Max Power Mining Corp. — Management Reports 2024

Apr 26, 2024

CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP

MANAGEMENT’S DISCUSSION AND ANALYSIS FORM 51-102F1

FOR THE YEAR ENDED DECEMER 31, 2023

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

The following management’s discussion and analysis (“MD&A”) of the financial condition and results of operations has been prepared as of April 26, 2024 and is qualified in its entirety by reference to and should be read together with the Churchill 11 Real Estate Limited Partnership (the “Limited Partnership”) consolidated audited financial statements (the “financial statements”) for the year ended December 31, 2023 and the Limited Partnership’s Prospectus filing dated April 6, 2011 (the “Prospectus”), as referred to herein, as well as the reference to forward-looking statements within this report. All financial information is reported in Canadian dollars and has been prepared in accordance with IFRS Accounting Standards (“IFRS”) unless otherwise noted. This MD&A has been prepared by, and is the responsibility of, the Limited Partnership’s management.

Additional information about the Limited Partnership filed with the Canadian securities commissions is available on-line at www.sedar.com.

RESPONSIBILITY OF MANAGMENT

Management is responsible for the information disclosed in this MD&A. Management has in place the appropriate information systems, procedures and controls to ensure information used internally by management and disclosed externally is materially complete and reliable.

FORWARD-LOOKING STATEMENTS

In various places in the MD&A, there are forward-looking statements reflecting management’s current expectations regarding future economic conditions, results of operations, financial performance and other matters affecting the Limited Partnership. Forward-looking statements include information regarding possible or assumed future results of transactions as well as statements proceeded by, followed by or that include the words “believes”, “expects”, “anticipates”, “estimates”, “intends” or similar expressions. Important factors, in addition to those discussed in this document, could affect the future results of the Limited Partnership and could cause those results to differ materially from those expressed in any forwardlooking statements.

BUSINESS OVERVIEW

The Limited Partnership was established by Churchill 11 Partners Inc. (the “General Partner”), together with Churchill 11 Debenture Corp. (the “Debenture Issuer”) for the purposes of owning and operating a diversified portfolio of quality incomeproducing commercial, industrial and/or residential real estate properties in Canada.

The primary business of the Limited Partnership is to acquire, own and operate a portfolio of income-producing real estate properties in Canada (or interests in such properties). The Limited Partnership will utilize the aggregate net proceeds realized from the Prospectus offering, along with mortgage loans, to purchase revenue-producing commercial, industrial and/or residential real estate properties and participate, to a limited extent, in real estate development opportunities.

During 2011, the Limited Partnership, along with the Debenture Issuer, conducted an initial public offering (“the Prospectus”) and issued 18,367 Units at a price of $1,250 per Unit. Each Unit consists of one unit of the Limited Partnership with a price of $250 and one Series A Debenture of the Debenture Issuer in the principal amount of $1,000 bearing interest at 8% per annum, maturing on December 31, 2016.

On October 9, 2018, the Debenture Issuer extended the maturity date of the Debenture to December 31, 2019, pursuant to the terms of the trust indenture dated January 28, 2011 between the Debenture Issuer and Computershare Trust Company of Canada. As a result of this extension, the maturity date of the Debenture Issuer Loan was extended to December 15, 2019. On November 8, 2019, the Debenture Issuer extended the maturity date of the Debenture to December 31, 2021, pursuant to the terms of the trust indenture dated January 28, 2011 between the Debenture Issuer and Computershare Trust Company of Canada. As a result of this extension, the maturity date of the Debenture Issuer Loan was extended to December 15, 2021. On October 14, 2021, the Debenture Issuer extended the maturity date of the Debenture to December 31, 2023, pursuant to the terms of the trust indenture dated January 28, 2011 between the Debenture Issuer and Computershare Trust Company of Canada. As a result of this extension, the maturity date of the Debenture Issuer Loan was extended to December 15, 2023. On November 21, 2023, the Debenture Issuer extended the maturity date of the Debenture to December 31, 2026, pursuant to the terms of the trust indenture dated January 28, 2011 between the Debenture Issuer and Computershare Trust Company of Canada. As a result of this extension, the maturity date of the Debenture Issuer Loan was extended to December 15, 2025.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

BUSINESS OVERVIEW (cont’d)

All terms of the Debentures and Debenture Issuer Loan, with the exception of the extended maturity date, remained consistent with the original terms.

OVERALL PERFORMANCE

The following is a summary of certain significant events and transactions related to the Limited Partnership’s performance:

1. On April 6, 2011, the Limited Partnership, along with Churchill 11 Debenture Corporation (the “Company”), filed a prospectus for an initial public offering to sell a minimum of 4,000 units and a maximum of 24,000 units at a price of $1,250 per unit. Each unit consists of one unit of the Limited Partnership and one Series A Debenture from the Company, in the principal amount of $1,000, bearing interest at 8.0% per annum, maturing on December 31, 2016.

