Www.centurionreit.com Real Estate Investing An Alternative to Fixed Income Stephanie Kremer Vice President, Business Development & Institutional Sales

www.centurionreit.com

Real Estate Investing

An Alternative to Fixed IncomeStephanie Kremer

Vice President, Business Development & Institutional Sales

RESPECT INTEGRITY SIMPLICITY EXCELLENCE

What is Real Estate?

www.centurionreit.com2

A piece of land, including the air above it and the ground below it, and any buildings or structures on it. Real estate can include business and / or residential properties, and is generally sold either by a realtor or directly by the individual who owns the property (for sale by owner).


Types of Real Estate

Commercial

Industrial

Retail

Services

Apartments

Residential Single Family Homes / Condominiums

Real Estate Sub Sectors

Investing in Apartments for Income & Stability

A timely opportunity to invest in one of the safest sectors 1 within the real estate market – income producing apartment properties in Canada


Real Estate Investment Benefits


Income: Provides the foundation for monthly income

Investment growth: A hard asset that appreciates over time

Lower volatility: Not impacted by as many short-term market forces as other asset classes

Capital preservation: For several usages a fundamental staple with downside protection

Inflation hedge: Real estate has a history of protecting against the destruction of wealth caused by inflation1

1

2

3

4

5


Options for investment in Real Estate


Direct ownership

Pool your money with friends/ business partners

Real Estate Investment Trusts: Public and Private

Mortgage Investment Trusts


Real Estate Investment Trust (REIT)


A REIT, or Real Estate Investment Trust, is a company that owns or finances income-producing real estate. Modeled after mutual funds, REITs provide investors of all types stable income streams, diversification and long-term capital appreciation.

REITs allow anyone to invest in portfolios of properties the same way they invest in other industries – through the purchase of units in the REIT.

What is a REIT?


Property Ownership vs. REIT Investment


Direct Property Ownership

Pride of ownership, you have a piece of property you can touch, feel and call your own

You make all the decisions

100% of the profit is yours

100% of the expenses are yours

Fully responsible for the day-to day maintenance and operations of the property

Legally responsible for the property

Only recipient of capital gains

Tax structures depend on where you live & where the property is located

100% of the risk is yours

Real Estate Investment Trust

Shared ownership and profits

Management of the property is professionally handled by an experienced property manager

Expenses are managed by the trust and does not require any out-of-pocket payments from the unitholder beyond their investment

Legal and financial requirements are managed by the asset and property manager

Board of Trustees make decisions in the best interest of the unitholders.

Unitholders have the right to vote on changes to the Declaration of Trust


Private vs. Public REIT


Differences between Public and Private REITs

Publicly-Traded REIT: Trade on a public stock exchange (provide

daily liquidity)

Trading daily also means investors can potentially push price up or down, reflecting current market sentiment, regardless of actual market value of the asset

Increased reporting costs due to requirements of a public listing

History of more volatile pricing

Tend to be more highly correlated to equity markets. Example during recent financial crisis:

2008: Public REIT Market*: -34.0% S&P/TSX*: -33.0%

Private REIT: Not traded on a public stock exchange

(generally offer 30-day liquidity)

Value is based on the value of underlying real estate or equity / lending rate (not a “market-traded” price)

No additional reporting costs related to a public listing

Rational pricing with lower volatility2

Tend to be far less correlated to major equity markets1

2008: Non Listed Property Ownership**: +3.7% Non Listed Apartment Property**: +6.4%

The two main categories of REITs in Canada are publicly traded REITs and private REITs.

* Source: Morningstar Research Inc.

** Source IPD (2008 Edition); Note: Non listed property ownership is similar to a Private REIT


Mortgage Investment Trust


What is a Mortgage Investment Trust?

A Mortgage Investment Trust is an income and capital growth oriented investment trust that allows qualified investors to invest in a diversified portfolio of mortgages and opportunistic real estate developments and investments.

