BYT Holdings Ltd. — Management Reports 2021

Apr 30, 2021

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Management Discussion and Analysis Fourth Quarter 2020 December 31, 2020

Management’s Discussion and Analysis

Basis of Presentation

This Management’s Discussion and Analysis (“MD&A”) has been prepared and includes material financial information as of April 15, 2021. This MD&A should be read in conjunction with the audited financial statements for the year ended December 31, 2020 prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

All dollar amounts in this MD&A are in Canadian dollars.

Additional information related to TG Income Trust III (the “Trust”), including the Trust’s audited financial statements for the year ended December 31, 2020 are available on SEDAR at www.sedar.com or www.trezcapital.com.

Forward-Looking Statements

This MD&A may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events. These statements are typically identified by expressions like “believe”, “expects”, “anticipates”, “would”, “will”, “intends”, “projected”, “in our opinion” and other similar expressions. By their nature, forward-looking statements require us to make assumptions which include, among other things, that (i) the Trust will have sufficient capital under management to effect its investment strategies and pay its targeted dividends to shareholders, (ii) the investment strategies will produce the results as intended, (iii) the markets will react and perform in a manner consistent with the investment strategies and (iv) the Trust is able to invest in mortgages or loans of a quality that will generate returns that meet or exceed the Trust’s targeted investment returns.

Forward-looking statements are subject to inherent risks and uncertainties. There is significant risk that predictions and other forward-looking statements will prove not to be accurate. We caution readers of this MD&A not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or implied in the forward-looking statements. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including but not limited to, general market conditions, interest rates, regulatory and statutory developments, the effects of competition in areas that the Trust may invest in and the risks detailed from time to time in the Trust’s public disclosures.

We caution that the foregoing list of factors is not exhaustive and that when relying on forward-looking statements to make decisions with respect to investing in the Trust, investors and others should carefully consider these factors, as well as other uncertainties and potential events and the inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, the Trust and Trez Capital Fund Management LP (the “Manager”) do not undertake, and specifically disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

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Non-IFRS Financial Measures

The Trust prepares and releases its financial statements in accordance with IFRS. In this MD&A, as a complement to results provided in accordance with IFRS, the Trust discloses certain financial measures not recognized under IFRS which do not have standard meanings prescribed by IFRS. These measures include the following:

• Income from operations per unit – represents the income from operations for the period divided by the total number of Series A, C, D and E units outstanding at the reporting date;

• Mortgage portfolio – represents investments in mortgages net of accrued interest and fees receivable, and mortgage syndications;

• Average mortgage investment – represents the mortgage portfolio divided by the number of mortgage investments at the reporting date;

• Weighted average interest rate – represents the weighted average effective interest rate on the mortgage portfolio at the reporting date; and

• Loan-to-value (“LTV”) – is a measure of risk determined at the time of loan underwriting calculated as (i) the sum of advanced and un-advanced mortgage commitments on a mortgage investment, including all other third party advanced and un-advanced debt which has priority or ranks pari-passu to the Trust’s debt (ii) divided by the pro forma estimate of the value of the underlying real estate collateral at that time if already developed or after completion of development in the case of a development project. Weighted average LTV is the dollar weighted average of mortgage LTVs in a portfolio.

Non-IFRS measures should not be construed as alternatives to net income (loss) or comprehensive income (loss) or cash flows from operating activities determined in accordance with IFRS as indicators of the Trust’s performance.

Review and Approval by the Board of Governors

The Board of Governors approved the content of this MD&A on April 15, 2021.

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Business Developments

On September 9, 2020, the Trust announced that the Manager, after due consideration and consultation with its advisors, determined that it is in the best interests of the Trust and its unitholders to terminate and dissolve the Trust.

Effective immediately, the Trust halted all investment activity and the Manager will focus on ensuring the investments of the Trust are converted into cash as soon as practicable. Given the illiquid nature of the Trust's mortgage portfolio, this process is anticipated to take up to 36 months based on the last investment maturity in the portfolio. The Manager will make all reasonable efforts to accelerate this timeline, if possible.

