How Does Seller Financing Transaction work? STB: Seller take back mortgage or better known as a VTB I'm going to show a breakdown but let's start with a few upfront assumptions. 1. I am not an accountant 2. This is for illustration only to show how the numbers work, this is not advice. 3. This is general advice and should not be considered specific, basically go get a tax plan if you're a seller. Assumptions: Let's call this an example I've worked on in the past where an older fellow (His name is Pietro) ran a construction business out of an industrial building. The industrial building has now had a land use change to "Mixed-Use" and can be used to build a 12 storey building. A. The sale is $11,000,000 B. Pietro bought the property for $650,000 in 2002 C. Pietro is taking back a mortgage of $7,150,000 (65/35 LTV) for 3 years at 0% interest D. The Property is owned corporately C. There is no "recapture tax" E. The property is bein sold as the only asset in the company and the capital gain is the only income of the company F. Pietro is an old school man at heart, he doesn't really need any money right away from the sale he's just planning so if he passed away his kids wouldn't sell immediately G. The company owned by Pietro outright has never had a capital gain in the history Capital Gain Calculation: Capital gain expected: $10,330,000 (keep in mind commissions, legals and accounting work on closing can be used as a way to reduce the gain) Taxable Capital Gain (50% of the gain): $5,165,000 Taxation Calculation: Corporate Tax on the sale is 50.17% of taxable gain: $2,591,280 Due to the VTB Pietro can partially defer the gain for future years. This is the advantage if used efficiently that is very helpful to sellers. Timing of taxes payable: Also important depending on timing, 3 year Year 1 Gain: $5,165,000 Reserve: $3,357,250 Taxable: $1,807,750 Taxes at 50.17% of gain: $906,948 Year 2 Gain: $3,357,250 Reserve: $3,099,000 Taxable: $258,250 Taxes at 50.17% of gain: $129,564 Year 3 Gain: $3,099,000 Reserve: $2,066,000 Taxable: $1,033,000 Taxes at 50.17%: $518,256 Year 4 Gain: $2,066,000 Reserve: - Taxable: $2,066,000 Taxes at 50.17% of gain: $1,036,512 Total Taxes paid: $2,591,280 So you see, there are two good options here to understand. Pietro can defer how much taxes he pays up front. If Pietro is smart he can take the cash he receives and put this cash into say an investment which returns him 10% per year. Thereby creating a return off the taxes not paid yet. Pietro is happier for taking a Seller take back mortgage.

Underrated value of a crashed market: Every smart family office is doing estate freezes right now. Lowest values in two decades for certain asset classes. Lock in your values now around a bottom

The irony that Morgan Stanley, a U.S. bank was hired to sell off Canadian airports in the middle gonna trade war with the U.S. is not lost on me. CIBC was hired as well at least…

Bringing a 107,000 SF vacant YMCA to market. Interesting building in and close to downtown St Catherine’s. Original a development site with multi-phased potential, now a large functional building that can be used for various uses.

The state of street front retail in Toronto Area + Hamilton: Why have sales gone from 3-4% caps to 5.5-7.5% caps? If you look a financial model and all of the return comes from the sale price then that investment is pretty speculative. Reason: From land assembly potential, to purely yield play. The math has to work.

Nobody cares. Work harder.

It’s all connected: The food is more expensive Because The lease is more expensive Because The developer is delayed by the city Because A retail developer in BC is being delayed on rezoning by 6 months because the province is asking for a study on a 500 year storm He asked where he should find data on 500 years before the foundation of Canada 😅

So maybe what I’m seeing isn’t so anecdotal. Canada inflation rate 2.8% Canada GDP growth on track for 3.4% - based on May. Let’s keep going!

Single Family Home sales are up 200% year over year 👀 (GTA)

Buyers think it’s 2009 Sellers think it’s 2022 I think I’m 32 We all can’t get what we want 😅

Remember where we are: In today's world commercial real estate does not equate to changes across every asset class. As capital moves across different uses where there are tailwinds: Data Centers vs Multifamily Residential As old as time every cycle always follows: Boom: 2015-2022 Bust: 2022-2024 Oversupply: 2024-2026 Pricing collapse: 2022-….? Repeat: ......

Positive news never gets clicks but we are seeing a bottom very clearly now in many asset classes in Toronto. We need three quarters of positive data to call it a trend. Save seeing a wildcard in H1 2027 you’ll see real positive signs moving forward. 1. Apartment building (multifamily) number of transactions are up 100% exactly in this same time period. 2. Development land although crushed where DC incentives, HST, land values have decreased and construction costs have decreased to the point that you can build and can break even with development management fees with bulk condo pricing (which is lowest value for resale) 3. Residential rents for PBR (professional landlords) are now flat (yes with incentives but incentives were always there). Examples of massive absorption still happening. Ie North York tower leased 120 units at $4 PSF to $4.55 PSF in 2.5 months 4. The target for immigration is still positive. Immigration converting Non permanent to permanent. 5. Townhouse new home sales are selling st levels not seen in years 6. Office building sales have stabilized 7. Anecdotally, Universities are seeing changes in their 2026-2027 enrollment This large reduction is trying to reduce temporary non-permanent residents from 7% to less than 5% However this never discusses those that are made permanent residents which is where “growth” will come in. Most are already here and in total the target is 380,000 Watching Benjamin Tal at CIBC, Urbanation Inc. for rents and Zonda Urban for their construction supply via satellite analyzing the data more closely.

Bay Street’s worst kept secret finally closes. InterRent REIT closes deal for $4 billion to Singapore GIC Another strong indication of international interest in a Canadian market that has been bottoming

The 3 positive things you need to know about the Office Market in Canada: As I mentioned 3 Quarters ago, I believe Office had bottomed. Data finally following: 1. Office asking rate growth turned positive in the second quarter. 2. Gains were observed across both the Downtown and Suburban sectors nationwide, as net absorption was positive in 3. Office vacancy rate decreased by another 20 bps quarter over quarter

Keep it coming.

AI is creating chaos in CRE financial modeling. Landowners and investors with zero modeling experience are now underwriting deals with different AI tools and getting wildly different answers. Even industry pro Bruce Kirsch is running tests and getting 30 different acquisition prices off the exact same prompts. In depth specialization and assumptions have never mattered more. This is getting concerning until the models get better.

Narrative violation: The Condo Bailout is identical to the HNW family offices and private equity firms buying bulk condo units today 😅 Investment Thesis: Buying condos in bulk below the cost of replacement (even in today’s lower cost environment)

Dear Toronto Here’s $1,500,000,000 for your very high development taxes. Love, Canada PS build more housing now

Building Ontario Fund investing $178 million into Scarborough Junction in an equity partnership which will build rental 1,700 units including 340 affordable units with Republic Developments and Harlo Capital. Scarborough Junction is a 26 acre master planned mixed use development site on the Scarborough Go Station a short 18 minute train ride to downtown Toronto