Aspen Real Estate Trust - Nickel Financial

|| CLEAR SKY CAPITAL – ASPEN REAL ESTATE TRUST 1

Nge ratio

Aspen Real Estate Trust S T R E N G T H I N N U M B E R S

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I

AND

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II

AND

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III

AND

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV

AND

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5

AND

CLEAR SKY SUNGATE LIMITED PARTNERSHIP

NOTICE OF SPECIAL MEETINGS OF UNITHOLDERS

TO BE HELD ON DECEMBER 1, 2020 - AND -

JOINT MANAGEMENT INFORMATION CIRCULAR

November 5, 2020


LETTER TO UNITHOLDERS

Dear fellow Unitholders,

You have the opportunity to enhance overall returns from your investment in Clear Sky Capital Strategic Asset Fund – Series I (“Fund 1”), Clear Sky Capital Strategic Asset Fund – Series II (“Fund 2”), Clear Sky Capital Strategic Asset Fund – Series III (“Fund 3”), Clear Sky Capital Strategic Asset Fund – Series IV (“Fund 4”), Clear Sky Capital Strategic Asset Fund – Series 5 (“Fund 5”, and collectively with Fund 1, Fund 2, Fund 3 and Fund 4, the “Trusts”) and/or Clear Sky Sungate Limited Partnership (“Sungate” and, together with the Trusts, the “Funds” and each, a “Fund”) through a consolidation of the Funds that we believe will provide:

(i) more effective access to the accumulated equity of the properties held by each of the Funds;

(ii) more geographic and asset class diversification and size; and

(iii) greater cost efficiencies.

Clear Sky invites you to participate in Aspen Real Estate Trust, a new open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”) that will be a consolidation of all multi-family properties currently held in the six separate Funds into one fund. The properties are located throughout Arizona, New Mexico and Texas (the “Properties”), and almost all of the Properties have experienced overall operational improvements and valuation gains since acquisition.

Please review the accompanying joint management information circular (the “Circular”) which provides details on how you can benefit from participating in New Fund and, if applicable, submit your proxy today (or ask your dealing representative to assist you) voting FFOR the proposed consolidation.

| CLEAR SKY CAPITAL – ASPEN REAL ESTATE TRUST 4

It is expected that, as a result of the consolidation, overall

Unitholder returns will be enhanced in the following ways:

1. Potential to increase overall

return by accessing currently

inaccessible equity. ________________________________________________

Overall there has been significant value creation within the

Funds; however, interest rates have declined since the

Properties were acquired by the Funds. With current

interest rates being lower than those under the existing

loans for the Properties, the costs associated with pre-

paying the loans make refinancing any of the loans on a

per loan basis or disposing of any of the Properties on a

per property basis, financially inefficient and impractical.

Due to the current ultra-low interest rate environment,

defeasance costs have increased, causing penalties

imposed upon pre-payment of the loans to rise sharply.

As a result, the equity appreciation in the Properties since

the initial investment or acquisition by the applicable Fund

is currently inaccessible. It is expected that, as New Fund

will have a larger portfolio of Properties, Clear Sky Capital,

Inc., an Arizona corporation, as manager and/or

administrator of the Funds (the “Manager” or “Clear Sky”),

will have more leverage to negotiate with the lenders under

the loans. Alternatively, the Manager may be better

positioned to pursue alternative methods to unlock the

equity appreciation in the Properties by pledging minority

interests in one or more of such Properties. The proposed

consolidation is expected to address these funding

limitations and provide the Manager with increased

financing flexibility by consolidating the Properties under

New Fund.

2. Superior investment in a larger,

more diversified Fund with further

upside potential. ________________________________________________

Upon completion of the proposed consolidation, it is

expected that New Fund’s portfolio will be comprised of

the current Properties contributed from each of the Funds.

With the potential to access currently inaccessible equity,

as discussed above, New Fund may also acquire or

develop additional properties to provide further

diversification and growth potential.

It is expected that New Fund will indirectly own seven

Properties comprising 1,159 multi-family units, appraised

in the aggregate at approximately US$122.4 million, and is

expected to benefit from increased geographical diversity

across metropolitan areas exhibiting population growth,

including in Arizona, New Mexico and Texas. The Manager

believes that additional growth remains to be realized in

the U.S. Sun Belt rental real estate markets and further

diversification across the property portfolio, including

geographical diversification, mitigates the risk and

exposure to any one property or market.

Additionally, the COVID-19 pandemic has caused

economic turmoil. While each of the Funds is positioned to

operate independently, the Manager believes that

investors in the Funds will be better positioned to achieve

higher returns and weather the economic storm by

combining into New Fund.

| CLEAR SKY CAPITAL – ASPEN REAL ESTATE TRUST 5

3. Potential to lead to greater cost

efficiencies. ________________________________________________

The proposed consolidation is expected to provide

economies of scale by eliminating duplicative general and

administrative costs, including legal, accounting and

auditing fees, and costs associated with operating the

Funds as separate funds.

In addition, holders of units (“Units”) of the Funds

(“Unitholders”) will receive units of New Fund that have an

aggregate asset management fee that is likely to be lower

than that charged in the aggregate in respect of the Units

that they currently hold, an acquisition fee that is lower

than that charged in respect of Units that they currently

hold (other than for the Class A units of Sungate (the

“Sungate Units”)), and a disposition fee that is equal to or

lower than that charged in respect of units that they

currently hold (other than for the Sungate Units). In

addition, the annual fee paid to the non-management

trustees of New Fund will be lower than that currently

charged in the aggregate in respect of the Funds. New

Fund will also have a Development Fee and a Construction

Fee, which is not currently charged in respect of Units that

Unitholders currently hold.

4. Provide optionality in disposition

strategy. ________________________________________________

Often times market conditions provide for a value premium

for larger, bulk sale transactions. Consolidating the

Properties into New Fund will provide the optionality to

take advantage of this, if available, or to sell the Properties

on an individual basis.

Other factors that Unitholders should consider in

assessing the proposed consolidation are:

Thorough process, Fairness Opinion and procedural

protections consistent with corporate governance best

practices - Evans & Evans, Inc. has provided a fairness

opinion to the independent member of each of the board of

trustees and board of directors of the general partner of

each of the Funds, as applicable, stating that as of

November 3, 2020, and based upon and subject to the

assumptions, limitations and qualifications set out therein,

the consolidation is fair, from a financial point of view to

Unitholders. Additionally, the proposed consolidation has

procedural measures to protect the interests of

Unitholders. Specifically, (i) in the case of each Trust, each

of the resolutions approving the proposed consolidation

must be approved by at least 66 2/3% of the votes cast by

applicable Unitholders virtually or represented by proxy at

the applicable Meeting, and (ii) in the case of Sungate, the

written resolutions approving the proposed consolidation

must be approved by holders of Sungate Units (the

“Sungate Unitholders”) holding more than 66 2/3% of the

issued Sungate Units. Furthermore, any registered

Unitholder of a Trust as of the Record Date (as defined in

the Circular) can exercise dissent rights and may, on strict

compliance with certain conditions, receive the fair value of

their Units in the applicable Fund.

Tax deferral - It is expected that, if approved, the proposed

consolidation will be completed on a tax deferred “rollover”

basis to Unitholders for Canadian income tax purposes,

provided that, in the case of a qualifying holder of Sungate

Units, the holder of Sungate Units elects to receive units of

a newly formed limited partnership subsidiary of New Fund

(“New LP”) in exchange for their Sungate Units and the

holder of Sungate Units makes the necessary joint tax

election with the general partner of New LP. See “Certain

Canadian Federal Income Tax Considerations” in the

accompanying Circular.


ABOUT CLEAR SKY CAPITAL REAL ESTATE INVESTMENTS

Continued commitment of experienced management with a track record of value creation. ________________________________________________

Clear Sky is a private equity investment management firm specializing in the acquisition and management of real estate assets in the United States.

Clear Sky was founded in 2009 by Marcus Kurschat and is led by an executive management team consisting of Marcus Kurschat (Founder and Chief Executive Officer), Matthew Collins (Chief Financial Officer) and Matt Mason (General Counsel). Clear Sky is currently comprised of a team of 13 investment professionals with experience in multi-family real estate asset management in the United States.

Clear Sky is an active investor in value-added real estate opportunities throughout the United States. Since its inception in 2009 through to December 31, 2019, Clear Sky has acquired or developed approximately US$771 million of real estate and operating assets, investing in excess of US$270 million of equity through various investment vehicles. Clear Sky’s real estate investments are diversified across real estate sectors including multi-family, self-storage and manufactured housing.

Clear Sky’s multi-family investments are primarily located in Arizona, California, Florida, New Mexico and Texas. Since inception, Clear Sky and its affiliates have successfully invested in 48 properties with invested equity in excess of US$194 million towards the acquisition or development of US$594 million in multi-family assets. Of the 48 properties, as of December 31, 2019, 28 properties have been realized, generating an aggregate realized gross internal rate of return of 30.9% and gross equity multiple of 2.2x.


The independent member of each of the board of trustees and board of directors of the general partner of each of the Funds, as applicable, has determined that the Transaction is advisable and in the best interest of the respective Fund and rrecommends that Unitholders of the Fund vote FOR or approve in writing, as applicable, the Transaction.

Special meetings of Unitholders of each of the Trusts will be held beginning at 9:00 a.m. (Mountain time) on December 1, 2020. Out of an abundance of caution, to proactively deal with the public health impact of the novel coronavirus disease, also known as COVID-19, and to mitigate risks to the health and safety of our communities, Unitholders, employees and other stakeholders, we will be holding the Meetings in a virtual-only format, which will be conducted via live audio webcast online at https://web.lumiagm.com. The accompanying Circular and Virtual Meeting User Guide provide important and detailed instructions about how to participate at the applicable virtual Meeting(s).

The consolidation is subject to the approval (i) in the case of each Trust, by at least 66 2/3% of the votes cast by Unitholders of each Trust, virtually or represented by proxy at the Meeting of such Trust, or any adjournment(s) or postponement(s) thereof, and (ii) in the case of Sungate, by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units.

Your participation in the applicable Meeting(s) is important to us. We encourage all Unitholders to take the opportunity to read the accompanying Circular in full and in advance of the applicable Meeting(s) or approval of the Sungate Resolution, as applicable, as it details important information that will assist you in exercising your right to vote as a Unitholder.

Sincerely, Marcus Kurschat P R E S I D E N T


Falling Interest Rates

When each of the Properties was acquired, a 10-

year term mortgage was secured on the Property.

A 10-year term would typically mitigate against

rising interest rate risk for a normal economic

cycle, allowing for a sale of the Property, either by

a small prepayment penalty or an attractive

mortgage for the acquirer to assume.

Prior to the fall of 2018, the general market

consensus was that interest rates would rise;

however, they instead took an unconventional

turn and began to drop. They continued to drop to

the point where one could borrow for a 10-year

term for less than a 2-year term (see chart below).

Falling interest rates have given rise to enormous

prepayment penalties on long-term debt, which

makes any consideration of selling a property not

financially viable.

N E W F U N D

7Properties comprising of

1,159 units

$122.4Million in Value (USD)


Clear Sky Fund Properties

STRATEGIC ASSET FUND – SERIES I: Silverado Apartments

Location Albuquerque, NM Purchase Price $19,500,000

Unit Count 256 Current Value $28,050,000 / 43.8%

Year Built 1985 Loan Amount $14,653,638

Acquisition Date January 2015 Defeasance $2,438,241

STRATEGIC ASSET FUND – SERIES II: Villas at Helen of Troy

Location El Paso, TX Purchase Price $10,750,000






STRATEGIC ASSET FUND – SERIES III: Casas de Soledad

Location Las Cruces, NM Purchase Price $15,550,000

Unit Count 256 (176 rental units, 80 units owned individually) Current Value $18,950,000 / 21.8%


Acquisition Date February 2016 Defeasance $3,052,533

STRATEGIC ASSET FUND – SERIES III: Rancho Verde




Acquisition Date June 2016 Defeasance $980,828



STRATEGIC ASSET FUND – SERIES IV: Tesoro on Spain





STRATEGIC ASSET FUND – SERIES 5: North Park Apartments

Location Houston, TX Purchase Price $14,500,000

Unit Count 192 Current Value $12,850,000 / 11%


Acquisition Date February 2018 Defeasance $3,412,544



SUNGATE LIMITED PARTNERSHIP: Sungate Apartments


Unit Count 95 Current Value $10,300,000 / 48%


Acquisition Date June 2016 Defeasance $1,200,950


NOTICE OF SPECIAL MEETINGS OF UNITHOLDERS

OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5

(collectively, the “Trusts”)

For each Trust, NOTICE IS HEREBY GIVEN that a special meeting (the “Meeting”) of holders (“Trust Unitholders”) of units (“Trust Units”) of the Trust will be held for the following purpose:

1. to consider and, if thought advisable, to pass, with or without variation, a special resolution of the Trust (the “Trust Resolution”), the full text of which is set forth in the applicable Schedule to the accompanying joint management information circular dated as of November 5, 2020 (the “Circular”), authorizing and approving an amendment to the declaration of trust to provide for the transfer of all of the assets of the applicable Trust (other than a nominal amount of cash) to Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), in consideration for the assumption of liabilities of the applicable Trust and units of New Fund (“New Fund Units”) and the redemption of all units of the applicable Trust (other than one unit of such Trust to be held by New Fund) in exchange for such New Fund Units (together with the Sungate Matters (as defined below), the “Transaction”), as more particularly described in the accompanying Circular; and

2. to transact such further or other business as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof.

Each Meeting will be held consecutively beginning at 9:00 a.m. (Mountain time) on December 1, 2020 as a virtual-only Meeting by way of a live audio webcast utilizing the LUMI meeting platform at https://web.lumiagm.com. Please refer to the accompanying Circular and Virtual Meeting User Guide for access details with respect to the applicable Meeting(s), including the Meeting ID(s).

The holders (the “Sungate Unitholders” and, together with the Trust Unitholders, “Unitholders”) of Class A units (“Sungate Units” and, together with the Trust Units, “Units”) of Clear Sky Sungate Limited Partnership (“Sungate” and, together with the Trusts, the “Funds” and each, a “Fund”) are requested to pass the applicable special resolution (the “Sungate Resolution” and, together with the Trust Resolutions, the “Transaction Resolutions”) authorizing and approving an amendment to the limited partnership agreement of Sungate to provide for (i) the redemption of the Sungate Units held by certain Sungate Unitholders (being Sungate Unitholders who do not elect to exchange their Sungate Units for units of a limited partnership subsidiary of New Fund to be formed under the laws of British Columbia (“New LP”)) in consideration for New Fund Units, and (ii) the transfer of all remaining Sungate Units to New LP in exchange for Class B limited partnership units of New LP that are, to the greatest extent practicable, economically equivalent to, and exchangeable for, New Fund Units (the “Sungate Matters”) by written resolution.

The accompanying Circular provides important and detailed information relating to the matters to be dealt with at the Meetings and forms part of this notice.

Out of an abundance of caution, to proactively deal with the public health impact of the novel coronavirus disease, also known as COVID-19, and to mitigate risks to the health and safety of our communities, Trust Unitholders, employees and other stakeholders, the Meetings will be held in a virtual-only format, which will be conducted via live audio webcast online at https://web.lumiagm.com. During the audio webcast, Trust Unitholders will be able to listen to the applicable Meeting live, and registered Trust Unitholders and duly appointed and registered proxyholders will be able to submit questions and vote while the applicable Meeting is being held. We hope that hosting the Meetings virtually helps enable greater participation by Trust Unitholders by allowing Trust Unitholders that might not


otherwise be able to travel to a physical meeting to attend online, while minimizing the health risk that may be associated with large gatherings. Please refer to the accompanying Circular and Virtual Meeting User Guide for access details with respect to the applicable Meetings, including the Meeting ID(s).

Registered Trust Unitholders and duly appointed and registered proxyholders will be able to virtually attend, participate in and vote at their respective Meeting(s) at https://web.lumiagm.com, using password “clearsky2020” (case sensitive). Non-registered Trust Unitholders who receive this notice of special meetings of Trust Unitholders and related materials through their broker, investment dealer, bank, trust company, custodian, nominee or other intermediary, should carefully follow the instructions of their intermediary to ensure that their Trust Units are voted at the applicable Meeting in accordance with such Trust Unitholders’ instructions. Please refer to the accompanying Circular and Virtual Meeting User Guide for access details with respect to applicable Meeting(s), including the Meeting ID(s).

Registered Trust Unitholders as of the record date of November 3, 2020 may exercise their right to vote at their respective Meeting(s) by completing and submitting a form of proxy. To be effective, the form of proxy, properly completed and duly signed, must be received by the proxy agent of the Trusts, Computershare Trust Company of Canada, prior to 9:00 a.m. (Mountain time) on November 27, 2020 or, in the case of any adjournment or postponement of a Meeting, not less than 48 hours, Saturdays, Sundays and holidays excepted, prior to the time of the adjournment or postponement. Detailed instructions on how to complete and return proxies are provided in the accompanying Circular.

Non-registered Trust Unitholders (being Trust Unitholders who hold their units through an investment dealer, trust company, custodian, nominee or other intermediary) are advised that voting through a proxyholder at the applicable Meeting will include, as a result of the virtual nature of the Meetings, the additional step of registering proxyholders with the proxy agent of the Trusts, Computershare Trust Company of Canada, after submitting their form of proxy or voting instruction form, as applicable. Failure to register the proxyholder with the proxy agent will result in the proxyholder not receiving a “Control Number” to participate in the applicable Meeting and only being able to attend as a guest. Non-registered Trust Unitholders who have not duly appointed themselves as proxyholder will be able to attend the applicable Meeting as guests but will not be able to vote or submit questions at the applicable Meeting. Please refer to the instructions provided in the Circular under “General Proxy Matters – Non-Registered Holders”.

If you plan to vote at a Meeting, it is important that you are connected to the internet at all times during such Meeting in order to vote when balloting commences. It is your responsibility to ensure internet connectivity for the duration of the applicable Meeting. You should allow ample time to login to the applicable Meeting online and complete the check-in procedures.

Trust Unitholders are encouraged to express their vote in advance of their respective Meeting(s) by completing the form of proxy or voting instruction form provided to them.

The Trust Units represented by properly executed proxies given in favour of the persons named in the form of proxy will be voted at the applicable Meeting in accordance with the instructions indicated thereon. If no instructions are given, the Trust Units represented by properly executed proxies given in favour of the persons named in the form of proxy will be voted FOR the applicable Trust Resolution.

DATED the 5th day of November, 2020.

BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I

BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II

(signed) “Kevin Kinnear” (signed) “Kevin Kinnear”Kevin Kinnear Independent Trustee

Kevin Kinnear Independent Trustee


BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III

BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV



BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5

(signed) “Kevin Kinnear”Kevin Kinnear Independent Trustee

TABLE OF CONTENTS Page


LETTER TO UNITHOLDERS .................................................................................................................................. 3 NOTICE OF SPECIAL MEETINGS OF UNITHOLDERS ................................................................................. 13 JOINT MANAGEMENT INFORMATION CIRCULAR ..................................................................................... 17 FORWARD-LOOKING STATEMENTS ............................................................................................................... 17 ELIGIBILITY FOR INVESTMENT....................................................................................................................... 18 CURRENCY AND EXCHANGE RATE ................................................................................................................. 19 NON-IFRS MEASURES ........................................................................................................................................... 19 QUESTIONS AND ANSWERS ................................................................................................................................ 20 GENERAL PROXY MATTERS .............................................................................................................................. 27 THE TRANSACTION .............................................................................................................................................. 30 SPECIAL BUSINESS OF THE MEETINGS ......................................................................................................... 50 RISK FACTORS ....................................................................................................................................................... 52 CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS ........................................................ 63 CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES .......................................................................... 74 VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF .................................................................. 79 INTERESTS OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON ............... 79 AUDITORS ................................................................................................................................................................ 79 OTHER MATTERS .................................................................................................................................................. 80 GLOSSARY OF TERMS.......................................................................................................................................... 81 APPROVAL OF THE BOARDS ............................................................................................................................. 93 SCHEDULE “A” TEXT OF FUND 1 RESOLUTION ....................................................................................... A-1 SCHEDULE “B” TEXT OF FUND 2 RESOLUTION ........................................................................................ B-1 SCHEDULE “C” TEXT OF FUND 3 RESOLUTION ....................................................................................... C-1 SCHEDULE “D” TEXT OF FUND 4 RESOLUTION ....................................................................................... D-1 SCHEDULE “E” TEXT OF FUND 5 RESOLUTION ........................................................................................ E-1 SCHEDULE “F” TEXT OF SUNGATE RESOLUTION ................................................................................... F-1 SCHEDULE “G” DISSENT RIGHTS ................................................................................................................. G-1 SCHEDULE “H” FAIRNESS OPINION ............................................................................................................ H-1 SCHEDULE “I” FORM OF TRANSACTION AGREEMENT .......................................................................... I-1 SCHEDULE “J” VOTING SECURITIES ........................................................................................................... J-1 SCHEDULE “K” DESCRIPTION OF THE EXISTING PROPERTIES ........................................................ K-1 SCHEDULE “L” INFORMATION RELATING TO NEW FUND ................................................................... L-1 SCHEDULE “M” PRO FORMA FINANCIAL STATEMENTS...................................................................... M-1


JOINT MANAGEMENT INFORMATION CIRCULAR

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5

(collectively, the “Trusts”)CLEAR SKY SUNGATE LIMITED PARTNERSHIP

(“Sungate” and, together with the Trusts, the “Funds” and each, a “Fund”)

This joint management information circular (this “Circular”) is provided by Clear Sky Capital Inc., an Arizona corporation, as manager and/or administrator of the Funds (the “Manager” or “Clear Sky”).

For each Trust, the Manager will hold a special meeting of holders of Trust Units (the “Meeting”) beginning at 9:00 a.m. (Mountain time) on December 1, 2020 in virtual-only format, which will be conducted by way of a live audio webcast at https://web.lumiagm.com for the purposes set forth in the enclosed Notice of Special Meetings of Unitholders of the Trusts (the “Notice of Meetings”), as more particularly described, with respect to each Meeting, under “General Proxy Matters – Meeting Information”. The holders (the “Sungate Unitholders”) of Class A units (“Sungate Units”) of Clear Sky Sungate Limited Partnership (“Sungate” and, together with the Trusts, the “Funds” and each, a “Fund”) are requested to pass the Sungate Resolution by written resolution. Please refer to the this Circular and the accompanying Virtual Meeting User Guide for access details with respect to the applicable Meeting(s), including the Meeting ID(s).

The Manager, as manager and/or administrator of the Funds, is providing this Circular in connection with the solicitation of proxies for use at the Meetings or at any adjournment(s) or postponement(s) thereof. No person has been authorized to give any information or to make representations in connection with the Transaction or any other matters to be considered at the Meetings other than those contained in this Circular and, if given or made, any such information or representation should not be considered to have been authorized by the Funds or the Manager.

This Circular does not constitute the solicitation of an offer to acquire any securities or the solicitation of a proxy by any person in any jurisdiction in which such solicitation is not authorized or in which the person making such solicitation is not qualified to do so or to any person to whom it is unlawful to make such solicitation.

All capitalized terms used in this Circular but not otherwise defined herein shall have the meanings set forth under “Glossary of Terms”.

Each Funds’ financial statements and the pro forma financial statements of New Fund that are included herein are reported in United States dollars and have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

You should not construe the contents of this Circular as legal, tax or financial advice and should consult with your own professional advisors as to the relevant legal, tax, financial or other matters in connection herewith.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Circular may constitute forward-looking statements and forward-looking information (collectively, “forward-looking statements”) within the meaning of Canadian securities laws, which are based on opinions, estimates and assumptions of the Manager and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Forward-looking statements may include, but are not limited to, statements with respect to: the completion of the Transaction; the expected benefits of the Transaction; the Exchange Ratios; the timing of the Meetings; the anticipated Effective Date; the effects of the Transaction on Unitholders; opportunities in the U.S. multi-


family real estate market; expectations regarding the U.S. economy; the anticipated and potential impact of the novel coronavirus disease (“COVID-19”) on the Funds, including rent collection; the treatment of Unitholders under tax laws, the expected future quarterly cash distributions of New Fund, and other expectations of the Manager and are often, but not always, identified by terminology such as “may”, “might”, “will”, “could”, “should”, “would”, “occur”, “expect”, “plan”, “anticipate”, “believe”, “intend”, “seek”, “aim”, “estimate”, “target”, “project”, “predict”, “forecast”, “potential”, “continue”, “likely”, “schedule”, or the negative thereof or similar expressions concerning matters that are not historical facts.

Forward-looking statements are provided for the purpose of presenting information about management’s current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Although the Manager believes that the expectations reflected in such forward-looking statements are reasonable, such statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions, including those discussed below. Many factors could cause actual results, performance or achievements to differ materially from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected.

Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking statements include, among other things, obtaining Unitholder approval of the Transaction Resolutions; assumptions made in connection with the anticipated benefits of the Transaction; the timing of the Meetings; assumptions made in connection with the preparation of the pro forma financial statements included herein; the impact of the current economic climate and the current global financial condition the Funds’ operations; vacancy and rental growth rates in the U.S. multi-family property market; demand for multi-family properties in the U.S.; demographic and economic trends in the U.S.; the realization of property value appreciation and timing thereof; the availability of properties for acquisition and the price at which such properties may be acquired; the price at which Properties may be disposed of and the ability and timing thereof; the availability of mortgage financing and current interest rates; the capital structure of New Fund; expenditures and fees in connection with the maintenance, operation and administration of the Properties; the ability of the Manager to manage and operate the Properties; actual or threatened epidemics, pandemics, outbreaks, or other public health crises, including the recent global outbreak of COVID-19; foreign currency exchange rates; governmental regulations and tax laws; and general global economic, market and business conditions. Risks and uncertainties regarding the Transaction are discussed under the “Risk Factors” section of this Circular.

Investors are cautioned against placing undue reliance on forward-looking statements. Except as required by law, the Manager undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

ELIGIBILITY FOR INVESTMENT

In the opinion of Blake, Cassels & Graydon LLP, counsel to the Funds, subject to the restrictions, limitations and assumptions set out under the heading “Certain Canadian Federal Income Tax Considerations”, provided that New Fund is a “mutual fund trust” for the purposes of the Tax Act on the Effective Date, New Fund Units will be, on that date, qualified investments under the Tax Act for trusts governed by registered retirement savings plans (“RRSPs”), registered retirement income funds (“RRIFs”), deferred profit sharing plans (“DPSPs”), registered education savings plans (“RESPs”), registered disability savings plans (“RDSPs”) and tax-free savings accounts (“TFSAs” and, together with RRSPs, RRIFs, DPSPs, RESPs and RDSPs, “Plans”).

Notwithstanding that New Fund Units may be qualified investments as discussed above, if New Fund Units are a “prohibited investment” (as defined in the Tax Act) for an RRSP, RRIF, TFSA, RDSP, or RESP, the annuitant of the RRSP or RRIF, the holder of the TFSA or RDSP, or the subscriber of the RESP, as the case may be, will be subject to a penalty tax as set out in the Tax Act if New Fund Units are held in a trust governed by such Plan. New Fund Units will not be a prohibited investment provided the annuitant, holder, or subscriber, as the case may be, deals at arm’s length with New Fund for purposes of the Tax Act and does not have a “significant interest” (as defined in the Tax Act) in New Fund. In addition, a New Fund Unit will not be a “prohibited investment” if the New Fund Unit is


“excluded property” (as defined for purposes of the prohibited investment rules in the Tax Act) for a trust governed by an RRSP, RRIF, TFSA, RDSP, or RESP, as applicable. Annuitants, holders, and subscribers of such Plans should consult their own tax advisors to ensure that New Fund Units would not be a prohibited investment in their particular circumstances.

Redemption Notes and other property which may be received in connection with an in specie redemption of New Fund Units may not be qualified investments for trusts governed by Plans. Accordingly, Unitholders should consult with their own tax advisors before deciding to exercise redemption rights in connection with New Fund Units held in a trust governed by a Plan.

New LP Units are not expected to be qualified investments for trusts governed by Plans.

CURRENCY AND EXCHANGE RATE

Unless otherwise indicated, all references to “dollars”, “$” or “US$” in this Circular refer to United States dollars and all references to “C$” in this Circular refer to Canadian dollars.

The daily average exchange rate as reported by the Bank of Canada for conversion of United States dollars to Canadian dollars on November 4, 2020 was US$1.00 = $1.3138.

NON-IFRS MEASURES

In this Circular, the Funds use certain non-International Financial Reporting Standards (“IFRS”) financial measures, which include Net Operating Income (NOI). These terms are not measures recognized under IFRS as prescribed by the International Accounting Standards, do not have standardized meanings prescribed by IFRS and should not be compared to or construed as alternatives to profit/loss, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Net Operating Income, as computed by the Funds, may not be comparable to similar measures as reported by other trusts or companies in similar or different industries. The Funds use these measures to better assess their underlying performance and provide these additional measures so that investors may do the same. NOI is presented in this Circular because management considers this non-IFRS measure to be an important measure of operating performance and uses this measure to assess each Property’s operating performance on an unlevered basis. In this Circular, “Net Operating Income” or “NOI” means all Property revenue, less direct Property costs such as utilities, realty taxes, repairs and maintenance, on-site salaries, insurance, bad debt expenses, Property management fees, and other Property specific administrative costs.


QUESTIONS AND ANSWERS

The following are some questions that you may have relating to the Transaction, and the answers to those questions. These questions and answers do not provide all the information relating to the Transaction and are qualified in their entirety by the more detailed information contained elsewhere in this Circular. Unitholders are urged to read this Circular in its entirety before making a decision related to their Units.

Q: What is the Transaction?

A: If the Transaction is consummated, among other things:

(i) with respect to each of the Trusts, all of the assets of the Trust (other than a nominal amount of cash) will be transferred to New Fund in consideration for the assumption of liabilities of the Trust and New Fund Units, and all of the Units of the Trust (other than one Unit of the Trust to be held by New Fund) will be redeemed in exchange for such New Fund Units;

(ii) with respect to Sungate, (i) all of the Sungate Units held by Non-Electing Sungate Unitholders will be redeemed in consideration for New Fund Units, and (ii) all of the Sungate Units held by Electing Sungate Unitholders will be transferred to New LP in exchange for New LP Units; and

(iii) as a result of the foregoing, the Funds will effectively be consolidated into New Fund which will continue to carry on, directly or indirectly, the business carried on by the Funds.

For further details of the Transaction, see “The Transaction”.

Q: What approval is required to pass the Transaction Resolutions of each of the Funds?

A: At each Meeting, Trust Unitholders will be asked to pass the applicable Trust Resolution, in each case approving the Transaction, including an amendment to the applicable Declaration of Trust. Each of the Trust Resolutions must be approved by at least 66 2/3% of the votes cast by applicable Trust Unitholders virtually or represented by proxy at the applicable Meeting.

The Sungate Resolution must be approved by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units. Sungate Unitholders are requested to pass the Sungate Resolution in writing.

See “The Transaction – Termination of the Transaction”.

Q: Does each of the Trust Boards and the Sungate GP Board support the Transaction?

A: Having received a Fairness Opinion and having considered a number of other factors, each Trust Board and the Sungate GP Board concluded (with the Conflicted Trustees or Conflicted Directors, as applicable, declaring their interest and refraining from consideration and voting) that the Transaction is fair from a financial point of view and is in the best interests of each of the Funds. Accordingly, the Independent Trustee of each Trust Board and the Independent Director of Sungate GP Board approved the Transaction and recommends that the Unitholders of each respective Fund vote FOR or approve in writing, as applicable, the applicable Transaction Resolution.

Q: What are the reasons for the recommendation of the Trust Boards and Sungate GP Board to approve the Transaction?

A: The Independent Trustee of each Trust Board and the Independent Director of Sungate GP Board identified a number of factors set out below as being most relevant to its recommendation to Unitholders to vote FORor approve in writing, as applicable, the applicable Transaction Resolution that will implement the Transaction, including the following:


Potential to increase overall return by accessing currently inaccessible equity: Overall there has been significant value creation within the Funds, however interest rates have declined since the Existing Properties were acquired by the Funds. With current interest rates being lower than those under the Loans, the costs associated with pre-paying the Loans make refinancing any of the Loans on a per Loan basis, or disposing of any of the Existing Properties on a per property basis, financially inefficient and impractical. Due to the current ultra-low interest rate environment, defeasance costs have increased, causing the penalties imposed upon pre-payment of the Loans to rise sharply.

As a result, the equity appreciation in the Existing Properties since the initial investment or acquisition by the applicable Fund is currently inaccessible. It is expected that, as New Fund will have a larger portfolio of Properties, the Manager will have more leverage to negotiate with the lenders under the Loans. Alternatively, the Manager may be better positioned to pursue alternative methods to unlock the equity appreciation in the Existing Properties by pledging minority interests in one or more Properties. The Transaction is expected to address these funding limitations and provide the Manager with increased financing flexibility to access such equity by consolidating the Existing Properties under New Fund. Access to equity can then be used by the Manager to increase the value of the Existing Properties through additional improvements or for the acquisition and development of new assets.

Superior investment in a larger, more diversified fund with further upside potential: Upon completion of the Transaction, it is expected that New Fund’s portfolio will be comprised of the Existing Properties contributed from each of the Funds. With the potential to access currently inaccessible equity, as discussed above, New Fund may also acquire or develop additional properties to provide further diversification and growth potential.

It is expected that New Fund will indirectly own seven Existing Properties comprising 1,159 multi-family units, appraised in the aggregate at approximately US$122.4 million and is expected to benefit from increased geographical diversity across metropolitan areas exhibiting population growth, including in Arizona, New Mexico and Texas. The Manager believes that additional growth remains to be realized in the U.S. Sun Belt rental real estate markets and that further diversification across the property portfolio, including geographical diversification, mitigates the risk and exposure to any one property or market.

Additionally, the COVID-19 pandemic has caused economic turmoil. While each of the Funds is positioned to operate independently, the Manager believes that investors in the Funds will be better positioned to achieve higher returns and weather the economic storm by combining into New Fund.

Potential to lead to greater cost efficiencies: The Transaction is expected to provide economies of scale by eliminating duplicative general and administrative costs, including legal, accounting and auditing fees, and costs associated with operating the Funds as separate funds.

In addition, Unitholders will receive New Fund Units that have an aggregate Asset Management Fee with respect to the Existing Properties that is likely to be lower than that charged in the aggregate in respect of the Units that they currently hold, an Acquisition Fee that is lower than that charged in respect of Units that they currently hold (other than for the Sungate Units), and a Disposition Fee that is equal to or lower than that charged in respect of Units that they currently hold (other than for the Sungate Units). In addition, the annual fee paid to the non-management New Fund Trustees will be lower than that currently charged in the aggregate in respect of the Funds. New Fund will also have a Development Fee and a Construction Fee, which is not currently charged in respect of the Units. See “Management Fees” in Schedule “L” to this Circular for additional details regarding the proposed Fees.

Provide optionality in disposition strategy: Often times market conditions provide for a value premium for larger, bulk sale transactions. The Transaction will provide the optionality to take advantage of this, if available, or to sell the Properties on an individual basis.


Thorough process, Fairness Opinion and procedural protections consistent with corporate governance best practices: Evans & Evans, Inc. (“E&E”) has provided a fairness opinion to the Independent stating that as of November 3, 2020, and based upon and subject to the assumptions, limitations and qualifications set out therein, the Transaction is fair, from a financial point of view, to Unitholders.

Additionally, the Transaction has procedural measures to protect the interests of Unitholders. Specifically, (i) in the case of each of the Trusts, the Trust Resolutions must be approved by at least 66 2/3% of the votes cast by applicable Unitholders virtually or represented by proxy at the applicable Meeting, and (ii) in the case of Sungate, the Sungate Resolution must be approved by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units.

Furthermore, any registered Unitholder of a Trust as of the Record Date can exercise Dissent Rights and may, on strict compliance with certain conditions, receive the fair value of their Units. See “The Transaction – Dissent Rights”.

Tax deferral: It is expected that, if approved, the Transaction will be completed on a tax deferred “rollover” basis to Unitholders for Canadian income tax purposes, provided that, in the case of a qualifying Sungate Unitholder, the Sungate Unitholder elects to receive New LP Units in exchange for their Sungate Units and the Sungate Unitholder makes the necessary joint tax election with New LP GP. See “Certain Canadian Federal Income Tax Considerations”.

Continued commitment of experienced management with track record of value creation: Clear Sky is a private equity investment management firm specializing in the acquisition and management of real estate assets in the United States. Clear Sky’s multi-family investments are primarily located in Arizona, California, Florida, New Mexico and Texas. Since inception, Clear Sky and its affiliates have successfully invested in 48 properties with invested equity in excess of US$194 million towards the acquisition or development of US$594 million in multi-family assets. Of the 48 properties, as of December 31, 2019, 28 properties have been realized, generating an aggregate realized gross internal rate of return of 30.9% and gross equity multiple of 2.2x.

See “The Transaction – Reasons for the Recommendation of the Trust Boards and Sungate GP Board”.

Q: How was the Exchange Ratio determined and what will I receive as consideration for my Units?

A: The Exchange Ratio for each class of Units for a particular Fund is determined to be the quotient equal to:

(i) the Net Equity Value of such Fund attributable to such class of Units, determined by:

(a) allocating the Net Equity Value to each applicable class of Units, calculated on the basis of the corresponding “proportionate share for each outstanding Participating Unit” as described in the applicable Declaration of Trust, Sungate LPA and Fund Offering Documents (provided that, in the case of Canadian dollar Units, the value is first determined in US dollars and converted to Canadian dollars using the Effective Exchange Rate);

(b) divided by the total outstanding Units of such class;

(ii) divided by the issue price of the corresponding class of New Fund Units (being C$ in the case of New Fund Class A Units and US$ in the case of New Fund Class B Units).


Based on the Effective Exchange Rate, Unitholders of each class of Units of a particular Fund would be entitled to receive for each Unit, approximately the following corresponding number and class of New Fund Units, or in the case of Electing Sungate Unitholders, the same number of New LP Units:

New Fund

Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Sungate

Class Class Ratio Class Ratio Class Ratio Class Ratio Class Ratio Class Ratio

A (C$)

A 0.925541 A 0.533480 A 0.648237 A 0.682402 A, Series A1

0.208417 A 797.163691

B N/A1 B N/A B N/A C N/A A, Series F1

N/A - -

Special N/A Special N/A Special N/A Special N/A - - - -

B (US$)

- - - - C 0.648237 B 0.682402 A, Series A2

0.208417 - -

- - - - - - - - A, Series F2

N/A - -

1 “N/A” is used to indicate that no units of such class are issued and outstanding as of the date of this Circular.

See “The Transaction – Process of Determination of Exchange Ratios”.

Q: Is the completion of the Transaction subject to any conditions?

A: The completion of the Transaction is subject only to the approval of Trust Resolutions by at least 66 2/3% of the votes cast by applicable Trust Unitholders virtually or represented by proxy at the applicable Meeting and approval of the Sungate Resolution by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units.

Q: What if the approval level required to pass the Transaction Resolutions is not obtained for one or more Funds?

A: If the Unitholders of a Fund do not approve the applicable Transaction Resolution, such Fund will not participate in the Transaction.

At any time before or after the Meetings or the passing of a written resolution by Sungate Unitholders, any of the Trust Boards or the Sungate GP Board, as applicable, may in their sole discretion delay or terminate the implementation of the Transaction, including any or all ancillary changes to the Declarations of Trust or Sungate LPA, as applicable, without further notice to, or action on the part of, the Unitholders. See “The Transaction – Termination of the Transaction”.

Q: When will the Transaction become effective?

A: Subject to having obtained the approval of the Transaction Resolutions by Unitholders, the Trust Boards and Sungate GP Board, as applicable, expect to consummate the Transaction as soon as practicable following the date of the Meetings, subject to the discretion of the Trust Boards and Sungate GP Board.


Q: Are there any risks that I should consider in deciding whether to vote for or approve in writing, as applicable, the applicable Transaction Resolution?

A: Yes. There are a number of risks you should consider in connection with the Transaction and the ownership of New Fund Units or New LP Units, which are described in this Circular under “Risk Factors”.

Q: Do I have Dissent Rights?

A: Pursuant to the Declarations of Trust, registered Trust Unitholders on the Record Date have the right to dissent with respect to the applicable Trust Resolution subject to the below conditions.

The Dissent Rights are subject to strict compliance with the following conditions: (i) the Trust Unitholder’s written objection to the applicable Transaction Resolution is sent to the applicable Trust, c/o Computershare Trust Company of Canada by fax at 1-866-249-7775 or by mail or hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, prior to 9:00 a.m. (Mountain time) on the second Business Day prior to the applicable Meeting or, if any Meeting is adjourned or postponed, not less than 48 hours prior to such adjourned or postponed meeting; (ii) the Dissenting Unitholder does not vote his, her or its Trust Units at the applicable Meeting either virtually or represented by proxy, in favour of the applicable Trust Resolution; and (iii) the Dissenting Unitholder exercises the Dissent Rights in respect of all of the Trust Units that he, she or it holds on behalf of the beneficial holder. See “The Transaction – Dissent Rights”.

A Non-Registered Holder who wishes to exercise its Dissent Rights in respect of its Trust Units should immediately contact the intermediary with whom the Non-Registered Holder deals. Trust Unitholders are advised that voting against the applicable Trust Resolution does not qualify as an exercise of Dissent Rights.

Sungate Unitholders do not have any right to dissent with respect to the Sungate Resolution.

Q: What if I have other questions?

A: Unitholders who have additional questions about the Transaction may contact Kevin Wheeler, Investor Relations, 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4 at [email protected] or (403) 354-5274. Unitholders who have questions about deciding how to vote should contact their professional advisors.

The following are some questions that a Trust Unitholder may have relating to the Meetings, and the answers to those questions. These questions and answers do not provide all the information relating to the Meetings or the matters to be considered at the Meetings and are qualified in their entirety by the more detailed information contained elsewhere in this Circular. Unitholders are urged to read this Circular in its entirety before making a decision related to their Units.

Q: When and where will the Meetings be held?

A: Each Meeting will be held beginning at 9:00 a.m. (Mountain time) on December 1, 2020 in a virtual-only format, unless adjourned or postponed, as more particularly described, with respect to each Meeting, under “General Proxy Matters – Meeting Information”.

Out of an abundance of caution, to proactively deal with the public health impact of COVID-19 and to mitigate risks to the health and safety of our communities, Trust Unitholders, employees and other stakeholders, the Meetings will be held in a virtual-only format, which will be conducted via live audio webcast. Trust Unitholders will have an equal opportunity to participate in their respective Meeting(s) online, regardless of their geographic location. The live audio webcast will be accessible online at https://web.lumiagm.com, password “clearsky2020” (case sensitive). Please refer to this Circular and the accompanying Virtual Meeting User Guide for access details with respect to the applicable Meeting(s), including the Meeting ID(s).


Q: How can I vote?

A: If you are eligible to vote at the applicable Meeting and your Trust Units are registered in your name, you can vote your Trust Units by signing and returning your form of proxy to Computershare by telephone at 1-866-732-VOTE (8683) or online at www.investorvote.com or by fax to 1-866-249-7775 or by mail or hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, prior to 9:00 a.m. (Mountain time) on November 27, 2020 or, in the case of any adjournment or postponement of a Meeting, not less than 48 hours, Saturdays, Sundays and holidays excepted, prior to the time of the adjournment or postponement. The time limit for the deposit of proxies may be waived or extended by the Chair of the applicable Meeting at his or her discretion without notice. Voting procedures for Non-Registered Holders are described below.

Q: Am I a Non-Registered Holder?

A: You are a Non-Registered Holder if your Trust Units are registered in the name of an Intermediary that you deal with in respect of the Trust Units, such as, among others, a trust company, securities dealer, director or administrator of RRSPs, RRIFs, RESPs and similar plans.

Q: How can a Non-Registered Holder vote?

A: If your Trust Units are not registered in your name but are held in the name of an Intermediary, your Intermediary is required to seek your instructions as to how to vote your Trust Units in advance of the applicable Meeting. Every Intermediary has its own mailing procedures and provides its own return instructions, which should be carefully followed in order to ensure that your Trust Units are voted at the applicable Meeting.

If you are a Non-Registered Holder and wish to attend and participate at a Meeting, you should carefully follow the instructions set out on your voting information form and in this Circular relating to the applicable Meeting, in order to appoint and register yourself as proxy.

The following are some questions that you may have relating to New Fund, and the answers to those questions. These questions and answers do not provide all the information relating to New Fund and are qualified in their entirety by the more detailed information contained elsewhere in this Circular. Unitholders are urged to read this Circular in its entirety before making a decision related to your Units.

Q: If a Property indirectly held by New Fund is sold, how will that impact me as a New Fund Unitholder?

A: It is generally contemplated that the net proceeds from the sale of any Property indirectly held by New Fund will be distributed amongst New Fund (through New LP), the other partners of New LP (including Electing Sungate Unitholders) and the general partner(s) of the applicable Property LP. The portion of net proceeds that will be available for distribution will depend on, among other things, the ongoing financial requirements of the other properties in the portfolio. Upon any reinvestment of such net proceeds in New Fund, it is expected that the general partner(s) of the applicable Property LP will reinvest any net proceeds it receives from the sale proportionately. The general partner(s) of the applicable Property LP has an economic interest in the applicable Property LP and is aligned with New Fund Unitholders in the distribution of such proceeds. For Canadian federal income tax purposes, New Fund Unitholders and New LP Unitholders will generally be required to recognize their share of any gain realized on a sale of a Property regardless of whether the proceeds of such sale are distributed by New Fund and New LP. See “Certain Canadian Federal Income Tax Considerations”.


Q: What right will I have to redeem my New Fund Units?

A: In accordance with the terms of the New Fund Declaration of Trust, New Fund Unitholders are entitled to receive cash upon the redemption of their New Fund Units; provided that, the Redemption Limit of US$100,000 per calendar quarter in respect of all New Fund Units is not exceeded. See “Description of New Fund Units – Redemption of New Fund Units” in Schedule “L” to this Circular.

New LP Units are not directly redeemable, but may be exchanged at the option of the holder for New Fund Units.

Q: How will the Net Asset Value of each Unitholder’s investment be impacted by the Transaction?

A: Each Trust intends to transfer substantially all of its assets and liabilities to New Fund and New Fund intends to acquire all of the Sungate Units, such that the assets and liabilities of the Funds combined will form the assets and liabilities of New Fund. The combined NAV may initially be decreased due to the costs of the Transaction; however the combined NAV is expected to increase over time as a result of the efficiency of New Fund and additional value created by carrying out New Fund’s investment objectives.


GENERAL PROXY MATTERS

Solicitation of Proxies

The solicitation of proxies will be primarily by mail, but proxies may also be solicited in person, by telephone, by facsimile, by email or by other form of electronic communication. If you have any questions about or require assistance completing the form of proxy, please contact Kevin Wheeler, Investor Relations, 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4 at [email protected] or (403) 354-5274.

Each Trust has fixed the close of business (Mountain time) on November 3, 2020 as the record date (the “Record Date”) for determining the Trust Unitholders entitled to receive notice of, and to vote at, the Meetings or any adjournment(s) or postponement(s) thereof.

Meeting Information

Each Meeting will be held beginning at the time set forth below (all times Mountain time) on December 1, 2020 in a virtual-only format, unless adjourned or postponed, as follows:

Clear Sky Capital Strategic Asset Fund – Series I 9:00 a.m.

Clear Sky Capital Strategic Asset Fund – Series II 10:00 a.m.

Clear Sky Capital Strategic Asset Fund – Series III 11:00 a.m.

Clear Sky Capital Strategic Asset Fund – Series IV 12:00 p.m.

Clear Sky Capital Strategic Asset Fund – Series 5 1:00 p.m.

Out of an abundance of caution, to proactively deal with the public health impact of COVID-19 and to mitigate risks to the health and safety of our communities, Trust Unitholders, employees and other stakeholders, the Meetings will be held in a virtual-only format, which will be conducted via live audio webcast. Trust Unitholders will have an equal opportunity to participate in their respective Meeting(s) online, regardless of their geographic location. The live audio webcast will be accessible online at https://web.lumiagm.com, password “clearsky2020” (case sensitive). Please refer to this Circular and the accompanying Virtual Meeting User Guide for access details with respect to the applicable Meeting(s), including the Meeting ID(s).

Sungate Unitholders are requested to pass the Sungate Resolution in writing.

Participation at the Meetings

The Meetings will be hosted online by way of a live audio-only webcast. Trust Unitholders will not be able to attend any Meeting in person. Please refer to the accompanying Virtual Meeting User Guide for access details with respect to the applicable Meeting(s), including the Meeting ID(s).

Registered Trust Unitholders and duly appointed and registered proxyholders will be able to virtually attend, participate and vote at the applicable Meeting(s). Registered Trust Unitholders and duly appointed and registered proxyholders who participate in a Meeting online will be able to listen to such Meeting, submit questions and vote, all in real time, provided they are connected to the Internet and comply with all of the requirements set out below under “– Registered Trust Unitholders – Voting at the Virtual Meetings”.

Non-Registered Holders who have not duly appointed themselves as proxyholders may still attend their respective Meeting(s) as guests. Guests will be able to listen to a Meeting but will not be able to submit questions or vote at such Meeting. See “– Non-Registered Holders”.


Registered Trust Unitholders, duly appointed and registered proxyholders and guests, including Non-Registered Holders who have not duly appointed themselves as proxyholder, can log in to a Meeting as set out below. Guests can listen to a Meeting but are not able to vote.

1. Log in online at https://web.lumiagm.com. We recommend that you log in at least 15 minutes before the applicable Meeting starts. Please refer to the accompanying Virtual Meeting User Guide for access details with respect to the applicable Meeting(s), including the Meeting ID(s).

2. Read and accept the Terms and Conditions.

3. Click “Login” and then enter your Control Number (see below) and password “clearsky2020” (case sensitive).

OR click “Guest” and then complete the online form.

Registered Trust Unitholders and duly appointed proxyholders may ask questions at the applicable Meeting and vote by completing a ballot online during the applicable Meeting.

Registered Trust Unitholders

The control number located on the form of proxy or in the email notification you received is your “Control Number” for the purposes of logging in to the applicable Meeting(s).

Duly Appointed Proxyholders

The proxy agent will provide proxyholders with a Username by email after the proxyholder has been duly appointed and registered in accordance with the instructions provided in the form of proxy.

If you attend a Meeting, it is important that you are connected to the Internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the applicable Meeting(s) online and complete the related procedures.

Appointment of Proxyholder

The individuals named in the accompanying form of proxy are trustees or officers of the Trusts. A registered Trust Unitholder has the right to appoint as proxyholder a person or company (who need not be a Trust Unitholder), other than the persons already named in the form of proxy, to represent such Trust Unitholder at the applicable Meeting, as the case may be. Such right may be exercised by crossing out the names the printed in the form of proxy and inserting the name of the person or company in the blank space provided or by completing another proper form of proxy, and in either case returning the proxy as instructed below.

Trust Unitholders who wish to appoint a third party proxyholder to represent them at the applicable Meeting must submit their proxy or voting instruction form (as applicable) prior to registering their proxyholder. Registering the proxyholder is an additional step once a Trust Unitholder has submitted their proxy/voting instruction form. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving a Username to participate in the applicable Meeting. To register a proxyholder, Unitholders MUST visit the website indicated in the accompanying Virtual Meeting User Guide by November 27, 2020 and provide Computershare with their proxyholder’s contact information, so that Computershare may provide the proxyholder with a Username via email.

To be valid, the proxy must be received by Computershare by telephone at 1-866-732-VOTE (8683), by fax at 1-866-249-7775, by Internet at www.investorvote.com, or by mail or hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, prior to 9:00 a.m. (Mountain time) on November 27, 2020 or, in the case of any adjournment or postponement of a Meeting, not less than 48 hours, Saturdays, Sundays and holidays excepted, prior to the time of the adjournment or postponement. The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting at his or her discretion without notice.


Voting by Proxyholder

A form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the accompanying Notice of Meetings and with respect to other matters which may properly come before a Meeting or any adjournment(s) or postponement(s) thereof. As of the date of this Circular, the Manager was not aware of any amendment, variation or other matter to come before any of the Meetings; however, if any amendments or variations to matters identified in the accompanying Notice of Meetings or any other matters should properly come before a Meeting, or any adjournment(s) or postponement(s) thereof, the Units represented by properly executed proxies given in favour of the persons named in the form of proxy will be voted on such matters pursuant to the discretionary authority provided for in the form of proxy. If no instructions are given, the Trust Units represented by properly executed proxies given in favour of the persons named in the form of proxy will be voted FOR the applicable Trust Resolution.

Registered Trust Unitholders

If you are a registered Trust Unitholder as of the Record Date, a form of proxy for the applicable Meeting is enclosed with this Circular and you may, and you are encouraged to appoint a proxy by completing, dating and signing the enclosed form of proxy and returning it to Computershare by telephone at 1-866-732-VOTE (8683) or online at www.investorvote.com or by fax to 1-866-249-7775 or by mail or hand delivery to 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada, ensuring that the proxy is received on November 27, 2020 not later than 9:00 a.m. (Mountain time) or in the case of any adjournment or postponement of a Meeting, not less than 48 hours, Saturdays, Sundays and holidays excepted, prior to the time of the adjournment or postponement. The time limit for the deposit of proxies may also be waived or extended Chair of the applicable Meeting at his or her discretion without notice.

Voting at the Virtual Meetings

You do not need to complete or return your form of proxy if you plan to vote at the applicable Meeting(s). Simply follow the instructions set out under “– Meeting Information – Participating at the Meetings” above and in the accompanying Virtual Meeting User Guide, to attend the applicable Meeting(s) online and complete a ballot virtually during the Meeting(s).

Non-Registered Holders

A Trust Unitholder is a non-registered (or beneficial) Trust Unitholder (a “Non-Registered Holder”) if the Trust Unitholder’s Trust Units are registered in the name of an intermediary that the Non-Registered Holder deals with in respect of the Trust Units, such as, among others, a trust company, securities dealer, director or administrator of RRSPs, RRIFs, RESPs and similar plans (in each case, an “Intermediary”).

Applicable regulatory policy requires Intermediaries to seek voting instructions from Non-Registered Holders in advance of the applicable Meeting(s). Every Intermediary has its own mailing procedures and provides its own return instructions, which should be carefully followed by Non-Registered Holders in order to ensure that their Trust Units are voted at the applicable Meeting(s). Often, the form of proxy supplied to a Non-Registered Holders by its Intermediary is identical to that provided to registered Trust Unitholders. However, its purpose is limited to instructing the registered Trust Unitholders how to vote on behalf of the Non-Registered Holder. A Non-Registered Holder receiving a voting instruction form cannot use that form to vote his, her or its Trust Units directly at the applicable Meeting(s). Rather, the Non-Registered Holder must return the voting instruction form, or otherwise indicate his, her or its voting wishes, to its Intermediary in accordance with such Intermediary’s procedures well in advance of the applicable Meeting(s) to have the Non-Registered Holder’s Trust Units voted.

Should a Non-Registered Holder who receives a voting instruction form wish to attend and vote at a Meeting (or have another person attend and vote on behalf of the Non-Registered Holder), the Non-Registered Holder should follow the corresponding instructions on the voting instruction form. Non-Registered Holders should carefully follow the instructions of their Intermediaries and their service companies.


Revocation of Proxy

In addition to revocation in any manner permitted by law, a registered Trust Unitholder as of the Record Date who has returned a form of proxy may revoke it by:

(a) completing and signing a form of proxy bearing a later date, and delivering it to Computershare, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, Canada and depositing it in accordance with the instructions (including the submissions deadlines) set out above;

(b) delivering a written statement expressly revoking such proxy, signed by the registered Trust Unitholder, who is authorized in writing, to:

(i) Kevin Wheeler, Investor Relations, at 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4, at any time up to and including the day that is 48 hours, Saturdays, Sundays and holidays excepted, prior to the day to which such Meeting is adjourned or postponed;

(ii) the Chair of the applicable Meeting prior to the start of such Meeting; or

(c) attending and voting at the applicable Meeting virtually.

A Non-Registered Holder who wishes to revoke his or her voting instructions must contact his or her Intermediary in respect of such instructions and comply with any applicable requirements imposed by such Intermediary. An Intermediary may not be able to revoke such instructions if it receives insufficient notice of revocation.

Questions

If you have questions or need assistance with the completion and delivery of your form of proxy, you may contact Kevin Wheeler, Investor Relations, 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4, at [email protected] or (403) 354-5274.

THE TRANSACTION

The Funds

The Trusts

Each of the Trusts is an open-ended, unincorporated investment trust formed under the laws of Alberta and governed by the applicable Declaration of Trust. The principal address of each of the Trusts is 120 Varsity Estates Bay NW, Calgary, Alberta, T3B 2W4, Canada.

The board of trustees of each of Fund 1, Fund 2, Fund 3 and Fund 4 is comprised of Marcus Kurschat, Elroy Gust, Kevin Wheeler and Kevin Kinnear. The board of trustees of Fund 5 is comprised of Marcus Kurschat, Kevin Wheeler and Kevin Kinnear. See “The Transaction – Conflicts of Interest”.

The Trusts are investment vehicles that were established for the primary purpose of investing, directly and indirectly, in interests in subsidiary entities, which carry on the business of acquiring, owning and operating a portfolio of multi-family rental properties in the U.S. Sun Belt.

Fund 1 was formed on June 23, 2014. Fund 1 indirectly acquired Silverado, located in Albuquerque, New Mexico, in January 2015 for US$19,500,000. As at the close of business on November 3, 2020, there were 1,022,923 Class A units, nil Class B units and nil Special Voting units of Fund 1 issued and outstanding.

Fund 2 was formed on January 2, 2015. Fund 2 indirectly acquired VHT, located in El Paso, Texas, in January 2016 for US$7,800,000. As at the close of business on November 3, 2020, there were 682,774 Class A units, nil Class B units and nil Special Voting units of Fund 2 issued and outstanding.