Simply put, investors pool their money together to invest in mortgage and growth-oriented real estate opportunities. The net profits are distributed back to investors.

Investor

Mortgages(income)

Investment Investments

Income & Capital Growth

Distributions & Capital Growth

Mortgage Investment

Trust Growth Oriented Investments(capital growth)


Centurion Asset Management Inc.


Based in Toronto, Centurion Asset Management Inc. is a Canadian asset management company that offers a growing portfolio of private investment products. Centurion Apartment REIT owns and operates 43 multi-residential rental properties in 16 Canadian communities.

Gravenhurst

Barrie

Brighton

Montreal

Oshawa

Whitby

Toronto

Hamilton

Huntsville

Acton

Mississauga

Cambridge

Kitchener

Waterloo

London

Tillsonburg


The Centurion Portfolio


Investment Solutions

Centurion Apartment REIT

Centurion Real Estate Opportunities TrustThe Centurion Asset Management Inc.’s Investment Products Portfolio is governed by two separate independent Board of Trustees, the majority of whom are independent of management.

Financing Solutions

Construction and Development, Refinancing, Bridge and Mezzanine Loans and Equity Participations

Property Management Services

Multi-residential apartments Student Residences through the Centurion Brand: The MARQ


1. We look at the needs of our Investors

Income-oriented investors that are looking for: Cash Flow Asset Appreciation Portfolio Diversification Opportunities to Re-Invest

2. Then we offer solutions with the objectives of meeting those needs

Investing with Centurion


Monthly Distributions

Growth Potential

RRSP, RESP, TFSA Eligible

Diversified Portfolio

Maximize Unit Value


At Centurion Asset Management Inc. we are:

Focused

Focused on investing and managing multi-unit residential properties, student housing residences and mortgages

Experienced

Centurion was established in 2003.

Regulated by the Ontario Securities Commission and Financial Services Commission of Ontario.

Depth of experience: managed by Greg Romundt, President; Wayne Tuck, COO; Robert Orr, CFO; and, Stephen Stewart, VP Mortgage Investing and Joint Ventures.

Supported by experienced analysts and an experienced, majority independent Board of Trustees with executive ownership.

Disciplined

Established, process-driven investment and operating methodology to manage risk and uncover opportunities to maximize income and value.

Diligent approach to asset and property management.

Adding value by improving both the physical building and the service experience to maximize income.

Investing with Centurion



Notes


1. Source: Canadian Investment Review, Spring 2001. “Canadian Real Estate and Inflation” by Victor W.K. Li

2. “Rational pricing with lower volatility” means that property values are based on a methodical process involving a number of highly skilled professionals that must opine on and thus impact upon value including a) knowledgeable and professional buyers and sellers b) third party appraisers and c) financial institutions (that will be restricted in loan to value ratios and debt service ratios and other financial covenants). Valuation methods would follow standard valuation guidelines used in the industry and third party appraisers would be accredited professionals. Further, buyers and sellers are not casual participants in the marketplace and are risking substantial capital in a transaction given that the average equity required for a purchase would be substantially larger than that required to buy a few shares of stock in a publicly listed company. Whereas regular stock market investors need to have no specific skills, industry knowledge, infrastructure, substantial capital, substantial capital at risk in a single investment and relationships that would otherwise serve to exclude them from the marketplace, direct property investors must have these at a minimum. The participation of knowledgeable buyers, and the limitations imposed by lenders for debt service and leverage further act to constrain valuation parameters which constraints may not apply on a traded stock. This rational pricing means that in the absence of changes in property net operating income (which ceteris paribus tend to move with inflation) or capitalization rates, that valuations tend to move slowly over time in comparison to how stocks can move constantly and with great volatility over the course of the day (or any other investment horizon). As such, rational pricing would tend to be associated with lower volatility.

Documents

Www.centurionreit.com Real Estate Investing An Alternative to Fixed Income Stephanie Kremer Vice President, Business Development & Institutional Sales