THE UNIVERSITY OF BRITISH COLUMBIA

AGENDA ITEM NO. THE UNIVERSITY OF BRITISH COLUMBIA FOR INFORMATION ONLY FORWARDED TO: BOARD OF GOVERNORS ON RECOMMENDATION OF PRESIDENT STEPHEN J. TOOPE APPROVED FOR SUBMISSION: DATE PRESENTED BY: DATE OF MEETING: SUBJECT: DECISION REQUESTED: EXECUTIVE SUMMARY: Pierre Ouillet, Vice President, Finance, Resources & Operations ~ AI Poettcker, President & CEO, UBC Properties Trust November 22, 2011 UBC Properties Investments Ltd. Financial Statements March 31,2011 For information only UBC Properties Trust and UBC Properties Investments Ltd. comprise a very material business enterprise and as such the Board has requested annual reporting. DISCUSSION SUMMARY: UBC Properties Trust (UBCPT) is a private trust created on June 9, 1999 (its predecessor was UBC Properties, a wholly owned subsidiary formed in 1988) under the laws of the Province of British Columbia to carry out real estate development activities on behalf of the University of British Columbia (UBC). The mandate of UBCPT, as approved by the UBC Board of Governors, is to: 1. Service and lease market-oriented sites on a prepaid basis for 99 years, 2. Manage and/or dispose of off-campus real estate properties acquired by UBC, usually through donations,

3. Undertake the planning and/or development of UBC institutional projects including infrastructure when requested by UBC, and 4. Advise UBC, where appropriate, on its management and development of institutional land holdings. The trustee of UBCPT is UBC Properties Investments Ltd. (UBCPIL) which operates with a Board of Directors comprising the President & CEO, seven external directors, three members of the UBC administration including the President of UBC, and a member of the UBC Board of Governors. The company reports to UBC through the Vice President Finance, Resources and Operations. During the year, UBCPT leased two market housing sites- Lot 30 in Wesbrook Place and Lot 1 in East Campus for gross proceeds of $34.8 million. In addition, UBCPT partnered with Adera Development to build and lease individual condominium units in Wesbrook Place. A total of 149 units were leased in the year generating gross proceeds of $85.7 million. This transaction was particularly significant as the developer could not obtain financing due to the credit crisis in late 2008. By deferring the land proceeds in exchange for an interest in the project, UBCPT was able to realize greater proceeds while maintaining UBC's reputation as an excellent place to build housing. Fiscal 2011 recognized the first full year of operations associated with Faculty and Staff F as well as the Technology Enterprise Facility 3 building. Gross rental revenues increased from $11.4 million to $17.6 million. The rental portfolio consists of 266 faculty and staff units, 203 market rental units, 219 student residences and 8 retail/commercial units. The Mews (72 residences above 18 retail units) and Tapestry (6 retail units) have recently been completed and will be reflected in the 2012 fiscal year. On a consolidated basis, there was net income of $66 million in fiscal 2011. All short term borrowings from UBC were repaid ($36 million) as well as the construction loans associated with the condominium projects. In order to capitalize on enhanced leasing activity, the TEF3 loan of $12.2 million (assumed on acquisition) was refmanced with an $18 million loan thus allowing for UBC's equity loan of $10 million to be repaid. At year end, the weighted average cost of fixed rate debt was 5.3% with an average term to maturity of 13.2 years (note that the has been further improved with the Mews financing subsequent to March 2011 which lowers the fixed rate debt to 5.12% and extends the average term to 15.4 years). In addition to the debt repayments, UBCPT distributed $11 million to UBC leaving a balance owing of $62 million. ATTACHMENTS: UBC Properties Investments Ltd. Consolidated Financial Statements for the year ended March 31, 2011

Consolidated Financial statements of UBC PROPERTIES TRUST Year ended March 31,2011

