Delavaco Residential Properties Corp.

Delavaco Residential Properties Corp. Management Discussion and Analysis For the Quarter Ended June 30, 2015

Table of Contents 1/ FORWARD- LOOKING STATEMENTS... 1 1.1/ INTRODUCTION... 1 1.2/ KEY PERFORMANCE MEASURES (INCLUDING NON- IFRS FINANCIAL MEASURES)... 1 2/ BUSINESS OVERVIEW... 3 2.1/ BUSINESS STRATEGY... 4 2.2/ FINANCING STRATEGY... 6 2.3/ MUNICIPAL CODE VIOLATIONS... 6 3/ HIGHLIGHTS... 8 3.1/ SUBSEQUENT EVENTS... 8 4/ PROPERTIES... 9 5/ FINANCIAL REVIEW... 11 5.1/ SUMMARY OF QUARTERLY RESULTS... 11 Summary of Properties... 11 Summary of Quarterly Results... 12 Review of Results... 13 5.2/ PERFORMANCE MEASURES... 16 6/ FINANCINGS, LIQUIDITY & CAPITAL RESOURCES... 18 6.1/ DEBT FACILITIES... 18 6.2/ WORKING CAPITAL... 19 6.3/ SHARE CAPITAL AND STOCK OPTIONS... 19 7/ RELATED PARTY TRANSACTIONS... 20 8/ ACCOUNTING PROCESSES AND POLICIES... 21 8.1/ CRITICAL ACCOUNTING POLICIES AND ESTIMATES... 21 8.2/ FUTURE ACCOUNTING STANDARDS... 22 9/ RISK FACTORS... 23 9.1/ RISKS RELATED TO THE OPERATIONS... 23 9.2/ RISKS RELATED TO THE REAL ESTATE INDUSTRY... 30 10/ CORPORATE INFORMATION... 37

1/ Forward- Looking Statements This Management Discussion and Analysis ( MD&A ) contains forward- looking statements with respect to expected financial performance, strategy and business conditions. The words believe, anticipate, estimate, plan, expect, intend, may, project, will, would and similar expressions are intended to identify forward- looking statements, although not all forward- looking statements contain these identifying words. These statements reflect management s current beliefs with respect to future events and are based on information currently available to management. Forward- looking statements involve significant known and unknown risks and uncertainties. Many factors could cause actual results, performance or achievement to be materially different from any future forward- looking statements. Factors that may cause such differences include, but are not limited to, general economic and market conditions, investment performance, financial markets, legislative and regulatory changes, technological developments, catastrophic events and other business risks. These forward- looking statements are as of the date of this MD&A and the Company and management assume no obligation to update or revise them to reflect new events or circumstances except as required by securities laws. The Company and management caution readers not to place undue reliance on any forward- looking statements, which speak only as of the date made. 1.1/ Introduction This MD&A is dated as of August 25, 2015, the date it was approved by the Board of Directors of the Company, and reflects all material events up to that date. It should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2014, including the notes thereof, of Delavaco Residential Properties Corp. ( Delavaco or the Company ) and the current period financial statements for the three and six month periods ended June 30, 2015, and 2014. All amounts have been expressed in United States dollars ( USD ), unless otherwise noted. Additional information relating to the Company is available on SEDAR at www.sedar.com. 1.2/ Key Performance Measures (Including Non- IFRS Financial Measures) Certain financial information presented in this Management Discussion & Analysis reflects certain non- International Financial Reporting Standards ( IFRS ) financial measures, which include NOI, FFO and AFFO (each as defined below). These measures are commonly used by real estate investment companies as useful metrics for measuring performance, however, they do not have any standardized meaning prescribed by IFRS and are not necessarily comparable to similar measures presented by other real estate investment companies. Delavaco believes 1

that FFO and AFFO are important measures of operating performance, while NOI is an important measure of economic performance. The IFRS measurement most directly comparable to AFFO is net income. Occupancy Rate Occupancy rate represents the total number of units leased, as a percentage of the total number of units owned. Leased properties consist solely of those units which are occupied by a tenant at the given date. Net Operating Income Net operating income, ( NOI ), is a term used by industry analysts, investors and management to measure operating performance of Canadian real estate investment companies. NOI represents rental revenue from properties less repairs and maintenance, insurance, utilities, property management, property taxes, bad debt, and other property operating costs. NOI excludes certain expenses included in the determination of net income such as interest, amortization and corporate overhead. Net Income (Loss) Before Other Income (Expenses) and Income Taxes Net income (loss) before other income (expenses) and income taxes, is a measure that the Company uses in order to present the key operations and administration of the Company, excluding special items. Items that are excluded from this total and are presented in other income include transaction costs, foreign exchange gain (loss), fair value adjustments of investment properties, gain (loss) on dispositions, fair value gain (loss) on derivative financial instruments and share- based compensation. Funds From Operations Funds from operations, ( FFO ), is a term used as an industry standard to define the cash flows from operations. FFO evaluates operating performance, but is not indicative of funds available to meet the Company s cash requirements. FFO is computed by Delavaco in accordance with the current definitions of the Real Property Association of Canada ( REALpac ). FFO is defined as, in respect of IFRS, net income before fair value gains/losses on real estate properties, gains/losses on the disposition of real estate properties, deferred income taxes and certain other non- cash adjustments. Adjusted Funds From Operations Adjusted funds from operations, ( AFFO ), is a term used as a non- IFRS financial measure by most Canadian real estate investment companies, but should not be considered as an alternative to net income, cash flow from operations or any other measure prescribed under IFRS. The directors of Delavaco consider AFFO to 2

