Capital Direct I Income Trust

incometrustone.com

we take another approach

Confidential Offering Memorandum

March 29, 2024

This Offering Memorandum is confidential. By their acceptance hereof, prospective investors agree that they will not transmit,

reproduce or make available to anyone this Offering Memorandum or any information contained herein.

FORM 45-106F2

Offering Memorandum for Non-Qualifying Issuers

Date March 29, 2024

The Issuer

Name Capital Direct I Income Trust (the “Trus

”)

Head Office Suite 305, 555 West 8th Avenue

Vancouver, B.C. V5Z 1C6

Phone # (604) 430-1498

Website Address: www.incometrustone.com

E-mail Address: [email protected]

Fax #: (604) 430-3287

Currently listed or Quote

These securities do not trade on any exchange or market.

Reporting issue

The Trust is not a reporting issuer.

SEDAR+ file

The Trust is not a SEDAR+ filer.

The Offering

Securities offered Trust Units (the “Units”) designated as either Class A, Class C or Class F (each, a “Class”)

Price per security $10 per Uni

Minimum/Maximum Offering There is no minimum. You may be the only purchaser. Maximum Offering: $975,000,000

Funds available under the Offering may not be sufficient to accomplish our proposed objective.

Minimum Subscription amoun

$5,000

Payment terms Bank draft or certified cheque on Closing. See “Securities Offered – Subscription for Units – Subscription

Procedure” for payment details.

Proposed closing date(s) Continuous Offering until the Maximum Offering is achieved. Closings may occur from time to time as

subscriptions are received.

Income Tax consequences There are important tax consequences to these securities. See “Income Tax Consequences and Certain

Deferred Plan Eligibility”.

Connected Issuer The Trust, the manager of the Trust, Capital Direct Management Ltd. (the “Manager”), Capital

Direct Lending Corp. (the “Mortgage Broker”) (including Capital Direct Atlantic Inc., a subsidiary

controlled by the Mortgage Broker) and Capital Direct II Management Ltd. ("Capital Direct II"),

an inactive, wholly-owned subsidiary of the Mortgage Broker, which is a party to the Loan

Agreement, as defined below, are “connected issuers”, and are “related issuers” of Capital Direct

Financial Ltd. (“CDFL”), as such terms are defined in National Instrument 33-105 – Underwriting

Conflicts (in Québec, Regulation 33-105 respecting Underwriting Conflicts). The Trust, the

Manager, the Mortgage Broker and Capital Direct II have determined that they are connected

issuers and may be related issuers of CDFL by virtue of CDFL’s role as an exempt market dealer

engaged to sell Class A Units and Class C Units offered hereby and based on the fact that the

Manager, the Mortgage Broker, Capital Direct II and CDFL have common directors, officers and

securityholders. In addition, the Trust is managed by the Manager and its activities are overseen

by a Board of Governors consisting of five persons, three of whom are also directors, officers and

securityholders of the Manager, the Mortgage Broker, Capital Direct II and CDFL. See “Risk

Factors – Conflicts of Interest” and “Board of Governors, Management, Promoters and Principal

Holders – Management Experience”.

Compensation Paid to Sellers and

Finders

A person has received or will receive compensation for the sale of securities under this Offering. See

“Compensation Paid to Sellers and Finders”. There is no Selling Agent, however, the Manager reserves

the right to retain one or more selling agents or finders during the course of the Offering. Any sale of

Units must be conducted through a Dealer, which includes CDFL, an Exempt Market Dealer registered

in all of the Provinces and Territories of Canada (the “Jurisdictions”). The Manager will pay to CDFL,

and in its discretion, may pay to other Dealers, the following fees, which fees will be negotiated between

the Manager and the applicable Dealer, however, the maximum fee that the Manager is authorized to pay

to a Dealer, including CDFL is: (i) a commission equal to 1.5% of the gross proceeds received by the

Trust from the sale of Class A Units; and (ii) an ongoing Trailer Fee equal to 1.0% of the gross proceeds

received by the Trust from the sale of Class A Units and Class C Units made by the Trust through the

Dealer. CDFL may pay a commission of 0.3% to dealing representatives of CDFL who facilitate

purchases of Class A Units and Class C Units. No service fees are payable in respect of the Class F Units.

In addition, CDFL will be paid a monthly dealer services fee by the Manager in consideration for

performing dealer services in connection with prospectus exempt purchases made in the Jurisdictions.

Resale restrictions

You will be restricted from selling your securities for an indefinite period. However the Units are retractable as of the last Business Day (as defined below)

of every month, subject to certain restrictions and deferred sales charges. See “Resale Restrictions”.

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Conditions on Repurchases

You will have a right to require the Trust to repurchase the securities from you, but this right is qualified by restrictions and fees. As a result, you

might not receive the amount of proceeds that you want. See "The Trust - Material Contracts – Summary of the Declaration of Trust – Redemption

of Units".

Purchasers’ rights

You have 2 (two) Business Days to cancel your agreement to purchase these securities. If there is a misrepresentation in this Offering Memorandum, you

have a right to damages or to cancel the agreement. See “Purchasers’ Rights”.

No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this Offering Memorandum. Any

representation to the contrary is an offence. This is a risky investment. See “Risk Factors”.

TABLE OF CONTENTS

GLOSSARY ............................................................................................................................................................................. I

CANADIAN CURRENCY ..................................................................................................................................................... 1

MARKETING MATERIALS ................................................................................................................................................ 1

FORWARD-LOOKING INFORMATION........................................................................................................................... 1

USE OF AVAILABLE FUNDS .............................................................................................................................................. 1

Available Funds .................................................................................................................................................................... 1

Use of Available Funds ........................................................................................................................................................ 2

Reallocation .......................................................................................................................................................................... 2

THE TRUST ............................................................................................................................................................................ 2

Structure ............................................................................................................................................................................... 2

Investment ............................................................................................................................................................................ 3

Development of the Investment Portfolio ............................................................................................................................. 4

Long Term Objectives .......................................................................................................................................................... 7

Short Term Objectives and How We Intend to Achieve Them ............................................................................................ 9

Material Contracts ................................................................................................................................................................ 9

BOARD OF GOVERNORS, MANAGEMENT, PROMOTERS AND PRINCIPAL HOLDERS ................................. 20

Compensation and Securities Held ..................................................................................................................................... 20

Management Experience .................................................................................................................................................... 22

Penalties, Sanctions, Bankruptcy, Insolvency and Criminal or Quasi-Criminal Matters ................................................... 26

CAPITAL STRUCTURE ..................................................................................................................................................... 27

Long Term Debt ................................................................................................................................................................. 27

Prior Sales ........................................................................................................................................................................... 28

SECURITIES OFFERED ..................................................................................................................................................... 29

Terms of Securities ............................................................................................................................................................. 29

Subscription for Units ......................................................................................................................................................... 29

Trading and Resale Restrictions ......................................................................................................................................... 31

REPURCHASE REQUESTS ............................................................................................................................................... 32

INCOME TAX CONSEQUENCES AND CERTAIN DEFERRED PLAN ELIGIBILITY ........................................... 33

Taxation of the Trust .......................................................................................................................................................... 34

Taxation of Unitholders ...................................................................................................................................................... 35

Investment by Deferred Plans ............................................................................................................................................. 35

COMPENSATION PAID TO SELLERS AND FINDERS ................................................................................................ 36

RISK FACTORS ................................................................................................................................................................... 37

REPORTING OBLIGATIONS ........................................................................................................................................... 42

RESALE RESTRICTIONS .................................................................................................................................................. 42

Manitoba Resale Restrictions ............................................................................................................................................. 43

PURCHASERS’ RIGHTS .................................................................................................................................................... 43

Two Day Cancellation Right .............................................................................................................................................. 43

Rights of Action in the Event of a Misrepresentation ......................................................................................................... 43

FINANCIAL STATEMENTS .............................................................................................................................................. 47

GLOSSARY

The following terms appear throughout this Offering Memorandum. Care should be taken to read each term in the

context of the particular provision of this Offering Memorandum in which such term is used.

(a) “Affiliate” or “Affiliates” means two entities that are affiliated, as described in subsection 1(2) of the B.C.

Securities Act;

(b) “Alberta Real Estate Act” means the Real Estate Act (Alberta);

to time and any statutes that may be passed which have the effect of supplementing or superseding such

statute;

(d) “Associates” has the same meaning as in the B.C. Securities Act;

(e) “Audit Committee” means the audit committee of the Board of Governors;

(f) “Auditors” means MNP LLP, Chartered Professional Accountants;

(g) “Authorized Interim Investments” means such investments that are “qualified investments” for a trust

governed by a “registered retirement savings plan”, “registered education savings plan”, “tax-free savings

account” or “registered retirement income fund” as those terms are defined in subsection 146(1) of the Tax

Act, and may include shares, bonds, debentures, income trust units, notes, marketable securities and cash,

among other things;

(h) “B.C. Mortgage Brokers Act” means the Mortgage Brokers Act (British Columbia);

(i) “B.C. Securities Act” means the Securities Act (British Columbia);

(j) “Board of Governors” means the board named as such and established pursuant to the Declaration of Trust;

(k) “Business Day” means a day other than a Saturday, Sunday or any day on which the principal office of the

Trust’s bankers located in Vancouver, British Columbia is not open for business during normal banking

hours;

(l) “Calculation Date” means the last Business Day of March, June, September and December;

(m) “Capital Direct II” means Capital Direct II Management Ltd., a company validly existing under the laws of

the Province of British Columbia;

(n) “CDFL” means Capital Direct Financial Ltd., a company validly existing under the laws of the Province of

British Columbia;

(o) “CDOR Loan” means an advance in Canadian Dollars that bears interest at a rate based upon the CDOR

Rate;

(p) “CDOR Rate” means on any day the annual rate of interest which is the rate determined as being the greater

of (i) zero, and (ii) the arithmetic average of the quotations of all institutions listed in respect of the rate for

Canadian Dollar denominated bankers' acceptances for the relevant period displayed and identified as such

on the “Refinitiv CDOR Page” (as defined in the International Swap Dealer Association, Inc. definitions, as

modified and amended from time to time) as of approximately 10:15 A.M. (Vancouver time) on such day;

provided that if such rates are not available on the “Refinitiv CDOR Page” on any particular day, then the

CDOR Rate on that day shall be the average of the rates applicable to Canadian Dollar bankers' acceptances

for the relevant period quoted for customers in Canada by the Lenders as of approximately 10:15 A.M.

(Vancouver time) on such day;

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(q) “Closing” means a closing of the sale of Units and includes the Initial Closing and such other closings as the

Manager may determine from time to time;

(r) “Cost Sharing and Dealer Services Fee Agreement” means the dealer services and cost sharing agreement

entered into effective February 14, 2020 and amended and restated as of November 1, 2020, May 31 and

November 30, 2021 between CDFL and the Manager;

(s) “Credit Committee” means the credit committee of the Board of Governors;

(t) “Dealer” means a securities dealer or an exempt market dealer registered under the securities legislation of a

jurisdiction in Canada where the Offering Memorandum is filed or where the Offering is being made pursuant

to exemptions from the prospectus requirements available in those jurisdictions;

(u) “Declaration of Trust” means the Declaration of Trust dated June 23, 2006, as amended and restated on

December 8, 2006, February 20, 2007, May 12, 2008, July 14, 2014, January 27, 2016, April 28, 2017 and

January 15, 2022 creating the Trust under the laws of the Province of Ontario;

(v) “Deferred Plans” means registered retirement savings plans, registered retirement income funds, registered

education savings plans, tax-free savings accounts, registered disability savings plans and deferred profit

sharing plans;

(w) “Distribution Payment Date” means in respect of a distribution to the Unitholders, for the first three calendar

quarters of a year, by the 15th day of the month following the Calculation Date for such calendar quarter,

and for the fourth quarter of a year, by March 31 of the year following the Calculation Date for such calendar

quarter;

(x) “Exempt Market Dealer” means a person or company registered in the category of exempt market dealer

under National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant

Obligations in Québec, Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing

Registrant Obligations) (collectively, “NI 31-103”);

(y) “Fiscal Year” means each consecutive period of twelve (12) months coinciding with the calendar year and

ending on December 31, provided however that the first Fiscal Year of the Trust will be the period

commencing on June 23, 2006, and ending on December 31, 2006;

(z) “Forced Redemption” means a redemption by the Manager upon a Unitholder becoming a non-resident or a

“designated beneficiary” as defined in section 210 of the Tax Act;

(aa) “Income Participation” means, in respect of the Manager, a distribution in an amount equal to 20% of the

aggregate of Net Income and Net Realized Capital Gains;

(bb) “Initial Closing” means the initial Closing of the sale of the Units offered hereby;

(cc) “Lenders” means a syndicate of lenders led by Canadian Western Bank and their successors and assigns;

(dd) “Lenders’ Loan” means the committed revolving credit facility established by the Lenders for the purpose of

financing the day-to-day operations of the business in the ordinary course, including without limitation, to

fund Mortgages;

(ee) “Loan Agreement” means the $180,000,000 committed loan facilities amended and restated credit agreement

between the Lenders, the Trust, the Mortgage Broker, the Manager and Capital Direct II and Canadian

Western Bank as agent, pursuant to which the Lenders established the Lenders’ Loan;

(ff) “Manager” means Capital Direct Management Ltd., a company validly existing under the laws of the

Province of British Columbia;

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(gg) “Manager’s Fee” means the monthly management fee payable to the Manager equal to 1/12 of 2% (2% per

annum) of the Net Asset Value of the Trust, payable monthly in arrears, for the Class A Units and the Class

C Units and the monthly management fee payable to the Manager equal to 1/12 of 1% (1% per annum) of

the Net Asset Value of the Trust, payable monthly in arrears, for the Class F Units;

(hh) “Manitoba Securities Act” means The Securities Act (Manitoba);

(ii) “Mortgage” or “Mortgages” means a mortgage, a mortgage of a mortgage or a mortgage of a leasehold

interest (or other like instrument, including an assignment of or an acknowledgement of an interest in a

mortgage), hypothecation, deed of trust, charge or other security interest of or in Real Property used to secure

obligations to repay money by a charge upon the underlying Real Property;

(jj) “Mortgage Broker” means Capital Direct Lending Corp., a company validly existing under the laws of the

Province of British Columbia;

(kk) “Mortgage Broker Agreement” means the agreement dated January 15, 2007 as amended August 21, 2007

and as amended and restated on August 31, 2007, between the Mortgage Broker and the Manager, pursuant

to which the Mortgage Broker will provide its services to the Manager;

(ll) “Net Asset Value” means, on a Valuation Day, the aggregate carrying value of the Trust Property plus

accrued interest on Mortgages on such Valuation Day, less any allowances for impairment losses recorded

against investments in Mortgages;

(mm) “Net Asset Value Per Unit” means, on a Valuation Day, the quotient obtained by dividing the amount equal

to the Net Asset Value on such Valuation Day by the total number of Units, including fractions of Units, then

outstanding;

(nn) “Net Income” of the Trust for a calendar year is equal to the Trust’s income for the year that would be

determined under the Tax Act if:

(i) no amount were included or deducted in respect of capital gains and capital losses,

(ii) there were no gross-up in respect of taxable dividends from corporations resident in

Canada, and

(iii) no amounts were deducted in respect of amounts that became payable to Unitholders;

(oo) “Net Realized Capital Gains” of the Trust for a calendar year is equal to twice the amount, if any, by which

the Trust’s taxable capital gains for the year exceed the sum of:

(i) the Trust’s allowable capital losses for the year,

(ii) the Trust’s net capital losses for prior years which the Trust is permitted to deduct in

computing its taxable income for the year, and

(iii) expenses of the Trust that would otherwise be deductible in arriving at the Trust’s taxable

income for the year, to the extent determined by the Manager,

provided that if there is a change to the percentage of capital gains included in income, the two times factor

will thereafter equal the reciprocal of the new percentage and other amounts referred to in this definition will

be adjusted, to the extent necessary;

(pp) “New Brunswick Securities Act” means the Securities Act (New Brunswick), with all amendments thereto

in force from time to time and any statutes that may be passed which have the effect of supplementing or

superseding such statute;

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(qq) “Newfoundland and Labrador Securities Act” means the Securities Act (Newfoundland and Labrador), with

all amendments thereto in force from time to time and any statutes that may be passed which have the effect

of supplementing or superseding such statute;

(rr) “Northwest Territories Securities Act” means the Securities Act (Northwest Territories), with all amendments

thereto in force from time to time and any statutes that may be passed which have the effect of supplementing

or superseding such statute;

(ss) “Nova Scotia Securities Act” means the Securities Act (Nova Scotia), with all amendments thereto in force

from time to time and any statutes that may be passed which have the effect of supplementing or superseding

such statute;

(tt) “Nunavut Securities Act” means the Securities Act (Nunavut), with all amendments thereto in force from

time to time and any statutes that may be passed which have the effect of supplementing or superseding such

statute;

(uu) “Offering” means the sale of Units to raise maximum gross subscription proceeds of $975,000,000;

(vv) “Ontario Mortgage Brokers Act” means the Mortgage Brokerages, Lenders and Administrators Act, 2006

(Ontario);

(ww) “Ontario Securities Act” means the Securities Act (Ontario), with all amendments thereto in force from time

to time and any statutes that may be passed which have the effect of supplementing or superseding such

statute;

(xx) “Ordinary Resolution” means a resolution consented to, in writing, by Unitholders holding more than 50%

of all outstanding Units entitled to vote on the matter at issue, or approved by at least 50% of the votes cast

by such Unitholders present in person or by proxy at a meeting of Unitholders which has been duly called

and at which a quorum is present, as provided herein;

(yy) “Person” means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship,

company or corporation with or without share capital, unincorporated association, trust, trustee, executor,

administrator or other legal personal representative, regulatory body or agency, government or governmental

agency, authority or entity however designated or constituted;

(zz) “Prime Lending Rate” means the floating rate of interest announced from time to time as Canadian Western

Bank’s prime lending rate for loans denominated in Canadian dollars, adjusted automatically upon any

change by Canadian Western Bank;

(aaa) “Prime Rate Loan” means an advance in Canadian Dollars that bears interest at the Prime Lending Rate;

(bbb) “Prince Edward Island Securities Act” means the Securities Act (Prince Edward Island), with all amendments

thereto in force from time to time and any statutes that may be passed which have the effect of supplementing

or superseding such statute;

(ccc) “Québec Securities Act” means the Securities Act (Québec), with all amendments thereto in force from time

to time and any statutes that may be passed which have the effect of supplementing or superseding such

statute;

(ddd) “Real Property” means land, rights or interest in land (including without limitation leaseholds, air rights and

rights in condominiums, but excluding Mortgages) used for residential purposes and any buildings,

structures, improvements and fixtures located thereon;

(eee) “Redemption” means a redemption of Units by the Trust;

(fff) “Retraction” means a redemption of Units by a Unitholder;

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(ggg) “Return” means, in respect of the Unitholders, a distribution in an amount equal to 80% of the aggregate of

Net Income and Net Realized Capital Gains;

(hhh) “Saskatchewan Securities Act” means the Securities Act, 1988 (Saskatchewan), with all amendments thereto

in force from time to time and any statutes that may be passed which have the effect of supplementing or

superseding such statute;

(iii) “Services Agreement” means the services agreement dated November 7, 2012 between the Manager and

SGGG pursuant to which SGGG provides unitholder record-keeping services to the Manager in relation to

the Trust;

(jjj) “SGGG” means SGGG Fund Services Inc.;

(kkk) “Special Resolution” means a resolution consented to, in writing, by Unitholders holding more than 75% of

all outstanding Units entitled to vote on the matter at issue, or approved by at least 75% of the votes cast by

such Unitholders present in person or by proxy at a meeting of Unitholders which has been duly called for

that purpose and at which a quorum is present, as provided herein;

(lll) “Subscriber” means a subscriber for Units;

(mmm) “Subscription Form” means the subscription form to subscribe for Units;

(nnn) “Subscription Price” means $10.00 per Unit;

(ooo) “Tax Act” means the Income Tax Act (Canada), R.S.C. 1985 (5th Supp.) c.l, as amended from time to time;

(ppp) “Term” means, the period of time from date of issue to the Termination Date of the Units;

(qqq) “Termination Date” means the termination date of the Trust, being the earlier of (i) 25 years from the date of

the Declaration of Trust (January 15, 2047), and (ii) the date on which the Trust is otherwise terminated in

accordance with its terms;

(rrr) “Trailer Fee” means the fee paid by the Manager from time to time following the Closing in respect of Class

A Units and Class C Units sold under this Offering, as more particularly described in the section entitled

“Compensation Paid to Sellers and Finders”;

(sss) “Trust” means Capital Direct I Income Trust, a trust created pursuant to the Declaration of Trust;

(ttt) “Trust Property” means:

(i) all monies, securities, property, assets and investments paid or transferred to and accepted by or in

any manner acquired by the Trustee and held by the Trustee on the trust herein declared,

(ii) all income which may hereafter be accumulated under the powers herein contained, and

(iii) all monies, securities, property, assets or investments substituted for or representing all or any part

of the foregoing,

less any monies, securities, property, assets or investments distributed, expended, sold, transferred or

otherwise disposed of in accordance with the provisions hereof;

(uuu) “Trustee” means Computershare Trust Company of Canada, the trustee named under the Declaration of Trust;

(vvv) “Unanimous Resolution” means a resolution consented to, in writing, by all Unitholders entitled to vote on

the matter at issue, or approved by 100% of the votes cast by Unitholders present in person or by proxy at a

meeting of such Unitholders which has been duly called for that purpose and at which a quorum is present,

as provided herein;

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(www) “Unit” means a unit of beneficial interest in the Trust and includes any Class A Unit, Class C Unit or Class

F Unit and “Units” means Class A Units, Class C Units and Class F Units;

(xxx) “Unitholders” means those investors whose subscriptions to purchase Class A Units, Class C Units or Class

F Units offered by this Offering Memorandum are accepted by the Trust and thereafter at any particular time

the persons are entered in the register or registers of the Trust as holders of Units and the singular form means

one such registered holder;

(yyy) “Valuation Day” means the last Business Day of each calendar month or any other day on which the Manager

determines valuation is necessary; and

(zzz) “Yukon Securities Act” means the Securities Act (Yukon), with all amendments thereto in force from time

to time and any statutes that may be passed which have the effect of supplementing or superseding such

statute.

CANADIAN CURRENCY

All dollar amounts in this Offering Memorandum, unless otherwise indicated, are expressed in Canadian currency.

MARKETING MATERIALS

In addition to and apart from this Offering Memorandum, the Trust may utilize certain marketing materials in

connection with the Offering, including an executive summary of certain of the material set forth in this Offering

Memorandum. This material may include fact sheets and investor sales promotion brochures, question and answer

booklets, and presentations. All such marketing materials are specifically incorporated by reference into and form an

integral part of this Offering Memorandum. All such marketing materials will be made reasonably available to

prospective purchasers of Units.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed

to be modified or superseded for the purposes of this Offering Memorandum to the extent that a statement contained

herein modifies or supersedes such statement. The modifying or superseding statement need not state that it has

modified or superseded a prior statement or include any other information set forth in the document that it modifies

or supersedes. The making of a modifying or superseding statement will not be deemed an admission for any purposes

that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a

material fact or an omission to state a material fact or that is necessary to make another statement not misleading. Any

statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of

this Offering Memorandum.

FORWARD-LOOKING INFORMATION

Prospective Subscribers should be aware that certain statements used in this Offering Memorandum constitute

forward-looking information. Forward-looking information often, but not always, is identified by the use of words

such as “seek”, “anticipate”, “believe”, “plan”, “estimate”, “expect” and “intend” and statements that an event or result

“may”, “will”, “should”, “could” or “might” occur or be achieved or other similar expressions. Forward-looking

information includes, but is not limited to, use of proceeds, regulatory environment and appetite for borrowing, long

and short term objectives, renewal of Mortgage portfolio, additional issuance of Units, acceptance of subscriptions,

investment of proceeds, payment of compensation to Dealers, geographic diversification of Mortgage portfolio and

payment of returns. The forward-looking information that is contained in this Offering Memorandum involve a

number of risks and uncertainties. Should one or more of the risks materialize or should assumptions underlying the

forward-looking statements prove incorrect, actual events or results might differ materially from events or results

projected or suggested in this forward-looking information. Some of these risks and uncertainties are identified under

the heading “Risk Factors”. Additional information regarding these factors and other important factors that could

cause actual events or results to differ materially may be referred to as part of the particular forward-looking

information. Neither the Trust nor the Manager intends, and do not assume any obligations, to update the forward-

looking information.

USE OF AVAILABLE FUNDS

Available Funds

The Trust sells Units on a continuous basis with Closings of this Offering occurring monthly on the last Business Day

of the month in which the subscriptions are received, and at such other times as the Manager may determine. The

available funds will be invested in Mortgages and used for expenses associated with the making of the investments

and the general operation of the Trust. All sales commissions or fees paid to Dealers in connection with the Offering

will be paid by the Manager. The ongoing expenses of the Trust will be primarily the Manager’s Fee, the Manager’s

Income Participation, the annual fee payable to the Trustee pursuant to the Declaration of Trust, fees payable to SGGG

as registrar and transfer agent, fees payable to SGGG pursuant to the Services Agreement, payments to the Mortgage

Broker under the Mortgage Broker Agreement, legal and accounting expenses in connection with the ongoing

operation of the Trust and other Trust related matters, such as meetings of and reporting to Unitholders, Offering

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expenses, which will be paid by the Trust and other general and administrative expenses. Investments in Mortgages

will be made as set out in “The Trust – Long Term Objectives – Investment Policies”. Pending investment in

Mortgages, the net proceeds will be invested in Authorized Interim Investments. The Manager will invest the available

funds of this Offering in Mortgages as suitable opportunities arise.

Assuming min. Offering Assuming max. Offering

A Amount to be raised by this Offering $0 $975,000,000

(1)

B Selling commissions and fees $0

(2)

C Estimated Offering costs (e.g., legal,

accounting and audit)

$0 $0

D Net Proceeds: D = A – (B+C) $0 $975,000,000

E Additional sources of funding required $0 $0

F Working capital deficiency

(3)

$0 $0

G Total: G = (D+E) – F $0 $975,000,000

(1) Although the Trust is authorized to raise a maximum of $975,000,000, the Trust anticipates raising $50,000,000 in the

next 12 months.