2. On April 29, 2011, the Limited Partnership announced its first closing pursuant to the Prospectus. The Limited Partnership issued 9,017 units for the total proceeds of $11,271,250. The Limited Partnership received $8,200,000 (the “Debenture Issuer Loan”) from the Debenture Issuer (by means of a promissory note) for the purpose of acquiring properties and to fund the various costs associated with real property acquisitions.

3. On May 27, 2011, the Limited Partnership announced its second closing pursuant to the Prospectus. The Limited Partnership issued additional 5,384 units for the total proceeds of $6,730,000. The Limited Partnership received an additional $4,900,000 as a second installment under the Debenture Issuer Loan from the Debenture Issuer (by means of a promissory note) for the purpose of acquiring properties and to fund the various costs associated with real property acquisitions.

4. On June 27, 2011, the Limited Partnership along with the Company filed Amendment No. 1, updating the Offering to reflect recent changes resulting from the release of the government of Canada’s federal budget on June 6, 2011.

5. On July 22, 2011, the Limited Partnership announced its third and final closing pursuant to the Prospectus. The Limited Partnership issued additional 3,966 units for the total proceeds of $991,500. The Limited Partnership received an additional $3,600,000 as a third installment under the Debenture Issuer Loan from the Debenture Issuer (by means of a promissory note) for the purpose of acquiring properties and to fund the various costs associated with real property acquisitions.

6. On October 27, 2011, the Limited Partnership acquired a 35% beneficial interest in an industrial property located at 8205 Dallas Drive, Kamloops, BC. The total purchase price was $17,600,000 (35% - $6,160,000). The acquisition was funded with cash on hand and assumption of Citizens Bank of Canada loan in the amount of $12,511,066 (35% - $4,378,873) at an interest of 5.650% per annum, maturing June 2020. The remaining interest was purchased by unrelated third parties.

7. On December 1, 2011, the Limited Partnership completed the purchase of a 2.40-acre retail development site at the corner of Westminster Avenue and Winnipeg Street in downtown Penticton, BC. The Limited Partnership has secured a 20-year lease from Landmark Cinemas for the occupation of a 23,565 newly constructed digital theatre complex. The total purchase price of the site was $1,900,000, plus standard closing costs and adjustments. The Limited Partnership funded the acquisition with cash and is currently in discussions with qualified lenders to provide construction financing for the build out of the Landmark Cinema building and the additional retail pad sites. This property was classified at December 31, 2011 as property underdevelopment.

8. On December 9, 2011, the Limited Partnership acquired a retail shopping mall located at 100 Ranch Market, Strathmore, AB. The Limited Partnership has acquired control over the Ranch Market property with ownership of 98.28% and a non-controlling interest of 1.72%. The total purchase price was $27,100,000, plus standard closing costs and adjustments. Churchill 11 funded the acquisition with cash and a new first mortgage loan with First Calgary Credit Union in the amount of $15,600,000 at an interest rate of 4.75%, maturing on December 9, 2012.

9. On January 30, 2012, the Limited Partnership received a further $2,000,000 on the mortgage related to the Ranch Market property, bringing the total mortgage principal outstanding on the property to the maximum committed amount of $17,600,000.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

OVERALL PERFORMANCE (cont’d)

1. On April 17, 2012, the Limited Partnership acquired a 100% operational interest (66.67% beneficial interest) in an industrial property located at 6270 205[th] Street, Langley, BC. The total purchase price was $4,875,000 plus standard costs and adjustments. The acquisition was funded with cash on hand and a new first mortgage from Westminster Saving Credit Union in the amount of $3,412,500 at an interest of 3.45% per annum, maturing April 16, 2014. The property was acquired with Spire 205 Project Inc. (“Spire”) as a Co-ownership, whereby Spire maintains the remaining 33.33% beneficial interest in the project subject to Co-Owners’ Agreement.

2. On July 15, 2012, the Limited Partnership distributed $4.9728 per Limited Partnership unit for a total cash distribution of $91,333.

3. On October 15, 2012, the Limited Partnership distributed $5.0273 per Limited Partnership unit for a total cash distribution of $92,337.

4. On January 15, 2013, the Limited Partnership distributed $5.0273 per Limited Partnership unit for a total cash distribution of $92,337.

5. On April 15, 2013, the Limited Partnership distributed $4.9315 per Limited Partnership unit for a total cash distribution of $90,577.

6. On October 1, 2014, the Limited Partnership completed the sale of its 66.67% beneficial interest in the 205th Street property, Langley, British Columbia. The gross sale price for the 100% interest in the property was $6,600,000, less standard closing costs, third party real estate commissions and adjustments.

