Dream Impact Trust — Management Reports 2023

Feb 14, 2023

MANAGEMENT’S DISCUSSION AND ANALYSIS

(All dollar amounts in our tables are presented in thousands of Canadian dollars, except unit and per unit amounts, unless otherwise stated)

This Management's Discussion and Analysis ("MD&A") is intended to assist readers in understanding Dream Impact Trust (“Dream Impact” or the “Trust”) and its business environment, strategies, performance and risk factors. This MD&A should be read in conjunction with the audited consolidated financial statements and the accompanying notes for the years ended December 31, 2022 and December 31, 2021, which can be found under the Trust’s profile on the System for Electronic Document Analysis and Retrieval (“SEDAR”) (www.sedar.com). The financial statements underlying this MD&A, including 2021 comparative information, have been prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board. Certain disclosures herein are specified financial measures including non-GAAP measures and supplementary or other specified financial measures. Refer to the “Specified Financial Measures and Other Disclosures” section of this MD&A for further details.

All dollar amounts in our tables are presented in thousands of Canadian dollars, except unit and per unit amounts, unless otherwise stated. This MD&A is dated as of, and reflects all material events up to, February 13, 2023, the date on which this MD&A was approved by the Board of Trustees of the Trust ("Board of Trustees").

When we refer to terms such as "we", "us" and "our", we are referring to the Trust, Dream Impact Master LP ("MPCT LP") and its subsidiaries. When we refer to the term "units" we are referring to the units of the Trust. When we refer to "unitholders" we are referring to holders of the units of the Trust.

The "Forward-Looking Information" section of this MD&A includes important information concerning certain information found in this MD&A that contains or incorporates statements that constitute forward-looking information within the meaning of applicable securities laws. Readers are encouraged to read the "Forward-Looking Information" and "Risks and Risk Management" sections of this MD&A for a discussion of the risks and uncertainties regarding this forward-looking information as there are a number of factors that could cause actual results to differ materially from those disclosed or implied by such forward-looking information.

Certain comparative results have been reclassified to conform to the presentation adopted in the current period.

1. OVERVIEW AND OVERALL FINANCIAL PERFORMANCE

1.1 OVERVIEW OF THE TRUST

Dream Impact Trust is an open-ended trust dedicated to impact investing. Impact investing is the intention of creating measurable positive, social, or environmental change in our communities and for our stakeholders, while generating attractive financial returns. The Trust’s underlying portfolio is comprised of exceptional real estate assets reported under two operating segments: development and investment holdings and recurring income. The units of the Trust are listed on the Toronto Stock Exchange ("TSX") under the symbol "MPCT.UN".

The Trust is managed by Dream Asset Management Corporation ("DAM" or the "Asset Manager"), a subsidiary of Dream Unlimited Corp. ("Dream Unlimited" or "Dream") (TSX: DRM), which is one of Canada’s leading real estate companies, with approximately $17 billion of assets under management in North America and Europe. On January 1, 2018, Dream acquired control of the Trust, for accounting purposes, based on Dream's increased exposure to variable returns resulting from increased ownership through units held in the Trust and from new real estate joint venture agreements. The ultimate controlling party of the Trust is Michael Cooper, President and Chief Responsible Officer of DAM and Dream. As of December 31, 2022, Dream has a 30% ownership interest in the Trust.

1.2 OUR STRATEGY AND OPERATING SEGMENTS

Our fundamental objectives are to:

• Create positive and lasting impacts for our stakeholders through our three impact verticals: environmental sustainability and resilience, attainable and affordable housing, and inclusive communities;

• Balance the growth and stability of the portfolio, increasing cash flow, unitholders’ equity and net asset value ("NAV")[(1)] over time;

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• Leverage our access to an experienced management team and strong partnerships in order to generate attractive returns for investors;

• Provide investors with a portfolio of high-quality real estate assets, concentrated in core geographic markets.

We work towards these objectives by operating our business under two distinct segments:

• Recurring income — comprised of a portfolio of stabilized office and commercial real estate income properties and multi-family rental assets in the Greater Toronto Area ("GTA") and Ottawa/Gatineau, a utility asset[(2)] , and interestpaying corporate loans; and

• Development and investment holdings — comprised of direct and indirect investments in residential and mixed-use developments, a hospitality asset, and participating mortgage receivables.

(1) NAV is a non-GAAP financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NAV is not a standardized financial measure under IFRS and might not be comparable to similar measures disclosed by other issuers.

(2) Relates to Zibi Community Utility. For further details, refer to Section 10.1, "Summary of Impact Investments" of this MD&A.

Recurring income is important to our business as it provides stable returns in order to fund our ongoing fixed operating costs, interest cost and distributions. Over time, we expect this segment to grow and represent approximately 70% of our portfolio, as we build out our extensive development pipeline and further invest in best-in-class income properties.

We believe the Trust’s development segment represents a portfolio of high-quality assets located in core geographic markets that would not otherwise be accessible in a public vehicle. These assets represent a significant source of growth for the Trust, which we expect will generate future income and cash flows over time as the projects are developed. Assets may be built for sale or built to hold for the long term.

Due to the nature of development, the Trust expects fluctuations in earnings from period to period from this segment. Typically, assets may be acquired and held for a number of years before development commences or contribution to net income is realized. However, depending on a variety of factors, including location, market conditions, density, and asset class, the value of these projects may appreciate as we progress through the rezoning and pre-development process. Our development segment is expected to generate attractive returns and continued NAV[(1)] accretion over time.

We also believe our portfolio will be more resilient and valuable because it is comprised of assets that are considered impact investments.

In line with our overarching strategy to be a pure-play impact investment vehicle, we utilize assets in both operating segments to generate positive impact across our verticals. These verticals are aligned with the widely recognized and accepted United Nations Sustainable Development Goals and are:

• Environmental sustainability and resilience — develop sustainable real estate that optimizes energy use, limits greenhouse gas ("GHG") emissions, and reduces water use and waste while also creating resiliency against natural disasters and major climatic events.

• Attainable and affordable housing — invest in mixed-income communities that are transit-oriented, located close to employment opportunities, and support an overall lower relative cost of living with high quality of life.

• Inclusive communities — intentionally design and program communities that are safe and inclusive for everyone. This includes creating spaces that encourage mental and physical health, and wellness.

As of December 31, 2022, over 95% of NAV[(1) ] qualified under the Trust's definition of an impact investment or was in the impact planning stage. Over the next few years, we intend to deploy capital into new impact investment opportunities, wind down or exit remaining non-impact investments and increase our financial flexibility from our build-to-sell assets.

(1) NAV is a non-GAAP financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

1.3 BUSINESS UPDATE - FOURTH QUARTER AND YEAR ENDED 2022

Over the course of the year, the Trust added $98.3 million to its recurring income segment, either through third-party acquisitions or block completions from its development pipeline. This translated to over 450 multi-family rental units and 34,000 square feet ("sf") of commercial gross leasable area ("GLA") (at the 100% project level).

The Trust also made significant progress on our active projects under construction as we work towards our goal of building out an additional $500 million in high-quality recurring income assets to the Trust’s portfolio by the end of 2025. This

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includes West Don Lands Block 8 ("WDL Block 8"), a 770-unit multi-family rental building of which 30% are designated as affordable, located in downtown Toronto’s east end adjacent to the Canary and Distillery Districts. WDL Block 8 will be the next asset completed from our pipeline as first tenant occupancies are anticipated this spring. For further details on the Trust’s development pipeline, please refer to Section 2.2, "Development and Investment Holdings".

In 2022, the Trust was the winning proponent of two significant bids, Dream LeBreton and Quayside. The Trust was wellpositioned for both of these projects given our dedicated impact strategy and track record.

Dream LeBreton is the first phase of the Build LeBreton project in Ottawa, Ontario. The site is adjacent to a light rail station and in close proximity to the Zibi development. In the fourth quarter, we received rezoning approval from the City of Ottawa which will provide for two towers on the site, comprised of 608 rental units, including 250 affordable units. The Trust has a 33.3% interest in the project.

On December 9, 2022, the Trust executed a project agreement with Waterfront Toronto to acquire a 12.5% interest in Quayside. The development is considered one of the most significant projects in Canada, integrating multiple levels of government and ambitious sustainability and inclusivity targets. Upon full build-out of the 12-acre site, Quayside is expected to include over 800 affordable housing units with an emphasis on family sized accommodations, 2.5 acres of public green space and Canada’s largest mass timber structure. Closing for the first phase of Quayside is anticipated in March 2023.

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FINANCIAL HIGHLIGHTS OF THE TRUST

FINANCIAL HIGHLIGHTS OF THE TRUST
	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Consolidated results of operations Net income (loss) Net income (loss) per unit(1) Distributions declared and paid per unit Units outstanding – end of period Units outstanding – weighted average	$ (44,863)$ 26,959 $ (43,554)$ 21,450 (0.67) 0.41 (0.66) 0.33 0.10 0.10 0.40 0.40 67,042,514 65,071,762 67,042,514 65,071,762 66,746,909 65,179,813 65,916,941 64,996,594
As at	December 31, 2022 September 30, 2022 December 31, 2021
Consolidated financial position Total unitholders' equity Total unitholders' equity per unit⁽¹⁾ NAV(2) NAV per unit(3) Total debt payable(2) Total assets Debt-to-asset value(3) Cash	$ 478,732 $ 526,350 $ 536,931 7.14 7.96 8.25 552,984 n/a 605,996 8.25 n/a 9.31 224,315 207,415 134,902 724,169 760,203 701,702 31.0 % 27.3 % 19.2 % 2,244 9,030 8,431

(1) Total unitholders' equity per unit and net income (loss) per unit are supplementary financial measures. Please refer to the Specified Financial Measure and Other Disclosures section of this MD&A.

(2) Total debt payable and NAV are non-GAAP financial measures. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. Total debt payable is included as part of the definition of debt-to-asset value, a non-GAAP ratio. Total debt payable and NAV are not standardized financial measures under IFRS and might not be comparable to similar measures disclosed by other issuers.

(3) NAV per unit and debt-to-asset value are non-GAAP ratios. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NAV per unit is updated annually. NAV per unit and debt-to-asset value are not standardized financial measures under IFRS and might not be comparable to similar measures disclosed by other issuers.

During the three months ended December 31, 2022, the Trust reported a net loss of $44.9 million compared to net income of $27.0 million in the prior year. Current period results included a fair value loss of $59.2 million on the Trust’s investment in the Virgin Hotels Las Vegas (the “U.S. Hotel”) as further described in the Development and Investment Holdings section of this MD&A. Adjusting for this fair value loss, the Trust generated income of $14.3 million in the fourth quarter, a decrease from the prior year due to the composition of fair value adjustments on commercial properties in each period and higher interest due to financing activities, partially offset by increased income contribution from our multi-family portfolio.

As previously disclosed, the Trust has a 10% minority interest in the U.S. Hotel. The U.S. Hotel is considered non-core to the Trust’s portfolio, as it is not impact and the investment strategy has always been to exit upon stabilization. In the fourth quarter, the Trust incurred a fair value loss of $59.2 million on the investment, which approximated its carrying value. The loss was driven by a variety of factors, which included operational performance, near-term financing and significant capital needs, uncertainty regarding stabilization, market comparators and a proposed capital re-organization by the U.S. Hotel investor group in the fourth quarter. In light of these considerations, we believe the write-down on the investment in the period was prudent.

In the year ended December 31, 2022, the Trust reported a net loss of $43.6 million compared to net income of $21.5 million in the prior year. Adjusting for the $59.2 million fair value loss related to the U.S. Hotel, the Trust generated net income of $15.7 million, a decrease compared to the prior year for the aforementioned reasons, partially offset by a prior year writedown on a legacy investment.

As at December 31, 2022, the Trust had $2.2 million of cash-on-hand. The Trust’s debt-to-asset value[(1)] as at December 31, 2022 was 31.0%, an increase relative to 27.3% as of September 30, 2022 and 19.2% as at December 31, 2021, primarily due to draws on the credit facility, net of certain project-level financing. The Trust's debt-to-total asset value, inclusive of projectlevel debt and market value adjustments[(1)] and assets within our development segment, including equity accounted investments, was 57.8% as at December 31, 2022. This includes long-term government debt at low interest rates and high leverage, providing financial benefits that help us pay for the social benefits we provide, including our affordable housing and sustainability programs within our communities. As at December 31, 2022, the Trust had drawn $41.7 million on its $50.0 million credit facility.

As of December 31, 2022, the Trust had $61.7 million of consolidated debt presented as current related to a mortgage on 49 Ontario Street ("49 Ontario") and the Trust’s credit facility. On January 31, 2023, the Trust closed on the refinancing of 49

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Ontario for gross proceeds of $80.0 million in the form of a non-revolving facility with a term of two years and interest rate of CDOR plus 2.65%. Proceeds were immediately used to repay the existing mortgage and the Trust’s credit facility. In addition, the Trust amended its credit facility, reducing the borrowing capacity from $50.0 million to $25.0 million and extending the maturity date to April 30, 2025. Upon completion of these two financing activities the Trust had approximately $30.0 million in available liquidity, up significantly from December 31, 2022.

(1) Debt-to-asset value and debt-to-total asset value, inclusive of project-level debt and market value adjustments, are non-GAAP ratios. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. Debt-to-asset value and debt-to-total asset value, inclusive of project-level debt and market value adjustments, are not standardized financial measures under IFRS and may not be comparable with similar measures presented by other issuers.

NAV AND RECONCILIATION OF NAV TO TOTAL UNITHOLDERS' EQUITY

As at December 31, 2022, NAV per unit was $8.25 compared with total unitholders' equity per unit of $7.14. NAV per unit is higher than total unitholders' equity per unit as a result of market value adjustments of $88.5 million, or $74.3 million net of a deferred tax adjustment (December 31, 2021 - $81.4 million, or $69.1 million net of a deferred tax adjustment) related to the Trust's investments in Lakeshore East, Brightwater and 100 Steeles, supported by independent third-party appraisals. NAV per unit as at December 31, 2021 was $9.31. The most significant factor contributing to the NAV decline year over year was the write-down of the U.S. Hotel.

The table below provides the reconciliation of NAV to total unitholders' equity, which is the closest IFRS measure to NAV:

As at December 31, 2022		Total unitholders' equity(1)	Market value(2)adjustment to equityaccounted investments	Deferred income taxes adjustment	NAV(3)	NAV per unit(4)	% of total NAV(3)
Development and investment holdings	$	256,403 $	88,498 $	—$	344,901 $	5.14	62.4 %
Recurring income		344,455	—	—	344,455	5.14	62.3 %
Cash and other(5)		(122,126)	—	(14,246)	(136,372)	(2.03)	(24.7) %
Total	$	478,732$	88,498$	(14,246) $	552,984$	8.25	100.0 %
As at December 31, 2021		Total unitholders' equity(1)	Market value(2)adjustment to equityaccounted investments	Deferred income taxes adjustment	NAV(3)	NAV per unit(4)	% of total NAV(5)
Development and investment holdings	$	296,709 $	81,428 $	—$	378,137 $	5.81	62.4 %
Recurring income		283,612	—	—	283,612	4.36	46.8 %
Cash and other(4)		(43,390)	—	(12,363)	(55,753)	(0.86)	(9.2) %
Total	$	536,931$	81,428$	(12,363) $	605,996$	9.31	100.0 %

(1) Total unitholders' equity includes working capital balances allocated to each respective segment.

(2) Market value is a supplementary financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

(3) NAV is a non-GAAP financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NAV is updated annually.

(4) NAV per unit is a non-GAAP ratio. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NAV per unit is updated annually.

(5) Includes cash of $2.2 million as at December 31, 2022 (December 31, 2021 - $8.4 million) less the Trust's outstanding convertible debentures of $70.0 million (December 31, 2021 - $30.0 million) and other net working capital balances not included in the development and investment holdings or recurring income segments.

As at December 31, 2022, approximately 70% of NAV was supported by third-party appraisals. The significant inputs to the market value adjustments include expected density and price per sf of the land. The increase relative to prior year of $7.1 million relates to 100 Steeles, which had not been previously appraised. Market value adjustments for Brightwater and Lakeshore were held flat relative to prior year.

Management considers NAV to be an important measure of intrinsic value for the Trust. Due to the nature of our portfolio, NAV is published annually to reflect various factors including the progression of each project toward completion, such as progress on zoning and/or reflecting information from recent market transactions. The Trust believes that incorporating an annual market value adjustment is a useful measure to value certain development assets that would not ordinarily be captured within IFRS and the Trust's consolidated financial statements as they are carried at cost.

Assuming consistent market conditions, the development projects are expected to continue to generate market value increases as they continue to advance closer to their completion dates.

