San Brisas Apartments, Phoenix, Arizona
2014 ANNUAL REPORT
For the year ended December 31, 2014
TABLE OF CONTENTS
Letter to Our Unitholders | 01
2014 Financial Report | 08
Management Discussion and Analysis | 09
Consolidated Financial Statements | 50
Management and Directors | 84
Corporate Information | 85
* All amounts disclosed in this report are expressed in U.S. dollars
Prairie Creek Villas, Dallas, Texas
TO OUR UNITHOLDERS,
2014 was a very good year for Pure Multi-Family REIT LP.
Our goals of demonstrating disciplined growth
through increased same property revenues, accretive
acquisitions of Class A, high quality properties and
recycling capital through the disposition of older,
higher maintenance properties were successfully
met. Our results were further enhanced by the
continued rationalization of expenses and we are
very pleased to report that our funds from operations
(“FFO”) grew 25.2% per share to $0.463 per share.
During the year, Pure Multi raised $50.2 million. With
these proceeds, we acquired $107 million of Class A,
high quality apartment communities consisting of
848 apartments. On the operations side, we focused
on several key areas: rental rate growth through
accretive acquisitions and value-add strategies,
occupancy, operational efficiencies and recycling our
capital to improve our portfolio’s overall performance.
As we focused on increasing our revenues, we also
executed the disposition of our oldest properties that
are more capital intensive and have lower operating-
margins. The end result was the very successful sale
in December 2014 of Windscape Apartments. This
property was acquired in July 2012 for a purchase
price of $8.4 million. We sold the property for $10.5
million, representing an annualized gain on equity
of over 24%. At year end, our portfolio consisted of
4,308 apartments and over 3.8 million square feet of
rentable space situated on over 236 acres of land.
It is important to note that subsequent to year end,
we completed the successful sale of Sunset Point
Apartments in January 2015. We acquired Sunset
Point in September 2012 for $24.6 million and it was
originally acquired as two separate but neighbouring
properties. We combined the property operations
on acquisition in order to achieve almost immediate
operational efficiencies and deployed a similar value-
add strategy that was implemented at Windscape.
We sold the property for $27.95 million representing
an annualized gain on equity of over 22%. The net
proceeds from both properties have been combined
to acquire Park at West Ave, a 2014 built Class A
property located in North San Antonio, Texas.
Walker Commons, Houston, Texas
1
OUR RESULTS
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
Pure Multi achieved strong financial results in 2014:
25.2% FFO per unit growth (2014 vs 2013)
5.6% same property total rental revenue
growth (2014 vs 2013)
$48.5 million 2014 rental revenues - an
increase from $31.6 million during 2013
2014 net operating income margin of 53.9%,
an increase from 51.8% in 2013
8.5% same property net operating income
(“NOI”) growth (2014 vs. 2013)
(cid:116)(cid:1)
(cid:116)(cid:1)
We believe that not only is it important to highlight
Pure Multi’s strong 2014 operating results and FFO
growth, but also that Pure Multi is unique in that we
provide investors with a truly aligned management
structure. Our structure does not permit external
asset management or transaction fees. We have
established a structure, through the issuance of our
Class B units, that is success driven. Management
is not remunerated in any other manner until
we reach a $300 million market capitalization,
at which point Pure Multi will internalize asset
management at no cost to the REIT. The savings to
the unitholders is significant. If Pure Multi had utilized
a REIT compensation model with a 0.4% external asset
management fee based on GBV, the cost to unitholders
would have been significantly greater than what
actually was incurred. Since IPO, Pure Multi’s efficient
model has resulted in net cash savings to unitholders of
greater than $2 million.
OUR STRATEGY
Pure Multi’s core strategy remains unchanged since
IPO, focusing on Class A, high quality multi-family
apartment communities in primary markets that
produce a steady, sustainable yield while offering
investors significant annual organic growth. Newer
construction, Class A properties tend to have better
operating efficiencies,
lower maintenance and
capital expenses and benefit from the ability to
generate stronger rental rate growth as the residents
generally have higher disposable incomes. The stable
and growing income produced by these high quality
properties stems from the strong demand in the
multi-family real estate sector. This demand continues
to be driven by employment and population growth,
lifestyle choices and limited new supply in our
MAY
PRIVATE
PLACEMENT
$20M
Walker Commons, Houston, Texas
STEADY, CONSISTENT
MONTHLY DIVIDEND
US$0.375
LISTED ON OTCQX
PMULF
JANUARY
JUNE
ACQUISITION
OF WALKER COMMONS
$43.8M
2
Prairie Creek Villas, Dallas, Texas
target markets. We believe our operational focus
on increasing revenues and maintaining strong NOI
margins will continue to drive shareholder value.
OUR APARTMENT COMMUNITIES
By way of a summary, U.S. multi‐family real estate has
generated strong investor returns over the last 20
years, driven by:
(cid:116)(cid:1)(cid:87)(cid:70)(cid:83)(cid:90)(cid:1)(cid:69)(cid:74)(cid:87)(cid:70)(cid:83)(cid:84)(cid:70)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:85)(cid:73)(cid:86)(cid:84)(cid:1)(cid:84)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:84)(cid:85)(cid:83)(cid:70)(cid:66)(cid:78)(cid:84)(cid:28)
(cid:116)(cid:1)(cid:84)(cid:85)(cid:70)(cid:66)(cid:69)(cid:90)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:81)(cid:83)(cid:70)(cid:69)(cid:74)(cid:68)(cid:85)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:80)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:68)(cid:80)(cid:84)(cid:85)(cid:84)(cid:28)
(cid:116)(cid:1)(cid:78)(cid:66)(cid:79)(cid:66)(cid:72)(cid:70)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:68)(cid:66)(cid:81)(cid:74)(cid:85)(cid:66)(cid:77)(cid:1)(cid:70)(cid:89)(cid:81)(cid:70)(cid:79)(cid:69)(cid:74)(cid:85)(cid:86)(cid:83)(cid:70)(cid:1)(cid:83)(cid:70)(cid:82)(cid:86)(cid:74)(cid:83)(cid:70)(cid:78)(cid:70)(cid:79)(cid:85)(cid:84)(cid:28)(cid:1)
(cid:116)(cid:1)(cid:71)(cid:66)(cid:87)(cid:80)(cid:83)(cid:66)(cid:67)(cid:77)(cid:70)(cid:1)(cid:69)(cid:70)(cid:67)(cid:85)(cid:1)(cid:246)(cid:79)(cid:66)(cid:79)(cid:68)(cid:74)(cid:79)(cid:72)(cid:1)(cid:85)(cid:70)(cid:83)(cid:78)(cid:84)(cid:15)
These drivers are evident across Pure Multi’s
leased
portfolio. The current portfolio has a
occupancy rate of 98.4% and has minimal capex
requirements. Our portfolio produces an attractive
sustainable yield and allows us to maintain
conservative leverage with a targeted debt to
gross book value ratio of 55% - 60%.
However, we believe that as in previous years,
what continues to differentiate Pure Multi from
its competitors is the quality of our apartment
communities, which we believe are unparalleled
in the Canadian REIT universe. With a weighted
average year of construction of 1996 at year end, our
properties can be classified as newer construction. As
highlighted above, and as further supported by our
results, there is a clear advantage to acquiring and
managing a Class A portfolio of assets.
Our communities offer luxurious amenities such
as resort-style swimming pools, outdoor kitchens
and lounge areas, tennis courts, sand volleyball
courts, gated dog parks, clubhouses with 24-hour
fitness centres, private function and meeting
facilities, business centres, movie theatres and
ample lush green space. The units offer high-end
condominium style finishes as well as attached and
detached garages.
JULY
CDN DOLLAR
LISTING ON TSX-V
RUF.UN
EQUITY OFFERING
JULY
$30.2M
AUGUST
ACQUISITION
OF THE PRESERVE
AND SAN BRISAS
$63.6M
DISPOSITION
OF WINDSCAPE
$10.5M
DECEMBER
DISPOSITION
OF SUNSET POINT
$27.95M
JANUARY 2015
Livingston, Dallas, Texas
3
OUR LOCATIONS - LEADERS IN POPULATION
AND EMPLOYMENT GROWTH
Our current core markets, Dallas-Fort
Worth, Houston and Phoenix, are
consistently ranked in the top performing
metropolitan areas in the U.S. for both
employment and population growth.
market is large and features an abundant
supply of acquisition opportunities at
attractive price levels, permitting Pure
Multi to execute our growth strategy with
discipline.