7. On October 30, 2014, the Limited Partnership made a payment in the amount of $1,377,525 to the Debenture Issuer as a partial repayment of the Debenture Issuer Loan and $10,530 of accrued interest.

8. On August 28, 2015, the Limited Partnership completed the sale of its 35% beneficial interest in the Dallas Drive #2 property, Kamloops, BC. The gross sale price for the 35% interest in the property was $6,895,000 less standard closing costs, third party real estate commissions and adjustments.

9. On September 30, 2015, the Limited Partnership made a payment in the amount of $1,836,700 to the Debenture Issuer as a partial repayment of the Debenture Issuer Loan and $41,665 of accrued interest.

10. On June 1, 2016, the Limited Partnership made a payment in the amount of $2,479,545 to the Debenture Issuer as a partial repayment of the Debenture Issuer Loan and $37,803 of accrued interest.

11. On February 4, 2020, the Limited Partnership completed the sale its 100% beneficial interest in the Iron City property, Penticton, BC, to a related party with common directors for the sale price of $8,650,000, less standard closing costs and adjustments.

12. On March 11, 2020, the Limited Partnership completed the sale of the remaining parcel of land on the Iron City property, Penticton, BC to an unrelated third party for the sale price of $600,000.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

OVERALL PERFORMANCE (cont’d)

Selected annual financial information

The following table provides a brief summary of the Limited Partnership’s financial results. Please refer to the financial statements for years ended December 31, 2023, 2022 and 2021 for additional information:

	For the Year Ended December 31, 2023	For the Year Ended December 31, 2022	For the Year Ended December 31, 2021
Total revenue	$ 2,450,044	$ 2,387,723	$ 2,371,432
Net loss attributable to unitholders	(3,663,149)	(4,961,563)	(13,900)
Net income (loss) attributable to non-controlling interest	(30,023)	(52,312)	34,612
Total assets	27,051,019	30,780,132	35,779,060
Total liabilities before net liabilities attributable to unitholders and non-controlling interest	44,743,416	44,761,191	44,708,404
Net liabilities attributable to unitholders and non- controlling interest	(17,692,397)	(13,981,059)	(8,929,344)

RESULTS OF OPERATIONS

The following discussion addresses the operating results and financial condition of the Limited Partnership for the threemonth period and year ended December 31, 2023. The MD&A should be read in conjunction with the Limited Partnership’s financial statements and the accompanying notes as well as the cautionary statements at the end of this discussion.

For the three-month period ended December 31, 2023

The Limited Partnership incurred a loss of $3,070,588 for the period.

The significant revenue and expenses are as follows:

REVENUE

The Limited Partnership earned revenue of $637,796 in rental revenue (includes all amounts earned from tenants related to lease agreements, such as basic rent, operating costs and property tax recoveries) from properties previously acquired and $7,693 in interest income.

EXPENSES

• asset management and loan commitment fees of $79,148

• investment property expenses of $182,389, which include costs relating to such items as building repairs and maintenance, utilities, cleaning, insurance, property taxes and property administration fees among other items, which can be recovered from the tenants

• interest on the Debenture Issuer Loan of $249,676, which represents interest at 9% on the outstanding loan

• interest on mortgages payable of $144,989, which includes mortgage interest of $136,426 and amortization of financing costs incurred of $8,563

• office and miscellaneous expenses in the amount of $4,484 which include costs primarily relating to bank service charges among other costs

• professional fees of $22,360, which include costs relating to such items as auditing fees and legal fees

• accrued distributions to Limited Partners of $92,590 and accrued distribution to General Partners of $63,887

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

RESULTS OF OPERATIONS (cont'd)

For the year ended December 31, 2023

The Limited Partnership incurred a loss of $3,693,172 for the year.

The significant revenue and expenses are as follows:

REVENUE

The Limited Partnership earned revenue of $2,450,044 in rental revenue (includes all amounts earned from tenants related to lease agreements, such as basic rent, operating costs and property tax recoveries) from properties previously acquired and $60,982 in interest income.

EXPENSES

• asset management and loan commitment fees of $314,007

• investment property expenses of $711,776, which include costs relating to such items as building repairs and maintenance, utilities, cleaning, insurance, property taxes and property administration fees among other items, which can be recovered from the tenants

• interest on the Debenture Issuer Loan of $990,561, which represents interest at 9% on the outstanding loan

• interest on mortgages payable of $583,075, which includes mortgage interest of $548,823 and amortization of financing costs incurred of $34,252

• office and miscellaneous expenses in the amount of $5,389, which include costs primarily relating to bank service charges among other costs

• professional fees of $102,031, which include costs relating to such items as auditing fees and legal fees

• accrued distributions to Limited Partners of $367,340 and accrued distribution to General Partners of $253,465

The following is a summary of the quarterly results of the Limited Partnership for the eight most recently completed financial quarters ended December 31, 2023:

	For the three month period ended December 31, 2023	For the three month period ended September 30, 2023	For the three month period ended June 30, 2023	For the three month period ended March 31, 2023
Total assets	$ 27,051,019	$ 30,078,371	$ 30,363,343	$ 30,536,390
Working capital (Note 1)	(19,320,751)	(19,240,997)	(19,241,389)	(19,158,291)
Debenture Issuer Loan	11,006,230	11,006,230	11,006,230	11,006,230
Net liabilities attributable to unitholders	(17,875,545)	(14,849,477)	(14,658,003)	(14,422,730)
Total revenue	645,489	622,833	624,866	617,838
Netloss	(194,034)	(187,322)	(230,005)	(205,257)

	For the three month period ended December 31, 2022	For the three month period ended September 30, 2022	For the three month period ended June 30, 2022	For the three month period ended March 31, 2022
Total assets	$ 30,780,132	$ 35,100,409	$ 35,319,600	$ 35,537,992
Working capital (Note 1)	(19,078,383)	(19,059,163)	(18,969,861)	(18,931,998)
Debenture Issuer Loan	11,006,230	11,006,230	11,006,230	11,006,230
Net liabilities attributable to unitholders	(14,212,396)	(9,884,203)	(9,671,316)	(9,457,539)
Total revenue	636,953	584,553	591,132	607,306
Net loss	(200,659)	(208,200)	(208,919)	(201,357)

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

RESULTS OF OPERATIONS (cont'd)

Note 1 : Working capital includes: cash, short term investments, accounts receivables, prepaid expenses, accounts payable, interest payable, and current portion of mortgages payable.

LIQUIDITY AND CAPITAL RESOURCES

The Limited Partnership has financed its operations to date primarily through the issuance of Limited Partnership Units and the Debenture Issuer Loan.

Pursuant to the Prospectus, the Limited Partnership issued 18,367 Limited Partnership units for total gross proceeds of $4,591,750 as of December 31, 2011. Together with the Debenture Issuer, the Limited Partnership has raised total gross proceeds of $22,958,750. The Limited Partnership has borrowed $16,700,000 from the Debenture Issuer for the purpose of acquiring income-producing properties and, to a limited extent, for investment in real estate development opportunities.

On October 30, 2014, the Limited Partnership partially repaid the Debenture Issuer Loan in the principal amount of $1,377,525. On September 30, 2015, the Limited Partnership partially repaid the Debenture Issuer Loan in the principal amount of $1,836,700. On June 1, 2016, the Limited Partnership partially repaid the Debenture Issuer Loan in the principal amount of $2,479,545. The total amount outstanding of the Debenture Issuer Loan after the partial repayments is currently $11,006,230.

CAPITAL MANAGEMENT

The primary objectives of the Limited Partnership’s capital management are to invest in a diversified portfolio of welllocated, quality investment properties with positive cash flows and to provide quarterly distributions to its limited partners. The Limited Partnership is restricted in its use of capital to making investments in real property in Canada. The Limited Partnership manages its capital structure and makes adjustments to it, in light of changes to prevailing economic conditions. The Limited Partnership will continue to make distributions if results of operations and cash flows permit in the future.

The capital structure consisted of the following components at:

	2023 2022
Capital
Mortgages payable Due to Churchill 11 Debenture Corp. General and Limited Partnership units outstanding Total capital	- $ 18,230,274 $ 11,006,230 11,006,230 4,591,760 4,591,760
	15,597,990 $ 33,828,264 $

During the year ended December 31, 2023, the total capital of the Limited Partnership changed due to the reclassification of mortgages payable to liabilities related to investment properties held-for-sale. There were no changes in the Limited Partnership’s approach to capital management during the year.

The Limited Partnership is not subject to externally imposed capital requirements.

OPERATING SEGMENTS

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker is the person or group that allocates resources to and assesses the performance of the operating segments of an entity. The Limited Partnership has determined that its chief operating decision maker is the General Partner.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

OPERATING SEGMENTS (cont’d)

The Limited Partnership owns and operates commercial properties in Alberta. Management, in measuring the Limited Partnership’s performance, does not distinguish or group its operations on a geographical or other basis. Accordingly, the Limited Partnership has a single reportable segment for disclosure purposes in accordance with IFRS 8, Operating Segments , which uses a management approach to segmented reporting under which the information reported would be that which management uses internally for evaluating the performance of operating segments.

All of the Limited Partnership’s revenues are earned in Canada and all its investment property is located in Canada.

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT

Fair value of financial instruments

The fair value of the amounts due to Churchill 11 Debenture Corp. are measured from the perspective of a market participant that holds the identical item as an asset, and is determined by discounting the future contractual cash flows under the current financing arrangements at a discount rate that represents an approximation to the borrowing rates presently available to the Limited Partnership for loans with similar terms to maturity, while also taking into account the Limited Partnership’s own credit risk.

