 million discharge costs and the repayment of existing debt on these properties.

Development and construction loan facilities At September 30, 2015, $62.4 million (December 31, 2014 – $77.6 million) of aggregate development and construction loans were subject to a fixed, weightedaverage interest rate of 4.98% (December 31, 2014 – 5.01%) and will mature between 2015 and 2025. A further $384.3 million (December 31, 2014 – $83.3million) of real estate debt was subject to a weighted average variable interest rate of 3.60% (December 31, 2014 – 3.80%) and matures between 2015 and2024. Included within the real estate debt subject to variable interest, is the non-revolving term facility which the Company entered into an interest rate swapto establish a fixed rate during the three months ended September 30, 2015. Refer to page 32 for further information.


Operating lineThe Company has established a revolving term credit facility (the "operating line") available up to a formula-based maximum not to exceed $290,000 with asyndicate of Canadian financial institutions. The facility bears interest, at the Company’s option, at a rate per annum equal to either the bank’s prime lendingrate plus 1.25% or at the bank’s then prevailing bankers’ acceptance rate plus 2.50%. The facility is secured by a general security agreement and a first chargeagainst various real estate assets in Western Canada. Interest expense relating to the operating line for the three and nine months ended September 30, 2015was $0.9 million and $3.9 million (three and nine months ended September 30, 2014 – $1.1 million and $3.1 million). The Company incurred financing costsrelated to the modification of the terms of the operating line on June 30, 2015 for $0.7 million. These costs were capitalized against the operating line andwill be amortized over the expected term of the loan. Total deferred financing costs of $1.9 million have been netted against the operating line as atSeptember 30, 2015.

In the nine months ending September 30, 2015, the Company amended the borrowing base structure underlying the operating line, available up to a formula-based maximum of up to $290 million. The amended borrowing base structure allows for reduced variability in the formula-based maximum thereby providingmanagement with increased predictability and flexibility in running the operations of the business. Interest and covenant terms remained unchanged and thematurity date was extended from November 30, 2016 to June 30, 2017. At September 30, 2015, $86.0 million was drawn under the Company’s operating line,and the Company had $59.4 million of outstanding letters of credit, leaving an undrawn credit availability of up to $144.6 million.

Non-revolving term facilityIn the nine months ending September 30, 2015, the Company established a new three year term non-revolving term facility amounting to $175 million witha syndicate of Canadian financial institutions (“non-revolving term facility”). The non-revolving term facility is secured by a general security agreement and afirst charge on various real estate and other financial assets of the Company. The loan bears interest at the Company’s option, at a rate per annum equal toeither the bank’s prime lending rate plus 1.50% or at the bank’s then prevailing bankers’ acceptance rate plus 2.75%, payable monthly. The principal balanceis due on its maturity date of June 30, 2018. On July 17, 2015, the Company also entered into an interest rate swap to effectively exchange the variable interestrate for a fixed rate of 3.65% per annum through the use of forward purchase contracts, which commenced on August 6, 2015. The interest rate swap wascontracted for approximately three years and effectively hedges 100% of the principal outstanding under the non-revolving term facility. As at September 30,2015, the non-revolving term facility was fully drawn.

Debt covenants on operating line and non-revolving term facility of DAMThe following are related to covenants between DAM and its lenders in relation to the operating line and the non-revolving term facility, with the exceptionof the adjusted asset coverage ratio, which is only applicable to the non-revolving term facility.

Covenant minimumAdjusted net worth, as defined per the Credit agreement Covenant minimum $ 325,000Adjusted net worth to debt ratio, as defined per the Credit agreement Covenant maximum 1.75Ratio of total interest expense to EBITDA of DAM, as defined per the Credit agreement Covenant minimum 3.00Adjusted asset coverage ratio, as defined per the Credit agreement Covenant minimum $ 875,000

As at September 30, 2015, DAM was in compliance with the above covenants.

Preference shares, series 1The Preference shares, series 1, may be redeemed, at the option of Dream, at any time on or after June 30, 2015, at a price of $7.16 per share.

The Preference shares, series 1, are redeemable by the holders at any time on or after December 31, 2014 and prior to December 31, 2015 at $7.23 per share,and at any time on or after December 31, 2015 at $7.16 per share.

(number of shares) September 30, 2015 December 31, 2014Issued and outstanding, beginning of period 5,428,900 6,000,000Redeemed by holders for cash (296,497) (571,100)Issued and outstanding, end of period 5,132,403 5,428,900

Shareholders’ Equity

Dream is authorized to issue an unlimited number of Dream Class A subordinate voting shares (the “Subordinate Voting Shares”) and an unlimited numberof Dream Class B common shares (“Class B Shares”). The total number of shares outstanding as at September 30, 2015 and December 31, 2014 are as follows:

(number of shares) September 30, 2015 December 31, 2014Subordinate Voting Shares, issued and outstanding, beginning of period 76,220,777 72,614,163Class B Shares converted into Subordinate Voting Shares — 814Deferred share units converted into Subordinate Voting Shares — 9,000Subordinate Voting Shares repurchased (839,200) (83,200)Subordinate Voting Shares issued pursuant to equity offering — 3,680,000Subordinate Voting Shares, issued and outstanding, end of period 75,381,577 76,220,777


(number of shares) September 30, 2015 December 31, 2014Class B Shares, issued and outstanding, beginning of period 3,115,512 3,116,326Class B Shares converted into Subordinate Voting Shares — (814)Class B Shares, issued and outstanding, end of period 3,115,512 3,115,512

Dream renewed its normal course issuer bid (the “Bid”), which commenced on September 2, 2015 and will remain in effect until the earlier of September 1,2016 or the date on which Dream has purchased the maximum number of Subordinate Voting Shares permitted under the Bid. Under the bid, Dream willhave the ability to purchase for cancellation up to a maximum of 3,789,759 of its Subordinate Voting Shares through the facilities of the Toronto Stock Exchange(the “TSX”) at prevailing market prices and in accordance with the rules and policies of the TSX. The actual number of Subordinate Voting Shares that may bepurchased and the timing of any such purchases will be determined by Dream, subject to a maximum daily purchase limitation of 28,927 shares except wherepurchases are made in accordance with block purchase exemptions under applicable TSX rules. In the nine month period ending September 30, 2015, 839,200Subordinate Voting Shares were purchased for cancellation by the Company, at an average price of $8.44 (December 31, 2014 – 83,200). Shareholders mayobtain a copy of the Form 12-Notice of Intention to make a Normal Course Issuer Bid filed by the Company with the TSX, without charge, by contacting Dream.Subsequent to September 30, 2015, 31,927 Dream Subordinate Voting Shares were purchased for cancellation by the Company.

Dream has a stock option plan under which key officers and employees are granted options to purchase Subordinate Voting Shares. Each option granted canbe exercised for one Subordinate Voting Share. As at September 30, 2015, 865,000 options were outstanding under the stock option plan, collectively. As atSeptember 30, 2015, 30,000 options have vested. This includes 715,000 which were issued during the three months ended September 30, 2015 at an averageexercise price of $9.81 per share and vest equally over a five year term.

In addition, Dream has a deferred share unit incentive plan pursuant to which deferred share and income deferred share units (“DSUs”) may be granted toeligible directors, senior management and certain service providers. As at September 30, 2015 there were 58,685 DSUs outstanding (December 31, 2014 –18,000 units outstanding). During the nine months ended September 30, 2015, compensation expense of $83 (nine months ended September 30, 2014 –$383) related to this plan was recognized as general and administrative expense. In the three and nine months ended September 30, 2015, the Board of Directors of DAM paid dividends to the non-controlling interest of DAM of $2.0 millionand $3.4 million (three and nine months ended September 30, 2014 – $nil and $0.8 million). During the nine months ended September 30, 2015, the Companyutilized cash in its operations of $30.9 million, as such the dividends of $3.4 paid by DAM to the non-controlling interest on its non-voting common sharesmay be viewed as an economic return of capital. The dividends paid to the non-controlling interest of DAM of $3.4 were funded from cash on hand and otherfinancing activities. Cash flows from operations are subject to fluctuations. Refer to page 34 of this MD&A for further details.

Liquidity and Capital Resources

Our capital consists of construction loans, an operating line, a non-revolving term facility, mortgages and term debt, shareholder loans, preference shares andshareholders’ equity. Our objective in managing capital is to ensure adequate operating funds are available to fund land, housing and condominium developmentcosts, to cover leasing costs, overheads and capital expenditures for investment and recreational properties; to provide for resources needed to acquire newproperties and invest in new ventures at reasonable interest costs; and to generate a target rate of return on investments. No material changes have occurredin future contractual obligations since September 30, 2015.


A summary of the classification of the Company's balance sheet is included below.


(in thousands of Canadian dollars)Less than 12

monthsGreater than 12

monthsNon-

determinable Total

AssetsCash and cash equivalents $ 23,899 $ — $ — $ 23,899Accounts receivable 163,514 21,153 — 184,667Other financial assets — 177,043 — 177,043Housing inventory — — 49,359 49,359Condominium inventory — — 83,870 83,870Land inventory — — 588,210 588,210Investment properties — 134,459 — 134,459Recreational properties — 33,055 — 33,055Equity accounted investments — 100,113 — 100,113Capital and other operating assets 4,896 23,871 — 28,767Intangible asset — 43,000 — 43,000Total assets $ 192,309 $ 532,694 $ 721,439 $ 1,446,442

LiabilitiesAccounts payable and accrued liabilities $ 70,509 $ 22,159 $ — $ 92,668Income and other taxes 30,808 — — 30,808Provision for real estate development costs 57,510 — — 57,510Customer deposits — — 27,522 27,522Construction loans(1) 64,257 58,257 — 122,514Operating line — 84,115 — 84,115Non-revolving term facility — 173,909 — 173,909Mortgages and term debt 12,346 50,857 — 63,203Preference shares, series 1 36,656 — — 36,656Deferred income taxes — 37,827 — 37,827Total liabilities $ 272,086 $ 427,124 $ 27,522 $ 726,732

(1) The amounts presented are consistent with the contractual terms of repayment. For instruments which are due on demand, the total liability has been included in the less than 12 monthscategory. In some instances, this is inconsistent with the repayment timing expected by management.

As at September 30, 2015, there are adequate resources to address the Company's short term liquidity requirements. Certain financial instruments which aredue on demand are presented as due within 12 months, which is inconsistent with the repayment timing expected by management. Due to the nature of ourdevelopment business, the Company expects to fund a portion of our current liabilities through sales of housing, condominium and land inventory, which areall classified as 'non-determinable'. In addition, at September 30, 2015, $86.0 million was drawn under the Company’s operating line, and had $59.4 millionof outstanding letters of credit, leaving an undrawn credit availability of up to $144.6 million.

Significant Sources and Uses of Cash

Operating Activities


Earnings excluding non-cash items $ 27,256 $ 4,383 $ 38,031 $ 27,602Changes in working capital (67,260) 67,391 (73,512) 15,081Acquisition of real estate inventory (540) (9,365) (13,879) (39,931)Advances of construction loan 14,532 (21,045) 33,870 80Development of real estate inventory, net of sales 23,300 (41,741) (15,406) (26,651)Net cash flows used in operating activities $ (2,712) $ (377) $ (30,896) $ (23,819)

We had cash outflows from operating activities of $2.7 million and $30.9 million for the three and nine months ended September 30, 2015 (three and ninemonths ended September 30, 2014 – outflows of $0.4 million and $23.8 million). The outflows in the third quarter of 2015 were primarily attributable tofluctuations in accounts receivable within changes in working capital.


Investing Activities

For the three months ended September For the nine months ended September2015 2014 2015 2014

Net additions to investment and recreational properties $ (6,881) $ (579) $ (11,831) $ (2,634)Net contributions to equity accounted and other investments 5,735 (1,231) (1,285) (3,055)Acquisition of intangible asset — (43,000) — (43,000)Net acquisition of deposits, capital and financial assets (531) (128) (5,154) (4,732)Net cash flows used in investing activities $ (1,677) $ (44,938) $ (18,270) $ (53,421)

We had cash outflows of $1.7 million and $18.3 million for investing activities for the three and nine months ended September 30, 2015 (three and ninemonths ended September 30, 2014 – $44.9 million and $53.4 million). The largest use of funds in the three and nine months ending September 30, 2015related to additions of investment and recreational properties in the period.

Financing Activities


Net debt borrowings $ 1,011 $ (20,539) $ (68,097) $ (20,017)Equity issuance — — — 54,965Net operating line borrowings 18,000 56,000 (50,000) 46,000Shares repurchased under NCIB (4,655) — (7,087) —Redemption of preference shares, series 1 (2,023) (4,164) (2,116) (4,164)Costs incurred on modification of operating line — — (725) —Proceeds from issuance of non-revolving term facility — — 173,810 —Dividends paid to non-controlling interest (1,950) — (3,405) (778)Net cash flows from financing activities $ 10,383 $ 31,297 $ 42,380 $ 76,006

For the three and nine months ended September 30, 2015, we had net inflows of $10.4 million and $42.4 million (three and nine months ended September30, 2014 – net inflows of $31.3 million and $76.0 million) from financing activities, which included $18.0 million of net borrowings and $50.0 million of netrepayments relating to the operating line (three and nine months ended September 30, 2014 – $56.0 million and $46.0 million). In the nine months ended,cash inflows of $173.8 million resulted from the net proceeds of our non-revolving term facility.

Cash RequirementsThe nature of the real estate business is such that we require capital to fund non-discretionary expenditures with respect to existing assets, as well as to fundgrowth through acquisitions and developments. At September 30, 2015, we had $23.9 million (December 31, 2014 – $30.7 million) in cash and cash equivalents.Our intention is to meet short-term liquidity requirements through cash from operating activities, working capital reserves and operating debt facilities. Inaddition, we anticipate that cash from operations will continue to provide the cash necessary to fund operating expenses and debt service requirements.


Off Balance Sheet Arrangements

We conduct our real estate activities from time to time through joint arrangements with third-party partners. At September 30, 2015, we were contingentlyliable for the obligations of the other owners of the unincorporated joint arrangements in the amount of $11.0 million (December 31, 2014 – $29.4 million).We have available to us other venturers’ share of assets to satisfy the obligations, if any, that may arise.