Fund 3 was formed on November 16, 2015. Fund 3 indirectly acquired Casas De Soledad, located in Las Cruses, New Mexico, in February 2016 for US$15,500,000 and indirectly acquired Rancho Verde, located in Albuquerque, New Mexico, in February 2016 for US$5,465,787. As at the close of business on November 3, 2020, there were 1,141,621 Class A units, nil Class B units, 112,564 Class C US$ units and nil Special Voting units of Fund 3 issued and outstanding.

Fund 4 was formed on April 28, 2016. Fund 4 indirectly acquired Tesoro, located in Albuquerque, New Mexico, in January 2016 for US$22,762,383 and a minority interest in University Villas, located in Tucson, Arizona, in May 2018. As at the close of business on November 3, 2020, there were 1,383,940 Class A units, 73,709 Class B US$ units, nil Class C units and nil Special Voting units of Fund 4 issued and outstanding.

Fund 5 was formed on February 23, 2018. Fund 5 indirectly acquired North Park, located in Houston, Texas, in February 2018 for US$14,500,000. As at the close of business on November 3, 2020, there were 1,041,695 Class A, Series A1 units, nil Class A, Series F1 units, 157,973 Class A, Series A2 units, and nil Class A, Series F2 units of Fund 5 issued and outstanding.

See Schedule “K” to this Circular for a description of the Existing Properties held by each of the Trusts.

Sungate

Sungate is a limited partnership formed on April 14, 2016 under the laws of British Columbia. The principal address of Sungate is 595 Burrard Street, Suite 2600, Vancouver, British Columbia, V7X 1L3, Canada.

The Sungate GP Board is comprised of Marcus Kurschat and Kevin Kinnear. See “The Transaction – Conflicts of Interest”.

Sungate is an investment vehicle that was established for the primary purpose of investing, directly and indirectly, in interests in subsidiary entities, which carry on the business of acquiring, owning and operating a portfolio of value-add, income producing multi-family rental properties in New Mexico. Sungate indirectly acquired Sungate Apartments, located in Albuquerque, New Mexico, in June 2016 for US$10,750,000.

As at the close of business on November 3, 2020, there were 468 Sungate Units issued and outstanding.

See Schedule “K” to this Circular for a description of Sungate Apartments.

Background to the Transaction

The following is a summary of the material events leading up to the Transaction being proposed by the Manager and the recommendation of the Independent to approve the Transaction Resolutions.

The investment objectives of each of the Funds is to indirectly acquire or invest in value-add, income producing multi-family rental properties in one or more of Arizona, New Mexico and Texas. Properties are acquired with the objective of generating capital appreciation above the local market appreciation by making enhancements to the properties, including aesthetic improvements and renovations to the common areas and the interior of the suites. Such enhancements are intended to result in the ability to charge higher rental rates. As the rental income grows, such additional income may be invested back into the properties to make further enhancements or distributed to investors.

In pursuing such objectives, between 2016 to 2018, each of the Funds indirectly acquired or invested in one or more Existing Properties. The acquisition of, or investment in, each of the Existing Properties was funded with a 10-year fixed term Loan. The Loans were entered into at a time when interest rates were on an upward trend; however, since 2018, interest rates have fallen significantly. This downward trend has been accelerated and exacerbated as a result of the COVID-19 pandemic.

The current ultra-low interest rate environment has limited the Manager’s ability to divest the Existing Properties. With current interest rates lower than those under the Loans, the Manager has concluded that the costs associated with


pre-paying the Loans make refinancing any of the Loans on a per Loan basis, or disposing of any of the Existing Properties on a per Property basis, financially inefficient and impractical. In addition, high defeasance costs in the current interest rate environment would give rise to significant pre-payment penalties under the Loans. Defeasance is the technical process for prepaying a fixed-term loan and involves the purchase of U.S. Treasury bonds with maturities equal to the remaining term of the loan that pay periodic interest and principal payments. These bonds provide cash flow to the lender until the bonds mature. When interest rates fall, defeasance costs increase as the bonds used as cash flow become more expensive and increased defeasance costs would result in most, if not all, of the appreciation on the Existing Properties being lost. Given the current economic environment, the Manager believes that it is unlikely that these circumstances will change prior to the maturity of the Loans. As a result, the equity appreciation in the Existing Properties since the initial investment or acquisition by the applicable Fund has remained inaccessible.

Beginning in late 2019, the Manager has explored strategic alternatives to address these funding limitations, as well as other measures that would improve the implementation of the Funds’ objectives and enhance Unitholder value. As part of such process, the Manager assessed the potential benefits, and related risks, of consolidating the Funds, including the ability to access additional equity through a broader portfolio of properties and greater diversification to mitigate the risk and exposure to any one property or market. The assessment of a potential consolidation accelerated in early 2020, with a growing emphasis on the benefits of risk mitigation, in particular, in light of the uncertainty that had arisen due to the impact of the COVID-19 pandemic.

The Manager initially proposed the consolidation to the Independent on March 10, 2020. The Manager set out the background and rationale in pursuing the Transaction, including the financing constraints that each of the Funds had experienced. The Manager also provided the Independent with an initial summary of the process of approval for the Transaction.

In an effort to respond to the ongoing COVID-19 pandemic, a tenant support program was established to allow tenants of each of the Existing Properties to defer a portion of their rent to a later date with no interest. As of July 31, 2020, approximately US$6,700 in rent deferrals have been granted to tenants of the Existing Properties. Due to the economic challenges and material uncertainty introduced by the COVID-19 pandemic, as a pre-emptive measure to conserve cash flow, the Trust Boards and Sungate GP Board determined to suspend all distributions for the first and second quarters of 2020 and cash redemptions of Units. The Manager, the Trust Boards and the Sungate GP Board also continued to assess strategic alternatives in light of the pandemic, and undertook a further analysis on the proposed terms of the consolidated fund and the exchange ratio among the various Funds under a potential consolidation.

At the meetings of the Trust Boards and the Sungate GP Board held on March 10, 2020, each of Marcus Kurschat, Elroy Gust and Kevin Wheeler, as trustees of each of the Funds and as directors of Sungate GP, as applicable, disclosed to the Independent that they are a Conflicted Trustee or Conflicted Director, as applicable. See “The Transaction – Conflicts of Interest”.

On March 30, 2020, the Independent engaged DuMoulin Black LLP as independent counsel to assist the Independent in his consideration of the Transaction and, on April 14, 2020, also engaged E&E to provide financial advice, including, if requested, the delivery of the Fairness Opinion, in connection with the Transaction. See “The Transaction – Fairness Opinion”.

During the second and third quarters of 2020, the Independent engaged in a number of discussions with the Manager regarding the proposed Transaction. As part of the review process, the Independent and its legal and financial advisors sought additional documentation and information relating to each of the Funds from the Manager, including requests for detailed information regarding the Funds’ respective ongoing operations, recent communications and redemption requests from Unitholders, the current values of the Existing Properties, the defeasance costs of the Loans, and historical, current and projected financial information. The Manager and its representatives provided all requested documentation and information to the Independent and participated in a series of discussions with the Independent and his advisors regarding such requests and the information provided.

The Independent, after consultation with E&E and DuMoulin Black LLP, and after careful consideration of, among other factors, the Fairness Opinion, determined that each of the Fund 1 Resolution, the Fund 2 Resolution, the Fund 3 Resolution, the Fund 4 Resolution, the Fund 5 Resolution and the Sungate Resolution is advisable and in the best interest of the applicable Fund.


On November 5, 2020 (i) the Fund 1 Trustees, with Marcus Kurschat, Elroy Gust and Kevin Wheeler abstaining, approved by written resolution this Circular and various other matters relating to the proposed Fund 1 Resolution and the Fund 1 Meeting, including resolving to recommend that Fund 1 Unitholders vote for the Fund 1 Resolution; (ii) the Fund 2 Trustees, with Marcus Kurschat, Elroy Gust and Kevin Wheeler abstaining, approved by written resolution this Circular and various other matters relating to the proposed Fund 2 Resolution and the Fund 2 Meeting, including resolving to recommend that Fund 2 Unitholders vote for the Fund 2 Resolution; (iii) the Fund 3 Trustees, with Marcus Kurschat, Elroy Gust and Kevin Wheeler abstaining, approved by written resolution this Circular and various other matters relating to the proposed Fund 3 Resolution and the Fund 3 Meeting, including resolving to recommend that Fund 3 Unitholders vote for the Fund 3 Resolution; (iv) the Fund 4 Trustees, with Marcus Kurschat, Elroy Gust and Kevin Wheeler abstaining, approved by written resolution this Circular and various other matters relating to the proposed Fund 4 Resolution and the Fund 4 Meeting, including resolving to recommend that Fund 4 Unitholders vote for the Fund 4 Resolution; (v) the Fund 5 Trustees, with Marcus Kurschat, Elroy Gust and Kevin Wheeler abstaining, approved by written resolution this Circular and various other matters relating to the proposed Fund 5 Resolution and the Fund 5 Meeting, including resolving to recommend that Fund 5 Unitholders vote for the Fund 5 Resolution; and (vi) the board of directors of Sungate GP, with Marcus Kurschat abstaining, approved by written resolution this Circular and various other matters relating to the proposed Sungate Resolution, including resolving to recommend that Sungate Unitholders approve in writing the Sungate Resolution.

Information and Factors Considered by the Independent

As described above, in making its determination and recommendation, the Independent consulted with the Manager, E&E, and DuMoulin Black LLP, received the Fairness Opinion, reviewed relevant information and considered a number of factors, including those listed under the heading “The Transaction – Reasons for the Recommendation of the Trust Boards and Sungate GP Board”. The Independent’s conclusions and recommendations are based upon the totality of the information presented and considered by the Independent. The following summary of information and factors considered by the Independent is not intended to be exhaustive, but includes a summary of material information and factors considered by the Independent in the Independent’s evaluation of the Transaction.

In view of the variety of factors and the amount of information considered in connection with the Independent’s evaluation of the Transaction, the Independent did not find it practicable to, and did not, quantify or otherwise attempt to assign any relative weight to each of the specific factors considered in reaching the Independent’s conclusions and recommendation. The recommendation of the Independent was made after consideration of all of the factors noted under the heading “The Transaction – Reasons for the Recommendation of the Trust Boards and Sungate GP Board”, other factors and in light of the Independent’s knowledge of the business, financial condition and prospects of the Funds and taking into account the advice of the Independent’s legal advisors.

The Independent also considered a variety of risks and other potentially negative aspects in the Independent’s deliberations concerning the Transaction, including:

1. Risks to the Business of Non-Completion. There are risks to the Funds if the Transaction is not completed, including the costs incurred in proceeding towards completion of the Transaction, the diversion of the Manager’s attention away from the conduct of the business of the Funds, and the potential impact on the Funds’ current business relationships. See “Risk Factors – Risks Relating to the Transaction”.

2. Management Fees. Fees payable in respect of the management and operations of the New Fund will likely be less than the existing fees payable in respect of the Funds, however other fees may increase depending on acquisition, disposition, development and construction activities undertaken by New Fund as described under “Management Fees” in Schedule “L” to this Circular.

3. Risks associated with Properties. New Fund Unitholders will be exposed to risks related to real estate projects that they were not previously exposed to. New Fund Unitholders may also be exposed to risks associated with activities such as development and construction of real estate projects that they were not previously exposed to, which may impact, among other things, distributions by New Fund.


Recommendation of the Trust Boards and Sungate GP Board

Having received a Fairness Opinion and having considered a number of other factors, including those noted below, each Trust Board and the Sungate GP Board concluded (with the Conflicted Trustees or Conflicted Directors, as applicable, declaring their interest and refraining from consideration and voting) that the Transaction is fair from a financial point of view and is in the best interests of each of the Funds. Accordingly, the Independent Trustee of each Trust Board and the Independent Director of Sungate GP Board approved the Transaction and recommends that the Unitholders of each respective Fund vote FOR or approve in writing, as applicable, the applicable Transaction Resolution.

Reasons for the Recommendation of the Trust Boards and Sungate GP Board

Each Trust Board and the Sungate GP Board has carefully considered all aspects of the Transaction and has received the benefit of advice from its legal and financial advisors.

The Independent Trustee of each Trust Board and the Independent Director of Sungate GP Board identified a number of factors set out below as being most relevant to its recommendation to the Unitholders of each respective Fund to vote FOR or approve in writing, as applicable, the applicable Transaction Resolution that will implement the Transaction. None of the Trust Boards nor the Sungate GP Board considered it practical to, and did not attempt to, assign relative weights to the various factors. The following discussion of the information and factors considered and evaluated by each Trust Board and the Sungate GP Board is not intended to be exhaustive of all factors considered and evaluated by each Trust Board and the Sungate GP Board. The conclusions and recommendations of each Trust Board and the Sungate GP Board were made after considering the totality of the information and factors considered.

1. Potential to increase overall return by accessing currently inaccessible equity

With current interest rates being lower than those under the Loans, the costs associated with pre-paying the Loans make refinancing any of the Loans on a per Loan basis, or disposing of any of the Existing Properties on a per property basis, financially inefficient and impractical. Due to the current ultra-low interest rate environment, defeasance costs have increased, causing the penalties imposed upon pre-payment of the Loans to rise sharply.

The below table provides a breakdown of the key terms of each of the Loans:

Aggregate principal amount outstanding as of June 30, 2020

(US$)

Interest rate Maturity date

Defeasance costs as of June 30,

2020 (US$)

Silverado Loan $14,653,638 3.910% February 1, 2025 $2,438,241

VHT Loan $7,800,000 4.870% February 5, 2026 $1,936,662

Casas De Soledad Loan $11,467,082 5.250% March 1, 2026 $3,052,533

Rancho Verde Loan $4,162,000 4.160% July 1, 2026 $980,828

Tesoro Loan $17,100,000 4.120% July 1, 2026 $3,801,980

North Park Loan $10,116,482 5.054% March 6, 2028 $3,412,544

Sungate Loan $5,272,000 4.080% July 1, 2016 $1,200,950


As a result, the equity appreciation in the Existing Properties since the initial investment or acquisition by the applicable Fund is currently inaccessible. It is expected that, as New Fund will have a larger portfolio of Properties, the Manager will have more leverage to negotiate with the lenders under the Loans. Alternatively, the Manager may be better positioned to pursue alternative methods to unlock the equity appreciation in the Existing Properties by pledging minority interests in one or more Properties. The Transaction is expected to address these funding limitations and provide the Manager with increased financing flexibility to access such equity by consolidating the Existing Properties under New Fund. Access to equity can then be used by the Manager to increase the value of the Existing Properties through additional improvements or for the acquisition and development of new assets.

2. Superior investment in a larger, more diversified fund with further upside potential

Upon completion of the Transaction, it is expected that New Fund’s portfolio will be comprised of the Existing Properties contributed from each of the Funds. With the potential to access currently inaccessible equity, as discussed above, New Fund may also acquire or develop additional properties to provide further diversification and growth potential.

It is expected that New Fund will indirectly own seven Existing Properties comprising 1,159 multi-family units, appraised in the aggregate at approximately US$122.4 million, and is expected to benefit from increased geographical diversity across metropolitan areas exhibiting population growth, including in Arizona, New Mexico and Texas. The Manager believes that additional growth remains to be realized in the U.S. Sun Belt rental real estate markets and that further diversification across the property portfolio, including geographical diversification, mitigates the risk and exposure to any one property or market.

Additionally, the COVID-19 pandemic has caused economic turmoil. While each of the Funds is positioned to operate independently, the Manager believes that investors in the Funds will be better positioned to achieve higher returns and weather the economic storm by combining into New Fund.

3. Potential to lead to greater cost efficiencies

The Transaction is expected to provide economies of scale by eliminating duplicative general and administrative costs, including legal, accounting and auditing fees, and costs associated with operating the Funds as separate funds.

In addition, Unitholders will receive New Fund Units that have an aggregate Asset Management Fee with respect to the Existing Properties that is likely to be lower than that charged in the aggregate in respect of the Units that they currently hold, an Acquisition Fee that is lower than that charged in respect of Units that they currently hold (other than for the Sungate Units), and a Disposition Fee that is equal to or lower than that charged in respect of Units that they currently hold (other than for the Sungate Units). In addition, the annual fee paid to the non-management New Fund Trustees will be lower than that currently charged in the aggregate in respect of the Funds. New Fund will also have a Development Fee and a Construction Fee, which is not currently charged in respect of the Units. See “Management Fees” in Schedule “L” to this Circular for additional details regarding the proposed Fees.

The below table sets out the current fees of each of the Funds and the proposed Fees.

Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Sungate New Fund

Asset Management Fee1

US$117,054 annually (per Fund)

US$130,375 annually (per Fund)

US$35,100 annually

(being 1.5% of the Sungate Unit subscription proceeds)

US$650,000 on Existing Properties

1.5% of all Equity Proceeds

Acquisition Fee

2.5% of the enterprise value of the applicable Property

1.75% of the purchase price of Sungate

2.0% of the enterprise value of the Additional Property


Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Sungate New Fund

Disposition Fee

1.5% of the enterprise value of the applicable Property

N/A 1.5% of the enterprise value of the Existing Property

1.0% of the enterprise value of the Additional Property or Developed Property

Development Fee

N/A 5.0% of the cost of developing the Developed Property

Construction Fee

N/A 6.0% of the hard costs and general conditions costs in connection with the development of the Developed Property (if incurred by an affiliate of the Manager acting in the capacity of a general contractor in lieu of a third party)

Guarantee Fee

N/A 0.15% of the then outstanding funds borrowed by New Fund and guaranteed by the Manager or any of its affiliates

Trustee Annual Fee

C$24,000 (per Fund) C$12,000 C$60,000 (C$30,000 to each of Elroy Gust and Kevin Kinnear)

1 The asset management fee may be referred to as an “annual salary” or “annual fee” in the Fund Offering Documents.

4. Provide optionality in disposition strategy

Often times market conditions provide for a value premium for larger, bulk sale transactions. Combining the Existing Properties into New Fund will provide the optionality to take advantage of this, if available, or sell the Properties on an individual basis.

5. Thorough process, Fairness Opinion and procedural protections consistent with corporate governance best practices

In connection with the Transaction, the Independent was required to approve the Transaction. In connection with such approvals, the Independent retained E&E as its independent financial advisor to provide advice. E&E has provided an opinion to each Trust Board and the Sungate GP Board stating that as of November 3, 2020, and based upon and subject to the assumptions, limitations and qualifications set out therein, the Transaction is fair, from a financial point of view, to the Unitholders. Based on the Fairness Opinion, the reasons set out above and other considerations, the Trust Boards and the Sungate GP Board concluded (with the Conflicted Trustees or Conflicted Directors, as applicable, declaring their interest and refraining from consideration and voting) that the Transaction is fair from a financial point of view and is in the best interests of each of the Funds and, accordingly, have each approved the Transaction and each recommend that Unitholders of the respective Funds vote FOR or approve in writing, as applicable, the Transaction. The full text of the Fairness Opinion is attached as Schedule “H” to this Circular.

Additionally, the Transaction has procedural measures to protect the interests of Unitholders. Specifically, (i) in the case of each Trust, each of the Trust Resolutions must be approved by at least 66 2/3% of the votes cast by applicable


Unitholders virtually or represented by proxy at the applicable Meeting, and (ii) in the case of Sungate, the Sungate Resolution must be approved by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units. Furthermore, any registered Unitholder of a Trust as of the Record Date can exercise Dissent Rights and may, on strict compliance with certain conditions, receive the fair value of their Units. If a sufficient percentage of Unitholders of a Trust exercise such Dissent Rights, the board of directors of such Trust may determine not to proceed with the Transaction or the board of one of the other Funds may determine not to include such Trust in the Transaction.

6. Tax deferral

It is expected that, if approved, the Transaction will be completed on a tax deferred “rollover” basis to Unitholders for Canadian income tax purposes, provided that, in the case of a qualifying Sungate Unitholder, the Sungate Unitholder elects to receive New LP Units in exchange for their Sungate Units and the Sungate Unitholder makes the necessary joint tax election with the general partner of New LP. See “Certain Canadian Federal Income Tax Considerations”.

7. Continued commitment of experienced management with track record of value creation

Clear Sky is a private equity investment management firm specializing in the acquisition and management of real estate assets in the United States. Clear Sky was founded in 2009 by Marcus Kurschat and is led by an executive management team consisting of Marcus Kurschat (Founder and Chief Executive Officer), Matthew Collins (Chief Financial Officer) and Matt Mason (General Counsel). Clear Sky is currently comprised of a team of 13 investment professionals with experience in multi-family real estate asset management in the United States.

Clear Sky is an active investor in value-added real estate opportunities throughout the United States. Since its inception in 2009 through to December 31, 2019, Clear Sky has acquired or developed approximately US$771 million of real estate and operating assets, investing in excess of US$270 million of equity through various investment vehicles. Clear Sky’s real estate investments are diversified across real estate sectors including multi-family, self-storage and manufactured housing.

Clear Sky’s multi-family investments are primarily located in Arizona, California, Florida, New Mexico and Texas. Since inception, Clear Sky has successfully invested in 48 properties with invested equity in excess of US$194 million towards the acquisition or development of US$594 million in multi-family assets. Of the 48 properties, as of December 31, 2019, 28 properties have been realized, generating an aggregate realized gross internal rate of return of 30.9% and gross equity multiple of 2.2x.

Through its economic interest in each of the US LPs, as of June 30, 2020 Clear Sky has earned approximately US$5,250,000 in the aggregate to-date in equity (the “Sponsor Equity”), which Clear Sky has left invested in the US LPs for re-investment. Clear Sky intends to continue executing its investment and asset management strategy to deliver superior performance in New Fund, deriving stable returns from attractive assets in target markets that exhibit favourable fundamentals.

New Fund Unitholders will continue to participate in value maximization through (i) active management of a diversified asset base; (ii) divestment of assets and the redeployment of capital in Additional Properties in order to further diversify the portfolio and capitalize on the opportunity to further improve Net Operating Income growth and asset values; and (iii) upside in the value of the properties as market demand for U.S. multi-family real estate continues to increase.

In the course of their deliberations, the Trustees and Directors also identified and considered a variety of risks and potentially negative factors relating to the Transaction. See “Risk Factors – Risks Relating to the Transaction”.

The Trust Boards’ and Sungate GP Board’s reasons for approving the Transaction and recommending that Unitholders vote FOR or approve in writing, as applicable, each of the Transaction Resolutions include certain assumptions relating to forward-looking information, and such information and assumptions are subject to various risks. In each case, see “Forward-Looking Statements” and “Risk Factors”.


Fairness Opinion

Each Trust Board and the Sungate GP Board received an oral opinion, followed by the delivery in writing of the Fairness Opinion, from E&E to the effect that as of November 3, 2020, and based upon and subject to the assumptions, limitations and qualifications set out therein, the Transaction is fair, from a financial point of view, to the Unitholders. The full text of the Fairness Opinion is attached as Schedule “H” to this Circular and should be reviewed and considered in its entirety. The summary of the Fairness Opinion in this Circular is qualified in its entirety by reference to the full text of the Fairness Opinion. The Fairness Opinion is not a recommendation as to whether or not Unitholders should vote in favour of or approve in writing, as applicable, the applicable Transaction Resolution. The Fairness Opinion was one of a number of factors taken into consideration by each Trust Board and the Sungate GP Board in making their determinations (the Conflicted Trustees or Conflicted Directors, as applicable, declaring their interest and refraining from consideration and voting) that the Transaction is fair from a financial point of view and is in the best interests of each of the Funds, and recommending that the Unitholders of each respective Fund vote FOR or approve in writing, as applicable, the applicable Transaction Resolutions.

Pursuant to the terms of its engagement letter with the Funds dated April 14, 2020 (the “Engagement Agreement”), E&E is to be paid a fee for preparation of the Fairness Opinion, plus reimbursement of any out-of-pocket disbursements. The compensation to E&E under the Engagement Agreement does not depend, in whole or in part, on the conclusion reached in the Fairness Opinion or the successful outcome of the Transaction. Furthermore, E&E has not been asked to prepare and has not prepared a formal valuation or appraisal of any of the assets or securities of the Funds and the Fairness Opinion should not be construed as such.

Effects of the Transaction on Unitholders

If the Transaction is consummated, among other things:

(a) with respect to each of the Trusts, all of the assets of the Trust (other than a nominal amount of cash) will be transferred to New Fund in consideration for the assumption of liabilities of the Trust and New Fund Units, and all of the Units of the Trust (other than one Unit of the Trust to be held by New Fund) will be redeemed in exchange for such New Fund Units;

(b) with respect to Sungate, (i) all of the Sungate Units held by Non-Electing Sungate Unitholders will be redeemed in consideration for New Fund Units, and (ii) all of the Sungate Units held by Electing Sungate Unitholders will be transferred to New LP in exchange for New LP Units; and

(c) as a result of the foregoing, the Funds will be effectively consolidated into New Fund which will continue to carry on, directly or indirectly, the business carried on by the Funds.

No fractional New Fund Units or New LP Units will be issued to Unitholders. If the aggregate number of New Fund Units or New LP Units, as applicable, that a Unitholder is entitled to receive includes a fraction of a New Fund Unit or a New LP Unit, as applicable, such fraction will be rounded down to the nearest whole New Fund Unit or New LP Unit, as applicable, with no consideration being paid for the fractional unit.

Unitholders will not be required to deliver any existing certificates representing Units in exchange for certificates representing New Fund Units or New LP Units, as applicable, in connection with the Transaction. Following completion of the Transaction, each such existing certificate shall be deemed to represent the number of New Fund Units or New LP Units, as applicable, delivered to the holder thereof in satisfaction of the redemption price for, or in exchange for the transfer of, the Units represented by such certificate, as applicable. In addition, the names of Unitholders set forth on the register of Units of each Fund will be, upon closing of the Transaction, registered on the register of New Fund Units or New LP Units, as applicable, as holders of such New Fund Units or New LP Units, as applicable, delivered pursuant to the Transaction. Unitholders who wish to exchange existing certificates representing Units for certificates representing New Fund Units or New LP Units, as applicable, may do so by submitting a written request, together with such existing certificates, to the transfer agent of New Fund, New LP or the Manager, as applicable, in accordance with the procedures established by the transfer agent or Manager from time to time. Unitholders with uncertificated Units, and whose name appear on the register of Units, will have their interests in New


Fund Units or New LP Units, as applicable, registered in their name on the register of New Fund Units or New LP Units, as applicable.

Process of Determination of Exchange Ratios

The Exchange Ratio for each class of Units for a particular Fund have been calculated as:

(a) the Net Equity Value of such Fund attributable to such class of Units to be determined by:

(i) allocating the Net Equity Value to each applicable class of Units, calculated on the basis of the corresponding “proportionate share for each outstanding Participating Unit” as described in the applicable Declaration of Trust, Sungate LPA and Fund Offering Documents (provided that, in the case of Canadian dollar Units, the value is first calculated in US dollars and converted into Canadian dollars using the Effective Exchange Rate);

(ii) divided by the total outstanding Units of such class;

(b) divided by the issue price of the corresponding class of New Fund Units (being C$ in the case of New Fund Class A Units and US$ in the case of New Fund Class B Units).

The Exchange Ratios are significantly impacted by the Net Equity Value determined for each of the Existing Properties. Net Equity Value is derived from the following factors:

1. The June 30, 2020 appraisal value of each of the real estate investments held in the Property LP of each of the Funds.

2. Deduction of the outstanding debt associated with the real estate asset and the deduction of estimated closing costs associated with a notional sale.

3. The available cash flow from the notional winding up of each Property LP and, where appropriate, Canadian LP, taking into account the distributions to the limited partners of such Property LP or Canadian LP, as applicable, to-date.

4. Working capital for each Property LP, for the purpose of determining the net available proceeds from the winding up of each Property LP.

5. Income tax amounts based on a notional winding up of each Property LP.

6. A review of planned capital expenditures for each Property LP and how such expenditures would impact the potential net income for such Property LP in the short-term.

7. Potential for raises to, or ability to raise, rental rates and potential for additional or greater property value appreciation in the short- and long-term.


NewFund



A(C$)

A 0.925541 A 0.533480 A 0.648237 A 0.682402 A, SeriesA1

0.208417 A 797.163691

B N/A1 B N/A B N/A C N/A A, SeriesF1

N/A - -


B(US$)

- - - - C 0.648237 B 0.682402 A, SeriesA2

0.208417 - -

- - - - - - - - A, SeriesF2

N/A - -

1 “N/A” is used to indicate that no units of such class are issued and outstanding as of the date of this Circular.

Post Transaction Ownership

Following completion of the Transaction, based on the Effective Exchange Rate, the relative interest that each classof Units of each Fund will have in New Fund will be as follows:


Class Ownership Class Ownership Class Ownership Class Ownership Class Ownership Class Ownership

A 25.30% A 9.73% A 19.78% A 25.24% A,SeriesA1

5.80% A 9.97%2

B 0.0% B 0.0% B 0.0% B 0.0% A,SeriesF1

0%

Special 0.0% Special 0.0% C 1.95% C 1.34% A,SeriesA2

0.88%

Special 0.0% Special 0.0% A,SeriesF2

0%

Total3 25.30 9.73% 21.73% 26.58% 6.68% 9.97%

1 Table assumes that all Funds will participate in the Transaction.2 Electing Sungate Unitholders holding their interests in the form of New LP Units.3 Total does not add up to 100% due to rounding.

Based on the Effective Exchange Rate, Unitholders of each class of Units of a particular Fund will be entitled toreceive for each Unit, the following corresponding class of New Fund Units, or in the case of Electing SungateUnitholders, the same number of New LP Units (the “Exchange Ratio”):


The Amendments to the Declarations of Trust and Sungate LPA

Trust Amendments

Each of the amendments to the Declarations of Trust would be implemented by amending the applicable Declaration of Trust to add a Section 2.15 substantially in the following form:

“2.15 Consolidation into New Fund

Notwithstanding any other provision of this Declaration of Trust, the Trust may undertake the following in connection with the consolidation of assets and liabilities of the Trust with the assets and liabilities of any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (the “Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):

(a) transfer all of the assets of the Trust (other than a nominal amount of cash determined by the Trustees) to New Fund in consideration for a net purchase price (the “Purchase Price”) equal to the fair market value of such assets, less the amount of the liabilities of the Trust assumed by New Fund;

(b) accept from New Fund, in satisfaction of the Purchase Price, such class and number of units of New Fund (“New Fund Units”) equal to the number of New Fund Units required to satisfy the redemption of Trust Units under (c) below;

(c) redeem all Trust Units (other than one Trust Unit to be held by New Fund), with the redemption price being satisfied by delivering New Fund Units to Trust Unitholders, with each Trust Unitholder receiving that class and number of New Fund Units (rounded down to the nearest whole unit) as is equal to the exchange ratio set out in the joint management information circular dated November 5, 2020 of the Trust delivered to Trust Unitholders (the “Exchange Ratio”) multiplied by the number of Trust Units held by such Unitholder after the close of business on the day immediately prior to the Effective Date;

(d) deem each existing certificate issued by the Trust representing Trust Units redeemed in connection with the Consolidation Transaction to represent such number of New Fund Units delivered to the holder thereof in satisfaction of the redemption price of the Trust Units represented by such existing certificate and provide that the name of each Trust Unitholder be registered on the register of New Fund Units as holders of such New Fund Units so delivered; and

(e) make such other amendments to the Declaration of Trust as are necessary or desirable to give effect to the foregoing or to resolve any inconsistencies arising out of the adoption of the foregoing or to conform other provisions to reflect the foregoing in connection with the Consolidation Transaction.”

See Schedule “A”, Schedule “B”, Schedule “C”, Schedule “D” and Schedule “E” to this Circular for the full text of the Fund 1 Resolution, Fund 2 Resolution, Fund 3 Resolution, Fund 4 Resolution and Fund 5 Resolution, respectively.


Sungate Amendment

The amendment to the Sungate LPA would be implemented by amending the Sungate LPA to add a Section 2.18 substantially in the following form:

“2.18 Transfer to New Limited Partnership

Notwithstanding any other provision of this Agreement, the General Partner may undertake the following in connection with the consolidation of the Partnership with any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV and Clear Sky Capital Strategic Asset Fund – Series 5, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (“Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):

(a) redeem the Units held by each Limited Partner, other than Eligible Persons that have validly elected (in a duly completed election form delivered with the joint management information circular of the Partnership dated November 5, 2020 delivered to such Persons (the “Circular”)) to transfer their Units to a limited partnership subsidiary of New Fund to be formed under the laws of British Columbia (“New LP”) in exchange for units of New LP (Limited Partners that have made such an election being “Electing Unitholders”, and Limited Partners that have not being “Non-Electing Unitholders”), for a redemption price satisfied by the delivery of a number of Class A units (“New Fund Units”) of New Fund (rounded down to the nearest whole number of New Fund Units) equal to the number of Units held by the Non-Electing Unitholder multiplied by the exchange ratio set out in the Circular (the “Exchange Ratio”);

(b) accept from New Fund a subscription for a number of Units equal to the number of Units held by Non-Electing Unitholders that are redeemed pursuant to the foregoing clause (a), for a subscription price to be satisfied by the issuance by New Fund, to or as directed by the Partnership, of a number of New Fund Units equal to the number of New Fund Units to be delivered to Non-Electing Unitholders upon the redemption of Units pursuant to the foregoing clause (a);

(c) permit the Units of each Electing Unitholder to be transferred to New LP in exchange for a number of Class B limited partnership units of New LP that are, to the greatest extent practicable, economically equivalent to, and exchangeable for, New Fund Units (“New LP Units”) (rounded down to the nearest whole number of New LP Units) equal to the number of Units held by the Electing Unitholder multiplied by the Exchange Ratio;

(d) deem each existing certificate issued by the Partnership representing Units redeemed from Unitholders in connection with the Consolidation Transaction to represent such number of New Fund Units or New LP Units, as applicable, delivered to the holder thereof in satisfaction of the redemption price of the Units represented by such existing certificate and provide that the name of each Unitholder be registered on the register of New Fund Units or New LP Units, as applicable, as holders of such New Fund Units or New LP Units, as applicable, so delivered; and

(e) make such other amendments to the Agreement as are necessary or desirable to give effect to any of the foregoing or to resolve any inconsistencies arising out of the adoption of the foregoing or to conform other provisions to reflect the foregoing in connection with the Consolidation Transaction.

For the purposes of this Section 2.18, “Eligible Person” means a Unitholder that (i) is a resident of Canada for the purposes of the Tax Act, (ii) is not exempt from tax under the Tax Act, and (iii) is neither a partnership nor a trust.

See Schedule “F” to this Circular for the full text of the Sungate Resolution.


Appraisals of the Properties

The Manager retained Cushman & Wakefield plc (“C&W”) to provide an appraisal of the fair market value of each of the Properties as of June 30, 2020. See Schedule “K” to this Circular for more information regarding such appraisals.

Summary of the Transaction Agreement

The Transaction shall be implemented subject to the terms and conditions of the Transaction Agreement, including receipt of all necessary approvals and the satisfaction of conditions therein. The following summary is qualified by the full text of the form of Transaction Agreement set forth in Schedule “I” to this Circular. The form of Transaction Agreement may be amended, modified or supplemented by the Funds prior to or following execution of such agreement, in their sole discretion.

If the Transaction Resolutions are passed without variation, and the Transaction is implemented, it would result in the completion of certain transactions in the course of which the following would occur:

1. the establishment of New Fund pursuant to the New Fund Declaration of Trust and the establishment of New LP pursuant to the New LP LPA;

2. New Fund will subscribe for the number of Sungate Units equal to the number of Sungate Units held by Non-Electing Sungate Unitholders in consideration for New Fund Class A Units and Sungate will redeem all of the Sungate Units held by Non-Electing Sungate Unitholders in consideration for New Fund Class A Units;

3. the Declarations of Trust will be amended to provide for the transfer of the assets of the applicable Trust (other than a nominal amount of cash) to New Fund in consideration for the assumption of liabilities of the applicable Trust and New Fund Units and the redemption of all of the Units of the applicable Trust (other than one Unit of such Trust to be held by New Fund) in exchange for such New Fund Units;

4. the Sungate LPA will be amended to provide for the redemption of the Sungate Units held by Non-Electing Sungate Unitholders in consideration for New Fund Units, and the transfer of Sungate Units held by Electing Unitholders to New LP in exchange for New LP Units;

5. each Trust will transfer its assets to New Fund in consideration for the assumption of liabilities of the applicable Trust and New Fund Units;

6. each Trust will redeem all of its issued and outstanding Units (other than one Unit of each Trust to be held by New Fund) and will deliver the applicable New Fund Units referred to in item 5 above to Unitholders of such Trust based on the applicable Exchange Ratio; and

7. the transfer of the remaining Sungate Units held by Electing Sungate Unitholders to New LP in exchange for New LP Units.

Upon completion of the Transaction, a Unitholder will be subject to all of the risks associated with the operations of New Fund and the industry in which it operates. See “Risk Factors – Risks Relating to the Transaction”.

Completion of the Transaction is subject to approval of the Transaction Resolutions by Unitholders. See “– Required Unitholder Approval”. Notwithstanding approval of the Transaction Resolutions by Unitholders, any of the Trust Boards or the Sungate GP Board, as applicable, may in their sole discretion delay or terminate the implementation of the Transaction. See “– Termination of the Transaction”.

The full text of the Transaction Agreement is set forth in Schedule “I” to this Circular.


The New Fund Declaration of Trust

New Fund, to be established in order to facilitate the Transaction, will be an open-ended, unincorporated investment trust formed under the laws of Alberta pursuant to a declaration of trust (the “New Fund Declaration of Trust”) to be entered into among Marcus Kurschat, Elroy Gust and Kevin Kinnear, as initial trustees, and Clear Sky Capital BC, as settlor on the Effective Date. The board of trustees of New Fund will be comprised of Marcus Kurschat, Elroy Gust and Kevin Kinnear and New Fund will be managed by the Manager.

A copy of the form of New Fund Declaration of Trust is available upon request and at no charge by contacting Kevin Wheeler, Investor Relations, 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4, at [email protected] (403) 354-5274.

Certain Material Differences of New Fund as Compared to the Funds

While New Fund is intended to operate and be governed in a manner substantially similar to the Funds, the following are certain material differences with respect to the rights of New Fund Unitholders between New Fund and the Funds.

Distributions

Pursuant to the New Fund Declaration of Trust, distributions to New Fund Unitholders will be payable proportionately to persons who are New Fund Unitholders on the record date for distribution in respect of each such distribution based on the number of New Fund Units held by each such person.

Fees

Asset Management Fee

In consideration of providing management services to the Existing Properties, the applicable US LP or Property LP, or a combination thereof, will pay to Clear Sky or its designated affiliate an asset management fee in an amount equal to US$650,000 per annum. If less than all of the Funds participate in the Transaction, the Existing Asset Management Fee shall be reduced pro-rata based on the initial capital raise of each Fund electing not to participate, with a one-time conversion from Canadian dollars to United States dollars (as applicable) based on the rate set by the Bank of Canada on the date the Transaction is completed.

The applicable US LP or Property LP, or a combination thereof, will pay or its designated affiliate an asset management fee of 1.5% of all Equity Proceeds not arising from or allocated from an acquisition or construction loan utilized to acquire or improve the Additional Properties or Developed Properties.

Fund 1 and Fund 2 each currently pay to Clear Sky an asset management fee of US$117,054 per annum. Fund 3, Fund 4 and Fund 5 each currently pay to Clear Sky an asset management fee of US$130,375 per annum. Sungate currently pays to Clear Sky an asset management fee of US$35,100 per annum and 1.5% of the Sungate Unit subscription proceeds. Such asset management fees may be referred to as an “annual salary” or “annual fee” in the Fund Offering Documents.

Acquisition Fee

In consideration of providing acquisition, sourcing, underwriting, due diligence and other services in connection with the acquisition of Additional Properties, the applicable US LP or Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate an acquisition fee in an amount equal to 2.0% of the enterprise value of the Additional Property at the time of the acquisition or investment.

An acquisition fee of 2.5% of the enterprise value of the applicable Property was paid, and is currently payable, by the Trusts to Marcus Kurschat and Kevin Wheeler and an acquisition fee of 1.75% of the purchase price of Sungate was paid by Sungate to Marcus Kurschat and Kevin Wheeler.


Disposition Fee

In connection with the sale or other disposition of a Property, the applicable US LP or Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate a disposition fee, in an amount equal to 1.5% of the enterprise value of the Existing Property and 1.0% of the enterprise value of the Additional Property or Developed Property at the time of the sale or other disposition of such Property.

A disposition fee of 1.5% of the enterprise value of the applicable Property is currently payable by each of the Trusts to Marcus Kurschat and Kevin Wheeler upon the sale or other disposition of a Property. A disposition fee is not currently payable by Sungate.

New Development Fee

In connection with the development of a Developed Property, the applicable new US LP or new Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate a development fee in an amount equal to 5.0% of the cost of developing the Developed Property. The cost of development shall include, without limitation, the cost of construction, architectural fees, engineering fees, legal fees, administrative fees, utility and access expenditure, zoning and entitlement consultants, environmental remediation costs, regulatory compliance and all permitting and other costs related to or arising from the development and construction. The Development Fee shall be paid in consideration of providing entitlement, zoning, architectural and construction management to and for the Developed Property.

A development fee is not currently payable by any of the Funds.

New Construction Fee

In connection with an affiliate of the Manager serving as the general contractor in the development of a Developed Property, the applicable US LP or Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate a construction fee. If Clear Sky or its affiliate does not serve as the general contractor, then no construction fee will be paid. In consideration of the general contractor services provided by Clear Sky, the construction fee shall be paid in an amount equal to 6.0% of the hard costs and general conditions costs incurred in connection with the construction of the Developed Property. Prior to awarding a general contract for a new construction project at a Developed Property, Clear Sky will review no less than three general contractor bids, at least two of which shall be from third party general contractors unaffiliated with Clear Sky. In the event that less than three general contractor bids are submitted for review, the independent New Fund Trustee(s) shall review all bids submitted and award the contract in its sole discretion. In the event that a Clear Sky affiliate is awarded the general contract, such award shall first be approved by the independent New Fund Trustee(s) to ensure that it is competitive with the other general contractor bids.

A construction fee is not currently payable by any of the Funds.

New Guarantee Fee

In the event that Clear Sky or any of its affiliates is required to provide a financing guarantee in connection with amounts borrowed by New Fund or its subsidiaries to indirectly acquire interests in Additional Properties, in consideration for providing, or causing the provision of such financing guarantees, the applicable US LP or Property LP, or a combination thereof, will pay Clear Sky a guarantee fee in an annual amount equal to 0.15% of the then-outstanding amount of guaranteed funds borrowed by the subsidiary of New Fund.

A guarantee fee is not currently payable by any of the Funds.


Annual Fees Payable to New Fund Trustees

Each of Elroy Gust and Kevin Kinnear will receive an annual retainer of C$30,000 for serving as a trustee of New Fund. Elroy Gust and Kevin Kinnear is currently being paid an annual retainer of C$12,000 by each of the Trusts, paid in equal monthly instalments, for an aggregate amount of C$120,000 per year. Kevin Kinnear is currently being paid an annual retainer of C$12,000 by Sungate, paid in equal monthly instalments.

Redemption Limit

In accordance with the terms of the New Fund Declaration of Trust, New Fund Unitholders are entitled to receive cash upon the redemption of their New Fund Units; provided that, the Redemption Limit of US$100,000 per calendar quarter in respect of all New Fund Units is not exceeded. See “Description of New Fund Units – Redemption of New Fund Units” in Schedule “L” to this Circular.

The Declaration of Trust of Fund 1 sets a redemption limit of C$25,000 per calendar quarter in respect of all Fund 1 Units. The Declaration of Trust of Fund 5 sets a redemption limit of C$50,000 per calendar quarter in respect of each class of Canadian dollar Fund 5 Units and US$50,000 per calendar quarter in respect of each class of United States dollar Fund 5 Units. The Sungate LPA does not provide Sungate Unitholders with a right to require Sungate to redeem their Sungate Units.

Suspension of Calculation of Net Asset Value

Pursuant to the New Fund Declaration of Trust, the New Fund Trustees shall suspend the calculation of the Net Asset Value when required to do so under applicable securities laws. During the period of suspension New Fund shall not be permitted to issue or redesignate New Fund Units in the affected class. The calculation of the Net Asset Value shall resume as soon as possible and in compliance with applicable securities laws or any exemptive relief granted therefrom. See “New Fund Declaration of Trust – Suspension of Calculation of Net Asset Value” in Schedule “L” to this Circular.

The Declarations of Trust of each of Fund 1, Fund 2, Fund 3 and Fund 4 and the Sungate LPA do not include an equivalent provision.

Suspension of Redemptions

Pursuant to the New Fund Declaration of Trust, the New Fund Trustees may suspend the redemption of New Fund Units if the New Fund Trustees determine that conditions exist as a result of which the disposition or valuation of the Properties is not reasonably practical; provided such suspension is in accordance with all applicable securities laws and other applicable law. Any suspension of the redemption of New Fund Units shall cease promptly following the ending of the conditions giving rise to the suspension and in any case not later than one year after the beginning of the suspension. See “Description of New Fund Units – Redemption of New Fund Units” in Schedule “L” to this Circular.

The Declarations of Trust of each of the Trusts do not include an equivalent provision. The Sungate LPA does not provide for the redemption of Sungate Units.

Court-Approved Arrangements

The New Fund Declaration of Trust will not include provisions regarding the process to be followed by the New Fund in connection with a court-approved arrangement.

The Declarations of Trust of each of the Trusts include provisions regarding the process to be followed by the applicable Trust in connection with a court-approved arrangement.


Dissent Rights

The New Fund Declaration of Trust will not grant New Fund Unitholders a right to dissent in connection with an arrangement involving New Fund as the New Fund Declaration of Trust will not have any provisions dealing with arrangements.

The Declarations of Trust of each of the Trusts grant applicable Unitholders a right to dissent in connection with an arrangement involving the applicable Trust.

New LP Units

The New LP LPA shall provide that New LP may issue an unlimited number of New LP Units. The New LP Units will be, to the greatest extent practicable, the economic equivalent of New Fund Class A Units. Holders of New LP Units are entitled to receive distributions paid by New LP, which distributions or advances will be equal on a per unit basis, to the greatest extent practicable, to the amount of distributions paid by New Fund to New Fund Unitholders on the New Fund Class A Units. Each New LP Unit is exchangeable for one New Fund Class A Unit, subject to the customary anti-dilution adjustments set out in the Exchange Agreement and the New LP LPA. New LP Units may not be transferred except in connection with an exchange for New Fund Class A Units or those certain limited exceptions set out in the New LP LPA. Although New LP Units will be, to the greatest extent practicable, economically equivalent to New Fund Class A Units, the tax consequences of holding New LP Units may be different from the tax consequences of holding New Fund Class A Units. Sungate Unitholders who intend to elect to receive New LP Units in connection with the Transaction should consult with their tax advisors.

Exchange Rights

Pursuant to the terms of the Exchange Agreement, holders of New LP Units will be entitled to require New Fund to facilitate the exchange by New LP of any or all of New LP Units held by such holder for an equal number of New Fund Class A Units, subject to the customary anti-dilution adjustments set out in New LP LPA and the Exchange Agreement. Holders of New LP Units may effect such exchange by presenting a certificate or certificates to the General Partner representing the number of New LP Units the holder desires to exchange together with such other documents as New LP and New Fund may require to effect the exchange. New Fund will cause the aggregate number of New Fund Class A Units for which New LP Units are exchanged to be delivered in accordance with the procedures set forth in the Exchange Agreement.

Distribution Rights

Distributions to be made to New LP Unitholders will be, to the greatest extent practicable, economically equivalent to the distributions made to New Fund Unitholders on the New Fund Class A Units. Without limiting the generality of the foregoing, New LP Unitholders will be entitled to receive, subject to applicable law, distributions:

in the case of a cash distribution declared on the New Fund Class A Units, an amount in cash for each New LP Unit corresponding to the cash distribution declared on each New Fund Class A Units; or

in the case of a distribution declared on New Fund Class A Units in property (other than (i) cash, or (ii) a distribution of New Fund Class A Units followed by an immediate consolidation such that the number of outstanding New Fund Class A Units both immediately prior to and following such transaction remains the same (subject to adjustments, if any, to account for applicable withholding taxes)), in such type and amount of property as is the same as, or economically equivalent to (as determined by the board of directors of the New LP GP, in good faith and in its sole discretion), the type and amount of property received by New Fund Unitholders on the applicable distribution on the New Fund Class A Units.

However, there are consequences related to the ownership of New LP Units that differ from the consequences of owning New Fund Class A Units. See “Risk Factors”.


Voting

The holders of Class A LP Units will have the right to exercise 100% of the votes in respect of all matters to be decided by the limited partners of New LP, and New LP Unitholders will not have the right to exercise any votes in respect of such matters except in certain limited circumstances. New Fund will be the initial holder of Class A LP Units. The New LP Unitholders will have no right, as such, to receive notice of or to attend any meeting of limited partners of New LP or to vote at any such meeting.

In addition, New LP Unitholders will have no right to receive notice of or to attend any meeting of New Fund Unitholders or to vote at any such meeting. Accordingly, the New LP Units will not provide holders thereof rights equivalent to those enjoyed as holders of the Sungate LP Units. New LP Unitholders wishing to exercise voting rights would be required to exchange such units for New Fund Class A Units in accordance with the terms of the New LP Units and the Exchange Agreement.

Liquidation

In the event of any dissolution, liquidation, winding up or other termination of New LP, New LP Unitholders, as indicated on the applicable registers, will be entitled to receive (a) any assets of New LP or (b) any proceeds of the sale of assets of New LP together with any cash forming part of New LP that remain following New LP’s (i) payment, retirement or discharge of all known liabilities and obligations of New LP; (ii) provision for indemnity against any other outstanding liabilities and obligations; and (iii) payment in full of the Redemption Price applicable to outstanding New LP Units.

Conflicts of Interest

The Declarations of Trust require that, to the extent there may exist a conflict of interest for one or more trustees (each, a “Conflicted Trustee”), the Conflicted Trustee shall, at the earliest opportunity, disclose in writing to the trustees of the applicable Trust, or request to have entered in the minutes of the initial meetings of the trustees in which the Transaction is considered, the nature and extent of such Conflicted Trustee’s interest.

On November 5, 2020, in advance of the consideration of the Transaction, each of Marcus Kurschat, Elroy Gust and Kevin Wheeler, as trustees of each of the Trusts, disclosed to the Independent Trustee their status as a Conflicted Trustee of each of the Trusts. Marcus Kurschat and Kevin Wheeler, as officers of the general partners of the Canadian LPs, US LPs and/or Property LPs and as direct or indirect beneficial owners of certain affiliated entities of the Trusts, have a material interest in the Transaction. In particular, Marcus Kurschat and Kevin Wheeler may receive fees and other compensation through their ownership of the general partners of the Canadian LPs, US LPs and/or Property LPs and the securities of certain affiliated entities of the Trusts. Elroy Gust has ongoing investments with affiliates of Clear Sky, which is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat, and, consequently, may have an implied material interest in the Transaction.

On November 5, 2020, in advance of the consideration of the Transaction, Marcus Kurschat (the “Conflicted Director”), as director of Sungate GP, disclosed to the Independent Director, that he may have a conflict of interest with respect to the Transaction. Marcus Kurschat, as an officer of the general partners of the Canadian LPs, US LPs and/or Property LPs and as a direct or indirect beneficial owner of certain affiliated entities of Sungate, has a material interest in the Transaction. In particular, Marcus Kurschat may receive fees and other compensation through his ownership of the general partners of the Canadian LPs, US LPs and/or Property LPs and the securities of certain affiliated entities of Sungate.

Required Unitholder Approval

The Transaction is, among other things, conditional upon the approval by Unitholders. With respect to each of the Trusts, the Trust Resolutions must be approved by at least 66 2/3% of the votes cast by applicable Trust Unitholders


virtually or represented by proxy at the applicable Meeting. With respect to Sungate, the Sungate Resolution must be approved by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units.

Unitholders will be asked to consider and, if thought advisable, to confirm their approval of the Transaction by voting in favour of or approving in writing, as applicable, a Transaction Resolution for the relevant Fund, the full text of which is set forth in Schedules “A” to “F” to this Circular.

The enclosed form of proxy or voting instruction form either permits the Trust Unitholders to vote FOR or AGAINST the applicable Trust Resolution. IF YOU DO NOT SPECIFY HOW YOU WANT YOUR TRUST UNITS VOTED, THE PERSONS NAMED AS PROXYHOLDERS IN THE ENCLOSED FORM OF PROXY OR VOTING INSTRUCTION FORM INTEND TO CAST THE VOTES REPRESENTED BY PROXY AT THE MEETING FOR THE APPLICABLE TRUST RESOLUTION. WE ENCOURAGE ALL TRUST UNITHOLDERS TO TAKE THE OPPORTUNITY TO READ THE CIRCULAR IN FULL AND IN ADVANCE OF THE MEETINGS AS IT DETAILS IMPORTANT INFORMATION THAT WILL ASSIST YOU IN EXERCISING YOUR RIGHT TO VOTE.

Termination of the Transaction

At any time before or after the Meetings or the passing of a written resolution, as applicable, any of the Trust Boards or the Sungate GP Board may in their sole discretion delay or terminate the implementation of the Transaction, including any or all ancillary changes to the Declarations of Trust or Sungate LPA, as applicable, without further notice to, or action on the part of, the Unitholders.

Dissent Rights

The following is a summary only of the Dissent Rights for registered Trust Unitholders as of the Record Date for the Meetings in the event the Transaction is approved and implemented. This summary is qualified in its entirety by the Dissent Rights provisions in Schedule A, Part B of each of the Declarations of Trust. Registered Trust Unitholders wishing to exercise Dissent Rights should refer to the full text of such provisions. See Schedule “G” to this Circular for a complete description of the Dissent Rights and the necessary steps and procedures that must be complied with to validly exercise your Dissent Right. Sungate Unitholders do not have any right to dissent with respect to the Sungate Resolution.

Registered Trust Unitholders as of the Record Date will have Dissent Rights with respect to the Transaction under the applicable Declaration of Trust.

Any registered Trust Unitholder as of the Record Date who properly exercises Dissent Rights with respect to the Transaction pursuant to Schedule A, Part B of the applicable Declaration of Trust will be entitled, in the event that the Transaction becomes effective, to be paid the fair value of the applicable Trust Units held by that Dissenting Unitholder determined as of the close of business on the day before the applicable Trust Resolution is approved and adopted. A registered Trust Unitholder may only claim Dissent Rights with respect to all the Trust Units of the applicable Trust held by the Dissenting Unitholder on behalf of itself or any one beneficial owner and registered in the name of the Dissenting Unitholder. A registered Trust Unitholder as of the Record Date who wishes to exercise Dissent Rights must send a Notice of Objection to the applicable Trust at or before the applicable Meeting. The address for notice for such purpose is Suite 615, 2398 East Camelback Road, Phoenix, Arizona, 85016, United States.

The giving of a Notice of Objection does not deprive a Dissenting Unitholder of the right to vote the Trust Units for which such notice was given. A vote either virtually or represented by proxy against the applicable Trust Resolution does not constitute a Notice of Objection.

If the applicable Trust Resolution is approved at the Meeting, an application may be made to the Court, by the applicable Fund or by a Dissenting Unitholder, to fix the fair value of the Trust Units of a Dissenting Unitholder (the “Dissent Application”). If a Dissent Application is made, the applicable Fund shall, unless the Court otherwise orders, send to each Dissenting Unitholder a written offer to pay the Dissenting Unitholder an amount considered by such Fund to be the fair value of the Trust Units (i) at least 10 days before the date on which the Dissent Application is


returnable, if the such Fund is the applicant, or (ii) within 10 days after such Fund is served with a copy of the Dissent Application, if a Trust Unitholder is the applicant (the “Offer”).

A Dissenting Unitholder may make an agreement with the applicable Trust for the purchase of the Dissenting Unitholder’s Trust Units by such Trust, in the amount of the Offer or otherwise, at any time before the Court pronounces an order fixing the fair value of the Trust Units. If such an agreement is not made between the applicable Trust and each Dissenting Unitholder, the Court shall make an order (i) fixing the fair value of the Trust Units of all Dissenting Unitholders who are parties to the Dissent Application who have not made an agreement with such Trust, (ii) giving judgment in that amount against such Trust and in favour of each of the Dissenting Unitholders, and (iii) fixing the time within which such Trust must pay that amount to the Dissenting Unitholders.

Until the earlier of (i) the Trust Resolution from which the Dissenting Unitholder dissents becoming effective, (ii) the making of an agreement, as described above, or (iii) the pronouncement of an order by the Court, a Dissenting Unitholder may withdraw its dissent and proceedings will be discontinued. Upon the occurrence of the earliest of such events to occur, the Dissenting Unitholder ceases to have any rights as a Trust Unitholder other than the right to be paid the fair value of its Trust Units as determined pursuant to the applicable Declaration of Trust.

At any time before or after the Meetings or the passing of a written resolution, as applicable, any of the Trust Boards or the Sungate GP Board may in their sole discretion delay or terminate the implementation of the Transaction, including any or all ancillary changes to the Declarations of Trust or Sungate LPA, as applicable, without further notice to, or action on the part of, the Unitholders. Among other considerations, any of the Trust Boards may terminate the implementation of the Transaction if Trust Unitholders of the applicable Trust holding a material number of Trust Units exercise Dissent Rights with respect to the Transaction.

SPECIAL BUSINESS OF THE MEETINGS

Fund 1 Meeting

The Fund 1 Meeting will be constituted as a special meeting. At the Fund 1 Meeting, the Fund 1 Unitholders will be asked to consider and, if thought advisable, to pass, with or without variation, the Fund 1 Resolution, substantially in the form attached as Schedule “A” to this Circular, authorizing and approving the Transaction, including the proposed amendments to the Fund 1 Declaration of Trust. To be approved, the Fund 1 Resolution must receive the approval of at least 66 2/3% of the votes cast by Fund 1 Unitholders, virtually or represented by proxy at the Fund 1 Meeting, or any adjournment(s) or postponement(s) thereof.

