HIGH RISE RESIDENTIAL APARTMENT

MORTGAGEINVESTMENTOFFERING

200 Adelaide Street West, Suite 401 Toronto, ON M5H 1W7Tel: (416) 865-3398 | Fax: (416) 865-3399

info@hirisecapital.com | www.hirisecapital.com

Mortgage Brokerage # 10897 | Mortgage Administrator # 11893

Company Profile

Track Record

Property Overview

Area Overview

Investment Offering

Zoning Approval

Project Economics

Market Overview

City of Toronto Land Use Map

Neighbouring Developments

Site Plan

Tower Plan

Disclaimer

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03

04

08

10

12

13

14

17

18

20

21

23

TABLE OFCONTENTS

COMPANYPROFILE

40-58 Widmer St 03

WHY INVEST IN REAL ESTATE DEVELOPMENT

WE ARE INVESTOR DRIVEN

INVESTMENT OPPORTUNITY IN THE DEVELOPMENT OF CLASS “A” APARTMENT BUILDINGS

In today’s financial climate, investors are looking for alternative investment options that provide diversification from public markets. An investment with Hi-Rise Capital provides:

• Security in concrete assets• Opportunity for consistent and strong returns• Access to investments beyond the financial capacity of smaller individual investors

For more than a decade, Hi-Rise Capital has offered investors the opportunity to participate in excellent real estate development projects in the Greater Toronto Area (GTA). We focus on residential development projects that are unique, differentiated, and are located in strong locations. Our mission is to preserve our investors’ capital while generating strong and consistent returns.

Hi-Rise Capital focuses on opportunities in the multifamily residential sector as this asset class provides the following:

• Superior risk-adjusted returns compared to the market as a whole over the past 20 years• Less volatility than other real estate investments as apartment buildings are not tied to the financial/economic cycle• Stable and predictable cash flows stemming from low vacancy rates• Steady and superior appreciation over time compared to other asset classes

TRACK RECORDBUILDING TYPE

Rental Apartment

Rental Apartment

Residential Condominium

Residential Townhouse

Residential Development

Residential Condominium

UNITS

394 Units

201 Units

154 Units

55 Units

16 Units

21 Units

BUILD-OUT VALUE

$243,000,000

$105,000,000

$31,000,000

$14,000,000

$6,500,000

$25,000,000

DEVELOPMENT STATUS

Under Development

Under Construction

Completed

Completed

Completed

Completed

FINANCING

Second Mortgage

Second Mortgage

Equity Loan

Second Mortgage

Construction Financing

Second Mortgage

LOCATION

Toronto

Oakville

Stoufville

Toronto

Whitby

Toronto

SELECTED PAST AND CURRENT PROJECTS

Hi-Rise Capital has successfully funded and exited 18 projects returning over $19 million in principal since inception. Estimated total build-out market value at $450 million.See Disclaimer Past Performance

PROPERTYOVERVIEW

PROPERTY STATISTICS

40-58 Widmer Street2RA Reinvestment Area* Regeneration186.0 Ft90.2 Ft16,286 SFOccupied Freehold Townhomes

PROPERTY ADDRESSNUMBER OF STOREYSCURRENT ZONINGOFFICIAL PLANFRONTAGEDEPTHLAND SIZECURRENT IMPROVEMENT

40-58 Widmer St 05

*As amended to permit construction of a 41 storey residential building.

IN THE HEART OF THE ENTERTAINMENT DISTRICT

06 40-58 Widmer St

WIDMER

40-58 Widmer St 07

ATTRACTIONS

SUBWAY

HOTELS

PARKS

40-58 Widmer St 07

INVESTMENT OFFERINGPROJECT SUMMARY

PROJECT STATISTICS

OVERVIEW

41 Storey purpose-built rental development consisting of 315 units located in downtown Toronto close to all major amenities, including transit, restaurants, shopping, and the financial core.

STATUS

A re-zoning application for 41 storeys and 315 units has been approved by City Council. Construction drawings and permit application to commence immediately after land acquisition. Construction is expected to begin no later than June 2017.