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SEGMENTED RESULTS OF OPERATIONS – THREE MONTHS ENDED DECEMBER 31, 2022

		Development
	and investment		Recurring
		holdings	income	Other⁽¹⁾	Total
INCOME
Lending portfolio interest income and lender fees	$	— $	412 $	—$	412
Income properties revenue		—	4,277	—	4,277
Share of income from equity accounted investments		1,695	4,243	—	5,938
TOTAL INCOME		1,695	8,932	—	10,627
EXPENSES
Income properties, operating		—	(2,290)	—	(2,290)
Interest expense		—	(1,266)	(1,826)	(3,092)
General and administrative		—	—	(2,946)	(2,946)
TOTAL EXPENSES		—	(3,556)	(4,772)	(8,328)
Fair value adjustments in development and investment holdings		(60,351)	—	—	(60,351)
Fair value adjustments to income properties		—	11,545	—	11,545
OPERATING INCOME (LOSS)		(58,656)	16,921	(4,772)	(46,507)
Interest and other income		—	9	31	40
Fair value adjustments to financial instruments		—	—	(104)	(104)
EARNINGS (LOSS) BEFORE INCOME TAX RECOVERY		(58,656)	16,930	(4,845)	(46,571)
INCOME TAX RECOVERY
Deferred income tax recovery		—	—	1,708	1,708
TOTAL INCOME TAX RECOVERY		—	—	1,708	1,708
NET INCOME (LOSS)	$	(58,656) $	16,930 $	(3,137) $	(44,863)
OTHER COMPREHENSIVE INCOME
Items that will be reclassified subsequently to net income (loss):
Fair value adjustments to derivative financial liabilities hedge, net of tax		—	26	—	26
TOTAL OTHER COMPREHENSIVE INCOME		—	26	—	26
TOTAL COMPREHENSIVE INCOME (LOSS)	$	(58,656) $	16,956 $	(3,137) $	(44,837)

SEGMENTED RESULTS OF OPERATIONS – THREE MONTHS ENDED DECEMBER 31, 2021

		Development
	and investment		Recurring
		holdings	income	Other⁽¹⁾	Total
INCOME
Lending portfolio interest income and lender fees	$	— $	448 $	—$	448
Income properties revenue		—	4,394	—	4,394
Share of income from equity accounted investments		1,481	1,335	—	2,816
TOTAL INCOME		1,481	6,177	—	7,658
EXPENSES
Income properties, operating		—	(2,204)	—	(2,204)
Interest expense		—	(905)	(611)	(1,516)
Provision for lending portfolio losses		—	(387)	—	(387)
General and administrative		—	—	(2,775)	(2,775)
TOTAL EXPENSES		—	(3,496)	(3,386)	(6,882)
Fair value adjustments in development and investment holdings		(265)	—	—	(265)
Fair value adjustments to income properties		—	26,964	—	26,964
OPERATING INCOME (LOSS)		1,216	29,645	(3,386)	27,475
Interest and other income		—	14	295	309
Transaction costs		—	(24)	—	(24)
Fair value adjustments to financial instruments		—	—	210	210
EARNINGS (LOSS) BEFORE INCOME TAX EXPENSE		1,216	29,635	(2,881)	27,970
INCOME TAX EXPENSE
Deferred income tax expense		—	—	(1,011)	(1,011)
TOTAL INCOME TAX EXPENSE		—	—	(1,011)	(1,011)
NET INCOME (LOSS)	$	1,216 $	29,635 $	(3,892) $	26,959

(1) Includes other Trust amounts not specifically related to the segments.

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SEGMENTED RESULTS OF OPERATIONS – YEAR ENDED DECEMBER 31, 2022

SEGMENTED RESULTS OF OPERATIONS – YEAR ENDED DECEMBER 31, 2022	SEGMENTED RESULTS OF OPERATIONS – YEAR ENDED DECEMBER 31, 2022
Development and investment holdings Recurring income Other⁽¹⁾ Total
INCOME Lending portfolio interest income and lender fees $ — $ 1,309 $ —$ 1,309 Income properties revenue — 17,118 — 17,118 Share of income (losses) from equity accounted investments (1,596) 10,254 — 8,658
TOTAL INCOME (LOSS) (1,596) 28,681 — 27,085 EXPENSES Income properties, operating — (9,142) — (9,142) Interest expense — (4,198) (5,088) (9,286) General and administrative — — (10,613) (10,613)
TOTAL EXPENSES — (13,340) (15,701) (29,041) Fair value adjustments in development and investment holdings (55,916) — — (55,916) Fair value adjustments to income properties — 11,247 — 11,247
OPERATING INCOME (LOSS) (57,512) 26,588 Interest and other income — 25 Fair value adjustments to financial instruments — —	(15,701) (46,625) 190 215 413 413
EARNINGS (LOSS) BEFORE INCOME TAX RECOVERY (57,512) 26,613	(15,098) (45,997)
INCOME TAX RECOVERY Deferred income tax recovery — —	2,443 2,443
TOTAL INCOME TAX RECOVERY — —	2,443 2,443
NET INCOME (LOSS) $ (57,512) $ 26,613 OTHER COMPREHENSIVE INCOME Items that will be reclassified subsequently to net income (loss): Share of other comprehensive income from equity accounted investments, net of tax — 1,874 Fair value adjustments to derivative financial liabilities hedge, net of tax — 413	$ (12,655) $ (43,554)
	— 1,874 — 413
TOTAL OTHER COMPREHENSIVE INCOME — 2,287	— 2,287
TOTAL COMPREHENSIVE INCOME (LOSS) $ (57,512) $ 28,900	$ (12,655) $ (41,267)

SEGMENTED RESULTS OF OPERATIONS – YEAR ENDED DECEMBER 31, 2021

		Development
	and investment		Recurring
		holdings	income	Other⁽¹⁾	Total
INCOME
Lending portfolio interest income and lender fees	$	— $	1,748 $	—$	1,748
Income properties revenue		—	17,814	—	17,814
Share of income from equity accounted investments		6,623	1,409	—	8,032
TOTAL INCOME		6,623	20,971	—	27,594
EXPENSES
Income properties, operating		—	(8,564)	—	(8,564)
Interest expense		—	(3,514)	(1,166)	(4,680)
Provision for lending portfolio losses		—	(1,465)	—	(1,465)
General and administrative		—	—	(11,345)	(11,345)
TOTAL EXPENSES		—	(13,543)	(12,511)	(26,054)
Fair value adjustments in development and investment holdings		(6,472)	—	—	(6,472)
Fair value adjustments to income properties		—	23,974	—	23,974
OPERATING INCOME (LOSS)		151	31,402	(12,511)	19,042
Interest and other income		—	101	930	1,031
Transaction costs		—	(348)	—	(348)
Fair value adjustments to financial instruments		—	—	524	524
EARNINGS (LOSS) BEFORE INCOME TAX RECOVERY		151	31,155	(11,057)	20,249
INCOME TAX RECOVERY
Current income tax recovery		—	—	7	7
Deferred income tax recovery		—	—	1,194	1,194
TOTAL INCOME TAX RECOVERY		—	—	1,201	1,201
NET INCOME (LOSS)	$	151 $	31,155 $	(9,856) $	21,450

(1) Includes other Trust amounts not specifically related to the segments.

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TOTAL INCOME

Total income for the three months ended December 31, 2022 was $10.6 million compared to total income of $7.7 million in the prior year, an increase driven by the net impact of fair value adjustments within equity accounted investments.

Total income for the year ended December 31, 2022 was $27.1 million compared to income of $27.6 million in the prior year. The decrease in income was driven by a decrease in income property revenue due to occupancy changes offset by a net increase in fair value adjustments.

TOTAL EXPENSES

Total expenses for the three months ended December 31, 2022 were $8.3 million, an increase compared to $6.9 million in the prior year, primarily as a result of higher interest expense from the issuance on the convertible debentures, draws on the credit facility and refinancing on mortgages payable on certain of our income properties.

Total expenses for the year ended December 31, 2022 were $29.0 million, an increase compared to $26.1 million in the prior year as a result of the aforementioned, partially offset by a provision recorded on the lending portfolio in the prior year.

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1.4 SUMMARY OF PORTFOLIO ASSETS

The following table includes supplementary information on certain assets in our portfolio as at December 31, 2022. Please refer to Section 10.1, "Summary of Impact Investments" of this MD&A for additional information on certain of these investments in our development and recurring income segments.

RECURRING INCOME SEGMENT

Project/property Property type	Dream Impact Trust ownership Accounting treatment Impact status(1)	Total residential units Residential GFA(2) (at 100%) In-place/ committed residential occupancy Total commercial and retail GLA (at 100%) In-place/ committed commercial occupancy	Total residential units Residential GFA(2) (at 100%) In-place/ committed residential occupancy Total commercial and retail GLA (at 100%) In-place/ committed commercial occupancy
Downtown Toronto & (GTA) Commercial: Sussex Centre Office/retail 49 Ontario(3) Office 10 Lower Spadina Office/retail 349 Carlaw Office 68-70 Claremont Street Office 76 Stafford Street Office/retail Berkeley properties(3), (4) Office 100 Steeles Avenue West⁽3⁾ Retail Plaza Imperial Office/retail Plaza Bathurst Office/retail Multi-Family Rental: Weston Common Multi-family rental Robinwood Portfolio Multi-family rental 70 Park Multi-family rental 262 Jarvis Multi-family rental 111 Cosburn Multi-family rental	50.1% Joint operation I, E 100.0% Consolidated TBD 100.0% Consolidated I, E 100.0% Consolidated I, E 100.0% Consolidated I, E 100.0% Consolidated I, E 100.0% Consolidated TBD 37.5% Equity accounted TBD 40.0% Equity accounted n/a 40.0% Equity accounted n/a 33.3% Equity accounted A, I, E 33.3% Equity accounted A, I, E 50.0% Equity accounted I, E 33.3% Equity accounted I, E 50.0% Equity accounted I, E	— — — 655,000 73.3 % — TBD — 88,000 91.5 % — — — 61,000 93.1 % — — — 34,000 64.3 % — — — 30,000 — % — — — 25,000 100.0 % — — — 14,000 76.5 % — TBD — 59,000 97.1 % — — — 35,000 100.0 % — — — 24,000 100.0 % 841 692,000 97.0 % 52,000 98.5 % 285 156,000 89.8 % — — 210 257,000 96.7 % — — 71 35,000 97.2 % — — 23 14,000 73.9 % — —
Total Downtown Toronto & GTA		1,430 1,154,000	95.2 % 1,077,000 78.2 %
Zibi (Ottawa/Gatineau): Commercial: Natural Sciences Building (Block 211) Office/retail 15 Rue Jos-Montferrand (Block 2-3) Office/retail 310 Miwate Private (Block 208) Office/retail Multi-Family Rental: Aalto Suites (Block 10) Multi-family rental Other: Zibi Community Utility Energy utility	50.0% Equity accounted I, E 50.0% Equity accounted I, E 50.0% Equity accounted I, E 50.0% Equity accounted A, I, E 20.0% Equity accounted E	— — — — — — 162 135,000 — —	— 186,000 93.4 % — 53,000 81.2 % — 33,000 100.0 % 87.0 % 1,000 — — — —
Total Zibi (Ottawa/Gatineau)		162 135,000	87.0 % 273,000 91.5 %
Total projects in the recurring income segment		1,592 1,289,000	94.3 % 1,350,000 80.9 %

(1) Investments will align with the following impact verticals as outlined in Section 1.2, "Our Strategy and Operating Segments": A - Attainable and affordable housing; I - Inclusive communities; and E - Environmental sustainability and resilience.

(2) Residential gross floor area ("GFA").

(3) Identified with redevelopment potential. Asset is currently occupied with tenants paying rental income.

(4) The Berkeley properties are a land assembly adjacent to 49 Ontario, and part of the asset's longer-term development plan.

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DEVELOPMENT AND INVESTMENT HOLDINGS SEGMENT

Project/property Property type	Dream Impact Trust ownership Status/type Impact status(1)	Total residential units/hotel rooms at completion (at 100%)(2)	Residential GFA(3) (at 100%) Total commercial and retail GLA(3) (at 100%) In-place/ committed commercial occupancy Occupancy date	Residential GFA(3) (at 100%) Total commercial and retail GLA(3) (at 100%) In-place/ committed commercial occupancy Occupancy date
Downtown Toronto & GTA WDL Block 8 Build to hold Brightwater I and II Build to sell Brightwater Towns Build to sell The Mason (Brightwater) Build to sell Canary Block 10 Various Ivy Build to sell/ Build to hold WDL Block 3/4/7 Build to hold Queen & Mutual Build to sell Bridge House (Brightwater) Build to sell Brightwater future blocks Build to sell Forma - East Tower Build to sell WDL Block 20 Build to hold Lakeshore East TBD Forma - West Tower Build to sell Scarborough Junction Build to sell BlackTusk Partnership Build to sell/ Build to hold Seaton Build to sell	25.0% Under construction A, I, E 23.3% Under construction I, E 23.3% Under construction I, E 23.3% Under construction I, E 25.0% Under construction I, E 75.0% Under construction n/a 25.0% Under construction A, I, E 9.0% Under construction n/a 23.3% Planning I, E 23.3% Planning I, E 25.0% Under construction I, E 25.0% Planning A, I, E 37.5% Planning TBD 25.0% Planning TBD 45.0%⁽5⁾ Planning n/a 2.5%-40.0% Various I 7.0% Planning n/a	770 624,000 4,000 2023 311 244,000 98,000 36.7 % 2023 106 237,000 — 2024 162 128,000 5,000 2024 444(4) 335,000 26,000 2024 268 193,000 — 2024 855 811,000 32,000 2025 369 243,000 7,000 2025 474 392,000 — 2026 1,942 2,433,000 257,000 2025-2032 864 590,000 1,000 2029 653 571,000 255,000 TBD 1,500 1,200,000 100,000 TBD 1,170 885,000 223,000 TBD 6,619 5,270,000 165,000 TBD TBD TBD TBD TBD TBD TBD TBD TBD
Total Downtown Toronto & GTA		16,507	14,156,000 1,173,000	36.7 %
Zibi (Ottawa/Gatineau): Block 206 Build to hold Block 207 Build to hold Block 11 Build to hold Future blocks Various Other (Ottawa/Gatineau): Dream LeBreton(6) Build to hold	50.0% Under construction A, I, E 50.0% Under construction I, E 50.0% Under construction A, I, E 50.0% Planning A, I, E 33.3% Planning A, I, E	207 — 148 1,255 608	196,000 11,000 — 76,000 127,000 4,000 1,292,000 1,891,000 410,000 26,000
				2023 2023 2023 TBD
				2025
Total Ottawa/Gatineau		2,218	2,025,000 2,008,000
Total projects in the development and investment holdings segment		18,725	16,181,000 3,181,000

(1) Investments will align with the following impact verticals as outlined in Section 1.2, "Our Strategy and Operating Segments": A - Attainable and affordable housing; I - Inclusive communities; E - Environmental sustainability and resilience.

(2) Residential units and GLA are at 100% project level and include planned units and GLA, which are subject to change pending various development approvals. Planned residential units may be developed as condominium units or purpose-built rentals as supported by market demand, targeted studies and return objectives. For projects currently in occupancy, residential units reflect remaining units in inventory to be occupied in future periods.

(3) Total commercial and retail GLA, and GFA, include planned GLA and GFA, which are subject to change pending various development approvals.

(4) This figure includes 238 rental units in which the Trust is considered build to hold, as well as a 206-unit condo building invested in by Dream.

(5) The Trust's equity ownership interest in Scarborough Junction is 45%, and the Trust's effective economic interest is expected to be approximately 23%.

(6) Of the 608 units, 132 units equivalent to 92,000 sf of GFA will be owned by a not-for-profit.

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2. REPORTABLE OPERATING SEGMENTS RESULTS OF OPERATIONS

2.1 RECURRING INCOME

The Trust holds a direct investment in 11 income properties across the GTA, as well as indirect investments in commercial, retail, and multi-family rental properties held through various joint venture partnerships. In aggregate, the Trust's portfolio is comprised of 1.4 million sf of commercial and retail GLA, and 1,592 multi-family rental units (at 100% asset level ownership).

The Trust's recurring income segment contains a lending portfolio that includes investments in loans secured by different types of residential and commercial real estate property that represent an acceptable underwriting risk to the Trust. We expect the lending portfolio to wind down over time as loans are repaid.

A summary of the recurring income segment results is as follows:

	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Net income - income properties(1) Share of net income from equity accounted investments ("EAI") - recurring income Net income (loss) - lending portfolio(1)	$ 12,275$ 28,259$ 15,050$ 29,805 4,243 1,335 10,254 1,409 412 41 1,309 (59)
Net income - recurring income	$ 16,930$ 29,635$ 26,613$ 31,155

(1) Net income - income properties, and net income (loss) - lending portfolio, are supplementary financial measures. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. Net income - income properties, and net income (loss) - lending portfolio are not standardized financial measures under IFRS and might not be comparable to similar measures disclosed by other issuers.

During the three months ended December 31, 2022, the Trust's recurring income segment generated net income of $16.9 million, a decrease from $29.6 million in the prior year. The fluctuation in net income was largely due to the magnitude of fair value changes on income properties in each respective period. Included in current period results was a fair value gain of $29.0 million on 49 Ontario driven by an increase in land value and density, partially offset by a fair value loss of $14.9 million on Sussex Centre due to capitalization rate expansion. Sussex Centre is located in Mississauga and is owned 50% by the Trust. Both fair value adjustments were supported by independent third-party appraisals.

During the year ended December 31, 2022, the Trust's recurring income segment generated net income of $26.6 million, a decrease from $31.2 million in the prior year. The decrease was due to the aforementioned, as well as increased net income from the multi-family rental assets from portfolio growth and fair market value gains.

49 Ontario is an 88,000-sf commercial property owned 100% by the Trust, located in downtown Toronto and in close proximity to a future Ontario line subway stop. Inclusive of the Berkeley land assembly acquired in 2022, the Trust paid $46.8 million for the site, which was carried at $140.0 million as of December 31, 2022. The Trust has submitted a rezoning application for the site for over 800,000 sf of gross floor area, including over 1,000 residential units, and anticipates rezoning to be achieved by mid 2023. Given current tenant occupancy, construction would not commence until the existing lease expires, which may not be until 2026 should in-place extension rights be exercised.

The Trust has a 37.5% leasehold interest in a retail shopping centre and future residential mixed-use development at 100 Steeles, located near the future Steeles station on the Yonge North subway extension. We are extremely pleased with rezoning progress made to date and expect the site to allow for approximately 1.5 million sf of gross floor area, including 1,800 residential units, when zoning is approved this year.

COMMERCIAL

The results of the Trust's commercial properties are as follows:

	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Net operating income ("NOI") - income properties(1) NOI - commercial income properties included in equity accounted investments ("EAI")(1)	$ 1,987$ 2,190$ 7,976$ 9,250 673 600 2,606 1,200
NOI - commercial properties	$ 2,660$ 2,790$ 10,582$ 10,450

(1) NOI-income properties, and NOI-commercial properties included in EAI are supplementary financial measures. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NOI - income properties, and NOI - commercial properties included in EAI are not standardized financial measures under IFRS and might not be comparable to similar measures disclosed by other issuers.