During the dissolution period, each series of units, including matured units, will continue to be paid the fixed return associated with the respective series of units based on the units outstanding at the time in accordance with the regular quarterly distribution schedule. However, as the Trust will no longer be operating as an active investment trust, all capital distributions that are made from time to time during the dissolution period will be completed pro rata based on all outstanding units, including matured units, of the Trust, irrespective of their series, to ensure one series of unitholders is not treated preferentially over another. The Manager believes this is essential to ensure the fair and equitable treatment of all unitholders.

Unitholder redemption rights have been suspended in connection with the dissolution of the Trust.

Payments to Series B unitholders will only be made once all Series A, C, D and E unit capital has been repaid in full.

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Financial Highlights and Key Performance Indicators

Financial Highlights and Key Performance Indicators	Financial Highlights and Key Performance Indicators
Three months ended December 31 Year ended December 31
2020 2019 2020	2019
OPERATING RESULTS
Revenue 1,269,781 1,711,989 6,775,262	6,900,751
Income from operations 851,564 631,860 5,961,674	5,518,496
Income from operations per Series A, C, D and E units 0.21 0.08 1.44	0.74
Cash flow from operations 2,784,035 692,957 4,529,132	3,887,754
Distributions to Series A, C, D and E Unitholders 952,853 1,340,844 4,924,182	4,760,906
FINANCIAL POSITION
Redeemable units outstanding (Series A, C, D and E) 4,146,445	7,452,623
Subordinated units outstanding 207,322	372,632
Total assets 49,832,526	85,865,538
Mortgageportfolio 32,558,588	67,988,792
Total number of mortgage investments 19	42
Average mortgage investments 1,713,610	1,618,781
Weighted average interest rate 9.79%	10.29%
Weighted average loan to value 71.90%	65.65%

Revenue decreased by $442 thousand and $125 thousand for the three months and year ended December 31, 2020 compared to the same periods in 2019. The decrease is primarily due to lower interest income, the result of returning unitholder capital. Interest income will continue to decline as unit capital is returned to investors.

Income from operations includes interest income from loans invested in both Canada and the United States, fair value gains on investments held at fair value, other income, income from investments in associates, related foreign exchange gains or losses and provisions for mortgage losses. Income from operations increased by $220 thousand and $443 thousand for the three months and year ended December 31, 2020 compared to the same periods of 2019. Income from operations is expected to remain relatively stable as the dissolution of the Trust continues. Cash drag will be minimized through returning investor capital.

In 2019 and 2020, the Trust invested in Special Purpose Entities, which are classified as Investment held at fair value and these increased revenue and income from operations by $376 thousand and $99 thousand for the three months and year ended December 31, 2020. These investments allow the Trust to participate in loan sharing arrangements with third party US based financial institutions.

During the quarter, the Trust converted a mortgage to an equity investment in a self-storage development in Texas. The investment is shown as an investment in an associate in the financial statements at December 31, 2020. A loss of $470 thousand has been recognized on the investment as December 31, 2020.

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Distributions to unitholders vary by unit series type. The series currently issued and outstanding in the Trust are Series A, B, C, D, and E units (collectively “the units”). The units had a term of 45 months from the date of issuance, at which time they were to be redeemed at a price equal to the subscription price of $10 per unit. The Series A, C, D, and E redeemable units have a fixed return of 7.10%, 7.20%, 7.50%, and 7.10% per annum respectively.

Historically, the Trust made a distribution to the Series B subordinated units on a quarterly basis. The amount to be distributed was an estimate of the expected annual distribution based on the year-to-date financial results of the Trust. The Series B distribution to be made in respect of the December 31 year-end will be equal to the amount by which the taxable income and the non-taxable portion of the net realized capital gains of the Trust for the particular year exceeds the sum of : (a) the aggregate fixed return for all Series A, C, D and E redeemable units for such year (including the non-taxable portion of any realized capital gains attributed thereto); and (b) the previous distributions made to the Series B unitholder in that year. In association with the dissolution of the Trust, the distribution payable will be paid in arrears once all Series A, C, D and E unit capital has been returned to investors.

In addition, a retraction payable to Series B unitholders has been recorded. The retraction payable is equal to 5% of the capital returned to Series A, C, D and E unitholders in association with the dissolution of the Trust. The retraction payable will be paid once all Series A, C, D and E capital has been returned.

The units redeemable feature has been suspended in line with the dissolution of the Trust.

