RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

CONFIDENTIAL OFFERING MEMORANDUM

CONTINUOUS PRIVATE PLACEMENT OFFERING

Date:	April 1,2025
The Issuer:	Royal Canadian Mortgage Investment Corporation (the “Company” or “RCMIC”)
Head office Address:	6 Ronrose Dr, Suite 301, Vaughan, On L4K4R3
Phone:	647-360-0783
Email:	[email protected]
Website:	Royalcanadianmortgage.com
Currently listed or quoted:	These securities do not trade on any exchange or market. The Company is not current listed or quoted on any stock exchange.
Reporting Issuer:	No.
SEDAR Filer:	Yes, but only as required pursuant to Section 2.9 of national instrument policy, NI 45-106. The Corporation is not a reporting issuer and does not file continuous disclosure documents on SEDAR that are required to be filed by reporting issuers.
The Offering:	Continuous Private Placement Offering. There is no minimum offering amount.
Securities Offered:	Up to 100,000,000 Class A common shares, Class B common shares, and/or Class A Preferred shares (collectively, the “Shares” or the “Offered Shares” or the “securities”) in the Capital of the Company for aggregate gross proceeds of up to $100,000,000 (the “Offering”)
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Price per security:	$ 1.00 per Share
Minimum Offering:	There is no minimum offering. You may be the only purchaser. Funds available under the offering may not be sufficient to accomplish our proposed objectives.
Maximum Offering:	The maximum offering is $100,000,000 (100,000,000 Shares). As at the date of this Offering Memorandum, 54,598,576 Shares have been issued pursuant to the Offering, for aggregate gross proceeds of $54,798,576. There can be no assurance that the Corporation will complete the maximum Offering.
Insufficient Funds:	Funds available under the offering may not be sufficient to accomplish our proposed objectives. See Section 2.6 – Insufficient Funds.
Minimum subscription amount:	The minimum first subscription amount by a subscriber has changed to $25,000.00 (25,000 shares) for the Class A common or Class B common shares. The minimum first subscription amount by a subscriber for the Class A Preferred shares is $100,000.00 (100,000 shares). In

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

	addition, the Corporation has the discretion to waive or change the minimum from time to time so long as it is in compliance with the prospectus exemption relied on. See ITEM 5, Securities Offered, particularly, Subscription Procedure and Statutory Exemptions Relied Upon by the Issuer.
Payment terms:	Subscribers may subscribe for Offered Shares in the Offering by delivering an executed subscription agreement and risk acknowledgment form in the form provided with this Offering Memorandum and a cheque or bank draft made payable to “ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION” in the amount of the subscription price for the Shares. See 5.0 SECURITIES OFFERED – SUBSCRIPTION PROCEDURES.
Proposed Closing date(s):	Closings will take place periodically at the Company’s sole discretion with the initial closing having past. All future closings will be at such dates announced to prospective Subscribers from time to time as may be determined by the Company and will be continuous with the ongoing operations of the Company.
Income tax consequences:	There are important tax consequences to these securities. You should consult your own professional tax advisors to obtain advice respecting the tax consequences applicable to you. See item 7.0- INCOME TAX CONSEQUENCES.
Selling agent:	The Company has retained selling agent(s) and shall pay sales commissions pursuant to such agency agreements between the Company and such selling agent(s). See item 8.0 COMPENSATION PAID TO SELLERS AND FINDERS”.
Underwriter:	None as of the date of this Offering Memorandum.
Resale Restrictions:	You will be restricted from selling your Shares for an indefinite period. See 11.0 - RESALE RESTRICTIONS.
Redemption by the Company:	Subject to the Business Corporations Act (Ontario) (“OBCA”), the Company may redeem all or any part of the then outstanding Shares upon written notice given by the Company to the holders of all Shares to be redeemed, specifying that such shares are to be redeemed upon payment to each holder of Shares of the Redemption Price for each Share held by such holder as indicated on the Company’s records, plus the pro rata share of any unpaid distributions thereon which have been declared payable but remain unpaid as at the time of calculation of the Redemption Price to the extent same are not otherwise included in the Redemption Price of the Shares to be retracted. ITEM 5.1 Terms of Securities – Redemption Rights.
Redemption Request by the Shareholder:	You will have a right to require the Company to repurchase some or all of the Shares from you, but this right is qualified and therefore subject to certain conditions and in some circumstances, fees. These qualifications and conditions can be found in some of the Company’s articles of incorporation, amalgamation and amendment and are described below. As a result, you might not receive the amount of proceeds that you want. See ITEM 5.1 – Shareholder Redemption Rights.
Certain Dividends or Distributions	In the past, Royal Canadian Mortgage Investment Corporation has paid dividends or distributions that exceeded cash flow from operations. See item 8 – Compensation Paid to Sellers and Finders.
Purchaser’s Rights:	You have two (2) business days to cancel your agreement to purchase these securities. If there is a misrepresentation in this offering memorandum, you have the right to sue

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

either for damages or to cancel the agreement. See Item 12 – Purchasers Rights.

NO SECURITIES REGULATORY AUTHORITY OR REGULATOR HAS ASSESSED THE MERITS OF THESE SECURITIES OR REVIEWED THIS OFFERING MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE. THIS IS A RISKY INVESTMENT. SEE ITEM 8 - RISK FACTORS.

This offering memorandum ("Offering Memorandum") has been prepared solely for the purpose of assisting prospective purchasers in making an investment decision with respect to the Class A Common, Class B Common and/or Class A Preferred Shares (the "Shares" or the "Offered Shares" or the "securities")) of Royal Canadian Mortgage Investment Corporation (the "Company"). The Shares are offered for sale only in those jurisdictions and to those persons where and to whom they may be lawfully offered for sale. This Offering Memorandum is not, and under no circumstances is to be construed as, a public offering or advertisement of shares. No securities regulatory authority or regulator has assessed the merits of these securities or reviewed this offering memorandum. Any representation to the contrary is an offence. This is a risky investment (see "Risk Factors"). These securities do not trade on any exchange or market. The Company is not a reporting issuer. Subject to the availability of exemptions from the prospectus and registration requirements under applicable securities laws, holders of Shares will be restricted from selling their Shares for an indefinite period (see "Resale Restrictions").

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

OFFERING MEMORANDUM

Offering: April 1,2025

Up to $100,000,000.00 (100,000,000 Class A Common shares, Class B Common shares and/or Class A Preferred shares)

Price: $1.00 per Share

Investment Limitations: Participation in the Offering is limited by the requirements of applicable securities laws, depending on the jurisdiction of the investor, the exemption relied upon by the Company and other factors. The limitations applicable may include the following (more detailed information about these limitations and requirements is set forth under "Subscription Qualification" in this Offering Memorandum):

All first time investors of the Company must subscribe for a minimum amount of $25,000.00 or 25,000 shares of the Class A Common or Class B Common shares, or for a minimum amount of $100,000.00 or 100,000 shares of the Class A Preferred shares (subject to the right of the Company to waive the minimum).
For investors who qualify for participation in the Offering pursuant to the applicable "family, friends and business associates" exemption and/or as "accredited investors", there is no maximum limit.
For investors subscribing under the "offering memorandum exemption" (subject to exceptions applicable to subscribers resident in certain jurisdictions as described under "The Offering"), the maximum participation in the Offering (less the aggregate amount of any other acquisitions of securities under that exemption in the prior twelve month period) is:
$100,000 for investors that are "eligible investors" who received advice from a registered portfolio manager, investment dealer or exempt market dealer;
$30,000 for other "eligible investors"; and
$10,000 for all other ("non-eligible investor") investors.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

Royal Canadian Mortgage Investment Corporation (the “Company”) is offering on a private placement basis a maximum of 100,000,000 Class A Common, Class B Common and/or Class A Preferred Shares (collectively the “Offered Shares” or individually an “Offered Share”) at a price of $1.00 per Share (the “Offering”). Each Class A Common, Class B Common and/or Class A Preferred Shares, (each a “Share,” the attributes of which are described herein under “The Company”) represents an interest in the assets of the Company, which will principally be comprised of direct interests in Mortgage loans. See “The Company”. There is no minimum offering. You may be the only investor. Funds available under the offering may not be sufficient to accomplish our proposed objectives.

The address for the issuer is 6 Ronrose Dr, Suite 301, Vaughan, ON L4K4R3, telephone number is 647-360-0783, the email address is [email protected], and the Company website is at www.royalcanadianmortgage.com

Subscribers should thoroughly review this Offering Memorandum and are advised to consult with their professional advisors to assess the business, legal, income tax and other aspects of this investment. A summary of the income tax consequences of an investment in Shares is set forth under “Certain Canadian Federal Income Tax Consequences.”

You have two business days to cancel your agreement to purchase these securities. If there is a misrepresentation in this offering memorandum, you have the right to sue either for damages or to cancel the agreement. See “Rights of Action for Rescission or Damages”.

The Offering is being made in reliance on certain exemptions to the prospectus requirements under applicable securities laws. As a result, the Shares will be subject to resale restrictions under the said laws. Distributions of Shares under this Offering may be made through a Selling Agent, including an exempt market dealer registered under applicable securities laws.

The Company was originally an amalgamated corporation under the laws of the Province of Ontario pursuant to Articles of Amalgamation dated December 31, 2016. The original Company was the corporation resulting from the amalgamation of Aberdeen Mortgage Investment Corporation, Preston Mortgage Investment Corporation and (old) Royal Canadian Mortgage Investment Corporation, which amalgamation continues the business and operations of those predecessor entities. Thereafter, under the laws of the Province of Ontario pursuant to the Articles of Amalgamation dated March 1, 2024, the Company then became a formation of the amalgamation of the predecessor corporations, (original) Royal Canadian Mortgage Investment Corporation and Royal Canadian 1st Mortgage Investment Corporation. As a result of the amalgamation of the predecessor corporations, the issued and outstanding shares of each amalgamating corporation held by the then shareholders of each respective predecessor corporation had been cancelled and re-issued by the Company. The Company following the amalgamation continued the business and operations of those predecessor entities. Finally, the Class A Preferred Shares were added to the capital structure of the Company pursuant to the Articles of Amendment dated May 21, 2024. The price of the Shares offered hereby was established by the Board of Directors. The net proceeds of the Offering will be used by the Company to acquire and hold whole, partial, direct or indirect interests in Mortgages. The objectives of the Company are to provide its shareholders with stable and secure cash distributions from the Company's investments in mortgage loans and related investments in market segments which are under-serviced by large financial service providers; and to obtain superior yields and maximize distributions through the efficient management of the Company's Mortgage investments in such market segments. The Company is a non-bank provider of real estate finance. The Company intends to make monthly cash distributions to Shareholders from monies received from its

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

investments and in the ordinary course distributes all of the Distributable Cash of the Company calculated as described under "Distribution Policy". However, there is no guarantee of any particular rate of return, or of any return. It is important for Subscribers to consider risk factors that may affect the commercial and residential mortgage markets generally and therefore the stability of distributions to Shareholders, as well as the other risk factors inherent in an investment in the Shares and in the activities of the Company. Subscribers are urged to read the "Risk Factors" section of this Offering Memorandum for a more complete discussion of these risks and to review these risks with their professional advisors.

The Company is not a trust company and does not carry on business as a trust company and, accordingly, the Company is not registered under applicable legislation governing trust companies in any jurisdiction. The Shares are not "deposits" within the meaning of the Canada Deposit Insurance Corporation Act (Canada) and are not insured under that Act or any other legislation.

Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager. Consequently, there may be conflicts of interest (as further explained herein below) as between the interests of the Mortgage Manager and the Company (including, without limitation, insofar as the administration and application of the Company's investment and operating policies, and for investment opportunities in view of the fact that the Mortgage Manager and Company do not have an exclusive relationship).

Subscriptions will be received if, as and when accepted, subject to prior sale and satisfaction of the conditions set forth under "Subscription Procedure" and to the right of the Board of Directors to close the subscription books at any time without notice. Closings will be held from time to time as determined by the Board of Directors. Subscribers will have two (2) Business Days to cancel their agreement to purchase Shares. If there is a misrepresentation in this Offering Memorandum, Subscribers will have the right to sue either for damages or to rescind their agreement to purchase Shares. See "Subscription Procedures" and "Rights of Action for Damages or Rescission."

INCORPORATION BY REFERENCE

The marketing materials used by the Company from time to time in marketing the Offering (including presentations, financial statements and other financial information concerning the portfolio and performance of the Company), are incorporated herein by reference.

DISCLAIMERS

The information contained in this Offering Memorandum is intended only for the persons to whom it is transmitted for the purposes of evaluating the securities offered hereby. Prospective investors should only rely on the information in this Offering Memorandum. No persons are authorized to give any information or make any representation in respect of the Corporation, or the securities offered herein, and any such information or representation must not be relied upon.

This Offering Memorandum does not constitute and may not be used for or in conjunction with, an offer or solicitation by anyone in any jurisdiction or in any circumstances in which such offer or solicitation is not authorized, or to any person to whom it is unlawful to make such an offer or solicitation. You are directed to inform yourself of and observe such restrictions and all legal requirements of your jurisdiction of residence in respect of the acquisition, holding and disposition of the Shares offered hereby. The Shares will be issued only on the basis of information

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

contained in this Offering Memorandum and provided by the Board of Directors in writing, and no other information or representation is authorized or may be relied upon as having been authorized by the Board of Directors and the Company. Any subscription for the Shares made by any person on the basis of statements or representations not contained in this Offering Memorandum or so provided, or inconsistent with the information contained herein or therein, shall be solely at the risk of such person. Neither the delivery of this Offering Memorandum at any time nor any sale to Subscribers of any of the Shares shall, under any circumstances, constitute a representation or create any implication that there has been no change in the business and affairs of the Company since the date of the sale to any Subscriber of the securities offered hereby or that the information contained herein is correct as of any time subsequent to that date. This Offering Memorandum is confidential. By their receipt hereof, prospective Subscribers agree that they will not transmit, reproduce or make available to anyone, other than their professional advisors, this Offering Memorandum or any information contained herein.

THIS IS A SPECULATIVE OFFERING. An investment in the securities must be regarded as highly speculative due to the nature of the Corporation's business and its stage of development. Purchasers must rely on the ability, expertise, judgment, discretion, integrity and good faith of the management of the Corporation. The securities are suitable only for purchasers who are able to accept the risks inherent in the Corporation's business. In addition, there are a number of other risk factors that should be considered by persons proposing to make an investment in the securities. Purchasers should consult their own professional advisors to assess the income tax, legal and other aspects of the investment. See ITEM 9 "Risk Factors".

FORWARD-LOOKING STATEMENTS

Prospective Subscribers should be aware that certain statements used herein, including, without limitation, sensitivity analyses, analyses of market trend, trends in revenue and anticipated expense levels as well as other statements about anticipated future events or results, are forward-looking statements. Forward-looking statements often, but not always, are identified by the use of words such as "seek", "anticipate", "believe", "plan", "estimate", "expect", and "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or be achieved and other similar expressions. The forward-looking statements that are contained herein involve a number of risks and uncertainties. Should one or more of these risks materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual events or results might differ materially from events or results projected or suggested in these forward-looking statements. In particular, this Offering Memorandum contains forward-looking statements, pertaining to the Company's ability to procure appropriate investments, such as residential mortgages in Canada, to earn the same or similar returns illustrated herein, particularly interest income, on the basis that its investment portfolio summary included in this Offering Memorandum continues to perform without disruption or other circumstances.

Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable and represent the Company's expectations and belief at this time, such statements involve known and unknown risks and uncertainties which may cause the Company's actual performance and results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. Important factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, including interest rates, business competition, changes in government regulations or in tax laws, in addition to those factors discussed or referenced in "ITEM 7: Risk Factors". These factors should not be considered exhaustive. Many of these risk factors are beyond the Company's control and each contributes to the possibility that the forward-looking statements will not occur or

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

that actual results, performance or achievements may differ materially from those expressed or implied by such statements. The impact of any one risk, uncertainty or factor on a particular forward-looking statement is not determinable with certainty as these risks, uncertainties and factors are interdependent and management's future course of action depends upon our assessment of all information available at that time.

The forward-looking statements made herein relate only to events or information as of the date of this Offering Memorandum and are expressly qualified by this cautionary statement. Except as required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

OM MARKETING MATERIALS

Any marketing materials included or in relation to this Offering Memorandum or as otherwise provided ("OM Marketing Materials" as such term is defined in NI 45-106) related to each distribution under this Offering Memorandum and delivered or made reasonably available to a prospective investor before the termination of such distribution will be, and will be deemed to be, incorporated by reference into this Offering Memorandum, provided that any OM Marketing Materials to be incorporated by reference into this Offering Memorandum is not part of the Offering Memorandum to the extent that the contents of such OM Marketing Materials have been modified or superseded by a statement contained in an amended and restated Offering Memorandum or OM Marketing Materials subsequently delivered or made reasonably available to a prospective investors prior to the execution of the subscription agreement by the investor. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of a modifying or superseding statement is not deemed an admission for any purposes that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement so modified or superseded is not deemed, except as so modified or superseded, to constitute a part of this Offering Memorandum.

CURRENCY

All dollar amounts stated in this Offering Memorandum are expressed in Canadian currency, except where otherwise indicated.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Issuer 12
Board of Directors 12
The Offering 12
Investment Policies 13
Operating Policies 14
The Mortgage Portfolio 15
Risk Factors 15
Certain Canadian Income Tax Considerations 15
Rights of Action 15
1.0 Use of Available Funds 23
1.1 Funds 23
1.2 Use of Available Funds 24
2.2 Our Business 25
2.3 Development of Business 27
Borrowing Strategy 27
Syndication Strategy 28
Risk Management 28
Development and Maintenance of the Mortgage Portfolio 29
Sourcing Mortgage Investment Opportunities 29
Proven Industry Experience 29
Problem Identification and Rectification Experience 29
Focus on Greater Toronto Area and other Ontario Urban Centres 30
The Mortgage Portfolio 30
MANAGEMENT OF THE MORTGAGE PORTFOLIO 30
INVESTMENT AND OPERATING POLICIES OF THE COMPANY 31
Investment Policies 31
Operating Policies 31
Amendments to Investment and Operating Policies 32
Collection Activities 33

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

LICENSING AND LEGISLATIVE REGIME 42
2.4 Long Term Objectives 42
2.5 Short Term Objectives 42
2.6 Insufficient Funds 43
2.7 Material Agreements 43

MANAGEMENT OF THE COMPANY 43
Conflict of Interest Restrictions and Provisions for Board of Directors 44

MORTGAGE MANAGER 45

MORTGAGE MANAGEMENT AGREEMENT 46
Services 46
Fees 47
Liability and Indemnity 48
Term and Termination 48
Acknowledgement of Potential Conflicts 48

3.0 Interests of Directors, Management, Promoters and Principal Holders 50
3.1 Compensation and Securities Holdings of Certain Parties 50

4.0 Capital Structure 53
4.1 Share Capital 53
Description of Shares 53
Shares 54
4.2 Long Term Debt Securities 57

5.0 Securities Offered 58
Rights and Characteristics of the Class A Common Shares and Class B Common Shares 58
Distribution Reinvestment Right 59
Redemption Rights 59
Mandatory Redemption 59
Shareholder Redemption Rights 59
Distribution Policy 67
Calculation of Company Income and Net Capital Gains 68
Method of Payment of Distributions 68
Withholding Tax 68

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Meetings of Shareholders 69
Register 69
Tax Information and Reports 70
Matters Requiring Approval by Special Resolution 70
Term and Termination of the Company 71
Reporting Obligations of the Company 71
Plan of Distribution 72
Subscription Qualification 72
Eligible Subscribers For the Shares 73
Ineligible Subscribers For the Shares 74
Additional Information 74

6.0 Income Tax Consequences and RRSP Eligibility 75
6.2 CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS 75
General 75
Qualification as a Mortgage Investment Corporation 76
Taxation of the Company 77
Taxation of Shareholders 78
Corporate Dividends 78
Dispositions of Shares 78
Minimum Tax and Refundable Tax 79
Tax Implications of our Dividend Policy 79
6.3 RRSP Eligibility 79
Eligibility for Investment for Exempt Plans 79

7.0 Compensation Paid to Sellers and Finders 80
8.0 RISK FACTORS 81
No Market for the Shares 81
The Shares Are Not Insured 81
"Mortgage Investment Corporation" Status and Qualification for "Exempt Plans" 82
Tax Treatment and Possible Changes in Tax Laws 82
Restrictions on Ownership and Repurchase of Shares 82
Dilution 83

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Reliance on Board of Directors and Key Personnel 83
No Guaranteed Return 83
Fluctuations in Distributions 84
Nature of the Investments 84
Concentration and Composition of the Portfolio and Exposure to Ontario Economy 85
Changes in Land Values 85
Sensitivity to Interest Rates 86
Availability of Investments 86
Dependence on Mortgage Manager 86
Risks Related to Mortgage Defaults 87
Foreclosure and Related Costs 87
Litigation Risks 88
Borrowing and Leverage 88
Renewal of Mortgages 88
Composition of the Mortgage Portfolio 89
Failure to Meet Commitments 89
Competition 89
Environmental and Other Regulatory Matters 89
Knowledge and Expertise of the Mortgage Manager 90
Conflicts of Interest 90
9.0 Reporting Obligations 91
9.1 Reporting to Shareholders 91
10 – Resale Restrictions 92
10.1 General Statement 92
10.2 Restricted Period 92
11.0 Purchasers’ Rights 92
12.0 – Financial Statements 95
The audited financial statements for the Company are attached. 95
13.0 Date and Certificate 96

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

SUMMARY OF OFFERING

This is a summary only and is qualified by the information appearing elsewhere in this Offering Memorandum. Capitalized terms appearing herein and not otherwise defined have the respective meanings ascribed thereto in the "Definitions" section or elsewhere in this Offering Memorandum. Unless otherwise indicated, all references to dollar amounts in this Offering Memorandum are to Canadian dollars.

Significant Parties

Issuer

Royal Canadian Mortgage Investment Corporation is a corporation amalgamated under the laws of the Province of Ontario pursuant to its latest Articles of Amalgamation dated March 1st, 2024 and as was further amended on May 21st, 2024. The Company is a non-bank provider of real estate finance. In the ordinary course, the Company makes monthly cash distributions to shareholders from monies received from the Company.

The head office of the Company is located at: 6 Ronrose Dr, Suite 301, Vaughan, ON L4K4R3. The Company website can be found at www.royalcanadianmortgage.com.

Board of Directors

The Board of Directors of the Company is, and has since amalgamation been, comprised of Richard E. Petrie, Angelo Grossi and Massimo R. Giovannetti. Blake Albright became an additional Director April 1,2025. Each Director is an individual resident in the Province of Ontario. Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager. See ITEM 2 BUSINESS OF THE COMPANY

Mortgage Manager

Royal Canadian Asset Management Inc., a company governed by the laws of Ontario, is the mortgage manager (the "Mortgage Manager"). The Mortgage Manager is obligated to provide services, including presentation of investment opportunities, administration of the Company's investments, assistance in collection and handling, and provision of administrative service and support, to the Corporation pursuant to the Mortgage Management Agreement. See "Mortgage Management Agreement." See ITEM 2 BUSINESS OF THE COMPANY

The Offering

| Offering | Class A Common Shares;
Class B Common Shares; and
Class A Preferred Shares in the Company. |
| --- | --- |
| Offering Size | The maximum number of Offered Shares in total is 100,000,000. |
| Price | $1.00 per Share |
| Attributes of Shares | The Offered Shares represent the ownership in the Company. Except for the Class A Preferred Shares, the Class A and Class B Common Shares carry one vote at |

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

meetings of shareholders and a holder thereof is entitled to distributions as described under Item 5.1 “DISTRIBUTION POLICY”.

Use of Proceeds

All proceeds from the Offering (after deducting the costs of issue, described under “The Offering”) will be used by the Company to acquire Authorized Investments. See Item 1.1 “USE OF PROCEEDS”.

Payment Terms

Subscribers may subscribe for Offered Shares in the Offering by delivering an executed subscription agreement for such class or type of Share, and risk acknowledgment form in the form provided with this Offering Memorandum and a cheque or bank draft made payable to “Royal Canadian Mortgage Investment Corporation” in the amount of the subscription price for the Offered Shares. See Item 5.2, “SUBSCRIPTION PROCEDURE.”

Risk Factors

The purchase of shares includes a number of risks. Please refer to ITEM 9: RISK FACTORS

Investment and Operating Policies of the Company

Investment Policies

The Board of Directors establishes certain policies and restrictions on investments that the Company may make from time to time. The current investment policies of the Corporation are as follows:

the Company’s capital may be invested in First Mortgages, Second Mortgages, Insured Mortgages, Subordinate Mortgages, AAA Rated Mortgage-Backed Securities and/or Related Investments;
the Company may assign all or a portion of a Mortgage or Mortgages held by it (the “Assigned Portion”) to one or more arm’s length third party lenders (the “Assignee Lender(s)”) for value provided that: (i) if a portion of such Mortgage or Mortgage(s) (the “Retained Portion”) is retained by the Company, the Company may enter into an agreement with the Assignee Lender(s) as to relative ranking of the Assigned Portion and the Retained Portion; and (ii) if the Retained Portion is subordinate to the Assigned Portion, the Retained Portion will be considered a Subordinate Mortgage;
no more than 30% of Company capital may be invested in Commercial Mortgage-Backed Securities that are not AAA Rated Mortgage-Backed Securities;
when not invested in other Authorized Investments, the Company’s capital will be placed in Authorized Interim Investments;
the Company may participate in Authorized Investments on a syndicated basis with others, including affiliates and associates of the Mortgage Manager and their affiliates and associates, subject to the approvals otherwise required in connection with its investments;
notwithstanding any limits stated herein, for risk management purposes only, the Company may increase a given investment to more than 20% of the Company’s capital in order to remedy the default by a borrower of its obligations in respect of a prior ranking security or satisfy the indebtedness secured by a prior ranking security or for any other reason if such action is required to protect the Company’s investment and if such proposed increase in the Company’s investment is approved by the Mortgage Manager and the Company; and

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

the Company has adopted the additional risk management policies outlined herein under “Risk Management.”

The Company will offer Offered Shares from time to time only if the receipt of the proceeds of such offering by the Company does not impair: the Company’s expected return from its investment in and management of the Mortgages.

Operating Policies

The Board of Directors from time to time establishes policies governing the operations and affairs of the Company. At present the business of the Company is required to be conducted in accordance with the following operating policies:

the Company may borrow on commercially reasonable terms subject to the limitation described below, to acquire or invest in specific Authorized Investments;
when making an investment in, or an acquisition of, a Mortgage or other Authorized Investment, the Mortgage Manager may, in its sole discretion, but will not be obliged to, obtain or review an independent appraisal from a Qualified Appraiser of, and/or a Phase 1 Environmental Audit on, the underlying Real Property which is the primary security for the Mortgage or other Authorized Investment, and may or may not obtain additional independent appraisals or audits of the underlying property or any additional collateral and other properties securing the Mortgage or other Authorized Investment;
in addition, in its sole discretion and in satisfaction of the requirements of the immediately preceding paragraph, the Mortgage Manager may rely upon an independent appraisal from a Qualified Appraiser and/or a Phase 1 Environmental Audit in respect of the subject property that has been provided to the Company by the borrower;
approval of an investment or acquisition must be in writing, may be signed in counterparts, in original form or by facsimile, and must be signed by the authorized persons required to approve such investment or acquisition in accordance with the Mortgage Management Agreement;
when deemed necessary by the Mortgage Manager, the Company will, where appropriate, establish and manage property tax escrow accounts in respect of the Real Property provided as security for the Company’s Mortgage investments, if any;
the legal title to each Authorized Investment may be held by and registered in the name of the Company or a corporation or other entity that is an affiliate, associate or subsidiary of the Company or its subsidiaries, associates or affiliates. Where the Company’s interest is held in trust, the trust arrangements must be approved by the Board of Directors. Where the legal title to an Authorized Investment is held by and registered in the name of an entity wholly-owned by, or affiliated or associated with, the Mortgage Manager, or in the name of a person or persons in trust for the Company, such entity may hold legal title to such Authorized Investment on behalf of other beneficial owners of such Authorized Investment; and
the appraised value relied upon for purposes of making a Mortgage investment need not be on an “as is” basis and may be based on stated conditions, including without limitation, completion, rehabilitation, sale or lease-up of improvements located on the Real Property.

The Company may maintain a funding facility with arm’s length third party financial institutions pursuant to which the Company has access, on a revolving basis, to funds in the maximum amount of eighty percent (80%) of the Company’s portfolio. The Company may use the revolving facility to take investment positions in Eligible Mortgages

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

acquired by the Company directly or by participating with a beneficial interest at times when funds are not immediately available from other sources (such as subscription proceeds from the Company).

The Mortgage Portfolio

The Mortgage Portfolio consists (and shall consist) of Mortgages, or interests therein, secured by a range of properties and reflects, among other things, the following characteristics:

payment schedules consist primarily of interest only;
Mortgages are generally written for terms of one year or less;
Mortgage investments are secured by Real Property located in Canada and are denominated in Canadian dollars; and
Mortgages are syndicated where it is deemed appropriate by the Board of Directors.

For additional defining or limiting elements of the portfolio, see "Investment and Operating Policies of the Company".

Other Matters

Risk Factors

An investment in Shares involves significant material risks that prospective Subscribers should consider before making an investment decision or a decision to participate. Prospective Subscribers who are not willing to accept these risks should not proceed with an investment in Shares. Prospective Subscribers are urged to read the "Risk Factors" section of this Offering Memorandum and to review these risks with their professional advisors.

Certain Canadian Income Tax Considerations

The income tax summary contained herein addresses the principal Canadian federal income tax considerations of an investment in Shares ("Tax Commentary"). Subscribers are cautioned that the Tax Commentary is a general summary only and does not constitute tax advice to any particular Subscriber. The Tax Commentary identifies certain tax risks and contains assumptions, limitations, qualifications and caveats. Prospective Subscribers should review these risks, assumptions, limitations and caveats with their professional tax advisors and reach their own conclusion as to the merits and likely tax consequences of an investment in Shares.

Rights of Action

The following is a summary of the relevant rights of action for damages or rescission available to certain purchasers resident in Ontario. The rights discussed below are in addition to and without derogation from any other right or remedy which purchasers may have at law and are intended to correspond to the provisions of the relevant securities legislation and are subject to the defences contained therein.