A quorum at the Fund 1 Meeting will be present if two or more individuals are present in person either holding personally or representing by proxy not less in aggregate than 5% of the votes attached to the total voting Fund 1 Units then outstanding and entitled to vote at the Fund 1 Meeting. If quorum is not met, the Fund 1 Meeting shall be adjourned to such date, being not less than 21 nor more than 60 days following the date of the Fund 1 Meeting. At such adjourned meeting, Unitholders entitled to vote upon the applicable Transaction Resolution, present in person or by proxy, shall form a quorum. All classes of Fund 1 Units will vote together as a single class at the Fund 1 Meeting.

Fund 2 Meeting

The Fund 2 Meeting will be constituted as a special meeting. At the Fund 2 Meeting, the Fund 2 Unitholders will be asked to consider and, if thought advisable, to pass, with or without variation, the Fund 2 Resolution, substantially in the form attached as Schedule “B” to this Circular, authorizing and approving the Transaction, including the proposed amendments to the Fund 2 Declaration of Trust. To be approved, the Fund 2 Resolution must receive the approval by at least 66 2/3% of the votes cast by Fund 2 Unitholders, virtually or represented by proxy at the Fund 2 Meeting, or any adjournment(s) or postponement(s) thereof.

A quorum at the Fund 2 Meeting will be present if two or more individuals are present in person either holding personally or representing by proxy not less in aggregate than 5% of the votes attached to the total voting Fund 2 Units then outstanding and entitled to vote at the Fund 2 Meeting. If quorum is not met, the Fund 2 Meeting shall be adjourned to such date, being not less than 21 nor more than 60 days following the date of the Fund 2 Meeting. At


such adjourned meeting, Unitholders entitled to vote upon the applicable Transaction Resolution, present in person or by proxy, shall form a quorum. All classes of Fund 2 Units will vote together as a single class at the Fund 2 Meeting.

Fund 3 Meeting

The Fund 3 Meeting will be constituted as a special meeting. At the Fund 3 Meeting, the Fund 3 Unitholders will be asked to consider and, if thought advisable, to pass, with or without variation, the Fund 3 Resolution, substantially in the form attached as Schedule “C” to this Circular, authorizing and approving the Transaction, including the proposed amendments to the Fund 3 Declaration of Trust. To be approved, the Fund 3 Resolution must receive the approval by at least 66 2/3% of the votes cast by Fund 3 Unitholders, virtually or represented by proxy at the Fund 3 Meeting, or any adjournment(s) or postponement(s) thereof.


Fund 4 Meeting

The Fund 4 Meeting will be constituted as a special meeting. At the Fund 4 Meeting, the Fund 4 Unitholders will be asked to consider and, if thought advisable, to pass, with or without variation, the Fund 4 Resolution, substantially in the form attached as Schedule “D” to this Circular, authorizing and approving the Transaction, including the proposed amendments to the Fund 4 Declaration of Trust. To be approved, the Fund 4 Resolution must receive the approval by at least 66 2/3% of the votes cast by Fund 4 Unitholders, virtually or represented by proxy at the Fund 4 Meeting, or any adjournment(s) or postponement(s) thereof.


Fund 5 Meeting

The Fund 5 Meeting will be constituted as a special meeting. At the Fund 5 Meeting, the Fund 5 Unitholders will be asked to consider and, if thought advisable, to pass, with or without variation, the Fund 5 Resolution, substantially in the form attached as Schedule “E” to this Circular, authorizing and approving the Transaction, including the proposed amendments to the Fund 5 Declaration of Trust. To be approved, the Fund 5 Resolution must receive the approval by at least 66 2/3% of the votes cast by Fund 5 Unitholders, virtually or represented by proxy at the Fund 5 Meeting, or any adjournment(s) or postponement(s) thereof.


Sungate Written Resolutions

Sungate Unitholders are requested to pass the Sungate Resolution in writing. Sungate Unitholders will be asked to consider and, if thought advisable, to pass, with or without variation, the Sungate Resolution, substantially in the form


attached as Schedule “F” to this Circular, authorizing and approving the Transaction. To be approved, the Sungate Resolution must be passed by Sungate Unitholders holding more than 66 2/3% of the issued Sungate Units.

RISK FACTORS

Unitholders should understand that if the Transaction is completed, Unitholders will receive New Fund Units or New LP Units (to the greatest extent practicable, economically equivalent to, and exchangeable for, New Fund Units) pursuant to the Transaction Agreement. Accordingly, a Unitholder will become a New Fund Unitholder or a New LP Unitholder (and therefore, if a New LP Unitholder, effectively exposed to the same economic consequences as a New Fund Unitholder) and, as a result, such Unitholder will be subject to all of the risks associated with the operations of New Fund and the industry in which it operates. For more information on New Fund following completion of the Transaction, see Schedule “L” to this Circular.

The risks discussed in this Circular can adversely affect New Fund’s prospects, results and financial condition. These risks could cause the value of New Fund Units to decline, cause New Fund to be unable to pay distributions on New Fund Units, and also cause New Fund Unitholders to lose part or all of their investment. In addition to the risk factors set out below and elsewhere in this Circular, other material risks and uncertainties of which New Fund may not be aware may also arise and harm New Fund’s business and its operations. New Fund Unitholders must rely on the ability, expertise, judgment, discretion, integrity and good faith of the New Fund Trustees and the management of New Fund’s subsidiaries.

Risks Relating to the Transaction

The Transaction may be delayed or terminated

At any time before or after the Meetings, any of the Trust Boards or the Sungate GP Board may in their sole discretion delay or terminate the implementation of the Transaction, without further notice to, or action on the part of, the Unitholders. Among other considerations, any of the Trust Boards or the Sungate GP Board, as applicable, may terminate the implementation of the Transaction if Unitholders of the applicable Fund holding a material number of Units exercise Dissent Rights with respect to the Transaction.

Fees, costs and expenses of the Transaction are not recoverable

If the Transaction is not completed, the Funds will not receive any reimbursement for most or all of the fees, costs and expenses incurred in connection with the Transaction, which may cause harm to the financial position of the Funds. Such fees, costs and expenses include, without limitation, legal fees, financial advisor fees, accounting and auditing fees, proxy agent fees and printing and mailing costs, which will be payable whether or not the Transaction is completed.

The consolidation of the assets and liabilities of the Funds into New Fund may not occur as planned

The Transaction Agreement will be entered into with the expectation that the successful completion of the Transaction will result in an enhanced enterprise with growth opportunities for New Fund. The ability to realize the benefits of the Transaction, including, among other things, those set forth in this Circular under “The Transaction”, will depend in part on whether the Funds’ operations can be consolidated in an efficient and effective manner under New Fund. It is possible that some or all of the anticipated benefits of the Transaction will not be realized.

It is possible that actual results for New Fund’s operations will differ from current estimates and assumptions, and these differences may be material. In addition, experience from actual operations may identify new or unexpected conditions which could increase capital and/or operating costs of New Fund above the Manager’s current estimates. If actual results of New Fund are less favourable than the Manager currently estimates, New Fund’s business, results of operations, financial condition and liquidity could be adversely impacted.


Assumption of unknown liabilities by New Fund

Pursuant to the Transaction, New Fund will be assuming unknown liabilities arising out of or related to the Funds’ past, present or future business, operations or assets and which liabilities could be significant.

No guarantee of performance of New Fund

There is no guarantee that, following the completion of the Transaction, New Fund’s financial performance will meet or exceed the performance to date of the Funds, on an individual or collective basis.

Further, there is no guarantee that New Fund Unitholders will not realize losses from an investment in New Fund Units and there can be no assurance that New Fund’s objective of earning a profit on its investment in Properties, indirectly through the Property LPs, will be achieved. The success of New Fund depends to a certain extent on the efforts and abilities of the management of New LP, the US LPs and the Property LPs, and on external factors such as, among other things, the real estate markets where the Properties are located and the general political and economic conditions that may prevail from time to time, which factors are out of New Fund’s control. A return on investment for a New Fund Unitholder depends upon the net revenues received by a Property LP from its investment in one or more Properties. As a result, there is no guarantee that New Fund and, correspondingly, New Fund Unitholders will earn a return on their investment.

Once New Fund distributions are paid in a given distribution period, the New Fund Trustees may, in their discretion, make other distributions on New Fund Units. However, the New Fund Trustees are under no obligation to make any such other distributions. Once New Fund distributions have been fully satisfied in a given distribution period, New Fund Unitholders have no entitlement to other distributions.

The pro forma financial information is presented for illustrative purposes only and may not be an indication of New Fund’s financial condition or results of operations upon completion of the Transaction

The pro forma financial statements contained in this Circular are presented for illustrative purposes only and may not be an indication of New Fund’s financial condition or results of operations upon completion of the Transaction for several reasons. For example, the combined pro forma financial statements have been derived from the historical financial statements of the Funds and do not represent a financial forecast or projection and certain assumptions have been made. Such assumptions may not prove to be accurate. Moreover, the combined pro forma financial statements do not reflect all Transaction-related costs that are expected to be incurred by New Fund following completion of the Transaction. For example, the impact of any incremental costs incurred in integrating the Funds is not reflected in the combined pro forma financial statements. In addition, the assumptions used in preparing the combined pro forma financial information may not prove to be accurate, and other factors may affect New Fund’s post-Transaction financial condition or results of operations.

See the unaudited combined pro forma financial statements of New Fund attached as Schedule “M” to this Circular.

Risks Relating to New Fund Post-Transaction

New Fund will have limited assets and working capital

New Fund will have no material assets other than interests in subsidiary entities and will undertake no activities other than as described in this Circular (being New Fund’s investment in New LP through capital contributions as a limited partner and loans). The Properties represent the primary assets of New Fund (through New Fund’s indirect investment in the Property LPs).

New Fund will not carry on an active business and will have limited sources of working capital. There is no assurance that New Fund will have adequate working capital to meet the anticipated requirements. In addition, there is no assurance that New Fund will have access to additional debt or equity financing when needed or at all, or on terms that will be acceptable to New Fund.


The impact of the COVID-19 pandemic remains uncertain

On March 11, 2020, the World Heath Organization declared COVID-19 a global pandemic. The COVID-19 pandemic has had, and is expected to continue to have, significant adverse impacts on economic and market conditions and global economic contraction. The duration and impact of the COVID-19 pandemic on the Canadian LPs, the US LPs, the Property LPs and, therefore, the Funds and the Units is unknown at this time. The extent to which any of the Fund’s financial condition or operating results will continue to be affected by the COVID-19 pandemic will largely depend on future developments, which are highly uncertain and cannot be accurately predicted. The potential impact of the COVID-19 pandemic on New Fund and New Fund Units therefore also remains uncertain at this time.

The Manager has undertaken certain measures in an effort to respond to the COVID-19 pandemic. A tenant support program was established to allow tenants of each of the Existing Properties to defer a portion of their rent to a later date with no interest. As of July 31, 2020, approximately US$6,700 in rent deferrals have been granted to tenants of the Existing Properties. Due to the economic challenges and material uncertainty introduced by the COVID-19 pandemic, as a pre-emptive measure to conserve cash flow, the Trust Boards and Sungate GP Board determined to suspend all distributions for the first and second quarters of 2020 and all cash redemptions of Units. The Manager, the Trust Boards and the Sungate GP Board also continued to assess strategic alternatives in light of the COVID-19 pandemic, and undertook a further analysis on the proposed terms of the consolidated fund and the exchange ratio among the Funds under a potential consolidation. See “The Transaction – Background to the Transaction”.

The spread of COVID-19 could result in further increases in unemployment, and tenants that experience deteriorating financial conditions as a result of the COVID-19 pandemic may be unwilling or unable to pay rent on a timely basis, or at all. In some cases, the Funds (or New Fund, as applicable) may be legally required, or otherwise agree, to restructure tenants’ rent obligations, and may not be able to do so on terms as favorable to the Funds (or New Fund, as applicable) as those currently in place. Numerous local, county, state, federal and industry-initiated efforts may also affect the Funds’ (or New Fund’s, as applicable) ability to collect rent or enforce remedies for the failure to pay rent, including, among others, limitations or prohibitions on evicting tenants unwilling or unable to pay rent. Additionally, eviction moratoriums have passed in various formats at every level of government, with considerable differences between county and state orders, as well as between individual county orders and how cities are interpreting and enforcing them. This patchwork of conflicting standards may continue to create a great deal of confusion and challenges with compliance. While the Manager intends to comply with the framework of local, county, state, and federal laws, given the confusion, strict compliance might be difficult. In the event of tenant non-payment, default or bankruptcy, the Funds (or New Fund, as applicable) may incur costs in protecting its investment and re-leasing the Existing Properties, and have limited ability to renew existing leases or sign new leases at projected rents.

Additionally, market fluctuations as a result of the COVID-19 pandemic may affect the Funds’ (or New Fund’s, as applicable) ability to obtain necessary funds for operations from current lenders or new borrowings. The Funds (or New Fund, as applicable) may be unable to obtain financing for the acquisition of investments on satisfactory terms, or at all. In addition, moratoriums on construction and macro-economic factors may cause construction contractors to be unable to perform, which may cause the delivery date of certain development projects or investments in third-party development projects to be extended.

Further, while each of the Funds carry (or New Fund, as applicable, will carry) general liability, pollution, and property insurance along with other insurance policies that may provide some coverage for any losses or costs incurred in connection with the COVID-19 pandemic, given the novelty of the issue and the scale of losses incurred throughout the world, there is no guarantee that the Funds (or New Fund, as applicable) will be able to recover all or any portion of its losses and costs under these policies. The occurrence of any of the foregoing events or any other related matters could have a material adverse effect on the Funds’ (or New Fund’s, as applicable) business, financial condition, results of operations or cash flows.

Risks associated with the market in which New Fund will invest

The economic performance and value of a Property LP’s investment in real estate assets will be subject to all of the risks associated with investing in real estate, including, but not limited to:


changes in the national, regional and local economic climate;

local conditions, including an oversupply of properties like real estate assets, a reduction in demand for properties like real estate assets, or a reduction in demand for leased premises;

the attractiveness of all or parts of real estate assets to renters or purchasers;

competition from other available real estate assets; and

changes in laws and governmental regulations, including those governing usage, zoning, the environment and taxes.

A Property LP’s performance will be affected by the supply and demand for property in its respective geographic area(s) of ownership. Key drivers of demand include employment levels, population growth, demographic trends and consumer confidence. The potential for reduced sales revenue exists in the event that demand diminishes or supply becomes overabundant thereby driving down prices for real estate assets.

Economic circumstances in real estate markets may cause a Property LP to hold real estate assets for a longer than anticipated period of time in order to realize profits from the sale thereof. There can be no guarantee that any Property LP will realize a profit from real estate assets and there is no guarantee that New Fund will attain its intended results.

Real estate investments are relatively illiquid

Real property investments tend to be relatively illiquid, with the degree of liquidity generally fluctuating in relation to demand for, and for the perceived desirability of, the investment. Such illiquidity may tend to limit the US LPs’ ability, through their respective Property LPs, to vary their asset base promptly in response to changing economic or investment conditions. If the proceeds to a Property LP from the rental, refinancing or sale of real estate assets are significantly less than the total cost of its investment, in whole or in part, on a timely basis, New Fund’s ability to pay distributions to New Fund Unitholders could be adversely affected.

New Fund’s growth depends in part upon identifying, pursuing and consummating acquisition and investment opportunities

New LP’s growth of New Fund investment capital, through the Property LPs, depends in part upon identifying, pursuing and consummating suitable acquisition or investment opportunities. The acquisition of, or investment in, Properties entails risks that investments will fail to perform in accordance with expectations. It is not possible to manage all risks associated with such acquisitions in the terms and conditions contained in commercial agreements pertaining to such acquisitions or investments. The real estate assets may be subject to unknown, unexpected or undisclosed liabilities that may materially and adversely affect a Property LP’s financial condition, results of operations or cash flows.

The representations and warranties, if any, given by an arm’s length seller to a Property LP may not adequately protect against these liabilities and any recourse against third parties may be limited by the financial capacity of such third parties. Properties may not achieve anticipated occupancy levels and the estimates of costs and benefits of renovations for a particular Property may prove inaccurate or may not have the intended results. Moreover, real estate assets acquired or invested in by a Property LP may not meet expectations of operational or financial performance due to unexpected costs associated with repositioning such properties, as well as the general investment risks inherent in any real estate investment.

Reliance upon New LP, the US LPs and the Property LPs

New Fund will be a limited purpose investment trust that will entirely depend upon New LP, the US LPs and the Property LPs since New Fund’s primary asset is its interest in New LP, as a limited partner, and any loans made to New LP. Distributions, if any, to New Fund Unitholders will depend upon numerous factors, including profitability,


fluctuations in working capital, the sustainability of margins and capital expenditures of New LP, the US LPs and the Property LPs.

The real estate portfolio of New LP, held through the applicable Property LPs, will represent the primary asset of New LP. New Fund’s financial performance is directly tied to the performance of New LP and consequently directly tied to the performance of the Property LPs’ portfolios. Neither New LP nor New Fund has any other investments of significance; therefore, New Fund’s success depends solely on the success of New LP, the US LPs and the Property LPs.

Reliance on property management

New Fund will rely on various entities to perform certain property management functions in respect of each of the Properties. It is expected that the respective property manager(s) will devote as much of their time to the management of the Properties as in their judgement is reasonably required, but conflicts of interest may arise in allocating management time, services and functions among the Properties and the other development, investment and/or management activities of such property manager(s) not related to the Properties.

Cash distributions to New Fund Unitholders are not guaranteed and are not fixed obligations of New Fund

The return on an investment in New Fund Units is not comparable to the return on an investment in fixed-income securities. Cash distributions to New Fund Unitholders will not be guaranteed and will not be fixed obligations of New Fund. Any receipt of cash distributions by a New Fund Unitholder is at any time subject to the terms of the New Fund Declaration of Trust. Any anticipated return on investment is based upon many performance assumptions. Although New Fund intends to distribute its available cash to New Fund Unitholders, cash distributions may be reduced or suspended at any time and from time to time. The ability of New Fund to make cash distributions and the actual amount distributed will depend on the operations of the Properties, and will be subject to various factors including those referenced under “Risk Factors”. The value of New Fund Units may decline if New Fund is unable to meet its cash distribution targets, if any, in the future and that decline may be significant.

Once New Fund distributions are paid in a given distribution period, the New Fund Trustees may, in their discretion, make other distributions on New Fund Units. However, the New Fund Trustees are under no obligation to make any such other distributions. Once New Fund distributions have been fully satisfied in a given distribution period, New Fund Unitholders have no entitlement to other distributions.

New Fund may not be able to pay cash distributions

There is no assurance that there will be adequate cash flow of New Fund to meet the obligations and economic objectives of New Fund. New Fund’s sources of capital will be primarily distributions and other advances from New LP. New Fund may not have any available funds to distribute cash or pay expenses, even where it has established and funded a working capital reserve for such purposes. New Fund will rely on the cash flow available to New Fund to fund, in the discretion of the New Fund Trustees, distributions, if any, of distributable cash, if any.

Cash distributions of New Fund will substantially depend upon the success of the investments in the Properties. There can be no assurance that New Fund’s income from the distributions and other advances from New LP will sufficiently fund distributions, if any, to New Fund Unitholders, including New Fund’s payment of cash distributions during each distribution period.

If, for any reason, New Fund is unable to distribute net available cash, if any, other sources of financing will need to be found to pay for its ongoing costs and expenses or to fund distributions, if any, which other sources of financing may not be available or may not be available under terms that are acceptable to New Fund. There is no assurance regarding the actual levels of distributable cash by New Fund. In addition, the composition of distributable cash for tax purposes may change over time and may affect after-tax return for New Fund Unitholders.

Whether or not New Fund will pay cash distributions in a particular year, it is expected that New Fund will make sufficient distributions (in the form of additional New Fund Units if cash distributions are not paid) to ensure that New


Fund is not subject to non-refundable tax under Part I of the Tax Act for the year. Accordingly, New Fund Unitholders will generally be subject to tax under the Tax Act on their share of New Fund’s income regardless of whether cash distributions are paid.

New LP Unitholders will not have a right to attend or vote at meetings of New Fund Unitholders

While the New LP Units will be, to the greatest extent practicable, economically equivalent to, and exchangeable for, New Fund Units, New LP Unitholders will have no right to receive notice of or to attend any meeting of New Fund Unitholders or to vote at such meeting. Accordingly, the New LP Units will not provide holders thereof to rights equivalent to those enjoyed as holders of the Sungate LP Units. New LP Unitholders wishing to exercise voting rights would be required to exchange such units for New Fund Class A Units in accordance with the terms of the New LP Units.

New Fund Unitholders do not enjoy the rights and privileges generally offered to shareholders

New Fund will not be generally regulated by established corporate law and New Fund Unitholders’ rights will be instead governed primarily by the specific provisions of the New Fund Declaration of Trust.

New Fund Unitholders will not be shareholders and will not enjoy the rights and privileges generally offered to shareholders of a corporation incorporated under the ABCA. Although the New Fund Declaration of Trust will confer upon New Fund Unitholders some of the same protections, rights and remedies that a shareholder would have as a non-voting shareholder of a corporation governed by the ABCA, significant differences exist.

New Fund Unitholders will not have recourse to a dissent right pursuant to the New Fund Declaration of Trust under which shareholders of an ABCA corporation are entitled to receive the fair value of their shares where certain fundamental changes affecting the corporation are undertaken, such as an amalgamation, a continuance under the laws of another jurisdiction, the sale of all or substantially all of its property, a going private transaction or the addition, change or removal of provisions restricting either the business or businesses that the corporation can carry on, or the issue, transfer or ownership of shares. New Fund Unitholders will similarly not have recourse to the statutory oppression remedy that is available to shareholders of an ABCA corporation where the corporation undertakes actions that are oppressive, unfairly prejudicial or disregard the interests of security holders and certain other parties. Shareholders of an ABCA corporation may also apply to a court to order the dissolution and liquidation of the corporation in those circumstances, whereas New Fund Unitholders will only be able to rely on the general provisions of the New Fund Declaration of Trust, which will permit the termination and dissolution of New Fund with the approval by of New Fund Unitholders by Special Resolution. The ABCA also permits shareholders to bring or intervene in derivative actions in the name of the corporation or any of its subsidiaries, with the leave of a court. The New Fund Declaration of Trust will not include a comparable right of New Fund Unitholders to commence or participate in legal proceedings with respect to New Fund.

In the event of an insolvency or restructuring of New Fund, the rights of New Fund Unitholders will be different from those of shareholders of an insolvent or restructuring corporation.

New Fund may be unable to renew, repay or refinance outstanding debt

New Fund and its subsidiaries are subject to the normal risks associated with debt financing, including the risk that their cash flow will be insufficient to meet required payments of principal and interest, the risk that indebtedness on the multi-family rental properties, or unsecured indebtedness, will not be able to be renewed, repaid or refinanced when due or that the terms of any renewal or refinancing will not be as favourable as the existing terms of such indebtedness. If New Fund or its subsidiaries are unable to refinance their indebtedness on acceptable terms, or at all, they may be forced to dispose of one or more of the Properties on disadvantageous terms, which may result in losses to New Fund. Such losses could have a material adverse effect on New Fund and New Fund’s ability to make distributions to New Fund Unitholders and pay amounts due on outstanding debt.


Degree of leverage could limit New Fund’s ability to obtain additional financing

New Fund’s degree of leverage could have important consequences to New Fund Unitholders. For example, the degree of leverage could affect the ability of New Fund or its subsidiaries to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes, making New Fund more vulnerable to a downturn in business or the economy in general.

Restrictions in financing agreements

New Fund or one of its subsidiaries may in the future enter into debt financing arrangements whereby the entity is required to provide restrictive covenants that limit its ability to make cash distributions. In the event New Fund or one of its subsidiaries enters into one of these arrangements, the amount of indebtedness of New Fund or the applicable subsidiary could have significant consequences on New Fund Unitholders, including that the ability of New Fund or the applicable subsidiaries to obtain additional financing for working capital, capital expenditures, acquisitions, development or other general corporate purposes may be limited; and that a significant portion of the cash flow from operations of New Fund or the applicable subsidiaries may be dedicated to the payment of principal and interest on its indebtedness, thereby reducing funds available for future operations and cash distributions. Additionally, some of New Fund’s or the applicable subsidiary’s consolidated debt may be at variable rates of interest or may be renewed at higher rates of interest, which may affect cash flow from operations available for cash distributions. Also, in the event of a significant economic downturn, there can be no assurance that New Fund or the applicable subsidiary will generate sufficient cash flow from operations to meet required interest and principal payments. New Fund and its subsidiaries are subject to the risk that they may not be able to refinance existing indebtedness upon maturity or that the terms of such refinancing may be onerous. These factors may adversely affect New Fund’s cash distributions.

If New Fund or one of its subsidiaries is encumbered by real estate loan financing or has guaranteed a loan or lease, if any, it may be prohibited from paying distributions in the event that any loan or lease on a Property is in default in payment, unless a specific reserve in respect of such loan or lease is retained. In the event that New Fund or one of its subsidiaries defaults in payment of any loan or lease and is unable or unwilling to establish an appropriate reserve, there may be significant consequences to New Fund Unitholders, including that distributions to New Fund and to NewFund Unitholders could be prohibited.

Liability of New Fund Unitholders

There is a risk that a party may seek to assert that New Fund Unitholders be held personally liable for the obligations of New Fund or in respect of claims against New Fund. Such risks are expected to be limited since New Fund intends to limit its investments to limited partnership units of New LP and loans to New LP and New Fund does not intend to carry on any business. However, there is no assurance that New Fund Unitholders will not be personally liable for the obligations of New Fund.

Pursuant to the New Fund Declaration of Trust, if any New Fund Unitholder is held personally liable as such to any other person in respect of any debt, liability or obligation incurred by or on behalf of New Fund, or any action taken on behalf of New Fund, such New Fund Unitholder shall be entitled to indemnity and reimbursement out of New Fund’s assets to the full extent of such liability for all costs of any litigation or other proceedings in which such liability has been determined, including all fees and disbursements of legal counsel. The rights accruing to a New Fund Unitholder do not exclude any other rights to which such New Fund Unitholder may be lawfully entitled, nor shall the New Fund Declaration of Trust restrict the right of the New Fund Trustees to indemnify or reimburse a New Fund Unitholder out of New Fund’s assets in any appropriate situation not specially provided herein but, for greater certainty, the New Fund Trustees have no liability to reimburse a New Fund Unitholder for taxes assessed against them by reason of or arising out of ownership of New Fund Units.

Redemption or retraction of New Fund Units

Redemption rights under the New Fund Declaration of Trust shall be subject to certain restrictions. Unitholders should carefully review “Description of New Fund Units – Redemption of New Fund Units” in Schedule “L” to this Circular.


Once the quarterly cash Redemption Limit is reached, and in certain other circumstances to be set out in the New Fund Declaration of Trust, redeeming New Fund Unitholders may receive from New Fund (in lieu of cash), Redemption Notes. Redemption Notes so issued will be unsecured debt securities of New Fund or a subsidiary of New Fund and may be subordinated to other of New Fund’s debt obligations. Furthermore, Redemption Notes are not expected to be qualified investments for Plans which could give rise to adverse consequences to a trust governed by an exempt Plan or the annuitant, holder or subscriber under an exempt Plan if the Redemption Notes are held in a trust governed by such Plan, including the redeeming unitholder becoming subject to a penalty tax or having its tax exempt status revoked depending on the circumstances.

In addition, in accordance with the New Fund Declaration of Trust, the New Fund Trustees may, at any time and from time to time, upon giving a retraction notice, redeem one or more of the then outstanding New Fund Units, as if such New Fund Units were tendered by the applicable New Fund Unitholders for redemption as at the date of the retraction notice. The provisions of the New Fund Declaration of Trust shall apply mutatis mutandis with respect to such redemption, provided that New Fund may pay the Redemption Price, in whole or in part, by a distribution in specieof any New Fund assets.

The Redemption Price payable to New Fund Unitholders redeeming New Fund Units may be lower than the price per Unit originally paid by the New Fund Unitholder, as a New Fund Unitholder will receive a lower Redemption Price if such New Fund Unitholder redeems his, her or its New Fund Units within a certain period of time from the original investment date. There is no assurance that investors will be paid the whole amount of their original investment through any exercise of redemption rights or through New Fund’s retraction of New Fund Units.

In addition, in accordance with the New Fund Declaration of Trust, New Fund Trustees shall suspend the calculation of the Net Asset Value when required to do so under applicable securities laws. During the period of suspension New Fund shall not be permitted to issue or redesignate New Fund Units in the affected class. The calculation of the Net Asset Value shall resume as soon as possible and in compliance with applicable securities laws or any exemptive relief granted therefrom.

The New Fund Trustees may suspend the redemption of New Fund Units if the New Fund Trustees determine that conditions exist as a result of which the disposition or valuation of the Properties is not reasonably practical; provided such suspension is in accordance with all applicable securities laws and other applicable law. Any suspension of the redemption of New Fund Units shall cease promptly following the ending of the conditions giving rise to the suspension and in any case not later than one year after the beginning of the suspension.

Dilution or concentration of New Fund Units

New Fund will be authorized to issue an unlimited number of New Fund Units. Any issuance of additional New Fund Units may have a dilutive or concentrative effect on the value of New Fund Units. New Fund Unitholders who invest after a particular Property is acquired will be entitled to receive the same distributions as a New Fund Unitholder of the same class who invested before such Property was acquired and will therefore be entitled to the equivalent benefits or disadvantages as each other New Fund Unitholder.

Fluctuations in Capitalization Rates

As interest rates fluctuate in the lending market, generally Capitalization Rates will fluctuate as well, which affects the underlying value of real estate. As such, when interest rates rise, generally Capitalization Rates should be expected to rise. Over the period of investment, capital gains and losses at the time of disposition can occur due to the increase or decrease of these Capitalization Rates.

Environmental matters

Under various environmental and ecological laws, ordinances and regulations, New Fund or its subsidiaries could become liable for the costs of removal or remediation of certain hazardous or toxic substances released on or in one or more of the Properties or disposed of at other locations. The failure to deal effectively with such substances may


adversely affect the Manager’s ability to sell such Property or to borrow using the Property as collateral, and could potentially also result in claims against New Fund or its subsidiaries by third parties.

Environmental laws provide for sanctions for non-compliance and may be enforced by governmental agencies or, in certain circumstances, by private parties. Certain environmental laws and common law principles could be used to impose liability for release of and exposure to hazardous substances into the air. Third parties may seek recovery from real property owners or operators for personal injury or property damage associated with exposure to released hazardous substances. The cost of defending against claims of liability, of complying with environmental regulatory requirements, of remediating any contaminated property, or of paying personal injury claims could be substantial and reduce cash distributions by New Fund.

Property LPs may be subject to liability for undetected pollution or other environmental hazards against which they cannot insure, or against which they may elect not to insure where premium costs are disproportionate to the Property LPs’ perception of relative risk. Such factors may impact the Property LPs’ ability to pay cash distributions, which in turn would have an adverse impact on New Fund and its ability to pay cash distributions.

Uninsured losses of Property LPs may result in harm to New Fund Unitholders

The Property LPs carry, or intend to carry, comprehensive general liability, fire, flood, extended coverage, rental loss and vacancy insurance with policy specifications, limits and deductibles customarily carried for similar properties. However, there are certain types of risks, generally of a catastrophic nature, such as wars, terrorist attacks or environmental contamination, which are either uninsurable or not insurable on an economically viable basis. Should an uninsured or underinsured loss occur, a Property LP could lose its investment in, and anticipated profits and cash flows from, one or more of its Properties, but would continue to be obligated to repay any recourse mortgage indebtedness on such Properties.

From time to time a Property LP may be subject to lawsuits as a result of the nature of its business. The Property LPs maintain, or intend to maintain, business and property insurance policies in amounts and with such coverage and deductibles as are deemed appropriate, based on the nature and risks of the businesses, historical experience and industry standards. However, there can be no assurance that claims in excess of the insurance coverage or claims not covered by the insurance coverage will not arise or that the liability coverage will continue to be available on acceptable terms. A successful claim against a Property LP that is not covered by, or in excess of, such Property LP’s insurance could materially affect such entity’s operating results and financial condition, which would have an adverse impact on New Fund. Claims against a Property LP, regardless of their merit or eventual outcome, will require the Manager to devote time to matters unrelated to the operation of the business.

Legislative changes

Legal, tax and regulatory changes may occur that can adversely affect New Fund or New Fund Units. There can be no assurance that income tax, securities and other laws will not be changed in a manner that adversely affects New Fund or New Fund Units.

Risks Relating to Taxes

SIFT Status

Although, as of the date hereof, the Manager believes that none of New Fund, New LP, or the Subsidiary LPs will at any time own any “non-portfolio property” within the meaning of the SIFT Rules, such that the SIFT Rules will not apply to any of New Fund, New LP, or the Subsidiary LPs. However, there can be no assurance that this will be the case or that New Fund, New LP, the Subsidiary LPs and the New Fund Unitholders and New LP Unitholders will not be subject to the tax imposed by the SIFT Rules in 2020 or future years. Please refer to the discussion under “Certain Canadian Federal Income Tax Considerations – The SIFT Rules”.

In the event that the SIFT Rules were to apply to New Fund, New LP, or a Subsidiary LP, the impact to a New Fund Unitholder or New LP Unitholder would depend, among other factors, on the particular circumstances of the holder,


on the amount of the “non-portfolio earnings” (as defined in the Tax Act) of New Fund, New LP, or a Subsidiary LP, as applicable, and, in the case of New Fund, on the amount of income distributed which would not be deductible by New Fund in computing its income in a particular year and the proportions of New Fund’s distributions that constitute “non-portfolio earnings” (as defined in the Tax Act), other income and returns of capital.

In the event that the SIFT Rules apply to New Fund, New LP or a Subsidiary LP, the SIFT Rules may have an adverse impact on New Fund, New LP and the New Fund Unitholders and New LP Unitholders, on the value of New Fund Units and New LP Units, and on the ability of New Fund to undertake financings and acquisitions; and the distributable cash of New Fund may be materially reduced. The effect of the SIFT Rules on the market for New Fund Units is uncertain.

Mutual Fund Trust Status

New Fund intends to comply with the requirements under the Tax Act at all relevant times such that it will qualify at all times as a “unit trust” and a “mutual fund trust” for purposes of the Tax Act.

There can be no assurances that Canadian federal income tax laws and the administrative policies and assessing practices of the CRA respecting mutual fund trusts will not be changed in a manner that adversely affects New Fund Unitholders and New LP Unitholders. Should New Fund cease to qualify as a mutual fund trust under the Tax Act, the income tax considerations described under “Certain Canadian Federal Income Tax Considerations” would be materially different in certain respects.

Deductibility of Interest

In certain circumstances, the deductibility of interest on money borrowed to invest in units of a trust may be reduced on a pro rata basis in respect of distributions from the trust that are a return of capital and that are not reinvested for an income earning purpose. A similar limitation may apply where borrowed money is used to invest in a partnership. Accordingly, part of the interest payable by a New Fund Unitholder or New LP Unitholder on borrowed money previously used to invest in Units could be non-deductible where such returns of capital have occurred or occur in the future.

Changes of Tax Legislation and Administrative Policies

There can be no assurance that Canadian federal income tax laws, the judicial interpretation of the terms of the Canada-United States Income Tax Convention, or the administrative policies and assessing practices of the CRA will not be changed in a manner that adversely affects New Fund, its subsidiaries, New Fund Unitholders or New LP Unitholders. Any such change could increase the amount of tax payable by New Fund or its affiliates or could otherwise adversely affect New Fund Unitholders or New LP Unitholders by reducing the amount available to pay distributions or changing the tax treatment applicable to New Fund Unitholders or New LP Unitholders in respect of distributions.

Distributions to Non-Residents

The Tax Act may impose additional withholding or other taxes on distributions made by New Fund to New Fund Unitholders who are Non-Residents. Such taxes and any reduction thereof under a tax treaty between Canada and another country may change from time to time. In addition, this Circular does not describe the Canadian federal income tax consequences under the Tax Act to Non-Residents of disposing of Units or of acquiring and holding New Fund Units, which may be materially different than the consequences to Canadian resident Unitholders. Unitholders who are Non-Residents should consult their own tax advisors.

Differences between Canadian and US Income Tax Rules

For the purposes of the Tax Act, New Fund, New LP and each of the Subsidiary LPs is required to compute its income as though it were a person resident in Canada. Such income must therefore be computed for purposes of the Tax Act in accordance with the provisions of the Tax Act which may differ materially from the applicable provisions of the


Code. In addition, the effective tax rate under the Tax Act and the Code may differ, in which case New Fund Unitholders and New LP Unitholders generally will be subject to the higher effective tax rate.

Foreign Currency Exchange Rates

For purposes of the Tax Act, New Fund, New LP and each of the Subsidiary LPs generally is required to compute its Canadian tax results using Canadian currency. Where an amount that is relevant in computing a taxpayer’s Canadian tax results is expressed in a currency other than Canadian currency, such amount generally must be converted to Canadian currency using the rate of exchange quoted by the Bank of Canada on the day such amount first arose, or using such other rate of exchange as is acceptable to the CRA. As a result, New Fund or New LP may realize gains and losses for Canadian tax purposes (either directly or through the Subsidiary LPs) by virtue of fluctuations in the value of the U.S. dollar or other foreign currencies relative to the Canadian dollar.

Taxable Income Exceeding Distributions

New Fund’s share of income earned by New LP (including New LP’s share of the income of the Subsidiary LPs) will be allocated to New Fund whether or not any amounts are actually distributed by New LP to New Fund. The New Fund Declaration of Trust shall provide that the amount necessary to ensure that New Fund will not be liable to pay non-refundable income tax under Part I of the Tax Act for any taxation year shall be deemed to be declared as a distribution by the New Fund Trustees prior to the end of each taxation year. See “New Fund Declaration of Trust – Distributions” in Schedule “L” to this Circular. Such distributions may be payable in the form of additional New Fund Units where New Fund’s available cash is not sufficient to make a payment of the full amount of such distributions, or where otherwise determined by New Fund. It is currently intended that distributions of income by New Fund in each taxation year will be paid in cash, the New Fund Trustees have discretion to determine in the future to make such distributions payable in New Fund Units. New Fund Unitholders generally will be required to include an amount equal to the amount of such distributions in their taxable income, even in circumstances where they do not receive a cash distribution from New Fund.

New LP Unitholders will be required to include in income their allocated share of the income of New LP, regardless of the amount of cash or other distributions made by New LP.

Limitations on Foreign Tax Credits

Foreign taxes paid by New LP (including foreign taxes attributed to New LP by the Subsidiary LPs) will be allocated pursuant to the New LP LPA to the partners of New LP, including New Fund. Provided appropriate distributions and designations are made, New Fund’s share of such foreign taxes will generally be attributed to the New Fund Unitholders for purposes of the foreign tax credit provisions of the Tax Act. Each partner’s or unitholder’s share of the “business-income tax” and “non-business-income tax” paid in a foreign country for a year will be creditable against its Canadian federal income tax liability to the extent permitted by the detailed rules contained in the Tax Act. See “Certain Canadian Federal Income Tax Considerations – Foreign Tax Credits”. Although the foreign tax credit provisions are designed to avoid double taxation, the maximum credit is limited. Because of this, and because of timing differences in recognition of expenses and income and other factors, some level of double taxation may arise.

Need to Properly Complete Joint Tax Election

New LP GP will make a Joint Tax Election with each Electing Sungate Unitholder, if requested by such Electing Sungate Unitholder. However, none of New Fund, New LP, or any of their unitholders or subsidiaries, will be responsible for the validity, proper completion or timely filing of any Joint Tax Election nor for any taxes, interest, penalties or other consequences under the Tax Act (or applicable provincial tax legislation) in respect thereof. New LP GP will only to execute (or cause to be executed) and deliver to an Electing Sungate Unitholder an otherwise completed copy of the applicable Tax Election Form provided by the Electing Sungate Unitholder to New LP GP on or before the Election Deadline, provided that the information therein complies with the applicable rules under the Tax Act. See “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for Sungate and the Sungate Unitholders – Taxation of Holders of Sungate Units – Transfer of Sungate Units to New LP by Electing Sungate Unitholders”.


CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

In the opinion of Blake, Cassels & Graydon LLP, counsel to the Funds, the following is, as of the date hereof, a summary of the principal Canadian federal income tax considerations generally applicable under the Income Tax Act (Canada) and the regulations thereunder (collectively, the “Tax Act”) to the disposition of Units pursuant to the Transaction and the holding and disposition of New Fund Units and New LP Units acquired pursuant to the Transaction. This summary applies only to a Unitholder who, at all relevant times, for purposes of the Tax Act, (a) is, or is deemed to be, resident in Canada; (b) deals at arm’s length with each of the Funds and will deal at arm’s length with New Fund and New LP; (c) is not affiliated with any of the Funds and will not be affiliated with New Fund or New LP; and (d) holds their Units as capital property and will hold their New Fund Units or New LP Units, as the case may be, received in exchange for their Units as capital property (a “Holder”). Generally, Units, New Fund Units and New LP Units will be considered to be capital property to a Unitholder provided that the holder does not hold such units in the course of carrying on a business of trading or dealing in securities and has not acquired such units in one or more transactions considered to be an adventure or concern in the nature of trade.

A Unitholder whose Trust Units or New Fund Units might not otherwise qualify as capital property may be entitled to make an irrevocable election under subsection 39(4) of the Tax Act to have their Trust Units, New Fund Units and every other “Canadian security” (as defined in the Tax Act) owned by such Unitholder in the taxation year in which the election is made and in all subsequent taxation years, be deemed to be capital property. Sungate Units and New LP Units will not be “Canadian securities” for these purposes, and accordingly no such election will apply to the Sungate Units or New LP Units. Unitholders who do not hold their Units, or may not hold their New Fund Units or New LP Units, as capital property should consult their own tax advisors regarding their particular circumstances.

This summary does not apply to a Holder: (a) that is a “financial institution” for purposes of the mark-to-market rules in the Tax Act; (b) that is a “specified financial institution”, as defined in the Tax Act; (c) an interest in which is a “tax shelter investment”, as defined in the Tax Act; (d) that has elected to determine its “Canadian tax results”, as defined in the Tax Act, in a currency other than Canadian dollars; (e) that has entered into or will enter into a “derivative forward agreement”, as defined in the Tax Act, in respect of Units, New Fund Units, or New LP Units; or (f) that has at any time, directly or indirectly, a “significant interest”, as defined in subsection 34.2(1) of the Tax Act, in Sungate or New LP. Such Holders should consult their own tax advisors regarding their particular circumstances. In addition, this summary does not address the deductibility of interest expense incurred by a Holder in respect of debt incurred in connection with the acquisition or holding of Units, New Fund Units, or New LP Units.

This summary is based on the assumptions that (i) neither Sungate nor New LP, nor any interest in Sungate or New LP, will be a “tax shelter” or “tax shelter investment”, each as defined in the Tax Act; (ii) not more than 50% of the fair market value of all interests in either Sungate or New LP are or will be held by one or more persons that are “financial institutions”, as defined in section 142.2 of the Tax Act; and (iii) no member of Sungate is a Non-Resident, a person exempt from tax under section 149 of the Tax Act, a partnership, or a trust (other than a trust that is a “mutual fund trust” for the purposes of the Tax Act).

This summary is based upon the current provisions of the Tax Act, a certificate from an officer of the Manager as to certain factual matters, and counsel’s understanding of the current administrative policies and assessing practices of the CRA made publicly available prior to the date of this Circular. This summary also takes into account all specific proposals to amend the Tax Act that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date of this Circular (the “Tax Proposals”). This summary assumes that the Tax Proposals will be enacted as currently proposed, but no assurances can be given that this will be the case. Except for the Tax Proposals, this summary does not take into account or anticipate any changes in law, whether by legislative, governmental or judicial decision or action, or changes in the CRA’s administrative policies or assessing practices, nor does it take into account any other federal or any provincial, territorial or foreign tax legislation or considerations (including any transfer tax considerations), which may differ significantly from those discussed herein.

No advance income tax ruling has been or will be sought or obtained from the tax authorities in respect of the Transaction.

For the avoidance of doubt, in this summary a reference to a Trust, Sungate, New Fund, New LP or any other entity will be a reference to that entity only and not a reference to any of its subsidiaries.


This summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Unitholder. This summary is not exhaustive of all Canadian federal income tax considerations. Consequently, Unitholders are urged to consult their own tax advisors to determine the particular tax consequences applicable to them in connection with the Transaction, and the holding and disposition of New Fund Units and New LP Units, under Canadian federal, provincial, territorial or local tax laws, having regard to their own particular circumstances.

This summary does not address any tax considerations other than the Canadian federal income tax considerations discussed herein. Unitholders who are resident or otherwise taxable in jurisdictions other than Canada should consult their own tax advisors with respect to the tax consequences of the Transaction, and the holding and disposition of New Fund Units and New LP Units, in such jurisdictions.

Currency

The Tax Act generally requires taxpayers to compute their “Canadian tax results” (as defined in the Tax Act) in Canadian currency. Where an amount (including adjusted cost base, proceeds of disposition, or a trust or partnership distribution) that is relevant in computing a taxpayer’s Canadian tax results is expressed in a currency other than Canadian currency, such amount must generally be converted to Canadian currency using the rate of exchange quoted by the Bank of Canada for the day such amount first arose, or using such other rate of exchange as is acceptable to the CRA. As a result, Holders, the Funds, New Fund and New LP may realize gains and losses for tax purposes by virtue of fluctuations in the value of the U.S. dollar or other foreign currencies relative to the Canadian dollar.

Change of Fiscal Periods

The Funds may seek approval of the CRA (the “CRA Approval”) to change the fiscal period end of Sungate and certain subsidiaries of the Funds in order to ensure, to the extent possible, that substantially all of the income and net taxable capital gains directly or indirectly earned by the Funds up to the Effective Time will be allocated to Unitholders of the applicable Fund in their respective taxation years that include the Effective Time. Provided the CRA Approval is granted, the fiscal periods of such partnerships that would otherwise include the Effective Time will end immediately before the Effective Date. The remainder of this summary assumes that the CRA Approval will be obtained, but no assurance can be given in this regard. In the event that none of the Funds has any taxable income to report through the Effective Date, the change in fiscal period end may not be necessary.

Status of the Funds and New Fund

This summary assumes that at all relevant times each Trust has qualified and will qualify, and that New Fund will at all relevant times qualify, as a “mutual fund trust” for the purposes of the Tax Act. There can be no assurance that the Trusts have qualified as mutual fund trusts at any time, or that subsequent investments or activities will not result in a Trust or New Fund failing to qualify as a mutual fund trust. If any particular Trust or New Fund were not to qualify as a “mutual fund trust” at any particular time, the income tax considerations described below would, in some respects, be materially and adversely different. Counsel expresses no opinion as to whether or not any of the Trusts or New Fund qualified or will qualify at any time as a “mutual fund trust” for purposes of the Tax Act.

This summary also assumes that at all relevant times Sungate is, and New LP will be, a “Canadian partnership” for the purposes of the Tax Act. If Sungate or New LP were not to qualify as a “Canadian partnership” at a relevant time, the income tax considerations described below may, in some respects, be materially and possibly adversely different. The Sungate LPA contains, and the New LP LPA will contain, restrictions intended to ensure that such partnerships will be “Canadian partnerships”.

The SIFT Rules

The Tax Act includes rules (the “SIFT Rules”) that effectively tax certain income of a publicly-traded or listed trust that is distributed to its investors, and certain income of a publicly-traded or listed partnership, on the same basis as would have applied had the income been earned through a taxable Canadian corporation and distributed by way of dividend to its shareholders. These rules apply only to “SIFT trusts” and “SIFT partnerships”, each as defined in the


Tax Act (collectively, “SIFTs”), and to investors in SIFTs. The SIFT Rules do not apply in a taxation year to a trust or partnership that does not hold any “non-portfolio property” at any time in that year. Counsel has been advised that none of the Funds, New Fund, New LP, or any of their respective subsidiaries (collectively, the “Relevant Entities”) has held at any time or will at any time hold any non-portfolio property. Provided that this is limitation is satisfied, no Relevant Entity will be a SIFT.

The remainder of this summary assumes that none of the Relevant Entities will be a SIFT at any time. If any of the Relevant Entities were to be a SIFT, the income tax considerations described below could, in some respects, be materially and adversely different.

Tax Consequences of the Transaction for the Trusts and Holders of Trust Units

Taxation of the Trusts

Qualifying Exchanges

Provided that a Trust files the necessary election (a “QE Election”) with New Fund under section 132.2 of the Tax Act, in the manner and time prescribed, the transfer by the Trust of its property to New Fund as part of the QE Transfers will be a “qualifying exchange” as defined in section 132.2 of the Tax Act. Counsel has been advised that the parties intend to file the necessary QE Elections, and the balance of this summary assumes that such elections will be timely filed in accordance with the Tax Act.

As a result of the rules in the Tax Act applicable to a qualifying exchange, the property transferred by a Trust to New Fund will be deemed to be disposed of by such Trust for proceeds of disposition equal to the greater of the tax cost of such property and the principal plus accrued interest of any debt assumed and any consideration other than New Fund Units received for the transfer, except to the extent that either (a) the Trust and New Fund elect in the relevant QE Election to recognize greater proceeds of disposition in respect of such disposition or (b) such proceeds would exceed the fair market value of the transferred property. Counsel has been advised that such elections will be completed with a view to minimizing tax payable by the Trusts and their Unitholders, and that it is intended that gain on the QE Transfers will be realized only to the extent of available losses or other deductions available to shelter such gain and, as a result, there should be no net taxable income to the Trusts as a result of the QE Transfers.

The Trusts will not realize a gain or loss on the transfer of New Fund Units to Unitholders on the QE Redemptions.

Computation and Distribution of Income and Taxable Capital Gains of the Trusts

The current taxation year of each of the Trusts will be deemed to end on the Effective Date following the transfer of the Trust’s property to New Fund pursuant to the QE Transfer, giving rise to a short taxation year for each of the Trusts.

If, based on bona fide best estimates, the Trusts determine that a particular Trust’s undistributed taxable income for this short taxation year, taking into account any income or gains allocated to such Trust by its Subsidiary LP and after application of any non-capital loss carry forwards and other available deductions or attributes, exceeds prior distributions made to Unitholders in that period, the applicable Trust will pay a special distribution to Unitholders to ensure that the Funds will not be liable for non-refundable tax under Part I of the Tax Act for this short taxation year (a “Special Distribution”).


Taxation of Holders of Trust Units

Special Distributions and final income allocations by the Trusts

The tax treatment to Holders of any Special Distribution paid by the Trusts will be determined in a manner similar to the tax treatment that applies to other distributions that have been paid or payable by the Trusts to Holders in the past. Since the current taxation years of the Trusts will be deemed to end on the Effective Date following the QE Transfers, Holders with taxation years ending after the Effective Date but before December 31 of the calendar year in which the Effective Date occurs may be required to report income from the Trusts earlier than they would otherwise have been required to do so.


A Holder will not realize any income or gain as a result of the QE Transfers.

The redemption by a Holder of Trust Units in exchange for New Fund Units pursuant to the QE Redemptions will be deemed to be a disposition of the applicable Trust Units for proceeds of disposition equal to the adjusted cost base to the Holder of such Trust Units immediately prior to the redemption, and the cost to the Holder of New Fund Units received will be the same amount. Accordingly, a Holder will not realize any income or gain as a result of the redemption of Trust Units pursuant to the QE Redemptions.

Holding and Disposing of New Fund Units Received Pursuant to the Transaction

Taxation of New Fund

In each taxation year, New Fund will generally be subject to tax under Part I of the Tax Act on any taxable income of New Fund, less the portion thereof that it deducts in respect of the amounts paid or payable, or deemed to be paid or payable, in the year to New Fund Unitholders. New Fund will include in calculating its taxable income for a taxation year its share of the income or loss (subject to the “at-risk rules” described under “Taxation of New LP”) for the fiscal periods of New LP ending in or coincident with such taxation year. The income of New LP is discussed further under “– Tax Consequences of the Transaction for Sungate and the Sungate Unitholders – Taxation of Holders of Sungate Units – Holding and Disposing of New LP Units Received Pursuant to the Transaction – Taxation of New LP”. An amount will be considered to be payable to a New Fund Unitholder in a taxation year if the unitholder is entitled in that year to enforce payment of the amount.

In computing its income, New Fund may generally deduct reasonable administrative costs and other reasonable expenses incurred by it for the purpose of earning income, as well as a portion of any reasonable expenses incurred by New Fund to issue units, subject to the relevant provisions of the Tax Act. Losses incurred by New Fund cannot be allocated to New Fund Unitholders, but may generally be deducted by New Fund in future years in computing its taxable income, subject to and in accordance with the provisions of the Tax Act. Following the Transaction, New Fund’s taxation year end will be December 31 of each year.

New Fund will generally not be subject to tax on any amounts received as distributions from New LP. Generally, distributions to New Fund in excess of its allocated share of the income of New LP for a fiscal period will result in a reduction of the adjusted cost base of New Fund’s interest in New LP by the amount of such excess. If, as a result, the adjusted cost base to New Fund of its interest in New LP at the end of a fiscal period of New LP would otherwise be a negative amount, New Fund would be deemed to realize a capital gain in such amount for its taxation year in which such fiscal period ends and the adjusted cost base to New Fund of its interest in New LP would be reset to nil.

New Fund will be entitled for each taxation year to reduce (or receive a refund in respect of) its liability, if any, for tax on its net realized taxable capital gains by an amount determined under the Tax Act based on the redemption of New Fund Units during the year (the “Capital Gains Refund”). The Capital Gains Refund in a particular taxation year may not completely offset New Fund’s tax liability for such taxation year.


The New Fund Declaration of Trust shall provide that all or a portion of any taxable capital gains realized by New Fund as a result of a redemption of New Fund Units may, at the discretion of the New Fund Trustees, be treated as income paid or payable to the redeeming New Fund Unitholder in the applicable year. However, pursuant to Tax Proposals released on July 30, 2019 (the “July 2019 Proposals”), New Fund generally will not be entitled to a deduction in computing its income in respect of amounts allocated to redeeming New Fund Unitholders in respect of such taxable capital gains to the extent that the amount so allocated is greater than the taxable capital gain that would otherwise have been realized by the redeeming New Fund Unitholder on the redemption (as determined by the New Fund Trustees using reasonable efforts to obtain the information required to determine the New Fund Unitholder’s cost amount). Counsel has been advised that New Fund intends, to the extent possible, to administer the redemption of New Fund Units in such a manner that no deduction by New Fund should be denied under the July 2019 Proposals, if enacted. As a result, the taxable component of distributions by New Fund to non-redeeming New Fund Unitholders may be adversely affected.

The New Fund Declaration of Trust will generally require New Fund to distribute to its unitholders, in cash or in New Fund Units, in each year its net income and net realized capital gains to such an extent that New Fund will not be liable in any year for income tax under Part I of the Tax Act, after taking into account any Capital Gains Refund to which New Fund is entitled for such year.

Holding of New Fund Units

A Holder that holds New Fund Units following the Transaction will generally be required to include in income for a particular taxation year of the Holder the portion of the net income of New Fund for each taxation year of New Fund ending in or concurrently with the particular taxation year of the Holder, including net realized taxable capital gains, that is paid or payable to the Holder in the taxation year of New Fund, whether that amount is paid in cash, additional New Fund Units or otherwise.

The non-taxable portion of any net realized taxable capital gains of New Fund that is paid or payable to a Holder in a taxation year will not be included in computing the Holder’s income for the year. Any other amount in excess of the net income and net taxable capital gains of New Fund that is paid or payable to a Holder in that year will generally not be included in the Holder’s income for the year. However, where such an amount is paid or payable to a Holder (other than as proceeds in respect of the redemption of New Fund Units), the Holder will be required to reduce the adjusted cost base of New Fund Units by that amount. Where reductions to the adjusted cost base to a Holder of New Fund Units for a year would result in the adjusted cost base becoming a negative amount, such amount will be treated as a capital gain realized by the Holder in that year and the Holder’s adjusted cost base of New Fund Units will then be reset to nil.

Provided that appropriate designations are made by New Fund, those portions of the: (a) net realized taxable capital gains; (b) income from a source in a country other than Canada (“Foreign Source Income”); and (c) taxable dividends received by it from taxable Canadian corporations, as are paid or payable to a Holder will effectively retain their respective characters and be treated as such in the hands of the Holder for purposes of the Tax Act. To the extent that Foreign Source Income is designated as having been paid or payable to a Holder, such Holder will generally be deemed for the purposes of the foreign tax credit provisions in the Tax Act to have paid its pro rata share of any foreign business income taxes and non-business income taxes considered to have been paid by New Fund in respect of the particular source for the relevant taxation year, and may be entitled to claim a foreign tax credit in respect of such foreign taxes, subject to the detailed rules in respect of foreign tax credits and deductions in the Tax Act. See “– Foreign Tax Credits”.

Dispositions of New Fund Units

A disposition or deemed disposition of a New Fund Unit by a Holder (whether on a redemption or otherwise) will give rise to a capital gain (or a capital loss) equal to the amount by which the Holder’s proceeds of disposition of the New Fund Unit exceed (or are exceeded by) the aggregate of the adjusted cost base of the New Fund Unit to the Holder and any reasonable costs of disposition. The Holder’s proceeds of disposition will not include an amount payable by New Fund that the Holder is otherwise required to include in income, including any capital gain realized by New Fund in connection with a redemption which New Fund has designated to the redeeming Holder. The taxation of capital gains and capital losses is discussed below under “Taxation of Capital Gains and Losses”.


If New Fund redeems New Fund Units by distributing notes or other property of New Fund to a Holder, the Holder will also be required to include in income any taxable capital gains that New Fund realizes on or in connection with such in specie distribution of property and designates to such Holder. The proceeds of disposition to the redeeming Holder will be equal to the fair market value of the notes or other property of New Fund so distributed less any income or capital gain realized by New Fund in connection with such redemption. The cost of any property distributed in specie by New Fund to a Holder upon redemption of New Fund Units will be equal to the fair market value of that property at the time of distribution. The Holder will thereafter be required to include in income interest or other income derived from the property in accordance with the provisions of the Tax Act.

