ROMSPEN REVEST HOMES LP. Reliable Rental Income Plus Significant Capital Appreciation

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1 ROMSPEN REVEST HOMES LP Reliable Rental Income Plus Significant Capital Appreciation

2 Overview US recession and mortgage crisis drove house prices in SE Florida down 70% from peak Low prices plus strong rental market provide opportunity to build rental portfolio Over the next 3-5 years, housing prices in SE Florida will rise by 50%-100% Romspen & Revest have formed a fund to take advantage of those opportunities 2

3 Our Business Model BUY 3 RENOVATE RENT OUT HOLD SELL

4 Fund Investment Objectives Use fund capital to build a portfolio of safe, secure rental properties Provide strong annual return from reliable rental income Create significant portfolio appreciation over next 3-5 years Generate potential investor returns of 15%-20% per year 4

5 Outline of Presentation Opportunity Execution Sample Property Potential Investment Return Fund Terms What To Do Next 5

6 US Mortgage Crisis 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Existing Bank Inventory Delinquent Mortgages Foreclosures

7 Impact of Crisis on Housing Prices Southern Florida (-50%) Las Vegas (-41%) Phoenix (-48%) Source: S/P Case-Shiller Housing Price Index National (-30%) National Trendline

8 2014 Update: Steady Improvement 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000, Existing Bank Inventory Delinquent Mortgages Foreclosures

9 2014 Update: Steady Improvement National (-30%) Southern Florida (-50%) Las Vegas (-41%) Phoenix (-48%) National Trendline 9 Source: S/P Case-Shiller Housing Price Index

10 SE Florida Showing Strong Improvement Palm Beach County Housing Prices $250,000 $208,800 $200,000 $150,000 $91,400 $100,000 $94,900 $62,200 $50,000 $ E

11 Outline of Presentation Opportunity Execution Sample Property Potential Investment Return Fund Terms What To Do Next 11

12 Focus on Three Key Factors Depth of Distress Orlando Strength of Rental Market (Orange County) South East Florida (Palm Beach, Broward & Martin Counties) Long Term Cap Appreciation 12

13 Focus On Gated HOA Communities Gated Home Owner Association (HOA) communities located in SE Florida Our target communities: A- and B+ quality in good neighbourhoods Built units Traditionally owner-occupied Monthly HOA fees of $200-$400/month HOA responsible for all structural maintenance (roofs, exterior walls, windows & foundations), as well as insurance, maintenance, security and landscaping Peak prices of $250,000-$450,000 Currently selling for $80,000-$150, Metropolitan Area (County) Homeowner Associations (HOAs) Total HOA Housing Units (estimated) Palm Beach 5, ,880 Orlando 2, ,480 Broward 5, ,400 Miami Dade 6, ,640

14 Sample Community: Links at Emerald Dunes 14

15 Sample Community: Jonathans Cove 15

16 Sample Community: Boynton Landings 16

17 Revest: Boots on the Ground Corporate Overview Revest operational headquarters located in Delray Beach, Florida Full time team of 16 manages all aspects of acquisition, renovation, tenanting and management Brokerage Renovations Property Management 17

18 Outline of Presentation Opportunity Execution Sample Property Potential Investment Return Fund Terms What To Do Next 18

19 Jonathan s Cove, West Palm Beach 19

20 Jonathan s Cove, West Palm Beach 20

21 Jonathan s Cove, West Palm Beach Attributes: Built units 1,200 square feet (2/2) 1,400 square feet (3/2) A- quality in traditional owner community in decent neighbourhood Gated, with swimming pool, community centre & other amenities 21

22 Jonathan's Cove, West Palm Beach Jonathan's Cove Estimated Peak Price Purchase Price Closing Costs and Renovations Total Cost of Property Discount from Peak 22 $260,000 $108,000 $15,138 $123,138 63%

23 Jonathan's Cove, West Palm Beach Jonathan's Cove Estimated Peak Price Purchase Price Closing Costs and Renovations Total Cost of Property Discount from Peak Gross Annual Rent ($1,425 per month) Operating Expenses Net Operating Income Annual Portfolio Yield 22 $260,000 $108,000 $15,138 $123,138 63% $17,100 $8,695 $8, %

24 Plan of the Fund Use fund capital to build portfolio of single family homes in gated communities in SE Florida Provide strong annual return from reliable rental income Create significant portfolio appreciation over next 3-5 years Generate potential investor returns of 15%-20% per year 23

25 Outline of Presentation Opportunity Execution Sample Property Potential Investment Return Fund Terms What To Do Next 24

26 Annual Return: Rental Market is Strong Portfolio takes 12 months to stabilize (buy, renovate & rent out) After that, portfolio will generate 7%-8% annual return to investors Approximately half paid out in quarterly distributions; other half goes to pay down mortgage principal 26

27 Housing Prices Will Rise in SE Florida Over the next 3-5 years, five key factors will drive housing prices up significantly in SE Florida: General Economic Recovery in SE Florida End of Foreclosure Sales Shortage of New Housing Recovery of HOA Communities Mortgage Financing & Inverted Cost to Rent vs Cost to Own Ratio 26

