1. Investment Analysis 1 William Morgan Drive Toronto, ON Ryan Malenfant Greg Gowan

2. Outline Property Description - Ryan Highest & Best Use - Ryan Neighbourhood Description - Ryan Market Analysis - Greg Nearby Employment Districts - Greg Valuation Assumptions - Greg Investor Profile - Ryan Investor, Direct Cap & DCF Values – Greg Estimated Market Value - Greg Sensitivity Analysis - Ryan Recommendations - Ryan & Greg

3. Property Description Class B Office Built in 1963 26,245 GSF 1.23 acre lot size Zoned E01.0 Employment Tenants Community Care Centre signed until 2023 with yearly $0.25/SF increases Real Estate Firm signed until 2023 with step up in 2019 of $2.00/SF 36 parking spaces 12.5 km from CBD (via DVP)

6. Highest and Best Use Physically Possible Legally Permissible Financially Feasible Maximally Productive As Vacant: Given the current zoning, location, and site area it is our opinion the HBU of the subject site ‘as if vacant’ is the development of a 2 storey commercial office building. As Improved: Given the current zoning, location, site area, and building improvements it is our opinion that the HBU of the subject site would be for the continuation of the commercial office use.

7. Neighbourhood Description Thorncliffe Park Mixed use & employment zones Mostly low rise 1-2 storey building Transportation DVP TTC bus service Future Ellington LRT Amenities within 2 km radius All Big Five banks Restaurants Office supply & printing services Leaside Smartcentre & East York Town Centre Dry cleaning & tailoring Travel agencies Major telephone carriers

8. Market Analysis Employment The Office Sector is Toronto’s largest source of employment representing nearly half of all jobs (48.2%) (Source: Toronto Employment Survey 2013, March 2014) Employment is continuing to grow in Toronto Market Rents Central East Area of Toronto Class B Weighted Average Net Rent is $12.31/SF, Weighted Average Gross Rent is $26.38/SF for Q3 of 2014. (Source: Colliers Q3 2014 GTA Office Statistics) Market Vacancy Market vacancy rate for Central East Area of Toronto Class B Office Space is 8.1% (Source: Colliers Q3 2014 GTA Office Statistics)

9. Nearby Employment Districts

10. Valuation Assumptions Vacant space (basement) rented out at $7.00 /PSF Gross Vacancy & Bad debt 10% of GPI Expenses increase 3%/year Management Fee 5% of EGI Replacement Reserves $0.15/PSF Market Office Cap Rate 7% We used a rate between Suburban & Downtown Terminal Cap Rate 8% Cost of Sales of 5%

11. Investor Profile Required rate of return 7% Not eligible for capital gains Willing to put down 40% equity 5 year holding period Mortgage Quoted at 6.5% closed nominal interest rate Amortized over 25 years, Term of 5 years

12. Investor, Direct Cap & DCF Values Direct Cap Year 1 NOI: $170,000 Cap Rate of 7% Giving us a Direct Cap value of $2,423,000 DCF Year 5 NOI: $184,000 Terminal Cap Rate 8% Giving us a Net Sales Proceeds of $2,189,000 Value as per Discounted Cash Flow of $2,231,000 Investor At purchase price of $2,000,000 & Required rate of return of 7% NPV of $94,000 and an IRR of 9.96% Cash on Cash Return of 7.5%

13. Estimated Market Value Direct CapDCF Value$2,423,000$2,231,000 Weight40%60% Weighted Value $969,200$1,338,600 Weighted Value $2,307,800 Rounded To: $2,300,000

14. Sensitivity Analysis Holding original model constant; vacant space remains vacant Year 1 NOI: $135,000 Giving us Direct Cap value of $1,930,000 Net Sale Proceeds of $1,745,000 NPV $(120,000) IRR of 3.0% Cash on Cash Return 4.6% Holding original model constant; 100% equity NPV $(42,000) IRR of 6.5% Cash on Cash Return 6.3% Holding original model constant; 25% equity NPV $125,000 IRR 13.1% Cash on Cash Return 8.6%

15. Recommendation Based on Direct Cap and DCF Valuations, purchase property for $2,000,000 Otherwise, seek other investment opportunities Have a tenant commitment for the vacant space Use less equity; provides better returns Hold onto the property in the long term to benefit from appreciation of land value

16. Questions or Comments?