DALLAS
HOUSTON
SAN
ANTONIO
PHOENIX
There has been some concern expressed
recently regarding the Houston market.
Pure Multi currently owns two properties in
the greater Houston area, which represent
approximately 13% of our total revenues
We have not experienced
and units.
any weakness that can be attributed to
the layoffs in the oil field areas. We will
continue to monitor the market closely, but
Houston is a far more diversified economy
today than in previous downturns. We
expect that growth will continue at our
locations and the general consensus is that
job growth should continue in 2015, albeit
at slower levels than in 2014.
Phoenix is also continuing to experience
job and population growth. Current
unemployment rates remain lower than
the national average and Phoenix is
expected to continue with higher than
average population growth throughout
2015.
in
from
ranking higher
The majority of our portfolio is currently
located within the Dallas-Forth Worth
metroplex. DFW has one of the most
the United
diversified economies
States,
than Boston
and Los Angeles in terms of diversity.
DFW has benefitted
increasing
technology firms,
concentrations of
corporate headquarters, distribution and
infrastructure warehouses, health centres,
related manufacturing businesses and
construction industry operations. DFW
is expected to continue experiencing
strong
job and population growth
which will further contribute to above-
average performance at our multi-family
properties.
We believe that strong returns can be
achieved by continuing to target high
quality properties
these markets
leading markets that are
and other
economic
also
fundamentals. The U.S. multi-family
displaying
strong
in
OUR RESIDENTS
Our residents are as varied as our
from
range
properties and
single
professionals
families and
to young
retirees. Our larger overall average unit
size allows us to attract a varied group of
residents that enables us to diversify our
income stream.
One of the key drivers of the strong
demand for U.S. multi-family apartments
continues to be the Echo Boom Generation.
Just as their parents (the Baby Boomers)
drove dramatic long term growth in certain
areas of the economy, this demographic
is estimated to be between 72-80 million
strong in the United States and they have a
very high (almost 70%) propensity to rent.
Lifestyle amenities continue to be a
priority for many of this generation and
luxury amenities like those found at our
properties serve as additional draws
to attract this group of renters. Echo
Boomers generally choose to rent rather
than own during their career-building
years as renting affords a great low-
maintenance standard of living with the
flexibility to transfer from one city to
another with ease to pursue their career
paths. This generation tends to prefer to
live in close proximity to their jobs, shops
and entertainment, as well as public
transportation.
Negative sentiment continues to cloud
home ownership. Lenders continue to
require a significant down payment, a
static career position and strong credit
scores. This negative sentiment combined
with the lifestyle choices of the Echo
Boom Generation should continue to
drive profitability, rental growth rates and
values in the apartment sector for many
years to come.
4
LOOKING FORWARD
In summary, we continue to build a Class A apartment portfolio spread across the strongest growth markets in
the U.S. sunbelt, and we have demonstrated that we can rework our portfolio to enhance its value by recycling
our equity through profitable sales.
Management’s calculated net asset value is $5.91(USD) and trending upwards with our most recent acquisition
announcement located in San Antonio, Texas. We are among the leaders in the Canadian REIT sector, with
operational results that drive shareholder value including:
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:87)(cid:70)(cid:83)(cid:90)(cid:1)(cid:83)(cid:80)(cid:67)(cid:86)(cid:84)(cid:85)(cid:1)(cid:84)(cid:66)(cid:78)(cid:70)(cid:14)(cid:84)(cid:85)(cid:80)(cid:83)(cid:70)(cid:1)(cid:79)(cid:70)(cid:85)(cid:1)(cid:80)(cid:81)(cid:70)(cid:83)(cid:66)(cid:85)(cid:74)(cid:79)(cid:72)(cid:1)(cid:74)(cid:79)(cid:68)(cid:80)(cid:78)(cid:70)(cid:1)(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1)(cid:80)(cid:71)(cid:1)(cid:25)(cid:15)(cid:22)(cid:6)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:1)(cid:80)(cid:87)(cid:70)(cid:83)(cid:1)(cid:90)(cid:70)(cid:66)(cid:83)(cid:28)
strong year over year funds from operations (FFO) and/adjusted funds from operations (AFFO) per unit
(cid:72)(cid:83)(cid:80)(cid:88)(cid:85)(cid:73)(cid:1)(cid:9)(cid:19)(cid:22)(cid:15)(cid:19)(cid:6)(cid:1)(cid:66)(cid:79)(cid:69)(cid:1)(cid:19)(cid:23)(cid:15)(cid:24)(cid:6)(cid:1)(cid:83)(cid:70)(cid:84)(cid:81)(cid:70)(cid:68)(cid:85)(cid:74)(cid:87)(cid:70)(cid:77)(cid:90)(cid:10)(cid:28)
a trend of decreasing our payout ratio.
(cid:116)(cid:1)
Despite these leading results, delivered quarter after quarter, and our net asset value of $5.91, there has been,
and in fact still continues to be, a valuation disconnect in terms of our current trading range which offers
investors an exciting growth prospect in what is generally considered to be the most conservative sector of
commercial real estate.
Our same property revenue growth, year over year, was 5.6%. With our rental rate growth, combined with
long term, fixed mortgage interest rates, our very low REIT cost structure and improving net operating income
margins, we believe that Pure Multi will continue to position itself as the leader in our asset class.
Our goals remain unchanged - build the best Class A portfolio across key markets in the U.S. sunbelt, while
enhancing shareholder value through our unique structure, hands-on management, capital recycling and
accretive acquisitions. We are looking forward to an exciting and busy 2015. We would like to sincerely thank
all of our unitholders for their continued support and and to our Board of Directors and the Pure Multi team
for their continued commitment to our goals.
Yours truly,
Steve Evans, CEO and Unitholder
San Brisas, Phoenix, Arizona
5
PORTFOLIO SUMMARY
Deer Park, Houston, Texas
IN-PLACE RENTS AND OCCUPANCY TRENDS
JANUARY 2014 TO DECEMBER 2014
$1.150
$1.140
$1.130
$1.120
98.0%
98.3%
97.2%
98.7%
99.0%
99.4%
99.5%
99.3%
96.9%
97.0%
97.2%
96.4%
97.5%
97.4%
97.6%
98.9%
97.9%
98.4%
98.5%
97.1%
97.0%
98.2%
97.6%
$1.110
95.6%
100.0%
98.0%
96.0%
94.0%
92.0%
90.0%
$1.055
$1.059
$1.064
$1.067
$1.071
$1.098
$1.104
$1.078
$1.083
$1.109
$1.112
$1.117
88.0%
86.0%
84.0%
82.0%
80.0%
January
February March
April
May
June
July
August September October November December
Avg rent per sq.ft.
Avg physical occupancy
Avg leased occupancy
$1.100
$1.090
$1.080
$1.070
$1.060
$1.050
$1.040
$1.030
$1.020
$1.010
$1.000
2014
AVERAGE
LEASED
OCCUPANCY
98%
Fairways at Prestonwood , Dallas, Texas
6
SAME PROPERTY
NOI GROWTH
2014
8.5%
FINANCIAL HIGHLIGHTS
($000’s except
per unit amounts)
Year ended
December 31, 2014
Year ended
December 31, 2013
Revenue
Property NOI
NOI margin
Income for the year
Funds from operations
FFO per class A unit
Distributions per unit
FFO payout ratio
$48,475
$26,111
53.9%
$41,949
$14,399
$0.463
$0.375
82.8%
$31,583
$16,357
51.8%
$14,202
$8,437
$0.370
$0.365
99.2%
As at December 31,
2014
As at December 31,
2013
Total assets
Mortgages payable
$492,791
$256,735
Total debt to gross book value
57.9%
Weighted average interest rate
on mortgages payable
3.86%
$351,007
$196,333
64.0%
4.12%
PORTFOLIO HIGHLIGHTS*
(cid:116)(cid:1) Number of units: 4,308
(cid:116)(cid:1) Number of acres: 236
(cid:116)(cid:1)
(cid:116)(cid:1)
(cid:116)(cid:1)
Rentable square feet: 3.83 million
Portfolio employs only property level debt
Target loan to gross book value range: 55% to 60%
(to a maximum of 70%)
Bear Creek, Dallas, Texas
(cid:116)(cid:1) Debt to gross book value: 57.9%
(cid:116)(cid:1)
Loan to portfolio value: 55.7%
* As at December 31, 2014
FFO GROWTH PER UNIT
2014
25.2%
Valley Ranch , Dallas, Texas
7
2014 FINANCIAL REPORT
Management’s Discussion and Analysis
Consolidated Financial Statements
For the year ended December 31, 2014
Bear Creek Apartments, Dallas TX
8
PURE MULTI-FAMILY REIT LP
Management’s Discussion and Analysis
For the year ended December 31, 2014
Dated: March 6, 2015
Fairways at Prestonwood, Dallas TX
9
Pure Multi-Family REIT LP
MD&A – December 31, 2014
SECTION I
FORWARD-LOOKING DISCLAIMER
The following management’s discussion and analysis (“MD&A”) of the financial position and the results of
operations of Pure Multi-Family REIT LP (“Pure Multi”) for the year ended December 31, 2014 should be read in
conjunction with Pure Multi’s audited consolidated financial statements for the year ended December 31, 2014,
available on SEDAR at www.sedar.com or on Pure Multi’s website at www.puremultifamily.com. Historical
results, including trends which might appear, should not be taken as indicative of future operations or results.
