APPRAISAL REPORT OF: Silverthorn Mill of Meadowvale Village. Located at 6811 Second Line West, Mississauga, Ontario. Effective Date: January 19, 2015

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1 APPRAISAL REPORT OF: Silverthorn Mill of Meadowvale Village Located at 6811 Second Line West, Mississauga, Ontario Effective Date: January 19, 2015 Prepared for:

2 March 31, 2015 The Fuller Landau Group Inc. in its capacity as court-appointed Monitor of Hush Homes Inc., Hush Inc., Ontario Inc., Ontario Inc. and Ontario Inc. As Proposed Monitor or the Hush Applicant 151 Bloor Street West, 12 th Floor Toronto, ON M5S 1S4 ATTENTION: Mr. Gary Abramson Re: Silverthorn Mill Development Located at 6811 Second Line West, Mississauga, Ontario Property of Hush Homes Inc. Our File No Dear Mr. Abramson: In accordance with your request, we hereby submit an appraisal report of the property located at 6811 Second Line West, Mississauga, Ontario. The purpose of the appraisal is to estimate a) as-is and b) as-if completed market values for the Silverthorn Mill of Meadowvale Village (Silverthorn Mill) housing development. We understand the appraisal will serve to assist a CCAA court ordered function. The appraisal report has been developed in accordance with the Canadian Uniform Standards of Professional Appraisal Practice ( The Standards ) as developed by the Standards Board of the Appraisal Institute of Canada. A copy of the corporate curriculum vitae is included in Appendix A. This is a Narrative Appraisal Report, and as such it presents a detailed and concise description of the appraisal process with supporting documentation concerning the data, reasoning and analysis also retained in the appraiser s file. Definitions of Appraisal Terms and Explanations are included in the Addendum as Appendix B. The depth of discussion contained in this report is specific to the needs of the client and is for the intended use as stated in the report. The report is for the sole use of our client, The Fuller Landau Group Inc. in its capacity as court-appointed Monitor of Hush Homes Inc., Hush Inc., Ontario Inc., Ontario Inc. and Ontario Inc. / 1

3 Page 2 Mr. Abramson March 31, 2015 As a result of our investigations and analysis, it is our opinion that estimated market value of the subject property as at the effective date of January 19, 2015 (date of initial order date made by Justice Penny), is estimated as follows: Final Estimates of Market Value (Rnd.) "As-Is" Estimate of Value $6,930,000 "As-If Complete" Estimate of Value $12,200,000 HYPOTHETICAL LIMITING CONDITION & EXTRAORDINARY ASSUMPTION The market value estimates contained herein are made on the Hypothetical Conditions and Extraordinary Assumptions as follows: 1. In the completion of this appraisal assignment we have relied on product and financial information supplied by HUSH Homes Inc., as it relates to Agreements of Purchase and Sale, project budget costs, costs to complete, housing product type standard finishes, etc.; and, 2. The unsold vacant residential building lots are assumed to have full services at the site boundary (water, sanitary and storm) and development charges paid; and, 3. That the proposed home building works are completed in a proper workmanship like manner in accordance with the plans, specifications and budget provided by Hush Homes Inc.; 4. The as-if-completed value is an aggregate total based on an overall average rate per square foot and does not include any upgrades or premiums that is common with custom homes; and, 5. The value estimates herein for the as-if-completed reflects actual gross sale price of the sold homes, exclusive of deposits; and, 6. We did not obtain an opinion on the state of title or any of the encumbrances, and are not qualified in these legal matters and have not read the documents registered against title; and, 7. That the subject site is free and clear of any environmental contamination. Any variance from these assumptions and the development specifics provided to us could alter the market value opinion contained herein; and as such, we retain the right to alter our final estimate of value if this assumption is later proven inaccurate. Details of our investigation and analysis are set out in the following report. If further information is required we would be pleased to furnish it upon request. Respectfully submitted, Gus Dal Colle, AACI, MRICS, PLE

4 TABLE OF CONTENTS Summary of Salient Facts... 1 Regional Overview... 3 Site Description Silverthorn Mill Development Project Snapshot As of January 19, Site Plan Outlining Remaining and Sold Inventory Photographs of the Subject Property Architect Rendering / Picture of Partially Completed Dwelling and Floor Plans Land Use Policy Highest and Best Use Approach to Value Direct Comparison Approach As-Is Market Value Direct Comparison Approach As-If Completed Final Estimate of Value Certification Assumptions and Limiting Conditions Scope of the Appraisal Addendum Addendum Appendix A Appendix B Corporate Curriculum Vitae Definitions of Appraisal Terms and Explanations

5 SUMMARY OF SALIENT FACTS Property Details Client: Municipal Address: Effective Date: Date of Inspection: PIN: Legal Description: Owner of Record: Purpose of Appraisal: Function of Appraisal: Property Rights Appraised: The Fuller Landau Group Inc. in its capacity as court-appointed Monitor of Hush Homes Inc., Hush Inc., Ontario Inc., Ontario Inc. and Ontario Inc Second Line West, Mississauga January 19, 2015 February 5, , -4269, -4270, -4271, -4272, -4273, -4274, & Lots 3-11 and Block 14, Plan 43M1843; Subject to an easement over Part 7 on 43R34120 in favour of Lots 4-10, and Block 14, Plan 43M1843, as in PR ; Subject to an easement in gross as in PR ; Subject to an easement as in PR , PR , PR & PR ; Part 7 on 43R34120, as in PR ; Subject to an easement in gross over Parts 3, 4, 8 on 43R34120 & Block 14, Plan 43M1843, as in PR ; City of Mississauga. Hush Homes Inc. To estimate current market value Serve a CCAA court ordered function Fee Simple Exposure Time: Property Description 4 to 8 months Location: History: Easement/Right of Way: Configuration: Land Use Control Greenbelt: Official Plan: Zoning: Located on the north corner of Second Line West and Silverthorn Mill Avenue, in the City of Mississauga We understand the owner assembled the subject site through the purhase of four seperate parcels of land from June 2008 to May 2010 for a total consideration of $4,156,900. Hush Homes Inc. proposed the development of thirteen detached dwelling lots for the site, 7 on a private condominium road. Hush Homes Inc. has since sold, built and closed on four of the parcels leaving the remaining 9 parcels and roadway (Loganberry Court) that make up the current subject property. Multiple Easements noted within subject property Mix of irregular and rectangular shaped parcels Not Applicable Residential Low Density I R2-53 & R16-7 Highest & Best Use Existing Use Highest & Best Use (as if vacant) Highest & Best Use (as improved) Infill single family residential development Infill single family residential development Not applicable 1

6 AERIAL MAP 2

7 REGIONAL OVERVIEW The City of Mississauga is one of three municipalities comprising the Region of Peel. The others are the City of Brampton and the Town of Caledon. The Region and the three municipalities were created in The Region is located immediately west and northwest of Toronto and covers an area of 485 square miles, of which the City of Mississauga covers 111 square miles. It borders with the Towns of Oakville and Milton to the west, the City of Brampton to the north and the former City of Etobicoke, now the City of Toronto, to the east. The City of Mississauga has shown rapid growth over the past two decades and has now developed into a strong business and housing rival to the municipalities within the Greater Toronto Area (GTA). The Meadowvale North Business Park continues to improve as infill properties are developed and the neighbourhood matures. REGIONAL LOCATION MAP: 3