For the purpose of determining the adjusted cost base of a New Fund Unit to a Holder, when a New Fund Unit is acquired following the Transaction (including upon the exchange of a New LP Unit), the cost of the newly-acquired New Fund Unit will be averaged with the adjusted cost base of all of the other New Fund Units of that same class owned by the Holder as capital property immediately before that acquisition. The cost to a Holder of New Fund Units received in lieu of a cash distribution of income of New Fund will be equal to the amount of such distribution that is satisfied by the issuance of such New Fund Units.

The consolidation of New Fund Units following a distribution paid in the form of additional New Fund Units will not be considered to result in a disposition of New Fund Units by a Holder. The aggregate adjusted cost base to a Holder of all of the Holder’s New Fund Units of that class will not change as a result of a consolidation of New Fund Units; however, the adjusted cost base per New Fund Unit of that class will increase.

Exercise of Dissent Rights

A Dissenting Unitholder who is entitled to be paid fair value of the holder’s Dissenting Trust Units will be considered to have disposed of such holder’s Dissenting Trust Units to the applicable Trust in exchange for a right to be paid the fair value of such Dissenting Trust Units, as determined in accordance with the applicable Declaration of Trust. The disposition will result in a capital gain (or a capital loss) to such Dissenting Unitholder equal to the amount, if any, by which the proceeds of disposition of the Dissenting Trust Units, net of any reasonable costs of disposition, exceed (or are less than) the adjusted cost base of the Dissenting Trust Units to such Dissenting Unitholder immediately prior to the disposition. For this purpose, proceeds of disposition will not include an amount made payable by the particular Trust to such Dissenting Unitholder that is (a) otherwise required to be included in the holder’s income or (b) the non-taxable portion of any capital gains made payable by the Trust or interest awarded by a court to the Dissenting Unitholder.

Interest awarded by a court to a Dissenting Unitholder will be included in the Dissenting Unitholder’s income for purposes of the Tax Act. The treatment of capital gains and capital losses is generally described below under “Taxation of Capital Gains and Losses”.

Dissenting Unitholders should consult their own tax advisors concerning the tax consequences of an exercise of Dissent Rights.

Tax Consequences of the Transaction for Sungate and the Sungate Unitholders

Taxation of Sungate

Under the Tax Act, Sungate will not be subject to tax on its income or net taxable capital gains for its fiscal period ending on the Effective Date, but will allocate such income or gains to the Sungate Unitholders. Holders of Sungate Units with taxation years ending after the Effective Date but before December 31 of the calendar year in which the Effective Date occurs may be required to report their share of income from Sungate for its fiscal period that includes the Effective Date earlier than they would otherwise have been required to.


Taxation of Sungate Unitholders

Redemption of Sungate Units by Non-Electing Sungate Unitholders

A Holder that is a Non-Electing Sungate Unitholder will have their Sungate Units redeemed in consideration for New Fund Units. Such redemption of the Holder’s Sungate Units will constitute a disposition of the Sungate Units for proceeds of disposition equal to the fair market value of the New Fund Units received upon such redemption, and will give rise to a capital gain (or capital loss) equal to the amount by which such proceeds of disposition of the Sungate Units exceed (or are exceeded by) the aggregate of the adjusted cost base of the Sungate Units to the Holder and any reasonable costs of disposition. The taxation of capital gains and capital losses is discussed below under “Taxation of Capital Gains and Losses”. The cost to the Holder of the New Fund Units so received will generally be equal to the fair market value of such New Fund Units.

Transfer of Sungate Units to New LP by Electing Sungate Unitholders

A Holder that is an Electing Sungate Unitholder (an “Electing Holder”) will transfer their Sungate Units to New LP in exchange for New LP Units.

Such an Electing Holder may choose to recognize all or a portion of any capital gain that would otherwise be realized on the exchange of Sungate Units for New LP Units pursuant to the Transaction by filing with the CRA (and, where applicable, with a provincial tax authority) a joint election under subsection 97(2) of the Tax Act, and the corresponding provisions of any applicable provincial tax legislation (a “Joint Tax Election”). A Joint Tax Election would be made jointly by the Holder and New LP GP on behalf of all of the members of New LP.

Subject to the limitations set out in this Circular, New LP GP, on behalf of all of the members of New LP, will make a Joint Tax Election with each Electing Sungate Unitholder at the elected amount (the “Elected Amount”) determined by such Electing Sungate Unitholder, subject to the limitations set out in the Tax Act (or any applicable provincial tax legislation).

The relevant limitations imposed by the Tax Act in respect of the Elected Amount are that the Elected Amount:

(a) may not be less than the lesser of:

(i) the adjusted cost base to the Electing Holder of the Sungate Units that are transferred to New LP by the Electing Holder and in respect of which a Joint Tax Election is made;

(ii) the fair market value of the Sungate Units that are transferred to New LP by the Electing Holder and in respect of which a Joint Tax Election is made; and

(b) may not exceed the fair market value of the Sungate Units transferred to New LP by such Electing Holder and in respect of which the Joint Tax Election is made.

An Elected Amount that does not otherwise comply with the foregoing limitations will be automatically adjusted under the Tax Act so that it is in compliance.

Where an Electing Holder and New LP GP on behalf of all of the members of New LP make a Joint Tax Election that complies with the above parameters and the Joint Tax Election is filed on a timely basis, then generally (a) the proceeds of disposition realized by such Electing Holder from the disposition of such Sungate Units, (b) the cost to New LP of such Sungate Units, and (c) the cost to the Electing Holder of the New LP Units received in exchange will all be equal to the Elected Amount, subject to the specific limitations and constraints applicable under the Tax Act. The Electing Holder will realize a capital gain (or capital loss) equal to the amount by which such proceeds of disposition exceed (or are exceeded by) the aggregate of the adjusted cost base of the Sungate Units to the Electing Holder and any reasonable costs of disposition. The taxation of capital gains and capital losses is discussed below under “Taxation of Capital Gains and Losses”.


To make a Joint Tax Election, an Electing Sungate Unitholder must provide a copy of the Tax Election Form, completed apart from execution, to New LP GP including: (i) the required information concerning the Electing Sungate Unitholder; (ii) the details of the number of Sungate Units transferred in respect of which the Electing Sungate Unitholder is making a Joint Tax Election; and (iii) the applicable Elected Amounts for such Sungate Units. Such copy of the Tax Election Form must be submitted to New LP GP before the day that is 75 days following the date on which the exchange occurs (the “Election Deadline”). New LP GP may not make a Joint Tax Election with Electing Sungate Unitholders who do not provide such copy of the Tax Election Form on or before the Election Deadline.

After receipt of such copy of the Tax Election Form, and provided that the information therein complies with the rules under the Tax Act described above, New LP GP will deliver an executed copy of the Joint Tax Election to the Electing Sungate Unitholder. The Electing Sungate Unitholder will be solely responsible for executing its portion of the Tax Election Form and submitting it to the CRA (and, where applicable, to any provincial tax authority) within the required time. In order to avoid late filing penalties, the Tax Election Form is required to be filed with the CRA (and, where applicable, with any provincial tax authority) on or before the earliest of the days on or before which any member of New LP is required to file a Canadian federal income tax return for the member’s taxation year in which the exchange to which the election relates occurs. This could be as early as 90 days after the date of exchange. Accordingly, Electing Sungate Unitholders wishing to make a Joint Tax Election should consult their own tax advisors without delay and should provide the relevant Tax Election Form to New LP GP as described above as soon as possible.

A Joint Tax Election will be valid only if it meets all the applicable requirements under the Tax Act (and any applicable provincial tax legislation) and the relevant Tax Election Form is filed on a timely basis. These requirements are complex, are not discussed in any detail in this summary, and meeting these requirements with respect to preparing and filing the Tax Election Form will be the sole responsibility of the Electing Sungate Unitholder. None of New Fund, New LP, or any of their unitholders or subsidiaries or New LP GP, will be responsible for the validity, proper completion or timely filing of a Joint Tax Election, or for any taxes, interest, penalties or other consequences under the Tax Act (or applicable provincial tax legislation) in respect thereof. New LP GP is making no representation or warranty in respect of any such Joint Tax Election. Accordingly, Sungate Unitholders wishing to make a Joint Tax Election should consult their own tax advisors without delay.

Holding and Disposing of New LP Units Received Pursuant to the Transaction

Taxation of New LP

Under the Tax Act, New LP generally will not itself be subject to income tax. Instead, each partner (including New Fund and the Holders that receive New LP Units pursuant to the Transaction) of New LP will be required to include (or entitled to deduct), in computing income for a particular taxation year, the partner’s share of the income (or loss) of New LP (subject to the application of the “at risk rules” described below) for each fiscal period of New LP ending in, or coincidentally with, such taxation year. For this purpose, the income or loss of New LP will be calculated for each fiscal period as if New LP were a separate person resident in Canada and will be allocated to the partners of New LP on the basis of their respective shares of that income or loss as provided for in the New LP LPA. New LP’s fiscal period end will be December 31 of each year.

The income of New LP will include New LP’s allocated share of the income or loss from the Subsidiary LPs (subject to the “at-risk rules” described below) and thereby, indirectly, New LP’s share of income from the Properties, calculated in accordance with the rules in the Tax Act. In computing its income, New LP may generally deduct reasonable administrative costs and other reasonable expenses incurred by it for the purpose of earning income, as well as a portion of any reasonable expenses incurred by New LP to issue units, subject to the relevant provisions of the Tax Act.

In general, a partner’s share of income or loss of New LP from a particular place or a particular source (such as taxable capital gains or Foreign Source Income) will be treated as if it were income or loss of the partner from the same source or place, and the provisions of the Tax Act applicable to that type of income or loss will apply to the partner with respect thereto. U.S. or other foreign taxes paid by New LP, or withheld at source from payments made to New LP (including New LP’s allocable share of foreign taxes of the Property LPs), will be attributed among the partners of New LP in accordance with the New LP LPA.


At-risk Rules

The Tax Act contains rules (the “at-risk rules”) which, in general, limit the amount of the losses (other than capital losses) for a fiscal period of a limited partnership (such as New LP or the Property LPs) that a partner of the partnership may deduct to an amount not greater than such partner’s “at-risk amount” in respect of the partnership at the end of the fiscal period. A partner’s at-risk amount in respect of a partnership will generally be equal to the adjusted cost base to such partner of the partner’s interest in the partnership at the end of partnership’s fiscal period plus such partner’s share of any income of the partnership for the fiscal period (including, for this purpose, the whole amount of any net capital gains), less any amount owing by such partner (or by a person or partnership that does not deal at arm’s length with such partner for purposes of the Tax Act) to the partnership (or to a person or partnership not dealing at arm’s length with the partnership for purposes of the Tax Act), and less the amount of such partner’s investment in the partnership that may reasonably be regarded as protected against loss. In the case of a partner that is not itself a partnership, such partner’s share of any loss of the partnership that is not deductible as a result of the application of the at-risk rules is considered to be a “limited partnership loss” in respect of the partnership for that year which may generally be carried forward and deducted by the partner in a subsequent taxation year against income for that year to the extent that the partner’s at-risk amount at the end of the partnership’s last fiscal period ending in that year exceeds the partner’s share of any loss of the partnership for that fiscal period. Where a partner is itself a partnership, as is the case for New LP’s interest in the Subsidiary LPs, any loss that is not deductible as a result of the application of the at-risk rules in respect of the limited partnership generally may not be carried forward and deducted in future years.

Holding of New LP Units

A Holder that holds New LP Units following the Transaction will be required to include in computing income for each taxation year the Holder’s share of the income or loss (subject to the “at-risk rules” described under “Taxation of New LP”) of New LP for the fiscal periods of New LP that end in, or coincident with, that taxation year, regardless of whether the Holder has received distributions from New LP.

A Holder will generally not be subject to tax on any amounts received as distributions from New LP. Generally, distributions to a Holder in excess of a Holder’s allocated share of the income of New LP for a fiscal period will result in a reduction of the adjusted cost base to the Holder of the Holder’s New LP Units by the amount of such excess. If, as a result, the adjusted cost base to the Holder of the Holder’s New LP Units at the end of a fiscal period of New LP would otherwise be a negative amount, the Holder would be deemed to realize a capital gain in such amount for its taxation year in which such fiscal period ends and the adjusted cost base of the New LP Units to the Holder would be reset to nil.

U.S. or other foreign taxes payable by (or attributed by a Subsidiary LP to) New LP will be attributed to the partners of New LP in accordance with the New LP LPA. To the extent that such foreign taxes are attributable to a Holder, the Holder may be entitled to claim a foreign tax credit or foreign tax deduction in respect of such foreign taxes, subject to the detailed rules in respect of foreign tax credits and deductions in the Tax Act. See “– Foreign Tax Credits”.

Each Holder that holds New LP Units must file his, her or its own tax return reporting such Holder’s share of New LP’s income or loss. While New LP will generally provide each Holder that holds New LP Units with information required for income tax purposes pertaining to such Holder’s investment in New LP, New LP will not prepare or file income tax returns on behalf of any Holder. The general partner of New LP will file an annual information return on behalf of New LP containing required information. Holders should consult their own advisors regarding required reporting in respect of New LP.

Dispositions of New LP Units

A disposition or deemed disposition of New LP Units by a Holder (including upon the exchange of New LP Units for New Fund Units), will give rise to a capital gain (or capital loss) equal to the amount by which the Holder’s proceeds of disposition of the New LP Units exceed (or are exceeded by) the aggregate of the adjusted cost base of the New LP Units to the Holder and any reasonable costs of disposition. The taxation of capital gains and capital losses is discussed below under “Taxation of Capital Gains and Losses”. Where a Holder exchanges New LP Units for New Fund Units, pursuant to the terms of the New LP Units, both the proceeds of disposition to the Holder of the New LP Units and the cost to the Holder of New Fund Units so received will generally be equal to the fair market value of such New


Fund Units. The consequences of holding and disposing of any such New Fund Units received upon the exchange of New LP Units will generally be as described above under “Tax Consequences of the Transaction for the Trusts and Holders of Trust Units – Taxation of Trust – Holding and Disposing of New Fund Units Received Pursuant to the Transaction”.

At any particular time, the adjusted cost base to a Holder of his, her, or its New LP Units will generally be the cost to such Holder of the New LP Units, plus the Holder’s share of the income of New LP (including, for this purpose, the whole amount of any capital gains) for fiscal periods ended before that time, minus any amounts distributed to the Holder before that time, and minus the Holder’s share of losses of New LP (including, for this purpose, the whole amount of any capital losses) for fiscal periods ended before that time (other than losses that are not deductible by the Holder by reason of the “at-risk rules” described above).

Where a Holder disposes of all of the Holder’s New LP Units and the Holder is entitled to receive a distribution or other amount from New LP after the time of such disposition, then the Holder will be deemed to have disposed of his or her New LP Units at the time that is the later of (i) the end of the fiscal period of New LP in which the disposition occurred, and (ii) the time at which the Holder’s rights to receive amounts from New LP are satisfied in full. The share of income (or loss) of New LP for tax purposes for a particular fiscal period which is allocated to a Holder who has ceased to be a partner of New LP will generally be added (or deducted) in the computing the adjusted cost base of New LP Units to the Holder immediately prior to the time of disposition. These rules are complex and Holders should consult their own tax advisors for advice with respect to the specific tax consequences to them of disposing of New LP Units, including by way of an exchange for New Fund Units.

Taxation of Capital Gains and Losses

One-half of any capital gain realized by a Holder on the disposition of a Unit, New Fund Unit or a New LP Unit, and the amount of any net taxable capital gains designated by a Trust or New Fund in respect of a Holder or allocated by Sungate or New LP to a Holder, will be required to be included by the Holder in computing income as a taxable capital gain under the Tax Act and, subject to the detailed rules in the Tax Act, one-half of any capital loss sustained on a disposition of a Unit, New Fund Unit or New LP Unit, and any allowable capital losses allocated by Sungate or New LP to the Holder, must generally be deducted only from taxable capital gains of the Holder in the year of disposition, and any excess of allowable capital losses over taxable capital gains may be carried back to the three preceding taxation years or caried forward to any subsequent taxation year, to the extent and under the circumstances described in the Tax Act.

In certain cases, the portion of the capital gains realized by a Holder upon a disposition of New LP Units that is included in income as a taxable capital gain may be increased from one-half of the capital gain to a larger amount (up to the full amount of the capital gain) if, as part of the series of transactions or events that includes the disposition, interests in New LP are acquired by certain persons or entities, including a tax-exempt person, a person that is a non-resident of Canada (subject to certain exceptions), or certain partnerships or trusts. Holders contemplating a disposition of New LP Units (other than on an exchange of New LP Units pursuant to their terms for New Fund Units) should consult with their own tax advisors in this regard.

Foreign Tax Credits

As described above, U.S. or other foreign taxes payable by (or attributed by a Subsidiary LP to) New LP will be attributed to the partners of New LP, including the New LP Unitholders, in accordance with the New LP LPA. Furthermore, provided that appropriate designations are made by New Fund, such portion of the Foreign Source Income of New Fund, including New Fund’s share of the Foreign Source Income of New LP, as is paid or payable to a New Fund Unitholder will effectively retain its character and be treated as such in the hands of the New Fund Unitholder; and the corresponding portion of the foreign “business income tax” and “non-business income tax” (each as defined in the Tax Act) considered to have been paid by New Fund in respect of such Foreign Source Income will be deemed to have been paid by such New Fund Unitholder for the purposes of the foreign tax credit provisions of the Tax Act.

The “business income taxes” of New Fund or a Holder that holds New LP Units (a “New LP Holder”) will generally include United States income taxes imposed on New Fund’s or New LP Holder’s, as applicable, share of New LP’s


income from businesses carried on in the United States (including business income allocated to New LP by the Subsidiary LPs). The “non-business incomes taxes” of New Fund or a New LP Holder will generally include other United States income taxes imposed on New Fund’s or the New LP Holder’s, as applicable, share of New LP’s income, including United States income taxes imposed on income from property, to the extent that they have not been deducted in computing the income of New Fund or the New LP Holder, as applicable, and, in the case of income from property other than real or immovable property that is attributable to New Fund or a New LP Holder that is an individual, do not exceed 15% of the corresponding income. Foreign “non-business income taxes” considered to be paid by New Fund, or a New LP Holder may also generally be deducted by New Fund or the New LP Holder, as applicable, in computing its income for the purposes of the Tax Act.

Whether an item of income of New LP, including income earned through the Subsidiary LPs, will be considered income from a business or income from property will depend on the circumstances of the particular income including the nature and amount of services, if any, provided in connection with earning such income. Counsel has been advised that New Fund and New LP generally intend to take the position that the income of New LP will constitute income from property.

The U.S. tax paid for a taxation year that is “business income tax” or “non-business income tax”, as defined in the Tax Act, and that is regarded as paid by a particular Holder as described above will, subject to the detailed rules in the Tax Act regarding foreign tax credits, generally be creditable against the Holder’s Canadian federal income liability to the extent permitted by the detailed rules contained in the Tax Act.

A Holder’s ability to apply U.S. taxes in the foregoing manner may be affected where the Holder does not have sufficient taxes otherwise payable under Part I of the Tax Act or sufficient U.S. source income in the taxation year the U.S. taxes are paid; where the Holder has other U.S. source income or losses or has paid other U.S. taxes; or in certain circumstances has not filed a U.S. federal income tax return where required for the relevant taxation year. Although the foreign tax credit provisions are designed to avoid double taxation, the maximum credit is limited in some circumstances as described above. Because of this, and because of timing differences in recognition of expenses and income and other factors, there is a risk of double taxation. Prospective purchasers should consult their own tax advisors regarding their ability to claim foreign tax credits or foreign tax deductions.

The foreign tax credit provisions in the Tax Act include anti-avoidance rules intended to address certain transactions specifically designed to generate foreign tax credits (the “FTC Generator Rules”). Under the FTC Generator Rules, the foreign “business income tax” or “non-business income tax” eligible for a foreign tax credit for a Holder for any taxation year may be limited in certain circumstances, including where New Fund’s share of the income of New LP under the income tax laws of a country other than Canada (e.g. the U.S.) under whose laws the income of the such partnership is subject to income taxation, is less than New Fund’s share of such income for purposes of the Tax Act. Although the FTC Generator Rules are not expected to apply to New Fund, New LP or Holders, no assurance can be given in this regard.

Reference should be made below to “Certain U.S. Federal Income Tax Consequences” for further information on the taxation of New Fund, New LP, Subsidiary LPs, Unitholders, New Fund Unitholders and New LP Unitholders for U.S. federal income tax purposes, as such taxation directly affects Holders’ entitlement to the foreign tax credits and deductions outlined above.

Alternative Minimum Tax

Capital gains realized by a Holder that is an individual or trust, other than certain specified trusts, may give rise to a liability for alternative minimum tax under the Tax Act.

Refundable Tax

A Holder that is, throughout its taxation year, a “Canadian-controlled private corporation” (as defined in the Tax Act) may be subject to pay a refundable tax on its “aggregate investment income” (as defined in the Tax Act), including amounts in respect of taxable capital gains and interest.


International Information Exchange

The Tax Act includes provisions which implement the Organization for Economic Co-operation and Development Common Reporting Standard and the Canada-United States Enhanced Tax Information Exchange Agreement (the “International Information Exchange Legislation”). Pursuant to the International Information Exchange Legislation, certain “Canadian financial institutions” (as defined in the International Information Exchange Legislation) are required to have procedures in place to identify accounts held by residents of foreign countries or by certain entities the “controlling persons” of which are resident in a foreign country (or, in the case of the U.S., of which the holder or any such controlling person is a citizen) and to report required information to the CRA. Such information would be exchanged on a reciprocal, bilateral basis with the countries in which the account holder or any such controlling person is resident (or of which such holder or person is a citizen, where applicable), where such countries (including the U.S.) have agreed to a bilateral information exchange with Canada to which the International Information Exchange Legislation applies. Under the International Information Exchange Legislation, Holders may be required to provide certain information regarding their tax status for the purpose of such information exchange, unless the investment is held in a trust governed by a Plan.

CERTAIN U.S. FEDERAL INCOME TAX CONSEQUENCES

General

The following is a discussion of the principal U.S. federal income tax considerations applicable to non-U.S. Unitholders with respect to the Transaction, the ownership of New Fund Units and the ownership of New LP Units. This discussion does not purport to be a comprehensive description of all of the U.S. federal income tax considerations that may be relevant to the Transaction, and the ownership of New Fund Units, or the ownership of New LP Units. Unitholders should consult with their own U.S. tax advisors concerning their respective situations and the impact which the Transaction and their ownership of New Fund Units, and/or their ownership of New LP Units may have on their U.S. federal income tax liability and their U.S. state or local tax liability, if any. The United States – Canada Income Tax Convention, signed September 26, 1980, as amended, is herein referred to as the “Treaty.”

This discussion does not address all aspects of U.S. federal income taxation nor does it address any aspects of U.S. state or local taxation. This discussion also does not consider any specific facts or circumstances that may apply to a non-U.S. Unitholder and does not address the special U.S. tax rules applicable to particular non-U.S. Unitholders, such as insurance companies, tax-exempt organizations, banks or other financial institutions, brokers or dealers in securities, regulated investment companies, pension plans, controlled foreign corporations, passive foreign investment companies, and certain U.S. expatriates. Each Unitholder acknowledges that such Unitholder is not a U.S. Person (as defined below).

The following discussion is based on the current provisions of the United States Internal Revenue Code of 1986, as amended (the “Code”), administrative rulings, judicial decisions, and final, temporary, and proposed U.S. Treasury Regulations, all in effect on the date hereof and all of which are subject to change and differing interpretation. Changes to any of the foregoing subsequent to the date of this Circular may affect the tax consequences described herein, possibly with retroactive effect. In addition, the Internal Revenue Service could challenge one or more of the tax consequences described in this Circular. Unitholders are urged to consult with their own tax advisors regarding the application of the U.S. federal tax laws to their particular situations as well as any tax consequences arising under the laws of any U.S. state, local, or foreign taxing jurisdiction.

This discussion applies only to Unitholders that are not U.S. Persons. As used in this offering memorandum, the term “U.S. Person” means:

An individual who is a citizen or resident of the U.S., including the District of Columbia, as determined for U.S. federal tax purposes, or an individual who is a non-resident alien of the U.S. but who has elected to be treated as a U.S. resident for purposes of filing a joint federal income tax return, but only while such election is in effect;


A domestic partnership created or organized in the U.S. or under the laws of the U.S. or any state or political subdivision of the U.S., including the District of Columbia;

A domestic corporation created or organized in the U.S. or under the laws of the U.S. or any state or political subdivision of the U.S., including the District of Columbia;

An estate, the income of which is subject to U.S. federal income taxation regardless of its source, including income effectively connected with a U.S. trade or business; or

A trust if (i) a court within the U.S. can exercise primary supervision over its administration and one or more U.S. Persons have the authority to control all its substantial decisions, or (ii) the trust has a valid election in effect under applicable Treasury Regulations to be treated as a U.S. Person.

An individual may be treated as a resident instead of a non-resident of the U.S. in any calendar year for U.S. federal income tax purposes if the individual was present in the U.S. for at least thirty-one (31) days in that calendar year and for an aggregate of at least one hundred eighty-three (183) days during the three-year period ending with the current calendar year. For purposes of this calculation, all of the days present in the current year, one-third of the days present in the immediately preceding year, and one-sixth of the days present in the second preceding year are counted. Residents are taxed for U.S. federal income tax purposes as if they were U.S. citizens.

Additionally, this discussion is based upon the following assumptions: (i) the Funds, Sungate, and New Fund are not U.S. Persons (as defined above), (ii) the Canadian LPs and New LP are or will be Canadian partnerships, (iii) each of the Canadian LPs and New LP has made or will make a timely and valid election to be treated as a corporation for U.S. federal income tax purposes effective as of the date of its formation, (iv) each of the US LPs is a partnership for U.S. federal income tax purposes, and (v) each Property LP in which the US LPs own a limited partnership/economic interest is taxable as a partnership for U.S. federal income tax purposes.

U.S. Federal Income Tax Considerations with Respect to the Transaction

Formation of New Fund and New LP; Contribution of Canadian LPs to New Fund and to New LP

To effectuate the Transaction, after the formation of New Fund, New Fund will subscribe for one Unit in each Fund (the “Surviving Unit”) in consideration for cash (the “Retained Cash”) equal to the fair market value of the Surviving Unit. Thereafter, each Fund will contribute all of its assets, including their respective limited partner interests in the Canadian LPs, but exclusive of the Retained Cash, to New Fund in order to consolidate the ownership of the Property LPs, and New Fund will form New LP. In the case of each Fund other than Sungate, all of the assets of each Fund (other than Retained Cash) will be contributed to New Fund in exchange for New Fund Units. Each Fund will then distribute all of the New Fund Units that each Fund receives to the Unitholders in consideration for the complete redemption of all of the Units in each of the Funds (other than the Surviving Unit held by New Fund). Immediately following such redemption, New Fund will contribute all of the limited partner interests in the Canadian LPs to New LP in exchange for New LP Units.

In the case of Sungate, concurrently with the contribution of all of the limited partner interests in the Canadian LPs to New LP, the Sungate Unitholders may elect to either (i) transfer their Sungate Units to New LP in exchange for New LP Units or (ii) receive New Fund Units from Sungate in redemption of their Sungate Units (such New Fund Units to be contributed by New Fund to Sungate in consideration for new Sungate Units). All of New LP Units issued to the Sungate Unitholders will, by their terms, be economically equivalent to and exchangeable for New Fund Units.

The formation of New Fund, the formation of New LP by New Fund, the contribution of the assets of the Funds, including the limited partner interests in the Canadian LPs, but exclusive of the Retained Cash, to New Fund in exchange for New Fund Units, and the distribution of the New Fund Units to the Unitholders in complete redemption of all of the Units in the Funds (other than the Surviving Unit) are non-recognition events for U.S. federal income tax purposes, such that no gain or loss will be recognized by the Funds, New Fund, or the Unitholders as a result of the formation of New Fund and New LP, the ensuing contributions, and the distribution of New Fund Units to the Unitholders.


The Sungate Unitholders who elect to have their Sungate Units redeemed in consideration for New Fund Units from Sungate will not recognize gain or loss that is treated as effectively connected with a United States trade or business under Code Section 897 and, therefore, will not be taxable in the United States on any gain recognized on the redemption of their Sungate Units.

Similarly, the contribution of (a) all of the limited partner interests in the Canadian LPs to New LP by New Fund in exchange for New LP Units; and (b) the transfer of the Sungate Units to New LP by the Sungate Unitholders in exchange for exchangeable units in New LP should qualify as non-recognition events under Code Section 351(a). Code Section 351(a) provides that no gain or loss is recognized for U.S. federal income tax purposes if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and, immediately after the exchange, such person or persons are in control, as defined in Code Section 368(c), of the corporation. “Control” for this purpose is defined by Code Section 368(c) as the ownership of stock possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and at least eighty percent (80%) of the total number of shares of all other classes of stock of the corporation. As (i) the transfer of all of the limited partner interests in the Canadian LPs and all of the Sungate Units to New LP (following the redemption of any Sungate Unitholders who elect to have their Sungate Units redeemed) constitute transfers of property under Code Section 351(a); and (ii) New Fund and the Sungate Unitholders will own all of the New LP Units immediately following the contributions, the contribution of all of the limited partner interests in the Canadian LPs and all of the Sungate Units to New LP by New Fund and the Sungate Unitholders in exchange for New LP Units should not trigger the recognition of gain or loss for U.S. federal income tax purposes.

However, the contribution of one hundred percent (100%) of the limited partner interests in the Canadian LPs to New Fund could limit the ability of the Canadian LPs to utilize their current net operating loss carryovers. In cases in which there is a “change of ownership” with respect to a corporation with a net operating loss, Code Section 382 restricts the amount of taxable income that can be offset by the net operating loss carryovers in taxable years (or partial taxable years) after the change of ownership. The Code Section 382 limitation is defined by Code Section 382(b)(1) as an amount equal to the value of the old loss corporation, multiplied by the “long-term tax-exempt rate,” as defined in Code Section 382(f). If the amount of the limitation exceeds taxable income for any year, such excess limitation is carried forward and added to the limitation in the succeeding taxable year under Code Section 382(b)(2). The annual Code Section 382 limitation is intended to approximate the amount of income that the loss corporation could have produced as a return on equity, absent the change ownership, had it invested its capital in tax-exempt securities.

An “ownership change” within the meaning of Section 382 consists generally of any “change of ownership” of the loss corporation’s stock aggregating more than 50 percentage points (by value) over a three (3) year period, whether occurring as a result of taxable (or nontaxable) stock acquisitions, new issues, conversions, redemptions, recapitalizations, reorganizations, or any combination thereof. Two basic types of ownership changes are prescribed by Code Section 382(g). The first is an “owner shift” involving a “5-percent shareholder,” and the second is an “equity structure shift.” In either case, if immediately after the shift, the proportionate interest of one or more five percent (5%) shareholders in the loss corporation is at least fifty percent (50%) higher than it was at some time during the preceding three (3) years, the Code Section 382 limitation rules apply. Code Section 382 measures the shareholders’ ownership percentages based on value and not just the number of shares. Constructive ownership, including family attribution rules, are also used in determining five percent (5%) percent shareholder status. Shareholders who own less than five percent (5%) of the loss corporation’s stock are aggregated and treated as one five percent (5%) shareholder.

The formation of New Fund and the contribution of one hundred percent (100%) of the limited partner interests in the Canadian LPs by the existing Funds to New Fund will likely result in a “change of ownership” for purposes of Code Section 382. In such event, Section 382 will likely impose limitations on the ability of the Canadian LPs to utilize their net operating loss carryovers.


U.S. Federal Income Tax Considerations Associated with Ownership of New Fund Units and Exchangeable Units of the New LP

U.S. Income Tax Return Filing Obligations

Based on the assumptions set forth under the section entitled “Federal Income Tax Considerations – General,” New Fund Unitholders and Sungate Unitholders who are not U.S. Persons not otherwise required to file U.S. federal income tax returns should not be subject to tax in the U.S. nor should they be required to file such returns solely by virtue of the Transaction or the acquisition, holding, or disposition of New Fund Units or exchangeable units of New LP. Assuming New LP treats its tax items of income, gain, loss, deduction, and credit as effectively connected with a U.S. trade or business, New LP will be required to file tax returns (e.g., IRS Form 1120F) in the U.S.

U.S. Taxes Imposed on New LP

Assuming New LP treats its tax items of income, gain, loss, deduction, and credit as effectively connected with a U.S. trade or business, New LP will be subject to taxes in the U.S. on the same basis as the Canadian LPs are currently subject to taxes in the U.S. These taxes are expected to include (i) U.S. federal income taxes, at a corporate rate of twenty-one percent (21%), (ii) U.S. branch profits taxes, which may be as high as thirty percent (30%), but which may be reduced to approximately five percent (5%) if the Treaty applies, and (iii) state and local income taxes, in the states in which the Property LPs are located or from which the Property LPs generate income.

U.S. Withholding Taxes Under the Foreign Investment in Real Property Tax Act

Under the U.S. Foreign Investment in Real Property Tax Act of 1980 (the “FIRPTA”), the disposition of an interest in U.S. real property by a foreign person generally is subject to U.S. federal income tax under Code Section 897. The collection of U.S. federal income tax on such dispositions is ensured through the imposition of U.S. withholding tax on the purchaser of the U.S. real property interest. Under Code Section 1445(a), the purchaser of a U.S. real property interest from a foreign seller generally is required to withhold and pay over to the Internal Revenue Service fifteen percent (15%) of the gross purchase price.

In addition, Code Section 1445(e)(1) generally requires a U.S. partnership to deduct and withhold tax equal to the highest corporate tax rate under Code Section 11(b) (currently 21%) multiplied by the gain realized on the disposition of a U.S. real property interest or, to the extent provided in the Treasury Regulations, twenty percent (20%) of the gain realized on the disposition of the U.S. real property interest, to the extent the gain is allocable to a partner who is a non-U.S. Person. The distributive share of each partner of the gain realized on the disposition of a U.S. real property interest is determined under Code Section 704 principles and the Treasury Regulations promulgated thereunder. If an entity is required to withhold tax under Code Section 1445(e)(1), the transferee is not required to withhold under Code Section 1445(a). Likewise, a transfer of a U.S. real property interest described in Code Section 1445(e) that is exempt from withholding under Code Section 1445(e) is also exempt from withholding under Code Section 1445(a). Accordingly, in the event that a US LP disposes of an interest in a Property LP, the US LP will be required to withhold and pay over withholding tax on any portion of the gain realized on the disposition that is allocable to New LP, unless an exception or exemption applies.

If withholding taxes are paid under Code Section 1445, the taxes withheld may be credited against any U.S. taxes ultimately determined to be due under Code Section 897 as a result of the disposition of a U.S. real property interest.

U.S. Withholding Taxes on the US LPs

Under Code Section 1446, if the US LPs have taxable income that is effectively connected, or treated as effectively connected, with the conduct of a U.S. trade or business and any portion of that income is allocable to New LP, as a foreign partner, or to other foreign partners, the US LPs will be required to pay U.S. withholding tax at the highest applicable rate of tax with respect to that allocable income. In the event that withholding taxes are paid by the US LPs under Code Section 1446, New LP may be entitled to a credit under Code Section 33 for its share of the withholding taxes paid by the US LPs.


U.S. Income and Withholding Taxes on Gain from Disposition of a Partnership Interest in the US LPs

Under Code Section 897(g) and the Treasury Regulations promulgated thereunder, if fifty percent (50%) or more of the gross assets of a US LP consist of U.S. real property interests and ninety percent (90%) or more of the gross assets of the US LP consist of U.S. real property interests and cash or cash equivalents, then the limited partnership interest in such US LP will be treated as a U.S. real property interest. If an interest in a US LP is treated as a U.S. real property interest, the gain on the disposition of that interest will be subject to tax under Code Section 879(g) to the extent that the gain on the disposition is attributable to the U.S. real property interests of the US LP (and not the cash, cash equivalents, or other property of the US LP). The gain attributable to the U.S. real property interests of the US LP will be subject to withholding under Code Section 1445(a) as described under “Certain U.S. Federal Income Tax Consequences – U.S. Federal Income Tax Considerations Associated with Ownership of New Fund Units – U.S. Withholding Taxes Under the Foreign Investment in Real Property Tax Act” above.

In addition to the foregoing, in 2017, the U.S. Congress enacted Code Section 864(c)(8), which treats gain or loss on a sale or exchange of a partnership interest by a foreign partner as income effectively connected with a U.S. trade or business to the extent of the foreign partner’s distributive share of effectively connected gain or loss that the partnership would recognize on a sale of all partnership assets. If such a partnership holds a U.S. real property interest at the time of the sale or distribution, then the gain or loss treated as effectively connected income under Code Section 864(c)(8) is reduced by the gain treated as effectively connected income under Code Section 897(g) as described above. A partner also recognizes gain on receiving a distribution of money or marketable securities to the extent the money and the fair market value of the securities exceeds the adjusted basis of the partner’s partnership interest immediately before the distribution, and Code Section 864(c)(8) applies to this gain. Simultaneously with the enactment of Code Section 864(c)(8), the U.S. Congress amended Code Section 1446 to require the buyer or other transferee of a foreign partner’s partnership interest, in certain cases, to withhold tax equal to ten percent (10%) of the amount realized by the transferor foreign partner on the sale or exchange. The withholding requirement generally applies if the foreign transferor partner recognizes gain, any portion of which is treated as effectively connected with the conduct of a U.S. trade or business. If the transferee fails to withhold, the partnership must do so. As a result, unless an exemption or exception applies, in the event of the sale or exchange of an interest in a US LP, unless the purchaser or transferee of the interest satisfies the Code Section 1446 withholding requirement, the US LP will be required to pay U.S. withholding taxes at a rate of ten percent (10%) on the gain which is treated as effectively connected with the conduct of a U.S. trade or business (reduced by any gain treated as effectively connected income under Code Section 897(g) and subject to withholding under Code Section 1445(a)).

If withholding taxes are paid under Code Section 1446, the taxes withheld may be credited against any U.S. taxes ultimately determined to be due under Code Section 864(c)(8).

U.S. Income Tax on Gain from the Disposition of New Fund Units

Non-U.S. Unitholders generally will not be subject to U.S. federal income tax on any gain recognized as a result of a disposition of New Fund Units or the New LP Units unless:

The gain is effectively connected with the non-U.S. Unitholder’s conduct of a trade or business in the U.S. (and the gain is attributable to a permanent establishment or a fixed base maintained by the non-U.S. Unitholder in the United States if required by an applicable treaty); in these cases, the non-U.S. Unitholder will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. Persons, and, if the non-U.S. Unitholder is a foreign corporation, an additional branch profits tax at a rate of thirty percent (30%), or a lower rate as may be specified by an applicable income tax treaty, may also apply; or

The non-U.S. Unitholder is an individual present in the U.S. for 183 days or more in the taxable year of the disposition and some other requirements are met.

U.S. Net Investment Income Surtax

For U.S. federal income tax purposes, U.S. Persons that are individuals, estates, or trusts and whose modified adjusted gross income exceeds certain thresholds generally will be subject to a three and eight tenths percent (3.8%) “net


investment income surtax” on unearned income, which would include dividends on, and gains from the sale or other taxable disposition of, New Fund Units in New Fund or exchangeable units of New LP. The net investment income surtax, if applicable, applies in addition to any other taxes imposed on a U.S. Person’s net investment income. The net investment income surtax does not apply to “foreign estates” (as defined in Code Section 7701(a)(31)(A)) or to “foreign trusts” (as defined in Code Section 7701(a)(31)(B) and U.S. Treasury Regulation Section 301.7701-7(a)(2)). However, the net investment income surtax does apply to distributions of net investment income received by beneficiaries of foreign estates and foreign trusts who are U.S. Persons. Non-U.S. Unitholders that are foreign estates or foreign trusts with beneficiaries that are U.S. Persons are urged to consult their own tax advisors regarding the impact of the net investment income surtax.

The Foreign Account Tax Compliance Act (“FATCA”)

New LP (and possibly New Fund), each referred to below as a “foreign payee”, may be required to provide extensive information to the Internal Revenue Service regarding all U.S. Persons who have accounts in (or in some instances, who own debt or equity in) such foreign payee, and in certain instances enter into an agreement with the Internal Revenue Service. The failure of New LP (and possibly of New Fund) to comply with these information reporting rules, if applicable, will result in a withholding tax on U.S. source payments made to New LP from the US LPs. Specifically, a foreign payee that does not comply with the FATCA requirements will generally be subject to a thirty percent (30%) withholding tax with respect to “withholdable payments” (as defined below). Unitholders are urged to consult with their own tax advisors regarding the effect, if any, of the FATCA provisions to them based on their particular circumstances.

No rulings have been requested from the Internal Revenue Service or any state taxing authorities and no opinions from counsel have been obtained with respect to this Circular. No assurances can be given that the Internal Revenue Service or any state taxing authority will agree with the U.S. federal tax consequences and other tax consequences discussed above.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

Each Fund is authorized to issue an unlimited number of Units. For each Fund, the number of Units in each class issued and outstanding as of November 3, 2020 is set out in Schedule “J” to this Circular.

To the knowledge of the trustees and officers of the Trusts and the directors and officers of the Sungate GP, with respect to each of the Funds, no person or company beneficially own, or controls or directs, directly or indirectly, Units carrying more than 10% or more of the votes attached to the outstanding Units except, with respect to Sungate, as stated below.

Each Trust Unitholder has one vote for each such Trust Unit held at the close of business on the Record Date at the applicable Meeting. All classes of Trust Units will vote together as a single class at the applicable Meeting.

INTERESTS OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

Other than as disclosed in this Circular, none of the trustees or senior officers, if any, of the Trusts or the directors or senior officers, if any, of the Sungate GP, none of the persons who have been trustees or senior officers of the Trusts or directors or senior officers of the Sungate GP since the commencement of the applicable Funds’ last completed financial year and no associate or affiliate of any of the foregoing persons has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meetings or in writing pursuant to the Sungate Resolution.

AUDITORS

The independent auditor of each of the Funds is RSM Alberta LLP at its office located at 2500 Bell Tower, 10104 103 Avenue, Edmonton, Alberta, T5J 0H8 Canada.


OTHER MATTERS

Other than the above, the Manager knows of no amendment, variation or other matters to come before the Meetings other than the matters referred to in the Notice of Meetings. However, if any other matters properly come before the Meetings, the accompanying form of proxy confers discretionary authority upon the persons named therein to vote on such matters in accordance with their best judgment.


GLOSSARY OF TERMS

In this Circular, the following capitalized terms shall have the following meanings, in addition to other terms defined elsewhere in this Circular.

“ABCA” means the Business Corporations Act (Alberta);

“Acquisition Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Acquisition Fee”;

“Additional Properties” means any multi-family rental property acquired or invested in, directly or indirectly, by a Property LP (including land, rights or interest in land leaseholds, air rights, rights in condominiums and mortgages) and any buildings, structures, improvements and fixtures located thereon;

“Asset Management Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Asset Management Fee”;

“at-risk rules” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for Sungate and the Sungate Unitholders – Taxation of Holders of Sungate Units – Holding and Disposing of New LP Units Received Pursuant to the Transaction – At-risk Rules”;

“Bridge Financing” has the meaning given to it in Schedule “L” to this Circular under “Fund Structure – Name and Formation – Property LPs”;

“Bridge Financing Investor” has the meaning given to it in Schedule “L” to this Circular under “Fund Structure – Name and Formation – Property LPs”;

“Business Day” means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in Calgary, Alberta;

“C&W” means Cushman & Wakefield plc;

“Canadian LP 1” means Clear Sky Capital Real Estate Solutions XV Limited Partnership;

“Canadian LP 2” means Clear Sky Capital Real Estate Solutions XVI, Limited Partnership;

“Canadian LP 3” means Clear Sky Capital Real Estate Solutions XIX Limited Partnership;

“Canadian LP 4” means Clear Sky Capital Real Estate Solutions XXII Limited Partnership;

“Canadian LP 5” means Clear Sky Capital Real Estate Solutions 31 Limited Partnership;

“Canadian LPs” means, collectively, Canadian LP 1, Canadian LP 2, Canadian LP 3, Canadian LP 4 and Canadian LP 5;

“Capital Gains Refund” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for the Trusts and Holders of Trust Units – Taxation of Holders of Trust Units – Holding and Disposing of New Fund Units Received Pursuant to the Transaction – Taxation of New Fund”;

“Capitalization Rates” means the ratio of a property’s Net Operating Income to such property’s purchase price;

“Casas De Soledad” means Casas De Soledad Apartments;

“Casas De Soledad Loan” has the meaning given to it in Schedule “K” to this Circular under “Description of the Existing Properties – Fund 3 – Casas De Soledad Apartments – Acquisition and Purchase Financing”;


“Circular” means this joint management information circular dated November 5, 2020;

“Class A LP Units” means the Class A, voting limited partnership units of New LP;

“Clear Sky” or “Manager” means Clear Sky Capital Inc., an Arizona corporation, which is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat;

“Clear Sky Capital BC” means Clear Sky Capital Inc., a British Columbia corporation, which is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat;

“Clear Sky GP 1” means Clear Sky Capital & Associates XV Inc.;

“Clear Sky GP 2” means Clear Sky Capital & Associates XVI Inc.;

“Clear Sky GP 3” means Clear Sky Capital & Associates XIX Inc.;

“Clear Sky GP 4” means Clear Sky Capital & Associates XXII Inc.;

“Clear Sky GP 5” means Clear Sky Capital & Associates XXXI Inc.;

“Clear Sky GPs” means, collectively, Clear Sky GP 1, Clear Sky GP 2, Clear Sky GP 3, Clear Sky GP 4 and Clear Sky GP 5;

“CMBS” means commercial mortgage backed security;

“Code” has the meaning given to it under “Certain U.S. Federal Income Tax Consequences – General”;

“Computershare” means Computershare Trust Company of Canada;

“Conflicted Director” has the meaning given to it under “The Transaction – Conflicts of Interest”;

“Conflicted Trustee” has the meaning given to it under “The Transaction – Conflicts of Interest”;

“Construction Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Construction Fee”;

“Court” means a court of competent jurisdiction to which an application in respect of an arrangement is made and includes, where an application respecting an arrangement is brought under the ABCA, the Court of Queen’s Bench of Alberta;

“CRA” means the Canada Revenue Agency;

“CRA Approval” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Change of Fiscal Periods”;

“Declarations of Trust” means, collectively, the Fund 1 Declaration of Trust, the Fund 2 Declaration of Trust, the Fund 3 Declaration of Trust, the Fund 4 Declaration of Trust and the Fund 5 Declaration of Trust, and “Declaration of Trust” means any one of them;

“Developed Properties” means real property acquired for the purpose of developing and constructing new multi-family residential buildings including, without limitation, unattached single family residential units developed under a community plan with the intent of marketing leasing and managing such residences in a manner similar to traditional multi-family residential developments;


“Development Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Development Fee”;

“Disposition Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Disposition Fee”;

“Dissent Application” has the meaning given to it under “The Transaction – Dissent Rights”;

“Dissent Rights” means the rights of registered Trust Unitholders to dissent from the Transaction and to be paid the fair value of their Trust Units in accordance with the applicable Declaration of Trust;

“Dissenting Trust Units” means the Trust Units in respect of which a Dissenting Unitholder has validly exercised Dissent Rights;

“Dissenting Unitholder” means a registered Trust Unitholder entitled to vote at a Meeting that validly exercises Dissent Rights in respect of Trust Units with respect to the Transaction as provided in the applicable Declaration of Trust, and has not withdrawn such exercise of Dissent Rights;

“DPSPs” has the meaning given to it under “Eligibility for Investment”;

“E&E” means Evans & Evans, Inc.;

“Effective Date” means the date of closing of the Transaction, expected to be as soon as practicable following the Meetings, subject to the discretion of the Trustee Boards and Sungate GP Board;

“Effective Exchange Rate” means an exchange rate of US$1.00 = C$1.3628, as reported by the Bank of Canada for conversion of United States dollars to Canadian dollars on June 30, 2020;

“Effective Time” means 12:01 a.m. on the Effective Date, or such other time as the Trustees may agree to in writing before the effective date;

“Elected Amount” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for Sungate and the Sungate Unitholders – Taxation of Sungate Unitholders – Transfer of Sungate Units to New LP by Electing Sungate Unitholders”;

“Electing Holder” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for Sungate and the Sungate Unitholders – Taxation of Sungate Unitholders – Transfer of Sungate Units to New LP by Electing Sungate Unitholders”;

“Electing Sungate Unitholders” means Sungate Unitholders that are Eligible Sungate Unitholders and that have validly elected in a duly completed Election Form to transfer their Sungate Units to New LP in exchange for New LP Units;

“Election Deadline” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for Sungate and the Sungate Unitholders – Taxation of Sungate Unitholders – Transfer of Sungate Units to New LP by Electing Sungate Unitholders”;

“Election Form” means an election form to be provided to Sungate Unitholders pursuant to which Sungate Unitholders that are Eligible Sungate Unitholders may elect to exchange their Sungate Units for New LP Units (and thereby be Electing Sungate Unitholders);

“Eligible Sungate Unitholder” means a Sungate Unitholder that (i) is a resident of Canada for the purposes of the Tax Act, (ii) is not exempt from tax under the Tax Act, and (iii) is neither a partnership nor a trust;

“Engagement Agreement” has the meaning given to it under “The Transaction – Fairness Opinion”;


“Equity Proceeds” means funds derived from the value of the Properties obtained through the refinancing, disposition or restructure of such Properties and not distributed to investors in the applicable Property LP;

“Exchange Agreement” means the exchange agreement to be entered into on the Effective Date among New Fund, New LP, New LP GP, and each Person who from time to time becomes or is deemed to become a party thereto by reason of his, her or its registered ownership of New LP Units, as the same may be amended or amended and restated;

“Exchange Ratio” has the meaning given to it under “The Transaction – Process of Determination of Exchange Ratios”;

“Existing Asset Management Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Asset Management Fee”;

“Existing Properties” means, collectively, Silverado, VHT, Casas de Soledad, Rancho Verde, Tesoro, North Park, and Sungate;

“Fairness Opinion” means the fairness opinion dated as of November 3, 2020, delivered by Evans & Evans, Inc. to each Trust Board and the Sungate GP Board;

“FATCA” has the meaning given to it under “Certain U.S. Federal Income Tax Consequences – U.S. Federal Income Tax Considerations Associated with Ownership of New Fund Units – The Foreign Account Tax Compliance Act”;

“Fees” means, collectively, the Asset Management Fee, the Acquisition Fee, the Disposition Fee, the Development Fee, the Construction Fee and the Guarantee Fee;

“FHLMC” means Federal Home Loan Mortgage Corporation;

“Foreign Source Income” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for the Trusts and Holders of Trust Units – Taxation of Holders of Trust Units – Holding and Disposing of New Fund Units Received Pursuant to the Transaction – Holding of New Fund Units”;

“Forward-Looking Statements” has the meaning given to it under “Forward-Looking Statements”;

“Fund 1” means Clear Sky Capital Strategic Asset Fund – Series I;

“Fund 1 Declaration of Trust” means the declaration of trust dated as of June 23, 2014 between the Fund 1 Trustees and the Fund 1 Unitholders, as beneficiaries;

“Fund 1 Meeting” means the special meeting of the Fund 1 Unitholders to be held on December 1, 2020, including any adjournment(s) or postponement(s) thereof, to consider and to vote upon the Fund 1 Resolution;

“Fund 1 OM” means the amended and restated confidential offering memorandum of Fund 1 dated January 16, 2015;

“Fund 1 Resolution” means the special resolution of the Fund 1 Unitholders authorizing and approving the Transaction;

“Fund 1 Trustees” means the trustees of Fund 1;

“Fund 1 Unitholders” means the holders of the Fund 1 Units;

“Fund 1 Units” means, collectively, the Class A units, Class B units and Special Voting units of Fund 1;

“Fund 2” means Clear Sky Capital Strategic Asset Fund – Series II;


“Fund 2 Declaration of Trust” means the declaration of trust dated as of January 2, 2015 between the Fund 2 Trustees and the Fund 2 Unitholders, as beneficiaries;


“Fund 2 OM” means the confidential offering memorandum of Fund 2 dated August 14, 2015;




“Fund 2 Units” means, collectively, the Class A units, Class B units and Special Voting units of Fund 2;

“Fund 3” means Clear Sky Capital Strategic Asset Fund – Series III;

“Fund 3 Declaration of Trust” means the amended and restated declaration of trust dated as of November 16, 2015 between the Fund 3 Trustees and the Fund 3 Unitholders, as beneficiaries;


“Fund 3 OM” means the amended and restated confidential offering memorandum of Fund 3 dated March 1, 2016;




“Fund 3 Units” means, collectively, the Class A units, Class B units, Class C US$ units and Special Voting units of Fund 3;

“Fund 4” means Clear Sky Capital Strategic Asset Fund – Series IV;

“Fund 4 Declaration of Trust” means the declaration of trust dated as of April 28, 2016 between the Fund 4 Trustees and the Fund 4 Unitholders, as beneficiaries;


“Fund 4 OM” means the confidential offering memorandum of Fund 4 dated June 20, 2016;





“Fund 4 Units” means, collectively, the Class A units, Class B US$ units, Class C units and Special Voting units of Fund 4;

“Fund 5” means Clear Sky Capital Strategic Asset Fund – Series 5;

“Fund 5 Declaration of Trust” means the declaration of trust dated as of February 23, 2018 between the Fund 5 Trustees and the Fund 5 Unitholders, as beneficiaries


“Fund 5 OM” means the confidential offering memorandum of Fund 5 dated April 25, 2018;




“Fund 5 Units” means, collectively, the Class A, Series A1 units, Class A, Series F1 units, Class A, Series A2 units, Class A, Series F2 units and Special Voting units of Fund 5;

“Fundable Costs” has the meaning given to it in Schedule “L” to this Circular under “Other Fees and Expenses – Cost Sharing and Support Agreement”;

“Fund Offering Documents” means, collectively, the Fund 1 OM, the Fund 2 OM, the Fund 3 OM, the Fund 4 OM, the Fund 5 OM and the Sungate Term Sheet;

“Funds” means, collectively, Fund 1, Fund 2, Fund 3, Fund 4, Fund 5 and Sungate;

“Guarantee Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Guarantee Fee”;

“HOA” means the Home Owners Association;

“Holder” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations”;

“IFRS” means International Financial Reporting Standards;

“Independent” means, together, the Independent Director and the Independent Trustee;

“Independent Director” means Kevin Kinnear, a director of the Sungate GP;

“Independent Trustee” means Kevin Kinnear, a trustee of each of Fund 1, Fund 2, Fund 3, Fund 4 and Fund 5;

“Intermediary” has the meaning given to it under “General Proxy Matters – Non-Registered Holders”;

“International Information Exchange Legislation” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – International Information Exchange”;

“Joint Tax Election” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for Sungate and Sungate Unitholders – Taxation of Sungate Unitholders – Transfer of Sungate Units to New LP by Electing Sungate Unitholders”;


“July 2019 Proposals” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for the Trusts and Holders of Trust Units – Taxation of Holders of Trust Units – Holding and Disposing of New Fund Units Received Pursuant to the Transaction – Taxation of New Fund”;

“Loans” means, collectively, the Casas De Soledad Loan, the North Park Loan, the Rancho Verde Loan, the Silverado Loan, the Tesoro Loan and the VHT Loan;

“Meetings” means, collectively, the Fund 1 Meeting, the Fund 2 Meeting, the Fund 3 Meeting, the Fund 4 Meeting and the Fund 5 Meeting, and “Meeting” means any one of them;

“Net Asset Value” means the net asset value of New Fund, computed pursuant to Section 4.1 of the New Fund Declaration of Trust;

“Net Capital Gains” means the capital gains of New Fund for the relevant taxation year less the capital losses of the Trust for such taxation year computed in accordance with the provisions of the Tax Act, taking into account the application of available non-capital loss carryforwards remaining after application in determining Net Income;

“Net Equity Value” means the estimated value of the applicable entity based on hypothetical liquidation of the entity’s and its subsidiaries’ assets at its appraised value (which is based on the aggregate appraised value in a hypothetical liquidation taking into account the C&W appraisals and other factors) of the properties owned by the applicable entity and after consideration of net working capital, and the payment of outstanding liabilities, selling costs, tax (including value of net operating losses to be transferred), and the payment of the applicable Sponsor Equity;

“Net Income” means the net income of New Fund for each taxation year of New Fund, computed pursuant to Section 6.1 of the New Fund Declaration of Trust;

“Net Operating Income” or “NOI” has the meaning given to it under “Non-IFRS Measures”;

“New Asset Management Fee” has the meaning given to it in Schedule “L” to this Circular under “Management Fees – Asset Management Fee”;

“New Fund” means Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta on the Effective Date pursuant to the New Fund Declaration of Trust;

“New Fund Class A Units” means the Class A units of New Fund;

“New Fund Class B Units” means the Class B units of New Fund;

“New Fund Declaration of Trust” has the meaning given to it under “The Transaction – New Fund Declaration of Trust”;

“New Fund Trustees” means Marcus Kurschat, Elroy Gust and Kevin Kinnear;

“New Fund Unitholders” means, together, the holders of New Fund Class A Units and the holders of New Fund Class B Units;

“New Fund Units” means, together, New Fund Class A Units and New Fund Class B Units;

“New LP” means CSC Merger LP, a limited partnership subsidiary of New Fund to be formed under the laws of British Columbia on the Effective Date pursuant to the New LP LPA;

“New LP GP” means CSC Merger GP Inc., a corporation to be formed under the laws of a jurisdiction of Canada on or prior to the Effective Date to serve as the general partner of New LP;


“New LP LPA” means a limited partnership agreement to be entered into among the New LP GP, as general partner, New Fund, as Class A LP Unit limited partner, and the Electing Sungate Unitholders, as New LP Unit limited partners, to be dated on or about the Effective Date;

“New LP Unitholder” means a holder of New LP Units;

“New LP Units” means the Class B, non-voting exchangeable limited partnership units of New LP;