If you are a resident of Ontario, under the Securities Act (Ontario) (the "OSA"), if this Offering Memorandum contains a misrepresentation, a purchaser who purchases a security offered by this Offering Memorandum during the period of distribution has the following statutory rights:

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

(a) the purchaser has a right of action for damages against the issuer and a selling security holder on whose behalf the distribution is made, or

(b) where the purchaser purchased the securities from a person or the issuer referred to in clause (a), the purchaser may elect to exercise a right of rescission against the person or the issuer, in which case the purchaser shall have no right of action for damages against such person or the issuer.

This statutory right to sue is available to you whether or not you relied on the misrepresentation. If you intend to rely on the rights described in (a) or (b) above, you must do so within strict time limitations. You must commence your action to cancel the Subscription Agreement within 180 days after the date that you purchased the securities. You must commence your action for damages within the earlier of (i) 180 days after you first had knowledge of the facts giving rise to the cause of action, and (ii) three years after the day you purchased the securities.

The OSA provides various defences to the persons or companies that you have a right to sue. In particular, they have a defence if they prove that the purchaser purchased the security with knowledge of the misrepresentation.

The rights referred to in (a) and (b) described above do not apply where this Memorandum is delivered to a prospective purchaser in connection with a distribution made in reliance on the exemption from the prospectus requirement in section 73.3 of the OSA (the "accredited investor exemption") if the purchaser is:

(a) a Canadian financial institution, meaning either:

(i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under that Act; or
(ii) a bank, loan corporation, issuer company, issuer corporation, insurance company, treasury branch, credit union, caisse populaire, financial services corporation, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada;

(b) a Schedule III bank, meaning an authorized foreign bank named in Schedule III of the Bank Act (Canada);
(c) the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); or
(d) a subsidiary of any of the foregoing, if the person owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by the directors of the subsidiary.

The Company will not be liable for a misrepresentation in "forward-looking information", as such term is defined under applicable Canadian securities laws, if they prove that:

(a) the Offering Memorandum contains, proximate to that information:

(i) reasonable cautionary language identifying the forward-looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection set out in the forward-looking information, and
(ii) a statement of the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward -looking information; and

(b) the person or company had a reasonable basis for drawing the conclusions or making the forecasts and projections set out in the forward-looking information.

Royal Canadian Mortgage Investment Corporation - Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

The Company will not be liable for all or any portion of damages that they prove do not represent the depreciation in value of the securities as a result of the misrepresentation relied upon. In no case shall the amount recoverable exceed the price at which the securities were offered under the Offering Memorandum.

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

DEFINITIONS

In this Offering Memorandum, unless the context otherwise requires, capitalized words and phrases shall have the meaning set forth below.

"AAA Rated Mortgage Backed Securities" means mortgage backed securities with a rating of AAA (or the equivalent), as determined by any one of Dominion Bond Rating Service Limited, Standard & Poor's Rating Group, Moody's Investor Service, Inc. or any of their successors.

"affiliate" has the meaning ascribed thereto in the OBCA.

"Agency Agreement" means the engagement letter or agreement between the Selling Agent(s) and the Corporation in connection with the distribution and sale of the or any of the Shares pursuant to this Offering.

"Annuitant" means an annuitant under an Exempt Plan of which a shareholder acts as a trustee or carrier.

"associate" has the meaning ascribed thereto in the OBCA.

"Authorized Investments" means Mortgages, Authorized Interim Investments, Commercial Mortgage Backed Securities, Related Investments, Workout Investments or the acquiring, holding, maintaining, improving, leasing or managing of any Real Property or an interest in Real Property where determined necessary or desirable, in the Mortgage Manager's sole discretion, to preserve, protect or enhance the Company or its assets.

"Authorized Interim Investments" means investments guaranteed by the Government of Canada or of a province or territory of Canada, cash deposits in or receipts, deposit notes, certificates of deposits, acceptances and other similar instruments issued, endorsed or guaranteed by a Schedule 1 or Schedule 2 Bank, CMHC insured Residential Mortgages and AAA Rated Mortgage Backed Securities.

"Bank Line of Credit" means operating credit facility with Schedule A bank in the amount of $30,000,000 with an accordion of $10,000,000.

"Board of Directors" means the board of directors of the Company, as comprised from time to time.

"Business Day" means a day other than a Saturday, Sunday or any day on which the Schedule 1 Banks located in Toronto, Ontario are not open for business during normal banking hours.

"Closing" means each closing of the Offering.

"CMHC" means the Canada Mortgage and Housing Corporation, a Canadian federal crown corporation providing mortgage insurance and federal social housing Companying, housing information and support for the export of Canadian housing products.

"Commercial Mortgages" means Mortgages granted as security for loans given in respect of properties, land developments and construction projects which have retail, commercial, service, office and/or industrial uses.

"Commercial Mortgage Backed Securities" means bonds or other financial obligations secured by a pool of Mortgages, no less than two thirds of which are First Mortgages at the time of the investment.

"Company" or "Corporation" means Royal Canadian Mortgage Investment Corporation.

"Company Income" for any taxation year of the Company, means the income for such year computed in accordance with the provisions of the Tax Act less, at the discretion of the Board of Directors, amounts of any non-capital losses

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

of the Company for the prior years that are deductible in computing the Company’s taxable income for the year under the Tax Act; provided, however, that capital gains and capital losses will be excluded from the computation of Company Income. In addition, in computing the Company Income of the Company for any taxation year of the Company, the Board of Directors will have the sole discretion to utilize or not utilize such deductions, provisions and alternate calculations available under the Tax Act, including without limitation, discretion as to timing and amount, in respect of offering expenses, operating expenses and discretionary deductions.

"Construction Mortgages" means Mortgages granted as security for loans which are advanced against stipulated budgets for single-family residential, multi-family residential and commercial, retail, service, office and/or industrial use projects.

"Distributable Cash" means the amount of available cash collected to be distributed by the Company, calculated as set out under "Distribution Policy".

"Distribution Date" means the date on the last day following the end of each fiscal quarter.

"Distribution Record Date" in respect of the Company, means the last day of the calendar month following the end of the fiscal quarter, or such other date or dates as the Board of Directors may from time to time designate as a Distribution Record Date, provided that December 31st in each year will be a Distribution Record Date; and in respect of the Company means such date or dates as the Board of Directors may from time to time designate, provided that December 31st in each year will be a Distribution Record Date.

"Eligible Mortgages" means those Mortgages selected for investment and management in the Mortgage Portfolio by the Mortgage Manager.

"Exempt Plans" means trusts governed by a registered retirement savings plan ("RRSP"), a registered retirement income fund ("RRIF"), deferred profit sharing plan ("DPSP"), a registered education savings plan ("RESP") or tax-free savings account ("TFSA"), in each case for the purposes of the Tax Act.

"Fair Market Value" in relation to a Share means the proportionate share of the net asset value of the Company represented by such Share.

"First Mortgage" means a Mortgage having priority over all other Mortgage loan interests registered against the same Real Property used to secure such Mortgage.

"Insured Mortgages" means Mortgages, the principal repayment of which have been insured with CMHC or another commercially recognized mortgage insurer.

"Material Agreements" means the contracts referred to under "Material Agreements".

"MBLAA" means the Mortgage Brokerages, Lenders and Administrators Act, 2006 (Ontario).

"Mortgage" means a mortgage, hypothec, deed of trust, charge or other security interest of or in real property used to secure obligations to repay money by a charge upon the underlying Real Property, whether evidenced by notes, debentures, bonds, assignments of purchase and sale agreements or other evidence of indebtedness, whether negotiable or non-negotiable.

"Mortgage Manager" means Royal Canadian Asset Management Inc., a company governed by the laws of Ontario, and its successors as Mortgage Manager under the Mortgage Management Agreement.

"Manager Services" shall have the meaning ascribed thereto under "ITEM 2 - Business of the Corporation – Our Business – Mortgage Management Agreement"

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

"Mortgage Management Agreement" means the mortgage management agreement dated as of January 5, 2016, between the Company and the Mortgage Manager, as amended and assigned, providing for, among other things, the retention of the Mortgage Manager to arrange and service the Company's Authorized Investments as the same may be amended, renewed, extended, supplemented or amended and restated from time to time. See "Mortgage Management Agreement".

"Mortgage Portfolio" means, at any time, the portfolio of Mortgages or interests therein held by the Company.

"Notice" means the notice sent by a Shareholder to the Board of Directors requiring the Company to redeem the Shares so described in the Notice.

"OBCA" means the Business Corporations Act (Ontario), as amended, supplemented or replaced from time to time.

"Offered Shares" means the Class A Common, Class B Common and Class A Preferred Shares under the Offering.

"Offering" means the offering on a private placement basis a maximum of 100,000,000 Offered Shares at a price of $1.00 per share described in this Offering Memorandum.

"Ordinary Resolution" means a resolution passed by a simple majority of the votes cast by those Shareholders who, being entitled to do so, vote in person or by proxy at a duly convened meeting of Shareholders, or, subject to applicable laws, regulations and regulatory policies, a written resolution, in one or more counterparts, consented to in writing by Shareholders holding not less than 50% plus one of the votes attached to those voting Shares held by all Shareholders entitled to vote at that time.

"Person" means and includes individuals, corporations, joint stock companies, joint ventures, associations, companies, trusts, banks, trust companies, pension funds, land trusts, business trusts or other organizations, whether or not legal entities and governments and agencies and political subdivisions thereof.

"Phase 1 Environmental Audit" means an evaluation of Real Property for purposes of environmental analysis performed solely on the basis of historical records without invasive sampling or drillings from such property.

"Pre-Development Mortgages" means Mortgages granted as security for loans which are advanced for the purpose of assisting in the development of the mortgaged lands which may include, but not be limited to, Mortgages that are advanced against stipulated budgets for the acquisition of land, pre-development costs and installation and construction of roads, drainage, sewage, utilities, and similar improvements on such lands.

"Qualified Appraiser" means a person who is an appraiser accredited or licensed by the Appraisal Institute of Canada or any successor thereof.

"Real Property" means property which in law is real property and includes, whether or not the same would in law be real property, leaseholds, Mortgages, undivided joint interests in real property (whether by way of tenancy-in common, joint tenancy, co-ownership, joint venture or otherwise) and any interests in and to any of the foregoing.

"Preferred Share Redemption Price" of a Class A Preferred Share at any time means the price paid for such Class A Preferred Share at the time the Class A Preferred Share was issued from the treasury of the Corporation.

"Register" means that record of the names and addresses of Shareholders together with other pertinent information to be kept by, on behalf of, or under the direction of the Board of Directors.

"Related Investments" means bonds, debentures, notes or other evidence of indebtedness in, or shares, Shares or other evidence of ownership in the Company or any other entity, including specifically a joint venture or a mortgage

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

investment corporation, engaged directly or indirectly in the funding, holding or investing in Mortgages granted as security for loans, or the sole or principal purpose and activity of which is to invest in, hold and deal in Mortgages.

"Related Persons" has the meaning ascribed to such term in the Tax Act.

"Residential Mortgages" means Mortgages that are registered on or against completed single family residences and multifamily residential properties.

"Schedule 1 Bank" means a bank listed in Schedule 1 of the Bank Act (Canada).

"Schedule 2 Bank" means a bank listed in Schedule 2 of the Bank Act (Canada).

"Second Mortgage" means a Mortgage having priority over all other Mortgage loan interests registered against the same Real Property other than a First Mortgage on such Real Property with such mortgage not exceeding 85% loan to value.

"Selling Agent" or "Selling Agents" means those registered dealers being at least able to trade and deal in exempt market securities, such as exempt market dealers ("EMD"), retained by the Company from time to time.

"Selling Jurisdictions" means the Provinces of Alberta, British Columbia, Saskatchewan, Manitoba and Ontario, and such other jurisdictions as the Company may determine.

"Shares" means, as the context requires, any of the shares in the capital of the Company, being the Class A Common, Class B Common and Class A Preferred shares.

"Shareholder" means a holder of Shares.

"Special Resolution" means a resolution approved by not less than 66.67% of the votes cast by those Shareholders who, being entitled to do so, vote in person or by proxy at a duly convened meeting of Shareholders, or, subject to applicable laws, regulations and regulatory policies, a written resolution, in one or more counterparts, consented to in writing by Shareholders holding not less than 66.67% of the votes attached to those voting Shares held by all Shareholders entitled to vote at that time.

"Subordinate Mortgage" means a Mortgage other than a First Mortgage, including, without limitation a Second Mortgage.

"Subscriber" means a subscriber for Shares hereunder, pursuant to the Offering, whose subscription has been accepted by the Board of Directors, and to whom Shares have been issued and not revoked or transferred, and any other holder of Shares from time to time (collectively "Subscribers").

"Subscription Agreement" means the agreement to be entered into between the Company and Subscribers in furtherance of a subscription for Shares under the Offering.

"Subsidiary" has the meaning ascribed thereto in the OBCA.

"Syndication" means the sharing of a Mortgage or other investment by more than one Person.

"Tax Act" means the Income Tax Act (Canada) and the regulations promulgated thereunder, as each may be amended from time to time.

"Term Financing Mortgages" means Mortgages granted as security for a loan used to finance a completed or substantially completed income-producing or owner occupied property for a period of time.

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MORTGAGE INVESTMENT CORPORATION

"Valuation Date" means the last Business Day of each calendar month upon which date the Board of Directors will determine the aggregate Fair Market Value of Shares outstanding on the first Business Day of the said calendar month.

"Workout Investments" means any evidence of indebtedness, any evidence of ownership in any entity or any other investment made by or at the direction of the Mortgage Manager, in the Mortgage Manager's sole discretion, on behalf of the Company, to preserve or protect the Company or its assets, provided that such investments do not, directly or indirectly, cause the Company to cease to be considered a "Mortgage Investment Corporation" (as such term is defined under the Tax Act).

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1.0 Use of Available Funds

1.1 Funds

The following table discloses the net proceeds available as a result of this Offering:

The offering costs, not including selling commissions and fees, if any, of this Offering remain at an amount less than the expected 1% of this Offering for the purposes of advertising, legal and accounting costs and printing. The Company intends to use all of the net proceeds of the Offering to subscribe for additional capital in the Company and to make future Mortgage investments which are consistent with the Company’s investment policies. The board of directors can reallocate the proceeds to other uses only for sound business reasons. The use of proceeds is reflected in the following table:

		Assuming minimum offering	Assuming maximum offering
A.	Amount to be raised by this Offering	$0	$100,000,000
B.	Selling commissions and fees	$0	$4,6000,000^{1}
C.	Estimated offering costs (including legal, accounting, audit, and mortgage administration fees)	$0	$2,850,000^{2}
D.	Available funds: D = A - (B+C)	$0	$92,550,000
E.	Additional sources of funding available Bank of Montreal Line of Credit	$0	$30,000,000^{3}
F.	Working capital deficiency	$0	$0
G.	Total: G = (D+E) - F	$0	$122,550,000

Note:

(1) We may sell the Shares through various Selling Agents, such as exempt market dealers in various provinces of Canada. The Selling Agents may form a sub-agency group that includes other qualified dealers lawfully authorized to sell the Shares in one or more of the Selling Jurisdictions and will determine and pay the fees payable to such dealers. These dealers may be paid selling commissions of up to 6% of the subscription price of the Shares. Any other fees payable to such dealers will be paid directly by the contracted Selling Agent with the Company under such Agency Agreement.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

(2) A sales commission (or fee) will not be payable to the Issuer when you purchase Shares. These commissions are paid to the Selling Agent, if any. However, if you acquire Shares through a registered dealer that is not our Selling Agent, then your dealer may charge you a sales commission or fee at a rate to be negotiated between you and your dealer. The Company is not in the practice of dealing with parties who are not our Selling Agents.

1.2 Use of Available Funds

The following table provides a detailed breakdown of how the Issuer uses the available funds of this Offering in the next 12 months following the date of this Offering Memorandum:

Description of intended use of available funds listed in order of priority	Assuming min. offering	Assuming max. offering and other available funds
Mortgage Lending – includes funds raised and bank line of credit less estimated selling commissions and offering costs, if any, equal to G in the Funds table above	$0	$122,550,000
Mortgage Manager Fees Maximum 2% of Mortgage Portfolio, assuming Mortgage Lending amount above is fully deployed and the Management Fees are paid from the interest revenues	$0	$2,451,000
Mortgage Manager Fees Maximum 2% of Mortgage Portfolio	$0	$125,001,000

1.3 Proceeds Transferred to Other Issuer/Reallocation

Proceeds will not be transferred to other Issuers.

1.4 Working Capital Deficiency

There is no working capital deficiency.

2.0 – BUSINESS OF THE COMPANY

2.1 Structure

Initially, the Company was amalgamated under the laws of the Province of Ontario pursuant to the Articles of Amalgamation dated December 31, 2016, that was intended to qualify as a “Mortgage Investment Corporation” under the provisions of the Tax Act. See “Canadian Federal Income Tax Considerations”. The original Company is the corporation resulting from the amalgamation of Aberdeen Mortgage Investment Corporation, Preston Mortgage Investment Corporation and (old) Royal Canadian Mortgage Investment Corporation, which amalgamation continued the business and operations of those predecessor entities. The head office of the Company is located at 6 Ronrose Dr, Suite 301, Vaughan, ON. The Board of Directors is responsible for the general control and direction of the Company. See “Board of Directors of the Company”.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Further, the original Company was then amalgamated under the laws of the Province of Ontario pursuant to the Articles of Amalgamation dated March 1, 2024, as a formation of the amalgamation of the predecessor corporations, (original) Royal Canadian Mortgage Investment Corporation and Royal Canadian 1st Mortgage Investment Corporation. As a result of the amalgamation of the predecessor corporations, the issued and outstanding shares of each amalgamating corporation held by the shareholders of each respective predecessor corporation had been cancelled and re-issued by the Company. The Company following the amalgamation continued the business and operations of those predecessor entities. Finally, the Class A Preferred Shares were added to the capital structure of the Company pursuant to the Articles of Amendment dated May 21, 2024.

The Company was established for the principal purpose of qualifying as a Mortgage Investment Corporation pursuant to the Tax Act, and for the purpose of issuing shares and investing its funds, directly or indirectly, primarily in Authorized Investments with the objective of providing its Shareholders with stable distributions while preserving capital. Following the amalgamation and amendment, the Company continued and intends to continue to use its capital to acquire and hold, a portfolio of whole or partial, and direct or indirect, interests in Authorized Investments arranged by the Mortgage Manager pursuant to the terms of the Mortgage Management Agreement. Details of the portfolio composition are reflected in the Company's regular shareholder reports (and a copy of the most recent can be obtained from the Company or the Mortgage Manager on request). See "Mortgage Management Agreement." The Company intends to continue to finance its activities by selling Shares and investing in the Authorized Investments to allow investment by the Company in Mortgage loans secured by Real Property principally situated in the Province of Ontario. The Company's long-term objective is to provide Shareholders with stable and secure cash distributions from its direct and indirect investments in Mortgage loans in its target market segments with the goal of obtaining favourable yields and maximizing distributions and share value through the efficient sourcing and management of a geographically diverse portfolio of Real Property Mortgage investments in Canada. There is no assurance that the Company will generate any specific rate of return, or any return, on its investments; see "Risk Factors" in this Offering Memorandum.

2.2 Our Business

The Company currently qualifies and carries on business as a Mortgage Investment Corporation (MIC) under the Tax Act. This effectively enables the Company to operate as a tax-free "flow through" conduit of profit to its shareholders since it does not pay income taxes on net earnings from which dividends are paid so long as all of the income is distributed to its shareholders by its fiscal year end or soon after.

Our primary business is earning income through investing in mortgages. There is an established need for real estate mortgage financing that is not readily provided by banks, trust companies, credit unions and other traditional lenders. Short term mortgage financing is a continuing need of individuals, builders and real estate developers and because of their need for flexibility and quick response, they often require the services of private lenders and organizations such as the Company.

Our income will primarily consist of our portion of the interest or distributions generated from our investments. As a MIC, we are allowed to deduct dividends that we pay from our income. Subject to such working capital or reserve requirements as the directors of the Company determine are necessary or desirable from time to time to meet the current and future expenses, liabilities, commitments and obligations of the Company and for the conduct, promotion and protection of the business and activities of the Company, its assets and shareholders, the Company currently intends to distribute to its shareholders substantially all of its net income and net realized capital gains as dividends within the time period specified in the Tax Act with the result that we will not pay any income tax.

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

The Company conducts its investment activities under contract with the Mortgage Manager which, if required, shall be licensed as a mortgage broker and administrator in the Province of Ontario. The Mortgage Manager has the exclusive right to arrange, underwrite, syndicate and service all investments on behalf of the Company in accordance with specific investment and operating policies established by the Company from time to time. See “The Mortgage Manager”, “Mortgage Management Agreement” and “Investment and Operating Policies of the Company.”

To achieve these objectives, the Company will rely upon the Mortgage Manager’s experience in originating, underwriting, syndicating and servicing Mortgage investments. Any Mortgage investments will be subject to the Company’s investment policies and the operation of the Company will be subject to its operating policies. These policies were established based on the historical practices of the Mortgage Manager’s principals, who have been successfully operating in the mortgage industry since 2016 along with the Officers of the Royal Canadian Mortgage Investment Corporation and the employees of the Mortgage Manager who have been in the mortgage industry since 1980. Blake Albright is the Director and Officer of the Mortgage Manager and has been in the industry since 2016. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager and have been in the industry since 1980. Because these individuals hold positions with both the Company and the Mortgage Manager, there may be conflicts of interest (as further explained below) as between the interests of the Mortgage Manager and the Company (including, without limitation, insofar as the administration and application of the Company’s investment and operating policies, allocation of investment opportunities and transactions in which the Mortgage Manager has direct or indirect interests are concerned). See “Investment Strategy” and “Investment and Operating Policies of the Company.”

The Company intends to continue to pursue a strategy of growth through additional investments in Commercial and Residential Mortgages that the Company believes are currently underserviced by Canadian banks and other lending institutions. The Company intends to add to its portfolio by focusing on underserviced market niches within the real estate lending market. See “Investment Strategy.” Management of the Company believes that controlled growth will be beneficial to Shareholders if such growth is achieved in a manner that is consistent with the Company’s objectives and investment strategy. The Company intends to continue to finance its investment through the issuance of Shares where such issuances are not considered by management of the Company to be dilutive to existing Shareholders with respect to future distributions and where they support a level of growth that enables the Company to achieve sustainable efficiencies relating to administrative and operating costs.

The Tax Act’s MIC criteria permit revenue sources other than mortgages, including, among other things, equity investments in real estate and investments in stocks and securities of Canadian companies. Notwithstanding our ability to invest in the array of investments allowed under the Tax Act, it is our policy to invest its non-CDIC (e.g. bank deposit) holdings in mortgages secured by Canadian real estate property, primarily residential real estate property. A MIC’s only permitted undertaking under the Tax Act criteria is the investing of its funds, and it is specifically prohibited from managing or developing real property.

To the extent that our funds are not invested in mortgages from time to time, they will be held in cash deposited with a Canadian chartered bank or will be invested in short term deposits, savings accounts or government guaranteed income certificates so that we maintain a level of working capital for its ongoing operations considered acceptable by the directors of the Company.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

2.3 Development of Business

The investment goal of the Company is to continue to make prudent investments in mortgage loans that provide financing for Real Property situated in Canada. The Company intends to invest primarily in First and Second Mortgages, and other Subordinate Mortgages. Investments in Real Property may arise from the acquisition of Real Property through foreclosure of a Mortgage held by the Company or conveyed to the Company in full or partial satisfaction of indebtedness owed to the Company. The Company intends to continue to make its Mortgage investments on Real Property located primarily in the Greater Toronto Area and other Ontario urban centres. The Mortgage Manager, on behalf of the Company, diligently reviews and selects Mortgage investment opportunities to present to the Company and manages and services the Mortgage Portfolio. The Company does not have an exclusive relationship with the Mortgage Manager, which allocates investment opportunities to its clients including the Company. Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager. There is no independent member of the Board of Directors of the Company to monitor and oversee the relationship (see "Risk Factors" and "Conflict of Interest Restrictions and Provisions for Board of Directors").

In making its investment selections to present to the Company, the Mortgage Manager adheres to the investment and operating policies of the Company. As part of such approval process, if applicable to the investment being considered, the Mortgage Manager provides a full underwriting report consisting of a thorough credit assessment of the Mortgage investment and the security provided therefor and, where considered necessary, an appraisal prepared by a Qualified Appraiser, a Phase 1 Environmental Audit, and an evaluation of the prospective borrower and the proposed real estate collateral. As part of its growth strategy, the Company may purchase existing Mortgages or Mortgage portfolios from lenders currently competing in these markets. The Company's investment decisions will be informed by its assessment of market conditions, available funds and available yields. See "Mortgage Management Agreement" and "Investment Policies and Operating Policies of the Company."

The investment strategy of the Company is to invest in First and Second Mortgages, and other Subordinate Mortgages in the lower and mid-tier markets where the Company believes that borrower and financing needs are not being met by the larger financial institutions. To maintain a stable interest yield on the Mortgage Portfolio, the Company seeks to manage risk through the maintenance of a diversified mortgage portfolio, conservative underwriting and diligent and pro-active mortgage servicing. Through its strategy of initiating a lending relationship in the early stages of a development and the restricted competition in the markets in which it invests, the Company seeks to manage interest rate and investment security exposure on its investments.

The Company intends to continuously distribute Shares from time to time only if the receipt of the proceeds of such offerings by the Company does not, in the determination of the Board of Directors, impair the Company's expected return from its investment in and management of the Mortgages.

Borrowing Strategy

The Company may from time to time borrow funds from arm's length entities with a view to obtaining a spread between the interest rates payable to the Company on the Mortgage investments made with the proceeds of such borrowings and the interest rate paid by the Company in respect of such borrowings. Such borrowings are subject to the restriction that the total indebtedness from such entities may not exceed 80% of the book value of the Mortgages held by the Company as at the date of drawdown of the borrowed funds. This strategy is intended, when

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

used, to enhance the aggregate yield on the Company’s Mortgage Portfolio. See “Investment and Operating Policies of the Company” and “Risk Factors.”

Syndication Strategy

To manage and diversify risk, Mortgage investments in which the Company participates may be syndicated with one or more lenders. All such syndicated mortgages may initially be funded by the Company with mortgagors at a specified interest rate and a portion of the Mortgage may then be syndicated to a financial institution or other lenders sourced by the Mortgage Manager. Syndication may be on a pari passu basis or on a subordinated basis. Syndicating Mortgages reduce the Company’s exposure in respect of any one Mortgage investment.

A syndicated mortgage investment may also be structured as a securitized mortgage. We may create securitized mortgages in its existing established markets and in lower rate markets. The lower rate market is comprised of projects which, because of their features and market conditions have lower perceived risk and accordingly, are funded at lower interest rates. In order to take advantage of this lower rate market, we may syndicate these mortgages by offering priority and subordinated investment positions in the mortgage and fixing the rate of return for each position, thereby creating a securitized mortgage. Each position within a securitized mortgage will have a different fixed rate of return going from a lower rate for the first position to higher rates on a graduated basis for the subordinate positions and a different priority position in respect of payments of interest, other distributions and returns of capital. The Mortgage Manager will have sole discretion to set and adjust the fixed rates of return for all participating interests it offers in securitized mortgages and may adjust the rates offered from time to time or at regular intervals to meet changing circumstances. The Mortgage Manager may also enter into agreements with securitized mortgage participants from time to time setting and governing priorities and the relationship among the participants. If we invest in securitized mortgages offered by the Mortgage Manager, we will invest in a position in the mortgage that conforms with our investment policies at the time.

Note: Syndications may be with other entities in which the directors of the Company serve as directors and/or have economic interests; in all circumstances syndication decisions will be made in furtherance of the best interests of the Company, but in syndications with other such entities members of the Board of Directors may have conflicts of interest.

Risk Management

In addition to the default management plan discussed under the heading “Collection Activities”, the Company has implemented the following controls to limit and manage risk:

a policy requiring that, when not invested in other Authorized Investments, the Company’s capital will be placed in Authorized Interim Investments;
retention of the Mortgage Manager, whose principals have substantial experience in originating, underwriting and servicing Mortgage investments in the markets in which the Company intends to invest;
adopting a syndication strategy whereby the Company may syndicate Mortgage investments with other investors to diversify and share risks associated with a given Mortgage investment; and

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

arranging for or reviewing existing independent appraisals prepared by Qualified Appraisers for Mortgage investments (except where the Board of Directors determines that, in the relevant circumstances, in its judgment, appraisals are not necessary).

Development and Maintenance of the Mortgage Portfolio

In the view of the Company (on the advice of the Mortgage Manager), the three keys to developing and maintaining a successful Mortgage Portfolio are: (i) knowledgeable Mortgage underwriting; (ii) the ability to source a broad range of investment opportunities thereby allowing the Mortgage Manager to be selective and prudent in its choices of Mortgage investments; and (iii) disciplined monitoring, servicing and collection enforcement methods. In these respects, the Company benefits from the experience of the Mortgage Manager. The Mortgage Manager intends to enhance interest rate yields through innovative sourcing practices that. the Mortgage Manager believes that the Company will be able to continue to source and fund Mortgage investments which satisfy the Company's investment criteria based on: (i) the specialized lending structures offered to borrowers; (ii) the reputation, experience and marketing ability of the Mortgage Manager and its principals; (iii) the timely credit analysis and decision-making processes followed by the Mortgage Manager and the Company; and (iv) a lack of significant lenders in the market segments in which the Company invests, resulting from the consolidation in the financial services industry and the migration by the remaining participants in the industry away from the small and medium sized Mortgage market in which the Company invests.

The Mortgage Manager's sourcing of the Company's investments and servicing of the Mortgage Portfolio provide the following benefits to the Company:

Sourcing Mortgage Investment Opportunities

The Mortgage Manager is able to manage and service Mortgages on behalf of various investor clients and it can source Mortgages for these investors either directly or through intermediaries such as mortgage brokerages, banks, trust companies, lawyers and accountants. The Mortgage Manager's officers have extensive contacts in the mortgage and real estate industries which allows them to identify investment opportunities and submit them to the Company. The Company continues to take advantage of the Mortgage Manager's principals' experience in these types of activities and therefore maintains access to what it considers to be a strong source of Mortgage investments.

Proven Industry Experience

Collectively, the principals of the Mortgage Manager have over 80 years of mortgage and real estate experience. The principals have a deep knowledge and understanding of the mortgage and real estate industries that has enabled them to make prudent investment decisions and identify sound investment opportunities. The name and municipality of residence, office held with the Mortgage Manager of each principal of the Mortgage Manager are described under the heading "Mortgage Manager". In addition, the principals of the Mortgage Manager hold an interest in the Company.