Certain information in this MD&A contains forward-looking information within the meaning of applicable securities
laws (also known as forward-looking statements) including, among others, statements made or implied under the
headings “Outlook”, “Results of Operations”, “Financial Condition”, “Liquidity and Capital Resources” and “Risks
and Uncertainties” relating to Pure Multi’s objectives, strategies to achieve those objectives, beliefs, plans,
estimates, projections and intentions; and similar statements concerning anticipated future events, results,
circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can
be identified by words such as “outlook”, “believe”, “expect”, “may”, “anticipate”, “should”, “intend”, “estimates”
and similar expressions.
In particular, certain statements in this MD&A discuss Pure Multi’s anticipated future events. These statements
include, but are not limited to:
(i) Pure Multi’s growth strategy, including the accretive acquisition of properties and the anticipated extent of the
accretion of any acquisitions, which could be impacted by demand for properties and the effect that demand
has on acquisition capitalization rates and changes in the cost of capital;
(ii) maintaining occupancy levels and rental revenue, which could be impacted by changes in demand for Pure
Multi’s properties, financial circumstances of tenants, including tenant defaults, the effects of general
economic conditions and supply of competitors’ properties in proximity to Pure Multi’s properties;
(iii) overall indebtedness levels, which could be impacted by the level of acquisition activity Pure Multi is able to
achieve, fair value of its properties and future financing opportunities;
(iv) tax status of Pure US Apartments REIT Inc., which can be impacted by regulatory changes enacted by
governmental authorities;
(v) anticipated distributions and payout ratios, which could be impacted by capital expenditures, results of
operations and capital resource allocation decisions;
(vi) obtaining and maintaining adequate insurance for Pure Multi’s properties; and
(vii) anticipated interest rates and exchange rates.
Forward-looking statements are provided for the purpose of presenting information about management’s current
expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate
for other purposes. Forward-looking statements involve significant risks and uncertainties and should not be read as
guarantees of future performance or results. Those risks and uncertainties include, among other things, risks related
to: unit prices; liquidity; credit risk and tenant concentration; interest rate and other debt related risk; tax risk; ability
to access capital markets; lease rollover risk; competition for real property investments; environmental matters;
changes in legislation; and indebtedness of Pure Multi.
Management believes that the expectations reflected in forward-looking statements are based upon reasonable
assumptions and information currently available, which include, management’s current expectations, estimates and
assumptions that: proposed acquisitions will be completed on the terms and basis agreed to by Pure Multi, property
acquisition and disposition prospects and opportunities will be consistent with Pure Multi’s experience over the past
12 months, the multi-family residential real estate market in the “Sunbelt” region in the United States will remain
strong, the global economic environment will remain stable, interest rates will remain at current levels, and Pure
Multi’s business strategy, plans, outlook, projections, targets and operating costs will be consistent with Pure Multi’s
10
Pure Multi-Family REIT LP
MD&A – December 31, 2014
experience over the past 12 months, Pure Multi will be able to maintain occupancy at current levels, tenants will not
default on lease terms, governmental regulations and taxation will not change to adversely affect Pure Multi’s
business and financial results, and Pure Multi will be able to obtain adequate insurance and financing; however,
management can give no assurance that actual results will be consistent with these forward-looking statements.
Readers are cautioned that the foregoing list of factors that may affect future results is not exhaustive. When relying
on forward-looking statements to make decisions with respect to Pure Multi, investors and others should carefully
consider the foregoing factors and other uncertainties and potential events.
These forward-looking statements are made as of March 6, 2015 and Pure Multi assumes no obligation to update or
revise them to reflect new events or circumstances, except as required by law.
BASIS OF PRESENTATION
Unless otherwise noted, all financial information has been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The financial
information included in this MD&A for the year ended December 31, 2014 includes material information up to
March 6, 2015. Except as otherwise stated in this MD&A, all dollar amounts in this MD&A, including per unit
amounts, are stated in U.S. dollars.
On January 1, 2014, Pure Multi adopted IFRIC 21, Levies (“IFRIC 21”), and such standard is reflected on a
retrospective basis with restatement of prior period comparative information as of and subsequent to January 1,
2013. IFRIC 21 removes Pure Multi’s ability to accrue and recognize property taxes on a pro-rata basis throughout
the given reporting year. As a result, property taxes must be recognized when the obligating event occurs, which is
deemed to be January 1 of the given reporting year.
All references herein to “consolidated” refer to amounts as reported under IFRS. All references to “Pure Multi’s
interest” refer to a non-IFRS measure presented on a proportionally consolidated basis and assuming Pure Multi did
not adopt the IFRIC 21 accounting policy change. For a reconciliation of Pure Multi’s statement of financial
position and results of operations, see “Statement of Financial Position and Results of Operations Reconciliation”.
Certain figures in this MD&A are non-IFRS measures, including, Pure Multi’s interest, Funds from Operations or
FFO, Adjusted Funds from Operations or AFFO, Distributable Income or DI, same property net rental income
growth, same property revenue growth, same property average monthly rent per occupied unit, rental revenue, same
property, rental revenue, property acquired, net rental income, same property and net rental income, properties
acquired. For an IFRS to non-IFRS reconciliation, see “Statement of Financial Position and Results of Operations
Reconciliation”, “Distributable Income” and “Liquidity and Capital Resources – Funds from Operations and
Adjusted Funds from Operations”.
OVERVIEW
About Pure Multi
Pure Multi is a Canadian-based publically traded vehicle which offers investors exclusive exposure to U.S. multi-
family real estate assets. It offers investors the ability to participate in monthly distributions, with potential for
capital appreciation, stemming from ownership in quality apartment assets located in core cities within the “Sunbelt”
region of the U.S.
11
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Pure Multi is a limited partnership formed under the Limited Partnership Act (Ontario) to indirectly invest in multi-
family real estate properties in the United States. Pure Multi was established by Pure Multi-Family Management
Limited Partnership (the “Managing GP”), its managing general partner, and Pure Multi-Family REIT (GP) Inc.
(the “Governing GP”), its governing general partner, pursuant to the terms of a Limited Partnership Agreement (the
“LP Agreement”). Pure Multi’s head office and address for service is located at 910 – 925 West Georgia Street,
Vancouver, British Columbia, V6C 3L2. A copy of the LP Agreement can be obtained from Pure Multi or on
SEDAR at www.sedar.com.
Pure Multi, through Pure US Apartments REIT Inc. (the “US REIT”), was established for, among other things, the
purposes of acquiring, owning and operating multi-family real estate properties in the United States.
Operational and Financial Highlights (all metrics stated at Pure Multi’s interest (1))
On May 21, 2014, Pure Multi completed a private placement offering of 4,395,824 units (each, a “Unit”), at a price
of $4.55 per Unit for gross proceeds of $20,000,999 (the “May 2014 Offering”). Each Unit consists of one Class A
unit (each, a “Class A Unit”) of Pure Multi and one-half of one Class A Unit purchase warrant (each whole warrant,
a “Warrant”). On June 27, 2014, Pure Multi used the proceeds from the May 2014 Offering to complete the
acquisition of a 352 residential unit, multi-family apartment community (“Walker Commons”), located in Houston,
Texas, for a purchase price of $43,800,000.