8 ECONOMIC AND DEMOGRAPHIC PROFILE CITY OF MISSISSAUGA Population Average Household Income Labour Force Unemployment Rate Number of Employees Private Households 713,443 (2011 Census) $71,393 (2006 Census) 411,000 (2010 Census) 6.5% (2011 Census) 418,990 (2010 Census) 234,580 (2011 Census) Tax Rates (2013) Residential % Multi-Residential % Commercial % Industrial % Largest Employers AECL/Atomic Energy Canada, Air Canada, Bell Mobility, GlaxoSmithKline, Honeywell, RBC Financial Group, RBC Insurance Services Inc., TD Bank Financial Group, Wal-Mart Canada Inc. INFRASTRUCTURE The City of Mississauga is the only city in the GTA serviced by seven major highways (Highway No. 401, The Queen Elizabeth Way, Highway No. 403, Highway No. 409, Highway No. 410, Highway No.427 and Highway No. 407). Highway No. 401 passes through Mississauga with five interchanges within the City. In the south, The Queen Elizabeth Way (QEW) connects the Greater Toronto Area with the international border at Niagara. The QEW provides entry to U.S.A. at Lewiston, Niagara Falls and Buffalo and passes through Mississauga en route to downtown Toronto. Highway No. 403 is a multiple lane freeway, which connects the QEW with Highway No. 401 and provides an east/west freeway link through the centre of Mississauga. Highway No. 409 provides a direct link from Highway Nos. 401 and 427 to Pearson International Airport. Highway No. 410 provides a link northwards from Highway No. 401 through Mississauga to the City of Brampton. Highway No. 427 is a north/south freeway system linking Toronto with Mississauga and areas to the north. Finally, Highway No. 407 runs east/west linking Peel Region in the west with York and Durham Regions in the east. Both CN and CP railways serve the City. GO Transit operates three train lines and three GO bus lines through Mississauga. Trains travel from points of origin in Georgetown and Milton to downtown Toronto. Public transit is by surface bus linking with the Toronto Transit Commission (TTC), Brampton Transit, Oakville Transit and all GO Transit stations. Mississauga is home of Canada s largest and busiest airport, Lester B. Pearson International Airport. 4

9 NEIGHBOURHOOD MAP 5

10 Neighbourhood Profile 6

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14 Neighbourhood Uses and Trends 6811 Second Line West (Silverthorn Mill), Oakville Meadowvale is a neighbourhood located in the northwestern part of the City of Mississauga. The rough boundaries of Meadowvale are; Ninth Line, Mississauga Road, Highway 401 and Britannia Road. The village of Meadowvale was established in the 1820 s and the main industry was milling with the mills drawing power from the Credit River. Gooderham and Worts owned and operated many businesses and mills in the Village during the 1860 s and 1870 s. In recognition of its many historical buildings, Meadowvale Village was recognized as Ontario s first Heritage Conservation District in To reduce traffic through the village, the Derry Road by-pass was built in the mid-1990s. Located about one kilometer north of the Old Derry Road, the new Derry Road is a major east-west traffic artery running from Mississauga Road to Mavis Road. Meadowvale Village is located adjacent to the largest business park area in Mississauga with the second largest being located in between Meadowvale Village and Meadowvale along the Highway 401 corridor, where numerous major corporations have recently located their offices, factories and research and development facilities, including; Wal-Mart Canada, Chrysler Canada, Siemens, GlaxoSmithKline, Magna International, Microsoft, Tech Data, Biovail, Dupont, among other notable companies. The immediate area is comprised of single family detached homes of a typical suburban standard. The balance of the area is scattered with high end residential dwellings and estates along Second Line and parts of Old Derry Road. There has not been much in the way of significant development in Meadowvale Village for a number of years. New development must adhere to local heritage conservation policies that are in place to maintain the rural historic nature of the past. Meadowvale Village is considered a much sought after residential area in the west part of the Toronto Region with the overall character and pricing of homes above a typical suburban standard. Meadowvale is accessed via Highway 401 via Winston Churchill Boulevard, Mississauga Road, or Mavis Road. Winston Churchill Blvd., Erin Mills Parkway and Mavis Road are major northsouth roads that connect Meadowvale to the rest of Mississauga. Derry and Britannia Roads are major east-west roads. 10

15 ADJACENT USES MAP: North: South: East: West: Adjacent Uses Single Family Residential Single Family Residential Single Family Residential Single Family Residential 11

16 SITE DESCRIPTION General Description Location: Municipal Address(es): PIN(s): Legal Description: Ownership: Site Configuration: Adjacent Land Uses: Lot Access Points: Located on the north corner of Second Line West and Silverthorn Mill Avenue, in the City of Mississauga 6811 Second Line West, Mississauga , -4269, -4270, -4271, -4272, -4273, -4274, & Lots 3-11 and Block 14, Plan 43M1843; Subject to an easement over Part 7 on 43R34120 in favour of Lots 4-10, and Block 14, Plan 43M1843, as in PR ; Subject to an easement in gross as in PR ; Subject to an easement as in PR , PR , PR & PR ; Part 7 on 43R34120, as in PR ; Subject to an easement in gross over Parts 3, 4, 8 on 43R34120 & Block 14, Plan 43M1843, as in PR ; City of Mississauga. Hush Homes Inc. Irregular Single family residential Second Line West & Silverthorn Mill Avenue Lot Nos. on Private Road: 4, 5, 6, 7, 8, 9, & 10 Lots Nos. Public Road: 3 & 11 Topography: Easements/Rights-of-way: Environmental: Building Improvements: Current Use: Zoning: The site is generally and at grade with the surrounding roads and properties Multiple easements registered on title None noted - See Assumptions and Limiting Conditions Ranges from vacant lots to partially completed dwellings Residential R2-53 & R16-7 Services Street Surface: Paved Hydro: Yes Sidewalks: Yes Well: No Street Lights: Yes Septic: No Municipal Water: Yes Sanitary Sewer: Yes Comments The subject is an infill residential development site which initially consisted of 13 lots to be developed with single family detached dwellings. Of the initial 13 lots, 4 lots were sold, built and are now occupied. These parcels have transferred to new ownership and are not part of the valuation of the subject property. As at the Effective Date the subject consists of the 9 remaining lots, 4 of which have been sold and partially built with detached dwellings. The remaining 5 lots are vacant and unsold. We understand that the lots which only have access from Loganberry Court are part of a Condominium Corporation; while the lots accessible from Second Line West and Silverthorn Mill Avuenue are considered independent sites. 12

17 SILVERTHORN MILL DEVELOPMENT 6811 Second Line West (Silverthorn Mill), Oakville Silverthorn Mill is a luxury custom home infill housing development approved for 13 residential building lots. As at the effective date, only nine lots remain of which four have been sold and contain homes that are partially built. The remaining five lots are serviced, but not sold and vacant. The lots that have access from Loganberry Court are part of a Condominium Corporation (Lots 4, 5, 6, 7, 8, 9 & 10); while lots 3 & 11 fronting Silverthorn Mill Avenue and Second Line West, respectively, are public roads and not part of the Condominium Corporation. A summary of the development is tabled below: LOT DETAILS Lot # Sold Silverthorn Mill Lot Details Lot Frontage (Ft.) Avg. Lot Depth (Ft.) Lot Area (Sq. Ft.) Sale Status 1 Yes ,863 Closed 2 Yes ,158 Closed 3 Yes ,111 Sold 4 No ,078 For Sale 5 No ,140 For Sale 6 No ,059 For Sale 7 Yes ,483 Sold 8 Yes ,900 Sold 9 No ,124 For Sale 10 No ,084 For Sale 11 Yes ,727 Sold 12 Yes ,477 Closed 13 Yes ,549 Closed Low ,111 High ,900 Average ,750 We note that of the 13 building lots, four lots (No. s 1, 2, 12 and 13) are sold, built and ownership transferred to the respective home owner(s). As such, these four lots do not form part of this appraisal and market value estimate. Building lots 3, 7, 8 and 11 have been sold; however, construction of these homes has not been completed and therefore forms part of the subject property and market value estimates made herein. As per our site visit and discussions with the Site Supervisor, we understand that these four lots have been sold but not closed and are in varying stages of construction. 13