Problem Identification and Rectification Experience

The Company intends to continue to minimize risks associated with defaulting Mortgages through diligent monitoring of the Mortgage Portfolio, active communication with borrowers and the institution of aggressive enforcement procedures on defaulting Mortgages. The Company accomplishes this through the Mortgage Manager, whose principals have substantial experience in servicing Mortgage loans, including the institution of enforcement

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

proceedings, and has a history of very low losses on Mortgages underwritten and serviced. The Mortgage Manager's principals also have extensive experience in servicing high yield mortgage portfolios as a result of purchasing and restructuring distressed mortgage debt.

The Mortgage Manager has implemented a default management and recovery program for the benefit of the Company which includes the following:

implementation of enforcement proceedings following default under the terms of a Mortgage;
performance of a property inspection following default under the terms of a Mortgage and, if necessary, taking possession of the property secured by such Mortgage or establishing a property management program for the mortgaged property; and
strict adherence to the Company's investment and operating policies.

Focus on Greater Toronto Area and other Ontario Urban Centres

Together, the Greater Toronto Area and other Ontario urban centres contain a sizeable portion of Canada's population and a well-diversified industry base. The Company intends to continue to make its Mortgage investments on Real Property located primarily in the Greater Toronto Area and other Ontario urban centres, areas with which the officers of the Mortgage Manager are familiar due to their past lending experience. The Company also intends to continue to diversify geographically by making Mortgage investments on Real Property located in other areas of Canada where prevailing economic conditions are considered to be favourable.

The Mortgage Portfolio

The Mortgage Portfolio consists of Mortgages, or interests therein, secured by a range of properties and reflects, among other things, the following characteristics, some of which are included among the Company's investment policies:

payment schedules consist primarily of interest only;
Mortgages are generally written for terms of one year or less;
Mortgage investments are secured by Real Property located in Canada and are denominated in Canadian dollars; and
Mortgages are syndicated where it is deemed appropriate.

See "Investment Strategy" and "Investment and Operating Policies of the Company."

The Company offers Shares from time to time only if the Company finds new Mortgages that meet its quality and risk tolerance criteria, and that can ensure that the weighted average interest yield remains within the target specified above.

MANAGEMENT OF THE MORTGAGE PORTFOLIO

The Mortgage Manager is responsible for arranging, underwriting, servicing and syndicating the Company's Mortgage investments pursuant to the Mortgage Management Agreement. See "Mortgage Manager" and "Mortgage Management Agreement."

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

INVESTMENT AND OPERATING POLICIES OF THE COMPANY

Investment Policies

The Management Agreement establishes certain policies and restrictions on investments that the Company may make as follows:

100% of the Company’s Capital may be invested in First Mortgages, Second Mortgages, Insured Mortgages, Subordinate Mortgages, AAA Rated Mortgage Backed Securities and/or Related Investments;
the Company may assign all or a portion of a Mortgage or Mortgages held by it (the “Assigned Portion”) to one or more arm’s length third party lenders (the “Assignee Lender(s)”) for value provided that: (i) if a portion of such Mortgage or Mortgage(s) (the “Retained Portion”) is retained by the Company, the Company may enter into an agreement with the Assignee Lender(s) as to relative ranking of the Assigned Portion and the Retained Portion; and (ii) if the Retained Portion is subordinate to the Assigned Portion, the Retained Portion will be considered a Subordinate Mortgage;
no more than 30% of Company capital may be invested in Commercial Mortgage Backed Securities that are not AAA Rated Mortgage Backed Securities;
when not invested in other Authorized Investments, the Company’s capital will be placed in Authorized Interim Investments;
the Company may participate in Authorized Investments on a syndicated basis with others, including affiliates and associates of the Mortgage Manager and their affiliates and associates, subject to the approvals otherwise required in connection with its investments; and
notwithstanding any limits stated herein, for risk management purposes only, the Company may increase a given investment to more than 20% of the Company’s capital in order to remedy the default by a borrower of its obligations in respect of a prior ranking security or satisfy the indebtedness secured by a prior ranking security or for any other reason if such action is required to protect the Company’s investment and if such proposed increase in the Company’s investment is approved by the Mortgage Manager.
overall investments in Mortgages by the Company shall not exceed 85% of the overall aggregate value of the underlying real properties.

The Company will distribute Shares from time to time only if the receipt of the proceeds of such offering by the Company does not impair the Company’s investment policies as described in this section.

Operating Policies

The Mortgage Manager Agreement provides that the operations and affairs of the Company are required to be conducted in accordance with the following operating policies:

the Company may borrow funds on commercially reasonable terms subject to the limitation previously described, to acquire or invest in specific Authorized Investments;
when making an investment in, or an acquisition of, a Mortgage or other Authorized Investment, the Mortgage Manager may, in its sole discretion, but will not be obliged to, obtain or review an independent appraisal from a Qualified Appraiser of, and/or a Phase 1 Environmental Audit on, the

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

underlying Real Property which is the primary security for the Mortgage or other Authorized Investment, and may or may not obtain additional independent appraisals or audits of the underlying property or any additional collateral and other properties securing the Mortgage or other Authorized Investment;

in addition, in its sole discretion and in satisfaction of the requirements of the immediately preceding paragraph, the Mortgage Manager may rely upon an independent appraisal from a Qualified Appraiser and/or a Phase 1 Environmental Audit in respect of the subject property that has been provided to the Company by the borrower;
approval of an investment or acquisition must be in writing, may be signed in counterparts, in original form or by facsimile, and must be signed by the authorized persons required to approve such investment or acquisition in accordance with the Management Agreement;
when deemed necessary by the Mortgage Manager, the Company will, where appropriate, establish and manage property tax escrow accounts in respect of the Real Property provided as security for the Company's Mortgage investments, if any;
the legal title to each Authorized Investment may be held by and registered in the name of the Company or other entity that is an affiliate, associate or subsidiary of the Company or its subsidiaries, associates or affiliates. Where the Company's interest is held in trust the trust arrangements must be approved by the Board of Directors. Where the legal title to an Authorized Investment is held by and registered in the name of an entity wholly-owned by, or affiliated or associated with, the Company, or in the name of a person or persons in trust for the Company, such entity may hold legal title to such Authorized Investment on behalf of other beneficial owners of such Authorized Investment; and
the appraised value relied upon for purposes of making a Mortgage investment need not be on an "as is" basis and may be based on stated conditions, including with limitation, completion, rehabilitation, sale or lease-up of improvements located on the Real Property.

Amendments to Investment and Operating Policies

The investment and/or operating policies of the Company set out above may be amended, supplemented or replaced from time to time by the Board of Directors in its sole discretion without the consent, approval or ratification of the Shareholders or any other person. In the alternative, the Board of Directors may elect, but will not be required, to submit any proposed amendments, supplements or replacements to the investment policies and/or operating policies to the Shareholders for approval by Ordinary Resolution upon which approval, such amendments, supplements or replacements will be immediately effective without the approval, unanimous or otherwise, of the Shareholders. Where the investment and/or operating policies of the Company are amended, supplemented or replaced by unanimous approval of the Board of Directors without the consent, approval or ratification of the Shareholders, Shareholders will be given written notice of material amendments to the investment policies thirty (30) days prior to the implementation of any such amended investment policies. Notwithstanding anything else to the contrary set out in the Company Agreement, if at any time a government or regulatory authority having jurisdiction over the Company or any property of the Company will enact any law, regulation or requirement which is in conflict with any investment or operating policy of the Company then in force, such policy in conflict will, if the Board of Directors so resolve, be deemed to have been amended to the extent necessary to resolve any such conflict and, notwithstanding anything to the contrary herein contained, any such resolution of the Board of Directors will not require the prior approval of Shareholders or any other person.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Collection Activities

The Mortgage Manager monitors the performance of the Mortgage Portfolio, including tracking the status of outstanding payments due, grace periods and due dates, and the calculation and assessment of other applicable charges. The Mortgage Management Agreement requires the Mortgage Manager to make reasonable efforts to collect all payments on account of principal and interest payable on an Authorized Investment where applicable, to cause the borrower to perform its obligations under the Authorized Investment or other security documents relating thereto and to follow collection procedures that are consistent with its servicing standards. The Mortgage Manager is required to monitor any loan that is in default, evaluate whether the causes of the default will be corrected by the borrower over a fifteen (15) day period without significant impairment of the value of the related mortgaged property, initiate corrective action and take such other actions as are consistent with its servicing standards. See "Mortgage Management Agreement."

The time within which the Mortgage Manager may make the initial determination of appropriate action, evaluate the appropriate corrective action, if any, develop additional initiatives, or institute foreclosure, power of sale or other enforcement proceedings on behalf of the Company may vary considerably depending on the particular Mortgage loan, the mortgaged property, the borrower, the mortgagor's circumstances as perceived by the Mortgage Manager and the presence of an acceptable party to assume the Mortgage loan. If a borrower makes a proposal, an assignment or takes any other proceedings under the Bankruptcy and Insolvency Act (Canada), the Companies' Creditors Arrangement Act (Canada), the Winding-Up and Restructuring Act (Canada) or other insolvency, arrangement or other legislation for the relief of debtors, the Mortgage Manager may not be permitted to accelerate the maturity of the related Mortgage loan, to foreclose the mortgaged property or to exercise power of sale or other mortgage enforcement proceedings for a considerable period of time.

Portfolio Analysis

Below is a comparative analysis of the mortgage portfolio (see table below):

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-Amalgamation)

For the year ended December 31, 2021
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	164	$41,095,244	100%	8.48%	$250,580
First mortgage	31	$18,724,695	46%	6.98%	$604,022
Second mortgage	133	$22,370,549	54%	9.74%	$168,200

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

For the year ended December 31, 2022
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	235	$48,459,970	100%	10.17 %	$206,213
First mortgage	19	$9,852,395	20%	7.48%	$518,547
Second mortgage	216	$38,607,575	80%	10.83%	$178,739
For the year ended December 31, 2023
---	---	---	---	---	---
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	212	48,873,673	100%	12.64%	$183,890
First mortgage	24	14,302,332	29%	10.22%	$595,930
Second mortgage	188	34,571,341	71%	11.93%	$230,536

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum
34

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

For the year ended December 31, 2021
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	37	$23,520,408	100	6.44%	$635,687
First mortgage	37	$23,520,408	100	6.44%	$635,687
Second mortgage	0	0	0	0	0
For the year ended December 31, 2022
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	46	$28,285,048	100%	8.17%	$614,892
First mortgage	46	$28,285,048	100%	8.17%	$614,892
Second mortgage	0	0	0	0	0
For the year ended December 31, 2023
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	30	$18,129,851	100%	9.78%	$604,328
First mortgage	30	$18,129,851	100%	9.78%	$604,328
Second mortgage	0	0	0	0	0

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION– Post 2024 Amalgamation

For the year ended December 31, 2024
Description	# of Loans	Value	As a %	Weighted Interest Rate	Average Mortgage Balance
Total Portfolio	211	60,109,209	100%	10.72%	$284,878
First mortgage	53	30,938,756	51%	9.71%	$583,750
Second mortgage	158	29,170,453	49%	12.04%	$184,623

The table below is a comparison of type of lending and applicable concentration:

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

	As at December 31
Type of Mortgage	2021			2022			2023
	# of Loans	Value	As a %	# of Loans	Value	As a %	# of Loans	Value	As a %
Residential	164	$41,095,244	100	235	$48,459,970	100%	212	$48,873,673	100%
Total	164	$41,095,244	100	235	$48,459,970	100%	212	$48,873,673	100%
Location of Mortgage
GTA & surrounding area	164	$41,095,244	100	235	$48,459,970	100%	212	$48,873,673	100%
Total	164	$41,095,244	100	235	$48,459,970	100%	100%	$48,873,673	100%

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

	As at December 31
Type of Mortgage	2021			2022			2023
	# of Loans	Value	As a %	# of Loans	Value	As a %	# of Loans	Value	As a %
Residential	37	$23,520,408	100%	46	$28,285,048	100%	30	$18,129,851	100%
Total	37	$23,520,408	100%	46	$28,285,048	100%	30	$18,129,851	100%
Location of Mortgage
GTA& surrounding area	37	$23,520,408	100%	46	$28,285,048	100%	30	$18,129,851	100%
Total	37	$23,520,408	100%	46	$28,285,048	100%	30	$18,129,851	100%

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Post-2024-Amalgamation)

Type of Mortgage	2024
	# of Loans	Value	As a %
Residential	211	60,109,209	100%
Total	211	60,109,209	100%
Location of Mortgage
GTA & surrounding area	211	60,109,209	100%
Total	100%	60,109,209	100%

Mortgage Portfolio Growth Rate – Previous 5 years:

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

Fiscal Year	Value of Mortgage Portfolio	Annual Growth Rate
2019	$27,066,089	-7.65
2020	$29,666,926	9.61
2021	$41,095,244	38.52
2022	$48,459,970	17.92
2023	$48,873,673	.85

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

Fiscal Year	Value of Mortgage Portfolio	Annual Growth Rate
2018	$12,034,530
2019	$15,601,147	29.64%
2020	$14,836,429	-4.90%
2021	$23,520,408	58.53%
2022	$28,285,048	20.26%
2023	$18,129,851	-35.90%

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Post 2024 Amalgamation) RCM1st & RCM Combined

Fiscal Year	Value of Mortgage Portfolio	Annual Growth Rate
2023 Combined	67,003,524	see above
2024	60,109,209	-10.29%

The chart below highlights mortgage defaults as of January 31, 2024:

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

MONTHLY Portfolio Arrears	# of Mortgages	Value of Mortgages	% of portfolio closing balance
0-30 Days	0	$0.00	0.00%
31-60 Days	1	$55,691.55	0.12%
61-90 Days	0	$0.00	0.00%
90+ Days	5	$2,712,724.84	5.61%
Total:	6	$2,768,416.39	5.73%
Foreclosure	# of Mortgages	Value of Mortgages	% of portfolio closing balance
Mortgages in Foreclosure process	0	$ -	0.00%

Losses	0	0	% of portfolio closing balance
Gross Loss	0	0	0
Recoveries	0	0	0
Net Loss	0	0	0

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

All mortgage terms are 12 months or less.

As of January 31,2024
	Number	$ Amount	% of Portfolio
Mortgages Maturing Less than 1 year	191	$44,190,358	91.40%
Mortgages Maturing 1 year or greater	17	$4,155,753	8.60%
Total Mortgages	208	$48,346,111	100%

ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

Portfolio Arrears End of Month	# of Mortgages	Value of Mortgages	% of portfolio closing balance
0-30 Days	0	$0.00	0.00%
31-60 Days	0	$0.00	0.00%
61-90 Days	1	$710,950.00	4.36%
90+ Days	6	$3,326,896.71	20.42%
Total:	7	$4,037,846.71	24.79%
Foreclosure	# of Mortgages	Value of Mortgages	% of portfolio closing balance
---	---	---	---
Mortgages in Foreclosure process	0	$ -	0

Losses for Month			% of portfolio closing balance
Gross Loss		0
Recoveries		0
Net Loss		0

All mortgage terms are 12 months or less.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

As of January 31,2024
	Number	$ Amount	% of Portfolio
Mortgages Maturing Less than 1 year	27	$16,289,748	100.00%
Mortgages Maturing 1 year or greater	0	0	0.00%
Total Mortgages	27	$16,289,748	100%

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Post-2024-Amalgamation)

The chart below highlights mortgage defaults as of March 31,2025

| Portfolio
Arrears End of
Month | # of Mortgages | Value of Mortgages | % of portfolio closing balance |
| --- | --- | --- | --- |
| 0-30 Days | 0 | $0.00 | 0.00% |
| 31-60 Days | 0 | $0.00 | 0.00% |
| 61-90 Days | 0 | $0.00 | 0.00% |
| 90+ Days | 12 | $8,560,626.90 | 15.52% |
| Total: | 12 | $8,560,626.90 | 15.52% |
| | | | |
| Foreclosure | # of Mortgages | Value of Mortgages | % of portfolio closing balance |
| Mortgages in
Foreclosure
process | 0 | 0 | 0.00% |
| Mortgages in
Power of Sale | 4 | 3,168,002.41 | 5.74% |
| Losses for
Month | | | % of portfolio closing balance |
| Gross Loss | | | 0.00% |
| Recoveries | | | 0.00% |
| Net Loss | | | 0.00% |
| | | | |

All mortgage terms are 12 months or less.

As of March 31, 2025
	Number	$ Amount	% of Portfolio
Less than 1 year	184	$0 55,162,816	100.00%
More than 1 year	0	$	0%
Total	184	$55,162,816	100%

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

We do not lend based on Beacon/Credit Score and therefore not within scope of information provided. We do not have any one single mortgage or borrower owing more than 10% of the portfolio.

Historical Annual Shareholder Returns – Since inception of ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation):

Year	Class A	Class B	Class C	Class D
2013	N/A	10%	N/A	N/A
2014	N/A	10%	N/A	N/A
2015	N/A	10%	N/A	N/A
2016	N/A	10%	N/A	N/A
2017	9%	10%	N/A	N/A
2018	9%	9%	N/A	N/A
2019	9%	9%	N/A	N/A
2020	8%	8%	N/A	N/A
2021	7%	7%	N/A	N/A
2022	7.55%	7.55%	7.55%	7.55%
2023	8.00%	8.00%	8.00%	8.00%

Historical Annual Shareholder Returns – Since inception of ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation):

Year	Common Share Return
2017	7.00%
2018	7.00%
2019	6.50%
2020	6.50%
2021	6.50%
2022	6.50%
2023	7.00%

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Historical Annual Shareholder Returns – 2024

Year	Class A	Class B	Class C	Class D	Preferred Class A
2024
Jan 1-May 31	8.00%	8.00%	N/A	N/A	N/A
2024
June 1 - Dec 31	8.50%	8.50%	N/A	N/A	7.25%

LICENSING AND LEGISLATIVE REGIME

Mortgage brokerages and mortgage administrators in Ontario are currently regulated under the MBLAA. The MBLAA is administered by the Ontario Ministry of Finance through the Financial Services Regulatory Authority (the "FSRA") and regulates mortgage brokerages and mortgage administrators, which must be licensed under the MBLAA. The Mortgage Manager is licensed under the MBLAA as pursuant to the Management Agreement it conducts mortgage administration activities.

The Mortgage Manager also performs ongoing administrative services to the Company pursuant to the Management Agreement.

2.4 Long Term Objectives

The Company intends to continue to pursue a strategy of growth through additional investments in Commercial and Residential Mortgages that the Company believes are currently under-serviced by Canadian banks and other lending institutions. The Company intends to add to its portfolio by focusing on underserviced market niches within the real estate lending market. See "Investment Strategy." Management of the Company believes that controlled growth will be beneficial to Shareholders if such growth is achieved in a manner that is consistent with the Company's objectives and investment strategy. The Company intends to continue to finance its investment through the issuance of Shares where such issuances are not considered by management of the Company to be dilutive to existing Shareholders with respect to future distributions and where they support a level of growth that enables the Company to achieve sustainable efficiencies relating to administrative and operating costs.

2.5 Short Term Objectives

Over the next twelve months, the Company's objective is to complete the maximum Offering and invest it pursuant to the Tax Act's MIC criteria and in accordance with the policies and guidelines set out under "ITEM 2 - Business of the Corporation – Our Business", with the intent of paying dividends to its shareholders. The Corporation will make every effort to calculate dividends monthly as and when net income allows for it, and then payout these dividends monthly or quarterly if possible. In the future, the Corporation may calculate and pay dividends on the Shares on a quarterly or monthly basis. Dividends, if any will therefore be paid quarterly or monthly within 15 days after each calendar quarter or month, respectively, once declared.

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Note: The offering is a continuous offering, and additional expenses will be incurred for updated financial information and other disclosures. The maximum 2% mortgage administration fee amount is an estimate of annual fees.

2.6 Insufficient Funds

The funds available as a result of this offering either may not or will not be sufficient to accomplish all of the issue's proposed objectives and there is no assurance that alternative financing will be available.

2.7 Material Agreements

The following is a list of the material agreements, other than contracts entered into in the ordinary course of business, entered into by the Company:

Mortgage Management Agreement dated January 5, 2016 (see “Mortgage Management Agreement”)
Bank Line of Credit Agreement: The Company has a revolving credit facility with Schedule A bank in the amount of $30,000,000 with an accordion of $10,000,000. The revolver has a one-year term. Borrowing rate is based upon Prime plus and/or CORRA plus and is repayable on maturity. The amount outstanding under the facility at any time is limited by the borrowing base, specifically 75% of the principle balance of residential First Mortgages plus 50% of the principal balance of residential Second Mortgages less the bank's estimate of deemed trusts and priority payables which could rank in priority to its security interest. The facility includes detailed prescriptive terms for eligibility criteria for the underlying mortgage portfolio. The Company's obligations under the revolver are secured by general security, unlimited guarantees for its subsidiaries, specific assets of specified material assets, and other security customary for arrangements of that nature. The credit agreement contains financial covenants, including minimum Interest rate coverage, tangible net worth threshold and maximum debt to tangible net worth ratio. The negative covenants include restrictions on redemptions; without bank consent the Company may not redeem shares with a value of more than (i) 8% of the aggregate beginning value per quarter, or (ii) more than 20% per trailing twelve (12) calendar month period of the aggregate value attributable to all shares outstanding at the beginning of that twelve (12) calendar month period. Additionally, no Redemptions shall be permitted in the case of a default or event of default which is continuing.

MANAGEMENT OF THE COMPANY

The Company is under the general control and direction of the Board of Directors, including the day-to-day operations of the Company, but the provision and supervision of the Company's investments is carried out by the Mortgage Manager. The Board of Directors may appoint an advisory board from time to time to advise the Company in respect of its business and investments. See "Structure", "The Board of Directors" and "Mortgage Manager". Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager.

The Mortgage Manager has entered into the Mortgage Management Agreement with the Company and is entitled to earn a fee for providing services to the Company. The Mortgage Manager must render its services under the Mortgage Management Agreement honestly, diligently and in good faith and must use reasonable commercial efforts to perform its duties and responsibilities under the Mortgage Management Agreement; however, the Mortgage Manager, its directors and officers, its affiliates, members of its credit committee and their affiliates may at any time and currently do engage in promoting or managing other entities or their investments including real

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property financing that may compete directly or indirectly with the Company. The Mortgage Manager intends to and may establish other investment vehicles that may involve transactions which conflict with the interests of the Company or the Company. See "Mortgage Management Agreement" and "Conflicts of Interest."

In addition, the Mortgage Manager has sole discretion in determining which Mortgages and investments it will make available to the Company for investment and will, at the same time and on an ongoing basis, be sourcing investment opportunities for its own account or the account of others. The Mortgage Manager, in exercising its discretion, will use its best judgment and act in such manner as it sees fit, having regard to the relative sizes, investment objectives, portfolio composition and financial capabilities of all of the entities involved, including the Company. See "Mortgage Manager." As disclosed herein, Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of Company and hold employment positions with the Mortgage Manager. The Mortgage Manager is a related party of the Company and there is no independent monitoring or supervision of the relationship with the Mortgage Manager.

The Mortgage Manager is obligated to devote as much time as is necessary to supervise the management of, and to manage or to advise on the business and affairs of, the Company and its business. Whenever a conflict of interest arises between the Company, on the one hand, and the Mortgage Manager on the other hand, the parties involved in resolving that conflict or determining any action to be taken or not taken will be entitled to consider the relative interests of all of the parties involved in the conflict or that will be affected by such action, any customary or accepted industry practices, and such other matters as the parties deem appropriate in the circumstances.

Conflict of Interest Restrictions and Provisions for Board of Directors

The Directors of the Company are required to disclose to the Company any material interest in a material contract or transaction or proposed material contract or transaction with the Company or the fact that such person is a director or officer of, or otherwise has a material interest in, any person who is a party to a material contract or transaction or proposed material contract or transaction with the Company and, unless the result would be that no Director is available to vote on the contract or transaction, to refrain from voting thereon. Such disclosure is required to be made at the first meeting at which a proposed contract or transaction is considered. If all of the Board of Directors have a material interest in a material contract or transaction or proposed material contract or transaction, then, provided the required disclosure has been made by each of the Board of Directors, the Board of Directors may proceed to consider and vote on any resolution to approve the contract or transaction or proposed contract or transaction if they in good faith determine that it is commercially reasonable to do so. Consequently, the Board of Directors may approve material contracts or transactions in relation to which each member has a disclosed interest. A Director complying with the conflicts of interest provisions set out in the OBCA will not be subject to any liability to the Company, the Board of Directors or the Shareholders with respect to such contract, transaction or proposed contract or transaction as aforesaid.

In the event that a meeting of Shareholders is called to confirm or approve a contract or transaction or proposed contract or transaction in which a Director is interested as aforesaid, the extent of the interest in the contract or transaction or proposed contract or transaction of the Director will be disclosed in reasonable detail in the notice calling the said meeting of Shareholders or in any information circular to be provided in respect thereof.

Where a material contract is made or a material transaction is entered into between the Company and a Director, or between the Company and another person of which a Director is a director or officer or in which he or she has a material interest and such person disclosed his or her interest and the contract or transaction was approved in good

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faith, then such person is not accountable to the Company or to the Shareholders for any profit or gain realized from the contract or transaction and the contract or transaction is neither void nor voidable by reason only of that relationship or by reason only that such person is present at or is counted to determine the presence of a quorum at the meeting or voted at the meeting that authorized the contract or transaction.

Subject to the paragraph immediately above, and except in respect of the material agreements entered into on or before the Closing, where a Director fails to disclose his interest in a material agreement or transaction or otherwise fails to comply with the OBCA, the Board of Directors or any Shareholder, in addition to exercising any other rights or remedies in connection with such failure exercisable at law or in equity, may apply to a court for an order setting aside the contract or transaction and directing that such person account to the Company for any profit or gain realized therefrom. It is specifically acknowledged that the Company has or will in the future enter into agreements or transactions with the Mortgage Manager or its affiliates or associates for the provision of products or services by the Mortgage Manager or its affiliates or associates to or for the Company or the Company, that the Board of Directors are all directors or officers of the Mortgage Manager and that any amounts charged to the Company or the Company for such products or services will be determined in a commercially reasonable manner. See "Management of the Company" and "Risk Factors."

As disclosed herein, Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are Directors and Officers of the Company and hold employment positions with the Mortgage Manager.

There is no independent monitoring or supervision of the relationship with the Mortgage Manager.

MORTGAGE MANAGER

The Company intends to conduct its mortgage investment activities under contract with the Mortgage Manager. See "Licensing and Legislative Regime." The Mortgage Manager is a corporation incorporated under the laws of the Province of Ontario and acts as the Company's loan originator, underwriter, servicer and syndicator. The directors of Mortgage Manager have been in the business of originating, underwriting, servicing and syndicating mortgage loans since 1980. The principals of the Mortgage Manager have been active in the industry since 1980.

The Mortgage Manager's principals' expertise has been built through funding borrowers whose property or application is not appropriate for traditional lending institutions or where traditional lending institutions will take too long to process the application. The Mortgage Manager seeks to gain competitive advantage by providing timely commitments to fund based on is speed in assessing and responding to a request for funds, and by maintaining a reputation for completing transactions in a timely and flexible manner.

Given the nature of its role and responsibilities with respect to the Company, the Mortgage Manager may be considered to be a promoter of the Company for the purposes of applicable securities laws.

The Mortgage Manager is not at arm's length with the Company in that the directors and officers of the Mortgage Manager, are also directors of the Company. This is also a form of a conflict of interest. Conflicts of interest exist, and others may arise, between and among the directors and officers and shareholders of the Mortgage Manager and the Company and their associates and affiliates. There is no assurance that any conflicts of interest that may arise will be resolved in a manner most favorable to investors. Persons considering a purchase of Shares pursuant

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to this Offering must rely on the judgment and good faith of the directors, officers and employees of the Mortgage Manager and the Company in resolving such conflicts of interest as may arise. By way of an example some of the directors and officers of the Mortgage Manager are also directors of the Company and may procure or underwrite mortgage loans or investments where the fees, such as the lender fees, that the Mortgage Manager will keep, can influence their decision to proceed with the said mortgage or investment.

MORTGAGE MANAGEMENT AGREEMENT

The statements in this Offering Memorandum concerning the Mortgage Management Agreement are intended to be only a summary of the provisions of such agreement and do not purport to be complete. A copy of the Mortgage Management Agreement will be provided to each prospective purchaser on request in writing to the Board of Directors. All capitalized terms in this section not otherwise defined herein shall have the meaning as set out in the Mortgage Management Agreement.

Services

Pursuant to the Mortgage Management Agreement, the Mortgage Manager has agreed to provide, or cause to be provided through qualified service providers, the following investment manager administration services (the "Manager Services"):

use its reasonable efforts to present to the Company investment opportunities consistent with the investment policies and objectives of the Company, which investments will mainly consist of whole or partial interests in Mortgages;
provide the Company with information relating to proposed acquisitions, dispositions, financing and Mortgage Investments;
service and administer the Company's investments on behalf of the Company maintaining records and accounts in respect of each eligible investment, remitting to the Company all amounts received by the Mortgage Manager on account of the Company's interest in an investment and on a monthly basis forwarding to the Company a monthly statement of account in respect of all Authorized Investments in which the Company has an interest;
assist the Board of Directors to formulate and modify the Company's investment policies and investment objectives when appropriate, and to report to the Company in connection with or relative to the Company's investments as may be required from time to time by the Company acting reasonably;
investigate, select and conduct relations with consultants, borrowers, lenders, mortgagors and other mortgage and investment participants, accountants, originators or brokers, correspondents and mortgage managers, technical advisors, lawyers, underwriters, brokers and dealers, corporate fiduciaries, escrow agents, depositories, custodians, agents for collection, insurers, insurance agents, banks, investors, builders and developers; to employ, retain and supervise such persons and the services performed or to be performed by such persons in connection with the Company's investments and to substitute any such party or itself for any other such party or for itself;
provide those services as may be required in connection with the collection, handling, prosecuting and settling of any claims of the Company with respect to the Company's investments, including foreclosing and otherwise enforcing Mortgages and other liens and security interests securing the Company's investments;

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provide office space, office equipment and necessary executive, clerical and secretarial personnel for the performance of its services as Mortgage Manager;
if required in accordance with the investment policies or operating policies, obtain an appraisal and/or a Phase 1 Environmental Audit of Real Property with respect to Mortgage interests which are being acquired or with respect to which a Mortgage loan or commitment is being made;
act on behalf of the Company as its nominee or agent in connection with acquisitions or dispositions of the Company's investments, the execution of deeds, Mortgages or other instruments in writing for or on behalf of the Company and the handling, prosecuting and settling of any claims of the Company relating to the Company's investments including the foreclosure or other enforcement of any Mortgage, lien or other security interest securing the Company's investments;
deliver to the Company portfolio reports from time to time with respect to the investments held by the Company and provide any other information or documentation relating to such Company's investments as maybe reasonably requested by the Board of Directors; and
generally, perform such other acts as a mortgage loan administrator would perform in the administration of the Company's investments and the related property. Under the Mortgage Management Agreement, the Mortgage Manager will have the exclusive right, during the term of the Agreement, to present, underwrite and syndicate all Authorized Investments for acquisition by the Company and to manage the Company's investments.