On July 29, 2014, Pure Multi completed a bought deal offering of 6,350,000 Class A Units, at a price of $4.75 per
Class A Unit, for gross proceeds of $30,162,500 (the “July 2014 Offering”). On August 28, 2014, Pure Multi used
the proceeds from the July 2014 Offering to complete the acquisition of two investment properties (the “July 2014
Target Properties”), consisting of 496 residential units, for an aggregate purchase price of $63,600,000. The July
2014 Target Properties consist of a multi-family apartment property (the “Preserve”) located in Dallas, Texas and
the remaining 80% interest in a multi-family property (“San Brisas”) located in Phoenix, Arizona, which was
previously partially owned by Pure Multi.
On December 18, 2014, Pure Multi sold Windscape Apartment Homes (“Windscape”), a multi-family apartment
community, located in Dallas, Texas, for a sale price of $10,500,000. From the date of acquisition on July 12, 2012,
until the date of sale on December 18, 2014, Pure Multi earned an average annualized return of over 24% on the
equity invested in Windscape. Pure Multi intends to use the net proceeds from the sale of Windscape to acquire a
newer investment property within the first six months of 2015.
As at December 31, 2014, Pure Multi’s portfolio consisted of 14 investment properties comprising an aggregate of
4,308 residential units and situated on over 236 acres of land.
During the fourth quarter of 2014, Pure Multi was able to increase total revenues by 34.0% compared to the same
period in 2013, and obtain an increase of 8.1% in same property net rental income growth (2), an increase of 7.1% in
same property revenue growth (3) and an increase of 5.3% in same property average monthly rent per occupied unit
(4), during the same period.
Pure Multi earned an average monthly rent per occupied unit of $989.48, or $1.117 per square foot, on its entire
portfolio during the three months ended December 31, 2014 (three months ended December 31, 2013 - $916.62 and
$1.053, respectively) and average monthly rent per occupied unit of $957.89, or $1.090 per square foot, on its entire
portfolio during the year ended December 31, 2014 (year ended December 31, 2013 - $912.62 and $1.038,
respectively).
Pure Multi had mortgages payable of $256.7 million, with a weighted average interest rate of 3.86% as at December
31, 2014 (December 31, 2013 - $196.3 million and 4.12%, respectively).
The resulting loan to gross book value, after the transactions described above, was 57.9% as at December 31, 2014
(December 31, 2013 – 64.0%), well below the maximum indebtedness level of 70% stipulated within the LP
Agreement. See “Capital Structure”.
12
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Pure Multi’s interest
Number of properties
Number of residential units
Physical Occupancy
Leased Occupancy
Investment properties (000’s)
Mortgages payable (000’s)
Weighted average effective interest rate on mortgages payable
Loan to gross book value
As at December 31, 2014
14
4,308
97.6%
98.2%
$ 468,518
$ 256,735
3.86%
57.9%
As at December 31, 2013
13
3,614
95.7%
96.9%
$ 337,603
$ 196,333
4.12%
64.0%
Notes:
(1)
Pure Multi’s interest (non-IFRS measure); (1) represents the proportionate share of all assets, liabilities, revenues and
expenses of all its portfolio investments, and (2) prorates and accrues property tax liability and expense, on all portfolio
investments, based on the time period of ownership throughout the given reporting year;
Same property net rental income growth (non-IFRS measure) represents property net rental income for properties owned
during the entire comparative periods;
Same property revenue growth (non-IFRS measure) represents total property revenues, including other income, for
properties owned during the entire comparative periods; and
Same property average monthly rent per occupied unit (non-IFRS measure) represents average monthly rental income for
occupied units, net of concessions and discounts, for properties owned during the entire comparative periods.
(2)
(3)
(4)
Pure Multi’s interest
($000s, except per unit basis)
(all per unit amounts based on weighted average
number of units outstanding)
Rental revenue, same property(1)
Rental revenue, properties acquired/sold(2)
Total rental revenue - Pure Multi’s interest(3)
Net rental income, same property(4)
Net rental income, properties acquired/sold(5)
Total net rental income - Pure Multi’s interest(3)
Distributions
per Class A unit (basic and diluted)
per Class B unit (basic and diluted)
Distributable income(3)
per Class A unit (basic and diluted)
per Class B unit (basic and diluted)
Payout ratio
Funds from operations(3)
per Class A unit (basic and diluted)
per Class B unit (basic and diluted)
Payout ratio
Adjusted funds from operations(3)
per Class A unit (basic and diluted)
per Class B unit (basic and diluted)
Payout ratio
$
For the
year ended
December 31,
2014
21,890
26,585
48,475
12,112
13,999
26,111
11,919
0.38
2.98
14,467
0.47
3.62
82.4%
14,399
0.46
3.60
82.8%
13,280
0.43
3.32
89.8%
$
For the
year ended
December 31,
2013
20,725
10,858
31,583
11,162
5,195
16,357
8,371
0.37
2.09
8,437
0.37
2.11
99.2%
8,437
0.37
2.11
99.2%
7,691
0.34
1.92
108.8%
$
For the three
months ended
December 31,
2014
10,659
3,337
13,996
5,745
1,915
7,660
3,438
0.09
0.86
4,413
0.12
1.10
77.9%
4,344
0.12
1.09
79.1%
4,080
0.11
1.02
84.3%
$
For the three
months ended
December 31,
2013
9,952
491
10,443
5,313
220
5,533
2,377
0.09
0.59
2,650
0.10
0.66
89.7%
2,650
0.10
0.66
89.7%
2,413
0.10
0.60
98.5%
13
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Notes:
(1) Rental revenue, same property (non-IFRS measure) represents total property revenues, including other income, for
properties owned during the entire comparative periods;
(2) Rental revenue, properties acquired (non-IFRS measure) represents total property revenues, including other income, for
(3)
properties which were acquired or sold, therefore not owned during the entire comparative periods;
For an IFRS to non-IFRS reconciliation, see “Statement of Financial Position and Results of Operations Reconciliation”,
“Distributable Income”, and “Liquidity and Capital Resources – Funds from Operations and Adjusted Funds from
Operations”;
(4) Net rental income, same property (non-IFRS measure) represents property net rental income for properties owned during the
entire comparative periods; and
(5) Net rental income, properties acquired (non-IFRS measure) represents property net rental income for properties which were
acquired or sold, therefore not owned during the entire comparative periods.
Portfolio Summary
As at December 31, 2014, Pure Multi’s portfolio consists of 14 investment properties, with an aggregate of 4,308
residential units, located within three metropolitan areas: (i) Dallas - Fort Worth (“DFW”), Texas, (ii) Houston,
Texas and (iii) Phoenix, Arizona.
The weighted average physical occupancy rate was 97.6% and weighted average leased occupancy rate was 98.2%
for all properties owned as at December 31, 2014 (December 31, 2013 – 95.7% and 96.9%, respectively). Typical
residential property leases have terms between one to 12 months.
Property Name
Preserve at Arbor Hills
Location
DFW, TX
Fairways at Prestonwood
DFW, TX
Vistas at Hackberry Creek
DFW, TX
Windsong Apartments
DFW, TX
Fountainwood Apartments
DFW, TX
Livingston Apartments
Oakchase Apartments
DFW, TX
DFW, TX
Stoneleigh at Valley Ranch
DFW, TX
Sunset Point Apartment Homes DFW, TX
Prairie Creek Villas
Stoneleigh at Bear Creek
DFW, TX
DFW, TX
DFW, TX
Walker Commons
Houston, TX
The Boulevard at Deer Park
Houston, TX
Houston, TX
Year of
Acquisition
Units
Fair
Market
Value
($000s)
$ 41,034
19,000
48,190
19,200
23,251
28,300
16,500
25,642
27,600
70,900
52,587
As at December 31, 2014
Debt to
Fair
Market
Value Cap Rate
Physical
Occupancy
Leased
Occupancy
60.0%
45.6%
61.2%
28.9%
55.7%
55.9%
52.8%
53.4%
57.7%
44.7%
61.0%
5.85%
5.75%
6.25%
6.25%
6.25%
5.85%
6.25%
5.75%
6.25%
5.75%
5.75%
97.0%
97.4%
97.0%
98.1%
99.6%
100.0%
97.0%
98.1%
99.7%
100.0%
98.3%
96.2%
98.6%
97.3%
97.4%
98.6%
98.3%
97.0%
98.6%
97.8%
98.3%
99.3%
330
156
560
264
288
180
236
210
408
464
436
3,532
372,204
53.5%
5.95%
98.0%
98.6%
352
216
568
43,866
24,148
64.9%
68.2%
6.00%
5.65%
94.9%
98.6%
95.5%
99.1%
68,014
66.1%
5.88%
96.3%
96.8%
2014
2013
2013
2013
2013
2013
2012
2012
2012
2012
2012
2014
2013
San Brisas Apartments (1)
Phoenix, AZ
2013
& 2014
208
28,300
60.0%
5.35%
93.8%
95.2%
Portfolio Total
4,308
$ 468,518
55.7%
5.90%
97.6%
98.2%
14
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Note:
(1)
Pure Multi acquired a 20% ownership interest in San Brisas during 2013 and acquired the remaining 80% ownership
interest during 2014.