(2) The Trust will be selling the Units through Dealers, including CDFL, an Exempt Market Dealer in the Jurisdictions. The

Manager will pay to CDFL, and in its discretion, may pay to other Dealers, the following fees, which fees will be

negotiated between the Manager and the applicable Dealer, however, the maximum fee that the Manager is authorized to

pay to a Dealer, including CDFL is: (i) a commission equal to 1.5% of the gross proceeds received by the Trust from the

sale of Class A Units; and (ii) an ongoing Trailer Fee equal to 1.0% of the gross proceeds received by the Trust from the

sale of Class A Units and Class C Units made by the Trust through the Dealer. No service fees are payable in respect of

the Class F Units, which are intended for fee-based accounts. In addition, CDFL will be paid a monthly dealer services

fee by the Manager in consideration for performing dealer services in connection with prospectus exempt purchases made

in the Jurisdictions. See “Compensation Paid to Sellers and Finders”.

(3) Amounts drawn from time to time on the Lenders’ Loan are not included in calculating working capital deficiency. The

Lenders’ Loan is a committed revolving credit facility used to manage cash flows and as part of the investment program.

It is regularly utilized to make Mortgage loans and to pay expenses in advance of receiving proceeds of Mortgage

repayments and sales and from the proceeds of the sale of Units and hence fluctuates regularly.

Use of Available Funds

Description of intended use of available funds

listed in order of priority

Assuming min. Offering

Assuming max. Offering

(1)

Investment in Mortgages and Working Capital $0 $975,000,000

(1) Although the Trust is authorized to raise a maximum of $975,000,000, the Trust anticipates raising $50,000,000 in the

next 12 months.

Reallocation

We intend to spend the available funds as stated. We will reallocate funds only for sound business reasons.

THE TRUST

Structure

The Trust is an open-end investment trust created under the laws of the Province of Ontario on June 23, 2006.

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Although the Trust is qualified as a “mutual fund trust” as defined by the Tax Act, the Trust will not be a “mutual

fund” as defined by applicable securities legislation because the Units are not redeemable on demand or within a

specified period after demand for an amount computed by reference to the value of the proportionate interest in the

whole or in part of the net assets. Units are retractable as of the last Business Day of every month (the “Retraction

Date”) on not less than 21 days notice by the Unitholder at the Net Asset Value Per Unit, plus any accrued and unpaid

Return.

There are three classes of Units (Class A, Class C and Class F) being offered for sale by the Trust pursuant to this

Offering Memorandum. Each Unit within a particular class will be of equal value, however, the value of a Unit in

one class may differ from the value of a Unit in another class. The attributes and characteristics of each Class are

described under the heading “Securities Offered – Terms of Securities”.

The address of the Trust is Suite 305, 555 West 8th Avenue, Vancouver, British Columbia, V5Z 1C6.

Computershare Trust Company of Canada is the trustee (“Trustee”) under the Declaration of Trust. The Manager is

the manager of the Trust under the Declaration of Trust. The principal place of business for the Trustee is located at

800, 324 – 8th Avenue S.W., Calgary, Alberta, T2P 2Z2. The principal place of business of the Manager is located

at Suite 305, 555 West 8th Avenue, Vancouver, British Columbia, V5Z 1C6, and the registered office of the Manager

is located at 2500 Park Place, 666 Burrard Street, Vancouver, British Columbia, V6C 2X8.

Investment

The Trust has been created for the purpose of generating a target quarterly return equal to 80% of the aggregate of Net

Income and Net Realized Capital Gains from interests acquired in a portfolio of, primarily, residential Mortgages.

These Mortgages may be either first position or subsequent ranking Mortgages. The Mortgages to be invested in by

the Trust are a common form of financing within the real estate industry. The underlying Real Property for the

Mortgages will be located in Canada. The Trust may from time to time invest in Mortgages securing more than one

property, which are owned by the same mortgagor, or different mortgagors. In certain circumstances, the Trust may

take alternate or additional security, such as a general security agreement over a mobile home or other personal

property.

The Trust may acquire interests in Mortgages by way of participation agreements. The standard documentation used

with respect to Mortgages will provide that, in the event of a failure by the mortgagor to pay any amount owing under

a Mortgage, the mortgagees will be entitled to enforce the Mortgage in accordance with applicable law. In the event

of a failure by a mortgagor to make a monthly payment of interest or principal, the mortgagees will immediately

communicate with the mortgagor and, failing prompt rectification, will issue a notice of its intent to exercise such

remedy or remedies available to the mortgagees, which the Manager considers appropriate. All legal costs, costs

related to registration of Mortgages and costs relating to obtaining appraisals of Real Property, as allowed by law, will

be for the account of the mortgagors.

It is the intention of the Manager that the net subscription proceeds will be invested as quickly as is reasonably possible

in Mortgages. Pending such investment in Mortgages, cash on hand will be invested in Authorized Interim Investments

only. The Manager may, from time to time, sell investments in Mortgages and reinvest the proceeds or exchange such

investments for other investments in Mortgages. After each Closing, the Manager may establish one or more interest-

bearing accounts for purposes of holding cash of the Trust until so invested.

The Manager has retained the services of the Mortgage Broker to acquire interests in Mortgages and make loans

secured by Mortgages for the Trust. The Manager is responsible for carrying out all the transactions of the Trust,

supervising the investment and Mortgage portfolio of the Trust and for providing management services for the Trust.

See “Board of Governors, Management, Promoters and Principal Holders – Management Experience – The Mortgage

Broker”.

The Mortgage Broker is active in the non-bank real estate lending industry in British Columbia, Alberta and Ontario.

It identifies potential transactions principally through direct to market advertising and, to a lesser extent, through a

network of mortgage brokers, repeat borrowers and its reputation. The Mortgage Broker seeks out, reviews and

presents to the Trust, Mortgage investment opportunities which are consistent with the investment and operating

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policies and objectives of the Trust and services such Mortgages on behalf of the Trust. All properties are evaluated

on the basis of location, quality and marketability. In addition, the credit of the borrower and stated income is also

reviewed and, often, personal covenants are obtained from the principals of corporate borrowers. Since 1997, the

Mortgage Broker has successfully originated, underwritten and serviced Mortgage investments aggregating raising

$2.38 billion as of December 31, 2023, and as of such date is placing between $200 million and $260 million in

Mortgages annually and directly administered approximately $449 million in Mortgages on behalf of numerous

investor clients and financial institutions.

The Mortgage Broker will reduce the risks associated with defaulting Mortgages through extensive initial due

diligence and careful monitoring of the Trust’s Mortgage portfolio, active communication with borrowers, the

institution of systemized enforcement procedures on defaulting Mortgages and by turning over the portfolio through

sales. The Mortgage Broker monitors the performance of the Trust’s Mortgage portfolio, including tracking the status

of outstanding payments due, grace periods and due dates, and the calculation and assessment of other applicable

charges. Each member of management of the Mortgage Broker has extensive knowledge and understanding of the

Mortgage and real estate industries that has enabled him to make prudent investment decisions and identify sound

investment opportunities.

Development of the Investment Portfolio

Since its inception in 2006, the Trust has raised capital through private placement Offerings using various prospectus

exemptions including the offering memorandum exemption (the “OM Exemption”) set out in section 2.9 of National

Instrument 45-106 – Prospectus Exemptions (in Québec, Regulation 45-106 respecting Prospectus Exemptions)

(collectively, “NI 45-106”).

Portfolio Summary

As of December 31, 2023, the Trust’s Mortgage portfolio consisted of 2074 Mortgage investments with a combined

net balance of $395 million. The Mortgages mature between 2024 and 2026 and rank in position of collateral from

first to third. Mortgages bear interest at rates ranging between 4.25% and 26% and bear interest at a weighted average

rate of 9.96%. The majority of Mortgage investments are on Real Properties located in British Columbia, Alberta and

Ontario. As of December 31, 2023, the weighted average loan to value (LTV) of the investments was 52.46% LTV.

The average LTV ratio of the Mortgages is calculated for each Mortgage by dividing the total principal amount of the

Mortgage and all other loans ranking in equal or greater priority to the Mortgage by the fair market value of the

property. The weighted average is weighted by the principal amount of each Mortgage.

The Trust invests in senior (1st) Mortgages and in junior (2nd) Mortgages in British Columbia, Alberta, Ontario and

Atlantic Canada, where management feels there is a definable active real estate market. The Mortgage investments of

the Trust relate to Real Property located in British Columbia, Alberta, Ontario and Atlantic Canada. Of the 2074

($395 million) Mortgages, 806 ($175 million) or 44% are in British Columbia, 259 ($43 million) or 11% are in Alberta,

869 ($156 million) or 40% are in Ontario and 140 ($21 million) or 5% are in Atlantic Canada. Mortgage loans are

considered on a case-by-case basis recognizing that the amount of the Mortgage will vary in relation to the value of

the property. The Trust intends to continue to diversify geographically by making investments in Mortgages on Real

Property in areas of Canada where prevailing economic conditions are favourable.

The following table illustrates the dollar value of Mortgages held by the Trust as of December 31, 2022 and December

31, 2023:

December 31,

2022

December 31,

2023

Mortgages $364,338,645 $395,457,663

The following table provides a description of the Trust's Mortgage portfolio as at December 31, 2023 by type of

mortgage, nature of the underlying property, and location of the underlying property:

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December 31, 2023

Description

# of

Mortgages

Principal

Amount

% of

Portfolio

Weighted

Average

Interest Rate

Type of Mortgage

First Priorit

657 $218,542,791 55.3% 9.27%

Second Priorit

1351 $169,975,660 43.0% 12.31%

Third or Lower Priority 66 $6,939,212 1.7% 14.94%

Total 2074 $395,457,663 100.00% 10.63%

Nature of Underlying Property

Residential 2074 $395,457,663 100% 10.63%

Commercial 0 $0 0% 0%

Total 2074 $395,457,663 100.00% 10.63%

Location of Underlying Property

British Columbia 806 $174,866,416 44.0% 10.80%

Alberta 259 $43,311,111 11.0% 10.56%

Atlantic 140 $20,857,055 5.0% 11.23%

Ontario 869 $156,423,081 40.0% 10.39%

Total 2,074 $395,457,663 100.00% 10.63%

The following table provides a description of the Mortgages as at December 31, 2023 that are overdue on payments

or have an impaired value:

December 31, 2023

Description

# of

Mortgages

Outstanding

Amount

% of

Portfolio

Weighted

Average Gross

Interest Rate

Payment more than 90 days overdue

56 $18,140,294 4.59% 10.89%

Mortgages that have an impaired

value

0 $0 0% 0%

Mortgages with financial

accommodations

0 $0 0% 0%

The average credit score of the borrowers, weighted by the principal amount of the Mortgages, is 620 for the main

applicants and 655 for the main applicants and co-applicants.

No Mortgage comprises 10% or more of the total principal amount of the Trust's Mortgages.

Portfolio Performance

The table below shows the portfolio performance for the last 10 years. The performance is calculated by dividing net

income for the year by the net mortgage portfolio balance.

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2013 2014 2015 2016 2017 2018

Mort

e Balance $36,139,391 $53,633,836 $88,672,929 $147,121,047 $165,613,676 $182,156,694

Net Income $1,536,217 $2,197,504 $3,691,507 $7,339,429 $10,279,629 $13,315,679

Return on Portfolio 4.25% 4.10% 4.16% 4.99% 6.21% 7.31%

2019 2020 2021 2022 2023

Mort

e Balance $200,483,054 $259,760,322 $334,981,715 $364,338,646 $395,457,663

Net Income $15,372,537 $16,193,008 $17,564,199 $21,397,295 $26,423,407

Return on Portfolio 7.67% 6.23% 5.24% 5.87% 6.68%

Ongoing Disclosure

The Trust makes available annual audited financial statements on the Trust’s website at www.incometrustone.com on

or before April 30 of each calendar year. In addition, the Trust provides to the Trustee and makes reasonably available

to each Unitholder, interim financial statements within 60 days of the end of the interim period and provides

Unitholders with quarterly statements reflecting their investment in the Trust. See “Reporting Obligations”.

Conflicts of Interest

As described more thoroughly under "Risk Factors – Conflicts of Interest", the Manager, the Mortgage Broker, CDFL

and Capital Direct II are related parties and the directors, officers and the securityholders of the Manager, the Mortgage

Broker, CDFL and Capital Direct II are the same individuals. The Manager and the Mortgage Broker are parties to

the Mortgage Broker Agreement, pursuant to which the Manager has retained the services of the Mortgage Broker to

acquire interests in Mortgages and make loans secured by Mortgages for the Trust. The Mortgage Broker seeks out,

reviews and presents to the Trust, Mortgage investment opportunities which are consistent with the investment and

operating policies and objectives of the Trust and services such Mortgages on behalf of the Trust. Any conflict of

interest between the Mortgage Broker and the Manager is mitigated by the fact that the Trust is governed by its own

Board of Governors that has certain independent members and that is required at all times to act in the best interests

of the Trust.

The following is the Trust’s distribution and return during the last two completed financial years:

2022:

Q1 Q2 Q3 Q4 Total

Net Income

allocated to

Unitholders

Class A

Class C

Class F

$1,285,342

(1)

$955,497

(1)

$1,705,931

(1)

$1,344,826

$1,103,703

$1,840,485

$1,409,198

$1,303,829

$1,957,046

$1,493,336

(2)

$1,428,187

(2)

$2,078,137

(2)

$5,532,702

(3)

$4,791,216

(3)

$7,581,599

(3)

Average

annualized rate

of return

Class A

Class C

Class F

6.04%

(1)

6.04%

(1)

7.04%

(1)

6.30%

7.30%

6.56%

7.56%

6.91%

(2)

6.91%

(2)

7.91%

(2)

6.45%

(3)

6.45%

(3)

7.45%

(3)

(1) The Board of Directors of the Manager unanimously agreed to waive 25% of the distribution to which it was entitled to

for the first quarter of the year ended December 31, 2022, which amount was distributed to Unitholders.

(2) The Board of Directors of the Manager unanimously agreed to waive 50% of the distribution to which it was entitled to

for the fourth quarter of the year ended December 31, 2022, which amount was distributed to Unitholders.

(3) The Manager agreed to waive 18% of the Income Participation it was entitled to during the year ended December 31,

2022, thereby increasing the distribution to Unitholders to 82%.

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2023:

Q1 Q2 Q3 Q4 Total

Net Income

allocated to

Unitholders

Class A

Class C

Class F

$1,467,940

(1)

$1,337,968

(1)

$2,108,597

(1)

$1,625,681

$1,357,485

$2,336,922

$1,775,486

$1,500,012

$2,500,272

$1,867,529

(1)

$1,597,538

(1)

$2,699,587

(1)

$6,736,636

(2)

$5,793,003

(2)

$9,645,378

(2)

Average

annualized rate

of return

Class A

Class C

Class F

6.77%

(1)

6.77%

(1)

7.77%

(1)

7.40%

8.40%

8.01%

9.01%

8.33%

(1)

8.33%

(1)

9.33%

(1)

7.63%

(2)

7.63%

(2)

8.63%

(2)

(1) The Board of Directors of the Manager unanimously agreed to waive 25% of the distribution to which it was entitled to

for each of the first and fourth quarters of the year ended December 31, 2023, which amounts were distributed to

Unitholders.

(2) The Manager agreed to waive 20% of the Income Participation it was entitled to during the year ended December 31,

2023, thereby increasing the distribution to Unitholders to 84%.

The rate of return the Trust earns from its Mortgage investments fluctuates with prevailing market demand for short-

term Mortgage financing. In some cases the Trust’s Mortgage investments may not meet financing criteria for

conventional Mortgages from institutional sources, and as a result, these investments generally earn a higher rate of

return than that normally attainable from conventional Mortgage investments. The Trust attempts to minimize risk

by being prudent in its credit decisions and in assessing the value of the underlying Canadian real estate property

offered as security. The Mortgage Broker, on behalf of the Trust, will not offer a new renewal term for a Mortgage

unless an updated valuation of a property connected to a Mortgage is obtained, when the original appraisal was

obtained more than 38 months after origination. This valuation may be obtained from the tax assessed value, a

PurView online property valuation value, or an updated appraised value, depending on the LTV of the subject

property.

Long Term Objectives

General

The investment goal of the Trust is to make prudent investments in Mortgages, which provide financing for Real

Property situated in Canada to create stable returns for Unitholders with the potential to realize additional benefits

from favourable markets.

The objective for the Trust is to provide a simple and effective way for individual investors to participate in the

lucrative mortgage industry traditionally dominated by all major Canadian banks. Even though this type of investment

has outperformed many other vehicles in terms of capital preservation and returns, ‘pooled mortgage investments’ are

less widely known than other income producing vehicles. The Trust provides a viable addition to or alternative to

other vehicles for the fixed income component of a balanced portfolio.

Investment Policies

The following investment policies are applied by the Trust in selecting Mortgages:

(a) the Trust may invest in Mortgages which may be first or subsequent charges on the security of the

Real Property. The Trust does not intend to restrict itself to investing in senior (first) Mortgages

only and intends to also invest in junior Mortgages such as second and third Mortgages;

(b) regardless of the position of the Mortgages being junior or senior, the Trust will apply its usual level

of diligence on each Real Property as well as the borrower(s), guarantor(s) and covenantor(s) to

assure itself that the aggregate principal of the senior and junior Mortgages fall within the maximum

LTV ratio prescribed by the Trust;

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within Canada and once the Trust’s assets reach $10 million, no more than 5% of the Trust’s assets

will be invested in Mortgages on the same property;

(d) the Trust will not directly invest in Real Property, and will be subject to the investment requirements

that must be met for certain trusts, as set out below under paragraph (f). However, the Trust may

hold Real Property acquired as a result of foreclosure and will use its reasonable best efforts to

dispose of such Real Property acquired on foreclosure;

(e) unless approved by the Board of Governors, the Trust will not make loans to, nor invest in securities

issued by the Manager or its Affiliates nor make loans to the directors or officers of the Manager or

their Associates or the members of the Board of Governors;

(f) the Trust may not invest in any asset which in any way does not qualify as a “qualified investment”

as that term is defined in the Tax Act for a trust governed by a Deferred Plan or would disqualify

the Trust as such;

(g) the Trust may co-invest with a third party or third parties in a Mortgage;

(h) the Trust may invest in any Mortgage where the term of the Mortgage exceeds five years;

(i) unless approved by the Board of Governors, the Trust will not make or dispose of an investment in

any Mortgage where the Manager, any member of the Board of Governors, the Mortgage Broker,

any of their respective officers, directors or employees or any respective Affiliate thereof: (i) has or

expects to obtain, insofar as the Trust or any such aforementioned person is aware, directly or

indirectly, an interest in the transaction (except the Mortgage Broker’s fees and charges under the

Mortgage Broker Agreement); (ii) has at any time in the period of 24 months preceding the date of

the transaction had a direct or indirect material financial interest in the Real Property being

mortgaged, acquired or disposed of; or (iii) has an interest in any other Mortgage on the Real

Property being mortgaged, acquired or disposed of;

(j) when not invested in Mortgages, the funds of the Trust are to be placed in Authorized Interim

Investments;

(k) the Trust may only borrow funds in order to acquire or invest in specific Mortgage investments or

Mortgage portfolios in amounts up to the greater of $1,000,000 and 50% of the book value of the

Trust’s portfolio of Mortgages and at an interest rate less than the interest rate charged or yield

earned by the Trust on the overall portfolio of Mortgages; and

(l) the Trust may participate in Mortgages on a syndication basis, subject to the approval by the Credit

Committee of the investment amount and the proposed syndication partners.

The Trust’s Mortgages

The Mortgage Broker is continually renewing its portfolio of committed Mortgage investments, which will be

presented to the Trust from time to time for investment, in accordance with the Mortgage Broker Agreement.

Each of the Trust’s Mortgages will be registered on title against the underlying Real Property securing such Mortgage.

Legal title to each Mortgage will usually be held by and registered in the name of the Mortgage Broker or a wholly-

owned subsidiary of the Mortgage Broker, other than Mortgages held by another entity or other entities holding an

interest in such Mortgages jointly with or in trust for the Trust, with beneficial title to the Trust’s interest being held

by the Trust. Where legal title to a Mortgage is held by and registered in the name of an entity wholly-owned by the

Mortgage Broker, such entity may hold legal title to such Mortgage on behalf of the other beneficial owners of such

Mortgage. Where appropriate, title insurance is obtained. Any title insurance will be held in the name of the Mortgage

Broker and not the Trust.

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Short Term Objectives and How We Intend to Achieve Them

The Trust’s objectives for the next 12 months are to raise $50,000,000 pursuant to this Offering, and invest all of the

Offering proceeds in Mortgages and loan securities after the payment of the Trust’s operating expenses.

Material Contracts

The following is a list of contracts which are material to this Offering and to the Trust:

(a) the Declaration of Trust creating the Trust under the laws of the Province of Ontario. See “The

Trust – Material Contracts – Summary of the Declaration of Trust”;

(b) the Mortgage Broker Agreement between the Mortgage Broker and the Manager with respect to the

provision of services by the Mortgage Broker to the Manager. See “The Trust – Material Contracts

– The Mortgage Broker Agreement”;

Direct II, pursuant to which the Lenders established a committed revolving operating loan credit

facility in favour of the Trust for the purpose of financing the investment operations of the Trust.

See “The Trust – Material Contracts – The Loan Agreement”;

(d) the Services Agreement between the Manager and SGGG pursuant to which SGGG provides

unitholder record-keeping services to the Manager in relation to the Trust. See “The Trust – Material

Contracts – The Services Agreement”;

(e) the Cost Sharing and Dealer Services Fee Agreement between the Manager and CDFL. See

“Compensation Paid to Sellers and Finders”; and

(f) the ATB ISDA Agreement. See “The Trust – Material Contracts – The ATB ISDA Agreement”.

Summary of the Declaration of Trust

The following is a summary of the provisions of the Declaration of Trust, which by its nature is not a comprehensive

description of all aspects of the Trust. Potential investors are encouraged to review the full text of the Declaration of

Trust, which is available on request from the Manager.

Redemption of Units

A Unitholder is entitled, as of the Retraction Date to make a request to the Trust to retract all or any of the Unitholder’s

Units in increments of not less than $5,000, by the Unitholder or the Dealer, as applicable, giving written notice or

notice by electronic means, as acceptable to the Manager, to the Manager not less than 21 days prior to the applicable

Retraction Date, of a specified number of Units to be redeemed by the Trust or the dollar amount which the Unitholder

requires to be paid. If a Unitholder elects to retract and holds Units with a value of $5,000 or less, the Unitholder must

retract all of his or her investment.

If more than one Retraction notice is given by a Unitholder in a calendar year, any additional Retraction by such

Unitholder, other than the first Retraction in a calendar year, will be subject to a $65 handling fee.

The Retraction proceeds payable for each Class A Unit retracted, prior to termination of the Trust, will be equal to the

Unitholder’s pro rata portion of the Return, plus the following amounts:

(a) if the Retraction occurs prior to the first anniversary of the acquisition by the Unitholder of such

Class A Units, 95% of the Net Asset Value per Class A Unit on the Retraction Date (Return + 95%

of Net Asset Value – handling fee, if applicable);

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(b) if the Retraction occurs on or after the first anniversary but prior to the second anniversary of the

acquisition by the Unitholder of such Class A Units, 96% of the Net Asset Value per Class A Unit

on the Retraction Date (Return + 96% of Net Asset Value – handling fee, if applicable);

acquisition by the Unitholder of such Class A Units, 97% of the Net Asset Value per Class A Unit

on the Retraction Date (Return + 97% of Net Asset Value – handling fee, if applicable);

(d) if the Retraction occurs on or after the third anniversary but prior to the fourth anniversary of the

acquisition by the Unitholder of such Class A Units, 98% of the Net Asset Value per Class A Unit

on the Retraction Date (Return + 98% of Net Asset Value – handling fee, if applicable);

(e) if the Retraction occurs on or after the fourth anniversary but prior to the fifth anniversary of the

acquisition by the Unitholder of such Class A Units, 99% of the Net Asset Value per Class A Unit

on the Retraction Date (Return + 99% of Net Asset Value – handling fee, if applicable); and

(f) if the Retraction occurs on or after the fifth anniversary of the acquisition by the Unitholder of such

Class A Units, 100% of the Net Asset Value of the Class A Units on the Retraction Date (Return +

100% of Net Asset Value – handling fee, if applicable).

The Retraction proceeds payable for each Class C Unit or Class F Unit retracted, prior to termination of the Trust, will

be equal to the Unitholder’s pro rata portion of the Return, less, if the Retraction occurs on or prior to the 180

day

after the acquisition by the Unitholder of such Class C Units or Class F Units, a short term trading fee of 2%, which

will be paid into the Trust (Return + 100% Net Asset Value – 2% short term trading fee, if applicable, – handling fee,

if applicable). If the Retraction occurs after the 180

day following the acquisition by the Class C Unitholder of the

Class C Unit or the Class F Unitholder of the Class F Unit, or in the event of death or permanent infirmity of the Class

C Unitholder or Class F Unitholder (and for greater certainty, in the case of jointly held units, of both individuals

jointly holding such units ), the Unitholder of the Class C Unit or Class F Unit will receive 100% of the Net Asset

Value per Class C Unit or Class F Unit on the Retraction Date. Although the Declaration of Trust does not specifically

provide for a waiver of early Retraction fees in the event of the death or permanent infirmity of a Class A Unitholder,

the Manager would reasonably consider also waiving early Retraction fees in respect of Class A Unitholders in such

extraordinary circumstances. Notwithstanding the foregoing, in respect of any Units acquired by the Unitholder

pursuant to the reinvestment of distributions, the date of acquisition of such Units will be deemed to be the date of the

acquisition of the Units in respect of which the distribution was paid. Furthermore, no retraction fees will be payable

upon the Retraction of such Units and the Retraction proceeds payable on the Retraction of such Units will be equal

to 100% of the Net Asset Value Per Unit.

