HOUSING RESEARCH REPORTMortgage Investment Corporations Update

This study was conducted for Canada Mortgage and Housing Corporation (CMHC) under Part IX of the National Housing Act. The analysis, interpretations and recommendations are those of the consultant and do not necessarily reflect the views of CMHC.

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PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT

February 3, 2017

Mortgage Investment Corporations – Update

Prepared For:

Canada Mortgage and Housing Corporation (CMHC)

2017 Fundamental Research Corp. “10+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” www.researchfrc.com

2017 Fundamental Research Corp. “10+ Years of Bringing Undiscovered Investment Opportunities to the Forefront” www.researchfrc.com

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT

Executive

Summary

Growth in Credit

The objective of this report is to provide an update on the contribution of Mortgage Investment

Corporations (“MICs”) to the residential mortgage lending sector in Canada since our initial

report published in October 2015. The report outlines the following key topics and updates:

□ Growth of the residential mortgage lending market in Canada

□ Size of the MIC Industry and contribution of MICs to overall market growth

□ Key changes in lending / mortgage policies

□ Factors that continue to drive private lending

At the time of our 2015 report, we had built a database of 72 entities that operate as MICs or have

similar structures. With a goal to expand the database to over 100 entities, we shortlisted 45 new

entities for this report. Based on the quality of data we were able to gather from publicly

available documents and management interviews, we decided to include 16 of the 45 new

entities, and expand the original database to 88 entities. We estimate that these 88 lenders held

$6.63 billion of residential mortgages, or 0.46% of the total residential mortgages outstanding in

Canada as of October 2016 ($1.43 trillion). Our 2015 report had indicated an outstanding balance

of $5.70 billion by 72 lenders. The outstanding mortgages held by these 72 lenders increased by

12.6% since our previous report. Our estimate of the size of the MIC industry is approximately

$8 to $10 billion.

Approximately 85% - 90% of the mortgages in Canada are originated by federally or provincially

regulated entities such as chartered banks, credit unions and caisses populaires. The remaining

mortgages are originated by lenders that are either partially regulated or totally unregulated.

MICs account for a major share of the unregulated mortgage lending sector in the country. They

are considered unregulated as they are not subject to federal government mortgage lending rules,

such as reserve requirements and loan to value limits. This is primarily because, unlike banks and

the other major financial institutions, MICs do not take deposits. Note that MICs are audited /

regulated by their respective provincial securities commissions, so the term ‘unregulated’ only

applies to the federal mortgage lending rules.

The mortgage industry can be broadly classified into residential and commercial sub-sectors.

Residential real estate includes single family houses, townhouses, condominiums, etc., while

commercial real estate includes office, industrial, retail, multi-family apartments, hotels, etc. The

following section highlights the growth in the residential mortgage industry since our initial

report in October 2015.

The total debt (mortgage and consumer credit) held by Canadians increased from $627 billion in

2000, to $1.99 trillion by October 2016, indicating a CAGR (compounded annual growth rate) of

7.1% from December 2000 to October 2016, and a 6.6% YOY increase in the previous 12

months.

Résumé

Croissa

nce du

crédit

Croissance

du crédit

L’objectif du présent rapport est de faire le point sur la contribution des sociétés

de placement hypothécaire au secteur du crédit hypothécaire à l’habitation au Canada

depuis notre rapport initial publié en octobre 2015. Il contient des mises à jour sur les

sujets clés suivants :

Au moment de notre rapport de 2015, nous avions établi une base de données de 72 entités

fonctionnant sous forme de sociétés de placement hypothécaire ou ayant une structure

similaire. Dans le but d’étendre notre base de données à plus de 100 entités, nous avons

d’abord retenu 45 nouvelles entités pour le présent rapport. À l’aide des données que nous

avons réussi à recueillir dans des documents accessibles au public, notamment des rapports

d’entrevues avec des gestionnaires,, nous avons décidé d’inclure 16 des nouvelles entités

dans notre étude, et ainsi de porter à 88 le nombre d’entités dans notre base de données.

Nous estimons que ces 88 prêteurs détenaient 6,63 milliards de dollars en prêts

hypothécaires à l’habitation, ou 0,46 % de tous les prêts hypothécaires à l’habitation en

cours de remboursement au Canada en date d’octobre 2016 (1,43 billion de dollars). Selon

notre rapport de 2015, le solde des prêts en cours de remboursement s’établissait à

5,70 milliards de dollars pour 72 prêteurs. Le solde des prêts hypothécaires en cours de

remboursement détenus par ces 72 prêteurs a augmenté de 12,6 % depuis notre rapport

précédent. Notre estimation de la taille de l’industrie des sociétés de placement

hypothécaire est d’environ 8 à 10 milliards de dollars.

De 85 % à 90 % des prêts hypothécaires au Canada sont consentis par une entité

réglementée à l’échelle fédérale ou provinciale, comme des banques à charte, des

coopératives de crédit et des caisses populaires. Les autres prêts hypothécaires sont

octroyés par des prêteurs qui sont partiellement réglementés ou qui ne le sont pas. Les

sociétés de placement hypothécaire constituent une part considérable du secteur du crédit

hypothécaire non réglementé au pays. On dit qu’elles ne sont pas réglementées parce

qu’elles ne sont pas assujetties à la réglementation fédérale en matière de crédit

hypothécaire, notamment aux exigences relatives à la réserve en capital et aux plafonds des

rapports prêt-valeur, la principale raison étant que, contrairement aux banques et aux autres

grandes institutions financières, les sociétés de placement hypothécaire n’acceptent pas les

dépôts. Notez qu’elles sont toutefois auditées ou réglementées par leur commission

provinciale des valeurs mobilières; le terme « non réglementé » s’applique donc

uniquement aux règles fédérales en matière de crédit hypothécaire.