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During the three months and year ended December 31, 2022, NOI from commercial properties was $2.7 million and $10.6 million, respectively, relatively in line with the prior year. The composition of NOI from commercial properties differed in each period as additional NOI contribution from completed development blocks at Zibi was partially offset by the timing of lease expirations and early lease terminations in the prior year.

Operating statistics for the commercial income properties portfolio are as follows:

	December 31,	September 30,	December 31,
As at	2022	2022	2021
Total commercial income properties portfolio, including those held as equity
accounted investments
Number of properties(1)	17	17	12
Owned GLA (in millions of sf)	0.8	0.8	0.7
Occupancy rate (period-end) - including committed	80.3 %	80.8 %	83.6 %
Occupancy rate (period-end) - in-place	78.9 %	79.3 %	82.3 %
Average tenant size (in sf)	7,656	7,641	7,547
Average in-place and committed base rent per sf (period-end)	22.67	22.58	20.76
Weighted average remaining lease term (years)	6.8	6.9	6.9

(1) Includes five properties acquired as part of the Berkeley land assembly slated for re-development as part of the 49 Ontario site.

As at December 31, 2022, the committed and in-place occupancy rates for commercial income properties were 80.3% and 78.9%, respectively, a decrease compared to December 31, 2021 as a result of lease expirations.

MULTI-FAMILY RENTAL

MULTI-FAMILY RENTAL
NOI - multi-family rental(1)	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
	$ 1,685$ 817$ 4,408$ 848

(1) NOI-multi-family rental is a supplementary financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NOI - multi-family rental is not a standardized financial measure under IFRS and might not be comparable to similar measures disclosed by other issuers.

During the three months and year ended December 31, 2022, NOI - multi-family rental properties(1), which is included in equity accounted investments ("multi-family rental"), was $1.7 million and $4.4 million, respectively. The Trust recognized growth in NOI contribution from this segment, primarily due to third-party acquisitions and the completion of development blocks.

Operating statistics for the multi-family rental properties are as follows:

As at		December 31, 2022		September 30, 2022		December 31, 2021
Total multi-family rental portfolio
Number of properties		14		14		10
Number of units (at 100% project level)		1,592		1,592		1,140
Number of affordable units (at 100% project level)		389		389		92
Owned GFA (in millions of sf) (at the Trust's share)		0.5		0.5		0.3
Occupancy rate (period-end) - in place and committed		94.3 %		93.5 %		91.0 %
Net average monthly rate	$	1,423	$	1,275	$	1,272
Occupied average monthly rate	$	1,516	$	1,463	$	1,415

During the year ended December 31, 2022, using proceeds from the Trust's issuance of the 2022 Debentures (defined below), the Trust invested $19.6 million for a 50% interest in a 210-unit multi-family rental building and adjacent land slated for redevelopment. The site is near the Port Credit GO station and in close proximity to the Trust's Brightwater development. The purchase price for this site was $105.5 million (at 100%), of which approximately $25 million was allocated to the redevelopment land.

THREE-YEAR RECURRING INCOME PIPELINE

Based on the Trust's current development pipeline, we have an additional 2,826 residential units and 153,000 sf of retail and commercial GLA (at 100%) that are expected be completed and contribute to recurring income over the next three years. Details regarding such projects are as follows:

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Project/property	Dream Impact ownership Total rental residential units at completion(1) (at 100%) Residential GFA(2) (at 100%) Total commercial and retail GLA(2) (at 100%)	Occupancy date Value on completion(3)
WDL Block 8 Canary Block 10 WDL Block 3/4/7 Dream LeBreton(4) Zibi Block 206 Block 207 Block 11	25.0% 770 624,000 4,000 25.0% 238 182,000 — 25.0% 855 811,000 32,000 33.3% 608 410,000 26,000 50.0% 207 196,000 11,000 50.0% — — 76,000 50.0% 148 127,000 4,000	2023 2024 2025 2025 2023 2023 2023
Total	2,826 2,350,000 153,000	$490,000 - $510,000

(1) Residential units and GLA are at 100% project level and include planned units and GLA that are subject to change pending various development approvals. Planned residential units include purpose-built rental units that are expected to be part of the Trust's recurring income segment within the next three years.

(2) Residential GFA and total commercial and retail GLA are subject to change pending various development approvals.

(3) As at December 31, 2022, these values are estimates only, are subject to change and are at the Trust's ownership interest.

(4) Of the 608 units, 132 units equivalent to 92,000 sf of GFA will be owned by a not-for-profit. This is reflected in the Trust's share of value on completion.

2.2 DEVELOPMENT AND INVESTMENT HOLDINGS

As of December 31, 2022, the Trust's development and investment holdings segment was comprised of best-in-class development projects representing over 18,700 residential units and approximately 3.2 million sf of commercial and retail GLA (over 6,600 units and 1.3 million sf at the Trust's share). These figures do not include the Quayside development, as Phase I land is not expected to close until March 2023. The 12-acre Quayside development is expected to add significantly to the Trust's development pipeline, including the addition of 800 affordable housing units and 2.5 acres of public green space.

The majority of the Trust’s development assets are located in the GTA and Ottawa, and are in various planning and construction phases and classified as equity accounted investments. These equity accounted investments are typically held at cost and are expected to contribute meaningfully to the Trust’s earnings in future periods as properties are developed and completed. Fair value adjustments may be recorded on an individual investment level as a result of certain factors, such as terms of a construction contract, stage of completion, location, type and quality of the property, current market rents for similar properties, reliability of cash inflows after completion, development risks specific to the property, past experience with similar constructions, status of approvals and/or permits, estimated costs to complete, and market conditions.

Our developments are expected to provide attractive profits upon their respective completion dates and are expected to contribute to increased value for unitholders over the longer term.

Development holdings relate to the Trust's participating loans secured by Empire-related development projects (referred to as Empire Lakeshore and Empire Brampton), which are non-core legacy investments. Investment holdings relate to the Trust's 10% investment in the U.S. Hotel. These investments are not considered to be impact investments and are non-core as they relate to the Trust's overall strategy.

The table below provides a continuity of the Trust's development and investment holdings, including development assets within equity accounted investments, for the periods indicated:

within equity accounted investments, for the periods indicated:
					Equity
		Development	Investment		accounted
		holdings	holdings	investments		Total
Balance as at December 31, 2021	$	6,436 $	54,170	$	236,103$	296,709
Acquisitions		—	—		1,413	1,413
Contributions		—	1,303		28,879	30,182
Completed developments transferred to recurring income segment(1)		—	—		(6,094)	(6,094)
Transfer of working capital from recurring income segment(2)		—	—		750	750
Distributions		(800)	—		(8,245)	(9,045)
Share of loss from equity accounted investments		—	—		(1,596)	(1,596)
Fair value loss		(443)	(59,205)		—	(59,648)
Foreign exchange gain		—	3,732		—	3,732
Balance as at December 31, 2022	$	5,193 $	—	$	251,210 $	256,403

Dream Impact Trust 2022 Annual Report | 13

(1) Net of debt and working capital.

(2) Represents a transfer of working capital from Zibi commercial properties to Zibi development.

During the year ended December 31, 2022, the Trust acquired a 33.3% interest in the first phase of the Building LeBreton project ("Dream LeBreton") in Ottawa, Ontario. The site is adjacent to a light-rail station and in close proximity to the Zibi development. Dream LeBreton will be a 608-unit net-zero carbon rental project of which approximately 40% of units will be affordable.

During the year ended December 31, 2022, the Trust transferred certain investments from the development and investment holdings segment to the recurring income segment upon development completion and tenant occupancy. These included 310 Miwate Private, Aalto Suites and Zibi Community Utility ("ZCU"), which are part of the Zibi development. ZCU is a netzero heating and cooling system that powers the Zibi development by utilizing post-industrial waste energy for heating and the Ottawa River for cooling.

During the three months ended December 31, 2022, the Trust incurred a fair value loss of $59.2 million on the U.S. Hotel, which approximated its carrying value. The loss was driven by a variety of factors which included operational performance, near-term financing and capital needs, uncertainty regarding stabilization, market comparators and a proposed capital reorganization by the U.S. Hotel investor group in the fourth quarter.

During the year ended December 31, 2022, the Trust made contributions of $28.9 million to its development projects. We anticipate further capital investments in the range of $45.0 million to $55.0 million for our development projects over the next two years.

A summary of the development and investment holdings segment results is below:

	Three months ended December 31, Year ended December 31,	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Net loss - development and investment holdings Share of income (loss) from equity accounted investments - development and investment holdings	$ (60,351)$ (265)$ (55,916)$ (6,472) 1,695 1,481 (1,596) 6,623
Total net income (loss) - development and investment holdings	$ (58,656)$ 1,216	$ (57,512)$ 151

During the three months ended December 31, 2022, the development segment generated a net loss of $58.7 million compared to net income of $1.2 million in the comparative period. Adjusting for the fair value loss on the U.S. Hotel, the development segment generated net income of $0.5 million compared with $1.2 million in the prior year. The decrease was primarily due to a fair value adjustment related to a non-core legacy investment.

During the year ended December 31, 2022, the development segment generated a net loss of $57.5 million compared to net income of $0.2 million in the prior year. Adjusting for the fair value loss on the U.S. Hotel, the development segment generated net income of $1.7 million, an increase compared to $0.2 million in the prior year. The increase year over year was driven by a prior year write-down on a legacy investment and higher foreign exchange gains on the U.S. Hotel in the current year, partially offset by the net impact of fair value adjustments within equity accounted investments year over year.

DEVELOPMENT PIPELINE

Based on the timing and various stages of development, the Trust had minimal inventory available for occupancy in 2022. As our development projects progress towards completion and achieve various milestones, the Trust expects an increase in income and cash flows from this segment over time. Additionally, certain projects that are held by the Trust for the longer term, such as commercial or multi-family rental buildings, will be transferred to the recurring income segment, generating stabilized income for the Trust. For additional details, refer to Section 1.4, "Summary of Portfolio Assets".

Over the next three-year period, an additional 4,700 residential units and 0.3 million sf of retail and commercial product are expected to be completed (at the 100% project level). This includes both build-to-hold and build-to-sell assets. Build-to-hold assets, such as the West Don Lands development and future blocks at Zibi, are part of the Trust's long-term impact investing strategy.

SUMMARY OF DEVELOPMENT AND INVESTMENT HOLDINGS PARTNERS

We continue to leverage our relationships and expertise to attract world-class partners and investment opportunities. As a result of our partners and relationships, the Trust has access to unparalleled investment opportunities across North America. The table below provides an overview of some of the Trust's key partners within its development/redevelopment investments:

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Project	Partners	Partner since
Dream LeBreton BlackTusk Partnership Scarborough Junction Canary Block 10(1)	Dream Unlimited, Dream Impact Fund Dream Impact Fund, BlackTusk Group Harlo Capital, Republic Developments
Queen & Mutual Harlo Capital, Parallax Development Corp. 2018 West Don Lands(1) Dream Unlimited, Kilmer Van Nostrand Co. Ltd., Tricon Capital Group 2018 100 Steeles Dream Unlimited, Westdale Construction Co. Ltd. 2018 Seaton Fieldgate Homes, Mattamy Homes, Paradise Developments, TACC Construction Ltd. 2018 Forma (previously Frank Gehry) Dream Unlimited, Great Gulf Residential, Westdale Construction Co. Ltd. 2017 Zibi(1) Dream Unlimited 2017 Brightwater Dream Unlimited, Kilmer Van Nostrand Co. Ltd., Diamond Corp., FRAM + Slokker 2017 Lakeshore East Dream Unlimited, Great Gulf Residential 2016 Empire Lakeshore and Brampton Empire Communities 2014

(1) Dream Unlimited's share of the Canary Block 10, West Don Lands and Natural Sciences Building at Zibi developments was acquired by Dream Impact Fund. Dream Unlimited has a 40.93% interest in Dream Impact Fund as at December 31, 2022, with the residual interests held by third parties.

2.3 OTHER SEGMENT

GENERAL AND ADMINISTRATIVE EXPENSES

During the three months ended December 31, 2022, general and administrative expenses were $2.9 million, consistent with $2.8 million in the prior year. During the year ended December 31, 2022, general and administrative expenses were $10.6 million compared to $11.3 million in the prior year, driven by fluctuations in the deferred compensation recovery (expense) as a result of changes in the Trust's unit price period over period.

INCOME TAX EXPENSE (RECOVERY)

For the three months and year ended December 31, 2022, the Trust recorded an income tax recovery of $1.7 million and $2.4 million, respectively, compared to an income tax expense of $1.0 million and income tax recovery of $1.2 million, in the prior year. The fluctuation from period to period was driven by the composition of earnings.

Due to the Trust’s diversified asset mix and active asset management strategy, we expect some degree of variability in current and deferred income tax expense recognized each period through the consolidated statements of comprehensive income (loss) resulting in an income tax expense (recovery) position. The Trust intends to actively manage the portfolio in a tax-efficient manner.

We are subject to income taxes both federally and provincially in Canada and the United States. Judgments and estimates are required in the determination of the Trust's tax balances. Our income tax expense/recovery and deferred tax liabilities/ assets reflect management's best estimate of current and future taxes to be paid/recovered. The Trust is subject to tax audits from various government and regulatory agencies on an ongoing basis. As a result, from time to time, taxing authorities may disagree with the interpretation and application of tax laws taken by the Trust in its tax filings.

TAX ATTRIBUTES

INCOME PROPERTIES

We deduct mortgage interest and available tax depreciation on our buildings from our Canadian income properties that generate taxable net operating income. These deductions contribute to the overall tax efficiency of our structure and the tax depreciation helps provide the Trust with tax-sheltered cash flow. Any change in the fair value of income properties is not recognized in the determination of current taxes until the sale of the asset.

2.4 RELATED PARTY TRANSACTIONS

From time to time, the Trust and its subsidiaries enter into transactions with related parties that are contracted under commercial terms. DAM, which is a wholly owned subsidiary of Dream Unlimited, is the Asset Manager and is a related party that provides management personnel services to the Trust under the terms of the Management Agreement.

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DREAM ASSET MANAGEMENT

ASSET MANAGEMENT AGREEMENT

On July 8, 2014, the Trust entered into a management agreement (as amended from time to time, the "Management Agreement") with DAM, pursuant to which DAM provides a broad range of asset management services to the Trust for the following fees:

• Base annual management fee calculated and payable on a monthly basis, equal to 1.00% of the gross value of the initial assets at the Trust's listing, plus the gross cost of any asset acquired on the date of such acquisition, plus the gross amount invested in any assets following acquisition, less the gross amount previously included in the calculation of this amount in respect of any asset disposed of or repaid;

• Acquisition/origination fee equal to: (a) 0.40% of the principal amount of any loan originated by the Trust or a subsidiary having an expected term of less than five years;

• (b) 1.00% of the principal amount of any loan originated by the Trust or a subsidiary having an expected term of five years or more; and

• (c) 1.00% of the gross cost of any asset acquired or originated by the Trust or a subsidiary provided that in connection with the acquisition of an asset that will be a development or redevelopment project for the Trust excluding where DAM earns a development management fee; and

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

In addition, the Trust will reimburse DAM for reasonable out-of-pocket costs and expenses incurred in connection with the performance of the management services described in the Management Agreement and the costs and expenses incurred in providing such other services that the Trust and DAM agree to in writing that are to be provided from time to time by DAM.

For the years ended		December 31, 2022	December 31, 2021
Fees paid/payable by the Trust under the Management Agreement with DAM:
Base annual management fee	$	5,858$	6,327
Acquisition/origination fee and disposition fees		450	1,920
Expense recoveries relating to financing arrangements and other		1,437	1,115
Total fees under Management Agreement	$	7,745$	9,362
As at		December 31, 2022	December 31, 2021
Total payable to DAM	$	2,296$	2,868

For the duration of 2021 and 2022 the Trust had an arrangement in place to satisfy the management fees payable to DAM in units of the Trust converted at the most recent year-end NAV per unit[(1)] as determined by the Trust and recorded for accounting purposes based on the trading price on the date of settlement. During the year ended December 31, 2022, the Trust settled the asset management fee payable through the issuance of 1,517,828 units (year ended December 31, 2021 - 1,397,445 units). Subsequent to December 31, 2022, the Trust settled its management fee for the fourth quarter with the issuance of 391,312 units.

(1) For the Trust's definition of the following specified financial measure: NAV per unit, please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. NAV per unit is not a standardized financial measure under IFRS and might not be comparable to similar measures disclosed by other issuers.

DEVELOPMENT FEES

The Trust has entered into various project-level development management agreements with DAM, and its third-party codevelopers where applicable, in which the Trust has equity ownership interests. Pursuant to these agreements, DAM provides development management services to the project. The corresponding development management fees are shared among the partners within each development.

Under these agreements, during the year ended December 31, 2022, fees of $3.7 million were incurred by the projects, at the Trust's share (year ended December 31, 2021 - $3.7 million). As at December 31, 2022, at the Trust's share, $2.8 million was owed to DAM from the projects in respect of these fees (December 31, 2021 - $1.5 million).

Dream Impact Trust 2022 Annual Report | 16

Additionally, effective January 1, 2018, the Trust entered into a framework agreement (the "Framework Agreement") with DAM with respect to their management of development investments. During the year ended December 31, 2022, $0.4 million in development fees were incurred in accordance with the Framework Agreement (year ended December 31, 2021 - $0.9 million).

DREAM OFFICE REAL ESTATE INVESTMENT TRUST ("DREAM OFFICE REIT")

PROPERTY MANAGEMENT AGREEMENTS

The Trust's wholly owned and co-owned office properties are managed by Dream Office Management Corporation ("DOMC"). DOMC is owned by Dream Office REIT. Pursuant to a property management agreement, DOMC performs property management services including tenant administration, leasing services, accounting, etc., for a fee of 3.5% of income property revenues.

