Mr. Mitchell Cohen reports

REPORT ON FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2023

Urbanfund Corp. has filed its financial statements for the year ended Dec. 31, 2023, and corresponding management's discussion and analysis (MD&A).

Business overview and strategy

Business overview

Urbanfund is an incorporated entity listed on the TSX Venture Exchange under the symbol UFC. The company is a reporting issuer in Alberta, British Columbia and Ontario. Urbanfund's focus is to invest in Canadian real estate and real estate related projects with a focus on a mix of both residential and commercial properties. The company's assets are located in Toronto, Brampton, Belleville, Kitchener and London, Ont., Quebec City and Montreal, Que., and Dartmouth, N.S.

Operational highlights

Part of Urbanfund's strength is its ability to attract partners with proven records with both residential and commercial development expertise. Urbanfund continues to build alliances with its strategic partners:

• Suite 270, 330 Esna Park Dr., Markham: In June, 2023, Urbanfund invested $1.66-million into TREI (270-330 Esna Park) LP, which holds a 20-per-cent interest in 270-330 Esna Park LP (Esna Park LP), which owns an industrial complex located at Suite 270, 330 Esna Park Dr., Markham, Ont. Urbanfund owns 76.9 per cent of TREI (270-330 Esna Park) LP, effecting an indirect 15.4-per-cent ownership in Esna Park LP. The complex is approximately 100,524 square feet with 37 industrial units. The purpose of Esna Park LP is to convert property to condominium and sell individual units into market.
• Weber Investments LP (Weber LP): In May, 2023, the general partners of Weber LP, which holds Urbanfund's investment of 63 Scott St., Kitchener, Ont. (the Scott), issued a return of capital to the company in the amount of $1,343,333, as a result of excess cash flow generated from the operations of the Scott.
• 1040 Martin Grove Rd., Toronto: In April, 2023, Urbanfund invested $1.87-million into TREI (1040) LP, which holds a 50-per-cent interest in 1040 Martin Grove LP (1040 LP), which owns an industrial complex located at 1040 Martin Grove Rd., Toronto, Ont. Urbanfund owns 56.7 per cent of TREI (1040) LP, effecting an indirect 28.4-per-cent ownership in 1040 LP. The complex is approximately 75,727 square feet with 25 industrial units. The purpose of 1040 LP is to convert the property to condominium title and sell individual units into market.
• One Bloor project: During the year ended Dec. 31, 2023, Urbanfund received distributions relating to profit on sales of One Bloor Street totalling $188,000. Total profits received as of the date of the company's MD&A (management's discussion and analysis) were $4,804,667.
• Suite 2074, 84 Steeles Ave. E: In December, 2022, Urbanfund, along with its joint venture partners, completed the sale of 36 units within the industrial complex. Total profits received as of the date of the company's MD&A were $5,125,000.
• 67 to 69 Westmore Dr., Etobicoke: In January, 2022, Urbanfund formed a joint venture Takol 67-69 Westmore Inc., which acquired an industrial complex located at 67 to 69 Westmore Dr., Etobicoke, Ont. The joint venture intends to renovate, change to condominium title and sell units in the complex. Urbanfund holds a 40-per-cent interest and its joint venture partner, Kolt Investment Inc. (formerly Takol Real Estate Inc.), and two private investors hold the remainder. The purchase price was $23,425,000 plus customary closing costs, financed by a $17,568,750 mortgage and $5,856,250 in equity contributions.

Presentation of financial information and non-IFRS (international financial reporting standards) measures

Presentation of financial information

Unless otherwise specified herein, financial results, including historical comparatives, contained in this news release are based on Urbanfund's 2023 annual consolidated financial statements, which have been prepared in accordance with IFRS, as issued by the International Accounting Standards Board (IASB), and interpretations of the IFRS Interpretations Committee (IFRIC). Unless otherwise specified, amounts are in Canadian dollars and percentage changes are calculated using whole numbers.

Results from operations

In addition to reported IFRS measures, industry practice is to evaluate real estate entities giving consideration to certain non-IFRS performance measures, such as funds from operations, adjusted cash flows from operations and net operating income. For further details, please refer to non-IFRS measures.

