2015 annual reportannual report dream (tsx: drm) is an award-winning canadian real estate company...

DREAM

UN

LIMITED

2015 ANN

UAL REPORT

2015 Annual Report

Dream (TSX: DRM) is an award-winning Canadian real estate company with ~$15 billion of assets in North America and Europe.

Cover image: Canary District, Toronto, ON

Letter to Shareholders

In 2015, managing a business for the long term became increasingly difficult in a volatile economy. There were global surprises on many fronts, but for Canada, the biggest challenge was the decrease in the value of oil, which rocked the economy in Alberta. Canada had anemic growth and the debate whether we experienced a recession in 2015, and whether or not it is over, continues.

At Dream, our land and housing business produced below average earnings, but experienced higher lot sale volumes compared to the prior year. Our other divisions progressed according to plan. The seminal event of the year was the amendment and extension of our $290 million operating line and the addition of a new $175 million, three-year term loan. As a result of our financing activities, Dream ended 2015 with the most undrawn room on credit lines in our history.

The $800 million Athletes’ Village built for the Pan Am Games held in the summer of 2015 was delivered on time and on budget and received rave reviews for its architecture and livability. Our final construction work in converting the Village to its legacy use will conclude in 2016 and upon achievement of this milestone, the first phase of the Canary District development will be complete. As part of the interim cost recoveries from the Province of Ontario, we received land in the Canary District that will accommodate another 1,000 market condominiums and 20,000 square feet of retail, in addition to the 30,000 square feet in the first phase. We expect to launch the first building in phase two later this year.

In total, we are completing over 550 condominium units in Toronto in 2016 and will receive our profits while reducing our exposure. In 2015, we launched our exciting Zibi project in Ottawa by marketing the first condominium building, with over 2,000 more units to come. We are also commencing three buildings in downtown Toronto, so our investment will increase again as these projects become active. We are pleased with the level of pre-sales for our new projects.

In Western Canada, we achieved two significant planning milestones in 2015. First, the City of Regina approved its growth and funding plan for the next 25 years, which gives us clarity over the sequencing of developments. With our large holdings in the city, the plan is positive for our planning purposes. We also received approval from Calgary City

Council for our Area Structure Plan in Providence. This approval has been sought since 1997 and materially changes the nature of our holdings. In addition, subsequent to year-end, we entered into a sale agreement for the transfer of 172 acres of land to the Province of Alberta, which is required to build the balance of the Southwest Ring Road. With the construction of the Ring Road proceeding and planning approvals achieved for our lands, all that remains outstanding is the allocation of services to the development, which we are currently working on getting approved.

In 2015, we also commenced the development of Brighton, which is the first neighbourhood in our 3,000 acre community in Saskatoon. We are in the process of seeking approvals for the 1,000 acre Suburban Centre within this community. We also commenced our development in Vista Crossing, located 30 miles north of Calgary. We have developed the first 75 lots and have sold 28 to date. For the first time in Dream’s history, we began constructing homes in Calgary in 2015. We are currently building homes on the last 19 lots in our popular Evansridge community. We are also commencing construction of homes on 36 internal lots in Vista Crossing. As we commence development on our lands in Providence, we will also be able to build houses in the community. In addition to the residential development, Providence received approval for the development of 320 acres for commercial uses. The lands are ideally situated along the Ring Road with three exits over the two miles of frontage.

Our retail developments came into their own in 2015 with the occupancy of Tamarack in Edmonton in addition to significant leasing in both Edmonton and Saskatoon. We are commencing development of our retail centre in South Kensington in Saskatoon over the next few months. We are currently active on six retail centres totalling approximately 800,000 square feet.

Michael Cooper President and Chief Responsible Officer

Our asset management business continued to grow through Dream Alternatives Trust, Dream Global REIT’s new joint venture with a sovereign wealth fund, which acquired an office building in Austria, and through Dream CMCC Capital Fund I, which realized its first profits. We crystallized the value of the Dream Office REIT asset management contract in 2015 to provide more flexibility for the REIT to maximize its net asset value. We expect to grow our asset management business in the future through growth in investments in Dream Alternatives and through joint ventures in development opportunities that we create.

In 2015, we entered into a joint venture with Canadian Pacific Railway to develop excess land that they own in Canada and the United States. We are working very closely together on development plans and believe we will be able to commence the first project in 2016 and agree on development plans for other future projects. We recently hired an experienced commercial developer as Senior Vice President, Commercial Development. As our retail development division is proving itself as an essential element of our community building, our next step is to add commercial development to our capabilities. Our Providence development will likely have in excess of 7 million square feet of commercial space and the Holmwood Suburban Centre will also have several million square feet of commercial space. As the cities demand increased density in new communities, they will also want more commercial development. We expect that within a few years, we will have developed exceptionally located, innovative and highly profitable industrial, office and special use income properties. Combined with the retail in our communities, urban retail in our condominium and mixed use projects, commercial buildings developed on our own lands and our partnership lands, our recurring income from commercial real estate properties should increase dramatically. We believe we will ultimately generate a continuous stream of profit from our new commercial and retail development divisions, which will accordingly become material contributors to our overall business.

Economic activity and population growth in Alberta are currently impossible to predict and forecasting our lot sales with certainty remains difficult. We have excellent assets and believe that, over time, they will prove to be very successful. However, in the meantime, other business segments, including our ownership of the Distillery District in Toronto, our fully operational renewable power portfolio, the ski operations in Arapahoe Basin and more income-producing properties, will provide sufficient recurring income to fund our business before any income from land development, housing or condominium development. In addition, our lands will become more valuable over time as we receive the necessary approvals to get them developed.

With our capital availability in place, the completion of the Pan Am Games Village, the completion of over 550 condominium units in 2016, the significant sale of land to the Province of Alberta, our recurring income and land available for housing, we believe that 2016 will be another excellent year based on our expected profits and cash generation.

Our stock price has been disappointing in 2015, but our profits and progress have not. We will continue to provide transparent information to investors and analysts and present our business with as much clarity as we can. We are pleased with the continued growth in our shareholders’ equity, which has increased from approximately $3.73 to $6.37 per share since our first reporting period two and a half years ago. Almost all of the increase consists of retained earnings. We will continue to try to increase book equity by the earnings we achieve. As we come through the current restructuring due to the dramatic changes in the energy sector, our business will have better assets with more approvals, it will be more diverse and we will have more capabilities to build houses and retail and commercial centres. The balance of our business is functioning well and we are also developing new capabilities within our energy and infrastructure group and are in the process of establishing a new mixed use division, which will also provide Dream with further capabilities to deliver on new real estate development and infrastructure opportunities.

We would like to thank our Board, our senior leaders, colleagues and our investors for their continued support and contribution to making our business better.

Sincerely

Michael Cooper President and Chief Responsible Officer

Portfolio at-a-GlanceDECEMBER 31, 2015

Dream Unlimited is one of Canada’s leading real estate companies with over 1,000 employees and $15.0 billion of assets under management in North America and Europe. The scope of the business includes residential land development, housing and condominium development, asset management and management services for four TSX-listed funds, investments in and management of Canadian renewable energy infrastructure, and commercial property ownership.

APPROXIMATELY

$15 billionIN ASSETS UNDER MANAGEMENT

AS AT DECEMBER 31, 2015

20-yearHISTORY AS A

REAL ESTATE DEVELOPER, OWNER AND MANAGER

Evansridge, Calgary, AB

Renewable Power Wind Farm

Financial Highlights2015 2014

Revenue $333,365 $388,415

Earnings before income taxes $202,225 $109,316

Earnings per period $173,834 $77,456

Basic earnings per share $1.54 $0.69

Total equity $717,854 $591,833

Earnings Growth($ in millions)

$0

$50

$100

$150

$200

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

CAGR = 20%

Total Equity per Share Since Becoming a Publicly Listed Company($ in millions)

$0

$200

$400

$600

$800

Dec. 2015June 2014June 2013

$3.73/share

$5.21/share

$6.37/share

$410million

$592million

$718million

*Note: We issued $55.4M of equity in 2014.

24%CAGR in

Total Equityto 2015

Tota

l equ

ity

COMPLETED APPROXIMATELY

$20 billionOF REAL ESTATE AND RENEWABLE

POWER TRANSACTIONS

APPROXIMATELY

34% IRRDELIVERED TO SHAREHOLDERS OVER THE LAST

12+ PERIODS, BASED ON MARKET CAPITALIZATION, AT DECEMBER 31, 2015

Riverside Square, Toronto, ON

10,000 acresINCLUDING LANDS

UNDER COMMITMENT IN WESTERN CANADA

PROJECTS CONSISTING OF

3,800CONDOMINIUMS AND

3,200

SINGLE FAMILY HOMES

COMPLETED THE DEVELOPMENT AND

SALE OF OVER

19,100SINGLE FAMILY LOTS

Arapahoe Basin, Colorado

Shops of South Kensington, Saskatoon, SK

Table of ContentsManagement’s Discussion and Analysis 1

Management’s Responsibility for Financial Statements 43

Independent Auditor’s Report 44

Consolidated Financial Statements 45

Notes to the Consolidated Financial Statements 50

Directors IBC

Corporate Information IBC

Management’s Discussion and Analysis

The Management’s Discussion and Analysis (“MD&A”) is intended to assist readers in understanding Dream Unlimited Corp. (the “Company” or “Dream”), itsbusiness environment, strategies, performance and risk factors. This MD&A should be read in conjunction with the consolidated financial statements of Dream,including the notes thereto, as at and for the year ended December 31, 2014 and the year ended December 31, 2015. The financial statements underlyingthis MD&A, including 2014 comparative information, have been prepared in accordance with International Financial Reporting Standards (“IFRS”). Certaindisclosures included herein are Non-IFRS or Additional IFRS measures. For further details, see page 42 of this MD&A.

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

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

This MD&A is dated as of February 11, 2016.

Business Overview

Dream is one of Canada’s leading real estate companies with approximately $15 billion of assets under management in North America and Europe. The scopeof the business includes residential land development, housing and condominium development, asset management services for four TSX-listed trusts andinstitutional partnerships and developments, investments in and management of Canadian renewable energy infrastructure and commercial propertyownership. Dream has an established track record for being innovative and for its ability to source, structure and execute on compelling investmentopportunities.

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

On May 30, 2013, we became a publicly traded company following a reorganization whereby Dundee Corporation transferred its 70.05% interest in DundeeRealty to Dream. In January 2014, Dundee Realty changed its name to Dream Asset Management Corporation (“DAM”). The chart below illustrates the structureand diversity of our business:

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

Dream Unlimited Corp. – 2015 Annual Report | 1

Business Update – Fourth Quarter and Year Ended 2015

Key Planning Approvals and Achievements in Western Canada

Planning AdvancementsDream achieved significant planning approvals pertaining to its ownership of 650 acres in the Providence Area Structure Plan ("ASP") and 320 acres in theGlacier Ridge (Panorama) Area Structure Plan in Calgary, Alberta. Both of these significant Area Structure Plans were formally adopted by Calgary City Councilin December 2015. As the largest land owner within the 2,000 acre southwest Providence Area Structure Plan area, Dream, in collaboration with Cityadministration, led all aspects of the planning process, including the design, controls and policies for future community development. The innovative land useplan for Providence has been designed to incorporate residential, commercial, institutional and industrial development, allowing Providence to function as a“City within a City”. It is anticipated that the Providence Area Structure Plan lands will accommodate 32,000 future residents. Dream expects the detailedplanning and development of its 650 acres could commence as early as 2017 and yield over 3,000 single and multi-family residential units and 5 million squarefeet of commercial space over the next 15 years. The approval of these lands in Providence is considered to be a material and profound event for the Company.In addition to these lands, Dream owns an additional 1,100 acres in Providence West.

With respect to the Glacier Ridge Area Structure Plan, the plan area comprises nearly 3,200 acres along the northwest boundary of Calgary. The Area StructurePlan seeks to create four communities and 18 neighbourhoods which will accommodate an estimated population of 60,000 residents. Through the ASP’stechnical review process, Dream’s 320 acres proved to be highly developable with very limited development restrictions, and as such is expected to yieldapproximately 2,800 residential units and 0.2 million square feet of commercial/retail space. Dream expects the detailed planning and development of theselands could commence within the next four years.

In December 2015, Regina’s City Council reached a landmark decision with the approval of a $1.4 billion Phasing & Financing Plan that will guide developmentwithin the city as the population grows to 300,000 people over the next 25 years. The plan establishes a complex policy framework for when and where newgreenfield communities can be built up to 2040. In accordance with the City’s approved growth sequencing system, in 2016, we are eligible to proceed withcompleting the remaining undeveloped portions of our existing community of Harbour Landing and commencing development on more than 160 acres of itslands in Eastbrook (previously the Towns), a new neighbourhood in the City’s southeast quadrant.

Residential Land and Housing ActivityIn the year ended December 31, 2015, we achieved 868 lot sales, 27 developed acre sales, 45 undeveloped acre sales and 209 housing unit occupancies (yearended December 31, 2014 – 821 lots, 61 developed acre sales and 219 housing unit occupancies). Approximately 85% of our lots sold in 2015 were withinthe following active developments: Harbour Landing in Regina, Brighton (Holmwood) in Saskatoon and the Meadows in Edmonton. In the fourth quarter of2015, we achieved our first sales within our newest development in Crossfield, a community north of Airdrie, and our homebuilding division commencedDream's first homes in Calgary's northwest community of Evansridge.

On February 5, 2016, Dream transferred 172 acres of raw land in Providence to the Province of Alberta to construct parts of the Southwest Calgary Ring Roadin exchange for cash consideration. The cash consideration was used to repay amounts outstanding under our operating line, thereby immediately increasingthe Company's undrawn borrowing capacity to approximately $169.0 million using financial information up to February 9, 2016.

Retail DevelopmentIn the year ended December 31, 2015, Dream achieved approximately 63,000 square feet of retail occupancies within its Tamarack North, North East, andSouth East development sites within the community of the Meadows in Edmonton, Alberta, where Dream has been actively developing over 1,400 acres ofresidential land since 1997. These three properties are expected to comprise 184,400 square feet of gross leasable area (“GLA”) upon completion. As atDecember 31, 2015, we had committed leases for approximately 72% of the aggregate GLA with a weighted average lease term of approximately 14 years.Management expects that the properties will be fully leased by their expected completion dates in 2017 and 2018.

Dream recognized fair value gains with respect to these properties in the amount of $1.9 million and $12.0 million for the three and twelve months endedDecember 31, 2015, respectively, which resulted primarily from a change in use of under IFRS from inventory (held at cost) to investment property (held atfair value) on achievement of first tenant occupancies. In the fourth quarter of 2015, we added the Shops of South Kensington in Saskatoon as an active projectunder construction, upon successfully securing construction financing to develop the 6.5 acre site. Dream’s South Kensington community is expected toaccommodate 8,300 people on approximately 470 acres upon completion (140 acres at Dream’s share).

Toronto Condominium and Mixed-Use Development ProjectsIn the year ended December 31, 2015, Dream achieved 185 condominium unit occupancies (excluding equity accounted investments) primarily within TheCarlaw and The Carnaby in downtown Toronto, which are 100% and 98% sold, respectively. Our condominium projects include 2,282 units (1,014 units atDream’s share) in various stages of pre-construction or active development. Approximately 82% of the condominium projects were either sold or pre-sold asat December 31, 2015.

In the fourth quarter of 2015, the Pan/Parapan American Games Athletes’ Village in Toronto, utilized by the athletes as a temporary home during the games,was returned by the organizing entity to a 50/50 partnership owned by Dream and Kilmer Van Nostrand Co. Limited. Construction work is well underway toconvert the $800 million development to its final use. The legacy of the Athletes Village will include a YMCA, a 500 bed George Brown College student residence,253 affordable housing rental units and 810 market condominium units. To date, 87% of the condominium units have been sold and, together with the saleof the other components to third parties, approximately 95% of the revenue has been contracted. Sales of the condominiums continue to progress well andthe development is expected to be substantially sold out when construction is complete in mid-2016. The “Stage 2” lands (collectively, Blocks 12, 13 and 16)


were transferred to the partnership in the fourth quarter of 2015 at a fair value of $51.0 million ($25.5 million at Dream’s share), with a corresponding recoveryof costs incurred to date on the project. The partnership expects to develop another 1,000 market condominium units and 20,000 square feet of retail inaddition to the 30,000 square feet in Stage 1, which is now 78% leased.

New $175 Million, Three-Year Secured Term Facility Financing & Amendment of Existing Two-Year $290 Million Operating LineIn the year ended December 31, 2015, the Company established a new three year non-revolving term facility amounting to $175 million with a syndicate ofCanadian Financial Institutions (“non-revolving term facility”). The non-revolving term facility is secured by a general security agreement and a first chargeon various real estate and other financial assets of the Company. The loan bears interest at the Company’s option, at a rate per annum equal to either thebank’s prime lending rate plus 1.50% or at the bank’s then prevailing bankers’ acceptance rate plus 2.75%, payable monthly. The principal balance is due onits maturity date of June 30, 2018. The Company utilized the full net proceeds from the financing to complete final installments for acquisitions of land andrepay $160.6 million of other debt obligations, which included the full repayment of the shareholder loan outstanding to Dundee Corporation (TSX: DC.A),and $82.0 million of repayments on the Company’s operating line, increasing the Company’s financial flexibility. The Company entered into an interest rateswap to effectively exchange the variable interest rate for a fixed rate of 3.65% per annum through the use of forward purchase contracts. The interest rateswap was contracted for approximately three years and effectively hedges 100% of the principal outstanding under the non-revolving term facility until itsmaturity. See page 32 of this MD&A for further details on the non-revolving term facility.

The Company also amended the borrowing base structure underlying its existing revolving term credit facility in the year ended December 31, 2015, availableup to a formula-based maximum, of up to $290 million (“operating line”). The amended borrowing base structure allows for reduced variability in the formula-based maximum thereby providing management with increased predictability and flexibility in running the operations of the business. Interest and covenantterms remained unchanged and the maturity date was extended from November 30, 2016 to June 30, 2017.

Strategy and Business Focus

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

More Land in Production in High-Growth MarketsWe own and have under contract approximately 10,000 acres of land in Western Canada, of which over 9,100 acres are in 10 large master-planned communitiesat various stages of approval. We estimate that, when approved, these master-planned communities will supply lots for the next 25 to 35 years. We are workingto increase the number of lots that we develop in each of these markets. Annually, we estimate that we consume approximately 3%–4% of our acres that wehave available for development, to generate margin from land development activities. We plan to continue to leverage our expertise to develop phased,master-planned communities.

Develop and Acquire Strategic Land Positions in Our Key Markets We are continuously looking to increase and/or develop more of our land inventory and intend to reinvest a significant portion of our profits from residentialdevelopment into our core development business.

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


Asset Management, Management Services and Equity Interests in Related PartiesAs the asset manager of four publicly listed funds and numerous institutional and development partnerships, we are on the front line and well-positioned toobserve, in real time, the impact of economic trends on the drivers of demand for real property, such as demand for space, urbanization trends and employmentlevels in each of the markets in which we operate. This access to real-time economic data may provide us with a competitive advantage.

In 2015, Dream and Canadian Pacific Railway Limited (NYSE/TSX: CP) announced an agreement to form a joint venture called Dream Van Horne Properties(Dream VHP). The joint venture will maximize the value of Canadian Pacific’s surplus real estate portfolio in Canada and the United States by leveraging theexperience and expertise of Dream to develop real estate assets over the next several years. Under the terms of the joint venture with Canadian Pacific, Dreamwill earn development and management fees as properties are developed by the joint venture. Dream is entitled to an equity interest in these properties.We have commenced leasing our first property, a neighbourhood retail/commercial mixed-use development in Toronto.

We will continue to be proactive in seeking out other opportunities to independently manage third parties and/or create new, unique investment vehicles orpartnerships that can provide value to investors through our skills and track record in sourcing unique investment opportunities and generating high risk-adjusted returns through active asset management.

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

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

Description of Our Operating Segments

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

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

Condominium and Mixed-Use DevelopmentOur core high-rise condominium and mixed-use development business consists of operations in Toronto, where we have approximately 2,282 condominiumunits (approximately 1,014 units at Dream’s share) and over 650,000 square feet of commercial space in various stages of pre-construction or activedevelopment. High-rise condominium development typically does not commence until a substantial number of units have been pre-sold. A few months aftersubstantial completion and customer occupancy of the building, the developer obtains all necessary approvals and the building is registered, purchasers paythe balance of the purchase price and title is transferred.


Retail DevelopmentWe recently achieved first tenant occupancies with three retail developments on our owned land. In many cases, the construction is not overly complex andthe demand for retail is created by our development of the master-planned community. Dream Centres, our internal retail development division, hasapproximately 24 acres of active retail projects under construction, which will result in over 256,000 square feet of GLA upon completion. In total, we areactively developing 137 acres in Western Canada that are in various stages of approvals. Our development and leasing team is also evaluating the potentialof retail development on an additional 300 acres of land currently owned by Dream. See the Retail Development section on page 17 of this MD&A for furtherdetails.

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

We provide asset management and management services to four listed funds, our renewable power business and various institutional partner/third-partyreal estate and development assets. The majority of our fee and investment income in 2015 was derived from providing asset management and managementservices and/or having equity interests in the following listed funds: Dream Office REIT (TSX: D.UN), Dream Global REIT (TSX: DRG.UN), Dream Industrial REIT(TSX: DIR.UN) and Dream Alternatives (TSX: DRA.UN).

We participate in numerous mezzanine loans and equity investments on an opportunistic basis and invest in and manage Dream CMCC Capital Funds I and II.Dream CMCC Capital Fund I and II are investment vehicles formed through the collaboration of Dream and its partner, Canadian Mortgage Capital Corporation,to provide an opportunity for investors to invest with partners who are market leaders in developing, managing and financing real estate development projects.

Investment and Recreational PropertiesOur investment properties include interests in commercial and retail properties consisting of approximately 527,000 square feet of GLA, excluding parking,which includes The Distillery District in downtown Toronto and jointly controlled entities. Our recreational properties include a ski area in Colorado and a 50%interest in the Broadview Hotel in a neighbourhood just east of downtown Toronto.

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

Key Financial Information and Performance Indicators

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

December 31, 2015 December 31, 2014Land held for development $ 442,558 $ 383,751Land under development 150,843 143,209Housing inventory 48,167 71,588Condominium inventory 91,323 75,515Investment properties 141,377 94,072Recreational properties 29,031 26,970Other financial assets 162,800 70,645

$ 1,066,099 $ 865,750

Dream also carries investments in the development of the Canary District in Toronto, the development of Zibi – a master planned community in Ottawa/Gatineau, and in a renewable energy infrastructure fund, Firelight, which are excluded from the above. For further details, see Equity Accounted Investmentson page 27 of this MD&A.


Selected Financial Information – Income Statement

Three months ended December 31, Year ended December 31,(in thousands of dollars, except per share and outstanding

share amounts) 2015 2014 2015 2014

Revenue $ 89,326 $ 127,169 $ 333,365 $ 388,415Gross margin(1) $ 31,807 $ 48,607 $ 110,094 $ 134,335Gross margin (%) 35.6% 38.2% 33.0% 34.6%Net margin(2) $ 25,102 $ 40,637 $ 80,734 $ 106,243Net margin (%) 28.1% 32.0% 24.2% 27.4%Earnings before income taxes $ 26,721 $ 53,729 $ 202,225 $ 109,316Earnings for the period $ 20,130 $ 38,384 $ 173,834 $ 77,456Basic earnings per share(3) $ 0.18 $ 0.34 $ 1.54 $ 0.69Diluted earnings per share(3) $ 0.18 $ 0.34 $ 1.46 $ 0.69Weighted average number of shares outstanding 78,456,452 79,407,193 78,837,047 78,213,228Total issued and outstanding shares 78,385,662 79,336,289 78,385,662 79,336,289

Total earnings for the period attributable to: Shareholders $ 14,076 $ 26,946 $ 121,898 $ 54,010 Non-controlling interest $ 6,054 $ 11,438 $ 51,936 $ 23,446

(1) Gross margin (see Additional Items - additional IFRS measures) represents revenue less direct operating costs and asset management and management services expenses, excluding selling, marketingand other operating costs.

(2) Net margin (see Additional Items) represents gross margin, as defined above, net of selling, marketing and other operating costs.(3) See Note 36 of the Company's consolidated financial statements for the year ended December 31, 2015 for further details on the calculation of basic and diluted earnings per share.

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

Selected Annual Information

Year ended December 31,(in thousands of dollars, except per share amounts) 2015 2014 2013Revenue $ 333,365 $ 388,415 $ 514,483Total earnings attributable to shareholders $ 121,898 $ 54,010 $ 82,620Basic earnings per share $ 1.54 $ 0.69 $ 1.09Diluted earnings per share $ 1.46 $ 0.69 $ 1.07Total assets $ 1,463,264 $ 1,223,198 $ 1,095,578Total liabilities $ 745,410 $ 631,365 $ 639,975

Quarterly Business Trends

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

(in thousands of dollars, except per share amounts)

Dec 31, 2015

Sep 30, 2015

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Mar 31, 2014

Revenue $ 89,326 $ 130,350 $ 65,538 $ 48,151 $ 127,169 $ 77,704 $ 99,618 $ 83,924Earnings for the period 20,130 26,085 124,548 3,071 38,384 7,825 17,620 13,627Basic earnings per share 0.18 0.23 1.10 0.03 0.34 0.07 0.16 0.12

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

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


As a result of the above, the Company's results can vary significantly from quarter to quarter. The Company has segregated the net margin from condominium,housing and land operations from the Company's remaining activities. We have identified the net margin from asset management and management services,investment and recreational properties as recurring sources of income. Similarly, due to the seasonal nature of the renewable power segment, we expecthigher returns on our investment in Firelight Infrastructure Partners LP in the spring and summer months, compared to the fall and winter. A summary ispresented below.

Contribution of Net Margin by Business Segment

(in thousands of dollars, except per share amounts)

Dec 31, 2015

Sep 30, 2015

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Jun 30, 2014

Mar 31, 2014

Land development(1) $ 18,315 $ 13,127 $ 11,732 $ (479) $ 32,229 $ 3,854 $ 9,844 $ 6,357Housing development(1) 170 1,596 1,835 (94) 1,780 2,459 2,277 1,231Condominium development (511) 10,538 (811) (7) (1,533) 1,485 9,492 8,802

17,974 25,261 12,756 (580) 32,476 7,798 21,613 16,390

Investment and recreational properties(2) 588 (1,976) 2,833 3,399 903 (1,390) 1,933 3,093Asset management and management services(3),(4) 7,484 4,543 4,098 9,721 8,807 9,436 5,131 5,010

8,072 2,567 6,931 13,120 9,710 8,046 7,064 8,103Total $ 26,046 $ 27,828 $ 19,687 $ 12,540 $ 42,186 $ 15,844 $ 28,677 $ 24,493Income amounts included below net marginFirelight Infrastructure Partners LP(5) $ (488) $ 1,755 $ 3,179 $ (5,851) $ (703) $ 1,304 $ 2,205 $ 291Investment income earned from publicly listedfunds $ 6,524 $ 1,320 $ 1,443 $ 755 $ 553 $ 649 $ 598 $ 658

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

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

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

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

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

Recurring Sources of IncomeThe Company considers most of its non-development-related business lines and assets to be recurring income sources. Below is a summary of income and/or cash flow from such assets and their applicable fair value or carrying value as at December 31, 2015.

Asset Segment IFRS ValueCarrying

Value2015 Pre-

Tax IncomePre-Tax Income Measure

Shown

Distillery District (inclusive of retail and parking) Investment Properties $ 90,481 $ n/a $ 5,370 Net Operating Income(1)

Other Toronto retail properties below/adjacent tocompleted condominiums

Equity Accounted Investments 10,427 n/a 265 Net Operating Income(1)

Arapahoe Basin Ski Hill (Colorado) Recreational Properties n/a 19,328 6,811 Net Margin(1)

Asset Management Agreements with Dream HardAsset Alternatives Trust, Dream Global REIT andDream Industrial REIT

Asset Managementn/a 43,000 20,400

Net Margin(1)

Investments in publicly listed funds Other Financial Assets 149,525 n/a 10,042 Investment income

Asset management fees earned from institutionalpartnerships

Asset Management n/a n/a 2,611 Asset management fees

Firelight Infrastructure Partners LP Renewable Power n/a 46,296 5,595 Net earnings(2)

Total $ 250,433 $ 108,624 $ 51,094(1) Refer to page 42 for definitions of Non-IFRS Measures for the Net Operating Income and Net Margin.(2) Net earnings presented are adjusted to exclude the impact of non-recurring impairment charges of $7.0 million incurred during the year ended December 31, 2015.


Selected Operating Metrics

For the three months ended December 31, For the year ended December 31,

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

LAND DEVELOPMENT

Lot revenue $ 48,974 $ 70,116 $ 103,739 $ 108,294Acre revenue(1) $ 2,748 $ 13,840 $ 21,814 $ 45,355Total revenue(1),(2) $ 52,222 $ 83,956 $ 126,053 $ 153,649Gross margin(1),(2) $ 20,813 $ 34,398 $ 52,662 $ 61,257Gross margin (%) 39.9 % 41.0% 41.8% 39.9%Net margin(1),(2) $ 18,315 $ 32,229 $ 42,695 $ 52,284Net margin (%) 35.1% 38.4% 33.9% 34.0%Lots sold 412 485 868 821Average selling price – lot units $ 119,000 $ 145,000 $ 120,000 $ 132,000Undeveloped acres sold — — 45 —Developed acres sold 3 21 27 61Average selling price – undeveloped acres $ — $ — $ 19,000 $ —Average selling price – developed acres $ 916,000 $ 658,000 $ 769,000 $ 755,000

HOUSING DEVELOPMENT

Housing units occupied 41 59 209 219Revenue(1),(2) $ 15,083 $ 24,274 $ 82,598 $ 93,111Gross margin(1),(2) $ 2,636 $ 4,875 $ 14,812 $ 19,010Gross margin (%) 17.5% 20.1% 17.9% 20.4%Net margin(1),(2) $ 170 $ 1,780 $ 3,507 $ 7,746Net margin (%) 1.1% 7.3% 4.2% 8.3%Average selling price – housing units $ 368,000 $ 411,000 $ 395,000 $ 425,000Average selling price per square foot for occupied units $ 277 $ 283 $ 279 $ 281

CONDOMINIUM DEVELOPMENT

Attributable to Dream, excluding equity accounted investmentsCondominium occupancies – units 13 3 185 172Revenue(3) $ 4,747 $ 2,618 $ 61,492 $ 73,475Gross margin(4) $ 145 $ 166 $ 13,150 $ 22,020Gross margin (%) 3.1% 6.3% 21.4% 30.0%Net margin $ (511) $ (1,533) $ 9,209 $ 18,246Net margin (%) (10.8%) n/a 15.0% 24.8%

Average selling price of condominiums occupiedPer unit $ 303,000 $ 530,000 $ 303,000 $ 381,000Per square foot $ 515 $ 573 $ 475 $ 505

ASSET MANAGEMENT AND MANAGEMENT SERVICES

Total assets under management – listed funds(7) $ 11,737,965 $ 11,710,220 $ 11,737,965 $ 11,710,220Fee-earning assets under management – listed funds(7) 5,100,548 11,710,220 $ 5,100,548 11,710,220Revenue $ 9,389 $ 10,964 $ 33,984 $ 39,867Net margin $ 7,484 $ 8,807 $ 25,846 $ 28,384Net margin (%) 79.7% 80.3% 76.1% 71.2%

INVESTMENT INCOME EARNED ON INVESTMENTS IN LISTED FUNDS(5)

Dream Office REIT $ 6,105 $ 227 $ 8,149 $ 908Other distributions from listed funds 419 326 1,893 1,550Interest and other income 943 705 3,324 3,422Total $ 7,467 $ 1,258 $ 13,366 $ 5,880

INVESTMENT AND RECREATIONAL PROPERTIES

Revenue $ 10,371 $ 9,864 $ 44,073 $ 43,041Net margin(6) $ 588 $ 903 $ 4,844 $ 4,539Net margin (%) 5.7% 9.2% 11.0% 10.5%

(1) Results for the year ended December 31, 2015 include revenue and gross margin of $0.8 million and $0.2 million, respectively relating to 45 acres of undeveloped land sold to the Ministry for $0.8million. See Results of Operations – Land for Regina on page 16 of this MD&A for further details.

(2) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenueand net margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to page 10 of this MD&A.

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

for further details.(6) Net margin for investment and recreational properties includes depreciation expense. (7) Refer to page 42 for definitions of Non-IFRS Measures for the Assets under management and Fee-earning assets under management.


Segmented Financial Position

The Company's segmented financial position is as follows:

As at December 31, 2015

Landdevelopment

Housingdevelopment

Condominiumdevelopment

Assetmanagementand advisory

services

Investmentand

recreationalproperties Total

Inventory $ 593,401 $ 48,167 $ 91,323 $ — $ — $ 732,891Properties — — — — 170,408 170,408Total real estate assets(1) $ 593,401 $ 48,167 $ 91,323 $ — $ 170,408 $ 903,299Intangible asset — — — 43,000 — 43,000Non-segmented assets(2) 516,965

Total assets $ 1,463,264

Provision for real estate development costs $ 40,389 $ 1,085 $ 10,123 $ — $ — $ 51,597Customer deposits 952 306 23,038 — 969 25,265Construction loans — 37,682 62,055 — 23,999 123,736Mortgages and term debt — — 10,750 — 57,625 68,375Total segmented liabilities $ 41,341 $ 39,073 $ 105,966 $ — $ 82,593 $ 268,973Non-segmented liabilities(3) 476,437Total liabilities $ 745,410


Landdevelopment

Housingdevelopment



services

Investmentand


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

Provision for real estate development costs $ 50,053 $ 2,048 $ 2,935 $ — $ — $ 55,036Customer deposits 1,942 2,746 16,969 — 1,084 22,741Construction loans 6,171 41,408 41,065 — — 88,644Mortgages and term debt 33,752 — 7,469 — 30,873 72,094Total segmented liabilities $ 91,918 $ 46,202 $ 68,438 $ — $ 31,957 $ 238,515Non-segmented liabilities(4) 392,850Total liabilities $ 631,365

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

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

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

not directly attributable to a specific operating segment.