be a useful measure of cash available for distributions. AFFO should not be interpreted as an indicator of cash generated from operating activities as it does not consider changes in working capital. AFFO is defined as FFO adjusted by (i) adding amortization of deferred financing costs in place at closing (ii) deducting for capital expenditures incurred, and (iii) making such other adjustments as may be determined by the directors of Delavaco at their discretion. NOI, FFO and AFFO should not be construed as alternatives to net income or cash flow from operating activities determined in accordance with IFRS. Management s method of calculating NOI, FFO and AFFO may differ from other issuers methods of calculating NOI, FFO and AFFO, and accordingly, may not be comparable to the NOI, FFO or AFFO reported by other issuers. 2/ Business Overview Delavaco is invested in residential properties located in select markets in the United States, primarily in Florida, Georgia, New Jersey and Texas. Delavaco has historically invested in single- family properties at prices below replacement costs that were hard hit by the residential market downturn and multi- family properties at attractive capitalization rates. With the continued housing market recovery pushing single- family home prices upward, the Company made a strategic decision to sell its single- family portfolio, which commenced with the sales of the single- family portfolio in Florida. The Company continues to operate and maintain its multi- family portfolio and will explore potential opportunities to acquire additional buildings. 3

2.1/ Business Strategy Acquisitions Delavaco has halted acquisitions to focus on the repositioning of its portfolio through the sale of certain single- family properties while maintaining its multi- family portfolio. Property Management Delavaco currently operates using a combination of internal and external property management for different regions. The Company relies on external property managers for the single- family properties located in Georgia, New Jersey and the Tampa region in Florida and for the two multi- family buildings located in Austin, Texas. The Company internally manages certain single- family homes, condominium units and a multi- family building, all of which are located in South Florida. The internal management of the South Florida single- family portfolio allows the Company to manage and coordinate the strategic sale of the properties. Delavaco s internal management team supervises the external managers, who manage the individual homes and buildings located outside of the South Florida region, develop and implement strategies to maximize occupancy and monthly rent and efficiently manage Delavaco s operating costs. Management intends to capture the economic upside potential in each property through strategic capital improvements and increasing rents as the market will bear. 4

Divestitures In September 2014, Delavaco commenced the listing and sale of its single- family portfolio in Florida. Initially, approximately 20 properties were listed for sale for the purpose of testing the housing market. The Company experienced success with these sales, prompting the Company to implement a sales process for the remainder of the Florida single- family portfolio. During Q2 2015, 24 single- family units in Florida were sold for an aggregate sale price of approximately $2,200,000, or $91,667 per unit, bringing the total sales since September to 76 single- family units for approximately $7,028,990, or $92,487 per unit. As at June 30, 2015, 290 Florida units, 1 vacant Florida lot and 122 New Jersey units were classified as held for sale. Region Total Single-Family Units Single-Family Units Held for Sale Total Value of Units Held for Sale Florida 356 290 $ 20,394,560 Georgia 312 - - New Jersey 122 122 7,461,940 Total 790 412 $ 27,856,500 Net proceeds from encumbered assets have been and will continue to be used to pay down the corporate debt. In March 2015, and June 2015, the Company made equal principal payments of $2,500,000 on the 7.5% secured debt facility, representing a total debt repayment equal to $5,000,000 or 20% of the original principal amount of $25,000,000. As at June 30, 2015, 289 of the Florida units, 1 vacant Florida lot and 31 New Jersey units classified as held for sale are encumbered by the remaining $20,000,000, 7.50% secured debt facility. Additionally, 65 condominium units in Florida and 128 single- family units in Georgia not classified as held for sale are encumbered by the same debt facility. The total fair value of the properties encumbered by the $20,000,000 debt facility as at June 30, 2015, was estimated to be $34,751,294, resulting in a loan to value ( LTV ) of 58%. Other secured debt facilities include a $4,000,000 mortgage encumbering 120 Georgia properties and two promissory notes totaling $3,120,000 encumbering 91 New Jersey properties. The single- family portfolio encumbrances as at June 30, 2015, are as follows: Total Value of Region(s) Principal Outstanding Encumbered Units Encumbered Properties LTV Florida, Georgia and New Jersey $ 20,000,000 513 $ 34,751,294 58% Georgia 4,000,000 120 7,203,077 56% New Jersey 3,120,000 91 5,565,873 56% Total $ 27,120,000 724 $ 47,520,244 57% The sales strategy will have a temporary negative impact on portfolio occupancy. As discovered through the Florida single- family sale process, unoccupied homes are typically more desirable to potential purchasers. As a result, Delavaco will strategically discontinue new tenant placements in preparation for an immediate sale. 5