During the three months and year ended December 31, 2020, the Trust made distributions of $953 thousand and $4.9 millions to holders of redeemable units. As at December 31, 2020, $907 thousand is payable to the holders of Series A, C, D, and E units.

As at December 31, 2020, the Trust’s mortgage investment portfolio was valued at $32.6 million and comprised of 19 mortgages, 13 of which were invested in the United States and 6 invested in Canada. The mortgage investment portfolio had a weighted average interest rate of 9.79% and an average mortgage investment of $1.7m at December 31, 2020 .

Business Objective

The investment objective of the Trust was to invest in real estate investments in Canada and the United States (subject to the applicable investment objectives and restrictions of the Trust) as follows: (a) interest-bearing loans secured by variously ranking charges in real property; (b) loans comprising a base interest rate, various ranking security charges and a participation in profits; (c) loans secured with variously ranking charges by a developer's interest in the entity which is developing the real estate; (d) registered and/or unregistered real property interests through an indirect unsecured interest in real property; and (e) joint ventures which may also involve registered and/or unregistered real property interests and loan combinations to generate a fixed return for the Trust’s unitholders.

No further investments will be made in relation to the planned dissolution of the Trust.

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Current Business Environment

In Q1 of 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization. As at the date of this MD&A, the global reactions to the spread of COVID-19 have led to, among other things, significant restrictions on travel, quarantines, temporary business closures and a general reduction in consumer activity. While these effects are expected to be temporary, the duration of the disruptions to business internationally and the related financial impact cannot be estimated with any degree of certainty at this time. The public health crises has resulted in disruptions and volatility in financial markets and global supply chains as well as declining trade and market sentiment and reduced mobility of people, all of which could impact Real Property prices, interest rates, credit ratings, credit risk and inflation. These impacts could include decreases in the fair value of our mortgage investments. It is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Trust.

Portfolio

A summary of our mortgage portfolio is presented below:

	December 31, 2020	December 31, 2019
Mortgage portfolio	$32,558,588	$67,988,792
Provision for mortgage losses	(1,584,000)	(1,273,000)
Accrued interest	362,579	583,429
Mortgage syndications	3,743,768	6,371,596
Investments in mortgages	$35,080,935	$73,670,817

As at December 31, 2020, the Trust’s mortgage portfolio was comprised of 19 mortgage investments (December 31, 2019 – 42). The provision for mortgage losses at December 31, 2020 was $1.58 million (December 31, 2019 - $1.27 million). The Trust currently has a total IFRS 9 Stage 1 provision of $84 thousand. The Stage 1 provision represents management’s estimate of the expected credit losses on mortgages in the company’s portfolio that have not experienced a significant increase in credit risk since initial recognition. The expected credit losses on mortgages with increased credit risks were assessed individually for each investment in mortgages and commitments. Management estimated the expected credit loss for these at $1.5 million as at December 31, 2020 (2019 - $1.1 million).

Asset Type

A summary of our mortgage portfolio by asset type is presented below:

December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019
Number	$ Amount % of Portfolio Number $ Amount	% of Portfolio
Residential 16 Industrial 2 Other 1	$26,226,700 80.6% 38 $57,098,715 5,605,890 17.2% 2 5,250,000 725,998 2.2% 2 5,640,077	84.0% 7.7% 8.3%
Total 19	$32,558,588 100.0% 42 $67,988,792	100.0%

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As at December 31, 2020, 80.6% of the Trust’s mortgage portfolio was secured by residential projects. The Manager has significant expertise in underwriting residential development financings and has several long-standing relationships with developers with successful track records.

Security

A summary of our mortgage portfolio by priority of security is presented below:

December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019
Number	$ Amount % of Portfolio Number $ Amount	% of Portfolio
First 12 Second 7	$16,495,787 50.6% 37 $54,455,812 16,062,801 49.4% 5 13,532,980	80.1% 19.9%
Total 19	$32,558,588 100.0% 42 $67,988,792	100.0%

Loan-to-Value

Summaries of our mortgage portfolio by period, loan-to-value and security are presented below:

December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019
Number	$ Amount % of Portfolio Number $ Amount	% of Portfolio
55% or less 2 56-60% 1 61-65% 3 66-70% 2 71-75% 1 76-80% 4 81-85% 2 86% or more 4	$4,285,743 13.2% 7 $18,156,607 4,105,890 12.6% 2 3,628,838 5,285,229 16.2% 10 13,284,047 6,349,424 19.5% 3 6,527,302 875,996 2.7% 8 9,461,808 4,851,654 14.9% 5 7,342,475 181,970 0.6% 4 7,919,320 6,622,682 20.3% 3 1,668,395	26.7% 5.3% 19.5% 9.6% 13.9% 10.8% 11.6% 2.5%
Total 19	$32,558,588 100.0% 42 $67,988,792	100.0%

The loan-to-value is determined at the time of underwriting of the loan and is based on the estimated project value after the loan proceeds have been expended on it. The loan-to-value estimate would only be adjusted at the time of a loan renewal or modification, when there is a change in loan structure such as a partial discharge on loans secured by multiple properties, or when the loan becomes challenged. As at December 31, 2020, the weighted average loan-to-value for the portfolio had increased to 71.90% (December 31, 2019 – 65.65%).

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Maturity

A summary of our mortgage portfolio by maturity date is presented below:

	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019
Number	$ Amount % of Portfolio Number $ Amount	% of Portfolio
2020 - 2021 10 2022 2023 7 2	- - 19 $27,285,475 8,584,982 26.4% 17 21,151,364 22,440,202 1,533,404 68.9% 4.7% 4 2 13,758,587 5,793,366	40.1% 31.1% 20.2% 8.6%
Total 19	$32,558,588 100.0% 42 $67,988,792	100.0%

There were no mortgages that are past due or in default as at December 31, 2020 (December 31, 2019 - none).

Interest Rate

A summary of our mortgage portfolio by effective interest rate is presented below:

December 31 2020 December 31, 2019	December 31 2020 December 31, 2019	December 31 2020 December 31, 2019
Number	$ Amount % of Portfolio Number $ Amount	% of Portfolio
7.99% or less 1 8.00% - 8.99% 1 9.00% – 9.99% 3 10.00% – 10.99% 4 11.00% - 11.99% 5 12.00%+ 5	$5,250,435 16.1% 2 $7,085,615 657,406 2.0% 2 2,915,961 9,391,633 28.8% 4 9,667,648 6,674,707 20.5% 17 32,645,755 6,985,098 21.5% 5 5,904,351 3,599,309 11.1% 12 9,769,462	10.4% 4.3% 14.2% 48.0% 8.7% 14.4%
Total 19	$32,558,588 100.0% 42 $67,988,792	100.0%

The weighted average interest rate as at December 31, 2020 was 9.79% (December 31, 2019 – 10.29%). The decrease in rate is the result of smaller loan balances held with an interest rate of less than 11.00% in the year ended December 31, 2020.

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Geographic Diversification

A summary of our mortgage portfolio by province and state is presented below:

December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019	December 31, 2020 December 31, 2019
Number	$ Amount % of Portfolio Number $ Amount	% of Portfolio
Texas 12 Arizona - Florida 1 Georgia - British Columbia 1 Alberta 4 Ontario 1	$13,286,442 40.8% 27 $36,474,035 - - 2 2,000,501 130,078 0.5% 4 5,866,785 - - 1 1,090,708 1,285,743 3.9% 3 8,058,613 13,750,435 42.2% 4 13,467,727 4,105,890 12.6% 1 1,030,423	53.6% 2.9% 8.6% 1.6% 11.9% 19.8% 1.6%
Total 19	$32,558,588 100.0% 42 $67,988,792	100.0%

As at December 31, 2020, 58.7% of the Trust’s mortgage portfolio is located in Canada (December 31, 2019 – 33.3%). The Manager has significant experience with operating in Canada and many of the Trust’s borrowers have long-standing relationships with the Manager.

Results from Operations

Three months ended December 31 Year ended December 31	Three months ended December 31 Year ended December 31
2020 2019 2020	2019
Revenue 1,269,781 1,711,989 6,775,262	6,900,751
Income from operations 851,564 631,860 5,916,674	5,518,496
Financingcosts:
Amortization of deferred financing costs (3,309) (5,318) (17,124)	(18,172)
Distributions to holders of redeemable units (Series A,C,D and E) (952,853) (1,340,844) (4,924,182)	(4,760,906)
Distribution to holders of subordinated trust units(Series B) (63,528) 787,284 (886,495)	(572,660)

Revenue

Revenue decreased by $442 thousand and $125 thousand during the three months and year ended December 31, 2020 compared to the same periods of 2019. The decrease was the result of lower interest income due to returning investor capital, in relation to the dissolution of the Trust.