The fair values of the aggregate amounts payable to Churchill 11 Debenture Corp. included in accounts payable and accrued liabilities, interest payable to Churchill 11 Debenture Corp. and due to Churchill 10 Debenture Corp. are determined based on the performance and net realizable value of the assets of the Limited Partnership, specifically investment properties. Accordingly, the inputs used to determine the respective fair values are unobservable and therefore classified as Level 3.

The fair value of amounts payable to Churchill 11 Debenture Corp. is most sensitive to changes in the discount rate. As at December 31, 2023 the discount rate of the Limited Partnership was 9% (2022 - 9%). A 0.25% increase in the discount rate of the Limited Partnership decrease the aggregate fair value of the aggregate payable to Churchill 11 Debenture Corp. by approximately $73,000 (2022 - $29,000) and a 0.25% decrease in the discount rate of the Limited Partnership would increase the fair value by approximately $74,000 (2022 - $29,000).

The fair value of the mortgage payable and liabilities classified as held-for-sale has been calculated based on discounted future cash flows using discount rates that reflect current market conditions for instruments having similar terms and conditions and therefore classified as Level 2. Discount rates are either provided by lenders or are observable in the open market.

The fair values of the distribution payable to the partners, and the Limited Partner units and General Partner units outstanding are not readily determinable as they are dependent on future performance of the Limited Partnership (see note 3(e)) to the financial statements.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont’d)

Fair value of financial instruments (cont’d)

The carrying amounts and fair values of the Limited Partnership’s financial instruments not measured at fair value are presented in the table below:

		2023	2023			2022	2022
		Carrying				Carrying
		Amount	Fair Value			Amount		Fair Value
Financial assets
Cash	$	574,906	$	574,906	$	547,461	$	547,461
Short-term investments		1,000,000		1,000,000		1,900,000		1,900,000
Accounts receivable		160,383		160,383		134,987		134,987
Financial liabilities
Accounts payable and accrued liabilities		2,329,785		675,749		2,432,454		778,418
Interest payable to Churchill
11 Debenture Corp.		1,052,704		1,052,704		1,078,704		1,078,704
Loan payable to Churchill
11 Debenture Corp.		11,006,230		6,690,266		11,006,230		10,420,266
Tenant deposits		-		-		31,835		31,835
Liabilities classified as held-for-sale		17,709,281		17,709,281		-		-
Mortgagespayable		-		-		18,230,274		17,322,320

The fair value of cash, short-term investments, accounts receivable, tenant deposits and interest payable approximate their carrying amounts due to the relatively short periods to maturity of these financial instruments.

Risk management framework

The overall responsibility for the establishment and oversight of the Limited Partnership’s risk management policies resides with the board of directors of the General Partner.

The Limited Partnership’s risk management policies are established to identify, analyze and manage the risks faced by the Limited Partnership and to implement appropriate procedures to monitor risks and adherence to established controls. Risk management policies and systems are reviewed periodically in response to the Limited Partnership’s activities and to ensure applicability. In the normal course of business, the main risks arising from the Limited Partnership’s use of financial instruments include credit risk, liquidity risk and market risk. These risks, and the actions taken to manage them, include:

Credit risk

Credit risk is the risk of financial loss to the Limited Partnership arises from cash held at the bank and the failure of a tenant or other party to meet its contractual obligations related to lease agreements, including future lease payments.

As at December 31, 2023 and 2022, the cash and short-term investments balances are held with major Canadian banks and therefore not exposed to significant credit risk.

As at December 31, 2023, there are four (2022 - four) individual tenants that individually account for more than 10% of the Limited Partnership’s rental income which represent approximately $252,000, $254,000, $259,000 and $553,000 (2022 - $250,000, $252,000, $266,000 and $546,000) of the Limited Partnership’s rental income.

The Limited Partnership mitigates the risk by checking tenants’ credit history, requesting security deposits and implementing an appropriate collection process. At December 31, 2023, the Limited Partnership’s maximum exposure to credit risk is comprised of its accounts receivable in the amount of $160,383 (2022 - $134,987).

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont’d)

Risk management framework (cont’d)

Liquidity risk

Liquidity risk is the risk that the Limited Partnership will not be able to meet its financial obligations as they fall due. The Limited Partnership’s approach to managing liquidity is to ensure that it will have sufficient financial resources available to meet its liabilities as they become due. This includes monitoring of cash, current receivables and payables, and non-current liabilities as they become current.

Real property investments tend to be relatively illiquid, with the degree of liquidity generally fluctuating in relation to the demand for and the perceived desirability of such investments. Such illiquidity may tend to limit the Limited Partnership’s ability to vary its portfolio promptly in response to changing economic or investment conditions. If the Limited Partnership were required to liquidate a real property investment, the proceeds to the Limited Partnership might be significantly less than the aggregate carrying value of such property.