Properties Acquired During 2014
On June 27, 2014, Pure Multi, through the US REIT, acquired Walker Commons, a multi-family apartment
community, located in Houston, Texas, for a purchase price of $43,800,000, plus standard closing costs and
adjustments. As part of the adjustments made on closing, Pure Multi agreed to pay to the seller, Sunstone U.S.
Opportunity (No. 2) Realty Trust (see “Related Party Transactions”), $1,689,631, which is equal to the fair market
value adjustment that Pure Multi would have incurred if it had assumed the mortgage as part of the acquisition, for a
portion of the mortgage buyout costs. This additional cost was treated as an acquisition cost at the time of the
acquisition. The acquisition was financed with proceeds from the May 2014 Offering and a new five year mortgage
in the amount of $28,470,000.
On August 28, 2014, Pure Multi, through the US REIT, acquired the Preserve, a multi-family apartment community,
located in Plano, Texas, for a purchase price of $41,000,000, plus standard closing costs and adjustments. This
acquisition was financed with proceeds from the July 2014 Offering and a new seven year mortgage in the amount
of $24,600,000.
On August 28, 2014, Pure Multi, through the US REIT, acquired the remaining 80% interest in San Brisas, a multi-
family apartment community, located in Chandler, Arizona, for a purchase price of $22,640,000, plus standard
closing costs and adjustments. As part of the adjustments made on closing, Pure Multi agreed to pay to the seller,
Sunstone U.S. Opportunity (No. 2) Realty Trust (see “Related Party Transactions”), $1,236,807, which is equal to
the fair market value adjustment that Pure Multi would have incurred if it had assumed the mortgage as part of the
acquisition, for a portion of the mortgage buyout costs. This additional cost was treated as an acquisition cost at the
time of the acquisition. This acquisition was financed with proceeds from the July 2014 Offering and a new seven
year mortgage in the amount of $16,980,000.
Properties Sold During 2014
On December 18, 2014, Pure Multi, through the US REIT, sold Windscape, a multi-family apartment community,
located in Dallas, Texas, for a sale price of $10,500,000, plus standard closing costs and adjustments. The mortgage
payable, secured by Windscape, was paid off in full as of the same date.
July 2014 Class A Unit Offering
On July 29, 2014, Pure Multi completed the July 2014 Offering of 6,350,000 Class A Units, at a price of $4.75 per
Class A Unit, for gross proceeds of $30,162,500.
Proceeds from the July 2014 Offering were used to acquire the July 2014 Target Properties. The following tables
provide a description about Pure Multi’s previous disclosure regarding the proposed use of proceeds from the July
2014 Offering, as identified in Pure Multi’s short form prospectus dated July 22, 2014 (the “July 2014 Prospectus”),
available on SEDAR at www.sedar.com, and its actual use of such proceeds, including purchase prices (before
closing adjustments), mortgage proceeds and balance of funds to complete the acquisitions:
15
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Proposed Use of Proceeds
($000s)
Purchase Price
(Before Closing
Adjustments)
Estimated Mortgage
Proceeds
Estimated Balance
Required to Close
Proposed property purchases
$ 63,340
$
41,171
$
22,169
Unallocated working capital
-
-
6,036
Totals
$
63,340
$
41,171
$
28,205
Actual Use of Proceeds
($000s)
Purchase Price
(Before Closing
Adjustments)
Mortgage Proceeds
Balance Required to
Close
Property purchases to date
$ 63,640(1)
$
38,184(2)
$
25,456
Unallocated working capital
-
-
2,749
Totals
Notes:
(1) Pure Multi completed the acquisitions of the July 2014 Target Properties, which closed on August 28, 2014, with proceeds
$ 38,184
$ 63,640
28,205
$
from the July 2014 Offering.
(2) Pure Multi acquired the July 2014 Target Properties with proceeds from the July 2014 Offering and mortgages in the amount
of $24,600,000 and $13,584,000, respectively.
Pure Multi had anticipated acquiring the July 2014 Target Properties for an aggregate purchase price of $63,340,000
with $41,171,000 in estimated mortgage financing, as disclosed in the July 2014 Prospectus. Pure Multi
subsequently acquired the July 2014 Target Properties for $63,640,000 with $38,184,000 in actual mortgage
financing, as indicated in the table above. The decrease in actual mortgage financing resulted in Pure Multi using a
greater amount of the proceeds from the July 2014 Offering to complete the acquisitions and correspondingly
reduced the unallocated working capital compared to the disclosure in the July 2014 Prospectus.
16
Pure Multi-Family REIT LP
MD&A – December 31, 2014
OUTLOOK
Pure Multi has raised approximately $194.5 million, through public and private offerings, since it began operations
in July of 2012 to the date of this report. This includes the issuance of 34,834,824 Class A Units and 2,197,912
share purchase warrants for gross proceeds of $171.5 million, and the issuance of 23,000 Convertible Debentures for
gross proceeds of $23 million. These proceeds have been used to acquire a high-quality portfolio of apartment
communities, predominantly located within the Dallas-Fort Worth area, but also with exposure to the Houston and
Phoenix sub-markets. Pure Multi’s strategy is one of strong growth combined with steady cash distributions to
unitholders. Management continues to focus on core “Sunbelt” markets within the U.S. and the acquisition of well
located, quality apartment communities, with a conservative mix of medium to long-term conventional mortgage
debt.
As at December 31, 2014, Pure Multi’s portfolio consists of 14 investment properties, 4,308 high-quality apartment
units, comprising approximately 3.83 million rentable square feet and situated on 236 acres, located in Texas and
Arizona. Pure Multi’s platform in the U.S. consists of 85 employees, undertaking marketing, due diligence and
management, at its property level.
Looking back at the 2014 fiscal year, Pure Multi raised over $50.1 million, through the issuance of equity
instruments, and used these proceeds to acquire three investment properties located in Dallas-Fort Worth, Houston,
Texas and Phoenix, Arizona markets, thus increasing its presence into strong “Sunbelt” markets. In addition to
building the portfolio through acquisitions, management also began to work its base portfolio by strategically
divesting two of its assets, including one subsequent to December 31, 2014, at substantial return on equity gains,
with the intention to re-invest that capital into newer, Class A type assets. Pure Multi’s equity gains were enhanced
due to the execution of its value-add strategy, on both of these mid-1980’s built assets, since acquisition by way of
cosmetic physical improvements and aggressive property management. The first of these sales occurred on
December 18, 2014, when Pure Multi sold Windscape, located in Dallas, Texas, for gross proceeds of $10.5 million,
resulting in an average annualized return on equity of over 24%, since acquisition. Subsequent to the 2014 year end,
on January 14, 2015, Pure Multi completed its second divesture, when it sold Sunset Point Apartment Homes
(“Sunset Point”), located in Arlington, Texas, for gross proceeds of $27.95 million, which resulted in an average
annualized return on equity over 22%, since acquisition. With the net proceeds obtained from these sales,
approximately $16.4 million, Pure Multi intends on upgrading its portfolio by acquiring a newer, Class A type asset,
within the first half of 2015. Not only is Pure Multi upgrading the age of its portfolio, by way of these transactions,
but it is enhancing the value of its portfolio by acquiring a newer, Class A type asset, which typically have lower
maintenance costs and higher rents than a Class B type property. Pure Multi will continue to monitor the
capitalization rates within its markets throughout 2015, continue to execute on its value-add strategy, and will look
to recycle capital, by way of strategic upgrades, where management can create additional shareholder value, as they
have with their two most recent divestures.