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Financing Costs

For the three months and year ended December 31, 2020, the Trust’s charges relating to the credit facility were $3,309 and $17,124 respectively (2019 - $5,318 and $18,172).

For the three months and year ended December 31, 2020, the fund recorded distributions of $1.0 million and $4.9 million respectively (2019 - $1.3 million and $4.8 million) to Series A, C, D, and E unitholders. The Series A, C, D, and E unitholders are entitled to a fixed return. The decrease in distribution during the three months was a result of reduction in units due to returning investor capital, in relation to the dissolution of the Trust. The increase in distribution for the year ended was the result of units issued in the prior periods being outstanding for a longer period of time.

Distribution to Subordinated trust units (Series B)

The Trust made a distribution to the Series B Unitholders on a quarterly basis. For the three months and year ended December 31, 2020, the fund recorded distributions of $63 thousand and $886 thousand respectively (2019 – overdistribution of $787 thousand and $573k thousand). In association with the dissolution of the Trust, all further distributions to Series B will only be paid once all Series A, C, D and E unit capital has been returned.

Financial Condition

Liquidity and Capital Resources

The liquidity needs of the Trust arise from working capital requirements, debt servicing with respect to the revolving credit facility, distributions to unitholders, future mortgage investment funding requirements, and future mandatory redemptions.

Cash flows from the Trust’s mortgage investments and cash-on-hand represent the primary sources of liquidity. Cash flow from operations is dependent upon interest payments and principal repayments from borrowers.

Payment of quarterly distributions and amounts returned to unitholders in relation to the dissolution of the Trust are the primary uses of cash.

Credit Facility

The Trust had a credit facility with a Canadian bank providing for borrowings up to $2.0 million by way of a demand revolving loan. The amount available under the credit facility is further limited by a margin requirement and is also limited by the Trusts eligible Canadian loan portfolio. As at December 31 2020, the borrowing available under the credit facility was $nil (December 31, 2019 – $480 thousand). Interest is calculated at the bank’s prime rate plus 1.1% per annum and a standby fee is calculated on the undrawn portion of the facility at 0.35% per annum.

The facility was cancelled in the fourth quarter of 2020. As at December 31, 2020, no amounts have been drawn down on the credit facility (December 31, 2019 – nil).

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The credit facility had financial tests and other covenants with which the Trust must comply. The Trust shall not, without the prior written consent of the Bank:

• (a) permit its ratio of bank debt to EBITDA at any time to exceed 2.50 to 1.00;

• (b) permit its ratio of bank debt to tangible net worth at any time to exceed 0.65 to 1.00; or

• (c) permit its tangible net worth at any time to be less than $20,000,000.

These covenants placed restrictions on, among other things, the ability of the Trust to incur additional indebtedness, to pay distribution to Series B unitholders, and to sell or otherwise dispose of assets. During the three months and year ended December 31, 2020, the Trust was in compliance with all such covenants.

The credit facility was collateralized by a general security agreement creating a first priority security interest in all personal property of the Trust and a floating charge over all of the Trust’s real property, and an assignment of the Trust’s beneficial interest in all mortgages held. During the three months and year ended December 31, 2020, financing costs associated with the credit facility were $3,309 and $17,124 respectively (2019-$5,318 and $18,172).

Trust Units

Series A, C, D, and E Units

The Trust has authorized the issuance of an unlimited number of units. Units will no longer be issued in connection with the dissolution of the Trust.

On April 8, 2020, the Trust announced that the Manager, suspended retractions and redemptions of units of the Trust effective March 30, 2020. After due consideration of the economic interruption caused by the COVID-19 pandemic, including the Manager’s ability to determine the value of the assets held by the Trust, the Manager determined to suspend unit retractions and redemptions in accordance with the Trust’s declaration of trust.

On September 9, 2020, the Trust announced that the Manager after due consideration and consultation with its advisors, determined that it is in the best interests of the Trust and its unitholders to terminate and dissolve the Trust.