SERVICES AGREEMENT

The Trust entered into a services agreement ("Service Agreement") with DOMC on July 8, 2014. Pursuant to the Service Agreement, DOMC provides administrative and support services including the use of office space, office equipment, communication services and computer systems, and the provision of personnel in connection with accounts payable, human resources, taxation, and other services. DOMC receives a monthly fee sufficient to reimburse it for the expenses incurred in providing these services.

For the years ended		December 31, 2022		December 31, 2021
Fees incurred pursuant to the property management agreements	$	2,585	$	2,103
Fees incurred pursuant to the Service Agreement		1,032		552
Total fees incurred to DOMC	$	3,617	$	2,655
Total payable to DOMC for property management agreements	$	101	$	208
Total payable to DOMC for Service Agreement	$	112	$	66

3. DISTRIBUTION MEASURES

In any given period, the Trust anticipates that actual distributions paid and payable may differ from cash generated from (utilized in) operating activities. This difference is driven by a number of factors, including the impact of leasing incentives and initial direct leasing costs, which can fluctuate with lease maturities, renewal terms and the type of asset being leased; changes in non-cash working capital; and the longer-term nature and investment return profile of our development and investment holdings, including those held as equity accounted investments considered to be development projects.

These cash flows are relevant in the determination of distributions, as cash flows relating to a development project will ultimately be received upon project completion. The Trust considers these factors among others in evaluating its distribution policy as well as its assessment of cash generated from operating activities over the longer term.

The Trust reinstated its distribution reinvestment and unit purchase plan ("DRIP") during the year ended December 31, 2022, effective with the August 2022 distribution payable on September 15, 2022, to unitholders of record as at August 31, 2022.

Effective with the February 2023 distribution, payable on March 15, 2023 to unitholders of record as of February 28, 2023, we have revised our distribution from $0.40 per unit to $0.16 per unit, on an annualized basis. We believe the revised distribution preserves additional liquidity for the Trust's development commitments and is better aligned with our strategy. With the Trust's current stabilized asset portfolio and forecasted development completions by 2026, the Trust's distribution will be more sustainable and we are better positioning the company for success.

As required by National Policy 41-201, "Income Trusts and Other Indirect Offerings", the following tables outline the differences between cash generated from (utilized in) operating activities and distributions paid and payable in accordance with the guidelines:

	Three months ended December 31, For the year ended December 31,
	2022 2021 2022 2021
Cash generated from (utilized in) operating activities Distributions paid and payable	$ (5,759)$ 5,240$ (7,424)$ 15,425 6,688 6,517 26,390 25,991
Shortfall of cash utilized over distributions paid and payable	$ (12,447)$ (1,277)$ (33,814)$ (10,566)

Dream Impact Trust 2022 Annual Report | 17

For the three months and year ended December 31, 2022, distributions paid and payable exceeded cash utilized in operating activities by $12.4 million and $33.8 million (three months and year ended December 31, 2021 - distributions paid and payable exceeded cash generated from operating activities by $1.3 million and $10.6 million). The following table summarizes net income and total distributions paid and payable for the periods indicated:

	Three months ended December 31, For the year ended December 31, 2022 2021 2022 2021
Net income (loss)	$ (44,863)$ 26,959$ (43,554)$ 21,450 6,688 6,517 26,390 25,991
Distributions paid and payable
Shortfall of net income (loss) over distributions paid and payable	$ (51,551)$ 20,442$ (69,944)$ (4,541)

For the three months and year ended December 31, 2022, distributions paid and payable exceeded net loss by $51.6 million and $69.9 million, respectively, (three months and year ended December 31, 2021 - net income exceeded distributions paid and payable by $20.4 million and distributions paid and payable exceeded net income by $4.5 million, respectively). Results in 2022 included a fair value loss of $59.2 million related to a non-core investment.

Certain assets and liabilities are recognized at fair value in the consolidated financial statements. Unrealized fair value adjustments and other non-cash items are included in net income and can fluctuate from period to period. As a result, the Trust anticipates that distributions declared will, in certain periods, continue to vary from net income. The total unrealized fair value adjustments and other non-cash items included in net income in the consolidated financial statements for the periods indicated are summarized in the following table:

	Three months ended December 31, For the year ended December 31,
	2022 2021 2022 2021
Total adjustments to fair values and other non-cash items included in net income(1)	$ 42,720$ (26,658)$ 38,573$ (19,204)

(1) Total adjustments to fair values and other non-cash items included in net income is a supplementary financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A. Total adjustments to fair values and other non-cash items included in net income is a supplementary financial measure is not a standardized financial measure under IFRS and might not be comparable to similar measures disclosed by other issuers.

To the extent that there are shortfalls in cash flows from operations relative to distributions paid and payable, the Trust has used and may continue to use its cash-on-hand and undrawn capacity on its credit facility as a source of funding. For the year ended December 31, 2022, the Trust funded the amount of the shortfalls in cash flows relative to the distributions paid and payable by utilizing existing cash-on-hand and funds from its credit facility. The use of the Trust's revolving credit facility may involve risks as compared to using cash on hand as a source of funding, such as the risk that interest rates may rise in the future, which will make it more expensive for the Trust to borrow under its credit facility, and the risk associated with increasing the overall indebtedness of the Trust. See also the section titled Credit Facility.

Our DRIP entitles unitholders to reinvest all cash distributions into additional units. Of the distributions paid and payable, for the year ended December 31, 2022, $2.4 million was reinvested into the DRIP. Over time, reinvestments pursuant to the DRIP will increase the number of units outstanding, which could result in an increase in the total amount of cash distributions. As at December 31, 2022, the participation rate in the DRIP was approximately 31%.

4. CAPITAL RESOURCES AND LIQUIDITY

The Trust’s primary sources of financing are cash generated from operating activities, debt financing and refinancing. Our primary uses of capital include: investments in development and investment holdings and equity accounted investments, the acquisition of commercial and multi-family rental properties that align with our impact verticals, debt principal repayments, interest payments, distributions, costs of attracting and retaining tenants, recurring property maintenance and major property improvements. It is the Trust's objective to meet all our ongoing obligations with current cash, cash flows generated from operating activities, including profit from build-for-sale assets, cash from maturing lending portfolio investments, and cash from financing and refinancing activities.

SUMMARY OF DEBT

Total debt relates to mortgages payable on the Trust's income properties, the credit facility and the convertible debentures as further disclosed below. The increase of $87.7 million since the prior year was due to the issuance of the $40.0 million 2022 Debentures, draws on the credit facility, and modest upsizing on mortgages payable during the period.

Dream Impact Trust 2022 Annual Report | 18

		December 31,	December 31,
As at		2022	2021
Mortgages payable	$	112,615$	104,902
Revolving credit facility		41,700	—
Convertible debentures payable		70,000	30,000
Total debt payable	$	224,315$	134,902
Unamortized discount on host instrument of convertible debentures		(1,086)	(809)
Conversion feature		449	357
Unamortized balance of deferred financing costs		(2,789)	(1,300)
Total debt	$	220,889$	133,150

We use the following cash flow performance and debt level indicators to assess our ability to meet or refinance our debt obligations:

obligations:
		December 31,		December 31,
As at		2022		2021
Weighted average face rate of interest (period-end)		5.2 %		3.8 %
Weighted average effective interest rate (period-end)⁽¹⁾		5.3 %		3.9 %
Debt due within one year	$	61,700	$	77,402
Total assets	$	724,169	$	701,702
Debt-to-asset value(2)		31.0 %		19.2 %
Debt-to-total asset value, inclusive of project-level debt and market value adjustments(2)and assets within
our development segment, including equity accounted investments		57.8%		49.2 %
Debt – average term to maturity (years)		3.11		2.13

(1) Weighted average effective interest rate is calculated as the weighted average face rate of interest, net of financing costs of interest-bearing debt, weighted by the size of the respective interest-bearing debt instruments in the portfolio.

(2) For the Trust's definition of the following specified financial measures: debt-to-asset value and debt-to-total asset value, inclusive of project-level debt and market value adjustments, please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

As at December 31, 2022, the weighted average face and effective rates of interest were 5.2% and 5.3%, respectively, compared to 3.8% and 3.9% as at December 31, 2021, an increase driven by the issuance of the $40.0 million convertible debentures, normal course refinancing of mortgages payable during the year, and use of the Trust's variable rate credit facility combined with higher interest rates.

Debt-to-total asset value, inclusive of project-level debt and market value adjustments[(2)] and assets within our development segment, including equity accounted investments has increased to 57.8% as at December 31, 2022 from 49.2% as at December 31, 2021. The increase is driven by draws on the credit facility and net of certain project-level financing.

As at December 31, 2022, principal repayments and maturity balances on total debt to be repaid each year are as follows:

				Total
				maturity	% of total debt		Weighted
		Outstanding	Scheduled	balance and	maturities and	Weighted	average
		balance due	principal	principal	principal	average interest	effective
Debt maturities		at maturity	repayments	repayments	repayments	rate (face)	interest rate
Total debt payable
2023	$	61,700 $	— $	61,700	27.5 %	5.8 %	5.8 %
2024		—	—	—	— %	— %	— %
2025		—	—	—	— %	— %	— %
2026		57,500	—	57,500	25.6 %	4.2 %	4.6 %
2027		105,115	—	105,115	46.9 %	5.4 %	5.5 %
Subtotal before undernoted	$	224,315 $	— $	224,315	100.0 %	5.2 %	5.3 %
Unamortized discount on host instrument of
convertible debentures		(1,086)	—	(1,086)
Conversion feature		449	—	449
Unamortized balance of deferred financing costs		(2,789)	—	(2,789)
Total debt	$	220,889 $	— $	220,889

As of December 31, 2022, approximately 81% of the Trust's consolidated debt was subject to a fixed interest rate either directly through the facility terms or an interest rate hedge.

Dream Impact Trust 2022 Annual Report | 19

CREDIT FACILITY

The revolving credit facility ("the credit facility") provides liquidity of up to $50.0 million based on a formula-based calculation. As at December 31, 2022, $41.7 million of funds were drawn on the credit facility (December 31, 2021 - $nil), and an additional $8.0 million, net of $0.3 million of letters of credit issued against the credit facility was available.

As of December 31, 2022, the Trust had $61.7 million of consolidated debt presented as current related to a mortgage on 49 Ontario and the Trust’s credit facility. On January 31, 2023, the Trust closed on the refinancing of 49 Ontario for gross proceeds of $80.0 million in the form of a non-revolving facility with a term of two years and interest rate of CDOR plus 2.65%. Proceeds were earmarked to repay the existing mortgage and the Trust’s credit facility. In addition, the Trust amended its credit facility, reducing the borrowing capacity from $50.0 million to $25.0 million and extending the maturity date to April 30, 2025. Upon completion of these two financing activities the Trust had approximately $30 million in available liquidity, up significantly from December 31, 2022.

CONVERTIBLE DEBENTURES

During the year ended December 31, 2022, the Trust closed on a public offering of $40.0 million aggregate principal amount of impact convertible unsecured subordinated debentures ("2022 Debentures") before transaction costs of $2.0 million. The 2022 Debentures bear a coupon interest rate of 5.75% per annum and an effective interest rate of 6.0% per annum, payable semi-annually on June 30 and December 31 of each year, commencing on December 31, 2022 and maturing on December 31, 2027. The 2022 Debentures are convertible at the holder's option into units of the Trust at a conversion price of $8.00 per unit, representing a conversion rate of 125.0000 units of $0.001 million principal amount of 2022 Debentures, convertible at the holder's option at any time before the maturity date.

During the year ended December 31, 2021, the Trust closed on a private placement offering of $30.0 million, before transaction costs. The private placement was in the form of impact convertible unsecured subordinated debentures ("the 2021 Debentures") and part of Canada's first impact-dedicated bond offerings.

The 2021 Debentures bear a coupon interest rate of 5.50% per annum and an effective interest rate of 6.2% per annum, payable semi-annually on July 31 and January 31 of each year, commencing on January 31, 2022. The 2021 Debentures are convertible at the holder's option into units of the Trust at a conversion price of $7.755/unit, representing a conversion rate of 128.9491 units per $0.001 million principal amount of 2021 Debentures. The 2021 Debentures mature in July 2026 and are redeemable at the holders' option before the maturity date.

The proceeds from the 2022 Debentures were used for eligible impact investments as described in the Impact Financing Framework and included acquisitions of 70 Park, Dream LeBreton and 111 Cosburn, as well as capital funding for the Trust's development investments, primarily Zibi, and Canary Block 10, which was verified in 2022. The proceeds from the 2021 Debentures were used to acquire Weston Common, which was verified in 2021. The Trust intends to verify metrics associated with the use of proceeds in line with the Impact Financing Framework where applicable.

A summary of the terms of the convertible debentures outstanding as at December 31, 2022 is below:

							December 31,	December 31,
							2022	2021
Convertible debentures	**Date issued **	Maturity date	Conversion rate in units(1)	Coupon rate	Effective rate	Outstanding principal	Carrying value	Carrying value
2022 Debentures	Jun 9, 2022	Dec 31, 2027	125.0000	5.75 %	6.02 % $	40,000 $	39,548 $	—
2021 Debentures	Aug3,2021	Jul 31,2026	128.9491	5.50 %	6.20 %	30,000	29,365	29,191

FINANCIAL COVENANTS

The credit facility, certain financial guarantees and certain mortgages on income properties contain financial covenants that require the Trust and/or its subsidiaries to meet certain financial ratios and financial condition tests. A failure to meet these tests could result in default and, if not cured or waived, could result in an acceleration of the repayment in the underlying financing.

The following are financial covenants required to be met by MPCT LP, a wholly owned subsidiary of the Trust, under the terms of the credit facility, applicable as at December 31, 2022:

Financial covenant	Financial covenant requirement
Unitholders' equity	≥ $375,000
Debt-to-asset value	≤ 40.0%

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As at December 31, 2022, the Trust was in compliance with these financial covenants.

TOTAL EQUITY

As at December 31, 2022, the Trust had 67,042,514 units outstanding and a total unitholders’ equity balance of $478.7 million.

	December	31, 2022		December	31, 2021
As at	Number of units	Amount	Number of units		Amount
Unitholders' equity	67,042,514 $	553,230	65,071,762	$	543,772
Retained earnings/(deficit)		(76,785)			(6,841)
Accumulated other comprehensive income (loss)		2,287			—
Total unitholders' equity	67,042,514 $	478,732	65,071,762	$	536,931

The following table summarizes the changes in the outstanding units and unitholders' equity:

	Units	Unitholders' equity	Unitholders' equity
As at December 31, 2021	65,071,762	$	543,772
Units issued pursuant to the DRIP	563,382		2,375
Deferred units exchanged for Trust units	82,642		507
Cancellation of Trust units	(193,100)		(1,161)
Units issued as settlement of asset management fees under the Management Agreement	1,517,828		7,737
Total units outstanding on December 31, 2022	67,042,514	$	553,230
Units issued pursuant to the DRIP	170,628		693
Units issued as settlement of asset management fees under the Management Agreement	391,312		1,773
Total units outstanding on February 13, 2023	67,604,454	$	555,696

The Deferred Unit Incentive Plan ("DUIP") provides for the grant of deferred trust units ("DTUs") to Trustees of the Trust, officers and employees, as well as affiliates, including the Asset Manager. DTUs are granted at the discretion of the Board of Trustees of the Trust and participants are also credited with income deferred trust units based on distributions as they are declared and paid by the Trust. As at December 31, 2022, up to a maximum of 3.0 million DTUs were issuable under the DUIP. Distributions on the unvested DTUs are paid in the form of units converted at the market price of the units of the Trust on the date of distribution. As at December 31, 2022, there were 733,569 DTUs and income deferred trust units outstanding (December 31, 2021 - 623,789 units). As at February 13, 2023, 739,502 DTUs and income deferred trust units were outstanding.

DISTRIBUTIONS

The distributable cash flow and amount of monthly distributions to unitholders are determined by the Board of Trustees of the Trust based on distributions received from MPCT LP, net of general and administrative expenses, operating and other expenses, and income tax expenses. The Asset Manager forecasts the annual distributable cash flow from the Trust’s operating segments to assist the Board of Trustees in determining the targeted distribution amount.

Effective with the February 2023 distribution, payable on March 15, 2023 to unitholders of record as of February 28, 2023, we have revised our distribution from $0.40 per unit to $0.16 per unit, on an annualized basis. We believe the revised distribution preserves additional liquidity for the Trust's development commitments and is better aligned with our strategy. With the Trust's current stabilized asset portfolio and forecasted development completions by 2026, the Trust's distribution will be more sustainable and we are better positioning the company for success.

As at	2022 2021
	Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
Annualized distribution amount Monthly distribution amount Annualized distribution rate of return⁽¹⁾	$ 0.400 $ 0.400 $ 0.400 $ 0.400 $ 0.400 $ 0.400 $ 0.400 $ 0.400 0.033 0.033 0.033 0.033 0.033 0.033 0.033 0.033 9.9 % 9.8 % 8.5 % 6.5 % 6.5 % 6.5 % 6.0 % 6.3 %

(1) Annualized distribution rate of return is calculated as the annualized distribution amount divided by the closing price per unit on the TSX at the period-end date of the quarter specified.

Dream Impact Trust 2022 Annual Report | 21

UNIT BUYBACK PROGRAM

The following table summarizes the Trust's unitholders' equity activity under its unit buyback program for the periods ended as indicated:

as indicated:
	Three months ended December 31, For the year ended December 31,
	2022 2021 2022 2021
Units repurchased (number of units) Total cash consideration	— 317,900 193,100 1,219,436 $ —$ 1,987$ 1,161$ 7,843

During the three months and year ended December 31, 2022, the Trust repurchased nil and 0.2 million units, respectively, under its Normal Course Issuer Bid ("NCIB") at a weighted average price of $6.01 per unit. From the inception of the Trust's unit buyback program in December 2014 to February 13, 2023, the Trust has repurchased 15.4 million units for cancellation for a total cost of $96.0 million.