Liquidity and capital resources

Urbanfund expects to meet all of its obligations, including dividends to shareholders, property maintenance, capital expenditures and other commitments, as they become due. The company has various financing sources to fund future acquisitions and continues to finance working capital needs from cash flows generated from operating activities. Cash flows from operating activities are dependent on the occupancy levels of our income properties.

An attached table presents liquidity as a percentage of debt.

The company's liquidity will be impacted by contractual commitments as outlined in Urbanfund's MD&A. Urbanfund's debt obligations can be financed by the company's cash and cash equivalents, marketable securities, and rental revenue from property operations.

Dividend reinvestment plan (DRIP)

On June 17, 2015, Urbanfund adopted a dividend policy and implemented a dividend reinvestment plan for the holders of common shares and Series A preferred shares. The DRIP is a voluntary program permitting holders of Series A first preferred shares and common shares to automatically and without charge reinvest dividends into additional common shares at a specified discount to the volume-weighted average market price calculated as the date of payment.

On June 22, 2021, Urbanfund amended its dividend policy to increase the annual dividend rate to five cents per common share and five cents per Series A preferred share, or a 67-per-cent increase from the previous year, payable quarterly in the amount of 1.25 cents per common share and Series A preferred share.

For the year ended Dec. 31, 2023, Urbanfund issued 988,816 common shares valued at $840,834 to participants enrolled in the DRIP (Dec. 31, 2022 -- 826,326 and $795,823). The average participant rate of the DRIP was 31.54 per cent (Dec. 31, 2022 -- 31.44 per cent).

The record date for dividends is typically the last business day of each quarter and payment is approximately two weeks from the record date. An attached table summarizes the company's quarterly distributions as at Dec. 31, 2023:

Non-IFRS measures

In addition to reported IFRS measures, industry practice is to evaluate real estate entities giving consideration to certain non-IFRS performance measures such as funds from operations, adjusted cash flows from operations and net operating income. Management believes that these measures are helpful to investors because they are widely recognized measures of Urbanfund's performance and provide a relevant basis of comparison to other real estate entities. In addition to IFRS results, these measures are also used internally to measure the operating performance of our property portfolio. These measures are not in accordance with IFRS and have no standardized definitions, as such, our computations of these non-IFRS measures may not be comparable to measures by other reporting issuers. In addition, Urbanfund's method of calculating non-IFRS results may differ from other reporting issuers, and, accordingly, may not be comparable.

The Real Property Association of Canada (REALpac) issued a white paper in February 2019 prescribing revised definitions for certain non-IFRS financial measures of cash flow and operating performance commonly used by the Canadian real estate industry. Urbanfund has reviewed these guidelines and adopted certain measures, where appropriate, commencing with our fourth quarter 2017 reporting.

Funds From Operations (FFO)

Funds from Operations (FFO) is a non-IFRS financial measure of operating performance widely used by the Canadian real estate industry based on a white paper published in April 2014 and subsequently revised in February 2019. In the view of management, FFO better presents operating performance over IFRS net income and comprehensive income, which does not necessarily provide a complete view on performance. IFRS's net income and comprehensive income includes items such as fair value adjustments on investment properties which are subject to market fluctuations, which is not representative of the company's year-over-year operating performance.

FFO is computed as IFRS consolidated net income and comprehensive income attributable to Urbanfund's shareholders adjusted for items such as, but not limited to, fair value adjustments on investment properties, transaction gains and losses and fair market value adjustments on marketable securities. FFO should not be construed as an alternative to net income or cash flows provided by or used in operating activities as determined in accordance with IFRS. A reconciliation of FFO to IFRS net income is presented under the Results from Operations section above.

Adjusted Cash Flows from Operations (ACFO)

In February 2019, REALpac introduced a new non-IFRS measure called adjusted Cash Flow from Operations (ACFO), which is intended to measure sustainable economic cash flow available for distributions. ACFO is used by management as an input, together with FFO to assess Urbanfund's distribution payout ratios.