Dream and its operating subsidiaries may become liable under guarantees that are issued in the normal course of business and with respect to litigation andclaims that arise from time to time. In the opinion of management, any liability that may arise from such contingencies would not have a material adverseeffect on the condensed consolidated financial statements of Dream.

Commitments and Contingencies

As part of our various agreements to purchase land and housing, we have commitments totalling $13.0 million as at September 30, 2015 (December 31, 2014– $71.3 million), which will become payable in future periods upon the satisfaction of certain conditions pursuant to such agreements. For further details referto page 13 of this MD&A.

Levies relating to signed municipal agreements received by Dream as at September 30, 2015 may result in future obligations totalling $2.6 million (December 31,2014 – $5.1 million).

We are contingently liable for letters of credit and surety bonds that have been provided to support land developments in the amount of $46.1 million as atSeptember 30, 2015 (December 31, 2014 – $65.7 million).

Shareholder Arrangements

Dream and Sweet Dream Corp. (“SDC”) entered into an agreement (the "Permitted Sales Agreement") that provides for “put rights” in favour of each of them.Upon the occurrence of certain triggering events, Dream may by notice in writing to SDC require SDC, at SDC’s option, to either (i) acquire all of the non-votingcommon shares in the capital of DAM (the “DAM Common Shares”) and all of the Class C voting preference shares in the capital of DAM (the “DAM Class CShares”) held by Dream, or (ii) cause the sale of all of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale ofassets, distribute the net proceeds from the sale of assets to the shareholders of DAM. Upon the occurrence of certain different triggering events, SDC mayby notice in writing to Dream require Dream, at Dream’s option, to either (i) acquire all of the DAM Common Shares and DAM Class C Shares held by SDC, or(ii) cause the sale of all of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale of assets, distribute the proceedsto DAM’s shareholders. Completion of any transaction under this agreement will be subject to receipt of the approval of the shareholders of Dream, if requiredby law or under the agreement, and the receipt of any required regulatory approvals. For additional details regarding the Permitted Sales Agreement, see ourAnnual Information Form for the year ended December 31, 2014.

Transactions with Related Parties

The Company has agreements for asset management and management services, shared services and cost sharing administrative services with related parties.The Company also has other transactions conducted with related parties, which are outlined in Note 37 of our condensed consolidated financial statementsfor the three and nine months ended September 30, 2015.

Critical Accounting Estimates

The preparation of the condensed consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions thataffect the reported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Critical accountingestimates represent estimates made by management that are, by their very nature, uncertain. We evaluate our estimates on an ongoing basis. Such estimatesare based on historical experience and on various other assumptions that we believe are reasonable under the circumstances, and these estimates form thebasis for making judgments about the carrying value of assets and liabilities and the reported amount of revenues and expenses that are not readily apparentfrom other sources. Actual results may differ from these estimates under different assumptions or conditions. A detailed summary of the significant judgmentsand estimates made by management in the preparation and analysis of our financial results is included in Note 4 of our condensed consolidated financialstatements for September 30, 2015.

Internal Control over Financial Reporting

At September 30, 2015, the CEO and CFO, along with the assistance of senior management, have designed disclosure controls and procedures to providereasonable assurance that material information relating to Dream is made known to the CEO and CFO, and have designed internal controls over financialreporting to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the unaudited interim condensed consolidatedfinancial statements in accordance with IFRS.

During the three months ended September 30, 2015 there have not been any changes that have materially affected, or are reasonably likely to materiallyaffect, the internal controls over financial reporting.


Changes in Accounting Policies Including Initial Adoption of New Accounting Pronouncements

New Accounting Standards Adopted during the Year and Future Accounting StandardsWe have adopted new or revised standards for retail properties under development, including any consequential amendments thereto, for the period effectiveJanuary 1, 2015, as detailed in Note 3 of the Company’s condensed consolidated financial statements. Changes in accounting policies adopted by Dream weremade in accordance with the applicable transitional provisions as provided in those standards and amendments. There were no changes to the condensedconsolidated financial statements as a result of the adoption of the new IFRS pronouncements.

Financial Instruments

A detailed discussion of our strategy and risk management in respect of financial instruments is provided in Note 33 of our condensed consolidated financialstatements for the three months ended September 30, 2015.

Risk Factors

We are exposed to various risks and uncertainties, many of which are beyond our control. A detailed description of our business environment and risks, exceptfor those outlined below, is contained in our Annual Information Form and in our Management Discussion & Analysis for the year ended December 31, 2014,both of which are posted on our website at www.dream.ca and on SEDAR at www.sedar.com.

Given the prominence of the oil and gas industry in the Provinces of Alberta and Saskatchewan, the economies of these Provinces can be significantly impactedby the price of oil. Similarly, because of our substantial land and housing development operations in Alberta and Saskatchewan, any substantial decline in theprice of oil could also adversely affect the Company's operating results. We continuously evaluate the economic health of the markets in which we operatethrough various means to ensure that we have identified and, where possible, mitigate risks to the Company, including the potential impacts of changes inthe price of oil. Additionally, the land development process is longer term in nature, which, to some extent, mitigates the impacts of short term fluctuationsin the health of the economies in which we operate. As of September 30, 2015 the Company had not identified any material adverse effect on our businessas a result of the current softening of oil prices.

Our Saskatchewan and Alberta operations have historically focused on the Company's land and housing businesses, as well as a golf course reported underour recreational properties. The Company has also recognized the potential of our substantial land holdings in these markets for retail and multi-familyresidential development opportunities and we expect to continue to increase the activity for these types of developments in the future. Our retail developmentsutilize the Company’s existing land inventory to develop assets which will derive cash flows over a longer term.

Forward-Looking Information

Certain information in this MD&A may constitute “forward-looking information” within the meaning of applicable securities legislation, including statementsin respect of the anticipated timelines and GLA of future retail developments; the estimated cost of development; estimated costs of completion and estimatedvalue upon completion for retail developments; anticipated timing and size of our future housing and condominium projects; estimated lot and developedacres sales results as well as anticipated lot inventories; expected occupancies in our housing and condominium projects and timing thereof; anticipatedreturns from building on owned land; our strategies to grow our business, including our renewable power and asset management business; anticipated effectof investment in Dream Office REIT on net margin; and anticipated IRR of Dream CMCC Capital Funds I and II and expected management fee revenue earnedtherefrom. The forward-looking information in this MD&A is presented for the purpose of providing disclosure of the current expectations of our future eventsor results, having regard to current plans, objectives and proposals, and such information may not be appropriate for other purposes. Forward-lookinginformation may also include information regarding our respective future plans or objectives and other information that is not comprised of historical fact.Forward-looking information is predictive in nature and depends upon or refers to future events or conditions; as such, this MD&A uses words such as “may”,“would”, “could”, “should”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intend”, “plan”, “forecast”, “project”, “estimate” and similar expressions suggestingfuture outcomes or events to identify forward-looking information.

Any such forward-looking information is based on information currently available to us, and is based on assumptions and analyses made by us in light of ourrespective experiences and perception of historical trends, current conditions and expected future developments, as well as other factors we believe areappropriate in the circumstances, including but not limited to: that no unforeseen changes in the legislative and operating framework for the respectivebusinesses will occur; that we will meet our future objectives and priorities; that we will have access to adequate capital to fund our future projects and plans;that our future projects and plans will proceed as anticipated; and that future market and economic conditions will occur as expected.

However, whether actual results and developments will conform with the expectations and predictions contained in the forward-looking information is subjectto a number of risks and uncertainties, many of which are beyond our control, and the effects of which can be difficult to predict. Factors that could causeactual results or events to differ materially from those described in the forward-looking information include, but are not limited to: adverse changes in generaleconomic and market conditions; our inability to raise additional capital; our inability to execute strategic plans and meet financial obligations; and risksassociated with our anticipated real estate operations and investment holdings in general, including environmental risks, market risks, and risks associatedwith inflation, changes in interest rates and other financial exposures. For a further description of these and other factors that could cause actual results todiffer materially from the forward-looking information contained, or incorporated by reference, in this MD&A. See Risk Factors section on page 37 of thisMD&A.


In evaluating any forward-looking information contained, or incorporated by reference, in this MD&A, we caution readers not to place undue reliance on anysuch forward-looking information. Any forward-looking information speaks only as of the date on which it was made. Unless otherwise required by applicablesecurities laws, we do not intend, nor do we undertake any obligation, to update or revise any forward-looking information contained, or incorporated byreference, in this MD&A to reflect subsequent information, events, results, circumstances or otherwise, except as required by law.

Additional Items

“Gross margin” is an important measure of operating earnings in each business segment of Dream and represents revenue less direct operating costs andasset management and management services expenses, excluding selling, marketing and other operating costs. Gross margin may be expressed as an absolutenumber or as a percentage of revenue.

“Net margin” is an important measure of operating earnings in each business segment of Dream and represents gross margin, as defined above, includingselling, marketing and other operating costs. Net margin may be expressed as an absolute number or as a percentage of revenue.

“Credit agreement” is the revolving term credit facility and the non-revolving term facility between DAM and a syndicate of Canadian financial institutions.

Non-IFRS Measures

We believe that important measures of operating performance include certain performance measures that are not defined under IFRS and, as such, may notbe comparable to similar performance measures used by other companies. Throughout this MD&A, there are references to certain performance measures,which management believes are relevant in assessing the economics of the business of Dream. While these performance measures are not defined by IFRS,do not have a standardized meaning and may not be comparable with similar measures presented by other companies, we believe that they are informativeand provide further insight as supplementary measures of earnings for the period and cash flows.

“Assets under management (“AUM”)” is the respective carrying value of total assets managed by the Company on behalf of its clients, investors or partners.Assets under management is a measure of success against the competition and consists of growth or decline due to asset appreciation, changes in fair marketvalue, acquisitions and dispositions, operations gains and losses, and inflows and outflows of capital.

"Committed leases" represent the GLA under an agreement to lease between a tenant and the Company as at September 30, 2015.

"Debt to total assets" represents the total debt obligations divided by the total assets of the Company.

"Debt to enterprise value" represents the total debt obligations of the Company divided by the enterprise value, measured as the total market capitalizationof the Dream Subordinated Voting Shares and Dream Class B Common Shares plus the total debt, non-controlling interest and Preference shares, series 1minus cash and cash equivalents.

"Development yield" is calculated using the Estimated Stabilized NOI at completion and the total estimated cost of development including land.

"Estimated cost of development" represents the total estimated costs to develop each retail site specified to the point where the space is completed andleasable to retail tenants and includes the cost of land, building, interest and other carrying costs. Estimated cost of development is forward-looking informationand the estimated cost of development may differ materially from the estimates used herein.

"Estimated costs to complete" represents the estimated costs yet to be incurred by the Company in order to complete the development of the real estateasset including land, building, interest and other carrying costs. The estimated costs to complete is forward-looking information and the estimated costs ofcompletion may differ materially from the estimates used herein.

"Estimated Stabilized NOI" represents expected income for the property at completion that reflects relatively stable operations.

"Estimated value upon completion" represents the estimated value of a real estate asset upon completion of the development of such asset. The estimatedvalue upon completion is forward-looking information and may differ materially from the estimates used herein.

“Fee earning assets under management” represents assets under management that are managed under contractual arrangements that entitle the Companyto earn asset management revenues.

“Internal rate of return" or "IRR” is an important measure of average annual returns delivered over a period of time, calculated based on Dream’s marketcapitalization (including non-controlling interests) at September 30, 2015. The internal rate of return for the Dream CMCC Capital Funds are calculated basedon the estimated returns and completion date of the investments within the Fund, net of fund expenses and management fees.

Additional Information

Additional information relating to Dream is available on SEDAR at www.sedar.com. The Subordinate Voting Shares trade on the Toronto Stock Exchange underthe symbol “DRM” and Dream Preferred shares, series 1, trade under the symbol “DRM.PR.A”.


Condensed Consolidated Statements of Financial PositionAs at September 30, 2015 and December 31, 2014 (unaudited)

(in thousands of Canadian dollars) Note September 30, 2015 December 31, 2014AssetsCash and cash equivalents $ 23,899 $ 30,685Accounts receivable 5 184,667 134,005Other financial assets 6 177,043 70,645Housing inventory 7 49,359 71,588Condominium inventory 8 83,870 75,515Land inventory 9 588,210 526,960Investment properties 10 134,459 94,072Recreational properties 11 33,055 26,970Equity accounted investments 12 100,113 90,821Capital and other operating assets 13 28,767 58,937Intangible asset 43,000 43,000

Total assets $ 1,446,442 $ 1,223,198

LiabilitiesAccounts payable and other liabilities 14 $ 92,668 $ 85,879Income and other taxes payable 22 30,808 55,348Provision for real estate development costs 15 57,510 55,036Customer deposits 27,522 22,741Construction loans 16 122,514 88,644Operating line 17 84,115 134,500Non-revolving term facility 18 173,909 —Mortgages and term debt 19 63,203 72,094Due to a shareholder 20 — 60,328Preference shares, series 1 21 36,656 38,746Deferred income taxes 22 37,827 18,049

Total liabilities 726,732 631,365

Shareholders’ equityShare capital 23 990,814 997,901Reorganization adjustment 23 (944,577) (944,577)Contributed surplus 34 1,308 767Retained earnings 465,577 357,704Accumulated other comprehensive income 24 6,271 17,457Total shareholders’ equity 519,393 429,252Non-controlling interest 25 200,317 162,581Total equity 719,710 591,833Total liabilities and equity $ 1,446,442 $ 1,223,198

See accompanying notes to the condensed consolidated financial statements. Commitments and contingencies (Note 36)Subsequent events (Note 23)

On behalf of the Board of Directors of Dream Unlimited Corp.:

Michael J. Cooper Ned GoodmanDirector Chair


Condensed Consolidated Statements of Earnings For the three and nine months ended September 30, 2015 and 2014 (unaudited)

Three months ended September 30, Nine months ended September 30,(in thousands of Canadian dollars, except forper share amounts) Note 2015 2014 2015 2014

Revenues 26 $ 130,350 $ 77,704 $ 244,039 $ 261,246Direct operating costs 27 (93,536) (53,953) (159,519) (167,024)Asset management and advisory services

expenses 28 (2,487) (2,061) (6,233) (8,474)

Gross margin 34,327 21,690 78,287 85,748

Selling, marketing and other operating costs 29 (8,392) (7,279) (22,655) (20,142)Net margin 25,935 14,411 55,632 65,606

Other income (expenses):General and administrative expenses 30 (3,811) (2,895) (12,619) (10,882)Fair value changes of investment properties 10 119 368 9,823 7,326Share of gains from equity accounted

investments 12 3,315 832 212 1,608

Investment and other income 31 2,222 1,275 5,899 4,622Interest expense 32 (4,533) (4,499) (14,574) (12,833)Gain on reorganization of asset management

agreement 37 — — 127,313 —

Gain on settlement of debt 20 — — 2,248 —Fair value changes in derivative financial

instruments 33 (54) (220) 1,570 140

Earnings before income taxes 23,193 9,272 175,504 55,587Income tax recovery/(expense) 22 2,892 (1,447) (21,800) (16,515)Earnings for the period $ 26,085 $ 7,825 $ 153,704 $ 39,072

Total earnings for the period attributable to:Shareholders $ 18,254 $ 5,480 $ 107,822 $ 27,064Non-controlling interest 25 7,831 2,345 45,882 12,008Earnings for the period $ 26,085 $ 7,825 $ 153,704 $ 39,072

Basic earnings per share 35 $ 0.23 $ 0.07 $ 1.36 $ 0.35Diluted earnings per share 35 $ 0.22 $ 0.07 $ 1.29 $ 0.35

See accompanying notes to the condensed consolidated financial statements.