Segmented Results of Operations

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

For the three months ended December 31, 2015

Landdevelopment(1)

Housingdevelopment(1)



services

Investmentand

recreationalproperties Eliminations(1) Total

Revenues $ 52,222 $ 15,083 $ 4,747 $ 9,389 $ 10,371 $ (2,486) $ 89,326Direct operating costs (31,409) (12,447) (4,602) — (8,698) 1,542 (55,614)Asset management and advisory

services expenses — — — (1,905) — — (1,905)

Gross margin 20,813 2,636 145 7,484 1,673 (944) 31,807Selling, marketing and other

operating costs (2,498) (2,466) (656) — (1,085) — (6,705)

Net margin $ 18,315 $ 170 $ (511) $ 7,484 $ 588 $ (944) $ 25,102Net margin (%) 35.1% 1.1% (10.8)% 79.7% 5.7% 38.0% 28.1%Fair value changes in investment

properties — — — — 1,335 — 1,335

Investment and other income 448 — 202 6,766 51 — 7,467Gain on reorganization of asset

management service agreement — — — — — — —

Earnings before the following: $ 18,763 $ 170 $ (309) $ 14,250 $ 1,974 $ (944) $ 33,904 General and administrative expenses (3,592) Gain on sale of recreational and investment properties 2,183 Share of losses from equity accounted investments(2) (742) Loss on derivative financial instruments (343) Interest expense (4,689) Gain on settlement of debt — Income tax expense (6,591)Earnings for the period(3) $ 20,130

For the three months ended December 31, 2014

Landdevelopment(1)




services

Investmentand




Gross margin 34,398 4,875 166 8,893 1,804 (1,549) 48,587Selling, marketing and other

operating costs (2,169) (3,095) (1,699) (86) (901) — (7,950)

Net margin $ 32,229 $ 1,780 $ (1,533) $ 8,807 $ 903 $ (1,549) $ 40,637Net margin (%) 38.4% 7.3% (58.6)% 80.3% 9.2% 34.4% 32.0%Fair value changes in investment

properties — — — — 21,043 — 21,043

Investment and other income 119 — 342 — 797 — 1,258Gain on reorganization of asset

management service agreement — — — — — — —

Earnings before the following: $ 32,348 $ 1,780 $ (1,191) $ 8,807 $ 22,743 $ (1,549) $ 62,938 General and administrative expenses (3,426) Share of losses from equity accounted investments(2) (1,284) Loss on sale of recreational properties (76) Loss on derivative financial instruments (108) Interest expense (4,315) Gain on settlement of debt — Income tax expense (15,345)Earnings for the period(3) $ 38,384

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


For the year ended December 31, 2015

Landdevelopment(1)




services

Investmentand




Gross margin 52,662 14,812 13,150 25,846 8,991 (5,367) 110,094Selling, marketing and other

operating costs (9,967) (11,305) (3,941) — (4,147) — (29,360)

Net margin $ 42,695 $ 3,507 $ 9,209 $ 25,846 $ 4,844 $ (5,367) $ 80,734Net margin (%) 33.9% 4.2% 15.0% 76.1% 11.0% 36.2% 24.2%Fair value changes in investment

properties — — — — 11,158 — 11,158

Investment and other income 1,695 367 537 10,716 51 — 13,366Gain on reorganization of asset

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

Earnings before the following: $ 44,390 $ 3,874 $ 9,746 $ 163,875 $ 16,053 $ (5,367) $ 232,571 General and administrative expenses (16,211) Gain on sale of recreational and investment properties 2,183 Share of losses from equity accounted investments(2),(3) (530) Gain on derivative financial instruments 1,227 Interest expense (19,263) Gain on settlement of debt 2,248 Income tax expense (28,391)Earnings for the period(4) $ 173,834

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


Landdevelopment(1)




services

Investmentand




Gross margin 61,257 19,010 22,020 29,322 7,682 (4,956) 134,335Selling, marketing and other

operating costs (8,973) (11,264) (3,774) (938) (3,143) — (28,092)

Net margin $ 52,284 $ 7,746 $ 18,246 $ 28,384 $ 4,539 $ (4,956) $ 106,243Net margin (%) 34.0% 8.3% 24.8% 71.2% 10.5% 33.7% 27.4%Fair value changes in investment

properties — — — — 28,369 — 28,369

Investment and other income 1,602 123 544 2,814 797 — 5,880Earnings before the following: $ 53,886 $ 7,869 $ 18,790 $ 31,198 $ 33,705 $ (4,956) $ 140,492 General and administrative expenses (14,308) Loss on sale of recreational properties (76) Share of earnings from equity accounted investments(2) 324 Gain on derivative financial instruments 32 Interest expense (17,148) Income tax expense (31,860)Earnings for the period(4) $ 77,456

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


Revenue by Geographic Region

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

For the year ended December 31, 2015 For the year ended December 31, 2014Revenue % Revenue %

Saskatchewan Saskatoon $ 72,750 21.8% $ 68,772 17.7% Regina 80,474 24.1% 90,907 23.4%

153,224 46.0% 159,679 41.1%Alberta Edmonton 41,490 12.4% 56,999 14.7% Calgary 5,807 1.7% 21,196 5.5%

47,297 14.1% 78,195 20.1%Ontario Toronto 74,691 22.4% 92,077 23.7%

Canada 275,212 82.6% 329,951 84.9%United States 24,169 7.3% 18,597 4.8%Non-segmented (asset management) 33,984 10.2% 39,867 10.3%Total $ 333,365 100.0% $ 388,415 100.0%

Net Margin by Geographic Region

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

For the year ended December 31, 2015 For the year ended December 31, 2014Net Margin % Net Margin %

Saskatchewan Saskatoon $ 18,115 22.4% $ 6,255 5.9% Regina 13,174 16.3% 16,887 15.9%

31,289 38.8% 23,142 21.8%Alberta Edmonton 7,538 9.3% 22,329 21.0% Calgary(1) 169 0.2% 8,416 7.9%

7,707 9.5% 30,745 28.9%Ontario Toronto 12,722 15.8% 20,990 19.8%

Canada 51,718 64.1% 74,877 70.5%United States 3,170 3.9% 2,982 2.8%Non-segmented (asset management) 25,846 32.0% 28,384 26.7%Total $ 80,734 100.0% $ 106,243 100.0%

(1) The Company had minimal inventory available for sale during the year ended December 31, 2015. For full details refer to page 17 of the MD&A.

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


Land Development

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

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

As at December 31, 2015, our land portfolio, including land held for development and land under development, consisted of 9,140 acres and 953 lots in variousstages of development. This represents 9,297 acre equivalents. Dream also has commitments to purchase an additional 626 acres, for a total of 9,923 acres.

(in thousands of dollars, except lots and acres) As at December 31, 2015Land held for development Land under development

Cost AcresCost per

acre Cost Acres LotsCost per acre

equivalent Total

Saskatoon $ 70,925 2,548 $ 28 $ 72,150 154 505 $ 300 $ 143,075Regina 160,681 2,893 56 25,352 56 198 324 186,033Calgary 170,124 2,495 68 22,683 58 202 233 192,807Edmonton 39,249 858 46 29,321 62 48 419 68,570Other 1,579 2 n/a 1,337 14 — 94 2,916Total inventory $ 442,558 8,796 $ 50 $ 150,843 344 953 $ 302 $ 593,401Land under commitment $ 19,375 626 $ 31 $ 19,375

A summary of the changes in land inventory during the year ended12/31/2015 is included below:

(in thousands of dollars) Year ended December 31, 2015Land held fordevelopment

Land underdevelopment Total

Balance, December 31, 2014 $ 383,751 $ 143,209 $ 526,960Acquisitions 60,415 — 60,415Development 8,539 113,184 121,723Lot and acre sales (726) (70,107) (70,833)Transfers (9,421) 9,421 —Transfers to housing inventory — (13,402) (13,402)Transfers to investment properties — (27,815) (27,815)Transfers to condominium inventory — (3,647) (3,647)Balance, December 31, 2015 $ 442,558 $ 150,843 $ 593,401

The carrying value of our land portfolio increased to $593.4 million as at December 31, 2015 from $527.0 million as at December 31, 2014, representing a netincrease of $66.4 million.

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

Remaining commitments

(in thousands of dollars, except for acres)Total

commitmentAcquisition

depositsRemaining

commitment Acres(1) 2016 2017 2018 TotalLand purchase deposits and future commitments $ 19,375 $ 10,371 $ 9,004 626 $ 7,626 $ 1,378 $ — $ 9,004

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

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

Totalcommitments

Acquisitiondeposits Acres

Opening balance, December 31, 2014 $ 78,476 $ 45,598 1,341Deposits made — 11,064 —Additional commitments 870 734 10Deposits transferred to land inventory upon final payment (59,971) (47,025) (725)Closing balance, December 31, 2015 $ 19,375 $ 10,371 626


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


(in thousands of dollars, except for average selling prices and acre / lot statistics) 2015 2014 2015 2014

Land revenue(1)

Saskatoon $ 25,997 $ 16,877 $ 43,893 $ 33,464Regina(2) 16,199 15,638 35,550 41,239Calgary 4,094 19,566 5,307 21,196Edmonton 5,432 31,875 40,803 56,999Other 500 — 500 751

Total $ 52,222 $ 83,956 $ 126,053 $ 153,649Land net margin(1)

Saskatoon $ 9,092 $ 6,060 $ 20,386 $ 6,521Regina (2) 6,646 5,658 12,955 14,787Calgary 1,332 9,541 187 8,416Edmonton 1,263 11,018 9,213 22,329Other (18) (48) (46) 231

Total $ 18,315 $ 32,229 $ 42,695 $ 52,284Net margin (%)(1)

Saskatoon 35.0% 35.9% 46.4% 19.5%Regina(2) 41.0% 36.2% 36.4% 35.9%Calgary 32.5% 48.8% n/a 39.7%Edmonton 23.3% 34.6% 22.6% 39.2%Other n/a n/a n/a n/a

Total 35.1% 38.4% 33.9% 34.0%Lots sold(1)

Saskatoon 221 111 298 180Regina 115 81 267 252Calgary 28 76 38 77Edmonton 48 217 265 311Other — — — 1

Total 412 485 868 821Lot revenue(1)

Saskatoon $ 25,997 $ 14,517 $ 35,518 $ 22,198Regina 13,451 7,438 28,104 24,413Calgary 4,094 19,566 5,307 19,696Edmonton 5,432 28,595 34,810 41,666Other — 1 — 321

Total $ 48,974 $ 70,117 $ 103,739 $ 108,294Average lot selling price(1)

Saskatoon $ 118,000 $ 131,000 $ 119,000 $ 123,000Regina 117,000 92,000 105,000 97,000Calgary 146,000 257,000 140,000 256,000Edmonton 113,000 132,000 131,000 134,000Other — n/a — 321,000

Total $ 119,000 $ 145,000 $ 120,000 $ 132,000Acres sold

Saskatoon — 4 13 21Regina(2) 3 13 52 22Calgary — — — 1Edmonton — 3 7 15Other — — — 1

Total 3 21 72 61Acre revenue(1)

Saskatoon $ — $ 2,360 $ 8,375 $ 11,265Regina(2) 2,748 8,200 7,446 16,826Calgary — — — 1,500Edmonton — 3,280 5,993 15,333Other — — — 431

Total $ 2,748 $ 13,840 $ 21,814 $ 45,355Average acre selling price

Saskatoon $ — $ 590,000 $ 644,000 $ 536,000Regina(2) 916,000 631,000 143,000 749,000Calgary — — — 1,200,000Edmonton — 1,093,000 856,000 998,000Other — — — 431,000

Total $ 916,000 $ 659,000 $ 303,000 $ 755,000(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenue

and net margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to page 10 of this MD&A.(2) Results for the year ended December 31, 2015 include revenue and gross margin of $0.8 million and $0.2 million, respectively, relating to 45 acres of undeveloped land sold to the Ministry for $0.8

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


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

For the three months ended December 31, For the year ended December 31,2015 2014 2015 2014

Lot revenue $ 48,974 $ 70,117 $ 103,739 $ 108,294Acre revenue $ 2,748 $ 13,840 $ 21,814 $ 45,355Other revenue $ 500 $ — $ 500 $ —Total revenue $ 52,222 $ 83,957 $ 126,053 $ 153,649Gross margin $ 20,813 $ 34,398 $ 52,662 $ 61,257Gross margin (%) 39.9% 41.0% 41.8% 39.9%Net margin $ 18,315 $ 32,229 $ 42,695 $ 52,284Net margin (%) 35.1% 38.4% 33.9% 34.0%Lots sold 412 485 868 821Average selling price – lots $ 119,000 $ 145,000 $ 120,000 $ 132,000Undeveloped acres sold — — 45 —Developed acres sold 3 21 27 61Average selling price – undeveloped acres — — 19,000 —Average selling price – developed acres $ 916,000 $ 659,000 $ 769,000 $ 755,000

Despite a more challenging economy in Western Canada in 2015, our land division generated a higher volume of lot sales compared to the prior year. Totallot revenue declined by $4.6 million in the year ended December 31, 2015, compared to 2014, with higher volumes more than offset by lower average sellingprices, due to differences in the type and location of lots sold year over year. Acre revenue declined by $23.5 million in the year ended December 31, 2015,compared to 2014, due to fewer developed acre sales in 2015, which was in line with management’s expectations. The overall net margin as a percentage ofrevenue within the division was 33.9% in the year ended December 31, 2015, in line with 2014, demonstrating relatively stable operations year over year.

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

Saskatoon, Saskatchewan


Lot revenue $ 25,997 $ 14,517 $ 35,518 $ 22,199Acre revenue $ — $ 2,360 $ 8,375 $ 11,265Total revenue $ 25,997 $ 16,877 $ 43,893 $ 33,464Gross margin $ 9,622 $ 6,485 $ 22,722 $ 8,306Gross margin (%) 37.0% 38.4% 51.8% 24.8%Net margin $ 9,092 $ 6,060 $ 20,386 $ 6,521Net margin (%) 35.0% 35.9% 46.4% 19.5%Lots sold 221 111 298 180Average selling price – lots $ 118,000 $ 131,000 $ 119,000 $ 123,000Acres sold — 4 13 21Average selling price – acres $ — $ 590,000 $ 644,000 $ 536,000

In the year ended December 31, 2015, net margin was generated primarily by sales within two developments in Saskatoon: Brighton (Holmwood), Stonebridge,and Blairemore (Kensington). We have wound down our remaining inventory in Stonebridge, which has been an active development since 2005 and themajority of inventory remaining will be constructed upon internally by our housing division. In the fourth quarter of 2015, we achieved our first lot sales withinour new development of Brighton, a neighbourhood within the Holmwood community.

For the three months ended December 31, 2015, total revenue increased by $9.1 million over the prior year, primarily due to an increase in lot sale volumesdue to increased availability. Net margin as a percentage of revenue remained consistent period over period.

For the year ended December 31, 2015, total revenues increased by $10.4 million over the prior year, primarily due to an increase in lot sale volumes partiallyoffset by a reduction in acre sales. The increase in lot volumes was driven by an additional 210 sales within Brighton. Over the same period, the net marginincreased by $13.9 million, due to $3.9 million of profit participation costs incurred in 2014 relating to the prior year, $4.3 million of favourable cost recoveriesrelating to the release of contingencies at the end of development phases in the second quarter of 2015 and a higher margin on acre sales achieved in 2015relative to prior year.


Regina, Saskatchewan


Lot revenue $ 13,451 $ 7,438 $ 28,104 $ 24,413Acre revenue $ 2,748 $ 8,200 $ 7,446 $ 16,826Total revenue $ 16,199 $ 15,638 $ 35,550 $ 41,239Gross margin $ 7,583 $ 6,324 $ 15,747 $ 17,734Gross margin (%) 46.8% 40.4% 44.3% 43.0%Net margin $ 6,646 $ 5,658 $ 12,955 $ 14,787Net margin (%) 41.0% 36.2% 36.4% 35.9%Lots sold 115 81 267 252Average selling price – lots $ 117,000 $ 92,000 $ 105,000 $ 97,000Undeveloped acres sold — — 45 —Developed acres sold 3 13 7 22Average selling price – undeveloped acres $ — $ — $ 19,000 $ —Average selling price – developed acres $ 916,000 $ 631,000 $ 943,000 $ 749,000

Lot and developed acre revenue was generated within our Harbour Landing community, which has been an active development since 2008. In the first quarterof 2015, 45 undeveloped acres were sold to the Saskatchewan Ministry of Highways and Infrastructure for $0.8 million for the development of roadinfrastructure. It is not in the normal course of business to sell undeveloped land acres, outside of infrastructure requirements by provincial or other governmentauthorities.

For the three months ended December 31, 2015, total revenues increased by $0.6 million over the prior year, primarily due to an increase in lot sale volumes,offset by a reduction in developed acre sales. The average selling price of acres sold in the three months ended December 31, 2015 increased compared tothe prior year due to differences in the type of acres sold. Over the same period, net margin increased by $1.0 million relative to 2014, as lots were sold fromlater phases of development, which generally yield more favourable margins.

For the year ended December 31, 2015, total revenue decreased by $5.7 million relative to the prior year due to a reduction in developed acre sales, whichwas partially offset by an increase in lot sales due to higher market absorption. The reduction in acre revenue was primarily due to fewer developed acressold. Net margin decreased by $1.8 million, mainly due to the aforementioned reasons as margin as a percentage of revenue remained consistent year overyear.

In December 2015, Regina’s City Council reached a landmark decision with the approval of a $1.4 billion Phasing & Financing Plan that will guide developmentwithin the city as the population grows to 300,000 people over the next 25 years. The plan establishes a complex policy framework for when and where newgreenfield communities can be built up to 2040. In accordance with the City’s approved growth sequencing system, in 2016, the Company is eligible to proceedwith completing the remaining undeveloped portions of its existing community of Harbour Landing and commencing development on more than 160 acresof its lands in Eastbrook (previously the Towns), a new neighbourhood in the City’s southeast quadrant.

Calgary, Alberta


Lot revenue $ 4,094 $ 19,566 $ 5,307 $ 19,696Acre revenue $ — $ — $ — $ 1,500Total revenue $ 4,094 $ 19,566 $ 5,307 $ 21,196Gross margin $ 1,434 $ 10,203 $ 2,401 $ 10,897Gross margin (%) 35.0% 52.1% 45.2% 51.4%Net margin $ 1,332 $ 9,541 $ 187 $ 8,416Net margin (%) 32.5% 48.8% n/a 39.7%Lots sold 28 76 38 77Average selling price – lot units $ 146,000 $ 257,000 $ 140,000 $ 256,000Acres sold — — — 1Average selling price – acres $ — $ — $ — $ 1,200,000

In the three months ended December 31, 2015, revenue and net margin were generated primarily as a result of achieving our first sales within our developmentin Crossfield, a community north of Airdrie. Lot sales in the prior year were primarily generated from our Evansridge community in Calgary, which was windingdown and had been an active development from 2010 to 2013 and accordingly had no remaining inventory supply available for sale in 2015.

In the three months ended December 31, 2015, lot revenue and net margin decreased by $15.5 million and $8.2 million respectively, primarily due to fewerlot sales and a lower margin earned on lots sold in Crossfield relative to lot sales in our Evansridge development which are not comparable communities.


In the year ended December 31, 2015, total revenue and net margin decreased by $15.9 million and $8.2 million respectively, due to the lower volume of lotsales as a result of lower supply. In addition to sales in Crossfield, there were 10 lots sales in High River in the year ended December 31, 2015. These lots hadbeen serviced in prior periods, and the sales were attributable to increased demand from one builder. We continue to expect servicing and sales to increasein High River once the market is ready to absorb higher volumes of new inventory.

Edmonton, Alberta


Lot revenue $ 5,432 $ 28,595 $ 34,810 $ 41,666Acre revenue $ — $ 3,280 $ 5,993 $ 15,333Total revenue $ 5,432 $ 31,875 $ 40,803 $ 56,999Gross margin $ 1,674 $ 11,404 $ 11,292 $ 24,028Gross margin (%) 30.8% 35.8% 27.7% 42.2%Net margin $ 1,263 $ 11,018 $ 9,213 $ 22,329Net margin (%) 23.3% 34.6% 22.6% 39.2%Lots sold 48 217 265 311Average selling price – lot units $ 113,000 $ 132,000 $ 131,000 $ 134,000Acres sold — 3 7 15Average selling price – acres $ — $ 1,093,000 $ 856,000 $ 998,000

The Meadows is our active development in Edmonton with 204 remaining acres to develop as at December 31, 2015, which we expect to remain involved inthrough 2022. This includes our Laurel, Maple Crest and Tamarack communities.

In the three months ended December 31, 2015, total revenue and net margin decreased by $26.6 million and $9.8 million respectively, primarily due to fewerlots sold relative to 2014 as a result of lower lot supply. In 2015, lots were registered earlier in the fiscal year, whereas lot registration in the prior year occurredlate in the fourth quarter.

In the year ended December 31, 2015, total revenue decreased by $16.2 million over the prior year due to a reduction in volume of lot and acre sales withinour Meadows community, consistent with management expectations. Net margin decreased by $13.1 million, due to the reasons discussed above, an additional$2.3 million of reserves taken at the end of development phases in the second quarter of 2015 and a lower margin realized on acre sales relative to the prioryear.

Retail Development

In the year ended December 31, 2015, Dream achieved approximately 63,000 square feet of retail occupancies within its Tamarack development in theMeadows community in Edmonton, Alberta. Dream has been actively developing over 1,400 acres of residential land within the Meadows since 1997.Altogether, the three retail sites within the Meadows (Tamarack North East, Tamarack South East and Tamarack North) comprise approximately 18 acres and184,400 square feet of GLA upon completion. Management expects that the properties are on track to be fully leased by their expected completion dates in2017 and 2018.

Tamarack North, which achieved first tenant occupancy in the three months ended December 31, 2015, is a 3.2 acre parcel with 25,000 square feet of GLAcurrently in active development. Lease commitments within Tamarack North as at December 31, 2015 total 16,000 square feet and include Petro Canada andMcDonald's. As at December 31, 2015, Dream has committed leases for approximately 72% of the aggregate GLA for all three Tamarack sites, compared to61% at September 30, 2015.

The achievement of first tenant occupancy within our properties under development, demonstrates a change of intent in use of the land, which result in achange in classification under IFRS from land inventory (held at cost) to investment properties (held at fair value). As a result, Dream recognized non-cash fairvalue gains of $1.9 million and $12.0 million on its Tamarack sites in the three and twelve months period ended December 31, 2015 within fair value changesof investment properties in the statement of operations. The fair value gains were recognized by transferring the carrying value of land under development(representing the accumulated costs of land and development costs) to investment properties and recording the gain to increase the total carrying value ofthe retail development to its fair value. Dream expects to recognize similar gains, if achieved, on future developments constructed on its own land when theinitial occupancy occurs for retail tenants. Further changes in the fair value of the Tamarack developments, and other future developments subsequent toinitial recognition will be treated in a consistent manner.

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


In 2016, we expect to commence construction of our 6.5 acre South Kensington retail site, located in Saskatoon. Our South Kensington master plannedcommunity is approximately 140 acres in total and will also include home and multi-family lot development by Dream. Anchor tenants for the site include:Shoppers Drug Mart and Save on Foods. Construction is expected to commence in the second quarter of 2016.

In the three months ended December 31, 2015, Dream obtained a combined construction facility of $18.0 million for our South Kensington developmentincluding letters of credit. The construction facility bears interest at prime plus 0.50% or the banker's acceptance rate plus 2%. Our Tamarack retail developmenthas financing established with maximum credit available of $53.7 million to be used for internal servicing of the project land, project costs and the developmentof the three Tamarack retail development projects and to provide letters of credit to municipal and other government authorities. The Tamarack constructionloan bears interest at the banker's acceptance rate plus 2%. As at December 31, 2015, approximately $30.0 million of construction loans were outstandingwith respect to both Tamarack and South Kensington retail developments.

Highlights of Dream's active retail development projects as at December 31, 2015 are shown in the table below. Including the active projects below, DreamCentres, our internal retail development division, is actively developing 137 acres in Western Canada that are at various stages of approvals. Our developmentand leasing team is also evaluating the potential of developing retail on an additional 300 acres of land currently owned by Dream.

Active Retail Projects under Construction

Balance sheetclassification as atDecember 31, 2015

Measurementfor

accountingpurposes

Estimatedacres todevelop

EstimatedGLA at

completionCommitted

leases(1)Committed

Leases %

Weightedaverage

lease term(2)

EstimatedStabilized

NOI atcompletion(3)

DevelopmentYield

on Cost(3)

Estimatedcompletion

date

Saskatoon

South Kensington Land underdevelopment

Cost 6.5 72,000 55,139 76.6% 17.7 2018

Edmonton

Tamarack NorthEast Investment properties Fair value 5.6 62,600 28,645 45.8% 13.9 2018

Tamarack North Investment properties Fair value 3.2 24,900 16,059 64.5% 17.4 2017Tamarack SouthEast Investment properties Fair value 9.1 96,900 88,606 91.4% 10.8 2017

24.4 256,400 188,449 73.5% 13.9 $ 6,500 8.2%

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

Estimated costof development,including land(3)

Costsincurred to

date

Estimatedcosts to

complete(3)

Estimatedvalue upon

completion(3)

Estimatedcost per

square foot

Estimatedvalue per

square footupon

completion

SaskatoonSouth Kensington Shoppers Drug Mart, Save-On Foods $ 19,000 $ 3,700 $ 15,300 $ 29,300 $ 264 $ 407

EdmontonTamarack North East GoodLife Fitness 18,600 9,100 9,500 25,000 297 399Tamarack North Petro Canada, McDonald's 7,100 3,700 3,400 11,600 285 466Tamarack South East Michaels, Sport Chek, Shoppers Drug

Mart, Tim Hortons, Liquor Depot35,000 24,100 10,900 41,100 361 424

$ 79,700 $ 40,600 $ 39,100 $ 107,000 $ 311 $ 417(1) Committed leases represent the GLA under an agreement to lease between a tenant and the Company as at December 31, 2015. (2) The weighted average lease term is from the commencement date of the committed lease and excludes renewal options.(3) Refer to page 42 for definitions of Non-IFRS Measures for the Estimated Cost of Development, Estimated Costs to Complete, Estimated Value Upon Completion, Development Yield, and Estimated

Stabilized NOI.


Housing Development

As at December 31, 2015, our housing inventory consisted of 423 units, under various stages of construction and lots held for future development, inSaskatchewan and Alberta, Canada. The carrying value of our housing inventory decreased by $23.4 million or 32.7% as at December 31, 2015 from $71.6million as at December 31, 2014, due to unit occupancies, partially offset by transfers from the land division and development activities throughout the period.

(in thousands of dollars, except units) Year ended December 31, 2015

Saskatoon Regina Calgary Total

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

Balance of inventory, December 31, 2014 143 $ 25,304 287 $ 46,284 — $ — 430 $ 71,588Acquisitions 1 365 2 175 — — 3 540Transfers from land development 25 1,867 156 9,222 19 2,313 200 13,402Development — 6,908 — 13,574 — 270 — 20,752Housing units occupied (80) (19,608) (129) (37,916) — — (209) (57,524)Other (1) (591) — — — — (1) (591)

Balance of inventory, December 31, 2015 88 $ 14,245 316 $ 31,339 19 $ 2,583 423 $ 48,167

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

(number of units) December 31, 2015 December 31, 2014Total units under construction 111 270Total units held for future construction 312 160Total units in inventory 423 430

Results of Operations – Housing


Housing units occupied 41 59 209 219Revenue(1) $ 15,083 $ 24,274 $ 82,598 $ 93,111Gross margin(1) $ 2,636 $ 4,875 $ 14,812 $ 19,010Gross margin (%) 17.5% 20.1% 17.9% 20.4%Net margin(1) $ 170 $ 1,780 $ 3,507 $ 7,746Net margin (%) 1.1% 7.3% 4.2% 8.3%Average selling price – housing units $ 368,000 $ 411,000 $ 395,000 $ 425,000Average square foot of housing unitsoccupied 1,328 1,452 1,415 1,512

Average selling price per square foot foroccupied units

$ 277 $ 283 $ 279 $ 281(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the year. The revenue and

net margin recognized in both the land and housing divisions, have been eliminated on consolidation. For more details, please refer to page 10 of this MD&A.

In the year ended December 31, 2015, the Company achieved 209 unit occupancies (80 in Saskatoon; 129 in Regina), down slightly from 219 unit occupancies(97 in Saskatoon and 122 in Regina) in the prior year. Volumes achieved in 2015 were in line with management’s expectations for the year. Revenues declinedby $10.5 million as a result of lower volumes and lower average selling prices from the occupancy of smaller homes relative to the prior year. Net margindeclined by $4.2 million due to the factors discussed above, as well as slightly higher interim direct costs on inventory sold and occupied during the periodrelative to the prior year. The reported net margin percentage at 1.1% and 4.2% for the three and twelve month periods ending December 31, 2015, respectivelyare below the historical margins earned and targeted by management. The housing division is in transition as the Company continues to implement processchanges that will enable the Company to focus on planning the best communities and having the most competitive housing platform in the markets in whichit operates in terms of product offering, customer satisfaction and profitability. Accordingly, the Company expects to see the results of these efforts realizedin future years as new inventory is developed and sold in line with its revised operating model.

In the fourth quarter of 2015, the homebuilding division commenced Dream’s first homes in Calgary’s northwest community of Evansridge. Evansridge is afamily-oriented master-planned community developed by the Company’s land division with an extensive network of pathways and green spaces. It forms partof the larger neighbourhood of Evanston, one of the fastest-growing and most attractive neighbourhoods in the City. Construction activity had commencedon all 19 of Dream’s lots in Evansridge by the end of January 2016, with our first housing occupancies also expected in 2016.


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

Saskatoon, Saskatchewan


Housing units occupied 10 26 80 97Revenue(1) $ 3,641 $ 10,110 $ 31,717 $ 38,760Gross margin(1) $ 596 $ 2,271 $ 6,449 $ 8,688Gross margin (%) 16.4 % 22.5% 20.3% 22.4%Net margin(1) $ (290) $ 853 $ 1,539 $ 4,165Net margin (%) (8.0)% 8.4% 4.9% 10.7%Average selling price – housing units $ 364,000 $ 389,000 $ 396,000 $ 400,000Average square foot of housing unitsoccupied 1,343 1,404 1,430 1,455


$ 271 $ 277 $ 277 $ 275(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the period. Revenue (and

net margin) results of $1.1 million ($0.5 million) and $8.9 million ($3.6 million) in the three and twelve months ended December 31, 2015 and $2.7 million ($1.0 million) and $10.0 million ($3.5 million)in the same period in the prior year, recognized in both the land and housing divisions, have been eliminated on consolidation. For more details please refer to page 10 of this MD&A.

Housing units occupied during the year ended December 31, 2015 were sold primarily from Stonebridge and South Kensington.

During the three months ended December 31, 2015, revenue decreased by $6.5 million due to a reduction in occupancies and lower average selling pricesfrom the sale of smaller homes, relative to the prior year. Over the same time period, net margin declined by $1.1 million due to the aforementioned reasons.Net margin at a percentage of revenues was negative 8.0% for the three months ended December 31, 2015, as fixed costs incurred during the period werenot able to be absorbed by the lower level of occupancies during the period.

During the year ended December 31, 2015, revenue decreased by $7.0 million compared to the prior year, primarily due to a reduction in occupancies. Grossand net margin declined by $2.2 million and $2.6 million, respectively due to the reduction in occupancies, higher interim direct costs as well as slightly loweraverage selling prices from the sale of smaller homes relative to the prior year.

Regina, Saskatchewan


Housing units occupied 31 33 129 122Revenue(1) $ 11,442 $ 14,164 $ 50,881 $ 54,351Gross margin(1) $ 2,040 $ 2,586 $ 8,363 $ 10,304Gross margin (%) 17.8% 18.3% 16.4% 19.0%Net margin(1) $ 460 $ 911 $ 1,968 $ 3,565Net margin (%) 4.0% 6.4% 3.9% 6.6%Average selling price – housing units $ 369,000 $ 429,000 $ 394,000 $ 446,000Average square foot of housing unitsoccupied 1,323 1,490 1,402 1,559


$ 279 $ 288 $ 281 $ 286(1) Results include land revenues and net margin on internal lot sales to our housing division as the homes have been sold to external customers by the housing division during the period. Revenue (and

net margin) results of $1.4 million ($0.5 million) and $5.9 million ($1.8 million) in the three and twelve months ended December 31, 2015 and $1.8 million ($0.6 million) and $4.7 million($1.5 million)in the same period in the prior year, recognized in both the land and housing divisions, have been eliminated on consolidation. For more details please refer to page 10 of this MD&A.