Project AddressNumber Of StoreysOfficial PlanSite AreaFrontageDepthBuildableRentableAmenity IndoorResidential UnitsAverage Unit SizeParking StallsParking LevelsLockersAnticipated Completed Project ValueAnticipated Raise

40-58 Widmer St41Regeneration16,286 SF186.0 Ft90.2 Ft288,073 SF243,580 SF10,559 SF315773 SF1006159$231,800,000$50,000,000

Mortgage Brokerage # 10897 | Mortgage Administrator # 11893

10 40-58 Widmer St

Year1 Year 2 Year 3 Total Interest Earned Total Interest Return

Interest $10,000 $10,000 $10,000 $30,000 30%

Principal Repayment – – – $100,000 –

Total – – – $130,000 30%

40-58 Widmer St 11

See Disclaimer Forward Looking Statements

Source: Urbanation

EXAMPLE OF $100,000 INVESTMENT

OFFERING SUMMARY

Renters tend to favour a professionallymanaged and secure source of housing“

“Minimum Investment

Eligibility

Security

Investment Term

Distribution to Investors

Return

$25,000

Cash and Registered accounts (RSP, LIRA, TFSA)Investors can transfer their registered investments without tax consequences

Mortgage registered against the property

36 months

Paid Quarterly

10% per annum

200 Adelaide Street West, Suite 401 Toronto, ON M5H 1W7Tel: (416) 865-3398 | Fax: (416) 865-3399info@hirisecapital.com | www.hirisecapital.com

Mortgage Brokerage # 10897 | Mortgage Administrator # 11893

12 40-58 Widmer St

Authority: Toronto and East York Community Council Item TE13.3, as adopted by City of Toronto Council on February 3 and 4, 2016

CITY OF TORONTO

BY-LAW No. 273-2016

To amend former City of Toronto Zoning By-law No. 438-86, as amended, respecting the lands municipally known as 40-58 Widmer Street.

Whereas authority is given to the Council of a municipality by Section 34 of the Planning Act, R.S.O. 1990, c. P.13, as amended, to pass Zoning By-laws; and

Whereas Council of the City of Toronto has provided adequate information to the public and has held at least one public meeting in accordance with the Planning Act; and

Whereas Council of the City of Toronto, at its meeting on February 3 and 4, 2016, determined to amend the former City of Toronto Zoning By-law No. 438-86 with respect to lands known municipally in the year 2016 as 40-58 Widmer Street;

The Council of the City of Toronto enacts:

1. None of the provisions of Section 2 with respect to the definitions of lot, grade, height and bicycle parking space - visitor and Sections 4(2)(a), 4(5), 4(5) Schedule 1, 4(12), 4(13)(a), 4(14)(a), 7(3) Part II 1(i), 7(3)Part II 3, 7(3) Part II 7, 7(3) Part II 8(ii), 7(3) Part III 2, 7(3)Part IV and 12(2)246 of Zoning By-law No. 438-86, being "A By-law to regulate the use of land and the erection, use, bulk, height, spacing of and other matters relating to buildings and structures and to prohibit certain uses of land and the erection and use of certain apartment buildings and structures in various areas of the City of Toronto", as amended, shall apply to prevent the erection and use of an apartment building provided that:

(a) the lot upon which the proposed apartment building and/or structure is erected or used comprises at least the lands shown outlined by dashed lines on the attached Map 1;

(b) in addition to the uses permitted in Section 7(1), the following uses are permitted on the lot:

(i) guest suites;

(c) despite Section 4(12) guest suites shall be considered residential amenity space located indoors;

(d) the aggregate residential gross floor area and non-residential gross floor area on the lot shall not exceed 27,200 square metres, subject to the following:

(i) the residential gross floor area erected or used on the lot shall not exceed 27,200 square metres; and

(ii) the non-residential gross floor area erected or used on the lot shall be 0 square metres;

ZONING APPROVAL

PROJECT ECONOMICSFIVE YEAR PROJECTIONS - REVENUE & STABILIZED EXPENSES

PROJECT COST

The above assumptions were made in creating five year projected financials: Revenue projections are based on average market rents of neighbouring buildings in close proximity to the project (See Neighbouring Developments). Expenses are then calculated using the same methodology of industry leading cost consultants. Finally, value is then determined by applying a capitalization rate adherent with Canada’s largest commercial real estate services companies. All assumptions are forward-looking.

See Disclaimer Forward Looking Statements

40-58 Widmer St 13

Year 1 Year 2 Year 3 Year 4 Year 5

Rent (Residential) $10,925,972 $11,258,295 $11,600,727 $11,953,575 $12,317,154

Parking $211,613 $215,845 $220,162 $224,565 $229,056

Storage Lockers $45,030 $45,931 $46,849 $47,786 $48,742

Other Income $478,681 $488,254 $498,019 $507,980 $518,139

Total Revenue $11,661,295 $12,008,325 $12,365,757 $12,733,905 $13,113,091

Vacancy $233,226 $240,166 $247,315 $254,678 $262,262

Effective Gross Income (EGI) $11,428,069 $11,768,158 $12,118,442 $12,479,227 $12,850,829