In addition to generating shareholder value through acquisitions, Pure Multi is experiencing strong organic growth
on its current portfolio. On a year over year basis, during the 2014 fiscal year, Pure Multi achieved same property
revenue growth of over 5.6%, which led to same property net rental income growth of over 8.5%, when compared to
the 2013 fiscal year. Looking ahead at the 2015 fiscal year, Pure Multi does not expect the current decline in the
price of oil to have a significant impact on its current operations. The majority of Pure Multi’s portfolio is located
within the Dallas-Fort Worth area, which is a largely diversified market, and is not expected to be significantly
impacted by the current decline in the price of oil. Should oil prices remain at current levels for an extended period
of time, management expects there could be more of an impact in southern Texas, where Pure Multi has only two
investment properties, representing 13% of its residential units at December 31, 2014. Notwithstanding this
potential impact at this time, management is still expecting rental revenue to grow over prior year in this market,
perhaps just not to the same degree as in the prior year. On an overall portfolio basis, management believes Pure
Multi is well positioned to continue its strong organic rental revenue and net rental income growth into the 2015
year. Pure Multi will also look to grow through acquisitions of newer, Class A type assets, in markets across the
U.S. that are near the top in both population and job growth. There continues to be a large supply of acquisition
opportunities that come to the market, permitting Pure Multi to execute its growth plans with discipline.
Management is excited about the growth prospects of the Pure Multi investment platform over the coming months.
17
Pure Multi-Family REIT LP
MD&A – December 31, 2014
SECTION II
STATEMENT OF FINANCIAL POSITION AND RESULTS OF OPERATIONS RECONCILIATION
“Pure Multi’s interest” is a non-IFRS measure representing: (1) Pure Multi’s proportionate share of the financial
position and results of operations of its entire portfolio, taking into account the difference in accounting for joint
ventures using proportionate consolidation versus equity accounting; and (2) the accrual of property tax liability and
expense, on all portfolio investments, based on time period of ownership throughout the given reporting year. Pure
Multi’s interest does not have any standardized meaning prescribed by IFRS.
The following tables provide reconciliations from Pure Multi’s financial statements prepared in accordance with
IFRS to Pure Multi’s interest, as described above, for the affected current and comparative periods.
18
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Reconciliation of Consolidated Statement of Financial Position to Statement of Financial Position at Pure
Multi’s Interest:
As at December 31, 2013
($000s)
ASSETS
Non-current assets
Investment properties
Equity-accounted investment
Current assets
Prepaid expenses
Mortgage reserve fund
Amounts receivable
Cash and cash equivalents
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Mortgages payable
Convertible debentures
Preferred units of subsidiary
Current liabilities
Mortgages payable – current portion
Credit facility
Rental deposits
Unearned revenue
Accounts payable and accrued liabilities
TOTAL LIABILITIES
PARTNERS’ CAPITAL
TOTAL LIABILITIES AND PARTNERS’
CAPITAL
Consolidated (1)
Pure Multi’s Share of
Equity-Accounted
Investment (2)
Pure Multi’s
Interest (3)
$ 332,003
$ 5,600
$ 337,603
2,831
334,834
950
5,657
33
6,673
13,313
(2,831)
2,769
9
15
-
67
91
-
337,603
959
5,672
33
6,740
13,404
$ 348,147
$ 2,860
$ 351,007
$ 192,733
$ 2,757
$ 195,490
19,664
125
212,522
798
5,281
559
650
8,544
15,832
228,354
119,793
-
-
2,757
45
-
9
14
35
103
2,860
-
19,664
125
215,279
843
5,281
568
664
8,579
15,935
231,214
119,793
$ 348,147
$ 2,860
$ 351,007
Notes:
(1) Represents Pure Multi’s consolidated statement of financial position prepared in accordance with IFRS;
(2) Represents Pure Multi’s proportionate share of assets and liabilities of its joint venture that is accounted for on the equity
basis of accounting; and
(3) Represents Pure Multi’s proportionate ownership interest in assets and liabilities of all of its portfolio investments.
19
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Reconciliation of Consolidated Statement of Income and Comprehensive Income to Statement of Income and
Comprehensive Income at Pure Multi’s Interest:
Year ended
December 31, 2014
($000s)
REVENUES
Rental
OPERATING EXPENSES
Insurance
Property management
Property taxes
Property operating expenses
NET RENTAL INCOME
NET FINANCE INCOME
(EXPENSES)
Interest income
Interest expense
Distributions to subsidiary’s
preferred unitholders
NET OTHER INCOME
(EXPENSES)
Other income
General and administrative
Fair value adjustments to
investment properties
Loss on disposal of
investment property
Franchise taxes
SHARE OF LOSS OF
EQUITY-ACCOUNTED
INVESTMENT
NET INCOME AND
COMPREHENSIVE INCOME
Consolidated(1)
Pure Multi’s Share of
Equity-Accounted
Investment(2)
IFRIC 21
Property Tax
Adjustment(3)
Pure Multi’s Interest(4)
$ 48,133
$ 342
$ -
$
48,475
1,287
1,444
6,696
12,218
21,645
26,488
5
(10,343)
(16)
(10,354)
1
(770)
27,507
(235)
(329)
26,173
(358)
4
10
28
96
138
204
-
(589)
-
(589)
-
-
27
-
-
27
358
-
-
580
-
580
(580)
-
-
-
-
-
-
580
-
-
580
-
1,291
1,454
7,304
12,314
22,363
26,111
5
(10,932)
(16)
(10,943)
1
(770)
28,114
(235)
(329)
26,781
-
$ 41,949
$ -
$ -
$ 41,949
Notes:
(1) Represents Pure Multi’s consolidated statement of income and comprehensive income prepared in accordance with IFRS;
(2) Represents Pure Multi’s proportionate share of revenues and expenses of its joint venture that is accounted for using the
equity basis of accounting;
(3) Represents Pure Multi’s annual pro-rated portion of property tax expense, on its entire portfolio, that is accounted for under
IFRIC 21; and
(4) Represents Pure Multi’s interest, as previously described.
20
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Reconciliation of Consolidated Statement of Income and Comprehensive Income to Statement of Income and
Comprehensive Income at Pure Multi’s Interest:
Three months ended
December 31, 2014
($000s)
REVENUES
Rental
OPERATING EXPENSES
(RECOVERIES)
Insurance
Property management
Property taxes
Property operating expenses
NET RENTAL INCOME
NET FINANCE INCOME
(EXPENSES)
Interest income
Interest expense
Distributions to subsidiary’s
preferred unitholders
NET OTHER INCOME
(EXPENSES)
Other income
General and administrative
Fair value adjustments to
investment properties
IFRIC 21 fair value
adjustment to investment
properties
Loss on disposal of
investment property
Franchise taxes
SHARE OF LOSS OF
EQUITY-ACCOUNTED
INVESTMENT
NET INCOME AND
COMPREHENSIVE INCOME
Consolidated(1)
Pure Multi’s Share of
Equity-Accounted
Investment(2)
IFRIC 21
Property Tax
Adjustment(3)
Pure Multi’s Interest(4)
$ 13,996
$ -
$ -
$ 13,996
395
420
(96)
3,566
4,285
9,711
1
(3,036)
(4)
(3,039)
1
(209)
14,790
(1,709)
(235)
(94)
12,544
-
-
-
(2)
2
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,051
-
2,051
(2,051)
-
-
-
-
-
-
342
1,709
-
-
2,051
-
395
420
1,953
3,568
6,336
7,660
1
(3,036)
(4)
(3,039)
1
(209)
15,132
-
(235)
(94)
14,595
-
$ 19,216
$ -
$ -
$ 19,216
Notes:
(1) Represents Pure Multi’s consolidated statement of income and comprehensive income prepared in accordance with IFRS;
(2) Represents Pure Multi’s proportionate share of revenues and expenses of its joint venture that is accounted for using the
equity basis of accounting;
(3) Represents Pure Multi’s annual pro-rated portion of property tax expense, on its entire portfolio, that is accounted for under
IFRIC 21; and
(4) Represents Pure Multi’s interest, as previously described.