The Mortgage Manager has agreed to fulfill the role and provide the services set out in the Mortgage Management Agreement in an honest and diligent manner, in good faith and to the best of its ability. The Mortgage Manager has further agreed to service the Company's portfolio of Authorized Investments in the same manner, and with the same care, skill, prudence and diligence, with which it services and administers its current Mortgage loans, giving due consideration to customary and usual standards of practice employed by mortgage loan administrators and mortgage managers with respect to loans comparable to the Company's investments and to exercise reasonable business judgment in accordance with applicable law to maximize recovery under the Company's investments.

Fees

In consideration of the performance of its services under the Mortgage Management Agreement, the Mortgage Manager is entitled to a fee (the "Fee") in an amount equal to 2.00% per annum of the average outstanding principal balance of all of the Mortgage Portfolio plus 2.00% per annum of the fair market value of any other non-mortgage Company investments beneficially owned or held directly or indirectly by the Company. Such fees shall be calculated daily, aggregated and paid in monthly instalments on the last day of each month. The fee may be paid to the Mortgage Manager by the Company. The Fee for any partial month will be pro-rated based upon the number of days in such month in respect of which the Fee is being paid. In addition, the Mortgage Manager will be entitled to all lender, broker, origination, commitment, renewal, extension, discharge, participation, NSF and administration fees ("Lender/Broker Fees") generated on the Authorized Investments it arranges and presents to the Company.

Under the Mortgage Management Agreement, the Mortgage Manager is responsible for the employment expenses of its personnel, including but not limited to, salaries, wages and the cost of employee benefit plans and temporary help expenses, expenses of the Board of Directors who are directors, officers or employees of the Mortgage Manager or an affiliate of the Mortgage Manager (except expenses incurred in attending meetings of Board of Directors or a committee appointed by the Board of Directors), costs associated with the sourcing and arranging of eligible investments for presentation to the Company, rent, telephone, utilities, office furniture and supplies, equipment

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and machinery and other office expenses of the Mortgage Manager and miscellaneous administrative expenses relating to the performance by the Mortgage Manager of its functions under the Mortgage Management Agreement.

Liability and Indemnity

The Mortgage Manager is liable to the Company for breach of its contractual obligations and for damages resulting from acts constituting bad faith, willful misconduct or gross negligence in respect of its duties under the Mortgage Management Agreement. The Company has agreed to indemnify and hold harmless the Mortgage Manager, as well as its directors, officers, shareholders, employees, affiliates and agents, from and against any and all liabilities, losses, claims, damages, penalties, actions, suits, demands, costs and expenses including, without limiting the foregoing, reasonable legal fees and expenses, arising from or in connection with any actions or omissions which the Mortgage Manager takes as Mortgage Manager under the Mortgage Management Agreement, provided that such action or omission is taken, or not taken, in good faith and without willful misconduct or gross negligence or is taken pursuant to and is in compliance with that agreement. This indemnity will survive the removal or resignation of the Mortgage Manager in connection with any and all of its duties and obligations under the Mortgage Management Agreement.

Term and Termination

The Mortgage Management Agreement continues in force until terminated in accordance with its provisions. The Mortgage Management Agreement is terminable by the Company on or after January 5, 2026, on twelve (12) months' notice or at any time without notice upon the occurrence of an Event of Termination on the part of the Mortgage Manager as set out in the Mortgage Management Agreement. The Mortgage Management Agreement is terminable by the Mortgage Manager at any time upon the occurrence of an Event of Termination on the part of the Company or upon six (6) month's prior written notice to the Board of Directors. Upon termination and for a period of six (6) months following the effective date of termination, the Mortgage Manager is entitled, upon at least five (5) days written notice to the Board of Directors, to repurchase all or a portion of the Company's investments existing as at the effective date of termination, in its sole discretion, from the Company within sixty (60) days of such notice for an amount, payable in cash or by way of set-off against amounts owing by the Company to the Mortgage Manager, equal to the outstanding principal balance of, or the Company's percentage interest in, such Company investments plus interest accrued thereon up to the date immediately preceding the purchase date in respect of such Company investments. Upon the termination of the Mortgage Management Agreement by the Company (other than for cause or following the notice period set out in the agreement) or upon termination by the Mortgage Manager upon the occurrence of an Event of Termination in respect of the Company, the Company will forthwith pay to the Mortgage Manager an amount equal to 2.00% of the fair market value of the Company's assets under administration on the date on which the Mortgage Manager receives a notice of termination under the Mortgage Management Agreement in addition to any other amounts which are due and owing to the Mortgage Manager by the Company up to and including the day immediately preceding the effective date of the termination of the Mortgage Management Agreement. These amounts will be satisfied by the payment of cash, in interests in Mortgages or in such combination thereof as determined by the Mortgage Manager.

Acknowledgement of Potential Conflicts

The Company acknowledges that the Mortgage Manager, or its directors, officers, shareholders, employees and Affiliates, may purchase with their own funds and own as a co-lender, a percentage interest in an investment that the Mortgage Manager presents to the Company for acquisition and that the Mortgage Manager may also sell undivided percentage interests in such investments to other co-lenders. The Company also acknowledges that the

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Mortgage Manager may hold a subordinated portion in a Mortgage which is presented to the Company and the rate of return on such subordinated portion may vary from the Company's rate of return. These risks are affected by the governance of the Company; Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager.

The Company also consents to and acknowledges, among other things, that: (i) the directors, officers, employees, affiliates and associates of the Mortgage Manager are engaged in a wide range of investing and other business activities, which may include real property financing in direct competition with the Company, and the Mortgage Manager intends to and has established other investment vehicles which may involve transactions which conflict with the interests of the Company; (ii) the services of the Mortgage Manager and its directors, officers and employees are not exclusive to the Company and the Mortgage Manager, its directors, officers, employees and affiliates may at any time engage in promoting or managing any other entity or its investments including those which may compete directly or indirectly with the Company; (iii) the Mortgage Manager may, from time to time, charge brokers' fees, lenders' fees, commitment fees, renewal fees, NSF fees, administration fees, discharge fees and similar fees to borrowers with respect to the eligible investments and all of such fees will be and remain the sole property of the Mortgage Manager; and (iv) the Mortgage Manager is under no obligation to make payments to the Company under the Mortgage Management Agreement in respect of an eligible investment unless and until payments are received by the Mortgage Manager from the borrower or other applicable person in respect of the eligible investment in any particular month. See "Management of the Company" and "Risk Factors."

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3.0 Interests of Directors, Management, Promoters and Principal Holders

3.1 Compensation and Securities Holdings of Certain Parties

The following table sets out specified information about each director, officer and promoter of the Company and each person who, directly or indirectly, beneficially owns or controls 10% or more of any class of voting securities of the Company:

Name and Municipality of Residence	Positions with the Company and date of obtaining position	Compensation paid by issuer or related party in the most recently completed financial year and the compensation anticipated to be paid in the current financial year^{4}
Richard E. Petrie
Wasaga Beach, Ontario	Senior Vice-President and director
January 1, 2017	No compensation is paid directly by the Company to the Director.
Mortgage Administration Fees are paid by the Company to the Mortgage Manager who is considered a related party of issuer See Note 3	Class B
$100,000
0.31%	Class B
$100,000
0.31%
Massimo R. Giovannetti
King, Ontario	President and director
January 1, 2017	No compensation is paid directly by the Company to the Director.
Mortgage Administration Fees are paid by the Company to the Mortgage Manager who is considered a related party of issuer See Note 3	Class B
142,959.51
0.57%	Class B
142,959.51
0.57%
Angelo Grossi
Richmond Hill, Ontario	Director
January 1, 2017	No compensation is paid directly by the Company to the Director.
Mortgage	Nil	Nil

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ROYAL CANADIAN
MORTGAGE INVESTMENT CORPORATION

Name and Municipality of Residence	Positions with the Company and date of obtaining position	Compensation paid by issuer or related party in the most recently completed financial year and the compensation anticipated to be paid in the current financial year^{4}
		Administration Fees are paid by the Company to the Mortgage Manager who is considered a related party of issuer
Administration Fees are paid to related party of issuer
See Note 3
Blake Albright Kitchener, Ontario	Director
April 1,2025	No compensation is paid directly by the Company to the Director.
Mortgage Administration Fees are paid by the Company to the Mortgage Manager who is considered a related party of issuer
Administration Fees are paid to related party of issuer
See Note 3	Nil	Nil

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3.2 Management Experience

The principal occupations during the last five years and any relevant experience of each director and executive officers of the Company are set out below:

NAME	Principal Occupation and Related Experience
RICHARD (RICK) E. PETRIE	Rick Petrie brings with him 30 years of extensive financial services knowledge in both residential and commercial mortgage lending comprising of an immense knowledge of diverse lender products and wealth management sectors. Rick’s comprehensive business experience includes a broad range of management roles at National Trust Co., Bank of Nova Scotia and XCEED Mortgage Corporation. Currently holds an Accredited Mortgage Planner (AMP) and Canadian Securities Course (CSC) designations. Presently Mr. Petrie manages a territory of 300 Mortgage Brokers and agents providing creative residential and commercial mortgage solutions. His extensive mortgage lending, investment knowledge and solid background in customer relationship management combine to bring a multi-faceted leadership to the Royal Canadian Mortgage Investment Corporation team.
MASSIMO R. GIOVANNETTI	Massimo Giovannetti has been the President and a director of Virgin Venture Capital Corp., a private mortgage company, since September 2002. He also is president of several other companies, which include real estate development and real estate holdings. In 2013 Royal Canadian Asset Management (Mortgage Manager) was established with the focus to provide mortgage management services to mortgage investment corporation.
ANGELO GROSSI	Angelo Grossi was the President and CEO of Canadian Underwriting Services Limited since 1979 and built the business into the second largest Insurance inspection company in Canada before selling to Real Matters in 2010. After retiring from iv3CUS and Real Matters in early 2016, Angelo focused on the growth of his realty portfolio which currently owns many commercial and residential properties in the GTA. Currently, Angelo manages over 300 mortgages through both private lending and through Royal Canadian Asset Management (Mortgage Manager).
BLAKE ALBRIGHT	Blake entered the mortgage industry in 2016 with a clear vision: to reshape Canada’s private mortgage market by offering innovative, strategic lending solutions. With a strong foundation in financial management, consulting, and M&A strategy, he saw an opportunity to build a firm that blends deep financial insight with operational excellence. Earlier in his career, Blake developed his expertise across a range of industries—including manufacturing, financial services, telecommunications, and software—where he advised companies through complex financial decisions. This cross-sector experience gave him a robust understanding of risk, investment strategy, and sustainable growth. A Chartered Professional Accountant (CPA) with an MBA in Management Accounting and Finance from McMaster University, Blake combines technical expertise with a strategic mindset. Throughout his career, he has remained focused on driving growth, improving operational efficiency, and delivering innovative solutions that meet the evolving needs of the mortgage market.

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3.3 Penalties, Sanctions and Bankruptcy, Insolvency and Criminal or Quasi-Criminal Matters

No director, executive officer or control person of the Company or of the Mortgage Manager, or any issuer of which any of the foregoing was a director, executive officer or control person at the time:

a. has been subject to any penalty or sanction imposed by a court or a regulatory body that has been in effect during the last 10 years, or any cease trade order that has been in effect for a period of more than 30 consecutive days during the past 10 years; or

b. been subject to any declaration of bankruptcy, voluntary assignment in bankruptcy, proposal under any bankruptcy or insolvency legislation, proceedings, arrangement or compromise with creditors or appointment of a receiver, receiver manager or trustee to hold assets, that has been in effect during the last 10 years; or

c. has been convicted of, or pled guilty to, a summary conviction or indictable offence under the Criminal Code (Canada), a quasi-criminal offence in any jurisdiction, a misdemeanor or felony under the criminal laws of the United States or any state or territory thereof, or an offence under the criminal legislation of any jurisdiction.

Additionally, there have been no debentures or loans due to or from the directors, management, the Mortgage Manager and principal holders as at a date not more than 30 days prior to the date of this offering memorandum.

3.4 Certain Loans

There have been no debentures or loans due to or from the directors, management, the Mortgage Manager and principal holders as at a date not more than 30 days prior to the date of this offering memorandum.

4.0 Capital Structure

4.1 Share Capital

Description of Shares

The statements in this Offering Memorandum concerning the Shares are intended to be only a summary of the attributes of the shares in the Company's Articles of Amalgamation and do not purport to be complete. A copy of the Articles of Amalgamation, Articles of Amendment and By-laws (collectively the "Constating Documents") will be provided to each prospective Subscriber on request in writing to the Board of Directors. Prior to executing a Subscription Agreement, each prospective Subscriber should review with his, her or its advisors the provisions of the Shares for the complete details of these provisions and all other provisions thereof. All capitalized terms in this section not otherwise defined herein shall have the meaning as set out in the Articles of Amalgamation and By-laws.

The Company is an incorporated entity governed by the laws of the Province of Ontario. See "Company".

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The following table sets forth the share capital structure of the Company (post-2024-Amalgamation and Amendment), the Company (pre-2024-amalgamation) and Royal Canadian 1st Mortgage Investment Corporation as at the dates indicated below:

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION December 31,2024

Description of security	Number authorized to be issued	Price per security	Number outstanding as at December 31,2024	Number outstanding after min. offering	Number outstanding after max. offering
Class A Common Shares	Unlimited	$1.00	33,280,021	33,280,021	33,280,021
Class B Common Shares	Unlimited	$1.00	21,451,136	21,451,136	21,451,136
Class C Common Shares	Unlimited	N/A	Nil	Nil	Nil
Class D Common Shares	Unlimited	N/A	Nil	Nil	Nil
Class A Preferred Shares	Unlimited	$1.00	Nil	Nil	Nil

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Post-2024-Amalgamation and Amendment) April 30, 2024

Description of security	Number authorized to be issued	Price per security	Number outstanding as at	Number outstanding after min. offering	Number outstanding after max. offering
Class A Common Shares	Unlimited	$1.00	33,327,362.37	33,327,362.37	33,327,362.37
Class B Common Shares	Unlimited	$1.00	24,023,627.57	24,023,627.57	24,023,627.57
Class A Preferred Shares	Unlimited	$1.00	Nil	Nil	Nil

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ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

Description of security	Number authorized to be issued	Price per security	Number outstanding as at December 31,2023	Number outstanding after min. offering	Number outstanding after max. offering
Class A Common Shares	Unlimited	$1.00	14,974,117	14,974,117	14,974,117
Class B Common Shares	Unlimited	$1.00	24,077,253	24,077,254	24,077,255
Class C Common Shares	Unlimited	N/A	Nil	Nil	Nil
Class D Common Shares	Unlimited	N/A	Nil	Nil	Nil

ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

Description of security	Number authorized to be issued	Price per security	Number outstanding as at December 31,2023	Number outstanding after min. offering	Number outstanding after max. offering
Common Shares	Unlimited	$1.00	20,616,197	20,616,197	20,616,197

The beneficial interests in the Company are divided into three classes of interests, described and designated as "Class A Common shares", "Class B Common shares", and "Class A Preferred shares" and together as "Shares", and which are entitled to the rights and subject to the limitations, restrictions and conditions set out in the Constating Documents. The attributes of the two classes of common Shares are identical except in relation to retraction rights, as summarized below, and the class of preferred Shares have different attributes from the common class of Shares as summarized below. The Company may issue an unlimited number of Shares (of any class). The Shares issued on amalgamation of the Company to the prior holders of the amalgamating corporations shares were Class B Common shares; future issuances to those holders will be of additional Class B Common shares, and all other future issuances will be of Class A Common shares or Class A Preferred shares.

Each Shareholder's interest in the Company is determined by reference to the number and class of Shares held. Each common class of Shares rank equally with all other outstanding common classes of Shares without discrimination, preference or priority (other than the differential dividend entitlements between the classes). The preferred class of Shares carry both dividend and liquidation preference rights, are non-voting and have different redemption and retraction privileges from that of the common class of Shares. Shares may be issued by the Company at the times,

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

to the persons, for the consideration and on the terms and conditions that the Board of Directors determine in their sole discretion and, without limiting the generality of the foregoing, the Board of Directors may, subject to applicable securities laws, authorize the payment of a commission or other fee to any person, including, specifically, the Board of Directors, the Mortgage Manager and its directors, officers, employees, subsidiaries, affiliates and associates, in consideration of such person purchasing or agreeing to purchase Shares from the Company or for finding, procuring or agreeing to find or procure purchasers of Shares. The Board of Directors may also, subject to applicable securities laws, authorize and allow commercially reasonable discounts to persons, including, specifically, the Mortgage Manager and its directors, officers, employees, subsidiaries, affiliates and associates, in consideration of their subscribing or agreeing to subscribe for Shares, or agreeing to produce subscriptions therefore, whether absolute or conditional.

Fractions of Shares will not be issued except pursuant to distributions of additional Shares to all Shareholders and distributions of additional Shares to those Shareholders exercising the right to purchase additional Shares. In the event that Share Certificates are issued, no certificates will be issued for fractional Shares. Fractional Shares will not entitle the holders thereof to a vote regardless if such Shares are voting shares.

The following is an illustrative table reflecting the flows of funds in the Company's contractual structure:

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

4.2 Long Term Debt Securities

Description of Long Term Debt (Including Whether Secured or Not)	Interest Rate	Repayment Terms	Amount Outstanding as at December 31,2024
Revolving credit facility with a Schedule A bank in the amount of $30 million with an accordion of $10 million.	Borrowing rate is based upon Prime plus and/or CORRA plus	On Demand	7,092,728

4.3 Prior Sales

The table below discloses information regarding the Shares issued within the last 12 months of the Company and of the pre-2024-amalgamating predecessor companies. Note that all Class C Common shares of the original Company were exchanged for Class B Common shares, and all Class D Common shares were exchanged for Class A Common shares of the Company.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Pre-2024-Amalgamation)

Fiscal 2022 as at December 31, 2022

Type of Security (Shares)	Number of Securities Issued	Dollar Value of Securities Issued	Number of Securities Redeemed	Dollar Value of Securities Redeemed	Net Funds Received
Class A Common	3,951,431	$1.00	825,630	825,630	3,125,801
Class B Common	1,839,043	$1.00	5,066,813	5,066,813	-3,227,770
Class C Common	3,831,000	$1.00	0	0	3,831,000
Class D Common	1,652,000	$1.00	0	0	1,652,000
Total	11,273,474	$1.00	5,892,443	5,892,443	5,381,031

Fiscal 2023 as at December 31, 2023

Type of Security (Shares)	Number of Securities Issued	Dollar Value of Securities Issued	Number of Securities Redeemed	Net Funds Received
Class A Common	5,527,788	$1.00	3,516,664	2,011,124
Class B Common	5,671,576	$1.00	2,181,616	3,489,960
Class C Common	410,000	$1.00	4,241,000	-3,831,000
Class D Common	600,000	$1.00	1,877,000	-1,277,000
Total	12,209,364.00	$1.00	11,816,280.00	393,084.00

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

ROYAL CANADIAN 1ST MORTGAGE INVESTMENT CORPORATION

Fiscal 2022 as at December 31, 2022

Type of Security (Shares)	Number of Securities Issued	Dollar Value of Securities Issued	Number of Securities Redeemed	Dollar Value of Securities Redeemed	Net Funds Received
Common	2,956,110	$1.00	2,713,581	$2,713,581	$242,529

Fiscal 2023 as at December 31, 2023

Type of Security (Shares)	Number of Securities Issued	Dollar Value of Securities Issued	Number of Securities Redeemed	Dollar Value of Securities Redeemed	Net Funds Received
Common Shares	2,382,804	$1.00	1,700,888	$1,700,888	681,916

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Post-2024-Amalgamation and Amendment) December 31,2024

Type of Security	Number of Securities Issued	Dollar Value of Securities Issued	Number of Securities Redeemed	Dollar Value of Securities Redeemed	Net Funds Received
Class A *	26,106,963	$1.00	7,799,898	7,799,898	18,307,065
Class B	1,640,168	$1.00	4,266,285	4,266,285	-2,626,117
Class C	0	$1.00	0	0	0
Class D	0	$1.00	0	0	0
Total	27,747,131.05	$1.00	12,066,182.77	12,066,182.77	15,680,948.28

Class A Number of Securities Issued includes amalgamation from RCM1st shares = 20,125,338 shares

5.0 Securities Offered

5.1 Terms of Securities

Rights and Characteristics of the Class A Common Shares and Class B Common Shares

Each Class A Common and Class B Common share confers the right to one vote on any resolution of Shareholders, whether conducted at a meeting of Shareholders or in writing. Both classes shall vote together, subject to applicable corporate law requirements for class votes.

All common class of Shares outstanding from time to time will participate pro rata in (i) any distributions from the Company, and (ii) in the event of a termination or winding-up of the Company, in the net assets of the Company remaining after satisfaction of, or provision for, all liabilities.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

No person is entitled, as a matter of right, to subscribe for or purchase any common class of Share. The common class of Shares are redeemable and retractable as outlined below, and there is no conversion or pre-emptive rights attaching to the common class of Shares. The common class of Shares are personal property and confer upon the holders thereof only the interest and rights specifically set forth in the Constating Documents. A common class of Share may be transferred by a Shareholder or his agent duly authorized in writing, to any other person, to the transferor and one or more other persons jointly, or by two or more joint holders to one or some of them to the extent permitted under the Constating Documents and only in compliance with all applicable securities and other laws unless, as a result of the transfer, the Company will cease to qualify as a “Mortgage Investment Corporation” as defined in the Tax Act. See “Resale Restrictions”.

Distribution Reinvestment Right

Subject to all applicable securities and other laws and the right of the Board of Directors to suspend or terminate such right in accordance with the Constating Documents, a Shareholder has the right at any time and from time to time to purchase additional common class of Shares using the cash distributions allotted and payable to the Shareholder on account of the common class of Shares held by the Shareholder from time to time.

Redemption Rights

The Board of Directors may in its sole discretion at any time, by providing a written redemption notice to a Shareholder, redeem all or any of the common class of Shares held by such Shareholder at a price per common class of Share to be redeemed equal to the Fair Market Value of the common class of Share(s) to be redeemed, calculated as at the Valuation Date immediately preceding the redemption date (the “Calculation Time”), plus the pro rata share of any unpaid distributions thereon which have been declared payable to Shareholders but remain unpaid as at the Calculation Time to the extent same are not otherwise included in the Fair Market Value of the common class of Share(s) to be redeemed. As set out in the Constating Documents, the redemption date is set by the Board of Directors and will be a date that is not less than ten (10) days or more than sixty (60) days from the date of the redemption notice, all in accordance with the conditions set out in the Constating Documents. From and after the date of the redemption notice, the holder of the common class of Shares to be redeemed will be entitled to exercise any of the rights of a Shareholder in respect thereof until the redemption price has been paid in full.

Mandatory Redemption

No Shareholder of the Company is permitted, together with Related Persons, at any time to hold more than 25% of any class of the issued shares of the Corporation. Any Shares held by a Shareholder, together with Related Persons, that exceeds 24.9% of the class of issued shares will be repurchased by the Company.

Shareholder Redemption Rights

Each Shareholder is entitled to require the Company to redeem at any time and from time to time at the demand of the Shareholder all or any part of the common class of Shares registered in the name of the Shareholder at the prices determined and payable, and in accordance with the conditions, provided in the Constating Documents. There will be a redemption date (“Redemption Date”) established each month pursuant to the terms of the Constating Documents. The monthly Redemption Date will be the 15th day of each and every month. If the 15th day of the month is not a Business Day, the Redemption Date for that month will be the next succeeding Business Day. In order to exercise this right, a Shareholder must send to the Board of Directors a duly completed and properly executed Notice

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

in a form approved by the Board of Directors, requiring the Company to redeem the common class of Share(s) and forwarding the common class of Share Certificate(s) representing the common class of Share(s) to be redeemed. The Notice must be received sixty (60) days before the Redemption Date to be considered for that particular Redemption Date. If sixty (60) days' notice is not given, the Board of Directors will not be required to consider redeeming the common class of Share(s) until the next subsequent Redemption Date. No form or manner of completion or execution is sufficient unless the same is in all respects satisfactory to the Board of Directors and is accompanied by any evidence that the Board of Directors may reasonably require with respect to the identity, capacity or authority of the person giving such Notice. The Board of Directors shall be entitled in their sole discretion to accelerate the Redemption Date specified by the Shareholder in the Notice.

As of the Redemption Date, the Shareholder will only cease to have any rights with respect to the common class of Shares tendered for redemption until the Common Share Redemption Price therefore (as defined below), plus the pro rata share of any unpaid distributions declared thereon and paid prior to the Redemption Date has been paid in full. common class of Shares will be considered to be tendered for redemption on the Redemption Date, provided that the Board of Directors have, to their satisfaction, received the Notice, together with the common class of Share Certificate(s) representing the common class of Shares to be redeemed and other required documents or evidence as aforesaid; and subject to the following paragraph below, the holder of a common class of Share properly tendered for redemption will be entitled to receive a price per common class of Share equal to the Fair Market Value of the common class of Share to be redeemed calculated at the Valuation Date immediately preceding the Redemption Date, plus the pro rata share of any unpaid distributions thereon which have been declared payable to Shareholders but remain unpaid as at the Redemption Date to the extent same are not otherwise included in the Fair Market Value of the common class of Share(s) to be redeemed (the "Common Share Redemption Price").

The Class A Common Share Redemption Price for Class A Common Shares tendered for redemption will be reduced by an amount equal to up to:

4.00% of the Class A Common Share Redemption Price, if such Shares are redeemed within the first year following the Closing at which such Class A Common Shares were subscribed for;
2.70% of the Class A Common Share Redemption Price, if such Shares are redeemed within the second year following the Closing at which such Class A Common Shares were subscribed for; and
1.40% of the Class A Common Share Redemption Price, if such Shares are redeemed within the third year following the Closing at which such Class A Common Shares were subscribed for.

The Class B Common Share Redemption Price for Class B Common Shares tendered for redemption will be reduced by an amount equal to up to:

6.00% of the Class B Common Share Redemption Price, if such Shares are redeemed within the first year following the Closing at which such Class B Common Shares were subscribed for;
4.80% of the Class B Common Share Redemption Price, if such Shares are redeemed within the second year following the Closing at which such Class B Common Shares were subscribed for;

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

3.60% of the Class B Common Share Redemption Price, if such Shares are redeemed within the third year following the Closing at which such Class B Common Shares were subscribed for;
2.40% of the Class B Common Share Redemption Price, if such Shares are redeemed within the fourth year following the Closing at which such Class B Common Shares were subscribed for; and
1.20% of the Class B Common Share Redemption Price, if such Shares are redeemed within the fifth year following the Closing at which such Class B Common Shares were subscribed for.

In addition, at all times there will be a fixed fee for the administrative costs of a redemption, which are currently fixed at $200.00, however subject to changes. Subject to the provisions set out in the following paragraphs, the Common Share Redemption Price payable in respect of common class of Share(s) tendered for redemption will be paid in cash by direct deposit or cheque, drawn on a Canadian chartered bank or trust company in lawful money of Canada, payable at par to, or deposited to the account of the registered Shareholder of the common class of Share tendered for redemption, or payable or deposited as otherwise instructed in writing by such registered Shareholder. Cash payments of the Common Share Redemption Price made by the Company are conclusively deemed to have been made when deposited by direct deposit or upon the mailing of a cheque in a postage pre-paid envelope addressed to the payee unless such cheque is dishonoured upon presentment. Upon such payment as set out herein or otherwise in accordance with the Constating Documents, the Board of Directors and the Company will be discharged from all liability to the former registered Shareholder in respect of the common class of Shares so redeemed.

All Notices shall be time and date stamped on receipt by the Company. Notwithstanding any other provision contained in this Offering Memorandum, the Company will not pay the Common Share Redemption Price in cash as set out above on a particular Redemption Date if the aggregate number of common class of Shares properly tendered for redemption (the "Tendered Shares") by Shareholders (the "Tendering Shareholders") for which the Common Share Redemption Price remains unpaid, exceeds 3% of the total number of common class of Shares outstanding on such Redemption Date. Cash payments being paid pursuant to Notices shall be paid in order of receipt of such Notices with the intent that Common Share Redemption Prices shall be paid out in order of receipt of Notices. Payments shall be made to a maximum of 1% of the aggregate Fair Market Value of common class of Shares outstanding on the Valuation Date immediately preceding any Redemption Date. Those common class of Shares for which Notices have been received but not paid out on any given Redemption Date shall maintain their order of priority until the Common Share Redemption Price for such common class of Share(s) has been paid in full. Additionally, the Board of Directors shall be entitled in their sole discretion to extend the time for payment of any Common Share Redemption Prices, if in the reasonable opinion of the Board of Directors such payment would be materially prejudicial to the interests of the remaining Shareholders in the Company.

In the extraordinary circumstance where the number of Tendered Shares on any given Redemption Date exceeds 3% of the total number of common class of Shares outstanding on such Redemption Date, the Board of Directors are entitled in their sole discretion to modify or suspend Shareholder redemption rights. Specifically, if the extraordinary circumstance referenced above occurs, the Board of Directors are entitled, in their sole discretion, to implement one of the following measures:

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Discounted Redemptions of the common class of Shares - The Board of Directors shall give notice to Tendering Shareholders that their Tendered Shares shall be redeemed on the next Redemption Date at a redemption price discounted by a discount factor to be determined by the Board of Directors in their sole discretion, acting reasonably. In determining the discount factor, the Board of Directors may consider such factors as market prices for similar investments that are traded on a stock exchange in Canada, the variation inherent in any estimates used in the calculation of the Fair Market Value of the common class of Shares to be redeemed, the liquidity reasonably available to the Company and general economic conditions in Canada. Shareholders may choose to retract their redemption request upon receiving notice from the Board of Directors of a discounted redemption, however, Shareholders who retract will be prohibited from redeeming the Tendered Shares to which their retraction applies for a period of up to twelve (12) months following the date the discounted redemptions are processed.