“Non-Electing Sungate Unitholders” means Sungate Unitholders other than Electing Sungate Unitholders;

“Non-Registered Holders” has the meaning given to it under “General Proxy Matters – Non-Registered Holders”;

“Non-Resident” means a person that is not a resident of Canada for the purposes of the Tax Act, or a partnership that is not a “Canadian partnership” for the purposes of the Tax Act;

“North Park” means North Park Apartments;

“North Park Loan” has the meaning given to it in Schedule “K” to this Circular under “Description of the Existing Properties – Fund 5 – North Park Apartments – Acquisition and Purchase Financing”;

“Notice of Meetings” means the Notice of Special Meetings of Unitholders of the Trusts accompanying this Circular;

“Notice of Objection” means a written objection, as contemplated by the Declarations of Trust, as applicable;

“Offer” has the meaning given to it under “The Transaction – Dissent Rights”;

“Plans” has the meaning given to it under “Eligibility for Investment”;

“Properties” means the Existing Properties and any Additional Properties; and “ Property” means any one of the Properties;

“Property GP 1” means, Clear Sky Capital Silverado Apartments, LLC and Wheelerco GP II, Ltd.;

“Property GP 2” means, Clear Sky Capital VHT LLC and Wheelerco GP III, Ltd.;

“Property GP 3” means, Clear Sky Capital Casas De Soledad Apartments, LLC and Wheelerco GP IV, Ltd.;

“Property GP 4” means, Clear Sky Capital Suncreek Village Apartments, LLC and Wheelerco GP VI, Ltd.;

“Property GP 5” means, Clear Sky North Park, LLC;

“Property GP 6” means, Clear Sky Capital Sungate Apartments, LLC and Wheelerco GP VII Ltd.;

“Property GPs” means, collectively, Property GP 1, Property GP 2, Property GP 3, Property GP 4, Property GP 5, Property GP 6 and any other corporation organized in the United States for the purpose of acting as the general partner of a Property LP;

“Property LPs” means, collectively, Clear Sky Capital Silverado Apartments LP, Clear Sky Capital VHT Apartments LP, Clear Sky Capital Casas De Soledad Apartments LP, Clear Sky Capital Rancho Verde LP, Clear Sky Capital Suncreek Village Apartments LP, Clear Sky Capital North Park LP and Clear Sky Capital Sungate Apartments LPand any limited partnership formed under the laws of a State of the United States (or elsewhere as reasonably determined by the applicable US LP) as a subsidiary of the New Fund for the purpose of acquiring or investing in a Property; and “ Property LP” means any one of the Property LPs;


“QE Election” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for the Trusts and Holders of Trust Units – Taxation of the Trusts – Qualifying Exchanges”;

“QE Redemptions” means the redemptions of the Trust Units in consideration for New Fund Units, as contemplated as part of the Transaction;

“QE Transfers” means the transfers of the assets of the Trusts to New Fund in consideration for the assumption of liabilities and New Fund Units, as contemplated as part of the Transaction;

“Rancho Verde” means Rancho Verde Apartments;

“Rancho Verde Loan” has the meaning given to it in Schedule “K” to this Circular under “Description of the Existing Properties – Fund 3 – Rancho Verde Apartments – Acquisition and Purchase Financing”;

“RDSPs” has the meaning given to it under “Eligibility for Investment”;

“Record Date” has the meaning given to it under “General Proxy Matters – Solicitation of Proxies”;

“Redemption Date” means March 31, June 30, September 30 and December 31 of each year or such other dates as the New Fund Trustees may designate;

“Redemption Limit” the maximum total amount payable by New Fund in cash in respect of New Fund Units tendered for redemption in the same calendar quarter (unless the New Fund Trustees detemine, in their absolute discretion, to waive such limitation in respect of all New Fund Units tendered for redemption in any calendar quarter), which is equal to US$100,000;

“Redemption Notes” means debt securities of New Fund or any subsidiary of New Fund that may be created and issued from time to time, that are subordinated and unsecured, have a maturity of 10 years or less, are pre-payable at any time at the option of the issuer prior to maturity, without notice, bonus or penalty and pay an annual rate of interest equal to the Canada T-Bill Rate (as defined in the New Fund Declaration of Trust), fixed at the time the Redemption Notes are issued, which interest is payable quarterly in arrears;

“Redemption Price” means the price at which each New Fund Unitholder may require New Fund to redeem all or any part of New Fund Units held by the New Fund Unitholder pursuant to Section 7.1(a) of the New Fund Declaration of Trust;

“Relevant Entities” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – The SIFT Rules”;

“RESPs” has the meaning given to it under “Eligibility for Investment”;

“Retained Cash” has the meaning given to it under “Certain U.S. Federal Income Tax Consequences – U.S. Federal Income Tax Considerations with Respect to the Transaction – Formation of New Fund and New LP; Contribution of Canadian LPs to New Fund and to New LP”;

“RRIFs” has the meaning given to it under “Eligibility for Investment”;

“RRSPs” has the meaning given to it under “Eligibility for Investment”;

“SIFT Rules” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – The SIFT Rules”;

“SIFTs” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – The SIFT Rules”;


“Silverado” means Silverado Apartments;

“Silverado Loan” has the meaning given to it in Schedule “K” to this Circular under “Description of the Existing Properties – Fund 1 – Silverado Apartments – Acquisition and Purchase Financing”;

“Special Distribution” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations – Tax Consequences of the Transaction for the Trusts and Holders of Trust Units – Taxation of the Trusts – Computation and Distribution of Income and Taxable Capital Gains of the Funds”;

“Special Resolution” means a resolution of New Fund Unitholders that is approved by not less than 66 2/3% of the votes cast by those New Fund Unitholders holding New Fund Units who, being entitled to do so, vote in person or by proxy at a duly convened meeting of New Fund Unitholders, or any adjournment thereof, called in accordance with the New Fund Declaration of Trust;

“Sponsor Equity” has the meaning given to it under “The Transaction – Reasons for the Recommendation of the Trust Boards and Sungate GP Board – Continued commitment of experienced management with track record of value creation”;

“Subsidiary LPs” means, following the completion of the Transaction, the US LPs, the Property LPs, and any other partnership subsidiaries of New LP;

“Sungate” means Clear Sky Sungate Limited Partnership;

“Sungate GP” means Clear Sky Sungate GP Inc., the general partner of Sungate;

“Sungate GP Board” means the board of directors of the Sungate GP;

“Sungate Loan” has the meaning given to it in Schedule “K” to this Circular under “Description of the Existing Properties – Sungate – Sungate Apartments – Acquisition and Purchase Financing”;

“Sungate LPA” means the limited partnership agreement dated as of April 14, 2016 between the Sungate GP and the Sungate Unitholders, as limited partners;

“Sungate Resolution” means the written extraordinary resolution of the Sungate Unitholders authorizing and approving the Transaction;

“Sungate Term Sheet” means the term sheet of Sungate with respect to the offering of the Sungate Units;

“Sungate Unitholders” means the holders of the Sungate Units;

“Sungate Units” means the Class A limited partnership units of Sungate;

“Surviving Unit” has the meaning given to it under “Certain U.S. Federal Income Tax Consequences – U.S. Federal Income Tax Considerations with Respect to the Transaction – Formation of New Fund and New LP; Contribution of Canadian LPs to New Fund and to New LP”;

“Tax Act” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations”;

“Tax Election Form” means the tax election form(s) pursuant to which Electing Sungate Unitholders may make a Joint Tax Election in connection with the Transaction, including the CRA form T2059 and corresponding provincial tax forms, if applicable;

“Tax Proposals” has the meaning given to it under “Certain Canadian Federal Income Tax Considerations”;

“Tesoro” means Tesoro on Spain Apartments;


“Tesoro Loan” has the meaning given to it in Schedule “K” to this Circular under “Description of the Existing Properties – Fund 4 – Tesoro on Spain Apartments (formerly Suncreek Village Apartments) – Acquisition and Purchase Financing”;

“TFSAs” has the meaning given to it under “Eligibility for Investment”;

“Transaction” means, in the case of each Trust, the transfer of all of the assets of the applicable Trust (other than a nominal amount of cash) by the Trust to New Fund, in consideration for the assumption of liabilities of the applicable Trust and New Fund Units and the redemption of all Trust Units (other than one Trust Unit of such Trust to be held by New Fund) in exchange for such New Fund Units, and, in the case of Sungate, (i) the redemption of all Sungate Units held by Non-Electing Sungate Unitholders in consideration for New Fund Units, and (ii) the transfer of all Sungate Units held by Electing Sungate Unitholders to New LP in exchange for New LP Units, and certain related transactions, all as more particularly described in this Circular;

“Transaction Agreement” means the transaction agreement to be entered into between each of the Funds participating in the Transaction and New Fund to be dated the Effective Date;

“Transaction Resolutions” means, collectively, the Fund 1 Resolution, the Fund 2 Resolution, the Fund 3 Resolution, the Fund 4 Resolution, the Fund 5 Resolution and the Sungate Resolution;

“Trust Boards” means the board of trustees of each of the Trusts;

“Trust Resolutions” means, collectively, the Fund 1 Resolution, the Fund 2 Resolution, the Fund 3 Resolution, the Fund 4 Resolution and the Fund 5 Resolution;

“Trust Unitholders” means, collectively, the Fund 1 Unitholders, the Fund 2 Unitholders, the Fund 3 Unitholders, the Fund 4 Unitholders and the Fund 5 Unitholders;

“Trust Units” means, collectively, the Fund 1 Units, the Fund 2 Units, the Fund 3 Units, the Fund 4 Units and the Fund 5 Units;

“Trustees” means, collectively, the Fund 1 Trustees, the Fund 2 Trustees, the Fund 3 Trustees, the Fund 4 Trustees and the Fund 5 Trustees;

“Trusts” means, collectively, Fund 1, Fund 2, Fund 3, Fund 4 and Fund 5;

“Unitholders” means, collectively, the Fund 1 Unitholders, the Fund 2 Unitholders, the Fund 3 Unitholders, the Fund 4 Unitholders, the Fund 5 Unitholders and the Sungate Unitholders;

“Units” means, collectively, the Fund 1 Units, the Fund 2 Units, the Fund 3 Units, the Fund 4 Units, the Fund 5 Units and the Sungate Units;

“US GP 1” means Clear Sky Capital and Associates XV, Inc.;

“US GP 2” means Clear Sky Capital and Associates XVI, Inc.;

“US GP 3” means Clear Sky Capital and Associates XIX, Inc.;

“US GP 4” means Clear Sky Capital and Associates XXII, Inc.;

“US GP 5” means Clear Sky North Park LLC;

“US GP 6” means Clear Sky Capital and Associates XXIII, Inc.;


“US GPs” means, collectively, US GP 1, US GP 2, US GP 3, US GP 4, US GP 5, US GP 6 and any other corporation organized in the United States for the purpose of acting as the general partner of a US LP;

“US LP 1” means Clear Sky Capital Real Estate Solutions XV LP;

“US LP 2” means Clear Sky Capital Real Estate Solutions XVI LP;

“US LP 3” means Clear Sky Capital Real Estate Solutions XIX LP;

“US LP 4” means Clear Sky Capital Real Estate Solutions XXII LP;

“US LP 5” means Clear Sky Capital Real Estate Solutions XXXI LP;

“US LP 6” means Clear Sky Capital Real Estate Solutions XXIII LP;

“US LPs” means, collectively, US LP 1, US LP 2, US LP 3, US LP 4, US LP 5, US LP 6 and any other limited partnership formed in the United States as a direct subsidiary of a Canadian LP or Sungate or, following the completion of the Transaction, New LP;

“U.S. Person” has the meaning given to it under “Certain U.S. Federal Income Tax Consequences – General”;

“U.S. Sun Belt” means the region of the United States generally considered to stretch across the Southeast and Southwest United States, including, among other states, Arizona, New Mexico and Texas;

“VHT” means Villas at Helen of Troy Apartments; and

“VHT Loan” has the meaning given to it under Schedule “K” to this Circular under “Description of the Existing Properties – Fund 2 – Villas at Helen of Troy Apartments – Acquisition and Purchase Financing”.


APPROVAL OF THE BOARDS

The contents of this Circular and the sending of it to Unitholders, to each of the Trustees and the directors of Sungate GP and to the auditors of each of the Funds, has been approved by each of the Trust Boards and the Sungate GP Board.

DATED the 5th day of November, 2020.

BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I

BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II



BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III

BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV



BY ORDER OF THE BOARD OF TRUSTEES OF CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5

BY ORDER OF THE BOARD OF DIRECTORS OF THE GENERAL PARTNER OF CLEAR SKY SUNGATE LIMITED PARTNERSHIP, CLEAR SKY SUNGATE GP INC.


Kevin Kinnear Independent Director

A-1

SCHEDULE “A”

TEXT OF FUND 1 RESOLUTION

WHEREAS it is desirable that the declaration of trust of Clear Sky Capital Strategic Asset Fund – Series I (“Fund 1”) dated as of June 23, 2014 (the “Declaration of Trust”) be amended to provide for the transfer of all of the assets and liabilities of Fund 1 to Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), and the redemption of all Units of Fund 1 (other than one Unit of Fund 1 held by New Fund) in consideration for units of New Fund (“New Fund Units”) (the “Transaction”) and such other amendments as are necessary to implement such amendments, as further described in the joint management information circular of Fund 1, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership dated November 5, 2020 (the “Circular”);

NOW THEREFORE BE IT RESOLVED THAT:

1. the trustees of Fund 1 are hereby authorized to amend the Declaration of Trust (the “Amendment”) to add Section 2.15 in the following form:


Notwithstanding any other provision of this Declaration of Trust, the Trust may undertake the following in connection with the consolidation of assets and liabilities of the Trust with the assets and liabilities of any or all of Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (the “Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):




(d) deem each existing certificate issued by the Trust representing Trust Units redeemed in connection with the Consolidation Transaction to represent such number of New Fund Units delivered to the holder thereof in satisfaction of the redemption price of the Trust Units represented by such existing certificate and provide that the name of each Trust Unitholder be registered on the New Fund register of units as holders of such New Fund Units so delivered; and


A-2

2. Fund 1 is authorized to enter into and perform its obligations under the Transaction Agreement (as defined in the Circular, as it may be amended, modified or supplemented at any time) and any one trustee of Fund 1 is authorized to settle the terms of and enter into the Transaction Agreement and the execution and delivery of the Transaction Agreement on behalf of Fund 1 by such trustee is hereby authorized and approved, such execution and delivery to be conclusive evidence of such approval of the Transaction Agreement;

3. Fund 1 is hereby authorized to consummate the Transaction on the terms set forth in the Transaction Agreement;

4. the actions of the trustees of Fund 1 in approving the Transaction and in connection with the Transaction are hereby confirmed, ratified and approved;

5. an administrator of Fund 1, if any, or any one trustee of Fund 1 is hereby authorized to make such other amendments to the Declaration of Trust as are necessary or desirable to give effect to the Amendment or to resolve any inconsistencies arising out of the adoption of the foregoing amendment or to conform other provisions to reflect the foregoing amendments;

6. notwithstanding that this resolution has been duly passed by the voting unitholders of Fund 1, the trustees of Fund 1 are hereby authorized and empowered, without further notice to, or approval of, the voting unitholders of Fund 1, to:

(a) decide on the timing of implementation of the Amendment and the Transaction;

(b) decide to amend the Transaction Agreement to the extent permitted therein; and

(c) decide not to proceed with the Amendment or the Transaction and revoke part or the whole of this resolution, as applicable, before it is acted on; and

7. an administrator of Fund 1, if any, or any one trustee of Fund 1 is hereby authorized and directed to execute on behalf of the Fund 1 and to deliver and to cause and be delivered all such documents, agreements and instruments and to do or cause to be done all such other acts and things as it shall determine to be necessary or desirable in order to carry out the intent of the foregoing resolution and the matters authorized thereby, such determinations to be conclusively evidenced by the execution or preparation and delivery of such document, agreement or instrument or designation or the doing of any such act or thing.

B-1

SCHEDULE “B”


WHEREAS it is desirable that the declaration of trust of Clear Sky Capital Strategic Asset Fund – Series II (“Fund 2”) dated as of January 2, 2015 (the “Declaration of Trust”) be amended to provide for the transfer of all of the assets and liabilities of Fund 2 to Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), and the redemption of all units of Fund 2 (other than one unit of Fund 2 held by New Fund) in consideration for units of New Fund (“New Fund Units”) (the “Transaction”) and such other amendments as are necessary to implement such amendments, as further described in the joint management information circular of Fund 2, Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership dated November 5, 2020 (the “Circular”);




Notwithstanding any other provision of this Declaration of Trust, the Trust may undertake the following in connection with the consolidation of assets and liabilities of the Trust with the assets and liabilities of any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (the “Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):






B-2









7. an administrator of Fund 2, if any, or any one trustee of Fund 2 is hereby authorized and directed to execute on behalf of Fund 2 and to deliver and to cause and be delivered all such documents, agreements and instruments and to do or cause to be done all such other acts and things as it shall determine to be necessary or desirable in order to carry out the intent of the foregoing resolution and the matters authorized thereby, such determinations to be conclusively evidenced by the execution or preparation and delivery of such document, agreement or instrument or designation or the doing of any such act or thing.

C-1

SCHEDULE “C”


WHEREAS it is desirable that the amended and restated declaration of trust of Clear Sky Capital Strategic Asset Fund – Series III (“Fund 3”) dated as of November 16, 2015 (the “Declaration of Trust”) be amended to provide for the transfer of all of the assets and liabilities of Fund 3 to Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), and the redemption of all units of Fund 3 (other than one unit of Fund 3 held by New Fund) in consideration for units of New Fund (“New Fund Units”) and such other amendments as are necessary to implement such amendments (the “Transaction”), as further described in the joint management information circular of Fund 3, Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership dated November 5, 2020 (the “Circular”);




Notwithstanding any other provision of this Declaration of Trust, the Trust may undertake the following in connection with the consolidation of assets and liabilities of the Trust with the assets and liabilities of any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series IV, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (the “Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):






C-2










D-1

SCHEDULE “D”


WHEREAS it is desirable that the declaration of trust of Clear Sky Capital Strategic Asset Fund – Series IV (“Fund 4”) dated as of April 28, 2016 (the “Declaration of Trust”) be amended to provide for the transfer of all of the assets and liabilities of Fund 4 to Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), and the redemption of all units of Fund 4 (other than one unit of Fund 4 held by New Fund) in consideration for units of New Fund (“New Fund Units”) and such other amendments as are necessary to implement such amendments (the “Transaction”), as further described in the joint management information circular of Fund 4, Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership dated November 5, 2020 (the “Circular”);




Notwithstanding any other provision of this Declaration of Trust, the Trust may undertake the following in connection with the consolidation of assets and liabilities of the Trust with the assets and liabilities of any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series 5, and Clear Sky Sungate Limited Partnership, as applicable, in Aspen Real Estate Trust, a new open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (the “Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):






D-2










E-1

SCHEDULE “E”


WHEREAS it is desirable that the declaration of trust of Clear Sky Capital Strategic Asset Fund – Series 5 (“Fund 5”) dated as of February 23, 2018 (the “Declaration of Trust”) be amended to provide for the transfer of all of the assets and liabilities of Fund 5 to Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), and the redemption of all units of Fund 5 (other than one unit of Fund 5 held by New Fund) in consideration for units of New Fund (the “Transaction”) and such other amendments as are necessary to implement such amendments, as further described in the joint management information circular of Fund 5, Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, and Clear Sky Sungate Limited Partnership dated November 5, 2020 (the “Circular”);




Notwithstanding any other provision of this Declaration of Trust, the Trust may undertake the following in connection with the consolidation of assets and liabilities of the Trust with the assets and liabilities of any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, and Clear Sky Sungate Limited Partnership, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (the “Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):






E-2










F-1

SCHEDULE “F”

TEXT OF SUNGATE RESOLUTION

WHEREAS it is desirable that the limited partnership agreement of Clear Sky Sungate Limited Partnership (“Sungate”) dated as of April 14, 2016 (the “LPA”) be amended to provide for (i) the redemption of all units of Sungate held by certain holders of units of Sungate in consideration for units of Aspen Real Estate Trust, an open-ended, unincorporated investment trust to be formed under the laws of Alberta (“New Fund”), and (ii) the transfer of all remaining units of Sungate to a limited partnership to be formed under the laws of British Columbia (“New LP”) in exchange for Class B limited partnership units of New LP that are, to the greatest extent practicable, economically equivalent to, and exchangeable for, units of New Fund (the “Transaction”) and such other amendments as are necessary to implement such amendments, as further described in the joint management information circular of Sungate, Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, and Clear Sky Capital Strategic Asset Fund – Series 5 dated November 5, 2020 (the “Circular”);


1. the General Partner is hereby authorized to amend the LPA (the “Amendment”) to add Section 2.18 in the following form:

“2.18 Transfer to New Limited Partnership

Notwithstanding any other provision of this Agreement, the General Partner may undertake the following in connection with the consolidation of the Partnership with any or all of Clear Sky Capital Strategic Asset Fund – Series I, Clear Sky Capital Strategic Asset Fund – Series II, Clear Sky Capital Strategic Asset Fund – Series III, Clear Sky Capital Strategic Asset Fund – Series IV, and Clear Sky Capital Strategic Asset Fund – Series 5, as applicable, in Aspen Real Estate Trust, an open-ended, unincorporated investment trust (“New Fund”) to be formed under the laws of Alberta (“Consolidation Transaction”) on or about the effective date of the Consolidation Transaction (the “Effective Date”):

(a) redeem the Units held by each Limited Partner, other than Eligible Persons that have validly elected (in a duly completed election form delivered with the joint management information circular of the Partnership dated November 5, 2020 delivered to such Persons (the “Circular”)) to transfer their Units to a limited partnership subsidiary of New Fund to be formed under the laws of British Columbia (“New LP”) in exchange for units of New LP (Limited Partners that have made such an election being “Electing Unitholders”, and Limited Partners that have not being “Non-Electing Unitholders”), for a redemption price satisfied by the delivery of a number of units (“New Fund Units”) of New Fund (rounded down to the nearest whole number of New Fund Units) equal to the number of Units held by the Non-Electing Unitholder multiplied by the exchange ratio set out in the Circular (the “Exchange Ratio”);

(b) accept from New Fund a subscription for a number of Units equal to the number of Units held by Non-Electing Unitholders that are redeemed pursuant to the foregoing clause (a), for a subscription price to be satisfied by the issuance by New Fund, to or as directed by the Partnership, of a number of New Fund Units equal to the number of New Fund Units to be delivered to Non-Electing Unitholders upon the redemption of Units pursuant to the foregoing clause (a);

(c) permit the Units of each Electing Unitholder to be transferred to New LP in exchange for a number of Class B limited partnership units of New LP that are economically equivalent to, and exchangeable for, New Fund Units (“New LP Units”) (rounded down to the nearest whole number of New LP Units) equal to the number of Units held by the Electing Unitholder multiplied by the Exchange Ratio;

F-2

(d) deem each existing certificate issued by the Partnership representing Units redeemed from Unitholders in connection with the Consolidation Transaction to represent such number of New Fund Units or New LP Units, as applicable, delivered to the holder thereof in satisfaction of the redemption price of the Units represented by such existing certificate and provide that the name of each Unitholder be registered on the register of New Fund Units or New LP Units, as applicable, as holders of such New Fund Units or New LP Units, as applicable, so delivered; and

(e) make such other amendments to the Agreement as are necessary or desirable to give effect to any of the foregoing or to resolve any inconsistencies arising out of the adoption of the foregoing or to conform other provisions to reflect the foregoing in connection with the Consolidation Transaction.

For the purposes of this Section 2.18, “Eligible Person” means a Person that is either a resident of Canada for the purposes of the Tax Act or a “Canadian partnership” within the meaning of the Income Tax Act.”

2. Sungate is authorized to enter into and perform its obligations under the Transaction Agreement (as defined in the Circular, as it may be amended, modified or supplemented at any time) and any one director of the General Partner, in its capacity as general partner of Sungate, is authorized to settle the terms of and enter into the Transaction Agreement and the execution and delivery of the Transaction Agreement by such director is hereby authorized and approved, such execution and delivery to be conclusive evidence of such approval of the Transaction Agreement;

3. the actions of the directors of the General Partner in approving the Transaction and in connection with the Transaction are hereby confirmed, ratified and approved;

4. any one director of the General Partner is hereby authorized to make such other amendments to the LPA as are necessary or desirable to give effect to the Amendment or to resolve any inconsistencies arising out of the adoption of the foregoing amendment or to conform other provisions to reflect the foregoing amendments;

5. notwithstanding that this resolution has been duly passed by the voting unitholders of Sungate, the directors of the General Partner are hereby authorized and empowered, without further notice to, or approval of, the voting unitholders of Sungate, to:




6. any one director of the General Partner is hereby authorized and directed to execute on behalf of the General Partner, in its capacity as general partner of Sungate, and to deliver and to cause and be delivered all such documents, agreements and instruments and to do or cause to be done all such other acts and things as it shall determine to be necessary or desirable in order to carry out the intent of the foregoing resolution and the matters authorized thereby, such determinations to be conclusively evidenced by the execution or preparation and delivery of such document, agreement or instrument or designation or the doing of any such act or thing.

G-1

SCHEDULE “G”

DISSENT RIGHTS

The following is the full text of Schedule A, Part B of each of the Declarations of Trust with slight variations in the terminology used in the Declarations of Trust identified in brackets.

“[…]

B. Unitholders’ right to dissent

[…]

2. In addition to any other right a Trust Unitholder may have, but subject to subsection B(19), a Trust Unitholder entitled to dissent under this section and who complies with this section is entitled to be paid by the Trust the fair value of the [Trust] Units held by the Trust Unitholder in respect of which the Trust Unitholder dissents, determined as of the close of business on the last business day before the day on which the [Extraordinary/Special] Resolution from which the Trust Unitholder dissents was passed or adopted.

3. A dissenting [Trust] Unitholder may only claim under this section with respect to all the [Trust] Units of a class held by the Trust Unitholder or on behalf of any one beneficial owner and registered in the name of the dissenting [Trust] Unitholder.

4. A dissenting [Trust] Unitholder shall send to the [General Partner/Trust] objection to a[n Extraordinary/Special] Resolution referred to in subsection B(1),

(a) at or before any meeting of Trust Unitholders at which the [Extraordinary/Special] Resolution is to be voted on, or

(b) if the Trust did not send notice to the Trust Unitholder of the purpose of the meeting or of the Trust Unitholder’s right to dissent, within a reasonable time after the Trust Unitholder learns that the [Extraordinary/Special] Resolution approving the arrangement was passed or adopted and of the Trust Unitholder’s right to dissent.

5. An application may be made to the Court after the adoption of an [Extraordinary/Special] Resolution approving an arrangement referred to in subsection B(1),

(a) by the Trust, or

(b) by a Trust Unitholder if the Trust Unitholder sent an objection to the [General Partner/Trust] under subsection B(4),

to fix the fair value in accordance with subsection B(2) of the [Trust] Units of a Trust Unitholder who dissents under this section.

6. If an application is made under subsection B(5), the Trust shall, unless the Court otherwise orders, send to each dissenting [Trust] Unitholder a written offer to pay the Trust Unitholder an amount considered by the [General Partner/Trustees] to be the fair value of the [Trust] Units.

7. Unless the Court otherwise orders, an offer referred to in subsection B(6) shall be sent to each dissenting [Trust] Unitholder,

(a) at least 10 days before the date on which the application is returnable, if the Trust is the applicant, or

(b) within 10 days after the Trust is served with a copy of the application, if a Trust Unitholder is the applicant.

G-2

8. Every offer made under subsection B(6) shall

(a) be made on the same terms, and

(b) contain or be accompanied with a statement showing how the fair value was determined.

9. A dissenting [Trust] Unitholder may make an agreement with the Trust for the purchase of the Trust Unitholder’s [Trust] Units by the Trust, in the amount of the Trust’s offer under subsection B(6) or otherwise, at any time before the Court pronounces an order fixing the fair value of the [Trust] Units.

10. A dissenting [Trust] Unitholder

(a) is not required to give security for costs in respect of an application under subsection B(5), and

(b) except in special circumstances must not be required to pay the costs of the application or appraisal.

11. In connection with an application under subsection B(5), the Court may give directions for

(a) joining as parties all dissenting [Trust] Unitholders whose [Trust] Units have not been purchased by the Trust and for the representation of dissenting [Trust] Unitholders who, in the opinion of the Court, are in need of representation,

(b) the trial of issues and interlocutory matters, including pleadings and questioning under the applicable rules of the Court,

(c) the payment to the Trust Unitholder of all or part of the sum offered by the Trust for the [Trust] Units,

(d) the deposit of the Trust Unit certificates with the Court or with the [General Partner/Trust] or its Transfer Agent,

(e) the appointment and payment of independent appraisers, and the procedures to be followed by them,

(f) the service of documents, and

(g) the burden of proof on the parties.

12. On an application under subsection B(5), the Court shall make an order

(a) fixing the fair value of the [Trust] Units in accordance with subsection B(2) of all dissenting [Trust] Unitholders who are parties to the application,

(b) giving judgment in that amount against the Trust and in favour of each of those dissenting [Trust] Unitholders, and

(c) fixing the time within which the Trust must pay that amount to a Trust Unitholder.

13. On

(a) the arrangement approved by the [Extraordinary/Special] Resolution from which the Trust Unitholder dissents becoming effective,

(b) the making of an agreement under subsection B(9) between the Trust and the dissenting [Trust] Unitholder as to the payment to be made by the Trust for the Trust Unitholder’s [Trust] Units, whether by the acceptance of the Trust’s offer under subsection B(6) or otherwise, or

G-3

(c) the pronouncement of an order under subsection B(12),

whichever first occurs, the Trust Unitholder ceases to have any rights as a Trust Unitholder other than the right to be paid the fair value of the Trust Unitholder’s [Trust] Units in the amount agreed to between the Trust and the Trust Unitholder or in the amount of the judgment, as the case may be.

14. Subsection B(13)(a) does not apply to a Trust Unitholder referred to in subsection B(4)(b).

15. Until one of the events mentioned in subsection B(13) occurs,

(a) the Trust Unitholder may withdraw the Trust Unitholder’s dissent, or

(b) the Trust may rescind or abandon the [Extraordinary/Special] Resolution or completion of the arrangement as approved,

and, in either event, proceedings under this section are discontinued.

16. The Court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting [Trust] Unitholder, from the date on which the Trust Unitholder ceases to have any rights as a Trust Unitholder by reason of subsection B(13) until the date of payment.

17. If subsection B(19) applies, the Trust shall, within 10 days after

(a) the pronouncement of an order under subsection B(12), or

(b) the making of an agreement between the Trust Unitholder and the Trust as to the payment to be made for the Trust Unitholder’s [shares/Trust Units],

notify each dissenting [Trust] Unitholder that it is unable lawfully to pay dissenting [Trust] Unitholders for their [Trust] Units.

18. Notwithstanding that a judgment has been given in favour of a dissenting [Trust] Unitholder under subsection B(12)(b), if subsection B(19) applies, the dissenting [Trust] Unitholder, by written notice delivered to the Trust within 30 days after receiving the notice under subsection B(17), may withdraw the Trust Unitholder’s notice of objection, in which case the Trust is deemed to consent to the withdrawal and the Trust Unitholder is reinstated to the Trust Unitholder’s full rights as a Trust Unitholder, failing which the Trust Unitholder retains a status as a claimant against the Trust, to be paid as soon as the Trust is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the Trust but in priority to its [Trust] Unitholders.

19. The Trust shall not make a payment to a dissenting [Trust] Unitholder under this Declaration of Trust if there are reasonable grounds for believing that,

(a) the Trust is or would after the payment be unable to pay its liabilities as they become due, or

(b) the realizable value of the Trust’s assets would by reason of the payment be less than the aggregate of its liabilities.”

H-1

SCHEDULE “H”

FAIRNESS OPINION

EVANS & EVANS, INC. 1075 WEST GEORGIA STREET SUITE 1330 VANCOUVER, BRITISH COLUMBIA CANADA, V6E 3C9 Tel: (604) 408-2222 www.evansevans.com

November 3, 2020 CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I (“FUND 1”)

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II (“FUND 2”)

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III (“FUND 3”)

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV (“FUND 4”)

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5 (“FUND 5”)

CLEAR SKY SUNGATE LIMITED PARTNERSHIP (“Sungate”)

Attention: Kevin Kinnear, Independent Trustee of Fund 1, Fund 2, Fund 3, Fund 4, Fund 5 and Independent Director of Sungate Dear Sir:

Subject: Fairness Opinion

1.0 Introduction

1.01 Evans & Evans, Inc. (“Evans & Evans” or the “authors of the Opinion”) understands that of Fund 1, Fund 2, Fund 3, Fund 4 and Fund 5 (each a “Trust” and together the “Trusts”) and Sungate (together with the Trusts the “Funds’ or the “Clear Sky Group”) are contemplating a reorganization (the “Reorganization”) and that the Reorganization will involve the unitholders of the Trusts exchanging their units for units in Aspen Real Estate Trust, a new investment trust formed under the laws of Alberta (“New Fund”) and the unitholders of Sungate, exchanging their units for units of a new subsidiary partnership of New Fund that are exchangeable for units of New Fund ( all as described in more detail below).

We understand each of the Trusts is a “mutual fund trust” for purposes of the Income Tax Act (Canada) (“Tax Act”) and Sungate is a “Canadian partnership” for purposes of the Tax Act. The Funds are investment entities which, through a series of limited partnerships, hold U.S. real estate assets.

1.02 If approved, the Reorganization will result in the reorganization of the Clear Sky Group’s existing structure into a consolidated entity (i.e., New Fund) which will continue to carry on, directly and indirectly, the business carried on by the Clear Sky Group.

The following is an overview of the steps involved in the Reorganization and is summary in nature.

1) A proposed exchange ratio methodology (the “ER Methodology”) was established which resulted in exchange ratios (the “Exchange Ratios” and each and “Exchange

H-2

Fund 1, Fund 2, Fund 3, Fund 4, Fund 5 and Sungate November 3, 2020 Page 2

EVANS & EVANS, INC.

Ratio”) for each of the Funds. The established Exchange Ratios reflect the carried interest of each general partner associated with each entity in the Clear Sky Group.

2) Pursuant to the Reorganization, the unitholders of each Trust will authorize and approve an amendment to the declaration of trust or limited partnership agreement, as applicable, to provide for (a) in the case of each Trust, the transfer of all of the assets and liabilities of such Trust (other than a nominal amount of cash) by the Trust to New Fund, in consideration for units of New Fund (“New Fund Units”) and the redemption of all units of such Trust (other than one unit of such Trust held by New Fund) in exchange for such New Fund Units; and (b) in the case of Sungate, (i) the redemption of the Sungate Class A limited partnership units (“Sungate Units”) held by certain unitholders of Sungate (being the unitholders who do not elect to exchange their Sungate Units for New LP Units (as defined below)) in consideration for New Fund Units, and (ii) the transfer of all of the remaining Sungate Units to a limited partnership subsidiary of New Fund to be formed under the laws of British Columbia (“New LP”) in exchange for Class B limited partnership units of New LP that are economically equivalent to, and exchangeable for, New Fund Units (“New LP Units”). The Reorganization and certain related transactions as defined in the Circular (as defined herein in section 5.01 herein) are referred to as the “Transaction”.

The following chart shows the number of units in New Fund that a holder of a unit in an entity in the Clear Sky Group will be entitled to receive upon redemption of a unit in such entity (each such number of units in New Fund). The proposed Exchange Ratios will result in the following ownership of New Fund. The reader is advised to refer to Exhibit 1.0 of this Opinion for additional detail as to the ER Methodology and the Exchange Ratios.

Exchange Ratio is the number of units in New Trust to be received for each existing unit in a Trust.

1.03 The independent trustee of the Trusts and the independent director of Sungate (the “Independent”) retained Evans & Evans to act as an independent advisor and to prepare and deliver the Fairness Opinion (the “Opinion”). The Opinion is intended to provide the Independent with an independent opinion as to the fairness of the Transaction, from a financial point of view, to the Funds’ unitholders, each entity viewed independently1.

1 If all entities in the Clear Sky Group approve the Reorganization

Trust Enity Canadian Limited Partnership U.S. Real Estate Limited Partnership Real Estate Asset Exchange Ratio% Holding of Former Unit Holders in New Trust

Clear Sky Capital Strategic Asset Fund Series I

Clear Sky Capital Real Estate Solutions XV Limited Partnership

Silverado Apartments LP Silverado Apartments 0.925541 25.30%

Clear Sky Capital Strategic Asset Fund Series II

Clear Sky Capital Real Estate Solutions XVI Limited Partnership

VHT Apartments LP Villas at Helen of Troy 0.533480 9.73%

Clear Sky Capital Strategic Asset Fund Series III

Clear Sky Capital Real Estate Solutions XIX Limited Partnership

Rancho Verde LP Rancho Verde Apartments 0.648237 21.73%

Casas De Soledad LP Casas De SoledadClear Sky Capital Strategic Asset Fund Series IV

Clear Sky Capital Real Estate Solutions XXII Limited Partnership

Suncreek Village Apartments LP Tesoro on Spain 0.682402 26.6%

Clear Sky Capital Strategic Asset Fund Series 5

Clear Sky Capital Real Estate Solutions XXXI Limited Partnership

North Park LP North Park Apartments 0.208417 6.7%

Clear Sky Sungate LP Sungate Apartments LP Sungate Apartments 797.163691 10.0%100.0%

H-3


EVANS & EVANS, INC.

The Opinion is structured in such a manner that the body of the Opinion provides:

1) An overview of the Reorganization; 2) An overview of the structures of the Funds; 3) A description of the real estate holdings of the Clear Sky Group; 4) A description of the overall rental market in the United States; 5) The valuation methodology employed in developing the ER Methodology; and, 6) Qualitative factors relevant to the Clear Sky Group as a whole.

Exhibits 2.0 through 7.0 of the Opinion, provide Evans & Evans’ opinions as to the fairness, from a financial point of view, to the unitholders of each entity in the Clear Sky Group viewed independently. Each Exhibit outlines the qualitative and quantitative factors considered by Evans & Evans in offering its Opinion for each of the Funds.

1.04 Unless otherwise noted, all currency amounts referenced herein are U.S. dollars.

2.0 Overview of the Funds

2.01 Each of the Trusts has a similar organizational structure and investment thesis. Accordingly, for readability of the Opinion, Evans & Evans has provided an overview of the organizational structure that is common to each Trust.

The Trusts were created to provide an opportunity for investors, by way of a tiered partnership structure, to invest indirectly in United States real estate properties without creating any obligation on behalf of the investors (except US Persons) to file United States income tax returns. The tiered investment structure is outlined below.

Trust

Canadian Limited Partnership

U.S. Limited Partnership

U.S. Property Limited

Partnership

Real Estate Asset(s)

H-4


EVANS & EVANS, INC.

Throughout the Opinion, the Canadian limited partnerships for each of the Trusts is referred to as a “Canadian LP”. Each U.S. limited partnership referenced in the above structure is referred to as the “US LP” and each U.S. property limited partnership is referred to as the “Property LP”.

Each Trust is an open-ended, unincorporated investment trust formed and existing under the laws of Alberta and is governed by a Declaration of Trust.

The Trusts do not and will not carry on active business, directly. Rather, each Trust owns interests in subsidiary entities, which carry on the business of investing in multi-family rental properties in one of Arizona, Texas, and New Mexico.

Each Trust is the sole voting limited partner of its Canadian LP and each Canadian LP is the sole limited partner of the US LP. Each US LP holds an 80% economic interest in the respective Property LP, except for Fund 2 in which the US LP holds a 75% economic interest in its Property LP.

Fund Flow from Real Estate Investments

Set out below is a summary of the distribution of funds from a Trust’s subsidiaries to the Trust:

(a) distributions of net available cash from the Property LPs to the US LP, including any special distributions by a Property LP as a result of (i) the sale or other disposition of a Property, in whole or in part, or (ii) the refinancing of a property;

(b) distributions of net available cash from the US LP to the Canadian LP, including any special distributions received by US Limited Partnership as a result of (i) the sale or other disposition of a property, in whole or in part, or the sale of a Property LP, or (ii) the refinancing of a property; and

(c) distributions of net available cash from the Canadian LP to the Trust, including any special distribution of net available cash received by the Canadian LP as a result of (i) the sale or other disposition of a Property, in whole or in part, or the sale of a property LP, or (ii) the refinancing of a property.

Subject to the special distribution of a Property LP's net available cash attributable to (1) a Property LP's sale or other disposition of its property, in whole or in part, or the sale of the Property LP (2) a Property LP's refinancing of a property, net available cash is to be distributed by a Property LP pro rata and pari passu in the following manner, less any tax required to be withheld, and subject to any Property LP partnership interest(s) that may be created and issued in connection with the acquisition of or investment in the applicable property being held, directly or indirectly, by any bridge equity investor(s) and subject to restrictions regarding the use of such funds for any purpose other than the redemption of bridge financing limited partnership units that may be created and issued in connection with the acquisition of or investment in the Property, as follows:

H-5


EVANS & EVANS, INC.

(a) as to 80% thereof, to the US LP; and

(b) as to 20% thereof, to the general partner(s) of such Property LP2.

2.02 Fund 1 was formed as of June 23, 2014 under the laws of Alberta pursuant to the Declaration of Trust. Fund 1’s ultimate Property LP is the Silverado Apartments LP, an Arizona limited partnership formed as of November 10, 2014 pursuant to the Arizona Revised Uniform Limited Partnership Act (“ARULPA”).

Silverado Apartments LP acquired the Silverado Apartments on January 15, 2015 for a purchase price of approximately $19.5 million. The purchase price was funded with a $15,600,000 10-year fixed-term loan from the Federal Home Loan Mortgage Corporation (“FHLMC”) having an interest rate of 3.91% and interest only period of two years (the “Silverado Loan”). The Silverado Loan matures on February 1, 2025. As of June 30, 2020, the aggregate principal amount outstanding under the Silverado Loan is approximately $14,653,638. The defeasance cost3 to June 30, 2020 is approximately $2,438,241.

As of June 30, 2020, the independent appraised value of the Silverado Apartments is $28,050,000, a 1.4% increase from the December 31, 2019 appraised value. As of December 31, 2019, the independently appraised value of the Silverado Apartments was $27.65 million, up 7.4% from the December 31, 2018 appraised value. The Silverado Apartments appraised value is 43.8% over the purchase price. The author of the appraisal noted that “New Mexico is a non-disclosure state. As a result it is not possible to actually confirm or verify information provided by market participants in the market. This applies to sales, rents, expenses, and other pertinent information. It is an extraordinary assumption of this appraisal that the information provided and relied upon in this appraisal report is accurate.” No other conditions or extraordinary assumptions are outlined in the appraisal. The Silverado Apartments were inspected on November 4, 2019 and were not inspected as part of the updated appraisal process in August of 2020.

The Silverado Apartments are located in Albuquerque, New Mexico and consist of 256 units on a total area of approximately 8.1 acres. As of June 30, 2020, the Silverado Apartments were 97.3% occupied and produced an average monthly rent in the amount of $1.19 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of the Silverado Apartments during 2019 was 95% with an annual turnover rate of 61%.

2 Exception is Fund 2 whereby the split is 75% to the US LP and 25% to the general partner. 3 Unlike home mortgages, commercial loans may have significant prepayment penalties due to the obligations to bondholders with a stake in the commercial mortgage-backed security (“CMBS”) that contains the loan. Prepayment can be a problem in these situations because investors expect a certain number of interest payments to generate revenue. The defeasance costs are the costs associated with early payment of or refinancing the loan.

H-6


EVANS & EVANS, INC.

2.03 Fund 2 was formed as of January 2, 2015 under the laws of Alberta pursuant to the Declaration of Trust. Fund 2’s ultimate Property LP is the VHT Apartments LP, an Arizona limited partnership formed as of July 13, 2015 pursuant to the ARULPA.

VHT Apartments LP acquired the Villas at Helen of Troy Apartments in January of 2016 for a purchase price of approximately $10.75 million. The purchase price was funded with a $7,800,000 10-year fixed-term commercial mortgage backed security (“CMBS”) loan having an interest rate of 4.87% (the “VHT Loan”). The VHT Loan matures on February 5, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the VHT Loan is approximately $7,800,000. The defeasance cost to June 30, 2020 is approximately $1,936,662.

As of June 30, 2020, the independent appraised value of the Villas at Helen of Troy apartments is $12,700,000, a slight increase from the December 31, 2019 appraised value. As of December 31, 2019, the independently appraised value of the Villas at Helen of Troy Apartments was $12.6 million, up 6.3% from the December 31, 2018 appraised value. The Villas at Helen Troy June 30, 2020 appraised value represents an increase of 18.1% over the purchase price. The author of the appraisal noted that “Texas is a non-disclosure state. As a result it is not possible to actually confirm or verify information provided by market participants in the market. This applies to sales, rents, expenses, and other pertinent information. It is an extraordinary assumption of this appraisal that the information provided and relied upon in this appraisal report is accurate.” No other conditions or extraordinary assumptions are outlined in the appraisal. The Villas at Helen of Troy were inspected on November 7, 2019 and were not inspected as part of the updated appraisal process in August of 2020.

The Villas at Helen of Troy are located in El Paso, Texas and consist of 108 units on a total area of approximately 4.63 acres. As of June 30, 2020, the Villas at Helen of Troy was 95.4% occupied and produced an average monthly rent in the amount of $1.10 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Villas at Helen of Troy during 2019 was 92% with an annual turnover rate of 68%.

2.04 Fund 3 was formed as of November 16, 2014 under the laws of Alberta pursuant to the Declaration of Trust. Fund 3 has two Property LPs – the Rancho Verde LP and the Casas De Soledad LP. The Casas De Soledad Apartments LP is an Arizona limited partnership formed as of November 24, 2015 pursuant to the ARULPA. The Rancho Verde LP is an Arizona limited partnership formed as of May 13, 2016 pursuant to the ARULPA.

Casas De Soledad was acquired for a purchase price of $15,550,000. The purchase price was funded with a $11,660,000 10-year fixed-term CMBS loan having an interest rate of 5.25% (the “Casas De Soledad Loan”). The Casas De Soledad Loan matures on March 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Casas De Soledad Loan is approximately $11,467,082. The defeasance cost to June 30, 2020 is approximately $3,052,533.

H-7


EVANS & EVANS, INC.

As of June 30, 2020, the independent appraised value of the Casas De Soledad apartments is $18,950,000, a 2.6% decline from the December 31, 2019 appraised value. As of December 31, 2019, the independently appraised value of the Casas De Soledad apartments was $19.45 million, up 14.7% from the December 31, 2018 appraised value. The Casas De Soledad apartments June 30, 2020 appraised value represents an increase of 21.9% over the February 2016 purchase price of approximately $15.55 million. The author of the appraisal noted that “New Mexico is a non-disclosure state. As a result it is not possible to actually confirm or verify information provided by market participants in the market. This applies to sales, rents, expenses, and other pertinent information. It is an extraordinary assumption of this appraisal that the information provided and relied upon in this appraisal report is accurate.” No other conditions or extraordinary assumptions are outlined in the appraisal. The Casas De Soledad apartments were inspected on November 7, 2019 and were not inspected as part of the updated appraisal process in August of 2020.

The Casas De Soledad apartments are located in Las Cruces, New Mexico and consist of 176 units on a total area of approximately 14.5 acres. As of June 30, 2020, Casas De Soledad was 92.6% occupied and produced an average monthly rent in the amount of $0.92 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Casas De Soledad during 2019 was 92% with an annual turnover rate of 62.0%.

Rancho Verde was acquired for a purchase price of $5,465,787. The purchase price was funded with a $4,162,000 10-year fixed-term loan from the FHLMC having an interest rate of 4.16% (the “Rancho Verde Loan”). The Rancho Verde Loan matures on July 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Rancho Verde Loan is approximately $4,162,000. The defeasance cost to June 30, 2020 is approximately $980,828.

As of June 30, 2020, the independent appraised value of the Rancho Verde apartments is $7,300,000, a 2.8% increase from the December 31, 2019 appraised value. As of December 31, 2019, the independently appraised value of the Rancho Verde apartments was $7.1 million, up 15.4% from the December 31, 2018 appraised value. The Rancho Verde June 30, 2020 appraised value represents an increase of 33.6% over the June 2016 purchase price of approximately $5.5 million. The author of the appraisal noted that “New Mexico is a non-disclosure state. As a result it is not possible to actually confirm or verify information provided by market participants in the market. This applies to sales, rents, expenses, and other pertinent information. It is an extraordinary assumption of this appraisal that the information provided and relied upon in this appraisal report is accurate.” No other conditions or extraordinary assumptions are outlined in the appraisal. The Rancho Verde apartments were inspected on November 4, 2019 and were not inspected as part of the updated appraisal process in August of 2020.

The Rancho Verde apartments are located in Albuquerque, New Mexico and consist of 65 units on a total area of approximately 2.97 acres. As of June 30, 2020, Rancho Verde was 100% occupied and produced an average monthly rent in the amount of $1.07 per square

H-8


EVANS & EVANS, INC.

foot based on the monthly in-place rent of all occupied suites. The average occupancy of Rancho Verde during 2019 was 96% with an annual turnover rate of 52%.

2.05 Fund 4 was formed as of April 28, 2016 under the laws of Alberta pursuant to the Declaration of Trust. Fund 4’s ultimate Property LP is the Suncreek Village Apartments LP, an Arizona limited partnership formed as of April 14, 2016 pursuant to the ARULPA.

Suncreek Village Apartments LP acquired the Tesoro on Spain (formerly Suncreek Village) apartments on June 17, 2016 for a purchase price of approximately $25.3 million. The purchase price was funded with a $17,071,000 10-year fixed-term loan from the FHLMC having an interest rate of 4.12% and an interest only period of five years (the “Tesoro Loan”). The Tesoro Loan matures on July 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Tesoro Loan is approximately $17,100,000. The defeasance cost to June 30, 2020 is approximately $3,801,980.

As of June 30, 2020, the independent appraised value of the Tesoro on Spain apartments is $29,300,000, unchanged from the December 31, 2019 appraised value. As of December 31, 2019, the independently appraised value of the Suncreek Village apartments was $29.3 million, up 15.8% from the December 31, 2018 appraised value and a total increase of approximately 28.7% over the purchase price. The author of the appraisal noted that “New Mexico is a non-disclosure state. As a result it is not possible to actually confirm or verify information provided by market participants in the market. This applies to sales, rents, expenses, and other pertinent information. It is an extraordinary assumption of this appraisal that the information provided and relied upon in this appraisal report is accurate.” No other conditions or extraordinary assumptions are outlined in the appraisal. The Rancho Verde apartments were inspected on November 4, 2019 and were not inspected as part of the updated appraisal process in August of 2020.

The Tesoro on Spain apartments are located in Albuquerque, New Mexico and consist of 267 units on a total area of approximately 14.8 acres. As of June 30, 2020, Tesoro was 96.6% occupied and produced an average monthly rent in the amount of $0.96 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Tesoro during 2019 was 94% with an annual turnover rate of 50%.

University Villas at Ironwood Apartments (“University Villas”) is a 140 suite/484 bed, garden style, Class “A”, purpose-built student apartment community located approximately four miles west of University of Arizona and the Pima Community College Downtown Campus and one mile north of Pima Community College West Campus in Tucson, Arizona.

University Villas was acquired for a purchase price of $17,450,000. The purchase price was funded with a $12,215,000 7-year fixed-term loan from the FHLMC having an interest rate of 4.73% amortizing over 30 years (the “University Villas Loan”). The University Villas Loan matures on June 1, 2025. As of the date hereof, the aggregate principal amount

H-9


EVANS & EVANS, INC.

outstanding under the University Villas Loan is approximately $11,877,000. The defeasance cost to June 30, 2020 is approximately $1,465,362.

A wholly owned subsidiary of Fund 4 purchased a 4.923% ownership interest in University Villas on May 15, 2018. Fund 4’s investment in University Villas is reflected in the working capital calculation.

The independent opinion of value of University Villas as of December 31, 2019 was $19,500,000, representing an approximate 11.7% increase over the purchase price.

The 140 suites that comprise University Villas are constructed on gross building area of 184,589 square feet on a 16.4 acre site. The average occupancy of University Villas during 2019 was 80% with an annual turnover rate of 64%.

2.06 Fund 5 was formed as of February 23, 2018 under the laws of Alberta pursuant to a Declaration of Trust. Fund 5’s ultimate Property LP is the North Park LP, a Delaware limited partnership formed as of January 25, 2018 pursuant to the Delaware Revised Uniform Partnership Act.

North Park LP acquired the North Park apartments on February 29, 2018 for a purchase price of approximately $14.5 million. The purchase price was funded with a $10,150,000 10-year fixed-term CMBS loan having an interest rate of 5.054% and an interest only period of two years (the “North Park Loan”). The North Park Loan matures on March 6, 2028. As of June 30, 2020 the aggregate principal amount outstanding under the North Park Loan is approximately $10,116,482. The defeasance cost to June 30, 2020 is approximately $3,412,544.

As of June 30, 2020, the updated appraised value was $12.85 million, a slight decrease from December 31, 2019. As of December 31, 2019, the independent appraised value of the North Park apartments was $12.9 million, a decrease of 11.6% from the December 31, 2018 appraised value and a total decrease of approximately 11.4% over the purchase price. The North Park apartments were inspected on November 16, 2019 and were not inspected as part of the updated appraisal process. The author of the appraisal noted that “New Mexico is a non-disclosure state. As a result it is not possible to actually confirm or verify information provided by market participants in the market. This applies to sales, rents, expenses, and other pertinent information. It is an extraordinary assumption of this appraisal that the information provided and relied upon in this appraisal report is accurate.” No other conditions or extraordinary assumptions are outlined in the appraisal.

The North Park apartments are located in Houston, Texas and consist of 192 units on a total area of approximately 6.21 acres. As of June 30, 2020, North Park was 95.31% occupied and produced an average monthly rent in the amount of $1.02 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of North Park during 2019 was 84% with an annual turnover rate of 63%.

H-10


EVANS & EVANS, INC.

2.07 Sungate is structured slightly different from the Trusts in that there is no parent trust associated with Sungate. Sungate was formed as of April 14, 2016 pursuant to the laws of British Columbia. Sungate’s ultimate Property LP is Sungate Apartments LP.

Sungate Apartments LP acquired the Sungate Apartments on June 17, 2016 for a purchase price of approximately $7.01 million.

Sungate does not require an independent appraisal; however one was undertaken as part of the Reorganization. The independent appraised value of the Sungate Apartments as of June 30, 2020 was $10,300,000 a 13.3% decline from the December 31, 2019, the Broker’s Opinion of Value of $11.3 to $12.25 million. The June 30, 2020 independently appraised value results in an increase of 47.4% since the acquisition date.

Sungate Apartments was acquired for a purchase price of $6,972,430. The purchase price was funded with a $5,229,000 10-year fixed-term from the FHLMC having an interest rate of 4.08% and interest only period of five years (the “Sungate Loan”). The Sungate Loan matures on July 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Sungate Loan is approximately $5,272,000. The defeasance cost to June 30, 2020 is approximately $1,200,950.

The Sungate apartments are located in Albuquerque, New Mexico and consist of 95 units on a total area of approximately 3.25 acres. As of June 30, 2020, Sungate Apartments was 100% occupied and produced an average monthly rent in the amount of $1.17 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Sungate Apartments during 2019 was 97% with an annual turnover rate of 47%.

2.08 In an effort to respond to the ongoing COVID-19 pandemic, a tenant support program was established to allow tenants of each of the Clear Sky Group properties as described in sections 2.02 to 2.07 of this Opinion (the “Properties”) to defer a portion of their rent to a later date with no interest. As of July 31, 2020, approximately $6,700 in rent deferrals have been granted to tenants of the Properties.

Due to the economic challenges and material uncertainty introduced by the COVID-19 pandemic, as a pre-emptive measure to conserve cash flow, the Board of Trustees of each of the Trusts and the Board of Directors of the general partner of Sungate determined to suspend all distributions for the first and second quarters of 2020 and all redemptions of units. The boards and management of the Clear Sky Group also continued to assess strategic alternatives in light of the pandemic, and undertook a further analysis on the proposed terms of the consolidated fund and the exchange ratio among the various Trusts under a potential consolidation.

3.0 Market Overview

3.01 In preparing the Opinion, Evans & Evans considered the following information on the overall apartment rental market in the United States:

H-11


EVANS & EVANS, INC.

a) Market research firm IBISWorld estimates the U.S. apartment rental market size in 2020 will reach $182.9 billion. The market has generally trended upwards over the past 10 years.

b) IBISWorld forecasts that revenue growth for the industry will decelerate in 2020 due to the national increase in unemployment due to the impact of COVID-19. There is also concern that evictions will increase due to unemployment.

c) Housing costs have been rising faster than overall inflation in the United States, but at fairly stable rates of gain. The latest four-quarter change in price for existing home prices was 5.1%, not much different than in recent years. Residential rent increased by just under 4%, pretty steady over the past few years4.

d) In the United States, the national rent index fell by 0.2% from April to May of 2020. Traditionally in quarter 2, rent growth is increasing due to seasonality in the market. From 2016 to 2019, month-over-month rent growth from April to May ranged from 0.4% to 0.5%. The unusual decline is generally attributed to uncertainty and economic fallout of the COVID-19 pandemic5.

e) Data suggests Mesa, Arizona represents the city with the highest growth in rents in 2019, growing at 3.4%, or more than four times the national rate. Mesa is located just outside of Phoenix, which ranks third on the list at 2.3%. Mesa is followed in the rent growth rankings by Colorado Springs (2.5%), while El Paso, Texas ranks fourth at 2.1%1. Fund 2 holds property in El Paso, Texas.

4 https://www.forbes.com/sites/billconerly/2020/03/07/us-housing-market-in-balance/#4d733bac584b 5 https://www.apartmentlist.com/rentonomics/national-rent-data/

H-12


EVANS & EVANS, INC.

