CMCC :: PRIVATE MORTGAGE FUND

DB Mortgage Investment Corporation (DB MIC)

DB MIC is a $170 million private mortgage fund which was created to fill the lending gap caused by the few number of financial institutions operating in Canada. Until the creation of DB MIC in 2001, CMCC had always placed these types of loans with private lenders. However, we became frustrated by the lack of consistency, reliability and expertise of these private lenders and consequently decided to start a fund, structured as a mortgage investment corporation, which would help fill this market void. DB MIC was sponsored by and is managed by CMCC.

Lending Parameters Of DB MIC:

Specifically, DB MIC targets loans which cannot be placed with financial institutions but which represent an acceptable underwriting risk. A typical loan from DB MIC has an interest rate of 8.0% to 10.0% per annum, a one or two-year term, and monthly 'interest only' mortgage payments. DB MIC will only lend in Ontario and has a strong preference for mortgage investments in the Greater Toronto Area and Ottawa. The basic lending parameters are provided below:

	1st or 2nd mortgages on income producing real estate up to 85% of value.
	mortgages on residential and commercial land up to 75% of appraised value.
	Construction loans up to 90% of cost.
	Loans to condominium corporations for capital expenditure.
	Purchase of guest suite & superintendent condominium mortgages.
	Real estate must be located in a major urban centre (i.e. Toronto or Ottawa) in Ontario.
	Maximum term of five (5) years.
	Loan amounts of $500,000 to $20,000,000. For loan amounts in excess of $20 million, DB MIC will co-lend with another private lender.
	Interest must be paid monthly (or an interest reserve established at funding).

Examples Of DB MIC Mortgage Investments:

Since the inception of DB MIC, we have structured a wide variety of loans. Types of loans recently funded include the following:

(i)	1st mortgage low rise residential lands (zoned for townhomes - 80% loan to value).
(ii)	1st mortgage high-rise residential lands (zoned for condominium development - 75% loan to value).
(iii)	1st mortgage on an industrial building (75% loan to value).
(iv)	2nd mortgage on residential condominium development under construction (75% loan to sales ratio).
(v)	1st and 2nd mortgages on condominium inventory (loan on unsold units in a completed condominium development - 80% loan to value).
(vi)	1st mortgage on a parking lot (85% loan to value as a parking lot with residential development potential).
(vii)	2nd mortgage on apartment buildings (85% loan to value).

INFORMATION FOR PROSPECTIVE SHAREHOLDERS:

Background & Risk Profile:

DB MIC is a �mortgage investment corporation� which has been operating since late 2001, and has generated consistent returns for its shareholders since inception. The annual returns generated to date are outlined below:

Year Return

2002 10.28%

2003 11.42%

2004 9.99%

2005 9.37%

2006 9.68%

2007 9.97%

2008 9.77%

2009 9.59%

2010 9.30%

2011 8.74%

Shareholders earn a return both from interest income collected on the mortgage portfolio, and from sharing origination fees with the manager, Canadian Mortgage Capital Corporation.

The objective of DB MIC is to generate consistent and sustainable returns without taking on undue risk. The objective is a return of no less than 8.0% per annum to investors. CMCC has an eight (8) person credit committee who approve each and every loan transaction. Many of the members of the credit committee are the large shareholders of DB MIC shares, and consequently have a substantial vested interest in the ongoing quality of the loan portfolio.

CMCC and its the credit committee attempt to maintain a consistent level of risk, regardless of competition in the marketplace. DB MIC lends mostly within the GTA and Ottawa, and to other major urban centres within Ontario.

Dividends:

By structuring DB MIC as a �mortgage investment corporation�, dividend income flows directly to the shareholders without incurring taxation at the corporate level.

Dividends are paid quarterly in arrears to each of the shareholders. To ensure the accuracy of the dividend amounts paid, quarterly income statements are prepared by a 3rd party accounting firm and the overall financial statements of DB MIC are audited at the end of each year.

Equity Offerings:

Shareholder Equity offerings usually occur twice per annum, but the timing is dependent upon the Manager�s assessment of the demand for mortgages in the marketplace. The shares offered are shares in a mortgage investment corporation and are being offered on a private placement basis through an Offering Memorandum. The minimum investment is $20,000.

Redemptions:

Shareholders will have redemption rights on or before April 1, 2012, April 1, 2013 and April 1, 2014, for up to 10% of the total outstanding shares of the company on December 1 of the prior year.

Investment Horizon:

DB MIC has an investment horizon of approximately 5 years. The current investment horizon is December 31, 2015 and those shareholders who wish to exit at that time are free to do so. CMCC has extended the investment horizon twice since inception (in 2006 and 2010) and will be requesting that the investment horizon be extended approximately 2-3 years prior to maturity. In the unlikely event that 2/3rd of the shareholders did not approve an extension of the investment horizon, the Board would initiate proceedings to wind-up the Corporation as soon as practicable after December 31, 2015.

Interested in being a Shareholder?

Prospective shareholders can invest in DB MIC personally, or through RRSPs, RRIFs, corporations, trusts and foundations.

Should you have interest in subscribing for shares in DB MIC, please call Laurie Floyd at 416-607-4200.