Temporary Suspension of Redemptions of the common class of Shares - The Board of Directors shall give notice to all Shareholders of the common class of Shares that normal course redemption rights are suspended for a period of up to six (6) months. Issuance of a suspension notice by Board of Directors will have the effect of canceling all pending redemption requests of the common class of Shares. At the end of the suspension period, the Board of Directors may call a special meeting of Shareholders of the common class of Shares to approve an extension of the suspension period, failing which normal course redemptions will resume.

Rights and Characteristics of the Class A Preferred Shares

The holders of Class A Preferred Shares shall not be entitled to notice of or to attend or vote at meetings of the shareholders of the Corporation.

The holders of Class A Preferred Shares shall be entitled to receive in each fiscal year out of any or all profits or surplus available, if, as and when declared by the Board of Directors of the Corporation, a cumulative preferred dividend (the "Preferred Dividend") of up to a target rate of 7.25% per annum (the "Preferred Target Yield") of the Preferred Share Redemption Price of the Class A Preferred Shares (provided that such dividend shall be prorated where any Class A Preferred Shares are not outstanding for an entire fiscal year). In any fiscal year, following the payment of any part of the Preferred Dividend to the holders of the Class A Preferred Shares and the payment of dividends in a like amount per share to the holders of the common class of Shares, the Class A Preferred Shares shall be entitled to participate pari passu with the holders of the common class of Shares in any further payment of dividends of the Corporation for that fiscal year up to the Preferred Target Yield. Provided the Corporation is in compliance with subsection 130.1(6)(e) of the Tax Act, the Class A Preferred Shares shall rank in priority to the common class of Shares in regards to the initial payment of dividends in any fiscal year up to the Preferred Target Yield.

Within the first quarter of every fiscal year, the Preferred Target Yield for that fiscal year shall be established by the Board of Directors of the Corporation, in their sole discretion and together with the advisement of any managers and administrators of the Corporation. The rate for the Preferred Target Yield in any fiscal year shall not be lower than the higher of 6.00% per annum or the then going offering rate for the one (1) year treasury bills issued by the Government of Canada plus 1.25% per annum, provided that the Corporation is in compliance with Section 130.1 of the Tax Act and with subsection 38(3) of the OBCA or any such successor legislation.

The Board of Directors of the Corporation shall be entitled to declare all or part of such dividends in any fiscal year.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Unless required under subsection 130.1(6)(e) of the Tax Act or any such successor legislation, no other dividends shall be declared on the common class of Shares prior to the full amount of such dividends having been declared and paid to the holders of Class A Preferred Shares as provided for above.

Subject to such working capital or reserve requirements as the Board of Directors of the Corporation determine are necessary or desirable from time to time to meet the current and future expenses, liabilities, commitments and obligations of the Corporation and for the conduct, promotion and protection of the business and activities of the Corporation as a mortgage investment corporation pursuant to Section 130.1 of the Tax Act or any such successor legislation, and for the protection of its assets and shareholders, the Corporation currently intends to distribute as dividends to its shareholders substantially all of its net income and net realized capital gains.

No person is entitled, as a matter of right, to subscribe for or purchase any preferred class of Share. The Class A Preferred Shares are redeemable and retractable as outlined below, and there are no conversion or pre-emptive rights attaching to the Class A Preferred Shares. The Class A Preferred Shares are personal property and confer upon the holders thereof only the interest and rights specifically set forth in the Constating Documents. A Class A Preferred Share may be transferred by a Shareholder or his agent duly authorized in writing, to any other person, to the transferor and one or more other persons jointly, or by two or more joint holders to one or some of them to the extent permitted under the Constating Documents and only in compliance with all applicable securities and other laws unless, as a result of the transfer, the Company will cease to qualify as a "Mortgage Investment Corporation" as defined in the Tax Act. See "Resale Restrictions".

Distribution Reinvestment Right

Subject to all applicable securities and other laws and the right of the Board of Directors to suspend or terminate such right in accordance with the Constating Documents, a Shareholder has the right at any time and from time to time to purchase additional Class A Preferred Shares using the cash distributions allotted and payable to the Shareholder on account of the Class A Preferred Shares held by the Shareholder from time to time.

Corporation Redemption Rights

The OBCA does not permit the Corporation to make any payment to purchase or redeem the Class A Preferred Shares issued by it if there are reasonable grounds for believing that: (a) the Corporation is, or after the payment, would be unable to pay its liabilities as they become due; or (b) after the payment, the realizable value of the Corporation's assets would be less than the aggregate of: (i) its liabilities; and (ii) the amount that would be required to pay the holders of shares that have a right to be paid, on a redemption or in a liquidation, rateably with or before the holders of the Class A Preferred Shares to be purchased or redeemed, to the extent the amount has not been included in its liabilities.

Subject to the Corporation's compliance with Section 130.1 of the Tax Act or any such successor legislation, and with the OBCA, the Corporation may redeem all or any part of the then outstanding Class A Preferred Shares upon written notice given by the Corporation to the holders of all or part of the Class A Preferred Shares to be redeemed, specifying that such shares are to be redeemed upon payment to each holder of Class A Preferred Shares of the Preferred Share Redemption Price for each Class A Preferred Share held by such holder as indicated on the Corporation's records, plus the pro rata share of any unpaid distributions thereon which have been declared payable but remain unpaid as at the time of calculation of the Preferred Share Redemption Price to the extent same are not otherwise included in the Preferred Share Redemption Price of the share(s) to be retracted.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

The written notice from the Corporation shall at a minimum specify the intent to redeem, the date on which the redemption is to take place, which date shall be not less than one (1) nor more than sixty (60) days from the date of the written notice, if part only of the Class A Preferred Shares held by the person to whom such notice is addressed are to be redeemed, which shares are to be redeemed as selected by the directors of the Corporation in their sole discretion, and, if a certificate(s) representing the Class A Preferred Shares to be redeemed has been issued, that such original certificate(s) is to be surrendered to the Corporation prior to the redemption date and the identity and location of the person to whom such certificate(s) is to be sent or delivered for surrender.

From and after the redemption date, the holder of the Class A Preferred Shares to be redeemed as aforesaid, shall thereafter cease to have any rights with respect to the Class A Preferred Shares to be redeemed other than the right to receive the Preferred Share Redemption Price therefor.

On the redemption date, provided that any existing original certificates representing the Class A Preferred Shares called for redemption have been surrendered to the Corporation as specified in the written notice, or after the redemption date upon surrender to the Corporation of such original certificates, the Corporation shall pay or cause to be paid to or to the order of the registered holder of the Class A Preferred Shares to be redeemed the Preferred Share Redemption Price, and such Class A Preferred Shares shall thereupon be redeemed.

The Preferred Share Redemption Price payable in respect of the Class A Preferred Shares called for redemption shall be paid by direct deposit or cheque, drawn on a Canadian chartered bank or trust company in lawful money of Canada, payable at par to, or deposited to the account of, the registered holder of the Class A Preferred Shares called for redemption. Payments of the Preferred Share Redemption Price made by the Corporation are conclusively deemed to have been made when deposited by direct deposit or upon the mailing of a cheque in a postage pre-paid envelope addressed to the payee at the last address of the payee shown in the records of the Corporation or the address of the payee provided to the Corporation by the registered holder at the time, unless such cheque is dishonoured upon presentment. Upon such payment as set out above, the Corporation and its directors, officers, manager and employees shall be discharged from all liability to the former holder in respect of the Class A Preferred Shares so redeemed.

All Class A Preferred Shares redeemed by the Corporation pursuant to this section shall be cancelled and such Class A Preferred Shares shall no longer be outstanding and shall not be re-issued.

Mandatory Redemption

No Shareholder of the Company is permitted, together with Related Persons, at any time to hold more than 25% of any class of the issued shares of the Corporation. Any shares held by a Shareholder, together with Related Persons, that exceeds 24.9% of the class of issued shares will be repurchased by the Company.

Shareholder Redemption Rights

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

of the Class A Preferred Shares to be purchased or redeemed, to the extent the amount has not been included in its liabilities.

Subject to the Corporation’s compliance with Section 130.1 of the Tax Act or any such successor legislation, and to the OBCA and upon compliance with the provisions hereof, all applicable laws and any applicable provisions of our articles of incorporation, by giving a duly completed and properly executed written notice to the Corporation (the "Retraction Notice"), any holder of Class A Preferred Shares shall be entitled, at such holder’s option, and at any time and from time to time, to have all or any part of the Class A Preferred Shares originally held by such holder, purchased by the Corporation (the "Retraction Right") for an amount equal to the Preferred Share Redemption Price after the first sixty (60) months from the date such Class A Preferred Shares were issued.

Notwithstanding any other provisions herein this Offering Memorandum or the Constating Documents of the Corporation, should the Corporation waive the minimum sixty (60) month hold period, an early retraction redemption fee may apply. The Preferred Share Redemption Price for Class A Preferred Shares tendered for redemption will be reduced by an amount equal to up to:

6.00% of the Preferred Share Redemption Price, if such Shares are retracted and deemed within the first year following the Closing at which such Class A Preferred Shares were subscribed for;
4.80% of the Preferred Share Redemption Price, if such Shares are retracted and redeemed within the second year following the Closing at which such Class A Preferred Shares were subscribed for;
3.60% of the Preferred Share Redemption Price, if such Shares are retracted and redeemed within the third year following the Closing at which such Class A Preferred Shares were subscribed for;
2.40% of the Preferred Share Redemption Price, if such Shares are retracted and redeemed within the fourth year following the Closing at which such Class A Preferred Shares were subscribed for; and
1.20% of the Preferred Share Redemption Price, if such Shares are retracted and redeemed within the fifth year following the Closing at which such Class A Preferred Shares were subscribed for.

No redemption fees shall apply if retracted after the first sixty (60) months following issuance of the Class A Preferred Shares. However, the Board of Directors, in their sole and absolute discretion may waive or reduce any redemption fees or remove any restrictions. The holders of Class A Preferred Shares may retract their shares, without penalty or reduction, at any time after the date that is sixty (60) months from the date of issuance of such Class A Preferred Shares.

Upon acceptance by the Board of Directors of the Corporation of the Retraction Notice and the retraction request, the Retraction Notice will thereafter be irrevocable by the holder without the consent of the Corporation and the Class A Preferred Shares specified therein (the "Retraction Shares") shall be considered to be tendered for retraction as at the acceptance date (the "Notice Date"). The holder of the Retraction Shares shall continue to have all of the

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

holder's rights as a shareholder in respect of each Retraction Share until the Retraction Payment (as defined below) for that Retraction Share has been paid in full.

The payment for a retraction of Class A Preferred Shares will be the Preferred Share Redemption Price of the Retraction Share, calculated as at the end of business on the Business Day immediately preceding the Retraction Date (as defined below), plus the pro rata share of any dividend distributions declared on such Retraction Share which have accrued up to and including the Retraction Date, to the extent same are not included in the calculation of the Preferred Share Redemption Price and remain unpaid (the "Retraction Payment") less the redemption fees if any.

Subject to the limitations set out herein, on the last day of the calendar month (or the next following Business Day if the last day of the calendar month falls on a day that is not a Business Day) which is 3 full months following the month in which the Notice Date falls or such earlier date as determined by the Board of Directors of the Corporation in their sole discretion (the "Retraction Date"), the Corporation will redeem the Retraction Shares. Subject to the Board of Directors of the Corporation right to extend the time for payment of any Retraction Payment if in their sole discretion the Board of Directors of the Corporation determine that such payment would be prejudicial to the interests of the remaining shareholders of the Corporation, or that in the same calendar quarter the redemption limit of redemption requests totaling nine percent (9%) of the Class A Preferred Shares outstanding has been reached, and any limitations on the payment of the Retraction Payment set out in these redemption provisions, the Retraction Payment, less any reductions, amounts, redemption fees or other fees payable in respect of the Retraction Share, will be paid on or within 10 Business Days of the Retraction Date.

Notwithstanding any other provision herein, the aggregate amount of the Retraction Payments that the Corporation is obliged to make on or in respect of each Retraction Date is limited to an amount that is equal to 85% of the aggregate Preferred Share Redemption Price of all Class A Preferred Shares to be retracted calculated as at the first day of the month in which the Retraction Date falls. Such aggregate amount of Retraction Payments includes amounts payable to shareholders who have previously tendered their Class A Preferred Shares for retraction and the Retraction Payment for which has not been paid in full as of that Retraction Date. Retraction Shares will be retracted and Retraction Payments will be paid in order of receipt of Retraction Notices or pari passu if, in their sole discretion, the Board of Directors of the Corporation determine that pari passu would be better suited to the interests of the shareholders or the operations of the Corporation, on the next following Retraction Dates, or such earlier dates as determined by the Board of Directors of the Corporation in their sole discretion, until the Retraction Payment for such shares has been paid in full.

Notwithstanding any other provision herein, the Board of Directors of the Corporation may, in their sole discretion at any time and from time to time suspend the retraction feature in respect of any or all of the Class A Preferred Shares for such period of time as the Board of Directors of the Corporation determine, in their sole discretion, that: (a) conditions exist which render imprudent or impractical the Corporation's ability to obtain the cash on hand required to make any or all Retraction Payments; or (b) the suspension is in the best interests of the shareholders of the Corporation as a whole; or (c) the retraction would disqualify the Corporation as a mortgage investment corporation or render the Corporation's shares a prohibited investment or a prohibited investment to any shareholder, under the Tax Act. The suspension may, in the sole discretion of the Board of Directors of the Corporation, apply to Class A Preferred Shares tendered for retraction prior to the suspension but as to which payment in full has not been made, as well as to Class A Preferred Shares tendered for retraction while the suspension is in effect. Any declaration of suspension by the Board of Directors of the Corporation is conclusive.

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A shareholder may, with the consent of the Corporation, which may be given or withheld in its sole discretion, withdraw its retraction request and revoke its Retraction Notice by providing written notice to the Corporation.

Notwithstanding any other provision herein, the Board of Directors of the Corporation may, but are not obliged to, in their sole discretion at any time and from time to time waive or alter the amount or payment of a fee or discount, or the reduction or limitation of any Retraction Payment, on any terms and conditions they so determine for any particular retraction request.

The amount payable in respect of Retraction Shares will be paid by direct deposit or cheque, drawn on a Canadian chartered bank or trust company in lawful money of Canada, payable at par to, or deposited to the account of, the registered holder of such shares. Such payments made by the Corporation are conclusively deemed to have been made when deposited by direct deposit or upon the mailing of a cheque in a postage pre-paid envelope addressed to the payee at the last address of the payee shown in the records of the Corporation or the address of the payee provided to the Corporation by the registered holder at the time, unless such cheque is dishonoured upon presentment. Upon such payment as set out above, the Corporation and its Board of Directors, officers, manager and employees shall be discharged from all liability to the former holder in respect of the shares so retracted.

Notwithstanding any other provision herein, the Board of Directors of the Corporation will not approve any retraction of any Class A Preferred Shares that would result in the Corporation ceasing to meet the qualifications of a mortgage investment corporation as defined for the purposes of the Tax Act or that would result in the Corporation's shares ceasing to be a qualified investment as a whole or to any shareholder pursuant to the Tax Act. Furthermore, substantial shareholders holding more than 15% of the total number of Class A Preferred Shares outstanding, will be limited to retracting no more than 20% every six months from the Notice Date.

In addition, at all times there will be a fixed fee for the administrative costs of a redemption, which are currently fixed at $200.00, however subject to changes.

Distribution Policy

It is the Company's current intention to distribute, subject to applicable corporate law and to the restrictions in the Company's credit arrangements (if any, from time to time), 100% of the Distributable Cash on an ongoing basis. The Company's Distributable Cash will be determined by the Board of Directors based on the Company's net operating cash flow from operations, less such reserves as the Board of Directors determines to be necessary or advisable to address anticipated expenses and/or to reduce variability in distributions. With respect to each Distribution Record Date, the Board of Directors intend to declare payable to the persons who are Shareholders of record on that Distribution Record Date all of the Distributable Cash for the Distribution Period that includes such Distribution Record Date. As noted in the description of each class of the Share attributes herein, dividends will be paid concurrently on both common classes of Shares and subordinate to the payment of dividends on the preferred class of Shares. Each Share's proportionate share of the amount of Distributable Cash allocable to the relevant class in accordance with the foregoing will be determined by dividing such amount by the number of issued and outstanding Shares of that class on such Distribution Record Date. Each Shareholder's share of such Distributable Cash will be based upon the number and class of Shares owned of record by each such Shareholder on such Distribution Record Date. Subject to certain specific provisions in the Constating Documents, such Distributable Cash will be paid to such Shareholders on the Distribution Date. Distributable Cash may be estimated whenever the actual amount has not been fully determined, which estimate will be adjusted as of the subsequent Distribution Date when the amount of Distributable Cash for the Distribution Period in question has been fully determined.

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All redemption rights of all classes of Shares are subject to the restrictions in the Company's credit arrangements. Notwithstanding any other provision herein or in the Constating Documents, without bank consent the Company may not redeem shares with a value of more than (i) 8% of the aggregate beginning value per quarter, or (ii) more than 20% per trailing twelve (12) calendar month period of the aggregate value attributable to all shares outstanding at the beginning of that twelve (12) calendar month period. Additionally, no Redemptions shall be permitted in the case of a default or event of default which is continuing.

Calculation of Company Income and Net Capital Gains

The income of the Company ("Company Income") for any taxation year of the Company will be the income for such year computed in accordance with the provisions of the Tax Act less, at the discretion of the Board of Directors, amounts of any non-capital losses of the Company for the prior years that are deductible in computing the Company's taxable income for the year under the Tax Act; provided, however, that capital gains and capital losses will be excluded from the computation of Company Income. In addition, in computing the Company Income for any taxation year of the Company, the Board of Directors will have the sole discretion to utilize or not utilize such deductions, provisions and alternate calculations available under the Tax Act, including without limitation, discretion as to timing and amount, in respect of offering expenses, operating expenses and discretionary deductions.

The Net Capital Gains of the Company for any taxation year of the Company will be determined as the amount, if any, by which the aggregate of the capital gains of the Company in the year exceeds: (i) the aggregate of the capital losses of the Company in the year; (ii) the amount determined by the Board of Directors in respect of any net capital losses for prior taxation years which the Company is permitted by the Tax Act to deduct in computing the taxable income of the Company for the year; and (iii) any amount in respect of which the Company is entitled to a capital gains refund under the Tax Act, as determined by the Board of Directors; provided that, at the discretion of the Board of Directors, the Net Capital Gain of the Company for the year may be calculated without subtracting the full amount of the net capital losses for the year and/or without subtracting the full amount of the net capital losses of the Company carried forward from previous years.

Method of Payment of Distributions

Distributions will be made by direct deposit or by such other manner of payment approved by the Board of Directors from time to time. A payment will be conclusively deemed to have been made to a Shareholder upon the Company receiving confirmation from the financial institution(s) it deals with from time to time that a direct deposit has been made to the order of such Shareholder in accordance with the bank account information provided to the Company by such Shareholder.

The Board of Directors may change any Distribution Date or Distribution Record Date at any time, subject to having given the Shareholders not less than thirty (30) days' prior written notice, and upon compliance with any requirements of applicable law.

Withholding Tax

The Board of Directors may deduct or withhold amounts required by law respecting a Shareholder's distributions or other payments under the Constating Documents. If withholding taxes are exigible on any distributions or redemption or other amounts paid under the Constating Documents and the Board of Directors are, or were, unable

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to withhold taxes from a particular amount paid to a Shareholder or have not otherwise withheld taxes on past amounts paid to the Shareholder, the Board of Directors will be permitted to withhold such amounts from other amounts payable to such Shareholder.

Meetings of Shareholders

There will be an annual meeting of the Shareholders at such time and place as the Board of Directors prescribe for the purpose of electing Board of Directors, appointing auditors of the Company and transacting such other business as the Board of Directors may determine or as may properly be brought before the meeting. The annual meeting of Shareholders will be held within one hundred and eighty (180) days after the end of each fiscal year of the Company or such later date (not to exceed fifteen (15) months from the date of the most recently held annual meeting) as the Board of Directors may determine, subject to compliance with all applicable regulatory requirements, if any. The Company has engaged the Mortgage Manager to provide annual general meeting services. A meeting of Shareholders may be convened at any time and for any purpose by the Board of Directors and must be convened, except in certain circumstances, if requisitioned in writing by the holders of not less than 25% of the voting Shares then outstanding. A requisition must state in reasonable detail the business proposed to be transacted at the meeting. Shareholders may attend and, for those holders of voting Shares, vote at all meetings of the Shareholders either in person or by proxy and a proxy need not be a Shareholder.

Any action to be taken by the Shareholders will, except as otherwise required by the Constating Documents or by law, be authorized when approved by Ordinary Resolution. The chairperson of any such meeting will not have a second or casting vote. To the extent permitted by applicable law, the Board of Directors may from time to time make, vary or revoke such regulations as they think fit providing for and governing the depositing and tabulation of proxies by telephonic, electronic or other communication means. Other than as specifically provided for in the Constating Documents and subject to the limitations set out therein, Shareholders will be entitled to pass resolutions that will bind the Company only with respect to the following matters: (a) the election or removal of a Director; (b) the appointment or removal of auditors of the Company; (c) certain amendments to the Constating Documents; (d) those matters listed in the Constating Documents as requiring approval by Special Resolution; and (e) the termination of the Company in accordance with the Constating Documents.

The Constating Documents further provide that, subject to all applicable legal and regulatory requirements, a resolution consented to in writing, by those entitled to vote and by the required majority, whether by facsimile or any other method of transmission of legibly recorded messages or other means, is as valid and effectual as if the resolution had been passed at a meeting of Shareholders or Board of Directors, including committee meetings, duly called and held.

Prior to each meeting of Shareholders, where entitled, the Board of Directors will provide to each Shareholder, together with the notice of the meeting, a form of proxy which can be used by a Shareholder to appoint a proxy, who need not be a Shareholder, to attend and act at the meeting on behalf of the Shareholder, in the manner and to the extent authorized by the proxy and all information required by applicable law.

Register

The Register will be kept by, or on behalf of and under the direction of the Board of Directors, which Register will contain the names and addresses of Shareholders, the respective numbers of Shares held by them, the certificate numbers of the certificates representing such Shares, if applicable, and a record of all transfers thereof. The Board

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of Directors may appoint one or more persons, chartered banks or trust companies to act as transfer agents and to act as registrars for the Shares and may provide for the transfer of Shares in one or more places within Canada. The Board of Directors has entered into negotiations with the Mortgage Manager to act as the Company’s transfer agent. The Register will at all reasonable times be open for inspection by the Board of Directors.

Only persons whose Shares are recorded on the Register and are voting Shares, are entitled to vote, receive distributions or otherwise exercise or enjoy the rights of Shareholders. The Board of Directors will have the right to treat the person registered as a Shareholder on the Register of the Company as the owner of such Shares for all purposes, including, without limitation, payment of any distribution, giving notice to Shareholders and determining the right to attend and vote, if a holder of voting Shares, at meetings of Shareholders and the Board of Directors will not be bound to recognize any transfer, pledge or other disposition of a Share or any attempt to transfer, pledge or dispose of a Share, or any beneficial interest or equitable or other right or claim with respect thereto, whether or not the Board of Directors will have actual or other notice thereof until such Share has been transferred on the Register of the Company as herein provided.

Tax Information and Reports

By March 31st in each year, subject to compliance with applicable laws, the Board of Directors will forward to each Shareholder who was shown on the Register as a Shareholder at the end of the immediately preceding fiscal period such prescribed forms as are needed for the completion of Shareholders’ tax returns under the Tax Act and equivalent provincial legislation. By June 30th in each year, subject to compliance with applicable laws, the Board of Directors will make available to each Shareholder who was shown on the Register as a Shareholder at the end of the immediately preceding fiscal period an annual report for the immediately preceding fiscal period containing: (i) audited financial statements of the Company as at the end of and for the fiscal period, with comparative financial statements as at the end of and for the immediately preceding fiscal period, if any; and (ii) such other information as, in the opinion of the Board of Directors, is material to the activities of the Company. A copy of such materials will be provided to a Shareholder upon request in writing to the Board of Directors.

Matters Requiring Approval by Special Resolution

Other than as expressly stated in the Constating Documents, none of the following will occur unless the same has been approved by a Special Resolution of those voting Shareholders:

(a) any amendment to the items requiring approval by Special Resolution;
(b) any amendment to the Constating Documents to reduce or remove a right with respect to any outstanding Shares of the Company;
(c) any amendment to the term or termination provisions of the Company;
(d) any amendment relating to the powers, duties, rights, obligations, liabilities or indemnification of the Board of Directors; or
(e) any merger of the Company with another corporation or other person (other than as part of an internal reorganization of the assets of the Company approved by the Board of Directors).

Any changes to the Constating Documents requiring notice to be provided to the shareholders pursuant to the OBCA, the Board of Directors will notify each Shareholder in writing of the substance of such material amendment.

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Term and Termination of the Company

Unless sooner terminated as provided in the Constating Documents, the Company will continue until no property of the Company is held by it. Shareholders may terminate the Company by Special Resolution, following which the Board of Directors will commence to wind up the affairs of the Company. In the event of a termination of the Company, after paying, retiring or discharging, or making provision for the payment, retirement or discharge of all known liabilities and obligations of the Company and providing for indemnity against any other outstanding liabilities and obligations, the Board of Directors will distribute the cash forming part of the Company assets together with, subject to obtaining all necessary regulatory approvals, the non-cash Company assets in specie among the Shareholders in accordance with their pro rata interests.

Reporting Obligations of the Company

The Company is not a reporting issuer and is therefore not subject to most of the continuous reporting obligations imposed on reporting issuers by securities legislation in the jurisdiction in which this Offering is being made. Audited financial statements will be made available to Shareholders annually. In addition, Shareholders will be given a quarterly statement of account and will also be given notice of and be entitled to attend and, if a holder of voting Shares, vote at any meetings of the Shareholders of the Company.

5.2 Subscription Procedure

Subscribers may subscribe for Shares in the Offering by delivering the following documents to the Company at the address shown in the Subscription Agreement:

(a) an executed subscription agreement, in the form provided with this Offering Memorandum for the subscribing class of Shares; and
(b) a cheque or bank draft made payable to “Royal Canadian Mortgage Investment Corporation” in the amount of the subscription price for the Shares or an irrevocable direction to a financial institution to deliver to the Company full payment for the Shares upon delivery of certificates representing such Shares to the financial institution or to the Subscriber.

The Company will hold subscription funds in trust until midnight on the second Business Day after the day on which it received a signed Subscription Agreement. After this, the Company will hold the subscription funds in trust pending a Closing under this Offering. See “Purchaser’s Rights”.

The Company may collect, use and disclose individual personal information in accordance with the privacy policy of the Company and will obtain consent to such collection, use and disclosure from time to time as required by its policy and applicable law. A copy of its current privacy policy will be provided with the subscription agreement.

The Company anticipates that there will be multiple Closings. The Company may close any part of the Offering on any date as it may determine in its sole business judgment. The Company reserves the right to accept or reject in whole or in part any subscription for Shares and the right to close the subscription books at any time without notice. Any investment funds for subscriptions which are not accepted will be promptly returned after it has been determined not to accept the investment funds.

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At a Closing of the Offering, the Company will deliver to Subscribers certified copies of or, if requested, original certificates representing fully paid and non-assessable Shares, provided the subscription price has been paid in full. Subscribers should carefully review the terms of the Subscription Agreement accompanying this Offering Memorandum for more detailed information concerning the rights and obligations of subscribers and the Company. Execution and delivery of a Subscription Agreement will bind subscribers to the terms thereof, whether executed by Subscribers or by an agent on their behalf. Subscribers should consult with their own professional advisors. See Item 9 - "Risk Factors".

Plan of Distribution

Subscriptions received are subject to rejection or allotment by the Board of Directors in whole or in part. The Board of Directors reserve the right to close the subscription books at any time without notice. If any subscription is not accepted, all applicable Subscription Agreements and subscription proceeds will be returned to the potential Subscribers, without interest or deduction.

There is no market through which the Shares may be sold. The Board of Directors determined the Share Subscription Price arbitrarily. The minimum number of Shares required to be subscribed for, by each first time Subscriber, is either 25,000 Class A Common or Class B Common Shares, or 100,000 Class A Preferred Shares, as the case may be. The Board of Directors reserve the right to waive the minimum number of Shares subscribed for, provided that it is in compliance with applicable securities laws. The requirements of applicable exemptions are outlined in the form of Subscription Agreement and above under "Subscription Qualification."

Subscription Qualification

The Company is currently offering the Shares in reliance on prospectus exemptions available under applicable securities laws of Ontario. Such exemptions relieve the Company from the provisions under such legislation requiring the Company to utilize a registered dealer in most jurisdictions to sell the Shares and file a prospectus. Accordingly, purchasers of the Shares will not receive the benefits associated with the involvement of such registrants or the benefits associated with purchasing the Shares pursuant to a filed prospectus, including the review of the material by the securities commissions or similar regulatory authority in such jurisdictions.

Participation in the Offering is limited by the requirements of applicable securities laws, depending on the jurisdiction of the investor, the exemption relied upon by the Company and other factors. The limitations applicable may include the following:

All first time investors must subscribe for a minimum amount of $25,000.00 or 25,000 Class A Common or Class B Common Shares or for a minimum amount of $100,000.00 or 100,000 Class A Preferred Shares.
For investors who qualify for participation in the Offering pursuant to the applicable "family, friends and business associates" exemption and/or as "accredited investors", there is no maximum limit.
For investors subscribing under the "offering memorandum exemption" (subject to exceptions applicable to subscribers resident in certain jurisdictions as described under "The Offering"), the maximum participation in the Offering (less the aggregate amount of any other acquisitions of securities under that exemption in the prior twelve month period) is:

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$100,000 for investors that are “eligible investors” who received advice from a registered portfolio manager, investment dealer or exempt market dealer;
$30,000 for other “eligible investors”; and
$10,000 for all other (“non-eligible”) investors.

For investors subscribing under the “offering memorandum exemption” who are:

resident in Manitoba, Northwest Territories, Nunavut, Prince Edward Island or Yukon, there are no restrictions on the amount of investment by “eligible investors”; or
resident in British Columbia or Newfoundland and Labrador, there are no quantitative limits on investment.

“Eligible investors” and “accredited investors” are defined under applicable securities laws. Particulars of the characteristics of each are set forth in the Subscription Agreement.