18 PROJECT SNAPSHOT AS OF JANUARY 19, 2015 Below provides a current snapshot of the Silverthorn Mills project, including the sold lots which have closed. Lot # Sold Purchaser Dwelling Size (Sq. Ft.) Silverthorn Mill, Mississauga, ON Sales & Deposit Summary Asking/Selling Price Deposit (HUSH) Deposit (KMB) Total Deposits Sale Date Closing Date Construction Status 1 Twahira Mohammed & Yes Haleemuh Muhammed 3,730 $1,311,375 $196,706 - $196, Apr Aug-12 Complete Closed 2 Yes Lily Woo & Raymond 3,505 $980,900 $91,590 - $91,590 8-Apr Jul-12 Complete Closed 3 Yes Venkat Royalpad 3,164 $1,085,000 $162,750 - $162, Feb-12 TBD Roof Sold 4 No - 4,450 $1,995, $ For Sale 5 No - 3,543 $1,755, $0 - TBD - For Sale 6 No - 2,896 $1,795, $0 - TBD - For Sale 7 Yes John Olarte & Raquel Zapata 4,655 $1,287,800 $193,170 - $193, Feb-12 TBD Brick Sold 8 Yes Adel and Mona Kalil 4,948 $1,545,000 $40,000 $191,750 $231,750 1-Mar-12 TBD Roof Sold 9 No - 3,497 $1,747, $0 - TBD - For Sale 10 No - 3,750 $1,995, $0 - TBD - For Sale 11 Navneet Dhami & Ranvir Yes Rai 4,450 $1,100,900 $110,090 - $110, May-11 TBD Finishing Sold 12 Yes Acilio Almeida & Julia Domingos 3,885 $1,011,500 $101,150 - $101, May Jul-12 Complete Closed 13 Yes Stefica Latkovic 3,600 $1,079,900 $147,990 - $147,990 7-Apr-11 5-Dec-11 Complete Closed Totals 50,073 $18,693,875 $1,043,446 $191,750 $1,235,196 Sale Status We note that of the 13 building lots, four lots (No. s 1, 2, 12 and 13) are sold, built and ownership transferred to the respective home owner(s). As such, these four lots do not form part of this appraisal and market value estimate. 14

19 SITE PLAN OUTLINING REMAINING AND SOLD INVENTORY Sold & Closed Sold (not finished) For Sale 15

20 ARCHITECTURAL RENDERING OF SITE PLAN OUTLINING REMAINING AND SOLD INVENTORY 16

21 Detailed Description of Remaining Inventory Detailed Lot Descriptions Lot # Address Roll Number Assessment (2015) Lot Lot Area Frontage (Sq. Ft.) Lot Configuration Construction Status Lot Character Silverthorn Mill Ave $320, ,111 Irregular Partially Completed (Roof) Generally level and fronting onto Silverthorn Mill Avenue Silverthorn Mill Ave $331, ,078 Irregular Vacant Generally level and at grade with both Silverthorn Mill Avenue and Loganberry Court. Has two street frontages Silverthorn Mill Ave $320, ,140 Irregular Vacant Generally level with and fronting onto Loganberry Court Silverthorn Mill Ave $331, ,059 Irregular Vacant Generally level and fronting onto Loganberry Court. The site is a longer slight awkward shaped parcel Silverthorn Mill Ave $325, ,483 Irregular Partially Completed (Brick) Generally level and fronting onto Loganberry Court Silverthorn Mill Ave $341, ,900 Irregular Partially Completed (Roof) Generally level and fronting onto Loganberry Court Silverthorn Mill Ave $320, ,124 Irregular Vacant Generally level and fronting onto Loganberry Court Silverthorn Mill Ave $331, ,084 Irregular Vacant Generally level and at grade with both Silverthorn Mill Avenue and Loganberry Court. Has two street frontages Second Line West $335, ,727 Irregular Partially Completed (Finishing) Generally level and at road grade with Silverthorn Mills Avenue and Second Line West. Has two street frontages. 17

22 PHOTOGRAPHS OF THE SUBJECT PROPERTY Lot #3 Partially Constructed Lot #3 Interior Lot #4 Lot #5 Lot #6 Lot #7 Partially Constructed 18

23 PHOTOGRAPHS OF THE SUBJECT PROPERTY Lot #7 Interior Lot #8 Partially Constructed Lot #8 Interior Lot #9 Lot #10 Lot #11 Partially Constructed 19

24 PHOTOGRAPHS OF THE SUBJECT PROPERTY Lot #11 Interior Loganberry Court Looking North Silverthorn Mill Ave. Looking East Silverthorn Mill Ave. Looking West 20

25 PHOTOGRAPHS OF COMPLETED INVENTORY (SOLD, CLOSED AND NOT PART OF THE APPRAISAL) Lot #1 Lot #2 Lot #12 Lot #

26 SILVERTHORN PROJECT INVENTORY AND STATUS OVERVIEW AS AT EFFECTIVE DATE The table below provides a detailed inventory overview and status, as at the effective date, of the Silverthorn Mill housing development: Lot # Sold Purchaser Silverthorn Mill, Mississauga, ON Project Status as at Effective Date Asking/Selling Price Dwelling Size (Sq. Ft.) # of Beds # of Frontage Lot Area Price Per Baths (Ft.) (Sq. Ft.) Sq. Ft. Price Per Front Foot Sale Status 3 Yes Venkat Royalpad $1,085,000 3,164 n/a n/a ,111 $343 $13,849 Sold 4 No - $1,995,900 4, ,078 $449 $25,658 For Sale 5 No - $1,755,900 3, ,140 $496 $25,329 For Sale 6 No - $1,795,900 2, ,059 $620 $62,918 For Sale 7 Yes John Olarte & Raquel Zapata $1,287,800 4,655 n/a n/a ,483 $277 $19,626 Sold 8 Yes Adel and Mona Kalil $1,545,000 4,948 n/a n/a ,900 $312 $21,308 Sold 9 No - $1,747,900 3, ,124 $500 $25,626 For Sale 10 No - $1,995,900 3, ,084 $532 $25,756 For Sale 11 Yes Navneet Dhami & Ranvir Rai $1,100,900 4,450 n/a n/a ,727 $247 $14,743 Sold Low $1,085,000 2, ,111 $247 $13,849 High $1,995,900 4, ,900 $620 $62,918 Average $1,590,022 3, ,856 $420 $26,090 The table above outlines the standard square footage and floor plans of the development. For the purpose of this appraisal, we will value the development, as-if completed, based on the above noted home size (square footage), No. of beds, No. of baths and standard finishes. We have included the standard home features and finishes that are offered by the current home builder to a potential home buyer. The standard finishes appear to be typical for this type of custom home offering. We note that the standard finish does not include a finished basement or upgrades that are typical with this type of luxury and custom home project. The standard features and finishes are provided in the following pages. 22

27 STANDARD HOME FEATURES AND FINISHES 23

28 24

29 ARCHITECT RENDERING / PICTURE OF PARTIALLY COMPLETED DWELLING AND FLOOR PLANS LOT 3 SOLD Main Floor Plan: Second Storey Floor Plan: 25

30 LOT 4 FOR SALE Main Floor Plan: Second Storey Floor Plan: 26

31 LOT 5 FOR SALE Main Floor Plan: Second Storey Floor Plan: 27

32 LOT 6 FOR SALE Main Floor Plan: Second Storey Floor Plan: 28

33 LOT 7 SOLD Main Floor Plan: Second Storey Floor Plan: 29

34 LOT 8 SOLD Main Floor Plan: Second Storey Floor Plan: 30

35 LOT 9 FOR SALE Main Floor Plan: Second Storey Floor Plan: 31

36 LOT 10 FOR SALE Main Floor Plan: Second Storey Floor Plan: 32

37 LOT 11 SOLD Main Floor Plan: Second Storey Floor Plan: 33

38 MISSISSAUGA OFFICIAL PLAN LAND USE POLICY The subject property is designated Residential Low Density I in accordance with the City of Mississauga Official Plan, as identified below: The Residential Low Density I designation is meant to preserve the character of the lands. The designation generally permits detached single family residential dwellings. 34

39 ZONING According to the City of Mississauga Zoning By-law, the subject property is zoned R2-53 & R16-7 Residential. The subject site is currently being developed with single family detached dwellings, which is permitted within the R2 & R16 zoning classifications. 35