As at February 13, 2023, the Asset Manager, DAM, owns 20.9 million units of the Trust, inclusive of 2.0 million units acquired under the Trust's DRIP, 5.0 million units acquired in satisfaction of asset management fees payable under the Management Agreement, and the remainder acquired on the open market for DAM's own account. In aggregate, as at February 13, 2023, DAM owns approximately 31% of the Trust.

During the year ended December 31, 2022, the Trust renewed its Normal Course Issuer Bid ("NCIB"), which commenced on January 20, 2022 and expired on January 19, 2023. Under the bid the Trust purchased for cancellation 124,000 units through the facilities of the TSX at a weighted average price of $6.00 for a total cost of approximately $0.7 million. Subsequent to December 31, 2022, the Trust renewed its prior NCIB (the "2023 NCIB") for a one-year period, commencing February 1, 2023 to the earlier of January 31, 2024 or the date on which the Trust has purchased the maximum number of Units permitted under the bid. Under the 2023 NCIB, the Trust will have the ability to purchase for cancellation up to a maximum of 4,648,812 units (representing 10% of the Trust's public float of 46,488,128 units as of January 20, 2023) through the facilities of the TSX. Daily repurchases will be limited to 12,580 Units, representing 25% of the average daily trading volume of the Units on the TSX during the last six calendar months (being 50,320 Units per day), other than purchases pursuant to applicable block purchase exceptions. As of January 20, 2023, the number of issued and outstanding Units was 67,213,142. The Trust has renewed its NCIB because it believes that units may become available during the period of the bid at prices that would make the purchase of such units for cancellation in the best interests of the Trust and its unitholders.

Subsequent to December 31, 2022, in connection with the renewal of the 2023 NCIB, the Trust renewed its automatic securities repurchase plan (the "Plan") in order to facilitate purchases of its units under the 2023 NCIB. The Plan allows for purchases by the Trust of units at any time including, without limitation, times when the Trust would ordinarily not be permitted to make purchases due to regulatory restrictions or self-imposed blackout periods. Purchases will be made by the Trust's broker based upon the parameters prescribed by the TSX and the terms of the parties' written agreement. Outside of such restricted or blackout periods, the units may also be purchased in accordance with management’s discretion. The Plan will terminate on January 31, 2024.

LIQUIDITY

The following table summarizes the Trust's consolidated statements of cash flows for the periods indicated:

	Three months ended December 31, For the year ended December 31,
	2022 2021 2022 2021
Cash generated from (utilized in) operating activities	$ (5,759)$ 5,240$ (7,424)$ 15,425 (13,269) (32,599) (60,713) (128,870) 12,242 (9,190) 61,950 11,205
Cash utilized in investing activities
Cash generated from (utilized in) financing activities

Cash utilized in operating activities for the three months ended December 31, 2022 was $5.8 million compared to cash generated of $5.2 million in the prior year, a decrease due to proceeds received from legacy developments in the prior year and changes in non-cash working capital.

Cash utilized in operating activities for the year ended December 31, 2022 was $7.4 million compared to cash generated of $15.4 million in the prior year, as a result of the aforementioned as well as timing of deposits made on the Trust's acquisitions.

Cash utilized in investing activities for the three months ended December 31, 2022 was $13.3 million compared to $32.6 million in the prior year. The decrease was driven by the timing of acquisitions and capital contributions made to certain of the Trust's equity accounted investments during the period. Cash utilized in investing activities for the year ended

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December 31, 2022 was $60.7 million compared to $128.9 million in the prior year. The decrease was as a result of fewer acquisitions of equity accounted investments and income properties made during the year, partially offset by distributions received from certain equity accounted investments in the current year and repayments received on the lending portfolio in the prior year.

Cash generated from financing activities for the three months ended December 31, 2022 was $12.2 million compared to cash utilized of $9.2 million in the prior year. The increase was driven by draws on the credit facility in the current period, the reinstatement of the DRIP, and lower unit buyback activity. Cash generated from financing activities for the year ended December 31, 2022 was $62.0 million compared to $11.2 million in the prior year. The increase in cash generated from financing activities was driven by net draws on the credit facility, a decrease in NCIB activity and an increase in proceeds from the 2022 Debentures compared to the 2021 Debentures. Partially offsetting this were borrowings on mortgages payable for income properties acquired in the prior year.

COMMITMENTS AND CONTINGENCIES

Dream Impact and its operating subsidiaries are contingently liable under guarantees that are issued in the normal course of business and with respect to litigation and claims that arise from time to time. In the opinion of the Asset Manager, any liability that may arise from such contingencies would not have a material adverse effect on the consolidated financial statements of the Trust.

OTHER COMMITMENTS

As at December 31, 2022, guarantees on underlying loan amounts of third parties and certain development arrangements were $344.3 million (December 31, 2021 - $401.8 million). Our guarantees include contingent liabilities on our joint venture partners' obligations for certain investments. These exclude our share of the obligations based on our ownership interest in the investment, which is included in equity accounted investments on our consolidated statements of financial position. However, the Trust would have available the joint venture partners’ share of assets to satisfy any obligations that may arise. From time to time, the Trust may be required to fund capital contributions to its various investments.

The Trust has entered into lease agreements that may require tenant improvement costs of approximately $nil (December 31, 2021 - $0.1 million).

Dream Impact Trust 2022 Annual Report | 23

5. SELECTED ANNUAL AND QUARTERLY FINANCIAL INFORMATION

The Trust's consolidated financial statements have been prepared in accordance with IFRS and are presented in Canadian dollars.

For the years ended December 31,		2022		2021		2020
Total Income	$	27,085	$	27,594	$	33,951
Net income (loss)		(43,554)		21,450		16,339
TOTAL NET INCOME ATTRIBUTABLE TO
Unitholders		(43,554)		21,450		16,339
For the years ended December 31,		2022		2021		2020
Total assets	$	724,169	$	701,702	$	648,514
Total non-current liabilities		167,008		71,051		87,994
Total unitholders' equity		478,732		536,931		539,877
NAV(1)(2)		552,984		605,996		582,870
Annualized distributions per unit		0.40		0.40		0.40
Net income (loss) per unit		(0.66)		0.33		0.24
Total unitholders' equity per unit(3)		7.14		8.25		8.33
NAV per unit(4)		8.25		9.31		8.99

(1) NAV is a non-GAAP financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

(2) For a reconciliation of NAV to total unitholders' equity, refer to section 1.3 of this MD&A.

(3) Total unitholders' equity per unit is a supplementary financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

(4) NAV per unit is a non-GAAP ratio. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

	2022 2021 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 $ 10,627$ 4,408 $ 4,055 $ 7,995 $ 7,658 $ 7,976 $ 4,972 $ 6,988 (44,863) 337 623 349 26,959 2,154 (1,451) (6,212) (0.67) 0.01 0.01 0.01 0.41 0.03 (0.02) (0.10)
Total income Net income (loss) Net income (loss) per unit(1)

(1) Net income (loss) per unit is a supplementary financial measure. Please refer to the Specified Financial Measures and Other Disclosures section of this MD&A.

As a result of a large portion of the Trust's portfolio being in the development stage as we work towards growing our recurring income segment, results of operations may fluctuate from period to period.

Dream Impact Trust 2022 Annual Report | 24

6. SPECIFIED FINANCIAL MEASURES AND OTHER DISCLOSURES

We have presented certain specified financial measures because we believe these are important in evaluating the Trust's underlying operating performance, debt management and our ability to earn and pay cash distributions to unitholders. These specified financial measures do not have standardized meanings prescribed by IFRS and may not be comparable with similar measures presented by other issuers. Investors are cautioned not to view specified financial measures as alternatives to financial measures calculated in accordance with IFRS.

NON-GAAP RATIOS

"Debt-to-asset value" is a non-GAAP ratio calculated as total debt payable (a non-GAAP financial measure) divided by the total asset value of the Trust as at the applicable reporting date. This non-GAAP ratio is an important measure used by the Trust in evaluating the amount of debt leverage; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers.

As at		December 31, 2022		December 31, 2021
Total debt	$	220,889	$	133,150
Unamortized discount on host instrument of convertible debentures		1,086		809
Conversion feature		(449)		(357)
Unamortized balance of deferred financing costs		2,789		1,300
Total debt payable	$	224,315	$	134,902
Total assets		724,169		701,702
Debt-to-asset value		31.0%		19.2%

"Net asset value ("NAV") per unit" represents the net asset value of the Trust divided by the number of units outstanding at the end of the period. This non-GAAP ratio is an important measure used by the Trust in evaluating the Trust’s performance as it is an indicator of the intrinsic value of the Trust; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers. A reconciliation of NAV to unitholders' equity can be found in Section 1.3 of this MD&A.

SUPPLEMENTARY FINANCIAL MEASURES AND OTHER MEASURES

"Debt-to-total asset value, inclusive of project-level debt and market value adjustments" represents the Trust’s total debt payable plus the debt payable within our development and investment holdings, and equity accounted investments, divided by the total asset value of the Trust, plus market value adjustments and debt payable within our development and investment holdings, and equity accounted investments, as at the applicable reporting date. This supplementary measure is an important measure in evaluating the amount of debt leverage inclusive of project-level debt within our development and investment holdings, and equity accounted investments; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers.

		December 31, 2022		December 31, 2021
Total assets	$	724,169	$	701,702
Market value adjustments		88,498		81,428
Debt payable within our development and investment holdings, and equity accounted investments		581,883		493,217
Total portfolio assets, inclusive of project-level debt and market value adjustments	$	1,394,550	$	1,276,347
Debt payable within our development and investment holdings, and equity accounted investments	$	581,883	$	493,217
Total debt payable		224,315		134,902
Total debt, inclusive of project-level debt	$	806,198	$	628,119
Debt-to-total asset value, inclusive of project-level debt and market value adjustments and assets within our
development segment, including equity accounted investments		57.8%		49.2%

"Market value" represents the carrying value of equity accounted investments as per the consolidated statements of financial position, adjusted for externally appraised values or internally prepared valuations using the most appropriate valuation methodology determined for each investment on a highest and best use basis, incorporating expected future cash flows, discount rates, other applicable market information and the change in the risk profile of the equity accounted investments as they are developed or achieve completion milestones. The Trust believes that incorporating this adjustment in determining the value of the asset is a more useful measure to value the equity investments that would not ordinarily be

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captured within IFRS and the Trust's consolidated financial statements. This supplementary measure is an important measure used by the Trust in evaluating the Trust’s and Asset Manager’s performance as it is an indicator of the intrinsic value of the Trust; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers.

"Net income - income properties" is defined by the Trust as including the sum of income properties revenue, income properties operating expenses, interest expense, fair value adjustments to income properties and interest and other income.

For the three months ended March 31,	Three months ended December 31, Year ended December 31, 2022 2021 2022 2021
Income properties revenue Income properties operating expenses Interest expense Fair value adjustments to income properties Interest and other income Transaction costs	$ 4,277$ 4,394$ 17,118$ 17,814 (2,290) (2,204) (9,142) (8,564) (1,266) (905) (4,198) (3,514) 11,545 26,964 11,247 23,974 9 14 25 101 — (4) — (6)
Net income - income properties	$ 12,275$ 28,259$ 15,050$ 29,805

"Net income (loss) - lending portfolio" is defined by the Trust as lending portfolio interest income and lender fees less provision for lending portfolio losses and transaction costs related to the lending portfolio.

For the three months ended March 31,	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Lending portfolio interest income and lender fees Provision for lending portfolio losses Transaction costs	$ 412$ 448$ 1,309$ 1,748 — (387) — (1,465) — (20) — (342)
Net income (loss) - lending portfolio	$ 412$ 41$ 1,309$ (59)

"Net income (loss) per unit" represents net income (loss) of the Trust divided by the weighted average number of units outstanding during the period.

For the three months ended March 31,	Three months ended December 31, Year ended December 31, 2022 2021 2022 2021
Net income (loss) Units outstanding - weighted average Net income (loss) per unit	$ (44,863)$ 26,959$ (43,554)$ 21,450 66,746,909 65,179,813 65,916,941 64,996,594 $ (0.67)$ 0.41$ (0.66)$ 0.33

"NOI - commercial income properties included in EAI" is defined by the Trust as income properties revenue less income properties operating expenses at the equity accounted investment level. This supplementary measure is an important measure used by the Trust in evaluating operating performance; however, it is not defined by IFRS, does not have a standardized meaning, and may not be comparable with similar measures presented by other issuers.

For the three months ended March 31,	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Income properties revenue Income properties operating expenses	$ 1,725$ 1,311$ 6,081$ 3,096 (1,052) (711) (3,475) (1,896)
Net operating income - income properties included in equity accounted investments - commercial Interest expense Fair value adjustments Depreciation expense	673 600 2,606 1,200 (954) (221) (2,539) (637) 2,079 2,842 2,701 2,707 (47) — (195) —
Share of net income (loss) - included in equity accounted investments - commercial	$ 1,751$ 3,221$ 2,573$ 3,270

"NOI - multi-family rental" is defined by the Trust as multi-family rental revenue less multi-family property operating expenses, at the equity accounted investment level. This supplementary measure is an important measure used by the Trust in evaluating operating performance; however, it is not defined by IFRS, does not have a standardized meaning, and may not be comparable with similar measures presented by other issuers.

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For the three months ended March 31,	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Income properties revenue Income properties operating expenses	$ 2,857$ 1,387$ 8,670$ 1,448 (1,172) (570) (4,262) (600)
Net operating income - income properties included in equity accounted investments - multi-family rental Interest expense Fair value adjustments	1,685 817 4,408 848 (1,697) (723) (4,630) (729) 2,504 (1,980) 7,903 (1,980)
Share of net income - included in equity accounted investments - multi- family rental	$ 2,492$ (1,886)$ 7,681$ (1,861)

"Total unitholders' equity per unit" represents the total unitholders' equity of the Trust divided by the number of units outstanding at the end of the year.

"Total unitholders' equity per unit"represents the tota outstanding at the end of the year.	l unitholders' equity of the Tru	st divided by the	number of units
As at		December 31, 2022	December 31, 2021
Total unitholders' equity	$	478,732$	536,931
Units outstanding - end of period		67,042,514	65,071,762
Total unitholders' equity per unit	$	7.14$	8.25

"Total adjustments to fair values and other non-cash items included in net income" represents deferred income tax expense, fair value adjustments in development and investment holdings, share of income (loss) from equity accounted investments, fair value adjustments to income properties, deferred compensation expense (recovery), fair value adjustments to financial instruments, asset management fees, and other non-cash items.

For the three months ended March 31,	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Deferred income tax (expense) recovery Share of income (loss) from equity accounted investments Provision for lending portfolio losses Fair value adjustments to income properties Deferred compensation (expense) recovery Asset management fee settled in units Fair value adjustments to financial instruments Foreign exchange gain in development and investment holdings Fair value adjustments to development and investment holdings	$ 1,708$ (1,011)$ 2,443$ 1,194 5,938 2,816 8,658 8,032 — (387) — (1,465) 11,545 26,964 11,247 23,974 (176) (18) 37 (940) (1,280) (1,651) (5,455) (5,643) (104) 210 413 524 (703) (265) 3,732 (214) (59,648) — (59,648) (6,258)
Total adjustments to fair values and other non-cash items included in net income	$ (42,720)$ 26,658$ (38,573)$ 19,204

NON-GAAP MEASURES

"Net asset value ("NAV")" , a non-GAAP financial measure, represents total unitholders' equity per the consolidated financial statements, adjusted for market value adjustments for equity accounted investments (including applicable deferred income tax adjustments). The market value adjustments account for the applicable deferred income tax estimates considering the timing of their realization and, if appropriate, will be incorporated into the determination of the NAV. The applicable deferred income tax estimates related to the market value adjustments are calculated either based on income or capital gain rates or a combination thereof. The income tax rates used to determine NAV are dependent on various factors such as anticipated development plans, stage of development and current market trends applicable to the future development plans, and will be reviewed on a regular basis and are subject to change. Excluded from the NAV calculation are any market value adjustments with respect to liabilities as well as commitments/contracts that are not otherwise recorded as liabilities on the Trust's consolidated statements of financial position. The Trust has not appraised the lending portfolio, as the Trust intends to hold certain investments in the lending portfolio until maturity and its term to maturity is over the next one to five years; as such, this portfolio is considered fairly liquid. This non-GAAP measure is an important measure used by the Trust in evaluating the Trust’s and Asset Manager’s performance as it is an indicator of the intrinsic value of the Trust; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers. A reconciliation of NAV to total unitholders' equity can be found in section 1.3 of this MD&A.

"Net operating income - income properties ("NOI - income properties")" is defined by the Trust as income properties revenue less income properties operating expenses. This non-GAAP measure is an important measure used by the Trust in evaluating operating performance; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers.

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For the three months ended March 31,	Three months ended December 31, Year ended December 31,
	2022 2021 2022 2021
Income properties revenue Incomeproperties operatingexpenses	$ 4,277$ 4,394$ 17,118$ 17,814 (2,290) (2,204) (9,142) (8,564)
Net operating income - income properties	$ 1,987$ 2,190$ 7,976$ 9,250

"Total debt payable" is defined by the Trust as the balance due at maturity for its debt instruments. Total debt payable is a non-GAAP measure and is an important measure used by the Trust in evaluating the amount of debt leverage; however, it is not defined by IFRS, does not have a standardized meaning and may not be comparable with similar measures presented by other issuers.

7. DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROL OVER FINANCIAL REPORTING

The Trust does not have a Chief Executive Officer or a Chief Financial Officer. At December 31, 2022, the President and Chief Responsible Officer of DAM and Chief Financial Officer of Dream Impact Master GP (the "Certifying Officers") are responsible for and, along with the assistance of senior management of DAM, have designed or caused to be designed under the Certifying Officers' supervision, disclosure controls and procedures ("DC&P") as defined in National Instrument 52-109, “Certification of Disclosure in Issuers’ Annual and Interim Filings”, to provide reasonable assurance that material information relating to the Trust is made known to the Certifying Officers in a timely manner and information required to be disclosed by the Trust is recorded, processed, summarized and reported within the time periods specified in securities legislation, and have designed internal controls over financial reporting ("ICFR") to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements in accordance with IFRS.

As at December 31, 2022, the Certifying Officers, together with other members of management, have evaluated the design and effectiveness of the Trust’s DC&P. Based on that evaluation, the Certifying Officers have concluded that, as at December 31, 2022, the DC&P are adequate and effective in order to provide reasonable assurance that material information has been accumulated and communicated to management to allow timely decisions of required disclosures by the Trust and its consolidated subsidiary entities within the required time periods.

The Trust’s ICFR is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with IFRS. Using the framework established in “2013 Committee of Sponsoring Organizations (COSO) Internal Control Framework”, published by the Committee of Sponsoring Organizations of the Treadway Commission, the Certifying Officers, together with other members of management, have evaluated the design and operation of the Trust’s ICFR. Based on that evaluation, the Certifying Officers have concluded that the Trust’s ICFR was effective as at December 31, 2022.

During the year ended December 31, 2022, there have not been any changes that have materially affected, or are reasonably likely to materially affect, the Trust's disclosure controls and procedures and internal controls over financial reporting.

8. RISKS AND RISK MANAGEMENT

Dream Impact is exposed to various risks and uncertainties, many of which are beyond our control. The following is a review of material factors that may impact our business operations. Additional risks and uncertainties are described in our most recent Annual Report and our current Annual Information Form, which are posted on our website at www.dreamimpacttrust.ca and under the Trust's profile on SEDAR at www.sedar.com. The occurrence of any of such risks could materially and adversely affect our investments, future prospects, cash flows, results of operations or financial condition and our ability to make cash distributions to unitholders. Although we believe that the risk factors described below and in our Annual Information Form are the most material risks that we will face, they are not the only risks. Additional risk factors not presently known to us or that we currently believe are immaterial could also materially adversely affect our investments, future prospects, cash flows, results of operations or financial condition and our ability to make cash distributions to unitholders and thereby adversely affect the value of our units.

ECONOMIC ENVIRONMENT RISKS

Uncertainty over whether the economy will be adversely affected by inflation or stagflation, and the systematic impact of volatile energy costs and geopolitical issues, may contribute to increased market volatility. Such economic uncertainties and market challenges, which may result from a continued or exacerbated general economic slowdown, and their effects could

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materially and adversely affect the Trust's ability to generate revenues, thereby reducing its operating income and earnings. A difficult operating environment could have a material adverse effect on the ability of the Trust to maintain occupancy rates at its properties, which could harm the Trust's financial condition.

Increased inflation could have a more pronounced negative impact on development costs and any variable rate debt the Trust is subject to or incurs in the future and on its results of operations. Similarly, during periods of high inflation, annual rent increases may be less than the rate of inflation on a continued basis. Substantial inflationary pressures and increased costs may have an adverse impact on the Trust's tenants if increases in their operating expenses exceed increases in revenue. This may adversely affect the tenants' ability to pay rent, which could negatively affect the Trust's financial condition.

The Trust is also subject to the risk that if the real estate market ceases to attract the same level of capital investment in the future that it attracts at the time of the Trust's purchases, or the number of investors seeking to acquire properties decreases, the value of the Trust's investments may not appreciate or may depreciate. Accordingly, the Trust's operations and financial condition could be materially and adversely affected to the extent that an economic slowdown or downturn occurs, is prolonged or becomes more severe.

INTEREST RATE RISK

When negotiating financing agreements or extending such agreements, we will depend on our ability to agree on terms, including in respect of interest payments and amortization. In addition, we may enter into financing agreements with variable interest rates. An increase in interest rates could result in a significant increase in the amount paid by us to service debt that could materially adversely affect our cash flows.

We may implement hedging programs in order to offset the risk of revenue losses and to provide more certainty on our cash flows should current variable interest rates increase. However, to the extent that we fail to adequately manage these risks, our financial results and our ability to make interest payments under future financings may be adversely affected. Increases in interest rates generally cause a decrease in demand for properties. Higher interest rates and more stringent borrowing requirements, whether mandated by law or required by financial institutions, could have a material adverse effect on our ability to sell any of our investments.

In addition, the value of our lending portfolio at any given time may be affected by the level of interest rates prevailing at such time. The income we earn on our lending portfolio is primarily from interest payments. If there is a decline in interest rates (as measured by the indices upon which the interest rates of our mortgages are based), we may find it difficult to make additional mortgages bearing rates sufficient to achieve our investment objectives. This could have a materially adverse impact to the Trust’s cash flows. A decline in interest rates could depress the housing market, which may affect our investment holding mortgage investments in condominium and home development and have a materially adverse impact on our cash flows. As well, if interest rates increase, the value of our lending portfolio may be negatively impacted.

PUBLIC HEALTH RISK

Adverse Canadian, U.S. and global market, economic and political conditions, including dislocations and volatility in the credit markets and general global economic uncertainty, could have a material adverse effect on our business, results of operations and financial condition with the potential to impact, among others: (i) the value of our properties; (ii) the availability or the terms of financing that we have or may anticipate utilizing; (iii) our ability to make principal and interest payments on, or refinance any outstanding debt when due; (iv) the occupancy rates in our properties; and (v) the ability of our tenants to enter into new leasing transactions or to satisfy rental payments under existing leases.

Public health crises, pandemics and epidemics, such as those caused by new strains of viruses such as H5N1 (avian flu), severe acute respiratory syndrome (SARS) and, most recently, the coronavirus (COVID-19), could, particularly if prolonged, adversely impact our and our customers’ businesses, and thereby our and our customers’ ability to meet payment obligations, by disrupting supply chains and transactional activities, causing reduced traffic at our properties, leading to mobility restrictions and other quarantine measures, precipitating increased government regulation and negatively impacting local, national or global economies. Contagion in one of our properties or markets or the quarantine of one of our properties could negatively impact our reputation, the reputation of our customers and the attractiveness of that market. All of these factors may have a material adverse effect on our business, results of operations and our ability to make cash distributions to unitholders.

The speed and extent of the spread of COVID-19, and the duration and intensity of resulting business disruption and related financial and social impact, are uncertain, and such adverse effects may be material. Efforts to slow the spread of COVID-19

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could severely impact the operation of our properties and development projects and our customers’ businesses. The Trust is continuously monitoring the situation but is unable to accurately predict the impact that COVID-19 will have on its results of operations, due to uncertainties including the ultimate geographic spread of the virus, the severity of the disease, the duration of the outbreak, the rise of COVID-19 variants of concern and actions that may be taken by governmental authorities to contain COVID-19 or to treat its impact. While governmental agencies and private sector participants will seek to mitigate the adverse effects of COVID-19, the efficacy and timing of such measures remains uncertain. If the outbreak of COVID-19 and related developments lead to a prolonged or significant impact on global, national or local markets or economic growth, the Trust’s cash flows, financial condition or results of operations and our ability to make cash distributions to unitholders may be materially and adversely affected.

Furthermore, the outbreak of COVID-19 may affect our and our customers’ businesses by disrupting supply chains and transactional activities. The Trust and many of our customers rely on third-party suppliers and manufacturers, many of which are located outside of Canada. This outbreak has resulted, or may result, in the extended shutdown of certain businesses, which may in turn result in disruptions, delays or reductions to our and our customers’ supply chains. These may include disruptions from the temporary closure of third-party supplier and manufacturer facilities, interruptions in supply, or restrictions on the export, import or shipment of products, including those sourced from China, Europe or the U.S.

The outbreak of COVID-19 may also negatively impact consumer demand for residential, retail or commercial real estate products and services or our customers’ products or services as well as consumer spending, which may negatively impact our business or the business of our customers. These factors may impact our customers’ ability to meet their payment and other obligations due to the Trust, which could have a material adverse effect on the Trust.

Finally, the actual and threatened spread of COVID-19 globally could adversely affect global economies and financial markets resulting in a prolonged economic downturn and a decline in the value of the Trust’s unit price. The extent to which COVID-19 (or any other disease, epidemic or pandemic) impacts business activity or financial results, and the duration of any such negative impact, will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning COVID-19 and the actions required to contain or treat its impact, among others.

GENERAL INVESTMENTS RISK

Our investments include direct and indirect investments in real estate, mortgages and other loans, and development and investment holdings, each of which can be relatively illiquid. While investments in illiquid assets have the potential to produce above-average growth opportunities, they may be difficult to value or sell at the time and price preferred by the owner. Accordingly, there is a risk that we would be unable to dispose of our illiquid assets in a timely way in response to changing economic or investment conditions. In recessionary times it may be difficult to dispose of certain of our assets, including certain types of real estate. The costs of holding certain of our assets, including real estate, are considerable and during an economic recession we may be faced with ongoing expenditures with a declining prospect of rental income. In such circumstances, it may be necessary for us to dispose of properties, or interests in properties, at discounted prices in order to generate sufficient cash for operations and making distributions. Where we are unable to dispose of illiquid assets, or we are forced to sell such assets at a discounted price, our ability to make cash distributions, our financial results and the value of our units may be adversely affected.

The Trust may undertake strategic property dispositions from time to time in order to recycle its capital and maintain an optimal portfolio composition but may experience significant delays in the repositioning of our portfolio as a result of the certain illiquid assets. The Trust may also be subject to unexpected costs or liabilities related to such dispositions, which could adversely affect the Trust's financial position and results of operations and its ability to meet its obligations.

DEVELOPMENT RISK

The Trust is involved in several residential and mixed-use development projects, often set up as joint ventures or partnerships. These developments are often carried out with an experienced developer or co-developers as the Trust's coventurers/partners. The Trust expects to be increasingly involved in investments that develop residential and mixed-use developments.

Before a development project generates any revenues, material expenditures are incurred. This includes, but is not limited to, expenditures incurred to acquire land, obtain development approvals and construct significant portions of project infrastructure, amenities, model suites and sales facilities. It generally takes several fiscal periods for a development to achieve cumulative positive cash flow. If the development projects in which we participate are not developed and marketed

Dream Impact Trust 2022 Annual Report | 30

successfully or costs of development exceed original estimates and do not generate positive cash flows in a timely manner, this may have a material adverse effect on our business and results of operations.

There are also several factors that impact development risk, including, but not limited to, rising construction costs and development charges, shortage of experienced labour in certain construction-related trades, and structure for municipal zoning approvals due to its unclear mandate at an early stage of development. These factors could impact our development profit margin or development yield potential and may be beyond our control. As a result, there can be no assurance that all of our proposed residential projects as described herein will be undertaken, and if so, with what mix of residential and commercial development, at what costs, and generating what profit margin or development yield. There could also be changes to the mix of condominium versus multi-family rental units for certain projects. As well, any change in the revenue or costing estimates or development timeline could have a significant impact on the value of the development and investment holdings.

In addition, purchaser demand with regards to residential condominiums is cyclical and is significantly affected by changes in general and local economic and industry conditions, such as employment levels, availability of financing for home buyers, interest rates, consumer confidence, levels of new and existing homes for sale, demographic trends and housing demand. As well, an oversupply of homes or residential condominium units in the market, such as resale properties, including properties held for sale by investors and speculators, foreclosed homes and rental properties, may reduce the Trust’s ability to sell residential development units and may depress prices and reduce margins from the sale of residential development units.

The Trust is also subject to the risk that purchasers of such properties may become unable or unwilling to meet their obligations or that the Trust may not be able to close the sale of a significant number of units in a development project on economically favourable terms. To mitigate these risks, the Trust monitors the market trends and development risks to adapt to any changes to market conditions.

IMPACT INVESTMENT STRATEGY RISK

In light of the Trust’s impact investment strategy, the Trust will be adopting objectives and deploying its capital into new impact investment opportunities that are intended to align with the Trust’s three impact verticals. Our ability to achieve our investment objectives and to continue to pay distributions will be dependent on our ability to successfully identify and realize investment opportunities that align with our investment framework. There can be no assurance that we will achieve these objectives or that our impact investments or developments will generate positive returns in a timely manner. In addition, we adapted our own impact investing framework, which we believe will be aligned with existing frameworks in this field. However, these may or may not be interpreted differently from other issuers or other participants in the impact investing space. While the Trust intends to responsibly create positive social and environmental change in our communities, the success of our impact investment strategy and our ability to generate market returns will be based on various and unpredictable factors, including investor perceptions and reactions and future economic or investment conditions.

MULTI-FAMILY RENTAL BUSINESS RISK

As a landlord in its properties that include rental apartments, the Trust is subject to the risks inherent in the multi-family rental business, including, but not limited to, fluctuations in occupancy levels, individual credit risk, heightened reputation risk, tenant privacy concerns, potential changes to rent control regulations, increases in operating costs, including the costs of utilities, and the imposition of new taxes or increased property taxes. Multi-family rental business risk may result in a significant loss of earnings to the Trust; however, to mitigate these risks, the Trust's portfolio includes well located and professionally managed properties.

JOINT VENTURE OR PARTNERSHIP RISK

Several investments, including the Trust’s property developments and income properties, are often made or developed as joint ventures or partnerships with third parties. These structures involve certain additional risks, including, but not limited to, co-venturers/partners that might experience financial difficulties or fail to fund their share of required capital contributions or suffer reputational damage that could have an adverse impact on the Trust.

In addition, our co-venturers/partners may, at any time, have economic or business interests inconsistent with ours and we may be required to take actions that are in the interest of the partners collectively, but not in the Trust’s sole best interests. Accordingly, we may not be able to favourably resolve issues with respect to such decisions or we could become engaged in a dispute with any of them that might affect our ability to develop or operate the business or assets in question efficiently. Any failure of the Trust or our co-venturers and partners to meet their obligations, or disagreements with respect to strategic decision-making, could have an adverse effect on the joint ventures or partnerships, which may have an adverse effect on the Trust.

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We attempt to mitigate these risks by performing due diligence procedures on potential partners and contractual arrangements, and by closely monitoring and supervising the joint ventures or partnerships.

GENERAL REAL ESTATE RISK

Returns on real estate and real estate related assets and investments are generally subject to a number of factors and risks, including changes in general economic conditions (which could affect the availability, terms and cost of mortgage financings and other types of credit), changes in local economic conditions (such as an oversupply of properties or a reduction in demand for real estate in a particular area), the attractiveness of properties to potential tenants or purchasers, competition with other landlords with similar available space, and the ability of the owner to provide adequate maintenance at competitive costs.

These factors and risks could cause fluctuations in the value of the real estate and real estate related assets and investments owned by us or in the value of the real estate securing mortgages and other loans we issue. These fluctuations could materially adversely affect us.

LEASE RENEWALS AND RENTAL RATES RISK

The income-producing properties in our investment portfolio generate income through rent payments made by our tenants. Upon the expiry of any lease, there can be no assurance that the lease will be renewed or that the tenant will be replaced. Furthermore, the terms of any subsequent lease may be less favourable than those of the existing lease. The Trust’s income and cash flows would be adversely affected if we were unable to lease a significant amount of the available space in any particular property on economically favourable lease terms or on a timely basis.

TENANT DEFAULT RISK

In the event of default by a tenant, we may experience delays or limitations in enforcing our rights as the lessor and incur substantial costs in protecting our investment. Furthermore, at any time, a tenant may seek the protection of bankruptcy, insolvency or similar laws, which could result in the rejection and termination of the lease of the tenant and, thereby, cause a reduction in the cash flows available to us, which may adversely affect us. The Trust mitigates this risk by attracting tenants of sound financial standing and by diversifying its tenant mix. The outbreak of COVID-19 and the measures introduced by the government and other parties to reduce its impact have created significant uncertainty in the general economy. A deterioration in the economy may impact the ability of tenants to meet their obligations under their leases or contracts.

CREDIT RISK

There is a risk that a borrower or issuer of an investment security will not make a payment on debt or that an originating lender will not make its payment on a loan participation interest purchased by us or that an issuer or an investment security or an originating lender retaining the original loan in which it grants participations may suffer adverse changes in financial condition, lowering the credit quality of its security or participation and increasing the volatility of the security or participation price. Such changes in the credit quality of a security or participation can affect its liquidity and make it more difficult to sell if we wish to do so. In addition, with respect to loans made or held by us, a change in the financial condition of a borrower could have a negative financial impact on us.

While we intend to diversify our investments to ensure that we do not have excessive concentration in any single borrower/ counterparty or related group of borrowers/counterparties, the Trust currently holds certain lending instruments and investments with the same counterparty or related counterparties within its lending portfolio and development and investment holdings portfolio, as discussed in Note 27 to the consolidated financial statements. A change in the financial condition of any single borrower/counterparty or related group of borrowers/counterparties to which the Trust has concentrated exposure could significantly and adversely affect the overall performance of the Trust.

Credit risk may also arise from a borrower that may not be able to honour its debt commitments as a result of a negative change in market conditions that could result in a loss to the Trust. Credit risk related to financial guarantees provided by the Trust arises from the possibility that counterparties default on their financial obligations. The Trust mitigates these risks by actively monitoring the mortgage receivables, loan investment and financial guarantees, and initiating recovery procedures in a timely manner when required.

CONCENTRATION RISKS AND OTHER SIMILAR RISKS

While our intention is to diversify our investments, our current investments are relatively concentrated in a limited number of market sectors or asset types or in a limited number of issuers. An investment in the Trust may therefore involve greater risk and volatility than an investment in an issuer with a broader portfolio of assets since the performance of one particular industry, market or issuer could significantly and adversely affect the overall performance of the Trust.