21
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Reconciliation of Consolidated Statement of Income and Comprehensive Income to Statement of Income and
Comprehensive Income at Pure Multi’s Interest:
Year ended
December 31, 2013
($000s)
REVENUES
Rental
OPERATING EXPENSES
Insurance
Property management
Property taxes
Property operating expenses
NET RENTAL INCOME
NET FINANCE INCOME
(EXPENSES)
Interest income
Interest expense
Distributions to subsidiary’s
preferred unitholders
Preferred units of subsidiary
offering costs
NET OTHER INCOME
(EXPENSES)
Other income
General and administrative
Fair value adjustments to
investment properties
Franchise taxes
SHARE OF LOSS OF
EQUITY-ACCOUNTED
INVESTMENT
NET INCOME AND
COMPREHENSIVE INCOME
Consolidated(1)
Pure Multi’s Share of
Equity-Accounted
Investment(2)
IFRIC 21
Property Tax
Adjustment(3)
Pure Multi’s Interest(4)
$ 31,456
$ 127
$ -
$ 31,583
761
942
3,467
8,584
13,754
17,702
2
(6,526)
(15)
(50)
(6,589)
6
(617)
4,141
(256)
3,275
(186)
2
4
9
34
49
78
-
(38)
-
-
(38)
-
-
(226)
-
(226)
186
-
-
1,423
-
1,423
(1,423)
-
-
-
-
-
-
-
1,423
-
1,423
-
763
946
4,899
8,618
15,226
16,357
2
(6,564)
(15)
(50)
(6,627)
6
(617)
5,339
(256)
4,472
-
$ 14,202
$ -
$ -
$ 14,202
Notes:
(1) Represents Pure Multi’s consolidated statement of income and comprehensive income prepared in accordance with IFRS;
(2) Represents Pure Multi’s proportionate share of revenues and expenses of its joint venture that is accounted for using the
equity basis of accounting;
(3) Represents Pure Multi’s annual pro-rated portion of property tax expense, on its entire portfolio, that is accounted for under
IFRIC 21; and
(4) Represents Pure Multi’s interest, as previously described.
22
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Reconciliation of Consolidated Statement of Income and Comprehensive Income to Statement of Income and
Comprehensive Income at Pure Multi’s Interest:
Three months ended
December 31, 2013
($000s)
REVENUES
Rental
OPERATING EXPENSES
Insurance
Property management
Property taxes
Property operating expenses
NET RENTAL INCOME
NET FINANCE INCOME
(EXPENSES)
Interest income
Interest expense
Distributions to subsidiary’s
preferred unitholders
NET OTHER INCOME
(EXPENSES)
Other income
General and administrative
Fair value adjustments to
investment properties
IFRIC 21 fair value
adjustment to investment
properties
Franchise taxes
SHARE OF LOSS OF
EQUITY-ACCOUNTED
INVESTMENT
NET INCOME AND
COMPREHENSIVE INCOME
Consolidated(1)
Pure Multi’s Share of
Equity-Accounted
Investment(2)
IFRIC 21
Property Tax
Adjustment(3)
Pure Multi’s Interest(4)
$ 10,316
$ 127
$ -
$ 10,443
247
310
-
2,840
3,397
6,919
1
(2,331)
(4)
(2,334)
1
(186)
5,047
(752)
(256)
3,853
(186)
2
4
9
34
49
78
-
(38)
-
(38)
-
-
-
-
1,464
-
1,464
(1,464)
-
-
-
-
-
-
(226)
712
-
-
(226)
186
752
-
1,464
-
249
314
1,473
2,874
4,910
5,533
1
(2,369)
(4)
(2,372)
1
(186)
5,533
-
(256)
5,091
-
$ 8,252
$ -
$ -
$ 8,252
Notes:
(1) Represents Pure Multi’s consolidated statement of income and comprehensive income prepared in accordance with IFRS;
(2) Represents Pure Multi’s proportionate share of revenues and expenses of its joint venture that is accounted for using the
equity basis of accounting;
(3) Represents Pure Multi’s annual pro-rated portion of property tax expense, on its entire portfolio, that is accounted for under
IFRIC 21; and
(4) Represents Pure Multi’s interest, as previously described.
23
Pure Multi-Family REIT LP
MD&A – December 31, 2014
RESULTS OF OPERATIONS
All of the information presented below relates to Pure Multi’s interest, unless noted otherwise.
Pure Multi’s interest
($000s, except per unit basis)
For the year ended
December 31, 2014
For the year ended
December 31, 2013
For the three
months ended
December 31, 2014
For the three
months ended
December 31, 2013
$
48,475
$
31,583
$
13,996
$
10,443
Revenues
Rental
Operating Expenses
Insurance
Property management
Property taxes
Property operating expenses
Net Rental Income
Net Finance Income (Expenses)
Interest income
Interest expense
Distributions to subsidiary’s
preferred unitholders
Preferred units of subsidiary
offering costs
Other Income (Expenses)
Other income
General and administrative
Fair value adjustments to
investment properties
Loss on disposal of
investment property
Franchise taxes
Earnings per Class A unit – basic
and diluted
Weighted average number of
Class A units – basic and diluted
Earnings per Class B unit – basic
and diluted
Weighted average number of
Class B units – basic and diluted
1,291
1,454
7,304
12,314
22,363
26,111
5
(10,932)
(16)
-
(10,943)
1
(770)
28,114
(235)
(329)
26,781
763
946
4,899
8,618
15,226
16,357
2
(6,564)
(15)
(50)
(6,627)
6
(617)
5,339
-
(256)
4,472
395
420
1,953
3,568
6,336
7,660
1
(3,036)
(4)
-
249
314
1,473
2,874
4,910
5,533
1
(2,369)
(4)
-
(3,039)
(2,372)
1
(209)
15,132
(235)
(94)
14,595
1
(186)
5,533
-
(256)
5,091
8,252
0.33
24,089,000
2.06
200,000
200,000
200,000
200,000
24
Net Income and Comprehensive
Income
$ 41,949
$
$
$
14,202
$ 19,216
0.62
21,653,384
3.55
$
$
0.52
34,834,824
4.80
$
$
$
$
$
1.35
29,512,727
10.49
Pure Multi-Family REIT LP
MD&A – December 31, 2014
During the year ended December 31, 2014, based on Pure Multi’s interest, Pure Multi recorded rental revenue of
$48,474,655, net rental income of $26,111,241 and net income of $41,949,277 from its investment properties,
compared to $31,582,947, $16,356,863 and $14,202,208, respectively, during the year ended December 31, 2013.
During the year ended December 31, 2014, based on Pure Multi’s interest, Pure Multi incurred $769,883 of general
and administrative expenses (year ended December 31, 2013 - $617,168), realized a fair value adjustment to
investment properties gain of $28,114,209 (year ended December 31, 2013 - $5,338,983) and incurred franchise tax
expense of $329,145 (year ended December 31, 2013 - $255,670). The increase in revenues, expenses and net
income are primarily attributable to Pure Multi operating additional investment properties during the year ended
December 31, 2014, compared to the year ended December 31, 2013, in addition to strong organic rental revenue
growth experienced from the investment properties operated during both periods.
Pure Multi’s loan to gross book value ratio decreased to 57.9% at December 31, 2014 from 64.0% at December 31,
2013 and its distribution payout ratio on Distributable Income was 82.4% for the year ended December 31, 2014
(year ended December 31, 2013 – 99.2%). For further clarity, Pure Multi’s loan to gross book value ratio is defined
as the ratio between Pure Multi’s overall borrowed money, including the face amount outstanding of any convertible
debentures, and the total book value of the assets plus accumulated depreciation and amortization in respect of such
assets. Pure Multi defines distribution payout ratio as the percentage of Distributable Income that is paid out to
unitholders (see “Distributable Income”). For additional information, see “Liquidity and Capital Resources –
Distributed Cash”.
Rental Revenue
Rental revenue from investment properties includes recoveries of specified operating expenses, in accordance with
the terms of the lease agreements.
Operating Expenses
Operating expenses include costs relating to such items as cleaning, building repairs and maintenance, property
repairs and maintenance, HVAC, property payroll, insurance, property taxes, utilities and property management fees
among other items. The following table illustrates operating expenses as a percentage of total operating expenses:
Pure Multi’s interest
Insurance
Property management
Property taxes
Property operating expenses
For the year ended
December 31, 2014
5.8%
6.5%
32.7%
55.0%
For the year ended
December 31, 2013
5.0%
6.2%
32.2%
56.6%
For the three
months ended
December 31, 2014
6.2%
6.6%
30.8%
56.4%
For the three
months ended
December 31, 2013
5.1%
6.4%
30.0%
58.5%
100.0%
100.0%
100.0%
100.0%
Finance Income
Finance income consists of interest income which was earned from bank deposits at Pure Multi and the property
level.