As at December 31, 2023	Carrying amount Total contractual cash flows Less than oneyear 1-5years More than 5years
Financial liabilities
Accounts payable and accrued liabilities Interest payable to Churchill 11 Debenture Corp. Accrued distributions payable to the Limited Partners(2)	2,329,785 $ 2,329,785 $ 2,329,785 $ - $ - $ 1,052,704 1,052,704 1,052,704 - - 4,263,540 4,263,540 4,263,540 - -
Accrued distributions payable to the General Partner(2) Liabilities classified as held-for-sale	3,790,116 3,790,116 3,790,116 - - 17,709,281 17,709,281 17,709,281 - -
Due to Churchill 11 Debenture Corp.	11,006,230 13,977,913 11,996,791 12,987,352 -
Limited Partnership Units outstanding(1) General Partner Unit outstanding(1)	4,591,750 4,591,750 - 4,591,750 - 10 10 - 10 -
Total financial liabilities	44,743,416 $ 47,715,099 $ 41,142,217 $ 17,579,112 $ - $

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (cont’d)

Risk management framework (cont’d)

Liquidity risk

Liquidity risk
As at December 31, 2022	Carrying amount Total contractual cash flows Less than oneyear 1-5years More than 5years
Financial liabilities
Accounts payable and accrued liabilities Interest payable to Churchill 11 Debenture Corp. Accrued distributions payable to the Limited Partners(2)	2,432,454 $ 2,432,454 $ 2,432,454 $ - $ - $ 1,078,704 1,078,704 1,078,704 - - 3,896,200 3,896,200 3,896,200 - -
Accrued distributions payable to the General Partner(2)	3,536,651 3,536,651 3,536,651 - -
Tenant deposits	31,835 31,835 14,375 17,460 -
Mortgages payable	18,230,274 18,780,511 18,780,511 - -
Due to Churchill 11 Debenture Corp. Limited Partnership Units outstanding(1) General Partner Unit outstanding(1)	11,006,230 11,996,791 11,996,791 - - 4,591,750 4,591,750 - 4,591,750 - 10 10 - 10 -
Total financial liabilities	44,804,108 $ 46,344,906 $ 41,735,686 $ 4,609,220 $ - $

• (1) The repayment of the Limited Partnership Units and the General Partner Unit is at the discretion of the General Partner and is expected to occur in the next 1 to 5 years.

(2) The accrued distribution payable to the Limited Partners and the General Partners is non-discretionary, but is subject to the GP determining that there is sufficient cash available to make the distribution.

Market risk

Market risk is the risk that changes in market prices, such as interest rates, will affect the Limited Partnership’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

Interest rate risk

Interest rate risk arises from the possibility that the value of, or cash flows related to, a financial instrument will vary as a result of changes in market interest rates. The Limited Partnership manages its financial instruments with the objective of mitigating any potential interest rate risks. The interest rates on all of the Limited Partnership’s loans at December 31, 2023 are fixed for the term. Therefore, the Limited Partnership is not exposed to significant interest rate risk on its mortgage, except at the maturity date of the mortgage in 2024. The Limited Partnership is exposed to interest rate risk on its short-term investments which are variable rate instruments. However, the impact of reasonably foreseeable change in interest rates would not have a material impact to the consolidated financial statements. Management has assessed the Limited Partnership’s exposure to interest rate risk as at December 31, 2023 and determined it to be negligible.

OFF-BALANCE SHEET ARRAGEMENTS

There are no off-balance sheet arrangements at December 31, 2023.

PROPOSED TRANSACTIONS

There are no significant proposed transactions at December 31, 2023.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

RELATED PARTY TRANSACTIONS

(a) Due to Churchill 11 Debenture Corp. (the “Debenture Issuer Loan”)

The amount due in respect of the Debenture Issuer Loan as at December 31, 2023 is $11,006,230 (2022 - $11,006,230). This amount bears simple interest at 9% per annum with interest-only payments due quarterly in arrears and is secured by a general security agreement over all the assets of the Limited Partnership, excluding real property. The maturity date is December 15, 2025 and accordingly has been classified as a non-current liability.

During the year ended December 31, 2023, interest in the amount of $990,561 (2022 - $990,561) was incurred in respect of this loan, and $249,676 (2022 - $249,676) was paid subsequent to the year end. Interest payable in respect to the Debenture Issuer Loan as at December 31, 2023 is $1,052,704 (2022 - $1,078,704).

The president, secretary and directors of the Debenture Issuer are also the president, secretary and directors of the General Partner.

(b) Fees payable to Churchill 11 Debenture Corp.