Retraction is subject to certain limitations, as follows:

(a) the obligation of the Trust to retract Units will be subject to the Manager determining in its sole

discretion, acting reasonably, that sufficient funds are available to the Trust for the purposes of

Retraction;

(b) unless otherwise determined by the Manager in its discretion, the aggregate Retraction proceeds to

be paid in respect of the Retraction of Units on any Retraction Date will not exceed 0.833%

(approximately 10% annually) of the Net Asset Value of the Trust on the applicable Retraction Date;

and

Value of the Trust on the Retraction Date, if by any Retraction Date, the Trust has received notices

of Retraction requiring the Trust to pay aggregate Retraction proceeds in excess of 0.833% of the

Net Asset Value of the Trust on the Retraction Date, then the Retraction of Units will be made pro

rata according to the number of Units specified on the notices for Retraction to the maximum

number of Units subject to Retraction on the Retraction Date, and any Units not retracted will be

eligible for retraction on the next (successive) Retraction Date(s) without the necessity of submitting

a new Retraction notice.

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Retractions will be funded out of the proceeds of the repayment in full or sale of Mortgages within the Mortgage

portfolio. Following the receipt of one or more Retraction notices, the Manager will, until the Retraction price in

respect of all Units to be retracted pursuant to such notice(s) has been paid in full, reserve funds for the purpose of

funding Retractions in an amount equal to the Retraction price. The Trustee or Manager on behalf of the Trustee will

pay the Retraction proceeds to Unitholders who have properly submitted Retraction notices up to the full amount of

the Retraction price for the Units to be retracted (after the exclusion of any Units in the circumstances contemplated

by paragraph (c) above) in the order such notices are received by the Manager until the Retraction price has been paid

in full or such proceeds are exhausted.

The Trustee or the Manager on behalf of the Trustee will pay the proceeds for the Units being retracted by the mailing

or delivery of a cheque or by electronic funds transfer in the relevant amount in Canadian funds determined as set out

in the Declaration of Trust (less any amount required to be withheld) to the Unitholder.

Redemption on Death of Unitholder

Upon the Manager being advised in writing of the death of a Unitholder and upon the Manager being provided with

the appropriate documentation in form satisfactory to the Manager, the Retraction of 100% of the Net Asset Value of

the Units will be processed by the Manager at the next Retraction Date if not sooner, subject to any applicable

retraction fees that are not waived by the Manager.

Redemption on Termination

The Trustee will redeem each Unit (“Redemption”) on the termination of the Trust. The proceeds payable for each

Unit to be redeemed pursuant to a Redemption will be equal to the Net Asset Value Per Unit plus the Unitholder’s pro

rata portion of the Return. Fractions of Units may be redeemed as a result of a Redemption. See “The Trust – Material

Contracts – Summary of the Declaration of Trust – Termination of the Trust” for further details on the termination

procedure.

Forced Redemption Upon Non-Residency

At no time may non-residents of Canada be the beneficial owners of Units. If a Unitholder becomes a non-resident

of Canada or otherwise becomes a “designated beneficiary” as defined in section 210 of the Tax Act, the Manager

may at its discretion, either forthwith redeem all or a part of the Units held by such Unitholder (a “Forced

Redemption”), or by written notice require the Unitholder to, within thirty (30) days, transfer the Units to a transferee

who is not a “designated beneficiary” as defined in section 210 of the Tax Act. However, in such situations the

transferability of the Units will be subject to resale restrictions under applicable securities laws. The redemption

proceeds payable for each Unit so redeemed will be the amount which would otherwise have been paid to the

Unitholder as if the Unitholder had given written notice to the Manager of the Retraction of his, her or its Units as

described above under “Redemption of Units”.

Transfers of Units

Units are not transferable, except in the circumstances resulting in Forced Redemption, or otherwise with the consent

of the Manager, which consent may be withheld for any reason or for no reason, and the Manager will have no

obligation to advise a Unitholder requesting a transfer of its reason for refusing to consent to the transfer.

Conversion of Units

Unitholders may convert Units of any class into Units of a different class in any given month by delivering notice of

such conversion to the Manager prior to the last Business Day in any month. Any conversion of a Class A or Class C

Unit to a Class F Unit would require the Unitholder to participate in a fee-based program, in respect of such converted

Class F Units, through an authorized third-party Dealer or broker who has signed an agreement with the Manager.

The Units surrendered for conversion will be converted on the last Business Day of that month. The Unitholder will

receive the number of Units the fair market value of which is equal to the fair market value of the Units to be converted,

both as determined at the time of conversion.

- 12 -

In the case of a conversion of Class A Units, the Unitholder will pay the applicable retraction fee as if such Class A

Units were redeemed at the time of conversion. If a Unitholder pays the applicable retraction fee upon conversion of

its Class A Units, the Unitholder shall not be required to pay any further retraction fees. In the case of a conversion of

Class C Units or Class F Units, the original retraction fees attached to such Units will continue to apply.

Net Asset Value

The Net Asset Value of the Trust and the Net Asset Value Per Unit will be computed by the Manager as at the close

of business on a Valuation Day. The number of Units, the carrying value of the Trust Property and the amount of any

allowances for impairment losses recorded against investments in Mortgages of the Trust shall be calculated by the

Manager subject to the following:

(a) the recorded value of any cash on hand, on deposit or on call, and prepaid expenses shall be the cost

amount thereof;

(b) the recorded value of any money market instruments shall be deemed to be cost plus accrued unpaid

interest;

interest, net of any impairment loss recorded;

(d) all material expenses or liabilities (including fees payable to the Manager and the Mortgage Broker)

of the Trust shall be recorded on an accrual basis; and

(e) the amount of any undistributed income or Net Realized Capital Gains allocated to Units, but not

yet distributed on the Valuation Day, shall not be included in the assets of the Trust.

Powers and Duties of Trustee

The Trustee, subject to the specific limitations contained in the Declaration of Trust, has full, absolute and exclusive

power, control and authority over the assets of the Trust and over the investment and affairs of the Trust to the same

extent as if the Trustee was the sole owner thereof in its own right to do all such acts and things as in its sole judgment

and discretion are necessary or incidental to, or desirable for, the carrying out of any of the purposes of the Trust or

the investment of Trust assets.

Powers and Duties of Manager

The Declaration of Trust grants the Manager the full authority and responsibility to manage the investments and affairs

of the Trust, including all investment management, clerical, administrative, and operational services. The Trustee has

no responsibility for investment management of the Trust Property or for any investment decisions.

Resignation and Removal of the Trustee

The Trustee may resign or be removed by the Manager at any time by notice to the Unitholders and the Manager or

the Trustee, as applicable, not less than 60 days prior to the date that such resignation or removal is to take effect

provided that a successor trustee is appointed or the Trust is terminated.

Trustee’s Fee

For its services, the Trustee will receive an annual fee which shall be paid from the Trust (the

“Trustee’s Fee”). The amount and frequency of such payment of this annual fee will be settled by agreement between

the Trustee and the Manager. Unless other arrangements are agreed upon by the Manager, the Trustee will receive no

other compensation for its services as Trustee.

- 13 -

Manager’s Fee

In consideration for its services in managing the Trust, the Manager will be entitled to receive a Manager’s Fee for

each of the applicable classes of Units, as follows:

Class A: 1/12 of 2% (2% per annum) of the Net Asset Value of the Trust payable monthly in arrears.

Class C: 1/12 of 2% (2% per annum) of the Net Asset Value of the Trust payable monthly in arrears.

Class F: 1/12 of 1% (1% per annum) of the Net Asset Value of the Trust payable monthly in arrears.

All sales commissions or fees paid to Dealers in connection with the Offering will be paid by the Manager. No sales

commissions or fees will be paid to Dealers in connection with the Class F Units, which are intended for fee-based

accounts.

In addition to the Manager’s Fee, the Manager is entitled to the Income Participation on a quarterly basis.

Expenses

All expenses or outlays relating to the Trust from inception to the Termination Date, including, but not limited to, the

Manager’s Fee, the Trustee’s Fee, Offering expenses (other than organizational expenses in connection with the

creation of the Trust and sales commissions or fees paid to Dealers in connection with the offer and sale of Class A

Units and Class C Units), taxes payable by the Trust, expenses related to Unitholder’s meetings, brokerage, legal and

other fees and disbursements relating to the implementation of transactions for Trust investments, if any, will be paid

by the Trust.

Distributions

As of the Calculation Date, the Manager will calculate the Return and the Trust shall pay to Unitholders their

proportionate share of the Return based upon the number of Units held and the number of days within the applicable

calendar quarter that the Units were issued and outstanding. The Return shall become payable on the Calculation

Date, however, in respect of the first three calendar quarters of a year, the Unitholders’ proportionate share of the

Return will be paid by the 15th day of the month following the Calculation Date for such calendar quarter, and in

respect of the fourth quarter of a year the Unitholders’ proportionate share of the Return will be paid by March 31 of

the year following the Calculation Date for such calendar quarter. Although the Return for the fourth quarter is payable

by March 31 of the year following the Calculation Date, the Trust now generally intends to pay 75% of the estimated

fourth quarter Return in early January and the remaining 25% of the fourth quarter Return in March.

Distribution to Unitholders for a year will be deemed to have been paid:

(a) firstly, to the extent the Trust has Net Realized Capital Gains for the year, from such Net Realized

Capital Gains;

(b) secondly, to the extent the total of such distributions exceeds the amount designated under (a)

above, from the Trust’s taxable income in excess of the taxable portion of the Trust’s Net Realized

Capital Gains for the year; and

under (a) and (b) above, from amounts other than Net Income.

Each amount that becomes payable by a Distribution Payment Date will be paid subject to tax withholding

requirements applicable under applicable laws in the following manner:

(a) such portion of the amount as is agreed between the Unitholder and the Manager shall be applied

to the payment of any fees or charges payable by the Unitholder; and

- 14 -

(b) all of the remaining amounts shall be paid by cheque or by electronic transfer to the Unitholder or,

at the election of the Unitholder, if permitted under applicable securities laws, will be reinvested

in additional Units of the Trust at the Net Asset Value Per Unit on the Calculation Date, having an

aggregate subscription price equal to the amount so reinvested, without the payment of fees or

expenses, including any sales charge or commission.

Each Unitholder may elect to receive their Return in cash or in Units of the Trust pursuant to the Trust’s Distribution

Reinvestment Plan (the “DRIP”). The DRIP is open to all Unitholders of the Trust. A copy of the DRIP is available

on the Trust’s website at www.incometrustone.com or upon request.

Meetings of Unitholders and Resolutions

The Trustee or the Manager respectively, may, at any time, convene a meeting of the Unitholders and the Trustee will

be required to convene a meeting on receipt of a request in writing of the Manager or of Unitholders holding, in

aggregate, not less than 25% or more of the Units outstanding. Each Unitholder is entitled to one vote per Unit held.

Any matter to be considered at a meeting of Unitholders, other than certain matters requiring the approval of

Unitholders by Special Resolution or Unanimous Resolution of the Unitholders, as discussed below, will require the

approval of Unitholders by a resolution passed by Ordinary Resolution. A quorum for any meeting convened to

consider such matter will consist of two or more Unitholders present in person or by proxy and representing not less

than 10% of the Units outstanding on the record date.

The following matters require approval by Ordinary Resolution and shall be deemed approved, consented to or

confirmed, as the case may be, upon the adoption of such Ordinary Resolution:

(a) matters relating to the administration of the Trust for which the approval of the Unitholders is

required by policies of the securities regulatory authorities in effect from time to time;

(b) subject to the requirements for a Special Resolution and a Unanimous Resolution, any matter or

thing stated herein to be required to be consented to or approved by the Unitholders; and

their confirmation or approval by Ordinary Resolution.

Each of the following actions require approval by Special Resolution, the terms of which shall specify the date upon

which the proposed action shall be undertaken and the party who shall undertake the action:

(a) the amendment of the Declaration of Trust (except as provided under “Amendments to the

Declaration of Trust” below) or changes to the Trust, including the investment objectives of the

Trust;

(b) the merger of the Trust with any other Person; and

Notwithstanding the foregoing, any amendment to the Declaration of Trust which would have any of the following

effects requires approval by Unanimous Resolution, the terms of which shall specify the date upon which the proposed

amendment shall be undertaken and the party who shall undertake the amendment:

(a) a reduction in the interest in the Trust of any Unitholder (other than a reduction arising through an

issuance of additional Units);

(b) a reduction in the amount payable on any outstanding Units upon liquidation of the Trust;

- 15 -

(d) the alteration or elimination of any voting rights pertaining to any outstanding Units.

Notwithstanding the above, no confirmation, consent or approval shall be sought or have any effect and no Unitholder

shall be permitted to effect, confirm, consent to or approve, in any manner whatsoever, increases in the obligations of,

reductions in the compensation payable to, or protection provided to, either the Manager, the Board of Governors or

the Trustee or the termination of the Manager, except with the prior respective written consent of the Manager, the

Board of Governors or the Trustee, as the case may be.

In addition, notwithstanding the above (i) Class A Unitholders shall not be entitled to vote on any amendment which

directly or indirectly adds, removes or changes any of the rights, privileges, restrictions and conditions in respect of

the Class C Units or Class F Units only and (ii) Class C Unitholders shall not be entitled to vote on any amendment

which directly or indirectly adds, removes or changes any of the rights, privileges, restrictions and conditions in respect

of the Class A Units or Class F Units only and (iii) Class F Unitholders shall not be entitled to vote on any amendment

which directly or indirectly adds, removes or changes any of the rights, privileges, restrictions and conditions in respect

of the Class A Units or Class C Units only.

Termination of the Trust

The Trust will continue in force until the Termination Date.

The Manager may at any time (and, in particular, upon the payment in full or disposition of all Mortgages held by the

Trust) terminate and dissolve the Trust by giving to the Trustee and each then Unitholder written notice of its intention

to terminate the Trust at least 90 days before the date on which the Trust is to be terminated. Prior to the Termination

Date, the right of Unitholders to require payment for all or any of their Units shall be suspended and the Manager will

make appropriate arrangements to convert the assets of the Trust to cash. Unitholders may also vote to wind up the

Trust on a specified Termination Date by a resolution consented to in writing, by holders of more than 90% of all

outstanding Units, or approved by at least 90% of the votes cast by Unitholders present in person or by proxy at a

meeting of Unitholders. The Manager may, in its discretion, defer the Termination Date for up to two years if the

Manager provides written notice of such deferral to the Unitholders at least 30 days prior to the Termination Date and

advises the Trust that the Manager is unable to convert all of the Trust’s assets to cash and that it would be in the best

interests of the Unitholders to do so. Upon termination, the net assets of the Trust will be distributed to the Unitholders.

After payment of the liabilities of the Trust, each Unitholder registered as such at the close of business on the date

fixed as the Termination Date shall be entitled to receive from the Trustee the proportionate share of the value of the

Trust in accordance with the number of Units which the Unitholder then holds. If the Manager receives a Retraction

notice or is required to make a Redemption for an amount exceeding the Net Asset Value of such Units, the Manager

may, in its discretion, and in accordance with this paragraph give notice to terminate the Trust as of a Termination

Date which precedes the intended date of such Retraction or Redemption.

There are no provisions in the Declaration of Trust which permit the involuntary removal of the Manager. Following

the occurrence of certain “termination events” including a material default of the Manager under the Declaration of

Trust or bankruptcy of the Manager, the Trustee will, as soon as reasonably practicable, realize or appoint a receiver

to realize on the assets of the Trust, redeem each Unit pursuant to the provisions of the Declaration of Trust, and

distribute any remaining Trust Property to the Unitholders in accordance with the provisions of the Declaration of

Trust and the Declaration of Trust will terminate.

Amendments to the Declaration of Trust

Subject to the restrictions described under “Meetings of Unitholders and Resolutions” above, any provision of the

Declaration of Trust may be amended, deleted, expanded or varied by the Manager, with the approval of the Trustee,

if the amendment is, in the opinion of counsel to the Trust, not a material change and does not relate to certain specific

material changes including a change in the authority or role of the Manager or Board of Governors; a change in fees

or method of calculating the Return; or a change in the investment policy of the Trust, which may only be made with

the consent of Unitholders.

- 16 -

Information and Reports

The Trust’s annual financial statements for each Fiscal Year (December 31), and auditor’s report will be made

available on the Trust’s website at: www.incometrustone.com, on or before April 30 in each calendar year and will

include a notice describing how the funds raised pursuant to the OM exemption have been used. In addition, the

Manager will provide each Unitholder, as applicable, who received a distribution at any time during the previous

calendar year, tax reporting information enabling such person to report the income tax consequences of an investment

in Units for Canadian income tax purposes.

Liability of Unitholders

In circumstances where a material obligation of the Trust is created, the Declaration of Trust provides that the Manager

or the Trustee, as the case may be, shall use its best efforts to have any such obligations modified so as to achieve

disavowal of any personal liability of Unitholders. Further, the Manager will cause the operations of the Trust to be

conducted, with the advice of counsel, in such a way and in such jurisdictions as to avoid, as far as possible, any

material risk of liability against the Unitholders for claims against the Trust.

In case of claims made against the Trust, which do not arise out of contracts, for example, claims for taxes or claims

in tort, personal liability may also arise against Unitholders. However, in accordance with prudent real estate practice,

the Manager will maintain sufficient insurance in respect of the above-mentioned perils.

The Mortgage Broker Agreement

The Mortgage Broker was incorporated as Capital Direct Lending Corp. in December, 1997, as a near-prime mortgage

lender, specializing in single-family, residential Mortgages and equity loans for borrowers that do not meet the strict

lending criteria of traditional lenders or who require customized mortgage solutions. With standardized Mortgage

products and strict underwriting guidelines, the traditional lenders are often unable to meet the borrowing needs of

many Canadians. The Mortgage Broker recognizes that each application is unique and takes a holistic approach when

entertaining applications.

The Mortgage Broker emphasizes a strict, disciplined approach in assessing credit risk and sets a fair mortgage rate

that reflects the risk involved. Clear underwriting guidelines, geographic diversity, and arrears management, are

designed to manage and mitigate credit risk.

The Mortgage Broker has entered into the Mortgage Broker Agreement with the Manager pursuant to which the

Mortgage Broker acts as the mortgage broker to the Trust and is responsible for identifying Mortgage investment

opportunities for the Trust that fall within the investment objectives and investment policies of the Trust. The

shareholders of the Mortgage Broker are Richard F.M. Nichols, Derek R. Tripp and Timothy P.J. Wittig. Since

incorporation, the Mortgage Broker has expanded and now has branches in Vancouver, Calgary, Edmonton and

Toronto. Capital Direct Atlantic, a subsidiary controlled by the Mortgage Broker, serves eastern Canada from its

offices in Halifax, Moncton and Charlottetown. Since 1997, as of December 31, 2023, the Mortgage Broker has

originated investments aggregating $2.38 billion in Mortgages, as of such date is placing between $200 million and

$260 million in Mortgages annually and directly administered approximately $449 million in Mortgages for itself and

its investors.

The Mortgage Broker is required to service the Trust’s Mortgage portfolio in the same manner, and with the same

care, skill, prudence and diligence, with which it services and administers similar Mortgage loans for other investors

giving due consideration to customary and usual standards of practice of prudent residential Mortgage loan services

used with respect to loans comparable to the Trust’s Mortgage portfolio. It must also exercise reasonable business

judgment in accordance with applicable law to maximize recovery under the Trust’s Mortgage portfolio without regard

to any other relationship that the Mortgage Broker or any of its Affiliates may have with borrowers or any Affiliates

of such borrowers.

The Mortgage Broker or any of the directors, officers, shareholders or employees of the Mortgage Broker are permitted

to invest (each for its own account) in the Trust’s Mortgage investments or other securities.

- 17 -

The Mortgage Broker Agreement provides that the Mortgage Broker and its directors, officers, employees and agents

will not have any liability to the Manager, Trust or Unitholders for losses incurred in the ordinary course of its duties,

unless the particular loss is attributable to the wilful misfeasance, dishonesty, bad faith or negligence of the Mortgage

Broker in the performance of its obligations, responsibilities, powers, discretions or authorities under the Mortgage

Broker Agreement. The term of the Mortgage Broker Agreement extends to the term of the Trust, provided that the

Mortgage Broker Agreement may be terminated by the Mortgage Broker on six months prior notice to the Manager.

The Mortgage Broker Agreement may be terminated by the Manager if the Mortgage Broker is in material default of

its obligations under the Mortgage Broker Agreement, has been declared bankrupt or ceases to hold necessary

registrations.

The Mortgage Broker receives originating fees, commitment fees and renewal fees from borrowers on Mortgages it

originates for the Trust. The Mortgage Broker may also initially fund a Mortgage at a specified interest rate and then

syndicate the Mortgage at a higher or lower interest rate to entities such as the Trust. It is the current practice of the

Mortgage Broker to charge a lower interest rate to the Trust. The Trust pays fees and charges to the Mortgage Broker

at the same rate that the Mortgage Broker charges its other clients. Such fees are not expected to exceed 1.75% of the

Net Asset Value of the Trust. The Mortgage servicing fees payable to the Mortgage Broker are commensurate with

fees paid to other entities providing similar services as the Mortgage Broker and which have been negotiated at arm’s

length. In addition to such fees, the Mortgage Broker is entitled to retain any overnight float interest on all accounts

maintained by the Mortgage Broker in connection with its originating and servicing of the Trust’s Mortgage

investments. No fees are paid to the Mortgage Broker by the Trust otherwise than pursuant to the Mortgage Broker

Agreement.

Under the Mortgage Broker Agreement, the Mortgage Broker is responsible for all expenses of its personnel, rent and

other office expenses of the Mortgage Broker.

The Mortgage Broker may be seen as the promoter of the Trust by reason of its initiative in forming and establishing

the Trust and taking steps necessary for the distribution of the Units offered hereby. The Mortgage Broker will not

receive any benefits, directly or indirectly from the issuance of the Units offered hereby other than as described in this

Offering Memorandum.

The Manager, the Mortgage Broker, Capital Direct II and CDFL have common directors, officers and securityholders.

The Manager has determined that it is a connected issuer and is considered a related issuer of the Mortgage Broker,

Capital Direct II and CDFL by virtue of the Mortgage Broker’s role as a mortgage broker and based on the fact that

the Manager, the Mortgage Broker, Capital Direct II and CDFL have common directors, officers and securityholders.

In addition, the Trust is managed by the Manager and its activities are overseen by a Board of Governors consisting

of five persons, three of whom are also directors, officers and securityholders of the Manager, the Mortgage Broker,

CDFL and Capital Direct II.

Mortgage Broker Regulation

Activities of mortgage brokers in Canada are regulated by provincial legislation. All activities that constitute mortgage

brokering activities under the laws of British Columbia, Alberta and Ontario, are carried out exclusively by the

Mortgage Broker. The Mortgage Broker, which performs mortgage broker services on behalf of the Trust pursuant

to the Mortgage Broker Agreement, is an Affiliate of the Manager and is currently registered or licensed under the

B.C. Mortgage Brokers Act, the Alberta Real Estate Act and the Ontario Mortgage Brokers Act in order to permit it

to carry on the activities contemplated in the Mortgage Broker Agreement.

After some previous correspondence with the Manager and despite the Trust’s and the Manager’s continued operations

using the current structure since 2007, in March of 2023, the B.C. Financial Services Authority took the position that

the activities of the Trust and the Manager constitute registrable mortgage broker activities under the B.C. Mortgage

Brokers Act and notified the Trust and the Manager that the Trust and the Manager must each register under the B.C.

Mortgage Brokers Act. Each of the Trust and the Manager are therefore in the process of preparing an application to

- 18 -

The Loan Agreement

The Trust, by the Manager, the Mortgage Broker and Capital Direct II, have entered into the Loan Agreement with

the Lenders for the Lenders’ Loan in the amount of $180 million. Of the $180 million, up to $5,500,000 is available

to the Manager (the “Manager Facility”), for which a separate overdraft lending agreement has been provided to

Canadian Western Bank. The Manager Facility bears interest at the Prime Lending Rate plus three-quarters of one

percent (0.75%) per annum. In connection with the Loan Agreement, a swingline facility of up to a maximum of

$5,000,000 was advanced by Canadian Western Bank to the Trust (the “Swingline Facility”), the Manager and the

Mortgage Broker. The Swingline Facility bears interest at the Prime Lending Rate plus three-quarters of one percent

(0.75%) per annum. The remaining $169,500,000 is available to the Trust (the “Operating Facility”). The Trust uses

the Lenders’ Loan to manage cash flows and as part of its investment program. The Lenders’ Loan is a committed

revolving credit facility, subject to margin requirements on eligible mortgage investments. For Prime Rate Loans, the

Operating Facility bears interest at the Prime Lending Rate plus three-quarters of one percent (0.75%) per annum or

at the Prime Lending Rate plus one and one-half percent (1.50%) per annum, depending on the Lenders advancing the

loan. For CDOR Loans, the Operating Facility bears interest at the CDOR Rate plus two and two-tenths percent

(2.20%) per annum or at the CDOR Rate plus three percent (3.00%) per annum, depending on the Lenders advancing

the loan. Interest rates are calculated by weighting the interest rates for the Lenders according to their share of the

borrowing limit, above the Prime Lending Rate and the CDOR Rate, respectively. To date, the Manager, the Mortgage

Broker and Capital Direct II have elected that the Operating Facility be a Prime Rate Loan, as described above.

The funds secured pursuant to the Lenders’ Loan are used to pay expenses pending the receipt of proceeds from

Mortgage sales or repayments and receipt of proceeds from the Offering, and to make new Mortgage investments.

The Lenders’ Loan allows the Trust to invest, at any given time, more than the aggregate contributed capital of the

Unitholders, which is accretive to returns received by Unitholders. To the extent that the Lenders’ Loan adds leverage

to the portfolio, the Manager attempts to prudently manage the Lenders’ Loan so as not to expose the Mortgage

portfolio to undue risk. In accordance with the Lenders’ usual practice, the Lenders have reserved the right to

withdraw the whole or part of the credit facility at any time without notice.