3.02 Fund 1, Fund 3, Fund 4 and Sungate hold investments in Albuquerque, New Mexico. Located in the middle of the Rio Grande valley, Albuquerque is the most populous city in the state of New Mexico and the 32nd-most populous city in the United States. The city has seen steady population growth over the past 10 years. Albuquerque is New Mexico’s urban center and the 32nd largest city in the U.S., with a metro area population of over one million people6.

The City of Albuquerque reports the city’s median household income is $50,192 and the average household income is $69,3807. Historically, the area has grown at a pace of 1-2% per year. The Albuquerque metro area is growing year over year, specifically in the 30-34 and 40-44 age ranges.

In 2018, the median property value in Albuquerque grew to $207,300 from the previous year's value of $196,9008. In 2018, 58.3% of the housing units in Albuquerque were occupied by their owner. This percentage declined from the previous year's rate of 60.6%4 and is lower than the national average of 63.9%.

6 City of Albuquerque 7 No date provided. 8 https://datausa.io/profile/geo/16000US3502000#housing

H-13


EVANS & EVANS, INC.

New Mexico’s seasonally adjusted unemployment rate was 9.2% in May 2020, down from 11.9% in April and up from 4.9% the previous year. The national unemployment rate in May was 13.3%, down from 14.7% in April and up from 3.6% in May 20199.

3.03 Fund 2’s real estate property is located in El Paso, Texas. HW Media, LLC’s Housingwire named El Paso, Texas the country’s most affordable housing market in 2019. In 2018, El Paso, TX had a population of 845,000 people with a median age of 32.5 and a median household income of $43,862. Between 2017 and 2018 the population of El Paso, Texas grew from 842,677 to 844,723, a 0.243% increase and its median household income declined from $44,416 to $43,862, a -1.25% decrease10.

In 2018, 61.1% of the housing units in El Paso, TX were occupied by their owner. This percentage declined from the previous year's rate of 61.2%. This percentage of owner-occupation is lower than the national average of 63.9%.

Unemployment rates in Texas increased April 2020, due to the impact of the COVID-19 pandemic. In April of 2020, the Texas economy lost 1,298,900 nonfarm positions. Texas’ seasonally adjusted unemployment rate rose to 12.8%, below the national average of 14.7%11. El Paso’s unemployment rate was 14.8% in April of 2020, up from 3.3% in April of 2019.

3.04 Fund 3’s real estate property is located in Las Cruces, New Mexico. In 2017, Las Cruces, had a population of approximately 214,000 with a median age of 32.9 and a median household income of $39,114. Between 2016 and 2017 the population of Las Cruces grew from 213,825 to 213,849, a 0.0112% increase and its median household income grew from $38,636 to $39,114, a 1.24% increase.

In 2017, the median property value in Las Cruces grew to $140,700 from the previous year's value of $137,300. In 2017, 62.7% of the housing units in Las Cruces were occupied by their owner. This percentage declined from the previous year's rate of 63.2%.

3.05 Fund 5’s property is located in Houston, Texas. In 2018, Houston had a population of 2.33 million with a median age of 33.1 and a median household income of $51,203. Between 2017 and 2018 the population of Houston, TX grew from 2.31 million to 2.33 million, a 0.556% increase and its median household income grew from $50,896 to $51,203, a 0.603% increase.

9 https://www.jobs.state.nm.us/gsipub/index.asp?enc=JdKtFhuODzQ+aO5C6MuCGQ==#:~:text=New%20Mexico's%20seasonally%20adjusted%20unemployment,3.6%20percent%20in%20May%202019. 10 https://datausa.io/profile/geo/el-paso-tx-metro-area 11 https://www.twc.texas.gov/news/texas-unemployment-rate-128-percent#:~:text=Texas%20Unemployment%20Rate%2012.8%20Percent%20%7C%20Texas%20Workforce%20Commission

H-14


EVANS & EVANS, INC.

In 2018, the median property value in Houston grew to $179,100 from the previous year's value of $173,600. In 2018, 41.9% of the housing units in Houston were occupied by their owner, a decrease from the previous year's rate of 42.8%.

Houston’s unemployment rate was 14.2% in April of 2020, up from 3.3% in April of 2019.

4.0 Engagement of Evans & Evans, Inc.

4.01 Evans & Evans was formally engaged by the Independent pursuant to an engagement letter with the Trusts and Sungate signed April 14, 2010 (the “Engagement Letter”). The Engagement Letter was verbally amended on October 26, 2020. The Engagement Letter provides the terms upon which Evans & Evans has agreed to provide the Opinion to the Independent. The terms of the Engagement Letter provide that Evans & Evans is to be paid a fixed professional fee for its services. In addition, Evans & Evans is to be reimbursed for its reasonable out-of-pocket expenses and to be indemnified by the Funds in certain circumstances. The fee established for the Opinion is not contingent upon the opinions presented.

5.0 Scope of Review

5.01 In connection with preparing the Opinion, Evans & Evans has reviewed and relied upon, or carried out, among other things, the following:

Discussions with the Independent to gain an understanding of the Transaction and the rationale for the Transaction.

Conducted numerous interviews with management of the Clear Sky Group to understand how the Exchange Ratio was developed and to review and provide feedback on the assumptions and data considered in the calculations.

Reviewed a Memo outlining the terms of the Transaction.

Reviewed the draft Joint Management Information Circular for the Clear Sky Group respecting the Transaction (the “Circular”).

Reviewed the draft Transaction Agreement between the Clear Sky Group, New Fund and the Exchange LP.

Reviewed the draft Declaration of Trust for New Fund.

Reviewed the Appraisal of Real Property prepared for Clear Sky Capital, Inc. (“CS Capital”), a non-voting limited partner, on the Silverado property located in Albuquerque, New Mexico by Cushman & Wakefield of Arizona, Inc. as of December 31, 2019 and 2018. Also reviewed the updated Appraisal as of June 30, 2020.

H-15


EVANS & EVANS, INC.

Reviewed the Appraisal of Real Property prepared for CS Capital on the Villas at Helen of Troy property located in El Paso, Texas by Cushman & Wakefield of Arizona, Inc. as of December 31, 2019 and 2018. Also reviewed the updated Appraisal as of June 30, 2020.

Reviewed the Appraisal of Real Property prepared for CS Capital on the Casas De Soledad property located in Las Cruces, New Mexico by Cushman & Wakefield of Arizona, Inc. as of December 31, 2019 and 2018. Also reviewed the updated Appraisal as of June 30, 2020.

Reviewed the Appraisal of Real Property prepared for CS Capital on the Rancho Verde property located in Albuquerque, New Mexico by Cushman & Wakefield of Arizona, Inc. as of December 31, 2019 and 2018. Also reviewed the updated Appraisal as of June 30, 2020.

Reviewed the Appraisal of Real Property prepared for CS Capital on the Tesoro On Spain property located in Albuquerque, New Mexico by Cushman & Wakefield of Arizona, Inc. as of December 31, 2019 and 2018. Also reviewed the updated Appraisal as of June 30, 2020.

Reviewed the broker’s Opinion of Value on the University Villas property located in Tucson, Arizona as prepared by Cushman & Wakefield of Arizona, Inc. as of October 2019.

Reviewed the Appraisal of Real Property prepared for CS Capital on the Sungate Apartments property located in Albuquerque, New Mexico by Cushman & Wakefield of Arizona, Inc. as of June 30, 2020.

Reviewed the Opinion of Value on the Sungate Property in Albuquerque, New Mexico as prepared by NorthMarq as of October 2019.

Reviewed the Appraisal of Real Property prepared for CS Capital on the North Park Apartment apartments located in Houston, Texas by Cushman & Wakefield of Houston, Texas as of December 31, 2019. Also reviewed the updated Appraisal as of June 30, 2020.

Reviewed the Appraisal of North Park Apartments of Houston, Texas, as prepared by CBRE.

Reviewed the Agreement of Limited Partnership of Clear Sky Capital Rancho Verde LP effective as of May 13, 2016.

Reviewed the Confidential Offering Memorandum of Fund 1 dated October 17, 2014 and the Offering Memorandum for Fund 1 dated November 3, 2014 and amended and restated on January 16, 2015.

H-16


EVANS & EVANS, INC.

Reviewed the Confidential Offering Memorandum of Fund 2 dated August 14, 2015.

Reviewed the Confidential Offering Memorandum of Fund 3 dated December 4, 2015 as amended and restated March 1, 2016.

Reviewed the Confidential Offering Memorandums of Fund 4 dated May 16, 2016 and June 20, 2016.

Reviewed the Confidential Offering Memorandums of Fund 5 dated April 25, 2018.

Reviewed the Subscription Agreements for Class A LP units of Sungate and the associated Term Sheet.

Reviewed information on planned capital expenditures for each of the Property LPs and the potential for growth in rental income as provided by Clear Sky management.

Reviewed Fund 1’s consolidated audited financial statements for the years ended December 31, 2017 to 2019 as audited by RSM Alberta, LLP of Edmonton, Alberta.





Reviewed information on the legal, accounting and tax matters related to the Reorganization.

Reviewed industry and financial market information considered relevant to the determination of fairness.

Conducted interviews with independent individuals familiar with standard fees for construction and development of commercial properties and guarantee fees for loans.

Reviewed stock market, financial and operational data on the following entities: Equity Residential Properties Trust; Mid-America Apartment Communities, Inc.; Essex Property Trust, Inc.; AvalonBay Communities Inc; Camden Property Trust; Apartment Investment and Management Company; Bluerock Residential Growth REIT, Inc.; Sun Communities, Inc.; Independence Realty Trust, Inc.; NexPoint Residential Trust, Inc.;

H-17


EVANS & EVANS, INC.

BRT Apartments Corp.; Investors Real Estate Trust; and Preferred Apartment Communities, Inc.

Limitation and Qualification: Evans & Evans did not visit any of the Clear Sky Group’s facilities or properties. Evans & Evans has, therefore, relied on management’s disclosure with respect to the operations of the Clear Sky Group and the unitholder disclosure referenced above. The reader is advised that Evans & Evans can provide no independent technical and due diligence comfort or assurances as to the specific operating characteristics and functional capabilities of any of the properties.

6.0 Prior Valuations

6.01 The Clear Sky Group has represented to Evans & Evans that there have been no formal valuations relating to any of the Trusts or any affiliate or any of their respective material assets or liabilities made in the preceding two years which are in the possession or control of the Clear Sky Group other than property appraisals outlined in section 5.0 of the Opinion.

6.02 Evans & Evans did review and rely upon the appraisals and broker opinions of value as outlined in section 5.0 of the Opinion.

7.0 Conditions and Restrictions

7.01 The Opinion may not be issued to anyone, nor relied upon by any party beyond the Independent and the Clear Sky Group. The Opinion may be referenced and/or included in the Circular.

7.02 The Opinion may not be issued to any stock exchange and/or regulatory authority.

7.03 The Opinion may not be issued and/or used to support any type of value with any other third parties, legal authorities, nor stock exchanges, or other regulatory authorities, nor the Canada Revenue Agency nor the Internal Revenue Service. Such use is done so without the consent of Evans & Evans and readers are advised of such restricted use as set out above. Nor can it be used or relied upon by any of these parties or relied upon in any legal proceeding and/or court matter.

7.04 Any use beyond that defined above in 7.01 to 7.03 is done so without the consent of Evans & Evans and readers are advised of such restricted use as set out above.

7.05 The Opinion should not be construed as a formal valuation or appraisal of any of the Trusts or any of their securities or assets. Evans & Evans, has, however, conducted such analyses as we considered necessary in the circumstances.

7.06 In preparing the Opinion, Evans & Evans has relied upon and assumed, without independent verification, the truthfulness, accuracy and completeness of the information and the financial data provided by the Clear Sky Group. Evans & Evans has therefore

H-18


EVANS & EVANS, INC.

relied upon all specific information as received and declines any responsibility should the results presented be affected by the lack of completeness or truthfulness of such information. Publicly available information deemed relevant for the purpose of the analyses contained in the Opinion has also been used.

The Opinion is based on: (i) our interpretation of the information which the Clear Sky Group, as well its representatives and advisers, have supplied to-date; (ii) our understanding of the terms of the Transaction; and (iii) the assumption that the Transaction will be consummated materially in accordance with the expected terms as outlined in the Circular.

7.07 The Opinion is necessarily based on economic, market and other conditions as of the date hereof, and the written and oral information made available to us until the date of the Opinion. It is understood that subsequent developments may affect the conclusions of the Opinion, and that, in addition, Evans & Evans has no obligation to update, revise or reaffirm the Opinion.

7.08 Evans & Evans denies any responsibility, financial, legal or other, for any use and/or improper use of the Opinion however occasioned.

7.09 Evans & Evans is expressing no opinion as to the price at which any securities of New Fund will be sold or redeemed at any time.

7.10 No opinion is expressed by Evans & Evans whether any alternative transaction might have been more beneficial to the unitholders of the Clear Sky Group.

7.11 Evans & Evans reserves the right to review all information and calculations included or referred to in the Opinion and, if it considers it necessary, to revise part and/or its entire Opinion and conclusion in light of any information which becomes known to Evans & Evans during or after the date of this Opinion.

7.12 In preparing the Opinion, Evans & Evans has relied upon a letter from management of Clear Sky Group confirming to Evans & Evans in writing that the information and management's representations made to Evans & Evans in preparing the Opinion are accurate, correct and complete, and that there are no material omissions of information that would affect the conclusions contained in the Opinion.

7.13 Evans & Evans has based its Opinion upon a variety of factors. Accordingly, Evans & Evans believes that its analyses must be considered as a whole. Selecting portions of its analyses or the factors considered by Evans & Evans, without considering all factors and analyses together, could create a misleading view of the process underlying the Opinion. The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Any attempt to do so could lead to undue emphasis on any particular factor or analysis. Evans & Evans’ conclusions as to the fairness, from a financial point of view, to the Clear Sky Group’s unitholders, viewed independently, of the Transaction were based on its review of the Transaction taken as a

H-19


EVANS & EVANS, INC.

whole, in the context of all of the matters described under “Scope of Review”, rather than on any particular element of the Transaction or the Transaction outside the context of the matters described under “Scope of Review”. The Opinion should be read in its entirety.

7.14 Evans & Evans and all of its principals, partner, staff or associates’ total liability for any errors, omissions or negligent acts, whether they are in contract or in tort or in breach of fiduciary duty or otherwise, arising from any professional services performed or not performed by Evans & Evans, its principals, partner, any of its directors, officers, shareholders or employees, shall be limited to the fees charged and paid for the Opinion. No claim shall be brought against any of the above parties, in contract or in tort, more than two years after the date of the Opinion.

7.15 Evans & Evans does not express any opinion on the underlying business decision as to why to proceed with and/or why to effect the Transaction. The Opinion does not opine on such matters. Evans & Evans is not commenting nor providing any legal, accounting or tax advice in connection with the Transaction.

8.0 Assumptions

8.01 In preparing the Opinion, Evans & Evans has made certain assumptions as outlined below.

8.02 With the approval of Clear Sky Group and as provided for in the Engagement Letter, Evans & Evans has relied upon, and has assumed the completeness, accuracy and fair presentation of, all financial information, business plans, forecasts and other information, data, advice, opinions and representations obtained by it from public sources or provided by the Fund or its affiliates or any of its respective officers, directors, consultants, advisors or representatives (collectively, the “Information”). The Opinion is conditional upon such completeness, accuracy and fair presentation of the Information. In accordance with the terms of the Engagement Letter, but subject to the exercise of its professional judgment, and except as expressly described herein, Evans & Evans has not attempted to verify independently the completeness, accuracy or fair presentation of any of the Information.

8.03 Senior officers of the Clear Sky Group have represented to Evans & Evans that, among other things: (i) the Information (other than financial forecasts, projections, estimates or budgets) provided orally by, an officer or employee of the Clear Sky Group or in writing by the Clear Sky Group (including, in each case, affiliates and their respective directors, officers, consultants, advisors and representatives) to Evans & Evans relating to the Clear Sky Group, their affiliates or the Transaction, for the purposes of the Engagement Letter, including in particular preparing the Opinion was, at the date the Information was provided to Evans & Evans, fairly and reasonably presented and complete, true and correct in all material respects, and did not, and does not, contain any untrue statement of a material fact in respect of the Clear Sky Group, their affiliates or the Transaction and did not and does not omit to state a material fact in respect of the Clear Sky Group, their affiliates or the Transaction that is necessary to make the Information not misleading in light of the circumstances under which the Information was made or provided; and (ii) since the dates

H-20


EVANS & EVANS, INC.

on which the Information was provided to Evans & Evans, except as disclosed in writing to Evans & Evans, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of the Clear Sky Group or any of its affiliates and no material change has occurred in the Information or any part thereof which would have, or which would reasonably be expected to have, a material effect on the Opinion.

8.04 In preparing the Opinion, we have made several assumptions, including that all final or executed versions of documents will conform in all material respects to the drafts provided to us, all of the conditions required to implement the Transaction will be met, all consents, permissions, exemptions or orders of relevant third parties or regulating authorities will be obtained without adverse condition or qualification, the procedures being followed to implement the Transaction are valid and effective and that the disclosure provided or (if applicable) incorporated by reference in the Circular provided to unitholders with respect to the Trusts and their subsidiaries and the Transaction will be accurate in all material respects and will comply with the requirements of applicable law. Evans & Evans also made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of Evans & Evans and any party involved in the Transaction. Although Evans & Evans believes that the assumptions used in preparing the Opinion are appropriate in the circumstances, some or all of these assumptions may nevertheless prove to be incorrect.

8.05 The Clear Sky Group and all of its related parties and their principals had no contingent liabilities, unusual contractual arrangements, or substantial commitments, other than in the ordinary course of business, nor litigation pending or threatened, nor judgments rendered against, other than those disclosed by management and included in the Opinion that would affect the evaluation or comment.

8.06 There were no material changes in the financial position of the Funds, or their related limited partnerships between the date of the management-provided financial information (June 30, 2020) and November 3, 2020 (the “Date of Review”) unless noted in the Opinion.

8.07 There are no material changes in the appraised value of the Clear Sky Group’s real estate properties between June 30, 2020 and the Date of Review.

8.08 Conclusions contained herein are on a pre-tax basis to all unitholders of the Funds.

9.0 Review of the ER Methodology and the Exchange Ratios

9.01 The first step in providing the Opinion was understanding the ER Methodology employed and the data used in establishing the Exchange Ratios. Evans & Evans had multiple discussions with the Clear Sky Group with respect to the assumptions employed, the methodology and the data included / excluded. The reader is advised to refer to Exhibit 1.0 for a summary of the analysis.

H-21


EVANS & EVANS, INC.

In the view of Evans & Evans, the ER Methodology, which involved a notional winding up each of the limited partnerships to determine the net proceeds available to the Funds was appropriate and representative of the methodology employed in other transactions involving limited partnerships that Evans & Evans has participated in.

9.02 Evans & Evans has outlined below the steps involved in the development of the Exchange Ratios along with how Evans & Evans tested the reasonableness and fairness of the calculations.

a) The first step in the analysis was to review the independent December 31, 2019 and June 30, 2020 appraisals or broker opinions of value for each of the real estate investments held in the U.S. real estate limited partnership for each of the Funds. In the view of Evans & Evans reliance on independent appraisals or broker opinions of value for real estate assets is appropriate. Evans & Evans reviewed each of the appraisals and broker opinions of value and found no evidence to suggest the documents did not adhere to industry standards. Evans & Evans found none of the appraisals contained any restrictions or limitations that were not industry standard in nature.

The authors of the Opinion confirmed the appraised values used in the model to the appraisals. Evans & Evans also conducted a review of the real estate market in each geographical region to gain an understanding of whether there would be any material change in the appraised value.

b) The outstanding debt associated with the real estate asset was deducted. Defeasance costs were not included in the analysis. Estimated closing costs associated with a notional sale were also deducted. The consideration of closing costs and pre-payments was considered necessary in order to determine the fair market value of the assets held by each Property LP.

c) The available cash flow from the notional “winding up” of each Property LP, US LP and where appropriate Canadian LP also considered the distributions to the limited partners to-date. For each limited partnership, based on the partnership agreements, it was assumed the limited partners would receive a priority return of their invested capital. If funds were available over and above the return of capital, such excess funds were allocated 80% to the limited partners and 20% to the general partner. These amounts are set out in the offering memorandum for each of the Funds and are industry standard allocations in the experience of Evans & Evans.

d) Working capital for each limited partnership was added in determining the net available proceeds from winding up each limited partnership.

e) Income tax amounts were considered given the notional winding up of the Property LPs. The consideration of income tax amounts was important as given each of the Property LPs had held the real estate assets for differing periods of time and certain

H-22


EVANS & EVANS, INC.

properties had appreciated more than others. The North Park apartments, as ultimately invested in by Fund 5, was the only real estate asset where the most recent appraisal was below the purchase price. If, in a notional winding up of the Funds there existed tax loss carryforwards over and above what could be utilized to offset any gains in such winding up, such tax loss carryforward were not deemed as an additional asset. The nature of the Transaction is such that such New Fund may not be able to take advantage of such of “excess” tax loss carryforwards. Should New Fund make use of such tax losses it would serve to increase the distributable funds and all unitholders of New Fund would benefit on a pro rata basis.

f) A review of planned capital expenditures for each of the Property LPs and how such expenditures would impact the potential net income for the Property LP in the short-term.

10.0 Fairness Considerations

10.01 In arriving at the conclusions as to the fairness of the Transaction, Evans & Evans considered the following:

a) The methodology and waterfall analysis which resulted in a net contribution and Exchange Ratio for each Clear Sky Group entity to New Fund was fair and reasonable. In the opinion of Evans & Evans all assumptions which could be reasonably and fairly measured were included in the analysis and reflected in the calculation of the Exchange Ratio. As a result, in the opinion of Evans & Evans the Exchange Ratios to be received by the unitholders of the Clear Sky Group are fair, from a financial point of view, to the unitholders.

b) The assumption used in developing the Exchange Ratios were consistent for each of the Funds.

c) New Fund will hold properties in four different cities across three states. Regional diversification could potentially reduce overall risk of the portfolio and exposure to one region.

d) New Fund may be able to generate efficiencies and economies of scale at the administrative level to reduce costs. As a larger, consolidated entity, New Fund may be able to invest in technology to manage its portfolio more efficiently.

e) As outlined in section 2.01 of this Opinion, if any of the Properties is refinanced resulting a Property LP receiving additional funds, the general partner of the associated US LP has a right to its economic interest in such funds. Management of the Clear Sky Group has noted to Evans & Evans that one of the goals of New Fund is to leverage the equity in the existing Properties to access new sources of funding, which may be utilized to buy new real estate assets without seeking new equity through the issuance of new units in New Fund. Management of the Clear Sky Group has further noted that

H-23


EVANS & EVANS, INC.

the general partner intends to invest its pro rata share of any funds received. Such “reinvestment” by the general partner may result in the ability to grow New Fund’s property portfolio and / or decrease financing costs for existing properties.

f) The proposed Asset Management Fee (which will include all salaries and other general and administrative costs) for New Fund is significantly less than the annual general and administration costs of the Clear Sky Group as a whole, which is positive.

g) The proposed fees which may be generated by New Fund are reasonable. Evans & Evans reviewed the development fee, construction fee, and guarantee fee in relation to similar transactions. Evans & Evans conducted an independent review of such fees and found them to be reasonable and within industry standard fee ranges. The review included discussions with independent industry professionals and a review of literature on the subject from a variety of sources.

h) A review of trusts, real estate investment trusts (“REITs”) and corporations which focus on rental apartment real estate assets as outlined in the table below12.

In reviewing the above-noted data, Evans & Evans found that on average, entities with less than 20,000 units had lower enterprise value (“EV”) to unit and EV to net asset value (“NAV”) multiples than entities with greater than 20,000 but less than 100,000 units13. There is potential, that unitholders may benefit from owning units in a larger investment entity.

12 Data as of September 15, 2020 13 Evans & Evans remove the EV / NAV multiple of BRG as it appeared to be an outside relative to the data set.

Market Enterprise Forward TTM EV/ EV/Company Name Ticker Exchange Capitalization Value P/E Revenues Units NAV Unis NAV

BRT Apartments Corp. BRT NYSE 216.6 359.0 n/a 19.3 11,783 195.2 $30,472 1.84 (x)Investors Real Estate Trust IRET NYSE 895.6 1,566.0 n/a 181.5 11,445 665.5 $136,830 2.35 (x)Independence Realty Trust, Inc. IRT NYSE 1,108.5 2,104.7 97.1 206.3 15,805 616.4 $133,165 3.41 (x)Bluerock Residential Growth REIT, Inc. BRG NYSE 773.3 2,113.3 n/a 225.6 15,962 172.7 $132,393 12.24 (x)NexPoint Residential Trust, Inc. NXRT NYSE 1,072.3 2,359.7 69.4 199.8 14,104 354.4 $167,308 6.66 (x)Preferred Apartment Communities, Inc. APTS NYSE 317.6 3,055.0 n/a 494.5 12,936 1,710.0 $236,159 1.79 (x)AvalonBay Communities Inc AVB NYSE 2,191.4 9,406.5 32.2 2,360.0 86,380 10,870.8 $108,897 0.87 (x)Apartment Investment and Management Company AIV NYSE 5,444.0 10,333.1 714.3 904.1 32,938 1,774.2 $313,713 5.82 (x)Camden Property Trust CPT NYSE 8,961.4 11,652.9 55.3 1,060.0 56,383 3,610.6 $206,675 3.23 (x)Sun Communities, Inc. SUI NYSE 14,418.5 17,450.4 n/a 1,260.0 142,000 4,419.4 $122,890 3.95 (x)Mid-America Apartment Communities, Inc. MAA NYSE 13,560.3 18,214.0 n/a 1,660.0 101,954 6,171.6 $178,650 2.95 (x)Essex Property Trust, Inc. ESS NYSE 14,110.8 20,206.1 46.1 1,630.0 60,000 6,352.9 $336,768 3.18 (x)Equity Residential Properties Trust EQR NYSE 20,966.6 29,477.4 54.6 2,710.0 78,410 10,837.5 $375,939 2.72 (x)

Average of all Comparables: $190,758 3.92 (x)Median of all Comparables: $167,308 3.18 (x)Coefficient of Variance 0.53 0.75

H-24


EVANS & EVANS, INC.

Evans & Evans also found that on average, entities with a NAV less than $1.0 billion had EV / unit and EV / NAV multiples below that of larger companies. Overall EV / unit multiples increased with NAV. There is potential, that unitholders may benefit from owning units in a larger investment entity.

11.0 Qualifications & Certification

11.01 The Opinion preparation was carried out by Jennifer Lucas and thereafter reviewed by Michael Evans.

Mr. Michael A. Evans, MBA, CFA, CBV, ASA, Principal, founded Evans & Evans, Inc. in 1988. For the past 34 years, he has been extensively involved in the financial services and management consulting fields in Vancouver, where he was a Vice-President of two firms, The Genesis Group (1986-1989) and Western Venture Development Corporation (1989-1990). Over this period, he has been involved in the preparation of over 2,500 technical and assessment reports, business plans, business valuations, and feasibility studies for submission to various Canadian stock exchanges and securities commissions as well as for private purposes. Formerly, he spent three years in the computer industry in Western Canada with Wang Canada Limited (1983-1986) where he worked in the areas of marketing and sales.

Mr. Michael A. Evans holds: a Bachelor of Business Administration degree from Simon Fraser University, British Columbia (1981); a Master’s degree in Business Administration from the University of Portland, Oregon (1983) where he graduated with honors; the professional designations of Chartered Financial Analyst (CFA), Chartered Business Valuator (CBV) and Accredited Senior Appraiser. Mr. Evans is a member of the CFA Institute, the Canadian Institute of Chartered Business Valuators (“CICBV”) and the American Society of Appraisers (“ASA”).

Unit Analysis Average Median Average Median

< 20,000 units $139,388 $134,998 3.21 (x) 2.35 (x)>20,000 & < 100,000 units $268,398 $313,713 3.16 (x) 3.18 (x)> 100,000 units $150,770 $150,770 3.45 (x) 3.45 (x)

EV / Unit EV / NAV

NAV Analysis Average Median Average Median

<$1.0 billion $120,034 $133,165 3.57 (x) 2.88 (x)>$1.0 billion and < $5.0 billion $219,859 $221,417 3.7 (x) 3.59 (x)> $5.0 billion $250,063 $257,709 3.23 (x) 2.95 (x)

EV / Unit EV / NAV

H-25


EVANS & EVANS, INC.

Ms. Jennifer Lucas, MBA, CBV, ASA, Managing Partner, joined Evans & Evans in 1997. Ms. Lucas possesses several years of relevant experience as an analyst in the public and private sector in British Columbia and Saskatchewan. Her background includes working for the Office of the Superintendent of Financial Institutions of British Columbia as a Financial Analyst. Ms. Lucas has also gained experience in the Personal Security and Telecommunications industries. Since joining Evans & Evans Ms. Lucas has been involved in writing and reviewing over 1,500 valuation and due diligence reports for public and private transactions.

Ms. Lucas holds: a Bachelor of Commerce degree from the University of Saskatchewan (1993), a Master in Business Administration degree from the University of British Columbia (1995). Ms. Lucas holds the professional designations of Chartered Business Valuator and Accredited Senior Appraiser. She is a member of the CICBV and the ASA.

11.02 The analyses, opinions, calculations and conclusions were developed, and this Opinion has been prepared in accordance with the standards set forth by the Canadian Institute of Chartered Business Valuators.

11.03 The authors of the Opinion have no present or prospective interest in any of the Funds, or any entity that is the subject of this Opinion, and we have no personal interest with respect to the parties involved.

H-26

Exhibit 1.0 – Summary of ER Methodology and Exchange Ratios Analysis November 3, 2020 Page 26

The following table provides a summary of the waterfall analysis outlined in section 9.0 of this Opinion that was used in deriving the ultimate Exchange Ratios for each of the Funds.

Notes 1. BOV – Mid represents the appraised value of the real estate asset as of June 30, 2020. Where

a range has been provided the mid-point has been utilized. 2. ReFi – 75% LTV – is the refinancing at a 75% loan to value ratio 3. Prop LP – Property LP 4. GP – General Partner

Proceeds Fund 1 Fund 2 Fund 3 Fund 4 Fund 5 Sungate TotalBOV - Mid 28,050,000 12,700,000 26,250,000 29,300,000 12,850,000 10,300,000 119,450,000ReFi - 75% LTV 0 0 - 0 0 0 0Loan Balance 14,653,638 7,800,000 15,629,082 17,100,000 10,116,482 5,272,000 70,571,202Loan Prepayment Penalty - - - - 0 - - Closing Fees - 1.50% 420,750 254,000 393,750 439,500 257,000 154,500 1,919,500Net proceeds on sale/refinace (Total Equity) 12,975,612 4,646,000 10,227,168 11,760,500 2,476,518 4,873,500 46,959,298

Disposition fee (420,750) (190,500) (393,750) (439,500) (192,750) - (1,637,250)

Less other payables at Prop LP 80,558 36,736 (68,565) 157,149 7,523 157,469 370,871 Net proceeds available (Total Equity after fees) 12,635,420 4,492,236 9,764,853 11,478,149 2,291,291 5,030,969 45,692,919 Less Property GP Distribution (1,767,076) (420,105) (999,658) (1,240,867) - (740,717) (5,168,424)

Less other payables at US LP (26,809) (294,786) 298,878 353,969 (79,032) 21,677 273,897

Less US GP Distribution (589) - (306) (400) (221) (286) (1,803)

Less other payables at Can LP (80,461) (71,436) (111,017) (41,225) (59,028) 130,280 (232,888)

Less CAD GP Distribution (427) - (191) (257) - (193) (1,068)

Less US tax liability/plus tax benefit (1,446,289) (80,301) (697,503) (873,303) - (711,004) (3,808,400)

Less other payables at Trust 153,803 16,858 (124,964) 270,960 347,304 - 663,961 Cash Distributed To Unitholders (Total Equity to Unitholders)-USD 9,467,572$ 3,642,466$ 8,130,091$ 9,947,026$ 2,500,314$ 3,730,726$ 37,418,194$

Current Fx rate 1.32 1.32 1.32 1.32 1.32 1.32 1.32 Cash Distributed To Unitholders (Total Equity to Unitholders)-CAD 12,497,194$ 4,808,055$ 10,731,720$ 13,130,074$ 3,300,414$ 4,924,558$ 49,392,016$

Original Investment to Liquidation valueOriginal Subscription Less distributions 6,519,905 4,415,458 7,512,276 9,093,828 8,353,577 1,837,756 37,732,800 Equity (Negative Equity) 2,947,667$ (772,992)$ 617,815$ 853,198$ (5,853,263)$ 1,892,970$ (314,606)$ Cash Distributed To Unitholders (Total Equity to Unitholders) 9,467,572 3,642,466 8,130,091 9,947,026 2,500,314 3,730,726 37,418,194

145% 82% 108% 109% 30% 203%

GP Totals LP15 LP16 LP19 LP22 LP31 LP23Disposition Fees 420,750 190,500 393,750 439,500 192,750 - 1,637,250

GP Carried Interest 1,768,092 420,105 1,000,155 1,241,525 221 741,196 5,171,295 2,188,842 610,605 1,393,905 1,681,025 192,971 741,196 6,808,545

H-27

Exhibit 3.0 – Clear Sky Capital Strategic Asset Fund Series I November 3, 2020 Page 27

EVANS & EVANS, INC.

The data from the above analysis was used to establish a contribution value for each entity in the Clear Sky Group in order to determine the notional value of New Fund. The pro rata contribution of each of the Funds results in the Exchange Ratios.

Fund Name Value Current Units $/Current Unit New Units New units per old unit

Clear Sky Capital Strategic Asset Fund Ser $9,467,572 1,022,923 9.26 946,757 0.925541

Clear Sky Capital Strategic Asset Fund Ser $3,642,466 682,774 5.33 364,247 0.533480




Clear Sky Sungate LP $3,730,726 468 7,971.64 373,073 797.163691

-

$37,418,194 5,617,667 6.66 3,741,819 0.67

H-28

Exhibit 2.0 – Clear Sky Capital Strategic Asset Fund Series I November 3, 2020 Page 28

Clear Sky Capital Strategic Asset Fund Series I

Based upon and subject to the foregoing and such other matters as we consider relevant, it is our opinion, as of the date hereof, that the terms of the Transaction are fair, from a financial point of view, to the unitholders of Fund 1.

In considering fairness, from a financial point of view, Evans & Evans considered the Transaction from the perspective of Fund 1’s unitholders as a group and did not consider the specific circumstances of any particular unitholder, including with regard to income tax considerations.

In arriving at the above-noted conclusions as to the fairness of the Transaction, Evans & Evans considered the following factors that were specific to Fund 1, over and above the consideration outlined in section 10.0 of the body of the Opinion :

a. New Fund’s loan to value ratio will be approximately 0.59 versus 0.52 for Fund 1. The loan-to-value (“LTV”) ratio is an assessment of lending risk that financial institutions and other lenders examine before approving a mortgage. Typically, loan assessments with high LTV ratios are considered higher risk loans. Therefore, if the mortgage is approved, the loan has a higher interest rate.

b. The appraised value Fund 1’s property has increased approximately 43.8% since acquisition. Given such a significant increase there is risk that there is limited opportunity for continued growth in the appraised value.

c. Net income from the Silverado apartments has stabilized and this Property LP has the lowest potential for growth amongst the Clear Sky Group holdings. Accordingly, the holders of Fund 1 units may benefit from the potential growth of other holdings within New Fund’s assets.

Yours very truly,

EVANS & EVANS, INC.

H-29

Exhibit 3.0 – Clear Sky Capital Strategic Asset Fund Series II November 3, 2020 Page 29

Clear Sky Capital Strategic Asset Fund Series II



In arriving at the above-noted conclusions as to the fairness of the Transaction, Evans & Evans considered the following factors that were specific to Fund 2, over and above the consideration outlined in section 10.0 of the body of the Opinion:

a. New Fund’s loan to value ratio will be approximately 0.59 versus 0.61 for Fund 2. The overall reduced LTV for New Fund relative to Fund 2, may be helpful if there is the potential to renegotiate future mortgage rates.

b. Fund 2 ultimately holds property in El Paso, Texas, which has one of the most affordable housing markets, which reduces the potential for rentals.

c. El Paso’s unemployment rate near the date of the Opinion is higher than the other regions in which the Clear Sky Group operates. Higher unemployment rates do create risk with regards to rent appreciation.

d. The Villas at Helen of Troy have had the second least appreciation since acquisition amongst the Clear Sky Group holdings. Accordingly, the holders of Fund 2 units may benefit from the potential growth of other holdings within New Fund’s assets.

e. There is potential for net income growth for Fund 2 as occupancy rates are currently low at the Villas at Helen of Troy. However, given broader economic factors, there is no certainty such growth will occur.

f. The appraised value of Fund 2’s real estate asset is below the average and median value of the Clear Sky Group holdings. Thus, unitholders in Fund 2 may benefit from ownerships in a larger entity.

Yours very truly,

EVANS & EVANS, INC.

H-30

Exhibit 4.0 – Clear Sky Capital Strategic Asset Fund Series III November 3, 2020 Page 30

Clear Sky Capital Strategic Asset Fund Series III




a. New Fund’s loan to value ratio will be approximately 0.59 versus 0.60 for Fund 3. Thus, the risk profile is nearly the same.

b. Fund 3 ultimately holds property in Las Cruces, a city with a high percentage of homeowners.

c. The appraised value of Fund 3’s real estate is above both the average and the median of properties, i.e., Fund 3 is contributing one of the larger assets.

d. Net income from the Casas De Soledad and Rancho Verde apartments have stabilized and as such the potential for net income growth is low. Accordingly, the holders of Fund 3 units may benefit from the potential growth of other holdings within New Fund’s assets.

Yours very truly,

EVANS & EVANS, INC.

H-31

Exhibit 5.0 – Clear Sky Capital Strategic Asset Fund Series IV November 3, 2020 Page 31

EVANS & EVANS, INC.

Clear Sky Capital Strategic Asset Fund Series IV




a. New Fund’s loan to value ratio is essentially on par with that of Fund 4, meaning the risk profile is similar.

b. Fund 4 ultimately holds property in Albuquerque, a city which has one of the second lowest homeownership percentage of the markets in which the Clear Sky Group operates.

c. The appraised value of Fund 4’s real estate is above both the average and the median of properties. Fund 4 is contributing largest asset and there is no adjustment for this contribution. Conversely, the appraised value of the asset has increased significantly since acquisition and there is limited potential for growth.

d. Net income from the Tesoro on Spain apartments has stabilized and as such the potential for net income growth is low. Accordingly, the holders of Fund 4 units may benefit from the potential growth of other holdings within New Fund’s assets.

Yours very truly,

EVANS & EVANS, INC.

H-32

Exhibit 7.0 – Clear Sky Capital Strategic Asset Fund Series V November 3, 2020 Page 32

Clear Sky Capital Strategic Asset Fund Series V




a. New Fund’s loan to value ratio is 0.59 versus 0.79 for Fund 5. Accordingly, unit holders may benefit being part of a less risky portfolio of assets.

b. Fund 5 had the only asset that declined in appraised value in 2019 relative to 2018. Thus, unitholders may benefit from participating in a more stable group of real estate assets.

c. Related to the point above, given the decline in value, Fund 5’s real estate asset has significantly greater potential for an increase in net income relative to the rest of the assets in New Fund’s portfolio. However, there is no assurance such appreciation will occur.

d. Fund 5 is also contributing one of the smaller assets to the New Fund portfolio and as such unitholders may benefit from holding units in a larger portfolio.

e. Based on a notional wind up of all of the assets of Fund 5, Fund 5 is contributing tax loss carryforwards of a material nature to New Fund. As noted above, given the uncertainty as to whether New Fund would be able to take advantage of such losses in a reasonable time period, the value of Fund 5 used in the calculation of the Exchange Ratio does not include these tax losses. If New Fund is able to utilize such tax losses, the benefits will be shared pro rata by all unitholders of Fund 5, However, it is important to note, that such “excess” tax losses exist because the value of Fund 5’s ultimate real estate asset has declined in value whereas the value of the remaining Trusts and Sungate’s real estate assets have increase in value. In other words, the “excess” tax losses exist because Fund 5 has no gains to offset. As a result of the decline in the value of its real estate assets, Fund 5 can currently not make use of the “excess” tax losses.

Yours very truly,

EVANS & EVANS, INC.

H-33

Exhibit 8.0 – Clear Sky Sungate Limited Partnership November 3, 2020 Page 33

Clear Sky Sungate Limited Partnership

Based upon and subject to the foregoing and such other matters as we consider relevant, it is our opinion, as of the date hereof, that the terms of the Transaction are fair, from a financial point of view, to the unitholders of Sungate.

In considering fairness, from a financial point of view, Evans & Evans considered the Transaction from the perspective of Sungate’s unitholders as a group and did not consider the specific circumstances of any particular unitholder, including with regard to income tax considerations.

In arriving at the above-noted conclusions as to the fairness of the Transaction, Evans & Evans considered the following factors that were specific to Sungate, over and above the consideration outlined in section 10.0 of the body of the Opinion:

a. New Fund’s loan to value ratio is 0.59 versus 0.51 for Sungate. Essentially, holders of Sungate are contributing more value over outstanding mortgage than the Trusts. Thus, Sungate is helping to reduce the overall risk of the portfolio without any change in return.

b. Sungate contributing one of the smaller assets to the New Fund portfolio and as such unitholders may benefit from holding units in a larger portfolio.

c. Net income from the Sungate apartments has stabilized and as such the potential for net income growth is low. Accordingly, the holders of Sungate units may benefit from the potential growth of other holdings within New Fund’s assets.

d. Holders of units in Sungate are being issued Exchangeable Units and not units in New Fund, however, the Exchangeable Units are convertible into New Fund units on a 1:1 ratio.

e. It is proposed that New Fund will have a slightly higher Acquisition Fee (the fee paid for new properties) than Sungate, but the difference is not material and in the opinion of Evans & Evans is offset from the potential synergies and benefits of participating in a larger, more diversified portfolio of properties.

Yours very truly,

EVANS & EVANS, INC.

H-34

I-1

SCHEDULE “I”

FORM OF TRANSACTION AGREEMENT

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I

– and –

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II

– and –

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III

– and –

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV

– and –

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5

– and –

CLEAR SKY SUNGATE LIMITED PARTNERSHIP

– and –

ASPEN REAL ESTATE TRUST

– and –

CSC MERGER LP

TRANSACTION AGREEMENT

- 1 -

TRANSACTION AGREEMENT

Agreement”), is made:

B E T W E E N

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES I, an open-ended, unincorporated investment trust formed under the laws of Alberta (“Fund 1”);

- and -

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES II, an open-ended, unincorporated investment trust formed under the laws of Alberta (“Fund 2”);

- and -

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES III, an open-ended, unincorporated investment trust formed under the laws of Alberta (“Fund 3”);

- and -

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES IV, an open-ended, unincorporated investment trust formed under the laws of Alberta (“Fund 4”);

- and -

CLEAR SKY CAPITAL STRATEGIC ASSET FUND – SERIES 5, an open-ended, unincorporated investment trust formed under the laws of Alberta (“Fund 5” and, together with Fund 1, Fund 2, Fund 3, and Fund 4, the “Trusts” and each, a “Trust”);

- and -

CLEAR SKY SUNGATE LIMITED PARTNERSHIP, a limited partnership formed under the laws of British Columbia (“Sungate” and, together with the Trusts, the “ExistingFunds” and each, an “Existing Fund”);

- and -

ASPEN REAL ESTATE TRUST, an open-ended, unincorporated investment trust formed under the laws of Alberta (“New Fund”);

- and -

CSC MERGER LP, a limited partnership formed under the laws of British Columbia (“New LP”).

WHEREAS each of the Existing Funds desires that the Existing Funds shall be effectively consolidated into New Fund (the “Transaction”);

WHEREAS the independent member of the board of trustees or board of directors of the general partner, as applicable, of each of the Existing Funds has considered the Transaction and has determined that the Transaction is advisable and in the best interests of the applicable Existing Fund;

WHEREASa special meeting of Existing Unitholders of each of the Trusts authorizing and approving an amendment to the declaration of trust of their respective Trusts to provide for the transfer of all of the assets of the

- 2 -

applicable Trust (other than a nominal amount of cash) to New Fund in consideration for the assumption of liabilities of the applicable Trust and New Fund Units, and the redemption of all units of the applicable Trust (other than one unit to be held by New Fund) in exchange for such New Fund Units, and (ii) the Sungate Unitholders passed a written resolution authorizing and approving an amendment to the limited partnership agreement of Sungate to provide for (a) the redemption of the Sungate Units held by Non-Electing Sungate Unitholders (as defined herein) in consideration for New Fund Units, and (b) the transfer of all of the Sungate Units held by Electing Sungate Unitholders (as defined herein) to New LP in exchange for Class B LP Units (as defined herein), in each case to facilitate the Transaction;

WHEREAS this Agreement is being made to set out the terms and conditions pursuant to which the Transaction shall be implemented.

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises, the payments and the mutual agreements and covenants herein contained and for other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties hereto agree as follows:

ARTICLE 1 INTERPRETATION

1.1 Definitions. In this Agreement, unless the context expressly or by necessary implication requires otherwise, the following words and phrases shall have the meanings indicated and grammatical variations shall have the corresponding meanings:

(a) “Agreement” has the meaning specified in the recitals hereto;

(b) “Canadian LPs” means, collectively, Clear Sky Capital Real Estate Solutions XV Limited Partnership, Clear Sky Capital Real Estate Solutions XVI, Limited Partnership, Clear Sky Capital Real Estate Solutions XIX Limited Partnership, Clear Sky Capital Real Estate Solutions XXII Limited Partnership and Clear Sky Capital Real Estate Solutions 31 Limited Partnership; and “Canadian LP” means any one of them;

(c) “Circular” means the joint management information circular of the Existing Funds dated November 5, 2020;

(d) “Class A LP Units” means the Class A, voting limited partnership units of New LP;

(e) “Class B LP Units” means the Class B, non-voting exchangeable limited partnership unitsof New LP;

(f) “Closing Date

(g) “Closing Time on the Closing Date;

(h) “Effective Exchange Rate” means an exchange rate of US$1.00 = C$1.3628, as reportedby the Bank of Canada for conversion of United States dollars to Canadian dollars on June30, 2020;

(i) “Electing Sungate Unitholder” means a holder of Sungate Units that (i) is resident inCanada for purposes of the Tax Act, (ii) is not exempt from tax under section 149 of the

- 3 -

Tax Act, (iii) is neither a partnership nor a trust, and (iv) has validly elected in accordance with the procedures set out in the Circular;

(j) “Existing Funds” has the meaning specified in the recitals hereto;

(k) “Existing Unitholders” means, collectively, the holders of the Existing Units;

(l) “Existing Units” means, collectively, the Fund 1 Units, the Fund 2 Units, the Fund 3 Units, the Fund 4 Units, the Fund 5 Units and the Sungate Units;

(m) “Fund 1” has the meaning specified in the recitals hereto;

(n) “Fund 1 Units” means the Class A units, Class B units and Special Voting units of Fund 1;

(o) “Fund 2” has the meaning specified in the recitals hereto;

(p) “Fund 2 Units” means the Class A units, Class B units and Special Voting units of Fund 2;

(q) “Fund 3” has the meaning specified in the recitals hereto;

(r) “Fund 3 Units” means the Class A units, Class B units, Class C US$ units and Special Voting units of Fund 3;

(s) “Fund 4” has the meaning specified in the recitals hereto;

(t) “Fund 4 Units” means the Class A units, Class B US$ units, Class C units and Special Voting units of Fund 4;

(u) “Fund 5” has the meaning specified in the recitals hereto;

(v) “Fund 5 Units” means the Class A, Series A1 units, Class A, Series F1 units, Class A, Series A2 units and Class A, Series F2 units of Fund 5;

(w) “Funds” means, collectively, the Existing Funds and New Fund;

(x) “Joint Tax Election” has the meaning specified in Section 2.5;

(y) “Net Equity Value” of an Existing Fund means the estimated value of such Existing Fund on a hypothetical liquidation of such Existing Fund’s and its subsidiaries’ assets at its appraised value of the properties owned by the applicable Existing Fund and after consideration of net working capital, and the payment of outstanding liabilities, selling costs, tax (including value of net operating losses to be transferred), and the payment of the applicable sponsor equity of the Existing Fund;

(z) “New Fund” has the meaning specified in the recitals hereto;

(aa) “New LP” has the meaning specified in the recitals hereto;

(bb) “New Fund Class A Units” means the Class A units of New Fund;

- 4 -

(cc) “New Fund Class B Units” means the Class B units of New Fund;

(dd) “New Fund Units” means, together, the New Fund Class A Units and the New Fund Class B Units;

(ee) “Non-Electing Sungate Unitholders” means the holders of Sungate Units, other than Electing Sungate Unitholders;

(ff) “QE Transactions” has the meaning given in Section 2.4;

(gg) “Sungate” has the meaning specified in the recitals hereto;

(hh) “Sungate Units” means the Class A limited partnership units of Sungate;

(ii) “Sungate Unitholders” means the holders of the Sungate Units;

(jj) “Tax Act” the Income Tax Act (Canada) and the regulations made thereunder;

(kk) “Tax Election Deadline” has the meaning specified in Section 2.5;

(ll) “Taxes” means all taxes, charges, fees, levies, imposts and other assessments, including all income, sales, use, goods and services, value added, capital, capital gains, alternative, net worth, transfer, profits, withholding, excise, real property and personal property taxes, and any other taxes, customs duties, fees, assessments or similar charges in the nature of a tax, together with any instalments with respect thereto, and any interest, fines and penalties, imposed by any governmental authority (including federal, state, provincial, municipal and foreign governmental authorities), and whether disputed or not;

(mm) “Transaction” has the meaning specified in the recitals hereto;

(nn) “Trust” has the meaning specified in the recitals hereto;

(oo) “Trust Assets” of a Trust means all of the assets of the Trust as at the Closing Time and all other rights of and claims that may be advanced by such Trust of any sort existing on or arising after the Closing Time (including the Trust’s limited partnership interests in the corresponding Canadian LP); and

(pp) “Trust Liabilities” of a Trust means all of the liabilities of the Trust as at the Closing Time (including for greater certainty any obligations of the Trust to make payments to holders of units of the Trusts who validly exercised dissent rights in respect of the Transaction).

1.2 Number and Gender. In this Agreement, where the context so requires, words importing the singular include the plural and vice versa and words importing one gender include all genders.

1.3 Headings. Section headings are not to be considered part of this Agreement and are included solely for convenience of reference and are not intended to be full or accurate descriptions of the contents thereof.

1.4 Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof, and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties, whether oral or written, and there are

- 5 -

no warranties, representations or other agreements between the parties in connection with the subject matter hereto except as specifically set forth herein. No supplement, modification, waiver or termination of this Agreement shall be binding unless executed in writing by the party or parties to be bound thereby.

1.5 Successors and Assigns. This Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective successors and assigns.

ARTICLE 2CONSOLIDATION OF THE EXISTING FUNDS AND

PURCHASE AND SALE OF THE EXISTING FUND ASSETS

2.1 Amendments to Constating Documents. Prior to the Closing Time, the declaration of trust orlimited partnership agreement of each of the Existing Funds, as applicable, shall be amended toprovide for:

(a) in the case of each of the Trusts, the transfer of the Trust Assets of such Trust (other thana nominal amount of cash) to New Fund in consideration for the assumption of the TrustLiabilities of such Trust and the issuance to such Trust of New Fund Units, and theredemption of the Existing Units of such Trust (other than one unit to be held by NewFund) in exchange for such New Fund Units; and

(b) in the case of Sungate, the redemption of the Sungate Units held by Non-Electing SungateUnitholders in consideration for New Fund Units, and the transfer of Sungate Units heldby Electing Sungate Unitholders to New LP in exchange for Class B LP Units,

in each case to effect the Transaction in accordance with this Agreement.

2.2 Transaction Steps. The Transaction shall be carried out by the sequence of steps described below,which the parties agree shall occur sequentially at five minute intervals in the order set forth belowstarting at the Closing Time, except where otherwise stated.


(a) Each Trust shall transfer to New Fund the Trust Assets of such Trust (other than a nominalamount of cash determined by the trustees of such Trust), in consideration of theassumption of the applicable Trust Liabilities of such Trust by New Fund and the issuanceby New Fund such number and class of New Fund Units determined in accordance withSection 2.3 hereof, and New Fund shall assume such liabilities and issue such New FundUnits to such Trust.

(b) Each Trust shall redeem all of the issued and outstanding Existing Units of the Trust (otherthan one Existing Unit held by New Fund) and shall deliver the applicable New Fund Units(received from New Fund as described in the preceding step) to Existing Unitholders ofthe Trust on a pro rata basis as determined in accordance with Section 2.3 hereof (but, foreach Existing Unitholder, rounded down to the nearest whole New Fund Unit) in fullsatisfaction of the redemption price of the Existing Units so redeemed.

- 6 -

Redemption of Sungate Units

(c) The following shall occur simultaneously: (i) New Fund shall subscribe for and be issued a number of Sungate Units (the “Subscribed Sungate Units”) equal to the number of Sungate Units held by Non-Electing Sungate Unitholders, with the subscription price therefore to be satisfied by the issuance by New Fund of the number and class of New Fund Units determined in accordance with Section 2.3 hereof to or as directed by Sungate (the “Consideration Units”), and Sungate hereby irrevocably directs New Fund to deliver such Consideration Units directly to the Non-Electing Sungate Unitholders in accordance with clause (iii) below; (ii) Sungate shall redeem all Sungate Units held by Non-Electing Sungate Unitholders for a redemption price to be satisfied by the delivery of Consideration Units to the Non-Electing Sungate Unitholders; and (iii) New Fund shall issue and deliver the Consideration Units directly to the Non-Electing Sungate Unitholders pro rata in satisfaction of Sungate’s obligation to pay the redemption price for the Sungate Units being redeemed.

Transfers of Limited Partnership Interests to New LP

(d) New Fund shall transfer its limited partnership interests in each of the Canadian LPs (received in the foregoing step (a)) to New LP in exchange for additional Class A LP Units.

(e) Simultaneously with the preceding step, New Fund shall transfer the Subscribed Sungate Units to New LP in exchange for additional Class A LP Units.

(f) Simultaneously with the preceding step, Sungate shall cause each of the Electing Sungate Unitholders to transfer all of the Sungate Units held by such Electing Sungate Unitholder to New LP in exchange for Class B LP Units.

2.3 Exchange Ratios. The parties acknowledge that (i) the number of New Fund Units to be issued by New Fund to the Trusts (and subsequently delivered to the Existing Unitholders of the Trusts upon the redemption of the Existing Units of the Trusts), (ii) the number of New Fund Units to be delivered upon the redemption of Sungate Units held by Non-Electing Sungate Unitholders, and (iii) the number of Class B LP Units to be issued in exchange for Sungate Units held by Electing Sungate Unitholders, will each be determined based upon an exchange ratio for each class of Existing Units of the applicable Existing Fund as set out in Schedule A. Such exchange ratio for each class of Existing Units was based on the quotient equal to:

(a) the Net Equity Value of such Existing Fund attributable to such class of Existing Units determined by:

(i) allocating the Net Equity Value of such Existing Fund to each applicable class of Existing Units, calculated on the basis of the corresponding “proportionate share for each outstanding Participating Unit” as described in the declaration of trust or limited partnership agreement, as applicable, and offering documents of such Existing Fund (provided that in the case of Canadian dollar Existing Units, such value shall first be determined in US dollars and converted to Canadian dollars using the Effective Exchange Rate);

(ii) divided by the total number of outstanding Existing Units of such class on the Closing Date;

- 7 -

(b) divided by the issue price of the corresponding class of New Fund Units (being C$ in the case of New Fund Class A Units and US$ in the case of New Fund Class B Units).

2.4 Qualifying Exchange Election. The parties acknowledge and confirm their mutual intent that each transfer of assets from a Trust to New Fund pursuant to Section 2.2(a) and the redemption of the Existing Units of such Trust pursuant to Section 2.2(b) (the “QE Transactions”) shall be structured so as to constitute a “qualifying exchange” within the meaning of section 132.2 of the Tax Act (and any applicable similar provincial laws), and the provisions of this Agreement and the constating documents of the parties, as amended, as contemplated herein shall be construed in such a manner as is consistent with such tax treatment. Without limiting the generality of the foregoing, New Fund and each Trust agree to elect jointly in respect of the QE Transactions in prescribed form pursuant to paragraph (e) of the definition “qualifying exchange” in section 132.2 of the Tax Act (and any applicable similar provincial laws), and to designate in a notification accompanying such election in respect of each property transferred pursuant to the QE Transactions such amounts determined with a view to minimizing the Tax payable by the applicable Trust and the Existing Unitholders of such Trust. For greater certainty, it is intended that the designated amounts will be elected such that each Trust will realize taxable gains on the transferred assets only to the extent that it has losses or other deductions available to it to shelter such gains.

2.5 Elections for Electing Sungate Unitholders. Each Electing Sungate Unitholder shall be entitled to make an income tax election pursuant to subsection 97(2) of the Tax Act (and the analogous provisions of any applicable provincial income tax law) (a “Joint Tax Election”) with respect to the transfer of its Sungate Units to New LP and receipt of Class B Units pursuant to Section 2.2(f) hereof. In order to make such an election, an Electing Sungate Holder must provide a duly completed copy of the applicable tax election form to the general partner of New LP on or before the day that is 75 days after the Closing Date (the “Tax Election Deadline”). Provided that the information in such election forms complies with requirements of the Tax Act (and any applicable provincial legislation), the general partner of New LP will execute a copy of such forms and deliver such executed copy to the Electing Sungate Unitholder. The Electing Sungate Unitholder will be solely responsible for executing its section of such forms and submitting such forms to the Canada Revenue Agency and any applicable provincial taxing authorities with the time limits prescribed by applicable law. For greater certainty, compliance with all legal requirements governing any Joint Tax Election shall be the sole responsibility of the Electing Sungate Unitholder and none of New Fund, New LP, any of their unitholders or subsidiaries or the general partner of New LP will have any responsibility for the validity, proper completion or timely filing of such elections, or for any taxes, interest, penalties or other consequences to the Electing Sungate Unitholder in respect thereof. For greater certainty, the general partner of New LP shall be under no obligation to execute any Joint Tax Election received from an Electing Sungate Unitholder after the Tax Election Deadline.