Condensed Consolidated Statements of Comprehensive IncomeFor the three and nine months ended September 30, 2015 and 2014 (unaudited)

Three months ended September 30, Nine months ended September 30,(in thousands of Canadian dollars) Note 2015 2014 2015 2014Earnings for the period $ 26,085 $ 7,825 $ 153,704 $ 39,072Other comprehensive incomeUnrealized gain (loss) on financial assets

designated as available for sale, net oftax expense (18,881) (3,102) (18,371) 2,685

Unrealized gain from foreign currencytranslation (reclassified to earnings onpartial or full disposal of foreignoperation) 2,565 1,075 2,904 903

Unrealized loss on interest rate hedge (460) — (460) —

Total other comprehensive income (loss) (16,776) (2,027) (15,927) 3,588Other comprehensive income 9,309 5,798 137,777 42,660

Total comprehensive income for theperiod attributable to:Shareholders $ 6,472 $ 4,057 $ 96,636 $ 29,575Non-controlling interest 25 2,837 1,741 41,141 13,085Comprehensive income $ 9,309 $ 5,798 $ 137,777 $ 42,660



Condensed Consolidated Statements of Changes in EquityFor the nine months ended September 30, 2015 and 2014(unaudited)

(in thousands of Canadiandollars)

Dreamshare

capital(Note 23)

Contributedsurplus

Reorganizationadjustment

(Note 23)Retainedearnings

Accumulatedother

comprehensiveincome

Totalshareholders'

equity

Non-controlling

interestTotal

equity

Balance, January 1, 2014 $ 942,845 $ 78 $ (944,577) $ 303,694 $ 14,792 $ 316,832 $ 138,771 $ 455,603

Earnings for the period — — — 27,064 — 27,064 12,008 39,072

Other comprehensive incomefor the period — — — — 2,511 2,511 1,077 3,588

Dividends declared — — — — — — (778) (778)

Share issuance, net ofissuance costs 55,712 — — — — 55,712 — 55,712

Share-based compensation(Note 34) 124 607 — — — 731 — 731

Balance, September 30, 2014 $ 998,681 $ 685 $ (944,577) $ 330,758 $ 17,303 $ 402,850 $ 151,078 $ 553,928

(in thousands of Canadiandollars)

Dreamshare

capital(Note 23)

Contributedsurplus

Reorganizationadjustment

(Note 23)Retainedearnings

Accumulatedother

comprehensiveincome

Totalshareholders'

equity

Non-controlling

interestTotal

equity

Balance, January 1, 2015 $ 997,901 $ 767 $ (944,577) $ 357,704 $ 17,457 $ 429,252 $ 162,581 $ 591,833

Earnings for the period — — — 107,822 — 107,822 45,882 153,704

Other comprehensive loss forthe period — — — — (11,186) (11,186) (4,741) (15,927)

Dividends declared — — — — — — (3,405) (3,405)

Share repurchase undernormal course issuer bid(Note 23) (7,087) — — — — (7,087) — (7,087)

Share-based compensation (Note 34) — 541 — 51 — 592 — 592

Balance, September 30, 2015 $ 990,814 $ 1,308 $ (944,577) $ 465,577 $ 6,271 $ 519,393 $ 200,317 $ 719,710



Condensed Consolidated Statements of Cash FlowsFor the nine months ended September 30, 2015 and 2014(unaudited)

Nine months ended September 30,(in thousands of Canadian dollars) Note 2015 2014Operating activitiesEarnings for the period $ 153,704 $ 39,072

Adjustments for non-cash items:Depreciation and amortization 2,508 2,016Fair value changes in investment properties 10 (9,823) (7,326)Gain on re-organization of asset management contract 37 (127,313) —Share of earnings from equity accounted investments 12 (212) (1,608)Gain on settlement of debt 20 (2,248) —Deferred income taxes 22 23,662 (3,706)Other adjustments 38 (2,247) (846)

Changes in non-cash working capital 38 (73,512) 15,081Acquisition of housing inventory 7 (530) (8,765)Acquisition of condominium inventory 8 (330) (13,451)Development of housing inventory, net of sales 7 28,908 11,848Development of condominium inventory, net of sales 8 (6,146) 14,604Advances for construction loan, net of repayments 16 33,870 80Acquisition of land inventory 9 (13,019) (17,715)Development of land inventory, net of sales 9 (38,168) (53,103)Net cash flows used in operating activities (30,896) (23,819)

Investing activitiesAdditions to investment properties 10 (6,011) (349)Additions to recreational properties 11 (5,820) (3,698)Contributions to equity accounted investments (18,012) (6,514)Distributions from equity accounted and other investments 16,727 3,459Disposal of recreational properties — 1,413Acquisition of financial assets and other assets (5,154) (4,732)Acquisition of intangible asset — (43,000)Net cash flows used in investing activities (18,270) (53,421)

Financing activitiesBorrowings pursuant to mortgage and term debt 19 45,480 26,368Repayments pursuant to mortgage and term debt 19 (54,638) (31,645)Repayment of shareholder loan 20 (58,939) (14,740)Advances (repayments) from operating line 17 (50,000) 46,000Costs incurred on modification of operating line 17 (725) —

Proceeds from issuance of non-revolving term facility, net offinancing costs 18 173,810 —

Dividends paid to non-controlling interest (3,405) (778)Redemption of Preference shares, series 1 21 (2,116) (4,164)Shares repurchased under normal course issuer bid 23 (7,087) —Equity issuance, net of costs — 54,965Net cash flows from financing activities 42,380 76,006

Decrease in cash and cash equivalents (6,786) (1,234)Cash and cash equivalents, beginning of period 30,685 28,996Cash and cash equivalents, end of period 38 $ 23,899 $ 27,762



1. Business and structure

Dream Unlimited Corp. (“Dream” or the “Company”) was incorporated under the Business Corporations Act (Ontario) on April 9, 2013. A reorganization ofthe Company's share capital occurred in 2013, which is summarized in Note 23.

The Company, through its subsidiary, Dream Asset Management Corp. ("DAM"), is one of Canada’s leading real estate companies with approximately $15billion of assets under management in North America and Europe. The scope of the business includes residential land development, commercial development,housing development, condominium and mixed use development, asset management and management services for three TSX-listed real estate investmenttrusts and one TSX-listed diversified, hard asset alternatives trust, investments in and management of Canadian renewable energy infrastructure and commercialproperty ownership. Sweet Dream Corp. (“SDC”) has a 29.77% non-controlling interest in DAM and is wholly owned by the Chief Executive Officer of DAMand Dream.

The address of the Company’s registered office is 30 Adelaide Street East, Suite 1600, Toronto, Ontario, Canada. It is listed on the Toronto Stock Exchange andis domiciled in Canada.

2. Basis of preparation

The condensed consolidated financial statements are prepared in compliance with International Financial Reporting Standards (“IFRS”) as issued by theInternational Accounting Standards Board (“IASB”) and are in accordance with International Accounting Standard (“IAS”) 34, “Interim Financial Reporting,”on a basis consistent with the accounting policies disclosed in the audited consolidated financial statements for the year ended December 31, 2014, exceptas disclosed in Note 3. Accordingly, certain information and footnote disclosures normally provided in annual consolidated financial statements prepared inaccordance with IFRS have been omitted or condensed.

The condensed consolidated financial statements should be read in conjunction with the most recently issued Annual Report of the Company, which includesinformation necessary to understanding the Company's businesses and financial statement presentation.

All dollar amounts discussed herein are in thousands of Canadian dollars, unless otherwise stated.

The condensed consolidated financial statements for the period ended September 30, 2015 were approved by the Board of Directors for issue on November 5,2015.

3. Summary of significant accounting policies

The significant accounting policies are presented in Note 3 of the Company’s audited consolidated financial statements for the year ended December 31, 2014.The following are the new accounting policies adopted during 2015.

Fair value through profit and loss/(FVTPL)

Financial instruments in this category, which include the redemption and retraction options on the Preference shares, series 1, are initially and subsequentlyrecognized at fair value. Gains and losses arising from changes in fair value are presented within net income in the consolidated statements of comprehensiveincome in the period in which they arise. Changes in derivatives are also categorized as FVTPL unless they have been designated as hedges.

Hedging instruments and activities

At the inception of a hedging transaction, the Company documents the relationship between hedging instruments and hedged items, as well as its riskmanagement objectives and strategy for undertaking various hedging transactions. The Company also documents its assessment, both at hedge inceptionand on an ongoing basis, of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flowsof hedged items.

The effective portion of changes in the fair value of derivatives that are hedges of a particular risk associated with a recognized asset or liability or a highlyprobable forecasted transaction is recognized in other comprehensive income. The gain or loss relating to the ineffective portion, if any, is recognizedimmediately in the statement of earnings.

The realized gain or loss recognized on settlement of a hedging instrument designated as a cash flow hedge will be reclassified to earnings over the same basisas the cash flows received from the hedged item. When a hedging instrument no longer meets the criteria for hedge accounting, any cumulative gains orlosses existing in other comprehensive income at that time are recognized in earnings immediately.

Notes to the Condensed Consolidated Financial Statements (in thousands of Canadian dollars, except numbers of shares and per share amounts) (unaudited)


Retail development investment properties

Once appropriate evidence of a change in use of land held or under development is established, typically upon physical tenant occupancy for investmentproperty, the land is transferred from inventory to investment properties. At that time, the land is recognized at fair value in accordance with our accountingpolicy for investment properties, and any gain or loss is reflected in fair value changes of investment properties, within the statement of earnings, in the periodthe transfer occurs. The gain or loss recorded represents the difference between the fair value of the transferred property and the accumulated costs ofdevelopment.

The fair value of retail development investment properties is determined by management on a property-by-property basis using a discounted cash flowvaluation methodology. Within the discounted cash flows, the significant unobservable inputs include: forecasted net operating income based on the location,type and quality of the property, supported by the terms of actual or anticipated future leasing, current market rents for similar properties, adjusted for marketallowances; discount rates based on market terms at the valuation date, adjusted for property specific risks; estimated costs to complete based on internalbudgets, terms of construction contracts, market conditions; expected completion dates; development and leasing risks specific to the property; and thestatus of approvals and/or permits.

4. Critical accounting estimates, judgments and assumptions

The preparation of these condensed consolidated financial statements in accordance with IFRS requires the Company to make judgments in applying itsaccounting policies and estimates and assumptions about the future. These judgments, estimates, and assumptions affect the reported amounts of assets,liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities included in the Company’s condensed consolidated financialstatements. The Company evaluates its estimates on an ongoing basis. Such estimates are based on historical experience and on various other assumptionsthat the Company believes are reasonable under the circumstances, and these estimates form the basis for making judgments about the carrying value ofassets and liabilities and the reported amount of revenues and expenses that are not readily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions. Critical accounting judgments, estimates and assumptions made by the Company in the preparation ofthese condensed consolidated financial statements in addition to those judgments, estimates and assumptions disclosed in Note 4 of the Company’s auditedconsolidated financial statements for the year ended December 31, 2014 are as follows:

Fair value of hedging instruments and effectiveness

Critical judgments are made in respect of assumptions used to estimate the fair value of hedging instruments and to assess the effectiveness of the hedgingarrangement. The basis of valuation and assessment of effectiveness for the Company's derivatives is set out in Note 18; however, the fair values reportedmay differ from how they are ultimately recognized if there is volatility in interest rates between the valuation date and settlement date.

Transfer of land to retail development investment properties

Raw land is usually unentitled property without the regulatory approvals which allow the construction of residential, industrial, commercial and mixed usedevelopments. When development plans are formulated, the Company may decide that specific land holdings will be developed into investment properties.Once appropriate evidence of a change in use is established, typically upon tenant occupancy for investment properties, the land is transferred to investmentproperties.

Fair value of retail development investment properties

Fair value measurement of an investment property under development is applied only if the fair value is considered to be reliably measurable. In rarecircumstances, investment properties under development may be carried at cost until its fair value becomes reliably measurable. It may sometimes be difficultto determine reliably the fair value of retail investment properties under development. In order to evaluate whether the fair value of an investment propertiesunder development can be determined reliably, management considers various factors including the terms of the construction contract, the stage of completion,the location, type and quality of the property, expected completion dates, current market rents for similar properties, the level of reliability of cash inflowsafter completion, the development risks specific to the property, past experience with similar constructions, status of approvals and/or permits, estimatedcosts to complete and market conditions.