Le secteur hypothécaire est généralement divisé en deux sous-secteurs : les prêts

hypothécaires à l’habitation et les prêts hypothécaires commerciaux. L’immobilier

résidentiel s’entend des maisons individuelles, des maisons en rangée, des logements en

copropriété, etc. L’immobilier commercial s’entend des bureaux, bâtiments industriels,

commerces, appartements, hôtels, etc. La section qui suit met en évidence la croissance du

secteur hypothécaire résidentiel depuis notre rapport initial d’octobre 2015.

□ La croissance du marché du crédit hypothécaire à l'habitation au Canada □ La taille du secteur des sociétés de placement hypothécaire et leur contribution

à la croissance du marché en général □ Les principaux changements apportés aux politiques en matière de crédit

et de prêts hypothécaires □ Les facteurs qui continuent de stimuler le crédit privé

Résumé

Croissa

nce du

crédit

La dette totale (crédit hypothécaire et à la consommation) des Canadiens est passée

de 627 milliards de dollars en 2000 à 1,99 billion de dollars en octobre 2016,

indiquant un taux de croissance composée (TCC) de 7,1 % de décembre 2000 à

octobre 2016, et une hausse de 6,6 % d’une année à l’autre durant les 12 mois

précédents.

La SCHL fera traduire le document sur demande.

Pour recevoir une copie traduite de ce document, veuillez remplir la partie ci-dessous et la retourner à l’adresse suivante :

Centre canadien de documentation sur l’habitation Société canadienne d’hypothèques et de logement 700, chemin Montréal, bureau C1-200 Ottawa (Ontario) K1A 0P7

Titre du rapport :

Je demande que ce rapport soit disponible en français.

NOM :

ADRESSE : rue App.

ville province Code postal

No de téléphone : ( )

P a g e | 1

Source: Statistics Canada

As of October 2016, mortgage credit accounted for 72%, and consumer credit accounted for the

remaining 28% of the total debt. This ratio was at 71% : 29% at the time of our previous report.

The average since 2000 has been 69% : 31%.

Distribution 2000 Oct-16

Mortgage Credit 69% 72%

Consumer Credit 31% 28%

The total residential mortgage credit in Canada (outstanding balance of the major private

institutional lenders) increased from $0.43 trillion in 2000, to $1.43 trillion by October 2016,

reflecting a compounded annual growth rate (“CAGR”) of 7.8% from December 2000 to October

2016, and a 7.4% YOY increase in the previous 12 months. From December 2000 to October

2016, total consumer credit increased from $193 billion to $565 billion, reflecting a CAGR of

7.0%, and a 4.6% YOY increase in the previous 12 months.

Total Credit 7.59%

Mortgage Credit 7.83%

Consumer Credit 7.01%

The following chart shows the annual growth rate. As shown below, the growth rates of both

types of credit increased significantly in 2016, primarily because of the low interest rate

environment and the strong increase in housing prices.

CAGR Dec 2000 to Oct

2016

P a g e | 2

Residential Mortgage

Providers

Source: Statistics Canada

With regard to the financing required for a purchase, buyers have historically financed 67% of

their purchase through a mortgage and/or a home equity line of credit, ranging from 81% for

first-time buyers, to 67% for second-time buyers, and 50% for those purchasing their third or

subsequent home (Source: Canadian Association of Accredited Mortgage Professionals /

CAAMP).

Chartered banks, credit unions, life insurance companies, pension funds. and related entities,

accounted for $1.18 trillion, or 87.9% of total consumer credit as of October 2016, versus 88.6%

at the end of 2015. The remaining loans (approximately $152 billion) were from trust, mortgage

companies, and non-depository credit intermediaries.

P a g e | 3

Source: Statistics Canada

We estimate that the above figures do not account for the mortgages originated by MICs and

small private lenders. Based on our updated study, we estimate that these 88 lenders held $6.63

billion of mortgages, or 0.46% of the total mortgages outstanding in Canada as of October 2016

($1.43 trillion). Our 2015 report had indicated an outstanding balance of $5.70 billion by 72

lenders. The outstanding mortgages held by these 72 lenders increased by 12.6% since our

previous report.

Recent

changes in

mortgage

regulations

As mentioned in our 2015 report, tighter lending policies set by banks and conventional lenders

have been encouraging more and more unregulated private lenders to enter the market over the

last decade. On October 17, 2016, the federal government announced four key changes to

existing mortgage rules:

□ All newly insured mortgages will need to undergo a stress test; implying that a home buyer

would not only need to qualify at the loan rate, but also at the Bank of Canada’s five-year

fixed posted mortgage rate, which is currently (4.64%) much higher than the rates offered by

mortgage lenders.

□ Insurance for low-ratio mortgages (down payment of over 20%) will only be provided by

government backed lenders for the following: purchase price of under $1 million, a maximum

amortization period of 25 years, a minimum credit score of 600, and the property must be

owner-occupied.

□ New reporting rules for the primary residence capital gains exemption.

□ The government is considering options to shift some of the risk of defaults against insured

mortgages to lenders.