Annual loan fees are charged by the Debenture Issuer and consist of two components. The first component of the fee is expected to aggregate over the term of the loan to an amount equal to the total selling commission and offering costs of $1,797,250 incurred by the Debenture Issuer in respect of the offering of its debentures payable, with an annual charge to be determined by the Debenture Issuer. During the years ended December 31, 2023 and 2022, there was no loan fee charged as the offering costs related to the Debentures have been fully recognized by the Limited Partnership in previous years. At December 31, 2023, loan fees payable of $1,786,627 (2022 - $1,786,627) is included in accounts payable and accrued liabilities.

The second component of the fee is a loan commitment fee equal to 0.5% of the loan amount, payable quarterly in arrears. During the year ended December 31, 2023, the Limited Partnership was charged loan commitment fees of $55,032 (2022 - $55,032). At December 31, 2023, loan commitment fees payable of $13,871 (2022 - $13,871) is included in accounts payable and accrued liabilities.

(c) Transactions with key management personnel

Pursuant to a General Partner Services Agreement between the General Partner and the Limited Partnership, the General Partner provides all management services to the Limited Partnership. As such, the General Partner is the only person or entity which meets the definition of “key management personnel” as defined in IAS 24, Related Party Disclosures . As described in note 14 to financial statements, the General Partner is paid a quarterly asset management fee for its services and is also paid an acquisition fee for properties purchased and a disposition fee for properties sold.

During the year ended December 31, 2023:

• (i) The General Partner charged asset management fees of $258,975 (2022 - $258,975). This amount is included in asset management and loan fees expense. At December 31, 2023, asset management fees of $314,728 (2022 - $314,728) remain unpaid and are included in accounts payable and accrued liabilities.

• (ii) Churchill Property Corporation (a company with a director in common with the General Partner) charged property management fees of $89,282 (2022 - $92,056) for managing properties owned by the Limited Partnership. These fees are included in investment property expenses and are recoverable from tenants.

These transactions are in the normal course of operations and are measured at the exchange amount which is the consideration established and agreed to by the related parties.

OTHER RISKS AND UNCERTAINTIES

All real property investments are subject to elements of risk. General economic conditions, local real estate markets, supply and demand for leased premises, competition from other available premises and various other factors affect such investments. The Limited Partnership’s primary risk is the potential for declining revenue arising from increased vacancies or declining rental rates.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

GOING CONCERN

The application of the going concern basis of presentation assumes that the Limited Partnership will continue in operation for the foreseeable future and be able to realize its assets and discharge its liabilities and commitments in the normal course of business. For the year ended December 31, 2023, the Limited Partnership incurred a net loss before the change in fair value of investment properties of $816,618 (2022 – $819,135), and had net liabilities attributable to unitholders and non-controlling interest of $17,692,397 (2022 - $13,981,059) as at December 31, 2023. The Limited Partnership also has current liabilities in excess of current assets as at December 31, 2023 and 2022. As at December 31, 2023, the Limited Partnership’s net liabilities attributable to unitholders indicates that the existing assets are not sufficient to settle its outstanding liabilities.

In assessing the financial position of the Limited Partnership, management has considered that the General Partnership units, Limited Partnership units and the respective accrued distributions legally represent capital of the unitholders; however, these amounts have been classified as a liability for financial reporting purposes (note 3(e)(iii)). Under the Limited Partnership Agreement, these amounts represent the residual interest in the net assets of the Limited Partnership.

There is, primarily as a result of the conditions described above, a material uncertainty that may cast significant doubt about the Limited Partnership’s ability to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis notwithstanding these conditions. If the going concern basis was not appropriate for these consolidated financial statements, then adjustments would be necessary to the carrying value of assets and liabilities, the reported revenue and expenses and the classifications used in the consolidated statements of financial position, and these adjustments may be material.

USE OF ESTIMATES AND JUDGMENTS

The preparation of the consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the amounts reported in the consolidated financial statements and accompanying disclosures. Although these estimates are based on management’s knowledge of current events and actions the Limited Partnership may undertake in the future, actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

(i) Judgments

Information about critical judgments in applying accounting policies that have the most significant effect on the amounts recognized in the consolidated financial statements are the use of the going concern basis as described in note 2(b), and the items discussed below:

a. Lease contracts

The Limited Partnership has entered into property leases on its investment property portfolio. The Limited Partnership makes judgments in determining whether certain leases, in particular those leases with long contractual terms, are operating or finance leases. The Limited Partnership must assess each lease separately between land and building components. All leases have been determined to be operating leases.

b. Classification of partnership units

The Limited Partnership has issued partnership units to the General Partner and to Limited Partners. In determining whether these should be classified as liabilities or equity, management has assessed whether the Limited Partnership units contain a contractual agreement to deliver cash or another financial asset to another entity, whether the units are puttable, and whether the criteria in IAS 32, Financial Instruments: Presentation , which permit classification of a puttable instrument as equity have been satisfied. The Partnership Units have been determined to be classified as a liability.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