ACFO is computed as cash provided by or used in operating activities per IFRS plus, but not limited to adjustments for working capital items not considered to be indicative of sustainable economic cash flows for distributions, such as changes to other assets, indirect taxes payable and income taxes payable, cash distributions from investments, realized gains or losses from available-for-sale marketable securities and deducts capital expenditures. ACFO should not be construed as an alternative to cash flows provided by or used in operating activities as determined in accordance with IFRS. A reconciliation of ACFO to IFRS cash flow from or used in operating activities is presented under the Results from Operations section above.

Normalized Capital Expenditures

Normalized capital expenditures are an estimate made by management of the amount of ongoing capital investment required to maintain the condition of the physical property and the current rental revenues. Management will consider a number of items in estimating normalized capital expenditures given the age and size of the property portfolio, such as a review of historical capital expenditures and comparison of budgeted to actual on a quarterly basis.

Urbanfund does not obtain support from independent sources for normalized capital expenditures but relies on management's expertise in arriving at this estimate. Both the Chief Financial Officer and the Chief Executive Officer of the company have extensive experience in residential and commercial real estate and in-depth knowledge of the property portfolio.

Actual capital expenditures can vary widely from quarter to quarter depending on a number of factors, management believes that normalized capital expenditures are a more relevant input than actual capital expenditures in assessing the company's ACFO and for determining appropriate levels of dividends over time. A number of factors affect variations in capital expenditures, including, lease expiries, tenant vacancies, age and location of the properties, and market conditions.

Net Operating Income (NOI)

NOI is a non-IFRS measure and is defined by Urbanfund as rental revenue from income properties less direct property costs such as utilities, property taxes adjusted to normalize the impact of the application requirements of IFRIC 21, Levies, repairs and maintenance, salaries, insurance, bad debt expenses, property management fees and other property specific costs. Management believes that NOI is a meaningful supplementary measure of the income generated from the company's income properties and is used in evaluating the portfolio, as well as a key input in determining the value of the income properties.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (adjusted EBITDA)

Adjusted EBIDTA is a non-IFRS measure used by management as input in several of the debt metrics to measure Urbanfund's debt profile in assessing the ability of the company to satisfy obligations, including servicing of our debt. Adjusted EBITDA is used as an alternative to net income because it excludes major non-cash items such as fair value adjustments to investment properties and unrealized gains or losses on available-for-sale marketable securities, interest costs, current and deferred income tax expenses and recoveries, equity accounted investments and other items that management considers to be non-operating in nature. A reconciliation of adjusted EBITDA to IFRS net income is presented under the Debt Profile of the MD&A.

Debt to adjusted EBITDA

Debt to adjusted EBITDA is a non-IFRS measure calculated on a trailing 12-month basis and is defined as quarterly average total debt (net of cash and cash equivalents) divided by adjusted EBITDA as is calculated under the Debt Profile section of the MD&A.

Debt Service Ratio

Debt service ratio is a non-IFRS measure calculated on a trailing 12-month basis and is defined as adjusted EBITDA divided by the sum of total interest costs (including interest costs capitalized) and scheduled mortgage principal repayments. It measures Urbanfund's ability to meet debt obligations. Debt service ratio is calculated under the Debt Profile section of the MD&A.

Interest Coverage Ratio

Interest coverage ratio is a non-IFRS measure calculated on a trailing 12-month basis and is defined as adjusted EBITDA divided by the sum of total interest costs (including interest costs capitalized) It measures Urbanfund's ability to meet interest cost obligations. Interest coverage ratio is calculated under the Debt Profile section of the MD&A.

ADDITIONAL INFORMATION

For comprehensive disclosure of Urbanfund's performance reference should be made to the company's Consolidated Financial Statements and notes thereto and Management's Discussion and Analysis for the year ended Dec. 31, 2023, which have been filed electronically with the Canadian securities regulators through the System for Electronic Document Analysis and Retrieval (SEDAR) and may be accessed through the SEDAR website at www.sedar.com.

We seek Safe Harbor.