As security for the Lenders’ Loan: (i) the Trust, by the Manager, the Mortgage Broker, in its capacity as nominee for

the Trust and to the extent that it holds assets on behalf of the Trust, and Capital Direct II, have executed a general

security agreement in favour of the Lenders, including a fixed first charge over the real and personal property of the

Trust, the Mortgage Broker, the Manager and Capital Direct II; (ii) the Trust, by the Manager, the Mortgage Broker,

in its capacity as mortgage broker and nominee for the Manager, and Capital Direct II, have executed a general

assignment of Mortgages in favour of the Lenders; and (iii) the Trust, by the Manager, the Mortgage Broker and

Capital Direct II have executed an assignment of insurance interests in favour of the Lenders.

The Lenders’ Loan is subject to the following covenants:

• to maintain a cash flow coverage ratio of not less than 3.0:1 in each quarter;

• to maintain a tangible net worth of not less than $120,000,000 in each quarter; and

• to maintain a debt to tangible net worth ratio not greater than 0.85:1 in each quarter.

The Services Agreement

The Manager has entered into the Services Agreement with SGGG pursuant to which SGGG provides unitholder

record-keeping services to the Manager in relation to the Trust. The Manager pays a monthly fee for these services.

The Services Agreement automatically renews on a month-to-month basis until terminated by either party upon three

months’ written notice.

- 19 -

The Cost Sharing and Dealer Services Fee Agreement

The Cost Sharing and Dealer Services Fee Agreement was entered into effective February 14, 2020 by the Manager

and CDFL and amended and restated as of November 1, 2020, May 31, 2021 and November 30, 2021. The Manager

is a connected issuer and is considered a related issuer of CDFL, as such terms are defined in National Instrument 33-

105 – Underwriting Conflicts (in Québec, Regulation 33-105 respecting Underwriting Conflicts) (collectively, “NI

33-105”). The Manager has determined that it is a connected issuer and a related issuer of CDFL by virtue of CDFL’s

role as an Exempt Market Dealer engaged to sell the Class A Units and Class C Units offered hereby and based on the

fact that the Manager and CDFL have common directors, officers and securityholders. In addition, CDFL is currently

considered a “captive dealer” as defined in CSA Staff Notice 31-343 – Conflicts of Interest in Distributing Securities

of Related or Connected Issuers because it solely or primarily distributes securities of the Trust. See “Risk Factors -

Conflicts of Interest”.

Under the Cost Sharing and Dealer Services Fee Agreement, CDFL shall use its commercially reasonable efforts to

sell the Class A Units and the Class C Units under the Offering to qualified purchasers in one or more of the

Jurisdictions. For CDFL’s services, CDFL shall receive those commissions or Trailer Fees outlined in the section

entitled “Compensation Paid to Sellers and Finders” for each completed sale of Class A Units and Class C Units sold

through CDFL. CDFL will also receive a dealer services fee for costs incurred by CDFL for general and administration

costs of operations. The Manager and CDFL intend to review the terms of the Cost Sharing and Dealer Services Fee

Agreement periodically and will make such adjustments to the dealer services fee payable to CDFL thereunder as the

Manager and CDFL may deem reasonable and mutually agree upon.

Under the Cost Sharing and Dealer Services Fee Agreement, CDFL acknowledges that the Manager will be relying

on a prospectus exemption contained in section 2.3, 2.9 or 2.10 of NI 45-106 to distribute Class A Units and Class C

Units under the Offering to Subscribers on a prospectus exempt basis and accordingly, CDFL shall take reasonable

steps to ensure that each Subscriber executes the Subscription Forms as evidence that: (i) each Subscriber is

purchasing as principal; (ii) each Subscriber meets the qualifications and requirements of the prospectus exemption

under which the Subscriber is purchasing the Class A Units or Class C Units; and (iii) each Subscriber purchasing

Units pursuant to the OM Exemption has been provided with a copy of this Offering Memorandum and has been given

on opportunity to read and seek independent legal, tax and other professional advice respecting this Offering

Memorandum before entering into an agreement to purchase Class A Units or Class C Units.

The Manager may also enter into agreements with Dealers other than CDFL that are unrelated to the Manager, to use

commercially reasonable efforts to sell the Class A Units, the Class C Units and the Class F Units under the Offering

to qualified purchasers in one or more of the Jurisdictions in Canada in exchange for commissions and Trailer Fees.

See the section entitled “Compensation Paid to Sellers and Finders”.

During the Offering, the Manager shall promptly notify the applicable Dealers, including CDFL, of: (i) any material

change (actual, anticipated, contemplated, proposed or threatened, financial or otherwise) in the business,

management, financial condition, affairs, operations, assets, liabilities or obligations (contingent or otherwise) or

capital of the Manager; (ii) any material fact that has arisen or has been discovered which would have been required

to have been stated in this Offering Memorandum had the fact arisen or been discovered on, or prior to, the date of

this Offering Memorandum; and (iii) any change in any material fact or matter covered by a statement contained in

this Offering Memorandum which change is, or may be, of such a nature as to render any statement in this Offering

Memorandum misleading or untrue, or which would result in a misrepresentation in this Offering Memorandum.

The ATB ISDA Agreement

The Manager, on behalf of the Trust, entered into an ISDA 2002 Master Agreement with ATB Financial (“ATB”)

dated as of March 1, 2022 (the “ATB ISDA Agreement”). The form of the ISDA 2002 Master Agreement is an

internationally recognized document published by the International Swaps and Derivatives Association, Inc. that

provides terms and conditions under which parties may enter into over-the-counter derivatives transactions. The ATB

ISDA Agreement was put in place to govern over-the-counter derivatives transactions between the Trust and ATB

including (without limitation): (a) interest rate swap, option or forward rate transactions; (b) currency exchange swap,

option and forward rate transactions; (c) cross-currency rate swap, option or forward rate transactions; (d) equities

related swap, option and forward rate transactions; (e) commodity swap, option or forward rate transactions; and (f)

- 20 -

any derivative or combination of the foregoing and any cap, floor, collar, buy, sell, borrow, lend or similar transaction

with respect thereto.

The Trust has used the ATB ISDA Agreement to enter into interest rate swap agreements in an effort to manage risks

from fluctuations in interest rates in the past and does not anticipate entering into any additional swaps at this time.

Copies of all contracts referred to above may be inspected during normal business hours at the principal office of the

Manager, located at Suite 305, 555 West 8th Avenue, Vancouver, B.C. V5Z 1C6 and are available on request.

BOARD OF GOVERNORS, MANAGEMENT, PROMOTERS AND PRINCIPAL HOLDERS

Compensation and Securities Held

Full legal name

and place of

residence

Positions held

(e.g., director,

officer, promoter

and/or principal

holder*) and the

date of obtaining

that position

Compensation paid by

the Trust or related

party in the most

recently completed

financial year and the

compensation expected

to be paid in the

current financial year

(1)

Number, type and

percentage of

securities of the

Trust held after

completion of min.

Offering

Number, type and

percentage of

securities of the

Trust held after

completion of

max. Offering

Richard Frederick

Maurice Nichols,

Vancouver, BC

Managing Director

and Director of the

Manager – 2005

President and

Director of the

Mortgage Broker –

1997

Governor – 2006

President,

Managing Director

and Director of

CDFL – 2018

$45,000 was paid during

the year ended

December 31, 2023.

Currently, it is

anticipated that $45,000

will be paid during the

year ended December 31,

2024.

15,851.27 Class A

Units

(2)

0.17% of Class A

Units issued and

outstanding and

0.06% of all Units

issued and

outstanding at

December 31, 2023

15,851.27 Class A

Units

(2)

0.02% of the Units

issued and

outstanding

assuming

completion of

maximum Offering

Derek Ray Tripp,

Calgary, AB

Managing Director

and Director of the

Manager – 2005

Vice President and

Director of the

Mortgage Broker –

1997

Governor – 2006

Managing Director

and Director of

CDFL – 2018

$45,000 was paid during

the year ended

December 31, 2023.

Currently, it is

anticipated that $45,000

will be paid during the

year ended December 31,

2024.

24,374.161 Class A

Units

(2)

0.27% of Class A

Units issued and

outstanding and

0.08% of all Units

issued and

outstanding at

December 31, 2023

24,374.161 Class A

Units

(2)

0.02% of the Units

issued and

outstanding

assuming

completion of

maximum Offering

- 21 -

Full legal name

and place of

residence

Positions held

(e.g., director,

officer, promoter

and/or principal

holder*) and the

date of obtaining

that position

Compensation paid by

the Trust or related

party in the most

recently completed

financial year and the

compensation expected

to be paid in the

current financial year

(1)

Number, type and

percentage of

securities of the

Trust held after

completion of min.

Offering

Number, type and

percentage of

securities of the

Trust held after

completion of

max. Offering

Timothy Patrick

Joseph Wittig,

Vancouver, BC

Vice President and

Director of the

Manager – 2010

Vice President and

Director of the

Mortgage Broker –

2010

Governor – 2010

Vice-President and

a Director of

CDFL – 2018

$45,000 was paid during

the year ended

December 31, 2023.

Currently, it is

anticipated that $45,000

will be paid during the

year ended December 31,

2024.

120,170.278 Class

A Units

(2)(3)

1.32% of Class A

Units issued and

outstanding and

24,108.823 Class C

Units

(2)(3)

0.31% of Class C

Units issued and

outstanding and

0.5% of all Units

issued and

outstanding at

December 31, 2023

120,170.278 Class

A Units

(2)(3)

24,108.823 Class C

Units

(2)(3)

0.15% of the Units

issued and

outstanding

assuming

completion of

maximum Offering

David Boyd

Rally,

Richmond, BC

Vice President,

Legal Affairs, of

the Mortgage

Broker – 1997

Governor – 2006

$45,000 was paid during

the year ended

December 31, 2023.

Currently, it is

anticipated that $45,000

will be paid during the

year ended December 31,

2024.

89,921.786 Class A

Units

(2)(4)

0.99% of Class A

Units issued and

outstanding and

0.31% of all Units

issued and

outstanding at

December 31, 2023

89,921.786 Class A

Units

(2)(4)

0.09% of the Units

issued and

outstanding

assuming

completion of

maximum Offering

Brian Alexander

Korpan,

Port Moody, BC

Governor – 2023

$45,000 was paid during

the year ended

December 31, 2023.

Currently, it is

anticipated that $45,000

will be paid during the

year ended December 31,

2024.

None None

* A "principal holder" is a person that has beneficial ownership of, or direct or indirect control over, or a combination of

beneficial ownership and direct or indirect control over, 10% or more of any class of voting securities of the Trust.

(1) The Manager agreed to waive 18% of the Income Participation it was entitled to during the year ended December 31,

2022, thereby increasing the distribution to Unitholders to 82%. The Board of Directors of the Manager also unanimously

agreed to waive 25% of the distribution to which it was entitled to for the first quarter of the year ended December 31,

2022 and agreed to waive 50% of the distribution to which it was entitled to for the fourth quarter of the year ended

December 31, 2022, which amounts were distributed to Unitholders. The Manager agreed to waive 20% of the Income

Participation it was entitled to during the year ended December 31, 2023, thereby increasing the distribution to

Unitholders to 84%. The Board of Directors of the Manager also unanimously agreed to waive 25% of the distribution

to which it was entitled to for each of the first and fourth quarters of the year ended December 31, 2023, which amounts

- 22 -

were distributed to Unitholders. The Board of Directors of the Manager may determine to waive or not to waive any

portion of the net income to which the Manager is entitled in the future.

(2) Each of Messrs. Nichols, Tripp, Wittig and Rally have subscribed for Units of the Trust at a price of $10 per Unit. No

discounted Units have been purchased by Messrs. Nichols, Tripp, Wittig and Rally.

(3) Of this amount 105,411.344 Class A Units are held by Mr. Wittig through 597753 BC Ltd., a corporation owned by Mr.

Wittig and his family trust.

(4) Of this amount 49,998.482 Class A Units are held by Mr. Rally through David B. Rally Law Corporation, a corporation

wholly owned by Mr. Rally.

The Trust has adopted a unit option plan (the “Unit Option Plan”). Options granted under the Unit Option Plan are

designed to advance the interests of the Trust and those of the Trust’s Unitholders by providing to the Unit Option

Plan participants a performance incentive for continued and improved service. Options granted under the Unit Option

Plan will have a maximum term of five years and will be exercisable at a price determined by the Board of Governors

equal to the Net Asset Value Per Unit at the time of grant less a discount of 20%. At the discretion of the Board of

Governors, options granted may include a unit appreciation right. The maximum number of Units reserved for

issuance pursuant to the Unit Option Plan (other than in respect of options that have been exercised or have expired)

is equal to 10% of the issued and outstanding Units at the date of grant.

At the date of this Offering Memorandum, there are no outstanding options under the Unit Option Plan.

Management Experience

The directors and senior officers of the Manager and the Mortgage Broker have a broad background of experience

applicable to the activities undertaken by the Manager and the Mortgage Broker on behalf of the Trust. The following

tables disclose the principal occupations of the directors and senior officers of the Manager and the Mortgage Broker

for the past five years.

The Mortgage Broker

Full Legal Name Principal Occupation and Description of Experience Associated with

the Occupation

Richard Frederick

Maurice Nichols

President and Director

Founding Partner and President of the Mortgage Broker from 1997 to the

present. Mr. Nichols brings over 30 years of financial experience to the

Mortgage Broker. During his tenure, the Mortgage Broker has evolved

from a Vancouver-based company into an inter-provincial organization.

Mr. Nichols oversaw the Mortgage Broker’s expansion into new markets

including Calgary, Edmonton, and other Central Canadian cities, and

later developed a subsidiary in three Atlantic Provinces. He attended the

University of Prince Edward Island where he studied finance and capital

budgeting and received his Bachelors of Business Administration (BBA).

In 1993, Mr. Nichols graduated with honors from the Masters of Business

Administration (MBA) program at the University of British Columbia.

While completing his Masters degree, Mr. Nichols studied international

marketing at the Haute Etude Commerciale in Paris, France. Mr. Nichols

is an Accredited Mortgage Professional certified by the Canadian

Institute of Mortgage Brokers and Lenders (CIMBL) and the Canadian

Association of Accredited Mortgage Professionals (CAAMP). He is an

active member of Mortgage Brokers Association of British Columbia

(MBABC), Independent Mortgage Brokers Association of Ontario

(IMBA) and other provincial and national mortgage-brokering

professional and trade organizations. He is also a longstanding member

of the Vancouver Board of Trade. From 2010 to 2015 Mr. Nichols was

a volunteer member of the board of the CKNW Kids' Fund and continues

to serve on the

rants committee.

- 23 -

Full Legal Name Principal Occupation and Description of Experience Associated with

the Occupation

Derek Ray Tripp

Vice President and

Director

Founding Partner and Vice President of the Mortgage Broker from 1997

to the present. Mr. Tripp brings over 30 years of financial experience to

the Mortgage Broker. He has underwritten over $2 billion in mortgages

and specializes in builder’s mortgages. During his tenure at the Mortgage

Broker, Mr. Tripp has been instrumental in expanding the company into

new Provinces throughout Canada. Mr. Tripp studied Urban Land

Economics in Real Estate at the University of British Columbia. He is an

Accredited Mortgage Professional certified by the Canadian Institute of

Mortgage Brokers and Lenders (CIMBL) and the Canadian Association

of Accredited Mortgage Professionals (CAAMP) and is a licensed

mortgage broker in BC and Alberta and a licensed mortgage agent in

Ontario. He is a member of the Alberta Mortgage Brokers Association

(AMBA), Independent Mortgage Brokers Association of Ontario

(IMBA) and other provincial and national mortgage-brokering

rofessional and trade or

anizations.

Timothy Patrick Joseph

Wittig

Vice President and

Director

Partner, Vice President and Director of the Mortgage Broker from 2010

to the present. Mr. Wittig brings over 30 years of business experience to

the Mortgage Broker. He studied history and political science (Joint

Honours) at both the University of Waterloo and the University of British

Columbia before answering his entrepreneurial call. In 1987, Mr. Wittig

and a partner founded Shaftebury Brewing Company (“Shaftebury”) in

Vancouver. Mr. Wittig was instrumental in establishing Shaftebury as

one of the most successful craft breweries in the Pacific Northwest. Mr.

Wittig’s entrepreneurial spirit was recognized when he was twice

nominated for Ernst & Young’s Entrepreneur of The Year Award and

when he was a recipient of Business In Vancouver’s prestigious Forty

Under 40 Award. He has been an investor in private mortgages since

1998 and is a licensed mortgage broker. He is an active member of

various professional organizations including the Canadian Association of

Accredited Mortgage Professionals (CAAMP), the Mortgage Brokers

Association of British Columbia (MBABC) and the Independent

Mort

e Brokers Association of Ontario (IMBA).

David Boyd Rally

Vice President, Legal

Affairs

Vice President, Legal Affairs, of the Mortgage Broker from 1997 to the

present. Mr. Rally is a partner at Beck, Robinson & Company where he

has practiced exclusively since 1989. In his work as a lawyer, Mr. Rally

deals extensively in real estate law, including bank mortgages, private

financing and commercial leasing as well as in realizations and insurance

law. He has acted as counsel before all levels of court in British Columbia

and is a member of good standing of the Bar of British Columbia and was

previously a member of the Bar of Upper Canada (Ontario). Mr. Rally

served as an advisor in establishing in-house paralegal services for a well-

known real estate service provider and is also licensed as a mortgage

broker in Ontario. Mr. Rally studied in the Economics (Honours)

program at the University of British Columbia and obtained an LL.B/J.D.

from the Universit

of British Columbia in 1988.

- 24 -

The Manager

Full Legal Name Principal Occupation and Description of Experience Associated with

the Occupation

Richard Frederick

Maurice Nichols

Managing Director and

Directo

Managing Director and Director of the Manager from 2005 to the present.

See experience set out above under “Board of Governors, Management,

Promoters and Principal Holders – Management Experience – The

Mort

e Broke

”.

Derek Ray Tripp

Managing Director and

Director

Managing Director and Director of the Manager from 2005 to the present.

See experience set out above under “Board of Governors, Management,

Promoters and Principal Holders – Management Experience – The

Mort

e Broke

”.

Timothy Patrick Joseph

Wittig

Vice President and

Directo

Vice President and Director of the Manager from 2010 to the present. See

experience set out above under “Board of Governors, Management,

Promoters and Principal Holders – Management Experience – The

Mort

e Broke

”.

The Board of Governors

The Declaration of Trust provides that a Board of Governors be appointed for the Trust, to consist of five members,

whose mandate is to identify and establish procedures for resolving situations where there exists a conflict or potential

conflict between the interests of the Manager and the Mortgage Broker on the one hand and the interests of the Trust

or Unitholders on the other hand as well as in connection with certain other stated matters, and may include obtaining

independent advice should the Board of Governors deem it necessary. The Board of Governors performs various

functions including approval of investments, material contracts and financial statements of the Trust, approval of

options under the Unit Option Plan and review of the Trust’s performance. The Board of Governors must act at all

times, and ensure the actions of the Manager, the Trustee and the Mortgage Broker are at all times, in accordance with

the best interests of the Trust and the Unitholders. The members of the Board of Governors receive compensation

from the Manager in such amounts as the Manager determines.

A member of the Board of Governors must, among other things, have a minimum of five years of substantial

experience in real estate and Mortgage investment consistent with the investment objectives of the Trust. Any member

of the Board of Governors who has any material interest in a material contract or transaction with the Trust must

disclose in writing to the Manager the nature and extent of this interest and may not vote upon or sign any resolution

dealing with such material contract or transaction. The members of the Board of Governors are Richard F.M. Nichols,

Derek R. Tripp, Timothy P.J. Wittig and David B. Rally, who are described above, and Brian A. Korpan, who is

profiled below:

Brian Alexander Korpan

Mr. Korpan is a retired Banker with over 30 years of financial experience obtained working for two major Canadian

financial institutions. Over a 20 year career with CIBC, Mr. Korpan attained the level of Sr. Director and was

responsible for the management of the largest portfolio of premier Commercial accounts in the Vancouver Region,

which included the Bank’s Mortgage Investment Corporation (MIC) portfolio. In late 2011, Mr. Korpan was recruited

to join Canadian Western Bank as a board-level Vice President, responsible for their flagship operation in Vancouver

which accounted for a significant portion of the Bank’s annual profit. In 2018, he was promoted to Vice President and

District Manager, responsible for all branch operations in the Vancouver region.

Mr. Korpan’s educational background also brings important and relevant skills to his role on the Board of Governors.

After the successful completion of the Canadian Securities Course and Canadian Investment Finance programs, Mr.

Korpan attended Simon Fraser University where he studied finance and received his Bachelors of Business

Administration (BBA) in 1989/1990. In subsequent years, Mr. Korpan completed numerous management

development programs with CIBC and CWB which included time in Toronto and New York studying financial

- 25 -

modelling, completion of the Banff Centre Leadership Development program, as well as the Global Institute for

Leadership Development (GILD) in 2012. During his career, he was also a longstanding member of the Vancouver

Board of Trade, Association for Corporate Growth (ACG), Acetech, the Vancouver Club, and represented the Banks

at numerous corporate and community events.

The Credit Committee

The Declaration of Trust provides that the Board of Governors will appoint a Credit Committee consisting of at least

two persons, whose mandate is to review the Mortgage portfolio quarterly to confirm compliance with the investment

objectives by the Trust. The members of the Credit Committee are Timothy P.J. Wittig, David B. Rally and Brian A.

Korpan.

The Audit Committee

The Declaration of Trust provides that the Board of Governors will appoint an Audit Committee consisting of two

persons, whose mandate is to meet with the Auditors and review and recommend approval of financial statements

made available to Unitholders. The members of the Audit Committee are David B. Rally and Brian A. Korpan.

CDFL

CDFL was incorporated on November 23, 2018 under the Business Corporations Act (British Columbia) for the

purpose of becoming registered as an Exempt Market Dealer under NI 31-103 in the Jurisdictions. CDFL is also extra

provincially registered in the Jurisdictions in order to allow it to conduct business in the Jurisdictions and in order to

facilitate the growth of CDFL in those Jurisdictions.

In August, 2018, the British Columbia Securities Commission announced that it would permanently rescind BC

Instrument 32-517 - Exemption from Dealer Registration Requirement for Trades in Securities of Mortgage

Investment Entities effective February 15, 2019, which allowed for a dealer registration exemption for mortgage

investment entities, such as the Manager. This rescission of the dealer registration exemption substantially harmonizes

dealer registration requirements across Canada. As a result, effective February 14, 2020, CDFL was registered as an

Exempt Market Dealer in the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario, effective

February 24, 2023 CDFL was registered as an Exempt Market Dealer in the Yukon Territory, effective September 1,

2023 CDFL was registered as an Exempt Market Dealer in Québec and effective February 2, 2024 CDFL was

registered as an Exempt Market Dealer in all of the remaining Provinces and Territories of Canada and therefore is

able to sell Class A Units and Class C Units to Subscribers resident in the Jurisdictions on behalf of the Trust. CDFL

also entered into a Cost Sharing and Dealer Services Fee Agreement with the Manager in connection with the services

it provides as an Exempt Market Dealer. Units of the Trust will be offered for sale to residents of the Jurisdictions

through CDFL and other Dealers.

CDFL is a connected issuer and is considered to be a related issuer of the Trust, the Manager, the Mortgage Broker

and Capital Direct II. CDFL is related to the Manager, the Mortgage Broker and Capital Direct II because Richard

Nichols, Derek Tripp and Timothy Wittig control voting shares and have the power to elect directors of those entities

and are officers and directors of those entities. In addition, the Trust is managed by the Manager and its activities are

overseen by a Board of Governors consisting of five persons, three of whom are also directors, officers and

securityholders of the Manager, the Mortgage Broker, CDFL and Capital Direct II. CDFL, in its capacity as an Exempt

Market Dealer, has had no involvement in the decision to distribute the Units under this Offering, is not underwriting

the Offering, and has not been retained as the sole Exempt Market Dealer used by the Manager for this Offering.

The Manager may appoint Dealers as agents under agency agreements to sell the Units. The Manager appointed

CDFL as agent under the Cost Sharing and Dealer Services Fee Agreement to sell the Class A Units and the Class C

Units. The Manager has determined that it is a connected issuer and is a related issuer of CDFL by virtue of CDFL’s

role as an Exempt Market Dealer engaged to sell the Class A Units and Class C Units offered hereby and based on the

fact that the Manager and CDFL have common securityholders and directors and officers.

The following table discloses the principal occupations of the directors and senior officers of CDFL since

incorporation:

- 26 -

Full Legal Name Principal Occupation and Description of Experience Associated with

the Occupation

Richard Frederick

Maurice Nichols

President, Managing

Director and Director

President, Managing Director and Director of CDFL since 2018. Mr.

Nichols is registered as the ultimate designated person of CDFL. Mr.

Nichols will supervise all functional areas of CDFL. See experience set

out above under “Board of Governors, Management, Promoters and

Principal Holders

–

Mana

ement Experience

–

The Mort

e Broke

”.

Derek Ray Tripp

Managing Director and

Directo

Managing Director and Director of CDFL since 2018. Mr. Tripp will not

be engaged in registerable activities on behalf of CDFL.

Timothy Patrick Joseph

Wittig

Vice President and

Directo

Vice President and Director of CDFL since 2018. Mr. Wittig is registered

as a dealing representative of CDFL. See experience set out above under

“Board of Governors, Management, Promoters and Principal Holders –

Mana

ement Experience

–

The Mort

e Broke

”.

Barbara Dianne Insley

Chief Compliance

Officer and Chief

Operating Officer

Chief Compliance Officer and Chief Operating Officer of CDFL since

September, 2019. Ms. Insley is registered as a dealing representative of

CDFL.