2.6 Payment of Taxes. The New Fund shall pay, or cause the applicable entity to pay, all Taxes owing,directly or indirectly, by New Fund applicable to, or resulting from the transactions contemplated by this Agreement and any filing or recording fees payable in connection with the instruments of transfer provided for in this Agreement.

2.7 Tax Filings and Returns. The trustees or the general partner of the Existing Funds, as applicable, shall be responsible for preparing and filing all necessary tax returns and other filings or forms required to be filed by the Existing Funds under the Tax Act or any provincial tax legislation, and shall take such other steps and prepare such other documents as may be required thereunder or otherwise under applicable law following the termination of the Existing Funds.

- 8 -

ARTICLE 3 REPRESENTATIONS AND WARRANTIES

3.1 General. Each of the Existing Funds hereby represents and warrants that:

(a) Organization. The Existing Fund is an entity that has been created and is validly existing under the laws of its jurisdiction of formation.

(b) Due Authorization. The Existing Fund has all necessary power and authority to enter into this Agreement and the execution and delivery of this Agreement has been duly authorized by all necessary action on the part of the Existing Fund. This Agreement constitutes a legal, valid and binding obligation of the Existing Fund, enforceable against it in accordance with its terms, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium and other laws relating to or affecting the rights of creditors generally and except as limited by the application of equitable principles when equitable remedies are sought, and by the fact that rights to indemnity, contribution and waiver, and the ability to sever unenforceable terms, may be limited by applicable law.

(c) Non-Contravention. Neither the execution nor the delivery of this Agreement will constitute or result in the breach of or default under any terms, provisions or conditions of, or conflict with or violate, the constating documents of the applicable Existing Fund or any law, judgment, decree, order, injunction, rule, statute or regulation of any court, arbitrator or governmental authority by which such Existing Fund is bound or to which such Existing Fund is subject.

3.2 Tax.

(a) Each Trust hereby represents and warrants that (i) it is not a non-resident of Canada within the meaning of the Tax Act; (ii) it is a “mutual fund trust” within the meaning of the Tax Act; (iii) it is not a “SIFT trust” within the meaning of the Tax Act; and (iv) it has, prior to the consolidation of the Existing Funds contemplated herein, distributed any net income and net realized capital gains for the taxation year ending in connection with such consolidation to the extent necessary to eliminate any liability it may have for such year for non-refundable income tax under Part I of the Tax Act.

(b) New Fund represents and warrants that (i) it is not a non-resident of Canada within the meaning of the Tax Act; (ii) subject to the completion of the Transaction, it will satisfy the requirements under the Tax Act to be a “mutual fund trust”; (iii) it intends to file an election under subsection 132(6.1) of the Tax Act to be deemed to qualify as a mutual fund trust from the date of its formation; and (iv) it is not a “SIFT trust” within the meaning of the Tax Act.

(c) Each of Sungate and New LP hereby represents and warrants that (i) it is a “Canadian partnership” within the meaning of the Tax Act; and (ii) it is not a “SIFT partnership” within the meaning of the Tax Act.

- 9 -

ARTICLE 4 GENERAL

4.1 Time of Essence. Time shall be of the essence of this Agreement.

4.2 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such prohibition or unenforceability and shall be severed from the balance of this Agreement, all without affecting the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

4.3 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Province of Alberta and the laws of Canada applicable in that Province.

4.4 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and both of which taken together shall be deemed to constitute one and the same instrument. To evidence its execution of an original counterpart of this Agreement, a party may send a copy of its original signature on the execution page hereof to the other party by facsimile, e-mail in pdf format or by other electronic transmission and such transmission shall constitute delivery of an executed copy of this Agreement to the receiving party.

[Remainder of page intentionally left blank.]

Schedule “A”

Exchange Ratios

New Fund



A (C$)

A 0.925541 A 0.533480 A 0.648237 A 0.682402 A, Series A1

0.208417 A 797.163691

B N/A1 B N/A B N/A C N/A A, Series F1

N/A - -


B(US$)

- - - - C 0.648237 B 0.682402 A, Series A2

0.208417 - -

- - - - - - - - A, Series F2

N/A - -

J-1

SCHEDULE “J”

VOTING SECURITIES

As at the close of business on November 3, 2020, the Funds had the following number of issued and outstanding units.

Fund Series Securities Outstanding

Clear Sky Capital Strategic Asset Fund – Series I (Fund 1)

Class A 1,022,923

Class B Nil

Special Voting Nil

Clear Sky Capital Strategic Asset Fund – Series II (Fund 2)

Class A 682,774

Class B Nil

Special Voting Nil

Clear Sky Capital Strategic Asset Fund – Series III (Fund 3)

Class A 1,141,621

Class B Nil

Class C US$ 112,564

Special Voting Nil

Clear Sky Capital Strategic Asset Fund – Series IV (Fund 4)

Class A 1,383,940

Class B US$ 73,709

Class C Nil

Special Voting Nil

Clear Sky Capital Strategic Asset Fund – Series V (Fund 5)

Class A, Series A1 1,041,695

Class A, Series F1 Nil

Class A, Series A2 157,973

Class A, Series F2 Nil

Clear Sky Sungate Limited Partnership (Sungate) Class A 468

K-1

SCHEDULE “K”

DESCRIPTION OF THE EXISTING PROPERTIES

Fund 1

Silverado Apartments

Silverado Apartments (“Silverado”) is a 256 suite, garden style, Class “B”, apartment complex completed in 1985 and located in a B+ to A- location approximately 5 miles north of downtown Albuquerque, New Mexico at 5741 Osuna Road. Silverado consists of 13 two- and three-storey apartment buildings on an 8.07-acre site with one stand-alone business office, clubhouse and fitness facility and two onsite laundry facilities.

A wholly owned subsidiary of Fund 1 purchased a 100% ownership interest in Silverado on January 15, 2015.

Silverado is comprised of one, two- and three-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites 1 Bedroom 539 to 669 1802 Bedroom/1 Bath 880 362 Bedroom/2 Bath 1,000 363 Bedroom/2 Bath 1,229 4Average/Total 717 256

The 256 suites that comprise Silverado are constructed on gross building area of 188,104 square feet. Silverado contains 404 total parking spaces.

Silverado is managed by Shelton Residential.

Enhancements

Since Silverado was acquired in 2015, the following enhancements have been made to the property:

Complete renovation of 46 one bedroom and 30 two-bedroom suites and replacement of kitchen appliances in an additional 26 one bedroom, 15 two bedroom and 2 three-bedroom suites;

New signage and repainting of exterior areas and the common areas of the property;

Revitalization of the common areas, including the clubhouse and leasing office;

Purchase of new resort-style furniture for the pool area;

K-2

Construction of a new gym and purchase of fitness equipment;

Conversion of the volleyball court to a large playground and recreation area;

Improvements to the landscaping around key areas of the property.

Acquisition and Purchase Financing

Silverado was acquired for a purchase price of US$19,500,000. The purchase price was funded with a US$15,600,000 10-year fixed-term loan from the Federal Home Loan Mortgage Corporation (“FHLMC”) having an interest rate of 3.91% and interest only period of two years (the “Silverado Loan”). The Silverado Loan matures on February 1, 2025. As of June 30, 2020, the aggregate principal amount outstanding under the Silverado Loan is approximately US$14,653,638. The defeasance cost to June 30, 2020 is approximately US$2,438,241.

Operations

As of June 30, 2020, Silverado was 97.3% occupied and produced an average monthly rent in the amount of US$1.19 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Silverado during 2019 was 95% with an annual turnover rate of 61%.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have increased by 23%, operating expenses have increased by 4% and NOI has increased by 38%.

Appraised Value

The appraised value of Silverado as of June 30, 2020 was US$28.05 million, representing an approximate 43.8% increase over the purchase price.

Fund 2

Villas at Helen of Troy Apartments

Villas at Helen of Troy Apartments (“VHT”) is 108 suite, garden style, Class “B+”, apartment complex completed in 2013 and located in an “A-” location approximately 12 miles north of downtown El Paso, Texas at 1325 Northwestern Drive. VHT consists of seven three-storey apartment buildings with a stand-alone leasing office with a clubhouse, business center, fitness room, game room and conference center on a 4.63-acre site.

A wholly owned subsidiary of Fund 2 purchased a 100% ownership interest in VHT on January 16, 2016.

K-3

VHT is comprised of one, two- and three-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites 1 Bedroom 784 242 Bedroom 1,022 483 Bedroom 1,121 36Average/Total 1,002 108

The 108 suites that comprise VHT are constructed on gross building area of 113,654 square feet. VHT contains 208 total parking spaces.

VHT is managed by Shelton Residential.

Enhancements

Since VHT was acquired in 2016, the following enhancements have been made to the property:

Minor upgrades to the clubhouse and leasing office;

Replacement of flooring in the fitness centre;

Purchase of new resort style pool furniture;

Improvements to the landscaping around key areas of the property; and

Restriping and sealcoating of the parking lot.


VHT was acquired for a purchase price of US$10,750,000. The purchase price was funded with a US$7,800,000 10-year fixed-term commercial mortgage backed security (“CMBS”) loan having an interest rate of 4.87% (the “VHT Loan”). The VHT Loan matures on February 5, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the VHT Loan is approximately US$7,800,000. The defeasance cost to June 30, 2020 is approximately US$1,936,662.

Operations

As of June 30, 2020, VHT was 95.4% occupied and produced an average monthly rent in the amount of US$1.10 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of VHT during 2019 was 92% with an annual turnover rate of 68%.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have increased by 19%, operating expenses have decreased by 3% and NOI has increased by 45%.

Appraised Value

The appraised value of VHT as of June 30, 2020 was US$12.7 million, representing an approximate 18.1% increase over the purchase price.

K-4

Fund 3

Casas De Soledad Apartments

Casas De Soledad Apartments (“Casas De Soledad”) is a Class “A” asset located in an “A” location in the heart of Sonoma Ranch along the fairways of Sonoma Ranch Golf Course just off the U.S. Hwy 85 at 3901 Sonoma Springs Avenue, Las Cruces, New Mexico and built in 2004. Las Cruces, New Mexico is a vibrant college town, home of New Mexico State University with a student population in 2019 of approximately 11,600. Casas De Soledad is comprised of 176 apartment suites and 80 condominium units and consists of 19 two-storey garden style residential buildings and one leasing center with a clubhouse, business center and fitness facility on a 14.5-acre site.

A wholly owned subsidiary of Fund 3 purchased a 100% ownership interest in Casas De Soledad on February 29, 2016. The remaining 31.25% interest is owned by individuals that currently reside at Casas De Soledad as homeowners or renters.

Casas De Soledad is comprised of one, two- and three-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites/Units 1 Bedroom 708 to 913 452 Bedroom 876 to 1,638 973 Bedroom 1,092 to 1,757 31Average/Total 1,069 176/80

The 176 suites and 80 units that comprise Casas De Soledad are constructed on gross building area of 188,144 square feet. Casas De Soledad contains 481 total parking spaces.

Casas De Soledad is managed by Shelton Residential.

Enhancements

The common area of Casas De Soledad is run by the Home Owners Association (“HOA”) which is controlled by the Manager. The HOA has made several improvements to the common area including revitalizing the clubhouse, leasing center and business center. The pool area has also been updated with resort style outdoor furniture and barbeques. The HOA is currently installing parcel package lockers at the mail center and has plans to remodel the fitness center with new equipment in the fall of 2020.

In addition, to increase curbside appeal, the HOA has invested in new landscaping around key areas of the property and has updated the roofing, installed an automatic gate system and made significant repairs to the parking lots. The HOA has also remodeled the dog park by adding artificial turf and agility equipment.

K-5


Casas De Soledad was acquired for a purchase price of US$15,550,000. The purchase price was funded with a US$11,660,000 10-year fixed-term CMBS loan having an interest rate of 5.25% (the “Casas De Soledad Loan”). The Casas De Soledad Loan matures on March 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Casas De Soledad Loan is approximately US$11,467,082. The defeasance cost to June 30, 2020 is approximately US$3,052,533.

Appraised Value

The appraised value of VHT as of June 30, 2020 was US$18.95 million, representing an approximate 21.8% increase over the purchase price.

Operations

As of June 30, 2020, Casas De Soledad was 92.6% occupied and produced an average monthly rent in the amount of US$0.92 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Casas De Soledad during 2019 was 92% with an annual turnover rate of 62.0%.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have increased by 1%, operating expenses have increased by 5% and NOI has decreased by 2%.

The Manager believes that Casas De Soledad is performing well as of the date hereof, though the Property under-performed early on during the COVID-19 pandemic due to loss of employment, cancelation of classes at New Mexico State University and uncertainty of classes resuming in person in the fall of 2020.

Rancho Verde Apartments

Rancho Verde Apartments (“Rancho Verde”) is 65 suite, garden style, Class “B”, apartment complex completed in 1985 and located in a “A” location in Northeast Heights across from the Arroyo del Oso Municipal Golf Course and 1-1/2 miles east of the busy San Mateo Boulevard and I-25 Freeway at 5800 Truches Drive in Albuquerque, New Mexico. Rancho Verde consists of six two-storey, garden style apartment buildings on a 2.96-acre site.

A wholly owned subsidiary of Fund 3 purchased a 100% ownership in the property on June 17, 2016.

Rancho Verde is comprised of one- and two-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites/Units 1 Bedroom 752 to 760 322 Bedroom 986 to 1,008 33Average/Total 879 65

K-6

The 65 suites that comprise Rancho Verde are constructed on gross building area of 57,430 square feet. Rancho Verde contains 97 total parking spaces.

Rancho Verde is managed by Shelton Residential.

Enhancements

Since Rancho Verde was acquired in 2016, the following enhancements have been made to the property:

Revitalization of the common areas, including the clubhouse, fitness center and leasing office;


Replacement of water heaters with high-efficiency units;


Sealcoating of the parking lot.


Rancho Verde was acquired for a purchase price of US$5,465,787. The purchase price was funded with a US$4,162,000 10-year fixed-term loan from the FHLMC having an interest rate of 4.16% (the “Rancho Verde Loan”). The Rancho Verde Loan matures on July 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Rancho Verde Loan is approximately US$4,162,000. The defeasance cost to June 30, 2020 is approximately US$980,828.

Appraised Value

The appraised value of Rancho Verde as of June 30, 2020 was US$7.3 million, representing an approximate 33.5% increase over the purchase price.

Operations

As of June 30, 2020, Rancho Verde was 100% occupied and produced an average monthly rent in the amount of US$1.07 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Rancho Verde during 2019 was 96% with an annual turnover rate of 52%.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have increased by 5%, operating expenses have been reduced by 3% and NOI has increased by 13%.

The Manager believes that Rancho Verde has performed well throughout the COVID-19 pandemic due to a reliable tenant base and quick reopening of the Albuquerque economy.

K-7

Fund 4

Tesoro on Spain Apartments (formerly Suncreek Village Apartments)

Tesoro on Spain Apartments (“Tesoro”) is 267 suite, garden style, Class “B”, apartment complex completed in 1986 and located in a “B+” to “A-” location at 9900 Spain Rd. Albuquerque, New Mexico in the upper Northeast Heights submarket and has excellent drive-by visibility. Tesoro consists of 24 two-storey apartment buildings on a 14.79-acre site.

A wholly owned subsidiary of Fund 4 purchased a 100% ownership interest in Tesoro on January 17, 2016.

Tesoro is comprised of one- and two-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites 1 Bedroom 752 to 760 1332 Bedroom 986 to 1,008 134Average/Total 878 267

The 267 suites that comprise Tesoro are constructed on gross building area of 239,670 square feet. Tesoro contains 542 total parking spaces.

Tesoro is managed by Shelton Residential.

Enhancements

Since Tesoro was acquired in 2016, the following enhancements have been made to the property:

Full upgrade to three one bedroom and five two-bedroom suites;

Replacement of kitchen appliances in 47 one bedroom and 48 two-bedroom suites;

Re-branding of the property, including new signage and repainting of exterior areas and the common areas of the property;

Purchase of new resort-style furniture and barbeque stations for the pool area;

Repairs to the roof;

Upgrades to mechanical equipment;


Restriping and sealcoating of the parking lot.

K-8


Tesoro was acquired for a purchase price of US$22,762,383. The purchase price was funded with a US$17,071,000 10-year fixed-term loan from the FHLMC having an interest rate of 4.12% and an interest only period of five years (the “Tesoro Loan”). The Tesoro Loan matures on July 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Tesoro Loan is approximately US$17,100,000. The defeasance cost to June 30, 2020 is approximately US$3,801,980.

Appraised Value

The appraised value of Tesoro as of June 30, 2020 was US$29.3 million, representing an approximate 28.7% increase over the purchase price.

Discussion of Operation

As of June 30, 2020, Tesoro was 96.6% occupied and produced an average monthly rent in the amount of US$0.96 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Tesoro during 2019 was 94% with an annual turnover rate of 50%.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have increased by 9%, operating expenses have increased by 24% and NOI has decreased by 1%.

The Manager believes that Tesoro has performed reasonably well throughout the COVID-19 pandemic due to the strong resident demographic and the quick reopening of the Albuquerque economy.

Fund 5

North Park Apartments

North Park Apartments (“North Park”) is a 192 suite, garden style, Class “B”, apartment complex completed in 1978 and located in a “B-” location approximately five miles from Bush International Airport at 90 North Point Drive, Houston, Texas. North Park consists of 20 two-storey apartment buildings on a 6.21-acre site.

A wholly owned subsidiary of Fund 5 purchased a 100% ownership interest in North Park on February 28, 2018.

K-9

North Park is comprised of one- and two-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites 1 Bedroom 517 to 644 1042 Bedroom/1 Bath 812 482 Bedroom/2 Bath 880 40Average/Total 719 192

The 192 suites that comprise North Park are constructed on gross building area of 144,802 square feet. North Park contains 226 total parking spaces.

North Park is managed by Capstone Real Estate Services, Inc.

Enhancements

Since North Park was acquired in 2018, the following enhancements have been made to the property:

Various upgrades to the suites, including:

Upgrade % of Suites Replacement of kitchen appliances 97%Installation of faux wood plank flooring 70%Installation of Formica countertops 53%Installation of ceramic tile countertops in kitchen 46%Replacement of tub, surrounds and plumbing trim 65%

Installation of new full-size washers and dryers in two suites;

Revitalization of the common areas, including the clubhouse, business center and leasing office;

Purchase of new resort-style furniture and a barbeque station for the pool area;

Construction of a new playground and trash enclosures;

Replacement of property signage; and

Improvements to the landscaping around key areas of the property.


North Park was acquired for a purchase price of US$14,500,000. The purchase price was funded with a US$10,150,000 10-year fixed-term CMBS loan having an interest rate of 5.054% and an interest only period of two years (the “North Park Loan”). The North Park Loan matures on March 6, 2028. As of June 30, 2020, the aggregate principal amount outstanding under the North Park Loan is approximately US$10,116,482. The defeasance cost to June 30, 2020 is approximately US$3,412,544.

Appraised Value

The appraised value of North Park as of June 30, 2020 was US$12.85 million, representing an approximate 11% decrease over the purchase price.

Discussion of Operations

As of June 30, 2020, North Park was 95.31% occupied and produced an average monthly rent in the amount of US$1.02 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of North Park during 2019 was 84% with an annual turnover rate of 63%. Occupancy has been a challenge for North Park as

K-10

the Manager believes that the submarket is predominately a blue-collar workforce demographic sensitive to housing costs and economic uncertainty.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have decreased by 4%, operating expenses have increased by 37% and NOI has decreased by 47%. However, when comparing the trailing twelve-month period (as of June 30, 2020) as compared to the first twelve months of ownership, revenues have increased by 8%, operating expenses have increased by 8% and NOI has increased by 9%. The increase in operating expenses is a result of increases to utility costs, property taxes and insurance.

The Manager believes that North Park has not performed well throughout the past two years, including the COVID-19 pandemic, due to the downturn in the oil and gas market. In addition, as a result of the COVID-19 pandemic a large number of residents of the city of Houston have suffered a loss of employment.

Sungate

Sungate Apartments

Sungate Apartments is a 95 suite, garden style, Class “B”, apartment complex completed in 1983 and located in a “B+” to “A-” location in the Northeast Heights submarket at 10800 Comanche Road, Albuquerque, New Mexico. Sungate Apartments consists of five two- and three-storey apartment buildings on a 3.25-acre site.

A wholly owned subsidiary of Sungate purchased a 100% ownership interest in Sungate Apartments on June 17, 2016.

Sungate Apartments is comprised of one, two- and three-bedroom suites as follows:

Suite Type Sq. Ft. Number of Suites 1 Bedroom 578 to 651 642 Bedroom 829 to 964 303 Bedroom 1,240 1Average/Total 704 95

The 95 suites that comprise Sungate Apartments are constructed on gross building area of 73,507 square feet. Sungate Apartments contains 144 total parking spaces.

Sungate Apartments is managed by Shelton Residential.

K-11

Enhancements

Since Sungate Apartments was acquired in 2016, the following enhancements have been made to the property:

Revitalization of the common areas, including the clubhouse, game room and business center;


Replacement of all exterior lighting with LED light fixtures;

Construction of a small ballpark;

Improvements to the landscaping of the property; and

Sealcoating of the parking lot.


Sungate Apartments was acquired for a purchase price of US$6,972,430. The purchase price was funded with a US$5,272,000 10-year fixed-term from the FHLMC having an interest rate of 4.08% and interest only period of five years (the “Sungate Loan”). The Sungate Loan matures on July 1, 2026. As of June 30, 2020, the aggregate principal amount outstanding under the Sungate Loan is approximately US$5,272,000. The defeasance cost to June 30, 2020 is approximately US$1,200,950.

Appraised Value

The appraised value of Sungate Apartments as of June 30, 2020 was US$10.3 million, representing an approximate 48% increase over the purchase price.

Discussion of Operations

As of June 30, 2020, Sungate Apartments was 100% occupied and produced an average monthly rent in the amount of US$1.17 per square foot based on the monthly in-place rent of all occupied suites. The average occupancy of Sungate Apartments during 2019 was 97% with an annual turnover rate of 47%.

During the current trailing six-month period (as of June 30, 2020) as compared to the first six months of ownership, revenues have increased by 14%, operating expenses have decreased by 3% and NOI has increased by 30%.

The Manager believes that Sungate Apartments has performed well throughout the COVID-19 pandemic due to a solid resident demographic and the quick reopening of the Albuquerque economy.

L-1

SCHEDULE “L”

INFORMATION RELATING TO NEW FUND

Information contained in this Schedule “L” assumes the completion of, and gives effect to, the Transaction. References to New Fund, unless the context requires otherwise, include its subsidiaries, and in each case, refer to such entities as constituted after giving effect to the Transaction. Any reference to the indirect acquisition of Properties by New Fund means the acquisition of Properties by New Fund through its interests in New LP through New LP’s interests in the US LPs through the US LPs’ interests in the Portfolio LPs, which are or will be the indirect acquirer of such Properties through single purpose entities. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Glossary of Terms.

The Manager currently intends, shortly after the Effective Date, to dissolve the Canadian LPs and this Schedule “L” assumes that such dissolutions have taken place.

FUND STRUCTURE

Name and Formation

New Fund

New Fund is an open-ended, unincorporated investment trust to be formed on or prior to the Effective Date under the laws of Alberta pursuant to a declaration of trust to be entered into among Marcus Kurschat, Elroy Gust and Kevin Kinnear, as initial trustees, and Clear Sky Capital BC, as settlor. The board of trustees of New Fund is comprised of Marcus Kurschat, Elroy Gust and Kevin Kinnear.

New Fund will have no material assets other than interests in subsidiary entities, which carry on the business of acquiring, owning and operating a portfolio of multi-family rental properties in the U.S. Sun Belt. See “– Inter-corporate Relationships” for a chart setting forth the relationships among New Fund, New LP, the US LPs, the Property LPs and the Properties (and certain related entities) following completion of the Transaction.

New LP

New LP is a limited partnership to be formed on or prior to the Effective Date pursuant to the Partnership Act (British Columbia). The partners of New LP will be New LP GP (sole general partner), New Fund (voting limited partner holding Class A LP Units) and the Electing Sungate Unitholder (non-voting limited partners holding New LP Units).

New LP GP

New LP GP is a corporation to be formed under the laws of a jurisdiction in Canada on or prior to the Effective Date to serve as the general partner of New LP. The sole initial shareholder of New LP GP will be Marcus Kurschat.

US LPs and US GPs

The registered office of each of the US LPs and US GPs is located at 2398 East Camelback Road, Suite 615, Phoenix, Arizona, 85016, United States.

US LP 1 is an Arizona limited partnership formed on November 10, 2014 pursuant to the Arizona Revised Uniform Limited Partnership Act. Following the Transaction, the partners of US LP 1 will be US GP 1 (sole general partner holding a 0.01% economic interest therein) and New LP (sole limited partner holding a 99.99% economic interest therein). US GP 1 was incorporated as of November 10, 2014 and is currently existing pursuant to the Arizona Business Corporation Act. US GP 1 is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat.

US LP 2 is an Arizona limited partnership formed on July 13, 2015 pursuant to the Arizona Revised Uniform Limited Partnership Act. Following the Transaction, the partners of US LP 2 will be US GP 2 (sole general partner holding a

L-2

0.01% economic interest therein) and New LP (sole limited partner holding a 99.99% economic interest therein). US GP 2 was incorporated on July 7, 2015 and is currently existing pursuant to the Arizona Business Corporation Act. US GP 2 is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat.

US LP 3 is an Arizona limited partnership formed on November 24, 2015 pursuant to the Arizona Revised Uniform Limited Partnership Act. Following the Transaction, the partners of US LP 3 will be US GP 3 (sole general partner holding a 0.01% economic interest therein) and New LP (sole limited partner holding a 99.99% economic interest therein). US GP 3 was incorporated on November 23, 2015 and is currently existing pursuant to the Arizona Business Corporation Act. US GP 3 is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat.

US LP 4 is an Arizona limited partnership formed on April 20, 2016 pursuant to the Arizona Revised Uniform Limited Partnership Act. Following the Transaction, the partners of US LP 4 will be US GP 4 (sole general partner holding a 0.01% economic interest therein) and New LP (sole limited partner holding a 99.99% economic interest therein). US GP 4 was incorporated on April 14, 2016 and is currently existing pursuant to the Arizona Business Corporation Act. US GP 4 is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat.

US LP 5 is a Delaware limited partnership formed on January 24, 2018 pursuant to the Delaware Revised Uniform Partnership Act. Following the Transaction, the partners of US LP 5 will be US GP 5 (sole general partner holding a 0.01% economic interest therein) and New LP (sole limited partner holding a 99.99% economic interest therein). US GP 5 was incorporated on January 22, 2018 and is currently existing pursuant to the Delaware Limited Liability Company Act. US GP 5 is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat.

US LP 6 is an Arizona limited partnership formed on May 10, 2016 pursuant to the Arizona Revised Uniform Limited Partnership Act. Following the Transaction, the partners of US LP 6 will be US GP 6 (sole general partner holding a 0.01% economic interest therein) and New LP (sole limited partner holding a 99.99% economic interest therein). US GP 6 was incorporated on April 29, 2016 and is currently existing pursuant to the Arizona Business Corporation Act. US GP 6 is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat.

Property LPs

The purpose of each Property LP is, or will be, to operate, manage, rent, lease, improve and/or otherwise deal with the Property it owns or in which it is otherwise invested, including the sale or development of such Property, with a view to making a profit.

The registered office of each Property LP is located at 2398 East Camelback Road, Suite 615, Phoenix, Arizona, 85016, United States.

In connection with the acquisition of an Existing Property, a Property LP may use Bridge Financing from one or more investors that were wholly at arm’s length to the applicable Trust and its affiliates (“Bridge Financing Investor”). Such financing would have been entered into between Clear Sky Capital BC, as borrower, and the Bridge Financing Investor, as lender, with proceeds from such financing being used, through the investment in equity in the applicable Canadian LP, to enable the applicable Property LP to complete the acquisition of the applicable Property (“Bridge Financing”). In connection with the Bridge Financing, the Bridge Financing Investor received an economic interest in the applicable Property LP, as a limited partner, as described below.

Clear Sky Capital Silverado Apartments LP

Silverado Apartments LP is an Arizona limited partnership formed on November 10, 2014 pursuant to the Arizona Revised Uniform Limited Partnership Act. The partners of Silverado Apartments LP are Clear Sky Capital Silverado Apartments, LLC and Wheelerco GP II, Ltd. (general partners holding an aggregate 16% economic interest therein), the Bridge Financing Investor (limited partner holding a 4% economic interest therein), and the US LP 1 (limited partner holding a 80% economic interest therein). Silverado Apartments LP owns a 100% interest in Silverado. Clear Sky Capital Silverado Apartments, LLC is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat and Wheelerco GP II, Ltd. is beneficially owned or controlled, directly or indirectly by Kevin Wheeler.

L-3

Clear Sky Capital VHT Apartments LP

Clear Sky Capital VHT Apartments LP is an Arizona limited partnership formed on July 13, 2015 pursuant to the Arizona Revised Uniform Limited Partnership Act. The partners of Clear Sky Capital VHT Apartments LP are Clear Sky Capital VHT LLC and Wheelerco GP III, Ltd. (general partners holding an aggregate 25% economic interest therein) and the US LP 2 (sole limited partner holding a 75% economic interest therein). Clear Sky Capital VHT Apartments LP owns a 100% interest in VHT. Clear Sky Capital VHT LLC is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat and Wheelerco GP III, Ltd. is beneficially owned or controlled, directly or indirectly by Kevin Wheeler.

Clear Sky Capital Casas De Soledad Apartments LP

Clear Sky Capital Casas De Soledad Apartments LP is an Arizona limited partnership formed on November 24, 2015 pursuant to the Arizona Revised Uniform Limited Partnership Act. The partners of Clear Sky Capital Casas De Soledad Apartments LP are Clear Sky Capital Casas De Soledad Apartments, LLC and Wheelerco GP IV, Ltd. (general partners holding an aggregate 16% economic interest therein), the Bridge Financing Investor (limited partner holding a 4% economic interest therein), and the US LP 3 (limited partner holding a 80% economic interest therein). Clear Sky Capital Casas De Soledad Apartments LP owns a 100% interest in Casas De Soledad. Clear Sky Capital Casas De Soledad Apartments, LLC is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat and Wheelerco GP IV, Ltd. is beneficially owned or controlled, directly or indirectly by Kevin Wheeler.

Clear Sky Capital Rancho Verde LP

Clear Sky Capital Rancho Verde LP is an Arizona limited partnership formed on May 13, 2016 pursuant to the Arizona Revised Uniform Limited Partnership Act. The partners of Clear Sky Capital Rancho Verde LP are Clear Sky Capital Rancho Verde Apartments, LLC and Wheelerco GP VIII, Ltd. (general partners holding an aggregate 20% economic interest therein), and the US LP 3 (sole limited partner holding a 80% economic interest therein). Clear Sky Capital Rancho Verde LP owns a 100% interest in Rancho Verde. Clear Sky Capital Rancho Verde Apartments, LLC is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat and Wheelerco GP VIII, Ltd. is beneficially owned or controlled, directly or indirectly by Kevin Wheeler.

Clear Sky Capital Suncreek Village Apartments LP

Clear Sky Capital Suncreek Village Apartments LP is an Arizona limited partnership formed on April 20, 2016 pursuant to the Arizona Revised Uniform Limited Partnership Act. The partners of Clear Sky Capital Suncreek Village Apartments LP are Clear Sky Capital Suncreek Village Apartments, LLC and Wheelerco GP VI, Ltd. (general partners holding an aggregate 16% economic interest therein), the Bridge Financing Investor (limited partner holding a 4% economic interest therein), and the US LP 4 (sole limited partner holding a 80% economic interest therein). Clear Sky Capital Suncreek Village Apartments LP owns a 100% interest in Tesoro. Clear Sky Capital Suncreek Village Apartments, LLC is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat and Wheelerco GP VI, Ltd. is beneficially owned or controlled, directly or indirectly by Kevin Wheeler.

Clear Sky Capital North Park LP

Clear Sky Capital North Park LP is a Delaware limited partnership formed on January 25, 2018 pursuant to the Delaware Revised Uniform Partnership Act. The partners of Clear Sky Capital North Park LP are Clear Sky North Park, LLC and Wheelerco GP XII, Ltd. (general partners holding an aggregate 16% economic interest therein), the Bridge Financing Investor (limited partner holding a 4% economic interest therein), and the US LP 5 (limited partner holding a 80% economic interest therein). Clear Sky Capital North Park LP owns a 100% interest in North Park. Clear Sky North Park, LLC is beneficially owned or controlled, directly or indirectly, by Marcus Kurschat and Wheelerco GP XII, Ltd., is beneficially owned or controlled, directly or indirectly by Kevin Wheeler.

L-4

Clear Sky Capital Sungate Apartments LP

Clear Sky Capital Sungate Apartments LP is an Arizona limited partnership formed on May 10, 2016 pursuant to the Arizona Revised Uniform Limited Partnership Act. The partners of Clear Sky Capital Sungate Apartments LP are Clear Sky Sungate Apartments, LLC and Wheelerco GP VII, Ltd. (general partners holding an aggregate 20% economic interest therein) and the US LP 6 (sole limited partner holding a 80% economic interest therein). Clear Sky Capital Sungate Apartments LP owns a 100% interest in Sungate.

Properties

Following the completion of the Transaction, New Fund will indirectly own the Existing Properties. The Existing Properties are located in the States of Arizona, New Mexico and Texas in the markets of, Phoenix, Tucson, Albuquerque, Las Cruces, El Paso and Houston, respectively. For more information about the Existing Properties, see Schedule “K” to this Circular.

Trusts

New Fund will hold a Unit in each of the Trusts. Immediately following completion of the Transaction, each of the Trusts will have no material assets or liabilities.

L-5

Inter-corporate Relationships

The following chart sets forth the relationships among New Fund, New LP, the US LPs, the Property LPs and the Properties (and certain related entities) following completion of the Transaction.

For information on the current organizational structure of the Funds, see the applicable Fund Offering Documents.

[1] Sungate Unitholders that have validly elected in a duly completed Election Form to transfer their Sungate Units to New LP in exchange for New

LP Units.[2]

Each of the US LPs hold an 80% economic interest in their respective Property LP, other than US LP 2 which holds a 75% of the economic interest in Clear Sky Capital VHT Apartments LP. A Bridge Financing Investor also holds 4% limited partnership interest in Clear Sky Capital Silverado Apartments LP, Clear Sky Capital Casas De Soledad Apartments LP, Clear Sky Capital Suncreek Village Apartments LP and Clear Sky Capital North Park Apartments LP.[3]

Each Property GP holds a 20% economic interest in their respective Property LP, other than Property GP 1, Property GP 3, Property GP 4 and Property GP 5 which each hold 16% economic interest in their respective Property LP. Further, US GP 2 holds a 25% economic interest in Clear Sky Capital VHT Apartments LP.

INVESTMENT OBJECTIVES

New Fund, through its subsidiaries, intends to generate a stable stream of income for New Fund Unitholders by investing in a portfolio of Properties within the U.S. Sun Belt. New Fund intends to provide New Fund Unitholders with ongoing positive cash flow through rental income and to provide an opportunity to enhance New Fund Unitholders’ return on capital through value-added enhancements to the Properties and ongoing market growth in the rental rates of such Properties. New Fund’s subsidiaries may also indirectly invest in loans secured by mortgages of, or deeds of trust on, the Properties, with the expectation that, if the borrowers under these loans were unable to pay the principal and interest thereunder when due, the applicable subsidiary holding such mortgages or deeds of trust would be able to recover their investment through foreclosure proceedings on the secured Property.

L-6

Strategic U.S. Market Focus

Clear Sky will provide New Fund with the platform necessary to capitalize on acquiring and/or developing multi-family properties, offering its experience, expertise, and the benefit of its established network of industry contacts. Capital growth will be pursued by New Fund through value-added enhancements to the Properties and organic growth in suite rental rates. In addition, Clear Sky believes that the multi-family real estate sector in the U.S. is in high demand and as a result currently provides an opportunity to develop and acquire multi-family properties. See “– The U.S. Economy”.

Clear Sky believes that due to demographic and population migration trends, additional growth remains to be realized in the U.S. Sun Belt rental real estate markets. Clear Sky also believes further geographical diversification across the property portfolio mitigates the risk and exposure to any one market.

Clear Sky believes the current strong demand for multi-family properties reflects the combination of limited loss to home purchases, primarily due to affordability, as well as the availability of appealing new apartments have attracted a new renter class. Clear Sky further believes that demographic and economic trends continue to support the multi-family real estate market, including a continued shift away from homeownership.

Since the outset of the COVID-19 pandemic, there has been a propensity for individuals living in city centres to relocate to less urban locations with more outdoor space, which is expected to increase as a result of the work from home movement that has recently accelerated as a result of the COVID-19 pandemic.

Financing Strategy

Clear Sky will provide the necessary expertise in unlocking the equity appreciation in the Existing Properties. Currently, the valuations of each Existing Property do not warrant additional financing on a property-by-property basis. However, on a combined basis, Clear Sky believes that enough equity may be unlocked through refinancing to allow for the acquisition of Additional Properties or the development of Developed Properties. Clear Sky will conduct a broad canvass of the lending community, including lenders with whom Clear Sky enjoys long-term relationships, to secure debt financing on competitive terms.

The U.S. Economy

Clear Sky believes that following the COVID-19 pandemic, trends in the U.S. economy will continue to support the economic growth experienced in the last ten years. The reset of the economic cycle in the U.S. due to the economic impact of the COVID-19 pandemic has increased unemployment similar to the early 2010s. However, Clear Sky believes that low long-term economic growth will lead to a slow decline in unemployment rates. These conditions will lead to an environment in which home ownership becomes more difficult to obtain, resulting in a strong demand for multi-family real estate.

Clear Sky believes that New Fund is well positioned to take advantage of any such dislocation that may occur in the multi-family real estate market. Clear Sky further believes that the population growth trends favoring the U.S. Sun Belt are a significant driver for rental demand in these markets. U.S. Sun Belt markets have seen strong population gains in the last 40 years, and Clear Sky expects those trends to continue. With additional population growth, demand for housing is increased. Clear Sky believes that as a result of favorable demographic trends, employment is expected to grow at a faster pace in the U.S. Sun Belt than the U.S. as a whole, even after taking into account the impact of the COVID-19 pandemic.

Unemployment rates in the U.S. have increased substantially as a result of the economic impact of the COVID-19 pandemic and are expected to remain above 5.5% for at least the next three years.

L-7

Source: Goldman Sachs Global Investment Research

The U.S. Multi-Family Real Estate Sector

Over the long term, Clear Sky believes that the outlook for the multi-family real estate market remains positive, owing to the strong demand for rental housing. Clear Sky believes that demographic and economic trends continue to support the multi-family real estate market. Homeownership in the last 10 years has declined from an all-time high of approximately 69% to approximately 64%. This shift away from homeownership has resulted in higher demand for rental units. In addition, population migration trends have favored U.S. Sun Belt locations (Phoenix) and lifestyle locations (Denver) over traditional industrial or financial centers. Clear Sky believes these trends will continue due to the COVID-19 pandemic. Since the outset of the COVID-19 pandemic, there has been a propensity a propensity for individuals living in city centres to relocate to less urban locations with more outdoor space, which is expected to increase as a result of the work from home movement that has recently accelerated as a result of the COVID-19 pandemic.

Due to the impact of the COVID-19 pandemic, in the near term, Clear Sky expects the multi-family real estate sector to slow down. While new development permits and starts are expected to decrease, projects already under development continue to be delivered and supply continues to increase. In addition, vacancy rates are expected to increase due to decreased demand as a result of, among other things, a rise in unemployment in the U.S. However, as the U.S. economy begins to recover following the COVID-19 pandemic, Clear Sky expects the multi-family real estate market to stabilize due to the factors discussed above. In addition, as higher unemployment conditions often result in lower average wage earners, demand for multi-family real estate is expected to increase due to higher unaffordability for first time homeownership.

L-8

MANAGEMENT FEES

Asset Management Fee

In consideration of providing management services to the Existing Properties, the applicable US LP or Property LP, or a combination thereof, will pay to Clear Sky or its designated affiliate an asset management fee (the “Existing Asset Management Fee”) in an amount equal to US$650,000 per annum. The Existing Asset Management Fee will be paid in lieu of fees described in the Property LP limited partnership agreements and presently charged to each of the Property LPs. Management services shall include, without limitation:

Leasing; Facilities maintenance; Property manager oversite; Insurance advisory; Property Tax Appeals; Utilities Monitoring; Debt service; Debt refinance; Capital management; Legal and regulatory compliance; and Other services.

The Existing Asset Management Fee is payable on the last day of each calendar month in an amount equal to 1/12th

of the annual Existing Asset Management Fee. If less than all of the Funds participate in the Transaction, the Existing Asset Management Fee shall be reduced pro-rata based on the initial capital raise of each Fund electing not to participate, with a one-time conversion from Canadian dollars to United States dollars (as applicable) based on the rate set by the Bank of Canada on the date the Transaction is completed.

The applicable US LP or Property LP, or a combination thereof, will pay to Clear Sky or its designated affiliate, an asset management fee of 1.5% of all Equity Proceeds not arising from or allocated from an acquisition or construction loan utilized to acquire or improve the Additional Properties or Developed Properties (the “New Asset Management Fee” and, together with the Existing Asset Management Fee, the “Asset Management Fee”). The New Asset Management Fee will be paid in United States dollars. For the purpose of example only, if an existing Property LP were refinanced resulting in US$3 million proceeds and such proceeds were invested in a new asset, the value of which was US$10 million at the time of acquisition, then the New Asset Management Fee would equal 1.5% of US$3 million or approximately US$30,000. Such New Asset Management Fee would be paid as consideration for providing management services to the new asset.

As new assets are acquired by New Fund the New Asset Management Fee shall be applied to the new assets, but only to the equity amount utilized to acquire or develop such asset and exclusive of any debt instrument. Any asset acquired by New Fund, shall be acquired through a limited partnership formed for the purpose of holding such acquired asset. The New Asset Management Fee shall be described in such new Property LP limited partnership agreement entered into by and between the new limited partnership and any new general partner formed for the purpose of acquiring, developing or operating any new asset. Such New Asset Management Fee shall be limited to the amount described above and payable on the last day of each calendar month in an amount equal to 1/12th of the annual New Asset Management Fee.

Acquisition Fee

In consideration of providing acquisition, sourcing, underwriting, due diligence and other services in connection with the acquisition of Additional Properties, the applicable US LP or Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate an acquisition fee (the “Acquisition Fee”) in an amount equal to 2.0% of the enterprise value of the Additional Property at the time of the acquisition or investment.

L-9

In such case, the enterprise value of the Additional Property is to be determined, in the discretion of the applicable US GP or the general partner(s) of the applicable Property LP and without regard to the proportionate ownership interest (direct or indirect) of the applicable Property LP or other New Fund affiliate in such Additional Property with reference to either:

an independent appraisal of the fair market value of the Additional Property as of a date that is acceptably close, in the opinion of the applicable US GP or the general partner(s) of the applicable Property LP, acting reasonably, to the effective date of the acquisition of (or investment in) such Additional Property; or

the price paid by a Property LP (for example) for its ownership interest in the Additional Property plus the imputed value of all other ownership interests in such Additional Property (as extrapolated from the price paid by New Fund’s affiliate(s)) plus the debt secured by the Additional Property.

Disposition Fee

In connection with the sale or other disposition of a Property, the applicable US LP or Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate a disposition fee (the “Disposition Fee”) in an amount equal to 1.5% of the enterprise value of the Existing Property and 1.0% of the enterprise value of the Additional Property or Developed Property at the time of the sale or other disposition of such Property.

In such case, the enterprise value of the Property is to be determined, in the discretion of the applicable US GP or the general partner(s) of the applicable Property LP and without regard to the proportionate ownership interest (direct or indirect) of the applicable Property LP or other New Fund affiliate in such Property, with reference to either:

an independent appraisal of the fair market value of the Property as of a date that is acceptably close, in the opinion of the applicable US GP or the general partner(s) of the applicable Property LP, acting reasonably, to the effective date of the sale or other disposition, as the case may be; or

the value of the consideration received by the applicable Property LP (for example) for its ownership interest in the Property plus the value of the consideration received by the other owners, if any, for their ownership interests in the Property (or, if any ownership interest is not sold at the time of such disposition, the imputed value of any such owner’s interest in the Property, as extrapolated from the consideration received by New Fund’s affiliate(s)) plus the debt secured by the Property.

Development Fee

In connection with the development of a Developed Property, the applicable new US LP or new Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate a development fee (the “Development Fee”) in an amount equal to 5.0% of the cost of developing the Developed Property. The cost of development shall include, without limitation, the cost of construction, architectural fees, engineering fees, legal fees, administrative fees, utility and access expenditure, zoning and entitlement consultants, environmental remediation costs, regulatory compliance and all permitting and other costs related to or arising from the development and construction. The Development Fee shall be paid in consideration of providing entitlement, zoning, architectural and construction management to and for the Developed Property.

Construction Fee

In connection with an affiliate of Clear Sky serving as the general contractor in the development of a Developed Property, the applicable US LP or Property LP, or a combination thereof, will pay or cause to be paid to Clear Sky or its designated affiliate a construction fee (the “Construction Fee”). If an affiliate of Clear Sky does not serve as the general contractor, then no construction fee will be paid. In consideration of the general contractor services provided by Clear Sky, the construction fee shall be paid in an amount equal to 6.0% of the hard costs and general conditions costs incurred in connection with the construction of the Developed Property. Prior to awarding a general contract for a new construction project at a Developed Property, Clear Sky will review no less than three general contractor bids, at least two of which shall be from third party general contractors unaffiliated with Clear Sky. In the event that less

L-10

than three general contractor bids are submitted for review, the independent New Fund Trustee(s) shall review all bids submitted and award the contract in its sole discretion. In the event that a Clear Sky affiliate is awarded the general contract, such award shall first be approved by the independent New Fund Trustee(s) to ensure that it is competitive with the other general contractor bids.

Guarantee Fee

In the event that Clear Sky or any of its affiliates is required to provide a financing guarantee in connection with amounts borrowed by a subsidiary of New Fund to directly or indirectly acquire interests in Additional Properties, in consideration for providing, or causing the provision of such financing guarantees, the applicable US LP or Property LP, or a combination thereof, will pay Clear Sky a guarantee fee in an annual amount equal to 0.15% of the then-outstanding amount of guaranteed funds borrowed by the subsidiary of New Fund.

OTHER FEES AND EXPENSES

Compensation Paid to Trustees

Each of Elroy Gust and Kevin Kinnear will receive an annual retainer of C$30,000 for serving as a trustee of New Fund. Marcus Kurschat will not receive any compensation for serving as a trustee of New Fund.

Compensation Through Ownership of General Partners and Property LPs

Mr. Kurschat is a New Fund Trustee and officer of New Fund, a director, officer and sole beneficial shareholder (directly or indirectly) of the Clear Sky GPs and a director, officer and beneficial shareholder (directly or indirectly) of the US GPs. In addition, Mr. Kurschat currently does or will beneficially own or control, directly or indirectly, entities that serve as a general partner of each Property LP. Consequently, Mr. Kurschat will share (indirectly) in distributions, if any, resulting from his beneficial ownership of the applicable entities.

Mr. Wheeler is a director of each of the Clear Sky GPs and beneficially owns or controls, directly or indirectly, entities that serve as a general partner of each Property LP. Consequently, Mr. Wheeler will share (indirectly) in distributions, if any, resulting from his beneficial ownership of the applicable entities.

The US LP Agreements and the Property LP Agreements include provisions that allow accelerated depreciation to be specially allocated to the US GPs, as general partners of the Property LPs, in certain circumstances. Any such allocation could increase the amount of US tax payable by New LP. This increase in tax payable by New LP could reduce the amount of cash available for distribution to New Fund and, in turn, to New Fund Unitholders. Mr. Kurschat will share (indirectly) in any allocations of income, gain, loss, or deduction associated with the US GPs’ economic interests in the applicable US LPs, or their economic interests in the general partner(s) of the applicable Property LP, including any special allocations of accelerated depreciation deductions from the US LPs or a Property LP that are made to the US GPs or the general partner(s) of the applicable Property LP instead of to the limited partners, as a result of their beneficial ownership of those entities.

Expenses

New Fund will pay for all ordinary expenses incurred in connection with the administration and management of New Fund and its investments out of the assets of New Fund, including, without limitation: interest and other costs of borrowed money; fees and expenses of the auditors, accountants, legal counsel, appraisers and other agents or consultants of New Fund or the New Fund Trustees; fees and expenses of the New Fund Trustees; fees payable to an administrator of New Fund (if appointed); the Fees; expenses in connection with the acquisition, disposition and ownership of the Properties; insurance as considered necessary by the New Fund Trustees; expenses in connection with payments of distributions of Units; expenses in connection with communications to New Fund Unitholders; costs and expenses in connection with the incorporation or establishment, organization and maintenance of entities formed to hold real property or other assets of New Fund; expenses incurred upon changing or terminating New Fund; and costs and expenses arising as a result of complying with all applicable laws, regulations and policies. Such expenses

L-11

will also include expenses of any action, suit or other proceedings in which or in relation to which the New Fund Trustees are entitled to an indemnity from New Fund.

New LP, the US LPs or one or more of the Property LPs will reimburse Marcus Kurschat, Elroy Gust, and Kevin Kinnear and their respective affiliates for any expenses paid or incurred on behalf of New LP, the US LPs or one or more of the Property LPs. New LP, the US LPs or one or more of the Property LPs will also reimburse the directors and officers of the Clear Sky GPs, the US GPs and the general partner of the Property LPs, for all reasonable travel, promotional and other business expenses incurred by them in the performance of their duties.

New Fund may use its available cash to establish, in whole or in part, a working capital reserve account to provide capital for New Fund and its affiliates to meet ongoing obligations as anticipated or by paying such obligations separately from such reserve account. Without limitation, New Fund or any of its subsidiaries may, but none is obligated to, establish such a working capital reserve account for expenses, debt payments and accrued interest, taxes, contingencies (including redemptions or other purchases of New Fund Units), and proposed acquisitions, as determined by the New Fund Trustees, the Clear Sky GPs, the US GPs or the general partner of the Property LP, as applicable, in their discretion. In addition, any such working capital reserve account may be funded, in whole or in part, by proceeds from the ordinary operations of the Property LPs.

Cost Sharing and Support Agreement

Upon completion of the Transaction, New Fund intends to enter into a Cost Sharing and Support Agreement among New Fund and its subsidiaries, on one hand, and Clear Sky Capital BC and Clear Sky, on the other hand, whereby Clear Sky Capital BC and Clear Sky agree to pay (subject to a specified maximum amount and the ability of Clear Sky Capital BC and Clear Sky to terminate their funding obligations in certain circumstances) certain costs of New Fund and its subsidiaries (“Fundable Costs”), which New Fund is unable to finance from its working capital. Fundable Costs include all costs and expenses relating to the issue and sale of New Fund Units, securityholder matters, the organization and capitalization of New LP, the US LPs and the Property LPs, the acquisition of or investment in any Property, or any cost or expense that may be imposed upon or incurred by New Fund or its subsidiaries or for which they may otherwise become responsible or liable.

NEW FUND DECLARATION OF TRUST

The following is a summary of certain material provisions of the New Fund Declaration of Trust. This summary does not purport to be complete and reference should be made to the full text of the New Fund Declaration of Trust, the form of which is available upon request and at no charge by contacting Kevin Wheeler, Investor Relations, 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4, at [email protected] or (403) 354-5274.

Distributions

New Fund intends to distribute distributable cash that the New Fund Trustees prudently determine as being available for distributions on a quarterly basis to New Fund Unitholders of record on the last day of each calendar quarter. New Fund may also distribute cash to New Fund Unitholders for other distribution periods. Any distributions shall be payable proportionately to persons who are New Fund Unitholders on the record date for distribution in respect of each such distribution based on the number of New Fund Units held by each such person.

Amounts to be distributed (if any) in respect of New Fund Class A Units shall be determined, declared and paid in Canadian dollars and in respect of New Fund Class B Units shall be determined, declared and paid in United States dollars. Where any amount is to be distributed, the amount shall first be determined in United States dollars and shall then, in the case of New Fund Class A Units (if applicable), be converted to Canadian dollars based on the then prevailing exchange rates available to New Fund, as determined in the reasonable discretion of the New Fund Trustees.

New Fund does not intend to make any distributions to New Fund Unitholders unless cash flows are sufficiently stable, as determined by the New Fund Trustees, in their sole discretion. If cash flows are sufficiently stable, New Fund intends to distribute cash quarterly to New Fund Unitholders; provided that New Fund may distribute cash (if any) that the New Fund Trustees prudently determine as being available for distributions (if any) to New Fund Unitholders

L-12

for other distribution periods, as the New Fund Trustees determine, in their sole discretion, whether or not quarterly distributions are declared and paid. Where a distribution of distributable cash is declared by the New Fund Trustees, such distribution is anticipated to be paid within 30 days of the declaration period in respect of which such distribution has been declared.

The amount of distributable cash will be determined by the New Fund Trustees, in their sole discretion. Generally, it is expected that distributable cash will equal the amount earned or receivable by New Fund in the distribution period and received on or before the payment date in respect of the distribution period, including income from New LP, interest, distributions, dividends, proceeds from the disposition (other than by way of security interest) of securities, returns of capital and repayments of indebtedness together with all amounts, if any, received by New Fund from financing activities, less amounts New Fund estimates will be required for expenses of New Fund and other obligations of New Fund, cash redemptions or repurchases of New Fund Units, any tax liability and any reserves established by the New Fund Trustees, in their sole discretion.

In respect of each fiscal year of New Fund, New Fund will make payable to New Fund Unitholders not less than such amount of income (in respect of the taxable income and net realized capital gains, if any, of New Fund for such year) as is necessary to ensure that New Fund will not be liable for non-refundable income taxes under the Tax Act in such year. In this regard, New Fund intends to distribute cash to New Fund Unitholders that, to the extent possible, at least equals the income (including net taxable capital gains) of New Fund for each taxation year. However, if New Fund does not have sufficient cash to distribute in respect of such income, then New Fund Unitholders would receive distributions of New Fund Units to the extent necessary to ensure that New Fund does not have a liability for non-refundable income tax under Part I of the Tax Act, which would result in New Fund Unitholders being required to include amounts in income without a corresponding cash distribution. Unless the New Fund Trustees determine otherwise, immediately after any pro rata distribution of these additional New Fund Units, the number of outstanding New Fund Units will be consolidated such that each New Fund Unitholder will hold after the consolidation the same number of New Fund Units as the New Fund Unitholder held before the non-cash distribution, except where tax was required to be withheld in respect of the New Fund Unitholder’s share of the distribution.

To the extent distributions are calculated in respect of a distribution period and is payable at the end of such distribution period, if for any reason, including the termination of New Fund, such distribution period is not completed or such amounts are no longer payable, then the distribution will be pro-rated to the end of the shortened distribution period and be payable at the end of such shortened distribution period. In addition, in the event that a New Fund Unitholder has held its New Fund Unit(s) for less than the entire distribution period for which a distribution is payable, the New Fund Trustees may, but are not required to, determine that the New Fund Unitholder is only entitled to a share of the distributions based on the proportion that the number of days between the date of first issue of its New Fund Unit(s) and the last day of the distribution period bears to the aggregate total number of days in such distribution period.

The New Fund Trustees have the right but not the obligation to distribute distributable cash, income, capital gains and any other applicable amounts among New Fund Unitholders in such a manner so as to ensure, where possible, that New Fund Unitholders are treated equitably and fairly taking into account such considerations as the New Fund Trustees, in their discretion acting reasonably and in good faith, deem appropriate in the circumstances and determine to be equitable and fair, including differences among New Fund Unitholders arising, or that may arise from, as a consequence of, or in connection with, directly or indirectly: (a) one or more New Fund Unitholders having held their New Fund Units for less than the entire distribution period or New Fund Unitholders having held their New Fund Units) for different lengths of time prior to any distribution; (b) one or more New Fund Unitholders having acquired their New Fund Units at different times during a fiscal year or in different fiscal or calendar years; (c) one or more New Fund Unitholders having acquired their New Fund Unitholders in different currencies or at different prices; or (d) one or more New Fund Unitholders receiving distributions on their New Fund Units in different currencies.

The return on an investment in New Fund Units is not comparable to the return on an investment in fixed-income securities. Cash distributions to New Fund Unitholders are not guaranteed and are not fixed obligations of New Fund. Any receipt of cash distributions by a New Fund Unitholder is at any time subject to the terms of the New Fund Declaration of Trust. Any anticipated return on investment is based upon many performance assumptions. Although New Fund intends to distribute its available cash to New Fund Unitholders, cash distributions may be reduced or suspended at any time and from time to time. The ability of New Fund to make cash distributions and the actual amount distributed will depend on the operations of the Properties and will be subject to various factors

L-13

including those described in this Circular under “Risk Factors”. The value of New Fund Units may decline if New Fund is unable to meet its cash distribution targets in the future and that decline may be significant.

New Fund and New Fund Unitholders will be affected by fluctuations in the C$/US$ exchange rate because (a) New Fund will pay certain costs and expenses in C$; (b) since the Properties are, or will be, located in the United States, the Property LPs will pay the costs associated with acquiring or investing in the Properties, and general and administrative, marketing and operating expenses in US$ and (c) New Fund’s distributions (if any) to New Fund Unitholders who hold New Fund Class A Units (as opposed to New Fund Class B Units) are to be made in C$, in whole or in part.