40 HIGHEST AND BEST USE The foundation of market value rests on the Highest and Best use defined as: "The reasonably probable and legal use of vacant land or of an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value" Source: The Dictionary of Real Estate Appraisal, Third Edition, 1993, Appraisal Institute The four criteria that the Highest and Best use must meet are: 1. Legally permissible 2. Physically possible 3. Financially feasible 4. Maximally productive LEGALLY PERMISSIBLE In determining the Highest and Best Use of a property, it is important for the appraiser to ascertain the range of uses that are legally permissible. In cases where modifications to Zoning By-law and Official Plan designations are likely, these uses should also be considered. Consideration should also be given to public planning initiatives and economic and political conditions that affect planning decisions. These considerations will assist the appraiser in determining whether amendments to official plan and/or zoning designations are probable. The subject is designated and is zoned to permit the current use. PHYSICALLY POSSIBLE The proposed use for a site cannot be considered its highest and best use unless that use is physically and functionally possible and adaptable to the characteristics of the site. The size, shape, area, topography and soil conditions may affect the potential uses that can be developed. The physical possibility of development for the Subject also reasonably expects that development can occur without additional costs above those of a typical vacant site. In cases where there are unusual costs associated with development (e.g. soil clean, demolition, external costs, etc.) these costs should be deducted from market value. We have assumed the site is free and clear of contaminants and has soil bearing capacity to accommodate development. 36

41 The subject is irregular in configuration with frontage and exposure to both Second Line West and Silverthorn Mill Road. The site is assumed to have full services (water, sanitary and storm sewers). Overall, there does not appear to be any physical impediments for development. FINANCIALLY FEASIBLE The estimate of market value is based on the market demand for residential development, expecting that the purchasers have rationalized a positive financial benefit or utility for the basis of an acquisition. There is strong evidence in the market for similar residential infill acquisitions motivated for custom home development. We have outlined both lots sales acquired for custom home development and completed custom home sales MAXIMALLY PRODUCTIVE A use cannot be considered a site's highest and best use unless it's anticipated earnings ability is sufficient to generate a reasonable return on costs of acquisition and development. This aspect of highest and best use inherently involves a cost benefit analysis whereby the use that generates the highest profit or greatest return logically represents the highest and best use. In order to estimate the maximum productivity and market demand for residential development use, we have reviewed current economic market conditions and housing market conditions that are likely have an effect on developments for such uses. 37

42 ECONOMIC OVERVIEW CURRENT TRENDS UPDATE CANADA Update January 23, 2015 (RBC Ecotrend) OVERVIEW October GDP increased a solid 0.3%, which built further onto to the 0.4% jump recorded in September. Employment dipped marginally in December by 4,300 following on November's 10,700 decline but only denting the quarter's increase which still stood at 28,100. On a volumes basis, overall retail sales in November rose by a robust 0.8% after unchanged activity in October. Housing starts fell by 6.5% to an annualized 180,600 in December 2014 from a revised 193,200 in November (was 195,000). The Canadian merchandise balance deteriorated to a $0.6 billion deficit in November from a downwardly revised $0.3 billion shortfall (previously a $0.1 billion surplus) in October. Canada s headline consumer price index fell by 0.7% in December 2014, thereby reflecting a 5.0% drop in energy prices, which was a larger decline than market expectations for a 0.6% decline. CANADIAN OCTOBER GDP RISES 0.3% Latest available: October Release date: December 23, 2014 October GDP increased a solid 0.3%, which built further onto to the 0.4% jump recorded in September. Activity was boosted by robust gains in mining (1.2%) and manufacturing (0.7%). Serviceproducing industries also contributed to the gain, rising 0.3% boosted by a 2.6% jump in educational services output. The increase in October GDP builds further onto the strong gain in September and bodes well for annualized Q4 growth remaining at an abovepotential rate. Beyond the end of this year, the above-potential pace is projected to be maintained into As the economic data provide confirmation that this solid pace of growth is being sustained, the Bank of Canada is expected to start to return to tightening mode in mid

43 CANADIAN EMPLOYMENT DIPPED IN NOVEMBER Latest available: December Release date: January 9, 2015 Canadian employment surprised to the downside with the economy losing 4,300 jobs in December 2014 as forecasters looked for a 10,000 increase. The unemployment rate held steady at 6.6%. Losses were concentrated in the services sector where employment fell by 26,400, while goodsproducing industries showed a 22,100 rise in the month. The unemployment rate ended 2014 at 6.6%; the participation rate inched downward to 65.9%. CANADIAN NOVEMBER RETAIL SALES RISE 0.4% IN THE MONTH Latest available: November Release date: January 23, 2015 Nominal retail sales in November 2014 unexpectedly increased by 0.4% in the month following unchanged activity in October. Higher sales occurred despite declines in sales at gasoline stations (0.8%) and motor vehicle dealerships (0.3%). Excluding the auto and gasoline station components, so called core sales rose by a much stronger than expected 1.0%, thereby building further on a 0.5% gain in October. On a volumes basis, overall retail sales in November rose by a robust 0.8% after unchanged activity in October. CANADIAN HOUSING STARTS FALL TO A NINE-MONTH LOW IN DECEMBER Latest available: December Release date: January 9, 2015 Housing starts fell by 6.5% to an annualized 180,600 in December 2014 from a revised 193,200 in November (was 195,000). Market expectations had been for a modest decline to 192,000 in December. The drop in overall housing starts reflected declines in both urban single-unit (-4.8%) and urban multipleunit (-7.0%) starts. Rural starts also declined (-9.8%) in the month. Weakness was concentrated in the 39

44 Prairies (-10.2%), Quebec (-17.6%), and in Atlantic Canada (-19.4%). In contrast, strength in the multiples component drove an overall increase in Ontario (2.0%) while starts in British Columbia also rose (1.9%) to provide some offset. CANADA TRADE BALANCE POSTED A $0.6 BILLION DEFICIT IN NOVEMBER Latest available: November Release date: January 7, 2015 The Canadian merchandise balance posted a $0.6 billion deficit in November 2014, which was down from a revised $0.3 billion shortfall (previously reported as a $0.1 billion surplus) in October. Market expectations had been for a $0.2 billion deficit in November. Nominal exports declined by 3.5% after falling 0.2% (previously up 0.1%) in October. Imports fell by 2.7% in November to retrace a revised 1.2% (was 0.5%) increase in October. Controlling for the effect of prices, the volume of exports, in chained 2007 dollars, declined by 2.2%. Imports declined as well but by a moderate 1.6%, thereby resulting in a fourth consecutive monthly deterioration in the real trade balance. CANADIAN HEADLINE INFLATION RATE DROPPED ON LOWER ENERGY PRICES IN DECEMBER; CORE MEASURE TICKED UP RELATIVE TO DECEMBER 2013 Latest available: December Release date: January 23, 2015 Canada s headline consumer price index fell by 0.7% in December 2014, thereby reflecting a 5.0% drop in energy prices, which was a larger decline than market expectations for a 0.6% decline. Prices were 1.5% higher than a year earlier, which was a slower pace than November s 2.0%. The Bank of Canada s core measure slipped by 0.3% in December, thereby meeting market expectations. The annual core rate inched upward to 2.2% from 2.1% in November. 40

45 COMMENTARY The indicators are mixed with some signs of stability, with Real GDP recovering strongly in the second quarter of 2014 with the economy growing at an annualized 3.1% rate then unexpectedly dropping by 0.1% in August. The second-quarter gain was firmer than the Bank of Canada s projection; however, combined with the downgrade of first quarter s growth rate to 0.9% from 1.2% and the recent drop in August of 0.1%, the net result was that economic growth seems to be declining. Canadian employment surprised to the downside with the economy losing 4,300 jobs in December 2014 as forecasters looked for a 10,000 increase. The Canadian merchandise balance posted a $0.6 billion deficit in November 2014, which was down from a revised $0.3 billion shortfall (previously reported as a $0.1 billion surplus) in October. Weakening oil prices may be cited as a factor weighing on growth; however, it is not expected to significantly alter the Bank s annual forecast for real GDP growth of 2.2% in 2014 and 2.4% in The real estate market, from the standpoint of investment remains reasonably attractive. The lack of investment product on the market is a main reason as investors remain very active in the pursuit of real estate investments and debt capital remains abundantly available at low rates with inflation rates expected to remain close to the lower end of the Bank of Canada s 0.75% target. Source:

46 RESIDENTIAL MARKET OVERVIEW 6811 Second Line West (Silverthorn Mill), Oakville A synopsis of the current trends affecting the housing market as examined by economist Will Dunning is as follows: The housing market impacts of plunging oil prices will play out in phases. The initial impact (tied to stock market volatility) may be increased caution by home buyers, due to fear and uncertainty. For the GTA, mid-term and longer-term impacts should be positive overall. Job creation will be supported by a weaker dollar, lower business costs, and more discretionary income for consumers; there will be less pressure for interest rates to rise. A précis from the Will Dunning Inc. Housing Market Digest (January 2015) is presented as follows The December employment numbers caught Dunning by surprise, with drops for both Toronto CMA (minus 11,100 month-over-month) and Canada (minus 4,300). Year-over-year growth is negative for Toronto (-0.6%) and weak for Canada (1.0%). In drawing conclusions about artifacts, one of the things I consider is the labour force participation rate (the percentage of adults that are either employed or looking for work). As shown in this chart, the data is highly volatile. It fell again in December - Dunning was expecting it to rebound from the big drop that occurred six months earlier. Interest Rates Bond yields have plunged further during the past month. It appears that mortgage interest rates are now starting to follow (probably to 3.00%). During the past month, the Canadian dollar has dropped by cents US (currently below 83 cents US per $Canada, or more than $1.20 Canada per USD). The TSX index has been wild, which is adding to uncertainty. It is down by about 1,300 points (9%) from the record high reached during the summer. 42

47 Resale Market Sales slowed in December, to a rate of 88,600 (based on 4,446 actual sales). TREB s midmonth rate for January hints at a similar rate (close to 90,000). Price growth remains very rapid. The average price for December - $556,602 - is up by 6.0% year-over-year. However, CREA s seasonal adjustment of the price data hints that the price trend is flattening. For all of Canada, the seasonally-adjusted sales rate also dipped in December (sales have plunged in Alberta). Price growth is decelerating. For December the year-over-year increase was 3.8%, down from 7% just six months ago (again, this change is centered in Alberta). New Homes Market New home sales were at a healthy rate in December (39,800, based on 1,991 actual sales). Low-rise activity was at 16,000 (815 actual sales). Sales rates have been below the trend for two months. There just aren t enough new project openings. It is also possible that the effect of low interest rates is starting to wear off. The high-rise rate remains very high, at 23,800 (1,176 actual sales). 43

48 The Outlook The Dunning forecast is summarized in the table below: Source: Will Dunning Inc. Economic Research HIGHEST& BEST USE CONCLUSION The Highest and Best Use is deemed to be the current use. 44

49 APPROACH TO VALUE METHOD OF VALUATION The most common approaches used to value land are namely; The Direct Comparison Approach, The Abstraction Method, The Subdivision Development Method and Land Residual Method. Either approach is typically used in conjunction with the Direct Comparison Approach in estimating market value for land. The Cost Approach and Income Approach to value have also been considered, but are not deemed appropriate to value land. DIRECT COMPARISON APPROACH The Direct Comparison Approach, based on the Principle of Substitution, is more common and uses a comparison of transactions that have occurred, involving similar vacant land, and acting as a proxy for the Subject property. The approach is successfully applied where there is a reasonable volume of transactions and/or listings having similar characteristics when compared to the Subject property. According to the principle, a buyer would not pay more for one property than for another that was equally desirable. SUBDIVISION DEVELOPMENT METHOD The Subdivision Development Approach (also referred to as the Cost of Development Approach or land Development approach) is based on a proposed development of the land, where the costs (hard & soft) of construction and development profit are deducted from the expected market value or revenue of the completed project. The residual value is that price which the developer would pay for the raw land. The Appraisal Institute's The Appraisal of Real Estate, Canadian Edition, (1992) states at p. 297 that;... bona fide sales data provide a better indication of value than a subdivision development prospectus. The reliability of the approach is determined by the accuracy of the lot yield, absorption rate, sale prices, servicing costs and soft cost estimates. CONCLUSION We have undertaken the Direct Comparison Approach in valuing the subject building lots and homes. 45

50 DIRECT COMPARISON APPROACH AS-IS MARKET VALUE The Direct Comparison Approach studies the interaction of buyers and sellers in the market place. This approach has also been traditionally referred to as the comparative approach and involves a process of comparing the subject property in all respects to similar properties. The as-is market value comprises 9 lots of which five are serviced, vacant and not yet sold. The remaining four lots have been sold and partially built. However, each of the partially completed dwellings has an Agreement of Purchase and Sale in place. As such, for the as-if complete value for these four lots, we have used the contractual price. The Silverthorn Mill project status, as of the effective date, is detailed below: Lot # Sold Purchaser Silverthorn Mill, Mississauga, ON Project Status as at Effective Date Asking/Selling Price Dwelling Size (Sq. Ft.) # of Beds # of Frontage Lot Area Price Per Baths (Ft.) (Sq. Ft.) Sq. Ft. Price Per Front Foot Sale Status 3 Yes Venkat Royalpad $1,085,000 3,164 n/a n/a ,111 $343 $13,849 Sold 4 No - $1,995,900 4, ,078 $449 $25,658 For Sale 5 No - $1,755,900 3, ,140 $496 $25,329 For Sale 6 No - $1,795,900 2, ,059 $620 $62,918 For Sale 7 Yes John Olarte & Raquel Zapata $1,287,800 4,655 n/a n/a ,483 $277 $19,626 Sold 8 Yes Adel and Mona Kalil $1,545,000 4,948 n/a n/a ,900 $312 $21,308 Sold 9 No - $1,747,900 3, ,124 $500 $25,626 For Sale 10 No - $1,995,900 3, ,084 $532 $25,756 For Sale 11 Yes Navneet Dhami & Ranvir Rai $1,100,900 4,450 n/a n/a ,727 $247 $14,743 Sold Low $1,085,000 2, ,111 $247 $13,849 High $1,995,900 4, ,900 $620 $62,918 Average $1,590,022 3, ,856 $420 $26,090 We have provided a breakdown of the subject site based on units sold vs. units available below: Current Project Status Statistics Sold Available Frontage (Ft.) Lot Area (Sq. Ft.) Price Per Sq. Ft. Frontage (Ft.) Lot Area (Sq. Ft.) Price Per Sq. Ft. Minimum ,111 $ ,124 $449 Maximum ,900 $ ,084 $620 Average ,055 $ ,697 $519 MARKET VALUE ESTIMATE FOR UNSOLD VACANT LOTS The as-is contains a combination of serviced and vacant residential building lots and partially constructed dwellings. As such, a two part analysis has been undertaken to determine the current as-is market value. First, we will present sales of comparable residential lots, acquired for luxury custom home development. Second, we will subtract the estimated cost (as supplied by Hush Inc.) to complete each dwelling from each of the partially completed dwellings contractual sales prices. The total of the two estimates of value are combined to form the total as-is market value estimate for the subject. 46

51 Sales of comparable residential lots are gathered, analyzed and adjusted for differences such as time of sale, size, location and site condition (e.g. demolition, availability of services). The comparable vacant lot sales are presented in the following pages. VACANT LOT VALUATION AS-IS VACANT LOT UNIT RATE The unit of comparison relied upon for the vacant building lots is the price expressed as a rate per building lot. VACANT LOT DETAILS Lot # Sold Vacant Lot Details Lot Frontage (Ft.) Avg. Lot Depth (Ft.) Lot Area (Sq. Ft.) 4 No ,078 5 No ,140 6 No ,059 9 No , No ,084 Low ,124 High ,084 Average ,697 Sales of comparable lots are provided for on the following page. We have identified 8 residential land sales. Due to a lack of recent residential lot activity within the area, we also looked at smaller redevelopment plays. As such, we identified the sales of 5 residential lot sales and 3 redevelopment sales. For the purpose of this report, we broke down the redevelopment sales on a per lot basis by dividing the total sale price by the proposed number of lots. 47