As at August 20, 2015, 34 units were pending sale with executed contracts in place totaling $2,853,019. The Company will continue to divest itself of its single- family home portfolio in Florida and New Jersey and intends on preparing the Georgia portfolio for sale. To date, the Company s selling process has been affected by municipal code violations in Southern Florida. The Company believes that as these code violations are rectified sales shall move more efficiently. The Company remains confident that the sale of the single- family home portfolio accompanied by the pay down of debt shall strengthen its balance sheet s leverage profile while increasing operating income by eliminating the costs associated with operations of the non- performing single- family homes. As at August 20, 2015 Properties Held for Sale Properties Under Contract Total Contracted Sales Average Contracted Price per Property South Florida (1) 214 34 $ 2,853,019 $ 83,912 Tampa (2) 47 - - - New Jersey (3) 122 - - - Total 383 34 $ 2,853,019 $ 83,912 (1) South Florida region consists of Broward, Miami-Dade and West Palm Counties (2) Tampa region consists of Hillsborough and Pinellas Counties (3) New Jersey region consists of Passaic County All assets classified as held for sale are currently being marketed. 2.2/ Financing Strategy To date, acquisitions and working capital needs have been funded through a mix of equity capital, debt financings, mortgage financings and cash generated from operations. Going forward, the Company expects to be able to fund operations via the sale of homes, repayment of promissory notes receivable and funds from profitable components of the portfolio. As required, Delavaco will seek traditional and non- traditional debt financing to acquire additional multi- family properties at a lower cost of capital. 2.3/ Municipal Code Violations The Company has received notices of fines and penalties relating to liens placed by municipal authorities as a result of various code violations pertaining to some of the Florida single- family investment properties, primarily located in Palm Beach County, which is estimated at approximately $8,404,824 on 75 properties as at March 31, 2015. During Q2 2015, the Company successfully settled fines and penalties on 10 properties. However, properties that had not yet been brought into compliance incurred additional penalties during the period. As a result, the total code violations outstanding as at June 30, 2015, was approximately $8,129,654 on 6

66 properties. Of the remaining code violations, 24 properties totaling approximately $2,922,116 were not in compliance, 14 properties totaling approximately $1,522,500 were pending compliance and 28 properties totaling approximately $3,655,038 were in compliance, pending settlement. As at June 30, 2015 Properties Total Liens Outstanding Average Code Liens per Property Not in compliance (1) 24 $ 2,922,116 $ 121,755 Pending compliance (2) 14 1,552,500 110,893 In compliance (3) 28 3,655,038 130,537 Total 66 $ 8,129,654 $ 123,177 (1) Property is not in compliance and is expected to incur additional fines and penalties depending on the severity of the violation. (2) Property is in compliance and is awaiting inspection for confirmation of compliance. It is still expected to incur additional fines and penalties. (3) Property has been confirmed by the municipality to be in compliance and will not incur additional fines or penalties. The Company is in the process of filing for a reduction of such liens. Subsequent to June 30, 2015, the Company has worked to remedy approximately $127,208 in code violations on 4 properties for a total cost of $23,422, or 18% of the total. This cost is not reflective of the average penalty and fines the Company will incur remedying the portfolio. During this time, the Company also incurred $341,154 in additional penalties on preexisting violations. As at August 20, 2015, there was approximately $8,343,600 in outstanding code violations on 56 properties, of which 23 properties totaling $4873,575 in code violations are not in compliance, 15 properties totaling $939,200 are pending compliance and 18 properties totaling $2,530,825 are in compliance awaiting reduction hearings. The Company is aggressively rectifying the outstanding issues and currently expects to resolve these violations over the next three to six months. The rate at which these are being remedied has increased substantially due to the efforts of our professional advisors and the interim COO. Based on historical evidence and expert advisors, the Company expects to settle the remaining penalties and fines for approximately 4.5% of the lien totals. As at August 20, 2015 Properties Total Liens Outstanding Average Code Liens per Property Not in compliance 23 $ 4,873,575 $ 211,895 Pending compliance 15 939,200 62,613 In compliance 18 2,530,825 140,601 Total 56 $ 8,343,600 $ 148,993 To ensure this issue is not repeated, the Company has implemented appropriate operating procedures so that the exposure to municipal code violations is significantly reduced and brought in line with industry standards. 7

3/ Highlights Corporate On June 30, 2015, Delavaco completed a $2,500,000 partial redemption of its original $25,000,000 7.50% secured notes, leaving $20,000,000 in principal remaining. As of June 4, 2015, the Company is not exposed to any penalties for early redemption. Portfolio Fair value of investment properties and assets held for sale as at June 30, 2015, was $87,280,887, of which $51,885,400 is the single- family portfolio and $35,395,487 is the multi- family portfolio. As at June 30, 2015, Delavaco owned 790 single- family units and 311 multi- family units bringing the total unit count to 1,101. Aggregate portfolio occupancy as at June 30, 2015, was 65%. Single- family portfolio occupancy was 53% while multi- family portfolio occupancy was 97%. Average monthly rent for the aggregate portfolio was $944. Single- family average rent was $926 while average rent for the multi- family portfolio was $968. Operational and Financial Performance Revenue for the three months ended June 30, 2015, was $2,005,120, compared to $2,561,291 for the three months ended June 30, 2014. During the three months ended June 30, 2015, Delavaco sold 24 single- family units located in Florida for an aggregate sale price of approximately $2,200,000. 3.1/ Subsequent Events From July 1, 2015, to August 20, 2015, Delavaco sold 29 single- family units located Florida for an aggregate sale price of approximately $1,758,200. From July 1, 2015, to August 20, 2015, Delavaco successfully settled approximately $127,208 in municipal code violations for a total cost of $23,422 or 18% of the total penalty. This cost is not reflective of the average penalty and fines the Company will incur remedying the portfolio. Effective August 31, 2015, Andy DeFrancesco has resigned as a member of the board of the Company. Given the unsuccessful results experienced by the 8