Stabilized Expenses

Utilities $409,500 $417,690 $426,044 $434,565 $443,256

Taxes $687,296 $701,042 $715,063 $729,364 $743,951

Turnover $303,801 $310,092 $316,513 $323,069 $329,763

Other Operating Expenses $754,887 $919,117 $943,180 $966,114 $988,836

Total Expenses $2,155,484 $2,347,941 $2,400,799 $2,453,112 $2,505,807

Net Operating Income $9,272,585 $9,420,217 $9,717,643 $10,026,115 $10,345,022

Project Cost (M) PBSF Per Suite

Land $31.3 $89 $99,365

Hard Cost $72.0 $205 $228,571

Soft Cost $58.7 $168 $186,349

Contingency $3.5 $10 $11,111

Total Cost $165.5 $472 $525,397

Projected Value @ 4% Cap Rate $231.8 – –

Projected Profit $66.3 – –

MARKET OVERVIEWTORONTO HOME PRICE & AVERAGE APARTMENT RENT

TORONTO’S HOUSING AFFORDABILITY GAP

Source: Realnet Canada Inc. and CMHC

Historical trends show that as the price of low-rise homes increases and becomes less affordable, there is more demand for purpose built rental. With this strong demand and sparce supply, we see that the average rent of purpose built rentals has continued to increase.

The housing affordability gap is a strong indicator of demand for multifamily vacancy rates and rental rates1. As home prices continue to rise, the demand for multifamily rentals follows, increasing rental rates and decreasing vacancy rates.

Source: RealNet Canada, CMHC, and OECD

Source: 1 RBC

14 40-58 Widmer St

180.00%

170.00%

160.00%

150.00%

140.00%

130.00%

120.00%

110.00%

100.00%

90.00%

80.00%2009 2010 2011 2012 2013 2014 2015

Average Home PriceAverage RentGDP/Capita

$801,376

$1,465

$42,387

Average Home PriceAverage RentAverage Condo Price

$472,154

$402,532

$1,182

$501,962

$1,208

$441,652

$548,462

$1,253

$435,613

$431,273 $432,512$454,476 $445,382

$1,354

$630,522

$653,481

$1,359

$705,813

$801,376

$1,465$1,402

2009 2010 2011 2012 2013 2014 2015

RENTAL RATE VOLATILITY - TORONTOSource: TREB

40-58 Widmer St 15

Historically, retail and office show higher rental rate volatility than multifamily. Multifamily rents consistently increased over the past ten years, resulting in rents that were 19% higher in 2015 than a decade prior. For example, despite strong economic growth in Toronto, retail rental rates have fluctuated over 30% as recently as 2012. Volatility of rental rates, both upward and downward, is undesirable for income producing assets such as real estate.

Over the past decade, multifamily rental rates have shown significantly greater stability compared to office and retail rental rates. The stability of multifamily rental rates reflects the fact that even during tough economic times, there is a strong demand for multifamily rentals in Toronto.

140.00%

130.00%

120.00%

110.00%

100.00%

90.00%

80.00%2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

RetailOfficeMultifamily +42%

-20%

-20%

+19%

-31%

50.00%

40.00%

30.00%

20.00%

10.00%

0.00%

-10.00%

-20.00%

-30.00%

RetailOfficeMultifamily

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

RENTAL RATES INDEXED TO 2005

YEAR-OVER-YEAR VOLATILITY OF RENTAL RATES

Despite strong growth in the supply of condo rentals, the average vacancy rate was 1.8% in 2015. Household formation in Toronto, the annual number of households that will be formed in the long-run, is 2.5 times that of Vancouver and approximately 3 times that of New York and Los Angeles . Based on projections of population, household formation is the underlying driver of demand for new housing.

GROWTH IN CONDO RENTAL SUPPLY AND AVERAGE VACANCY RATESGREATER TORONTO AREA: 2010 TO 2015

Source: CMHC, Urbanation

16,000

14,000

12,000

10,000

8,000

6,000

4,000

2,000

0

3.0%

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%2010 2011 2012 2013 2014 2015

Net Change in Condo Rental Stock

Vacancy Rate (%) 12,686

1.8%

16 40-58 Widmer St

TORONTO Q3 2016 RENT ($PSF) COMPARISON

Source: Urbanation Rental Report-Q3 2016 *Projected rents - See Disclaimer Forward Looking Statements

HARBOURFRONT$2.85

TORONTO CENTRAL

$3.10

EAST BLOOR/ VILLAGE

$3.09

DOWNTOWN WEST$3.11

DOWNTOWN CORE$3.32

ENTERTAINMENT DISTRICT

$3.34

CITY OF TORONTOLAND USE MAP

The Official Plan for the amalgamated City of Toronto was adopted between November 2002 and April 2007 and was approved by the OMB with the exception of certain policies and land use designations. This map identifies areas within the Plan and provides guidance on future land uses in the City of Toronto.