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COMPETITION FOR INVESTMENT OPPORTUNITIES AND ABILITY TO SOURCE SUITABLE INVESTMENTS

Our performance depends on our ability to source or acquire assets including mortgage and other loans, real estate, and other investment opportunities at favourable yields or potential rates of return. We will compete with other investors, managers, corporations, institutions, developers, and owners of real estate for investment opportunities in the financing and/or acquisition of assets, including real estate and other lending. Certain competitors may have a higher risk tolerance, greater financial and other resources, and greater operating flexibility than us, allowing these competitors to more aggressively pursue investment opportunities. Accordingly, we may be unable to acquire sufficient real property, real property lending assets, or other assets or investment opportunities at favourable yields or terms or at all.

Our strategy involves investing and reinvesting in suitable investment opportunities, pursuing such opportunities, consummating investments and, in the case of real estate property, effectively leasing and operating such properties and assets. There can be no assurance as to the pace of growth through investments and/or acquisitions or that we will be able to acquire assets on an accretive basis, which could adversely impact our financial performance.

ENVIRONMENTAL AND CLIMATE CHANGE RISKS

As an owner of real estate property, we are subject to various federal, provincial, municipal and state laws relating to environmental matters. Such laws provide that we could be liable for the costs of removal and remediation of certain hazardous, toxic substances released on or in our properties or disposed of at other locations, as well as potentially significant penalties. We have insurance and other policies and procedures in place to review and monitor environmental exposure, which we believe mitigates these risks to an acceptable level. Some of the properties in which we have an interest currently have or have had occupants that use hazardous substances or create waste. Such uses can potentially create environmental liabilities. A few issues have been identified through site assessments, including the need to remediate or otherwise address certain contaminations. These issues are being carefully managed with the involvement of professional consultants. Where circumstances warrant, designated substance surveys and/or environmental assessments are conducted. Although environmental assessments provide some assurance, we may become liable for undetected pollution or other environmental hazards on our properties against which we cannot insure, or against which we may elect not to insure where premium costs are disproportionate to our perception of relative risk.

The Trust has formal policies and procedures which cause the review and monitoring of environmental exposure. These policies include the requirement to conduct a Phase I environmental site assessment, or review a current Phase I, before we acquire real properties or originate any real estate lending.

Climate change continues to attract the focus of governments and the general public as an important threat, given the emission of greenhouse gases and other activities continue to negatively impact the planet. We face the risk that our properties will be subject to government initiatives aimed at countering climate change, such as reduction of greenhouse gas emissions, which could impose constraints on our operational flexibility or cause us to incur financial costs to comply with various reforms. Any failure to adhere and adapt to climate change reform could result in fines or adversely affect our reputation, operations or financial performance. Furthermore, our properties may be exposed to the impact of events caused by climate change, such as natural disasters and increasingly frequent and severe weather conditions. Such events could interrupt our operations and activities, damage our properties and may potentially decrease our property values or require us to incur additional expenses including an increase in insurance costs to insure our properties against natural disasters and severe weather.

UNEXPECTED CAPITAL EXPENDITURES AND OTHER FIXED COSTS

Certain significant expenditures, including property taxes, maintenance costs, mortgage payments, insurance costs and related charges, must be made throughout the period of ownership of real property, regardless of whether the property is producing sufficient income to pay such expenses. This may include expenditures to fulfill mandatory requirements for energy efficiency. In order to retain desirable rentable space and to generate adequate revenue over the long term, the condition of the properties in which we have an interest must be maintained or, in some cases, improved to meet market demand. Maintaining or upgrading a rental property in accordance with market standards can entail significant costs, which we may not be able to pass on to our tenants. Numerous factors, including the age of the relevant building structure, the material and substances used at the time of construction or currently unknown building code violations, could result in substantial unbudgeted costs for refurbishment or modernization.

If the actual costs of maintaining or upgrading a property in which we have an interest exceed our estimates, or if hidden defects are discovered during maintenance or upgrading that are not covered by insurance or contractual warranties, or if we are not permitted to raise rents due to legal constraints, we will incur additional and unexpected costs. If competing properties of a similar type are built in the area where one of our properties is located or similar properties located in the

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vicinity of one of our properties are substantially refurbished, the net operating income derived from and the value of such property could be reduced.

Any failure to undertake appropriate maintenance and refurbishment work in response to the factors described above could materially adversely affect the rental income that we earn from such properties; for example, such a failure could entitle tenants to withhold or reduce rental payments or even to terminate existing leases. Any such event could have a material adverse effect on our cash flows, financial condition and results of operations and our ability to make distributions on units.

UNEXPECTED COSTS OR LIABILITIES RELATED TO ACQUISITIONS

Our external growth prospects depend in part on identifying suitable acquisition opportunities, pursuing such opportunities and consummating acquisitions, including direct or indirect acquisitions of real estate. Notwithstanding pre-acquisition due diligence, it is not possible to fully understand a property before it is owned and operated for an extended period of time and there may be undisclosed or unknown liabilities concerning the acquired properties, and the Trust may not be indemnified for some or all of these liabilities. To mitigate this risk, the Asset Manager conducts an appropriate level of due diligence and investigation in connection with its acquisition of properties and seeks, through contractual arrangements, to ensure that risks lie with the appropriate party.

FINANCING RISKS, LEVERAGE AND RESTRICTIVE COVENANTS

Ownership of certain of our assets and the industries in which we operate are capital intensive. We will require access to capital to maintain the real estate and other assets in which we have an interest, as well as to fund our growth strategy and significant capital expenditures from time to time. There is no assurance that capital will be available when needed or on favourable terms. Our access to third-party financing will be subject to a number of factors, including general market conditions; the market’s perception of our growth potential; our current and expected future earnings; our cash flow and cash distributions, and cash interest payments; and the market price of our units. Our failure to access required capital could materially adversely impact our investments, cash flows, operating results or financial condition, our ability to make distributions on the units and our ability to implement our growth strategy.

A significant portion of our financing is debt. Accordingly, we are subject to the risks associated with debt financing, including the risk that our cash flows will be insufficient to meet required payments of principal and interest, and that, on maturities of such debt, we may not be able to refinance the outstanding principal under such debt or that the terms of such refinancing will be more onerous than those of the existing debt. If we are unable to refinance debt at maturity on terms acceptable to us or at all, we may be forced to dispose of one or more of our properties on disadvantageous terms, which may result in losses and could alter our debt-to-equity ratio or be dilutive to unitholders. Such losses could have a material adverse effect on our financial position or cash flows.

The degree to which we are leveraged could have important consequences to our operations. A high level of debt will reduce the amount of funds available for the payment of distributions to unitholders; limit our flexibility in planning for and reacting to changes in the economy and in the industry, and increase our vulnerability to general adverse economic and industry conditions; limit our ability to borrow additional funds, dispose of assets, encumber our assets and make potential investments; place us at a competitive disadvantage compared to other owners of similar assets that are less leveraged and, therefore, may be able to take advantage of opportunities that our indebtedness would prevent us from pursuing; make it more likely that a reduction in our borrowing base following a periodic valuation (or redetermination) could require us to repay a portion of then outstanding borrowings; and impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general trust or other purposes.

GOVERNMENT AND REGULATORY RISKS

We are subject to laws and regulations governing the development, ownership, operation and leasing of certain of our assets, employment standards, environmental matters, taxes and other matters. It is possible that future changes in applicable federal, provincial, municipal, state, local, or common laws or regulations, or changes in their enforcement or regulatory interpretation, could result in changes in the legal requirements affecting us (including with retroactive effect). Any changes in the laws to which we are subject could materially adversely affect the distributions received by the Trust from MPCT LP or by unitholders from the Trust. It is not possible to predict whether there will be any further changes in any regulatory regime to which we are subject or the effect of any such change on our investments.

The real estate development process is subject to a variety of laws and regulations. In particular, governmental authorities regulate such matters as zoning and permitted land uses, levels of density and building standards. We will have to continue to obtain approvals from various governmental authorities and comply with local, provincial and federal laws, including laws and regulations concerning the protection of the environment in connection with such development projects. Obtaining such

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approvals and complying with such laws and regulations may result in delays, which may cause us to incur additional costs that impact the profitability of a development project, or may restrict development activity altogether with respect to a particular project.

TAX RISK

There can be no assurance that Canadian federal income tax laws and the administrative policies and assessing practices of the Canada Revenue Agency ("CRA") respecting the treatment of "mutual fund trusts" will not be changed in a manner that adversely affects unitholders. If we cease to qualify as a "mutual fund trust" under the Income Tax Act (Canada) ("Tax Act"), the income tax considerations applicable to us would be materially and adversely different in certain respects, including that units may cease to be qualified investments for trusts governed by registered retirement savings plans, registered retirement income funds, deferred profit-sharing plans, registered disability savings plans, tax-free savings accounts and registered education savings plans under the Tax Act (collectively, "Plans").

Although we are of the view that all expenses to be claimed by us will be reasonable and deductible, all input tax credits claimed by us are appropriate, and that the cost amount and capital cost allowance claims of entities indirectly owned by us will have been correctly determined, there can be no assurance that the Tax Act, or the interpretation of the Income Tax Act, will not change, or that the CRA will agree with our determinations. If the CRA successfully challenges the deductibility of such expenses or the amount of input tax credits claimed, our taxable income will change.

The extent to which distributions will be non-taxable in the future will depend in part on the extent to which entities indirectly owned by us are able to deduct depreciation, interest and loan expenses relating to our investments for purposes of the Tax Act.

We will endeavour to ensure that units continue to be qualified investments for Plans; however, there can be no assurance that this will occur. The Tax Act imposes penalties for the acquisition or holding of non-qualified investments.

We are subject to tax audits from various government and regulatory agencies on an ongoing basis. As a result, from time to time, taxing authorities may disagree with the interpretation and application of tax laws taken by the Trust, which could lead to reassessments. These reassessments could have a material impact on the Trust in future periods.

LENDING PORTFOLIO DEFAULT RISK

If a borrower under a loan defaults under any terms of the loan, we may have the ability to exercise our enforcement remedies in respect of the loan. Exercising enforcement remedies is a process that requires a significant amount of time to complete, which could adversely impact our cash flow. In addition, as a result of potential declines in real estate values, there is no assurance that we will be able to recover all or substantially all of the outstanding principal and interest owed to us in respect of such loans by exercising our enforcement remedies. Our inability to recover the amounts owed to us in respect of such loans could materially adversely affect us.

There can be no assurance that any of the loans comprising our borrowers' portfolio can or will be renewed at the same interest rates and terms, or in the same amounts as are currently in effect. The lenders, the borrowers or both may elect to not renew any loan. If loans are renewed, the principal balance, the interest rates and the other terms and conditions will be subject to negotiation between the lenders and the borrowers at the time of renewal.

In addition, the composition of our lending portfolio may vary widely from time to time and may be concentrated by type of security, industry or geography, resulting in it being less diversified during certain periods. A lack of diversification may result in exposure to economic downturns or other events that have an adverse and disproportionate effect on particular types of securities, industries or geographies.

CYBER SECURITY RISK

Cyber security has become an increasing area of focus for issuers and businesses in Canada and globally, as reliance on digital technologies to conduct business operations has grown significantly. As we continue to increase our dependence on information technologies to conduct our operations, the risks associated with cyber security also increase. We rely on management information systems and computer control systems. Business interruptions, utility outages, and information technology system and network disruptions due to cyber-attacks could seriously harm our operations and materially adversely affect our operating results. Cyber-attacks against organizations are increasing in sophistication and can include but are not limited to intrusions into operating systems, theft of personal or other sensitive data and/or cause disruptions to business operations. Such cyber-attacks could compromise the Trust’s confidential information as well as that of the Trust’s employees, customers and third parties with whom the Trust interacts and may result in negative consequences, including

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remediation costs, loss of revenue, additional regulatory scrutiny, litigation and reputational damage. Our exposure to cyber security risks includes exposure through third parties on whose systems we place significant reliance for the conduct of our business. We have implemented security procedures and measures in order to protect our systems and information from being vulnerable to cyber-attacks. However, we may not have the resources or technical sophistication to anticipate, prevent, or recover from rapidly evolving types of cyber-attacks. Compromises to our information and control systems could have severe financial and other business implications.

INSURANCE RISKS

We carry, or cause to be carried, general liability, umbrella liability and excess liability insurance with limits, which are typically obtained for similar operations in Canada and otherwise acceptable to the Board of Trustees on the recommendation of DAM. For the property risks, we cause “All Risks” property insurance, including, but not limited to, flood, earthquake and loss of rental income insurance (with at least a 24-month indemnity period), to be carried. We also cause boiler and machinery insurance, covering all boilers, pressure vessels, HVAC systems and equipment breakdown, to be carried. There are, however, certain types of risks (generally of a catastrophic nature such as from war or nuclear accident) that are uninsurable under any insurance policy. Furthermore, there are other risks that are not economically viable to insure at this time. Should an uninsured or underinsured loss occur, we could lose our investment in, and anticipated profits and cash flows from, one or more of our properties, but we would continue to be obligated to repay any recourse mortgage indebtedness on such properties. We may carry, or may cause to be carried, title insurance on certain of our real estate assets but will not necessarily insure all titles. If a loss occurs resulting from a title defect with respect to a property where there is no title insurance or the loss is in excess of insured limits, we could lose all or part of our investment in, and anticipated profits and cash flows from, such property.

FOREIGN EXCHANGE RISKS

The Trust has some foreign exchange risk as it relates to the U.S. dollar against the Canadian dollar, in respect of our investment in the U.S. Hotel. The Trust's results are reported in Canadian dollars and the Trust pays distributions to unitholders in Canadian dollars; therefore, fluctuations in the value of the U.S. dollar impacts the fair value or future cash flows of these investments and our ability to pay cash distributions to unitholders. The Trust does not hedge this exposure.

RELIANCE ON DAM FOR MANAGEMENT SERVICES

We rely on DAM with respect to the asset management of our investments. Consequently, our ability to achieve our investment objectives depends in large part on DAM and its ability to properly advise us. Although the Management Agreement does not have a fixed term, DAM has the right to terminate the Management Agreement with 180 days’ prior written notice if MPCT LP and/or the Trust defaults in the performance or observance of any material term, condition or agreement of the Management Agreement in a manner that results in material harm and such default continues unremedied for a period of 60 days. The Management Agreement may also be terminated in other circumstances, such as upon the occurrence of an event of default or insolvency of DAM within the meaning of such agreement. Accordingly, there can be no assurance that DAM will continue to be our Asset Manager. If DAM should cease for any reason to be our Asset Manager, our ability to meet our objectives and execute our strategy may be adversely affected. We may be unable to duplicate the quality and depth of management available to DAM by becoming a self-managed Trust or by hiring another asset manager. In addition, the cost of obtaining substitute services may be greater than the fees we will pay DAM under the Management Agreement.

We depend on the management and administration services provided by DAM under the Management Agreement. DAM personnel and support staff that provide services to us under the Management Agreement are not required to have as their primary responsibility the management and administration of the Trust or MPCT LP or to act exclusively for either of us, and the Management Agreement does not require that the services we receive be provided to us by any specific individuals employed by DAM. Any failure to effectively manage our operations or to implement our strategy could materially adversely affect us.

RELIANCE ON MPCT LP

The Trust’s sole material asset is its limited partnership interest in MPCT LP. The cash distributions to unitholders are dependent on the ability of MPCT LP to pay distributions in respect of its LP A Units. The ability of MPCT LP to pay distributions or make other payments or advances to us may be subject to contractual restrictions contained in any instruments governing the indebtedness of MPCT LP or investments held by it. The ability of MPCT LP to pay distributions or make other payments or advances is also dependent on the ability of MPCT LP’s subsidiaries to pay distributions or make other payments or advances to MPCT LP. The Trust depends on distributions and other payments from MPCT LP and,

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indirectly, its subsidiaries and investments, to provide the Trust with the funds necessary to pay distributions to its unitholders and to meet its financial obligations.

9. SIGNIFICANT ACCOUNTING POLICIES

9.1 CRITICAL ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the consolidated financial statements requires management to make judgments, estimates and assumptions that affect the amounts reported. Management bases its judgments and estimates on historical experience and other factors it believes to be reasonable under the circumstances, which are inherently uncertain and unpredictable, the result of which forms the basis of the carrying amounts of assets and liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the affected asset or liability in the future. Refer to Note 4 of the Trust's consolidated financial statements for the year ended December 31, 2022 for a summary of the Trust's accounting judgments, estimates, and assumptions in applying accounting policies.

9.2 FUTURE CHANGES TO SIGNIFICANT ACCOUNTING POLICIES

Standards issued but not yet effective up to the date of issuance of the Trust's consolidated financial statements that are likely to have an impact on the Trust are listed below. This listing is of standards and interpretations the Trust reasonably expects to be applicable at a future date. The Trust intends to adopt these standards when they become effective.

AMENDMENTS TO IAS 1, PRESENTATION OF FINANCIAL STATEMENTS

The amendments clarify that liabilities are classified as either current or non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by expectations of the entity or events after the reporting date. The amendments also clarify that the settlement of a liability refers to the transfer by the counterparty of cash, equity instruments, and/or other assets or services. Early application is permitted. The Trust intends to adopt the amendments to IAS 1 on the required effective date of January 1, 2024. The Trust is in the process of assessing the impact of these amendments.

10. ADDITIONAL INFORMATION

10.1 SUMMARY OF IMPACT INVESTMENTS

In developing the Dream Impact Management System, we created pathways for each of our impact investments, which align with our three verticals and the United Nations Sustainable Development Goals. For further details, refer to our inaugural impact report published on our website, www.dreamimpacttrust.ca.

Zibi, including Zibi Community Utility (Ottawa, Ontario; Gatineau, Quebec) (Carrying value $110.3 million, including completed blocks)

Zibi is our 34-acre community, located in Ottawa, Ontario, and Gatineau, Quebec, overlooking the Ottawa River. This community is expected to welcome approximately 5,000 residents and 6,000 workers upon completion. The project is a multi-phase development that includes over 4.0 million sf of density consisting of approximately 1,900 residential units, including purpose-built rental units, over 2.0 million sf of commercial space and 8 acres of riverfront parks and plazas.