Company including those reported today, Mr. DeFrancesco has voluntarily offered to tender to the Company 3 million common shares for cancellation at no cost and the repayment of an advisory fee payable to Mr. DeFrancesco totaling $352,500 by June 30, 2016. 4/ Properties Occupancy The following table provides a leasing performance summary of our owned and operated portfolio as at June 30, 2015: Region (1) Includes assets held for sale. Number of Units Units Leased Units Vacant Occupancy Florida single-family (1) 356 136 220 38.2% Georgia single-family 312 194 118 62.2% New Jersey single-family (1) 122 86 36 70.5% Florida multi-family 153 150 3 98.0% Texas multi-family 158 152 6 96.2% Total - owned properties 1,101 718 383 65.2% Properties managed (not owned) 316 282 34 89.2% Total - owned and operated 1,417 1,000 417 70.6% Average Monthly Rent $ $ 932 830 1,132 1,097 842 944 Single- family occupancy has declined due to the recent sales effort in Florida. As at June 30, 2015, 290 Florida units and 122 New Jersey units were classified as held for sale. Assets held for sale in Florida exhibit low occupancy rates as unoccupied units are more desirable to potential purchasers. Multi- family occupancy remains strong at 97% as at June 30, 2015. 9

Single- Family Properties The following table provides a summary of our single- family portfolio as at June 30, 2015: Region Number of Units (1) Aggregate cost includes acquisition costs and any additional capital costs on the properties. (2) Florida region includes of Broward, Miami-Dade, Palm Beach, Pinellas and Hillsborough Counties. (3) Includes assets held for sale. Aggregate Cost (1) (4) Georgia region currently consists of Fulton, DeKalb, Decatur and Clayton Counties. (5) New Jersey region currently consists of Passaic County. Average Cost per Unit Fair Value (6) Florida (2)(3) 356 $ 22,934,089 $ 64,422 $ 25,695,461 Georgia (4) 312 18,669,948 59,840 18,728,000 New Jersey (3)(5) 122 7,610,331 62,380 7,461,940 Total 790 $ 49,214,368 $ 62,297 $ 51,885,400 Average Square Footage (6) See INVESTMENT PROPERTIES, ASSETS HELD FOR SALE and FAIR VALUE GAIN/LOSS in the Review of Results section. 1,042 1,163 735 1,042 Multi- Family Properties The following table provides a summary of our multi- family portfolio as at June 30, 2015: Region Number of Units Aggregate Cost (1) Average Cost per Unit Fair Value (4) Florida (2) 153 $ 17,585,894 $ 114,940 $ 18,817,813 Texas (3) 158 15,198,681 96,194 16,577,673 Total 311 $ 32,784,574 $ 105,417 $ 35,395,487 (1) Aggregate cost includes acquisition costs and any additional capital costs on the properties. (2) Florida region currently consists of one multi-family property located in Ft. Lauderdale. (3) Texas region currently consists of two multi-family properties located in Austin. Average Square Footage (4) See INVESTMENT PROPERTIES, ASSETS HELD FOR SALE and FAIR VALUE GAIN/LOSS in the Review of Results section. The Company currently manages a 316 unit multi- family building located in Hollywood, FL, that was 89% occupied as at June 30, 2015. The building is managed on behalf of the owner, who is a director of Delavaco. 1,078 550 810 10

5/ Financial Review The following is a review of selected financial information of the Company. 5.1/ Summary of Quarterly Results Summary of Properties Quarter Total 2015 Q2 2015 Q1 2014 Q4 2014 Q3 Single-Family Doors: Florida (1) 356 382 399 434 Single-Family Doors: Georgia 312 312 312 312 Single-Family Doors: New Jersey (1) 122 122 112 108 Multi-Family Units: Florida 153 153 153 153 Multi-Family Units: Texas 158 158 158 158 Total Units 1,101 1,127 1,134 1,165 Fair Value of Properties $ 87,280,887 $ 101,353,631 $ 102,166,871 $ 109,227,102 Average Fair Value per Unit $ 79,274 $ 89,932 $ 90,094 $ 93,757 Quarter Total 2014 Q2 2014 Q1 2013 Q4 2013 Q3 Single-Family Doors: Florida (1) 434 525 525 525 Single-Family Doors: Georgia 312 312 298 257 Single-Family Doors: New Jersey (1) 105 - - - Multi-Family Units: Florida 153 153 153 - Multi-Family Units: Texas 158 158 158 - Total Units 1,162 1,148 1,134 782 Fair Value of Properties $ 107,826,373 $ 101,929,277 $ 99,960,201 $ 62,545,842 Average Fair Value per Unit $ 92,794 $ 88,789 $ 88,148 $ 79,982 (1) Includes assets held for sale 11