Ms. Insley has been part of the securities industry for 25 years in various

legal and compliance roles. Ms. Insley practiced securities and

corporate/commercial law for public issuers and dealers from 1995 to

1999. From 1999 to 2000 Ms. Insley was corporate counsel at TSX

Venture Exchange before she was appointed Chief Compliance Officer

(Director, Compliance & Disclosure) in 2002 and continued until January

2016. Most recently, Ms. Insley was VP, Compliance at an independent

Dealer from September 2017 to June 2019, in charge of Product

Compliance and Risk (including exempt product), Privacy, Portfolio

Investment Management Group, Regulatory Change Management,

Compliance Polic

and Head Office reportin

Penalties, Sanctions, Bankruptcy, Insolvency and Criminal or Quasi-Criminal Matters

There are no penalties or sanctions imposed by a court or regulatory authority relating to a contravention of securities

legislation or cease trade orders that have been in effect for a period of more than 30 consecutive days, declarations

of bankruptcy, voluntary assignments in bankruptcy, proposals under any bankruptcy or insolvency legislation or

proceedings, arrangements or compromises with creditors, appointments of a receiver, receiver manager or trustee to

hold assets, that have been in effect during the ten years preceding the date of the Offering Memorandum against or

in connection with any of the directors, executive officers or control persons of the Trust, the Manager, the Mortgage

Broker, CDFL or Capital Direct II, or any issuer of which any director, executive officer or control person of the

Trust, the Manager, the Mortgage Broker, CDFL or Capital Direct II was a director, executive officer or control

person.

None of the Trust, the Manager, the Mortgage Broker, CDFL or Capital Direct II, or a director, executive officer or

control person of the Trust, the Manager, the Mortgage Broker, CDFL or Capital Direct II have pled guilty to or been

found guilty of: (a) a summary conviction or indictable offence under the Criminal Code (Canada); (b) a quasi-

criminal offence in any jurisdiction of Canada or a foreign jurisdiction; (c) a misdemeanour or felony under the

criminal legislation of the United States of America, or any state or territory of the United States of America; or (d)

an offence under the criminal legislation of any other foreign jurisdiction, save for Richard Nichols who pled guilty

to a charge of assault and received a sentence of 18 months probation.

- 27 -

CAPITAL STRUCTURE

The following are the details of the outstanding securities of the Trust:

Description of

Security

(1)

Number

Authorized

to be Issued

Price per

Security

Number Outstanding as at

February 29, 2024

(2)

Number Outstanding after

Maximum Offering

Class A Trust Units

Class C Trust Units

Class F Trust Units

Unlimited

Unlimite

$10

8,953,054.499

7,960,046.222

12,190,495.551

97,500,000

(3)

(1) The attributes and characteristics of the Units are set forth under the heading “Securities Offered – Terms of Securities”,

“The Trust - Material Contracts - Summary of the Declaration of Trust” and "The Trust - Material Contracts – Summary

of the Declaration of Trust – Redemption of Units”.

(2) One Class A Unit was issued to the Manager on the formation of the Trust. The balance of the Units have been issued

on a monthly basis since August 21, 2007 to Subscribers at a Subscription Price of $10 per Unit or pursuant to

reinvestment of distributions.

(3) Assuming all Units are issued at the Subscription Price of $10 per Unit. This number will vary if the Units are

subsequently sold at the Net Asset Value Per Unit.

Long Term Debt

The following table sets out information about outstanding debt of the Trust for which all or a portion is due, or may

be outstanding, more than 12 months from the date of this Offering Memorandum:

Description of debt

(including whether

secured)

Interest rate

(1)

Repayment

terms

Amount outstanding

at February 29, 2024

(2)

A committed revolving

credit facility, subject to

margin requirements on

eligible mortgage

investments, secured by a

general security agreement

including a fixed charge

over the real and personal

property of the Trust, the

Mortgage Broker, the

Manager and Capital

Direct II, a general

assignment of mortgages

agreement and a general

assignment of insurance

0.75% per annum

above the Prime

Lending Rate or at

1.5% per annum

above the Prime

Lending Rate and

2.2% per annum

above the CDOR

Rate or at 3% per

annum above the

CDOR Rate,

depending on the

Lenders advancing

the loan. See

"Material Contracts

- The Loan

reemen

On demand by

the Lenders

$117,663,023.63

(1) The interest rates are calculated by weighting the interest rates for the Lenders according to their share of the

borrowing limit, above the Prime Lending Rate and the CDOR Rate, respectively. The Trust has used the ATB

ISDA Agreement to enter into interest rate swap agreements in an effort to manage risks from fluctuations in

interest rates in the past in connection with the Lenders’ Loan. See The Trust – Material Contracts – The ATB

ISDA Agreement.

(2) The Trust is not obligated to repay any portion of this debt within 12 months from the date of this Offering

Memorandum unless a demand notice is issued to the Trust by the Lenders.

- 28 -

Prior Sales

The following table sets out the details of the prior sales of the Units within the last 12 months:

Date of Issuance Type of Security

Issued

Number of Securities

Issued

(1)

Price per Security Total Funds Received

February 29, 2024 Class A Units

Class C Units

Class F Units

29,571.4

67,540.82

207,961

$10

$295,714.00

$675,408.20

$2,079,610.00

January 31, 2024 Class A Units

Class C Units

Class F Units

40,149.23

134,679.703

244,687.482

$10

$401,492.30

$1,346,797.03

$2,446,874.82

December 29, 2023 Class A Units

Class C Units

Class F Units

8,335.89

79,997.68

120,501

$10

$83,358.90

$799,976.80

$1,205,010.00

November 30, 2023 Class A Units

Class C Units

Class F Units

108,929.34

79,417.54

217,451.608

$10

$1,089,293.40

$794,175.40

$2,174,516.08

October 31, 2023 Class A Units

Class C Units

Class F Units

162,628.53

158,854.369

138,285

$10

$1,626,285.30

$1,588,543.69

$1,382,850.00

September 29,

2023

Class A Units

Class C Units

Class F Units

6,785

50,362.77

62,700.002

$10

$67,850.00

$503,627.70

$627,000.02

August 31, 2023 Class A Units

Class C Units

Class F Units

82,516.18

72,940

108,333.5

$10

$825,161.80

$729,400.00

$1,083,335.00

July 31, 2023 Class A Units

Class C Units

Class F Units

22,889.33

128,577

140,619.754

$10

$228,893.30

$1,285,770.00

$1,406,197.54

June 30, 2023 Class A Units

Class C Units

Class F Units

24,742.12

250,688.48

132,670

$10

$247,421.20

$2,506,884.80

$1,326,700.00

May 31, 2023 Class A Units

Class C Units

Class F Units

9,739.12

20,355

97,214.522

$10

97,391.20

203,550.00

972,145.22

April 28, 2023 Class A Units

Class C Units

Class F Units

127,757.4

66,513.7

64,094.637

$10

$1,277,574.00

$665,137.00

$640,946.37

- 29 -

Date of Issuance Type of Security

Issued

Number of Securities

Issued

(1)

Price per Security Total Funds Received

April 3, 2023 Class A Units

Class C Units

Class F Units

Nil

75,000

13,700

$10

Nil

$750,000.00

$137,000.00

March 30, 2023 Class A Units

Class C Units

Class F Units

8,188.29

53,950

92,204

$10

$81,882.90

$539,500.00

$922,040.00

(1) Fractional Units have been issued to certain Unitholders pursuant to the distribution reinvestment plan of the Trust.

The Declaration of Trust provides that fractional Units may be issued and in certain circumstances, investors have

purchased partial Units.

In addition to the sale of Units in the table above, Unitholders of the Trust may also elect to have their distributions

reinvested in Units of the Trust. See “The Trust – Material Contracts – Summary of the Declaration of Trust –

Distributions”.

SECURITIES OFFERED

Terms of Securities

The beneficial interest in the Trust is divided into interests issuable as separate Units. The Trust is authorized to issue

an unlimited number of redeemable, non-transferable Class A, Class C and Class F Units. Except as otherwise

expressly provided below, each Unit represents an equal, undivided interest in the net assets of the Trust. Fractional

Units will be issued. On formation of the Trust, one Class A Unit was issued to the Manager.

The Trust may issue additional Units from time to time. Unitholders do not have any pre-emptive rights whereby

additional Units proposed to be issued are first offered to existing Unitholders. The Units are offered at a price of

$10.00 per Unit, however, the Manager may subsequently set the price or the value of the consideration for which

Units may be issued at the Net Asset Value Per Unit.

Each Unit within a particular class will be of equal value, however, the value of a Unit in one class may differ from

the value of a Unit in another class. Each Unit of a particular class entitles the Unitholder to the same rights and

obligations as a Unitholder of any other Unit of such class and no Unitholder in respect of each class is entitled to any

privilege, priority or preference in relation to any other Unitholders. Each Unitholder is entitled to one vote for each

whole Unit held and, subject to an adjustment in a Unitholder’s proportionate share as a result of the date of first issue

of a Unit in the first Fiscal Year, is entitled to participate equally with respect to any and all distributions made by the

Trust, including distributions of Net Income and Net Realized Capital Gains, if any. On termination, the Unitholders

of record holding outstanding Units are entitled to receive any assets of the Trust remaining after payment of all debts,

liabilities and liquidation expenses of the Trust and the payment of the redemption proceeds to each Unitholder.

Subscription for Units

The Manager is offering the Units for sale in all of the Provinces and Territories of Canada at a Subscription Price of

$10.00 per Unit. The maximum Offering amount is $975,000,000. Each investor must subscribe for a minimum of

$5,000.

Subscription Procedure

Investors in all of the Provinces and Territories of Canada

may purchase Units of the Trust through a Dealer. The

aggregate Subscription Price is payable upon subscription, by certified cheque or by bank draft payable to the Dealer

or as otherwise directed by the Dealer. Dealers should contact the Manager for further instructions. If purchasing

through CDFL, the aggregate Subscription Price is payable upon subscription, by wire to the Manager, or to such

- 30 -

other account determined by the Manager. If purchasing Units through a registered account, funds should be available

for transfer to Bennett Jones LLP, in trust, or to such other trust account determined by the Manager.

Class A Units and Class C Units are only available to investors who purchase through CDFL or a Dealer that has

signed an agreement with the Manager.

Class F Units are available to investors who participate in fee-based programs through authorized third-party Dealers

who have signed an agreement with the Manager. Instead of paying per-transaction sales charges, or through

embedded fees, investors who purchase Class F Units pay ongoing fees directly to their Dealer for investment advice

and other services. The Trust pays a reduced Manager’s Fee to the Manager in respect of the Class F Units.

No financing of the aggregate Subscription Price will be provided by the Manager or CDFL.

Each prospective and qualified investor who desires to subscribe for Units must complete and sign the form of

Subscription Form (including the applicable certificates and risk acknowledgement forms) specifying the number of

Units being subscribed for and follow the instructions set forth therein, as follows:

(a) if the Subscriber is purchasing Units pursuant to the OM Exemption, complete and sign Form 45-

106F4 – Risk Acknowledgement (“Form 45-106F4”) attached as Appendix I to the Subscription

Form (a copy is to be retained by the Subscriber and delivered to the Trust);

(b) if the Subscriber is resident in Manitoba, Prince Edward Island, the Northwest Territories, the Yukon

or Nunavut, and is purchasing Units having an aggregate acquisition cost of greater than $10,000

pursuant to the OM Exemption, the Subscriber must also be an Eligible Investor and complete and

sign the Eligible Investor Questionnaire attached as Appendix II to the Subscription Form;

Scotia or New Brunswick and is relying on the OM Exemption, complete Schedules 1 and 2 attached

to the Form 45-106F4. If the Subscriber is investing greater than $10,000 in a 12 month period, the

Subscriber must meet the definition of “Eligible Investor”. If the Subscriber is investing greater

than $30,000 (but no more than $100,000) in a 12 month period, Eligible Investors must seek

suitability advice with respect to the investment from a portfolio manager or Dealer. These limits

do not apply to Subscribers who meet the definition of “Eligible Investor” because they are

“Accredited Investors” as defined in NI 45-106 or non-individuals;

(d) if the Subscriber is an “Accredited Investor” as defined in NI 45-106 and is purchasing Units

pursuant to the Accredited Exemption set out in section 2.3 of NI 45-106, complete and sign the

Accredited Investor Status Certificate attached as Appendix III to the Subscription Form (including

the Form 45-106F9 risk acknowledgement form contained therein, if applicable);

(e) if the Subscriber is purchasing Units through CDFL, a certified cheque or bank draft for the

aggregate Subscription Price payable for the Units subscribed for, made payable to Capital Direct

Management Ltd., or to such other trust account determined by CDFL, or have funds available in

your registered account where your purchase is being made for transfer to Bennett Jones LLP, or to

such other trust account determined by the Manager; and

(f) if the Subscriber is purchasing Units through a Dealer, deliver to the Dealer through whom the

purchase is being conducted a certified cheque or bank draft for the aggregate Subscription Price

payable for the Units subscribed for, made payable to the Dealer through whom the purchase is

being conducted or as otherwise directed by the Dealer through whom the purchase is being

conducted.

Subscriptions will be received subject to prior sale and acceptance of the investor’s subscription, in whole or in part

(subject to compliance with applicable securities laws), by the Manager on behalf of the Trust.

The purchase price per Unit will be an amount equal to the Subscription Price.

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The cash amounts, Subscription Forms and other documents will be held in trust by the Manager and released upon

Closing. Where required pursuant to NI 45-106 the subscription amount will be held in trust until midnight on the

second Business Day after the investor signs a Subscription Form. Closings will occur on a continuous basis from

time to time as determined by the Manager.

Qualified Investors

The Manager is offering the Units for sale in all of the Provinces and Territories of Canada

by way of private placement

pursuant to the exemptions from the prospectus requirements afforded by NI 45-106.

The prospectus exemptions relieve the Trust from the provisions of the applicable securities laws of the applicable

Provinces and Territories, which otherwise would require the Trust to file and obtain a receipt for a prospectus.

Accordingly, prospective investors for Units will not receive the benefits associated with a subscription for securities

issued pursuant to a filed prospectus, including the review of material by securities regulatory authorities.

All sales of Units must be conducted through a Dealer.

Acceptance of Subscriptions

Subscriptions received are subject to rejection or allotment in whole or in part by the Manager on behalf of the Trust

within 30 days of their receipt by the Manager. The Manager reserves the right to close the subscription books at any

time without notice. In the case of rejection of a subscription the Manager will, forthwith return the subscription and

the funds accompanying the subscription without interest thereon. In the case of acceptance, the Manager will

forthwith forward either directly or through the applicable Dealer, a notice to the Subscriber indicating the number of

Units and fractions thereof, if any, to be purchased by such Subscriber. The Manager is not obligated to accept any

subscriptions, and will reject any subscription which the Manager considers to be not in compliance with applicable

securities laws and regulations.

Subject to the contractual or statutory rights of action and a two day right of withdrawal provided for in this Offering

Memorandum, and subject to applicable securities laws, an investor’s subscription may not be withdrawn, cancelled,

terminated or revoked by the investor for a period of 30 days from the date of receipt of the subscription by the

Manager. Units of the Trust will be issued to an investor if a Subscription Form is received by the Trust and accepted

by the Manager and if payment of the aggregate Subscription Price is made by certified cheque, bank draft or wire

transfer or through the applicable Dealer. An investor who subscribes for Units by executing and delivering a

Subscription Form will become a Unitholder after the Manager accepts such subscription, the Trust has received the

aggregate Subscription Price and the Unitholder is entered into the register of Unitholders.

Unit Certificates

No certificates evidencing ownership of the Units will be issued to a Unitholder. Following each purchase or

redemption of Units, Unitholders will receive a written confirmation indicating details of the transaction including the

number and dollar value of the Units purchased or redeemed and the number and dollar value of Units held by the

Unitholder following such purchase or redemption. In certain limited circumstances, the Manager will prepare

certificates evidencing ownership of the Units if such certificates are required for brokerage house accounting

purposes.

Trading and Resale Restrictions

This offering of Units is made only on a private placement basis to investors who are eligible to purchase on an exempt

basis under, and subject to compliance with, applicable securities laws. The Trust is not a reporting issuer in any of

the Provinces or Territories of Canada and does not presently intend to become a reporting issuer in any Province or

Territory of Canada. The Units will not be transferable without the Manager’s prior consent. There is no market for

the Units and the Units are not transferable. The transferability of the Units will also be subject to resale restrictions

under applicable securities laws.

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REPURCHASE REQUESTS

The Trust received Retraction requests from Unitholders as follows during the two most recently completed financial

years:

Description

of security

Date of

end of

financial

Number of

securities

with

outstanding

repurchase

requests on

the first

day of the

year

Number of

securities for

which

investors

made

repurchase

requests

during the

year

Number of

securities

repurchased

during the

year

Average

price paid

for the

repurchased

securities

Source of

funds used

to complete

the

repurchases

Number of

securities

with

outstanding

repurchase

requests on

the last day

of the year

Class A

Units

Dec.

31/23

0 479,223.74 479,223.74 $10 (1) 0

Class C

Units

Dec.

31/23

0 1,603,554.76 1,603,554.76 $10 (1) 0

Class F

Units

Dec.

31/23

0 1,255,571.42 1,255,571.42 $10 (1) 0

Class A

Units

Dec.

31/22

0 791,655.73 791,655.73 $10 (1) 0

Class C

Units

Dec.

31/22

0 1,622,776.20 1,622,776.20 $10 (1) 0

Class F

Units

Dec.

31/22

0 848,677.60 848,677.60 $10 (1) 0

(1)

Repurchases are funded from monies received from the payout of existing Mortgages, monies received from Mortgage

payments, funds received from the sale of Units to Subscribers and/or the utilization of the Lenders' Loan.

From January 1, 2024 to February 29, 2024, the Trust has received Retraction requests from Unitholders as follows:

Description

of securit

Beginning

and end

dates of

the perio

Number of

securities

with

outstanding

repurchase

requests on

the first

day of the

Number of

securities for

which

investors

made

repurchase

requests

during the

erio

Number of

securities

repurchased

during the

erio

Average

price paid

for the

securities

repurchased

Source of

funds used

to complete

the

repurchases

Number of

securities

with

outstanding

repurchase

requests on

the last day

of the

erio

Class A

Units

Jan. 1,

2024 to

Feb. 29,

2024

0 172,880.60 172,880.60 $10 (1)

- 33 -

Description

of securit

Beginning

and end

dates of

the perio

Number of

securities

with

outstanding

repurchase

requests on

the first

day of the

Number of

securities for

which

investors

made

repurchase

requests

during the

erio

Number of

securities

repurchased

during the

erio

Average

price paid

for the

securities

repurchased

Source of

funds used

to complete

the

repurchases

Number of

securities

with

outstanding

repurchase

requests on

the last day

of the

erio

Class C

Units

Jan. 1,

2024 to

Feb. 29,

2024

72,215.04 72,215.04 $10 (1)

Class F

Units

Jan. 1,

2024 to

Feb. 29,

2024

141,213.91 141,213.91 $10 (1)

(1)

Repurchases are funded from monies received from the payout of existing Mortgages, monies received from Mortgage

payments, funds received from the sale of Units to Subscribers and/or the utilization of the Lenders' Loan.

INCOME TAX CONSEQUENCES AND CERTAIN DEFERRED PLAN ELIGIBILITY

You should consult your own professional advisers to obtain advice on the tax consequences that apply to you.

In the opinion of Koffman Kalef LLP, tax counsel to the Trust, the following is a fair summary of the principal

Canadian federal income tax considerations generally relevant to individual investors who, for purposes of the Tax

Act, are resident in Canada, deal at arm’s length with the Trustee and Manager and beneficially hold their Units as

capital property.

This summary is based on the assumption that the Trust will qualify as a “Unit Trust”. To qualify as a Unit Trust the

Trust must satisfy each of the following conditions:

(i) throughout the period or periods that are in the current year the only undertaking of the Trust was:

(A) the investing of its funds in property (other than real property or an interest in real

property),

(B) the acquiring, holding, maintaining, improving, leasing or managing of any real property

or an interest in real property, that is capital property of the Trust, or

(ii) throughout the relevant periods at least 80% of the Trust’s property consisted of any combination

of:

(A) cash,

(B) bonds, debentures, mortgages, hypothecary claims, notes and other similar obligations,

(D) real property situated in Canada and interests in real property situated in Canada;

- 34 -

(iii) either

(A) not less than 95% of the Trust’s income for the current year was derived from, or from the

disposition of, investments described in paragraph (ii), or

(B) not less than 95% of the Trust’s income for each of its relevant periods was derived from,

or from the disposition of, investments described in subparagraph (ii); and

(iv) throughout the relevant periods, not more than 10% of the Trust’s property consisted of bonds,

securities or shares in the capital stock of any one corporation or debtor.

This summary assumes that at all relevant times there will be no fewer than 150 beneficiaries of a class of units of the

Trust, that qualified for distribution to the public, holding not less than 100 units of the class, having an aggregate fair

market value of not less than $500 and, as such, the Trust will not only be a Unit Trust but also a mutual fund trust.

The Trust may lose its status as a mutual fund trust if it is maintained primarily for the benefit of non-resident persons.

The terms of the Declaration of Trust provide that no Subscriber may be a non-resident of Canada. Thus, it is not

reasonable to consider the Trust is being maintained primarily for the benefit of non-resident persons.

This summary is based on the current provisions of the Tax Act and the regulations under it, all publicly announced

proposals to amend the Tax Act and its regulations, and the published administrative practices of the Canada Revenue

Agency. It is assumed that all amendments will be passed as proposed.

This summary is of a general nature and is not intended to be exhaustive. It does not take into account provincial,

territorial or foreign tax laws. Investors should consult their own tax advisers with respect to the tax consequences in

their particular circumstances. No application has been made nor is it intended that any application be made for an

advanced income tax ruling with respect to the tax consequences of acquiring or holding Units in the Trust.

Taxation of the Trust

The Trust must pay tax on its Net Income and Net Realized Capital Gains for a year, except to the extent such amounts

are distributed to Unitholders. Losses incurred by the Trust cannot be allocated to Unitholders but may be deducted

by the Trust in future years in accordance with the Tax Act. The Declaration of Trust requires the Trust to pay or make

payable to Unitholders all of its Net Income and Net Realized Capital Gains each year, and, as a result, the Trust will

not pay any tax under Part I of the Tax Act.

The Trust may be denied a deduction in respect of the portion of an allocation made to a Unitholder on a redemption

of a Unit that is greater than the capital gain that would otherwise have been realized by the Unitholder on redemption

of the Unit.

Provided the Trust continues to qualify as a mutual fund trust it will not be subject to tax under Part XII.2 of the Tax

Act on its “designated income” regardless of whether it has a “designated beneficiary”. A “designated beneficiary”

is defined in the Tax Act to include non-residents of Canada and certain tax-exempt entities. “Designated income” is

defined in the Tax Act to include, generally, taxable capital gains from the disposition of taxable Canadian property,

and income from Canadian businesses and real estate.

Provided the Trust continues to qualify as a mutual fund trust it will not be subject to alternative minimum tax.

The Trust will not be a specified investment flow-through trust, or SIFT trust, provided units of the Trust are not listed

or traded on a stock exchange or other public market. For these purposes the term “public market” is defined in the

Tax Act to include any trading system or other organized facility on which securities that are qualified for public

distribution are listed or traded, but does not include a facility that is operated solely to carry out the issuance of a

security or its redemption, acquisition or cancellation by its issuer. As such no Units of the Trust are currently listed

or traded on a stock exchange or other public market.

- 35 -

Taxation of Unitholders

Each Unitholder will be required to include in computing his or her income for a particular year the portion of the Net

Income, and the taxable portion of Net Realized Capital Gains, of the Trust for the year paid or made payable to the

Unitholder (including any amounts paid on the redemption of Units). The adjusted cost base to the Unitholder of his

or her Units will be subject to the averaging provisions of the Tax Act. Each year the Trust will advise each Unitholder

of the share of the Net Income and taxable portion of Net Realized Capital Gains of the Trust distributed to that

Unitholder.

Any amount in excess of the Net Income and the taxable portion of Net Realized Capital Gains of the Trust that is

distributed to a Unitholder in a year is not generally included in computing the Unitholder’s income for the year.

However, the payment of any such excess amount, other than as proceeds of disposition of a Unit or a part thereof,

will reduce the adjusted cost base to the Unitholder of his or her Unit except to the extent that such amount either was

included in the income of the Unitholder or was his or her share of the non-taxable portion of the Net Realized Capital

Gains of the Trust for the year in respect of which the taxable portion was designated by the Trust in respect of the

Unitholder. If the adjusted cost base of the Unit is a negative amount, such amount will be a capital gain in the year

to the Unitholder. The adjusted cost base of the Unit is then reset to nil.

Where an investor acquires Units of the Trust after the Closing, the Net Asset Value of the assets of the Trust may

reflect Net Income and Net Realized Capital Gains which have not been distributed. The Unitholder is subject to tax

on his or her share of those amounts when paid or made payable, even though the amounts were reflected in the

purchase price paid for the Units. Similarly, the Unitholder’s share of capital gains realized after the Units were

acquired will include the portion of the gains, if any, that accrued before he or she acquired the Units.

As the Trust will generate its income principally from interest on mortgages on Canadian real estate, it is unlikely that

the Trust will receive dividends, foreign income or realize capital gains. However, if such income or capital gains are

received, the Trust intends to make designations under the Tax Act so that taxable dividends received from taxable

Canadian corporations, income from foreign sources and Net Realized Capital Gains distributed to Unitholders, if

any, will retain their character in the hands of Unitholders. Distributed amounts that retain their character as taxable

dividends on shares of taxable Canadian corporations will be subject to the normal gross-up and tax credit rules in the

Tax Act applicable to individuals. Each taxable Unitholder will generally be entitled to a tax credit for any foreign

taxes paid by the Trust in respect of his or her share of income from foreign sources.

On a redemption or other disposition of Units, including a redemption of Units on the termination of the Trust, the

Unitholder will realize a capital gain to the extent that the proceeds of disposition exceed the adjusted cost base of the

Units, or a capital loss to the extent that the adjusted cost base of the Units exceeds the proceeds of disposition. One-

half of a capital gain must be included in income as a taxable capital gain. One-half of a capital loss is an allowable

capital loss, which may be applied against taxable capital gains realized in the year. Allowable capital losses in excess

of taxable capital gains may be carried back three years or forward indefinitely and applied against taxable capital

gains realized in those earlier or later years. The amount of allowable capital losses that may be carried back to prior

periods will be adjusted under the Tax Act to reflect the applicable inclusion rate.