Effective immediately, the Trust halted all investment activity and the Manager will focus on ensuring the investments of the Trust are converted into cash as soon as practicable. Given the illiquid nature of the Trust's mortgage portfolio, this process is anticipated to take up to 36 months based on the last investment maturity in the portfolio. The Manager will make all reasonable efforts to accelerate this timeline, if possible.

During the dissolution period, each series of units, including "matured units", will continue to be paid the fixed return associated with the respective series of units based on the units outstanding at the time in accordance with the regular quarterly distribution schedule. However, as the Trust will no longer be operating as an active investment trust, all capital distributions that are made from time to time during the dissolution period will be completed pro rata based on all outstanding units, including "matured units", of the Trust, irrespective of their series, to ensure one series of unitholders is not treated

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preferentially over another. The Manager believes this is essential to ensure the fair and equitable treatment of all unitholders.

Series A, C, D and E units had voting and retraction rights and a term of 45 months from the date of issue of each redeemable unit. The redeemable feature of the units has been suspended, as discussed in Note1. The units are entitled to a fixed return (defined as the set per annum percentage rate of the Subscription price for such Series, payable quarterly) of 7.1%, 7.2%, 7.5% and 7.1% per annum respectively. At the end of such term, the unitholders were entitled to receive an amount equal to any accrued but unpaid fixed return on the units, together with the subscription price paid for such units. This feature has also been suspended in connection with the dissolution of the Trust. The units are not entitled to a residual equity interest in the net assets of the Trust. The units are classified as financial liabilities.

A first return of capital was paid, on a pro rata basis to all unitholders on September 24, 2020, in connection with the dissolution of the Trust. The total paid was $7,000,020.

A second return of capital was paid, on a pro rata basis to all unitholders on October 23, 2020, in connection with the dissolution of the Trust. The total paid was $21,733,000.

A third return of capital was paid, on a pro rata basis to all unitholders on November 30, 2020, in connection with the dissolution of the Trust. The total paid was $4,316,990.

Unitholder redemption rights have been suspended in connection with the dissolution of the Trust.

The gains on redemption were recognized in the statement of comprehensive income in the period during which the redemptions take place. The gains on redemption form part of Net Revenue (defined as for a particular calendar quarter, net earnings of the Trust determined in accordance with IFRS, excluding unrealized gains arising from the revaluation of Investments and before the Aggregate Fixed Return) and therefore are available to pay the Aggregate Fixed Return (defined as an amount equal to the fraction of the Fixed Return for a Series based upon the proportion that the number of days in the calendar quarter that units of the Series are issued and outstanding multiplied by the subscription price for all units issued and outstanding in the Series, less any applicable taxes payable or allowable expenses) during the period in which the redemptions take place. Gains on redemption recorded for the three months and year ended December 31, 2020 was nil and $589 (December 30, 2019 - $7,585 and $11,310) and included in other income on the statement of comprehensive income.

Payment of quarterly distributions and amounts due on redemption or termination of the Trust may, in certain circumstances, be funded by the Manager’s Support Investment .

The Trust makes cash distributions to the Unitholders on a quarterly basis. Distributions are paid in arrears on the 15th day following the respective quarter.

As at December 31, 2020, distribution payable on the Series A, C, D and E units totals $907,043 (December 31, 2019 - $1,341,015).

Subsequent to December 31, 2020, a fourth return of capital was paid, on a pro rata basis to all unitholders on January 18, 2021, in connection with the dissolution of the Trust. The total paid was $5,300,000. The fourth return of capital was funded primarily through the transfer of mortgages to entities related to the Manager at unpaid principal plus accrued interest representing the estimated fair values of the related mortgages.