5. Accounts receivable

The details of accounts receivable are summarized in the following table:

Note September 30, 2015 December 31, 2014Contracted sales of land under development $ 92,196 $ 104,024Condominium sales 64,935 6,195Housing sales 4,819 3,514Receivables relating to investment and recreational properties 4,506 3,631Asset management and advisory services fees 37 8,727 9,797Other 9,484 6,844

$ 184,667 $ 134,005

6. Other financial assets

Other financial assets consisted of the following:

Note September 30, 2015 December 31, 2014Investment in Dream Office REIT $ 24,544 $ 29,117Investment in Dream Office REIT LP B units 102,821 —Investment in Dream Global REIT 24,752 23,996Investment in Dream Global REIT, deferred trust units 10,125 7,120Investment in Dream Alternatives 3,080 3,498Loans receivable 3,285 674Investments in equity securities not quoted in an active market 5,718 5,630Redemption option on Preference shares, series 1 1,846 —Other investments in equity securities quoted in an active market 872 610

33 $ 177,043 $ 70,645

Dream Office REIT

Three months ended September 30, Nine months ended September 30,2015 2014 2015 2014

Return of capital portion $ 2,456 $ 421 $ 5,333 $ 1,264Investment income portion 909 227 2,044 681Distributions earned on investment $ 3,365 $ 648 $ 7,377 $ 1,945

On April 2, 2015, the Company and Dream Office REIT announced a reorganization where the Company received 4,850,000 LP Class B Units, Series 1 (LP Bunits), of Dream Office LP, a subsidiary of Dream Office REIT, which are exchangeable for 4,850,000 Dream Office REIT Units. These units are carried at fairvalue with subsequent changes to fair value recorded in other comprehensive income. See Note 37 for further details.

Dream Global REIT


Return of capital portion $ 308 $ 280 $ 896 $ 840Investment income portion 252 280 784 840Distributions earned on investment $ 560 $ 560 $ 1,680 $ 1,680

In addition to its investment in Dream Global REIT units, the Company also held 1,679,562 deferred trust units (“DTUs”) as at September 30, 2015 with a fairvalue of $10,125 (December 31, 2014 – 1,364,659 DTUs with a fair value of $7,120), which were received as compensation provided for services pursuant toan asset management and advisory services agreement between the Company and Dream Global REIT. Refer to Note 33 for the valuation methodology usedto determine the fair value of the DTUs.



Dream Alternatives


Return of capital portion $ 43 $ — $ 126 $ —Investment income portion 7 — 28 —Distributions earned on investment $ 50 $ — $ 154 $ —

7. Housing inventory

The movement in housing inventory is as follows:

TotalBalance, January 1, 2014 $ 63,338Acquisitions 12,712Transferred from land inventory 9,058Development 50,336Housing units occupied (63,856)Balance, December 31, 2014 $ 71,588Acquisitions 530Transferred from land inventory 6,740Development 18,032Housing units occupied (46,940)Other (591)Balance, September 30, 2015 $ 49,359

8. Condominium inventory

The movement in condominium inventory is as follows:

TotalBalance, January 1, 2014 $ 79,794Acquisitions 13,452Development 43,507Condominium units occupied (51,378)Transfers to recreational properties (3,162)Transfers to investment properties (5,795)Other (903)Balance, December 31, 2014 $ 75,515Acquisitions 330Development 47,890Condominium units occupied (41,744)Transfers from land inventory 1,842Other 37Balance, September 30, 2015 $ 83,870



9. Land inventory

The movement in land inventory is as follows:

Land held fordevelopment

Land underdevelopment Total

Balance, January 1, 2014 $ 358,333 $ 101,368 $ 459,701Acquisitions 17,712 92 17,804Development 16,083 132,751 148,834Transfers (8,496) 8,496 —Lot and acre sales — (90,440) (90,440)Transfers to housing inventory — (9,058) (9,058)Other 119 — 119Balance, December 31, 2014 $ 383,751 $ 143,209 $ 526,960Acquisitions 56,112 — 56,112Development 4,413 75,415 79,828Lot and acre sales (1,466) (40,194) (41,660)Transfers (995) 995 —Transfers to housing inventory 940 (7,680) (6,740)Transfers to investment properties — (24,589) (24,589)Transfers to condominium inventory — (1,842) (1,842)Other 141 — 141Balance, September 30, 2015 $ 442,896 $ 145,314 $ 588,210

In the nine months ended September 30, 2015, the Company made final cash installments of $13,019 for lands. This resulted in $43,093 of deposits beingtransferred to land held for development, for a total of $56,112 of acquisitions in the current period. Refer to Note 13 for details.

In the nine months ended September 30, 2015, land with a carrying value of $24,589 was transferred to Western Canada retail within investment properties.See Note 10 for further details.

10. Investment properties

The movement in investment properties is as follows:

Toronto Western Canada TotalBalance, January 1, 2014 $ 59,350 $ — $ 59,350Additions to investment properties:

Land and building additions 528 — 528Transfers from condominium inventory 5,795 — 5,795Transfers from capital assets 75 — 75

Gains (losses) included in earnings:Fair value changes of investment properties 28,369 — 28,369Amortization of lease incentives (45) — (45)

Balance, December 31, 2014 $ 94,072 $ — $ 94,072Additions to investment properties:

Land and building additions 711 5,300 6,011Transfers from land inventory — 24,589 24,589

Gains (losses) included in earnings:Fair value changes of investment properties (316) 10,139 9,823Amortization of lease incentives (36) — (36)

Balance, September 30, 2015 $ 94,431 $ 40,028 $ 134,459



Movement in Western Canada investment properties is as follows:

Retail site

Period oftransfer toinvestmentproperties

Carrying valueat transfer

Fair value gainat initial

transfer toinvestment

propertyDevelopment

spend

Fair value gainsubsequent toinitial transfer Total

Tamarack North East Q1 2015 $ 7,634 $ 3,912 $ 1,332 $ 982 $ 13,860Tamarack South East Q2 2015 16,955 4,514 3,968 731 26,168

$ 24,589 $ 8,426 $ 5,300 $ 1,713 $ 40,028

During the nine months ended September 30, 2015, Dream achieved occupancies within its first retail development site in Western Canada. The achievementof first tenant occupancy within a property demonstrated a change of intent in use of the land, which resulted in a change in classification under IFRS fromland inventory (held at cost) to investment properties (held at fair value). As a result of occupancies achieved, Dream transferred the carrying value of landof $24,589 to investment properties and recognized a non-cash gain within fair value changes of investment properties in the statement of earnings. In addition,further fair value gains have been recognized during the nine months ended September 30, 2015 subsequent to the transfer date amounting to $1,713, as aresult of being closer to the completion dates under a discounted cash flow valuation methodology. The non-cash gain on the initial transfer of $8,426 recognizedwas equal to the difference between the fair value of the retail development of $33,015 and the carrying value of the land transferred.

Unrealized gains included in net income for the three and nine months ended September 30, 2015 for Toronto and Western Canada investment propertieswere $119 and $9,823 (three and nine months ended September 30, 2014 – $368 and $7,326).

Fair values of investment properties

Fair values of investment properties are determined using valuations prepared by management. To supplement the assessment of fair value, managementobtains valuations of selected investment properties on a rotational basis over a three-year period from qualified external valuation professionals and verifiesthe results of such valuations with the external appraisers. At September 30, 2015, no investment properties were externally appraised (December 31, 2014– $90,468 were externally appraised).

Discount rate is based on weighted average cost of capital of the Company and is used to determine the net present value of cash flows. Terminal capitalizationrate is based on the location, size and quality of the investment property and takes into account any available market data at the valuation date. The terminalcapitalization rate is used to estimate the value of a property at the end of the holding period.

Significant unobservable inputs were as follows for September 30, 2015 and December 31, 2014:

September 30, 2015 December 31, 2014Input Range Weighted Average Range Weighted Average

Toronto Discount rate 6.00%–7.50% 6.3% 6.00%–7.50% 6.8%Terminal Capitalization rate 5.25%–6.25% 5.3% 5.25%–6.25% 6.0%

Western Canada Discount rate 7.00% 7.0% n/a n/aTerminal Capitalization rate 6.40%–6.50% 6.4% n/a n/a

Fair values of investment properties are most sensitive to changes in capitalization rates. An increase in the capitalization rate or discount rate will result ina decrease in the fair value of an investment property and vice versa. If the capitalization rate were to decrease by 25 basis points (“bps”), the value ofinvestment properties would increase by approximately $5,714 as at September 30, 2015 (December 31, 2014 – approximately $4,100).

Fair value of Toronto investment properties

Fair values of Toronto investment properties which include commercial retail and other properties are calculated using a discounted cash flow (“DCF”) model,generally over an average period of 10 years, plus a terminal value based on the estimated cash flow in the final year of the detailed planning period. The DCFmodel incorporates, among other things, expected rental income from current leases, assumptions about rental income from future leases and implied vacancyrates, general inflation and projections of required cash outflows with respect to such leases. The significant unobservable inputs for the fair value of theCompany’s investment properties are provided above.

Fair value of Western Canada retail development investment properties

The fair value retail development is determined by management on a property-by-property basis using a DCF valuation methodology. Within the DCF thesignificant unobservable inputs include: forecasted net operating income based on the location, type and quality of the property, supported by the terms ofactual or anticipated future leasing, current market rents for similar properties, adjusted for market allowances; discount rates based on market terms at thevaluation date, adjusted for property specific risks; estimated costs to complete, terms of construction contracts, market conditions; expected completiondates; development and leasing risks specific to the property; and the status of approvals and/or permits.



11. Recreational properties

September 30, 2015 December 31, 2014Cost $ 42,010 $ 32,627Accumulated depreciation (15,040) (12,848)Balance, beginning of period 26,970 19,779Additions 5,820 5,951Disposals — (1,421)Depreciation (1,812) (1,704)Transfers from condominium inventory — 3,162Other 2,077 1,203Balance, end of period $ 33,055 $ 26,970

Cost $ 49,907 $ 42,010Accumulated depreciation (16,852) (15,040)Balance, end of period $ 33,055 $ 26,970

September 30, 2015 December 31, 2014Operational recreational properties:

Arapahoe Basin ski hill (Colorado) $ 17,134 $ 14,553King Edward Hotel (Ontario) 6,567 5,710Willows Golf Course (Saskatchewan) 2,888 2,852

Recreational properties under development:Broadview Hotel (Ontario) 6,466 3,855

$ 33,055 $ 26,970

12. Equity accounted investments

The Company has entered into certain arrangements in the form of jointly controlled entities, primarily for the development of investment and recreationalproperties and for renewable energy project management. These arrangements include restrictions on the ability to access assets without the consent of allpartners and include distribution conditions outlined in partnership agreements. These arrangements are accounted under the equity method. AtSeptember 30, 2015, the carrying value of these arrangements was $100,113 (December 31, 2014 – $90,821).

The following tables summarize the Company’s proportionate share of assets and liabilities in equity accounted investments as at September 30, 2015 andDecember 31, 2014.



LP



Restaurants LPDream

Windmill

DreamCMCC Funds


Dream's interest 50% 20% 50% 50% 9%–18% 18%–78% Assets $ 112,747 $ 210,917 $ 5,142 $ 26,560 $ 19,253 $ 21,922 $ 396,541 Liabilities (100,763) (164,132) (2,732) (10,051) (10,305) (8,445) (296,428) Net assets $ 11,984 $ 46,785 $ 2,410 $ 16,509 $ 8,948 $ 13,477 $ 100,113

During the nine months ended September 30, 2015, the Company contributed $14.3 million to Windmill Green Fund LP V ("Dream Windmill") and exercisedits right to convert a $2.2 million loan to equity in Dream Windmill. In addition, Dream Windmill established a two year credit facility amounting to $15.0million with a Canadian Schedule I bank, which bears interest at a rate per annum equal to the bank’s prime lending rate plus 1.50% or at the bank's thenprevailing bankers' acceptance rate plus 3.0%.



LP




Dream's interest 50% 20% 50% 9%–18% 18%–78% Assets $ 303,953 $ 196,657 $ 5,316 $ 11,486 $ 23,417 $ 540,829 Liabilities (290,744) (140,885) (2,944) (6,046) (9,389) (450,008) Net assets $ 13,209 $ 55,772 $ 2,372 $ 5,440 $ 14,028 $ 90,821



The following tables summarize the Company’s proportionate share of revenues, earnings (losses) and cash flows from operations in equity accountedinvestments for the three and nine months ended September 30, 2015 and 2014.



LP



Restaurants LPDream

Windmill

DreamCMCC Funds



Revenues $ 7 $ 9,251 $ 4,332 $ — $ 8,148 $ 375 $ 22,113Earnings (losses) (508) 1,755 181 — 1,695 192 3,315Cash flows from operations (508) 5,222 346 — 1,695 196 6,951



LP





Revenues $ 149 $ 5,288 $ 4,088 $ 80 $ 634 $ 10,239Earnings (losses) (355) 1,304 416 15 (548) 832Cash flows from operations (355) 2,649 579 15 (477) 2,411



LP



Restaurants LPDream

Windmill

DreamCMCC Funds



Revenues $ 47 $ 23,041 $ 10,900 $ — $ 8,427 $ 1,397 $ 43,812Earnings (losses) (1,224) (917) 38 — 1,951 364 212Cash flows from operations (1,224) 12,565 419 — 1,951 373 14,084

In the nine months ended September 30, 2015, there were impairment losses of $7,000, primarily due to Xeneca Limited Partnership, a subsidiary of FirelightInfrastructure Partners LP. After pursuing alternate strategies, the board of directors of the general partner of Xeneca, a subsidiary of Firelight InfrastructurePartners LP, approved an operational reorganization plan to suspend development of Xeneca’s waterpower electricity projects and pursue a sale of assets. Asa result, the Company reduced the value of its investment in Xeneca to its estimated recoverable amount of $500 and recorded an impairment charge of$6,000 in the Company’s share of income (losses) from equity accounted investments in the statement of operations. The estimated recoverable amount wasdetermined using the fair value of net assets less costs of disposal.



LP





Revenues $ 149 $ 14,053 $ 8,260 $ 80 $ 3,278 $ 25,820Earnings (losses) (914) 3,800 132 15 (1,425) 1,608Cash flows from operations (914) 7,758 521 15 (1,241) 6,139

The Company provides guarantees for certain debts of jointly controlled entities. These guarantees are generally limited to the Company’s investment in thespecific entity for which a guarantee is provided.