USE OF ESTIMATES AND JUDGMENTS (cont’d)

(ii) Estimates

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are discussed below:

a. Fair value measurement

A number of the Limited Partnership’s accounting policies require the measurement of fair values. When measuring the fair value of an asset or a liability, the Limited Partnership uses market observable data as far as possible. Fair values are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;

Level 2 - inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly; and

Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). If the inputs used to measure the fair value of an asset or a liability might be categorized in different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The only assets or liabilities of the Limited Partnership that are carried at fair value are the investment properties.

• b. Valuation of investment properties

The fair value of the investment properties are determined by management, in conjunction with independent real estate valuation experts as considered necessary, using recognized valuation techniques. The determination of the fair value of investment property requires the use of estimates such as future cash flows from assets (such as tenant profiles, future revenue streams and overall repair and condition of the property), capitalization and discount rates applicable to those assets. These estimates are based on market conditions existing at the reporting date.

The following approaches, either individually or in combination, are used by management, together with the appraisers, in their determination of the fair value of the investment properties:

The Income Approach derives market value by estimating the future cash flows that will be generated by the property and then applying an appropriate capitalization rate or discount rate to those cash flows. This approach can utilize the direct capitalization method and/or the discounted cash flow analysis.

The Direct Comparison Approach involves comparing or contrasting the recent sale, listing or optioned prices of properties comparable to the subject and adjusting for any significant differences between them.

Management reviews each external appraisal and ensures the assumptions (including all major inputs) used by the appraisers are reasonable and the estimated final fair value amount reflects those assumptions used in the various approaches above. Where an external appraisal is not obtained at the reporting date, management internally appraises the subject property, applying the approaches described above, and estimates the fair value.

Investment properties are valued on a highest and best use basis. Investment properties measured at fair value in the statement of financial position are categorized by level according to the significance of the inputs used in making the measurements. All of the Limited Partnership’s investment properties are categorized as Level 3 measurements in the fair value hierarchy. The significant assumptions used by management in estimating the fair value of investment property are set out in note 7 of the accompanying financial statements.

NEW STANDARDS AND INTERPRETATIONS

( i ) Classification of liabilities as current or non-current (Amendments to IAS 1) :

For the purposes of non-current classification, the amendments removed the requirement for a right to defer settlement or roll over of a liability for at least twelve months to be unconditional. Instead, such a right must exist at the end of the reporting period and have substance.

The amendments reconfirmed that only covenant with which a company must comply on or before the reporting date affect the classification of a liability as current or non-current. Covenants with which a company must comply after the reporting date do not affect a liability’s classification at that date.

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CHURCHILL 11 REAL ESTATE LIMITED PARTNERSHIP Management’s Discussion & Analysis As of April 26, 2024

NEW STANDARDS AND INTERPRETATIONS (cont’d)

( i ) Classification of liabilities as current or non-current (Amendments to IAS 1) (cont’d):

The amendments are effective for annual reporting periods beginning on or after January 1, 2024, with early adoption permitted. The Limited Partnership adopted the amendments to IAS 1 in its consolidated financial statements for the annual period beginning on January 1, 2024. The adoption of the amendments is not expected to have a significant impact to the Limited Partnership’s consolidated financial statements.

EXTERNAL AUDITOR SERVICE FEES

In the following table, “audit fees” are fees billed by the Limited Partnership’s external auditor for services provided in auditing the Limited Partnership’s annual financial statements for the subject year. “Audit-related fees” are fees not included in audit fees that are billed by the auditor for assurance and related services reasonably related to the performance of the audit review of the Limited Partnership’s financial statements. “Tax fees” are fees billed by the auditor for professional services rendered for tax compliance, tax advice and tax planning. “All other fees” are fees billed by the auditor for products and services not included in the foregoing categories.

The aggregate fees billed by the Limited Partnership’s external auditor in the last two fiscal years, by category, are as follows:

follows:
Fiscal Year Ending		Audit Fees(1)		Tax Fees(2)		Total
December 31, 2023	$	55,900	$	9,255	$	65,155
December 31,2022	$	57,900	$	13,477	$	71,377

Notes:

(1) Aggregate fees billed for assurance and related services by the Limited Partnership’s external auditor that are reasonably related to the performance of the audit or review of the Financial Statements and not reported under audit fees including the review of interim filings and travel-related expenses for the annual audit.

(2) Includes fees for professional services rendered by the external auditor for tax compliance, tax advice, and tax planning.

OUTSTANDING UNIT DATA

As at December 31, 2023, the Limited Partnership currently has 18,367 units issued, outstanding and fully paid.

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