We believe the above changes clearly indicate the government’s intent to stabilize the real estate

P a g e | 4

Quality of Mortgages

market in the country, and potentially avoid a major downturn, similar to the downturn

experienced in the U.S. during 2007 to 2011. The Department of Finance of Canada estimates

home sales could fall by up to 8% in 2017, before rebounding. We believe the new mortgage

rules further tighten the lending policies by the banks, which will likely drive more borrowers to

MICs and other private lenders.

The other factors that have been contributing to increased lending are the strong growth in

housing prices, decreasing unemployment rates (see chart below), a low interest rate

environment, and the relatively low default rates.

Although there was a rise in mortgage arrears during the recession (mid-1990s and 2008-2009),

the rates have dropped considerably since 2010, as shown in the chart below.

P a g e | 5

Source: CMHC

The national average was 0.28% in Q3-2016 versus 0.43% in 2010. This is significantly lower

than the default rates in the U.S. (see chart below).

Source: CMHC

P a g e | 6

Database of MICs

The following table shows the average, minimum and maximum rates in Canada since 2002.

Ontario’s (“ON”) rate of 0.13%, and British Columbia’s (“BC”) rate of 0.24% in Q3-2016, are

well below the historical average rates of 0.27% and 0.34%, respectively. The U.S. national

average was 1.41% in Q3-2016.

Data Source: CMHC

As mentioned earlier, the low interest rate environment is another factor that is driving lending.

The following chart shows the overnight lending rate since 2007.

Overnight Lending Rate

We believe that all of the above factors indicate strong deal flow for MICs and private

lenders in 2017.

At the time of our 2015 report, we had built a database of 72 MICs and funds with a very similar

structure to MICs. For this update report, with a goal of expanding the list, we analyzed and

reached out to the management teams of 118 entities. We had mentioned in the previous report

that we feel there may be 200 to 300 MICs in the country. We now feel that the actual figure may

P a g e | 7

be closer to 200 based on our updated research and discussions with industry players.

Upon completing data collection through publicly available information, company websites,

management interviews and surveys, we short listed 88 entities for the updated database. These

88 entities, we estimate, currently hold, a total of $6.63 billion in mortgages.

Eight entities are publicly traded, and they account for $2.31 billion, or 35% of the total

mortgages held by the 88 entities included in our database. Timbercreek Financial, Atrium

Mortgage Investment Corporation, and Firm Capital, are the three largest entities with $1.02

billion, $0.52 billion, and $0.43 billion, respectively, of mortgages outstanding. The total

mortgages held by the eight companies increased from $1.99 billion at the end of 2014, to $2.31

billion at the end of Q3-2016, reflecting a 16.3% increase.

Publicly Traded Mortgage Investment Corporations

The remaining $4.32 billion are held by 80 private entities. If a private MIC has less than 50

shareholders, and issues shares only to family, friends and business associates, they are not

required to file private placement reports with the securities commissions. As a result, there is a

serious lack of credible information on a number of private lenders.

Private company data was attained through management interviews, surveys, company websites,

investor presentations, and public filings. For public companies, data was attained through

company websites, investor presentations and public filings. In the following section, we present

a summary of our analysis, and the key portfolio parameters of each fund. The section starts with

brief explanations / definitions of the key portfolio parameters.

Page 10

Key Parameters

Portfolio Size

The following are the key parameters to look at when analyzing MICs:

□ Maturity and loan types: MICs typically provide short-term (typically 9 – 18 months)

loans. The shorter the term, the lower the risk as short-term loans have less exposure to

interest rate and real estate price fluctuations than longer term loans.

□ Composition of real estate: MICs are required to hold residential mortgages. As

mentioned earlier, at least 50% of a MICs assets must be in residential mortgages and/or

cash. The remaining assets can be held in mortgages secured by commercial properties,

land, industrial properties, developments, etc.

□ Position of the lender (seniority): Loans with a first claim on an asset (real estate) are

called first mortgages. MICs may also accept lower claim positions on assets (second,

third, fourth, etc.). The lender with a first mortgage would have the highest security since

in default, their claim would be settled before those in a lower position.

□ Loan to value (LTV): LTV is basically the borrowed amount as a percentage of the value

of the real estate. Although there are no restrictions in maintaining a certain level of

LTV, MIC loans typically have LTVs between 50% and 85%. Loans with a lower LTV

carry lower risk, as they can sustain a higher drop in real estate prices.

□ Geographically diversified portfolio: A geographically well-diversified portfolio (loans

secured by properties across various cities and provinces in Canada) mitigates region

specific real estate or mortgage lending risks.

□ Dividend yields: An investment in MICs can be considered an investment in short-term /

high-yield bonds. In the current environment, low-risk profile MICs generate about 5% –

7% p.a., while medium to high risk profile MICs generate about 7% – 10% p.a. for

investors in the form of dividends.

□ Historic default or loan loss rate: Historic defaults give an indication of management’s

ability to manage the portfolio. The average annual loss rate of the companies we have

reviewed was 0.19% in 2016; with the range being 0.0% to 2.5%.

We estimate the total outstanding mortgages of the 88 funds to be approximately $6.63 billion,

reflecting 0.46% of the total mortgages outstanding ($1.43 trillion) in Canada. Since our database

includes all of the large MICs (over $100 million), we estimate that our study represents at least

75% of the total mortgages held by the MIC industry. This implies a total market size of

approximately $8 to $10 billion.