13. Capital and other operating assets

Capital and other operating assets consisted of the following:

September 30, 2015 December 31, 2014Deposits $ 11,137 $ 45,908Restricted cash 4,971 2,594Capital assets 7,763 6,240Prepaid expenses 3,997 3,409Inventory 899 786Total capital and other operating assets $ 28,767 $ 58,937

September 30, 2015 December 31, 2014Capital assets $ 11,142 $ 7,519Accumulated depreciation (3,379) (1,279)Total capital assets $ 7,763 $ 6,240

Deposits represent amounts paid by the Company for future land and housing acquisitions and to secure other projects. During the nine months endedSeptember 30, 2015, the Company acquired certain lands for which deposits had been made and as a result, transferred the deposits made of $43,093 toland inventory (Note 9).

Restricted cash represents cash advanced by the Company to secure letters of credit provided to various government agencies to support development activity,certain customer deposits on land and housing and condominium sales required for specific statutory requirements before closing, and cash held as security.

14. Accounts payable and other liabilities

The details of accounts payable and other liabilities are as follows:

Note September 30, 2015 December 31, 2014Trade payables $ 23,133 $ 35,730Accrued liabilities 48,044 39,027Deferred revenue 20,672 11,013Interest rate hedge 18 460 —

Retraction option on Preference shares, series 1 33 359 109$ 92,668 $ 85,879

15. Provision for real estate development costs

The following table details the movement in the provision for real estate development costs:

September 30, 2015 December 31, 2014Balance, beginning of period $ 55,036 $ 66,541Additional provisions 19,712 35,801Utilized during the period (17,238) (47,306)Balance, end of period $ 57,510 $ 55,036

The provision for real estate development costs includes accrued costs based on the estimated costs to complete land, housing and condominium developmentprojects for which revenue has been recognized. These amounts have not been discounted as the majority are expected to be utilized within one year.



16. Construction loans

September 30, 2015 December 31, 2014WesternCanada Toronto Total

WesternCanada Toronto Total

Balance, beginning of period $ 47,579 $ 41,065 $ 88,644 $ 35,215 $ 36,479 $ 71,694Borrowings 45,579 24,564 70,143 50,485 44,917 95,402Repayments (36,273) — (36,273) (38,121) (40,362) (78,483)Other — — — — 31 31Balance, end of period $ 56,885 $ 65,629 $ 122,514 $ 47,579 $ 41,065 $ 88,644

Western Canada construction loans relate to housing and retail operations and are all due on demand with recourse provisions. The majority of Torontoconstruction loans relate to project-specific financing for condominiums under development and hold security against the underlying asset. Further detailson the weighted average interest rates related to construction loans are included in Note 33.

17. Operating line

The Company has established a revolving term credit facility available up to a formula-based maximum not to exceed $290,000, with a syndicate of Canadianfinancial institutions. The facility bears interest, at the Company’s option, at a rate per annum equal to either the bank’s prime lending rate plus 1.25% or atthe bank’s then prevailing bankers’ acceptance rate plus 2.50%. The facility is secured by a general security agreement and a first charge against various realestate assets in Western Canada. On June 30, 2015, the maturity date terms of the operating line were modified to extend from November 30, 2016 to June30, 2017.

September 30, 2015 December 31, 2014Principal outstanding, beginning of period $ 136,000 $ 78,000Advances from operating line 76,000 256,000Repayments to operating line (126,000) (198,000)Principal outstanding, end of period $ 86,000 $ 136,000Unamortized deferred financing costs (1,885) (1,500)Carrying balance, end of period $ 84,115 $ 134,500

At September 30, 2015, the Company had issued letters of credit of $59,399 (December 31, 2014 – $47,371), which reduce the undrawn credit available underthe operating line. The Company incurred additional financing costs related to the modification of the terms of the operating line in the nine months endedSeptember 30, 2015 in the amount of $725. Total deferred financing costs of $1,885 have been netted against the carrying value of the operating line as atSeptember 30, 2015 and are amortized over the remaining term of the loan.

Interest expense relating to the operating line during the three and nine months ended September 30, 2015 was $932 and $3,898, respectively (three andnine months ended September 30, 2014 – $1,139 and $3,132).

18. Non-revolving term facility

On June 30, 2015, the Company established a three year non-revolving term facility amounting to $175,000 with a syndicate of Canadian financial institutions.The facility bears interest, at the Company’s option, at a rate per annum equal to either the bank’s prime lending rate plus 1.50% or at the bank’s then prevailingbankers’ acceptance rate plus 2.75%. The non-revolving term facility expires on June 30, 2018. The non-revolving term facility is secured by a general securityagreement and a first charge against various real estate assets and other financial assets of the Company.

As at September 30, 2015, the non-revolving term facility had a carrying balance of $173,909, net of deferred financing costs of $1,091. Interest expenserelating to this non-revolving term credit facility during the three and nine months ended September 30, 2015 was $1,760 (2014 – nil).

Interest rate swap

On July 17, 2015, the Company entered into an interest rate swap to effectively exchange the variable interest rate on the non-revolving term facility for afixed rate of 3.65% per annum through the use of forward purchase contracts that commenced on August 6, 2015, maturing on June 30, 2018 to coincide withthe maturity of the non-revolving term facility. The Company has applied hedge accounting to this relationship, whereby the change in fair value of the effectiveportion of the hedging derivative is recognized in accumulated other comprehensive loss in the condensed statement of changes in equity. Settlement of boththe fixed and variable portions of the interest swap occurs on a monthly basis. The full amount of the hedge was determined to be effective up to September 30, 2015.



The following table summarizes the details of the interest rate swap, which has been classified as a hedging instrument, outstanding at September 30, 2015:

Maturity dateNotionalamount

Fixed interestrate

Financial instrumentclassification Fair value of hedging instrument (1)

June 30, 2018 $ 175,000 3.65% Cash flow hedge $ (460)(1) Included in accounts payable and other liabilities, as at September 30, 2015.

19. Mortgages and term debt

TotalBalance, January 1, 2014 $ 89,605Borrowings 26,311Repayments (44,447)Interest and other 625Balance, December 31, 2014 $ 72,094Borrowings 45,480Repayments (54,638)Interest and other 267Balance, September 30, 2015 $ 63,203

Included in the repayments were $34,800 related to certain mortgage and term debt amounts using the proceeds of the non-revolving term facility. Refer toNote 18 for further information.

Mortgages and term debt are provided by a variety of lenders. The balance of interest and other includes accrued interest adjustments for payment-freeperiods. The weighted average interest rates for the fixed and variable components of mortgages and term debt, and their expected dates of maturity, are asfollows:

As at September 30, 2015 As at December 31, 2014

Maturity dates Balance outstanding

Weighted average interest rate

Balanceoutstanding

Weightedaverage

interest rateFixed rateMortgages and term debt

Properties 2016-2025 $ 59,321 4.68% $ 34,479 5.60%Land n/a — n/a 33,749 3.67%

$ 59,321 4.68% $ 68,228 4.65%Variable rateMortgages and term debt

Properties 2017-2024 $ 3,882 4.07% $ 3,866 4.29%Total $ 63,203 4.65% $ 72,094 4.63%

20. Due to a shareholder

DAM had a revolving demand credit facility with Dundee Corporation (TSX: DC.A) that was fully repaid on June 30, 2015. The facility accrued interest at a rateequal to the rate charged under Dundee Corporation’s main operating facility plus 1.0% per annum, which at the time of settlement was 3.85% (December 31,2014 – 3.0%). The amount was secured by a security interest, lien and charge on the property and assets of DAM pursuant to a general security agreement,the payment of which had been subordinated to a creditor of DAM.

As at September 30, 2015, Dundee Corporation held 21,636,288 Subordinate Voting Shares of Dream and, the Chairman of Dundee Corp. also held an additional2,426,822 Subordinate Voting Shares and 3,086,583 Class B Common Shares of Dream.

On June 30, 2015, $43,857 was paid from the proceeds of the non-revolving term facility (Note 18) to extinguish the due to a shareholder balance. Thedifference between the carrying value at June 30, 2015 of $46,105 and the amount paid was recorded as a gain on settlement of debt amounting to $2,248in the statement of operations during the nine months ended September 30, 2015. As a result of the repayment, the security interest granted was discharged.



The changes in the due to a shareholder balance are included below:

September 30, 2015 December 31, 2014Balance, beginning of period $ 60,328 $ 72,785Interest accrual 859 2,560Repayment in the three months ended March 31, 2015 (15,082) (14,741)Repayment in the three months ended June 30, 2015 (43,857)Cost recovery — (276)Gain on settlement of debt (2,248) —Balance, end of period $ — $ 60,328

21. Preference shares, series 1

As part of the Arrangement (Note 23), the Company issued 6,000,000, 7.0% Cumulative Redeemable First Preference shares, series 1 (“Preference shares,series 1”), with a liquidation amount of $7.16 per share, as described in Note 21 of the December 31, 2014 audited financial statements.

Each series of Preference shares, series 1, will be entitled to preference on the payment of dividends and the distribution of assets in the event of the liquidation,dissolution or winding up of the Company over the Subordinate Voting Shares and Class B Shares (Note 23).

The Preference shares, series 1, issued and outstanding are as follows:

Number of shares Par value Carrying valueBalance, January 1, 2014 6,000,000 42,960 42,645Redemption of shares (571,100) (4,089) (4,069)Accretion using the effective interest method 170Balance, December 31, 2014 5,428,900 $ 38,871 $ 38,746Redemption of shares (296,497) (2,123) (2,116)Accretion using the effective interest method — — 26Balance, September 30, 2015 5,132,403 $ 36,748 $ 36,656

During the three and nine months ended September 30, 2015, the Company declared and paid dividends on the Preference shares, series 1 of $643 and $2,001(three and nine months ended September 30, 2014 – $681 and $2,184).

22. Income taxes

During the nine months ended September 30, 2015, the Company recognized an income tax expense amount of $21,800 (nine months ended September 30,2014 – $16,515), the major components of which include the following items:


Current income taxes:Current income taxes with respect to profits in the year $ 1,878 $ 2,025 $ 6,153 $ 19,248Current tax adjustments in respect of prior years (9,193) — (9,623) 2Other items affecting current tax expense 404 (280) 1,608 971

Current income tax expense/(recovery): (6,911) 1,745 (1,862) 20,221Deferred income taxes:

Origination and reversal of temporary differences 4,024 (284) 23,041 (3,619)Expense arising from previously unrecognizedtemporary difference — — — —

Impact of changes in income tax rates (5) (14) 621 (87)Deferred income tax expense/(recovery) 4,019 (298) 23,662 (3,706)Income tax expense/(recovery) $ (2,892) $ 1,447 $ 21,800 $ 16,515

The Company has modified its estimates of uncertain tax positions which has resulted in a recovery of $9,193 through income tax expense for the three andnine months period ending September 30, 2015.

Due to non-coterminous tax years of the Company’s partnership interests, taxable income of approximately $14,885 for the nine months ended September30, 2015 (nine months ended September 30, 2014 – $28,701) relating to such partnership interests will be included in computing the Company’s taxableincome for its 2016 and 2015 taxation year. The income tax expense amount on pre-tax earnings differs from the income tax expense amount that would arise



using the combined Canadian federal and provincial statutory tax rate of 26.6% (September 30, 2014 – 26.6%) as illustrated in the table below. Cash paid forincome taxes for the nine months ended September 30, 2015 was $22,678 (nine months ended September 30, 2014 – $31,189).

Nine months ended September 30,2015 2014

Earnings before tax at statutory rate of 26.6% (2014 – 26.6%) $ 46,684 $ 14,769Effect on taxes of:

Adjustment in expected future tax rates 620 (87)Net income tax expense not previously recognized 75 (773)Net income tax (recovery) in respect of prior periods (9,193) —

Non-taxable portion of capital gains (18,270) (94)Other items 1,884 2,700

Income tax expense $ 21,800 $ 16,515

The movement in the deferred income tax assets during the nine months ended September 30, 2015 and the year ended December 31, 2014, and the netcomponents of the Company’s net deferred income tax liabilities, are illustrated in the following table:

Asset / (Liability)Accounts

receivable

Investmentand

recreationalproperties

Non-coterminous

tax yearFinancial

assetsReal estate

inventoryLoss carryforwards

Equityissuance Total

Balance, January 1, 2014 $ (14,314) $ (10,667) $ (12,844) $ (4,063) $ 8,591 $ 7,961 $ — $ (25,336)(Charged) credited to:

Earnings for the period 7,213 (8,306) 6,569 2 1,091 (1,003) (149) 5,417Other comprehensive income — 911 — 212 — — — 1,123Share capital — — — — — — 747 747

Balance, December 31, 2014 $ (7,101) $ (18,062) $ (6,275) $ (3,849) $ 9,682 $ 6,958 $ 598 $ (18,049)(Charged) credited to:

Earnings for the period (5,074) (3,907) 2,296 (16,291) (238) (334) (114) (23,662)Other comprehensive income — 1,460 — 2,424 — — — 3,884

Balance, September 30, 2015 $ (12,175) $ (20,509) $ (3,979) $ (17,716) $ 9,444 $ 6,624 $ 484 $ (37,827)

At September 30, 2015, the Company had tax losses of $6,646 (December 31, 2014 – $5,319) that expire between 2026 and 2035 and federal investment taxcredits of $1,524 (December 31, 2014 – $1,999) that expire between 2025 and 2030. The Company also has US capital losses of $1,130 (USD $848) (December 31,2014 – $986, USD $848) that expire in 2019. Deferred income tax assets have not been recognized in respect of these losses as it is not probable that theCompany will be able to utilize all the losses against taxable profits in the future.

23. Share capital

The Company is authorized to issue an unlimited number of Subordinate Voting Shares and an unlimited number of Class B Shares. Holders of SubordinateVoting Shares and Class B Shares are entitled to one vote and 100 votes, respectively, for each share held. The Class B Shares are convertible into SubordinateVoting Shares on a one-for-one basis at any time. Holders of Subordinate Voting Shares and Class B Shares are entitled to receive and participate equally asto dividends, share for share, when declared by the directors of the Company. In the event of a liquidation, dissolution or winding up of the Company, holdersof Subordinate Voting Shares and Class B Shares will, after payment to the holders of Preference shares, series 1, be entitled to the remaining property andassets of the Company.