Eligible Subscribers for the Shares

Generally, any individual, corporation, fund or other entity resident in Canada may subscribe for the Shares (though the Company reserves the right to not accept subscriptions in its discretion including if the distribution is not permissible in the subscriber’s jurisdiction or if ownership of Shares in the relevant jurisdiction will affect the tax status of the Company). (See “Offering - Ineligible Subscribers for Shares” below). Each Subscriber will be required to execute a Subscription Agreement, which includes certain representations of the Subscriber including required representations to support eligibility for the relevant prospectus exemption as well as the following:

(a) If the Subscriber is an individual, the Subscriber has attained the age of majority and has legal capacity and competence to execute the Subscription Agreement and such other forms as may be required under the securities laws of the jurisdiction of residence of a Subscriber to lawfully subscribe for the Shares and to take all actions required pursuant thereto;

(b) If the Subscriber is a corporation, fund, syndicate or trust or unincorporated organization (each an “Entity”):

(i) the Entity has full power and authority to execute the Subscription Agreement and to take all actions required pursuant thereto and has obtained all necessary approvals of directors, shareholders, partners, members, or otherwise with respect thereto; and

(ii) the Entity was not created solely and is not being used primarily to permit the purchase of the Shares without a prospectus, or if the Entity was created or is being used primarily for such a purpose, each shareholder of the corporation, member of the syndicate, fund or other unincorporated organization or investment club or each beneficiary of the trust, as the case may be, is an individual who contributed to the Entity an amount of proceeds towards the purchase of the Shares which is not less than the statutory minimum requirement for the purchase to have been made pursuant to a prospectus exemption (as to minimum contribution amount) contained in the applicable securities legislation of the province of Canada in which the individual is a resident;

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(iii) in the case of a corporation, the Subscriber is duly incorporated and organized under the laws of its jurisdiction of incorporation.

(c) the Subscriber made the subscription for the Shares in compliance with applicable statutory exemptions from prospectus requirements for his, her or its own account for investment and not with a view to or for resale in connection with any distribution or trade within the meaning of applicable securities legislation;

(d) the Subscriber deals at arm’s length with any corporation that carries on an insurance business; and

(e) the Subscriber is a person, corporation or other entity who, by virtue of their net worth and investment experience or by virtue of consultation with or advice from a person or company who is not a promoter of the Company and who is registered to provide financial advice, is able to evaluate the prospective investment on the basis of information respecting the investment provided for in this Offering Memorandum.

Ineligible Subscribers for the Shares

No individual, corporation, fund or other entity resident in any of the Territories of Canada, the Provinces of Saskatchewan, Prince Edward Island, Newfoundland and Labrador nor any person in whom there is an interest which is a “tax shelter investment” (as that term is defined in the Tax Act), may subscribe for Shares. No person or fund which is a non-resident of Canada (for purposes of the Tax Act) may subscribe for Shares.

Additional Information

Prospective Subscribers are entitled to ask questions of the Company or its representatives concerning the business and financial condition of the Company and the terms and conditions of this Offering, and to request such data as may be necessary to enable the prospective Subscriber to make an informed investment decision. Furthermore, upon receipt of a written request, the Company will provide copies of documents referred to in this Offering Memorandum to the extent such documents are in the Company’s possession or can be acquired by the Company without unreasonable effort or expense.

6.0 Repurchase Requests

Description of Security	Date of end of financial year	Number of securities with outstanding repurchase requests on the first day of the year	Number of securities for which investors made repurchase requests during the year	Number of securities repurchased during the year	Average price paid for the repurchased securities	Source of funds used to complete the repurchases	Number of securities with outstanding repurchase requests on the last day of the year

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| Class A
Preferred Shares | | 0 | 0 | 0 | $Nil | N/A | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Class A
Common Shares | | 0 | 0 | 0 | $Nil | N/A | |
| Class B
Common Shares | | 0 | 0 | 0 | $Nil | N/A | |
| Class C
Common Shares | | 0 | 0 | 0 | $Nil | N/A | |
| Class D
Common Shares | | 0 | 0 | 0 | $Nil | N/A | |

7.0 Income Tax Consequences and RRSP Eligibility

7.1 Tax Consequences

You should consult your own professional advisers to obtain advice on the income tax consequences that apply to you.

7.2 CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

General

The following is, as of the date hereof, a summary of the principal Canadian federal income tax considerations pursuant to the Tax Act generally applicable to a holder who acquires Shares pursuant to this Offering. This summary is only applicable to such a holder who, for purposes of the Tax Act and at all relevant times, is or is deemed to be resident in Canada, deals at arm's length and is not affiliated with the Company and holds the Shares as capital property. Generally, the Shares will be considered to be capital property to a Shareholder provided the Shareholder does not hold the Shares in the course of carrying on a business of trading or dealing in securities and has not acquired the Shares in one or more transactions considered to be an adventure or concern in the nature of trade.

Certain Shareholders who might not otherwise be considered to hold their Shares as capital property may, in certain circumstances, be entitled to have the Shares, and all other “Canadian securities” (as defined in the Tax Act) owned or subsequently acquired by such Shareholders, deemed to be capital property by making the irrevocable election permitted by subsection 39(4) of the Tax Act. Such Shareholders should consult their own tax advisors as to whether such election is available and advisable, having regard to their own particular circumstances.

This summary is not applicable to a Shareholder: (i) that is a “financial institution” for the purposes of the mark-to-market rules; (ii) an interest in which is or would be a “tax shelter investment”; (iii) that is a “specified financial institution”; (iv) that reports its “Canadian tax results” in a “functional currency” (which excludes Canadian dollars);

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or (v) that enters into a “derivative forward agreement” in respect of the Shares (in each case, as defined in the Tax Act). Any such Shareholder should consult its own tax advisors with respect to an investment in the Shares. In addition, this summary does not address the deductibility of interest by a Holder who has borrowed money or otherwise incurred debt in connection with the acquisition of Shares.

This summary is based upon the facts set out in this Offering Memorandum, the provisions of the Tax Act in force as of the date hereof, all specific proposals to amend the Tax Act that have been publicly announced prior to the date hereof and the Board of Directors’ understanding, based on publicly available published materials as of the date hereof, of the current published administrative and assessing policies of the Canada Revenue Agency (“CRA”). This summary assumes that any proposed amendments will be enacted in the form proposed; however, no assurance can be given that any proposed amendments will be enacted in the form proposed, if at all. This summary is not exhaustive of all possible Canadian federal income tax considerations and does not take into account any changes in the law, whether by legislative, governmental or judicial action, or any changes in the administrative policies and assessing practices of the CRA or any changes in the administrative policies and assessing practices of the CRA. This summary does not take into account provincial, territorial or foreign tax considerations, which may differ significantly from those discussed herein. This summary is based upon the assumption that the Company will, at all times, qualify as a “Mortgage Investment Corporation” within the meaning of the Tax Act.

The income and other tax consequences of acquiring, holding or disposing of Shares will vary depending on the particular circumstances of the Holder thereof, including any province or territory in which the Holder resides or carries on business. Accordingly, this summary is of a general nature only and is not intended to be, nor should it be construed to be, legal or tax advice to any particular Holder or prospective Holder of Shares, and no representations with respect to the income tax consequences to any Holder or prospective Holder are made. Consequently, Holders and prospective Holders of Shares should consult their own tax advisors for advice with respect to the tax consequences to them of acquiring Shares pursuant to this Offering, having regard to their particular circumstances.

The summary contained in this section is of a general nature only and is not exhaustive of all possible Canadian federal income tax consequences. This summary is not intended to be and should not be interpreted as legal or tax advice to any particular holder. Holders should consult with their own tax advisor regarding the income tax consequences of acquiring, holding and disposing of the Shares including the application and effect of the income and other tax laws of any country, province, state or local tax authority. Generally, you should consult your own professional advisers to obtain advice on the income tax consequences that apply to you.

Qualification as a Mortgage Investment Corporation

This summary is based upon the assumption that the Company will qualify as a “Mortgage Investment Corporation” under the Tax Act throughout its current taxation year and for all future taxation years. It is intended that the Company will meet all of the requirements under the Tax Act to qualify as a “Mortgage Investment Corporation” throughout its current taxation year and for all of its future taxation years. If the Company were to not qualify as a “Mortgage Investment Corporation” at any time, the income tax considerations would be materially different from those described herein.

The Tax Act imposes certain requirements in order for a corporation to qualify as a “Mortgage Investment Corporation” in a taxation year. These requirements generally will be satisfied by the Company if, throughout the taxation year: the Company was a Canadian corporation for the purposes of the Tax Act; the Company’s only undertaking is the investing of its funds and it did not manage or develop real or immovable property; none of the Company’s property consisted of specified types of foreign property; the Company had at all times at least

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

20 Shareholders; no Shareholder (together with Related Persons, see below) held directly or indirectly more than 25% of any class of the issued shares of the Company; certain dividend rights attach to any shares of the Company; the cost amount to the Company of certain residential mortgages (see commentary below), deposits and money was at least 50% of the cost amount to it of all of its property; not more than 25% of the cost amount to the Company of its property was attributable to real or immovable property or leasehold interests therein; and, in circumstances where at any time in the year the cost amount to the Company of its money and certain of its residential mortgages and deposits (such residential mortgages and deposits referred to herein as “Required Property”) represented less than two-thirds of the aggregate cost amount to the Company of all of its property, the Company’s liabilities may not exceed 75% of its assets (at cost amount). Where, however, throughout the year the cost amount to the Company of its money and Required Property represented two-thirds or more of the aggregate cost amount to the Company of all of its property, the Company’s liabilities may not exceed 83.33% of its assets (at cost amount).

For these purposes, Related Persons (as referred to above) generally include a corporation and the person or persons that control the corporation, a parent corporation and its subsidiary corporation(s) and corporations that are part of the same corporate group, and an individual and that individual’s spouse, common-law partner or child under 18 years of age. The rules in the Tax Act defining “related persons” are complex and Shareholders should consult their own tax advisors in this regard.

For purposes of the 50% asset test noted above, the reference to certain residential mortgages is, more specifically, to debts that are secured by mortgages, hypothecs or in any other manner, on “houses” as defined in the National Housing Act (Canada) or on property included within a “housing project”, as defined in the National Housing Act (Canada) as it read on June 16, 1999. Generally, a “house” includes all or part of a building or moveable structure that is intended for human habitation containing not more than two family housing units, and “housing project” includes all or part of a building or movable structure intended for human habitation, any property intended to be converted or developed to provide housing accommodation, or property associated with housing accommodation such as parking, public and recreational facilities, but does not include a hotel.

Taxation of the Company

As a “Mortgage Investment Corporation”, the Company is deemed to be a “public corporation” for purposes of the Tax Act and as such is subject to tax at the full corporate rate on its taxable income. However, provided the Company qualifies as a “Mortgage Investment Corporation”, the Company may deduct in computing its income for a taxation year the amount of dividends paid to its Shareholders, as follows: (i) all taxable dividends, other than capital gains dividends, paid by the Company to its Shareholders during the year or within 90 days after the end of the year (to the extent not deductible in computing the Company’s income for the previous year); and (ii) one-half of all capital gains dividends paid by the Company to its Shareholders during the period commencing 91 days after the commencement of the year and ending 90 days after the end of the year. The Company must elect to have the full amount of a dividend qualify as a capital gains dividend. The payment of capital gains dividends will allow the Company to flow capital gains it realizes through to its Shareholders.

The Company intends to pay dividends to the extent necessary to reduce its taxable income in each year to nil so that it has no tax payable under Part I of the Tax Act and to generally elect to have dividends be capital gains dividends to the maximum extent allowable.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Taxation of Shareholders

Corporate Dividends

Capital gains dividends received by a Shareholder (whether paid in cash or reinvested in Shares) will be treated as a capital gain of the Shareholder from a disposition in the year of capital property for the year in which the dividend is received. See below under the subheading “Disposition of Shares” for a description of the tax treatment of capital gains.

Taxable dividends, other than capital gains dividends, received by a Shareholder of Shares (whether paid in cash or reinvested in Shares) must be included in the Shareholder’s income as interest payable on a bond issued by the Company. The amount of a dividend paid in additional Shares or reinvested in additional Shares will be the cost amount of such Shares.

The provisions of the Tax Act providing for interest accrual, the gross-up and dividend tax credit in respect of taxable dividends received by individuals from taxable Canadian corporations, and for the deduction generally available to corporations for inter-corporate dividends received, will not apply in respect of taxable dividends on the Shares. Similarly, the provisions of Part IV of the Tax Act will not apply to the receipt of taxable dividends on Shares by a corporate Shareholder.

Dispositions of Shares

On the disposition or deemed disposition of a Share by a Shareholder, the Shareholder will generally realize a capital gain (or a capital loss) equal to the amount by which the proceeds of disposition in respect of such Share, net of any reasonable costs of disposition, exceed (or are exceeded by) the adjusted cost base of the Share to the Shareholder. A Shareholder’s proceeds of disposition will not include an amount payable by the Company on the Share that is otherwise required to be included in the Shareholder’s income.

For the purpose of determining the adjusted cost base to a Shareholder of Shares, when a Share is acquired, the cost of the newly acquired Share will be averaged with the adjusted cost base of all of the Shares owned by the Shareholder as capital property immediately before that acquisition. The adjusted cost base of a Share to a Shareholder will be subject to certain adjustments.

One-half of the amount of any capital gain (a “taxable capital gain”) realized by a Shareholder in a taxation year must be included in computing such Shareholder’s income for that year, and one-half of any capital loss (an “allowable capital loss”) realized by a Shareholder in a taxation year must be deducted from any taxable capital gains realized by the Shareholder in the year, subject to and in accordance with the provisions of the Tax Act. Allowable capital losses in excess of taxable capital gains realized in a taxation year may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any following taxation year against net taxable capital gains realized in such years, subject to and in accordance with the provisions of the Tax Act.

On a redemption or acquisition of Shares by the Company, the Shareholder generally will be deemed to have received, and the Company will be deemed to have paid, a dividend in an amount equal to the amount by which the price paid by the Company exceeds the paid-up capital of the purchased Shares. This deemed dividend will be treated in the same manner as other dividends received by the Shareholder from the Company, (i.e., as interest income or a capital gain depending on whether the Company elects that the entire dividend be a capital gains dividend). The balance of the purchase price, if any, will constitute proceeds of disposition of the Shares for purposes of the capital gains rules, as described above.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Minimum Tax and Refundable Tax

In general terms, a capital gain realized by a Shareholder (including capital gains dividends received on Shares) who is an individual or trust (other than certain specified trusts) may increase the Shareholder's liability for alternative minimum tax.

A Holder that is a "Canadian-controlled private corporation" (as defined in the Tax Act) may be liable to pay an additional tax (refundable in certain circumstances) on certain investment income for the year, including amounts as, or in respect of, interest and taxable capital gains. Proposed amendments to the Tax Act extend this additional tax and refund mechanism in respect of aggregate investment income to "substantive CCPCs" (as defined in such proposed amendments) and introduce anti-avoidance rules that may deem certain corporations resident in Canada that do not otherwise qualify as "substantive CCPCs" to so qualify. Holders are advised to consult their own tax advisors in this regard.

Tax Implications of our Dividend Policy

The market value of a Share may be attributable in part to income and capital gains that have been earned by the Company, but which have not yet been realized and/or paid out as a dividend. If a Shareholder acquires Shares before a Distribution Record Date, the Shareholder will be taxed on the full amount of any such dividend that is received by the Shareholder. A Shareholder who acquires a Share late in the distribution period but prior to the Distribution Record Date will pay tax on the entire dividend, which will generally reflect the income and/or capital gains earned by the Corporation throughout the period up to the Distribution Record Date, although the Shareholder will have only recently acquired Shares.

7.3 RRSP Eligibility

Not all securities are eligible for investment in a registered retirement savings plan (RRSP). You should consult your own professional advisers to obtain advice on the RRSP eligibility of these securities.

Eligibility for Investment for Exempt Plans

The Shares will be qualified investments for Exempt Plans if the Company qualifies as a "Mortgage Investment Corporation" for the purposes of the Tax Act at all times and further provided that the Company does not hold as part of its property at any time during the relevant calendar year any indebtedness, whether by way of mortgage or otherwise, of a person who is an annuitant, a beneficiary, an employer, or a subscriber under, or a holder of, the Exempt Plan, or of any other person who does not deal at arm's length with that person (for purposes of the Tax Act).

Notwithstanding that the Shares may be a qualified investment for a TFSA, RRSP or RRIF, the holder of a TFSA or the annuitant of a RRSP or RRIF, as the case may be, which acquires Shares, will be subject to a penalty tax under the Tax Act if such Shares are a "prohibited investment" (within the meaning of the Tax Act) for the particular TFSA, RRSP or RRIF. Shares issuable will not be a prohibited investment for a TFSA, RRSP or RRIF provided the holder of the TFSA, or annuitant of the RRSP or RRIF, as applicable, deals at arm's length with the Company for purposes of the Tax Act and does not have a "significant interest" (within the meaning of the Tax Act) in the Company. A "significant interest" of a shareholder of the Company generally means ownership by the shareholder, either alone or together with persons with which the shareholders does not deal at arm's length for purposes of the Tax Act, of 10% or more of the issued shares of any class of the capital stock of the Company. In addition, Shares will not be a "prohibited

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

investment” if the Shares are “excluded property” as defined in the Tax Act for trusts governed by a TFSA, RRSP and RRIF. SHAREHOLDERS AND ANNUITANTS SHOULD CONSULT THEIR OWN TAX ADVISORS TO ENSURE THAT THE SHARES WOULD NOT BE A PROHIBITED INVESTMENT FOR A TRUST GOVERNED BY A TFSA, RRSP OR RRIF IN THEIR PARTICULAR CIRCUMSTANCES.

8.0 Compensation Paid to Sellers and Finders

As of the date of this Offering Memorandum, the Company has retained the services of three (3) Selling Agents that operate in various provinces across Canada. Each Selling Agent has their own Agency Agreement with the Company. The Selling Agent will agree to use its commercially reasonable efforts to sell the class of Shares granted to them under their respective Agency Agreement and as pursuant to this offering, to qualified purchasers in one or more of the Selling Jurisdictions. As of the date of this Offering, MNP Corporate Finance Inc. shall be the exclusive Selling Agent with regards to the sale of the Class A Preferred Shares in accordance with their Agency Agreement.

In consideration of the services performed by the Selling Agents, each such Selling Agent will be paid a fee, which may include commissions payable in respect of the sale of the Shares through such Selling Agent pursuant to this Offering and their respective Agency Agreement, of which the maximum commission will be 6.00% of the gross proceeds received from the sale of the Shares by or through such Selling Agent.

To the extent permitted by law, the Company may be agree to indemnify and save the Selling Agent(s), its dealing representatives, its affiliates and its directors, officers, employees, partners, agents, advisors and shareholders harmless from and against any and all losses, claims, actions, suits, proceedings, damages, liabilities or expenses of whatsoever nature or kind (other than losses of profit in connection with the distribution of the Shares) (collectively, the "Liabilities") to which such persons or companies may be subject or which such persons or companies may suffer or incur, whether under the provisions of any statute or otherwise, in any way caused by, or arising directly or indirectly from or in consequence of: (i) any information or statement contained in the public record (other than any information or statement relating solely to the Selling Agent and furnished to the Company by the Selling Agents expressly for inclusion in the public record) which is or is alleged to be untrue or any omission or alleged omission to provide any information or state any fact the omission of which makes or is alleged to make any such information or statement untrue or misleading in light of the circumstances in which it was made; (ii) any misrepresentation or alleged misrepresentation (except a misrepresentation which is based upon information relating solely to Selling Agents and provided to the Company by Selling Agents expressly for inclusion in the public record) contained in the public record; (iii) any prohibition or restriction of trading in the securities of the Company or any prohibition or restriction affecting the distribution of the Shares imposed by any competent authority if such prohibition or restriction is based on any misrepresentation or alleged misrepresentation of a kind referred to in the Agency Agreement (other than any information or statement relating solely to the Selling Agent and furnished to the Company by the Selling Agent expressly for inclusion in the public record); (iv) any order made or any inquiry, investigation (whether formal or informal) or other proceeding commenced or threatened by any one or more competent authorities into the affairs of the Company relating to or affecting the distribution of the Shares other than any such order, inquiry, investigation or other proceeding based substantively upon the activities or alleged activities of the Selling Agents; (v) any breach of, default under or non-compliance by the Company with any representation, warranty, covenant, term or condition of the Agency Agreement, the Subscription Agreements or any requirement of applicable securities laws; or (vi) the exercise by any Subscriber of any contractual or statutory right of rescission in connection with the purchase of the Shares; unless such Liabilities arose as a result of the indemnified person's breach of, default under or non-compliance with any material representation, warranty, covenant, term, condition or provision of the Agency Agreement.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

The Company may in the future engage other selling agents or dealers to sell the Offering and will compensate such dealers on commercially reasonable terms. Also, the Company may in the future pay fees in respect of sales of its Shares at or near prevailing or customary market rates and may also reimburse or otherwise compensate on commercially reasonable terms other related entities that pay such commissions or fees.

9.0 RISK FACTORS

There are certain risks inherent in an investment in the Shares and in the activities of the Company, which investors should carefully consider before investing in the Shares. The following is a summary only of the risk factors. Prospective investors should review the risks relating to an investment in the Shares with their legal and financial advisors.

The Company advises that prospective subscribers should consult with their own independent professional legal, tax, investment and financial advisors before purchasing Shares in order to determine the appropriateness of this investment in relation to their financial and investment objectives and in relation to the tax consequences of any such investment.

In addition to factors set forth elsewhere in this Offering Memorandum, potential Subscribers should carefully consider the following factors, many of which are inherent to the ownership of the Shares. The following is a summary only of the risk factors involved in an investment in the Shares, prospective Subscribers should consult with their own professional advisors to assess the income tax, legal and other aspects of an investment in the Shares.

Absence of Voting Rights

The Class A Preferred Shares being sold under this Offering do not carry voting rights, and consequently a Subscriber's investment in Class A Preferred Shares does not carry with it any right to take part in the control or management of the Corporation's business, including the election of directors. In assessing the risks and rewards of an investment in Class A Preferred Shares, potential Subscribers should appreciate that they are relying solely on the good faith, judgment and ability of the directors, officers and employees of the Corporation, and the Mortgage Manager to make appropriate decisions with respect to the management of the Corporation, and that they will be bound by the decisions of the Corporation's and the Mortgage Manager's directors, officers and employees.

No Market for the Shares

As there is no market for the Shares and the Shares are subject to resale restrictions under securities laws, a Shareholder will not be able to liquidate his or her investment or withdraw his or her capital at will. Other than in accordance with the redemption rights attached to the Shares, a Shareholder may never be able to sell his Shares and recover any part of his investment. Accordingly, an investment in Shares should only be considered by investors who do not require liquidity.

The Shares Are Not Insured

The Company is not a member institution of the Canada Deposit Insurance Company ("CDIC") and the Shares offered pursuant to this Offering Memorandum are not insured against loss through the Canada Deposit Insurance Company.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

The Shares are redeemable at the option of the holder, but only under certain circumstances. See “Rights and Characteristics of the Shares.”

“Mortgage Investment Corporation” Status and Qualification for “Exempt Plans”

It is intended that the Company continue to qualify as a “Mortgage Investment Corporation” (or “MIC”) for the purposes of the Tax Act. There can be no assurance, however, that the Company will be able to meet the relevant qualifications at all material times. Since the Company must meet certain requirements throughout the year to qualify as a MIC, it is only possible to determine whether the Company qualifies as a MIC for a particular taxation year at or after the end of such year. If for any reason the Company does not qualify as a MIC under the Tax Act, dividends paid by the Company on its Shares will not be deductible by the Corporation in computing its income and will not be deemed to have been received by Shareholders as interest or a capital gain, as the case may be. See Certain Canadian Income Tax Considerations – “mortgage investment corporation.” If the Company fails to meet one or more conditions to qualify as a “mortgage investment corporation”, the income tax considerations described under “Certain Canadian Income Tax Considerations”, would, in some respects, be materially different. In addition, the Shares might cease to be qualified investments for Exempt Plans. Prospective Shareholders should consult with their tax advisors for advice with respect to the tax consequences to them having regard to their own particular circumstances.

No shareholder of the Company is permitted, together with Related Persons, at any time to hold more than 25% of any class of the issued shares of the Company. The Company intends to monitor major holdings of Shares to ensure that no one Shareholder of the Company exceeds this 25% maximum ownership limit of any class of shares set by the Tax Act, in order for the Company to maintain its qualification as a MIC. In order for the Corporation to stay within this 25% limit, it may have to exercise its right to trigger an Automatic Repurchase of certain Shares.

Tax Treatment and Possible Changes in Tax Laws

There can be no assurance that income tax laws and the treatment of a “mortgage investment corporation” will not be changed in a manner which adversely affects Shareholders. See “Certain Canadian Federal Income Tax Considerations.” Prospective Shareholders should consult with their tax advisors for advice with respect to the tax consequences to them having regard to their own particular circumstances.

Restrictions on Ownership and Repurchase of Shares

No Shareholder of the Company is permitted, together with Related Persons, at any time to hold more than 25% of any class of the issued shares of the Corporation. The terms and conditions of the Shares provide that the portion of such Shares held by a Shareholder, together with Related Persons, that exceeds 24.9% of any class of the issued Shares will be repurchased by the Company. If a significant number of Shares are repurchased, (i) the Company may be required to sell Mortgage Portfolio assets in order to satisfy repurchase payment obligations and may not be able to complete such asset sales on favourable terms or at all, and (ii) the expenses of the Company would be spread among fewer Shares resulting in a higher management expense ratio per Share.

Notwithstanding any other provision herein and in the Constating Documents, the redemption rights are subject to the restrictions in the Company’s credit arrangements. Without bank consent the Company may not redeem shares with a value of more than (i) 8% of the aggregate beginning value per quarter, or (ii) more than 20% per trailing twelve (12) calendar month period of the aggregate value attributable to all shares outstanding at the

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

beginning of that twelve (12) calendar month period. Additionally, no Redemptions shall be permitted in the case of a default or event of default which is continuing.

Dilution

The number of Shares the Company is authorized to issue is unlimited and the Board of Directors has the sole discretion to issue additional Shares. The proceeds of the Offering may not be sufficient to accomplish all of the Company's proposed objectives. In addition to alternate financing sources, the Company may conduct future offerings of Shares in order to raise the funds required which will result in a dilution of the interests of the Shareholders in the Company.

Reliance on Board of Directors and Key Personnel

In assessing the risks and rewards of an investment in Shares, potential investors should appreciate that they are relying on the good faith and judgment of the Board of Directors in administering and managing the Company. Although approval of the Shareholders is required for certain matters, Shareholders have no right to take part in the management of, or the stated purpose of the Company and the Company will be bound by the decisions of the Board of Directors as provided in the Constating Documents. It would be inappropriate for investors who are unwilling to rely on the Board of Directors to this extent to subscribe for Shares. There is no certainty that the persons who are currently Board of Directors will continue to be available to the Company for the entire period during which it requires the provision of their services.

The operations of the Company and the Mortgage Manager are highly dependent upon the continued support and participation of their key personnel. The loss of their services may materially affect the timing or the ability of the Company to implement its business plan. The Company's and the Mortgage Manager's management teams consist of several key people. In order to manage the Company and the Mortgage Manager successfully in the future, it may be necessary to further strengthen their management teams. The competition for such key personnel is intense, and there can be no assurance of success in attracting, retaining, or motivating such individuals. Failure in this regard would likely have a material adverse effect on the Company's business, financial condition, and results of operations.

No Guaranteed Return

There is no guarantee that the Company will be able to achieve its business objectives or that an investment in Shares will earn any positive return in the short or long term. Moreover, the interest rates being charged for Mortgages reflect the general level of interest rates and, as interest rates fluctuate, management of the Company expects that the aggregate yield on Mortgage investments will also change.

A mortgage borrower's obligations to the Company or any other person are not guaranteed by the Government of Canada, the government of any province or any agency thereof nor are they insured under the National Housing Act (Canada). In the event that additional security is given by the borrower or a third party or that a private guarantor guarantees the mortgage borrower's obligations, there is no assurance that such additional security or guarantee will be sufficient to make the Company whole if and when resort is to be had thereto. Further, Shares are not "deposits" within the meaning of the Canadian Deposit Insurance Corporation Act (Canada) and are not insured under the provisions of that Act or any other legislation.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

An investment in the Company is appropriate only for investors who have the capacity to absorb a loss on their investment and who can withstand the effect of distributions not being paid in any period or at all.

Fluctuations in Distributions and Preferences

The funds available for distributions will vary according to, among other things, the value of the Mortgage Portfolio and the interest earned thereon. Fluctuations in the market value of the Mortgage Portfolio may occur for a number of reasons beyond the control of the Mortgage Manager or the Company. There can be no assurance regarding the amount of revenue that will be generated by the Company's investments; the amount of distributions will depend upon numerous factors, including the ability of borrowers to make applicable payments, interest rates, unexpected costs, and other factors which may not now be known by or which may be beyond the control of the Mortgage Manager or the Company. If the Directors of the Company, on the advice of the Mortgage Manager, determine that it would be in the best interests of the Company, they may reduce or suspend for any period, or altogether cease indefinitely, the distributions to be made on the Shares. The distributions to the holders of the preferred class of Shares are in priority to any distributions to the holders of the common classes of Shares in accordance with the Constating Documents.

Distributions made to Shareholders may exceed actual cash available to the Company from time to time because of items such as debt payment obligations, and fluctuations in returns, if any. The excess cash required to fund distributions may be funded from an operating credit facility to the extent that one is available or from the capital of the Company.

Nature of the Investments

Investments in Mortgages are affected by general economic conditions, local real estate markets, demand for housing or commercial premises, fluctuation in occupancy rates, operating expenses and various other factors. Given the concentration of the Company's exposure to the mortgage lending sector, the Company will be more susceptible to adverse economic or regulatory occurrences affecting that sector than an investment fund that is not concentrated in a single sector. Investments in Mortgages are relatively illiquid. This will tend to limit the Company's ability to vary its Mortgage Portfolio promptly in response to changing economic or investment conditions. The Company's investments in Mortgage loans will be secured by real estate. All Real Property investments are subject to elements of risk. While independent appraisals may be obtained before the Company makes any Mortgage investments, the appraised values provided therein, even where reported on an "as is" basis are not necessary reflective of the market value of the underlying Real Property, which may fluctuate. In addition, the appraised values reported in independent appraisals may be subject to certain conditions, including the completion, rehabilitation or lease-up improvements on the Real Property providing security for the investment. There can be no guarantee that these conditions will be satisfied and if, and to the extent, they are not satisfied, the appraised value may not be achieved. Even if such conditions are satisfied, the appraised value may not necessarily reflect the market value of the real property at the time the conditions are satisfied. The Company's income and funds available for distribution to Shareholders would be adversely affected if a significant number of borrowers were unable to pay their obligations to the Company or if the Company was unable to invest its funds in Mortgages on economically favourable terms. On default by a borrower, the Company may experience delays in enforcing its rights as lender and may incur substantial costs in protecting its investment.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Concentration and Composition of the Portfolio and Exposure to Ontario Economy

Given the concentration of the company's exposure to the mortgage lending sector, the Corporation will be more susceptible to adverse economic or regulatory occurrences affecting that sector than an investment fund that is not concentrated in a single sector.

