Mr. Mitchell Cohen reports

URBANFUND CORP. ANNOUNCES COMPLETION OF ACQUISITION OF CONTROLLING INTEREST IN MULTI-RESIDENTIAL RENTAL COMPLEX REDEVELOPMENT PROJECT

Urbanfund Corp. has completed the acquisition of a controlling interest in a multiresidential rental complex redevelopment project located at 48 Weber St. West in Kitchener, Ont., which property was acquired for an aggregate purchase price of $2.4-million.

Pursuant to a limited partnership agreement through which Urbanfund holds its controlling interest in the property, Urbanfund's initial capital contribution was approximately $1.17-million, representing approximately 87 per cent of the total initial equity capital contributed. The balance of the purchase price was funded by an initial drawdown under a conventional acquisition and redevelopment credit facility provided by an institutional lender. The maximum principal amount available for drawdown pursuant to the credit facility is $3.2-million. The credit facility matures on the earlier of the date that is 18 months following the initial advance and Feb. 1, 2017. The limited partnership's obligations are secured by a first-ranking mortgage registered against title to the property, a first-ranking security interest in all present and after-acquired personal property located on or related to the property, and joint and several guarantees from certain parties, including the company.

To the extent that additional capital contributions are required in order to draw on the credit facility, each limited partner's contribution shall be determined by multiplying each limited partner's proportionate share by the total additional capital required. If any limited partner does not contribute its share of additional capital, the general partner, or any limited partners that are prepared to do so, may advance such amount to the limited partnership on behalf of the non-contributing partner, and such advance shall be treated as an interest-bearing limited recourse loan from the contributing partner(s) to the non-contributing partner(s), which shall be repayable out of the first cash available for distribution otherwise payable to the non-contributing partner(s).

Following redevelopment of the property, any cash available for distribution shall be paid or distributed by the limited partnership (i) first, to Urbanfund until it has received its initial capital contribution amount, plus an amount required to achieve an annualized internal rate of return equal to 6 per cent thereon; (ii) second, to one of the other limited partners until it has received its initial capital contribution amount, plus an amount required to achieve an annualized internal rate of return equal to 6 per cent thereon; and (iii) thereafter, 64.99 per cent to Urbanfund, 10 per cent to the second limited partner, subject to meeting certain conditions precedent, 25 per cent to the other limited partner and 0.01 per cent to the general partner.

Urbanfund currently holds an 82.5-per-cent voting interest in the limited partnership. Such voting interest is subject to a carried interest held by the third limited partner, which is contingent upon satisfaction of certain conditions. If such conditions are met, Urbanfund's voting interest shall be reduced to 65 per cent.

We seek Safe Harbor.