Summary of Quarterly Results The following tables contain quarterly financial information derived from financial statements that have been prepared in accordance with IFRS: June 30, March 31, December 31, September 30 For the Three Months Ended 2015 2015 2014 2014 Rental revenue $ 2,005,120 $ 2,192,420 $ 2,193,829 $ 2,470,751 Property operating expenses 2,085,609 1,933,967 2,442,552 1,931,139 Net operating income (80,489) 258,453 (248,723) 539,612 General and administrative 480,665 438,740 492,852 516,571 Professional fees 188,072 102,394 14,264 92,194 Finance costs 1,236,311 1,380,760 1,416,793 1,366,403 Amortization 5,332 5,428 15,345 5,483 Transaction costs - 10,000-2,363 Fair value (gain) loss on investment properties 12,561,535-5,239,047 (892,495) Other (270,548) (1,032,360) (420,557) 661,401 Net earnings (loss) (14,281,856) (646,509) (7,006,467) (1,212,308) Net earnings (loss) per share (0.25) (0.01) (0.13) (0.02) Investment properties (1) 87,280,887 101,353,631 102,166,871 109,227,102 Working capital (2) 556,390 (999,686) 1,978,854 58,815 Total assets 94,446,127 111,155,361 115,695,986 120,167,777 Total long-term liabilities 37,924,338 59,540,418 61,961,161 61,283,293 Dividends $ - $ - $ - $ - June 30, March 31, December 31, September 30 For the Three Months Ended 2014 2014 2013 2013 Rental revenue $ 2,561,291 $ 2,419,860 $ 1,796,483 $ 1,606,311 Property operating expenses 1,941,457 1,633,946 1,725,584 964,676 Net operating income 619,834 785,914 70,899 641,635 General and administrative 500,662 627,730 586,183 780,049 Professional fees 163,519 288,879 170,590 129,924 Finance costs 1,294,194 1,242,527 2,126,847 1,583,042 Amortization 5,046 7,295 10,185 30,526 Transaction costs 37,301 290,814 2,202,981 907,835 Fair value (gain) on investment properties (1,195,418) (414,956) (1,929,148) (1,460,136) Other 328,122 (714,012) 506,464 (661,960) Net earnings (loss) (513,592) (542,363) (3,603,203) (667,645) Net earnings (loss) per share (0.01) (0.01) (0.14) (0.03) Investment properties (1) 107,826,373 101,929,277 99,960,201 62,545,842 Working capital (2) 1,631,549 835,554 3,792,240 (2,890,408) Total assets 120,167,597 110,173,907 111,589,667 71,348,140 Total long-term liabilities 60,991,808 56,805,256 56,797,752 34,629,393 Dividends $ - $ - $ - $ - (1) Includes assets held for sale (2) Excludes assets held for sale, derivative financial instruments and the book value of the $20,000,000 7.5% secured notes payable. 12

Review of Results Revenues: For the three months ended June 30, 2015, revenue decreased $556,171 (22%) year over year and $187,300 (9%) quarter over quarter. In early Q4 2014, the Company commenced the single- family home sales initiative in Florida. As at June 30, 2015, this initiative had resulted in the sale of 76 units. As at June 30, 2015, 290 Florida units and 122 New Jersey units are classified as held for sale. Purchasers in Florida have indicated a preference for unoccupied units and as a result, Delavaco has refrained from placing new tenants in the properties held for sale. The decline in occupancy on the portfolio targeted for this initiative has largely contributed to the year over year and quarter over quarter decreases in revenue. Additionally, the single- family portfolio has decreased in size by 61 units year over year and 24 units quarter over quarter, further contributing to the decrease in revenue. Property Operating Expenses: Property operating expenses include repairs and maintenance, insurance, utilities, property management fees, property taxes, bad debts and other costs directly attributable to the portfolio of single- family and multi- family homes. Property operating expenses for the three months ended June 30, 2015, were $2,085,609, an increase of $144,152 (7%) year over year and $151,642 (8%) quarter over quarter. The year over year increase is comprised of a $148,522 increase in operating costs, a $25,138 increase in utilities and a $29,508 decrease in property taxes. The quarter over quarter increase is comprised of a $188,313 increase in operating costs, a $14,094 increase in utilities and a $50,765 decrease in property taxes. Increases in operating costs are attributable to an increase in repairs and maintenance costs associated with rectifying municipal code violations. The Company also incurred one time transitioning costs associated with changing its property managers in Georgia and New Jersey. An increase in vacancy rates, as caused primarily by the single- family portfolio sales initiative, is responsible for increases in utilities costs as the Company incurs such costs on vacant homes. The sales initiative is also responsible for the decrease in property taxes as the overall portfolio size has decreased year over year and quarter over quarter. Corporate Expenses: Corporate expenses include finance costs, general and administrative expenses, professional fees, transaction costs, depreciation and amortization, and all costs that are not directly attributable to the property portfolio. Total corporate expenses for the three months ended June 30, 2015, were $1,639,832, a decrease of $689,012 (30%) year over year and an increase of $734,870 (81%) quarter over quarter. Significant areas of corporate expenses are as follows: 13

(i) Finance Costs Finance costs consist primarily of interest and accretion costs. Finance costs for the three months ended June 30, 2015, were $1,236,311, a decrease of $57,883 (5%) year over year and $144,449 (11%) quarter over quarter. The year over year decrease is attributable primarily to an increase of approximately $25,000 in accretion and a decrease of approximately $89,000 in interest. The quarter over quarter decrease is attributable to a decrease of approximately $3,000 in accretion and approximately $142,000 in interest. On March 31, 2015, the Company made a $2,500,000 principal payment on the 7.5% secured note, which reduced interest expense for the quarter by approximately $46,875. Interest revenue also increased during the period by approximately $98,280 as part of a related party promissory note. The promissory note, dated May 25, 2015, was amended such that the interest accrued and payable shall commence on the date it was originally funded, being October 28, 2013, removing the initial interest free period originally contemplated. ii) General and Administrative Expenses General and administrative expenses are comprised largely of salaries and wages and the costs of rent and office operations. For the three months ended June 30, 2015, general and administrative expenses decreased $19,997 (4%) year over year and increased $41,925 (10%) quarter over quarter. General and administrative expenses have typically trended downward over the past eight quarters due largely in part to a focus on internal efficiency and reduced overhead costs. Such expenses would have remained relatively flat quarter over quarter, however, in Q2 2015, the Company wrote off a $35,000 HST tax credit. The Canadian Revenue Agency denied the Company s claim for the HST tax credit and although the Company has filed an objection on the denial of the claim there is no certainty that the denial will be overturned. (iii) Professional Fees Professional fees for the three months ended June 30, 2015, were $188,072, an increase of $24,553 (15%) year over year and $85,678 (84%) quarter over quarter. As reported on April 15, 2015, the Company entered into discussions regarding a possible transaction whereby a third party may acquire a controlling interest in the Company. Professional fees increased in conjunction with the assessment of this potential transaction, which was never consummated as reported on July 2, 2015. (iv) Transaction Costs The Company did not incur transaction costs for the three months ended June 30, 2015. Transaction costs were $37,301 and $10,000 for the three months ended June 30, 2014, and March 31, 2015, respectively. 14