As at September 30, 2015 As at December 31, 2014Issued and outstanding Number of shares Amount Number of shares AmountDream Subordinate Voting Shares 75,381,577 $ 952,026 76,220,777 $ 959,113Dream Class B Common Shares 3,115,512 38,788 3,115,512 38,788

78,497,089 $ 990,814 79,336,289 $ 997,901



The following table summarizes the changes in the Dream Subordinate Voting shares issued.

As at September 30, 2015 As at December 31, 2014Number of shares Amount Number of shares Amount

Issued and outstanding, beginning of period 76,220,777 $ 959,113 72,614,163 $ 904,047Class B shares converted into Subordinate Voting Shares — — 814 10Deferred share units converted into Subordinate Voting Shares — — 9,000 124Subordinate Voting Shares issued pursuant to equity offering — — 3,680,000 55,712Subordinate Voting Shares repurchased (839,200) (7,087) (83,200) (780)Issued and outstanding, end of period 75,381,577 $ 952,026 76,220,777 $ 959,113

DividendsIn the three and nine months ended September 30, 2015, the Board of Directors of DAM declared dividends of $4,602 (September 30, 2014 – $231 and$1,588) to Dream, which are eliminated in the consolidated statements of Dream.

Reorganization adjustmentOn May 16, 2013, shareholders of Dundee Corporation unanimously voted in favour of a corporate restructuring, through a tax efficient Plan of Arrangement(the "Arrangement"), which resulted in Dundee Corporation transferring its 70.05% interest in DAM, formerly Dundee Realty Corporation, including DAMcommon shares and DAM Class C shares, to Dream, in exchange for shares of Dream.

The Arrangement was accounted for as a corporate reorganization and the Company has recognized the identifiable assets and liabilities of DAM transferredto Dream pursuant to the Arrangement at DAM’s historical carrying values, with no fair value adjustments. The difference between the stated capital of Dream’sissued shares and the previously recorded share capital and contributed surplus of DAM, and other minor adjustments, of $944,577 was reflected as a separatecomponent of equity described as “Reorganization adjustment”.

Normal Course Issuer BidDream renewed its normal course issuer bid (the “Bid”), which commenced on September 2, 2015 and will remain in effect until the earlier of September 1,2016 or the date on which Dream has purchased the maximum number of Subordinate Voting Shares permitted under the Bid. Under the bid, Dream willhave the ability to purchase for cancellation up to a maximum of 3,789,759 of its Subordinate Voting Shares through the facilities of the Toronto Stock Exchange(the “TSX”) at prevailing market prices and in accordance with the rules and policies of the TSX. The actual number of Subordinate Voting Shares that may bepurchased and the timing of any such purchases will be determined by Dream, subject to a maximum daily purchase limitation of 28,927 shares except wherepurchases are made in accordance with block purchase exemptions under applicable TSX rules. In the nine month period ending September 30, 2015, 839,200Subordinate Voting Shares were purchased for cancellation by the Company, at an average price of $8.44 (December 31, 2014 – 83,200). Subsequent toSeptember 30, 2015, 31,927 Dream Subordinate Voting Shares were purchased for cancellation by the Company.

24. Accumulated other comprehensive income

The following table details the movement in accumulated other comprehensive income:

Interest ratehedge

Foreigncurrency

translationAvailable-for-

sale securities

Less: amountsattributable to non-controlling interest Total

Balance, January 1, 2014 $ — $ 340 $ 22,294 $ (7,842) $ 14,792Other comprehensive income (loss) during the year — 5,061 (1,254) (1,142) 2,665Balance, December 31, 2014 $ — $ 5,401 $ 21,040 $ (8,984) $ 17,457Other comprehensive income during the period (460) 2,904 (18,371) 4,741 (11,186)Balance, September 30, 2015 $ (460) $ 8,305 $ 2,669 $ (4,243) $ 6,271

25. Non-controlling interest

The non-controlling interest represents the 29.77% equity interest in DAM owned by Sweet Dream Corp. (“SDC”), an entity wholly owned by the Chief ExecutiveOfficer of DAM and Dream, located in Toronto. SDC is entitled to receive 34,204,495 Subordinate Voting Shares of Dream at any time by exercising its right toexchange its DAM shares for Subordinate Voting Shares of Dream, pursuant to the Exchange Agreement between Dream, SDC and DAM. On a diluted basis,this represents approximately a 30% interest in Dream as at September 30, 2015.

Dream and SDC entered into an agreement (the "Permitted Sales Agreement") that provides for “put rights” in favour of each of them. Upon the occurrenceof certain triggering events, Dream may by notice in writing to SDC require SDC, at SDC’s option, to either (i) acquire all of the non-voting common shares inthe capital of DAM (the “DAM Common Shares”) and all of the Class C voting preference shares in the capital of DAM (the “DAM Class C Shares”) held byDream, or (ii) cause the sale of all of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale of assets, distribute



the net proceeds from the sale of assets to the shareholders of DAM. Upon the occurrence of certain different triggering events, SDC may by notice in writingto Dream require Dream, at Dream’s option, to either (i) acquire all of the DAM Common Shares and DAM Class C Shares held by SDC, or (ii) cause the sale ofall of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale of assets, distribute the proceeds to DAM’s shareholders.Completion of any transaction under this agreement will be subject to receipt of the approval of the shareholders of Dream, if required by law or under theagreement, and the receipt of any required regulatory approvals.

26. Revenues

The types of revenue earned are as follows:


Land $ 40,967 $ 25,684 $ 73,831 $ 69,693Housing 20,214 24,879 55,166 58,616Condominiums 54,727 8,430 56,745 70,857Asset management and advisory services 7,030 11,600 24,595 28,903Investment and recreational properties 7,412 7,111 33,702 33,177

$ 130,350 $ 77,704 $ 244,039 $ 261,246

Guarantee fees earned by the Company are included in condominium revenues.

27. Direct operating costs


Direct costs of real estate inventory $ 83,711 $ 45,144 $ 130,305 $ 137,637Direct costs of operating investment, recreational

properties and other 4,270 5,772 14,903 19,668

Salary and other compensation 5,555 3,037 14,311 9,719$ 93,536 $ 53,953 $ 159,519 $ 167,024

The Company has disaggregated total operating costs into direct operating costs; asset management and advisory services expenses; selling, marketing andother operating costs; and general and administrative expenses.

28. Asset management and advisory services expenses

Asset management and advisory services expenses consisted of the following:


Salary and other compensation $ 1,743 $ 1,821 $ 3,930 $ 7,742Corporate, service and professional fees 728 131 1,552 351General office and other 16 109 751 381

$ 2,487 $ 2,061 $ 6,233 $ 8,474

The Company disaggregated total operating costs into direct operating costs; asset management and advisory services expenses; selling, marketing and otheroperating costs; and general and administrative expenses in the second quarter of 2014. The comparative results above have not been reclassified to conformto the current presentation as it was considered immaterial.

29. Selling, marketing and other operating costs

The following table shows the breakdown of selling, marketing and other operating costs:


Selling and marketing costs $ 3,185 $ 2,274 $ 7,538 $ 5,659Salary and other compensation 2,256 2,510 6,687 7,154General office and other 2,951 2,495 8,430 7,329

$ 8,392 7,279 $ 22,655 $ 20,142



30. General and administrative expenses

General and administrative expenses consisted of the following:


Salary and other compensation $ 1,749 $ 1,242 $ 5,109 $ 3,414Corporate, service and professional fees 1,684 1,455 6,262 4,048General office and other 378 198 1,248 3,420

$ 3,811 $ 2,895 $ 12,619 $ 10,882

31. Investment and other income

The following table shows the breakdown of Investment and other income:


Investment income on listed funds $ 1,320 $ 649 $ 3,518 $ 1,905Interest income on receivables 733 544 1,683 1,690Other income 169 82 698 1,027

$ 2,222 $ 1,275 $ 5,899 $ 4,622

Investment income on listed funds includes the income portion of distributions earned on the Company's investment in Dream Office REIT, Dream GlobalREIT, and Dream Hard Asset Alternatives Trust.

32. Interest expense


Project-specific and general debt interest $ 4,632 $ 3,095 $ 12,587 $ 8,816Cancellation fees paid on early repayment of mortgages — — 1,250 —Interest on amounts due to a shareholder — 587 859 1,967Dividends on Preference shares, series 1 643 681 2,001 2,184Amortization of deferred financing costs 318 349 907 718Interest capitalized to real estate development projects (1,067) (246) (3,056) (991)Accretion of effective interest 7 33 26 139Interest expense $ 4,533 $ 4,499 $ 14,574 $ 12,833Add (deduct): Interest capitalized 1,067 246 3,056 991 Amortization of deferred financing costs (318) (349) (907) (718) Accretion expense (7) (34) (26) (139) Mark to market adjustment — (320) (202) (1,147) Accrued interest 14 1,335 143 438Cash interest paid $ 5,289 $ 5,377 $ 16,638 $ 12,258

Amounts of interest capitalized to real estate development projects flow through to direct operating costs as occupancies occur or when the assets are sold.Cash interest paid for the three and nine months ended September 30, 2015 was $5,289 and $16,638 (three and nine months ended September 30, 2014 –$5,377 and $12,258), which includes $1,250 discharge fee for the early repayment of mortgages during the nine months ending September 30, 2015.



33. Financial instruments fair value and risk management

Fair Value of Financial InstrumentsThe following table categorizes financial assets or liabilities measured or disclosed at fair value by level according to the significance of inputs used in makingmeasurements. Quoted market prices represent a Level 1 valuation. When quoted market prices are not available, the Company maximizes the use of observableinputs. When all significant inputs are observable, the valuation is classified as Level 2.

September 30, 2015 December 31, 2014Fair valuehierarchy

Carrying value Fair value

Carryingvalue Fair value

Recurring measurementFinancial assets

Investment in Dream Office REIT Level 1 $ 24,544 $ 24,544 $ 29,117 $ 29,117Investment in Dream Office REIT, LP Class B Units Level 2 102,821 102,821 — —Investment in Dream Global REIT Level 1 24,752 24,752 23,996 23,996Investment in Dream Alternatives Trust Level 1 3,080 3,080 3,498 3,498Other investments in equity securities quoted in an active market Level 1 872 872 610 610Investment in Dream Global REIT – deferred trust units Level 3 10,125 10,125 7,120 7,120Redemption option on Preference shares, series 1 Level 3 1,846 1,846 — —

Financial liabilitiesRetraction option on Preference shares, series 1 Level 3 359 359 109 109Interest rate swap Level 3 460 460 — —

Fair values disclosedConstruction loans Level 3 122,514 122,459 88,644 88,400Mortgages and term debt Level 3 63,203 64,870 72,094 74,462Non-revolving term facility Level 3 173,909 175,000 — —

Operating line Level 3 84,115 86,000 136,000 136,000Preference shares, series 1 (excluding redemption and retraction options) Level 1 36,656 36,594 38,746 39,305

The fair values of cash and cash equivalents, accounts receivables, deposits, restricted cash, loans receivable, accounts payable and other liabilities, andcustomer deposits approximate their carrying values due to their short-term nature.

The fair value of the due to a shareholder balance approximated its carrying value due to its variable interest rate of the prime rate plus an additional rate,consistent with instruments of a similar nature available for the Company’s specific credit risk.

The fair value of the Preference shares, series 1, is based on the market price as at September 30, 2015 of $7.13 per share for the 5,132,403 issued andoutstanding Preference shares, series 1.

Level 3 Fair Value MeasurementsThe Company used the following techniques to determine the fair value measurements categorized in Level 3:

Dream Global REIT Deferred Trust Units

The fair value of Dream Global REIT deferred trust units is based on the market price of Dream Global REIT units and applying an appropriate discount rate toreflect the vesting period. The significant unobservable inputs used in determining the discount rate include the following:


Risk-free rate 1%-2%Expected volatility 17%-37%

The volatility of the Dream Global REIT units is estimated based on comparable companies in both the German and Canadian real estate markets. The discountrate used to value the deferred trust units is calculated by weighting a put-and-call model calculated using the Black-Scholes model. A higher volatility or risk-free rate will decrease the value of the deferred trust units and vice versa.



Total deferred unitsgranted Years vested

Fair value as atSeptember 30, 2015

Units at September 30, closing price of $8.84 per unit $ 14,847Discount rate of 19% per unit for units issued in 2011 147,717 2017-2021 (248)Discount rate of 23% per unit for units issued in 2012 357,170 2018-2022 (726)Discount rate of 25% per unit for units issued in 2013 407,191 2019-2023 (900)Discount rate of 35% per unit for units issued in 2014 452,581 2020-2024 (1,400)Discount rate of 52% per unit for units issued in 2015 314,903 2021-2025 (1,448)

1,679,562 $ 10,125

Construction Loans and Mortgages and Term DebtThe fair value of the construction loans and mortgages and term debt has been calculated by discounting the expected cash flows of each loan using a discountrate specific to each individual loan. The discount rate is determined using the bond yield for similar instruments of similar maturity adjusted for each individualproject’s specific credit risk. In determining the adjustment for credit risk, the Company considers current market conditions and other indicators of theCompany’s creditworthiness.

Investments in Equity Securities Not Quoted in an Active MarketInvestments in equity securities not quoted in an active market are not measured nor disclosed at fair value since their fair value cannot be determined reliably.At September 30, 2015, the Company's only investments in equity securities not quoted in an active market were investments in jointly owned real estateassets.

Valuation ProcessThe Company’s finance department is responsible for performing the valuation of fair value measurements or reviewing the fair value measurements providedby third-party appraisers. The Company has determined that third-party appraisers will be utilized for recurring measurements of derivatives instruments,such as the redemption and retraction options on the Preference shares, series 1, on a quarterly basis. On a quarterly basis, management will review thevaluation policies, procedures and analysis of changes in fair value measurements.

The Company recognizes transfers into and transfers out of fair value hierarchy levels as of the date of the event or change in circumstances that caused thetransfer. There were nil transfers during the period ended September 30, 2015 (December 31, 2014 – $1,064) into Level 1 that were previously measured atcost, as the investment became publicly traded.