Housing units occupied during the year ended December 31, 2015 occurred within Harbour Landing, Westhill Park and the Creeks.

During the three months ended December 31, 2015, revenue and net margin decreased by $2.7 million and $0.5 million, respectively due to lower averageselling prices relative to the prior year, which resulted from a combination of market-level discounts and the sale of smaller homes.

During the year ended December 31, 2015, revenue and net margin decreased by $3.5 million and $1.6 million, respectively, compared to the prior year,primarily due to the factors discussed above.


Condominium Development

As at December 31, 2015 our condominium inventory consisted of 2,282 units in projects under and/or in pre-construction, with 1,284 units held throughdirect ownership (532 units at Dream’s share) and 998 units held through equity accounted investments (482 units at Dream’s share).

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

(in thousands of dollars, except units) Year ended December 31, 2015

Direct ownershipEquity accounted

investments Total

Balance of inventory, December 31, 2014 $ 75,515 $ 283,610 $ 359,125Acquisitions 1,345 20,538 21,883Development 56,312 32,489 88,801Condominium units occupied (45,496) (7,448) (52,944)Cost recoveries, net of tax and holdbacks — (220,000) (220,000)Transfers from land inventory 3,647 — 3,647Other — — —Balance of inventory, December 31, 2015 $ 91,323 $ 109,189 $ 200,512

For the year ended December 31, 2015, the carrying value of the directly owned condominium inventory increased by $15.8 million as a result of developmentspending on projects under construction, net of occupancies that commenced at The Carlaw and The Carnaby.

Included within equity accounted investments is $109.2 million of condominium inventory within the Canary District (Dundee Kilmer) and Dream Windmilldevelopments, described on page 30 of this MD&A.

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

For the three months ended December 31, 2015 For the three months ended December 31, 2014

Attributable to DreamDirectlyowned

Equityaccounted

investments TotalDirectlyowned

Equityaccounted

investments Total

Revenue $ 4,747 $ 1,540 $ 6,287 $ 2,618 $ — $ 2,618Gross margin(1) $ 145 $ 361 $ 506 $ 166 $ — $ 166Gross margin (%) 3.1% 23.4% 8.0% 6.3% n/a 6.3%Selling, marketing and other indirect costs (656) (845) (1,501) (1,699) (619) (2,318)Net margin $ (511) $ (484) $ (995) $ (1,533) $ (619) $ (2,152)Net margin (%) (10.8)% (31.4)% (15.8)% (58.6)% n/a (82.2)%Condominium occupancies (units) 13 4 17 3 — 3Per unit(2) $ 303,000 $ 284,000 $ 294,000 $ 530,000 $ — $ 530,000Per square foot $ 515 $ 510 $ 510 $ 573 $ 245 $ 654

For the year ended December 31, 2015 For the year ended December 31, 2014

Attributable to DreamDirectlyowned

Equityaccounted

investments TotalDirectlyowned

Equityaccounted

investments Total

Revenue $ 61,492 $ 9,468 $ 70,960 $ 73,475 $ 180 $ 73,655Gross margin(1) $ 13,150 $ 2,021 $ 15,171 $ 22,020 $ (26) $ 21,994Gross margin (%) 21.4% 21.3% 21.4% 30.0% n/a 30.0%Selling, marketing and other indirect costs (3,941) (2,349) (6,290) (3,774) (1,685) (5,459)Net margin $ 9,209 $ (328) $ 8,881 $ 18,246 $ (1,711) $ 16,535Net margin (%) 15.0% (3.5)% 12.5% 24.8% n/a 22.4%Condominium occupancies (units) 185 28 213 172 — 172Per unit(2) $ 303,000 $ 306,000 $ 304,000 $ 381,000 $ 530,000 $ 382,000Per square foot $ 475 $ 475 $ 475 $ 505 $ 670 $ 506

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

In the three and twelve months ended December 31, 2015, revenue of $4.7 million and $61.5 million was generated primarily from occupancies at The Carnabyand The Carlaw. In the three months ended December 31, 2015, $0.5 million of negative net margin was incurred within the Company's directly ownedcondominium activities, as a result of approximately $1.4 million of cost and revenue adjustments incurred. These adjustments primarily related to additionalcost reserves taken at The Carnaby based on slightly extended development timelines and a reduction in our fee revenue at The Carlaw, which was adjusted


upon the project's closing in December 2015. Despite such adjustments, we anticipate The Carlaw and The Carnaby to deliver an estimated net margin ofapproximately 18% at the project level. In the year ended December 31, 2015, our net margin across directly owned and equity accounted investments included$3.4 million of marketing expenses related to condominium projects expected to occupy in future periods, which are required to be expensed as they areincurred. Excluding these costs, our net margin as a percentage of revenues would have been reported at 17%, which is more in line with our targeted returns.

As at December 31, 2015, The Carlaw was fully sold out and all units were occupied. The Carnaby was 98% sold with the remainder of units expected to occupythrough to the third quarter of 2016.

When compared to the Gooderham project in the Distillery District in downtown Toronto, which was in occupancy during the year ended December 30, 2014,The Carlaw and The Carnaby have lower average selling prices due to smaller unit sizes, as a result of relative neighbourhood location and building amenities.

Owned Condominiums and Results of Pre-Sale Activity for CondominiumsThe results of our sales or pre-sales activity for condominium projects, which are in the marketing, development or construction phases is summarized below.These exclude condominium projects, which are in pre-development. Included in our development pipeline below are 2,282 units in inventory as atDecember 31, 2015 (1,014 at Dream's share).

Project Ownership StatusDream

Ownership % Development# Units (at

Project Level)

Units in inventoryas at

December 31, 2015

% Units Sold orPre-Sold as at

December 31, 2015Expected Closing

The Carlaw Direct/Equity Accounted Closed 25% Toronto Condo 313 — 100% 2015

The Carnaby DirectIn Occupancy/Construction 50% Toronto Condo 437 226 98% 2016

Canary District Equity Accounted Construction 50% Toronto Condo 810 810 87% 2016

1220 Dundas Direct/Equity Accounted Construction 25% Toronto Condo 96 96 96% 2016

20 Gladstone Direct Construction 50% Toronto Condo 113 113 97% 2016

646 Kingston Road Direct Pre-Construction 50% Toronto Condo 108 108 59% 2017

Riverside Square-Phase I Direct Pre-Construction 25% Toronto Condo 672 672 77% 2017

Sub-total, condominium projects closing before 2017 2,549 2,025 87%

Other projects Direct/Equity Accounted Various 25% to 100%W. Canada &Toronto Condo 257 257 26% 2017 – 2019

2,806 2,282 82%

Asset Management and Management Services

We provide asset management and management services to four publicly listed funds, our renewable power business and various institutional partner/third-party real estate and development assets. As at December 31, 2015, Dream managed assets with a value of approximately $15 billion (December 31, 2014 –$14.6 billion). For additional details refer to Note 29 of the consolidated financial statements for the year ended December 31, 2015.

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

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

Asset Management and Management Services AgreementThe majority of income earned from our asset management and management services segment for the year ended December 31, 2015 was generated fromthree publicly listed vehicles (Dream Alternatives, Dream Global REIT, Dream Industrial REIT), as well as fees earned on assets held through institutionalpartnerships and development fees earned on condominium projects in Toronto and Ottawa. Asset management (for which base fees are generated) includesthe overall management of the listed funds’ businesses, including the provision of a Chief Executive Officer and Chief Financial Officer and overseeing theoperations of accounting and property management. As the asset manager, Dream also provides acquisition and disposition personnel and, on a cost recoverybasis, oversees debt and equity financing. Dream has not reached benchmarks to earn incentive fees as at December 31, 2015.


Details of the fee structure for Dream Global REIT and Dream Industrial REIT are included below.

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

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

• Financing fee equal to 0.25% of the debt and equity of all financing transactions completed; the financing fee is adjusted on an annual basis toensure the fee does not exceed the amount of actual expenses incurred by Dream in supplying services relating to financing transactions.

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

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

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

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

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

• Disposition fee equal to 0.25% of the gross sale proceeds of any asset (including all indebtedness) sold by Dream Alternatives or any subsidiaryrepresented by loans, investments, assets or projects disposed of during the fiscal year, including any part of the initial assets, except for the dispositionof individual loans having a term to maturity of 12 months or less, (other than as part of a portfolio disposition) or the disposition of assets (otherthan initial assets unless approved by the independent trustees) acquired in the preceding 12 months and excluding the regular and scheduledrepayment of loans.

Breakdown of Fees EarnedThe following table summarizes the types of fees included in asset management and management services revenue, including those further described in Note39 of the Company's consolidated financial statements as at December 31, 2015:


Fees earned from publicly listed funds Base asset management fees – cash $ 4,744 $ 9,162 $ 23,535 $ 30,976 Base asset management fees – deferred units(1) 308 428 1,318 1,971 Acquisition fees and other 1,948 1,374 5,117 5,328Total fees earned from asset management agreementswith publicly listed funds 7,000 10,964 29,970 38,275

Development and other asset management fees 2,389 — 4,014 1,592$ 9,389 $ 10,964 $ 33,984 $ 39,867

(1) The consideration received for a portion of the asset management services provided to Dream Global REIT is received in deferred trust units of Dream Global REIT. The deferred trust units carry afive year vesting condition from the date of grant. As a result, the deferred trust units are recorded, when earned, at a discount to the publicly traded price. This discount fluctuates each periodbased on observable inputs and as a result, the amount of revenue recognized by Dream will fluctuate year over year based on the changes in the discount rate applied. The inputs used to determinethe discount applied to the deferred trust units is outlined in Note 34 of the consolidated financial statements for the year ended December 31, 2015.

In the three and twelve months ended December 31, 2015, base asset management fees earned from publicly listed funds decreased by $4.4 million and $7.4million, respectively relative to 2014 due to the reorganization of the asset management agreement with Dream Office REIT. Acquisition fees earned frompublicly listed funds increased by $0.6 million and decreased by $0.2 million in the three and twelve months ended December 31, 2015 due to the volume ofactivity within the funds, which can fluctuate period over period.

Included in development and other asset management fees in the three and twelve months ended December 31, 2015 were $1.7 million and $2.6 millionrespectively, of fees earned from institutional partnerships. The remaining fees were generated from the management and oversight over certain real estatedevelopment projects in Toronto and Ottawa. In the comparative period, the Company reported development fees from these arrangements undercondominium revenues.


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


Salary and other compensation $ 1,237 $ 1,936 $ 5,167 $ 9,678Corporate, service and professional fees 644 236 2,196 587General office and other operating costs 24 (15) 775 1,218

$ 1,905 $ 2,157 $ 8,138 $ 11,483

In the three and twelve months ended December 31, 2015, expenses decreased by $0.3 million and $3.3 million from the prior year primarily due to theimpact of the reorganization of the management services agreement with Dream Office REIT. For additional details on the reorganization of the Dream OfficeREIT asset management contract, please refer to Note 39 of the consolidated financial statements for the year ended December 31, 2015. Results of Operations – Asset Management and Management Services


Revenue $ 9,389 $ 10,964 $ 33,984 $ 39,867Net margin $ 7,484 $ 8,807 $ 25,846 $ 28,384Net margin (%) 79.7% 80.3% 76.1% 71.2%

During the three and twelve months ended December 31, 2015, net margin decreased by $1.3 million and $2.5 million respectively, due to the reorganizationof the asset management agreement with Dream Office REIT, partially offset by higher fee income from new developments and other asset managementarrangements entered into in 2015, as discussed above. Refer to the Investment and Other Income section on page 24 for further details on the cash-flowgenerated from distributions earned on the 4,850,000 LP Class B Units, of Dream Office REIT LP received as part of the Dream Office REIT reorganization.

Investment and Other Income

A summary of the components of investment and other income are presented below.


Investment income related to publicly listed funds $ 6,524 $ 553 $ 10,042 $ 2,458Interest income on receivables 521 244 2,204 1,934Other income(1) 422 461 1,120 1,488

$ 7,467 $ 1,258 $ 13,366 $ 5,880(1) Includes investment income primarily from land and condominium.

Breakdown of Investment Income

The breakdown of investment income is as follows:


Investment income earned on investments inpublicly listed fundsDream Office REIT $ 6,105 $ 227 $ 8,149 $ 908Dream Global REIT 252 280 1,036 1,120Dream Global REIT, deferred trust units 150 46 812 430Dream Alternatives 17 — 45 —

$ 6,524 $ 553 $ 10,042 $ 2,458

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

Dream Office REIT (TSX: D.UN) is an unincorporated real estate investment trust and operates high-quality, affordable business premises in key markets acrossCanada. It is focused on owning, acquiring, leasing and managing urban and suburban office properties in Canada. Dream Global REIT (TSX: DRG.UN) is anunincorporated, open-ended real estate investment trust that provides investors with the opportunity to invest in commercial real estate exclusively outsideof Canada. Dream Alternatives (TSX: DRA.UN) is a mutual fund trust focused on hard asset alternative investments including real estate, real estate lendingand infrastructure and renewable power. Refer to Note 6 of the consolidated financial statements for the year ended December 31, 2015 for more information.


In the three months ended, December 31, 2015, the Company revised its basis of measurement for assessing the proportion of return of capital on cashdistributions from units held in Dream Office REIT, Dream Global REIT and Dream Alternatives. As a result, investment income of $3.6 million from the ninemonths ended September 30, 2015 was recognized in the fourth quarter of 2015. Management is of the view that the change of measurement provides morerelevant information to users in assessing realized investment returns over time. For further details, refer to Note 3 and 6 of the December 31, 2015 consolidatedfinancial statements.

Investments in Listed Funds

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


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

Currentannual

distributionper unit

Current annualpre-tax cash

flowdistributions

Investment incomerecognized in year

ended December 31,2015 Units

Market price as atDecember 31, 2015 Fair Value

Dream Office REIT $ 2.24 $ 1,734 $ 1,248 773,939 $ 17.37 $ 13,443Dream Office REIT LP B $ 2.24 $ 11,724 $ 6,901 5,233,823 $ 17.37 $ 90,912Dream Global REIT $ 0.80 $ 2,240 $ 1,036 2,800,000 $ 8.66 $ 24,248Dream Global REIT, deferred trust units $ n/a $ n/a $ 812 1,792,344 $ n/a $ 10,609Dream Hard Asset Alternatives Trust $ 0.40 $ 726 $ 45 1,815,600 $ 5.68 $ 10,313

$ 16,424 $ 10,042 $ 149,525

Refer to Note 34 of the consolidated financial statements for the year ended December 31, 2015 for details on the fair value measurement approach for theDream Global REIT deferred trust units.

Investment and Recreational Properties

Our investment properties include interests in commercial and retail properties consisting of approximately 527,000 square feet of GLA, excluding parking,which include the Distillery District, Western Canada retail developments and jointly controlled entities. Recreational properties include a ski resort in Colorado,a golf course in Saskatoon and a hotel in development in Toronto. These properties are held to generate rental income and for capital appreciation.

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

Year ended December 31, 2015

(in thousands of Canadian dollars)Investmentproperties

Recreationalproperties Total

Balance, December 31, 2014 $ 94,072 $ 26,970 $ 121,042Additions 38,298 8,230 46,528Disposals (2,104) (6,595) (8,699)Fair value adjustments 11,158 — 11,158Amortization (47) (2,398) (2,445)Other — 2,824 2,824Balance, December 31, 2015 $ 141,377 $ 29,031 $ 170,408


Revenue $ 10,371 $ 9,864 $ 44,073 $ 43,041Net margin $ 588 $ 903 $ 4,844 $ 4,539Net margin (%) 5.7% 9.2% 11.0% 10.5%


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

Nature of Business Location Direct Ownership % December 31, 2015 December 31, 2014Distillery District(1) Historical heritage district Toronto 50% $ 90,481 $ 90,468Thornhill Woods Land and housing Toronto 30% 1,981 1,981Carlaw Rental office building Toronto 25% — 1,623Tamarack North, North East andSouth East Retail Western Canada 100% 48,915 —

Total investment properties $ 141,377 $ 94,072Total debt related to investment properties (74,287) (26,886)

(1) Includes retail space in our condominium developments and parking space.

The carrying value of our investment properties increased to $141.4 million as at December 31, 2015 from $94.1 million as at December 31, 2014. Theincrease of $47.3 million was primarily attributable to the transfer of our Tamarack retail developments from land under development (held at cost) toinvestment properties (held at fair value) during the year ended December 31, 2015, and their subsequent fair value adjustments, net of the sale of TheCarlaw which is discussed below. For details of the transfers, refer to page 17 of this MD&A.

In the three and twelve months ended December 31, 2015, the Company sold its interest in The Carlaw, a rental office building in Toronto, Ontario to DreamAlternatives for gross proceeds of $2.1 million. The Company recognized a loss of $0.1 million as a result of the sale.

December 31, 2015 December 31, 2014Number of commercial properties(1) 18 16Total commercial area (sq. ft.)(1),(2) 527,000 534,000Total parking stalls 484 556Range for terminal capitalization rate 5.75%–6.50% 5.75%–6.75%

(1) The above includes 63,000 square feet of GLA related to the portion of the Company's retail development in Western Canada, that has been occupied by tenants. The Company will include theadditional 121,400 square feet of GLA at Tamarack sites as it is constructed and completed. See Retail Development on page 17 of this MD&A for further details.

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

The operating results of investment properties are summarized below.


Toronto

WesternCanada

Retail 2015 2014 Toronto

WesternCanada

Retail 2015 2014

Revenue $ 2,347 $ 441 $ 2,788 $ 2,506 $ 9,408 $ 687 $ 10,095 $ 8,548

Distillery District 1,403 — 1,403 1,563 5,370 — 5,370 4,237 Other investment properties 17 401 418 19 265 345 610 53Total net operating income 1,420 401 1,821 1,582 5,635 345 5,980 4,290Net operating income % 60.5% 90.9 % 65.3% 63.1% 59.9% 50.2% 59.2% 50.2%

Total net margin $ 764 $ (158) $ 606 $ 838 $ 3,338 $ (1,675) $ 1,663 $ 2,618Net margin (%) 32.6% (35.8)% 21.7% 33.4% 35.5% n/a 16.5% 30.6%Fair value changes ininvestment properties

$(501)

$1,836

$1,335

$21,043

$(817)

$11,975

$11,158

$28,369

Net segment earnings $ 263 $ 1,678 $ 1,941 $ 21,881 $ 2,521 $ 10,300 $ 12,821 $ 30,987

In the three months ended December 31, 2015, net operating income from investment properties increased by $0.2 million from the prior year primarily dueto increased occupancy within our Western Canada retail properties. In the year ended December 31, 2015, net operating income from investment propertiesincreased by $1.7 million primarily due to increases in base rent and occupancy at the Distillery District and the addition of income generated from WesternCanada retail properties. Our Western Canada retail properties are under development and will not be fully income producing until their estimated completiondates in 2017 and 2018. For further details see the table on page 18 of this MD&A.

Overall, net margin as a percentage of revenue decreased in the three and twelve months ended December 31, 2015, due to higher overhead costs incurredfrom growth and added capabilities in our retail division. The decrease of $19.9 million and $18.2 million in net segment earnings in the three and twelvemonths ended December 31, 2015 compared to the prior year, was due to a fair value increase of $21.0 million and $28.4 million recognized with respect tothe Distillery District in the comparative prior periods.


Recreational PropertiesThe carrying value of recreational properties is summarized below.

Direct Ownership % December 31, 2015 December 31, 2014Operational recreational properties:

King Edward Hotel (Ontario) 9% $ — $ 5,710Willows Golf Course (Saskatchewan) 100% 2,814 2,852Arapahoe Basin ski hill (Colorado) 100% 19,328 14,553

Recreational properties under development:Broadview Hotel (Ontario) 50% 6,889 3,855

Total recreational properties $ 29,031 $ 26,970Total debt related to recreational properties $ (7,337) $ (6,304)

In the three and twelve months ended December 31, 2015, the Company disposed of its remaining 9% interest in the King Edward Hotel in downtown Torontofor net cash proceeds of $5.2 million recognizing a pre-tax gain of $2.3 million in the statement of earnings. The carrying value of recreational propertiesincreased to $29.0 million as at December 31, 2015 from $27.0 million as at December 31, 2014, primarily due to capital additions at Arapahoe Basin, relatedto the construction of a new Kids Centre, and Broadview Hotel renovations partially offset by the sale of the Company's interest in the King Edward Hotel.

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

Ownership interest

Current status

Last season opening date

Last season closing date

Willows Golf Course (Saskatchewan) 100% Closed 15-Apr-15 25-Oct-15Arapahoe Basin ski hill (Colorado) 100% Open 29-Oct-15 14-Jun-15Broadview Hotel (Ontario) 50% Under development n/a n/a

The operating results of recreational properties is summarized below.


Revenue $ 7,583 $ 7,358 $ 33,978 $ 34,493Net margin, excluding depreciation 813 854 6,519 4,726Net margin, including depreciation $ (18) $ 65 $ 3,181 $ 1,921Net margin, (%) (0.2)% 0.9% 9.4% 5.6%

(1) Included in net margin for recreational properties is depreciation of $0.8 million and $3.3 million in the three and twelve months ended December 31, 2015 (three and twelve months ended December31, 2014 – $0.8 million and $2.8 million).

In the three and twelve months ended December 31, 2015, $7.6 million and $34.0 million of revenue was earned, primarily from Arapahoe Basin, which hadfavourable weather conditions during 2015, resulting in approximately 458,000 skier visits in 2015, an increase of 6% from the prior year. In addition to theincreased ski hill volume, the Company has experienced favourable returns from the operations at Arapahoe Basin due to the appreciation of the US dollar,which has increased by approximately 15% since 2014. Results from Arapahoe Basin are subject to seasonality, and the third and fourth quarters are seasonallylower periods of income generation.

Net margin for the three months ended December 31, 2015, compared to the prior year, remained relatively stable. For the year ended December 31, 2015,the decrease in revenue was partially attributed to lower transient parking revenue, which is non-recurring in nature. The increase in net margin of $1.3million for the year ended December 31, 2015 compared to 2014, was attributable to stronger results from Arapahoe Basin.

The gain of $2.3 million recognized upon the Company's disposition of its remaining ownership in the King Edward Hotel was recognized below net marginand is excluded from the above segmented results.

Equity Accounted Investments

The Company has entered into certain arrangements in the form of jointly controlled entities, primarily for the development of condominium and investmentproperties and for renewable energy investments. These entities include restrictions on the ability to access assets without the consent of all partners andthrough distribution conditions outlined in partnership agreements. These arrangements are accounted for under the equity method. Our share of earningsfrom equity accounted investments is included in earnings for each period. Earnings from each of the equity accounted investments may fluctuate significantlydue to the nature of their operations, and may depend on market forces or other operating conditions that may not necessarily be under our direct control.The carrying value of our equity accounted investments increased to $106.8 million as at December 31, 2015, compared to $90.8 million as at December 31,2014.


In the year ended December 31, 2015, the Company recognized its share of losses of $0.5 million from these arrangements (the year ended December 31,2014 – earnings of $0.3 million) primarily as a result of $7.0 million of impairment losses recognized in Firelight LP and $1.7 million of losses on Dundee KilmerDevelopment LP as a result of sales and marketing expenses related to 810 condo units to be expensed as incurred. The following tables summarize theCompany’s proportionate share of revenues, earnings (losses) and cash flows from operations in other equity accounted investments for 2015 and 2014.

For the three months ended December 31, 2015Dundee KilmerDevelopments

LP

FirelightInfrastructure

Partners LPDistillery

Restaurants LPDream

Windmill

DreamCMCC Funds

I and II Other Total

Project level (at 100%) Revenues $ 5 $ 17,288 $ 9,724 $ — $ 9,193 $ 1,026 $ 37,236 Earnings (losses) (1,031) (2,440) 898 (2,506) 668 52 (4,359) Cash flows from operations(1) (1,031) 10,143 1,231 (2,506) 809 57 8,703Dream's ownership interestAttributable to Dream: 50% 20% 50% 50% 9%–40% 18%–78%

Revenues $ 3 $ 3,457 $ 4,863 $ — $ 1,708 $ 513 $ 10,544Earnings (losses) (516) (488) 449 (297) 183 (73) (742)Cash flows from operations(1) (516) 2,029 615 (297) 209 (72) 1,968

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

For the three months ended December 31, 2014Dundee KilmerDevelopments

LP



Restaurants LPDream CMCCFunds I and II Other Total

Project level (at 100%) Revenues $ 69 $ 8,845 $ 7,725 $ 1,562 $ 1,389 $ 19,590 Earnings (losses) (893) (3,515) 245 (219) 2,608 (1,774) Cash flows from operations(1) (893) 3,365 551 219 2,728 5,970Dream's ownership interestAttributable to Dream: 50% 20% 50% 9%–40% 18%–78%

Revenues $ 34 $ 1,769 $ 3,862 $ 399 $ (444) $ 5,620Earnings (losses) (447) (703) 123 154 (411) (1,284)Cash flows from operations(1) (447) 673 276 154 (351) 305

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

For the year ended December 31, 2015Dundee KilmerDevelopments

LP



Restaurants LPDream

Windmill

DreamCMCC Funds


Project level (at 100%) Revenues $ 99 $ 132,492 $ 31,525 $ — $ 55,624 $ 3,819 $ 223,559 Earnings (losses) (3,481) (7,026) 973 (2,506) 11,495 364 (181) Cash flows from operations(1) (3,481) 72,968 2,068 (2,506) 11,636 384 81,069Dream's ownership interestAttributable to Dream: 50% 20% 50% 50% 9%–40% 18%–78%

Revenues $ 50 $ 26,498 $ 15,763 $ — $ 10,135 $ 1,910 $ 54,356Earnings (losses) (1,740) (1,405) 487 (297) 2,134 291 (530)Cash flows from operations(1) (1,740) 14,594 1,034 (297) 2,160 301 16,052



LP




Project level (at 100%) Revenues $ 367 $ 79,110 $ 24,245 $ 2,251 $ 8,458 $ 114,431 Earnings (losses) (2,722) 15,485 510 (388) (256) 12,629 Cash flows from operations(1) (2,722) 42,155 1,594 (388) 233 40,872Dream's ownership interestAttributable to Dream: 50% 20% 50% 9%–40% 18%–78%

Revenues $ 183 $ 15,822 $ 12,122 $ 479 $ 2,834 $ 31,440Earnings (losses) (1,361) 3,097 255 169 (1,836) 324Cash flows from operations(1) (1,361) 8,431 797 169 (1,592) 6,444



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

As at December 31, 2015Dundee KilmerDevelopments

LP



Restaurants LPDream

Windmill

DreamCMCC Funds


Project level (at 100%) Assets $ 272,698 $ 1,028,063 $ 10,240 $ 50,831 $ 92,060 $ 47,094 $ 1,500,986 Liabilities (231,866) (795,725) (4,842) (20,620) (25,480) (18,687) (1,097,220)Net assets $ 40,832 $ 232,338 $ 5,398 $ 30,211 $ 66,580 $ 28,407 $ 403,766Dream's ownership interest 50% 20% 50% 50% 9%–40% 18%–78% Assets $ 136,349 $ 205,613 $ 5,120 $ 26,514 $ 12,070 $ 21,593 $ 407,259 Liabilities (115,933) (159,145) (2,421) (10,310) (4,175) (8,427) (300,411)Net assets $ 20,416 $ 46,468 $ 2,699 $ 16,204 $ 7,895 $ 13,166 $ 106,848


LP




Project level (at 100%) Assets $ 603,828 $ 1,065,948 $ 10,632 $ 67,665 $ 45,145 $ 1,793,218 Liabilities (577,410) (787,089) (5,887) (34,172) (19,436) (1,423,994)Net assets $ 26,418 $ 278,859 $ 4,745 $ 33,493 $ 25,709 $ 369,224Dream's ownership interest 50% 20% 50% 9%–40% 18%–78% Assets $ 303,953 $ 196,657 $ 5,316 $ 11,486 $ 23,417 $ 540,829 Liabilities (290,744) (140,885) (2,944) (6,046) (9,389) (450,008)Net assets $ 13,209 $ 55,772 $ 2,372 $ 5,440 $ 14,028 $ 90,821

Firelight Infrastructure Partners LPDream has an investment in Firelight, which has funded $324.6 million for renewable energy projects (of which Dream’s portion is $64.9 million), which includesletters of credit of $10.5 million as at December 31, 2015. A complete list of projects is provided below:

Project Energy source Province Status Completion MWDalhousie Mountain Wind NS Operational Q1 2010 51.0Amherst Wind NS Operational Q2 2012 15.4Erie Ridge Ground-mount Solar ON Operational Q3 2011 4.3Sandhurst Ground-mount Solar ON Operational Q2 2012 10.0Norfolk Bloomsburg Ground-mount Solar ON Operational Q1 2013 10.0Rutley Ground-mount Solar ON Operational Q1 2012 10.0Firelight Solar Rooftop Solar ON Operational 2011–2014 17.8Hwy 2 Ground-mount Solar ON Operational Q4 2013 10.0Odessa Ground-mount Solar ON Operational Q4 2013 10.0Alfred Ground-mount Solar ON Operational Q4 2013 10.0Unity Ground-mount Solar ON Operational Q1 2014 10.0Welland Ground-mount Solar ON Operational Q3 2014 10.0Ray Ground-mount Solar ON Operational Q4 2014 10.0Newboro 4 Ground-mount Solar ON Operational Q4 2014 10.0South Stormont Ground-mount Solar ON Operational Q1 2015 10.0Nova Scotia Wind Wind NS Operational Q4 2014 15.4Total 213.9

Dream’s investment in Firelight generated $1.4 million of losses and $14.6 million of operational cash flows for the year ended December 31, 2015 (year endedDecember 31, 2014 – $3.1 million of income and $8.4 million of operational cash flows). Included in the results for the year ended December 31, 2015, areimpairment losses of $7.0 million, primarily due to Xeneca Limited Partnership (“Xeneca”), a subsidiary of Firelight, with various waterpower electricity projectsin the pre-development stage. After pursuing alternate strategies, the board of directors of the general partner of Xeneca approved an operational reorganizationplan to suspend development of Xeneca’s waterpower electricity projects and pursue a sale of assets. As a result, the Company reduced the value of itsinvestment in Xeneca to its estimated recoverable amount of $0.5 million and recorded an impairment charge of $6.0 million in the Company’s share of income(losses) from equity accounted investments in the statement of operations. The estimated recoverable amount was determined using the fair value of netassets less costs of disposal. Excluding the impairment charges, earnings for the year ended December 31, 2015, would have been $2.5 million higher thanthe prior year as a result of income generated from new projects becoming operational in 2015.


The impairment charges recorded in the year ended December 31, 2015 have no impact on the remaining renewable energy investments within Firelight, asthey are all standalone and fully operational.

In the year ended December 31, 2015, revenue for Firelight (at Dream's share) increased by $10.7 million due to new projects becoming operational in thefourth quarter of 2014 or early 2015. The decrease in net assets of Firelight to $46.3 million (at Dream's share) as at December 31, 2015 from $55.8 millionas at December 31, 2014 was mainly due to the impairment losses.

Dundee Kilmer Developments LPDream has a 50% interest in Dundee Kilmer Developments LP ("Dundee Kilmer"), which is a partnership between Dream and Kilmer Van Nostrand Co. Limitedfor the purpose of developing the Canary District and the Toronto 2015 Pan/Parapan American Games Athletes’ Village. This site is anchored at Front andCherry Streets by Waterfront Toronto’s new 18-acre Don River Park. Built as a temporary home for the athletes of the 2015 Pan/Parapan American Games,the village will evolve into a vibrant mixed use neighbourhood known as the Canary District, comprising 810 market condominium units, 253 affordable housingunits, an 82,000 square foot YMCA and a 500-bed George Brown College student residence. Net losses in the current period and the prior periods relate tomarketing expenses for the condominium portion of the development. As at December 31, 2015, the market condominiums were over 86% pre-sold andtogether with the sale of the other components to third parties, approximately 95% of the revenue is contracted. Sales of the condominiums continue toprogress well and we expect to be substantially sold out when construction is complete in mid-2016.

In the year ended December 31, 2015, Dundee Kilmer, completed the transfer of the Toronto 2015 Pan/Parapan American Games Athletes’ Village to theProvince of Ontario and received a $393.0 million payment ($196.5 million at Dream's share) that was primarily used to repay construction debt. On September15, 2015, the Province of Ontario returned the Athletes' Village to Dundee Kilmer following the completion of the Pan/Parapan American Games, at whichpoint the conversion of the units to market condominiums commenced.

The “Stage 2” lands (collectively Blocks 12, 13 and 16) were transferred to the partnership in the fourth quarter of 2015 at a fair value of $51.0 million ($25.5million at Dream’s share), with a corresponding recovery of costs incurred to date on the project. The partnership expects to develop another 1,000 marketcondominium units and 20,000 square feet of retail in addition to the 30,000 square feet in Stage 1, which is now 74% leased. The partnership expects todevelop the Stage 2 lands from 2017 through 2024.

At the project level and Dream's share, total assets and liabilities decreased from December 31, 2014 to December 31, 2015, 2015 mainly due to the paymentreceived upon the completed transfer of the Toronto 2015 Pan/Parapan American Games Athletes’ Village to the Province of Ontario and the Stage 2 landtransfer, as described above. The increase of $7.2 million in the net assets of Dundee Kilmer as at December 31, 2015 compared to prior year, was primarilydue to contributions made to the project in the fourth quarter of 2015 to fund conversion costs.