KPMGLLP Chartered Accountants PO Box 10426 777 Dunsmuir Street Vancouver BC V7Y 1 K3 Canada Telephone (604) 691-3000 Fax (604) 691-3031 Internet www.kpmg.ca To the Trustee of UBC Properties Trust INDEPENDENT AUDITORS' REPORT We have audited the accompanying consolidated financial statements of UBC Properties Trust which comprise the consolidated balance sheet as at March 31, 2011, the consolidated stat~ments of earnings, trust equity, and cash flows for the year then ended, and notes, comprising a summary of significant accounting policies and other explanatory information. Managemenrs Responsibility for the Consolidated Financial Statements Management Is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Canadian generally accepted accounting principles, and for such internal control as management determines is necessary to enable the preparation of consoddated financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform an audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ~f the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained in our audit is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of UBC Properties Trust as at March 31, 2011, and the consolidated results of its operations and its consolidated cash flows for the year then ended in accordance with Canadian generally accepted accounting principles. Chartered Accountants June9, 2011 Vancouver, Canada KPMG LLP is a Canad1an limited lability partnership and a member firm ol111e ICPMG network o1 inclepandant member films affiliated with KPMG lntema~onal Cooporatiw I'ICPMG lntemalional"l. a Swiss.,tity. KPMG Canada pnmdas I8IVices to KPMG LLP.

Consolidated Balance Sheet March 31, 2011, with comparative figures for 201 0 2011 2010 Assets Properties under development {note 4) $ 66,948,214 Property held for sale 811,395 Revenue producing properties (note 5) 144,870,790 Intangible assets 566,039 Deferred development costs 3,846,728 Cash and cash equivalents 5,104,403 Amounts receivable 3,046,686 Due from related parties (note 6) 63,086,018 Funds held in trust 6,328,604 Deposits held In trust (note 11 (d)) 2,572,500 Short-term Investments 2,150,000 Equipment and leasehold (note 7) 230,537 $ 299,561,914 $ 76,538,056 148,234,868 849,058 4,389,765 8,900,261 2,098,461 46,876,143 4,433,440 14,084,058 5,150,000 305,056 $ 311,859,166 Liabilities and Trust Equity Loans payable (note 8) $ 171,997,122 Accounts payable and accrued liabilities 24,904,984 Holdbacks payable 14,192,684 Deposits on real estate sales (note 11 (d)) 3,072,500 Distributions payable to University of British Columbia 62,291,770 Due to related parties (note 9) 556,790 Non-controlling interest 277,015,850 Trust equity 22,546,064 $ 236,768,756 17,102,886 7,954,433 14,084,058 18,261,300 1,753,017 7,586,598 303,511,048 8,348,118 Commitments (note 11) $ 299,561,914 $ 311,859,166 See accompanying notes to consolidated financial statements. Approved on behalf of the Trustee:. ---- ===). c.. Director 4 Director 1

Consolidated Statement of Earnings Year ended March 31, 2011, with comparative figures for 2010 2011 2010 Land sale revenue: Revenue $ 34,848,308 $ Cost of sales (10.506.583} 24,341,725 Condominium sale revenue: Revenue 85,763,694 3,044,365 Cost of sales (42,213.078} {771.97 ) 43,550,616 2,272,390 Rental operations: Revenue 17,617,507 11,398,167 Oeerating exeenses (4.485.633l (2,846.359) 13,131,874 8,551,808 Mortgage interest (7,544,821) (5,148,451) Amortization (4.696.048} {2.9561790) 891,005 446,567 Other revenue: Management fees (note 10(b) (e)) 6,199,037 4,132,997 Interest 650,390 313,780 6 849,427 4,446,777 Earnings before the undernoted 75,632,773 7,165,734 General and administration expenses 5,224,752 4,697,460 General and administration expenses capitalized to properties under development (167,125) (225,742) 5,057,627 4,471,718 Earnings before non-controlling interest 70,575,146 2,694,016 Non-controlling interest (3,939,506) 13,442 Net earnings $ 66,635,640 $ 2,707,458 See accompanying notes to consolidated financial statements. 2

Consolidated Statement of Trust Equity Year ended March 31,2011, with comparative figures for2010 Trust equity, beginning of year Net earnings Distributions to University of British Columbia Trust equity, end of year 2011 $ 8,348,118 66,635,640 (52,437,694) $ 22,546,064 2010 $ 9,092,951 2,707,458 (3,452,291) $ 8,348,118 See accompanying notes to consolidated financial statements. 3