The following chart shows a list of funds with portfolios greater than $100 million. Timbercreek

Financial is the largest with approximately $1.02 billion in mortgages. We had noted

Romspen Mortgage Investment Fund as the largest fund in our 2015 report. However,

considering Romspen’s significant exposure to U.S. mortgages, and Canadian commercial and

Page 11

industrial mortgages, we have only accounted for Romspen’s Canadian residential mortgages in

our analysis this time.

Among the list of 88 entities, we estimate that only three funds, namely Romspen, Capital Direct

and Tri City Mortgage Investment Fund, are not legally structured as a MIC, but operate very

similar to, and competes with others MICs.

Securities of three out of the top 10 funds are listed on the Toronto Stock Exchange. At the time

of our previous report, five of the top 10 funds were held by publicly traded companies. The

reason for the decrease in number of publicly traded funds this year were because of two reasons:

□ Timbercreek MIC and Timbercreek Senior MIC were consolidated into a single company,

Timbercreek Financial.

□ The Manager of two publicly traded funds, namely Trez Capital MIC and Trez Capital

Senior MIC, decided to wind up the funds in 2016.

The top 10 funds accounted for $3.85 billion in mortgages at the end of Q3-2016, or 58% of the

total.

Top 10 Funds by Portfolio Size

Their combined portfolios were up by 23.5% since the end of 2014. As shown in the table below,

9 out of the 10 funds experienced growth in their portfolios.

Page 12

Geographical Diversification

In total, 16 funds (18 funds in 2015) have a portfolio greater than $100 million. These funds have

a total of $4.65 billion (70% of the total). The average portfolio size was $291 million and the

range was $109 million to $1.02 billion.

Funds with a portfolio greater than $100M (in $, millions)

The remaining 72 funds (with portfolio size of less than $100 million) accounted for $2.01

billion, with an average size of $28 million.

The following chart shows the average regional diversification and the diversification of each

fund with portfolios greater than $100 million. The average portfolio mix was ON (34%), BC

(34%), and AB (14%).

Page 13

Geographical diversification of funds with a portfolio greater than $100M

Geographical diversification by fund

The following charts show the average regional diversification of funds with portfolios less than

$100 million. BC dominates the mix for smaller funds with the average mix being ON (25%),

BC (53%), and AB (18%).

Page 14

Mortgages by security

Loan to Value

Geographical diversification of funds with a portfolio less than $100M

Smaller funds continue to be less geographically diversified than the larger funds.

The breakdown of loans by position (security) is shown below. Most funds have a high

percentages of first mortgages.

Type of mortgages (%) within funds with a portfolio greater than $100M

On average, first mortgages accounted for 83% (86% in 2015) of the portfolio of the larger funds

versus 63.4% (70% in 2015) of the smaller funds.

The average LTV of loan portfolios are displayed below.

Page 15

LTV (%) of funds with a portfolio greater than $100M

Yields

The average LTV for funds with a portfolio greater than $100 million is 64% (66% in 2015) and

66% (66.3%) for funds under $100 million.

The most recent annual yields are shown in the charts below. Excluding the funds that distributed

zero to minor returns, investors’ yields ranged between 4.5% and 10% for both large and small

funds.

Page 16

Leverage

Annual yields (%) of funds with a portfolio greater than $100M

The debt to capital of the larger funds averaged 18% with the range being from 0% to 44%.

Banks and Mortage Finance Corporations tend to have a much higher debt to capital of

approximately 90% to 95%. MICs can use leverage of up to 83%, provided at least two-thirds of

its portfolio is represented by residential mortgages and/or cash. The leverage cannot exceed 75%

if less than two-thirds of the portfolio is in residential mortgages and/or cash.

Page 17

Funds lent to foreign

borrowers

Conclusions

The average debt to capital of the smaller funds continue to be much lower (9%) than the larger

funds.

In order to estimate the contribution of foreign buyers, we asked the funds to provide us with the

percentage of mortgages held by foreign borrowers. Over 90% of the respondents stated that they

do not track their borrowers’ residency. The reason for this is that MICs evaluate mortgages

primarily based on the quality of the underlying assets rather than on a borrower's cash flow

or credit rating. Although borrowers are required to provide details of their employment status

and annual household income, MICs typically do not track their residency status.

Approximately 5% of the funds stated that they do track their borrowers’ residency and that

foreign borrowers account for less than 1% of their portfolios.

Despite the MIC industry’ strong growth since our previous report, we estimate that MIC lenders

continue to account for a significantly small portion (under 1%) of the overall mortgage lending

market. Our analysis of the larger MICs show that lenders continue to adopt sound risk mitigation

strategies and maintain their risk profile at a low to moderate level through the following:

□ Portfolio diversification across provinces.

□ Maintain a short duration strategy, which allows lenders to adjust lending rates, and

regularly reassess the security of the collateral.

□ Hold a high percentage of first mortgages.

□ Maintain LTV at reasonable levels.

□ Cautious use of debt.

□ Maintain relatively low loan loss rates.

We continue to believe that the sector should be regularly monitored to ensure that lenders do not

shift from their current lending practices and move towards more aggressive (risky) portfolios.