52 VACANT LOT COMPARABLES Comparable Lot Sales Sale No Address 6680 McLaughlin Road 1050 Old Derry Road 6985 Second Line West Haig Boulevard 6894 Campbell Settler Court 6830 Second Line West 6827 Second Line West 4583, 4589 & 4601 Mississauga Road Nearest Intersection Second Line West / Old Derry Road Second Line West / Old Derry Road Second Line West / Old Derry Road Haig Boulevard / Lakeshore Road East Second Line West / Old Derry Road Second Line West / Old Derry Road Second Line West / Old Derry Road Mississauga Road / Eglinton Ave W Sale Date Total Area (Sq. Ft.) Total Area per Lot (Sq. Ft.) Total Frontage (Ft) Frontage per Lot (Ft) Depth (Ft) Private or Public Road Total Price Price / Lot Price / Price/Front Sq. Ft. Foot Dec-14 N/A N/A N/A N/A N/A Public $2,750,000 $392,857 N/A N/A Oct-14 17,160 17, Public $562,500 $562,500 $33 $4,327 Jun-14 28,314 28, Public $800,000 $800,000 $28 $6,119 May-14 29,969 9, Public $1,450,000 $483,333 $48 $9,667 Apr-14 16,760 16, N/A Public $700,000 $700,000 $42 $11,945 May-13 13,315 13, Public $775,000 $775,000 $58 $13,136 Dec-11 6,710 6, Public $480,000 $480,000 $72 $8,000 Feb-11 91,746 8,341 N/A N/A N/A Public $5,250,000 $477,273 $57 N/A Average 14, $583,870 $48 $8,866 Comments Infill development site that totals over 10 acres; however, mostly open space. Planning approved for 7 separate lots on net developable acreage. Currently improved with a single detached dwelling. Requires an internal road. Property was improved with an older bungalow dwelling; however, value was in the land. Property was improved with an older bunaglow dwelling; however, value was in the land. Sale of three separate parcels, each improved with a single family dwelling. We understand the land was aquired for the development of 3 custom homes. Vacant building lot located on the north side of Cempbell Settler Court. Irregular shaped large parcel. Large vacant building lot located on the west side of Second Line West, south of Old Derry Road. Deep lot. Property was improved with a dwelling at the time of sale; however, dwelling was demolished for the development of a custom home. Large parcel purchased for the development of 11 custom homes. Requires an internal Road. 48

53 COMPARABLE LOT SALES MAP Subject Subject 49

54 MAJOR VARIABLES IMPACTING VALUE A comparison of the transaction activity has been made having regard to the following market variables that are likely to have the greatest impact on market value (the weight (%) is not necessarily distributed evenly amongst the variables of comparison): TIME OF SALE a) Time of Sale b) Location c) Size d) Site Character (configuration, mid-block, corner, adjacent uses, demolition required, etc.) e) Planning (Official Plan, Zoning) The date of the market activity is clearly an important factor to consider with more current transactions typically offering the best insight to value. LOCATION Location is clearly a major variable affecting market value. Transactions in close proximity to the subject are thus more relevant. Our research has focussed on similar lot sales within the subject neighbourhood. It is noted that generally lots south of Lakeshore Road, similar to the subject lots, are considered to have a superior overall location within the district area. DEPTH, FRONTAGE & SIZE As we are valuing the lots on a total per lot basis, lots with larger depths, frontages & sizes will trade at a higher rate per lot. TOPOGRAPHY / SITE CHARACTER Intrinsic features of each comparable property are reviewed such as configuration, site features (trees, ravine, privacy, etc.), development area, street exposure, access, nature of adjoining properties, demolition if required. PRIVATE VS. PUBLIC ROAD Through discussions with local real estate professionals, we understand that private roads are seen as a positive attribute with respect to this type of custom home development. Maintenance, garbage pick up, landscaping and snow removal are contracted to a private company. As such, buyers are more confident in the services they will receive when purchasing on a private road and are willing to pay a slight premium for it. 50

55 COMPARABLE LOT SALES ANALYSIS We have undertaken an overall comparative rating with comparable residential lot transactions detailed herein in order to arrive at a market value for the Subject. Our review and overall rating is tabled on the following page (note: not all variables are given similar weight). Comparable Lot Sales Adjustment Grid Lot Transactions Compared with the Subject Property Comp. # Property McLaughlin Road Sale Price Per Lot Time Location Frontage Depth Total Lot Area Topography / Site Character Overall Private vs. Comparison Public Road Adjustment $392,857 Similar Old Derry Road 6985 Second Line West Haig Boulevard 6894 Campbell Settler Court 6830 Second Line West 6827 Second Line West 4583, 4589 & 4601 Mississauga Road $562,500 Similar Similar $800,000 Similar Similar $483,333 Similar Similar $700,000 Similar Similar Similar $775,000 Similar Similar $480,000 Similar Similar Similar Similar Similar $477,273 The foregoing adjustments have been made to the common unit of comparison - rate per acre. Not all variables have been given equal weight The comparable transactions range in price from $392,857 to $800,000 per lot. The price range is necessarily broad given the differences in sizes, site features, locations and development potential. The overall average rate derived from the market transactions is $583,870 per lot. The low end of the range is reflected by Comparable No. s 1, 4 and 8, which represent the sales of infill development sites. These sales represent the acquisition of larger parcels that will be split into smaller single family detached lots. Further to the adjustments accounted for in the above table, they require upward adjustments for planning, servicing, internal road development, etc. These sales are not at the same point of development readiness as the subject lots, but have been included to set the lower limit of value. Overall, all of these comparables per lot rates require significant upward adjustments. The high end of the range is reflected by Comparable No. s 3 and 8 at $800,000 and $775,000 per lot, respectively. Both of these lots are in similar overall locations, being on Second Line West; however, they are significantly larger compared to the subject lots. Their lot sizes, site features and site character are also considered superior compared to the subject lots as they lend themselves to larger custom dwelling developments. Overall, these sales require downward adjustments. Comparable No. 2 at $562,500 is the sale of an improved parcel that was purchased for its land value. The lot is larger in size, but located in a slightly inferior location on the south side of Old 51

56 Price 6811 Second Line West (Silverthorn Mill), Oakville Derry Road. There is also an added cost to demolish the current improvements not accounted for in the sale price. Upward adjustments are required for location and being on a public road, while downward adjustments are warranted for lot frontage, depth and area. Overall, we expect to achieve a higher rate per lot for the subject due to its superior location, private road and the added cost of demolishing the developments on the comparable. Comparable No. 5 at $700,000 is the sale of a lot located a short distance from the subject property on Campbell Settler Court in a similar overall location. The lot has a similar frontage compared to the subject lots; however, it is much larger in overall size at 13, 315 sq. ft. An upward adjustment is required for private vs. public road, while downward adjustments are required for total lot area and site character. Overall, this sale requires downward adjustments. Comparable No. 7 at $480,000 is an older sale of an abutting lot located on the east side of Second Line West, directly north of lot 13 of the subject development (no longer part of the subject property). This comparable is similar in location, size, frontage, depth and total site area. As such, it is considered most similar to the subject lots; however, upward adjustments are required for time and private vs. public road. As such, we expect to achieve a higher rate per lot for the subject. Through this analysis, it is clear that the main variable attributed to lot value is the lot size. Smaller lots sell at much lower rates compared to larger lots. For demonstrative purposes, we have included the below chart to demonstrate that there is a clear positive correlation between lot size and sale price. It is noted that comparable No. s 1 and 8 are not included in the below chart as the individual lot sizes for these parcels are not known. $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- 0 5,000 10,000 15,000 20,000 25,000 30,000 Size The subject s lots are superior with respect to location and road type (private vs. public) to most of the comparables above. However, their smaller lot sizes are clearly a limiting factor. As such, the majority of the adjustment weight has been focused on lot size, while the remaining adjustment factors were used to refine the lot estimates. 52