Investment Properties, Assets Held for Sale and Fair Value Gain/Loss: As at June 30, 2015, the Company s portfolio consisted of 790 single- family homes and 311 multi- family units, for a combined fair value of $87,280,887, of which 290 single- family homes in Florida and 122 homes in New Jersey are classified as held for sale. The fair value loss on the portfolio for the three months ended June 30, 2015, was $12,561,535, compared to a fair value gain of $1,195,418 for the three months ended June 30, 2014, and no change in fair value for the three months ended March 31, 2015. This significant loss is a result of an analysis of our recent sales and the condition of the single- family home portfolio. As part of an accelerated sales process on the single- family portfolio during Q2 2015, the Company reclassified a significant portion of its single- family homes as held for sale. This reclassification led to a significant reduction in fair value as the assets held for sale were reduced to their estimated net sale proceeds value. This included an 8% reduction in value to account for all closing costs. This valuation methodology was applied to the entire single- family portfolio as the Company feels it is a more appropriate way to value this particular asset class given that it expects to classify such assets as held for sale during the next year. The multi- family portfolio will continue to be valued as it has been in previous reporting periods. For the three months ended June 30, 2015, the fair value of the multi- family portfolio increased only by the amount of capital expenditures incurred on the properties during the period, therefore, no fair value gain was recognized. Each quarter Delavaco determines the fair value of its single- family and multi- family portfolio using an internally managed valuation model. For the value of the single- family portfolio, the model calculates the increase/decrease in fair value of the properties based on the condition of the assets, the indices for specific regions and property classes and then makes adjustments for the anticipated net proceeds that would be received upon sale of the property. The fair value increase/decrease for the multi- family properties is calculated using net operating income and market capitalization rates. Annually, the Company has the portfolio reviewed by a qualified, independent valuator. 15

5.2/ Performance Measures Net Operating Income The following is a reconciliation of the Company s NOI (and loss) to net loss for the three months ended June 30, 2015 and 2014: June 30, June 30, For the Three Months Ended 2015 2014 Net income (loss) $ (14,281,856) $ (513,592) Income tax (261,632) 55,730 Share-based compensation - 834,589 Fair value (gain) loss on derivative financial instruments (202,475) (602,067) Loss on early extinguishment of debt 90,605 - Fair value (gain) loss on investment properties 12,561,535 (1,195,418) Foreign exchange (gain) loss 102,954 39,870 Transaction costs - 37,301 Amortization 5,332 5,046 Finance costs 1,236,311 1,294,194 Professional fees 188,072 163,519 General and administrative 480,665 500,662 Net operating income (loss) $ (80,489) $ 619,834 NOI for the three months ended June 30, 2015, decreased $700,323 year over year. The year over year decrease is primarily due to a $556,171 decrease in revenue and a $148,522 increase in operating costs. The decline in revenue is a result of decreased single- family unit count, from sales, and lower occupancy rates while the increase in operating costs is attributable to an increase in repairs and maintenance associated with municipal code violations and a temporary increase in property management costs as part of the replacement of two of the Company s property management companies. 16

Unadjusted and Adjusted Funds From Operations Management believes that FFO and AFFO are key measures for real estate investment companies. The calculations are as follows: June 30, June 30, For the Three Months Ended 2015 2014 Net loss $ (14,281,856) $ (513,592) Add (deduct): Deferred income tax (recovery) (261,632) 55,730 Fair value loss (gain) on derivative financial instruments (202,475) (602,067) Fair value (gain) on investment properties 12,561,535 (1,195,418) Foreign exchange loss 102,954 39,870 Amortization 5,332 5,046 Funds From Operations (FFO) (2,076,142) (2,210,431) Add (deduct): Amortization of deferred financing costs 362,155 337,278 Loss on early extinguishment of debt 90,605 - Share-based compensation - 834,589 Transaction costs - 37,301 Capital expenditures (386,205) (586,854) Adjusted Funds From Operations (AFFO) (2,009,587) (1,588,117) FFO per unit - basic $ (0.04) $ (0.04) AFFO per unit - basic $ (0.04) $ (0.03) For the three months ended June 30, 2015, FFO improved by $134,289 and AFFO decreased $421,470 year over year. FFO improved year over year as a result of an $834,589 decrease in share- based compensation and a $700,323 decrease in NOI. AFFO decreased year over year primarily due to a $200,649 decrease in capital expenditures, $57,883 decrease in finance costs and a $700,323 decrease in NOI. 17