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Series B: Subordinated Trust Units

As at December 31, 2020, the Manager has met its commitment to invest $1,365,003 in the Trust (the “Manager’s Support Investment”) (December 31, 2019 - $3,655,606) and in return received 372,573 Series B units (December 31, 2020 – 372,632). Series B units are subordinated to payment of the fixed return on all other units, the amount repayable on redemption or retraction of all other units and other liabilities of the trust. In order to meet any shortfall in the monies otherwise payable quarterly to unitholders as a distribution, or in respect of payments due to unitholders (other than Series B Unitholders) on retraction, and or redemption of Units (other than Series B units) or termination of the Trust, the Manager has agreed that Series B Units in the following aggregate subscription amounts will be subscribed for by the Manager at all times during the term of the Trust:

• (a) until the Trust has issued units other than the Series B Units for an aggregate subscription price of $5,000,000, 10% of such aggregate subscription price, up to an aggregate amount of $500,000;

• (b) upon the Trust having issued units (other than the Series B Units) for an aggregate subscription price of $5,000,000 until the Trust has issued units (other than Series B Units) for an aggregate subscription Price of $10,000,000, $500,000 (no additional Series B Units will be subscribed for by the Manager); and

• (c) upon and after the Trust having issued units (other than the Series B Units) for an aggregate subscription price up to $10,000,000, 5% of such aggregate subscription price.

The Series B Units are non-voting, have no Fixed Return and an indefinite term, except as Series A, C, D and E are redeemed. They are subordinated to payment of the Fixed Return for all other Units, the amount repayable on Redemption or Retraction of all other Units and all other liabilities of the Trust.

No Series B units will be redeemed until investor capital is returned to investors in relation to the dissolution of the Trust.

The Trust makes a distribution to the Series B Unitholder on a quarterly basis and the amount is an estimate of the expected annual distribution based on the year to date financial results of the Trust. As at December 31, 2020, the Trust had accrued $2.4 million distribution payable on Series B units (December 31 – 2019 - due from Series B units of $787 thousand).

In connection with the dissolution of the Trust, the Series B Units, may not receive any return of capital unless and until all amounts owing to the Trust's creditors and any payments to the other unitholders, both in respect of their aggregate fixed return and redemption of their units have been paid in full. Accordingly, the Manager will not receive any balance of monies remaining in the Trust unless and until all amounts payable to other unitholders and all liabilities of the Trust are paid.

At December 31, 2020 retractions payable to Series B unitholders total $1,652,511 (2019 - $nil). These amounts will not be paid until 100% of Series A, C, D and E units have been repaid in full.

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Distributions

For the three months and year ended December 31, 2020, the Trust had recognized distributions to Series A, C, D, and E unitholders totaling $953 thousand and $4.9 million. As at December 31, 2020, distributions payable to Series A, C, D, and E unitholders totaled $907 thousand (December 31, 2019 - $1.3 million).

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Statement of Cash Flows

The statement of cash flows for the three months and year ended December 31, 2020 and December 31, 2019 are as follows:

The statement of cash flows for the three months and year ended December 31, 2020 and December 31, 2019 are as follows:	The statement of cash flows for the three months and year ended December 31, 2020 and December 31, 2019 are as follows:
Three months ended December 31 Year ended December 31
2020 2019 2020	2019
Net change in cash related to
Operating $2,784,035 $692,957 $4,529,132	$3,887,754
Investing 26,786,331 (16,336,305) 33,513,848	(9,799,969)
Financing (27,448,560) 130,393 (38,453,414)	11,161,860
Increase(decrease)in cash $2,121,806 $(15,512,955) ($410,434)	$5,249,645

The increase (decrease) in net cash flow for the periods was mainly due to the following factors:

• Operating – cash from operating activities increased by $2.1 million and $641 thousand during the three months and year ended December 31, 2020 respectively compared to the same period of 2019. The movement is primarily related to changes in foreign exchange and changes in provisions for mortgage losses.

• Investing – cash flows from investing activities increased by $43.1 million and increased by $43.3 million for the three months and year ended December 31, 2020 compared to the same period for 2019. Cash flows from investing activities increased primarily due to transfer of mortgages to entities related to the Manager which funded the return of capital in association with the dissolution of the Trust.

• Financing – cash flows from financing activities decreased by $27.6 million and $49.6 million during the three months and year ended December 31, 2020 compared to the same period of 2019. During 2020 the Trust did not issue any new units, during the same period in 2019, the Trust raised $16.8 million through the issuance of redeemable units and began returning capital to investors in relation to the dissolution of the Trust.