57 ESTIMATE OF LOT VALUES AS-IS : 6811 Second Line West (Silverthorn Mill), Oakville Having regard to the above noted market activity; it is our opinion, that the subject property s lots would be likely fall within the range of $575,000 to $625,000 per lot. Differences in lot prices have been made due to private vs. public road (Lots 3 & 11), location within the subdivision and lot size/character. Our estimated market value for each of the subject s remaining vacant building lot is estimated as follows: Estimated Lot Market Values Lot # Estimated Lot Value 4 $575,000 5 $600,000 6 $625,000 9 $600, $575,000 Total $2,975,000 PARTIALLY BUILT DWELLING VALUATION AS-IS As at January 19, 2015, four of the lots within the subject development are improved with partially completed dwellings and under Agreements of Purchase and Sale. As such, the as-if complete value for these four lots reflects the contractual sale price in the Agreement of Purchase and Sale. AS-IS ESTIMATE OF VALUE Four of the parcels were improved with partially completed dwellings that were sold at contractual rates. In order to estimate their current values based upon the Agreement of Purchase and Sale prices, we must subtract the estimated cost to complete each dwelling from the contractual sale price. It is noted, that the cost to complete each dwelling has been supplied to us by the owner, Hush Homes Inc. We have relied upon and assumed these estimates to be accurate; if this assumption is later proven inaccurate, we retain the right to alter our final estimate of value. Hush Homes Inc. s estimates to complete construction on each of the dwellings are provided below: Sold Lots (Lots 3, 7, 8 & 11) Budget vs. Work Completed (As supplied by Hush Homes Inc.) Lot # Sold Purchaser Dwelling Size Contractual Work Work Cost to Budget (Sq. Ft.) Sale Price Invoiced Competed Finish 3 Yes Venkat Royalpad 3,164 1,085,000 $431,075 $181,832 $172,531 $258,544 7 Yes John Olarte & Raquel Zapata 4,655 1,287,800 $494,036 $205,067 $202,668 $291,368 8 Yes Adel and Mona Kalil 4,948 1,545,000 $529,017 $257,413 $252,492 $276, Yes Navneet Dhami & Ranvir Rai 4,450 1,100,900 $547,676 $332,316 $308,864 $238,812 Totals 17,217 5,018,700 $2,001,804 $936,555 $1,065,

58 For the purpose of this report, we have only focused on work actually completed within each site and not work invoiced. ESTIMATE OF PARTIALLY IMPROVED/SOLD LOTS AS-IS : Our estimates of value for the partially completed/sold lots (lots 3, 7, 8 & 11) are based upon the Agreement of Purchase and Sale prices (Contractual Sale Price) less the cost to finish each dwelling. As of the effective date of this report, January 19, 2015, our current estimate of value of the partially improved lots is: Current "As-is" Market Value of Partially Built Lots Lot # Contractual Sale Less: Estimated Value of Price Cost to Finish Partially Built Lots 3 $1,085,000 $258,544 $826,456 7 $1,287,800 $291,368 $996,432 8 $1,545,000 $276,525 $1,268, $1,100,900 $238,812 $862,088 Totals $5,018,700 $1,065,249 $3,953,451 FINAL ESTIMATE OF VALUE AS-IS The estimate for the as-is market value as of the effective date, January 19, 2015, is: Total "As-Is" Estimate of Value Estimated Lot Market Values $2,975,000 Estimated Value of Partially Built Lots $3,953,451 Total $6,928,451 Rounded To: $6,930,

59 DIRECT COMPARISON APPROACH AS-IF COMPLETED The as-if completed value is determined through the Direct Comparison Approach by comparing new custom home sales and re-sales win the subject s neighbourhood. The focus of our research for new homes and re-sales is centered within the Meadowvale and immediate area. Adjustments to the comparables sales are made for time, location, house size, finishes, No. of beds, No. of baths and lot size. We have considered the subjects standard finishes, as preciously outlined, for the bases of comparison with the market transaction activity presented herein. NEW CUSTOM HOME SALES The unit of comparison relied upon for the homes is the price expressed on a per square foot of dwelling living area, excluding the basement area. It is noted that the sold subject lots are at different stages of construction; however, they have been sold at a previously contracted price. As such, for the purpose of this report, these pre-determined prices will be viewed as their current market values. The following is a summary of the new home market transactions researched as well as an analysis of the market data and conclusion of market value. 55

60 NEW HOME MARKET ACTIVITY - SOLD LOT COMPARABLES (IMPROVED) AS-IS 6811 Second Line West (Silverthorn Mill), Oakville Builder: Hush Development Name: Estates of Silverthorn Mills Meadowvale Village Location: south of Derry Road, east of Second Line West Municipality: Mississauga Site Status: Active Tenure: Freehold Product Type: Detached Lot Size (ft): 68 Lot Type: Traditional Opening Date: N/A First Occupancy Date: 2012-Aug Available Home Sizes (sf): 2,896 to 4,948 Available Home Prices: $980,900 to $1,995,900 Avg Size (Sold): 3,992 Avg Price (Sold): $1,232,809 Avg $/PSF (Sold): $308 Exterior: Brick, Stone, Stucco Avg. Bedrooms: 4 Type: Luxury Detached Dwelling Comparables - MISSISSAUGA Silverthorn Mills (Subject Property) Model DESCRIPTION ELEVATION # OF BEDROOMS HOME TYPE SIZE (SF) PRICE PRICE/SF STATUS 1. The Alders Brick/Stone lot 1 N/A 2 Storey 3,730 $1,311,375 $352 closed 2. The Bayberry Brick/Stone lot 2 N/A 2 Storey 3,505 $980,900 $280 closed 3. The Silverberry Brick/Stone/Stucco lot 3 N/A 2 Storey 3,164 $1,085,000 $343 sold 7. The Cherry Birch Brick/Stone/Stucco lot 7 N/A 2 Storey 4,655 $1,545,000 $332 sold 8. The Rosebay Stone/Stucco lot 8 N/A 2 Storey 4,948 $1,747,900 $353 sold 11. The Redwood Brick/Stone lot 11 N/A 2 Storey 4,450 $1,100,900 $247 sold 12. The Elderberry Brick/Stone lot 12 N/A 2 Storey 3,885 $1,011,500 $260 closed 13. The Willows Stone/Stucco lot 13 N/A 2 Storey 3,600 $1,079,900 $300 closed 3,992 $1,232,809 $

61 Builder: Dunsire Developments Development Name: Crown Collection in Gooderham Estates Location: south of Derry Road, west of Mavis Road Municipality: Mississauga Site Status: Active Tenure: Freehold Product Type: Detached Lot Size (ft): 45 Lot Type: Traditional Opening Date: 9/13/2014 First Occupancy Date: Available Home Sizes (sf): 2,652 to 3,888 Available Home Prices: $1,075,000 to $1,285,000 Avg Size: 3,340 Avg Price: $1,175,833 Avg $/PSF: $358 Exterior: Brick, Stone, Stucco Bedrooms: 4 Type: SALES HISTORY -DETACHED - 45' - FREEHOLD 2014 Jan-15 SALES SALES LOTS RELEASED EACH MONTH 0 0 TOTAL LOTS RELEASED MONTHLY/ANNUAL SALES 6 0 CUMULATIVE SALES 6 6 TOTAL REMAINING LOTS 4 4 Dunsire Developments MODEL DESCRIPTION ELEVATION # OF BEDROOMS HOME TYPE SIZE (SF) PRICE PRICE/SF STATUS 1. Imperial Estate Stone English Manor 4 bdrm 2 Storey 3,888 $1,275,000 $328 available Stone/Stucco French Chateau 4 bdrm 2 Storey 3,888 $1,285,000 $331 available 2. Majestic Estate Brick/Stone English Manor 4 bdrm 2 Storey 3,479 $1,150,000 $331 available Stone/Stucco French Chateau 4 bdrm 2 Storey 3,479 $1,180,000 $339 available 3. Royal Estate Brick/Stone English Manor 4 bdrm 2 Storey 2,652 $1,075,000 $405 available Stone/Stucco French Chateau 4 bdrm 2 Storey 2,652 $1,090,000 $411 available 3,340 $1,175,833 $