We have the following recommendations:

□ make it mandatory for all MICs with portfolios over $10 million to have audited financial

statements

□ encourage MICs to have independent boards in place

□ encourage MICs to track the residency of borrowers

Page 18

Appendix

1 $1,023.00 TimberCreek Financial 2008 82% 7.50% 69.00% 7.2% 0.1% 35.0%

2 $522.60 Atrium MIC 2001 81% 8.56% 63.90% 7.8% 1.0% 44.0%

3 $431.25 Romspen Mortgage Investment Fund 2005 94% 11.3% n/a 7.6% 3.0% 13.0%

4 $429.26 Firm Capital MIC 2010 73% 8.10% n/a 6.5% 1.0% 42.3%

5 $350.00 Antrim Balanced Mortgage Fund 2007 80% 7.6% 60.0% 6.2% 0.5% 10.0%

6 $241.30 Harbour Edge Mortgage Investment Fund 2005 89% n/a 60% 6.5% n/a

7 $236.00 VWR Capital Corp. 1993 81% 8.3% 62.0% 8.8% 0.3% 24%

9 $218.00 Terrapin Mortgage Investment Corp. 1978 n/a 7%-15% n/a 7.2% 1.0% 12.42%

8 $206.00 Fisgard Capital Corporation 1994 94% 8.2% 56.2% 5.0% 0.7% 15.4%

10 $195.58 Frontenac Mortgage Investment Corporation 2004 99% 8.9% n/a 6.0% 0.4% 7.6%

11 $142.18 CareVest MIC 1994 100% 5-14% n/a 0.7% 22.87% 0.4%

12 $137.54 Trez Capital MIC 2012 72% 7.30% n/a 8.5% 2.9% n/a

13 $134.30 Carevest Senior MIC 2012 100% 5-14% n/a 0.4% 24.2% 0.2%

14 $133.00 Paradigm Mortgage Investment Corp. 1994 92% 7% -13% 68% 0.0% n/a 21.7%

15 $113.00 Capital Direct I Income Trust 2006 37% 8.2% n/a 8.0% 0.5% 30.0%

16 $109.00 Westboro Mortgage Investment Corporation 2005 63% 7.99% – 15.00% 70% 7.7% n/a n/a

Magenta Mortgage Investment Corporation

(MMIC) - Class A shares 1994 85% 6.7% - 15.2% 76% 6.6% n/a n/a

18 $81.33

Airmor Investmet Services Ltd. - Interior

Equities Corporation 37591 n/a 10.4% n/a n/a n/a 11.0%

19 $74.59 Pacifica Mortgage Investment Corporation 1994 n/a 8.0% n/a 6.9% 0.2% 19.7%

20 $70.00 Neighbourhood Holdings LP 2015 95% 6.9% 57% 6.5% 0.00% 44.0%

21 $68.00 Trez Capital Senior MIC 2012 100% 6.07% n/a 6.9% 1.4% 2.8%

Great Pacific Mortgage - Accredit Mortgage

Ltd. 1994 90% 2010: 6- 16 % 92% 0.0% n/a n/a

23 $67.46 Premiere Canadian Mortgage Corp. 1996 97% 4.99% - 13% n/a 7.4% n/a 10.5%

Magenta Mortgage II Investment Corporation

(MMIC II) 2003 n/a n/a n/a n/a n/a n/a

25 $62.80 Capital West Mortgage Inc. - Pacifica Mortgage Investment Corporation

6% - 13.99%

(average - 7.25%) 65% 6.5% n/a 29.5%

26 $60.70 KV Capital Incorporated 2009 93% 10.3% 51% 8.7% n/a 0.0%

27 $59.90 Morrison Laurier Mortgage Corporation 2009 91% 6.1% n/a 6.3% n/a 0.0%

28 $59.00

Sinclair-Cockburn Mortgage Investment

Corporation 2004 0% 12.0% 85% 9.3% 0.25% 0.0%

Crossroads-DMD Mortgage Investment

Corporation 37012 90%

short-term: 11% -

20% ; long-term:

2.1% - 16.5%

n/a n/a n/a

30 $57.60 Mortgage Company of Canada 2013 48% 9.6% 70.6% 9.3% 0.25% 33.0%

Ass ets Under

Management ($, M) Name

Year of

Inception First Mortgage (%)

Lending Rate LTV Dividend (2016)

(2016)

Loan Loss

Provision De bt to Capital

17 $94.50

22 $67.66

24 $64.00

1994 63%

29 $58.00

Page 19

1 $1,023.00 TimberCreek Financial 11% 9% 44% 36.4%

2 $522.60 Atrium MIC 19% 8% 71% 2.3%

3 $431.25 Romspen Mortgage Investment Fund 12% 9% 28% 51.0%

4 $429.26 Firm Capital MIC 0% 10% 79% 11.0%

5 $350.00 Antrim Balanced Mortgage Fund 95% 5% 0% 0.0%

6 $241.30 Harbour Edge Mortgage Investment Fund 0% 0% 58% 42.0%

7 $236.00 VWR Capital Corp. 49% 18% 25% 8.0%

9 $218.00 Terrapin Mortgage Investment Corp. 33% 33% 0% 33%

8 $206.00 Fisgard Capital Corporation 66.80% 21.50% 9.00% 2.70%

10 $195.58 Frontenac Mortgage Investment Corporation 0% 0% 99.9% 0.1%

11 $142.18 CareVest MIC 68% 31% 0.2% 0.0%

12 $137.54 Trez Capital MIC 0% 27% 45% 27.9%

13 $134.30 Carevest Senior MIC 64% 36% 0.4% 0.0%

14 $133.00 Paradigm Mortgage Investment Corp. 81% 7% 0% 12.0%

15 $113.00 Capital Direct I Income Trust 48% 12.00% 39.00% 0.7%

16 $109.00 Westboro Mortgage Investment Corporation 0% 0% 50% 50.0%

17 $94.50

Magenta Mortgage Investment Corporation

(MMIC) - Class A shares 0% 0% 100% 0.0%

18 $81.33 Airmor Investmet Services Ltd. - Interior Equities Corporation

19 $74.59 Pacifica Mortgage Investment Corporation 33.3% 33.3% 33.3% 0%

20 $70.00 Neighbourhood Holdings LP 24% 4% 69% 3.0%

21 $68.00 Trez Capital Senior MIC 17% 47% 35% 1.8%

22 $67.66 Great Pacific Mortgage - Accredit Mortgage Ltd.