6/ Financings, Liquidity & Capital Resources 6.1/ Debt Facilities 2015: The following table summarizes Delavaco s debt facilities as at August 20, Principal Outstanding Interest Rate Type Security Maturity $ 3,120,000 5.50% Notes Secured On Demand $ 20,000,000 7.50% Notes Secured June 3, 2016 $ 21,600,000 7.00% Convertible Debentures Unsecured July 31, 2018 (1) $ 4,000,000 5.23% Mortgage Secured July 1, 2019 $ 7,900,000 3.80% Mortgage Secured October 1, 2022 $ 4,256,986 4.22% Mortgage Secured June 1, 2023 $ 2,898,660 4.12% Mortgage Secured June 1, 2023 $ 63,775,646 6.26% (1) Convertible debentures are convertible at $1.15 per common share at the option of the holder. If the Company has a closing price of $2.00 or greater for a period of ten consecutive trading days, the debentures will automatically convert at the $1.15 conversion price As at August 20, 2015, Delavaco s debt facilities totaled $63,775,646 with a weighted average interest rate of 6.26%. The weighted average interest rate of the notes is 7.14% while the weighted average interest rates of the mortgages is 4.24%. The fair value of the entire portfolio as at June 30, 2015, was $87,280,887, resulting in a loan to value of 73%. On March 31, 2015, and June 30, 2015, the Company made equal principal payments of $2,500,000 on its 7.5% secured notes bringing the original principal balance of $25,000,000 down to $20,000,000 and equaling a 20% pay down. This results in a total decrease in interest expense of $93,730 per quarter and $375,000 per year. Subsequent to June 30, 2015, the holder of the $3,120,000 notes decided not to enter into an extension agreement as press released on July 2, 2015. The extension agreement would have allowed the overdue notes to roll on a bi- monthly basis provided the parties agreed to such extensions. The notes shall remain on an on demand basis. 18

6.2/ Working Capital As at August 20, 2015, the Company had a working capital of approximately $1,561,859 (June 30, 2015 - $556,390). The working capital consists of all current assets less current liabilities, excluding assets held for sale, derivative financial instruments and the book value of the $20,000,000 7.5% secured notes payable. The increase in working capital is a result of sales of our single- family homes. Although the Company has a limited working capital and historical losses, the Company expects to fund continued operations via the current working capital on hand, the sale of assets held for sale and repayments on the promissory note receivable. 6.3/ Share Capital and Stock Options Issued and outstanding as at August 20, 2015: Common shares 57,415,814 Dilutive effect of unsecured debentures 18,782,608 Warrants 4,880,611 Options 2,850,000 Deferred share units 221,000 Fully diluted 84,150,033 On July 15, 2015, the Company issued 221,000 deferred share units ( DSU ) to non- employee directors as compensation for fees earned by such directors, pursuant to the DSU plan of Delavaco. The number of DSU s issued to each director was calculated based on the fees earned by each director divided by a price of $0.75 per unit. 19

7/ Related Party Transactions During the three and six month periods ended June 30, 2015, and 2014, the Company entered into the following transactions with related parties: On December 30, 2013, the Company was still pending approval for the transfer of a mortgage associated with a fourth multifamily property. The transaction to acquire the multifamily property was with a senior officer and director of the Company. The Company had paid $4,303,248 as a deposit on the acquisition of the property. A promissory note receivable was signed which bears interest at 7% payable quarterly and matures on December 30, 2015, related to this deposit. This has been presented as a promissory note receivable on the consolidated statement of financial position. On May 25, 2015, the Company signed an interest bearing promissory note in the amount of $789,612 effective September 23, 2013, which bears interest at 7% per annum. The promissory note was issued in respect to the same property to fulfill the mortgagers liquidity account requirements, which has been recorded as other assets. As at June 30, 2015, the remaining balance on the promissory notes was $4,303,248 and $595,485, respectively. On December 30, 2013, the Company signed an advisory services agreement with a company controlled by a senior officer and director of the Company, where services will be provided related to the multifamily properties that were acquired, including acting as a required guarantor on the mortgages payable. Under the terms of the agreement, the Company must pay $23,500 per month. During the three and six months ended June 30, 2015, the Company incurred advisory costs of $Nil and $70,500 (2014 - $70,500 and $141,000). This agreement was terminated effective March 31, 2015. During the three and six months ended June 30, 2015, the Company charged interest of $173,586 and $248,893 (2014 - $75,307 and $150,614), related to the promissory notes in the amount of $4,303,248 and $595,485, which was recorded as part of net finance costs. During the three and six month periods ended June 30, 2015, the Company charged $12,762 and $25,831 (2014 - $12,610 and $25,066), netted against general and administrative expenses, to a company controlled by a director, relating to assistance with the management of a multi- unit building not owned by the Company. The amount is equal to 1% of the multi- unit buildings revenue. On December 23, 2014, the Company paid $16,751 to the CEO of the Company related to the completion of the private placement as contractually obligated. 20

8/ Accounting Processes and Policies 8.1/ Critical Accounting Policies and Estimates In the application of the Company's accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods. The critical areas of estimation and judgments include the following: Allowance for doubtful accounts receivable and impairment of receivables Assessment is made of the collectability of accounts receivable based on several factors including the credit risk of the counterparty and the age of the receivable. The allowance is assessed annually against the actual experience of unrecoverable accounts and assumptions are adjusted, if appropriate. Investment properties and assets held for sale Investment properties are re- measured at fair value at each reporting date. The values are determined annually by a third party valuator sampling a portion of the Company s portfolio and extrapolating the value throughout the portfolio based on a distribution between regions. Each multifamily building received an individual valuation by a third party valuator. For other period ends, the Company uses an internal valuation model. To value the investment properties, significant estimates are used in the calculations such as capitalization rates, inflation rates, vacancy rates, and net operating income Convertible debentures and valuation of derivative financial instruments The Company has issued convertible debentures which have an embedded derivative feature relating to the forced conversion upon the Company completing a going public transaction while meeting certain financing requirements. The derivative financial instrument is valued at the estimated additional equity value to be received above the par value of the convertible debentures upon conversion. The 21