Dream WindmillIn the year ended December 31, 2015, Windmill Green Fund LP V ("Dream Windmill"), a partnership between Dream and Windmill Development Group Ltd.,acquired 22 acres for $16.5 million at Dream's share, located on the former Domtar lands along the Ottawa River in Gatineau, Quebec for the purpose ofdeveloping a mixed-use master planned community to be marketed under the name "Zibi". Dream Windmill has an additional 15 acres of directly adjacentlands under contract, which it expects to acquire in 2016, pending certain approvals. The project concept plan, inclusive of all 37 acres, includes over 3 millionsquare feet of density, that consists of over 2,000 residential units and over 1 million square feet of commercial space. In June 2015, the project launched itsfirst building, which is a six-storey condominium project in Gatineau with 70 units and a ground floor retail component, marketed under the name "O". In thethree months ended December 31, 2015, the project launched its second building, a six-storey midrise on Chaudière Island that overlooks the Ottawa River,marketed under the name "Kanaal". As at December 31, 2015, the projects combined were over 35% pre-sold.

During the year ended December 31, 2015, the Company contributed $14.3 million to Dream Windmill and exercised its rights to convert a $2.2 million loanto equity in Dream Windmill. In addition, Dream Windmill established a two year credit facility amounting to $15.0 million with a Canadian Schedule I bank,which bears interest at a rate per annum equal to the bank’s prime lending rate plus 1.50% or at the bank's then prevailing bankers' acceptance rate plus 3.0%.

Dream CMCC Capital FundsDream CMCC Capital Fund I and II (“the Funds or Fund I and Fund II”) are investment vehicles formed through the collaboration of Dream and its partner,Canadian Mortgage Capital Corporation, to provide an opportunity for investors to invest with partners who are market leaders in developing, managing andfinancing real estate development projects. Fund I was incepted in June 2011 with $25.0 million of capital raised from high net worth investors and Fund IIwas formed in September 2014 with $65.0 million of capital, raised through the same channel. Dream has approximately $7.9 million of equity invested inboth Funds. Fund I is expected to return the invested capital to investors and, based on the anticipated performance of the Fund’s current developmentinvestments, deliver an estimated internal rate of return (IRR) of approximately 24%, net of expenses. Fund II is fully committed and is expected to generatean IRR of approximately 16%, net of expenses, from underlying residential, commercial development and mezzanine financing investments. As a co-manager,Dream is entitled to base management fees and a percentage of profits above a preferred return upon realization of investment proceeds within the Funds.Fund II is expected to generate fee income for Dream between 2016 and 2024, subject to the performance of the underlying investments. Dream will continueto seek opportunities to leverage its track record to create additional investment funds and opportunities for asset management in the future.

Included within the Funds are investments in various condominium development projects. At Dream's share revenue and earnings of the Funds increased by$9.7 million and $2.0 million, respectively, due to a condominium project that occupied in the year ended December 31, 2015. There was no comparableactivity within the Funds in 2014. The increase in total assets and liabilities for the Funds as at December 31, 2015 compared to prior year was primarily dueto the Fund's additional investment in 2015. This was partially offset by a condominium project closing in the fourth quarter of 2015. Cash received upon unitclosings was used to repay the construction loan, which resulted in a decrease to both assets and liabilities of the Fund.


Other Items

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

Accounts ReceivableAs at December 31, 2015, the carrying value of accounts receivable was $188.4 million compared to $134.0 million as at December 31, 2014. Approximately88% (December 31, 2014 – 85%) of accounts receivable represents amounts receivable under contracted sales of land under development or under housingand condominium sales contracts. Accounts receivable may fluctuate from period to period, reflecting the cyclical nature of the completion and closing oflarge-scale real estate projects. The increase in accounts receivable from the prior period is primarily due to the timing of the lots sold in Saskatoon and Regina,partially offset by the closing of The Carlaw condominium project during the year ended December 31, 2015.

General and Administrative ExpensesThe increase of $0.2 million and $1.9 million in the three and twelve months ended December 31, 2015 compared to prior year in general and administrativeexpenses are attributable to increased corporate transactional activity costs. Included within these costs are donations within our communities in WesternCanada and legal costs incurred for the reorganization of the asset management agreement with Dream Office REIT.

Interest ExpenseIn the three and twelve months ended December 31, 2015, interest expense was $4.7 million and $19.3 million respectively (December 31, 2014 – $4.3 millionand $17.1 million). Included in interest expense for the year ended December 31, 2015 were non-recurring discharge fees of $1.25 million for the earlyrepayment of certain mortgages related to investment properties and certain land mortgages.


Project-specific and general debt interest $ 4,876 $ 3,136 $ 17,463 $ 11,952Cancellation fees paid on early repayment of mortgages — — 1,250 —Interest on amounts due to a shareholder — 593 859 2,560Dividends on Preference shares, series 1 636 680 2,637 2,864Amortization of deferred financing costs 360 333 1,267 1,051Interest capitalized to real estate development projects (1,192) (458) (4,248) (1,449)Accretion of effective interest 9 31 35 170Interest expense $ 4,689 $ 4,315 $ 19,263 $ 17,148Add (deduct): Interest capitalized 1,192 458 4,248 1,449 Amortization of deferred financing costs (360) (333) (1,267) (1,051) Accretion expense (9) (31) (35) (170) Mark to market adjustment — (130) (202) (1,277) Accrued interest (891) (259) (748) 179Cash interest paid $ 4,621 $ 4,020 $ 21,259 $ 16,278

Income Tax ExpenseThe effective income tax rate was 14.0% for the year ended December 31, 2015 (year ended December 31, 2014 – 29.1%). The effective income tax rate for2015 is lower than the statutory combined federal and provincial tax rate of 26.6% due to non-taxable revenues and the difference between tax rates onincome and capital gains. In the year ended December 31, 2014, the effective income tax rate of 29.1% was higher than the statutory rate of 26.6% due tonon-deductible expenses and deferred income tax assets not being recognized.

The Company has modified its estimates of with respect to uncertain tax positions, which has resulted in a recovery of approximately $9.4 million throughincome tax expense for the year ended December 31, 2015.


Debt and Preference Shares

As at December 31, 2015, total debt was $494.4 million (December 31, 2014 – $395.8 million), which included $34.8 million of Preference shares, series 1(December 31, 2014 – $38.7 million).

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

(in thousands of Canadian dollars) Year ended December 31, 2015

Operatingline(1)

Non-revolvingterm facility(2)

Constructionloans

Mortgagesand term debt

Due to ashareholder

Preferenceshares,series 1 Total

Balance, December 31, 2014 $ 136,000 $ — $ 88,644 $ 72,094 $ 60,328 $ 38,746 $ 395,812Borrowings 92,500 175,000 99,938 53,771 — — 421,209Repayments (136,000) — (64,846) (57,632) (58,939) — (317,417)Redemption of Preference shares — — — — — (4,002) (4,002)Other — — — 142 (1,389) 35 (1,212)Balance, December 31, 2015 $ 92,500 $ 175,000 $ 123,736 $ 68,375 $ — $ 34,779 $ 494,390

(1) Excludes unamortized financing costs offset against the balance of $1.5 million as at December 31, 2015 (2014 – $1.5 million).(2) Excludes unamortized financing costs offset against the balance of $1.0 million.

Operating LineThe Company has established a revolving term credit facility (the "operating line") available up to a formula-based maximum not to exceed $290,000 with asyndicate of Canadian financial institutions. The facility bears interest, at the Company’s option, at a rate per annum equal to either the bank’s prime lendingrate plus 1.25% or at the bank’s then prevailing bankers’ acceptance rate plus 2.50%. The facility is secured by a general security agreement and a first chargeagainst various real estate assets in Western Canada. Interest expense relating to the operating line for the three months and year ended December 31, 2015was $1.1 million and $5.0 million (December 31, 2014 – $1.5 million and $4.6 million).

In the year ended December 31, 2015, the Company amended the borrowing base structure underlying the operating line, available up to a formula-basedmaximum of up to $290.0 million. The amended borrowing base structure allows for reduced variability in the formula-based maximum thereby providingmanagement with increased predictability and flexibility in running the operations of the business. Interest and covenant terms remained unchanged and thematurity date was extended from November 30, 2016 to June 30, 2017. The Company incurred financing costs related to the modification of the terms of theoperating line for $0.7 million. These costs were capitalized against the operating line and will be amortized over the expected term of the loan. The amountof $1.5 million has been netted against the operating line as at December 31, 2015. As at December 31, 2015, $92.5 million was drawn under the Company’soperating line, and the Company had $73.9 million of outstanding letters of credit, leaving an undrawn credit capacity of up to $123.6 million.

Non-revolving Term FacilityIn the year ended December 31, 2015, the Company established a new, three-year term non-revolving term facility amounting to $175 million with a syndicateof Canadian financial institutions (“non-revolving term facility”). The non-revolving term facility is secured by a general security agreement and a first chargeon various real estate and other financial assets of the Company. The loan bears interest at the Company’s option, at a rate per annum equal to either thebank’s prime lending rate plus 1.50% or at the bank’s then prevailing bankers’ acceptance rate plus 2.75%, payable monthly. The principal balance is due onits maturity date of June 30, 2018. The Company also entered into an interest rate swap to effectively exchange the variable interest rate for a fixed rate of3.65% per annum through the use of forward purchase contracts. The interest rate swap was contracted for approximately three years and effectively hedges100% of the principal outstanding under the non-revolving term facility. As at December 31, 2015, the non-revolving term facility was fully drawn.

Refinancing of Distillery District PropertiesIn the year ended December 31, 2015, the Company successfully refinanced its interest in the Distillery District through an $85 million ($42.5 million at Dream'sshare) ten-year mortgage bearing interest at 3.9%, with certain of the Distillery District properties mortgaged as security. The Company received $21.0 millionof net proceeds from this financing, net of $1.1 million discharge costs and the repayment of existing debt on these properties.

Development and Construction Loan Facilities As at December 31, 2015, $62.5 million (December 31, 2014 – $77.6 million) of aggregate development and construction loans were subject to a fixed, weightedaverage interest rate of 4.86% (December 31, 2014 – 5.01%) and will mature between 2016 and 2025. A further $395.8 million (December 31, 2014 – $83.3million) of real estate debt was subject to a weighted average variable interest rate of 3.67% (December 31, 2014 – 3.80%) and matures between 2016 and2024. Included within the real estate debt subject to variable interest, is the non-revolving term facility for which the Company entered into an interest rateswap to establish a fixed rate during the year ended December 31, 2015, as described above.

Term Loan Secured by Arapahoe BasinSubsequent to December 31, 2015, the Company successfully closed a US $9.5 million, seven-year, fully amortizing loan secured by Arapahoe Basin, whichgenerated $13.2 million of gross proceeds in Canadian dollars. The loan is fully amortizing over a term of seven years at an interest rate of 3.69%. Interest anddebt service requirements are expected to be funded from the operations of the ski resort. The carrying value of Arapahoe Basin (depreciated cost) as atDecember 31, 2015 was $19.3 million. The financing was subject to an appraisal of the asset by the lender, which was significantly in excess of the carryingvalue.


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

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

As at December 31, 2015, DAM was in compliance with the above covenants.

Preference Shares, Series 1The Preference shares, series 1, may be redeemed, at the option of Dream, at any time on or after December 31, 2015, at a price of $7.16 per share.

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

(number of shares) December 31, 2015 December 31, 2014Issued and outstanding, beginning of period 5,428,900 6,000,000Redeemed by holders for cash (560,481) (571,100)Issued and outstanding, end of period 4,868,419 5,428,900

As at February 9, 2016 there were 4,248,466 Preference shares, series 1, issued and outstanding.

Shareholders’ Equity

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

(number of shares) December 31, 2015 December 31, 2014Subordinate Voting Shares, issued and outstanding, beginning of period 76,220,777 72,614,163Class B Shares converted into Subordinate Voting Shares — 814Deferred share units converted into Subordinate Voting Shares — 9,000Subordinate Voting Shares repurchased (950,627) (83,200)Subordinate Voting Shares issued pursuant to equity offering — 3,680,000Subordinate Voting Shares, issued and outstanding, end of period 75,270,150 76,220,777

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

Dream renewed its normal course issuer bid (the “Bid”), which commenced on September 2, 2015 and will remain in effect until the earlier of September 1,2016 or the date on which Dream has purchased the maximum number of Subordinate Voting Shares permitted under the Bid. Under the Bid, Dream willhave the ability to purchase for cancellation up to a maximum of 3,789,759 of its Subordinate Voting Shares through the facilities of the Toronto Stock Exchange(the “TSX”) at prevailing market prices and in accordance with the rules and policies of the TSX. The actual number of Subordinate Voting Shares that may bepurchased and the timing of any such purchases will be determined by Dream, subject to a maximum daily purchase limitation of 28,927 shares except wherepurchases are made in accordance with block purchase exemptions under applicable TSX rules. In the year ended December 31, 2015, 950,627 SubordinateVoting Shares were purchased for cancellation by the Company, at an average price of $8.27 (December 31, 2014 – 83,200 Subordinate Voting Shares at anaverage price of $9.38). Subsequent to December 31, 2015, 137,300 Dream Subordinate Voting Shares were purchased for cancellation by the Company. Asat February 9, 2016, there were 75,132,850 Subordinate Voting Shares and and 3,115,512 Class B Shares issued and outstanding.

Dream has a stock option plan under which key officers and employees are granted options to purchase Subordinate Voting Shares. Each option granted canbe exercised for one Subordinate Voting Share. As at December 31, 2015, 1,560,000 options were outstanding under the stock option plan, collectively. Grantsthat occurred in the year ended December 31, 2015, are as follows:

Grant date October 2013 February 2015 December 2015Number of options granted and outstanding as at December 31, 2015 140,000 715,000 705,000Weighted average exercise price $ 13.88 $ 8.96 $ 7.25Vesting period 5 years 5 years 5 yearsNumber of options vested as at December 31, 2015 30,000 — —


In addition, Dream has a deferred share unit incentive plan pursuant to which deferred share and income deferred share units (“DSUs”) may be granted toeligible directors, senior management and certain service providers. As at December 31, 2015 there were 66,329 DSUs outstanding (December 31, 2014 –18,000 units outstanding). During the three and twelve months ended December 31, 2015, compensation expense of $16 and $99 (three and twelve monthsended December 31, 2014 – $nil and $383) related to this plan was recognized as general and administrative expense. In the year ended December 31, 2015, the Board of Directors of DAM paid dividends to the non-controlling interest of DAM of $3.4 million (year endedDecember 31, 2014 – $1.8 million). During the year ended December 31, 2015, the Company utilized cash in its operations of $18.8 million, as such thedividends of $3.4 million paid by DAM to the non-controlling interest on its non-voting common shares may be viewed as an economic return of capital. Thedividends paid to the non-controlling interest of DAM of $3.4 million were funded from cash on hand and other financing activities. Cash flows from operationsare subject to fluctuations. Refer to page 35 of this MD&A for further details.

Liquidity and Capital Resources

Our capital consists of construction loans, an operating line, a non-revolving term facility, mortgages and term debt, shareholder loans, preference shares andshareholders’ equity. Our objective in managing capital is to ensure adequate operating funds are available to fund land, housing and condominium developmentcosts, to cover leasing costs, overheads and capital expenditures for investment and recreational properties; to provide for resources needed to acquire newproperties and invest in new ventures at reasonable interest costs; and to generate a target rate of return on investments. No material changes have occurredin future contractual obligations since December 31, 2015.

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


(in thousands of Canadian dollars)Less than 12

monthsGreater than 12

monthsNon-

determinable Total

AssetsCash and cash equivalents $ 29,983 $ — $ — $ 29,983Accounts receivable 149,148 39,210 — 188,358Other financial assets — 162,800 — 162,800Housing inventory — — 48,167 48,167Condominium inventory — — 91,323 91,323Land inventory — — 593,401 593,401Investment properties — 141,377 — 141,377Recreational properties — 29,031 — 29,031Equity accounted investments — 106,848 — 106,848Capital and other operating assets 16,686 12,290 — 28,976Intangible asset — 43,000 — 43,000Total assets $ 195,817 $ 534,556 $ 732,891 $ 1,463,264

LiabilitiesAccounts payable and accrued liabilities $ 96,400 $ 10,557 $ — $ 106,957Income and other taxes payable 35,207 — — 35,207Provision for real estate development costs 51,597 — — 51,597Customer deposits — — 25,265 25,265Construction loans(1) 55,677 68,059 — 123,736Operating line — 90,968 — 90,968Non-revolving term facility — 174,006 — 174,006Mortgages and term debt 17,953 50,422 — 68,375Preference shares, series 1 34,779 — — 34,779Deferred income taxes — 34,520 — 34,520Total liabilities $ 291,613 $ 428,532 $ 25,265 $ 745,410

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

As at December 31, 2015, there are adequate resources to address the Company's short term liquidity requirements. Certain financial instruments which arecallable or due on demand are presented as due within 12 months, which is inconsistent with the repayment timing expected by management. Due to thenature of our development business, the Company expects to fund a portion of our current liabilities through sales of housing, condominium and land inventory,which are all classified as 'non-determinable'. In addition, as at December 31, 2015, $92.5 million was drawn under the Company’s operating line, and therewere $73.9 million of outstanding letters of credit, leaving an undrawn credit capacity of up to $123.6 million.


Significant Sources and Uses of Cash


Net cash flows used in operating activities $ 12,064 $ 13,335 $ (18,832) $ (10,484)Net cash flows used in investing activities (15,116) (8,767) (33,386) (62,188)Net cash flows used in financing activities 9,136 (1,645) 51,516 74,361Change in cash and cash equivalents $ 6,084 $ 2,923 $ (702) $ 1,689

In the year ended December 31, 2015, the Company had cash outflows from operating activities primarily attributable to fluctuations in accounts receivablewithin changes in working capital.

During the three and twelve months ended December 31, 2015, there were cash outflows from investing activities of $15.1 million and $33.4 million,respectively. The primary use of funds for investing activities related to contributions made to our equity accounted investments and the acquisition of financialassets.

For the three and twelve months ended December 31, 2015, we had net inflows from financing activities of $9.1 million and $51.5 million which included$62.3 million of net borrowings and $43.5 million of net repayments relating to the operating line. In the year ended December 31, 2015, cash inflows of$173.8 million resulted from the net proceeds of our non-revolving term facility. For more information refer to the consolidated statement of cash flows inthe consolidated financial statements for the year ended December 31, 2015.

Cash RequirementsThe nature of the real estate business is such that we require capital to fund non-discretionary expenditures with respect to existing assets, as well as to fundgrowth through acquisitions and developments. As at December 31, 2015, we had $30.0 million (December 31, 2014 – $30.7 million) in cash and cashequivalents. Our intention is to meet short-term liquidity requirements through cash from operating activities, working capital reserves and operating debtfacilities. In addition, we anticipate that cash from operations will continue to provide the cash necessary to fund operating expenses and debt servicerequirements.

Overall, our cash position has remained consistent from December 31, 2014 compared to December 31, 2015.

Off Balance Sheet Arrangements

We conduct our real estate activities from time to time through joint arrangements with third-party partners. As at December 31, 2015, we were contingentlyliable for the obligations of the other owners of the unincorporated joint arrangements in the amount of $6.8 million (December 31, 2014 – $29.4 million).We have available to us other venturers’ share of assets to satisfy the obligations, if any, that may arise, such as cost overruns.

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

Commitments and Contingencies

As part of our various agreements to purchase land and housing, we have commitments totalling $14.4 million as at December 31, 2015 (December 31, 2014– $71.3 million), which will become payable in future periods upon the satisfaction of certain conditions pursuant to such agreements. For further details referto page 13 of this MD&A.

Levies relating to signed municipal agreements received by Dream as at December 31, 2015 may result in future obligations totalling $3.0 million (December 31,2014 – $5.1 million).

We are contingently liable for letters of credit and surety bonds that have been provided to support land developments and other activities in the amount of$63.2 million as at December 31, 2015 (December 31, 2014 – $65.7 million).


Shareholder Arrangements

Dream and Sweet Dream Corp. (“SDC”) entered into an agreement (the "Permitted Sales Agreement") that provides for “put rights” in favour of each of them.Upon the occurrence of certain triggering events, Dream may by notice in writing to SDC require SDC, at SDC’s option, to either (i) acquire all of the non-votingcommon shares in the capital of DAM (the “DAM Common Shares”) and all of the Class C voting preferred shares in the capital of DAM (the “DAM Class CShares”) held by Dream, or (ii) cause the sale of all of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale ofassets, distribute the net proceeds from the sale of assets to the shareholders of DAM. Upon the occurrence of certain different triggering events, SDC mayby notice in writing to Dream require Dream, at Dream’s option, to either (i) acquire all of the DAM Common Shares and DAM Class C Shares held by SDC, or(ii) cause the sale of all of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale of assets, distribute the proceedsto DAM’s shareholders. Completion of any transaction under this agreement will be subject to receipt of the approval of the shareholders of Dream, if requiredby law or under the agreement, and the receipt of any required regulatory approvals. For additional details regarding the Permitted Sales Agreement, see ourAnnual Information Form for the year ended December 31, 2015.

Transactions with Related Parties

The Company has agreements for asset management and management services, shared services and cost sharing administrative services with related parties.The Company also has other transactions conducted with related parties, which are outlined in Note 39 of our consolidated financial statements for the yearended December 31, 2015.

Critical Accounting Estimates

The preparation of the consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect thereported amounts of assets, liabilities, revenues and expenses and the related disclosure of contingent assets and liabilities. Critical accounting estimatesrepresent estimates made by management that are, by their very nature, uncertain. We evaluate our estimates on an ongoing basis. Such estimates are basedon historical experience and on various other assumptions that we believe are reasonable under the circumstances, and these estimates form the basis formaking judgments about the carrying value of assets and liabilities and the reported amount of revenues and expenses that are not readily apparent fromother sources. Actual results may differ from these estimates under different assumptions or conditions. A detailed summary of the significant judgments andestimates made by management in the preparation and analysis of our financial results is included in Note 4 of our consolidated financial statements forDecember 31, 2015.

Internal Control over Financial Reporting

As at December 31, 2015, the Chief Responsible Officer ("CRO") and Chief Financial Officer ("CFO"), along with the assistance of senior management, haveevaluated the design and operational effectiveness of Dream's internal controls over financial reporting and disclosure controls and procedures as defined byNational Instrument 52-109. The Certifying Officers have concluded that the disclosure controls and procedures, and the internal controls over financialreporting are adequately designed and operating effectively to provide reasonable assurance regarding the reliability of financial reporting and the preparationof the financial statements in accordance with IFRS.

During the year ended December 31, 2015, there were no changes in Dream's internal controls over financial reporting that have materially affected, or arereasonably likely to materially affect, Dream's internal controls over financial reporting. Using the framework established in "Risk Management and Governance:Guidance to Control (COSO Framework)", published by the Chartered Professional Accountants of Canada, the Certifying Officers have evaluated, or causedto be evaluated, and have concluded that its internal controls over financial reporting are operating effectively for the year ended December 31, 2015.

Changes in Accounting Policies Including Initial Adoption of New Accounting Pronouncements

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

Financial Instruments

A detailed discussion of our strategy and risk management in respect of financial instruments is provided in Note 34 of our consolidated financial statementsfor the year ended December 31, 2015.


Risk Factors

We are exposed to various risks and uncertainties, many of which are beyond our control. The following is a review of material factors that may impact ourbusiness operations. A more detailed description of our business environment and risks is contained in our Annual Information Form, which is posted onour website at www.dream.ca and on SEDAR at www.sedar.com.

General RiskThe land development and homebuilding industry is cyclical and is significantly affected by changes in general and local economic and industry conditions,such as employment levels, availability of financing for homebuyers, government regulations, interest rates, consumer confidence, levels of new and existinghomes for sale, demographic trends, housing demand and competition from other real estate companies.

An oversupply of alternatives to new homes, such as resale homes, including homes held for sale by investors and speculators, foreclosed homes and rentalproperties, may reduce DAM’s ability to sell new homes, depress prices and reduce margins from the sale of new homes. Depending on market conditions,DAM may not be able, or may not wish, to develop its land holdings. Development of land holdings and properties that are to be constructed are subject toa variety of risks, not all within DAM’s control. Such risks include lack of funding, variability in development costs and unforeseeable delays.

Real estate assets, particularly raw land, are relatively illiquid in down markets. Such illiquidity tends to limit DAM’s ability to vary its real estate portfoliopromptly in response to changing economic or investment conditions. If there are significant adverse changes in economic or real estate market conditions,DAM may have to sell properties at a loss or hold undeveloped land or developed properties in inventory longer than planned. Inventory carrying costs canbe significant and may result in losses in a poorly performing project or market.

Asset Management

Our ability to successfully expand our asset management activities is dependent on a number of factors, including certain factors that are outside our control.In the event that the asset base of our funds were to decline, our management fees could decline as well. In addition, we could experience losses on ourinvestments of our own capital in our funds as a result of poor performance by our funds. Termination of an asset management agreement in accordancewith its terms by any of our funds would also result in a decline in our management fees.

Mortgage Rates and RegulationsIncreases in mortgage rates, decreases in the availability of mortgage financing or changes in laws or regulations relating to mortgage lending practices coulddepress the market for new homes. Even if potential customers do not need financing, changes in mortgage interest rates and mortgage availability couldmake it harder for them to sell their homes to potential buyers who need financing, which would result in reduced demand for new homes. As a result, risingmortgage rates and reduced mortgage availability could adversely affect our ability to sell new homes and/or the price(s) at which we can sell them.

Regulatory RisksThe real estate development process is subject to a variety of laws and regulations. In particular, governmental authorities regulate such matters as zoningand permitted land uses, levels of density, and building standards. We will have to continue to obtain approvals from various governmental authorities andcomply with local, provincial and federal laws, including laws and regulations concerning the protection of the environment in connection with suchdevelopment projects. Obtaining such approvals and complying with such laws and regulations may result in delays which may cause us to incur additionalcosts that impact the profitability of a development project, or may restrict development activity altogether with respect to a particular project.

Environmental RisksAs an owner of real estate property, we are subject to various federal, provincial and state laws relating to environmental matters. Such laws provide that wecould 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 thatuse 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 professionalconsultants. Where circumstances warrant, designated substance surveys and/or environmental assessments are conducted. Although environmentalassessments provide some assurance, we may become liable for undetected pollution or other environmental hazards on our properties against which wecannot insure, or against which we may elect not to insure where premium costs are disproportionate to our perception of relative risk. We do not currentlyanticipate material expenditures in respect of any required remediation.

Geographic ConcentrationOur land development and housing operations are concentrated in Saskatchewan and Alberta. Some or both of these regions could be affected by severeweather; natural disasters; shortages in the availability or increased costs of obtaining land, equipment, labour or building supplies; changes to the populationgrowth rates and therefore the demand for homes in these regions; and changes in the regulatory and fiscal environment. Due to the concentrated nature ofour expected land development and housing operations, negative factors affecting one or a number of these geographic regions at the same time could resultin a greater impact on our financial condition or results of operations than they might have on other companies that have a more diversified portfolio ofoperations.


Given the prominence of the oil and gas industry in the Provinces of Alberta and Saskatchewan, the economies of these provinces can be significantly impactedby the price of oil. Similarly, because of our substantial land and housing development operations in Alberta and Saskatchewan, any substantial decline in theprice of oil could also adversely affect the Company's operating results. We continuously evaluate the economic health of the markets in which we operatethrough various means to ensure that we have identified and, where possible, mitigate risks to the Company, including the potential impacts of changes inthe price of oil. Additionally, the land development process is longer term in nature, which, to some extent, mitigates the impacts of short term fluctuationsin the health of the economies in which we operate. As of December 31, 2015 the Company had not identified any material adverse effect on our businessas a result of the current softening of oil prices.

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

Supply of Materials and ServicesThe homebuilding industry has from time to time experienced significant difficulties in the supply of materials and services, including with respect to: shortagesof skilled and experienced contractors and tradespeople, labour disputes, shortages of building materials, unforeseen environmental and engineering problems,and increases in the cost of certain materials. If any of these difficulties should occur, we may experience delays and increased costs in the construction ofhomes.

CompetitionThe residential homebuilding industry is highly competitive. Residential homebuilders compete for homebuyers, desirable properties, building materials,labour and capital. We compete with other local, regional and national homebuilders. Any improvement in the cost structure or service of these competitorswill increase the competition we face. We also compete with sellers of existing homes, housing speculators and investors in rental housing. Competitiveconditions in the homebuilding industry could result in: difficulty in acquiring desirable land at acceptable prices, increased selling incentives, lower salesvolumes and prices, lower profit margins, impairments in the value of our inventory and other assets, increased construction costs and delays in construction.

Our ability to successfully expand asset management activities in the future is dependent on our reputation with clients. We believe that our track record,the expertise of our asset management team and the performance of the assets currently under management will enable us to continue to develop productiverelationships with these companies and to grow the assets under management. However, if we are not successful in doing so, our business and results ofoperations may be adversely affected.

Joint Venture RisksReal estate investments are often made as joint ventures or partnerships with third parties. These structures involve certain additional risks, including thepossibility that the co-venturers/partners may, at any time, have economic or business interests inconsistent with ours, the risk that such co-venturers/partnerscould experience financial difficulties which could result in additional financial demands on us to maintain and operate such properties or repay debt in respectof such properties, and the need to obtain the co-venturers’/partners’ consents with respect to certain major decisions in respect of such properties. Weattempt to mitigate these risks by performing due diligence procedures on potential partners and contractual arrangements, and by closely monitoring andsupervising the joint venture or partnership.

SeasonalityThe nature of our land development and housing business is inherently seasonal as it depends on sales of specific projects dictated by the marketplace andthe availability of buyers as well as weather-related delays. We have historically experienced, and we expect that we will continue to experience, variabilityin our results on a quarterly basis. We generally have more homes under construction, close more home sales and have greater revenues and operating incomefrom our housing business in the second quarter of our fiscal period. Therefore, although new home contracts are obtained throughout the period, a significantportion of our home closings occur during the second fiscal quarter. Our revenues from our land and housing development business therefore may fluctuatesignificantly on a quarterly basis and we must maintain sufficient liquidity to meet short-term operating requirements.

Adverse Weather Conditions and Natural DisastersAdverse weather conditions and natural disasters such as hurricanes, tornadoes, earthquakes, droughts, floods, fires, extreme cold, snow and other naturaloccurrences could have a significant effect on our ability to develop land. These adverse weather conditions and natural disasters could cause delays andincrease costs in the construction of new homes and the development of new communities. If insurance is unavailable to us or is unavailable on acceptableterms, or if the insurance is not adequate to cover business interruption or losses resulting from adverse weather or natural disasters, our business and resultsof operations could be adversely affected. In addition, damage to new homes caused by adverse weather or a natural disaster could cause our insurance coststo increase.

Adverse weather conditions and natural disasters could also limit the ability to generate or sell power. In certain cases, some events may not excuse us fromperforming obligations pursuant to agreements with third parties and we may be liable for damages or suffer further losses as a result. In addition, many ofour power generation assets are located in remote areas, which makes access for repair of damage difficult.


Financing RiskWe will require access to capital to ensure properties are maintained as well as to fund our growth strategy and significant capital expenditures. There is noassurance 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, includinggeneral market conditions, the market’s perception of our growth potential, our then current and expected future earnings, and our cash flows. Upon theexpiry of the term of the financing of any particular property, refinancing may not be available or may not be available on reasonable terms.

Ability to Obtain Performance, Payment, Completion and Surety Bonds and Letters of CreditWe may often be required to provide performance, payment, completion and surety bonds or letters of credit to secure the completion of our constructioncontracts, development agreements and other arrangements. We have obtained facilities to provide the required volume of performance, payment, completionand surety bonds and letters of credit for our expected growth in the medium term; however, unexpected growth may require additional facilities. Our abilityto obtain further performance, payment, completion and surety bonds and letters of credit primarily depends on our perceived creditworthiness, capitalization,working capital, past performance and claims record, management expertise and certain external factors, including the capacity of the performance bondmarkets. If our future claims record or our providers’ requirements or policies are different, if we cannot obtain the necessary consent from lenders to renewor amend our existing facilities, or if the market’s capacity to provide performance and completion bonds is not sufficient, we could be unable to obtain furtherperformance, payment, completion and surety bonds or letters of credit when required, which could have a material adverse effect on our business, financialcondition and results of operations.

Risks Related to Master-Planned CommunitiesBefore a master-planned community generates any revenues, material expenditures are incurred to acquire land, obtain development approvals and constructsignificant portions of project infrastructure, amenities, model homes and sales facilities. It generally takes several periods for a master-planned communitydevelopment to achieve cumulative positive cash flow. If we are unable to develop and market our master-planned communities successfully and generatepositive cash flows from these operations in a timely manner, this may have a material adverse effect on our business and results of operations.

Home Warranty and Construction Defect ClaimsAs a homebuilder, we are subject to construction defect and home warranty claims arising in the ordinary course of our business. These claims are commonin the homebuilding industry and can be costly. Where we act as the general contractor, we will be responsible for the performance of the entire contract,including work assigned to subcontractors. Claims may be asserted against us for construction defects, personal injury or property damage caused by thesubcontractors, and if successful these claims give rise to liability. Where we hire a general contractor, if there are unforeseen events like the bankruptcy of,or an uninsured or under-insured loss claimed against our general contractor, we will sometimes become responsible for the losses or other obligations ofthe general contractor. The costs of insuring against construction defect and product liability claims are high and the amount of coverage offered by insurancecompanies may be limited. There can be no assurance that this coverage will not be further restricted and become more costly. If we are not able to obtainadequate insurance against these claims in the future, our business and results of operations may be adversely affected.