Consofidated Statement of Cash Flows Year ended March 31, 2011, with comparative figures for 2010 Cash provided by (used in): 2011 2010 Operations: Neteamings $ 66,635,640 $ 2,707,458 Items not involving cash: Amortization of equipment and leasehold 172,203 109,664 Amortization of revenue producing properties 4,413,029 2,956,790 Amortization of intangible assets 283,019 Non-controlling interest 319391506 {131442) 75,443,397 5,760,470 Changes in non-cash operating working capital: Amounts receivable (948,225) 826,224 Funds held in trust (1,895, 164) 1,164,709 Accounts payable and accrued liabilities 7,802,098 (2,179,084) Holdbacks payable 6,238,251 (5,256,717) Deeosits held in trust 5001000 {153,696) 87,140,357 161,906 Recovery of deferred development costs through land sales 180,037 Additions to deferred development costs (307,711) (312,480) Recovery of properties under development through land sales 51,057,518 Expenditures on properties under development (41,608,360) (39,527,259) Recove!l: of eroee~ held for sale 11437,183 96,461,841 (38,240,650) Rnancing: Distributions to University of British Columbia (8,407,224) (8,570, 739) Due from related parties (16,209,875) (7,781,174) Due to related parties (1,196,227) 1,164,687 Proceeds from loans payable 40,324,214 109,314,727 Repayment of loans payable (1 05,159,621) (57,100,839) Deferred financing costs 63l73 (5671161) (90,584,960) 36,459,501 Investments: Expenditures on revenue producing properties (1,048,951) (21,160,768) Proceeds from (purchase of) short-term investments 3,000,000 (2,450,000) Purchase of equipment and leasehold (97,684) (116,706) Contributions from (distributions to) non-controlling interest (11,526,104) 7,600,040 Expenditures on intangible assets (849,058) Proceeds from mortgages receivable 3,062,550 Advances of mort~ge receivable {169,204) {916721739} {141083,146) Decrease in cash and cash equivalents (3,795,858) (15,864,295) Cash and cash equivalents, beginning of year 8,900,261 24,764,556 Cash and cash equivalents, end of year $ 5,104,403 $ 8,900,261 Supplemental cash flow information: Interest paid $ 9,120,313 $ 7,862,961 Non-cash transactions: Transfer of deferred development costs to property under development 670,711 Transfer of property under development to property held for sale 811,395 Transfer of property under development to revenue producing properties 41,708,276 Transfer of due from related parties to revenue producin~ properties 23,432,797 See accompanying notes to financial statements. 4

USC PROPERTIES TRUST Notes to Financial Statements Year ended March 31,2011 1. Operations: USC Properties Trust (the Trust) was created on June 9, 1999, under the laws of the Province of British Columbia to carry out real estate development activities on behalf of the University of British Columbia (USC). The Trustee of the Trust is UBC Properties Investments Ltd. (the Trustee). 2. Significant accounting policies: (a} Principles of consolidation: The consolidated financial statements include the accounts of the Trust and its subsidiaries Pacific Spirit Co-Development (Wesbrook Place) Ltd., and Spirit Co-Development (Wesbrook Place) Ltd. Non-controlling interest represents the co-developer's interest in Pacific Spirit Co-Development (Wesbrook Place) Ltd., and Spirit Co-Development (Wesbrook Place) Ltd. All significant intercompany balances and transactions have been eliminated. (b) Properties under development: (i) Apportionment of costs: Development, construction and other direct costs are capitalized to property under development. Capitalized development expenditures are apportioned to each building according to the percentage that its estimated buildable square feet bears to the total estimated buildable square feet of the entire project. Construction expenditures are allocated to each building on a specific identification basis. (ii) Carrying amount: Net revenues related to income producing property under development are treated as a reduction of costs until such time as the project has achieved break even cash flow after debt service or the expiration of a reasonable period of time following substantial completion. (c) Revenue producing properties: Revenue producing properties are recorded at cost less accumulated amortization. Amortization is provided over an estimated useful life of 40 years or the term of the lease, whichever is less. (d) Intangible assets: Intangible assets are recorded at cost and consist of in-place lease agreements with tenants. The cost is amortized over the remaining term of the in-place lease. 5