Environmental Sustainability and Resilience

The Zibi development includes Ottawa and Gatineau's first net-zero carbon heating and cooling system for all tenants and residents in the Zibi community. The District Energy System ("Zibi Community Utility" or "ZCU") utilizes post-industrial waste energy for heating and the Ottawa River for cooling. ZCU will enable the entire Zibi development to reach its goal of being carbon-neutral, consistent with the Federal Government's mandate to move to net-zero emissions by 2050. During the year ended December 31, 2022, the District Energy System commenced operations, making Zibi an official net-zero community. Construction at Zibi is environmentally conscious, using 20% recycled content in its construction materials, 20% of which are locally sourced. The development will feature nearly 8 acres of riverfront green space and 2.0 million sf of vibrant commercial space. Zibi is also among the first One Planet Master-Planned Communities in the country, making it one of Canada's most sustainable neighbourhoods.

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Attainable and Affordable Housing

The Trust plans to incorporate affordable housing at each of the multi-family rental buildings at Zibi. The first rental building at Zibi, Aalto Suites, is a 15-storey, 162-unit multi-family building with over 95% of its units designated as affordable. As at December 31, 2022, 87% of units were leased.

Inclusive Communities

Zibi is developed beneficially with and for the Algonquin Anishinábe nation, as we are engaging with the Algonquin Anishinábe nation to ensure that First Nations history, presence and culture are reflected throughout the development. The development has formalized a partnership to ensure this continues throughout the life of the project, which includes, but is not limited to, mandates for Algonquin employment, youth engagements and annual meetings with an advisory council of Algonquin Anishinábe.

West Don Lands (Toronto, Ontario) (Carrying value $35.5 million)

West Don Lands is a purpose-built multi-family rental apartment community in Toronto's downtown east end, adjacent to the Canary and Distillery Districts. The development is expected to feature over 2,000 rental units, as well as ancillary retail and office components, which are expected to include 5,000 sf of dedicated community space. Block 8 and Block 3/4/7 are currently under construction with approximately 1,600 residential units ready for market upon completion.

Environmental Sustainability and Resilience

Each of the buildings at West Don Lands will be built to LEED Gold standard and will have green roofs. The development will also incorporate water efficiency fixtures and generate clean energy in the form of solar panels. Each of these features will contribute to the Trust's goal of being carbon-neutral by 2035.

Attainable and Affordable Housing

West Don Lands is the largest affordable housing community currently under construction in Canada and the first within the Provincial Affordable Housing Lands Program to break ground. Upon completion, the development is expected to include 684 affordable units, priced at an approximate 50% discount to market rent in downtown Toronto, with 231 of these affordable units expected to be ready for occupancy in 2023 at Block 8.

Inclusive Communities

West Don Lands will be an inclusive community. The affordable housing units will be distributed throughout the building, with all tenants having access to the building amenities, unit quality and finishes equivalent to the suites rented at market price. The Trust is working towards establishing an inclusive process for determining how to fairly distribute access to the affordable units.

Dream LeBreton (Ottawa, Ontario) (Carrying value $2.9 million) Environmental Sustainability and Resilience

Dream LeBreton is set to become the largest residential building in Canada to be a Zero Carbon Building certified by the Canada Green Building Council. It is expected to be a high-performance, energy efficient building, as the design includes solar panels and leverages the sewage system to provide heating and cooling throughout the buildings.

Attainable and Affordable Housing

Dream LeBreton will have a total of 608 new housing units, of which approximately 40% will be affordable, and of which 31% will be accessible. The units will be integrated alongside market units, creating an inclusive, equitable, and richly diverse community. The affordable units are to be earmarked for five target populations as defined by the national housing strategy: Indigenous communities; veterans; women and children; immigrants and newcomers; and adults with cognitive disabilities.

Inclusive Communities

In partnership with the Dream Community Foundation and Multifaith Housing Initiative, the Trust intends to implement inclusive community programming that is available to all residents to meet specific social needs, improve overall well-being and increase a sense of belonging. A Workforce Development and Community Benefits Plan has also been prepared to ensure that the Trust’s investment in Dream LeBreton provides economic and employment opportunities to local businesses and equity-seeking groups.

Brightwater Development (Mississauga, Ontario) (Carrying value $36.9 million)

Brightwater, a 72-acre waterfront development in Mississauga's Port Credit area, is expected to transform the site to a complete, vibrant and diverse community, which will include an elementary school, YMCA and 18 acres of parks and outdoor space. The development won the Building Industry and Land Development Association Pinnacle Award in 2020 for Best New Community-Planned/Under Development. Over the past two years, four residential blocks have achieved sales launches.

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Environmental Sustainability and Resilience

When the Trust entered into the development in 2017, it was contaminated due to its history as an oil refinery, requiring the excavation of 1.4 million tonnes of soil. The source remediation program has since been completed and vertical construction for initial blocks commenced in 2021. The new community will incorporate a number of features that will result in a transitfriendly ecosystem, including installing electric vehicle charging stations, bike lanes and bike parking, and providing a shuttle bus to the Port Credit GO station to promote sustainable commuting. All buildings across the development will incorporate best-in-class stormwater management systems and energy efficiency features, including 18,000 sf of green roofs.

Inclusive Communities

The Brightwater community is expected to include nearly 3,000 residential units and over 350,000 sf of vibrant retail and commercial space. It will embody waterfront living while promoting connectivity, mental and physical health, and well-being in the community. To facilitate this, the development will include 18 acres of new parks and green space, which will include the Village Square, a planned hub for community programming.

Canary Block 10 (Toronto, Ontario) (Carrying value $9.6 million)

Canary Block 10 is a mixed-use project in downtown Toronto, expected to include a 238-unit multi-family rental building, a 206-unit condo building, and the first purpose-built Indigenous Hub in any major North American city. The development will be located within the Canary District, adjacent to the West Don Lands and Distillery District in downtown Toronto.

Environmental Sustainability and Resilience

Each of the buildings at Canary Block 10 will be built to LEED Gold standard as well as include features that will have energy and water consumption lower than market standard.

Inclusive Communities

Canary Block 10 features an innovative partnership with Anishinábe Health Toronto ("AHT"). AHT is a community health centre with the mission to improve the health and well-being of Indigenous People by providing Traditional Healing within a multi-disciplinary healthcare model. The Indigenous Hub will provide a state-of-the-art five-storey facility that draws from Indigenous architectural and design influences, and will combine essential health and education facilities to create a thriving centre of community for the city's Indigenous People.

Multi-Family Rental Income Properties (GTA, Ontario) (Carrying value $84.0 million)

Over the last two-year period, the Trust has invested $211.9 million (represents total assets, at the Trust's share) for 1,430 multi-family rental units located in the GTA.

Environmental Sustainability and Resilience

Where possible, the Trust intends to reduce GHG emissions by 15% within the first three years of ownership and implement water efficiency features, by retrofitting building systems and by engaging and educating tenants to reduce consumption.

Attainable and Affordable Housing

The Trust intends to preserve and create new affordable housing units at the multi-family rentals. During the year ended December 31, 2022, the Trust, alongside Dream, announced an increase from 52 to 189 affordable housing units at Weston Common, as a result of financing under CMHC's new MLI Select insurance program through TD Bank. The affordable units will not exceed 30% of Toronto's median renter income. In 2022, the Trust commenced converting the additional 137 units to affordable units.

Inclusive Communities

The Trust intends to implement inclusive and social programming in its multi-family rental buildings, in partnership with the Dream Community Foundation. The Trust and the Dream Community Foundation will work in collaboration with existing non-profit organizations and will invest in programs and services that improve the overall well-being of residents and increase a sense of community belonging. Programs will fall under the categories of affordable living, health and wellness, education and skills, and culture and belonging.

Commercial Income Properties (GTA, Ontario; Ottawa, Ontario; Gatineau, Quebec) (Carrying value $354.7 million)

The Trust's commercial income properties contribute to delivering impact under the Trust's environmental sustainability and resilience, and inclusive communities verticals.

Environmental Sustainability and Resilience

The Trust is committed to improving resource efficiency across our commercial income properties located in the GTA, with significant capital expenditures anticipated over the next five years. By 2025, the Trust is targeting a 20% reduction in GHG emissions across the income property portfolio. Certain of these capital expenditures include retrofitting all lighting to LED,

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installing low-flow fixtures in all washrooms, installing real-time utility metering and pursuing Building Owners and Managers Association of Canada ("BOMA") certifications for buildings not currently certified. In addition, commercial buildings at our Zibi development are carbon-neutral as they utilize the District Energy System.

Inclusive Communities

The Trust is promoting tenant health and wellness by building and promoting the use of amenity packages to encourage a more active lifestyle for our tenants, including end-of-trip facilities and bike storage. The Trust is also modifying its procurement process to be more inclusive and promote opportunities for underserved populations.

10.2 GEOGRAPHIC ALLOCATION

The following table summarizes our consolidated net assets as at December 31, 2022 by geographic allocation, excluding cash and the Trust's other consolidated working capital and tax.

As at	December 31, 2022	December 31, 2021
Toronto and GTA	81.3 %	73.2 %
Ottawa/Gatineau	18.7 %	17.3 %
United States	— %	9.5 %
Total	100.0 %	100.0 %

10.3 FORWARD-LOOKING INFORMATION

Certain information herein contains or incorporates statements that constitute forward-looking information within the meaning of applicable securities legislation, including, but not limited to, statements relating to the Trust’s objectives and strategies to achieve those objectives, the Trust’s beliefs, plans, estimates, projections and intentions, and similar statements concerning anticipated future events, future growth and drivers thereof, results of operations, performance, business prospects and opportunities, market conditions, acquisitions or divestitures, leasing transactions, future maintenance and development plans and costs, capital investments, financing, the availability of financing sources, income taxes, the real estate and lending industries in general, in each case, that are not historical facts; statements regarding our development, redevelopment and acquisition pipelines and our intention to further invest in best-in class income properties; the belief that the Trust’s development portfolio is composed of high-quality assets that represent a significant source of growth, which are expected to generate future income and cash flows as projects are developed; the expectation that development segment earnings will fluctuate and that the development segment will generate returns and continued NAV accretion over time; the expectation that project value may appreciate as rezoning and pre-development processes progress; the belief that the Trust’s portfolio will be resilient and valuable due to its impact investments; the Trust's focus on impact investing, including its intention to align its investments with its impact verticals; our intention to invest in further impact investment opportunities, wind down or exit non-impact investments and increase financial flexibility from our build-to-sell assets; the Trust’s intention to invest between $45 million and $55 million in development projects over the next two years; the Trust's ability to achieve its impact and sustainability goals, including in respect of its impact verticals, and implementing other sustainability initiatives throughout its projects; the Trust’s plans and proposals for current and future development and redevelopment projects, construction initiation, completion and occupancy/stabilization dates, rezoning, number of units, square footage of retail and commercial space, planned GLA and GFA, acreage, and outdoor space; expected occupancy; the Trust’s expected effective economic interest in certain projects; ownership of certain units and GFA square footage in certain projects by not-for-profit entities; the plan to transfer projects to the recurring income segment to generate stabilized income; expected value and yield of developments on completion; expectations that debt will wind down over time; expected stabilized NOI from certain assets, including that stabilized NOI from multi-family rental properties will be approximately $8 million to $9 million on an annualized basis; the expected sustainability impact of and sustainability plans for our development projects, including in respect of number of residents and workers, affordability, number of affordable units, green space, partnerships with Indigenous and First Nations groups and other stakeholders, community space, water efficiency and clean energy features, sustainable transportation infrastructure, building retrofits, tenant engagement, procurement process, and other sustainable features; the Trust’s goal of being carbon-neutral by 2035; the targeted carbon neutrality or GHG emission reduction targets for certain assets, and the 20% reduction in GHG emissions target across the Trust’s income property portfolio; the Trust’s ability to obtain certain green certifications; including BOMA certificates; the intention to implement certain social initiatives and investments in multi-family rental buildings in partnership with the Dream Community Foundation and non-profit organizations; the Trust’s intention to use proceeds from the convertible debentures in eligible impact investments and verify related metrics in line with the Impact Financing Framework; the 2,826 residential units and 153,000 sf of commercial and retail (at 100%) GLA which are expected to be completed and contribute to recurring income over the next three years; expected development approvals; the 4,700 residential units and 0.3 million sf of retail and commercial product expected to be completed in build-to-hold and build-to-sell projects over the next three

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years; the expectation that recurring income will grow and represent approximately 70% of the Trust’s portfolio; expectations regarding future purchases by the Trust under its 2023 NCIB; expectations regarding the Trust’s access to investment opportunities through partners and relationships; the Trust's belief that the distribution policy is sustainable and in-line with recurring income; expectations regarding the Trust's ability to pay distributions and the Trust's intention to maintain a distribution policy and annual distribution of $0.16 per unit; that distributions paid and payable may differ from net income and cash generated from operations; the Trust’s intention to meet all ongoing obligations with current cash, cash flows generated from operating activities, cash from maturing lending portfolio investments, and cash from financing activities; and our expectations regarding the Trust’s income tax expense/recovery, deferred tax liabilities/assets and the Trust’s ability to manage its portfolio in a tax-efficient manner.

Forward-looking statements generally can be identified by words such as "objective", "may", "will", "would", "expect", "intend", "estimate", "anticipate", "believe", "should", "could", "likely", "plan", "project", "continue", “strive”, “target”, “forecast”, “outlook” or similar expressions suggesting future outcomes or events. Forward-looking information is based on a number of assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Trust's control, which could cause actual results to differ materially from those disclosed in or implied by such forward-looking information. The assumptions, which may prove to be incorrect, include the various assumptions set forth herein as well as assumptions including, but not limited to: that the general economy remains stable; the gradual recovery and growth of the general economy continues throughout 2023 and into 2023; that no unforeseen changes in the legislative and operating framework for our business will occur; that there will be no material change to environmental regulations that may adversely impact our business; that we will meet our future objectives, priorities and growth targets; that we receive the licenses, permits or approvals necessary in connection with our projects; relatively low inflation; that we will have access to adequate capital to fund our future projects, plans and any potential acquisitions; that we are able to identify high-quality investment opportunities and find suitable partners with which to enter into joint ventures or partnerships; that we do not incur any material environmental liabilities; interest rates remain stable; there will not be a material change in foreign exchange rates; that the impact of the current economic climate and global financial conditions on our operations will remain consistent with our current expectations; our expectations regarding the impact of the COVID-19 pandemic and government measures to contain it, including the impact of COVID-19 on our operations, liquidity, financial condition or results; our expectation regarding ongoing remote working arrangements; and competition for and availability of acquisitions remains consistent with the current climate. All the forward-looking statements contained in this MD&A are based on what we believe are reasonable assumptions but are subject to inherent risks and uncertainties. Consequently, actual results could differ materially from the conclusions, forecasts or projections in the forward-looking information and there can be no assurance that actual results will be consistent with these forward-looking statements. Factors or risks that could cause actual results to differ materially from those set forth in the forward-looking statements and information include, but are not limited to; the impact of the novel coronavirus (COVID-19 and variants thereof) pandemic on the Trust; risks associated with unexpected or ongoing geopolitical events, including disputes between nations, terrorism, or other acts of violence, and international sanctions; inflation; the disruption of free movement of goods and services across jurisdictions; the risk of adverse global market, economic and political conditions and health crises; risks inherent in the real estate industry; risks relating to investment in development projects; impact investing strategy risk; risks relating to geographic concentration; risks inherent in investments in real estate, mortgages and other loans and development and investment holdings; credit risk and counterparty risk; competition risks; environmental and climate change risks; risks relating to access to capital; interest rate risk; the risk of changes in governmental laws and regulations; tax risks; foreign exchange risk; acquisitions risk; and leasing risks and other risks and factors described under or referenced under "Risks and Risk Management" in this MD&A and described from time to time in the documents filed by the Trust with securities regulators.

All forward-looking information is as of December 31, 2022. The Trust does not undertake to update any such forwardlooking information, whether as a result of new information, future events or otherwise, except as required by applicable law. Additional information about these assumptions and risks and uncertainties is contained in our filings with securities regulators. Certain filings are also available on our website at www.dreamimpacttrust.ca.

Certain market information has been obtained from Standard & Poor's publications prepared by independent, third-party commercial firms that provide information relating to the real estate industry. Although we believe this information is reliable, the accuracy and completeness of this information is not guaranteed. We have not independently verified this information and make no representation as to its accuracy.

In addition, certain disclosures incorporated by reference into this report including, but not limited to, information regarding our development and investment holdings' development partners were obtained from publicly available information. We have not independently verified any such information.

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10.5 TAX INFORMATION

The Trust pays a monthly distribution to its unitholders of which only a portion is taxable. A taxable Canadian holder of the units is required to include the taxable portion of the distribution in income. Any amount in excess of the after-tax net income of the Trust payable to the unitholder will generally not be included in the unitholders' income for the year. The nontaxable portion of the distribution received by a unitholder will reduce the unitholders' tax cost of their investment. On an annual basis, the unitholders will be provided with information relating to the tax treatment of the monthly distributions.

The Trust has determined that the distributions should be treated in the following manner:

	2021	2020	2019	2018	2017	2016	2015
Non-eligible dividends	— %	— %	— %	0.02 %	0.06 %	— %	— %
Eligible dividends	— %	— %	— %	— %	— %	— %	28.60 %
Return of capital	100.00 %	100.00 %	92.83 %	95.00 %	99.94 %	100.00 %	71.40 %
Foreign non-business income	— %	— %	7.17 %	4.98 %	— %	— %	— %

10.6 ADDITIONAL INFORMATION

Additional information relating to Dream Impact Trust, including the Trust's Annual Information Form and audited consolidated financial statements and accompanying notes, is available under the Trust's profile on SEDAR at www.sedar.com. The Trust’s units trade on the TSX under the symbol "MPCT.UN".

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