Reliance on Key ClientsOur revenues from the advisory services division are dependent on agreements with a few key clients. Although we have long‑term, stable managementcontracts with clients that may only be terminated in limited circumstances, any such termination could have a material adverse effect on our revenue frommanagement fees.

Regulatory Regime, Political Environment and PermitsThe development and operation of renewable power projects is subject to extensive regulation by various government agencies at the municipal, provincialand federal level. As legal requirements frequently change and are subject to interpretation and discretion, we are unable to predict the ultimate cost ofcompliance with these requirements or their effect on our operations. Any new law or regulation could require additional expenditure to achieve or maintaincompliance or could adversely affect the ability to generate and deliver energy. In addition, delays may occur in obtaining necessary government approvalsrequired for future power projects. We hold permits and licences from various regulatory authorities for the construction and operation of our renewablepower facilities. These licences and permits are critical to the operation of the renewable power business. It may not be possible to renew, maintain or obtainall necessary licences, permits and governmental approvals required for the continued operation or further development of projects, which could adverselyimpact our business, results of operations and cash flow. The profitability of any wind project will be in part dependent upon the continuation of a favourableregulatory climate with respect to the continuing operations, future growth and development of the independent power industry. Government regulationsand incentives currently have a favourable impact on the building of wind power facilities. Should the current governmental regulations or incentive programsbe modified, our business, operating results, financial condition or prospects may be adversely affected.

Inability to Negotiate Purchase AgreementsSecuring new power purchase agreements (“PPAs”) in Ontario is a key component of our growth strategy. We expect that we will continue to enter into PPAsfor the sale of power. PPAs are mainly obtained through participation in competitive requests for proposals processes. During these processes, we facecompetitors ranging from large utilities to small independent power producers. There is no assurance that we will be selected as power supplier followingany particular request for proposals in the future or that existing PPAs will be renewed or will be renewed on acceptable terms and conditions upon the expiryof their respective terms. Failure to secure or renew PPAs on acceptable terms will limit the expansion and growth of the renewable power business and couldadversely affect our business, operating results, financial condition or prospects.


Contract PerformanceThe renewable power operations are highly dependent upon parties to certain agreements fulfilling their contractual obligations, including counterparties toPPAs or Feed in Tariff (“FIT”) contracts and other key suppliers. An inability or failure of any such party to meet its contractual commitments may adverselyaffect our financial condition, results of operations and cash flow as it may not be possible to replace the agreement with an agreement on equivalent termsand conditions. The ability of our facilities to generate the maximum amount of power that can be sold to purchasers of electricity under PPAs is an importantdeterminant of the revenues of our renewable power business. If one of these facilities delivers less than the required quantity of electricity in a given contractperiod, penalty payments may be payable to the relevant purchaser. The payment of any such penalties could adversely affect the revenues and profitabilityof our renewable power business.

Delays and Cost Over-runsDelays and cost over-runs may occur in completing the construction of development projects, prospective projects and future projects that may be undertaken.A number of factors that could cause such delays or cost over-runs include, but are not limited to, permitting delays, changing engineering and designrequirements, the performance of contractors, labour disruptions, adverse weather conditions and the availability of financing. In addition, if one of ourdevelopment projects is not brought into commercial operation within the time stipulated in its related PPA, it may be subject to penalty payments or thecounterparty may be entitled to terminate the related PPA.

Changes in TechnologyThere are other alternative technologies that can produce renewable power, such as fuel cells and micro turbines. Research and development activities areongoing to seek improvements in such alternative technologies, and their cost of producing electricity is gradually declining. It is possible that advances willfurther reduce the cost of alternative methods of power generation. If this were to happen, the competitive advantage of our projects may be impaired andour business, financial condition, results of operations and cash flow could be materially adversely affected.

Assessment of Wind Resource and Associated Wind EnergyThe strength and consistency of the wind resource at any project site may vary from the anticipated wind resource. Weather patterns could change or thehistorical data could prove to be an inaccurate reflection of the strength and consistency of the wind in the future. The conclusions of wind studies and energyproduction estimates are based on a particular methodology and a set of assumptions about the existence of certain conditions, and the assumption thatthese conditions will continue in the future. The assumptions and factors are inherently uncertain and may result in actual energy production being differentfrom estimates. A decline in wind conditions at our wind energy facilities could materially adversely affect revenues and cash flows from such facilities.

Variability in HydrologyRevenues generated by hydropower facilities are correlated to the amount of electricity generated, which in turn is dependent upon available water flows.Hydrology varies naturally from period to period and may also change permanently because of climate change or other factors, and a natural disaster couldimpact water flows within the watersheds in which we operate. A sustained decline in water flow at our hydropower facilities could materially adversely affectrevenues and cash flow from such facilities.

Transmission Capacity and CurtailmentElectrical distribution grid systems have finite capacity to accommodate additional electricity that is supplied to the system. In order for projects to be developed,they need to be connected to the distribution grid system in a location where there is sufficient capacity to handle the additional electricity produced by theproject. In most cases the distribution grid system can be upgraded in order to accommodate such increased capacity; however, we are generally required tocover all or a portion of costs and expenses in connection with any construction and/or upgrades that are required, which impacts the financial viability ofsuch projects. There is also a potential risk associated with transmission curtailment measures being contemplated by the Ontario transmission system operator.These measures could be imposed in the future on renewable energy generators in Ontario. The curtailments may reduce the amount of annual revenuegenerated by our projects below the forecasted financial models, thus reducing the expected investment return from these projects.

Rollover of LeasesRevenue properties generate income through rent received from tenants. Upon the expiry of any lease, there can be no assurance that the lease will berenewed or the tenant replaced for a number of reasons. Furthermore, the terms of any subsequent lease may be less favourable than those of the existinglease. Our cash flows and financial position could be adversely affected if tenants were to become unable to meet their obligations under their leases or if asignificant amount of available space in our revenue properties could not be leased on economically favourable lease terms. In the event of default by a tenant,we may experience delays or limitations in enforcing our rights as lessor and incur substantial costs in protecting our investment. In addition, at any time, atenant 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.

Market ConditionsRevenue properties are subject to economic and other factors affecting the real estate markets in the geographic areas where we own and manage properties.These factors include government policies, demographics and employment patterns, the affordability of rental properties, competitive leasing rates and long-term interest and inflation rates. These factors may differ from those affecting the real estate markets in other regions. If real estate conditions in areas wherethese properties are located decline relative to real estate conditions in other regions, our cash flows and financial condition may be more adversely affectedthan those of companies that have more geographically diversified portfolios of properties.


Real Estate OwnershipAn investment in real estate is relatively illiquid. Such illiquidity tends to limit our ability to vary our commercial property portfolio promptly in response tochanging economic or investment conditions. In recessionary times it may be difficult to dispose of certain types of real estate. The costs of holding real estateare considerable and during an economic recession we may be faced with ongoing expenditures with a declining prospect of incoming receipts. In suchcircumstances, it may be necessary to dispose of properties at lower prices in order to generate sufficient cash for operations.

Certain significant expenditures (e.g., property taxes, maintenance costs, mortgage payments, insurance costs and related charges) must be made regardlessof whether or not a property is producing sufficient income to pay such expenses. In order to retain desirable rentable space and to generate adequate revenueover the long term, properties must be maintained or, in some cases, improved to meet market demand. Maintaining a rental property in accordance withmarket standards can entail significant costs, which may not be able to be passed on to tenants. Numerous factors, including the age of the relevant buildingstructure, the material and substances used at the time of construction, or currently unknown building code violations, could result in substantial unbudgetedcosts for refurbishment or modernization. Any failure by us to ensure appropriate maintenance and refurbishment work is undertaken could materiallyadversely affect the rental income that we earn from such properties; for example, such a failure could entitle tenants to withhold or reduce rental paymentsor even terminate existing leases. Any such event could have an adverse effect on our cash flows, financial condition and results of operations.

Changes in LawWe are subject to laws and regulations governing the ownership and leasing of real property, employment standards, environmental matters, taxes and othermatters. It is possible that future changes in such laws or regulations or changes in their application, enforcement or regulatory interpretation could result inchanges in the legal requirements affecting commercial properties (including with retroactive effect). Any changes in the laws to which we are subject or inthe jurisdictions where the commercial properties in which we have an interest are operated could adversely affect us and the revenues we are able to generatefrom our investments.

Forward-Looking Information

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

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

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

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


Additional Items

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

Additional IFRS Measures

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

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

Non-IFRS Measures

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

"Committed leases" represent the GLA under an agreement to lease between a tenant and the Company as at December 31, 2015.

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

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

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

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

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

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

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

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

“Internal rate of return" or "IRR” is an important measure of average annual returns delivered over a period of time, calculated based on Dream’s marketcapitalization (including non-controlling interests) as at December 31, 2015. The internal rate of return for the Dream CMCC Capital Funds are calculated basedon the estimated returns and completion date of the investments within the Fund, net of fund expenses and management fees.

“Net Operating Income" or "NOI” represents revenue less direct operating costs, asset management and management services expenses, and selling marketingand other operating costs, including depreciation.

Additional Information

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


Management’s responsibility for financial statements

Management of Dream is responsible for the preparation of the Annual Report, which includes the consolidated financialstatements, the notes thereto and management’s discussion and analysis. These financial statements have been prepared inaccordance with International Financial Reporting Standards, using management’s best estimates and judgments whenappropriate.

The Board of Directors is responsible for reviewing and approving the consolidated financial statements and for overseeingmanagement’s performance of its financial reporting. The Board of Directors carries out these responsibilities primarily throughan Audit Committee, which is composed entirely of independent directors. The Audit Committee meets periodically withmanagement, our internal auditors and independent auditors to review the scope and results of the annual audit and to reviewthe consolidated financial statements and related reporting and internal control matters before the financial statements areapproved by the Board of Directors and submitted to the shareholders.

PricewaterhouseCoopers LLP, the independent auditors, have audited the consolidated financial statements in accordance withCanadian generally accepted auditing standards. The auditors have full and unrestricted access to the audit committee, with orwithout management present.

Michael J. Cooper Pauline AlimchandaniPresident and Chief Responsible Officer Chief Financial Officer


February 11, 2016

Independent Auditor’s Report

To the Shareholders ofDream Unlimited Corp.

We have audited the accompanying consolidated financial statements of Dream Unlimited Corp. and its subsidiaries (together,Dream), which comprise the consolidated statements of financial position as at December 31, 2015 and December 31, 2014 andthe consolidated statements of earnings, comprehensive income, changes in equity and cash flows for the years then ended, andthe related notes, which comprise a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordancewith International Financial Reporting Standards, and for such internal control as management determines is necessary to enablethe preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted ouraudits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statementsare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financialstatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of materialmisstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, theauditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financialstatements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentationof the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our auditopinion.

OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Dream as atDecember 31, 2015 and December 31, 2014 and its financial performance and its cash flows for the years then ended in accordancewith International Financial Reporting Standards.

(Signed) “PricewaterhouseCoopers LLP”

Chartered Professional Accountants, Licensed Public AccountantsToronto, Ontario


Consolidated Statements of Financial PositionAs at December 31, 2015 and 2014

(in thousands of Canadian dollars) Note 2015 2014AssetsCash and cash equivalents 40 $ 29,983 $ 30,685Accounts receivable 5 188,358 134,005Other financial assets 6 162,800 70,645Housing inventory 7 48,167 71,588Condominium inventory 8 91,323 75,515Land inventory 9 593,401 526,960Investment properties 10 141,377 94,072Recreational properties 11 29,031 26,970Equity accounted investments 12 106,848 90,821Capital and other operating assets 13 28,976 58,937Intangible asset 14 43,000 43,000

Total assets $ 1,463,264 $ 1,223,198

LiabilitiesAccounts payable and other liabilities 15 $ 106,957 $ 85,879Income and other taxes payable 23 35,207 55,348Provision for real estate development costs 16 51,597 55,036Customer deposits 25,265 22,741Construction loans 17 123,736 88,644Operating line 18 90,968 134,500Non-revolving term facility 19 174,006 —Mortgages and term debt 20 68,375 72,094Due to a shareholder 21 — 60,328Preference shares, series 1 22 34,779 38,746Deferred income taxes 23 34,520 18,049

Total liabilities 745,410 631,365

Shareholders’ equityShare capital 24 990,039 997,901Reorganization adjustment 24 (944,577) (944,577)Contributed surplus 35 1,599 767Retained earnings 3 485,819 363,873Accumulated other comprehensive income (loss) 3,25 (14,997) 11,288Total shareholders’ equity 517,883 429,252Non-controlling interest 26 199,971 162,581Total equity 717,854 591,833Total liabilities and equity $ 1,463,264 $ 1,223,198

See accompanying notes to the consolidated financial statements. Commitments and contingencies (Note 38)Subsequent events (Note 44)

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

Michael J. Cooper Ned GoodmanDirector Chair


Consolidated Statements of Earnings For the years ended December 31, 2015 and 2014

(in thousands of Canadian dollars, except for per share amounts) Note 2015 2014

Revenues 27 $ 333,365 $ 388,415Direct operating costs 28 (215,133) (243,535)Asset management and advisory services expenses 29 (8,138) (10,545)Gross margin 110,094 134,335

Selling, marketing and other operating costs 30 (29,360) (28,092)Net margin 80,734 106,243

Other income (expenses):General and administrative expenses 31 (16,211) (14,308)Gain (loss) on sale of recreational and investment properties 10,11 2,183 (76)Fair value changes in investment properties 10 11,158 28,369Share of earnings (losses) from equity accounted investments 12 (530) 324Investment and other income 32 13,366 5,880Interest expense 33 (19,263) (17,148)Gain on reorganization of asset management agreement 39 127,313 —Gain on settlement of debt 21 2,248 —Fair value changes in derivative financial instruments 34 1,227 32Earnings before income taxes 202,225 109,316Income tax expense 23 (28,391) (31,860)Earnings for the year $ 173,834 $ 77,456

Total earnings for the year attributable to:Shareholders $ 121,898 $ 54,010Non-controlling interest 26 51,936 23,446Earnings for the year $ 173,834 $ 77,456

Basic earnings per share 36 $ 1.54 $ 0.69Diluted earnings per share 36 $ 1.46 $ 0.69

See accompanying notes to the consolidated financial statements.


Consolidated Statements of Comprehensive IncomeFor the years ended December 31, 2015 and 2014

(in thousands of Canadian dollars) Note 2015 2014Earnings for the year $ 173,834 $ 77,456Other comprehensive income (loss)Unrealized loss on financial assets designated as available for sale, net of tax expense (41,297) (1,254)

Unrealized gain from foreign currency translation (reclassified to earnings on partial orfull disposal of foreign operation) 4,087 5,061

Unrealized loss on interest rate hedge (216) —

Total other comprehensive income (loss) (37,426) 3,807Other comprehensive income $ 136,408 $ 81,263

Total comprehensive income for the year attributable to:

Shareholders $ 95,613 $ 56,675Non-controlling interest 26 40,795 24,588Comprehensive income $ 136,408 $ 81,263



Consolidated Statements of Changes in EquityFor the years ended December 31, 2015 and 2014

(in thousands of Canadiandollars)

Dreamshare

capital(Note 24)

Contributedsurplus

Reorganizationadjustment

(Note 24)Retained

earnings(1)

Accumulatedother

comprehensiveincome(1)

Totalshareholders'

equity

Non-controlling

interestTotal

equity

Balance, January 1, 2014 $ 942,845 $ 78 $ (944,577) $ 309,863 $ 8,623 $ 316,832 $ 138,771 $ 455,603

Earnings for the year — — — 54,010 — 54,010 23,446 77,456

Other comprehensive incomefor the year — — — — 2,665 2,665 1,142 3,807

Dividends declared (Note 24) — — — — — — (778) (778)

Share repurchase undernormal course issuer bid(Note 24) (780) — — — — (780) — (780)

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

Share-based compensation(Note 35) 124 689 — — — 813 — 813

Balance, December 31, 2014 $ 997,901 $ 767 $ (944,577) $ 363,873 $ 11,288 $ 429,252 $ 162,581 $ 591,833

(in thousands of Canadiandollars)

Dreamshare

capital(Note 24)

Contributedsurplus

Reorganizationadjustment

(Note 24)Retained

earnings(1)

Accumulatedother

comprehensiveincome(1)

Totalshareholders'

equity

Non-controlling

interestTotal

equity

Balance, January 1, 2015 $ 997,901 $ 767 $ (944,577) $ 363,873 $ 11,288 $ 429,252 $ 162,581 $ 591,833

Earnings for the year — — — 121,898 — 121,898 51,936 173,834

Other comprehensive loss forthe year — — — — (26,285) (26,285) (11,141) (37,426)

Dividends declared (Note 24) — — — — — — (3,405) (3,405)

Share repurchase undernormal course issuer bid(Note 24) (7,862) — — — — (7,862) — (7,862)

Share-based compensation (Note 35) — 832 — 48 — 880 — 880

Balance, December 31, 2015 $ 990,039 $ 1,599 $ (944,577) $ 485,819 $ (14,997) $ 517,883 $ 199,971 $ 717,854(1) Refer to Note 3.



Consolidated Statements of Cash FlowsFor the years ended December 31, 2015 and 2014

(in thousands of Canadian dollars) Note 2015 2014Operating activitiesEarnings for the year $ 173,834 $ 77,456

Adjustments for non-cash items:Depreciation and amortization 3,339 2,694

(Gain) loss on sale of recreational and investment properties 10,11 (2,183) 76Fair value changes in investment properties 10 (11,158) (28,369)Gain on reorganization of asset management agreement 39 (127,313) —Share of losses (earnings) from equity accounted investments 12 530 (324)Gain on settlement of debt 21 (2,248) —Deferred income taxes 23 23,536 (5,417)Other adjustments 40 (664) 4,012

Changes in non-cash working capital 40 (67,456) 3,440Acquisition of housing inventory 7 (540) (12,712)Acquisition of condominium inventory 8 (1,345) (13,452)Development of housing inventory, net of sales 7 36,772 13,520Development of condominium inventory, net of sales 8 (10,816) 7,871Advances for construction loan, net of repayments 17 35,092 16,919Acquisition of land inventory 9 (17,322) (17,804)Development of land inventory, net of sales 9 (50,890) (58,394)Net cash flows used in operating activities (18,832) (10,484)

Investing activitiesAdditions to investment properties 10 (10,483) (528)Additions to recreational properties 11 (8,230) (5,951)Contributions to equity accounted investments (28,150) (9,910)Distributions from equity accounted investments 13,052 4,019Distributions from other investments 4,015 2,818Disposal of recreational properties 11 8,935 1,345Disposal of investment properties 10 1,947 —Acquisition of financial assets and other assets (14,472) (10,981)Acquisition of intangible asset 14 — (43,000)Net cash flows used in investing activities (33,386) (62,188)

Financing activitiesBorrowings from mortgages and term debt 20 53,771 26,311Repayments for mortgages and term debt 20 (57,632) (44,447)Repayment of shareholder loan 21 (58,939) (14,741)Advances (repayments) from operating line 18 (43,500) 58,000Costs incurred on modification of operating line 18 (725) —

Proceeds from issuance of non-revolving term facility, net offinancing costs 19 173,810 —

Dividends paid to non-controlling interest 24 (3,405) (778)Redemption of Preference shares, series 1 22 (4,002) (4,169)Shares repurchased under normal course issuer bid 24 (7,862) (780)Equity issuance, net of costs — 54,965Net cash flows from financing activities 51,516 74,361

Increase/(decrease) in cash and cash equivalents (702) 1,689Cash and cash equivalents, beginning of year 30,685 28,996Cash and cash equivalents, end of year 40 $ 29,983 $ 30,685



1. Business and structure

Dream Unlimited Corp. (“Dream” or the “Company”) was incorporated under the Business Corporations Act (Ontario) on April 9, 2013. Pursuant to a Plan ofArrangement (the “Arrangement”) on May 30, 2013, Dundee Corporation transferred its 70.05% interest in Dream Asset Management Corp. (“DAM”), formerlyDundee Realty Corporation, to Dream and effectively distributed to all of its existing shareholders Class A subordinate voting shares (the “Subordinate VotingShares”) of Dream, such that shareholders of Dundee Corporation then held directly a 71.43% interest in Dream (representing an indirect 50% interest inDAM). The balance of the Dream Subordinate Voting Shares, representing a 28.57% interest in Dream, were then held directly by Dundee Corporation, resultingin an indirect 20% interest in DAM. After the Arrangement, the Chair of Dream, Ned Goodman, held a 3.34% interest in the Dream Subordinate Voting Sharesand a 99.05% interest in the Class B Common Shares (“Class B Shares”) of Dream. Holders of Dundee Corporation Preference shares, series 1, also participatedin the Arrangement and received Dream Preference shares, series 1. The non-controlling shareholder’s 29.95% interest in DAM was not affected by theArrangement and is reflected as the other shareholder of DAM for the period up to May 30, 2013 and as a non-controlling interest for the period after May30, 2013 in the consolidated financial statements of Dream. The details of the Arrangement are described in Note 24. Due to the equity issuance in the secondquarter of 2014, the non-controlling shareholder’s interest in DAM decreased to 29.77%.

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

The principal office and centre of administration of the Company is 30 Adelaide Street East, Suite 301, State Street Financial Centre, Toronto, Ontario, M5C3H1. It is listed on the Toronto Stock Exchange and is domiciled in Canada.

2. Basis of preparation

The consolidated financial statements are prepared in compliance with International Financial Reporting Standards (“IFRS”) as issued by the InternationalAccounting Standards Board (“IASB”).

The Arrangement has been accounted for as a corporate reorganization and the Company recognized the identifiable assets and liabilities of DAM transferredto Dream pursuant to the Arrangement at DAM’s historical carrying values with no fair value adjustments. The earnings for the period up to May 30, 2013 arethose of DAM. As at December 31, 2015, all operations of the Company are conducted through DAM.

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

The consolidated financial statements for the year ended December 31, 2015 were approved by the Board of Directors for issue on February 11, 2016, afterwhich date they may only be amended with the Board of Directors' approval.

3. Summary of significant accounting policies

The significant accounting policies adopted by the Company in the preparation of its consolidated financial statements are set out below. The Company hasconsistently applied these accounting policies throughout all years presented in the consolidated financial statements.

Basis of MeasurementThe consolidated financial statements have been prepared under the historical cost convention, except for investment properties, available-for-sale securitiesand financial instruments classified as fair value through profit and loss, which are measured at fair value as determined at each reporting date.

Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany transactions have been eliminated in theconsolidated financial statements.

Subsidiaries are those entities that the Company controls by having the power to govern the financial and operating policies of the entity and has exposure,or rights, to variable returns from its involvement with the entity. The existence and effect of potential voting rights that are currently exercisable are consideredwhen assessing whether the Company controls another entity. Subsidiaries are fully consolidated from the date on which control is obtained by the Companyand are subsequently deconsolidated on the date that control ceases.

Segmented ReportingOperating segments are reported in a manner consistent with internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the Chief Responsible Officer of the Company.

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


Joint Arrangements and AssociatesInvestments in Joint ArrangementsA joint arrangement is a contractual arrangement, pursuant to which Dream and other parties undertake an economic activity that is subject to joint control,whereby the strategic financial and operating policy decisions relating to the activities of the joint arrangement require the unanimous consent of the partiessharing control. Joint arrangements are of two types – joint ventures and joint operations.

Investments in Joint VenturesJoint ventures involve the establishment of a separate entity in which each venturer has an interest in the net assets of the arrangement and are accountedfor using the equity method of accounting whereby the Company recognizes its share of earnings or losses and of other comprehensive income (“OCI”) of theequity accounted investment in its own earnings or OCI, as applicable. Dilution gains and losses arising from changes in the Company’s interest in equityaccounted investments are recognized in earnings. If the Company’s investment is reduced to zero, additional losses are not provided for, and a liability is notrecognized, unless the Company has incurred legal or constructive obligations or made payments on behalf of the equity accounted investment.

The Company’s investments in joint ventures are as follows:

Ownership interestName of joint venture and location Nature of business 2015 2014Bear Valley Mountain Resort, California Ski facilities 50% 50%Corktown Commercial Inc., Toronto Investment property 50% 50%Distillery Restaurants Limited Partnership, Toronto Restaurant 50% 50%Dream CMCC Capital Fund LP, Toronto Investment property 18% 18%Dundee Kilmer Developments Limited, Toronto Condominiums 50% 50%Dundee Kilmer Developments LP, Toronto Condominiums 50% 50%Firelight Infrastructure Partners LP, Toronto Renewable energy 20% 20%Firelight Infrastructure Partners Management LP, Toronto Renewable energy 50% 50%King Edward Private Residence LP, Toronto Condominiums 17% 17%S/D Commercial Corporation, Toronto Investment property 50% 50%Westland Properties Ltd., Western Canada Land 78% 78%Dream VHP Limited Partnership, Toronto Mixed-use development 25% —Dream Windmill Green Fund LP V, Ottawa Mixed-use development 50% —Dream CMCC Shuter Advisor LP, Toronto Condominiums 26% 26%Dream CMCC Shuter LP, Toronto Condominiums 26% 26%Dream CMCC Capital Fund II LP, Toronto Condominiums 9% 9%

Investments in Joint Operations Where the Company undertakes its activities as a joint operation through a direct interest in the joint operation’s assets and a direct obligation for the jointoperation’s liabilities, rather than through the establishment of a separate entity, the Company’s proportionate share of the joint operation’s assets, liabilities,revenues, expenses and cash flow is recognized in the consolidated financial statements and classified according to their nature.

The following table summarizes joint operations in which the Company participates and for which it recognizes its proportionate interest in the underlyingassets, liabilities, revenues, expenses and cash flow:

Ownership interestName of joint operation and location Nature of business 2015 2014Arbor Creek, Saskatoon Land and housing 78% 78%Distillery District, Toronto Historical heritage district 50% 50%Distillery Market, Toronto Grocery market 50% 50%King Edward Hotel, Toronto Hotel management —% 9%Millswoods Robertson, Edmonton Land and housing 70% 70%Streetcar, Toronto Condominiums 50% 50%Thornhill Woods, Toronto Land and housing 30% 30%

Investments in AssociatesInvestments in associates comprise those investments over which the Company has significant influence, but not control. Generally, the Company is consideredto exert significant influence when it holds more than a 20% interest in an entity. However, determining significant influence is a matter of judgment andspecific circumstances and, from time to time, the Company may hold an interest of more than 20% in an entity without exerting significant influence.Conversely, the Company may hold an interest of less than 20% and exert significant influence through representation on the board of directors, direction ofmanagement or through contractual agreements. The Company accounts for its investments in associates using the equity method of accounting describedabove. The Company did not have any investments in associates as at December 31, 2015 and December 31, 2014.



Impairment of Equity Accounted InvestmentsThe Company assesses, at each reporting date, whether there is objective evidence that its interest in an equity accounted investment is impaired. If impaired,the carrying value of the Company’s share of the underlying assets of the equity accounted investment is written down to its estimated recoverable amount,with any difference charged to earnings.

Business CombinationsThe Company uses the acquisition method to account for business combinations. The consideration transferred for the acquisition is measured as the aggregateof the fair values of assets transferred, liabilities incurred or assumed, and any equity instruments of the Company issued in exchange for control of theacquiree. Acquisition costs are recorded as an expense in earnings as incurred. The acquiree’s identifiable assets, liabilities and contingent liabilities that meetthe conditions for recognition under IFRS 3, “Business Combinations” (“IFRS 3”), are recognized at their fair values at the acquisition date.

The interest of non-controlling shareholders in the acquiree, if any, is initially measured at the non-controlling shareholders’ share of the net assets of theacquiree. To the extent that the fair value of consideration paid exceeds the fair value of the net identifiable tangible and intangible assets acquired, the excessis recorded as goodwill. If the consideration transferred is less than the fair value of net identifiable tangible and intangible assets, the excess is recognized inearnings.

Where a business combination is achieved in stages, previously held interests in the acquired entity are remeasured to fair value at the acquisition date, whichis the date control is obtained, and the resulting gain or loss, if any, is recognized in earnings. Amounts arising from interests in the acquiree prior to the dateof acquisition of control that have previously been recognized in OCI are reclassified to earnings. Changes in the Company’s ownership interest of a subsidiarythat do not result in a loss of control are accounted for as equity transactions and are recorded as a component of equity.

Foreign Currency TranslationFunctional and Presentation CurrencyThe consolidated financial statements are presented in Canadian dollars, which is also the Company’s functional currency.

Functional Currency of Subsidiaries and Equity Accounted InvestmentsThe financial statements of consolidated subsidiaries and equity accounted investments that have a functional currency that is different from that of theCompany are translated into Canadian dollars using average rates for the year for items included in the consolidated statements of earnings and OCI, and therates in effect at the dates of the consolidated statements of financial position for assets and liabilities. All resulting changes are recognized in OCI as foreigncurrency translation adjustments.

If the Company’s interest in the foreign operations of a subsidiary or an equity accounted investment is diluted, but the foreign operations remain a subsidiaryor an equity accounted investment, a pro rata portion of the cumulative translation adjustment related to those foreign operations is reallocated betweencontrolling and non-controlling interest, in the case of a subsidiary, or is recognized as a dilution gain or loss in the case of an equity accounted investment.When the Company disposes of its entire interest in the foreign operations or when it loses control, joint control, or significant influence, the cumulativetranslation adjustment included in accumulated other comprehensive income (“AOCI”) related to the foreign operations is recognized in the consolidatedstatements of earnings on a pro rata basis.

Foreign Currency TransactionsForeign currency transactions are translated into the functional currency using exchange rates prevailing at the dates of the transactions. Generally, foreignexchange gains and losses resulting from the settlement of foreign currency transactions and from the translation of monetary assets and liabilities denominatedin currencies other than an entity’s functional currency at each period-end date are recognized in the consolidated statements of earnings, except whendeferred in OCI as qualifying cash flow hedges and qualifying net investment hedges.

Financial InstrumentsThe Company’s financial instruments include cash and cash equivalents, accounts receivable, other financial assets, financial instruments within accountspayable and other liabilities, customer deposits, construction loans, amounts borrowed pursuant to the Company’s operating line, non-revolving term facility,mortgages and term debt, amounts due to a shareholder, and Preference shares, series 1, including related redemption and retraction options that have beenseparately recognized and deposits and restricted cash which have been included in the consolidated financial statements under “Capital and other operatingassets.”

Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are nolonger recognized when the rights to receive cash flows from the assets have expired or are assigned and the Company has transferred substantially all risksand rewards of ownership in respect of an asset to a third party. Financial assets are recognized at settlement date less any related transaction costs. Financialliabilities are no longer recognized when the related obligation is discharged, cancelled or expires.

Classification of financial instruments in the Company’s consolidated financial statements depends on the purpose for which the financial instruments wereacquired or incurred. Management determines the classification of financial instruments at initial recognition.



Available-for-Sale SecuritiesAvailable-for-sale (“AFS”) securities are non-derivative financial instruments that are either specifically designated as available for sale or which have not beenclassified in any other financial instrument category. AFS securities are initially recognized at cost upon acquisition, including directly attributable transactioncosts, and are subsequently carried at fair value.

Certain investments included as “other financial assets” in the Company’s consolidated statements of financial position, including the Company’s investmentsin Dream Office Real Estate Investment Trust (“Dream Office REIT”), Dream Global Real Estate Investment Trust (“Dream Global REIT”) and Dream Hard AssetAlternatives Trust (“Dream Alternatives”) (Note 6), have been included in this category.

Changes in the fair values of AFS securities are reported in OCI until the financial asset is sold or becomes impaired, at which time the accumulated gain orloss is removed from AOCI and recognized in earnings.

Also included as AFS securities are deferred trust units (“DTUs”) of Dream Global REIT, which the Company receives as compensation for services providedpursuant to an asset management and advisory services agreement (Note 39). The DTUs earned by the Company vest annually over five years, commencingon the fifth anniversary of the grant date. The DTUs and the corresponding asset management and advisory services revenue are recognized at fair value,determined by applying a discount to the trading value of the underlying units of Dream Global REIT to reflect the vesting period. Subsequent to initialrecognition, the DTUs are carried at fair value, with changes in fair value recognized in AOCI.

Loans and ReceivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Financial instrumentsclassified in this category include cash and cash equivalents, accounts receivable, loans receivable included in the Company’s portfolio of other financial assets,and deposits and restricted cash. Financial instruments designated as loans and receivables are initially recognized at the amount expected to be received,less, when material, a discount to reduce the loans and receivables to fair value. Subsequently, loans and receivables are measured at amortized cost usingthe effective interest method, less a provision for impairment.

Financial Liabilities at Amortized CostFinancial liabilities at amortized cost include certain financial instruments included in accounts payable and other liabilities, customer deposits, constructionloans, amounts borrowed pursuant to the Company’s operating line, non-revolving term facility, mortgages and term debt, amounts due to a shareholder,and the Company’s Preference shares, series 1. These amounts are initially measured at the amount required to be paid, less, when material, a discount toreduce the liabilities to fair value. Subsequently, these financial liabilities are measured at amortized cost using the effective interest method.

Fair Value Through Profit and Loss/(FVTPL)Financial instruments in this category, which include the redemption and retraction options on the Preference shares, series 1, and the interest rate swap areinitially and subsequently recognized at fair value. Gains and losses arising from changes in fair value are presented within net income in the consolidatedstatements of comprehensive income in the period in which they arise, unless they are derivative instruments that have been designated as hedges.