Individuals (including most trusts) are required to pay tax equal to the greater of tax determined under the ordinary

rules and alternative minimum tax. Amounts distributed by the Trust that are taxable dividends from taxable Canadian

corporations or the taxable portion of Net Realized Capital Gains, and capital gains realized on the disposition of

Units, may increase a Unitholder’s liability for alternative minimum tax.

Investment by Deferred Plans

The Trust qualifies as a “mutual fund trust” as defined by the Tax Act. The Units of the Trust are therefore a qualified

investment under the Tax Act for Deferred Plans.

If the Trust ceases to be a mutual fund trust, the Units may not constitute a qualified investment for Deferred Plans.

- 36 -

Deferred Plans that hold a non-qualified investment will pay regular tax on income from the non-qualified investment

and in respect of a non-qualified investment or a prohibited investment are liable to a penalty tax of 50% calculated

on the fair market value of the property at the later of:

(i) the time the property was acquired by the Deferred Plan; and

(ii) the time the property became a non-qualified investment or a prohibited investment of the Deferred

Plan.

The Units will be a prohibited investment for a Deferred Plan where the holder of the Deferred Plan has a “significant

interest” in the Trust. An individual will have a significant interest in the Trust if that individual together with persons

with which the individual does not deal at arm’s length holds at that time interests as a beneficiary under the Trust

that have a fair market value of 10% or more of the fair market value of the interests of all the beneficiaries under the

Trust. Income and realized capital gains attributable to a prohibited investment are subject to a penalty tax of 100%.

COMPENSATION PAID TO SELLERS AND FINDERS

The Manager plans to sell the Units through Dealers, including CDFL. The Manager will pay to CDFL, and in its

discretion, may pay to Dealers, the following fees, which fees will be negotiated between the Manager and the Dealer,

as applicable, however, the maximum fee that the Manager is authorized to pay to a Dealer, including CDFL is: (i) a

commission equal to 1.5% of the gross proceeds received by the Trust from the sale of Class A Units; and (ii) an

ongoing Trailer Fee equal to 1.0% of the gross proceeds received by the Trust from the sale of Class A Units and Class

C Units made by the Trust through the Dealer. CDFL may pay a commission of 0.3% to dealing representatives of

CDFL who facilitate purchases of Class A Units and Class C Units. No service fees are payable in respect of the Class

F Units. Any fees to be paid to Dealers will be disclosed to Subscribers prior to their purchase of the Units.

In addition, the Manager will pay a monthly Dealer Services Fee to CDFL in consideration for CDFL performing

dealer services in connection with prospectus exempt purchases in the Jurisdictions. The Dealer Services Fee is equal

to a fixed amount of $15,000 per month; however, this amount will be subject to further consideration at the end of

each year. The Dealer Services Fee will be used by CDFL to cover its general and administrative costs of operation.

The amount of the Dealer Services Fee may be reviewed more frequently at the discretion of the Ultimate Designated

Person of CDFL to confirm that such Dealer Services Fee is reasonable and sufficient to cover the operations of CDFL.

CDFL may, in its sole discretion, pay a fee to selling agents and finders who assist CDFL in identifying prospective

Subscribers under written referral agreements. The fee will be negotiated between CDFL and the selling agent or

finder, as applicable, however, the maximum fee that CDFL is authorized to pay to a selling agent or finder who assists

CDFL in identifying prospective Subscribers is an ongoing Trailer Fee equal to 1.0% of the gross proceeds received

by the Trust from the sale of Class A Units and Class C Units by the selling agent or finder. The material terms of the

referral agreement and any fees to be paid to sellers and finders will be disclosed to Subscribers prior to their purchase

of the Units.

The Manager may, at its sole discretion, pay a 1.5% cashback fee to those Subscribers of Class A Units only, for new

subscriptions made directly, or arranged for transfer in, through CDFL, instead of paying any such commission to a

dealing representative. This cashback offered by the Manager may be modified or discontinued by the Manager at

any time.

The Manager is a connected issuer and is a related issuer of CDFL, the Mortgage Broker and Capital Direct II, as such

terms are defined in NI 33-105. The Manager has determined that it is a connected issuer and a related issuer of

CDFL, the Mortgage Broker and Capital Direct II by virtue of CDFL’s role as an Exempt Market Dealer engaged to

sell the Class A Units and Class C Units offered hereby and based on the fact that the Manager, CDFL, the Mortgage

Broker and Capital Direct II have common directors, officers and securityholders. See "Risk Factors - Conflicts of

Interest”.

- 37 -

RISK FACTORS

In management’s opinion, the investment is Medium risk in nature. In addition to the factors set forth elsewhere

in this Offering Memorandum, prospective investors should carefully consider the following factors:

Reliance on the Manager

In assessing the risk of an investment in the Units offered hereby, potential investors should be aware that they will

be relying on the good faith, experience and judgment of the directors and officers of the Manager to manage the

affairs of the Trust. There is no guarantee that the directors and officers of the Manager will remain unchanged. It is

contemplated that the directors, officers and employees of the Manager will devote to the Trust’s affairs only such

time as may be reasonably necessary to conduct its affairs. Although investments made by the Trust will be carefully

chosen by the Mortgage Broker, there is no representation made by the Manager that such investments will have a

guaranteed return to Unitholders nor that losses will not be suffered by the Trust from such investments.

Borrowing

The Trust may borrow up to the greater of $1,000,000 and 50% of the book value of the Trust’s Mortgage portfolio,

which could increase the risk of the Trust’s insolvency and the risk of Unitholder liability. There can be no assurance

that such a strategy will enhance returns and in fact the strategy may reduce returns. The security which the Trust is

required to furnish includes an assignment of its Mortgages to a third party lender. If the Trust is unable to service its

debt to such lender, a loss could result if the lender exercises its rights of foreclosure and sale.

Availability of Investments

The ability of the Trust to make investments in accordance with the objectives of the Trust will depend upon the

availability of suitable investments and the amount of Mortgages available. The Trust will compete with individuals,

trusts and institutions for the investment in the financing of real properties. Many of these competitors have greater

resources than the Trust or operate with greater flexibility. At present, the near-prime mortgage market is

underserviced. However, if new lenders enter the market, the yields which are now available may decrease and the

risk/reward ratio may become less favourable to the Trust than it is currently.

Role of the Trustee

The Trustee does not supervise or monitor the Manager in any respect. The powers, authorities and responsibilities

of the Trustee are limited to those expressly set forth in the Declaration of Trust. All other powers, authorities and

responsibilities are those of the Manager. The Trustee may not in all instances hold all of the Trust Property and, for

example, may not hold Mortgages where the Trust co-lends with other lenders or where Mortgages are, or are proposed

to be, subject to foreclosure.

Subordinate and Non-Conventional Financing

Subordinate financing, which will be carried on by the Trust, is generally considered a higher risk than primary

financing. Mortgages will be secured by a charge, which is in a first or subsequent-ranking position upon or in the

underlying real estate. When a charge on Real Property is in a position other than first-ranking, it is possible for the

holder of a prior charge on the Real Property, if the borrower is in default under the terms of its obligations to such

holder, to take a number of actions against the borrower and ultimately against the Real Property in order to realize

the security given for that loan. Such actions may include a foreclosure action, or an action forcing the Real Property

to be sold. A foreclosure action may have the ultimate effect of depriving any person having other than a first-ranking

charge on the Real Property of the security of the Real Property. If an action is taken to sell the Real Property and

sufficient proceeds are not realized from such sale to pay off all creditors who have prior charges on the Real Property,

the holder of a subsequent charge may lose its investment or part thereof to the extent of such deficiency unless it can

otherwise recover such deficiency from other property owned by the debtor. The Trust will make investments in

Mortgages where the loan exceeds 75% of the value of the Real Property which is mortgaged, which exceeds the

investment limit for conventional bank Mortgage lending.

- 38 -

Marketability

There is currently no market for Units and it is not anticipated that any market will develop. Units are not transferable,

except if required as a result of a Unitholder becoming a non-resident. In such situations, securities requirements may

prohibit or restrict transferability of Units. Consequently, Unitholders will not be able to resell their Units. See

“Securities Offered – Terms of Securities” and “The Trust – Material Contracts – Summary of the Declaration of Trust

– Forced Redemption Upon Non-Residency” and “Resale Restrictions”.

Lack of Liquidity

The Units are not transferable without the Manager’s prior consent and there are limits on the rights of a Unitholder

to retract their Units. In addition, any Retraction of Class A Units prior to the fifth anniversary of the issue of the

Class A Units, and any Retraction of Class C Units or Class F Units prior to the 180th day from the issue of the Class

C Units or Class F Units, will be at a discount to their Net Asset Value Per Unit. This investment may not be suitable

for investors who will require short term liquidity.

Inadequate Diversification of Mortgage Portfolio

The composition of the Trust’s Mortgage portfolio may vary widely from time to time and may be concentrated by

type of security, industry or geography, resulting in the Mortgage portfolio being less diversified than anticipated. A

lack of diversification may result in the Trust being exposed to economic downturns or other events that have an

adverse and disproportionate effect on particular types of security, industry or geography.

Nature of the Investments

Investments in Mortgages are affected by general economic conditions, local real estate markets, demand for housing,

fluctuation in occupancy rates and various other factors. Investments in Mortgages are relatively illiquid. This will

tend to limit the Trust’s ability to vary its portfolio promptly in response to changing economic conditions. The Trust’s

investment in Mortgage loans will be secured by real estate. All Real Property investments are subject to elements of

risk. While independent appraisals may be obtained before the Trust makes any Mortgage investment, the appraised

values provided therein, even where reported on an “as is” basis are not necessarily reflective of the market value of

the underlying Real Property, which may fluctuate. In addition, the appraised values reported in independent

appraisals may be subject to certain conditions, including the completion or rehabilitation of the Real Property

providing security for the investment. There can be no guarantee that these conditions will be satisfied and if, and to

the extent, they are not satisfied, the appraised value may not necessarily reflect the market value of the Real Property

at the time the conditions are satisfied.

The Trust’s income and funds available for distribution to Unitholders would be adversely affected if a significant

number of borrowers were unable to pay their obligations to the Trust or if the Trust were unable to invest its funds

in Mortgages on economically favourable terms. On default by a borrower, the Trust may experience delays in

enforcing its rights as lender and may incur substantial cost in protecting its investments.

Tax Matters

The return on the Unitholder’s investment in Units is subject to changes in Canadian federal and provincial tax laws,

tax proposals, other governmental policies or regulations and governmental, administrative or judicial interpretation

of the same. There can be no assurance that tax laws, tax proposals, policies or regulations, or the interpretation

thereof, will not be changed in a manner which will fundamentally alter the tax consequences to Unitholders acquiring,

holding or disposing of Units.

If the Trust ceases to meet the requirements for a registered investment as a mutual fund trust, registration of the Trust

may be revoked. In such a case, Units will cease to be qualified investments for Deferred Plans. This could result in

Deferred Plans which continue to hold Units becoming liable for a penalty tax.

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Remedies in the Event of Restructuring and Third Party Claims

The Trust is not a legally recognized entity within the relevant definitions of the Bankruptcy and Insolvency Act

(Canada), and the Companies’ Creditors Arrangement Act (Canada) or in some cases, the Winding Up and

Restructuring Act (Canada) and therefore would not be able to access the remedies available thereunder in the event

that a restructuring is necessary. As a result, Unitholders may not avail themselves of the remedies typically available

to a shareholder of a corporate entity. As a result, distributions otherwise payable may be subordinate to third party

debt such as Mortgages, bank facilities and other borrowing arrangements.

Trust's Obligation to Pay for Costs of the Offering

Agreements entered into with selling agents and finders retained by the Trust may require the Trust to pay all reasonable

expenses of the Offering and all reasonable out of pocket expenses incurred by such selling agents and finders in

connection with the Offering including, without limitation, reasonable fees and expenses of legal counsel of such selling

agents and finders. However, since the inception of the Trust, the Manager has paid out of its Manager’s Fee, all

commissions and Trailer Fees paid to selling agents.

Conflicts of Interest

Due to the relationships and contractual arrangements outlined elsewhere in this Offering Memorandum, there is the

potential for conflicts of interest between the Trust, the Manager, the Mortgage Broker, CDFL and Capital Direct II.

As the Manager’s directors, officers and securityholders are also directors, officers and securityholders of the

Mortgage Broker, CDFL and Capital Direct II, there may be conflicts of interest if the interests of these companies is

inconsistent. Although none of the directors or officers of the Manager will devote all of his or her full time to the

business and affairs of the Manager, each will devote as much time as is necessary to manage or advise on the business

and affairs of the Manager. In addition, the Board of Directors is required by law to act honestly and in good faith

with a view to the best interests of the Manager and to disclose the nature and extent of any interest that they may

have in any actual or proposed material contract or transaction with the Manager. If a conflict of interest arises at a

meeting of the Board of Directors, any director in a conflict will disclose the nature and extent of his or her interest

and act in accordance with applicable corporate law.

Mortgage Broker

The Manager, CDFL and Capital Direct II are connected issuers and are related issuers of the Mortgage Broker, as

such terms are defined in NI 33-105. The Manager, CDFL and Capital Direct II have determined that they are

connected issuers and may be considered related issuers of the Mortgage Broker based on the fact that the Manager,

CDFL, Capital Direct II and the Mortgage Broker have common directors, officers and securityholders. In addition,

the Trust is a connected issuer and a related issuer of the Mortgage Broker, as such terms are defined in NI 33-105, as

it is managed by the Manager and its activities are overseen by a Board of Governors consisting of five persons, three

of whom are also directors, officers and securityholders of the Manager, CDFL, the Mortgage Broker and Capital

Direct II.

CDFL

The Manager, the Mortgage Broker and Capital Direct II are connected issuers and related issuers of CDFL, as such

terms are defined in NI 33-105. The Manager, the Mortgage Broker and Capital Direct II have determined that they

are connected issuers and may be considered related issuers of CDFL by virtue of CDFL’s role as an Exempt Market

Dealer engaged to sell the Class A Units and the Class C Units offered hereby, on a non-exclusive basis, and based

on the fact that the Manager, the Mortgage Broker, Capital Direct II and CDFL have common directors, officers and

securityholders, and CDFL is currently considered a “captive dealer” as defined by CSA Staff Notice 31-343 –

Conflicts of Interest in Distributing Securities of Related or Connected Issuers because it solely or primarily distributes

securities of related or connected issuers. In addition, the Trust is a connected issuer and a related issuer of CDFL, as

such terms are defined in NI 33-105, as it is managed by the Manager and its activities are overseen by a Board of

Governors consisting of five persons, three of whom are also directors, officers and securityholders of CDFL, the

Mortgage Broker and Capital Direct II. Under the Cost Sharing and Dealer Services Fee Agreement, the Manager and

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CDFL share common premises and services, including human resources, administration, legal, accounting and

information technology. Additionally, in connection with the distribution of Class A Units and Class C Units, CDFL

receives commissions or Trailer Fees from the Manager and CDFL may pay a commission of 0.3% to dealing

representatives of CDFL who facilitate purchases of Class A Units and Class C Units. Dealing representatives,

supervisory staff and directors of CDFL are engaged in other business activities outside of their duties with CDFL,

which may include being a director, officer, licensed mortgage broker or employee of a related entity or related issuer.

The dealer services fee paid by CDML to CDFL was $15,000 per month for the full calendar year of 2022.

In light of the potential conflicts of interest arising from the foregoing, CDFL has adopted polices and procedures for

identifying and responding to conflicts of interest by avoiding, controlling or disclosing conflicts of interest, however

Unitholders should be aware that such conflicts of interest do exist. CDFL attempts to control conflicts of interest

through employing a Chief Compliance Officer to identify existing material or potential conflicts of interest, but given

the common management of the Manager and CDFL, conflicts of interest are impossible to completely avoid. Further

disclosure regarding such conflicts is made by CDFL to its clients in client disclosure documents, on its website, in

trade confirmation reports and in marketing materials. Any Unitholders who are purchasing Units through CDFL

should read such materials and understand the relationship between CDFL, the Manager, the Trust, the Mortgage

Broker and Capital Direct II as related parties.

As disclosed in this Offering Memorandum, net subscription proceeds from the Offering will be used for Mortgages

and Authorized Interim Investments and are not applied for the benefit of CDFL. See the section entitled “Material

Contracts”.

CDFL acts as the Exempt Market Dealer for the Manager to execute purchases of Class A Units and Class C Units

and CDFL is compensated by the Manager for this service.

CDFL may agree in the future to act as an Exempt Market Dealer in respect of offerings of securities by other entities

or third-party companies that may compete directly or indirectly with the Trust. CDFL has, however, agreed to use

commercially reasonable efforts to perform its duties and responsibilities under the Cost Sharing and Dealer Services

Fee Agreement in a conscientious, reasonable and competent manner, honestly and in good faith, and in compliance

with applicable securities laws.

The Trust will be subject to various conflicts of interest arising from its relationship with the Mortgage Broker, the

Manager, CDFL, Capital Direct II, Affiliates of the Mortgage Broker, and the officers and directors thereof. In

addition, there may be situations where the interests of the Trust conflict with the interests of the officers and directors

of the Manager. The risk exists that such conflicts will not be resolved in the best interests of the Trust and the

Unitholders. Among the factors which should be considered by prospective investors, are the following:

(a) Agreements Between the Trust and the Manager. Transactions between the Trust, the Mortgage

Broker, the Manager, CDFL, Capital Direct II and one or more of the Affiliates or associates of the

Mortgage Broker or the officers and directors thereof may be entered into without the protections

of arm’s length bargaining. Therefore, situations may arise in which the Mortgage Broker or the

Manager may be making determinations which could benefit itself, Affiliates or its associates or

its officers or directors to the detriment of the Trust or the Unitholders. Unitholders must rely on

the standard of care owed by the Manager to all Unitholders as set out in the Declaration of Trust

to prevent over reaching by others in transactions with the Trust.

(b) Directors and Officers of the Mortgage Broker, the Manager and CDFL. They will devote to the

Trust’s affairs only such time as may be necessary to conduct its affairs and to discharge their

fiduciary obligations to the Trust.

placing or arranging Mortgages against Real Properties and performing due diligence. The

Mortgage Broker may also initially fund a Mortgage at a specified interest rate and then syndicate

the Mortgage at a higher or lower interest rate to entities such as the Trust. CDFL will also receive

fees pursuant to the Cost Sharing and Dealer Services Fee Agreement.

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(d) Sale of Mortgages. In order to ensure adequate deal flow for both the Trust and the Manager, the

Manager may from time to time sell Mortgages within its portfolio to other lenders and reinvest

the proceeds. As a result of these sales, additional fees will be paid to the Mortgage Broker, to the

indirect benefit of the principals and shareholders of the Manager. Unitholders must be prepared

to accept that the Manager will use its discretion in turning over the portfolio in good faith and in

what it believes to be the best interests of the Trust.

Personal Liability of Unitholders

The Declaration of Trust provides that no Unitholder shall be held to have any personal liability as such, and no resort

shall be had to a Unitholder’s private property, for satisfaction of any obligation in respect of or claim arising out of

or in connection with any contract or obligation of the Trust or of the Trustee or any obligation in respect of which a

Unitholder would otherwise have to indemnify the Trustee for any liability incurred by the Trustee, but rather only

the Trust Property is intended to be liable and subject to levy or execution for satisfaction of any obligation or claim.

Because of uncertainties in the law relating to investment trusts such as the Trust, there is a risk that a Unitholder

could be held personally liable, notwithstanding the foregoing statement in the Declaration of Trust, for obligations in

connection with the Trust (to the extent that claims are not satisfied by the Trust). It is intended that the Trust’s

operations be conducted in such a way as to minimize any such risk and, in particular and where practical, to cause

every written contract or commitment of the Trust to contain an express statement that liability under such contract or

commitment is limited to the value of the assets of the Trust.

However, in conducting its affairs, the Trust will be acquiring Mortgage investments subject to existing contractual

obligations. The Trustee will use all reasonable efforts to have any such obligations, other than leases, modified so as

not to have such obligations binding upon any of the Unitholders. However, the Trust may not be able to obtain such

modification in all cases. To the extent that claims are not satisfied by the Trust, there is a risk that a Unitholder will

be held personally liable for obligations of the Trust where the liability is not disclaimed as described above. Personal

liability may also arise in respect of claims against the Trust that do not arise under contracts, including claims in tort,

claims for taxes and possibly certain other statutory liabilities.

In any event, the Manager considers that the risk of any personal liability of Unitholders is minimal in view of the size

of the anticipated equity of the Trust, the nature of its activities and the requirement of the Trust that any written

contract or commitment of the Trust (except where such inclusion is not reasonably possible) include an express

limitation of liability. In the event that a Unitholder should be required to satisfy any obligation of the Trust, such

Unitholder will be entitled to reimbursement from any available assets of the Trust.

Novel Coronavirus Pandemic

Global financial conditions and the global economy in general have, at various times in the past and may in the future,

experience extreme volatility in response to economic shocks or other events, such as the recent and somewhat

ongoing situation concerning COVID‐19. Many industries, including the mortgage industry, are impacted by volatile

market conditions in response to the widespread outbreak of epidemics, pandemics or other health crises. Such public

health crises and the responses of governments and private actors can result in disruptions and volatility in economies,

financial markets and global supply chains as well as declining trade and market sentiment and reduced mobility of

people, all of which could impact commodity prices, interest rates, credit ratings, credit risk and inflation.

The Trust could still be materially adversely affected by the effects of the COVID‐19 pandemic which began in 2019

or similar occurrences. As at the date of this Offering Memorandum, the global reactions to the spread of COVID‐19

led to, among other things, significant restrictions in many jurisdictions on travel and gatherings of individuals,

quarantines, temporary business closures, mandatory vaccination policies, supply chain disruptions and a general

reduction in consumer activity in certain industries.

Restrictions similar to the foregoing could have a material adverse impact on the Trust’s investments in Mortgages,

business prospects, cash flows, results of operations, Net Asset Value and overall financial condition, the Trust’s

ability to obtain equity or debt financing, re-finance existing debt, satisfy redemption requests by Unitholders, redeem

Units and make distributions to Unitholders, and service its debt, and may cause the Trust to be in non-compliance

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with the financial covenants or default under its existing debt. Generally, the COVID-19 outbreak or similar

occurrences could magnify and have unpredictable effects on each of the factors described in this section “Risk

Factors”.

To the knowledge of the Trust’s management as of the date hereof, COVID-19 does not present, at this time, any

specific known impacts to the Trust, nor to the timelines, business objectives or disclosed milestones related thereto.

The Trust is not currently aware of any changes in laws, regulations or guidelines, including tax and accounting

requirements, arising from COVID-19 which would be reasonably anticipated to materially affect the Trust’s business.

However, there is no guarantee that our operations will not be suspended or shut- down, in whole or in part, in the

future voluntarily or as a result of a resurgence the COVID-19 pandemic.

Derivative Instruments

The Trust may enter into certain derivative transactions pursuant to the ATB ISDA Agreement and other agreements

including (without limitation): (a) interest rate swap, option or forward rate transactions; (b) currency exchange swap,

option and forward rate transactions; (c) cross-currency rate swap, option or forward rate transactions; (d) equities

related swap, option and forward rate transactions; (e) commodity swap, option or forward rate transactions; and (f)

any derivative or combination of the foregoing and any cap, floor, collar, buy, sell, borrow, lend or similar transaction

(together, the “Derivative Instruments”) or hedging transactions that are intended to manage the Trust's equity, debt,

currency or interest rate exposure, however there is no obligation to enter into any such transactions. The use of

Derivative Instruments, even when used with the intent to manage risks associated with the Trust’s investments,

involves additional expenses as well as risks that are different from those of the Trust's mortgage investments,

including the possible default by the counterparty to the Derivative Instruments. In addition, any hedging Derivative

Instrument which the Trust enters may be imperfect. The successful use of hedging strategies depends upon the

availability of a liquid market and appropriate hedging instruments and there can be no assurance that the Trust will

be able to employ such strategies effectively.

REPORTING OBLIGATIONS

As the Trust is not a “reporting issuer” as defined in the B.C. Securities Act, the Alberta Securities Act, the

Saskatchewan Securities Act, the Manitoba Securities Act, the Ontario Securities Act, the Québec Securities Act, the

Newfoundland and Labrador Securities Act, the New Brunswick Securities Act, the Nova Scotia Securities Act, the

Prince Edward Island Securities Act, the Northwest Territories Securities Act, the Yukon Securities Act or the

Nunavut Securities Act, the continuous reporting requirements of those acts and the rules, regulations and policies

thereunder do not generally apply to the Trust. The Trust will, however, furnish to the Trustee within 90 days of the

date of the year end, a copy of the annual financial statements of the Trust. Furthermore, the Trust will make available

annual audited financial statements, including a notice describing how the funds raised pursuant to the OM Exemption

have been used, on the Trust’s website at www.incometrustone.com on or before April 30 of each calendar year. All

other information required to file Canadian income tax returns will be provided to Unitholders, as applicable, by March

31 each calendar year. In addition, the Trust will provide to the Trustee and will make reasonably available to each

Unitholder, interim financial statements within 60 days of the end of the interim period and will notify investors within

10 days of a discontinuation of the Trust’s affairs, a change in the Trust’s industry and a change of control of the Trust

or Manager. In addition, Unitholders are provided with quarterly statements reflecting their investment in the Trust.

RESALE RESTRICTIONS

These securities are not transferable and in addition, pursuant to applicable securities laws, will be subject to a number

of resale restrictions, including a restriction on trading. Until the restriction on trading expires, you will not be able

to trade the securities unless you comply with an exemption from the prospectus and registration requirements under

securities legislation.

Unless permitted under securities legislation, you cannot trade the securities before the date that is four months and a

day after the date the Trust becomes a reporting issuer in any Province or Territory of Canada. The Trust has no

current intention to become a reporting issuer in Canada, and so the transfer restriction could continue indefinitely.

