Mr. Evan Kirsh reports

STARLIGHT U.S. MULTI-FAMILY (NO. 2) CORE PLUS FUND ANNOUNCES Q1-2023 OPERATING RESULTS INCLUDING SAME PROPERTY NOI GROWTH OF 4.6%

Starlight U.S. Multi-Family (No. 2) Core Plus Fund has released its results of operations and financial condition for the three months ended March 31, 2023. Certain comparative figures are included for the three months ended March 31, 2022.

All amounts in this press release are in thousands of U.S. dollars except for average monthly rent (AMR) or unless otherwise stated.

"The fund owns a high-quality, well-located portfolio of multifamily communities, which has continued to demonstrate strong operating results, including same-property [net operating income] growth of 4.6 per cent during [first quarter] 2023," commented Evan Kirsh, the fund's president. "The fund continues to focus on increasing net operating income at the properties through its active asset management strategy and to navigate the present period of capital markets uncertainty with the goal of maximizing the total return for investors upon liquidation."

Q1 2023 highlights:

• Q1 2023 revenue from property operations and net operating income (1) were $5,279 and $3,271 (Q1 2022: $3,453 and $2,295), respectively, representing an increase of $1,826 and $977 relative to Q1 2022 primarily as a result of the acquisition of Summermill at Falls River, as well as strong same-property revenue growth of 12.4 per cent and strong same-property NOI growth of 4.6 per cent.
• The fund achieved an 8.9-per-cent increase in same-property AMR from Q1 2022 to Q1 2023, as well as an estimated gap to market versus in-place rents (1) of 13.0 per cent as at the end of Q1 2023 from 8.0 per cent as at Dec. 31, 2022.
• The fund completed 16 in-suite value-add upgrades during Q1 2023, generating an average rental premium of $303 and an average return on cost of approximately 20.0 per cent.
• As at May 24, 2023, the fund had collected 97.8 per cent of rents for Q1 2023, with further amounts expected to be collected in future periods, demonstrating the fund's high-quality resident base and operating performance.
• The fund reported a net loss and comprehensive loss for Q1 2023 of $1,872 (Q1 2022: net income and comprehensive income of $8,820), primarily resulting from the fair value gain on investment properties of $12,648 reported in Q1 2022, as well as increases in finance costs, partially offset by the increases in NOI including strong same-property NOI growth.

(1) This metric is a non-international financial reporting standard measure. Non-international financial reporting standard measures do not have standardized meanings prescribed by IFRS.

Financial condition and operating results

Highlights of the financial and operating performance of the fund as at March 31, 2023, and Q1 2023, including a comparison with March 31, 2022, and Q1 2022, as applicable, are provided herein.

Future outlook

Since early 2022, concerns over elevated levels of inflation have resulted in a significant increase in interest rates with the U.S. Federal Reserve raising the federal funds rate by approximately 475 basis points. Interest rate increases typically lead to increases in borrowing costs for the fund, reducing cash flow, given the fund employs a variable-rate debt strategy due to the fund's three-year term to provide maximum flexibility upon the eventual sale of the fund's properties during or at the end of the fund's term. Historically, investments in multifamily properties have provided an effective hedge against inflation given the short-term nature of each lease term, which was reflected in the rent growth achieved at the properties where same-property AMR increased by 8.9 per cent from Q1 2022 to Q1 2023. Furthermore, the fund does have certain interest rate caps in place, which protect the fund from increases in interest rates beyond stipulated levels and for stipulated terms as described in full detail in the fund's condensed consolidated interim financial statements for the three months ended March 31, 2023, and consolidated financial statements for the year ended Dec. 31, 2022, which are available at SEDAR. The fund also continues to closely monitor the U.S. employment and inflation data, as well as the U.S. Federal Reserve's monetary policy decisions in relation to future interest rates and resulting impact that these may have on the fund's financial performance in future periods.

The impact of rising interest rates and higher levels of inflation has also significantly disrupted active and new construction of comparable communities in the primary markets in which the fund operates, which may create a temporary imbalance in supply of multisuite residential properties in future periods. This imbalance, alongside the continued economic strength and solid fundamentals, may be supportive of favourable supply and demand conditions for the fund's properties in future periods, and could result in future increases in occupancy and rent growth. The fund believes it is well positioned to take advantage of these conditions should they transpire given the quality of the fund's properties and the benefit of having a resident pool employed across a diverse job base.

The fund continues to closely monitor the financial impact of elevated interest rates and higher levels of inflation on the fund's liquidity and financial performance.

Further disclosure surrounding the future outlook is included in the fund's management's discussion and analysis in the COVID-19 and future outlook sections for Q1 2023 under the fund's profile, which is available on SEDAR.

About Starlight U.S. Multi-Family (No. 2) Core Plus Fund

The fund is a limited partnership formed under the Limited Partnerships Act (Ontario) for the primary purpose of indirectly acquiring, owning and operating a portfolio of value-add, income-producing rental properties in the U.S. multifamily real estate market. The fund currently owns interests in three properties, consisting of 995 suites with an average year of construction in 2013.

For the fund's complete condensed consolidated interim financial statements and management's discussion and analysis for the three months ended March 31, 2023, and any other information related to the fund, please visit SEDAR. Further details regarding the fund's unit performance and distributions, market conditions where the fund's properties are located, performance by the fund's properties, and a capital investment update are also available in the fund's May, 2023, newsletter, which is available on the fund's profile at the fund's website.

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