Notes to Financial Statements Year ended March 31,2011 2. Significant accounting policies (continued): (e) Impairment of long-jived assets: The Trust reviews the carrying values of long-jived assets, including revenue producing properties under development and revenue producing properties, for impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. Long-Jived assets are tested and measured for impairment at the individual property level, the lowest level for whic~ identifiable cash flows are largely Independent. Impairment losses are recognized when the carrying amount of long-jived assets exceed the sum of the undiscounted cash flows expected to result from their use and eventual disposition. The impairment loss is determined as the amount by which the long-lived assets carrying amount exceeds its fair value. (f) Deferred development costs: The Trust defers development costs, which include professional fees and planning costs, incurred for the Neighborhood and Comprehensive Community Plan. These costs are allocated to properties under development under a buildable square footage basis. (g) Cash and cash equivalents and short-term investments: The Trust considers all highly liquid Investments and deposits with terms to maturity of three months or Jess when acquired to be cash equivalents. Deposits with terms in excess of three months are classified as short-term investments. {h) Funds held in trust Certain of the Trust's projects operate under construction management agreements whereby the contractor is responsible for collecting and distributing construction holdbacks. The hofdbacks are funded by cash deposited Into joint bank accounts which are under the contractor's direct management. {I} Deposits held in trust and deposits on real estate sales: Deposits held In trust represent the initial cash deposit made by purchasers toward property acquisitions. Such cash is held by a designated trustee and cannot be used to finance operations. Deposits on real estate sales will be recognized as revenue in accordance with the Trusrs revenue recognition policy. (j) Equipment and leasehold: Equipment and leasehold is recorded at cost Jess accumulated amortization. Amortization is provided over the estimated useful life on the declining-balance basis at a rate of 30% per annum for equipment and straight-line over the lease term for leasehold. (k) Revenue recognition: (l) Management fees: The Trust eams a fee for managing the construction of projects on the UBC campus. The fees are generally billed on a frxed percentage basis of costs incurred. 6

Notes to Financial Statements Year ended March 31, 2011 2. Significant accounting policies (continued): (k) Revenue recognition (continued): (ii) Land sales: Sales of prepaid leases are recognized as revenue when the agreement for sale has been entered into, an appropriate down payment has been received and all conditions of the agreement have been met including the passage of the risks and rewards of ownership of the lease. {iii) Condominium sales: Revenue from the sale of condominiums is recognized when the collection of the sales proceeds is reasonably assured and all other significant conditions are met. {iv) Rental operations: The Trust has retained substantially all of the risks and benefits of ownership of its revenue producing properties and therefore accounts for leases with its tenants as operating leases. Rental revenue is recorded when services are rendered. (I) Derivative financial instruments: Derivative instruments are financial contracts whose value is derived from interest rates, foreign exchange rates or other financial or commodity indices. The Trust has entered into an interest rate swap contract (used to manage the exposure to market risks from changing interest rates). This instrument is not recognized in the consolidated financial statements on inception. Payments and receipts under the interest rate swap contract are recognized as adjustments to interest expense on long-term debt. The carrying amounts of derivative financial instruments, which comprise accrued gains and losses not yet realized, are included in interest receivable in the case of contracts in a gain position and in interest payable in the case of contracts in a loss position. The Trust formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives to specific assets and liabilities on the balance sheet or to specific firm commitments or anticipated transactions. The Trust also formally assesses, both at the hedge's inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Realized and unrealized gains or losses associated with derivative instruments, which have been terminated or cease to be effective prior to maturity, are deferred under other assets or liabilities on the balance sheet and recognized in income in the period in which the underlying hedged transaction is recognized. In the event a designated hedged item is sold, extinguished or matures prior to the termination of the related derivative instrument, any realized or unrealized gain or loss on such derivative instrument is recognized in income. 7