Company was required to estimate the period of time until the convertible debentures will be converted as well as the value of the forced conversion option. Share- based compensation The Company measures the cost of equity- settled transactions by reference to the fair value of the equity instruments at the date at which they are granted if the fair value of the goods or services received by the Company cannot be reliably estimated. Estimating fair value for share- based compensation transactions requires determining the most appropriate valuation model, which is dependent on the terms and conditions of the grant. This estimate also requires determining the most appropriate inputs to the valuation model including expected life of the share- based payment, volatility and dividend yield and making assumptions about them. Deferred income taxes Tax interpretations and regulations in the jurisdictions of operations are subject to change, and as such, income taxes are subject to measurement uncertainty. Deferred income tax assets are assessed by management at the end of the reporting period to determine the likelihood that they will be realized from future taxable income. Judgment is required in determining the manner in which the carrying amounts will be recovered. 8.2/ Future Accounting Standards Future accounting policy changes IFRS 9 Financial Instruments ( IFRS 9 ) was issued by the IASB in its final form in June 2014, and will replace IAS 39 Financial Instruments: Recognition and Measurement ( IAS 39 ). IFRS 9 replaces the multiple rules in IAS 39 with a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. The new standard also requires a single impairment method to be used, replacing the multiple impairment methods in IAS 39. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The Company intends to adopt IFRS 9 on its effective date and has not reviewed the effects of this future policy change. IFRS 15 Revenue from Contracts with Customers ( IFRS 15 ) was issued by the IASB in May, 2014. IFRS 15 provides a comprehensive framework for recognition, measurement and disclosure of revenue from contracts with customers, excluding contracts within the scope of the standards on leases, insurance contracts and financial instruments. IFRS 15 becomes effective for annual periods beginning on or 22

after January 1, 2018 and is to be applied retrospectively. Early adoption is permitted. The Company intends to adopt IFRS 15 on its effective date and has not reviewed the effects of this future policy change. 9/ Risk Factors 9.1/ Risks Related to the Operations Geographic Concentration The properties are all located in the State of Florida, DeKalb and Fulton Counties, Georgia, New Jersey and Austin, Texas. Accordingly, the market value of the properties and the income to be generated by the Company s performance are particularly sensitive to changes in the economic conditions and regulatory environments of Florida, Georgia, New Jersey and Texas. Adverse changes in the economic condition or regulatory environment of Florida, Georgia or New Jersey may have a material adverse effect on the Company s business, cash flows, financial condition and results of operations. Acquisition Risk The Company may be subject to significant operating risks associated with its expanded operations. The Company s business strategy includes growth through identifying suitable acquisition opportunities, pursuing such opportunities, consummating acquisitions and effectively operating and leasing such properties. If the Company is unable to manage its growth effectively, it could have a material adverse effect on the Company s business, cash flows, financial condition and results of operations. There can be no assurance as to the pace of growth through property acquisitions or that the Company will be able to acquire assets on an accretive basis. The Company intends to acquire additional properties selectively. The acquisition of additional properties entails risks that investments will fail to perform in accordance with expectations. In undertaking such acquisitions, the Company will incur certain risks, including the expenditure of funds, including non- refundable deposits, due diligence costs and inspection fees, and the devotion of management s time to transactions that may not come to fruition. Additional risks inherent in acquisitions include risks that the properties will not achieve anticipated occupancy levels and that estimates of the costs and benefits of the renovation and repositioning program intended for that property may prove inaccurate or may not have the intended results. 23

Purchase Agreements Additional properties may be sold to the Company in an as is condition, and upon acquisition of properties, the Company may have limited recourse with respect to conditions affecting the purchased properties. The costs of unexpected repair and remediation work could be material and may therefore have an adverse effect on the Company s financial condition and results of operations. Further, representations and warranties made by the seller in a purchase agreement, if any, may survive only for a limited period of time after closing. If claims arising as a result of a breach of a representation or warranty are discovered after this period, the Company may not be able to seek indemnification from the seller and would therefore suffer the financial consequences of such a breach, which could be material. Further, even if the Company was entitled to indemnification from the seller, no assurance can be given that the seller would have sufficient funds to satisfy any such indemnification claims. Non- refundable Deposits Property acquisition transactions may require deposits by the Company and costs to be incurred by the Company which may be non- refundable. If such transactions fail to close, these funds may be unrecoverable in whole or in part, thereby reducing funds otherwise available to the Company. Operational Risks Operational risk is the risk that a direct or indirect loss may result from an inadequate or failed infrastructure, from a human process or from external events. The impact of this loss may be financial loss, loss of reputation or legal and regulatory proceedings. The Company endeavors to minimize losses in this area by ensuring that effective infrastructure and controls exist. These controls are constantly reviewed and if deemed necessary improvements are implemented. Risk of Natural Disasters The single- family homes that are located in Florida may have sustained significant storm damage in the past and may sustain significant storm damage in the future. While the Company will take insurance to cover a substantial portion of the cost of such events, the Company s insurance is likely to include deductible amounts and excluded claims and certain items may not be covered by insurance. Future hurricanes, floods or other natural disasters may significantly affect the Company s operations and some or all of the properties, and more specifically, may cause the Company to experience reduced rental revenue (including from increased vacancy), incur clean- up costs, administration and collection costs or otherwise incur costs in connection with such events. Any of these events may have a material adverse effect on the Company s business, cash flows, financial condition and results of operations and ability to declare and pay dividends, if any, to Company 24