40-58 Widmer Street is designated under “Regeneration Areas” on the Land Use Plan (Map 18). These areas are intended to provide for a broad mix of commercial, residential, light industrial and live/work uses in an urban form in order to revitalize areas that are largely vacant or underused. The Plan also identifies and encourages more intensification as part of the desirable maturation process within the imme-diate area.

Sources: Toronto Official Plan, King-Spadina Secondary Plan

Regeneration Areas Parks and Open Space Institutional Areas

Mixed Use Areas Neighbourhoods

40-58 Widmer Street

40-58 Widmer St 17

NEIGHBOURING PROPERTIES

FESTIVAL TOWER THREE HUNDRED CHARLIE

18 40-58 Widmer St

80 John Street378 Units46 StoreysAverage Rent $2,839Average Unit Size 756 SFRent Per SF $3.75

300 Front Street West683 Units49 StoreysAverage Rent $2,829Average Unit Size 818 SFRent Per SF $3.46

8 Charlotte Street311 Units 36 StoreysAverage Rent $2,283Average Unit Size 701 SFRent Per SF $3.26

Source: Urbanation Rental Report - Q3 2016

CINEMA TOWER PETER STREET CONDOS 40-58 WIDMER ST

21 Widmer Street440 Units43 StoreysAverage Rent $2,094Average Unit Size 633 SFRent Per SF $3.31

101 Peter Street429 Units40 StoreysAverage Rent $1,819Average Unit Size 536 SFRent Per SF $3.39

40-58 Widmer St315 Units41 StoreysAverage Rent $2,751Average Unit Size 786 SFRent Per SF $3.50

20 40-58 Widmer St

SITE PLAN

40-58 Widmer St 21

TOWERPLANS

DisclaimersExclusive Use

This presentation is confidential and proprietary to its author, Hi-Rise Capital Ltd. (“Hi-Rise”), and may not be disclosed, reproduced, distributed or used for any purpose without the express written consent of Hi-Rise.

General Risks

Investments with Hi-Rise are subject to risks arising from rapidly changing market conditions. All investments in real estate are speculative. Cur-rently, there is no secondary market through which Hi-Rise mortgage investments may be sold and this secondary market may never develop. The anticipated return on a mortgage investment with Hi-Rise is based on performance estimates and assumptions. While Hi-Rise intends to make regular interest payments to its investors, such interest payments may be reduced or suspended. The amount distributed to investors will depend on numerous factors including, but not limited to, the applicable borrower’s financial performance, debt covenants and obligations, inter-est rates, and future capital requirements. A potential investor should only invest in a mortgage if the investor is able to bear the risk of the entire loss of its investment and has no need for immediate liquidity. An investment in a mortgage should not constitute a major portion of the investor’s portfolio. All mortgage investments carry a risk. You should very carefully assess the risk of this mortgage investment before making a commit-ment. This mortgage investment is not insured by the Government of Ontario.

Forward Looking Statements

Certain statements made in this presentation may be “forward-looking statements” regarding the plans and/or objectives of Hi-Rise for future operations and anticipated results of operations. For this purpose, any statements contained herein or incorporated herein that are not state-ments of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, the words, “believes”, “anticipates”, “proposes”, “plans”, “targets”, “expects”, “intends”, “may” and similar expressions are intended to identify forward-looking statements. Such statements are based on current expectations that involve known and unknown risks, uncertainties and other factors, including but not limited to those described herein, that may cause actual results, performance or achievements of the investment to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The investment’s plans and objectives are based on assumptions involving the success of the offering described in this presentation and the development of its business. Although Hi-Rise believes that its assumptions are reasonable, any of the assumptions could prove to be inaccurate. In light of the significant uncertainties inher-ent in the forward-looking statements that may be made herein, the inclusion of such information should not be regarded as a representation or warranty by Hi-Rise, nor the promise that the objectives and/or plans of the investment will be achieved.

Informational Purposes

This material is for informational purposes only and is not intended as a solicitation for investment or purchase.

General Nature

This information is of a general nature only. It should not be used, relied upon, or treated as a substitute for professional financial planning advice.

Past Performance

Past performance of Hi-Rise may not be repeated. Investing with Hi-Rise involves significant risks. An investment with Hi-Rise is not intended as a complete investment program and should only be made after consultation with independent investment and tax advisors. A potential investor should only invest in a mortgage if the investor is able to bear the risk of the entire loss of its investment and has no need for immediate liquidity. The risks involved with this type of investment may be greater than those normally associated with other types of investments.

40-58 Widmer St 23

200 Adelaide Street West, Suite 401 Toronto, ON M5H 1W7Tel: (416) 865-3398 | Fax: (416) 865-3399

info@hirisecapital.com | www.hirisecapital.com

Mortgage Brokerage # 10897 | Mortgage Administrator # 11893

NOV-17-2016