Notes to Financial Statements Year ended March 31, 2011 2. Significant accounting policies (continued): (m) Use of estimates: The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Significant areas requiring estimates Include the impairment of revenue producing properties, properties under development, deferred development costs, and equipment and leasehold, and determination of useful lives for amortization. Actual results could differ from those estimates. (n) Asset retirement obligation: A liability for an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. This liability is initially recorded at its estimated fair value, based on a discounted value of the expected costs to be paid when the assets are retired. The associated retirement costs are capitalized as part of the carrying amount of the long-lived assets and depredated over the life of the asset. The liablrrty increases each period as the amount of the discount decreases over time. The resulting expense is referred to as accretion expense and is included in operating expenses. As at March 31, 2011, the Company determined there were no significant asset retirement obligations associated with its assets. (o) Adoption of new accounting standards: Effective April 1, 2010, the Trust adopted the Canadian Institute of Chartered Accountants (CICA) Handbook Section 3064, Goodwill and Intangible Assets, and Section 1535, Capital Disclosures. Section 3064 replaces Section 3062, Goodwill and Other Intangible Assets, and expands on the standards for recognition, measurement, presentation, and disclosure of Intangible assets. Section 1535 requires disclosure of externally imposed capital requirements. The adoption of these standards did not have a material impact on the Trust's financial statements. (p) Future changes in accounting policy: The Accounting Standards Board and the Public Sector Accounting Board have stated that government business enterprises will be required to follow International Financial Reporting Standards OFRS) for fiscal years beginning on or after January 1, 2011. As a result, the Trust will be converting to IFRS effective April1, 2011 for its year ending March 31, 2012. (q) Comparative figures: Certain comparative figures for the prior year have been reclassified to conform to the financial statement presentation adopted In the current year. 8

Notes to Rnancial Statements Year ended March 31,2011 3. Land development agreement: On October 26, 2006, the Trust entered into an agreement with UBC to lease certain lands for a term of 99 years. Payments of $900,000 per acre are payable to UBC on the closing of the sale of an individual lease. During the year. two Jots were leased. At March 31, 2011 conditions have been met to fully satisfy the $47,001,257 commitment under this agreement. 4. Properties under development: During the year, the Trust capitalized interest of $1,077,758 (2010 - $2,256,441) and general and administration expenses of $167,125 (201 0 - $225,7 42) to properties under development. 5. Revenue producing properties: The properties are all located within the UBC campus. commercial rental portfolio as follows: The Trust has a residential, mixed use and 2011 2010 Residential: Faculty and staff housing $ 47,390,100 $ 47,283,896 Fraser Hall 8,201,300 8,163,276 Greenwood Commons 23,386,501 23,357,647 Mixed use: MBA House 10,241,836 10,133,795 Granite Terrace 42,279,655 41,804,191 Commercial: David Strangway Building 6,532,326 6,520,004 Technolog: Ente!:Erise Facility 3 21,7261533 21,446,492 159,758,251 158,709,301 Accumulated amortization (14,887,461} (10,474,433} $ 144,870,790 $ 148,234,868 6. Due from related parties: 2011 2010 UBC (a) $ 60,266,354 $ 44,534,247 Village Gate Construction Ltd. (Village Gate Construction) (b) 1,455,306 1,160,306 Village Gate Homes Ltd. (Village Gate Homes) (c) 1,195,017 991,000 University Neighbourhood Association (d) 157,027 108,074 Wesbrook Properties (e) 12,314 82,516 $ 63,086018 $ 46876,143 9