100% 0% 0% 0.0%

23 $67.46 Premiere Canadian Mortgage Corp. 28% 59% 7% 6.0%

24 $64.00

Magenta Mortgage II Investment Corporation

(MMIC II)

25 $62.80 Capital West Mortgage Inc. - Pacifica Mortgage Investment Corporation

50% 50% 0% 0.0%

26 $60.70 KV Capital Incorporated 87% 0% 8% 5.6%

27 $59.90 Morrison Laurier Mortgage Corporation 0% 0% 100% 0.0%

28 $59.00

Sinclair-Cockburn Mortgage Investment

Corporation 0% 15% 75% 10.0%

29 $58.00 Crossroads-DMD Mortgage Investment

Corporation

5% 90% 0% 5.0%

30 $57.60 Mortgage Company of Canada 0% 0% 100% 0.0%

Assets Under

Management ($, M) Name

BC

AB ON Others

Page 20

31 $54.44

1982 58% 11.4% 66% 8.5% 0.24% 35.9%

34 $38.60 AP Capital Mortgage Investment Corporation 2008 51% n/a 69% 7.0% n/a 7.8%

35 $38.36 Cambridge Mortgage Investment Corporation 2007 n/a 6.95% - 13.99% n/a 7.2% 0.81% n/a

36

$37.37 First Circle Financial Services Ltd. - First

2005

87% prime + 2% - prime

53%

n/a

n/a

5.1% Circle Mortgage Investment Corporation + 10.5%

37

$37.33 Crystal Enhanced Mortgage Fund

2007 56%

10.1% 64%

2.7% n/a

n/a

38

$37.20 All Canadian Investment Corporation

1998 18%

n/a n/a

7.0% n/a

0.0%

39

$35.69

First Island Secured Real Estate Investments -

First Island Mortgage Investment Corporation

36982

100%

4.5% - 11.5%

n/a

5.3%

n/a

n/a

Series IV Ltd.

40

$32.00

Bancorp Balanced Mortgage Fund ll Ltd.

2009

95%

8.1%

61.7%

6.1%

0.0%

3.7%

41

$31.00 Eclipse Residential MIC

2013 67%

9.60% n/a

6.9% n/a

22.6%

42

$30.46

Ginkgo Mortgage Investment Corporation

n/a

31%

average rate -2014:

12.90%, -2013:

67%

8.5%

n/a

n/a

13.09%

43

$29.00

New Haven Mortgage Income Fund (1) Inc.

2008

44%

10.0%

69%

8.0%

5.00%

0.0%

44

$27.43

Can Terra Financial Inc. - Classic Mortgage 2003

95% 5.5% - 12.95%

46% 6.3%

0.73% n/a

Corporation

45

$26.00

Builders Capital Mortgage Corp.

2013

n/a

13.00%

n/a

8.0%

2.0%

12.2%

46 $25.20 PrimeWest Mortgage Investment Corporation 2005 70% 10.20% n/a 9.8% 1.1% 33.7%

47 $25.00 Tekamar Mortgage Fund 1998 75% 7% - 11% 60% 7.0% n/a 8.0%

48 24.7 AWM Balanced Mortgage Investment

Corporation

1992 42% n/a 64.86% n/a 3.2% 9.5%

49 $24.16 Bayfield Mortgage Professionals Ltd. - Upton

Capital Corporation

1990 65% n/a n/a 6.3% 0.46% n/a

50 $22.00 Bancorp Growth Mortgage Fund ll Ltd. 2009 0% 12.0% 77.5% 8.4% 0.0% 2.1%

51 $22.00

Cove Mortgage Ltd. - CMIC Mortgage

Investment Corporation 1999 41% 3% - 14.95% 63% 0.0% n/a 23.5%

52 21.2

AWM Diversified Mortgage Investment

Corporation 2004 5% n/a 84.59% n/a 1.5% 33.0%

53 $21.18 Armada Mortgage 2002 79% 8.6% 62% 5.4% 0.44% 15.0%

54 $21.00 RiverRock Mortgage Investment Corporation 2014 30% 10.6% 71% 7.0% 0.00% 0.0%

55 $20.00 RESCO Mortgage Investment Corporation 2013 10% 10.6% 77.2% 8.0% n/a 0.0%

56 $20.00

Cooper Pacific Mortgage Investment

Corporation - Cooper Pacific II MIC

2002 24% 8% - 16% 73% 8.1% n/a n/a

57 $19.92 Secure Capital Mortgage Investment Corporation

2007 11% 2014: 11.34%, 2013:

13.26%

75% 8.3% 2.01% 8.4%

58 $18.00 Bookstreet II MIC 2012 100% 6 - 9% 70% 6.1% n/a n/a

59 $17.98 Bayfield Mortgage Professionals Ltd. - Versatile Mortgage Corporation

1996 63% n/a n/a 6.3% n/a 17.5%

60 $17.84 Kensington Realfund Corp. 1997 92% n/a 61% 5.0% 1.40% n/a

Assets Under

Management ($, M)