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

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

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

Impairment of Financial AssetsAt each reporting date, management assesses whether there is objective evidence that financial assets are impaired. Objective evidence may include asignificant or prolonged decline in the trading value of an equity security below its cost, significant financial difficulty of the obligor, or delinquencies in interestand principal payments. If such evidence exists, an impairment loss is recognized equal to: (1) the difference between the weighted average cost of the financialasset and the present value of the estimated future cash flows, discounted using the instrument’s original effective interest rate, for financial assets carriedat amortized cost; or (2) the difference between the weighted average cost of the asset and the fair value at the measurement date, less any previouslyrecognized impairment loss, for financial assets designated as AFS securities.



Real Estate InventoryHousing and CondominiumsHousing and condominium inventory, which may, from time to time, include commercial property, is acquired or constructed for sale in the ordinary courseof business and is held as inventory and measured at the lower of cost and net realizable value. Net realizable value is the estimated selling price in the ordinarycourse of business, based on prevailing market prices at each reporting date and discounted for the time value of money, if material, less estimated costs ofcompletion and estimated selling costs.

LandLand inventory includes land held for development and land under development and is measured at the lower of cost and net realizable value.

Capitalized CostsCapitalized costs include all expenditures incurred in connection with the acquisition of property, direct development and construction costs, certain borrowingcosts and property taxes.

Provision for Real Estate Development CostsThe provision for real estate development costs reflects management’s estimate of costs to complete land, housing and condominium projects for whichrevenue has been recognized. These amounts have not been discounted as the majority of the costs are expected to be expended within approximately oneyear.

Investment PropertiesInvestment properties include properties held to earn rental income or for capital appreciation, or both. Investment properties are measured initially at cost,which includes all expenditures incurred in connection with the acquisition of property, direct development and construction costs, borrowing costs andproperty taxes. Subsequent to initial recognition, investment properties are measured at their fair value at each reporting date. Gains or losses arising fromchanges in fair value are recorded in earnings in the period in which they arise.

Retail Development Investment PropertiesOnce appropriate evidence of a change in use of land held or under development is established, typically upon physical tenant occupancy for investmentproperty, the land is transferred from inventory to investment properties. At that time, the land is recognized at fair value in accordance with the Company'saccounting policy for investment properties, and any gain or loss is reflected in fair value changes in investment properties, within the statement of earnings,in the period the transfer occurs. The gain or loss recorded represents the difference between the fair value of the transferred property and the accumulatedcosts of development.

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

Recreational PropertiesRecreational properties are owner-occupied properties used in the production or supply of goods or services. Recreational properties are stated at cost lessaccumulated depreciation and accumulated impairment losses, if any. Costs of recreational properties include all expenditures incurred in connection withthe acquisition of the property, direct development and construction costs, borrowing costs and property taxes. The Company uses the straight-line methodof depreciation for recreational properties including major expansions and renovations. The estimated useful life of the properties is between five and fiftyyears.

Real Estate Borrowing CostsReal estate borrowing costs include interest and other costs incurred in connection with the borrowing of funds for operations. Borrowing costs directlyattributable to the acquisition, development or construction of qualifying real estate assets that necessarily take a substantial period of time to prepare fortheir intended use or sale are capitalized as part of the cost of the respective real estate asset. For real estate construction and development projects, theCompany considers a substantial period of time to be a period longer than one year to complete. All other borrowing costs are expensed in the period in whichthey occur.

Borrowing costs that are directly attributable to investment properties under development or to the development of condominiums and commercial propertiesare capitalized. Borrowing costs related to land or housing developments are recognized in earnings as incurred. Where borrowing costs are specific to aqualifying asset, the amount is directly capitalized to that asset. Otherwise, borrowing costs are aggregated and pro-rated to qualifying assets using theCompany’s weighted average cost of borrowing. Borrowing costs are capitalized during periods of active development and construction, starting from thecommencement of the development work until the date all the activities necessary to prepare the real estate asset for its intended use or sale are complete.Thereafter, borrowing costs are charged to earnings.



Capital and Other Operating AssetsCapital assets are recorded at cost, net of accumulated depreciation and impairment, if any, and are depreciated on a straight-line basis. Annual depreciationrates estimated by management have a range of two to thirty years. The Company reviews the depreciation method, residual values and estimates of theuseful life of its capital assets at least annually. On sale or retirement, a capital asset and its related accumulated depreciation are removed from the consolidatedfinancial statements and any related gain or loss is reflected in earnings.

Other operating assets consist primarily of prepaid amounts, which are generally amortized to earnings over the expected service period; deposits made inconnection with potential future land acquisitions, which are subsequently allocated to specific land inventory on completion of the acquisition; and restrictedcash amounts, which comprise cash-securing letters of credit provided to various government agencies to support development activities, certain customerdeposits and amounts held as security against accounts receivable.

Impairment of Non-Financial AssetsNon-financial assets are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not berecoverable. An impairment loss, if any, is recognized for the amount by which the asset’s carrying value exceeds its recoverable amount. The recoverableamount of an asset is the greater of an asset’s fair value, less costs to sell, and its value in use. For the purposes of assessing impairment, assets are groupedat the lowest levels for which there are separately identifiable cash inflows (“cash-generating units” or “CGUs”). If their carrying value is assessed as notrecoverable, an impairment loss is recognized.

An assessment is made, at each reporting date, as to whether there is any indication that previously recognized impairment losses may no longer exist or mayhave decreased. If such indication exists, the Company makes an estimate of the recoverable amount and, if appropriate, reverses all or part of the impairment.If the impairment is reversed, the carrying amount of the asset is increased to the newly estimated recoverable amount. This increased carrying amount maynot exceed the carrying amount that would have resulted after taking into account depreciation if no impairment loss had been recognized in prior periods.The amount of any impairment reversal is recorded immediately in earnings for the period.

Intangible AssetUpon the purchase of the right to manage Dream Alternatives, the Company entered into a new management contract, as described further in Notes 14 and39, and the Company recognized an intangible asset with an indefinite life. Finite life intangible assets are carried at cost less any accumulated amortizationand any accumulated impairment losses, and are amortized on a straight-line basis over their estimated useful lives. The Company’s intangible asset has anindefinite life, as there is no foreseeable limit to the period over which the asset is expected to generate cash flows. Indefinite life intangible assets are recordedat cost unless an impairment is identified which requires a write-down to the recoverable amount. Indefinite life intangible assets are evaluated for impairmentannually or more often if events or circumstances indicate there may be an impairment. Any impairment of the Company’s indefinite life intangible assets isrecorded in earnings for the period in which the impairment is identified. Impairment losses on intangible assets may be subsequently reversed in earnings.

Revenue RecognitionRevenue from sales of real estate inventory is generally recognized when the earnings process is virtually complete, the significant risks and rewards ofownership are transferred to the buyer, collectability is reasonably assured, and the Company does not have a substantial continuing involvement with theasset to the degree normally associated with ownership.

Revenue relating to sales of land under development is recognized provided that the related agreement of purchase and sale is unconditional; at least 15%of the sale proceeds has been received; collectability of the remaining proceeds is reasonably assured; and the Company can reliably measure the necessarycosts to complete the development of the asset. Until these criteria are met, any proceeds received are accounted for as customer deposits.

Revenue relating to sales of condominiums and housing projects or commercial property is recognized provided that the related agreement of purchase andsale is unconditional; the buyer occupies the unit; a reasonable portion of the sale proceeds has been received; collectability of the remaining proceeds isreasonably assured; and the Company can reliably measure the necessary costs to complete the development of the asset. Until these criteria are met, anyproceeds received are accounted for as customer deposits.

Revenue from investment properties includes base rents, recoveries of operating expenses including property taxes, percentage participation rents, leasecancellation fees, parking income and other incidental income. The Company uses the straight-line method of rental revenue recognition on investmentproperties whereby any contractual free-rent periods and rent increases over the term of a lease are recognized in earnings evenly over the lease term.Initial direct leasing costs incurred in negotiating and arranging tenant leases are added to the carrying amount of the investment properties and are amortizedover the term of the lease. Lease incentives, which include costs incurred to make leasehold improvements to tenants’ space and cash allowances providedto tenants, are added to the carrying amount of investment properties and are amortized on a straight-line basis over the term of the lease as a reduction inrevenue from investment properties.

Amounts received for the sale of annual season passes to recreational properties are deferred and amortized on a straight-line basis over the term of theseason. Other amounts received from the use of recreational properties are recognized as revenue when earned.



Revenue from real estate asset management and advisory services is calculated based on a fee that is a formula specific to each advisory client and may includefee revenue calculated as a percentage of the capital managed, capital expenditures incurred, the purchase price of properties acquired, and the value offinancing transactions completed. These fees are recognized on an accrual basis over the period during which the related service is rendered. Asset managementand advisory services fee arrangements may also provide the Company with an incentive fee when the investment performance of the underlying assetsexceeds established benchmarks. Incentive fees and other revenues are not recognized in earnings until the amounts can be established with certainty andare no longer dependent on future events.

The Company recognizes investment income from distributions on financial assets when the distributions are received or receivable, after adjusting for theportion considered to be a return of capital. In the fourth quarter of 2015, the Company revised its basis of measurement for the amount of distributions fromfinancial assets that are considered to be investment income and return of capital, based on the Company's pro-rata share of cash flows from operations ofthe investee. The revised basis of measurement, which provides more relevant information to users in assessing realized investment returns over time, isconsidered a change in accounting policy and has been applied retrospectively. As a result, retained earnings as at January 1, 2014 increased by $6,169 andaccumulated other comprehensive income decreased by $6,169. There were no changes to the statement of comprehensive income for the year endedDecember 31, 2014. For the year ended December 31, 2015, investment income increased by $5,197 and OCI decreased by $4,495 (net of taxes of $702) dueto the change, resulting in an increase to earnings per share and diluted earnings per share of $0.04 and $0.04 respectively. There was no impact on totalshareholders' equity as at December 31, 2015.

Direct Operating CostsInventory costs associated with land held for development or land under development, including the estimated costs to complete the development of theasset, are allocated to direct operating costs on a per lot basis, pro-rated based on street frontage of each lot. Inventory costs associated with the developmentof condominiums are allocated to direct operating costs on a per unit basis, pro-rated based on the sales value of the unit relative to the sales value of allunits in a condominium project. Direct operating costs associated with the construction of housing inventory and commercial property are specific to eachproject.

Direct operating costs related to specific investment or recreational properties include property management costs and operating expenses, as well asmanagement and administrative expenses, and are recorded on an accrual basis.

Income TaxesThe Company follows the balance sheet liability method to provide for income taxes on all transactions recorded in its consolidated financial statements. Thebalance sheet liability method requires that income taxes reflect the expected future tax consequences of temporary differences between the carrying amountsof assets and liabilities and their tax bases. Deferred income tax assets and liabilities are determined for each temporary difference and for unused tax lossesand unused tax credits, as applicable, at rates expected to be in effect when the asset is realized or the liability is settled.

The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the substantive enactmentdate. Deferred tax assets are recognized to the extent that it is probable that the assets can be recovered.

Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods (carryforward periodassumptions), it is reasonably possible that actual results could differ from the estimates used in the Company’s historical analysis. If the Company’s resultsof operations are less than projected and there is insufficient objectively verifiable evidence to support the likely realization of its deferred tax assets, adjustmentswould be required to reduce or eliminate its deferred tax assets.

Non-Controlling InterestThe non-controlling interest represents equity interests of DAM owned by another shareholder. The share of net assets, net retained earnings and accumulatedother comprehensive income of DAM attributable to a non-controlling interest is presented as a component of equity.

Preference Shares, Series 1The Preference shares, series 1, are classified and accounted for as a financial liability as they are convertible at the sole discretion of the Company into avariable number of the Company’s Subordinate Voting Shares or are otherwise retractable at the option of the holder, at or after a particular date, for a fixedor determinable amount.

Dream’s Preference shares, series 1, are redeemable, at the option of Dream, at any time, and are retractable at the option of the holder, at any time on orafter December 31, 2015 (Note 22).

The redemption and retraction option features of the Preference shares, series 1, meet the definition of embedded derivatives requiring separate recognition,as the economic risks and characteristics of the redemption and retraction options are not closely related to those of the Preference shares, series 1. Accordingly,the embedded redemption and retraction options have been bifurcated from the Preference shares, series 1, and have been recognized as derivative financialinstruments included with other financial assets or accounts payable and other liabilities, with a corresponding increase or decrease in the initial carryingvalue of the Preference shares, series 1. These embedded derivatives will be settled on a net basis and are recognized in the consolidated financial statementson a net basis.



Earnings per ShareBasic earnings per share is computed by dividing Dream’s earnings attributable to owners of the parent by the weighted average number of Dream SubordinateVoting Shares and Dream Class B Shares outstanding during the year. Diluted earnings per share, where applicable, is calculated by adjusting the weightedaverage number of shares outstanding for dilutive instruments by applying the treasury stock method.

Share-Based CompensationStock Option PlanManagement issues share-based compensation to certain employees in the form of stock options that vest evenly over a five-year period. The fair value ofthe options on the grant date is determined using an option pricing model. The estimated fair value of options on the grant date is recognized as compensationexpense on a graded vesting basis over the period in which the employee services are rendered.

Deferred Share Incentive PlanThe Company has a deferred share incentive plan, as described in Note 35, that provides for the grant of deferred share units (DSUs) and income deferredshare units to eligible directors, senior management and their service providers. Grants to directors, officers and employees are recognized as compensationexpense and included in general and administrative expenses. The compensation expense, based on the share price at the grant date for this equity-settledplan, is recognized over the vesting period, with a corresponding increase to contributed surplus. During the holding period, which is between the grant dateand the vesting date, DSUs earn dividends declared by the Company in the form of additional fractional DSUs. Upon settlement of DSUs and their earnedfractional DSUs, the amount recognized in contributed surplus for the grant is reclassified to share capital.

Future Accounting StandardsThe Company is currently evaluating the impact of these accounting standards on the consolidated financial statements.

IFRS 5, “Non-Current Assets Held for Sale and Discontinued Operations” (“IFRS 5”)IFRS 5 specifies the accounting for assets held for sale, and the presentation and disclosure of discontinued operations. It was amended to clarify (i) the impactof reclassifications from “held for sale” to “held for distribution” and vice versa, and (ii) guidance on changes in a plan of sale. The amendments to IFRS 5 areeffective for annual periods beginning on or after January 1, 2016.

IFRS 7, “Financial Instruments - Disclosure” (“IFRS 7”)IFRS 7 requires entities to provide disclosures in their financial statements that enable users to evaluate the significance of financial instruments and the natureand extent of risks arising from financial instruments to which an entity is exposed and how the entity manages those risks. It was amended to (i) add guidanceon whether an arrangement to service a financial asset that has been transferred constitutes continuing involvement, and (ii) to clarify that the additionaldisclosure required by the amendments to IFRS 7 is not specifically required for interim periods, unless required by IAS 34. The amendments to IFRS 7 areeffective for annual periods beginning on or after January 1, 2018.

IFRS 9, “Financial Instruments” (“IFRS 9”)IFRS 9 establishes principles for the financial reporting of financial assets and financial liabilities where the final version of IFRS 9 was issued in July 2014 andincludes (i) a third measurement category for financial assets (fair value through OCI; (ii) a single, forward-looking “expected loss” impairment model; (ii) asubstantially reformed approach to hedge accounting, and (iv) a mandatory effective date of annual periods beginning on or after January 1, 2018.

IFRS 10, “Consolidated Financial Statements” (“IFRS 10”), and IAS 28, “Investments in Associates and Joint Ventures” (“IAS 28”)IFRS 10 and IAS 28 establish principles for the presentation and preparation of consolidated financial statements when an entity controls one or more otherentities and prescribe the accounting for investments in associates, respectively. They were amended to clarify that a full gain or loss is recognized when atransaction involves a business combination and a partial gain or loss is recognized when a transaction involves assets that do not constitute a business. Theamendments are effective for annual periods beginning on or after January 1, 2016.

IFRS 15, “Revenue from Contracts with Customers” (“IFRS 15”)IFRS 15 specifies how and when revenue should be recognized, in addition to requiring more informative and relevant disclosures. The IFRS 15 revenuerecognition model requires management to exercise significant judgment and make estimates that affect revenue recognition. This standard supersedes IAS18, “Revenue,” IAS 11, “Construction Contracts,” and a number of revenue-related interpretations. IFRS 15 must be applied for periods beginning on or afterJanuary 1, 2018, with early application permitted.

IFRS 16, “Leases” (“IFRS 16”)IFRS 16 sets out the principles for the recognition, measurement and disclosure of leases. IFRS 16 provides revised guidance on identifying a lease and forseparating lease and non-lease components of a contract. IFRS 16 introduces a single accounting model for all lessees and requires a lessee to recognize right-of-use assets and lease liabilities for leases with terms of more than 12 months, unless the underlying asset is of low value. Under IFRS 16 lessor accountingfor operating and finance leases will remain substantially unchanged. IFRS 16 is effective for annual periods beginning on or after January 1, 2019, with earlierapplication permitted for entities that apply IFRS 15.



4. Critical accounting estimates, judgments and assumptions

The preparation of these consolidated financial statements in accordance with IFRS requires the Company to make judgments in applying its accounting policiesand estimates and assumptions about the future. These judgments, estimates, and assumptions affect the reported amounts of assets, liabilities, revenuesand expenses, and the related disclosure of contingent assets and liabilities included in the Company’s consolidated financial statements. The Companyevaluates its estimates on an ongoing basis. Such estimates are based on historical experience and on various other assumptions that the Company believesare reasonable under the circumstances, and these estimates form the basis for making judgments about the carrying value of assets and liabilities and thereported amount of revenues and expenses that are not readily apparent from other sources. Actual results may differ from these estimates under differentassumptions or conditions. The following discusses the most significant accounting judgments, estimates and assumptions that the Company has made in thepreparation of its consolidated financial statements.

Joint Arrangements and AssociatesThe Company holds investments in various assets, and its ownership interest in these investments is established through diverse structures. Significant judgmentis applied in assessing whether the investment structure results in control, joint control or significant influence over the operations of the investment, orwhether the Company’s investment is passive in nature. The assessment of whether the Company exerts control, joint control or significant influence over aninvestment will determine the accounting treatment for the investment. In making this assessment, the Company considers its ownership interest in theinvestment as well as its decision-making authority with regards to the operating, financing and investing activities of the investment as specified in thecontractual terms of the arrangement. Joint arrangements that involve the establishment of a separate entity in which each venture has an interest are setup as joint ventures, whereas investments in associates are those investments over which the Company has significant influence but no control.

Business CombinationsThe Company uses significant judgment to conclude whether an acquired set of activities and assets is a business, and such judgment can lead to significantlydifferent accounting results. If an acquired set of activities and assets does not meet the definition of a business, the transaction is accounted for as an assetacquisition.

There are many differences in accounting for a business combination versus an asset acquisition including the recognition of goodwill and deferred tax amounts,the initial measurement of assets and accounting for transaction costs. These differences not only affect the accounting as at the acquisition date, but willalso affect future depreciation and possible impairment analysis. Accordingly, the conclusion as to whether a business has been acquired can have a significanteffect on the Company’s reported financial position and results of operations.

Significant judgment is required in applying the acquisition method of accounting for business combinations and, specifically, in identifying and determiningthe fair value of assets and liabilities acquired, including intangible assets and residual goodwill, if any.

ConsolidationIn determining if an entity is a subsidiary of the Company, the Company makes significant judgments about whether it has control over such an entity. Inaddition to voting rights, the Company considers the contractual rights and obligations arising from other arrangements, and other relevant factors, relatingto an entity in determining if the Company has the power and ability to affect returns from an investee. The contractual rights and obligations considered bythe Company include, amongst others, the approvals and decision-making process over significant operating, financing and investing activities, theresponsibilities and scope of decision-making power of the Company, the termination provisions of applicable agreements, the types and determination offees paid to the Company and the significance (if any) of any investment made by the Company. The Company reviews its prior conclusions when facts andcircumstances change.

Net Realizable ValueLand, including land under development and land held for development, as well as housing and condominium inventory are stated at the lower of cost andnet realizable value. In calculating net realizable value, management must estimate the selling price of these assets based on prevailing market prices at thedates of the consolidated statements of financial position, discounted for the time value of money, if material, less estimated costs of completion and estimatedselling costs. If estimates are significantly different from actual results, the carrying amounts of these assets may be overstated or understated on theconsolidated statements of financial position and, accordingly, earnings in a particular period may be overstated or understated.

ProvisionsProvisions are recorded by the Company when it has determined that it has a present obligation, whether legal or constructive, and that it is probable thatan outflow of resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation. Managementmust use judgment in assessing the magnitude and timing of the potential economic exposure and the likelihood of a future event occurring. Actual resultsmay differ significantly from these estimates. The consolidated financial statements include a significant provision for costs to complete land, housing andcondominium projects. The stage of completion of any development project, and remaining costs to be incurred, are determined by management, consideringrelevant available information at each reporting date. In making such determination, management makes significant judgments about milestones, actual workperformed and the estimates of costs to complete the work.



Capitalization of Borrowing CostsThe Company capitalizes borrowing costs to qualifying assets by determining whether the borrowings are general or specific to a project. Judgment is involvedin this determination. Borrowing costs are capitalized to qualifying real estate assets that necessarily take a substantial period of time to prepare for theirintended use or sale. The Company considers a substantial period of time to be a period longer than one year to complete.

Fair Value of Investment PropertiesCritical judgments are made in respect of the fair values of investment properties and the investment properties held in equity accounted investments.Assumptions relating to the estimates of fair values of investment properties include the receipt of contractual rents, expected future market rents, renewalrates, maintenance requirements, discount rates that reflect current market uncertainties, capitalization rates and current and recent investment propertytransaction prices, if any. If there is any change in these assumptions or regional, national or international economic conditions, the fair value of investmentproperties may change materially.

On a rotational basis, the Company engages independent, professionally qualified appraisers who are experienced, nationally recognized and qualified in theprofessional valuation of real estate in their respective geographic areas. Judgment is applied in determining the extent and frequency of independentappraisals. A select number of properties are valued by an independent appraiser on a rotational basis at least once every three years. For properties subjectto an independent valuation report, management verifies all major inputs to the valuation and reviews the results with the independent appraisers.

Fair Value of Retail Development Investment PropertiesFair value measurement of an investment property under development is applied only if the fair value is considered to be reliably measurable. In rarecircumstances, investment properties under development may be carried at cost until their fair value becomes reliably measurable. It may sometimes bedifficult to determine reliably the fair value of retail investment properties under development. In order to evaluate whether the fair value of an investmentproperty under development can be determined reliably, management considers various factors including the terms of the construction contract, the stageof completion, the location, type and quality of the property, expected completion dates, current market rents for similar properties, the level of reliability ofcash inflows after completion, the development risks specific to the property, past experience with similar constructions, status of approvals and/or permits,estimated costs to complete and market conditions.

Impairment of Recreational Properties, Capital Assets and Intangible AssetsRecreational properties, capital assets and intangible assets with finite lives are tested for impairment whenever events or changes in circumstances indicatethat the carrying amounts may not be recoverable. Intangible assets with indefinite lives are tested at least annually. Management uses judgment in performingthis impairment test. Imprecision in any of the assumptions and estimates used could affect the valuation of these assets and the assessment of performance.

Leases In applying its revenue recognition policy for revenue earned from investment properties, the Company makes judgments with respect to whether tenantimprovements provided in connection with a lease enhance the value of the leased space, which impacts whether such amounts are treated as additions tothe investment property or as a lease incentive. Judgments are also made in determining whether certain leases, in particular those with long contractualterms where the lessee is the sole tenant in a property and long-term ground leases where the Company is the lessor, are operating or finance leases. TheCompany has determined that all of its leases are operating leases.

Income TaxesThe determination of the Company’s income and other tax liabilities requires interpretation of complex laws and regulations, often involving multiplejurisdictions. Judgment is required in determining whether deferred income tax assets should be recognized on the consolidated statements of financialposition. Deferred income tax assets are recognized to the extent that the Company believes it is probable that the assets can be recovered. Furthermore,deferred income tax balances are recorded using enacted or substantively enacted future income tax rates. Changes in enacted income tax rates are not withinthe control of management. However, any such changes in income tax rates may result in actual income tax amounts that may differ significantly from estimatesrecorded in deferred tax balances.

Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation andestablishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Fair Value and Impairment of Financial InstrumentsCertain financial instruments are recorded in the Company’s consolidated statements of financial position at values that are representative of or approximatefair value. The fair value of a financial instrument that is traded in active markets at each reporting date is determined by reference to its quoted market priceor dealer price quotations. Investments in equity instruments whose fair value cannot be reliably measured are carried at cost.

The fair value of certain other financial instruments is determined using valuation techniques. By their nature, these valuation techniques require the use ofassumptions. Changes in the underlying assumptions could materially impact the determination of the fair value of a financial instrument. Imprecision indetermining fair value using valuation techniques may affect the amount of earnings recorded in a particular period.The Company assesses, at each reporting date, whether there is any objective evidence that a financial instrument, including equity accounted investments,is impaired. The assessment of impairment of a financial instrument requires significant judgment, where management evaluates, among other factors, theduration and extent to which the carrying value or fair value of an investment is less than its cost and the financial health of and short-term business outlookfor the investee.



The Company classifies the fair value of its financial instruments according to the following hierarchy, which is based on the amount of observable inputs usedto value the instrument:

Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for theasset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.

Fair Value of Hedging Instruments and EffectivenessCritical judgments are made in respect of assumptions used to estimate the fair value of hedging instruments and to assess the effectiveness of the hedgingarrangement. The basis of valuation and assessment of effectiveness for the Company's derivatives is set out in Note 19; however, the fair values reportedmay differ from how they are ultimately recognized if there is volatility in interest rates between the valuation date and settlement date.

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

5. Accounts receivable

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

Note 2015 2014Contracted sales of land under development and recoveries $ 117,513 $ 104,024Condominium sales 47,329 6,195Housing sales 1,907 3,514Receivables relating to investment and recreational properties 5,555 3,631Asset management and advisory services fees 39 12,087 9,797Other 3,967 6,844

$ 188,358 $ 134,005

Accounts receivable for contracted sales of land under development and housing and condominium sales are secured by the underlying real estate assets andhave various terms of repayment. The carrying value of accounts receivable is reported net of a provision for impairment of $958 (December 31, 2014 –$1,255).

As at December 31, 2015, there were contracted sales of land under development of approximately $3,010 (December 31, 2014 – $713) that are past duebut no impairment has been recorded as adequate non-refundable deposits have been received and the ownership of the asset will not be transferred tothe purchaser until the full purchase price has been received.



6. Other financial assets

Other financial assets consisted of the following:

Note 2015 2014Investment in Dream Office REIT $ 13,443 $ 19,464Investment in Dream Office REIT LP B units 90,912 9,653Investment in Dream Global REIT 24,248 23,996Investment in Dream Global REIT, deferred trust units 10,609 7,120Investment in Dream Alternatives 10,313 3,498Loans receivable 3,778 674Investments in equity securities not quoted in an active market 7,029 5,630Redemption option on Preference shares, series 1 1,460 —Other investments in equity securities quoted in an active market 1,008 610

34 $ 162,800 $ 70,645

The Company recognizes investment income from distributions on financial assets when the distributions are received or receivable, after adjusting for theportion considered to be a return of capital. In the fourth quarter of 2015, the Company revised its basis of measurement for the amount of distributions fromfinancial assets that are considered to be investment income and return of capital, based on the Company's pro-rata share of cash flows from operations ofthe investee. For the year ended December 31, 2015, investment income, relating to Dream Office REIT, increased by $5,197 as a result of this change. Forfurther details, refer to Note 3 on page 56.

Dream Office REIT

2015 2014Return of capital portion $ 2,592 $ 1,686Investment income portion 8,149 908Distributions earned on investment $ 10,741 $ 2,594

On April 2, 2015, the Company and Dream Office REIT announced a reorganization where the Company received 4,850,000 LP Class B Units, Series 1 (LP Bunits), of Dream Office LP, a subsidiary of Dream Office REIT, which are exchangeable for 4,850,000 Dream Office REIT units. These units are carried at fairvalue with subsequent changes to fair value recorded in OCI. See Note 39 for further details.

Dream Global REIT

2015 2014Return of capital portion $ 1,204 $ 1,120Investment income portion 1,036 1,120Distributions earned on investment $ 2,240 $ 2,240

In addition to its investment in Dream Global REIT units, the Company also held 1,792,344 deferred trust units (“DTUs”) as at December 31, 2015 with a fairvalue of $10,609 (December 31, 2014 – 1,364,659 DTUs with a fair value of $7,120), which were received as compensation provided for services pursuant toan asset management and advisory services agreement between the Company and Dream Global REIT. Refer to Note 34 for the valuation methodology usedto determine the fair value of the DTUs.

Dream Alternatives

2015 2014Return of capital portion $ 219 $ 13Investment income portion 45 —Distributions earned on investment $ 264 $ 13

In the year ended December 31, 2015, the Company purchased 1,299,700 units in Dream Alternatives (December 31, 2014 – 515,900 units). As at December31, 2015, the Company held 1,815,600 units in Dream Alternatives (December 31, 2014 – 515,900 units).



7. Housing inventory

The movement in housing inventory is as follows:

TotalBalance, January 1, 2014 $ 63,338Acquisitions 12,712Transfers from land inventory 9,058Development 50,336Housing units occupied (63,856)Balance, December 31, 2014 $ 71,588Acquisitions 540Transfers from land inventory 13,402Development 20,752Housing units occupied (57,524)Other (591)Balance, December 31, 2015 $ 48,167

8. Condominium inventory

The movement in condominium inventory is as follows:

TotalBalance, January 1, 2014 $ 79,794Acquisitions 13,452Development 43,507Condominium units occupied (51,378)Transfers to recreational properties (3,162)Transfers to investment properties (5,795)Other (903)Balance, December 31, 2014 $ 75,515Acquisitions 1,345Development 56,312Condominium units occupied (45,496)Transfers from land inventory 3,647Balance, December 31, 2015 $ 91,323



9. Land inventory

The movement in land inventory is as follows:

Land held fordevelopment

Land underdevelopment Total

Balance, January 1, 2014 $ 358,333 $ 101,368 $ 459,701Acquisitions 17,712 92 17,804Development 16,083 132,751 148,834Lot and acre sales — (90,440) (90,440)Transfers (8,496) 8,496 —Transfers to housing inventory — (9,058) (9,058)Other 119 — 119Balance, December 31, 2014 $ 383,751 $ 143,209 $ 526,960Acquisitions 60,415 — 60,415Development 8,539 113,184 121,723Lot and acre sales (726) (70,107) (70,833)Transfers (9,421) 9,421 —Transfers to housing inventory — (13,402) (13,402)Transfers to investment properties — (27,815) (27,815)Transfers to condominium inventory — (3,647) (3,647)Balance, December 31, 2015 $ 442,558 $ 150,843 $ 593,401

In the year ended December 31, 2015, the Company made final cash installments of $17,322 for land. This resulted in $43,093 of deposits being transferredto land held for development, for a total of $60,415 of acquisitions in the current year. Refer to Note 13 for details.

In the year ended December 31, 2015, land with a carrying value of $27,815 was transferred to Western Canada retail within investment properties. See Note10 for further details.

10. Investment properties

The movement in investment properties was as follows:

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

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

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

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

Land and building additions 1,358 9,125 10,483Transfers from land inventory — 27,815 27,815Disposals (2,104) — (2,104)

Gains (losses) included in earnings:Fair value changes of investment properties (817) 11,975 11,158Amortization of lease incentives (47) — (47)

Balance, December 31, 2015 $ 92,462 $ 48,915 $ 141,377

During the year ended December 31, 2015, Dream achieved occupancies within its first retail development site in Western Canada. The achievement of firsttenant occupancy within a property demonstrated a change of intent in use of the land, which resulted in a change in classification under IFRS from landinventory (held at cost) to investment properties (held at fair value). As a result of occupancies achieved, Dream transferred the carrying value of land of$27,815 to investment properties and recognized a non-cash gain within fair value changes in investment properties in the statement of earnings. In the yearended December 31, 2015, fair value gains of $11,975 were recognized relating to Western Canada investment properties.

Unrealized gains included in net income for the year ended December 31, 2015 for Toronto and Western Canada investment properties were $11,111 (yearended December 31, 2014 – $28,324).



Fair Values of Investment Properties

Fair values of investment properties are determined using valuations prepared by management using inputs which are Level 3 on the fair value hierarchy. Tosupplement the assessment of fair value, management obtains valuations of selected investment properties on a rotational basis from qualified externalvaluation professionals and verifies the results of such valuations with the external appraisers. As at December 31, 2015, the Western Canada investmentproperties were externally appraised which relate to $48,915 (December 31, 2014 – $90,468) were externally appraised.

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

The following are the significant assumptions used under the discounted cash flow method:

• Terminal capitalization rate – taking into account assumptions regarding vacancy rates and market rents• Discount rate – reflecting current market assessments of the uncertainty in the amount and timing of cash flows

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

December 31, 2015 December 31, 2014Input Range Weighted average Range Weighted average

Toronto Discount rate 6.00%–7.50% 6.3% 6.00%–7.50% 6.8%Terminal capitalization rate 5.75%–6.50% 5.8% 5.75%–6.75% 5.8%

Western Canada Discount rate 7.0% 7.0% n/a n/aTerminal capitalization rate 6.25%–6.50% 6.4% n/a n/a

Fair values of the Company's Toronto investment properties are most sensitive to changes in capitalization rates. An increase in the capitalization rate ordiscount rate will result in a decrease in the fair value of an investment property and vice versa. If the capitalization rate were to increase or decrease by 25basis points (“bps”), the value of investment properties would decrease by approximately $4,157 and increase by approximately $4,544, respectively, as atDecember 31, 2015 (December 31, 2014 – approximately decrease by $4,632 and increase by $4,100).

