Mr. Mitchell Cohen reports

URBANFUND CORP. ANNOUNCES COMPLETION OF TAKE-OUT FINANCING FOR ITS PROPERTY LOCATED AT 48 WEBER STREET AND THE SECURING OF A CREDIT FACILITY FOR 61 AND 65 ROY STREET, KITCHENER, ONTARIO

Renovations of the multiresidential rental complex redevelopment project located at 48 Weber St. West in Kitchener, Ont., in which Urbanfund Corp. retains a controlling interest, have been completed. Leasing has been under way for some time now, and the property is now 95 per cent leased and occupied.

The company further announces that the limited partnership that owns the property completed today a conventional mortgage financing in the principal amount of $4.8-million. The financing is for a seven-year term at an interest rate of 2.92 per cent. Proceeds were used to pay off the current construction financing of approximately $3.2-million with the remaining proceeds to be distributed to the joint venture partners as set forth in the paragraphs below and Urbanfund's portion thereof to be used to seek other real estate opportunities.

In connection with financing the acquisition and redevelopment of the property, the company guaranteed the obligations of the borrower, Weber Investments GP Inc., which is the general partner of the limited partnership through which Urbanfund holds its controlling interest in the property, in respect of the mortgage financing in the principal amount of $4.8-million.

Coincident with the financing, the limited partnership (in which the company retains a controlling interest) that owns the adjacent properties located at 61 and 65 Roy St. in Kitchener, secured a $900,000 credit facility, the proceeds of which will be used solely for the renovation of the Roy Street property. The credit facility is for a one-year term and bears interest at a rate of prime plus 1.25 per cent.

Pursuant to a limited partnership agreement through which Urbanfund holds its interest in the property, Urbanfund's initial capital contribution in respect of the acquisition of the property was approximately $1.17-million, representing approximately 87 per cent of the total initial capital contributed. If additional capital contributions are required by limited partners, such additional capital contributions are to be determined by multiplying each limited partner's proportionate share by the total additional capital contributions required. Urbanfund's proportionate share in respect of the property is equal to 65 per cent. If any limited partner does not make such additional capital contribution, the general partner, or any limited partners who 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 deemed for all purposes to be a limited recourse loan from the contributing partner to the non-contributing partner, bearing interest at the annual rate of the limited partnership's chartered bank's prime rate plus 8 per cent, and principal and accrued interest shall be repayable out of the first cash available for distribution otherwise payable to the non-contributing partner.

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 cumulative distributions in an amount equal to its initial capital contribution, plus the 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 cumulative distributions in an amount equal to its initial capital contribution, plus the 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 and, subject to meeting the conditions precedent set out above, 25 per cent to the other limited partner, and 0.01 per cent to the general partner, provided, however, that such allocation to the limited partners shall be subject to redirecting amounts on account of contribution loans and accrued interest.

Urbanfund currently holds an 82.5-per-cent voting interest in the property; however, such voting interest is subject to a carried interest held by one of the other limited partners and upon satisfaction of certain conditions precedent, including the property having a stabilized net operating income of an amount equal to or greater than $315,000 by the date that is 12 months from the date the development manager for the project is required to commence management responsibilities. If such conditions are met, Urbanfund's voting interest shall be reduced to 65 per cent.

About Urbanfund

Urbanfund is a Toronto-based real estate development and operating company. The company's assets are located in Belleville, Kitchener, London and Toronto, Ont., and Quebec City and Montreal, Que.

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