62 Di Blasio Homes Builder: Di Blasio Homes Development Name: 1955 Vintages Select Location: south of Derry Road West, west of McLaughlin Road Municipality: Mississauga Site Status: Active Tenure: Freehold Product Type: Detached Lot Size (ft): 50 Lot Type: Traditional Opening Date: 6/7/2008 First Occupancy Date: Available Home Sizes (sf): 4,856 to 5,745 Available Home Prices: $1,549,500 to $1,937,500 Avg Size: 5,097 Avg Price: $1,618,969 Avg $/PSF: $319 Exterior: Brick, Stone, Stucco Bedrooms: 4-May SALES HISTORY -DETACHED - 50' - FREEHOLD SALES SALES SALES SALES SALES SALES SALES SALES LOTS RELEASED EACH MONTH TOTAL LOTS RELEASED MONTHLY/ANNUAL SALES CUMULATIVE SALES TOTAL REMAINING LOTS MODEL DESCRIPTION ELEVATION # OF BEDROOMS HOME TYPE SIZE (SF) PRICE PRICE/SF STATUS 1. Allegro Stone/Stucco A lot 7 4 bdrm 2 Storey 4,856 $1,597,500 $329 available Stone/Stucco Allegro 4 bdrm 2 Storey 4,856 $1,200,000 $247 sold out Stone/Stucco B lot 8 4 bdrm 2 Storey 4,856 $1,597,500 $329 available 2. Beaumont Stone/Stucco A lot 3 4 bdrm 2 Storey 5,090 $1,799,000 $353 sold out Stone/Stucco B lot 5 4 bdrm 2 Storey 5,090 $1,629,500 $320 available Stone/Stucco B lot 9 4 bdrm 2 Storey 5,090 $1,497,000 $294 sold out Stone/Stucco Beaumont 4 bdrm 2 Storey 5,090 $1,250,000 $246 sold out 3. Chianti Stone/Stucco A lot 4 5 bdrm 2 Storey 5,458 $1,749,500 $321 available Stone/Stucco B lot 6 5 bdrm 2 Storey 5,458 $1,549,500 $284 available Stone/Stucco Chianti 5 bdrm 2 Storey 5,458 $1,325,000 $243 sold out 4. Lot Brick/Stone bdrm 2 Storey 4,381 $1,749,500 $399 sold out 5. Lot Brick/Stone bdrm 2 Storey 5,030 $1,629,500 $324 sold out 6. Lot Brick/Stone bdrm 2 Storey 5,745 $1,650,000 $287 available 7. Lot Brick/Stone bdrm 2 Storey 5,025 $1,845,000 $367 available 8. Ripasso Stone/Stucco A lot 11 N/A 2 Storey 5,034 $1,897,500 $377 sold out Stone/Stucco B lot 10 N/A 2 Storey 5,034 $1,937,500 $385 available 5,097 $1,618,969 $

63 Schoolhouse Vale Builder: Hush Development Name: Schoolhouse Vale Location: south of Derry Road, west of Second Line West Municipality: Mississauga Site Status: Active Tenure: Freehold Product Type: Detached Lot Frontage (ft): N/A Lot Type: Traditional Opening Date: N/A First Occupancy Date: 2012-Mar Available Home Sizes (sf): 3,250 to 6,626 Available Home Prices: $1,074,900 to $2,400,000 Avg Size (Sold): 4,180 Avg Price (Sold): $1,534,750 Avg $/PSF (Sold): $365 Exterior: Brick, Stone, Stucco Avg. Bedrooms: 4 Model DESCRIPTION ELEVATION # OF BEDROOMS HOME TYPE SIZE (SF) PRICE PRICE/SF STATUS 3. Westminster Brick, Stone and/or Stucco lot 3 4 to 5 2 Storey 5,040 $1,900,000 $377 closed 4. Eton Brick, Stone and/or Stucco lot 4 4 to 5 2 Storey 6,626 $2,400,000 $362 closed 5. Winchester Brick, Stone and/or Stucco lot 5 4 to 5 2 Storey 4,190 $1,712,500 $409 closed 6. Cambridge Brick, Stone and/or Stucco lot 6 4 to 5 2 Storey 3,550 $1,239,900 $349 closed 7. Stowe Brick, Stone and/or Stucco lot 7 4 to 5 2 Storey 3,838 $1,289,900 $336 closed 8. Lyndon Brick, Stone and/or Stucco lot 8 4 to 5 2 Storey 3,530 $1,350,000 $382 closed 9. Mayfield Brick, Stone and/or Stucco lot 9 4 to 5 2 Storey 3,250 $1,074,900 $331 closed 10. Cavendish Brick, Stone and/or Stucco lot 10 4 to 5 2 Storey 3,975 $1,289,900 $325 closed 11. Sussex Brick, Stone and/or Stucco lot 11 4 to 5 2 Storey 3,340 $1,199,900 $359 closed 12. Guildford Brick, Stone and/or Stucco lot 12 4 to 5 2 Storey 4,462 $1,890,500 $424 closed 4,180 $1,534,750 $

64 COMPARABLE NEW HOME ACTIVITY ANALYSIS We have analysed sales of new homes from four different development infill sites (including the subjects own development. These sales are considered most similar to the subject. An overview of the comparables sales are provided for below: Development Name Avg. Lot Size (Ft.) Dwelling Avg. Size (Sq. Ft.) Avg. Asking / Selling Price Avg. Price / Sq. Ft. Silverthorn Mills Meadowvale Village 68 3,992 $1,232,809 $308 Dunsire Developments 45 3,340 $1,175,833 $358 Di Blasio Homes 50 5,097 $1,614,625 $319 Schoolhouse Vale N/A 4,180 $1,534,750 $365 SILVERTHORN MILLS (SUBJECT DEVELOPMENT) Comparable New Dwelling Sales Overview Averages 54 4,143 $1,341,089 $328 We have also considered sold homes within the subject development. The sales are considered relevant and provide a reasonable perspective to market value. There are four closed sales and three pending sales, which are set to close upon completion of the home(s). The seven older sales occurred between April 2011 and April 2012 and had an overall averaged $317 per sq. ft. Overall; these sales present the best comparison to the subject property as-if complete. DUNSIRE - CROWN COLLECTION This custom home infill development is located a short distance to the north of the subject property in a slightly inferior location on the east side of Second Line West, directly south of Derry Road West. The average lot frontages are smaller compared to the subject property; however, construction quality, dwelling features and finishes are considered similar. Overall, these sales all require slight upward adjustments. DI BLASIO HOMES 1955 VINTAGES SELECT This custom home infill development is located in an inferior location on the west side of McLaughlin Road, south of Derry Road West in an inferior overall neighbourhood. Furthermore, the development has inferior features and finishes compared to the subject. As such, these sales require significant overall upward adjustments. SCHOOLHOUSE VALE This custom home infill development is located a short distance to the north of the subject property on the west side of Second Line West. It is a slightly older development with most sales occurring between 2009 and 2010 and closing in 2012; however, as there is limited new sale activity within the immediate area and is of similar quality as the subject, we included it in our analysis. All of these sales clearly require upward adjustments for time. 60

65 CUSTOM HOME RE-SALE COMPARABLES 6811 Second Line West (Silverthorn Mill), Oakville We have also analysed re-sales of luxury custom homes in the immediate neighbourhood. These sales are considered most similar to the subject. An overview of the comparable re-sales is provided for below: DWELLING RESALE ACTIVITY IN THE NEIGHBOURHOOD Sale No. Address Type Sale Date Dwelling Area (Sq. Ft.) Price Price per Sq. Ft. No. of Bedrooms No. of Bathrooms Comments Golden Hills Way, Mississauga Detached 2- storey Mar-15 4,100 $1,000,000 $ Custom home; 4 bedrooms; finished basement with separate entrance; 2nd kitchen; cathedral ceilings; attached 4 car garage Golden Hills Way, Mississauga Detached 2- storey Jul-14 3,900 $1,020,000 $ Custom home; hardwood flooring throughout; attached 2 car garage; custom kitchen; large driveway Rothschild Trail, Mississauga Detached 2- storey Jun-14 3,775 $1,129,000 $ Custom home; hardwood flooring throughout; unfinished basement; 2 years old; attached 2 car garage Golden Hills Way, Mississauga Detached 2- storey Sep-14 4,000 $1,130,000 $ Newer built executive home; custom kitchen; hardwood throughout; finished basement with walk-out; ravine lot; builtin 2 car garage Ramonet Drive, Mississauga Detached 2- storey Aug-14 3,500 $980,000 $ Custom built executive home; hardwood throughout; inground saltwater pool; 2 baster bedrooms; finished basement with two bedrooms & kitchen; attached 2 car garage Blackheath Ridge, Mississauga Detached 2- storey Mar-15 3,100 $949,500 $ Newer built executive home; custom kitchen; hardwood throughout with ceramic floors in kitchen; dual sided fireplace; attached 2 car garage. L Second Line West, Mississauga Detached 2- storey Listing 4,274 $1,599,000 $ Newer built executive home; harwood throughout; finished basement; 3 beds with ensuite baths; attahced 2 car garage; 2nd kitchen in basement. Average 3,807 $1,115,357 $