Investment inDream Global

REIT – deferredtrust units

Interest rateswap

Redemptionoption on

Preferenceshares, series 1

Retractionoption on

Preferenceshares, series 1

Balance, December 31, 2014 $ 7,120 $ — $ — $ (109)Issued or received during the period:

Deferred trust units 1,336 — — —Total gains or losses for the period included in net income:

Change in fair value of redemption and retraction options(1) — — 1,846 (250)Included in other comprehensive income:

Change in fair value of deferred trust units(1) 1,669 — — —Change in fair value of interest rate swap — (460) — —

Balance, September 30, 2015 $ 10,125 $ (460) $ 1,846 $ (359)(1) The change in fair value of redemption and retraction options of $1,570 was included in the statement of operations as fair value change in financial instruments.

Risk ManagementThe Company is exposed to financial risks due to the nature of its business and the financial assets and liabilities that it holds. The Company’s overall riskmanagement strategy seeks to minimize potential adverse effects on the Company’s financial performance.

Fair Value RiskA 10% absolute change in the market price of the units in Dream Office REIT, Dream Global REIT and Dream Alternatives would increase (decrease) the carryingamount of the investments by $6,250, before associated taxes, with a corresponding increase (decrease) in OCI.

Interest Rate RiskThe Company is exposed to interest rate risk primarily through its variable rate debt obligations. At September 30, 2015, excluding the demand facility andPreference shares, series 1, variable rate debt represented 47% (December 31, 2014 – 74%) of total debt obligations. The Company entered into an interestrate swap during the three and nine months ended September 30, 2015 to mitigate interest rate risk. See Note 18 for further details.



Liquidity RiskA summary of the Company’s contractual obligations as at September 30, 2015 is as follows:

WesternCanada

constructionloans

Torontoconstruction

loansOperating

line

Mortgagesand term

debtNon-revolvingterm facility(1)

Preferenceshares,series 1 Total

Weightedaverage interest

rate (face)

2015 $ 37,487 $ 10,024 $ — $ 2,175 $ — $ 38,778 $ 88,464 4.94%2016 — 53,011 — 13,296 — — 66,307 4.94%2017 19,398 2,594 86,000 3,280 — — 111,272 3.38%2018 — — — 842 175,000 — 175,842 3.65%2019 and thereafter — — — 44,033 — — 44,033 3.91%

56,885 65,629 86,000 63,626 175,000 38,778 485,918 4.05%Discount/deferred financing costs — — (1,885) (423) (1,091) (2,122) (5,521)

$ 56,885 $ 65,629 $ 84,115 $ 63,203 $ 173,909 $ 36,656 $ 480,397Weighted average interest rate(face) 3.30% 4.46% 3.26% 4.63% 3.65% 7.00% 4.05%

(1) Refer to Note 18 for information regarding the interest rate swap the Company entered into during the three months ended September 30, 2015.

The contractual payments above include the principal repayments owing in future periods. The amounts presented above are shown consistent with theircontractual repayments. For instruments which are due on demand, the total liability has been included within the 2015 repayment year. In some instancesthis may be inconsistent with the repayment timing expected by the Company.

34. Share-based compensation

Stock Option PlanDream has a stock option plan under which key officers and employees are granted options to purchase Subordinate Voting Shares. Each option grantedcan be exercised for one Subordinate Voting Share. On February 12, 2015, 715,000 options were granted at an exercise price of $8.96 per share. In total asat September 30, 2015, 865,000 options were outstanding under the stock option plan and 30,000 of the options had vested.

September 30, 2015 December 31, 2014Units outstanding, beginning of period 200,000 200,000Granted 715,000 —Forfeited (50,000) —Units outstanding, end of period 865,000 200,000

The stock options vest over a period of five years. The estimated volatility is based on an average of the volatility of comparable companies. As at September 30,2015, 715,000 stock options outstanding had an average exercise price of $8.96 per share and 150,000 had an exercise price of $13.88 per share.

The fair value of the stock options granted during the nine months ended September 30, 2015 was estimated on the grant date as $2.33 per option using theBlack-Scholes option pricing model with the following weighted average assumptions:

Risk-free interest rate 1.87%Estimated volatility 18.60%Expected life 6.52 yearsContractual life 10 yearsExpected dividend yield —%

During the three and nine months ended September 30, 2015, the Company recognized $229 and $602 (three and nine months ended September 30, 2014– $116 and $348) of share-based compensation expense related to stock options, offset by a recovery of $nil and $144 from forfeited shares (three and ninemonths ended September 30, 2014 – $nil).

Deferred Share Unit PlanThe Company has a deferred share unit incentive plan pursuant to which deferred share and income deferred share units (“DSUs”) may be granted to eligibledirectors, senior management and certain service providers. As at September 30, 2015 there were 58,685 units outstanding (December 31, 2014 – 18,000units outstanding). During the nine months ended September 30, 2015, compensation expense of $83 (nine months ended September 30, 2014 – $383)related to this plan was recognized as general and administrative expense.



September 30, 2015 December 31, 2014Units outstanding, beginning of period 18,000 —Granted under deferred share unit plan 40,685 27,000Settled deferred share units — (9,000)Units outstanding, end of period 58,685 18,000

The net changes in contributed surplus relating to share-based compensation for both the stock option plan and deferred share unit plan were as follows:

TotalBalance, January 1, 2014 78Granted 813Settled deferred share units (124)Balance, December 31, 2014 767Granted 685Forfeited/cancelled (144)Balance, September 30, 2015 1,308

35. Earnings per share

Basic earnings per share is calculated by dividing the Company’s earnings attributable to outside shareholders of the Company by the weighted average numberof shares outstanding during the period.

Diluted earnings per share is calculated by dividing the Company’s earnings attributable to the outside shareholders of the Company by the weighted averagenumber of shares outstanding after the dilutive effect of the Preference shares, series 1, stock options and deferred share units. The exercise rights providedto SDC entitles an exchange of DAM shares for Subordinate Voting Shares of Dream. The diluted weighted average number of shares used in the dilutedearnings per share calculation is determined by assuming the total proceeds received for the conversion of such units is used to repurchase Subordinate VotingShares at the average selling price of such publicly traded units over the term of the calculation.

The following table summarizes the basic and diluted earnings per share and the weighted average number of shares outstanding:


Earnings attributable to the outside shareholders of theCompany $ 18,254 $ 5,480 $ 107,822 $ 27,064

Diluted earnings per share adjustments for Preferenceshares, series 1

Dividends paid included in interest expense (Note 32) 643 — 2,001 —Gain on redemption / retraction option (Note 33) 54 — (1,570) —Accretion expense 7 — 26 —

Earnings for diluted earnings per share $ 18,958 $ 5,480 $ 108,279 $ 27,064

Weighted average number of shares outstanding as atperiod end:

Dream Subordinate Voting Shares 75,764,444 76,303,367 75,933,084 74,717,960Dream Class B Shares 3,115,512 3,116,122 3,115,512 3,116,122

Total weighted average number of shares 78,879,956 79,419,489 79,048,596 77,834,082Effect of dilutive securities on weighted average number of

shares outstanding at period end:Preference shares, series 1(1) 5,310,322 — 5,454,423 —Stock options(1) — — — —Deferred share units(1) — 18,000 — 16,178

Total weighted average number of shares outstanding afterdilution 84,190,278 79,437,489 84,503,019 77,850,260

Basic earnings per share $ 0.23 $ 0.07 $ 1.36 $ 0.35Diluted earnings per share $ 0.22 $ 0.07 $ 1.29 $ 0.35

(1) For the three and nine months ended September 30, 2015, stock options and deferred units were excluded from the earnings per share calculation as the impact was anti-dilutive (2014 - Preferenceshares, series 1 were anti-dilutive). The weighted average number of shares is determined using the treasury stock method.



36. Commitments and contingencies

Land and Other Purchase Agreements At September 30, 2015, the Company had commitments under land and housing purchase agreements totalling $13,043 (December 31, 2014 – $71,269),which will become payable in future periods upon the satisfaction of certain conditions pursuant to these arrangements. These amounts exclude futurerepayments of debt relating to land, which has been included in mortgages and term debt as at September 30, 2015.

Letters of Credit and Surety BondsThe Company is contingently liable for letters of credit and surety bonds that have been provided to support land developments in the amount of $46,052(December 31, 2014 – $65,669). In addition, letters of credit in the amount of $22,302 were outstanding as at September 30, 2015 relating to the Pan/Parapan American Athletes’ Village development.

The Company is committed to pay levies in the future of up to $2,632 (December 31, 2014 – $5,095) relating to signed municipal agreements upon thecommencement of development of certain real estate assets. Additional development costs may also be required to satisfy the requirements of thesemunicipal agreements.

Joint Operations and Co-ownershipsThe Company may conduct its real estate activities from time to time through joint operations with third-party partners. The Company was contingentlyliable for the obligations of the other owners of the unincorporated joint ventures in the amount of $10,993 at September 30, 2015 (December 31, 2014 –$29,370). The Company would have available to it the other venturers’ share of assets to satisfy any obligations that may arise.

Joint Ventures and AssociatesThe Company may conduct its real estate activities from time to time through joint ventures with third-party partners. The Company may be contingentlyliable for the obligations of the other owners of the unincorporated joint ventures. The Company would have available to it the other venturers’ share of assetsto satisfy any obligations that may arise.

Legal ContingenciesThe Company and its operating subsidiaries may become liable under guarantees that are issued in the normal course of business and with respect to litigationand claims that arise from time to time. In the opinion of management, any liability that may arise from such contingencies would not have a material adverseeffect on the consolidated financial statements of the Company.

Management is aware of a possible legal matter and intends to vigorously defend any claim served. Management believes that it is without merit and thatthis action will not have a material adverse effect on the financial condition, results of operations or cash flows of the Company. An estimate of the possibleloss or range of loss cannot be made at this time.

37. Asset management and management services agreements and related party transactions

The Company has entered into agreements with each of Dream Global REIT and Dream Industrial REIT, Dream Alternatives and Dream Office (prior to April 2, 2015) pursuant to which the Company provides a broad range of management and advisory services related to their respective real estate holdings,lending and renewable power. The Company receives revenues in respect of these services, determined in accordance with a formula as outlined in therespective agreements and as described in Note 38 of the December 31, 2014 audited financial statements.

In addition, the Company will be reimbursed for out-of-pocket costs and expenses incurred in connection with the performance of the management servicesdescribed in the management agreement on a cost recovery basis.

For the three and nine months ended September 30, 2015 and 2014, the Company earned the following amounts pursuant to its asset management andadvisory services agreements.


Base asset management fees $ 5,677 $ 9,143 $ 20,739 $ 23,357Acquisition fees 714 2,019 2,626 2,749Expense recoveries relating to financing arrangements 100 388 691 1,205

$ 6,491 $ 11,550 $ 24,056 $ 27,311

In the case of Dream Global REIT, the Company has irrevocably elected to receive the first $3,500 of the annual fees payable to it pursuant to these arrangementsin DTUs of Dream Global REIT for the first five years. The DTUs will vest to the Company in five equal annual installments, beginning in the sixth year followingthe grant of such DTUs.



Reorganization of asset management agreement with Dream Office REITOn April 2, 2015, the Company and Dream Office REIT announced a reorganization where the Company received 4,850,000 LP Class B Units, Series 1, of DreamOffice LP, a subsidiary of Dream Office REIT, which are exchangeable for 4,850,000 Dream Office REIT Units. In return, the annual management fee, acquisitionfee and capital expenditure fee payable by Dream Office REIT to Dream under its asset management agreement were eliminated. These units were recordedat their fair value of $127,313 based on the closing trading price of the Dream Office REIT units on April 2, 2015 with a corresponding gain on the statementof earnings in the nine months ended September 30, 2015.

Cost recovery from Dream Office REITThe Company and Dream Office REIT have entered into a Management Services Agreement effective April 2, 2015, pursuant to which the Company will continueto provide certain management services, including services of a Chief Executive Officer to Dream Office REIT as requested. The Company will be reimbursedfor out-of-pocket costs and expenses incurred in connection with performance of the management services and costs incurred. This agreement will continueuntil it is terminated by either party in accordance with the termination provisions of the agreement.


Costs recovered under management services agreement $ 730 n/a $ 1,244 n/a

Costs recovered from Dream Office REIT in the three and nine months ended September 30, 2015 under the management services agreement related totreasury, legal and taxation services and compensation for senior management personnel.

The Company continues to be entitled to receive an incentive fee subject to the termination provisions of the Management Services Agreement. The incentivefee is determined in accordance with a formula based on 15% of Dream Office REIT’s aggregate adjusted funds from operations, including the net gain on thesale of any properties during the term of the agreement, and the deemed sale of the remaining portfolio upon termination in excess of $2.65 per Dream OfficeREIT unit. At September 30, 2015, the Company has not accrued any incentive fees receivable from Dream Office REIT.

Administrative services agreement As part of the reorganization of the asset management agreement, on April 2, 2015, the Company entered into a new services agreement with a wholly ownedsubsidiary of Dream Office REIT pursuant to which the subsidiary will continue to provide certain administrative and support services to the Company. Theterms of the agreement provide for a fee sufficient to reimburse the subsidiary for the actual costs incurred by it in carrying out these activities on behalf ofthe Company and are not intended to have a profit component. The administrative services agreement expires on December 31, 2015 and subject to thetermination provisions in the agreement, the Company is automatically reappointed for additional one year terms commencing on January 1 of the followingyear. For the three and nine months ended September 30, 2015, the Company incurred expenses of $1,774 and $4,745 under the administrative servicesagreement (three and nine months ended September 30, 2014 – $1,475 and $5,140).

Shared services and cost sharing agreementDAM has entered into cost sharing agreements with each of Dream Office REIT, Dream Industrial REIT, Dream Global REIT and Dream Alternatives. The detailsof these agreements are included in Note 38 of the December 31, 2014 consolidated financial statements. In the nine months ended September 30, 2015,DAM and Dream Office REIT amended their existing shared services and cost sharing agreement. No material changes occurred to the contract. Pursuant tothe agreements, DAM provides administrative and support services on an as-needed basis. DAM will receive an annual fee to reimburse it for all the expensesincurred in providing the services. Additionally, Dream Industrial REIT, Dream Global REIT and Dream Alternatives will also reimburse DAM for any shared costsallocated in each calendar year.