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Quarterly Financial Information

The following is a quarterly summary of the Trust’s for the eight most recently completed quarters:

	Three months ended December 31, 2020	Three months ended September 30, 2020 Three months ended June 30, 2020 Three months ended March 31, 2020 Three months ended December 31, 2019 Three months ended September 30, 2019 Three months ended June 30, 2019	Three months ended March 31, 2019
Revenue	$1,269,781	$1,497,456 $1,988,648 $1,927,136 $1,711,989 $1,790,186 $1,718,732	$1,679,842
Income from operations	851,564	1,647,937 2,075,720 1,386,363 631,860 1,643,169 1,673,701	1,569,585
Distributions to unitholders of Series A, C, D, and E redeemable units	952,853	1,243,312 1,382,055 1,347,192 1,340,844 1,192,456 1,153,236	1,074,370
Amortization of deferred financing costs	3,309	4,197 5,113 4,505 5,138 4,949 4,408	3,677
Income (loss) for the period	(104,507)	400,428 688,552 34,666 714,122 445,764 516,057	491,538
Other comprehensive income(loss)	(186,349)	(58,044) (145,861) 245,611 73,162 40,263 (73,740)	(59,938)
Comprehensive income (loss)for theperiod	$(290,856)	$342,384 $542,690 $280,277 $787,284 $486,027 $442,317	$431,600

Q4 2020 vs. Q4 2019

Revenue decreased by $820 thousand and income from operations increased by $220 thousand from the same period in Q4 2019 as a result of lower investments in mortgages and investment income from investments held at fair value.

Distributions to unitholders of Series A, C, D, and E redeemable units of $953 thousand were down 30% from the three months ended December 31, 2019. The Series A, C, D, and E units are entitled to a fixed return of 7.1%, 7.2%, 7.5% and 7.1% per annum respectively. The decrease is due to reduction in units consistent with the dissolution of the Trust.

Q4 2020 vs. Q3 2020

Revenue and income from operations were down 40% and 48% respectively. The decrease in revenue is mainly due to lower investments in mortgages and investment income in the fourth quarter as compared to the third quarter.

Distributions to unitholders of Series A, C, D, and E redeemable units of $953 thousand decreased by 23% from last quarter. The decrease is the result of the return of capital to unitholders in relation to the dissolution of the Trust.

Related Party Transactions and Commitments

The Trust invests in mortgages on a participation basis with parties related to the Manager. Titles to mortgages are held by TCC Mortgage Holdings Inc., a bare trustee, or Computershare Trust Company of Canada, on behalf of the beneficial owners of the mortgages that the Trust invests in. In addition, certain

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duties are performed by the Mortgage Broker. TCC Mortgage Holdings Inc. and the Mortgage Broker are related to the Manager and the Trustee through common control. In cases where mortgages are held on a participation basis:

• The Trust's rights are as outlined in the Trust Agreement and in a Mortgage Participation and Servicing Agreement with the Mortgage Broker. The Trustee will hold the Trust's interest in the mortgages and underlying security.

• Pursuant to these agreements, the Mortgage Broker agrees to administer and service the mortgages on behalf of the Trustee and other investees. The Mortgage Broker acts as the Trust's loan originator, underwriter, servicer and syndicator.

• The Mortgage Broker performs certain duties including registering title to the mortgages, arranging for title searches, and holding all title papers and other security documentation related to the mortgages.

• The Mortgage Broker agrees to deliver cash payments for interest and principal to the Trustee.

The Trust generally invests in an interest in a mortgage at the time the mortgage is funded. However, at any time during the term of the mortgage, it may acquire an interest from or sell its interest in a mortgage to parties related to the Manager, Trustee and Mortgage Broker. Most purchases from and sales to related parties are transacted at unpaid principal plus accrued interest due at the date of the transaction which, in the opinion of the Manager, represent the estimated fair values of the related mortgages.

During the three months and year ended December 31, 2020, the Trust purchase nil investments in mortgages (December 31, 2019 - $0.4 million and $10.3 million) and sold $28.4 million investment in mortgages (December 31, 2019 – $9.0 million and $15.9 million) to entities under common management.

During the year, the Trust invested in an associate with a related party by virtue of common management. As at December 31, 2020, the Trust held a $37.5% interest in the associate.

As at December 31, 2020, other receivables of $12,240 (December 31, 2019 – $3,539) are due from the Manager. The receivable is composed of certain reimbursable expenses, is non-interest bearing and due on demand.

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