Fair values of the Company's Western Canada investment properties are most sensitive to changes in the terminal capitalization rates. An increase in theterminal capitalization rate or discount rate will result in a decrease in the fair value of an investment property and vice versa. If the terminal capitalizationrate were to increase or decrease by 25 basis points (“bps”), the value of investment properties would decrease by approximately $1,353 and increase byapproximately $1,464, respectively, as at December 31, 2015 (December 31, 2014 – $nil).

Investment properties with a fair value of $93,030 as at December 31, 2015 (December 31, 2014 - $86,430), are pledged as security for mortgages and termdebt. Investment properties with a fair value of $48,915 as at December 31, 2015 (December 31, 2014 - $nil), are pledged as security for construction loans.

Fair Value of Toronto Investment Properties

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

Fair Value of Western Canada Retail Development Investment Properties

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

The Company’s future minimum rental commitments from non-cancellable tenant operating leases as at December 31, 2015 were as follows:

No longer than 1 year $ 11,254Between 1 and 5 years 39,584Longer than 5 years 42,095

$ 92,933



11. Recreational properties

2015 2014Cost $ 42,010 $ 32,627Accumulated depreciation (15,040) (12,848)Balance, beginning of year 26,970 19,779Additions 8,230 5,951Disposals (6,595) (1,421)Depreciation (2,398) (1,704)Transfers from condominium inventory — 3,162Other 2,824 1,203Balance, end of year $ 29,031 $ 26,970

Cost $ 46,469 $ 42,010Accumulated depreciation (17,438) (15,040)Balance, end of year $ 29,031 $ 26,970

During the year ended December 31, 2015, the Company sold its ownership in the King Edward Hotel recognizing a gain on sale of $2,340 on disposition beforetax.

2015 2014Operational recreational properties:

Arapahoe Basin ski hill (Colorado) $ 19,328 $ 14,553King Edward Hotel (Ontario) — 5,710Willows Golf Course (Saskatchewan) 2,814 2,852

Recreational properties under development:Broadview Hotel (Ontario) 6,889 3,855

$ 29,031 $ 26,970

12. Equity accounted investments

The Company has entered into certain arrangements in the form of jointly controlled entities, primarily for the development of investment and recreationalproperties and for renewable energy project management. These arrangements include restrictions on the ability to access assets without the consent of allpartners and include distribution conditions outlined in partnership agreements. These arrangements are accounted under the equity method. As atDecember 31, 2015, the carrying value of these arrangements was $106,848 (December 31, 2014 – $90,821).

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


LP



Restaurants LPDream

Windmill

DreamCMCC Funds


Project level (at 100%) Assets $ 272,698 $ 1,028,063 $ 10,240 $ 50,831 $ 92,060 $ 47,094 $ 1,500,986 Liabilities (231,866) (795,725) (4,842) (20,620) (25,480) (18,687) (1,097,220)Net assets $ 40,832 $ 232,338 $ 5,398 $ 30,211 $ 66,580 $ 28,407 $ 403,766Dream's ownership interest 50% 20% 50% 50% 9%–40% 18%–78% Assets $ 136,349 $ 205,613 $ 5,120 $ 26,514 $ 12,070 $ 21,593 $ 407,259 Liabilities (115,933) (159,145) (2,421) (10,310) (4,175) (8,427) (300,411)Net assets $ 20,416 $ 46,468 $ 2,699 $ 16,204 $ 7,895 $ 13,166 $ 106,848

During the year ended December 31, 2015, the Company contributed $14,322 to Windmill Green Fund LP V ("Dream Windmill") and exercised its right toconvert a $2,178 loan to equity in Dream Windmill. In addition, Dream Windmill established a two year credit facility amounting to $15,000 with a CanadianSchedule I bank, which bears interest at a rate per annum equal to the bank’s prime lending rate plus 1.50% or at the bank's then prevailing bankers' acceptancerate plus 3.0%.




LP




Project level (at 100%) Assets $ 603,828 $ 1,065,948 $ 10,632 $ 67,665 $ 45,145 $ 1,793,218 Liabilities (577,410) (787,089) (5,887) (34,172) (19,436) (1,423,994)Net assets $ 26,418 $ 278,859 $ 4,745 $ 33,493 $ 25,709 $ 369,224Dream's ownership interest 50% 20% 50% 9%–40% 18%–78% Assets $ 303,953 $ 196,657 $ 5,316 $ 11,486 $ 23,417 $ 540,829 Liabilities (290,744) (140,885) (2,944) (6,046) (9,389) (450,008)Net assets $ 13,209 $ 55,772 $ 2,372 $ 5,440 $ 14,028 $ 90,821

The following tables summarize the Company’s proportionate share of revenues, earnings (losses) and cash flows from operations in equity accountedinvestments for the year ended December 31, 2015 and 2014.

In the year ended December 31, 2015, there were impairment losses of $7,000, primarily due to Xeneca Limited Partnership, a subsidiary of FirelightInfrastructure Partners LP. After pursuing alternate strategies, the board of directors of the general partner of Xeneca, a subsidiary of Firelight InfrastructurePartners LP, approved an operational reorganization plan to suspend development of Xeneca’s waterpower electricity projects and pursue a sale of assets. Asa result, the Company reduced the value of its investment in Xeneca to its estimated recoverable amount of $500 and recorded an impairment charge of$6,000 in the Company’s share of income (losses) from equity accounted investments in the statement of operations. The estimated recoverable amount wasdetermined using the fair value of net assets less costs of disposal.


LP



Restaurants LPDream

Windmill

DreamCMCC Funds


Project level (at 100%) Revenues $ 99 $ 132,492 $ 31,525 $ — $ 55,624 $ 3,819 $ 223,559 Earnings (losses) (3,481) (7,026) 973 (2,506) 11,495 364 (181) Cash flows from operations (3,481) 72,968 2,068 (2,506) 11,636 384 81,069Dream's ownership interestAttributable to Dream: 50% 20% 50% 50% 9%–40% 18%–78%

Revenues $ 50 $ 26,498 $ 15,763 $ — $ 10,135 $ 1,910 $ 54,356Earnings (losses) (1,740) (1,405) 487 (297) 2,134 291 (530)Cash flows from operations (1,740) 14,594 1,034 (297) 2,160 301 16,052


LP




Project level (at 100%) Revenues $ 367 $ 79,110 $ 24,245 $ 2,251 $ 8,458 $ 114,431 Earnings (losses) (2,722) 15,485 510 (388) (256) 12,629 Cash flows from operations (2,722) 42,155 1,594 (388) 233 40,872Dream's ownership interestAttributable to Dream: 50% 20% 50% 9%–40% 18%–78%

Revenues $ 183 $ 15,822 $ 12,122 $ 479 $ 2,834 $ 31,440Earnings (losses) (1,361) 3,097 255 169 (1,836) 324Cash flows from operations (1,361) 8,431 797 169 (1,592) 6,444

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



13. Capital and other operating assets

Capital and other operating assets consisted of the following:

2015 2014Deposits $ 11,629 $ 45,908Restricted cash 5,231 2,594Capital assets 7,059 6,240Prepaid expenses 4,143 3,409Inventory 914 786Total capital and other operating assets $ 28,976 $ 58,937

2015 2014Capital assets $ 9,624 $ 7,519Accumulated depreciation (2,565) (1,279)Total capital assets $ 7,059 $ 6,240

Deposits represent amounts paid by the Company for future land and housing acquisitions and to secure other projects. During the year ended December31, 2015, the Company acquired certain lands for which deposits had been made and as a result, transferred the deposits made of $43,093 to land inventory(Note 9).

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

14. Intangible asset

In the year ended December 31, 2014, the Company acquired the right to manage Dream Alternatives for $43,000, which has been classified as an indefinitelife intangible asset, as the new management contract entered into has no expiration. A portion of the purchase price was used by the vendor, pursuant tothe purchase agreement, to acquire $10,000 of Dream Alternatives units, which are held in escrow and which may be repaid to DAM if certain performancemetrics are not maintained over the next five years. At this time, management expects that the performance criteria will be met in the foreseeable future andrecovery of any consideration is not probable. If performance metrics are not met in the future, a gain would be recognized at the time management believesrecovery of such amounts is virtually certain. As at December 31, 2015, the carrying value was $43,000 (December 31, 2014 - $43,000).

15. Accounts payable and other liabilities

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

Note 2015 2014Trade payables $ 31,881 $ 35,730Accrued liabilities 51,537 39,027Deferred revenue 23,031 11,013Interest rate swap 19 216 —

Retraction option on Preference shares, series 1 34 292 109$ 106,957 $ 85,879

16. Provision for real estate development costs

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

2015 2014Balance, beginning of year $ 55,036 $ 66,541Additional provisions 46,204 35,801Utilized during the year (49,643) (47,306)Balance, end of year $ 51,597 $ 55,036

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



17. Construction loans

December 31, 2015 December 31, 2014WesternCanada Toronto Total

WesternCanada Toronto Total

Balance, beginning of year $ 47,579 $ 41,065 $ 88,644 $ 35,215 $ 36,479 $ 71,694Borrowings 66,832 33,106 99,938 50,485 44,917 95,402Repayments (47,043) (17,803) (64,846) (38,121) (40,362) (78,483)Other — — — — 31 31Balance, end of year $ 67,368 $ 56,368 $ 123,736 $ 47,579 $ 41,065 $ 88,644

Western Canada construction loans relate to housing and retail operations and are all due on demand with recourse provisions. The majority of Torontoconstruction loans relate to project-specific financing for condominiums under development and hold security against the underlying asset. Further detailson the weighted average interest rates related to construction loans are included in Note 34.

18. Operating line

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

2015 2014Principal outstanding, beginning of year $ 136,000 $ 78,000Advances from operating line 92,500 256,000Repayments to operating line (136,000) (198,000)Principal outstanding, end of year $ 92,500 $ 136,000Unamortized financing costs (1,532) (1,500)Carrying balance, end of year $ 90,968 $ 134,500

As at December 31, 2015, the Company had issued letters of credit of $73,902 (December 31, 2014 – $47,371), which reduce the undrawn credit availableunder the operating line. The Company incurred additional financing costs related to the modification of the terms of the operating line in the year endedDecember 31, 2015 in the amount of $725. Total unamortized financing costs of $1,532 have been netted against the carrying value of the operating line asat December 31, 2015 and are amortized over the remaining term of the loan (December 31, 2014 - $1,500).

Interest expense relating to the facility for the year ended December 31, 2015 was $4,957 (year ended December 31, 2014 – $4,575).

19. Non-revolving term facility

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

As at December 31, 2015, the non-revolving term facility had a carrying value of $174,006, net of unamortized financing costs of $994. Interest expense relatingto the non-revolving term credit facility for the year ended December 31, 2015 was $3,359 (2014 – $nil).



Interest rate swap

On July 17, 2015, the Company entered into an interest rate swap to effectively exchange the variable interest rate on the non-revolving term facility for afixed rate of 3.65% per annum through the use of forward purchase contracts that commenced on August 6, 2015, maturing on June 30, 2018 to coincide withthe maturity of the non-revolving term facility. The Company has applied hedge accounting to this relationship, whereby the change in fair value of the effectiveportion of the hedging derivative is recognized in AOCI in the statement of changes in equity. Settlement of both the fixed and variable portions of the interestrate swap occurs on a monthly basis. The full amount of the hedge was determined to be effective as at December 31, 2015.

The following table summarizes the details of the interest rate swap, which has been classified as a hedging instrument, outstanding at December 31, 2015:

Maturity dateNotional amount

hedged Fixed interest rateFinancial instrument

classificationFair value of hedging

instrument (1)

June 30, 2018 $ 175,000 3.65% Cash flow hedge $ (216)(1) Included in accounts payable and other liabilities, as at December 31, 2015.

20. Mortgages and term debt

TotalBalance, January 1, 2014 $ 89,605Borrowings 26,311Repayments (44,447)Interest and other 625Balance, December 31, 2014 $ 72,094Borrowings 53,771Repayments (57,632)Interest and other 142Balance, December 31, 2015 $ 68,375

Included in the repayments was $34,800 related to certain mortgage and term debt amounts using the proceeds of the non-revolving term facility. Refer toNote 19 for further information.

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

As at December 31, 2015 As at December 31, 2014

Maturity dates Balance outstanding

Weighted average interest rate

Balanceoutstanding

Weightedaverage

interest rateFixed rateMortgages and term debt

Properties 2016 – 2025 $ 60,425 4.69% $ 34,479 5.60%Land n/a — n/a 33,749 3.67%

$ 60,425 4.69% $ 68,228 4.65%Variable rateMortgages and term debt

Properties 2016 – 2024 $ 7,950 3.94% $ 3,866 4.29%Total $ 68,375 4.61% $ 72,094 4.63%



21. Due to a shareholder

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

As at December 31, 2015, Dundee Corporation held 21,636,288 Subordinate Voting Shares of Dream and, the Chairman of Dundee Corp. also held an additional2,426,822 Subordinate Voting Shares and 3,086,583 Class B Common Shares of Dream.

On June 30, 2015, $43,857 was paid from the proceeds of the non-revolving term facility (Note 19) to extinguish the balance due to a shareholder. Thedifference between the carrying value at June 30, 2015 of $46,105 and the amount paid was recorded as a gain on settlement of debt amounting to $2,248in the consolidated statement of earnings during the year ended December 31, 2015. As a result of the repayment, the security interest granted was discharged.

2015 2014Balance, beginning of year $ 60,328 $ 72,785Interest accrual 859 2,560Repayments during the year (58,939) (14,741)Cost recovery — (276)Gain on settlement of debt (2,248) —Balance, end of year $ — $ 60,328

22. Preference shares, series 1

As part of the Arrangement (Note 24), the Company issued 6,000,000, 7.0% Cumulative Redeemable First Preference shares, series 1 (“Preference shares,series 1”), with a liquidation amount of $7.16 per share. The shares are classified and accounted for as a financial liability as they are convertible, at the solediscretion of Dream, into a variable number of Dream Subordinate Voting Shares, or are otherwise retractable at the option of the holder, at or after a particulardate, for a fixed or determinable amount.

The Preference shares, series 1, may be redeemed, at the option of the Company, at any time at a price of $7.16 per share on or after December 31, 2015, inaccordance with the terms of the Preference shares, series 1.

The Company may elect to convert the Preference shares, series 1, into Dream Subordinate Voting Shares of the Company at any time, subject to regulatoryapprovals.

The Preference shares, series 1, are retractable by the holders at any time on or after December 31, 2015 at $7.16 per share.

Each series of Preference shares, series 1, will be entitled to preference on the payment of dividends and the distribution of assets in the event of the liquidation,dissolution or winding up of the Company over the Subordinate Voting Shares and Class B Shares (Note 24).

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

Number of shares Par value Carrying valueBalance, January 1, 2014 6,000,000 42,960 42,645Redemption of shares (571,100) (4,089) (4,069)Accretion using the effective interest method — — 170Balance, December 31, 2014 5,428,900 $ 38,871 $ 38,746Redemption of shares (560,481) (4,013) (4,002)Accretion using the effective interest method — — 35Balance, December 31, 2015 4,868,419 $ 34,858 $ 34,779

In the year ended December 31, 2015, the Company declared and paid dividends on the Preference shares, series 1 of $2,638 (year ended December 31, 2014– $2,864).



23. Income taxes

During the year ended December 31, 2015, the Company recognized an income tax expense amount of $28,391 (year ended December 31, 2014 – $31,860),the major components of which include the following items:

2015 2014Current income taxes:

Current income taxes with respect to profits in the year $ 13,116 $ 35,814Current tax adjustments in respect of prior years (10,551) (180)Other items affecting current tax expense 2,290 1,643

Current income tax expense 4,855 37,277Deferred income taxes:

Origination and reversal of temporary differences 22,507 (5,627)Expense arising from previously unrecognized temporary difference 365 285Impact of changes in income tax rates 664 (75)

Deferred income tax expense/(recovery) 23,536 (5,417)Income tax expense $ 28,391 $ 31,860

The Company has modified its estimates of uncertain tax positions which resulted in a recovery of $9,446 through income tax expense for the year endedDecember 31, 2015.

Due to non-coterminous tax years of the Company’s partnership interests, taxable income of approximately $18,194 for the year ended December 31, 2015(year ended December 31, 2014 – $23,603) relating to such partnership interests will be included in computing the Company’s taxable income for its 2016and 2015 taxation year. The income tax expense amount on pre-tax earnings differs from the income tax expense amount that would arise using the combinedCanadian federal and provincial statutory tax rate of 26.6% (December 31, 2014 – 26.6%) as illustrated in the table below. Cash paid for income taxes for theyear ended December 31, 2015 was $24,996 (year ended December 31, 2014 – $38,742).

2015 2014Earnings before tax at statutory rate of 26.6% (2014 – 26.6%) $ 53,792 $ 29,077Effect on taxes of:

Adjustment in expected future tax rates 664 (75)Net income tax expense not previously recognized — (756)Net income tax (recovery) in respect of prior periods (9,446) —

Non-taxable portion of capital gains (19,496) (308)Other items 2,877 3,922

Income tax expense $ 28,391 $ 31,860

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

Asset / (Liability)Accounts

receivable

Investmentand

recreationalproperties

Non-coterminous

tax yearFinancial

assetsReal estate

inventoryLoss carryforwards

Equityissuance Total

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

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

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

Earnings for the year (3,229) (4,413) 1,410 (16,635) 291 (809) (151) (23,536)Other comprehensive income — 1,144 — 5,921 — — — 7,065

Balance, December 31, 2015 $ (10,330) $ (21,331) $ (4,865) $ (14,563) $ 9,973 $ 6,149 $ 447 $ (34,520)

As at December 31, 2015, the Company had tax losses of $7,627 (December 31, 2014 – $5,319) that expire between 2026 and 2035 and federal investmenttax credits of $1,841 (December 31, 2014 – $1,999) that expire between 2025 and 2030. The Company also has capital losses of $28 (December 31, 2014 –$nil) that can be carried forward indefinitely and US capital losses of $1,174 (US $848) (December 31, 2014 – $986, US $848) that expire in 2019. Deferredincome tax assets have not been recognized in respect of these losses as it is not probable that the Company will be able to utilize all the losses against taxableprofits in the future.



24. Share capital

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

As at December 31, 2015 As at December 31, 2014Issued and outstanding Number of shares Amount Number of shares AmountDream Subordinate Voting Shares 75,270,150 $ 951,251 76,220,777 $ 959,113Dream Class B Shares 3,115,512 38,788 3,115,512 38,788

78,385,662 $ 990,039 79,336,289 $ 997,901

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

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

Issued and outstanding, beginning of year 76,220,777 $ 959,113 72,614,163 $ 904,047Class B Shares converted into Subordinate Voting Shares — — 814 10Deferred share units converted into Subordinate Voting Shares — — 9,000 124Subordinate Voting Shares issued pursuant to equity offering — — 3,680,000 55,712Subordinate Voting Shares repurchased (950,627) (7,862) (83,200) (780)Issued and outstanding, end of year 75,270,150 $ 951,251 76,220,777 $ 959,113

The following table summarizes the changes in the Dream Class B Shares issued during the year ended December 31, 2015.

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

Issued and outstanding, beginning of year 3,115,512 $ 38,788 3,116,326 $ 38,798Class B Shares converted into Subordinate Voting Shares — — (814) (10)Issued and outstanding, end of year 3,115,512 $ 38,788 3,115,512 $ 38,788

Class G Preference SharesUsing the proceeds of the equity offering in the second quarter of 2014, the Company invested $44,698 in Class G preference shares and $10,767 in commonshares of DAM. The Class G preference shares have similar terms to the Company’s Preference shares, series 1, except that they do not have a conversionfeature and have a subscription price of $7.45 per share. The Class G preference shares held by the Company are eliminated on consolidation of DAM.

DividendsIn the year ended December 31, 2015, the Board of Directors of DAM declared dividends of $8,026 and $3,405 to the Company and the non-controlling interestof DAM, respectively, on its non-voting common shares (December 31, 2014 – $1,820 and $778 respectively). Dividends attributable to the Company areeliminated in the consolidated statements of Dream.

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

As a result of the Arrangement, on May 30, 2013, Dundee Corporation effectively distributed to all of its shareholders certain shares of Dream, such that theshareholders of Dundee Corporation would hold a 71.43% interest in Dream (representing an indirect 50.00% interest in DAM). The balance of the shares,representing a 28.57% interest in Dream, are held directly by Dundee Corporation, providing it with a 20.00% indirect interest in DAM. Holders of DundeeCorporation Preference shares, series 1 received Dream Preference shares, series 1, following the Arrangement.

The Arrangement was accounted for as a corporate reorganization and the Company has recognized the identifiable assets and liabilities of DAM transferredto Dream pursuant to the Arrangement at DAM’s historical carrying values, with no fair value adjustments.



The effect of the Arrangement on shareholders’ equity on May 30, 2013 was as follows:

1. Subordinate Voting Shares of Dream issued to Dundee Corporation and to the holders of Dundee Corporation Subordinate Voting Shares on aone-for-one basis as part of the Arrangement were recognized at $12.45 per share based on the weighted average trading price of Dream SubordinateVoting Shares from May 30, 2013 to June 5, 2013;

2. Class B Shares of Dream issued to holders of Dundee Corporation common shares on a one-for-one basis as part of the Arrangement wererecognized at $12.45 per share, consistent with the value of Subordinate Voting Shares of Dream, as they are exchangeable on a one-for-one basisfor Subordinate Voting Shares of Dream;

3. Preference shares, series 1, of Dream issued to the holders of Dundee Corporation Preference shares, series 1, as part of the Arrangement wererecognized at $7.16 per share, and embedded derivatives associated with the redemption and retraction options were recognized in the amountsof $300 and ($720), respectively;

4. Common shares and Class C shares of DAM transferred to Dream have been eliminated on consolidation;

5. The remaining common shares and Class C Preferred shares of DAM and a corresponding amount of retained earnings and OCI were recorded asnon-controlling interest based upon the non-controlling shareholder’s 29.95% interest in the net assets of DAM at the time of the Arrangement;

6. The Class D Preferred shares and Class F Preferred shares of DAM were classified as a liability with a net carrying value of $nil given that theseamounts eliminate on consolidation with Dream;

7. Contributed surplus of $3,370 was eliminated; and

8. The difference between the stated capital of Dream’s issued shares and the previously recorded share capital and contributed surplus of DAM,and other minor adjustments, of $944,577 was reflected as a separate component of equity described as “Reorganization adjustment.”

The revised share structure of Dream is summarized above as a result of the Arrangement. Common and Preferred shares of DAM as at May 30, 2013 wereas follows.

Number of shares AmountCommon sharesDream 947 $ 13,782Preferred sharesDAM Class C 947 $ —DAM Class D 512,108 —DAM Class F 18,061,333 —

Shares of DAMThe following shares exist within DAM’s share capital; they hold a carrying value of $nil in the consolidated financial statements of Dream.

Class D Preferred SharesThe Class D Preferred shares of DAM, held by Sweet Dream Corp. ("SDC"), are non-voting and are not entitled to receive dividends. The Class D Preferredshares are redeemable by DAM, at its sole discretion, for an amount per share equal to the lesser of (i) $10,447 divided by the aggregate number of Class DPreferred shares originally outstanding at the date of grant of the Class D Preferred shares, and (ii) an amount obtained by multiplying 512,108 by the closingmarket price of a Series A unit of Dream Office REIT at the time of such redemption, divided by the aggregate number of Class D Preferred shares originallyoutstanding at the date of grant of the Class D Preferred shares. In each case, the redemption amount is to be satisfied only to the extent of proceeds of acorresponding redemption of Preferred shares owned by DAM in SDC.

The Class D Preferred shares have been recognized as a liability with a net carrying value of $nil (2014 – $nil). The value attributable to DAM’s investment inthe Preferred shares of SDC has been offset against the Class D Preferred shares as a result of the right to set off the redemption amounts payable on therespective shares.

Class F Preferred SharesThe Class F Preferred shares of DAM, held by a subsidiary of Dundee Corporation (“Subco”), are non-voting and are entitled to receive dividends of up to4% of the Class F redemption amount as and when declared by the directors of DAM. The Class F Preferred shares are redeemable by DAM and areretractable at the option of Subco at a price of $10.00 per share, plus accrued and unpaid dividends.

The Class F Preferred shares have been recognized as a liability with a net carrying value of $nil (December 31, 2014 – $nil). The value attributable to DAM’sinvestment in the Preferred shares of Subco has been offset against the Class F Preferred shares as a result of the right to set off the redemption amountspayable of $180,613 on the respective shares.



Normal Course Issuer BidDream renewed its normal course issuer bid (the “Bid”), which commenced on September 2, 2015 and will remain in effect until the earlier of September 1,2016 or the date on which Dream has purchased the maximum number of Subordinate Voting Shares permitted under the Bid. Under the Bid, Dream willhave the ability to purchase for cancellation up to a maximum of 3,789,759 of its Subordinate Voting Shares through the facilities of the Toronto Stock Exchange(the “TSX”) at prevailing market prices and in accordance with the rules and policies of the TSX. The actual number of Subordinate Voting Shares that may bepurchased and the timing of any such purchases will be determined by Dream, subject to a maximum daily purchase limitation of 28,927 shares except wherepurchases are made in accordance with block purchase exemptions under applicable TSX rules. In the year ended December 31, 2015, 950,627 SubordinateVoting Shares were purchased for cancellation by the Company, at an average price of $8.27 (December 31, 2014 – 83,200 Subordinate Voting Shares at anaverage price of $9.38). Subsequent to December 31, 2015, 137,300 Dream Subordinate Voting Shares were purchased for cancellation by the Company, atan average price $6.94.

25. Accumulated other comprehensive income

The following table details the movement in AOCI:

Interest ratehedge

Foreigncurrency

translation

Available-for-sale

securities

Less: amountsattributable to non-controlling interest Total

Balance, January 1, 2014(1) $ — $ 340 $ 16,125 $ (7,842) $ 8,623Other comprehensive income (loss) during the year — 5,061 (1,254) (1,142) 2,665Balance, December 31, 2014(1) $ — $ 5,401 $ 14,871 $ (8,984) $ 11,288Other comprehensive income (loss) during the year (216) 4,087 (41,297) 11,141 (26,285)Balance, December 31, 2015 $ (216) $ 9,488 $ (26,426) $ 2,157 $ (14,997)

(1) Refer to Note 3.

26. Non-controlling interest

The non-controlling interest represents the 29.77% equity interest in DAM owned by SDC, an entity wholly owned by the Chief Responsible Officer of DAMand Dream, located in Toronto. SDC is entitled to receive 34,204,495 Subordinate Voting Shares of Dream at any time by exercising its right to exchange itsDAM shares for Subordinate Voting Shares of Dream, pursuant to the Exchange Agreement between Dream, SDC and DAM. On a diluted basis, this representsapproximately a 30% interest in Dream as at December 31, 2015.

Dream and SDC entered into an agreement (the "Permitted Sales Agreement") that provides for “put rights” in favour of each of them. Upon the occurrenceof certain triggering events, Dream may by notice in writing to SDC require SDC, at SDC’s option, to either (i) acquire all of the non-voting common shares inthe capital of DAM (the “DAM Common Shares”) and all of the Class C voting preference shares in the capital of DAM (the “DAM Class C Shares”) held byDream, or (ii) cause the sale of all of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale of assets, distributethe net proceeds from the sale of assets to the shareholders of DAM. Upon the occurrence of certain different triggering events, SDC may by notice in writingto Dream require Dream, at Dream’s option, to either (i) acquire all of the DAM Common Shares and DAM Class C Shares held by SDC, or (ii) cause the sale ofall of the DAM Common Shares and DAM Class C Shares or all of DAM’s assets and, in the case of a sale of assets, distribute the proceeds to DAM’s shareholders.Completion of any transaction under this agreement will be subject to receipt of the approval of the shareholders of Dream, if required by law or under theagreement, and the receipt of any required regulatory approvals.

27. Revenues

The types of revenue earned are as follows:

2015 2014Land $ 126,053 $ 153,649Housing 67,763 78,383Condominiums 61,492 73,475Asset management and advisory services 33,984 39,867Investment and recreational properties 44,073 43,041

$ 333,365 $ 388,415

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



28. Direct operating costs

2015 2014Direct costs of real estate inventory $ 175,589 $ 203,986Direct costs of operating investment, recreational properties and other 18,785 24,711Salary and other compensation 20,759 14,838

$ 215,133 $ 243,535

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

29. Asset management and advisory services expenses

Asset management and advisory services expenses consisted of the following:

2015 2014Salary and other compensation $ 5,167 $ 9,678Corporate, service and professional fees 2,196 587General office and other 775 280

$ 8,138 $ 10,545

30. Selling, marketing and other operating costs

Selling, marketing and other operating costs consisted of the following:

2015 2014Selling and marketing costs $ 9,637 $ 9,242Salary and other compensation 8,711 8,506General office and other 11,012 10,344

$ 29,360 $ 28,092

31. General and administrative expenses

General and administrative expenses consisted of the following:

2015 2014Salary and other compensation $ 6,515 $ 7,399Corporate, service and professional fees 7,490 5,821General office and other 2,206 1,088

$ 16,211 $ 14,308

32. Investment and other income

Investment and other income consisted of the following:

2015 2014Investment income on publicly listed funds $ 10,042 $ 2,458Interest income on receivables 2,204 1,934Other income 1,120 1,488

$ 13,366 $ 5,880

Investment income on publicly listed funds includes the income portion of distributions earned on the Company's investment in Dream Office REIT, DreamGlobal REIT, and Dream Alternatives.

For details on the recognition of investment income on publicly listed funds, refer to Note 6 - Other financial assets.



33. Interest expense

2015 2014Project-specific and general debt interest $ 17,463 $ 11,952Cancellation fees paid on early repayment of mortgages 1,250 —Interest on amounts due to a shareholder 859 2,560Dividends on Preference shares, series 1 2,637 2,864Amortization of deferred financing costs 1,267 1,051Interest capitalized to real estate development projects (4,248) (1,449)Accretion of effective interest 35 170Interest expense $ 19,263 $ 17,148Add (deduct): Interest capitalized 4,248 1,449 Amortization of deferred financing costs (1,267) (1,051) Accretion expense (35) (170) Mark to market adjustment (202) (1,277) Accrued interest (748) 179Cash interest paid $ 21,259 $ 16,278

Amounts of interest capitalized to real estate development projects flow through to direct operating costs as occupancies occur or when the assets are sold.Cash interest paid for the year ended December 31, 2015 was $21,259 (December 31, 2014 – $16,278), which includes a $1,250 discharge fee for the earlyrepayment of mortgages during the year ended December 31, 2015.



34. Financial instruments fair value and risk management

Measurement CategoriesFinancial instruments have been classified into categories that determine the basis of measurement and, for items carried at fair value, whether changes infair value are recognized in the consolidated statements of earnings or in OCI. The following table illustrates the carrying values of financial instruments andtheir classification.

As at December 31 2015 2014Financial assetsAvailable for sale Investment in Dream Office REIT $ 13,443 $ 19,464 Investment in Dream Office REIT, LP Class B Units 90,912 9,653 Investment in Dream Global REIT 24,248 23,996 Investment in Dream Global REIT - deferred trust units 10,609 7,120 Investment in Dream Alternatives 10,313 3,498 Other investments in equity securities quoted in an active market 1,008 610 Investments in equity securities not quoted in an active market 7,029 5,630

Loans and receivables Cash and cash equivalents 29,983 30,685 Accounts receivable 188,358 134,005 Loans receivable 3,778 674 Capital and other operating assets Deposits 11,629 45,908 Restricted cash 5,231 2,594

Fair value through profit and loss Redemption option on Preference shares, series 1 1,460 —

Financial liabilitiesAmortized cost Financial instruments included in accounts payable and other liabilities 83,418 74,757 Customer deposits 25,265 22,741 Construction loans 123,736 88,644 Operating line 90,968 134,500 Non-revolving term facility 174,006 — Mortgages and term debt 68,375 72,094 Due to a shareholder — 60,328 Preference shares, series 1 34,779 38,746

Fair value through profit and loss Retraction option on Preference shares, series 1 292 109 Interest rate swap 216 —



Fair Value of Financial InstrumentsThe following table categorizes financial assets or liabilities measured or disclosed at fair value by level according to the significance of inputs used in makingmeasurements. Quoted market prices represent a Level 1 valuation. When quoted market prices are not available, the Company maximizes the use of observableinputs. When all significant inputs are observable, the valuation is classified as Level 2. Valuations that require the significant use of unobservable inputs areconsidered Level 3.