28 Key Driver #1: Economic Recovery Projected Florida Population Florida GDP, Actual & Projected ($billions) 1,000 25,000, ,000, ,000, ,000,000 5,000,

29 Key Driver #2: End of Foreclosures 28

30 Key Driver #3: Shortage of New Housing Housing Demand vs Housing Supply 2,500,000 2,000,000 1,500,000 1,000, ,000 Needed Per Year Built Per Year

31 Key Driver #4: HOA Recovery When owners default on their mortgages, they stop paying their HOA fees HOA declines as it cannot pay for maintenance & repairs, security, landscaping, pool services, etc. When foreclosures are completed, outstanding HOA fees get paid from proceeds of foreclosure As outstanding dues are paid, HOA regains financial health, completes maintenance and repairs, security, landscaping, etc Values in HOA can pop by 20-30% when this happens 30

32 Key Driver #5: Mortgage Financing US Mortgage Originations Credit Score Trends 45% 4,500 40% 4,000 35% 3,500 30% 3,000 25% 2,500 20% 15% 2,000 10% 1,500 5% 1,000 0% Worsened Improved

33 Key Driver #5: Inverted Rent vs Own Ratio Healthy real estate market: cost to own is higher than cost to rent Unhealthy real estate market: cost to rent is higher than cost to own Community Fund Total Cost Monthly Cost to Rent Monthly Cost to Own FMV if Cost to Own = Cost to Rent Embedded Capital Appreciation % Embedded Capital Appreciation Sandalwood $124,500 $1,350 $935 $230,570 $106,070 85% Cove at Briar Bay $95,000 $1,150 $798 $184,002 $89,002 94% Chateau Wood $161,000 $1,650 $1,121 $296,447 $135,447 84% 32

34 Exit Strategy Option 1: list portfolio on MLS & sell to owner/occupiers (12-18 months) Option 2: sell portfolio to larger aggregator (6 months) Option 3: roll portfolio into public REIT (6-9 months) Predicted life of investment: 3-5 years 33

35 Aggregate Return Over 5 years ($100,000) 2% Annual Appreciation (5 years) 5% Annual Appreciation (5 years) 10% Annual Appreciation (5 years) Annual Distributions $16,000 $16,000 $16,000 Mortgage Principal Payments $16,440 $16,440 $16,440 Investor Share of Profits (70%) $21,857 $58,019 $128,207 Total Investor Payments $54,297 $90,459 $160,647 54% (11% per year) 90% (18% per year) 160% (32% per year) % Return 34

36 Outline of Presentation Opportunity Execution Sample Property Potential Investment Return Fund Terms What To Do Next 35

37 Proposed Investment Terms Romspen/Revest raise $25 million over next 9 months Minimum investment US$100,000 (must pay in US$) Closings: April 30, June 30, Sep 30 & Dec 15 (or until sold out) Management contributing US$2.5 million to first closing Accredited investors only Five year investment term with two one year extensions Limited redemption rights during investment period 36

38 Proposed Investment Terms 7% annual priority return to investors 2% annual management fee (on equity) 100% of profits paid to investors until capital repaid Thereafter, 70% to investors and 30% to management 37

39 Why invest? Experienced professional management team with significant equity investment Investing in a hard asset at less than replacement cost Positive annual cash flow secured by reliable rental income Potential 50%-100% gain through housing price appreciation 38

40 What to do next Review presentation, term sheet & subscription agreement Contact Greg Coleman or Dianna Price for questions about the investment Contact Lisa Calandra or Victoria Moayedi for questions about how to complete your subscription Next closing date is June 30 39

41 Final Word: What Would Warren Do? If I had a way of buying singlefamily homes I would load up on them it's a very attractive asset class now. I could buy them at distressed prices and find renters and [take a] mortgage, it s a leveraged way of owning a very cheap asset and I think that s as attractive of an investment as you can make. Warren Buffett on CNBC's Squawk Box, Monday, February 27,

42 Appendix A: Where are we in the cycle? Market metrics confirm ongoing opportunity: SE Florida housing price index still off 36% from peak (179 vs 279) Housing starts still down 60% from peak (800,000 vs 2,000,000) Acquisition cost still 20% below replacement cost ($76 psf vs $95 psf) Household formation still down 33% from long term average (0.91% vs 1.36%) Houses still 67% more affordable than at peak (affordability index: 167 vs 101) Mortgage originations still down 62% from peak ($8.8 billion vs. $23.1 billion) National foreclosure rates still more than double long term average (43,000 per month vs 21,000 per month) 41 Sources: Case Schiller HPI, National Builders Association, HUD, Mortgage Bankers Association, CoreLogic 01/15 Foreclosure Report

43 Appendix B: Cdn/US Exchange Rates Q4/2014 (actual) Q1/2015 (actual) Q4/2015 (forecast) Q4/2016 (forecast) Scotia Bank $0.86 $0.79 $0.75 $0.77 Bank of Montreal $0.86 $0.79 $0.79 $0.83 Royal Bank $0.86 $0.79 $0.75 $0.78 CIBC $0.86 $0.79 $0.77 $0.81 Toronto Dominion $0.86 $0.79 $0.77 $0.85 Morgan Stanley $0.86 $0.79 $0.71 $0.74 Average $0.86 $0.79 $0.76 $