Name

Year of

Inception

First Mortgage (%)

Lending Rate

(2016)

LTV

Dividend (2016)

Loan Loss

Provision

Debt to Capital

30

$57.60

Mortgage Company of Canada

2013

48%

9.6%

70.6%

9.3%

0.25%

33.0%

Calvert Home Mortgage Investment

Corporation

32

$40.00 Magenta Mortgage III Investment

2012

n/a

n/a

n/a

n/a

n/a

n/a

Corporation (MMIC III)

33

$38.60

AP Capital Mortgage Investment Corporation

2007

54%

8.8%

63.9%

7.1%

2.1%

9.3%

Page 21

31 $54.44 Corporation

0% 99% 1% 0.0% n/a

33 $38.60 AP Capital Mortgage Investment Corporation 91.20% 8.43% 0.40% 0.0% n/a

34 $38.60 AP Capital Mortgage Investment Corporation 78% 20% 1% 2.2%

35 $38.36 Cambridge Mortgage Investment Corporation

36 $37.37

First Circle Financial Services Ltd. - First

100% 0% 0% 0.0%

C +

44 $27.43

68% 32% 0% 0.0%

46 $25.20 PrimeWest Mortgage Investment Corporation 0% 4.60% 0% 95.4% n/a

47 $25.00 Tekamar Mortgage Fund 100% 0% 0% 0.0%

48 24.7

AWM Balanced Mortgage Investment

Corporation

13% 81% 5% 1%

49 $24.16

Bayfield Mortgage Professionals Ltd. - Upton

Capital Corporation

77% 23% 0% 0.9%

50 $22.00 Bancorp Growth Mortgage Fund ll Ltd. 95% 6% 0% 0.0%

2-year GOC +

7%

51

$22.00 Cove Mortgage Ltd. - CMIC Mortgage Investment Corporation

100% 0% 0% 0.0%

52

21.2 AWM Diversified Mortgage Investment

Corporation

11% 35% 53% 1%

53 $21.18 Armada Mortgage 84% 6% 9% 0.0% n/a

54 $21.00 RiverRock Mortgage Investment Corporation 0% 0% 100% 0.0% n/a

55 $20.00 RESCO Mortgage Investment Corporation 0% 1% 85% 14.5% n/a

56 $20.00

Cooper Pacific Mortgage Investment

Corporation - Cooper Pacific II MIC 100% 0% 0% 0.0%

57 $19.92

Secure Capital Mortgage Investment

Corporation 5% 0% 58% 37.0%

58 $18.00 Bookstreet II MIC 0% 0% 100% 0.0% 0

59 $17.98

Bayfield Mortgage Professionals Ltd. -

Versatile Mortgage Corporation 73% 26% 0% 0.6%

60 $17.84 Kensington Realfund Corp. 100% 0% 0% 0.0%

Assets Under Name

BC

AB

ON

Others

Hurdle rate Management ($, M)

Calvert Home Mortgage Investment

Magenta Mortgage III Investment 32 $40.00

Corporation (MMIC III)

Circle Mortgage Investment Corporation

37

$37.33 Crystal Enhanced Mortgage Fund

50% 17%

29% 3.5%

38

$37.20

All Canadian Investment Corporation

98%

1%

0%

1.1%

First Island Secured Real Estate Investments - 39 $35.69 First Island Mortgage Investment Corporation

Series IV Ltd.

40

$32.00

Bancorp Balanced Mortgage Fund ll Ltd.

92%

8%

0% 0.0% 2-year GO

4%

41

$31.00

Eclipse Residential MIC

12%

18%

61%

9.8% n/a

42

$30.46

Ginkgo Mortgage Investment Corporation

0%

12%

70%

17.0%

43

$29.00

New Haven Mortgage Income Fund (1) Inc.

0%

0%

100%

0.0% 10%

Can Terra Financial Inc. - Classic Mortgage

Corporation

45 $26.00

Builders Capital Mortgage Corp. 13%

84% 0%

3.0% n/a

Page 22

73 $6.79

Assets Under Year of L

Management ($, M) Name

Inception First Mortgage (%)

(2

ending Rate

016)

LTV

Dividend (2016)

Loan Loss

Provision

Debt to Capital

61

$17.50

Brookstreet MIC

2010

0%

5% - 13%

84%

n/a

n/a

n/a

62 $16.29 CapLink Mortgage Investment Corporation 2005 89% 7.7% n/a 5.4% 0.4% 12.4%

63 $15.10 Highland-Pacific Mortgage BC Mortgage

Investment Corporation n/a 100% 6% - 11% 71% 5.4% n/a n/a

64 $14.50 Vanguard Mortgage Investment Corporation 2011 25% 11.1% n/a 8.3% 0.00% 15.0%

65 $14.22 Tri City Mortgage Investment Fund 2011 33% 13.7% n/a 7.9% 0.0% 6.0%

66 $13.93 Redbricks Mortgage Investment Corporation 2008 n/a 15.0% 66% 10.0% n/a 0.0%

67 13.27 First Place Mortgage Investment Corporation 2007

100%

n/a 67% n/a 1.7% 4.2%

68 12.178 Townline Mortgage Investment Corporation 1994 n/a n/a n/a n/a 0% 0%

Great Pacific Mortgage - First Accredit

Mortgage Corp. 2005 100% 10.1% n/a 4.6% 0% 0.0%

Bayfield Mortgage Professionals Ltd. -

Community One Mortgage Corporation 1998 74% n/a n/a 5.0% 0.26% 0.0%

71 $10.08 First Place Mortgage Investment Corporation 2007 100% 4.84 - 13.01% 67% 5.5% 0.56% n/a