2015 2014Fair valuehierarchy

Carrying value Fair value

Carryingvalue Fair value

Recurring measurement at fair valueFinancial assets

Investment in Dream Office REIT Level 1 $ 13,443 $ 13,443 $ 19,464 $ 19,464Investment in Dream Office REIT, LP Class B Units Level 2 90,912 90,912 9,653 9,653Investment in Dream Global REIT Level 1 24,248 24,248 23,996 23,996Investment in Dream Alternatives Level 1 10,313 10,313 3,498 3,498Other investments in equity securities quoted in an active market Level 1 1,008 1,008 610 610Investment in Dream Global REIT – deferred trust units Level 3 10,609 10,609 7,120 7,120Redemption option on Preference shares, series 1 Level 3 1,460 1,460 — —

Financial liabilitiesRetraction option on Preference shares, series 1 Level 3 292 292 109 109Interest rate swap Level 3 216 216 — —

Fair values disclosedConstruction loans Level 3 123,736 123,709 88,644 88,400Non-revolving term facility Level 3 174,006 175,000 — —

Mortgages and term debt Level 3 68,375 68,999 72,094 74,462Operating line Level 3 90,968 92,500 134,500 136,000Preference shares, series 1 (excluding redemption and retraction options) Level 1 34,779 34,761 38,746 39,305

The fair values of cash and cash equivalents, accounts receivables, deposits, restricted cash, loans receivable, certain financial instruments included in accountspayable and other liabilities, and customer deposits approximate their carrying values due to their short-term nature.

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

The fair value of the Preference shares, series 1, is based on the market price as at December 31, 2015 of $7.14 per share for the 4,868,419 issued andoutstanding Preference shares, series 1.

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

Dream Global REIT Deferred Trust Units

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

For the year endedDecember 31, 2015

For the year endedDecember 31, 2014

Risk-free rate 0.6%–1.1% 1.3%–1.5%Expected volatility 17.0%–36.0% 20.0%–34.0%

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



Total deferred unitsgranted Years vested

Fair value as atDecember 31, 2015

Units as at December 31, 2015 closing price of $8.66 per unit $ 15,522Discount rate of 19% per unit for units issued in 2011 147,717 2017-2021 (243)Discount rate of 21% per unit for units issued in 2012 357,170 2018-2022 (649)Discount rate of 25% per unit for units issued in 2013 407,191 2019-2023 (882)Discount rate of 30% per unit for units issued in 2014 452,581 2020-2024 (1,176)Discount rate of 53% per unit for units issued in 2015 427,685 2021-2025 (1,963)Total 1,792,344 $ 10,609

Total deferred unitsgranted Years vested

Fair value as atDecember 31, 2014

Units as at December 31, 2014, closing price of $8.57 per unit $ 11,695Discount rate of 24% per unit for units issued in 2011 147,717 2017-2021 (304)Discount rate of 25% per unit for units issued in 2012 357,170 2018-2022 (765)Discount rate of 46% per unit for units issued in 2013 407,191 2019-2023 (1,605)Discount rate of 49% per unit for units issued in 2014 452,581 2020-2024 (1,901)Total 1,364,659 $ 7,120

Redemption and Retraction Options on Preference Shares, Series 1The fair value of the Preference shares, series 1, redemption and retraction options is valued using an interest rate option pricing method. The significantunobservable inputs used in the fair value measurement of the redemption and retraction options on the Preference shares, series 1, include the following:

2015 2014Credit spread 4.7% 4.5%Reversion parameter 3.6% 3.6%Expected volatility 55.6% 22.0%

A higher volatility will increase the value of the redemption and retraction options. A lower credit spread will decrease the value of the redemption andretraction options.

Interest rate swapThe fair value measurement of the interest rate swap was valued by a qualified independent valuator based on the present value of the estimated future cashflows determined using observable yield curves.

Non-revolving term facility and Operating lineThe fair value measurement of the non-revolving term facility and operating line approximates the carrying value excluding unamortized financing costs. Thenon-revolving term facility bears interest, at the Company’s option, at a rate per annum equal to either the bank’s prime lending rate plus 1.50% or at thebank’s then prevailing bankers’ acceptance rate plus 2.75%. The non-revolving term facility is hedged against the interest rate swap to effectively exchangethe variable interest rate. for a fixed rate of 3.65%. The operating line bears interest, at the Company’s option, at a rate per annum equal to either the bank’sprime lending rate plus 1.25% or at the bank’s then prevailing bankers’ acceptance rate plus 2.50%.

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

Investments in Equity Securities Not Quoted in an Active MarketInvestments in equity securities not quoted in an active market are neither measured nor disclosed at fair value since their fair value cannot be determinedreliably. As at December 31, 2015, the Company's only investments in equity securities not quoted in an active market were investments in jointly owned realestate assets.



The table below shows the reconciliation of investments in equity securities not quoted in an active market:

2015 2014Balance, beginning of year $ 5,630 $ 2,992Additional investments 1,440 4,741Transfers to Level 1 — (1,064)Investments sold — (998)Foreign exchange (loss) through OCI (41) (41)Balance, end of year $ 7,029 $ 5,630

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

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

Investment inDream Global

REIT – deferredtrust units

Interest rateswap

Redemptionoption on

Preferenceshares, series 1

Retractionoption on


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

Deferred trust units 1,740 — — —Total gains or losses for the year included in net income:

Change in fair value of redemption and retraction options(1) — — 1,460 (183)Included in other comprehensive income:

Change in fair value of deferred trust units 1,748 — — —Change in fair value of interest rate swap — 216 — —

Balance, December 31, 2015 $ 10,608 $ 216 $ 1,460 $ (292)(1) The change in fair value of redemption and retraction options of $1,277 was included in the consolidated statement of earnings as fair value change in financial instruments.

Investment inDream Global

REIT – deferredtrust units

Interest rateswap

Redemptionoption on


Retractionoption on


Balance, December 31, 2013 $ 4,829 $ — $ 180 $ (420)Issued or received during the year:

Deferred trust units 1,901 — — —Total gains or losses for the year included in net income:

Change in fair value of redemption and retraction options(1) — — (180) 311Included in other comprehensive income:

Change in fair value of deferred trust units 390 — — —Change in fair value of interest rate swap — — — —

Balance, December 31, 2014 $ 7,120 $ — $ — $ (109)(1) The change in fair value of redemption and retraction options of $131 was included in the consolidated statement of earnings as fair value change in financial instruments.

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

Market RiskMarket risk is the risk that a material loss may arise from fluctuations in the fair value of a financial instrument. For purposes of this disclosure, the Companysegregates market risk into three categories: fair value risk, interest rate risk in its non-revolving term facility and currency risk.



Fair Value RiskFair value risk is the risk of a potential loss from adverse movements in the values of assets and liabilities, excluding movements relating to changes in interestrates and foreign exchange currency rates, because of changes in market prices. The Company's investments in Dream Office REIT, Dream Global REIT andDream Alternatives are listed on the Toronto Stock Exchange. A 10% absolute change in the market price of the units in Dream Office REIT, Dream Global REITand Dream Alternatives would increase (decrease) the carrying amount of the investments by $14,953, before associated taxes, with a corresponding increase(decrease) in OCI.

Interest Rate RiskInterest rate risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.The Company is exposed to interest rate risk primarily through its variable rate debt obligations. As at December 31, 2015, excluding the demand facility andPreference shares, series 1, variable rate debt represented 83% (December 31, 2014 – 74%) of total debt obligations. Interest rate risk is mitigated, in part,by borrowing long-term fixed rate mortgages with relatively consistent interest expense. The Company entered into an interest rate swap during the yearended December 31, 2015 to mitigate interest rate risk. See Note 19 for further details.

Credit RiskCredit risk is the risk that one party to a financial instrument will cause a financial loss to the other party by failing to discharge an obligation.

Credit risk arises from the possibility that builders or other third-party purchasers of the Company’s real estate inventory, or other entities to which theCompany may have advanced funds, may not fulfill their contractual obligations to repay amounts due to the Company. The Company mitigates its credit riskby requiring graduated deposits from buyers and withholding real estate titles until final payments are received. The Company also mitigates credit risk bydealing only with builders and other third-party buyers that the Company considers to have secure financial standing and by diversifying the mix of buildersand markets.

Credit risk also arises from the possibility that tenants in investment properties may not fulfill their lease or contractual obligations. The Company mitigatesthis credit risk by attracting tenants of sound financial standing and diversifying its mix of tenants. It also monitors tenant payment patterns and discussespotential tenant issues with property managers on a regular basis.

Liquidity RiskLiquidity risk is the risk that the Company will encounter difficulty in meeting obligations associated with the maturity of financial liabilities. The Companymanages its liquidity risk primarily through the management of its financial leverage. The Company uses various debt and equity ratios to monitor its capitaladequacy and debt requirements including interest coverage, minimum net worth, average term to debt maturity and the ratio of variable rate debt toaggregate debt. These ratios assist the Company in assessing the debt level maintained by the Company in order to ensure adequate cash flows for real estatedevelopment. The Company manages maturities of outstanding debt by matching them to project closing dates and monitoring the repayment dates to ensuresufficient capital will be available to cover obligations. Management also monitors the repayment of the operating line, which is due June 30, 2017.

A summary of the Company’s contractual obligations as at December 31, 2015 is as follows:

WesternCanada

constructionloans

Torontoconstruction

loansOperating

line

Mortgagesand term

debtNon-revolvingterm facility(1)

Preferenceshares, series

1 Total

Weightedaverage interest

rate (face)

2016 $ 37,682 $ 17,995 $ — $ 17,953 $ — $ 34,858 $ 108,488 5.13%2017 29,686 38,373 92,500 1,869 — — 162,428 3.66%2018 — — — 9,376 175,000 — 184,376 3.67%2019 — — — 1,596 — — 1,596 3.97%2020 and thereafter — — — 37,581 — — 37,581 3.91%

67,368 56,368 92,500 68,375 175,000 34,858 494,469 4.01%Discount/unamortized financing

costs — — (1,532) — (994) (79) (2,605)

$ 67,368 $ 56,368 $ 90,968 $ 68,375 $ 174,006 $ 34,779 $ 491,864Weighted average interest rate(face) 3.19% 4.43% 3.44% 4.61% 3.65% 7.00% 4.01%

(1) Refer to Note 19 for information regarding the interest rate swap the Company entered into during the year ended December 31, 2015.

The contractual payments above include the principal repayments owing in future periods. The amounts presented above are shown consistent with theircontractual repayments. For instruments which are due on demand, the total liability has been included within the 2016 repayment year. In certain instancesthis may be inconsistent with the repayment timing expected by the Company.



35. Share-based compensation

Stock Option PlanThe Company has a stock option plan under which key officers and employees are granted options to purchase Subordinate Voting Shares. Each option grantedcan be exercised for one Subordinate Voting Share.

TotalUnits outstanding, beginning of year 200,000Granted 1,420,000Forfeited (60,000)Units outstanding, end of year 1,560,000

As at December 31, 2015, 1,560,000 options were outstanding under the stock option plan, collectively. Grants that are outstanding in the year ended December31, 2015, are as follows:

Grant date October 2013 February 2015 December 2015Number of options granted and outstanding as at December 31, 2015 140,000 715,000 705,000Weighted average exercise price $ 13.88 $ 8.96 $ 7.25Vesting period 5 years 5 years 5 yearsFair value of stock options granted at grant date $ 5.08 $ 2.05 $ 2.06Number of options vested as at December 31, 2015 30,000 — —

The fair value of the stock options granted during the year ended December 31, 2015 was estimated on the grant date as using the Black-Scholes option pricingmodel with the following weighted average assumptions:

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

During the year ended December 31, 2015, the Company recognized $877 (year ended December 31, 2014 – $430) of share-based compensation expenserelated to stock options, offset by a recovery of $144 from forfeited shares (year ended December 31, 2014 – $nil).

Deferred Share Unit PlanThe Company has a deferred share unit incentive plan pursuant to which deferred share and income deferred share units (“DSUs”) may be granted to eligibledirectors, senior management and certain service providers. As at December 31, 2015 there were 66,329 units outstanding (December 31, 2014 – 18,000units outstanding). During the year ended December 31, 2015, compensation expense of $99 (year ended December 31, 2014 – $383) related to this planwas recognized as general and administrative expense.

TotalUnits outstanding, beginning of year 18,000Granted under deferred share unit plan 48,329Settled deferred share units —Units outstanding, end of year 66,329

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

TotalBalance, January 1, 2014 $ 78Granted 813Settled deferred share units (124)Balance, December 31, 2014 $ 767Granted 976Forfeited/cancelled (144)Balance, December 31, 2015 $ 1,599



36. Earnings per share

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

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

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

2015 2014Earnings attributable to the outside shareholders of the Company $ 121,898 $ 54,010

Diluted earnings per share adjustments for Preference shares, series 1Dividends paid included in interest expense (Note 33) 2,637 2,857Gain on redemption / retraction option (Note 34) (1,227) —Accretion expense 35 171

Earnings for diluted earnings per share $ 123,343 $ 57,038

Weighted average number of shares outstanding as at year end:Dream Subordinate Voting Shares 75,721,535 75,097,179Dream Class B Shares 3,115,512 3,116,049

Total weighted average number of shares 78,837,047 78,213,228Effect of dilutive securities on weighted average number of shares outstanding at year end:

Preference shares, series 1 5,727,095 4,497,088Stock options(1) — —Deferred share units(1) — —

Total weighted average number of shares outstanding after dilution 84,564,142 82,710,316

Basic earnings per share $ 1.54 $ 0.69Diluted earnings per share $ 1.46 $ 0.69

(1) For the year ended December 31, 2015 and 2014, stock options and deferred units were excluded from the earnings per share calculation as the impact was anti-dilutive. The weighted averagenumber of shares is determined using the treasury stock method.

37. Capital management

The Company’s capital consists of term debt, mortgages, non-revolving term facility, an operating line, Preference shares, series 1, and shareholders’ equity.The Company’s objectives in managing capital are to:

i) Ensure adequate operating funds are available to fund the development of real estate inventory;ii) Ensure that the Company has adequate resources available to benefit from acquisition opportunities, should they arise; andiii) Generate a targeted rate of return on its investments.

The Company continuously monitors its debt structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics ofthe underlying real estate industry.



38. Commitments and contingencies

LeasesThe Company and its subsidiaries have operating lease commitments pursuant to which future minimum annual lease payments, exclusive of operating costsand realty taxes, are as follows:

2016 $ 2,4082017 2,2712018 2,2182019 2,1962020 1,9022021 and thereafter 9,515

$ 20,510

Land and Other Purchase Agreements As at December 31, 2015, the Company had commitments under land and housing purchase agreements totalling $14,373 (December 31, 2014 – $71,269),which will become payable in future periods upon the satisfaction of certain conditions pursuant to these arrangements. These amounts exclude futurerepayments of debt relating to land, which has been included in mortgages and term debt as at December 31, 2015.

Letters of Credit and Surety BondsThe Company is contingently liable for letters of credit and surety bonds that have been provided to support land developments and other activities in theamount of $63,186 (December 31, 2014 – $65,669). In addition, letters of credit in the amount of $15,666 were outstanding as at December 31, 2015 relatingto the Pan/Parapan American Athletes’ Village development.

The Company is committed to pay levies in the future of up to $2,997 (December 31, 2014 – $5,095) relating to signed municipal agreements upon thecommencement of development of certain real estate assets. Additional development costs may also be required to satisfy the requirements of these municipalagreements.

Joint Operations and Co-ownershipsThe Company may conduct its real estate activities from time to time through joint operations with third-party partners. The Company was contingently liablefor the obligations of the other owners of the unincorporated joint ventures in the amount of $6,762 as at December 31, 2015 (December 31, 2014 – $29,370).The Company would have available to it the other venturers’ share of assets to satisfy any obligations that may arise.

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

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

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



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

Transactions with Dream Office REIT, Dream Global REIT, Dream Industrial REIT and Dream Alternatives Asset Management and Advisory ServicesAgreements

The Company has entered into agreements with each of Dream Office REIT (prior to April 2, 2015), Dream Global REIT and Dream Industrial REIT pursuant towhich the Company provides the REITs a broad range of management and advisory services related to their respective real estate holdings. The Companyreceives revenues in respect of these services, determined in accordance with a formula as outlined in the respective agreements and which include:

• A base annual management fee, calculated and paid monthly, equal to 0.25% of gross asset value of properties in the case of Dream Office REIT;or, in the case of Dream Global REIT, equal to 0.35% of the historical purchase price of the properties; or, in the case of Dream Industrial REIT,equal to 0.25% of the purchase price paid by the REIT for the properties;

• An incentive fee of 15% of adjusted funds from operations in excess of $2.65 per Series A unit in the case of Dream Office REIT; 15% of adjustedfunds from operations in excess of $0.93 per unit, increasing annually by 50% of the increase in weighted average consumer price index of thejurisdictions in which the properties are located, in the case of Dream Global REIT; and 15% of adjusted funds from operations in excess of $0.80per unit in the case of Dream Industrial REIT;

• A capital expenditures fee of 5% of all hard construction costs incurred on capital projects with costs in excess of $1,000, including work done onbehalf of tenants or any maintenance capital expenditures;

• An acquisition fee equal to: (i) 1% of the purchase price on the first $100,000 of properties acquired in a fiscal year; (ii) 0.75% of the purchaseprice of additional properties acquired in a fiscal year in excess of $100,000 but not exceeding $200,000; and (iii) 0.50% of the purchase price ofadditional properties acquired in any fiscal year should such purchases exceed $200,000; and

• A financing fee equal to 0.25% of the debt and equity of all financing transactions completed; the financing fee is adjusted on an annual basis toensure the fee does not exceed the amount of actual expenses incurred by Dream in supplying services relating to financing transactions.

The Company entered into the management and advisory services agreement with Dream Office REIT on August 24, 2007 (amended on December 31, 2007and April 2, 2015), with Dream Global REIT on August 3, 2011, and with Dream Industrial REIT on October 4, 2012. Each of these agreements has an initialterm of ten years and is renewable for further five-year terms. Subject to the termination provisions in the management and advisory services agreements,the Company is automatically reappointed at the expiration of each five-year term. Refer to the reorganization of the asset management agreement withDream Office REIT.

On July 8, 2014, the Company entered into a management agreement with Dream Alternatives. The Company receives revenues in respect of these services,determined in accordance with a formula as outlined in the respective agreement, which includes:

• A base annual management fee calculated and payable on a monthly basis, equal to 1.0% of the gross value of the initial assets on July 8, 2014,plus the gross cost of any asset acquired on the date of such acquisition, plus the gross amount invested in any assets following acquisition, lessthe gross amount previously included in the calculation of this amount in respect of any asset disposed of or repaid;

• An acquisition/origination fee equal to: (a) 0.40% of the principal amount of any loan originated by Dream Alternatives or a subsidiary having anexpected term of less than five years; (b) 1.00% of the principal amount of any loan originated by Dream Alternatives or a subsidiary having anexpected term of five years or more; and (c) 1.00% of the gross cost of any asset acquired or originated by Dream Alternatives or a subsidiaryrepresented by all other investments, assets or projects; and

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

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



For the year ended December 31, 2015 and 2014, the Company earned the following amounts pursuant to its asset management and advisory servicesagreements.

2015 2014Base asset management fees $ 25,891 $ 32,947Acquisition fees 4,431 4,226Expense recoveries relating to financing arrangements and other 1,220 1,119

$ 31,542 $ 38,292

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

Reorganization of asset management agreement with Dream Office REITOn April 2, 2015, the Company and Dream Office REIT announced a reorganization where the Company received 4,850,000 LP Class B Units, Series 1, of DreamOffice LP, a subsidiary of Dream Office REIT, which are exchangeable for 4,850,000 Dream Office REIT units. In return, the annual management fee, acquisitionfee and capital expenditure fee payable by Dream Office REIT to Dream under its asset management agreement were eliminated. These units were recordedat their fair value of $127,313 based on the closing trading price of the Dream Office REIT units on April 2, 2015 with a corresponding gain on the statementof earnings in the year ended December 31, 2015.

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

2015 2014Costs recovered under Management Services Agreement $ 2,223 $ n/a

Costs recovered from Dream Office REIT in the year ended December 31, 2015 under the management services agreement related to treasury, legal andtaxation services and compensation for senior management personnel.

The Company continues to be entitled to receive an incentive fee subject to the termination provisions of the Management Services Agreement. The incentivefee is determined in accordance with a formula based on 15% of Dream Office REIT’s aggregate adjusted funds from operations, including the net gain on thesale of any properties during the term of the agreement, and the deemed sale of the remaining portfolio upon termination in excess of $2.65 per Dream OfficeREIT unit. As at December 31, 2015, the Company has not accrued any incentive fees receivable from Dream Office REIT.

Administrative services agreement As part of the reorganization of the asset management agreement, on April 2, 2015, the Company entered into a new services agreement with a wholly ownedsubsidiary of Dream Office REIT pursuant to which the subsidiary will continue to provide certain administrative and support services to the Company. Theterms of the agreement provide for a fee sufficient to reimburse the subsidiary for the actual costs incurred by it in carrying out these activities on behalf ofthe Company and are not intended to have a profit component. The administrative services agreement expired on December 31, 2015 and subject to thetermination provisions in the agreement, the Company was automatically reappointed for additional one year terms commencing on January 1 of the followingyear. For the year ended December 31, 2015, the Company incurred expenses of $6,529 under the administrative services agreement (December 31, 2014 –$13,711).

Shared services and cost sharing agreementDAM has entered into cost sharing agreements with each of Dream Office REIT, Dream Industrial REIT, Dream Global REIT and Dream Alternatives. Theagreements are for a one-year term and are renewable for further one-year terms on the expiration date. In the year ended December 31, 2015, DAM andDream Office REIT amended their existing shared services and cost sharing agreement. No material changes occurred to the contract. Pursuant to theagreements, DAM provides administrative and support services on an as-needed basis. DAM will receive an annual fee to reimburse it for all the expensesincurred in providing the services. Additionally, Dream Industrial REIT, Dream Global REIT and Dream Alternatives will also reimburse DAM for any shared costsallocated in each calendar year.



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

2015 2014Dream Office REIT $ 1,947 $ 1,542Dream Industrial REIT 1,074 727Dream Global REIT 1,241 841Dream Alternatives 1,644 1,332

$ 5,906 $ 4,442

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

2015 2014Dream Office REIT $ 5,124 $ 97Dream Industrial REIT 2,110 942Dream Global REIT 4,125 4,000Dream Alternatives 1,178 4,645

$ 12,537 $ 9,684

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

2015 2014Dream Office REIT $ 831 $ 790Dream Industrial REIT 45 26Dream Global REIT 7,143 5,699

$ 8,019 $ 6,515

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

Other TransactionsIncluded in other financial assets as at December 31, 2015 is $6,965 relating to an investment in properties acquired jointly with Dream Global. The acquisitionswere primarily funded through loans from Dream Global amounting to $6,416, which were included in the above mentioned other financial assets andaccounts payable and other liabilities as at December 31, 2015.

In the twelve months ended December 31, 2015, the Company sold its interest in The Carlaw, a rental office building in Toronto, Ontario to Dream Alternativesfor gross proceeds of $2,104.

During the year ended December 31, 2014, the Company sold its interest in Dream Renewable Solar LP to Dream Alternatives at its carrying value of $2,414.No gain or loss was realized on this transaction. Included in this transaction was $1,384 of assets previously classified as recreational properties.

Compensation of Key Management

Compensation expense for the year for key management personnel, including the President and Chief Responsible Officer, Chief Financial Officer, Presidentof Asset Management, Senior Vice President of Land and Housing, Senior Vice President of Urban Development, and the Company’s directors, is shown in thetable below.

2015 2014

Salaries and benefits $ 2,520 $ 2,322Share-based payments(1) 721 258Bonus 3,133 3,199Directors' fees 707 779

$ 7,081 $ 6,558(1) The compensation for share-based payments included for the years presented is equal to the share-based compensation charged on all outstanding stock options and DSUs held by key management

personnel.



40. Supplementary cash flow information

Components of other adjustments include:

2015 2014Dream Global REIT deferred trust units $ (2,098) $ (2,245)Accrued interest on loans receivables and other expenses 900 2,560Share-based compensation expense 880 813Gain on derivative financial instruments (292) —Other (54) 2,884

$ (664) $ 4,012

Components of changes in non-cash working capital include:

2015 2014Accounts receivable $ (54,353) $ 64,561Accounts payable and other liabilities 21,370 (20,962)Income and other taxes payable (20,141) (1,465)Provision for real estate development costs (3,439) (11,505)Customer deposits 2,524 (6,975)Deposits on land (8,929) (19,694)Restricted cash (2,637) 3,382Inventory, prepaid and other assets (1,851) (3,902)

$ (67,456) $ 3,440

The breakdown of cash and cash equivalents is as follows:

2015 2014Cash $ 29,492 $ 29,657Money market funds, term deposits and GICs 491 1,028

$ 29,983 $ 30,685

Non-revolving term facilityRefer to Note 19 for further information regarding the use of proceeds from the non-revolving term facility on December 31, 2015.

41. Segmented information

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

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

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



Segmented Revenues and ExpendituresSegmented revenues and expenditures for the years ended December 31, 2015 and 2014 are as follows:


Landdevelopment(1)




services

Investment andrecreational

properties Eliminations(1) Total

Revenues $ 126,053 $ 82,598 $ 61,492 $ 33,984 $ 44,073 $ (14,835) $ 333,365

Direct operating costs (73,391) (67,786) (48,342) — (35,082) 9,468 (215,133)

Asset management and advisory servicesexpenses — — — (8,138) — — (8,138)

Gross margin 52,662 14,812 13,150 25,846 8,991 (5,367) 110,094

Selling, marketing and other operatingcosts (9,967) (11,305) (3,941) — (4,147) — (29,360)

Net margin $ 42,695 $ 3,507 $ 9,209 $ 25,846 $ 4,844 $ (5,367) $ 80,734

Fair value changes in investmentproperties — — — — 11,158 — 11,158

Investment and other income 1,695 367 537 10,716 51 — 13,366

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

Earnings before the following: $ 44,390 $ 3,874 $ 9,746 $ 163,875 $ 16,053 $ (5,367) $ 232,571

General and administrative expenses (16,211)

Gain on sale of recreational properties 2,183

Share of losses from equity accountedinvestments (530)

Fair value changes in derivative financial instruments 1,227

Interest expense (19,263)

Gain on settlement of debt 2,248

Income tax expense (28,391)

Earnings for the year $ 173,834(1) Results include housing land sales to external customers, which are recognized in each of the land and housing divisions and eliminated on consolidation.


Landdevelopment(1)




services

Investment andrecreational

properties Eliminations(1) Total

Revenues $ 153,649 $ 93,111 $ 73,475 $ 39,867 $ 43,041 $ (14,728) $ 388,415

Direct operating costs (92,392) (74,101) (51,455) — (35,359) 9,772 (243,535)

Asset management and advisory servicesexpenses — — — (10,545) — — (10,545)

Gross margin 61,257 19,010 22,020 29,322 7,682 (4,956) 134,335

Selling, marketing and other operatingcosts (8,973) (11,264) (3,774) (938) (3,143) — (28,092)

Net margin $ 52,284 $ 7,746 $ 18,246 $ 28,384 $ 4,539 $ (4,956) $ 106,243

Fair value changes in investmentproperties — — — — 28,369 — 28,369

Investment and other income 1,602 123 544 2,814 797 — 5,880

Earnings before the following: $ 53,886 $ 7,869 $ 18,790 $ 31,198 $ 33,705 $ (4,956) $ 140,492

General and administrative expenses (14,308)

Loss on sale of recreational properties (76)

Share of earnings from equity accountedinvestments 324

Fair value changes in derivative financial instruments 32

Interest expense (17,148)

Income tax expense (31,860)

Earnings for the year $ 77,456(1) Results include housing land sales to external customers, which are recognized in each of the land and housing divisions and eliminated on consolidation.



Segmented Assets and Liabilities

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


Landdevelopment

Housingdevelopment



services

Investmentand


Inventory $ 593,401 $ 48,167 $ 91,323 $ — $ — $ 732,891

Properties — — — — 170,408 170,408

Total real estate assets(1) $ 593,401 $ 48,167 $ 91,323 $ — $ 170,408 $ 903,299

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

Non-segmented assets(2) 516,965

Total assets $ 1,463,264(1) Real estate assets exclude investments in jointly controlled entities.(2) Included in non-segmented assets are cash and cash equivalents, accounts receivable, other financial assets, equity accounted investments and capital and other operating assets, which include

balances not directly attributable to a specific operating segment.


Landdevelopment

Housingdevelopment



services

Investmentand


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

Properties — — — — 121,042 121,042

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

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

Non-segmented assets(2) — — — — — 385,093

Total assets $ 1,223,198(1) Real estate assets exclude investments in jointly controlled entities.(2) Included in non-segmented assets are cash and cash equivalents, accounts receivable, other financial assets, equity accounted investments and capital and other operating assets, which include

balances not directly attributable to a specific operating segment.

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


Landdevelopment

Housingdevelopment



services

Investmentand


Provision for real estate development costs $ 40,389 $ 1,085 $ 10,123 $ — $ — $ 51,597

Customer deposits 952 306 23,038 — 969 25,265

Construction loans — 37,682 62,055 — 23,999 123,736

Mortgages and term debt — — 10,750 — 57,625 68,375

Total segmented liabilities $ 41,341 $ 39,073 $ 105,966 $ — $ 82,593 $ 268,973

Non-segmented liabilities(1) 476,437

Total liabilities $ 745,410(1) Included in non-segmented liabilities are certain amounts of accounts payable and other liabilities, income and other taxes payable, operating line, non-revolving term facility, Preference shares,

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


Landdevelopment

Housingdevelopment



services

Investmentand


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

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

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

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

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

Non-segmented liabilities(1) 392,850

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

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



42. Classification of Items in Consolidated Statements of Financial Position

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

As at December 31, 2015Less than 12

monthsGreater than 12

monthsNon-

determinable Total

AssetsCash and cash equivalents $ 29,983 $ — $ — $ 29,983Accounts receivable 149,148 39,210 — 188,358Other financial assets — 162,800 — 162,800Housing inventory — — 48,167 48,167Condominium inventory — — 91,323 91,323Land inventory — — 593,401 593,401Investment properties — 141,377 — 141,377Recreational properties — 29,031 — 29,031Equity accounted investments — 106,848 — 106,848Capital and other operating assets 16,686 12,290 — 28,976Intangible asset — 43,000 — 43,000Total assets $ 195,817 $ 534,556 $ 732,891 $ 1,463,264

LiabilitiesAccounts payable and accrued liabilities $ 96,400 $ 10,557 $ — $ 106,957Income and other taxes payable 35,207 — — 35,207Provision for real estate development costs 51,597 — — 51,597Customer deposits — — 25,265 25,265Construction loans(1) 55,677 68,059 — 123,736Operating line — 90,968 — 90,968Non-revolving term facility — 174,006 — 174,006Mortgages and term debt 17,953 50,422 — 68,375Preference shares, series 1 34,779 — — 34,779Deferred income taxes — 34,520 — 34,520Total liabilities $ 291,613 $ 428,532 $ 25,265 $ 745,410

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

43. Comparative figures

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

44. Subsequent events

Subsequent to December 31, 2015, the Company sold 172 acres of raw land in Providence to the Province of Alberta to construct parts of the SouthwestCalgary Ring Road, for proceeds in excess of the land's carrying value.



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Corporate Information

HEAD OFFICEDream Unlimited Corp. State Street Financial Centre 30 Adelaide Street East, Suite 301 Toronto, Ontario M5C 3H1 Phone: (416) 365-3535 Fax: (416) 365-6565 Web: www.dream.ca

INVESTOR RELATIONSPhone: (416) 365-3535 E-mail: [email protected] Web: www.dream.ca

TRANSFER AGENT(for change of address, registration or other unitholder enquiries)

Computershare Trust Company of Canada 100 University Avenue, 8th Floor Toronto, Ontario M5J 2Y1 Phone: (514) 982-7555 or 1 800 564-6253 Fax: (416) 263-9394 or 1 888 453-0330 Web: www.computershare.com E-mail: [email protected]

AUDITORSPricewaterhouseCoopers LLP PwC Tower, 18 York Street, Suite 2600 Toronto, Ontario M5J 0B2

CORPORATE COUNSELOsler, Hoskin & Harcourt LLP Box 50, 1 First Canadian Place, Suite 6100 Toronto, Ontario M5X 1B8

STOCK EXCHANGE LISTINGThe Toronto Stock Exchange Listing symbols: Subordinate Voting Shares: DRM Series 1 Preferred Shares: DRM.PR.A

For more information please visitwww.dream.ca

Directors

Michael Cooper4 Toronto, Ontario, Canada President and Chief Responsible Officer, Dream Unlimited Corp.

Joanne FerstmanInd.,1,3,4

Toronto, Ontario, Canada Corporate Director

Richard GatemanInd.,2, 3

Calgary, Alberta, Canada Vice President, Major Projects Business Development, TransCanada PipeLines Limited

P. Jane Gavan4 Park City, Utah, United States of America President, Asset Management, Dream Unlimited Corp.

Ned GoodmanInd.,5 Innisfil, Ontario, Canada Chairman, Dundee Corporation

Jennifer Lee KossInd.,1,2 Toronto, Ontario, Canada Co-Founder and Builder of Business, BRIKA

Vicky SchiffInd.,1 Los Angeles, California, United States of America Co-Founder, Mosaic Real Estate Investors

Vincenza SeraInd.,1, 2, 3,4 Toronto, Ontario, Canada Corporate Director

Ind. Independent1 Member of the Audit Committee2 Member of the Governance and

Nominating Committee3 Member of the Organization, Design and

Culture Committee4 Member of Leaders and Mentors Committee5 Chair of the Board

Corporate Offices 30 Adelaide Street East, Suite 301 Toronto, ON M5C 3H1 Phone: 416.365.3535 Fax: 416.365.6565 E-mail: [email protected] dream.ca

DREAM

UN

LIMITED

2015 ANN

UAL REPORT

2015 annual reportannual report dream (tsx: drm) is an award-winning canadian real estate company...

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