As of the date of this Offering Memorandum, all of the Mortgage investments made by the Company are to Ontario borrowers, secured by Mortgages registered on Ontario real property. This leaves the Company susceptible to both positive and negative economic trends which may affect the Ontario economy and the real estate market in particular.

Investments in Mortgages are relatively illiquid. Such illiquidity will limit the Company's ability to vary its Portfolio promptly, if at all, in response to changing economic or investment conditions.

The Investment objectives and investment restrictions of the Company permit the assets of the Company to be invested in First Mortgages, Second Mortgages, Insured Mortgages, Subordinate Mortgages, AAA Rated Mortgage Backed Securities and/or Related Investments. Therefore, the composition of the Portfolio may vary widely from time to time. The Portfolio will be comprised of and may from time to time be concentrated with Mortgage investments where the underlying real property is of a similar type or in a similar location or have other similar features or characteristics resulting in the Portfolio being less diversified than at other times. As a result, the returns generated by the Portfolio and the risks associated with its Mortgage investments may change as its composition changes.

Changes in Land Values

The Company's investments in Mortgage investments will be secured by real estate, the value of which can fluctuate. The value of real estate is affected by general economic conditions, local real estate markets, the attractiveness of the property to tenants where applicable, competition from other available properties, fluctuations in occupancy rates, operating expenses and other factors.

The value of income-producing real property may also depend on the credit worthiness and financial stability of the borrowers, which may then depend on the credit worthiness of any tenants of borrowers leasing the real property secured by the Mortgage investment. Changes in market conditions may decrease the value of the secured property and reduce the cash flow from the property, thereby impacting on the ability of the borrower to service the debt and/or repay the Mortgage loan. In particular, recent economic disruptions Ontario may adversely affect the value of Ontario real estate secured by a Mortgage investment and the ability of the borrowers to repay the Mortgage loans, and thereby negatively impact the Company's business and hence the value of the Shares.

A decline in value of real property provided as security for a Mortgage include in the Portfolio may cause the value of the property to be less than the outstanding principal amount of the Mortgage loan. Foreclosure by the Company on any such Mortgage loan generally would not provide the Company with proceeds sufficient to satisfy the outstanding principal amount of the Mortgage loan.

Where independent appraisals are required before the Company may make any Mortgage investments, the appraised values provided, even where reported on an "as is" basis, are not necessarily reflective of the market value of the underlying real property, which may fluctuate. In addition, the appraised values reported in independent

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

appraisals may be subject to certain conditions, including the completion of construction, rehabilitation or leasehold improvements on the real property providing security for the loan. There can be no assurance that these conditions will be satisfied and if, and to the extent they are not satisfied, the appraised value may not be achieved. Even if such conditions are satisfied, the appraised value may not necessarily reflect the market value of the real property at the time the conditions are satisfied.

Sensitivity to Interest Rates

The market price for the Shares and the value of the Mortgage Portfolio at any given time may be affected by the level of interest rates prevailing at such time. The Company's income consists primarily of interest payments on the Mortgages comprising the Mortgage Portfolio. If there is a decline in interest rates (as measured by the indices upon which the interest rates of the Company's Mortgages are based), the Company may find it difficult to purchase additional Mortgages bearing rates sufficient to achieve the desired payment of distributions on the Shares. There can be no assurance that an interest rate environment in which there is a significant decline in interest rates would not adversely affect the Company's ability to make distributions on the Shares. As well, if interest rates increase, the value of the Mortgage Portfolio may be negatively impacted.

Availability of Investments

Because the source of all of the Company's investments is through the Mortgage Manager, the Company is exposed to adverse developments in the business and affairs of the Mortgage Manager, to its management and financial strength, to its ability to operate its businesses profitably and to its ability to retain its mortgage brokerage licenses issued to it under applicable legislation. The ability of the Company to make investments in accordance with its objectives and investment policies depends upon the availability of suitable investments and the amount of funds available.

There can be no assurance that the yields on the Mortgages currently invested in by the Mortgage Manager will be representative of yields to be obtained on future Mortgage investments of the Company. The Mortgage Manager must render its services under the Mortgage Management Agreement honestly and in good faith and must use reasonable commercial efforts to perform its duties and responsibilities under the Mortgage Management Agreement in a conscientious, reasonable and competent manner. However, the services of the Mortgage Manager, the directors and officers of the Mortgage Manager and the members of its credit committee are not exclusive to the Company.

The Mortgage Manager, its directors and officers, its affiliates, members of its credit committee and their affiliates may, at any time, engage in promoting or managing other entities or their investments including those that may compete directly or indirectly with the Company, and the Mortgage Manager has sole discretion in determining which Mortgages and investments it will make available to the Company for investment.

Dependence on Mortgage Manager

The Company is dependent on the Mortgage Manager for the services to be provided under the Mortgage Management Agreement. Any inability of the Mortgage Manager to perform would negatively affect the Company. If that agreement were to terminate for any reason, the Company would be required to engage an alternative service provider. There is no assurance that such a party could be engaged, or that it could be engaged on comparable or acceptable terms. Additionally, on termination of the Mortgage Manager it would be entitled to repurchase all or a

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

portion of the Company’s investments existing as at the effective date of termination, in its sole discretion, from the Company for an amount equal to the outstanding principal balance of, or the Company’s percentage interest in, such Company investments plus interest accrued thereon up to the date immediately preceding the purchase date in respect of such Company investments. This is a significant hurdle to the termination of the Mortgage Manager, limiting the Company’s discretion in that regard and increasing the Company’s reliance on the Mortgage Manager.

Risks Related to Mortgage Defaults

As part of the Company’s active management of the Mortgage Portfolio, among other strategies, it may from time to time deem it appropriate to extend or renew the term of a mortgage loan past its maturity, or to accrue the interest on a mortgage loan. The Company generally will do so if it believes that there is a very low risk to the Company of not being repaid the full principal and interest owing on the mortgage loan. In these circumstances, however, the Company is subject to the risk that the principal and/or accrued interest of such mortgage loan may not be repaid in a timely manner or at all, which could impact the cash flows of the Company during the period in which it is exercising such remedies. Further, in the event that the valuation of the asset underlying the mortgage loan has fluctuated substantially due to market conditions, there is a risk that the Company may not recover all or substantially all of the principal and interest owed to it in respect of such mortgage loan.

When a mortgage loan is extended past its maturity, the loan can either be held over on a month to month basis or renewed for an additional term at the time of its maturity. Notwithstanding any such extension or renewal, if the borrower subsequently defaults under any terms of the loan, the Company has the ability to exercise its mortgage enforcement remedies in respect of the extended or renewed mortgage loan. Exercising mortgage enforcement remedies is a process that requires a significant amount of time to complete, which could adversely impact the cash flows of the Company during the period of enforcement. In addition, as a result of potential declines in real estate values, in particular given the current economic environment, there is no assurance that the Company will be able to recover all or substantially all of the outstanding principal and interest owed in respect of such mortgages by exercising its mortgage enforcement remedies. Should the Company be unable to recover all or substantially all of the principal and interest owed in respect of such mortgage loans, the returns, financial condition and results of operations of the Company could be adversely impacted.

Foreclosure and Related Costs

One or more borrowers could fail to make payments according to the terms of their loan, and the Company could therefore be forced to exercise its rights as mortgagee. The recovery of a portion of the Company’s assets may not be possible for an extended period of time during this process and there are circumstances where there may be complications in the enforcement of the Company’s rights as mortgagee. Legal fees and expenses and other costs incurred by the Company in enforcing its rights as mortgagee against a defaulting borrower are usually recoverable from the borrower directly or through the sale of the mortgaged property by power of sale or otherwise, although there is no assurance that they will actually be recovered. In the event that these expenses are not recoverable, they will be borne by the Company.

Furthermore, certain significant expenditures, including property taxes, capital repair and replacement costs, maintenance costs, mortgage payments, insurance costs and related charges must be made through the period of ownership of real property regardless of whether the property is producing income or whether mortgage payments are being made. The Company may therefore be required to incur such expenditures to protect its investment, even if the borrower is not honouring its contractual obligations.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Litigation Risks

The Company may, from time to time, become involved in legal proceedings in the course of its business. The costs of litigation and settlement can be substantial and there is no assurance that such costs will be recovered in whole or at all. During litigation, the Company is not receiving payments of interest on a mortgage loan that is the subject of litigation, thereby impacting cash flows. The unfavourable resolution of any legal proceedings could have an adverse effect on the Company and its financial position and results of operations that could be material.

Borrowing and Leverage

The Canadian financial marketplace has a limited number of financial institutions that provide credit to entities such as the Company. The limited availability of sources of credit may limit the Company's ability to take advantage of leveraging opportunities to enhance the yield on its mortgage investments. The Company intends to limit its exposure to the potential scarcity of such funds by continuously seeking out new sources of credit.

Subject to complying with rules to qualify as a MIC, and to its operating policies in effect from time to time, there is no restriction on the amount of funds which the Company may borrow from time to time. In the event that the Company could not meet the obligations of such loans pertaining to the payment of interest or the repayment of principal, the Company could incur substantial costs if the Company is forced to sell assets to repay the loan or to otherwise protect the investments of the Company while managing the repayment of such loan. In addition, the Company could lose some or all of its assets as a result of lenders exercising their rights of foreclosure and sale or under the security arrangements made with respect to such loan. The interest expense and banking fees incurred in respect of any credit facilities of the Company may exceed the incremental capital gains/losses and income generated by the incremental investments made with the proceeds of leverage. Accordingly, any event which adversely affects the value of mortgage investments would be magnified to the extent that leverage is employed to purchase same. In addition, the Company may not be able to renew any credit facility on acceptable terms or at all. There can be no assurance that the borrowing strategy employed by the Company will enhance returns. Any such loan will not be guaranteed by the Mortgage Manager or secured by any of its assets.

In the event the Company exceeds Line of Credit interest rate coverage ratio they may not be in the position to fully utilized the credit facility available. The interest coverage ratio is a debt and profitability ratio used to determine how easily a company can pay interest on its outstanding debt.

In the event the Company cannot meet the minimum total net worth requirements, the company may not be in the position to fully utilize the credit facility available until they increase shareholder investments or reduce debt. Mortgage payouts will reduce debt. IF shareholder net redemptions decrease total net worth the credit facility may need to be repaid and limit decreased to ensure ratios are within applicable bank guidelines.

Renewal of Mortgages

There can be no assurances that any of the Mortgages comprising the Mortgage Portfolio from time to time can or will be renewed at the same interest rates and terms, or in the same amounts as are currently in effect. With respect to each Mortgage comprising the Mortgage Portfolio, it is possible that the mortgagor, the mortgagee or both, will not elect to renew such Mortgage. In addition, if the Mortgages in the Mortgage Portfolio are renewed, the principal

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

balance of such renewals, the interest rates and the other terms and conditions of such Mortgages will be subject to negotiations between the mortgagors, the mortgagee and the Mortgage Managers at the time of renewal.

Composition of the Mortgage Portfolio

The composition of the Mortgage Portfolio may vary widely from time to time and may be concentrated by type of security, industry or geography, resulting in the Mortgage Portfolio being less diversified than anticipated. A lack of diversification may result in the Company being exposed to economic downturns or other events that have an adverse and disproportionate effect on particular types of security, industry or geography.

Failure to Meet Commitments

The Company may commit to making future Mortgage investments in anticipation of repayment of principal outstanding under existing Mortgage investments. In the event that such repayments of principal are not made in contravention of the borrowers' obligations, the Company may be unable to advance some or all of the funds required to be advanced pursuant to the terms of its commitments and may face liability in connection with its failure to make such advances.

Competition

The Company competes for Mortgage loans with individuals, corporations and institutions (both Canadian and foreign) which are seeking or may seek Mortgage loan investments similar to those desired by the Company. Many of these investors will have greater financial resources than those of the Company or operate without the investment or operating restrictions of the Company or according to more flexible conditions. An increase in the availability of investment funds and an increase in interest in Mortgage investments may increase competition for Real Property investments, thereby increasing purchase prices and reducing the yield on investments. While management of the Company does not anticipate a significant increase in competition in the markets in which it intends to continue to invest, changing market conditions may increase the level of competition for profitable Mortgage investments and thus may reduce the number of suitable investment opportunities for the Company.

Environmental and Other Regulatory Matters

Although the Mortgage Manager generally obtains an evaluation of the property to be subject to the Mortgage in the form of a Phase 1 Environmental Audit, environmental legislation and policies have become an increasingly important feature of property ownership and management in recent years. Under various laws, the Company could become liable for the costs of effecting remedial work necessitated by the release, deposit or presence of certain materials, including hazardous or toxic substances and wastes at or from a property, or disposed of at another location. The failure to effect remedial work may adversely affect an owner's ability to sell real estate or to borrow using the real estate as collateral and could result in claims against the owner.

The Company follows the environmental program of the Mortgage Manager, which includes policies and procedures to review and monitor environmental matters associated with its properties. The Mortgage Manager's environmental policy usually includes a Phase 1 Environmental Audit when warranted, conducted by an independent and experienced environmental consultant, before advancing a loan or acquiring a Mortgage.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Knowledge and Expertise of the Mortgage Manager

The Company will be dependent on the knowledge and expertise of the Mortgage Manager for investment advisory and portfolio management services under the Mortgage Management Agreement. There is no certainty that the persons who are currently officers and directors of the Mortgage Manager or members of its credit committee will continue to be officers and directors of the Mortgage Manager or members of its credit committee for an indefinite period of time. See "Conflicts of Interest" and "The Mortgage Manager."

Conflicts of Interest

Blake Albright is the Director and Officer of the Mortgage Manager. Massimo Giovannetti, Richard Petrie and Angelo Grossi are directors and officers of the Company and hold employment positions with the Mortgage Manager. There may be conflicts of interest if the interests of these persons or entities are inconsistent. The Board of Directors are compensated by the Mortgage Manager based on revenue generated by the Mortgage Manager. This would include Mortgage Administration fees paid by the Company to the Mortgage Manager plus fees paid directly by the borrowers to the Mortgage Manager. Borrower fees paid to Mortgage Manager would include lender fees, renewal fees, discharge fees, non-sufficient fund processing fees, to name core revenue generation for Mortgage Manager. The Mortgage Manager has entered into the Mortgage Management Agreement with the Company and is entitled to earn fees for providing services to the Company and to earn various fees from mortgagors on loans under its administration. The Mortgage Manager must render its services under the Mortgage Management Agreement honestly and in good faith and must use reasonable commercial efforts to perform its duties and responsibilities under the Mortgage Management Agreement in a conscientious, reasonable and competent manner. However, the Mortgage Manager, its directors and officers, its Affiliates, members of its credit committee and their Affiliates may at any time, and currently do, engage in promoting or managing other entities or their investments including real property financing that may compete directly or indirectly with the Company and hence with the Company, and it and its principals may invest for their own account(s). The Mortgage Manager intends to and has established other investment vehicles which may involve transactions which conflict with the interests of the Company or the Company. See "Mortgage Management Agreement".

In addition, the Mortgage Manager has sole discretion in determining which Mortgages and investments it will make available to the Company for investment and will, at the same time and on an on-going basis, be sourcing investment opportunities for its own account or the account of others. The Mortgage Manager, in exercising its discretion, will use its best judgment and act in such manner as it sees fit, having regard to the relative sizes, investment objectives, portfolio composition and financial capabilities of all of the entities involved, including, specifically the Company. See "Mortgage Manager." However, in addition to the conflicts referenced, the Mortgage Manager may also be conflicted in the selection of investment opportunities because it will be entitled to all Lender/Broker Fees generated on the Authorized Investments, which will commonly vary among investment opportunities.

Although none of the Board of Directors, the directors or officers of the Mortgage Manager will devote all of his or her full time to the business and affairs of the Company, each will devote as much time as is necessary to supervise the management of, to manage or to advise on the business and affairs of, the Company and its individual members and business. See "Management of the Company."

Whenever a conflict of interest arises between the Company, on the one hand, and the Mortgage Manager on the other hand, the parties involved, in resolving that conflict or determining any action to be taken or not taken, will be entitled to consider the relative interests of all of the parties involved in the conflict or that will be affected by

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

such action, any customary or accepted industry practices, and such other matters as the parties deem appropriate in the circumstances. The Constating Documents contains conflicts of interest provisions requiring the Board of Directors to disclose material interests in material contracts and transactions. See “Conflict of Interest Restrictions and Provisions for Board of Directors.”

10.0 Reporting Obligations

The Company is not a reporting issuer in any of the Selling Jurisdictions nor will it become a reporting issuer in any Selling Jurisdiction or any other jurisdiction in Canada or elsewhere following the completion of the Offering of the Shares pursuant to this Offering Memorandum. As a result, the Company will not be subject to the continuous disclosure requirements of such securities legislation, including, without limitation, the dissemination of news releases disclosing material changes in the business and affairs of the Company and the filing of material change reports.

The fiscal year end of the Company is December 31st, and the tax year end is December 31st. On or before the 90th day following the tax year end in each year the Company will distribute to each holder of Shares such income tax information regarding the Company and its operations as is reasonably necessary to enable each holder of Shares to file returns with respect to his or her income or loss from the Company in respect of the most recently completed fiscal year.

10.1 Reporting to Shareholders

The fiscal year end of the Company is December 31st, and the tax year end is December 31st.

The Company will, within 120 days after the end of each fiscal year end, and in accordance with the requirements of Section 2.9 of NI 45-106, send to holders of Shares and file with applicable securities regulatory authorities:

i. the annual audited financial statements of the Company and the accompanying Form 45-106F16 – Notice of Use of Proceeds; and
ii. so long as required by applicable securities laws in New Brunswick, Nova Scotia and Ontario, Form 45-106F17 – Notice of Specified Key Events.

While the distribution of securities under this Offering Memorandum is part of a continuous Offering, the Company will not prepare or send quarterly interim financial statements to holders of the Shares unless the Company believes that their inclusion in this Offering Memorandum is necessary to prevent this Offering Memorandum from containing a misrepresentation. However, once the Offering has been completed, the Company will post quarterly interim financial statements on a timely basis onto the external web portal referenced above.

The Mortgage Manager will, within the time required under the Tax Act, cause to be forwarded to each holder of the Shares who received distributions from the Company in the prior calendar year, such information and forms as may be needed by the holder of the Shares in order to complete its income tax return in respect of the prior calendar year under the Tax Act and equivalent provincial legislation in Canada.

The Company is not a "reporting issuer" or its equivalent under the securities legislation of any jurisdiction. Accordingly, the Company is not subject to the "continuous disclosure" requirements of any securities legislation and there is therefore no requirement that the Company make ongoing disclosure of its affairs including, without limitation, the disclosure of financial information on a quarterly basis or the disclosure of material changes in the

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

business or affairs of the Company. The Company files information on SEDAR+ only as required pursuant to section 2.9 of NI 45-106, which information is available electronically from SEDAR+(www.sedarplus.com).

The Company will deliver to prospective investors certain documents, including this Offering Memorandum, a subscription agreement and any updates or amendments to the Offering Memorandum, from time to time by way of facsimile or e-mail. Delivery of such documents by email or facsimile shall constitute valid and effective delivery of such documents unless the Company or Mortgage Manager receive actual notice that such electronic delivery failed. Unless the Company or Mortgage Manager receive actual notice that the electronic delivery failed, the Company and Mortgage Manager are entitled to assume that the facsimile or e-mail and the attached documents were actually received by the prospective investor and the Company and Mortgage Manager will have no obligation to verify actual receipt of such electronic delivery by the prospective investor.

11 – Resale Restrictions

11.1 General Statement

These securities will be subject to a number of resale restrictions, including a restriction on trading. Until the restriction on trading expires, you will not be able to trade the securities unless you comply with an exemption from the prospectus and registration requirements under securities legislation.

The Company has not filed a prospectus in connection with the issuance of the Shares. As a consequence of the Company offering the Shares in reliance upon exemptions from the prospectus and registration requirements under applicable securities laws, Shares issued under the Offering will be subject to a number of resale restrictions, including a restriction on trading. Until the restriction on trading expires, you will not be able to trade the Shares unless you comply with an exemption from the prospectus and registration requirements under securities legislation.

Subscribers are advised to consult with their legal advisors concerning restrictions on the disposition of their Shares and are advised against disposing of any Shares until they ascertain that such disposition is in compliance with the requirements of the applicable legislation.

11.2 Restricted Period

Unless permitted under applicable securities laws, you cannot trade such Shares before the date that is 4 months and a day after the appropriate registration/prospectus-filing with securities commissions of the relevant provinces or pursuant to available prospectus and registration exemptions. In that the Company does not intend to file a prospectus, the regulatory restricted period may be indefinite.

12.0 Purchasers' Rights

If you purchase these securities, you will have certain rights, some of which are described below. For more information about your rights, you should consult a lawyer.

The securities laws in your jurisdiction may provide you with the right, in certain circumstances, to seek damages or to cancel your agreement to buy Shares. Most often, these rights are available if the Company makes a misrepresentation in this Offering Memorandum or any amendment hereto, but in some jurisdictions, you may have these rights in other circumstances including if the Company fails to deliver the Offering Memorandum to you within the required time or if the Company makes a misrepresentation in any advertisements or literature regarding Shares. Generally, a "misrepresentation" means an untrue statement about a material fact or the failure to disclose a

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

material fact that is required to be stated or that is necessary in order to make a statement not misleading in light of the circumstances in which it was made. The meaning of misrepresentation may differ slightly depending on the law in your jurisdiction. In most jurisdictions there are defenses available to the persons or companies that you may have a right to sue. In particular, in many jurisdictions, the person or company that you sue will not be liable if you knew of the misrepresentation when you purchased the Shares.

The following summaries are subject to any express provisions of the securities legislation of each Selling Jurisdiction and the regulations, rules and policy statements thereunder and reference is made thereto for the complete text of such provisions.

The rights of action described herein are in addition to and without derogation from any other right or remedy that a Subscriber may have at law.

Two Day Cancellation Right – You can cancel your Subscription Agreement to purchase the securities. To do so, you must send a notice to the Corporation by midnight on the second Business Day after you sign the Subscription Agreement to buy the securities.

Subscribers in British Columbia, Alberta, Saskatchewan and Manitoba

Statutory rights in the event of a misrepresentation

If there is a misrepresentation in this Offering Memorandum, you have a statutory right to sue:

the Corporation to cancel your agreement to buy the Shares; or
for damages against:

(a) if you are resident in Alberta or Manitoba:

i. the Corporation;
ii. every director of the Corporation at the date of this Offering Memorandum; and
iii. every person or company who signed this Offering Memorandum; and

(b) if you are resident in British Columbia:

i. the Corporation;
ii. every director of the Corporation at the date of this Offering Memorandum; and
iii. every person who signed this Offering Memorandum.

i. the Corporation;
ii. every promoter of the Corporation at the time this Offering Memorandum or any amendment was sent or delivered;
iii. every director of the Corporation at the time this Offering Memorandum or any amendment was sent or delivered;
iv. every person or company whose consent has been filed respecting this Offering, but only with respect to reports, opinions or statements that have been made by them;
v. every person who or company that, in addition to the persons or companies mentioned in paragraphs (2)(c)(i) to (iv), signed this Offering Memorandum or any amendment; and
vi. every person who or company that sells Shares on behalf of the Corporation under this Offering Memorandum or any amendment.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

This statutory right to sue is available to you whether or not you relied on the misrepresentation. However, there are various defenses available to the persons or companies that you have a right to sue. In particular, they have a defense if you knew of the misrepresentation when you purchased the Shares.

Time limitations

If you intend to rely on the rights described above in paragraph (1) or (2), you must do so within strict time limitations.

You must commence an action to cancel the agreement within:

if you are resident in Alberta, 180 days from the date of the transaction that gave rise to the cause of action; and
if you are resident in British Columbia, Saskatchewan or Manitoba, 180 days after the date of the transaction that gave rise to the cause of action.

You must commence an action for damages within:

if you are resident in Alberta, the earlier of:
(a) 180 days from the date that you first had knowledge of the facts giving rise to the cause of action; or
(b) 3 years from the day of the transaction that gave rise to the cause of action.
if you are resident in British Columbia, the earlier of:
(a) 180 days after you first had knowledge of the facts giving rise to the cause of action; or
(b) 3 years after the date of the transaction that gave rise to the cause of action.
if you are resident in Saskatchewan, the earlier of:
(a) 1 year after you first had knowledge of the facts giving rise to the cause of action; or
(b) 6 years after the date of the transaction that gave rise to the cause of action.
if you are resident in Manitoba, the earlier of:
(a) 180 days after the date you first had knowledge of the facts giving rise to the cause of action; or
(b) 2 years after the date of the transaction that gave rise to the cause of action.

Subscribers in Ontario

Statutory rights in the event of a misrepresentation

If this Offering Memorandum, together with any amendment hereto, is delivered to you and contains a misrepresentation and it was a misrepresentation at the time of purchase of Shares by you, you will have, without regard to whether you relied on such representation, a right of action against the Corporation for damages or, while still the owner of the Shares purchased by you, for rescission, in which case if you elect to exercise the right of rescission you will have no right of action for damages against the Corporation. You may exercise these rights of action against the Corporation provided that:

the right of action for rescission or damages will be exercisable by you only if you commence an action to enforce such right not later than,
(a) in the case of an action for rescission, 180 days after the date of the transaction that gave rise to the cause of action; or
(b) in the case of any action, other than an action for rescission, the earlier of (A) 180 days after you first had knowledge of the facts giving rise to the cause of action or (B) three years after the date of the transaction that gave rise to the cause of action;

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RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

the Corporation will not be liable if it proves that you purchased the Shares with knowledge of the misrepresentation;
in the case of an action for damages, the Corporation will not be liable for all or any portion of the damages that it proves do not represent the depreciation in value of the Shares as a result of the misrepresentation relied upon;
in no case will the amount recoverable in any action exceed the price at which the Shares were sold to you; and
the Corporation will not be liable for a misrepresentation in forward-looking information if the Corporation proves that:

(a) this Offering Memorandum contains reasonable cautionary language identifying the forward looking information as such, and identifying material factors that could cause actual results to differ materially from a conclusion, forecast or projection in the forward looking information, and a statement of material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection set out in the forward looking information; and
(b) the Corporation has a reasonable basis for drawing the conclusion or making the forecasts and projections set out in the forward-looking information.

General

The securities laws of the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario are complex. Reference should be made to the full text of the provisions summarized above relating to statutory rights of action. Purchasers should consult their own legal advisers with respect to their rights and the remedies available to them. The rights discussed above are in addition to and without derogation from any other rights or remedies which Purchasers may have at law.

13.0 – Financial Statements

The audited financial statements for the Company are attached.

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

RC ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

13.0 Date and Certificate

This Offering Memorandum does not contain a misrepresentation.

DATED this 1st day of April, 2025.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

(Signed)
Massimo Giovannetti
Chief Executive Officer

(Signed)
Richard Petrie
Chief Financial Officer

On behalf of the Board of Directors

(Signed)
Angelo Grossi, Director

ROYAL CANADIAN ASSET MANAGEMENT INC.

(Signed)
Massimo Giovannetti, President

Royal Canadian Mortgage Investment Corporation – Confidential Offering Memorandum

Financial Statements of

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Years ended December 31, 2024 and 2023

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

Years Ended December 31, 2024 and 2023

Table of contents

Independent Auditor’s Report...1-2
Statements of Financial Position...3
Statements of Net Income (Loss) and Comprehensive Income (Loss)...4
Statements of Changes in Shareholders’ Deficit and Net Assets Attributable to
Holders of Redeemable Common Shares...5
Statements of Cash Flows,...6
Notes to Financial Statements...7-17

WRZ CHARTERED PROFESSIONAL ACCOUNTANTS

15 Wertheim Court, Suite 311 Richmond Hill, Ontario L4B 3H7

P 416-665-8735

905-731-4600

F 416-665-2365

905-731-4601

INDEPENDENT AUDITOR'S REPORT

To the Shareholders of Royal Canadian Mortgage Investment Corporation

Opinion

We have audited the financial statements of Royal Canadian Mortgage Investment Corporation (the "Fund"), which comprise the financial position as at December 31, 2024 and 2023, and the statements of net income (loss) and comprehensive income (loss), deficit and cash flow for the years then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Fund as at December 31, 2024 and 2023, and the financial performance and cash flow for the years then ended in accordance with International Financial Reporting Standards (IFRS).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Fund in accordance with ethical requirements that are relevant to our audit of the financial statements in Canada, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Responsibilities of Management and Those Charged with Governance for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Fund's financial reporting process.

Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Richmond Hill, Canada
February 18, 2025

WRZ
Chartered Professional Accountants
Licensed Public Accountants

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

STATEMENTS OF FINANCIAL POSITION

As at December 31, 2024 and 2023

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| ASSETS | | |
| Mortgage investments – current portion (note 4) | 60,051,709 | 47,257,173 |
| Accrued interest (note 4) | 689,068 | 669,699 |
| | 60,740,777 | 47,926,872 |
| Mortgage investments (note 4) | 57,500 | 1,566,500 |
| Total assets | 60,798,277 | 49,493,372 |
| LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT) | | |
| Liabilities | | |
| Bank indebtedness (note 5) | 5,987,834 | 10,450,531 |
| Accounts payable and accrued liabilities | 59,924 | 42,069 |
| Prepaid mortgage interest | 344,748 | 275,978 |
| Deposit for common shares (note 9) | 50,000 | - |
| Redeemable common shares (note 7) | 54,621,578 | 38,761,947 |
| Total liabilities (excluding net assets attributable to holders of redeemable common shares) | 61,064,084 | 49,530,525 |
| Net assets attributable to holders of redeemable common shares | - | - |
| Shareholders’ equity (deficit) | | |
| Retained earnings (Deficit) | (265,807) | (37,153) |
| Total liabilities and shareholders’ equity (deficit) | 60,798,277 | 49,493,372 |

Commitments and contingencies (note 14)

Approved on behalf of the Directors:

The accompanying notes are an integral part of these financial statements.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

STATEMENTS OF NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

For the years ended December 31, 2024 and 2023

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| Income | | |
| Interest (gross and net) | 7,125,306 | 5,928,460 |
| Expenses | | |
| Loss of mortgage interest (note 4) | 620,704 | 61,759 |
| Management fees (note 10) | 389,963 | 880,702 |
| Loss on mortgage investments (note 4) | 299,502 | 50,000 |
| Exempt market dealer fees | 217,409 | 195,790 |
| Accounting fees | 115,985 | 51,427 |
| Trailer fees | 101,268 | 79,082 |
| Other operating | 26,788 | 4,860 |
| | 1,771,619 | 1,323,620 |
| Income from operations | 5,353,687 | 4,604,840 |
| Financing costs | | |
| Interest and bank charges | 812,086 | 1,134,940 |
| Professional fees | 125,292 | 54,377 |
| Dividends to holder of redeemable common shares | 4,644,963 | 3,159,713 |
| Total financing costs | 5,582,341 | 4,349,030 |
| Net income (loss) and comprehensive income (loss) for the year | (228,654) | 255,810 |

The accompanying notes are an integral part of these financial statements.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT AND NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE COMMON SHARES

For year ended December 31, 2024 and 2023

2024

	Net assets attributable to holders of redeemable common shares $	Equity $
Balance, beginning of year	-	(37,153)
Gross proceeds from issuances of redeemable common shares (7,251,807 shares, at $1 per share)	7,251,807	-
Share issuance cost of redeemable common shares	(37,565)	-
Early redemption penalty and amortization of share issuance cost of redeemable common shares	217,409	-
Redemption of redeemable common shares (12,188,217 shares, at $1 per share)	(12,188,217)	-
Shares issued to the former Royal Canadian 1st Mortgage Investment Corporation shareholders (20,616,197 shares, at $1 per share)	20,616,197
Amount presented under liabilities relating to redeemable common shares	(15,859,631)	-
Net income (loss) and comprehensive income (loss) for the year	-	(228,654)
Balance, end of year	-	(265,807)

2023

	Net assets attributable to holders of redeemable common shares $	Equity $
Balance, beginning of year	-	(292,963)
Gross proceeds from issuances of redeemable common shares (6,642,994 shares, at $1 per share)	6,642,994	-
Share issuance cost of redeemable common shares	(104,923)	-
Early redemption penalty and amortization of share issuance cost of redeemable common shares	195,790	-
Redemption of redeemable common shares (6,249,910 shares, at $1 per share)	(6,249,910)	-
Amount presented under liabilities relating to redeemable common shares	(483,951)	-
Net income (loss) and comprehensive income (loss) for the year	-	255,810
Balance, end of year	-	(37,153)

The accompanying notes are an integral part of these financial statements.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

STATEMENTS OF CASH FLOWS

For the years ended December 31, 2024 and 2023

| | 2024
$ | 2023
$ |
| --- | --- | --- |
| OPERATING ACTIVITIES | | |
| Net income (loss) and comprehensive income (loss) | (228,654) | 255,810 |
| Changes in non-cash operating items: | | |
| Loss provision on mortgage investments | 204,475 | 50,000 |
| Accrued interest receivable | (19,369) | (300,606) |
| Accounts payable and accrued liabilities | 17,855 | 1,317 |
| Prepaid mortgage interest | 68,770 | 130,109 |
| Deposit for common shares | 50,000 | - |
| Accrued management fees | - | (131,293) |
| Cash used in operating activities | 93,077 | 5,337 |
| FINANCING ACTIVITIES | | |
| Net proceeds from issuance of redeemable common shares | 28,047,848 | 6,733,861 |
| Redemption of redeemable common shares | (12,188,217) | (6,249,910) |
| Cash provided by (used in) financing activities | 15,859,631 | 483,951 |
| INVESTING ACTIVITIES | | |
| Funding of mortgage investments | (46,947,744) | (24,845,657) |
| Discharge of mortgage investments | 35,457,733 | 24,431,954 |
| Cash used in investing activities | (11,490,011) | (413,703) |
| Increase (decrease) in cash and cash equivalents | 4,462,697 | 75,585 |
| Cash and cash equivalents, beginning of year | (10,450,531) | (10,526,116) |
| Cash and cash equivalents (Indebtedness), end of year | (5,987,834) | (10,450,531) |

The accompanying notes are an integral part of these financial statements.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS

For year ended December 31, 2024 and 2023

Description of business:

Royal Canadian Mortgage Investment Corporation (the "Fund") a mortgage investment company was incorporated under the laws of the Province of Ontario pursuant to the Articles of Incorporation dated November 21, 2012 and is authorized to issue an unlimited number of Class A common shares, unlimited number of Class B common shares, unlimited number of Class C common shares and unlimited number of Class D common shares. The objectives of the Fund are to provide its shareholders with stable distributions, while preserving capital, from its investments in mortgage loans and related investments and to obtain superior yields and maximize distributions through efficient management of such investments. On March 1, 2024, the Fund amalgamated with Royal Canadian 1st Mortgage Investment Corporation (the "RCM 1st"), and continued operations as Royal Canadian Mortgage Investment Corporation. Royal Canadian Asset Management Inc. a related party, as manager of the Fund (the "Fund Manager"), is responsible for the day-to-day operations and providing all general management and administrative services of the Fund's mortgage loan portfolio.

The registered office of the Fund is located at –
6 Ronrose Dr., Suite #301, Vaughan, Ontario L4K4R3

Basis of preparation:

(a) Basis of presentation:

Statement of compliance:

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board ("IASB").

The financial statements were authorized for issue by the Board of Directors on February 18, 2025.

(b) Basis of measurement:

The financial statements have been prepared on the historical cost basis.

These financial statements are presented in Canadian dollars, which is the functional currency of the Fund.

(d) Use of estimates and judgments:

The preparation of the financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. 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.

The most significant estimates that the Fund is required to make relate to the valuation of the mortgage investments (note 4). These estimates may include assumptions regarding local real estate market conditions, market interest rates and the availability of credit, cost and terms of financing, the impact of present or future legislation or regulation, prior encumbrances and other factors affecting the investments and underlying security of the investments.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS

For year ended December 31, 2024 and 2023

3. Significant accounting policies:

The following is a summary of significant accounting policies used in preparation of these financial statements:

(a) Financial instruments:

(i) Financial assets:

The Fund initially recognizes all financial assets on the date that they are originated. The Fund’s financial assets are comprised of mortgage investments, cash and cash equivalents, loan receivable and accrued interest. Such financial assets are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, these financial assets are measured at amortized cost using the effective interest method less any impairment losses.

The Fund derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or when it transfers the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. On de-recognition of a financial asset, the difference between the carrying amount of the asset and the carrying amount allocated to the portion of the asset transferred, and the consideration received (including any new asset obtained less any new liability assumed) is recognized in profit or loss.

(ii) Financial liabilities:

The Fund initially recognizes financial liabilities on the date that they are originated. The Fund derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire.

The Fund has the following financial liabilities which it has classified as other financial liabilities: accounts payable and accrued liabilities, accrued management fee, prepaid mortgage interest and redeemable common shares. Such financial liabilities are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.

(b) Cash and cash equivalents:

Cash and cash equivalents comprise cash and bank balances with less than 90 days maturity from the date of acquisition, including cash and deposits with banks and cheques and other items in transit.

Mortgage investments are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, the mortgage investment loans are measured at amortized cost using the effective interest method, less any impairment losses.

The mortgage investments are assessed at each reporting date to determine whether there is objective evidence of impairment. A mortgage is recognized as being impaired (non-performing) when the Fund is no longer reasonably assured of the timely collection of the full amount of principal and interest. As a matter of practice, a mortgage is deemed to be impaired at the earlier of the date it has been individually provided for or when it has been in arrears for 90 days. Mortgage credit quality is assessed at both a specific and collective level for reasonable assurance of timely collection of the full amount of principal and interest. Impairment is assessed on a specific mortgage basis taking into account past experience, credit quality, and payments in arrears, general economic conditions and real estate market conditions. When a mortgage is identified as impaired, the carrying amount becomes the lower of the recorded investment and the estimated realizable amount. Estimated realizable amounts are measured by discounting the expected future cash flows at the effective interest rate inherent in the mortgage. When the amount and timing of such cash flows cannot be estimated with reasonable reliability,

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS

For year ended December 31, 2024 and 2023

3. Significant accounting policies (continued):

estimated realizable amounts are based on the fair value of the security underlying the mortgages, net of expected costs of realization.

All individually significant mortgages found not to be specifically impaired are then collectively assessed for impairment that has occurred but not yet been identified. Mortgages that are not individually significant are collectively assessed for impairment by grouping together mortgages with similar risk characteristics. In assessing the collective impairment, the Fund uses analysis of past performance and the level of allowance already in place, adjusted for management’s judgment as to whether current economic and credit conditions are such that actual losses are likely to be greater or less than suggested by past performance.

Losses are recognized in the statement of comprehensive loss and reflected in an allowance account against the mortgage investments. Interest on the impaired asset continues to be recognized through the unwinding of the discount if it is considered collectable. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(d) Revenue Recognition:

Interest income is recorded on the accrual basis using the effective interest method. Interest income is allocated over the expected term of the loan by applying the effective interest rate to the carrying amount of the loan. The effective interest rate is the rate that exactly discounts estimated future cash receipts over the expected life of the loan. Origination revenues and costs are applied to the carrying amount of the loan. When calculating the effective interest rate, the Fund estimates future cash flows considering all contractual terms of the financial instrument, but not future credit losses.

(e) Income taxes:

The Fund is a mortgage investment corporation ("MIC") for income tax purposes. The Fund is effectively exempt from taxation and no provision for current or future income taxes is required for the Fund.

(f) Redeemable common shares:

Redeemable common shares are classified as liability. Incremental costs directly attributable to the issue of common shares are recognized as a deduction from proceeds. Dividends are recognized as financing costs in profit or loss as accrued.

(g) Provisions:

A provision is recognized if, as a result of a past event, the Fund has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at the pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as interest expense.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

4. Mortgage investments:

The mortgage investments held by the Fund consisted of mortgages with a first interest, non-first interest and mortgages with a line of credit facility (“LOC mortgage”).

As at December 31, the balances of mortgage investments were as follows:

	2024		2023
	%	$	%	$
Interest in first mortgage		31,021,400		14,302,332
Less allowances		(82,644)		-
Interest in first mortgage	51	30,938,756	29	14,302,332
Interest in non-first mortgage		29,342,284		34,571,341
Less allowances		(171,831)		(50,000)
Interest in non-first mortgage	49	29,170,453	71	34,521,341
	100	60,109,209	100	48,823,673

Diversification:

The mortgage investments as at December 31, 2024 consisted of 211 mortgages (2023: 212) of which 53 mortgages were First (2023: 24). Of these first mortgages 17 mortgages were LOC mortgages (2023: 9). The mortgage investments as at December 31, 2024 included 158 non-first mortgages (2023: 188), of which 116 mortgages were the LOC mortgages (2023: 149). No individual mortgage represented greater than 1.84% (2023: 2.84%) of the outstanding mortgage investments.

The mortgages are secured by the real property to which they relate, bear interest at a weighted average interest rate of approximately 10.72% per annum (2023: 11.93%) and mature as follows:

	$
2025	60,051,709
2026	57,500
	60,109,209

The un-advanced mortgage commitments under the existing mortgage portfolio amounted to $1,374,879 as at December 31, 2024 (2023: $3,645,478). This amount represents the un-advanced portion of the LOC mortgages. Subsequent to year end, $nil of commitments have expired. Principal repayments based on contractual maturity dates are due by September 1, 2026.

All of the mortgages contain a prepayment option, whereby the borrower may repay the principal at any time prior to maturity with a three month interest penalty.

As part of the assessment of fair value, management of the Fund routinely reviews each mortgage for impairment to determine whether or not a mortgage investment should be recorded at its estimated realizable value. The Fund provides for specific losses based on a regular review of individual mortgages. In assessing the existence of impairment in value of mortgage investments, management compares the current fair market valuation data against data at the date of the initial appraised amount, monitors changes in market interest rates whereby increasing rates will affect the discount rate used in fair valuing properties and monitors monthly cash flows receivable to ensure repayment terms are being met. In addition, mortgage investments are issued on short-terms thereby limiting the period of exposure to the negative impact of market conditions on their recoverability.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

4. Mortgage investments (continued):

As at December 31, 2024, 16 (2023: 5) of the mortgages were in default with an aggregate principal mortgage balance of $9,687,160 (2023: $2,712,725). A provision for mortgage impairment of $254,475 (2023: $50,000) was recorded in the current year for 4 (2023: 1) of the mortgages in default.

A mortgage is considered in default if the mortgage has been in arrears for 90 days or greater. Given the current uncertain real estate market conditions, any significant downturn in the real estate market may result in additional impairments of certain mortgages receivable.

As at December 31, 2024 accrued interest on mortgage investments is $1,140,230 (2023: $720,782) of which $766,659 (2023: $123,600) represents outstanding interest owing on mortgages in default. An allowance of $451,162 (2023: $51,083) has been set up to cover any possible interest loss.

5. Bank Credit Facility

The Fund has available up to a $30,000,000 demand revolving facility (the "Facility") with the Bank of Montreal (the "Bank"), for the purpose to finance working capital, general corporate requirements and funding of the mortgages. The Facility is available at the Fund's option by way of:

i) CDN$ Prime Rate loans or Overdraft
ii) CDN$ CORRA loans with minimum draw of $5,000,000 and multiples of $1,000,000 with terms of 1 or 3 months subject to availability. CORRA floor of 0%.

The demand revolving facility bears interest at Bank's Prime rate plus (i) 2.90% per annum for interest payable on CORRA rate loan, and (ii) 1.40% per annum for interest payable on any prime rate loan or overdraft.

The interest on the CORRA loans is to be paid monthly in arrears, or quarterly on the first business day or each calendar quarter, or on loan maturity, whichever occurs first.

The Fund shall make repayments from time to time to ensure the advances under facility shall not exceed the facility limit as defined in the Agreement. The Fund is required to make the following additional repayments:

i) 100% of the net proceeds from any sale or issuance of equity or debt by the Fund;
ii) 100% of the net proceeds from the sale or disposition of assets which are not reinvested in similar assets within 90 days; and
iii) 100% of the net proceeds of insurance, expropriation and condemnation proceeds.

The borrowings outstanding under this facility must not exceed at any time an amount as determined as follows:

i) 75% of the principal balance of first position mortgages held by the Fund on eligible single-family residential properties as defined in the Agreement;

PLUS

ii) 50% of the principal balance of second position mortgages held by the Fund on eligible single-family residential properties

LESS

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS

For year ended December 31, 2024 and 2023

5. Bank Credit Facility (continued):

iii) the Bank’s estimate of deemed trusts and priority payables which could rank in priority to the Bank’s security interest in accounts receivable or inventory, including those arising from unpaid taxes, unpaid source deductions and other government remittances (including amounts accrued but not yet payable).

In the calculation above the aggregate amount advanced against mortgaged properties which are subject to second-ranking mortgages held by the Fund shall not exceed 35% of the facility limit.

In the calculation above the aggregate amount advanced against mortgaged properties which are non-owner occupied single-family residential properties shall not exceed 20% of the facility limit.

Also, a maximum of 2 mortgages per debtor or debtor group can be included in the calculation of the maximum amount available under the demand revolving facility.

The facility is secured by a general security agreement over all personal property of the Fund. Notwithstanding compliance with the covenants and all other conditions of the Agreement with the Bank, borrowings under this facility are repayable on demand.

As at December 31, 2024, the Fund had utilized $7,092,728 (2023: 11,367,027) of its available revolving facility. The utilized revolving facility included CORRA rate loan in the amount of $Nil (2023: $Nil) and overdraft facility in the amount of $7,092,728 (2023: $11,367,027).

The credit facility agreement with the Bank includes the following financial covenants on a consolidated trailing twelve-month basis:

1) Minimum Interest Coverage Ratio not less than 3 times
2) Minimum Tangible Net Worth of $40,000,000
3) Senior Funded Debt/Tangible Net Worth no greater than 0.60 times

The Fund is in compliance with these financial covenants as at December 31, 2024.

6. Accrued management fee:

The Fund and Royal Canadian Asset Management Inc. (the “Fund Manager”) are related by virtue of common management. As at December 31, 2024, accrued management fees of $Nil (2023: $Nil) was owing to the Fund Manager.

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

Otherwise disclosed elsewhere in the financial statements (refer to note 10), there were no related party transactions.

7. Redeemable common shares:

The authorized capital of the Fund consists of an unlimited number of Class A Common Shares, an unlimited number of Class B Common Shares, an unlimited number of Class C Common Shares, and an unlimited number of Class D Common Shares. The total number of issued shares as at December 31, 2024 is 54,731,157 (2023: 39,051,370). During the year ended December 31, 2024, the Fund has issued 7,251,807 shares (2023: 6,642,994) at $1 per share. In addition, on March 1, 2024, the Fund issued 20,616,197 Class A Common Shares to the shareholders of RCM 1st upon the amalgamation of the Fund and RCM 1st. The Company incurred cash share issuance cost of $37,565 (2023: 104,923). This was adjusted against the gross cash proceeds received on the issuance of the common shares and

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

7. Redeemable common shares (continued):

will accrete over a term of three years for Class A and Class D Common Shares, 5 years for Class B and Class C Common Shares.

As at December 31, the balances of redeemable common shares were as follows:

	2024		2023
	Number of shares	Cost of Shares	Number of shares	Cost of Shares
Class A Common Shares	33,280,021	33,280,021	14,974,117	14,974,117
Class B Common Shares	21,451,136	21,451,136	24,077,253	24,077,253
Less: share issuance cost		(109,579)		(289,423)
	54,731,157	54,621,578	39,051,370	38,761,947

The Fund may at any time and from time to time purchase any issued common shares outstanding from any holder of the same, and such purchase need not be made pro rata from the holders of such shares. During the years ended December 31, 2024 and 2023, the Fund has redeemed 12,188,217 and 6,249,910 common shares, respectively, at $1 per share.

Each shareholder is entitled to require the Fund to redeem at any time and from time to time at the demand of the Shareholder all or any part of the shares registered in the name of the Shareholder at the prices determined and payable, and in accordance with the conditions, provided in the Constating Documents. The monthly Redemption Date will be the 1st day of each and every month. If the 1st day of the month is not a Business Day, the Redemption Date for that month will be the next succeeding Business Day. A shareholder must send to the Board of Directors a Notice 60 days before the Redemption Date to be considered for that particular Redemption Date.

The Share Redemption Price for Class A and Class B Shares issued and outstanding prior to October 1, 2023 which is tendered for redemption will be reduced by an amount equal to up to 2% of the Share Redemption Price, if such Shares are redeemed within the first year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class A and Class B Shares tendered for redemption will be reduced by an amount equal to up to 1% of the Share Redemption Price, if such Shares are redeemed within the second year following the Closing at which such Shares were subscribed for.

The Share Redemption Price for Class B Shares issued after October 1, 2023 and Class C Shares which are tendered for redemption will be reduced by an amount equal to up to 6% of the Share Redemption Price, if such Shares are redeemed within the first year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class B Shares issued after October 1, 2023 and Class C Shares which are tendered for redemption will be reduced by an amount equal to up to 4.8% of the Share Redemption Price, if such Shares are redeemed within the second year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class B Shares issued after October 1, 2023 and Class C Shares which are tendered for redemption will be reduced by an amount equal to up to 3.6% of the Share Redemption Price, if such Shares are redeemed within the third year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class B Shares issued after October 1, 2023 and Class C Shares which are tendered for redemption will be reduced by an amount equal to up to 2.4% of the Share Redemption Price, if such Shares are redeemed within the fourth year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class B Shares issued after October 1, 2023 and Class C Shares which are tendered for redemption will be reduced by an amount equal to up to 1.2% of the Share Redemption Price, if such Shares are redeemed within the fifth year following the Closing at which such Shares were subscribed for.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

7. Redeemable common shares (continued):

The Share Redemption Price for Class A Shares issued after October 1, 2023 and Class D Shares which are tendered for redemption will be reduced by an amount equal to up to 4% of the Share Redemption Price, if such Shares are redeemed within the first year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class A Shares issued after October 1, 2023 and Class D Shares which are tendered for redemption will be reduced by an amount equal to up to 2.7% of the Share Redemption Price, if such Shares are redeemed within the second year following the Closing at which such Shares were subscribed for. The Share Redemption Price for Class A Shares issued after October 1, 2023 and Class D Shares which are tendered for redemption will be reduced by an amount equal to up to 1.4% of the Share Redemption Price, if such Shares are redeemed within the third year following the Closing at which such Shares were subscribed for.

The Fund shall not accept for redemption in the same calendar month shares representing more than 1% of the total number of Shares outstanding on such Redemption Date. In the extraordinary circumstance where the number of Tendered Shares on any given Redemption Date exceeds 3% of the total number of Shares outstanding on such Redemption Date, the Board of Directors are entitled in their sole discretion to modify or suspend Shareholder redemption rights.

8. Dividend reinvestment plan:

The Fund has a dividend reinvestment plan (“DRIP”) available to all shareholders. Under the DRIP, shareholders may enroll to have their cash dividends reinvested to purchase additional Shares.

9. Deposit for shares:

The amount represents a deposit received by the Fund from an investor to purchase common shares of the Fund. The common shares were issued subsequent to the year ended December 31, 2024. The total amount of deposit received as of December 31, 2024, was $50,000 (2023: $Nil).

10. Management fees:

The Fund Manager is responsible for the day-to-day operations, including administration of the Fund's mortgage and loan portfolio. The Fund used to pay the Fund Manager an annual management fee of 2% for its services in accordance with Manager's Compensation clause as defined in the Mortgage Management Agreement dated November 21, 2012. For the year ended December 31, 2024, the Fund incurred management fees of $1,273,229 (2023: $1,007,205). The Fund Manager had waived $883,266 (2023: $126,504) of management fees for the year ended December 31, 2024.

11. Comparative figures:

Some of the comparative figures have been reclassified to confirm to the current year’s presentation.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

12. Financial instruments:

Overview:

The Fund has exposure to the following risks from its use of financial instruments:

Interest rate risk
Credit risk
Liquidity risk
Fair value measurements

The Board of Directors and Fund Manager approve and monitor, respectively, the risk management processes.

(a) Interest rate risk:

Interest rate risk is the risk that the fair value or future cash flows of financial assets or financial liabilities will fluctuate because of changes in market interest rates. As of December 31, 2024, mortgage investments of $60,109,209 (2023: $48,823,673) bear interest at fixed rates.

The Fund's cash and cash equivalent, accrued interest receivable, redeemable common shares, accounts payable and accrued liabilities, accrued management fee and deposits have no exposure to interest rate risk.

A 50 basis point decrease in interest rates, with all other variables held constant, will reduce net assets from operations by $300,546 annually, arising mainly as a result of lower interest income generated on variable rate mortgage investments. A 50 basis point increase in interest rates, with all other variables held constant, will increase net assets from operations by $300,546 annually, arising mainly as a result of higher interest income generated on variable rate mortgage investments. The Fund manages its sensitivity to interest rate fluctuations by generally entering into fixed rate mortgage investments or adding a "floor-rate" to protect its negative exposure.

(b) Credit risk:

Credit risk is the possibility that a borrower may be unable to honor its debt commitments as a result of a negative change in market conditions that could result in a loss to the Fund.

The Fund mitigates this risk by the following:

(i) adhering to the investment restrictions and operating policies included in the asset allocation model (subject to certain duly approved exceptions);

(ii) ensuring a comprehensive due diligence process is conducted on each mortgage and loan investment prior to funding. This generally includes, but is not limited to (a) engaging professional independent consultants, lawyers and appraisers and (b) performing credit checks on prospective borrowers;

(iii) all mortgage investments are approved by the mortgage advisory committee before funding; and

(iv) actively monitoring the mortgage portfolio and initiating recovery procedures, where required.

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

12. Financial instruments (continued):

The maximum exposure to credit risk at December 31, 2024 is the carrying values of its net mortgage investments, including interest receivable, amounting to $60,798,277 (2023: $49,493,372). The Fund has recourse under these mortgage investments in the event of default by the borrower; in which case, the Fund would have a claim against the underlying collateral.

(c) Liquidity risk:

Liquidity risk is the risk that the Fund will encounter difficulty in meeting its financial obligations as they become due. This risk arises in normal operations from fluctuations in cash flow as a result of the timing of mortgage investment fundings and repayments and redemptions of shares. Management routinely forecasts future cash flow sources and requirements to ensure cash is efficiently utilized.

Fair value measurements:

The Fund must classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making its fair value measurements. The following hierarchy has been used in determining and disclosing fair value of financial instruments:

Level 1 - quoted prices in active markets for the same instrument (i.e., without modification or repackaging);
Level 2 - quoted prices in active markets for similar assets or liabilities or other valuation techniques for which all significant inputs are based on observable market data; and
Level 3 - valuation techniques for which any significant input is not based on observable market data.

The following tables show an analysis of financial instruments recorded at fair value by level of the fair value hierarchy at:

December 31, 2024

	Level 1 $	Level 2 $	Level 3 $	Total $
Financial assets:
Mortgage investments	-	-	60,109,209	60,109,209
	-	-	60,109,209	60,109,209

The Fund's maximum exposure in respect of all its financial assets is their carrying value as reflected on the statements of net assets.

(i) Mortgage investments:

Fair value is the amount of consideration that would be agreed upon in an arm's-length transaction between knowledgeable, willing parties under no compulsion to act. As there is no quoted price in an active market for these mortgage investments, the Fund Manager makes its determination of fair value based on its assessment of the current lending market for mortgage and loan investments of same or similar terms. Typically, these mortgage investments approximate their carrying values given the mortgage investments consist of short-term loans that are repayable at the option of the borrower with a three month interest penalty. When collection of the principal amount of a mortgage or loan is no

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION
NOTES TO FINANCIAL STATEMENTS
For year ended December 31, 2024 and 2023

12. Financial instruments (continued):

longer reasonably assured, the fair value of the mortgage or loan is reduced to the estimated net realizable value of the underlying security.

(ii) Other financial assets:

The fair values of cash and cash equivalents approximate their carrying amounts due to their short-term maturities.

Changes in Level 3 financial instruments recorded at fair value.

The following table shows a reconciliation of the opening and closing balance of mortgage and loan investments:

	As at December 31, 2023 $	Realized fair value gain $	Unrealized fair value gain $	Transfer from RCM 1st $	Net advances and repayment $	As at December 31, 2024 $
Financial assets:
Mortgage investments	48,823,673	-	-	18,129,851	(6,844,315)	60,109,209

13. Capital risk management:

The Fund manages its capital structure in order to support ongoing operations while focusing on its primary objectives of preserving shareholder capital and generating a stable return to shareholders. The Fund defines its capital structure to include common shares.

The Fund reviews its capital structure on an ongoing basis and adjusts its capital structure in response to mortgage investment opportunities, the availability of capital and anticipated changes in general economic conditions.

The Fund's investment restrictions and asset allocation model incorporate various restrictions and investment parameters to manage the risk profile of the mortgage investments. The investment restrictions permit the Fund to use leverage to maintain liquidity, for general working capital purposes, and to bridge the timing differences between loan advances and maturities. The aggregate amount of borrowing by the Fund may not exceed 80% of the book value of the Mortgages held by the Company as at the date of drawdown of the borrowed funds. In addition, the asset allocation model dictates the allocation of the mortgage and loan investments based upon geographical, economic sector, term, borrower and loan-to-appraised value criteria. At December 31, 2024, the Fund was in compliance with its investment restrictions and the asset allocation model parameters.

14. Commitments and contingencies:

In the ordinary course of business activities, the Fund may be contingently liable for litigation and claims arising from investing in mortgages. Where required, management records adequate provision in the accounts. Although it is not possible to accurately estimate the extent of potential costs and losses, if any, management believes that the ultimate resolution of such contingencies would not have a material adverse effect on the Fund's financial position.

AI assistant

New Break Resources Ltd. — Capital/Financing Update 2025

48179_rns_2025-04-10_96b420db-2006-4937-a1ba-958efc76182a.pdf

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

CONFIDENTIAL OFFERING MEMORANDUM

CONTINUOUS PRIVATE PLACEMENT OFFERING

INCORPORATION BY REFERENCE

DISCLAIMERS

FORWARD-LOOKING STATEMENTS

OM MARKETING MATERIALS

CURRENCY

TABLE OF CONTENTS

SUMMARY OF OFFERING

Significant Parties

Issuer

Board of Directors

Mortgage Manager

The Offering

Use of Proceeds

Payment Terms

Risk Factors

Investment and Operating Policies of the Company

Investment Policies

Operating Policies

The Mortgage Portfolio

Other Matters

Risk Factors

Certain Canadian Income Tax Considerations

Rights of Action

DEFINITIONS

1.0 Use of Available Funds

1.1 Funds

Note:

1.2 Use of Available Funds

1.3 Proceeds Transferred to Other Issuer/Reallocation

1.4 Working Capital Deficiency

2.0 – BUSINESS OF THE COMPANY

2.1 Structure

2.2 Our Business

2.3 Development of Business

Borrowing Strategy

Syndication Strategy

Risk Management

Development and Maintenance of the Mortgage Portfolio

Sourcing Mortgage Investment Opportunities

Proven Industry Experience

Problem Identification and Rectification Experience

Focus on Greater Toronto Area and other Ontario Urban Centres

The Mortgage Portfolio

MANAGEMENT OF THE MORTGAGE PORTFOLIO

INVESTMENT AND OPERATING POLICIES OF THE COMPANY

Investment Policies

Operating Policies

Amendments to Investment and Operating Policies

Collection Activities

Portfolio Analysis

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION (Post-2024-Amalgamation)

ROYAL CANADIAN MORTGAGE INVESTMENT CORPORATION

LICENSING AND LEGISLATIVE REGIME

2.4 Long Term Objectives

2.5 Short Term Objectives

2.6 Insufficient Funds

2.7 Material Agreements

MANAGEMENT OF THE COMPANY

Conflict of Interest Restrictions and Provisions for Board of Directors

MORTGAGE MANAGER

MORTGAGE MANAGEMENT AGREEMENT

Services

Fees

Liability and Indemnity

Term and Termination

Acknowledgement of Potential Conflicts

3.0 Interests of Directors, Management, Promoters and Principal Holders

3.1 Compensation and Securities Holdings of Certain Parties

3.2 Management Experience

3.3 Penalties, Sanctions and Bankruptcy, Insolvency and Criminal or Quasi-Criminal Matters

3.4 Certain Loans

4.0 Capital Structure

4.1 Share Capital

Description of Shares

New Break Resources Ltd. Capital/Financing Update 2025