Notes to Financial Statements Year ended March 31,2011 6. Due from related parties (continued): (a) The amount due from UBC, the shareholder of the Trustee, is unsecured, non-interest bearing and has no fixed terms of repayment. (b) The amount due from VIllage Gate Construction, an entity related by common control, is unsecured, non-interest bearing and has no fixed terms of repayment. (c) The amount due from Village Gate Homes, an entity related by common control, is unsecured, non Interest bearing and has no frxed terms of repayment. (d) The amount due from the University Neighbourhood Association, an entity related by common control, Is unsecured, non-interest bearing and is due on or before June 30, 2011. (e) The amount due from Wesbrook Properties, an entity related by common control, is unsecured, noninterest bearing and has no fixed terms of repayment. 7. Equipment and leasehold: 2011 2010 Accumulated Net book Net book Cost amortization value value Computer equipment $ 496,973 $ 364,315 $ 132,658 $ 103,270 Furniture and office equipment 163,509 108,603 54,906 49,482 leasehold 4,500 225 4,275 97,628 Website 142,722 104,024 38,698 54,676 $ 807,704 $ 577,167 $ 230,537 $ 305,056 8. Loans payable: 2011 2010 Secured by revenue producing property: Mortgage, bearing interest at 6.64% per annum and due on May 31, 2011. Blended monthly payments of interest and principal of $49,931 are payable on the first day of each month Mortgage, bearing interest at 5. 76% per annum and due on February 28, 2013. Blended monthly payments of interest and principal of $30,856 are payable on the third day of each month Mortgage, bearing interest at the one month Banker's Acceptance rate and due on October 31, 2014. Pursuant to an interest rate swap agreement, the interest rate has been fixed at 6.23% per annum Carried forward $ 5,723,778 $ 5,935,743 3,996,685 4,132,221 7,530,000 7,737,000 17,250,463 17,804,964 10

Notes to Financial Statements Year ended March 31, 2011 8. Loans payable (continued}: 2011 2010 Secured by revenue producing property: Brought forward Mortgage, bearing interest at 5.62% per annum and due on November 1, 2026. Blended monthly payments of interest and principal of $77,17 4 are payable on the first day of each month Mortgage, bearing interest at 4. 79% per annum and due on June 1, 2016. Blended monthly payments of interest and principal of $46,395 are payable on the first day of each month Mortgage, bearing interest at 5.105% per annum and due on January 9, 2018. Blended monthly payments of interest and principal of $107,995 are payable on the ninth day of each month Mortgage, bearing interest at 5.085% per annum and due on January 9, 2018. Blended monthly payments of interest and principal of $18,309 are payable on the ninth day of each month Mortgage, bearing interest at 5.00% per annum and due on April 1, 2015. Blended monthly payments of interest and principal of $34,500, commencing May 1, 2010, are payable on the first day of each month Mortgage, bearing interest at 5.00% per annum and due on February 1, 2020. Blended monthly payments of interest and principal of $60,165 are payable on the first day of each month Mortgage, bearing interest at 4. 75% per annum and due on November 5, 2019. Blended monthly payments of Interest and principal of $55,694 are payable on the first day of each month Mortgage, bearing interest 5.33% per annum and due on November 1, 2034. Blended monthly payments of interest and principal of $215,141 are payable on the first day of each month Mortgage, bearing interest at the three month Banker's Acceptance rate plus 1.25% and due on May 12,2010 ($3,542,773) and May 13,2010 ($10,518,033) 17,250,463 17,804,964 11,485,073 11,764,845 7,235,928 7,444,087 19,021,257 19,347,437 3,231,490 3,286,967 5,105,328 5,250,000 11,091,203 11,259,763 10,132,059 10,295,609 38,169,887 38,724,396 14,060,806 Mortgage, bearing interest 5.28% per annum and due on November 1, 2030. Blended monthly payments of interest and principal of $107,576 are payable on the first day of each month Mortgage, bearing interest at 5.17% per annum and due on January 1, 2011. Blended monthly payments of interest and principal of $79,828 are payable on the first day of each month 17,877,822 12,257,596 Carried forward 140,600,510 151,496,470 11