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Manitoba Resale Restrictions

Unless permitted under securities legislation, you must not trade the securities without the prior written consent of the

regulator in Manitoba unless:

1. the Trust has filed a prospectus with the regulator in Manitoba with respect to the securities you have

purchased and the regulator in Manitoba has issued a receipt for that prospectus; or

2. you have held the securities for at least 12 months.

The regulator in Manitoba will consent to your trade if the regulator is of the opinion that to do so is not prejudicial to

the public interest.

PURCHASERS’ RIGHTS

If you purchase Units you will have certain rights, some of which are described below. For information about your

rights, you should consult a lawyer.

Two Day Cancellation Right

You can cancel your agreement to purchase Units. To do so, you must send a notice by email to the Trust, c/o the

Manager, at [email protected], by midnight on the second Business Day after you sign the agreement to buy

the Units.

Rights of Action in the Event of a Misrepresentation

Securities legislation in certain of the Provinces and Territories of Canada provides investors in the Trust (the

“Investors”) with a statutory right of action for damages or rescission in cases where an offering memorandum or any

amendment thereto contains an untrue statement of a material fact or omits to state a material fact that is required to

be stated or is necessary to make any statement contained therein not misleading in light of the circumstances in which

it was made (a “misrepresentation”).

These rights, or notice with respect thereto, must be exercised or delivered, as the case may be, by Investors within

the time limits prescribed and are subject to the defenses and limitations contained under applicable securities

legislation.

The following summaries are subject to the express provisions of the securities legislation applicable in each of the

Provinces and Territories of Canada and the regulations, rules and policy statements thereunder. Investors should refer

to the securities legislation applicable in their Province or Territory along with the regulations, rules and policy

statements thereunder for the complete text of these provisions or should consult with their legal advisor. The

contractual and statutory rights of action described in this Offering Memorandum are in addition to and do not

undermine from any other right or remedy that Investors may have at law.

Rights for Investors in Alberta, British Columbia, Prince Edward Island, Newfoundland and Labrador, the Northwest

Territories, Nunavut and the Yukon

If you are a resident of Alberta, British Columbia, Prince Edward Island, Newfoundland and Labrador, the Northwest

Territories, Nunavut or the Yukon, and if there is a misrepresentation in this Offering Memorandum, you have a

statutory right to sue:

(a) the Trust to cancel your agreement to buy the Units, or

(b) for damages against the Trust, every person who was a director of the Manager at the date of this

Offering Memorandum and every person who signed this Offering Memorandum.

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In Alberta, Prince Edward Island, Newfoundland and Labrador, the Northwest Territories, Nunavut or the Yukon, if

you exercise your right against the Trust to cancel your agreement to buy the Units, you will have no right of action

for damages against any of the persons described in (b) above. In British Columbia, if you exercise your right against

the Trust to cancel your agreement to buy the Units, you will have no right of action for damages against the Trust.

The statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are

various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense

if you knew of the misrepresentation when you purchased the Units. In an action for damages, the amount recoverable

shall not exceed the price at which the Units were offered and the defendant will not be liable for all or any portion of

such damages that the defendant proves does not represent the depreciation in value of the Units as a result of the

misrepresentation.

If you intend to rely on the rights described in (a) to (b) above, you must do so within strict time limitations. You must

commence your action to cancel the agreement within 180 days from the day of the transaction. You must commence

your action for damages within the earlier of 180 days of learning of the misrepresentation and three years from the

date of the transaction.

Rights for Investors in Saskatchewan

If you are a resident of Saskatchewan, and if there is a misrepresentation in this Offering Memorandum, you have a

statutory right to sue:

(a) the Trust to cancel your agreement to buy the Units, or

(b) for damages against the Trust, every promoter of the Trust or director of the Manager at the date

this Offering Memorandum was sent or delivered, every person or company whose consent has been

filed respecting the Offering (but only with respect to reports, opinions or statements that have been

made by them), every person who or company that signed this Offering Memorandum and every

person who or company that sells Units on behalf of the Trust under this Offering Memorandum.

If you exercise your right against the Trust to cancel your agreement to buy the Units, you will have no right of action

for damages against the Trust.

The statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are

various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense

if you knew of the misrepresentation when you purchased the Units. In an action for damages, the amount recoverable

shall not exceed the price at which the Units were offered and the defendant will not be liable for all or any portion of

such damages that the defendant proves does not represent the depreciation in value of the Units as a result of the

misrepresentation.

If you intend to rely on the rights described in (a) to (b) above, you must do so within strict time limitations. You must

commence your action to cancel the agreement within 180 days from the day of the transaction. You must commence

your action for damages within the earlier of one year of learning of the misrepresentation and six years from the date

of the transaction.

Similar rights of action for damages and rescission are provided under the securities legislation of Saskatchewan in

respect of a misrepresentation in advertising and sales literature disseminated or in case of a verbal misrepresentation

made in connection with an offering of securities.

Rights for Investors in Manitoba

If you are a resident of Manitoba, and if there is a misrepresentation in this Offering Memorandum, you have a

statutory right to sue:

(a) the Trust to cancel your agreement to buy the Units, or

- 45 -

(b) for damages against the Trust, every person who was a director of the Manager at the date of this

Offering Memorandum and every person or company who signed this Offering Memorandum.

If you exercise your right against the Trust to cancel your agreement to buy the Units, you will have no right of action

for damages against any of the persons described in (b) above.

The statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are

various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense

if you knew of the misrepresentation when you purchased the Units. In an action for damages, the amount recoverable

shall not exceed the price at which the Units were offered and the defendant will not be liable for all or any portion of

such damages that the defendant proves does not represent the depreciation in value of the Units as a result of the

misrepresentation.

If you intend to rely on the rights described in (a) to (b) above, you must do so within strict time limitations. You must

commence your action to cancel the agreement within 180 days from the day of the transaction. You must commence

your action for damages within the earlier of 180 days of learning of the misrepresentation and two years from the

date of the transaction.

Rights for Investors in Ontario

If you are a resident of Ontario, and if there is a misrepresentation in this Offering Memorandum, you have a statutory

right to sue:

(a) the Trust to cancel your agreement to buy the Units, or

(b) for damages against the Trust.

If you exercise your right against the Trust to cancel your agreement to buy the Units, you will have no right of action

for damages against the Trust.

The statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are

various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense

if you knew of the misrepresentation when you purchased the Units. In an action for damages, the amount recoverable

shall not exceed the price at which the Units were offered and the defendant will not be liable for all or any portion of

such damages that the defendant proves does not represent the depreciation in value of the Units as a result of the

misrepresentation.

If you intend to rely on the rights described in (a) to (b) above, you must do so within strict time limitations. You must

commence your action to cancel the agreement within 180 days from the day of the transaction. You must commence

your action for damages within the earlier of 180 days of learning of the misrepresentation and three years from the

date of the transaction.

Rights for Investors in Québec

If you are a resident of Québec and are relying on the OM exemption in purchasing the Units, and there is a

misrepresentation in this Offering Memorandum, you have a statutory right to sue:

(a) the Trust to cancel your agreement to buy the Units or to revise the price of the Units, or

(b) for damages against the Trust, its officers or directors, the dealer under contract to the Trust, any person who

is required to sign an attestation in the Offering Memorandum and the expert whose opinion, containing a

misrepresentation, appeared, with his consent, in this Offering Memorandum.

If you exercise your right against the Trust to cancel your agreement to buy the Units, you will still have a right of

action for damages against the Trust.

- 46 -

The statutory right to sue is available to you whether or not you relied on the document containing the

misrepresentation. However, there are various defenses available to the persons or companies that you have a right to

sue. In particular, they have a defense if you knew of the misrepresentation when you purchased the Units.

If you intend to rely on the rights described in (a) and (b) above, you must do so within strict time limitations. You

must commence your action to cancel the agreement within three years from the day of the transaction. You must

commence your action for damages within three years from knowledge of the facts giving rise to the action except on

proof that delayed knowledge of the misrepresentation is attributed to you but in any event no later than five years

from the filing of this Offering Memorandum.

Please note that if you are a resident of Québec and are purchasing the Units in reliance on the accredited investor

exemption under section 2.3 of NI 45-106 or the minimum amount exemption under section 2.10 of NI 45-106, you

do not have the statutory rights described in paragraphs (a) and (b) above and should consult a lawyer for further

information regarding your rights.

Rights for Investors in New Brunswick

If you are a resident of New Brunswick, and if there is a misrepresentation in this Offering Memorandum, you have a

statutory right to sue:

(a) the Trust to cancel your agreement to buy the Units, or

(b) for damages against the Trust, every person who was a director of the Manager at the date of this

Offering Memorandum and every person who signed this Offering Memorandum.

If you exercise your right against the Trust to cancel your agreement to buy the Units, you will have no right of action

for damages against the Trust.

The statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are

various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense

if you knew of the misrepresentation when you purchased the Units. In an action for damages, the amount recoverable

shall not exceed the price at which the Units were offered and the defendant will not be liable for all or any portion of

such damages that the defendant proves does not represent the depreciation in value of the Units as a result of the

misrepresentation.

If you intend to rely on the rights described in (a) to (b) above, you must do so within strict time limitations. You must

commence your action to cancel the agreement within 180 days from the day of the transaction. You must commence

your action for damages within the earlier of one year of learning of the misrepresentation and six years from the date

of the transaction.

Similar rights of action for damages and rescission are provided under the securities legislation of New Brunswick in

respect of a misrepresentation in advertising and sales literature disseminated or in case of a verbal misrepresentation

made in connection with an offering of securities.

Rights for Investors in Nova Scotia

If you are a resident of Nova Scotia, and if there is a misrepresentation in this Offering Memorandum or any related

advertising or sales literature, you have a statutory right to sue:

(a) the Trust to cancel your agreement to buy the Units, or

- 47 -

(b) for damages against the Trust, every person who was a director of the Manager at the date of this

Offering Memorandum and every person who signed this Offering Memorandum or any amendment

thereto.

If you exercise your right against the Trust to cancel your agreement to buy the Units, you will have no right of action

for damages against any of the persons described in (b) above.

The statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are

various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense

if you knew of the misrepresentation when you purchased the Units. In an action for damages, the amount recoverable

shall not exceed the price at which the Units were offered and the defendant will not be liable for all or any portion of

such damages that the defendant proves does not represent the depreciation in value of the Units as a result of the

misrepresentation.

If you intend to rely on the rights described in (a) to (b) above, you must do so within strict time limitations. You must

commence your action to cancel the agreement within 180 days from the day of the transaction. You must commence

your action for damages within the earlier of 180 days of learning of the misrepresentation and three years from the

date of the transaction. Furthermore, no action shall be commenced to enforce the right of action described in (a) to

(b) above unless an action is commenced to enforce that right not later than 120 days after the date on which payment

was made for the securities or after the date on which the initial payment for the securities was made where payments

subsequent to the initial payment are made pursuant to a contractual commitment assumed prior to, or concurrently

with, the initial payment.

FINANCIAL STATEMENTS

Attached to this Offering Memorandum immediately following this Item are the audited financial statements for the

Trust for the fiscal year ended December 31, 2023.

Capital Direct I Income Trust

Financial Statements

For the years ended December 31, 2023 and December 31, 2022

Capital Direct I Income Trust

Contents

For the

years ended

December 31, 2023 and December 31, 2022

Page

Independent Auditors' Report

Financial Statements

Statement of Financial Position

................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................

Statement of Profit and Other Comprehensive Income

Statement of Changes in Equity

Statement of Cash Flows

Notes to the Financial Statements

Independent Auditor's Report

To the Unitholders

of Capital Direct I Income Trust:

Opinion

We have audited the financial statements of Capital Direct I Income Trust (the "

Trust

"), which comprise the

statements of financial position as at

December 31, 2023

, and the statements of

income and comprehensive income,

net assets

and cash flows

for the

year

s then ended, and notes to the financial statements, including

a summary

significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of

the

Trust

as at

December 31, 2023

, and its financial performance and its cash flows for the

year

then ended in

accordance with

International Financial Reporting Standards

Basis for Opinion

We conducted our

audits

in accordance with Canadian generally accepted auditing standards. Our responsibilities

under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements

section of our report. We are independent of the

Trust

in accordance with the ethical requirements that are relevant

to our

audits

of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Other Matter

The financial statement for the year ended

December 31, 2022

were

audited

by another

auditor

who expressed an

unqualified opinion on those statements on

February 22, 2023

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of the financial statements in accordance with

International Financial Reporting Standards

, and for such internal control as management determines is necessary to

enable the preparation of financial statements that are free from material misstatement, whether due to fraud or

error.

In preparing the financial statements, management is responsible for assessing the

Trust

’s ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless management either intends to liquidate the

Trust

or to cease operations, or has no realistic

alternative but to do so.

Those charged with governance are responsible for overseeing the

Trust

’s financial reporting process.

MNP LLP

Suite 301 – 15303 31st Avenue, Surrey BC, V3Z 6X2

1.800.761.7772 T: 604.536.7614 F: 604.538.5356

MNP.ca

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with

Canadian generally accepted auditing standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they

could reasonably be expected to influence the economic decisions of users taken on the basis of these financial

statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional

judgment and maintain professional skepticism throughout the audit. We also:

 Identify and assess the risks of material misstatement of the financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that

is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

 Obtain an understanding of internal control relevant to the audit in order to design audit procedures

that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the

Trust

’s internal control.

 Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by management.

 Conclude on the appropriateness of management's use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or

conditions that may cast significant doubt on the

Trust

’s ability to continue as a going concern. If we

conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to

the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our

opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's

report. However, future events or conditions may cause the

Trust

to cease to continue as a going

concern.

 Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the

audits

and significant audit findings, including any significant deficiencies in internal control that we

identify during our

audits

Surrey

British Columbia

February 26, 2024

Chartered Professional Accountants

Capital Direct I Income Trust

Statement of Profit and Other Comprehensive Income

For the

years ended

December 31, 2023 and December 31, 2022

2023

2022

Revenue

Interest

38,633,064

28,560,753

Other income

1,738,467

1,638,514

40,371,531

30,199,267

General and administrative expenses

Bank charges

502,777

448,918

Interest on loan payable

8,134,065

4,954,360

Management fees

(Note 12)

4,396,632

4,207,029

Professional fees

551,054

372,536

Provision for loan loss

59,942

197,366

Trustee and registrar fees

232,791

159,763

13,877,261

10,339,972

Operating profit

26,494,270

19,859,295

Other income (loss)

Unrealized loss on interest rate swap

(70,863)

Realized gain on interest rate swap

1,538,000

Profit and comprehensive income for the year

26,423,407

21,397,295

The accompanying notes are an integral part of these financial statements

Capital Direct I Income Trust

Statement of Changes in Equity

For the

years ended

December 31, 2023 and December 31, 2022

Class A

Class C

Class F

Total

Balance

January 1, 2022

85,481,042

61,333,159

94,550,216

241,364,417

Comprehensive income for the year

6,611,639

5,725,557

9,060,099

21,397,295

92,092,681

67,058,716

103,610,315

262,761,712

Distribution to unitholders

(5,532,702)

(4,791,216)

(7,581,599)

(17,905,517)

Distribution to the manager

(1,078,938)

(934,342)

(1,478,498)

(3,491,778)

Subscriptions

6,645,954

30,393,359

16,082,075

53,121,388

Reinvested distributions

3,281,969

2,876,879

5,018,991

11,177,839

Interchanges

(1,034,731)

710,921

323,810

Redemptions

(7,916,557)

(16,227,762)

(8,486,776)

(32,631,095)

Balance

January 1, 2023

86,457,676

79,086,555

107,488,318

273,032,549

Comprehensive income for the year

8,081,919

6,884,851

11,456,637

26,423,407

94,539,595

85,971,406

118,944,955

299,455,956

Distributions to unitholders

(6,736,636)

(5,793,003)

(9,645,378)

(22,175,017)

Distribution to the manager

(1,345,283)

(1,100,686)

(1,802,421)

(4,248,390)

Subscriptions

6,586,133

11,656,480

16,076,605

34,319,218

Reinvested distributions

3,808,287

3,781,402

6,077,299

13,666,988

Interchanges

(815,708)

(252,851)

1,068,559

Redemptions

(4,792,237)

(16,035,548)

(12,572,131)

(33,399,916)

Balance

December 31, 2023

91,244,151

78,227,200

118,147,488

287,618,839

The accompanying notes are an integral part of these financial statements

Capital Direct I Income Trust

Statement of Cash Flows

For the

years ended

December 31, 2023 and December 31, 2022

2023

2022

Cash provided by (used for) the following activities

Operating activities

Profit for the year

26,423,407

21,397,295

Provision for loan loss

59,942

197,366

Interest accrued on mortgage investments

(817,855)

(539,649)

25,665,494

21,055,012

Changes in working capital accounts

Accounts receivable

(128,049)

(2,901,691)

Accounts payable and accrued liabilities

3,172,860

23,369

28,710,305

18,176,690

Financing activities

Distributions to unitholders, net of distributions reinvested

(8,508,029)

(6,166,190)

Distribution to the manager

(4,248,390)

(3,624,409)

Cash received on subscriptions

33,481,024

53,535,437

Redemptions

(37,433,464)

(35,967,414)

Proceeds from loan payable, net

15,203,223

3,138,896

(1,505,636)

10,916,320

Investing activities

Purchase of mortgage investment, net

(27,520,537)

(29,014,648)

Increase (decrease) in cash resources

(315,868)

78,362

Cash resources, beginning of year

13,619,660

13,541,298

Cash resources, end of year

13,303,792

13,619,660

Supplementary cash flow information

Interest received

37,815,209

26,424,834

Interest paid

8,134,065

4,954,360

The accompanying notes are an integral part of these financial statements

Capital Direct I Income Trust

Notes to the

Financial Statements

For the years ended December 31, 2023 and December 31, 2022

1. Reporting entity

Capital Direct I Income Trust (the “Trust”) is an open-ended investment trust established under the laws of the Province of

Ontario pursuant to Declaration of Trust dated June 23, 2006, as amended from time to time, by Capital Direct Management

Ltd. (the "Manager") as administrator of the Trust and Computershare Trust Company of Canada (the "Trustee"). The

address of the

Trust

’s registered office is

305 - 555 W 8th Ave

Vancouver

V5Z 1C6.

The Trust is a non-reporting issuer under securities legislation and therefore is relying on Part 2.11 of National Instrument

81-106 for exemption from the requirements to file annual financial statements with the applicable regulatory authorities.

2. Summary of significant accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies

have been consistently applied to all the years presented, unless otherwise stated.

Basis of presentation

These audited annual financial statements, including comparatives, are prepared in accordance with International Financial

Reporting Standards ("IFRS") as published by the International Accounting Standards Board ("IASB") and interpreted by the

International Financial Reporting Interpretations Committee ("IFRIC").

These financial statements have been prepared on the basis of historical cost, except for financial instruments classified as

fair value through profit and loss, which are measured at fair value.

These financial statements are presented in Canadian dollars, which is the Trust's functional currency.

These annual financial statements for the year ended December 31, 2023 were authorized for issuance by the Manager on

February 21, 2024.

Significant accounting estimates and judgments

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions

that affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of the

financial statements and the reported amounts of revenues and expenses during the period. Such estimates include

valuation of accounts receivable, the provision for loan losses, and completeness of accrued liabilities.

Estimation uncertainty on accounts receivable and accrued liabilities arises due to the fact the financial statements may be

completed before all receivables are settled, or all liabilities identified. Uncertainty is low due to the relatively low balances,

and that they tend to be recurring in nature and have short term settlement windows.

Estimation uncertainty on the loan loss provision is higher due to greater variability in the mortgage portfolio and a longer

settlement horizon. Mortgages are frequently renewed beyond their initial term and it can take several years before credit

issues arise. In addition, the collateral held as security for mortgage loans depends on the real estate market and changes

in real estate prices may increase or decrease the risk of loss on mortgages. Management assesses potential credit losses

based on factors described in Note 5.

These estimates are periodically reviewed and any adjustments necessary are reported in earnings in the period in which

they become known. Actual results may differ from these estimates.

Financial instruments

Recognition and initial measurement

The

Trust

recognizes financial assets and liabilities including derivatives and embedded derivatives, on the balance sheet at

their initial fair value when the Trust becomes party to the contractual provisions of the instrument.

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

2. Summary of significant accounting policies (Continued from previous page)

Financial instruments

(Continued from previous page)

Classification and subsequent measurement

On initial recognition, financial assets and liabilities are classified as subsequently measured at amortized cost, fair value

through other comprehensive income ("FVOCI") or fair value through profit or loss ("FVTPL"). The

Trust

determines the

classification of its financial assets and liabilities, together with any embedded derivatives, based on the business model for

managing the financial assets and their contractual cash flow characteristics. Under certain circumstances the Trust may

designate any financial asset and liability at its inception to be measured at fair value through profit and loss. The Trust has

not made such a designation.

A financial asset may only be measured at amortized cost if it meets both of the following conditions:

 the financial asset is held within a business model whose objective is to hold financial assets in order to collect

contractual cash flows, and

 the contractual terms of the asset give rise on specified dates to cash flows that are solely payments of principal

and interest on the principal outstanding.

The

Trust

subsequently measures all financial liabilities at amortized cost unless they arise from a derivative liability, or the

Trust chooses to designate them at inception as being measured at fair value through profit and loss.

Cash, accounts receivable, mortgage investments, loan payable, and accounts payable and accrued liabilities are

measured at amortized cost. Amortized cost is determined using the effective interest rate method. The Trust has entered

into a interest rate swap which is a derivative and is measured at fair value through profit and loss.

Comprehensive income

Comprehensive income consists of profit and other comprehensive income ("OCI"). OCI comprises the change in fair value

of the effective portion of the derivatives used as hedging items in a cash flow hedge and the change in fair value of any

financial instruments carried at fair value through OCI. Amounts included in OCI are shown net of tax. Accumulated other

comprehensive income is an equity category comprised of the cumulative amounts of OCI.

The Trust had no "other comprehensive income or loss" transactions during the year ended December 31, 2023 (2022: $nil)

and no opening or closing balances for accumulated other comprehensive income or loss.

Derecognition of financial assets and liabilities

The

Trust

derecognizes a financial asset when its contractual rights to the cash flows from the financial asset expire. The

Trust derecognizes a financial liability only when its contractual obligations are discharged, cancelled or expire.

Fair value measurements

The

Trust

classifies fair value measurements recognized in the

statement of financial position

using a three-tier fair value

hierarchy, which prioritizes the inputs used in measuring fair value as follows:

 Level 1: Quoted prices (unadjusted) are available in active markets for identical assets or liabilities;

 Level 2: Inputs other than quoted prices in active markets that are observable for the asset or liability, either

directly or indirectly; and

 Level 3: Unobservable inputs in which there is little or no market data, which require the Trust to develop its own

assumptions.

Fair value measurements are classified in the fair value hierarchy based on the lowest level input that is significant to that

fair value measurement. This assessment requires judgment, considering factors specific to an asset or a liability and may

affect placement within the fair value hierarchy.

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

2. Summary of significant accounting policies (Continued from previous page)

Redeemable

Units

The Trust's redeemable and retractable units entitle the holders to retract their interest in the Trust for cash at $10 per unit,

amongst other contractual rights. These retractable units involve contractual obligations on the part of the Trust and

therefore meet the criteria for classification as financial liabilities. The Trust's obligation for net assets attributable to

unitholders is measured at amortized cost, which is equal to the redemption amount as of the reporting date. Redeemable

units are presented as net assets attributable to the unitholders in the statement of financial position.

Mortgage investments

The contractual terms of the mortgage investments give rise to scheduled cash flows which are solely payments of principal

and interest. As such mortgage investments are measured at amortized cost using the effective interest method, net of an

allowance for credit losses.

Interest income from mortgages is recorded on an accrual basis in accordance with the effective interest method. Mortgage

investments are assessed for impairment at each reporting date. A mortgage investment is classified as impaired when its

credit risk has increased significantly from its credit risk at the date of inception of the contract. When a mortgage is

classified as impaired, interest revenue is calculated by applying the effective interest rate to the amortized (i.e. impaired)

cost of the mortgage. If the credit risk on the mortgage subsequently improves such that it is no longer impaired, interest

revenue is calculated again using the effective interest rate on the gross mortgage balance. Subsequent payments received

on an impaired mortgage investment are recorded as a reduction in the amortized cost balance or as a reduction in the

impairment loss.

Mortgage discount income is deferred and recognized over the term of the underlying mortgage. Other fees are recognized

as the services are performed.

Provision for loan losses

The Trust maintains an allowance for losses in its mortgage investment portfolio. The allowance for loan losses is increased

by a provision for mortgage investment impairment charged to income and reduced by write-offs during the year.

Impairment losses are determined using a 3-stage approach based on the change in credit risk from inception.

Stage 1 – When there has not been a significant increase in credit risk since inception of the loan, the impairment provision

is assessed based on the probability of default in the following 12 month period, to the extent of credit losses estimated to

occur in the next 12 months.

Stage 2 – When there has been a significant increase in credit risk since inception but a loan is not considered to be in

default, impairment losses are determined based on the probability of default over the lifetime of the loan to the extent of

expected credit losses over the remaining estimated life of the loan.

Stage 3 – When a loan is considered to be in default, the loss provision represents the lifetime expected credit loss on the

instrument.

The Trust groups loans in Stage 1 according to similar credit risk characteristics, and evaluates the credit risk of on each

group of loans with such similar characteristics, recording an allowance for loan losses on an aggregate basis. Credit risk

on mortgage loans is presumed to have increased significantly and a loan enters Stage 2 when payments are in arrears

over 120 days. A loan is considered to be in Stage 3 when all attempts at recovery with the mortgagee have failed and the

Trust enters the foreclosure process to recover the loan balance. The lifetime expected credit losses on the loan take into

account the present value of future cash flows including the recovery expected from the disposition of the collateral. The

Trust incorporates mortgage investment loss history as well as macroeconomic factors such as trends in interest rates, real

estate prices, and insolvency rates, both historical and forecast, into its assessment of credit risk.