72 $6.85 Dundarave Mortgage Investment Corp. 2008 79% 9.3% n/a 7.9% 0.00% 0.0%

Pioneer West Mortgage Investment

Corporation (PWMIC) n/a 12 - 24 months n/a 7.0% n/a n/a

74 $6.40 Mandate National Mortgage Corp. 1982 78% 9-14% n/a 7.2% 1.40% 0.0%

75 5.72

Atlantic Advantage Mortgage Investment

Corporation (AAMIC) 2014 n/a n/a 38.10% n/a 0.40% 0.00%

Cooper Pacific Mortgage Investment

Corporation - Cooper Pacific Blended MIC n/a 87% 7.5 - 10% 70% 6.3% 0.00% n/a

77 $4.70 Providus Mortgage Investment Corporation 2013 75% 12.0% 70% 9.1% n/a n/a

78 $4.60

Cove Mortgage Ltd. - CMIC First Mortgage

Investment Corporation 2009 100% 5.95% - 9.95% 47% 3.0% n/a 14.7%

79 $3.96 Fisgard Capital II Corporation 2014 31% 10.7% 59.3% 7.5% 0.7% 0.0%

80 3.1 EvCorp Capital Inc. 2010 n/a n/a n/a 8.60% 0% 0%

n/a n/a n/a n/a n/a n/a n/a

87 1.065 MacBeth Mortgage Investment Corporation 2012 n/a n/a n/a n/a 0% 0%

88

$0.30

ROI Private Commercial Mortgage

Investment Corporation n/a n/a n/a n/a n/a n/a n/a

69 $12.05

70 $11.53

76 $5.66

81 2.77 460 Mortgage Investment Corporation 2014

93% n/a 48% 7.81% 0% 0%

82 $2.16 CMI Mortgage Investment Corporation 2016 4% 10.8% 76% 9.2% 0.00% 0.0%

83

$1.99

Metropointe Mortgage Investment

84

1.458

Corporation

Crown Vista Mortgage Investment

2014

94%

n/a

n/a

n/a

0%

0%

Corporation

Cooper Pacific Mortgage Investment 85 $1.32

n/a 100% 7.5 - 10% 69% 6.0% n/a n/a

Corporation - Cooper Pacific First MIC

86 $1.19 Great Pacific Mortgage - GP MIC Fund Ltd. 2006 0% 9.95% - 14% 64% 0.0% 0.30% 0.0%

Page 23

61 $17.50 Brookstreet MIC 0% 0% 100% 0.0% 0

62 $16.29 CapLink Mortgage Investment Corporation 2% 98% 0% 0.0% n/a

63 $15.10

Highland-Pacific Mortgage BC Mortgage

Investment Corporation 97% 3% 0% 0.0%

64 $14.50 Vanguard Mortgage Investment Corporation

65 $14.22 Tri City Mortgage Investment Fund 53% 46% 0% 1.0% 8%

66 $13.93 Redbricks Mortgage Investment Corporation 50% 50% 0% 0.0% 0.09

67 13.27 First Place Mortgage Investment Corporation

68 12.178 Townline Mortgage Investment Corporation 100% 0% 0% 0.0%

Great Pacific Mortgage - First Accredit

Mortgage Corp. 100% 0% 0% 0.0% n/a

70 $11.53 Bayfield Mortgage Professionals Ltd. -

Community One Mortgage Corporation 70% 28% 0% 1.6%

71 $10.08 First Place Mortgage Investment Corporation

72 $6.85 n/a

73 $6.79

74 $6.40

75 5.72

prime plus 2%

per annum

76 $5.66 Cooper Pacific Mortgage Investment Corporation - Cooper Pacific Blended MIC

100% 0% 0% 0.0%

77 $4.70 Providus Mortgage Investment Corporation 100% 0% 0% 0.0%

Cove Mortgage Ltd. - CMIC First Mortgage

Investment Corporation 100% 0% 0% 0.0%

79 $3.96 Fisgard Capital II Corporation 51.66% 2.50% 36.46% 9.4% Nil

80 3.1 EvCorp Capital Inc.

81 2.77 460 Mortgage Investment Corporation 100% 0% 0% 0.0%

82 $2.16 CMI Mortgage Investment Corporation 0% 4% 90% 7.0%

83 $1.99

Metropointe Mortgage Investment

Corporation

Crown Vista Mortgage Investment

Corporation 100% 0% 0% 0.0%

85 $1.32 Cooper Pacific Mortgage Investment Corporation - Cooper Pacific First MIC

100% 0% 0% 0.0%

86 $1.19 Great Pacific Mortgage - GP MIC Fund Ltd. 100% 0% 0% 0.0% N/A

87 1.065 MacBeth Mortgage Investment Corporation

88 $0.30 ROI Private Commercial Mortgage

Investment Corporation

Assets Under

Management ($, M) Name BC AB ON Others Hurdle rate

69 $12.05

Dundarave Mortgage Investment Corp.

Pioneer West Mortgage Investment

50%

50%

0%

0.0%

Corporation (PWMIC)

Mandate National Mortgage Corp. 100% 0% 0% 0.0%

Atlantic Advantage Mortgage Investment

Corporation (AAMIC)

78 $4.60

84 1.458

Page 24

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