Notes to Financial Statements Year ended March 31, 2011 8. Loans payable (continued): Secured by property under development or property held for sale: Brought forward Credit facility, to a maximum borrowing of $14,506,000 bearing interest at prime plus 0.35% per annum and due no later than March 31,2011 Credit facility, to a maximum borrowing of $20,306,000 bearing interest at prime plus 0. 70% per annum and due no later than September 30, 2010 Unsecured: Promissory notes, payable to UBC, bearing interest at prime less 1% or a floor rate of 2.5%, whichever Is less, per annum and due on dates ranging from September 30, 2011 to March 31, 2012 Financing costs 2011 140,600,510 31,900,000 172,500,510 (503,388) 2010 151,496,470 2,631,589 16,504,858 66,703,000 237,335,917 (567,161) $ 171,997,122 $ 236,768,756 Principal repayments on loans payable for each of the next fwe years and thereafter are as follows: 2012 $ 40,359,342 2013 6,593,927 2014 2,887,959 2015 9,592,244 2016 7,103,940 Thereafter 105,963,098 $ 172,500,510 The Trust has available an operating overdraft facility, which bears Interest at the bank's prime rate plus 0.1% and is repayable on demand. No amounts are drawn on the overdraft facility at March 31, 2011 (2010- nil). 9. Due to related parties: The amount due to UBC, is unsecured, non-interest bearing and has no frxed terms of repayment. 12

Notes to Rnancial Statements Year ended March 31, 2011 10. Related party transactions: In addition to transactions described elsewhere in the consolidated financial statements, the Trust had the following related party transactions: (a) The Trust paid $120,000 (2010- $120,000) in consulting fees to a company controlled by an officer of the Trustee. (b) The Trust earned project management fees of $6,077,079 (2010 - $3,742,247) from UBC for development and project management senices provided. (c) The Trust earned management fees of $20,000 (2010- $40,000) for administrative and accounting services provided to Village Gate Homes Ltd. and Wesbrook Properties Ltd. These companies are related by common control. (d) The Trust earned management fees of $80,000 (2010- $80,000) from the University Neighbourhood Association, an entity related by common control, for property management senices pertaining to landscaping in the Hampton Place, Hawthorn Place, Chancellor Place, and Wesbrook neighbourhoods. (e) The Trust earned management fees of nil (2010- $123,978) from Keenleyside, a Co-Development for which the Trust acts as a project manager. 11. Commibnents: (a) The Trust has a lease for its office premises. During the year, the Trust renewed its office lease for another five year term. The lease expires on December 31, 2015 and $708,733 is payable over the remaining term. (b) In its capacity as development manager, the Trust has provided letters of guarantee totaling $177,000 (2010- $647,432). (c) As at March 31, 2011, the Trust has committed to construction contracts totaling $204,105,340 (2010- $146,201,132). (d) On September 15, 2010 the Trust entered Into an Offer to Lease with Modem Investment Group (Canada) Ltd. for $29,225,000. The transaction is anticipated to close in August 2011. At March 31, 2011, the Trust has received a deposit of $3,072,500, with $23,152,250 due on closing. The remaining $3 million is due in three $1 million payments on December 1, 2011, 2012 and 2013. 13

Notes to Financial Statements Year ended March 31,2011 12. Financial instruments: (a) Fair value: The carrying values of cash and cash equivalents, funds held in trust, deposits held in trust. short-term investments, amounts receivable, due from and due to related parties, distributions payable to UBC, accounts payable and accrued liabilities, deposits on real estate sales, and holdbacks payable approximate their fair values due to their short-term nature. The Trusfs financial instruments of a long-term nature being loans payable, may be impacted by changes in market yields, which can result in differences between their carrying values and their fair values. The fair values of loans payable included In the balance sheet are as follows: 2011 Carrying amount Fair value 2010 Carrying amount Fair value Loans payable $ 171,997,122 $ 171,214,496 $ 236,768,756 $ 236,199,676 The fair value of loans payable was estimated at the present value of contractual future payments of principal and interest, discounted at the current market rates of interest available to the Trust for the same or similar debt instruments. The fair value of the interest rate swap, based on the mark-to-market price from a financial institution at March 31, 2011, is a liability of $995,444 (2010- $933,351). The swap matures on October 29, 2014. (b) Interest rate risk: As desaibed in note 8, certain of the Trust's debt bears interest at floating rates. interest rates will impact the cost of.financing incurred in the future. Fluctuations In (c) Credit risk: The Trust is not exposed to any significant concentrations of credit risk other than the amounts due from related parties described in note 6. 14