Costs recovered from Dream Office REIT, Dream Industrial REIT, Dream Global REIT and Dream Alternatives under the asset management and, sharedservices and cost sharing agreements are as follows:


Dream Office REIT $ 373 $ 423 $ 1,265 $ 1,170Dream Industrial REIT 249 205 796 564Dream Global REIT 338 263 876 479Dream Alternatives 179 — 357 —

$ 1,139 $ 891 $ 3,294 $ 2,213

Included in accounts receivable and other are balances due from Dream Office REIT, Dream Industrial REIT, Dream Global REIT and Dream Alternatives asfollows:



September 30, 2015 December 31, 2014Dream Office REIT $ 3,233 $ 97Dream Industrial REIT 3,064 942Dream Global REIT 4,255 4,000Dream Alternatives 2,398 4,645

$ 12,950 $ 9,684

Included in accounts payable are balances due to Dream Office REIT, Dream Industrial REIT and Dream Global REIT as follows:

September 30, 2015 December 31, 2014Dream Office REIT $ 947 $ 790Dream Industrial REIT 30 26Dream Global REIT(1) 6,818 5,699

$ 7,795 $ 6,515(1) Included in other financial assets as at September 30, 2015 is $5,718 relating to an investment in properties purchased jointly with Dream Global REIT. The purchases were primarily funded through

loans from Dream Global amounting to $5,224, which were included in accounts payable and other liabilities as at September 30, 2015.

Distributions earned from investmentsThe Company earned distributions from Dream Office REIT, Dream Global REIT and Dream Alternatives (Note 6).

38. Supplementary cash flow information

Significant components of other adjustments include:

For the nine months ended September 30,2015 2014

Dream Global REIT deferred trust units $ (1,667) $ (1,926)Accrued interest on loans receivables and other expenses 1,042 1,691Share-based compensation expense 592 731Gain on derivative financial instruments (109) 140Other (2,105) (1,482)

$ (2,247) $ (846)

Significant components of changes in non-cash working capital include:


Accounts receivable $ (50,662) $ 59,398Accounts payable and other liabilities 6,898 (14,547)Income and other taxes payable (24,540) (10,968)Provision for real estate development costs 2,474 (4,025)Customer deposits 4,781 (12,482)Deposits on land (8,322) (5,501)Restricted cash (2,377) 2,296Inventory, prepaid and other assets (1,764) 910

$ (73,512) $ 15,081

The breakdown of cash and cash equivalents is as follows:


Cash $ 23,030 $ 26,756Money market funds, term deposits and GICs 869 1,006

$ 23,899 $ 27,762

Non-revolving term facilityRefer to Note 18 for further information regarding the use of proceeds from the non-revolving term facility on September 30, 2015.



39. Segmented information

Management has determined the operating segments based on the reports reviewed by the Chief Executive Officer and senior management. Gross marginrepresents revenue, less direct operating costs and asset management and advisory services expenses, and excluding selling, marketing and other operatingcosts. Net margin represents gross margin, as defined above, including selling, marketing and other operating costs.

The Company evaluates its results using gross margin, as defined above, with the exception of the investment and recreational properties segment, whichuses net margin. Used as a percentage of revenue to evaluate operational efficiency, these margins are employed as fundamental business considerations inupdating budgets, forecasts and strategic planning.

The allocation of other components of earnings would not assist management in the evaluation of the segments’ contributions to earnings.



Segmented Revenues and Expenditures

Segmented revenues and expenditures for the three and nine months ended September 30, 2015 and 2014 are as follows:


Landdevelopment(1)




services

Investment andrecreational

properties Eliminations(1) Total

Revenues $ 40,967 $ 25,269 $ 54,727 $ 7,030 $ 7,412 $ (5,055) $ 130,350

Direct operating costs (25,409) (20,474) (42,450) — (8,365) 3,162 (93,536)

Asset management and advisory servicesexpenses — — — (2,487) — — (2,487)

Gross margin 15,558 4,795 12,277 4,543 (953) (1,893) 34,327

Selling, marketing and other operatingcosts (2,431) (3,199) (1,739) — (1,023) — (8,392)

Net margin $ 13,127 $ 1,596 $ 10,538 $ 4,543 $ (1,976) $ (1,893) $ 25,935

Fair value changes in investmentproperties — — — — 119 — 119

Investment and other income 315 283 71 1,553 — — 2,222

Gain on reorganization of assetmanagement agreement — — — — — — —

Earnings before the following: $ 13,442 $ 1,879 $ 10,609 $ 6,096 $ (1,857) $ (1,893) $ 28,276

General and administrative expenses (3,811)

Share of earnings from equity accounted investments 3,315

Gain on derivative financial instruments (54)

Interest expense (4,533)

Gain on settlement of debt —

Income tax recovery 2,892

Earnings for the period $ 26,085(1) Results include housing land sales to external customers, which are recognized in each of the land and housing divisions and eliminated on consolidation.


Landdevelopment(1)




services



Revenues $ 25,684 $ 29,051 $ 8,430 $ 11,600 $ 7,111 $ (4,172) $ 77,704



Gross margin 6,582 5,580 1,981 9,539 (559) (1,433) 21,690

Selling, marketing and other operatingcosts (2,728) (3,121) (496) (103) (831) — (7,279)

Net margin $ 3,854 $ 2,459 $ 1,485 $ 9,436 $ (1,390) $ (1,433) $ 14,411

Fair value changes in investmentproperties — — — — 368 — 368

Investment and other income 476 — 11 788 — — 1,275

Earnings before the following: $ 4,330 $ 2,459 $ 1,496 $ 10,224 $ (1,022) $ (1,433) $ 16,054


Share of losses from equity accounted investments 832

Gain on derivative financial instruments (220)


Income tax expense (1,447)

Earnings for the period $ 7,825(1) Results include housing land sales to external customers, which are recognized in each of the land and housing divisions and eliminated on consolidation..




Landdevelopment(1)




services



Revenues $ 73,831 $ 67,515 $ 56,745 $ 24,595 $ 33,702 $ (12,349) $ 244,039



Gross margin 31,849 12,176 13,005 18,362 7,318 (4,423) 78,287

Selling, marketing and other operatingcosts (7,469) (8,839) (3,285) — (3,062) — (22,655)

Net margin $ 24,380 $ 3,337 $ 9,720 $ 18,362 $ 4,256 $ (4,423) $ 55,632

Fair value changes in investmentproperties — — — — 9,823 — 9,823

Investment and other income 1,247 367 335 3,950 — — 5,899

Gain on reorganization of assetmanagement service agreement — — — 127,313 — — 127,313

Earnings before the following: $ 25,627 $ 3,704 $ 10,055 $ 149,625 $ 14,079 $ (4,423) $ 198,667


Share of earnings from equity accountedinvestments 212

Gain on derivative financial instruments 1,570


Gain on settlement of debt 2,248




Landdevelopment(1)




services



Revenues $ 69,693 $ 68,837 $ 70,857 $ 28,903 $ 33,177 $ (10,221) $ 261,246



Gross margin 26,859 14,135 21,854 20,429 5,878 (3,407) 85,748

Selling, marketing and other operatingcosts (6,804) (8,169) (2,075) (852) (2,242) — (20,142)

Net margin $ 20,055 $ 5,966 $ 19,779 $ 19,577 $ 3,636 $ (3,407) $ 65,606

Fair value changes in investmentproperties — — — — 7,326 — 7,326

Investment and other income 1,483 123 202 2,814 — — 4,622

Earnings before the following: $ 21,538 $ 6,089 $ 19,981 $ 22,391 $ 10,962 $ (3,407) $ 77,554


Share of losses from equity accountedinvestments 1,608

Gain on derivative financial instruments 140






Segmented Assets and Liabilities

Segmented assets as at September 30, 2015 and December 31, 2014 were as follows:


Landdevelopment

Housingdevelopment



services

Investmentand


Inventory $ 588,210 $ 49,359 $ 83,870 $ — $ — $ 721,439

Properties — — — — 167,514 167,514

Total real estate assets(1) $ 588,210 $ 49,359 $ 83,870 $ — $ 167,514 $ 888,953

Intangible asset — — — 43,000 — 43,000

Non-segmented assets(2) 514,489

Total assets $ 1,446,442(1) Real estate assets exclude investments in jointly controlled entities.(2) Included in non-segmented assets are cash, accounts receivable, other financial assets, equity accounted investments and capital and other operating assets, which include balances not directly

attributable to a specific operating segment.


Landdevelopment

Housingdevelopment



services

Investmentand


Inventory $ 526,960 $ 71,588 $ 75,515 $ — $ — $ 674,063

Properties — — — — 121,042 121,042

Total real estate assets(1) $ 526,960 $ 71,588 $ 75,515 $ — $ 121,042 $ 795,105

Intangible asset — — — 43,000 — 43,000

Non-segmented assets(2) 385,093

Total assets $ 1,223,198(1) Real estate assets exclude investments in jointly controlled entities.(2) Included in non-segmented assets are cash, accounts receivable, other financial assets, equity accounted investments and capital and other operating assets, which include balances not directly

attributable to a specific operating segment.

Segmented liabilities as at September 30, 2015 and December 31, 2014 were as follows:


Landdevelopment

Housingdevelopment



services

Investmentand


Provision for real estate development costs $ 41,867 $ 1,929 $ 13,714 $ — $ — $ 57,510

Customer deposits 2,754 1,125 23,178 — 465 27,522

Construction loans — 37,487 64,888 — 20,139 122,514

Mortgages and term debt — — 10,314 — 52,889 63,203

Total segmented liabilities $ 44,621 $ 40,541 $ 112,094 $ — $ 73,493 $ 270,749

Non-segmented liabilities(1) 455,983

Total liabilities $ 726,732(1) Included in non-segmented liabilities are certain amounts of accounts payable and other liabilities, income and other taxes payable, operating line, non-revolving term facility, Preference shares,

series 1 and deferred income taxes, which are not directly attributable to a specific operating segment.


Landdevelopment

Housingdevelopment



services

Investmentand


Provision for real estate development costs $ 50,053 $ 2,048 $ 2,935 $ — $ — $ 55,036

Customer deposits 1,942 2,746 16,969 — 1,084 22,741

Construction loans 6,171 41,408 41,065 — — 88,644

Mortgages and term debt 33,752 — 7,469 — 30,873 72,094

Total segmented liabilities $ 91,918 $ 46,202 $ 68,438 $ — $ 31,957 $ 238,515

Non-segmented liabilities(1) 392,850

Total liabilities $ 631,365(1) Included in non-segmented liabilities are certain amounts of income and other taxes payable, operating line, due to a shareholder, Preference shares, series 1 and deferred income taxes, which are

not directly attributable to a specific operating segment.



40. Classification of Items in Consolidated Statements of Financial Position

A summary of the classification between current and non-current assets and liabilities is presented below.

As at September 30, 2015Less than 12

monthsGreater than 12

monthsNon-

determinable Total

AssetsCash and cash equivalents $ 23,899 $ — $ — $ 23,899Accounts receivable 163,514 21,153 — 184,667Other financial assets — 177,043 — 177,043Housing inventory — — 49,359 49,359Condominium inventory — — 83,870 83,870Land inventory — — 588,210 588,210Investment properties — 134,459 — 134,459Recreational properties — 33,055 — 33,055Equity accounted investments — 100,113 — 100,113Capital and other operating assets 4,896 23,871 — 28,767Intangible asset — 43,000 — 43,000Total assets $ 192,309 $ 532,694 $ 721,439 $ 1,446,442

LiabilitiesAccounts payable and accrued liabilities $ 70,509 $ 22,159 $ — $ 92,668Income and other taxes 30,808 — — 30,808Provision for real estate development costs 57,510 — — 57,510Customer deposits — — 27,522 27,522Construction loans(1) 64,257 58,257 — 122,514Operating line — 84,115 — 84,115Non-revolving term facility — 173,909 — 173,909Mortgages and term debt 12,346 50,857 — 63,203Preference shares, series 1 36,656 — — 36,656Deferred income taxes — 37,827 — 37,827Total liabilities $ 272,086 $ 427,124 $ 27,522 $ 726,732

(1) The amounts presented are shown consistent with the contractual terms of repayment. For instruments which are due on demand, the total liability has been included in the less than 12 monthscategory, which in some instances may not reflect management's estimate of the timing of such repayments.

41. Comparative figures

Certain comparative balances have been reclassified from the consolidated financial statements previously presented to conform to the presentation of the2015 condensed consolidated financial statements.



Corporate Information

Head OfficeDREAM UNLIMITED CORP.State Street Financial Centre30 Adelaide Street East, Suite 1600Toronto, Ontario M5C 3H1Phone: (416) 365-3535Fax: (416) 365-6565Web: www.dream.ca

Investor RelationsPhone: (416) 365-3535E-mail: [email protected]: www.dream.ca

Transfer Agent(for change of address, registrationor other shareholder enquiries)

COMPUTERSHARETRUST COMPANy OF CANADA100 University Avenue, 8th FloorToronto, Ontario M5J 2y1Phone: (514) 982-7555 or1 800 564-6253Fax: (416) 263-9394 or1 888 453-0330Web: www.computershare.comE-mail: [email protected]

AuditorsPRICEWATERHOUSECOOPERS LLPPwC Tower, 18 york Street, Suite 2600Toronto, Ontario M5J 0B2

Corporate CounselOSLER, HOSKIN & HARCOURT LLPBox 50, 1 First Canadian Place, Suite 6100Toronto, Ontario M5X 1B8

Stock Exchange ListingTHE TORONTO STOCK EXCHANGEListing symbols:Subordinate Voting Shares: DRMSeries 1 Preference Shares: DRM.PR.A

Fore more information please visitwww.dream.ca

Corporate Offices

30 Adelaide Street East, Suite 1600

Toronto, ON M5C 3H1

Phone: 416.365.3535

Fax: 416.365.6565

Email: [email protected]

DreamMDA Q3 2015 … · Q3 2015 Dream Unlimited Corporation. Table of Contents ... of the business...

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