The nature of New Fund’s exposure to fluctuations in the C$/US$ exchange rate is expected to vary as distributions (if any) are made to New Fund Unitholders. In order to pay New Fund’s distributions to New Fund Unitholders holding New Fund Class A Units, New Fund will be required to convert US$ (received from distributions and other advances from New LP) to C$. New Fund does not intend to convert any amounts received from distributions and other advances from New LP in order to pay distributions to New Fund Unitholders holding New Fund Class B Units. Depending on the timing of the transaction and the applicable currency exchange rate such conversions may positively or negatively impact New Fund, and consequently, New Fund Unitholders. For example, a strengthening Canadian dollar relative to the US dollar would negatively impact the amount of distributable cash available for distributions by New Fund to holders of New Fund Class A Units.

Suspension of Calculation of Net Asset Value

The New Fund Trustees shall suspend the calculation of the Net Asset Value when required to do so under applicable securities laws. During the period of suspension New Fund shall not be permitted to issue or redesignate New Fund Units in the affected class. The calculation of the Net Asset Value shall resume as soon as possible and in compliance with applicable securities laws or any exemptive relief granted therefrom.

Meetings and Resolutions of New Fund Unitholders

New Fund may, but is not required to, hold annual meetings of New Fund Unitholders. New Fund does not, at this time, intend to call annual meetings for the election of the New Fund Trustees or otherwise.

A special meeting of New Fund Unitholders may be called by the New Fund Trustees at any time and from time to time and for any purpose and must be called, if requisitioned by a written requisition of New Fund Unitholders holding in the aggregate not less than 40% of the New Fund Units then outstanding and entitled to vote at a meeting of New Fund Unitholders. The written requisition must be in writing and must set forth the name and address of, and number of New Fund Units (and votes attached thereto) held by, each person who is supporting the requisition, state in reasonable detail the business proposed to be transacted at the meeting, and be sent to the New Fund Trustees in accordance with the New Fund Declaration of Trust.

New Fund Unitholders may attend and vote at all meetings of New Fund Unitholders either in person or by proxy and a proxyholder need not be a New Fund Unitholder. At any meeting of New Fund Unitholders, a quorum shall be two or more individuals present in person either holding personally or representing by proxy not less, in the aggregate, than 5% of the New Fund Units then outstanding and entitled to vote at the meeting.

Standard of Care

Pursuant to the New Fund Declaration of Trust, the New Fund Trustees are required to exercise their powers and discharge their duties under the New Fund Declaration of Trust honestly, in good faith and in the best interests of New Fund and in connection therewith, they are required to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.

L-14

Conflicts of Interest

The Declaration of Trust shall contain conflict of interest provisions, similar to those contained in the ABCA, that require the New Fund Trustees and officers of New Fund, if any, to disclose in writing to the New Fund Trustees if such person is a party to a material contract or transaction or proposed material contract or transaction with New Fund (or an affiliate thereof) or is a director, officer or employee of, or otherwise has a material interest in, any person who is a party to a material contract or transaction or proposed material contract or transaction with New Fund (or an affiliate thereof).

A New Fund Trustee who has made disclosure to the foregoing effect is not entitled to vote on any resolution to approve the material contract or transaction unless the material contract or transaction is (a) one relating primarily to such New Fund Trustee’s remuneration as a Trustee, officer, employee or agent of the New Fund or (b) one for indemnity of such Trustee or the purchase of liability insurance.

Certain Rights of Trustees Subject to Special Resolution

The New Fund Declaration of Trust shall provide that the New Fund Trustees may not under any circumstances whatsoever, without the approval of New Fund Unitholders by Special Resolution, vote, directly or indirectly, any securities of the Trust or any of its affiliates, to authorize, or otherwise permit, through action or inaction, any amalgamation, arrangement, recapitalization, business combination or other merger of New LP or any material subsidiary of New Fund, except:

1. in conjunction with an internal reorganization as a result of which New Fund has the same interest, whether direct or indirect, in New Fund’s assets as the interest, whether direct or indirect, it had prior to the reorganization;

2. in conjunction with a routine acquisition or routine disposition (each as defined in the New Fund Declaration of Trust); and

3. in conjunction with the dissolution of New Fund.

Delegation of Powers to Administrator

The New Fund Trustees may from time to time delegate to an administrator such powers and authority as the New Fund Trustees may in their discretion deem necessary or desirable to effect the administration of any of the duties of the New Fund Trustees under the New Fund Declaration of Trust.

Amendments to the New Fund Declaration of Trust

The New Fund Declaration of Trust shall provide that the New Fund Declaration of Trust may be amended, altered, supplemented or restated from time to time by the New Fund Trustees with the approval of New Fund Unitholders by Special Resolution. However, the New Fund Trustees may add, delete, amend, modify, vary or change the provisions of the New Fund Declaration of Trust without the consent, approval or ratification of New Fund Unitholders or any other person at any time, including those:

1. made prior to, or concurrently with, the closing of the Transaction;

2. made for the purpose of ensuring continuing compliance with applicable laws, regulations, requirements or policies of any governmental authority having jurisdiction over the New Fund Trustees or over New Fund;

3. which, in the opinion of the New Fund Trustees, provide additional protection or added benefits for Unitholders;

L-15

4. which, in the opinion of the New Fund Trustees are necessary or desirable to remove conflicts or inconsistencies in the New Fund Declaration of Trust;

5. which, in the opinion of the New Fund Trustees, are not prejudicial to New Fund Unitholders and are necessary or desirable (which, for greater certainty, exclude amendments in respect of which a New Fund Unitholder vote is specifically otherwise required);

6. to add or delete New Fund Units and classes or series of New Fund Units, changing distribution policies or to provide such other information the New Fund Trustees determine, in such manner and for any purpose permitted by this New Fund Declaration of Trust;

7. as the New Fund Trustees in their discretion deem necessary or desirable as a result of changes in the taxation laws from time to time which may affect New Fund or New Fund Unitholders;

8. to ensure that New Fund qualifies or continues to qualify as a “mutual fund trust” under the Tax Act and does not qualify as a SIFT, to better comply with any provisions of the Tax Act or any analogous legislation, or to respond to any amendment to the Tax Act or any analogous legislation or changes to the interpretation thereof; and

9. to change the situs of, or the laws governing, New Fund which, in the opinion of the New Fund Trustees, is desirable in order to provide New Fund Unitholders with the benefit of any legislation limiting their liability; provided that such change does not introduce a material disadvantage to New Fund Unitholders that did not exist prior to such change.

Notwithstanding the foregoing, no such addition, deletion, amendment, modification, variation or change or any other alteration, supplement or restatement is value under the New Fund Declaration of Trust or binds the New Fund Trustees or any New Fund Unitholder to the extent that it purports to:

1. without the affirmative vote of at least 90% of the votes cast at a meeting of New Fund Unitholders duly called and held by holders of New Fund Units entitled to vote thereon:

a. modify the voting rights in the New Fund Declaration of Trust;

b. reduce the percentage of votes required to be cast at a meeting of New Fund Unitholders for the purpose of any New Fund Unitholder approval or Special Resolution;

c. reduce the equal undivided interest in New Fund’s assets represented by any participating New Fund Unit (of any class or series thereof); or

2. result in New Fund failing to qualify as a “mutual fund trust” under the Tax Act at any time.

Take-Over Bids

The New Fund Declaration of Trust shall include provisions relating to take-over bids made to acquire New Fund Units. Under the New Fund Declaration of Trust, if a takeover bid is made to acquire New Fund Units and within the time provided in the offer for its acceptance or within 120 days after the date of the offer, whichever period is shorter, the offer is accepted by at least 90% of the outstanding New Fund Units on a fully-diluted basis (other than New Fund Units beneficially owned, or over which control or direction is exercised, on the date of the takeover bid, by the offeror or affiliates or associates of the offeror or any person or company acting jointly or in concert with the offeror) and such New Fund Units are taken up and paid for by the offeror, then the offeror is entitled to acquire New Fund Units held by New Fund Unitholders who did not accept the take-over bid on the terms offered by the offeror, pursuant to the procedures to be set out in the New Fund Declaration of Trust. The New Fund Declaration of Trust will not provide

L-16

a mechanism for New Fund Unitholders who do not tender their New Fund Units to a take-over bid to apply to a court to fix the fair value of their New Fund Units.

Notices to New Fund Unitholders and the New Fund Trustees

The New Fund Declaration of Trust shall provide that any notice or other communication required or permitted by the provisions of the New Fund Declaration of Trust to be given or made to New Fund Unitholders or the New Fund Trustees shall be effectively given and made if (a) delivered personally, (b) sent by prepaid courier service or mail addressed to a registered holder at his or her last address appearing on the New Fund Unitholder register or to the New Fund Trustees at the head office of New Fund, or (c) sent by e-mail or other means of recorded electronic communication.

Any such communication so given or made shall be deemed to have been given or made and to have been received on the day of delivery if delivered, or on the day of e-mailing or sending by other means of recorded electronic communication, provided that such day in either event is a Business Day and the communication is so delivered, e-mailed or sent before 5:00 p.m. (Calgary time) on such day. Otherwise, such communication shall be deemed to have been given and made and to have been received on the next following Business Day. Any such communication sent by mail shall be deemed to have been given and made and to have been received on the fifth Business Day following the mailing thereof; provided, however, that no such communication shall be mailed during any actual or apprehended disruption of postal services. Any such communication given or made in any other manner shall be deemed to have been given or made and to have been received only upon actual receipt

Fiscal Year

The fiscal year and taxation year of New Fund shall end on December 31 in each year.

DESCRIPTION OF NEW FUND UNITS

The rights and obligations of New Fund Unitholders will be governed by the New Fund Declaration of Trust. The following is a summary of certain material provisions of the New Fund Declaration of Trust with respect to such rights and obligations. This summary does not purport to be complete and reference should be made to the New Fund Declaration of Trust, the form of which is available upon request and at no charge by contacting Kevin Wheeler, Investor Relations, 120 Varsity Estates Bay NW, Calgary, Alberta T3B 2W4, at [email protected] or (403) 354-5274.

New Fund Units

General

The New Fund Declaration of Trust shall provide that New Fund may issue an unlimited number of New Fund Class A Units and New Fund Class B Units. New Fund may create additional classes and series of New Fund Units without notice to New Fund Unitholders. The New Fund Trustees may determine the number of classes and series of New Fund Units and the attributes attaching to each class or series of New Fund Units.

New Fund Units

Distributions

See “New Fund Declaration of Trust – Distributions”.

Voting

Each New Fund Unit shall entitle the holder thereof to one vote at all meetings of New Fund Unitholders where all classes of Units vote together and to one vote at all meetings of New Fund Unitholders where a particular class votes separately as a class.

L-17

Liquidation

In the event of any dissolution, liquidation, winding up or other termination of New Fund, New Fund Unitholders, as indicated on the applicable registers, will be entitled to receive (i) any assets of New Fund or (ii) any proceeds of the sale of assets of New Fund, together with any cash forming part of the assets of New Fund that remain following New Fund’s (a) paying, retiring or discharging, or making provision for the payment, retirement or discharge of, all known debts, liabilities and obligations of New Fund; (b) providing for indemnity against any other outstanding debts, liabilities and obligations; and (c) paying in full of the Redemption Price applicable to outstanding New Fund Units.

Redemption of New Fund Units

New Fund Units will be redeemable on demand at the option of the New Fund Unitholder. Cash redemption rights under the New Fund Declaration of Trust shall be restricted and provide limited opportunity for New Fund Unitholders to liquidate their investment in New Fund Units.

Each New Fund Unitholder will have a right to require New Fund to redeem all or any part of the New Fund Units registered in the name of the New Fund Unitholder on a specified Redemption Date (generally the last day of a calendar quarter or such other date as the New Fund Trustees determine). New Fund Units are not considered to be tendered for redemption until New Fund has, to its satisfaction (or the satisfaction of the transfer agent of New Fund Units, if any), received the New Fund Unitholder’s redemption notice and further documents or evidence that New Fund (or the transfer agent of New Fund Units, if any) may reasonably require with respect to the identity, capacity or authority of the person giving the redemption request.

Redemption requests must be given in writing to the New Fund Trustees, in a form approved by the New Fund Trustees, at least 45 days prior to a Redemption Date.

Upon redemption of a New Fund Unit, the New Fund Unitholder will receive proceeds of redemption equal to the Redemption Price, which is the Net Asset Value of such New Fund Unit in effect as of the Redemption Date, less, in the discretion of the New Fund Trustees, any redemption deduction set out in the New Fund Declaration of Trust or withholding tax, charge or fee determined pursuant to the New Fund Declaration of Trust. Upon payment to the redeeming New Fund Unitholder of the Redemption Price of the New Fund Units so redeemed, New Fund and the New Fund Trustees shall be discharged from all liability to the New Fund Unitholder in respect of such redeemed New Fund Units.

If the New Fund Unitholder redeems New Fund Units prior to the following anniversaries, based on the date in which the applicable New Fund Unitholder originally invested in the applicable Fund, then the following deferred sales charge, expressed as a percentage of the class Net Asset Value per New Fund Unit, will be deducted from the Redemption Price as of the applicable Redemption Date:

1st year = 6.0% 2nd year = 5.5% 3rd year = 5.0% 4th year = 4.0% 5th year = 3.0% Afterwards = 0.0%

Payment of the redemption amount will be paid to the redeeming New Fund Unitholder within 45 days following the later of the Redemption Date specified for such redemption and the receipt by the New Fund Trustees of all such properly completed redemption documents.

The New Fund Trustees have the absolute discretion to waive any conditions in respect of one or more redemption requests from time to time.

In accordance with the terms of the New Fund Declaration of Trust, the entitlement of a New Fund Unitholder to receive cash upon the redemption of such holder’s New Fund Units will be subject to limitations, including where:

L-18

1. the total amount payable by New Fund in respect of all New Fund Units validly tendered for redemption in the same calendar quarter exceeds the Redemption Limit; provided that, the New Fund Trustees may, in their absolute discretion, waive such Redemption Limit in respect of all New Fund Units tendered for redemption in any calendar quarter;

2. the redemption of New Fund Units would render New Fund insolvent; or

3. in the New Fund Trustees’ opinion, in their absolute discretion, New Fund has insufficient liquid assets to fund such redemptions or that the liquidation of assets at such time would be to the detriment of or adversely affect the remaining New Fund Unitholders or New Fund generally.

Subject to waiver of the Redemption Limit, New Fund Units tendered for redemption during any calendar quarter in which the Redemption Limit is exceeded are to be redeemed, in the discretion of the New Fund Trustees, for cash and a distribution in specie of Redemption Note(s) on a pro rata basis.

The Redemption Price paid by New Fund may, in certain circumstances, be paid by New Fund by way of a distribution in specie of Redemption Note(s). Redemption Notes issued by New Fund will be unsecured debt obligations of New Fund or a subsidiary of New Fund and may be subordinated to other financing obtained by New Fund. New Fund will create a reserve fund for interest payable with respect to Redemption Notes issued. In the event that New Fund is unable to pay out a Redemption Note on maturity it may borrow funds from related and unrelated parties or seek to extend the terms of the Redemption Note. Notwithstanding the foregoing, circumstances may arise that result in New Fund not having the funds available to pay the principal amount and any accrued and unpaid interest under a Redemption Note on maturity. Redemption Notes, if issued by New Fund, may, in certain circumstances, have priority over New Fund Units in the event of the liquidation of the assets of New Fund. Various considerations with respect to creditor rights and bankruptcy law shall be considered both at the time Redemption Notes are issued and at the time of any liquidation of the assets of New Fund to determine if any such priority exists.

New Fund Unitholders should note that Redemption Notes are not expected to be a qualified investment for tax-exempt Plans.

Suspension of Redemptions

Pursuant to the New Fund Declaration of Trust, the New Fund Trustees may suspend the redemption of New Fund Units if the New Fund Trustees determine that conditions exist as a result of which the disposition or valuation of the Properties is not reasonably practical; provided such suspension is in accordance with all applicable securities laws and other applicable law. Any suspension of the redemption of New Fund Units shall cease promptly following the ending of the conditions giving rise to the suspension and in any case not later than one year after the beginning of the suspension.

Redemption at the Option of New Fund

The New Fund Declaration of Trust will also provide that New Fund may, at any time and from time to time, upon giving a Retraction Notice, redeem one or more of the then outstanding New Fund Units in accordance with the provisions of the New Fund Declaration of Trust as if such New Fund Units were tendered by the applicable New Fund Unitholder(s) for redemption as at the date of the Retraction Notice. Upon redemption by New Fund of a New Fund Unit, the New Fund Unitholder will receive proceeds of redemption equal to the Redemption Price payable in cash or by a distribution in specie, including of Redemption Notes.

Redemption to Pay Elected Fees

New Fund Units held by a New Fund Unitholder may be redeemed by or under the authority of the New Fund Trustees to satisfy the payment of fees or charges to which such New Fund Unitholder has agreed to be subject, such agreement by the New Fund Unitholder to be conclusively evidenced by the purchase of any New Fund Unit that gives rise to such fee or charge being levied, provided the nature and amount of such fee or charge was disclosed in an offering

L-19

document or in an agreement between the New Fund Unitholder and the New Fund Trustees (or an associate or affiliate thereof) at the time of such purchase.

Purchase for Cancellation

New Fund may from time to time purchase for cancellation some or all of New Fund Units (or other securities of New Fund which may be issued and outstanding from time to time) in the market (if any), by private agreement, upon any recognized stock exchange on which such Units are traded or pursuant to tenders received by New Fund upon request for tenders addressed to all holders of record of New Fund Units, provided in each case that the New Fund Trustees have determined that such purchases are in the best interests of New Fund and are completed in accordance with application law (including applicable securities laws).

TRUSTEES AND OFFICERS

The following table sets forth certain information regarding each of the individuals who will be the New Fund Trustees and/or acting in the capacity of officer of Clear Sky as at the closing of the Transaction.

Name Principal Occupations and Related Experience MARCUS KURSCHATTrustee and President, Chief Executive Officer of Clear Sky

Mr. Kurschat will be a trustee of New Fund. Mr. Kurschat founded Clear Sky in 2009 and serves as its President and Chief Executive Officer. He has ultimate responsibility for Clear Sky’s investment strategy, growth initiatives, capital formation, risk management and operations.

Mr. Kurschat has over two decades of principal real estate investing experience with expertise in sourcing, acquisitions, structuring, development, redevelopment and repositioning. Under his leadership, Clear Sky is a leading investor and operator with value-add platforms focused on multi-family, self storage and manufactured housing. Mr. Kurschat has extensive relationships with U.S. and Canadian-based retail and institutional investors and has formed investment vehicles that aim to support their investing needs.

Prior to founding Clear Sky, Mr. Kurschat was the founder of a boutique real estate investment management firm focused on multi-family transactions primarily located in Canada. Mr. Kurschat began his career as an entrepreneur and has syndicated various multi-family transactions with joint venture partners and investors.

Mr. Kurschat received his Structural Engineering diploma from the British Columbia Institute of Technology in Burnaby, British Columbia. He actively supports various non-profit conservation organizations including Trout Unlimited, Wild Salmon Center and Pheasant Forever.

ELROY GUSTTrustee

Mr. Gust will be a trustee of New Fund. Mr. Gust is President, Managing Partner, and founder of Newlook Capital, a private equity firm focused on the lower mid-market. Prior to founding Newlook Capital, Mr. Gust started his career with positions at several banks as a commercial lender and then held several senior level positions at a multinational logistics company. During the tenure of his 15-year career with Newlook, Mr. Gust has been directly involved in real estate and private equity investments totalling in excess of US$100 million.

KEVIN KINNEARTrustee

Mr. Kinnear will be an independent trustee of New Fund. Mr. Kinnear is the owner and operator of an independent office supply and printing business on Vancouver Island, British Columbia. Prior to purchasing this business in 2015, Mr. Kinnear worked as an independent life insurance broker for six years and concurrently as a dealing representative for three years. Before those roles, Mr. Kinnear spent over seven years in the Credit Union banking system where he rose to the position of Business Account

L-20

Name Principal Occupations and Related Experience Manager assisting business owners and managers with their borrowing and cash management needs.

MATTHEW COLLINSChief Financial Officer of Clear Sky

Matthew Collins is Chief Financial Officer of Clear Sky. In this capacity, Mr. Collins oversees the company’s accounting, tax, financial reporting and treasury functions. Mr. Collins is also actively involved with the company’s capital markets efforts and investor communications. Mr. Collins is a seasoned professional experienced with GAAP and IFRS accounting rules and standards for financial reporting.

Before joining Clear Sky, Mr. Collins was a Senior Manager at Ernst & Young, LLP (“EY”), where he served nine years in the audit and financial accounting and advisory services practice, with a focus on serving companies funded through capital markets. While at EY, Mr. Collins served a portfolio of private and public companies, gaining experience in technical accounting, international operations, Securities Exchange Commission reporting and internal controls. In addition, Mr. Collins also served on a selective team at EY, carrying out the firm’s corporate social responsibility initiatives in Brazil and Costa Rica, consulting with local business owners on strategic business initiatives. Mr. Collins is a Certified Public Accountant and a Member of the Arizona Society of Certified Public Accountants. Mr. Collins has his Masters of Accounting and Bachelor of Science in Business Administration with a Major in Accounting from the University of Arizona, Tucson.

MATTHEW MASONGeneral Counsel of Clear Sky

Mr. Mason joined Clear Sky in 2017 and serves as its General Counsel with oversight of Clear Sky’s corporate governance and legal matters, risk management and financial structuring activities. Mr. Mason is well versed in real estate and corporate law and adheres to regulatory, compliance and other relevant standards that may have an impact on investors.

Before joining Clear Sky, Mr. Mason was a partner and shareholder at Gallagher & Kennedy, a large regional law firm in the southwestern United States. During his ten years in private practice, Mr. Mason represented clients in over US$1 billion worth of complex real estate and corporate transactions. Mr. Mason presently serves as a member of the Arizona State Board for Charter Schools and has previously served as a member of the City of Scottsdale Development Review Board, City of Scottsdale Board of Adjustment and other state-wide boards.

Mr. Mason is admitted to the practice of law in all state and federal courts in the State of Arizona and is a member of the State Bar of Arizona. Mr. Mason earned a Juris Doctor and a Master of Dispute Resolution from Pepperdine University School of Law, and a Bachelor of Science in Political Science from Arizona State University. Prior to practicing law, Mr. Mason worked as a Legislative Assistant to the United States House of Representatives, Committee on Rules.

M-1

SCHEDULE “M”

PRO FORMA FINANCIAL STATEMENTS

Pro Forma Consolidated Financial Statements (Expressed in US dollars)

Aspen Real Estate Trust

As at June 30, 2020 and for the six months endedJune 30, 2020 and for the year ended December 31, 2019 (Unaudited)

M-2

Asp

en R

eal E

stat

e Tr

ust

Pro

For

ma

Stat

emen

t of F

inan

cial

Pos

ition

(E

xpre

ssed

in U

S D

olla

rs)

As a

t Jun

e 30

, 202

0

(Una

udite

d)

Pro-

form

aFu

nd 1

Fund

2Fu

nd3

Fund

4Su

ngat

eFu

nd 5

adju

stm

ents

Not

esTo

tal

Ass

ets

Non

-cur

rent

ass

ets:

In

vest

men

t pro

perti

es$

28,0

50,0

00$

12,7

00,0

00$

26,2

50,0

00$

29,3

00,0

00$

10,

300,

000

$12

,850

,000

$--

-$

119,

450,

000

Inve

stm

ent i

n as

soci

ate

------

---36

5,90

3---

-----

-36

5,90

3Am

ount

s du

e fro

m re

late

d pa

rties

87,4

806,

320

223,

445

45,1

7896

,527

201,

253

(38,

054)

3(h)

622,

149

Tota

l non

-cur

rent

ass

ets

28,1

37,4

8012

,706

,320

26,4

73,4

4529

,711

,081

10,3

96,5

2713

,051

,253

(38,

054)

120,

438,

052

Cur

rent

ass

ets:

Prep

aid

expe

nses

and

rese

rves

97,4

4418

7,89

297

,528

7,26

433

,001

162,

126

---

585,

255

Tena

nt a

nd o

ther

rece

ivab

les

928

3,56

42,

120

5,74

4---

24,2

63--

-36

,619

Cas

h42

1,52

222

9,28

623

0,40

260

9,73

130

2,24

920

2,90

2--

-1,

996,

092

Tota

lcur

rent

asse

ts51

9,89

442

0,74

233

0,05

062

2,73

933

5,25

038

9,29

1--

-2,

617,

966

Tota

lass

ets

$28

,657

,374

$13

,127

,061

$

26,

803,

495

$30

,333

,820

$10

,731

,777

$13,

440,

545

$

(38,

054)

$ 12

3,05

6,01

8

See

acco

mpa

nyin

g no

tes

to p

ro fo

rma

cons

olid

ated

fina

ncia

l sta

tem

ents

.

M-3

Asp

en R

eal E

stat

e Tr

ust

Pro

For

ma

Stat

emen

t of F

inan

cial

Pos

ition

(E

xpre

ssed

in U

S D

olla

rs)

As a

t Jun

e 30

, 202

0

(Una

udite

d)

Fund

1Fu

nd 2

Fund

3Fu

nd 4

Sung

ate

Fund

5P

ro-fo

rma

adju

stm

ents

Not

esTo

tal

Liab

ilitie

sN

on-c

urre

nt li

abili

ties:

Mor

tgag

es p

ayab

le$

14,

245,

562

$

7,7

01,1

94$

1

5,28

3,04

1$

17

,001

,955

$5,

226,

735

$ 9

,939

,538

$---

3(b)

$ 6

9,39

8,02

5D

efer

red

tax

liabi

litie

s1,

603,

276

170,

091

800,

984

1,92

0,14

173

0,23

2---

2,16

1,87

23(

d)7,

386,

596

Tota

lnon

-cur

rent

liabi

litie

s15

,848

,838

7,87

1,28

516

,084

,025

18,9

22,0

965,

956,

967

9,93

9,53

82,

161,

872

76,7

84,6

21

Cur

rent

liab

ilitie

s:C

urre

nt p

ortio

n of

mor

tgag

es p

ayab

le30

7,94

6--

-18

2,39

6--

---

-13

2,26

7---

3(b)

622,

609

Am

ount

s du

e to

rela

ted

parti

es97

,092

321,

412

138,

682

--

90,8

33(3

8,05

4)

3(h)

609,

965

Tena

nt s

ecur

ity d

epos

its77

,594

40,1

1768

,205

73,4

3025

,170

70,1

41---

354,

657

Prep

aid

rent

s11

,211

8,39

123

,317

16,9

628,

006

13,0

30---

80,9

17A

ccou

nts

paya

ble

and

accr

ued

liabi

litie

s31

6,55

738

9,62

136

0,41

223

1,28

598

,529

223,

783

135,

212

3(c)

2,21

9,17

5(1

2,79

5)3(

c)47

6,57

13(

c), (

i)-

Tota

lcur

rent

liab

ilitie

s81

0,40

075

9,54

177

3,01

232

1,67

713

1,70

553

0,05

456

0,93

43,

887,

323

Tota

l lia

bilit

ies

befo

re n

et li

abili

ties

attri

buta

ble

to u

nith

olde

rs16

,659

,238

8,63

0,82

616

,857

,037

19,2

43,7

736,

088,

672

10,4

69,5

922,

722,

806

80,6

71,9

44

Net

liab

ilitie

s at

tribu

tabl

e to

uni

thol

ders

--

8,75

2,79

19,

639,

551

3,85

3,73

32,

970,

953

(2,2

84,2

89)

3(c)

,(d)

36,4

39,6

15

(476

,571

)3(

c), (

i)

13,9

83,4

473(

f)

Trus

t Uni

thol

ders

Equ

ity10

,047

,581

3,93

5,86

6(1

3,98

3,44

7)3(

f)N

on-c

ontro

lling

inte

rest

s1,

950,

555

560,

369

1,19

3,66

71,

450,

496

789,

372

---

---

5,94

4,45

8N

et li

abilit

ies

attri

buta

ble

to u

nith

olde

rs a

nd

non-

cont

rollin

g in

tere

sts

11,9

98,1

364,

496,

235

9,94

6,45

811

,090

,047

4,64

3,10

52,

970,

953

(2,7

60,8

60)

42,3

84,0

74To

tal l

iabi

litie

s an

d ne

t lia

bilit

ies

attr

ibut

able

to u

nith

olde

rs a

nd n

on-

cont

rolli

n g in

tere

sts

$ 2

8,65

7,37

4$

13,

127,

061

$ 26

,803

,495

$ 3

0,33

3,82

0$

10,

731,

777

$ 13

,440

,545

$

(38,

054)

$ 12

3,05

6,01

8

See

acc

ompa

nyin

g no

tes

to p

ro f

orm

a co

nsol

idat

ed fi

nanc

ial s

tate

men

ts.

M-4

Asp

en R

eal E

stat

e Tr

ust

Pro

For

ma

Stat

emen

t of C

ompr

ehen

sive

Inco

me

(Los

s)

(Exp

ress

ed in

US

Dol

lars

)Si

x m

onth

s en

ded

June

30,

202

0 (U

naud

ited)

Fund

1Fu

nd 2

Fund

3Fu

nd 4

Sung

ate

Fund

5P

ro-fo

rma

adju

stm

ents

Not

esTo

tal

Rev

enue

sR

enta

l$

1,23

5,44

6$

645,

491

$1,

244,

393

$1,

243,

476

$45

5,92

9$

823,

954

$

---$

5,6

48,6

89A

ncill

ary

fees

and

cha

rges

146,

145

46,2

1114

3,38

625

7,97

986

,503

81,2

54---

761,

478

Dire

ct o

pera

ting

expe

nses

(550

,940

)(3

31,0

34)

(774

,956

)(7

89,2

89)

(282

,132

)(7

11,2

52)

---(3

,439

,603

)N

et re

ntal

reve

nues

830,

651

360,

668

612,

823

712,

166

260,

300

193,

956

---2,

970,

564

Expe

nses

Fina

nce

cost

s29

0,89

619

2,04

039

2,76

935

6,16

410

8,74

426

4,74

1---

1,60

5,35

4G

ener

al a

nd a

dmin

istra

tive

134,

717

84,9

7911

7,57

312

4,49

025

,437

125,

159

135,

212

3(c)

734,

772

(12,

795)

3(c)

Gai

non

fore

ign

exch

ange

(23,

263)

(18,

874)

(21,

276)

(19,

374)

(1,2

44)

(13,

000)

---(9

7,03

1)40

2,35

025

8,14

548

9,06

646

1,28

013

2,93

737

6,90

012

2,41

72,

243,

095

Inco

me

(loss

) bef

ore

fair

valu

e ad

just

men

ts to

in

vest

men

t pro

pert

ies

428,

301

102,

523

123,

757

250,

886

127,

363

(182

,944

)(1

22,4

17)

727,

469

Fair

valu

e ad

just

men

t to

inve

stm

ent p

rope

rties

353,

390

92,5

09(3

00,0

00)

(14,

965)

(125

,000

)(6

9,01

5)---

(63,

081)

Inco

me

(loss

) bef

ore

inco

me

taxe

s78

1,69

119

5,03

2(1

76,2

43)

235,

921

2,36

3(2

51,9

59)

(122

,417

)66

4,38

9

Def

erre

d in

com

e ta

x (e

xpen

se) r

ecov

ery

(140

,077

)(1

9,92

7)23

3,74

657

,859

134,

768

---(2

,161

,872

)3(

d)(2

59,3

42)

1,63

6,16

13(

d), (

i)

Net

inco

me

(loss

) and

com

preh

ensi

ve

inco

me

(loss

)$

641,

614

$

175,

105

$

57,

503

$

293,

780

$ 1

37,1

31$

(251

,959

)(6

48,1

28)

$

405

,046

Net

inco

me

(loss

) and

com

preh

ensi

ve in

com

e (lo

ss)

attri

buta

ble

to:

Non

-con

trolli

ng in

tere

st$

1

84,7

74$

69,5

79$

(

9,88

1)$

80,0

65$

1

3,22

5$

---

---$

3

37,7

62U

nith

olde

rs45

6,84

010

5,52

667

,384

213,

715

123,

906

(251

,959

)(6

48,1

28)

67,2

84

$64

1,61

4$

17

5,10

5$

5

7,50

3$

29

3,78

0$

137

,131

$ (2

51,9

59)

$(6

48,1

28)

$

405

,046

See

acc

ompa

nyin

g no

tes

to p

ro f

orm

a co

nsol

idat

ed fi

nanc

ial s

tate

men

ts.

M-5

Asp

en R

eal E

stat

e Tr

ust

Pro

For

ma

Stat

emen

t of C

ompr

ehen

sive

Inco

me

(Los

s)

(Exp

ress

ed in

US

Dol

lars

)

Year

end

ed D

ecem

ber 3

1, 2

019

(U

naud

ited)

Fund

1Fu

nd 2

Fund

3Fu

nd 4

Sung

ate

Fund

5P

ro-fo

rma

adju

stm

ents

Not

esTo

tal

Rev

enue

sR

enta

l$

2,3

00,1

97$1

,208

,294

$2,5

57,0

57$2

,393

,293

$88

3,39

7$1

,485

,703

$--

-$

10,8

27,9

41

Anc

illar

y fe

es a

nd c

harg

es28

8,14

994

,412

317,

588

523,

027

180,

497

214,

235

---

1,61

7,90

8D

irect

ope

ratin

g ex

pens

es(1

,438

,199

)(7

75,0

48)

(1,5

56,2

27)

(1,6

03,4

44)

(439

,415

)(1

,457

,494

)--

-(7

,269

,827

)N

et re

ntal

reve

nues

1,15

0,14

752

7,65

81,

318,

418

1,31

2,87

662

4,47

924

2,44

4--

-5,

176,

022

Expe

nses

Fina

nce

cost

s58

9,21

837

2,59

578

4,53

272

9,39

922

5,04

954

3,57

9--

--3,

244,

372

Gen

eral

and

adm

inis

trativ

e30

0,68

615

7,30

629

5,01

835

5,99

214

5,26

535

3,95

225

8,01

33(

c)2,

122,

253

(243

,979

)3(

c)50

0,00

03(

g)Fu

nd p

rom

otio

n an

d ad

min

istra

tion

------

------

---10

9,88

0(3

7,46

3)3(

c)72

,417

(Gai

n) lo

ss o

n fo

reig

n ex

chan

ge(6

,989

)(1

2,40

7)51

5(1

1,73

9)2,

030

(16,

165)

---

(44,

755)

882,

915

517,

494

1,08

0,06

51,

073,

652

372,

344

991,

246

476,

571

5,39

4,28

7

Inco

me

(loss

)bef

ore

loss

on

inve

stm

ent i

n as

soci

ate

and

fair

valu

e ad

just

men

t to

inve

stm

ent p

rope

rties

267,

232

10,1

6423

8,35

323

9,22

425

2,13

5(7

48,8

02)

(476

,571

)(2

18,2

65)

Loss

on

inve

stm

ent i

n as

soci

ate

------

---(3

4,09

7)---

---

---

(34,

097)

Fair

valu

e ad

just

men

t to

inve

stm

ent p

rope

rties

1,85

9,11

975

0,00

03,

450,

000

3,88

1,18

61,

970,

671

(1,9

98,8

16)

---

9,91

2,16

0

Inco

me

(loss

)bef

ore

inco

me

taxe

s2,

126,

351

760,

164

3,68

8,35

34,

086,

313

2,22

2,80

6(2

,747

,618

)(4

76,5

71)

9,65

9,79

8

Def

erre

d in

com

e ta

x ex

pens

e (4

30,6

15)

(105

,089

) (7

80,0

82)

(1,4

31,0

00)

(614

,000

)--

-(1

,636

,161

)3(

d)

(4,9

96,9

47)

Net

inco

me

(loss

) and

co

mpr

ehen

sive

inco

me

(loss

)$

1,69

5,73

6$

655,

075

$2,9

08,2

71$2

,655

,313

$1,6

08,8

06$(

2,74

7,61

8)(2

,112

,732

)$

4,66

2,85

1

Net

inco

me

(loss

)and

com

preh

ensi

ve in

com

e (lo

ss)

attr

ibut

able

to:

Non

-con

trolli

ng in

tere

st74

9,79

331

0,47

61,

006,

054

1,09

4,69

748

1,76

0(4

02)

---

3,64

2,37

8

Uni

thol

ders

945,

943

344,

599

1,90

2,21

71,

560,

616

1,12

7,04

6(2

,747

,216

)(2

,112

,732

)1,

020,

473

$ 1,

695,

736

$ 65

5,07

5$

2,90

8,27

1$

2,65

5,31

3$

1,60

8,80

6$(

2,74

7,61

8)$

(2,1

12,7

32)

$ 4,

662,

851

See

acc

ompa

nyin

g no

tes

to p

ro f

orm

a co

nsol

idat

ed fi

nanc

ial s

tate

men

ts

M-6

Aspen Real Estate TrustNotes to Pro Forma Consolidated Financial Statements (Expressed in US Dollars)Six months ended June 30, 2020 and year ended December 31, 2019 (Unaudited)

1. Nature of operations and basis of presentation:

(a) Nature of operations:

Aspen Real Estate Trust (the “New Fund”) is an unincorporated open-ended mutual fund trust to be formed under and governed by the laws of the Province of Alberta. The principal executive office of the New Fund is Suite 1900, 520 - Third Avenue SW, Calgary, Alberta, T2P 0R3.The following entities will operate as subsidiaries of New Fund and have been consolidated for purposes of the Pro forma Financials:

A limited partnership subsidiary of New Fund to be formed under the laws of British Columbia in connection with the formation of the New Fund (“New LP”)

Clear Sky Capital Strategic Asset Fund – Series I (“Fund 1”) Clear Sky Capital Strategic Asset Fund – Series II (“Fund 2”) Clear Sky Capital Strategic Asset Fund – Series III (“Fund 3”) Clear Sky Capital Strategic Asset Fund – Series IV (“Fund 4”) Clear Sky Sungate Limited Partnership (“Sungate”) Clear Sky Capital Strategic Asset Fund – Series 5 (“Fund 5”) Clear Sky Capital Real Estate Solutions XV LP (“US LP 1”) Clear Sky Capital Real Estate Solutions XVI LP (“US LP 2”) Clear Sky Capital Real Estate Solutions XIX LP (“US LP 3”) Clear Sky Capital Real Estate Solutions XXII LP (“US LP 4”) Clear Sky Capital Real Estate Solutions XXXI LP (“US LP 5”) Clear Sky Capital Real Estate Solutions XXIII LP (“US LP 6”) Clear Sky Capital Silverado Apartments LP (“Property LP 1”) Clear Sky Capital VHT Apartments LP (“Property LP 2”) Clear Sky Capital Casas De Soledad Apartments LP (“Property LP 3”) Clear Sky Capital Rancho Verde LP (“Property LP 4”) Clear Sky Capital Suncreek Village Apartments LP (“Property LP 5”) Clear Sky Capital North Park LP (“Property LP 6”) Clear Sky Capital Sungate Apartments LP (“Property LP 7”)

Fund 1, Fund 2, Fund 3, Fund 4, Sungate and Fund 5 shall be collectively referred to as the “Funds”. US LP 1, US LP 2, US LP 3, US LP 4, US LP 5 and US LP 6 shall be collectively referred to as the “US LP’s”. Property LP 1, Property LP 2, Property LP 3, Property LP 4, Property LP 5, Property LP 6 and Property LP 7 shall be collectively referred to as the “Property LP’s”.

The New Fund will indirectly own seven Properties comprising 1,159 multi-family units located in the States of Arizona, New Mexico, and Texas (the “Existing Portfolio”, which will be acquired by the New Fund from Fund 1, Fund 2, Fund 3, Fund 4, Sungate, and Fund 5).The New Fund does not and will not carry on active business. The New Fund owns interests in subsidiary entities which carry on the business of investing in multi-family rental properties in Sunbelt States such as Arizona, New Mexico and Texas, including but not limited to the development and/or sale of such properties, with a view of potentially generating rental income and making a profit on the sale of properties. The New Fund will reside in Alberta. The principal executive office of the New Fund is Suite 1900, 520 - Third Avenue SW, Calgary, Alberta, T2P 0R3.

M-7


1. Nature of operations and basis of presentation (continued):

(b) Basis of presentation:

The accompanying unaudited pro forma consolidated financial statements of the New Fund have been prepared from the following financial statements:

Unaudited interim financial statements of Fund 1, Fund 2, Fund 3, Fund 4, Sungate and Fund 5, each as at and for the period ended June 30, 2020 which includes the Existing Portfolio; and

Audited annual financial statements of Fund 1, Fund 2, Fund 3, Fund 4, and Fund 5, each for the year ended December 31, 2019 and unaudited annual financial statements of Sungate, for the year ended December 31, 2019; which include the Existing Portfolio.

The accompanying pro forma consolidated financial statements give effect to:

(i) the execution of the “Consolidation”, as outlined in steps ii – iv below;

(ii) the issuance of Class A Units and/or Class B Units of the New Fund in exchange for existing units of Fund 1, Fund 2, Fund 3, Fund 4, and Fund 5;

(iii) the redemption of the Sungate limited partner units held by certain unitholders of Sungate (being the unitholders who do not elect to exchange their Sungate Units for New LP Units (as defined below)) in consideration for units of the New Fund Units (the “New Fund Units”);

(iv) the transfer of all of the remaining Sungate Units to New LP in exchange for limited partnership units of New LP that are economically equivalent to, and exchangeable for, New Fund Units.

The unaudited pro forma consolidated statement of financial position gives effect to the transactions in Note 3 as if they had occurred on June 30, 2020. The unaudited pro forma consolidated statements of comprehensive income (loss) for the six months ended June 30, 2020 and year ended December 31, 2019 give effect to the transactions in Note 3 as if they had occurred on January 1, 2019.

The unaudited pro forma consolidated financial statements are not necessarily indicative of the results that would have actually occurred had the transactions been consummated at the dates indicated nor are they necessarily indicative of future operating results or the financial position of the New Fund.

These pro forma consolidated financial statements have been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board and interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”), and incorporate the principal accounting policies used to prepare the audited financial statements of each of the Funds, the unaudited financial statements of Sungate and each of the properties that comprise the Existing Portfolio.

M-8


2. Significant accounting policies:

(a) Basis of consolidation:

The New Fund unaudited pro forma consolidated financial statements reflect the consolidation of each property in the Existing Portfolio along with Fund 1, Fund 2, Fund 3, Fund 4, Sungate and Fund 5, and the Funds’ subsidiaries as at June 30, 2020, as well as for the six months ended June 30, 2020 and for the year ended December 31, 2019. All intercompany balances and transactions arising from intercompany transactions have been eliminated upon consolidation.

(b) Functional currency:

The unaudited pro forma consolidated financial statements are presented in United States dollars. The functional currency for the New Fund and the subsidiaries is United States dollars, as this is the principal currency of the economic environment in which they operate.

(c) Use of Estimates and Judgements:

The preparation of the unaudited pro forma consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ from these estimates.

In making estimates and judgements, management relies on external information and observable conditions where possible, supplemented by internal analysis as required. Those estimates and judgements have been applied in a manner consistent with prior periods and there are no known trends commitments, events or uncertainties that we believe will materially affect the methodology or assumptions utilized in making those estimates and judgements in these pro forma financial statements. The estimates and judgments that are critical to the determination of the amounts reported in the pro forma consolidated financial statements relate to the following:

Investment Properties

The determination of the fair value of investment properties requires the use of estimates such as future cash flows from assets (i.e. tenant profiles, future revenue streams and overall condition of the property), discount rates applicable to those assets’ cash flows, identification of comparable properties and capitalization rates. These estimates are based on market conditions existing at the reporting date.

The following approaches, either individually or in combination, are used by management of the Funds, together with the appraisals, in determination of the fair value of the investment properties.

The Income Approach derives market value by estimating the future cash flows that will be generated by the property and then applying an appropriate capitalization rate or discount rate to those cash flows. This approach can utilize the direct capitalization method and/or the discounted cash flow analysis.

M-9


2. Significant accounting policies (continued):

(c) Use of Estimates and Judgements (continued)

Deferred Income Taxes

The amounts recorded for deferred income taxes are based on estimates as to the timing of the reversal of temporary differences and tax rates currently substantively enacted. They are also based on estimates of the probability of the New Fund utilizing losses carried forward. To the extent assumptions regarding future probability change, there can be a change in the amounts recognized in respect of deferred tax assets as well as the amounts recognized in profit or loss in the period in which the change occurs.

Investment in Associate

Management makes judgments to determine whether an investment in another entity represents the power to participate in the financial and operating policy decisions of the investee or represents the right to exercise control or joint control over those policies.

COVID-19

Since December 31, 2019, the outbreak of the novel strain of coronavirus, specifically identified as “COVID-19”, has resulted in governments worldwide enacting emergency measures to combat the spread of the virus. These measures, which include the implementation of travel bans, self-imposed quarantine periods and social distancing, have caused material disruption to businesses globally resulting in an economic slowdown. Global equity markets have experienced significant volatility and weakness.

Governments and central banks have reacted with significant monetary and fiscal interventions designed to stabilize economic conditions. The duration and impact of the COVID-19 outbreak is unknown at this time, as is the efficacy of the government and central bank interventions. COVID-19 could impact the ability of the New Fund to collect rent and evict tenants for non-payment of rent in certain instances and may increase the New Fund’s exposure to credit risk on rents receivable as a result of the impact of COVID-19 on the tenants of the properties in the Existing Portfolio. Management makes estimates for the impact of environmental factors; however, it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the New Fund and its operating subsidiaries in future periods.

(d) Revenue recognition:

Revenue from investment properties includes rent from tenants under leases and other ancillary revenues. Most leases are for one-year terms or less; consequently, the New Fund accounts for leases with its tenants as operating leases as the New Fund has retained substantially all of the risks and benefits of ownership of its investment properties. Lease revenue earned directly from leasing the asset is recognized and measured in accordance with IFRS 16 – Leases. In addition to revenue generated directly from the operating lease, rental revenue includes non-lease revenue earned from the tenant, which is recognized and measured under IFRS 15. Non-lease revenue includes other ancillary services. These revenues are recognized when services are provided, and performance obligations have been completed.

M-10



(d) Revenue recognition (continued):

Lease or rental incentives granted are recognized as an integral part of the total rental income, over the term of the lease. Accordingly, an accrued rent receivable or payable is recorded for the current difference between the rental revenue recorded and the contractual amount received. Lease cancellation fees are recognized as revenue when the tenant forgoes the rights and obligations from the use of the space.

(e) Foreign currency translation:

Foreign currency transactions are initially recorded in the functional currency at the transaction date exchange rate. At the statement of financial position date, monetary assets and liabilities denominated in Canadian dollars are translated into the functional currency at the reporting date exchange rate. Foreign exchange gains and losses resulting from the settlement of such transactions and from the remeasurement of monetary items at year-end exchange rates are recognized in net income (loss).

Non-monetary items measured at historical cost are translated using the historical exchange rate. Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.

(f) Provisions:

Provisions are recognized when the New Fund has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

(g) Net assets attributed to unitholders

The New Fund’s net assets attributed to Unitholders have been classified as financial liabilities under IAS 32, Financial Instruments – Presentation (“IAS 32”). Net asset value of each series is computed by calculating the value of the assets less liabilities.

(h) Financial instruments:

Classification and Measurement

Financial assets and liabilities are recognized when the New Fund becomes a party to the contractual provisions of the instrument.

M-11



(h) Financial instruments (continued):

Classification and Measurement (continued)

The New Fund classifies its financial instruments in the following categories: at fair value through profit and loss (“FVTPL”), at fair value through other comprehensive income (“FVTOCI”) or at amortized cost. The New Fund determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the New Fund’s business model for managing the financial instruments and their contractual cash flow characteristics. Equity instruments that are held for trading (including all equity derivative instruments) are classified as FVTPL. On the day of acquisition, the New Fund can make an irrevocable election (on an instrument-by-instrument basis) to designate other equity instruments as FVTOCI. Financial liabilities are measured at amortized cost, unless they are required to be measured at FVTPL (such as instruments held for trading or derivatives) or the New Fund has opted to measure them at FVTPL.

Subsequent to initial recognition, non-derivative financial instruments are measured as described below:

i. Financial assets at fair value through other comprehensive income

Elected investments in equity instruments at FVTOCI are initially recognized at fair value plus transaction costs. Subsequently they are measured at fair value, with gains and losses arising from changes in fair value recognized in other comprehensive income (loss). No financial instruments have been classified in this category.

ii. Financial assets and liabilities at amortized cost

Financial assets and liabilities at amortized cost are initially recognized at fair value, net of transaction costs, and subsequently carried at amortized cost less any impairment. Cash, tenant and other receivables, amounts due from/to related parties, tenant security deposits, accounts payable and accrued liabilities, mortgages payable and net liabilities attributable to Unitholders are classified in this category.

iii. Financial assets and liabilities at fair value through profit or loss

Financial assets and liabilities carried at FVTPL are initially recorded at fair value and transaction costs are expensed in the statement of net income (loss). Realized and unrealized gains and losses arising from changes in the fair value of the financial assets and liabilities held at FVTPL are included in the statements of net income (loss) in the period in which they arise. Where management has opted to recognize a financial liability at FVTPL, any changes associated with the New Fund’s own credit risk will be recognized in other comprehensive income (loss). No financial instruments have been classified in this category.

M-12



(i) Financial instruments (continued):

Impairment of Financial Assets at Amortized Cost

At each reporting date, each financial asset measured at amortized cost is assessed for impairment under an expected credit loss (ECL) model. The New Fund applies the simplified approach which uses lifetime ECLs for tenant receivables and the general approach for other receivables.

The New Fund uses an accounts receivable aging provision matrix to measure the ECL for tenant receivables and applies loss factors to aging categories greater than 30 days past due.

Derecognition

The New Fund derecognizes financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognized in the statement of comprehensive income (loss). However, gains and losses on derecognition of financial assets classified as FVTOCI remain within the accumulated other comprehensive income (loss).

The New Fund derecognizes financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognized and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognized in the statement of comprehensive income (loss).

(j) Investment properties:

Investment properties consist of income producing property that is held by the New Fund, indirectly, to earn rental income and for capital appreciation. The investment property is measured initially at cost, including costs that are directly attributable to the acquisition of the investment property.

Subsequent to initial recognition, investment properties are measured at fair value. The fair value of investment properties is determined by certified third-party appraisers or by market evidence where available. Gains and losses from changes in the fair value of investment properties are included in profit or loss in the period in which they arise.

Subsequent costs are capitalized to the investment property’s carrying amount only when it is probable that future economic benefits associated with the expenditure will flow to the New Fund and the cost of the item can be measured reliably. All other repairs and maintenance costs are expensed when incurred. When part of an investment property is replaced, the carrying amount of the replaced part is derecognized.

M-13



(j) Investment properties (continued):

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected. Any gain or loss arising on derecognition of the investment property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in income or loss in the period in which the investment property is derecognized.

Costs incurred in connection with the acquisition of an investment property are recorded as deferred acquisition costs and subsequently capitalized to the investment property once acquired.

(k) Income taxes:

As a result of the New Fund’s investment in US operations, the New Fund is subject to tax in the United States. Income tax on the profit or loss for the periods presented comprises current and deferred tax. Income tax is recognized in profit or loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.

Current tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at year end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill; the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable income; and differences relating to investments in subsidiaries, associates, and jointly controlled entities to the extent that they will probably not reverse in the foreseeable future.

The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the financial position reporting date applicable to the period of expected realization or settlement.

A deferred tax asset is recognized only to the extent that it is probable that future taxable profits will be available against which the asset can be utilized. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the New Fund intends to settle its current tax assets and liabilities on a net basis.

M-14



(l) Investment in associate:

An associate is an equity over which the New Fund has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the investee, but is not joint control or joint control over those policies.

Investment in associates where the New Fund has significant influence are accounted for using the equity method. The investment in an associate is initially recognized at cost. The carrying amount of the investment is adjusted to recognize changes in the New Fund’s share of net assets of the associate since the acquisition date less any identified impairment loss. Distributions received reduce the carrying amount of the investment.

3. Pro forma adjustments:

The pro forma adjustments to the unaudited pro forma financial statements have been prepared to account for the establishment of the New Fund and closing of the Consolidation:

a. Establishment of New Fund:

The New Fund will be established immediately prior to the closing of the Consolidation pursuant to a contribution of C$10 by the New Fund’s settlor to the trustees of the New Fund.

b. Loans / mortgages payable:

The New Fund is expected to assume financing in the amount of $70,571,202 or $70,020,634, net of deferred financing costs, in respect of the Existing Portfolio in relation to mortgages that the New Funds obtained when the properties were purchased. The weighted average interest rate on assumed loans is 4.48%.

c. New Fund expenses and related party transactions:

New Fund expenses have been adjusted by a decrease of $12,795 for the six months ended June 30, 2020 and a decrease of $243,979 for the year ended December 31, 2019 to reflect the best estimate of general and administrative expenses for the New Fund. New Fund expenses include legal fees, audit fees, tax fees, trustee fees, service fees, annual report costs, transfer agents fees, travel costs, and other miscellaneous costs. For the year ended December 31, 2019, the decrease includes $169,939 in non-recurring administration expenses originally recorded during the fiscal year and not expected under the New Fund.

M-15


3. Pro forma adjustments (continued):

c. New Fund expenses and related party transactions (continued)

Pursuant to the amended US LP’s and Property LP’s agreements subsequent to the Consolidation, and as disclosed in the joint management information circular (the “Circular”) sent to unitholders of the Funds in connection with the Consolidation, the Manager will provide asset management services to the New Fund. The Manager will be entitled to an asset management fee of $650,000 per year and 1.5% of all Equity Proceeds on Additional Property and Developed Properties (as defined in the Circular). This is a change from the executive management and asset management fees currently in place for the Funds. As a result, the asset management fees included in expenses of the Funds for the six months ended June 30, 2020 were increased by $135,212 and for the year ended December 31, 2019 were increased by $220,550, of which $258,013 was recorded as an increase to General and Administrative Expense and offset by a decrease to Fund promotion and administration expense of $37,463 .

Pursuant to the amended US LP’s and Property LP’s agreements subsequent to the Consolidation, and as disclosed in the Circular, the Manager will be providing financing and other services in connection with the acquisition of investment properties and is entitled to a 2.0% acquisition fee on the enterprise value of any Additional Property acquired. An acquisition fee has not been included in the pro forma adjustments for the six months ended June 30, 2020 and year ended December 31, 2019 since no Additional Property has been contemplated in the pro forma Financials.

Pursuant to the amended US LP’s and Property LP’s agreements subsequent to the Consolidation, and as disclosed in the Circular, if there occurs any amalgamation, merger, arrangement, take-over bid, material transfer or sale of units or rights or other securities of the New Fund or interest therein or thereto, or sale of all or substantially all of the properties indirectly held by the New Fund, or similar transaction involving the New Fund or a subsidiary of the New Fund (other than in connection with an internal reorganization, an initial public offering of all or substantially all of such properties, or a transaction with the Manager or any of its affiliates as the purchaser), whether in one transaction or series of transactions (collectively, the “Disposition Transaction”), the New Fund will pay the Manager a disposition fee, in cash, equal to 1.5% of the value of such Disposition Transaction on Existing Property and 1.0% on Additional or Developed Property (each such term as defined in the Circular). No disposition fee was included in the pro forma adjustments for the six months ended June 30, 2020 and year ended December 31, 2019.

In consideration for providing any financing guarantees in connection with the amount borrowed by the New Fund or its subsidiaries to indirectly acquire an interests in the Properties (as defined in the Circular), the New Fund and each US LP will, in consideration for providing such guarantee, in aggregate, pay the Manager an annual amount equal to 0.15% of the then-outstanding amount of such guaranteed funds borrowed by the New Fund and its subsidiaries in connection with the financing of the New Fund’s interests in properties, which guarantee fee shall be calculated and payable to the Manager or its appointee on a monthly basis in arrears in cash on the first day of each month.

M-16


No guarantee fee was included in the pro forma adjustments for the six months ended June 30, 2020 and the year ended December 31, 2019.

3. Pro forma adjustments (continued):

d. Income taxes:

The Funds have recorded a combined deferred tax liability of $5,224,724 as of June 30, 2020, in respect of the Existing Portfolio. The pro forma has increase this by 2,161,872 as a result of certain restriction placed on the Net Operating Loss (“NOLs”) held by the Canadian LP’s within each Fund as a result of the Transaction. As the use of the restricted NOLs is unknown, a full valuation allowance against those NOLs has been recorded for purposes of the pro forma adjustment.

e. Unrealized and realized foreign exchange gains and losses:

The pro forma assumes no change in the foreign exchange between the U.S. dollar and the Canadian dollar for the six months ended June 30, 2020 and for the year ended December 31, 2019.

f. Trust Unitholder’s Equity and Net Asset Available to Trust Unitholders:

The pro forma has been adjusted to reclassify $13,983,447 as from Trust Unitholders Equity to Net Liabilities available to Trust Unitholders. The New Fund Units are required to be classified as debt financial instruments as the New Fund Units do not meet the features of a puttable instrument as defined by IAS 32.

g. Transaction Expenses:

The pro forma has been adjusted to include the costs associated with the Transaction. This is estimated to be $500,000, including, legal, accounting and other costs associated with the preparation of the Circular.

h. Intercompany eliminations:

The proforma has been adjusted to eliminate any payables and receivables due between the existing Funds.

i. Carry over adjustments:

Adjustments made to the Statement of Comprehensive Income (Loss) for the year ended December 31, 2019 have been carried over to accurately reflect the Statement of Financial Position and Statementof Comprehensive Income (Loss) for the six months ended June 30, 2020.

M-17


4. Net Asset Attributable to Unitholders:

The New Fund is authorized to issue an unlimited number of Units:

Units Amount

Balance, beginning of period --- $ --- Class A and B Units (as if issued January 1, 2019)

3,741,805 35,351,858

Net Income (loss) allocated to Unitholders in 2019 1,020,473 Net Income (loss) allocated to Unitholders in 2020 (6 months) 67,284

Balance, end of period (June 30, 2020) 3,741,805 $ 36,439,615

M-18

Aspen Real Estate Trust - Nickel Financial

Documents

Transcript of Aspen Real Estate Trust - Nickel Financial