A loan is considered to be in default when the borrower has defaulted on their interest or principal payments and the

Manager has made various attempts to contact the borrower. The Trust considers that a default has occurred when the

borrower refuses to contact the broker and the loan has entered the foreclosure process. Loans are written off when all

collection efforts have failed and collateral has been realized.

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

2. Summary of significant accounting policies (Continued from previous page)

Income taxes

The Trust qualifies as a "Mutual Fund Trust" within the meaning of the Income Tax Act (Canada) (the "Act"). The Trust is

subject to applicable federal and provincial taxes on its net income for tax purposes for the year, including taxable capital

gains, except to the extent such amounts are distributed to unitholders. Losses incurred by the Trust cannot be allocated to

unitholders, but may be deducted by the Trust in future years in accordance with the Act.

Because the Trust is contractually obligated to distribute all profit and comprehensive income, and such distributions are

eligible for deduction against taxable income, the Trust does not recognize a deferred tax asset or liability for any temporary

differences.

3. Taxation

Under the specified investment flow-through trust or partnership ("SIFT") rules, certain distributions from a SIFT will no

longer be deductible in computing a SIFT's taxable income and a SIFT will be subject to tax on such distributions at a rate

that is substantially equivalent to the general tax rate applicable to a Canadian corporation. Distributions paid by a SIFT as

returns of capital will not be subject to the tax.

The Trust is not subject to the SIFT tax regime since units of the Trust are not listed on a stock exchange or other public

market. Accordingly, the Trust has not recorded a provision for income taxes or deferred income tax in respect of the SIFT

Rules.

4. Capital Management

The Trust defines capital as loan payable and net assets attributable to unitholders. The Manager's objective when

managing capital is to make prudent investments in mortgages so that it can continue to provide stable returns for its

unitholders. The Trust achieves its investment objectives by monitoring the Trust's mortgage investment portfolio.

Information on the net assets attributable to unitholders is described in Note 9.

The Trust's loan payable (Note 6) is subject to the following covenants as calculated in accordance with the credit facility

agreement. In the event of a violation of the covenants, no redeemable trust units may be retracted or repurchased.

1. To maintain a Cash Flow Coverage Ratio of not less than 3:1 in each quarter.

2. To maintain a Tangible Net Worth of not less than $120,000,000 in each quarter

3. To maintain a Debt to Tangible Net Worth Ratio not greater than 0.85:1 in each quarter.

As at December 31, 2023 the Trust was in compliance with the above covenants.

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

5. Mortgage Investments

Interest rates vary on the mortgages as noted below. The weighted average interest rate for the year was 9.96% (2022:

8.40%).

Interest rate

# of loans

Carrying value

Interest Rate

# of loans

Carrying Value

4.25 - 4.49%

172,463

14.25 - 14.49 %

4,712,760

4.75 - 4.99 %

748,512

14.50 - 14.74 %

2,684,140

5.00 - 5.24 %

374,142

14.75 - 14.99 %

4,918,328

5.25 - 5.49%

1,760,861

15.00 - 15.24 %

4,424,933

5.75 - 5.99 %

7,277,855

15.25 - 15.49 %

3,130,699

6.00 - 6.24 %

1,031,678

15.50 - 15.74 %

2,538,896

6.25 - 6.49 %

2,589,773

15.75 - 15.99 %

3,495,514

6.50 - 6.74 %

1,663,918

16.00 - 16.24 %

2,247,445

6.75 - 6.99 %

13,732,969

16.25 - 16.49 %

3,109,986

7.00 - 7.24 %

751,044

16.50 - 16.74 %

1,528,387

7.25 - 7.49 %

22,384,956

16.75 - 16.99 %

2,678,555

7.50 - 7.74 %

5,567,216

17.00 - 17.24 %

1,368,077

7.75 - 7.99 %

16,307,303

17.25 - 17.49 %

1,363,102

8.00 - 8.24 %

9,428,395

17.50 - 17.74 %

500,922

8.25 - 8.49 %

13,674,872

17.75 - 17.99 %

1,684,374

8.50 - 8.74 %

12,894,583

18.00 - 18.24 %

1,188,663

8.75 - 8.99 %

22,955,370

18.25 - 18.49 %

1,277,842

9.00 - 9.24 %

7,317,443

18.50 - 18.74 %

553,465

9.25 - 9.49 %

16,131,501

18.75 - 18.99 %

773,459

9.50 - 9.74 %

8,253,755

19.00 - 19.24 %

1,099,298

9.75 - 9.99 %

155

29,153,513

19.25 - 19.49 %

1,244,595

10.00 - 10.24 %

11,156,586

19.50 - 19.74 %

266,421

10.25 - 10.49 %

104

19,011,447

19.75 - 19.99 %

921,702

10.50 - 10.74 %

6,520,613

20.00 - 20.25 %

293,455

10.75 - 10.99 %

163

22,745,370

20.50 - 20.74 %

46,466

11.00 - 11.24 %

5,408,522

20.75 - 20.99 %

606,226

11.25 - 11.49 %

10,320,486

21.00 - 21.24 %

116,244

11.50 - 11.74 %

8,691,184

21.25 - 21.49 %

57,698

11.75 - 11.99 %

13,345,149

21.50 - 21.74 %

278,620

12.00 - 12.24 %

9,119,911

21.75 - 21.99 %

82,373

12.25 - 12.49 %

8,234,365

22.00 - 22.24 %

47,310

12.50 - 12.74 %

4,505,591

22.25 - 22.49 %

51,190

12.75 - 12.99 %

10,647,152

22.50 - 22.74 %

46,446

13.00 - 13.24 %

3,713,799

22.75 - 22.99 %

150,594

13.25 - 13.49 %

3,123,342

23.00 - 23.49 %

180,243

13.50 - 13.74 %

3,979,559

23.50 - 23.74 %

85,570

13.75 - 13.99 %

6,757,758

23.75 - 24.00 %

20,922

14.00 - 14.24 %

4,002,165

24.25 - 24.49 %

118,052

24.50 - 24.74 %

56,820

25.25 - 25.49 %

34,608

25.75 - 26.00 %

40,864

26.00 - 26.24 %

10,021

2,074

395,457,663

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

5. Mortgage Investments (Continued from previous page)

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

5. Mortgage Investments (Continued from previous page)

Mortgage investments consist of residential mortgages acquired from Capital Direct Lending Corp., the parent company of

the Manager, and Capital Direct Atlantic Inc, a subsidiary of Capital Direct Lending Corp. The Trust has insured no

mortgages (2022: nil) under the National Housing Act (Canada). Loan to value ratios on the mortgages vary as noted below.

The weighted average loan to value as at December 31, 2023 was 52% (2022: 52%). Balances shown include accrued

interest receivable totaling $2,866,919 (2022: $2,049,064).

Loan to Value Ratio Number of Loans Carrying Value

0.00 - 4.99 %

964,286

5.00 - 9.99 %

2,826,093

10.00 - 14.99 %

5,061,257

15.00 - 19.99 %

7,333,620

20.00 - 24.99 %

9,117,387

25.00 - 29.99 %

12,724,715

30.00 - 34.99 %

104

16,253,999

35.00 - 39.99 %

136

21,524,038

40.00 - 44.99 %

160

30,354,040

45.00 - 49.99 %

208

41,205,026

50.00 - 54.99 %

194

40,618,833

55.00 - 59.99 %

255

55,597,779

60.00 - 64.99 %

238

62,960,051

65.00 - 69.99 %

265

62,849,060

70.00 - 74.99 %

127

14,894,067

75.00 - 79.99 %

10,827,305

80.00 - 89.99 %

109,435

90.00 - 99.99 %

236,672

2,074

395,457,663

Loan loss provision

(1,315,152)

Deferred mortgage discount income

(1,525,415)

$ 392,617,096

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

5. Mortgage Investments (Continued from previous page)

The tables below provides a breakdown of the allowance for credit losses of the investment portfolio.

As at December 31, 2023 Stage 1 Stage 2 Stage 3 Total

Gross mortgage balance

366,385,533

29,072,130

395,457,663

Impairment allowance

(1,304,068)

(11,084)

(1,315,152)

Deferred discount income

(1,525,415)

Net

363,556,050

29,061,046

392,617,096

As at December 31, 2022 Stage 1 Stage 2 Stage 3 Total

Gross mortgage balance

354,176,227

1,030,038

11,756,409

366,962,674

Impairment allowance

(1,284,126)

(20,000)

(1,304,126)

Deferred discount income

(1,319,902)

Net

351,572,199

1,030,038

11,736,409

364,338,646

Details of allowance for credit losses

Opening balance

1,284,126

20,000

1,304,126

Additional provision

19,942

40,000

59,942

Transfer between stages

Balances written off

(48,916)

Closing balance

1,304,068

11,084

1,315,152

The mortgages typically have an original maturity ranging from 12 to 24 months and rank in position of collateral from first to

third. Mortgages mature as follows:

2023 2022

12 months or less

283,768,783

264,375,368

13 to 24 months

108,754,553

99,963,278

Over 24 months

93,760

Total

392,617,096

364,338,646

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

6. Financial instruments

Fair value of financial instruments

The following table details carrying values and fair values of financial assets and financial liabilities by financial instrument

classification. The Trust uses a fair value hierarchy to categorize the inputs used in valuation techniques to measure fair

value. The use of quoted market prices (Level 1), internal models using observable market information as inputs (Level 2)

and internal models without observable market information as inputs (Level 3) in the valuation of financial instruments for

disclosure purposes was as summarized below.

These fair values presented for information purposes only reflect conditions that existed only at the balance sheet date.

2023 2022

Carrying Value Fair Value Difference Fair Value

Hierarchy

Difference

Assets

Loans and receivables:

Cash

13,303,792

Level 1

Accounts receivable

6,883,133

Level 3

Mortgage investments

392,617,096

390,627,514

(1,989,582)

Level 3

(2,383,251)

(1,989,582)

(2,383,251)

Liabilities

Other financial liabilities:

Loan payable

116,662,856

Level 2

Accounts payable and

accrued liabilities

8,522,326

Level 3

Net difference

(1,989,582)

(2,383,251)

There is no quoted price in an active market for mortgage investments. As such the Manager estimates the fair value of

mortgage investments based on its assessment of the current lending market for mortgage investments of same or similar

terms. Fair value has been estimated using discounted cash flow techniques based on interest rates being offered for

similar types of assets with similar terms and risks as at the balance sheet date. As a result the fair value of mortgage

investments is based on Level 3 inputs.

The fair values of other financial assets and financial liabilities are assumed to approximate their carrying values, principally

due to their short term or demand nature.

There were no transfers between Level 1, Level 2, and Level 3 during the year ended December 31, 2023.

Risk management

Risk management involves the identification, ongoing assessment, managing and monitoring of material risks that could

adversely affect the Trust. The Trust is exposed to credit risks, liquidity risk, market risk and interest rate risk.

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

6. Financial instruments (Continued from previous page)

Credit Risk

Credit risk is the risk that a financial loss will be incurred due to the failure of a counterparty to discharge its contractual

commitment or obligation to the Trust. It is the Manager’s opinion that the Trust is exposed to credit risks on all mortgage

investments. Maximum exposure to credit risk at December 31, 2023 is the carrying value of mortgage investments which

total $392,617,096 (2022: $364,338,645). The credit risk is mitigated as all mortgage investments are collateralized by

residential real estate property and the Manager regularly reviews and monitors the fair value of the collateral.

The Trust uses a 3-stage process to evaluate credit risk and potential impairment on mortgage investments. Loans are

grouped in Stage 1 at inception and credit risk is reviewed and evaluated on a regular basis. The Trust incorporates

mortgage investment loss history as well as macroeconomic factors such as trends in interest rates, real estate prices, and

insolvency rates, both historical and forecast, into its assessment of credit risk. Management regularly reviews the mortgage

listing for balances in arrears and follows up with borrowers as needed regarding repayment. The Trust closely monitors

loan activity for increased credit risks and is in communication with borrowers who have missed a payment. Overdue

payments of 30 days are not uncommon and do not on their own indicate a significant decline in credit risk. When payments

are in arrears over 120 days, in absence of any other indicators, credit risk on mortgage loans is presumed to have

increased significantly and a loan enters Stage 2. Management continues to evaluate credit risk as discussions with the

borrower proceed.

For individual accounts in arrears where discussion with the borrower has not succeeded, foreclosure proceedings

commence and a loan is considered to be in Stage 3. Balances receivable include accrued interest income and legal and

other costs related to attempts at collection net of any provision for expected losses management deems necessary. The

loans are collateralized by real property and losses are recognized to the extent that recovery of the balance through sale of

the underlying property is not reasonably assured.

The loss provision for the mortgage investments includes a provision for specifically identified impaired mortgage

investments and a general provision applied to other loans based on similar credit characteristics. The Manager has

provided a loan loss provision of approximately 0.33% (2022: 0.36%) of gross mortgage investments. As at December 31,

2023 management had identified loans totaling 4.21% (2022: 3.48%) of the portfolio in arrears over 120 days. Of these,

$16.7 million (2022: $11.8 million) of loans have entered some form of legal proceedings in attempt to recover the balance.

The loan loss provision includes specific provisions totaling $40,000 (2022: $20,000) relating to two loans with a combined

carrying value of $1,299,767 (2022: $27,537).

During the year ended December 31, 2022, the Trust identified 8 mortgages which had been initiated by fraudulent

borrowers. The Trust is attempting to recover the balance through title insurance. During the year the Trust recovered 3 of

the mortgages and there remain 5 mortgages totaling approximately $3 million included in accounts receivable.

As at December 31, 2023, the Trust has outstanding mortgages totaling $174,866,416, or 44% (2022: $186,109,339, or

51%) of the balance in British Columbia, $ 156,423,081, or 40% (2021: $140,046,886, or 38%) of the balance in Ontario.

These loans are concentrated in Greater Vancouver Area and the Greater Toronto Area, respectively. The remaining

mortgages are in Alberta and Atlantic Canada.

Liquidity risk

Liquidity risk refers to the Trust's ability to meet its own financial obligations such as funding mortgage commitments,

operational expenses, trust distributions and unitholder redemptions. In this regard the Manager monitors cash regularly to

ensure the Trust can meet its obligations, however the Manager does have the right to postpone redemptions if it feels that

the Trust's financial position will become impaired. Contractual maturities of all financial liabilities are 12 months or less.

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

6. Financial instruments (Continued from previous page)

Market Risk

Market risk includes both interest rate risk and foreign currency risk. The interest rate risk relates to the Trust's ability to

adjust to the changing interest rates on their loan payable (Note 6). To offset this risk the Trust generally lends its funds with

rates adjustable within one or two years which allows the Trust to adjust rates on renewals annually. There is no foreign

exchange risk as the Trust is limited to investing in mortgages denominated in Canadian dollars.

During the year, the Trust entered into an interest note swap to manage its interest rate risk. The swap was a financial

derivative measured at fair value through profit and loss. As at the balance sheet date the fair value of the interest rate swap

was $(70,863).

It is estimated that a general 0.5% increase or decrease in market interest rates would have no impact on the mortgage

investment income, due to the fixed nature of the interest rates being earned on the mortgage investments. It is estimated

that an increase in 0.5% in the prime lending rate would result in an increase in interest expense on the loan payable of

approximately $545,000 (2022: $580,000).

7. Loan Payable

Jointly with Capital Direct Management Ltd., Capital Direct Lending Corp. and Capital Direct II Management Ltd., the Trust

has entered into a syndicated loan agreement with Canadian Western Bank ("CWB"), providing a $180,000,000 (2022:

$135,000,000) demand revolving operating loan. The syndicated debt currently bears interest at an average blended rate of

CWB's prime rate plus 0.94% (2022: 0.94%) per annum. For the year ended December 31, 2023, CWB's average prime

lending rate was 6.94% (2022: 4.14%) per annum. The facility is secured by general security agreements provided by all

four borrowers, a general assignment of mortgages by the Trust and an assignment of insurance.

The loan agreement includes within the $180,000,000 limit a $5,000,000 swingline facility and a $5,500,000 demand

revolving facility, both of which bear interest at CWB's prime lending rate plus 0.75% per annum. These facilities are drawn

by Capital Direct II Management and total $8,970,893 (2022: $8,466,829 drawn by Capital Direct Management Ltd.)

The facility is subject to certain financial covenants as outlined in Note 12. As at December 31, 2023, the Trust was in

compliance with these covenants.

The maximum and minimum amounts borrowed during the year were $116,662,846 (2022: $126,858,353) and $92,322,680

(2022: $91,497,000) respectively.

8. Trade and other payables

2023 2022

Redemptions

1,266,360

5,299,907

Unitholder distributions

2,373,630

1,979,175

Manager distribution and management fees

2,540,080

1,662,977

Other

2,342,256

440,954

8,522,326

9,383,013

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

9. Related party transactions

During the year, the Trust purchased 93.5% (2022: 96.0%) of its mortgages with a face value totaling $201,865,111 (2022:

$199,202,259) from Capital Direct Lending Corp. and 6.5% (2022: 4.0%) of its mortgages totaling $13,979,500 (2022:

$8,279,400) from Capital Direct Atlantic Inc.

Accounts receivable includes $503,000 (2022: $Nil) due from the Manager and $784,390 (2022: $Nil) due from Capital

Direct II Management Ltd. (a company controlled by Capital Direct Lending Corp.), and $Nil (2022: $901,682) due from

Capital Direct Lending Corp.

10. Net Assets Attributable to Unitholders

Pursuant to the Declaration of Trust, the Trust is authorized to issue an unlimited number of redeemable and retractable

and transferable units, each of which represent an equal, undivided interest in any distributions made by the Trust and in

the net assets of the Trust in the event of termination or windup. Each Unitholder is entitled to one vote for each whole unit

held.

The Trust's current offering authorizes Class A, Class C and Class F redeemable and retractable units totaling 37,500,000

units for a combined maximum of $375,000,000. Class A, Class C, and Class F units are issued and retracted as listed

below.

Class A, Class C and Class F units share pro rata in distributions from the Trust. All classes or units are permitted to be

retracted on the last day of each month by giving written notice to the Manager. Class C and Class F units may be retracted

after 180 days with no penalty. Class A units bear a retraction fee which diminishes over 5 years from 5% to zero.

Prior to December 31, 2023, 126,636 (2022: 529,991) units were called for retraction. The retraction price of $1,266,360

(2022: $5,299,907) is accrued in accounts payable. 250,250 (2022: 166,431) units were issued for subscription prior to

December 31, 2023 for which proceeds are receivable from brokers at year end. The subscription price of $2,502,503

(2022: $1,664,308) is accrued in accounts receivable.

Class A Class C Class F Total

Units outstanding beginning of period

8,645,767

7,908,656

10,748,832

27,303,255

Units issued on subscription

658,613

1,165,648

1,607,661

3,431,922

Units issued on reinvestment

380,830

378,140

607,730

1,366,700

Units interchanged

(81,571)

(25,285)

106,856

Units retracted

(479,224)

(1,604,439)

(1,256,330)

(3,339,993)

Units outstanding, end of period

9,124,415

7,822,720

11,814,749

28,761,884

Net assets attributable to unitholders:

91,244,151

78,227,200

118,147,488

287,618,839

Net asset value per unit

During the year, 106,856 units were interchanged from Class A and Class C to Class F. The overall units outstanding

remained unchanged (2022: Nil).

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

11. Distributions to Unitholders

The Trust distributes 80% of the profit and comprehensive income from operations to unitholders on a quarterly basis from

investments held by the Trust. The quarterly distributions are paid in arrears on the 15th day following the first three

calendar quarters and on March 31 following the fourth calendar quarter to which the distribution relates. Distributions by

the Trust will be paid in cash unless the unitholder elects to receive distributions in the form of units.

The Manager has waived 20% (2022: 18%) of the distribution profit and comprehensive income to which it was entitled

during the year ended December 31, 2023, thereby providing distributions of 84% (2022: 82%) of profit for the year to

unitholders.

12. Management Fees and Expenses

Management fees and distributions

Pursuant to the management agreement between the Trust and the Manager, the Manager is to provide management,

administration and investment advisory services to the Trust. For these services, the Manager will be entitled to receive a

monthly fee (the "Manager's Fee") calculated and payable monthly in arrears based on an annual rate of 2% of the Class A

net asset value plus 2% of the Class C net asset value plus 1% of the Class F net asset value. The total management fee

for the year was $4,396,632 (2022: $4,207,029).

In addition, 20% of the profit and comprehensive income from operations are distributed to the Manager on a quarterly basis

(Note 11).

The Board of Directors of the Manager unanimously agree to waive 25% of the distribution to which it was entitled for the

first quarter of the year ended December 31, 2023 and 25% of the distribution for the fourth quarter (2022: 25% for the first

quarter and 50% for the fourth quarter). The amount waived was distributed to the unitholders. The total distribution paid to

the Manager for the year was $4,248,390 (2022: $3,491,778).

Of the above amounts, $2,540,080 (2022: $1,662,977) remains in accounts payable and accrued liabilities.

Expenses

All organizational expenses and sales commissions or fees paid to registered dealers in connection with the offering will be

paid by the Manager.

All expenses or outlays relating to the Trust from inception, including but not limited to, the Manager's fee, the Trustee's

Fee, offering expenses (other than organizational expenses and sales commissions on fees paid to registered dealers in

connection with the offer and sale of units), taxes payable by the Trust, expenses related to Unitholders' meetings,

brokerage, legal and other fees and disbursements relating to the implementation of transactions for Trust investments, if

any, are paid by the Trust.

13. Contingent Liabilities

From time to time the Trust may be subject to various lawsuits arising from investing in mortgages in which claims for

monetary damages are asserted in the ordinary course of business. While any litigation involves an element of uncertainty,

it is the opinion of the Manager that liabilities, if any arising from such litigation will not have a material adverse effect on the

Trust's financial condition, liquidity, or results of operations.

14. Key Management Compensation

The compensation of the senior management of the Manager is paid through the management fees paid to the Manager

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

15. Annualized Rate of Return

Class A Redeemable Units

Net asset value

Weighted

average net

assets per

quarter

Profit and

comprehensive

income to be

allocated to

holders of

redeemable units

First quarter -

March 31, 2023

87,364,020

86,713,981

1,467,940

Second quarter -

June 30, 2023

88,958,721

87,852,007

1,625,681

Third quarter -

September 30, 2023

88,586,095

88,660,038

1,775,486

Fourth quarter -

December 31, 2023

91,244,151

89,662,448

1,867,529

Year ended

December 31, 2023

91,244,151

88,222,118

6,736,636

Average

annualized rate

of return

calculated

quarterly

Compounded

annual rate of

return

Weighted

average return

weighted by net assets

outstanding

Effective

weighted average

annual rate of

return

First quarter -

March 31, 2023

6.77

1.69

Second quarter -

June 30, 2023

7.40

1.85

Third quarter -

September 30, 2023

8.01

2.00

Fourth quarter -

December 31, 2023

8.33

2.08

Year ended

December 31, 2023

7.63

7.85

7.63

7.85

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

15. Annualized Rate of Return (Continued from previous page)

Class C Redeemable Units

Net asset value

Weighted

average net

assets per

quarter

Profit and

comprehensive

income to be

allocated to

holders of

redeemable units

First quarter -

March 31, 2023

74,290,159

79,036,276

1,337,968

Second quarter -

June 30, 2023

74,569,020

73,358,642

1,357,485

Third quarter -

September 30, 2023

76,423,092

74,904,050

1,500,012

Fourth quarter -

December 31, 2023

78,357,102

76,712,509

1,597,538

Year ended

December 31, 2023

78,357,102

76,002,869

5,793,003

Average

annualized rate

of return

calculated

quarterly

Compounded

annual rate of

return

Weighted

average return

weighted by net assets

outstanding

Effective

weighted average

annual rate of

return

First quarter -

March 31, 2023

6.77

1.69

Second quarter -

June 30, 2023

7.40

1.85

Third quarter -

September 30, 2023

8.01

2.00

Fourth quarter -

December 31, 2023

8.33

2.09

7.63

7.85

7.63

7.85

Capital Direct I Income Trust

Notes to the

Financial Statements

For the

years ended

December 31, 2023 and December 31, 2022

15. Annualized Rate of Return (Continued from previous page)

Class F Redeemable Units

Net asset value

Weighted

average net

assets per

quarter

Profit and

comprehensive

income to be

allocated to

holders of

redeemable units

First quarter -

March 31, 2023

112,212,265

108,530,962

2,108,597

Second quarter -

June 30, 2023

110,444,685

111,256,771

2,336,922

Third quarter -

September 30, 2023

113,485,932

110,996,066

2,500,272

Fourth quarter -

December 31, 2023

118,147,488

115,737,921

2,699,587

118,147,488

111,630,430

9,645,378

Average

annualized rate

of return

calculated

quarterly

Compounded

annual rate of

return

Weighted

average return

weighted by net assets

outstanding

Effective

weighted average

annual rate of

return

First quarter -

March 31, 2023

7.77

1.94

Second quarter -

June 30, 2023

8.40

2.10

Third quarter -

September 30, 2023

9.01

2.25

Fourth quarter -

December 31, 2023

9.33

2.33

8.63

8.91

8.63

8.91

CERTIFICATE

This Offering Memorandum does not contain a misrepresentation.

Capital Direct I Income Trust,

by its Manager, Capital Direct Management Ltd.

DATED this 29th day of March, 2024.

(signed) Richard F.M. Nichols (signed) Derek R. Tripp

Richard F.M. Nichols, Managing Director Derek R. Tripp, Managing Director

(signed) Timothy P.J. Wittig

Timothy P.J. Wittig, Vice-President

On Behalf of the Board of Directors

of the Manager, Capital Direct Management Ltd.

(signed) Richard F.M. Nichols (signed) Derek R. Tripp

Richard F.M. Nichols, Director Derek R. Tripp, Director

(signed) Timothy P.J. Wittig

Timothy P.J. Wittig, Director

Trustee

Computershare Trust Company of Canada

by the Manager pursuant to section 17.4 of the Declaration of Trust

(signed) Richard F.M. Nichols

Richard F.M. Nichols, Director of the Manager

1-800-625-7747

version updated: March 29, 2024

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