25
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Finance Expenses
Finance expenses consist of interest expense, distributions to subsidiary’s preferred unitholders and preferred units
of subsidiary offering costs (see “Financial Condition – Preferred Units of Subsidiary”). Pure Multi declared
distributions in the amount of $15,625 to the subsidiary’s preferred unitholders during the year ended December 31,
2014 (year ended December 31, 2013- $14,888). Preferred units of subsidiary offering costs are the costs incurred
by Pure Multi that relate to the issuance of the preferred units of subsidiary. During the year ended December 31,
2014, Pure Multi did not incur any costs relating to the preferred units of subsidiary offering costs (year ended
December 31, 2013 - $50,454).
Interest Expense
Interest expense consists of mortgage interest, convertible debenture interest, credit facility interest, amortization of
transaction costs, amortization of mark to market mortgage adjustment and accretion of convertible debentures.
The weighted average interest rate on the mortgages, based on Pure Multi’s interest, is 3.86% per annum as at
December 31, 2014 (December 31, 2013 - 4.12%) and the mortgages mature between 2017 and 2028 with a
weighted average mortgage term of 6.8 years remaining (December 31, 2013 - 8.0 years remaining). Pure Multi
intends to refinance any mortgages which mature within six months of the maturity date.
General and Administrative Expenses
General and administrative expenses are primarily comprised of directors’ fees, directors’ and officers’ liability
insurance, professional fees, legal fees, filing fees, and administrative expenses. Professional fees include auditing
and tax fees. Administrative expenses include US REIT compliance expenditures, investor relations expenses and
bank charges. For the year ended December 31, 2014, total general and administrative expenses amounted to 1.6%
of rental revenue (year ended December 31, 2013 - 2.0%). Pursuant to the Asset Management Agreement with the
Managing GP, as described under “Related Party Transactions”, Pure Multi will not compensate the Managing GP
for its services, which include providing asset management, administrative and reporting services. The Asset
Management Agreement also requires the Managing GP to provide Pure Multi with support services consisting of
office space and equipment and the necessary clerical and secretarial personnel for the administration of its day-to-
day activities, at no cost.
The following table illustrates corporate expenses as a percentage of overall general and administrative expenses:
For the year ended
December 31, 2014
4.4%
43.6%
17.3%
12.6%
22.1%
For the year ended
December 31, 2013
4.7%
53.3%
12.0%
10.9%
19.1%
For the three
months ended
December 31, 2014
4.8%
48.6%
18.7%
11.6%
16.3%
For the three
months ended
December 31, 2013
3.9%
50.1%
19.9%
14.6%
11.5%
100.0%
1.6%
100.0%
2.0%
100.0%
1.5%
100.0%
1.8%
Pure Multi’s interest
Insurance
Professional fees
Legal and filing fees
Director’s fees
Administrative expenses
As a percentage of rental
revenue
Other Income (Expenses)
Other income (expenses), is income (expenses) incurred on foreign exchange gains (losses) incurred by Pure Multi
as a minor amount of transactions occur in Canadian dollars while cash and cash equivalents are held in United
States dollars.
26
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Fair Value Adjustment to Investment Properties
As Pure Multi revalues its investment properties at fair value each reporting date, it records the fair value
adjustments as an income or expense item. For the year ended December 31, 2014, based on Pure Multi’s interest,
Pure Multi recorded a gain of $28,114,209 in fair value adjustments to its investment properties (year ended
December 31, 2013 - $5,338,983). The weighted average capitalization rate of the investment properties at
December 31, 2014, based on Pure Multi’s interest, was 5.90% (December 31, 2013 - 6.16%).
Loss on Disposal of Investment Property
During the year ended December 31, 2014, Pure Multi sold Windscape for a sale price of $10,500,000. As a result
of the sale, Pure Multi incurred a loss on disposal of the investment property in the amount of $235,421. The loss on
disposal is a result of the selling costs incurred during the sales process, which reduced the net proceeds received
below the fair market value of the investment property on the date of the sale. Pure Multi did not sell any properties
during the year ended December 31, 2013.
Income Taxes
Pure Multi is not subject to tax under Part I of the Income Tax Act (Canada) (the “Tax Act”). Each partner
(or “unitholder”) of Pure Multi is required to include in computing the partner’s income for a particular taxation year
the partner’s share of the income or loss of Pure Multi for its fiscal year ending in or on the partner’s taxation year-
end, whether or not any of that income or loss is distributed to the partner in the taxation year. Accordingly, no
provision has been made for Canadian income taxes under Part I of the Tax Act.
Franchise Taxes
Texas Franchise Tax applicable to Pure Multi, for its investment properties operated in Texas, is equal to 1% of the
lesser of: (i) 70% of total revenue; (ii) 100% of total revenue less cost of goods sold; or (iii) 100% of total revenue
less compensation expense. Pure Multi recorded a provision for Texas Franchise Tax of $329,145 for the year
ended December 31, 2014 (year ended December 31, 2013 - $255,670).
Offering Costs
Offering costs are the costs incurred by Pure Multi that relate to the issuance of equity instruments, which are
included in the statement of partners’ capital. During the year ended December 31, 2014, Pure Multi incurred
$2,188,921 of offering costs (year ended December, 2013 - $2,350,475).
Distributions to Limited Partners
Pure Multi declared distributions in the amount of $11,322,956 to Class A unitholders and $595,945 to Class B
unitholders during the year ended December 31, 2014 (year ended December 31, 2013 - $7,952,485 and $418,552,
respectively).
DISTRIBUTABLE INCOME
Pure Multi uses Distributable Income (“DI”) to measure its ability to earn and distribute cash to unitholders. DI is a
non-IFRS measurement, using Pure Multi’s interest as previously disclosed, and should not be construed as an
alternative to net earnings determined in accordance with IFRS as an indicator of Pure Multi’s performance. DI as
computed by Pure Multi may differ from similar computations as reported by other similar business entities and,
accordingly, may not be comparable to DI as reported by such business entities. DI does not have any standardized
meaning prescribed by IFRS. Management calculates DI by adding to or deducting the following items from net
cash from operating activities: non-cash working capital items, IFRIC 21 adjustments, interest income, interest
expense, distributions to preferred unitholders and preferred units of subsidiary offering costs.
27
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Pure Multi’s interest
($000s, except per unit basis)
For the year ended
December 31,
2014
For the year ended
December 31,
2013
For the three
months ended
December 31,
2014
For the three
months ended
December 31,
2013
Net cash provided from operating activities
$
26,902
$
19,998
$
7,545
$
5,577
Adjustment:
Changes in non-cash operating working capital
(1,889)
(4,507)
IFRIC 21 property tax liability adjustment, net
Interest income
Interest expense
Distributions to subsidiary’s preferred
unitholders
Preferred units of subsidiary offering costs
Distributable Income
Class A units
Class B units
Distributions to Unitholders
Class A units
Class B units
Total distributions paid
Total distributions paid as a % of
Distributable Income
Weighted average number of units (000s)
Class A units
Class B units
Diluted weighted average number of units (000s)
Class A units
Class B units
Basic DI per unit
Class A units
Class B units
Diluted DI per unit
Class A units
Class B units
Distributions paid per unit
Class A units
Class B units
-
5
-
2
(10,535)
(6,990)
1,522
(1,709)
1
(2,942)
(4)
-
4,413
4,192
221
3,266
172
3,438
$
$
$
$
$
$
267
(752)
-
(2,438)
(4)
-
2,650
2,517
133
2,258
119
2,377
(15)
(51)
8,437
8,015
422
7,952
419
8,371
99.2%
77.9%
89.7%
21,653
200
21,653
200
0.37
2.11
0.37
2.11
0.37
2.09
$
34,835
200
34,835
200
0.12
1.10
0.12
1.10
0.09
0.86
$
24,089
200
24,089
200
0.10
0.66
0.10
0.66
0.09
0.59
$
$
$
$
(16)
-
$
14,467
13,744
723
$
11,323
596
$
11,919
82.4%
29,513
200
29,513
200
0.47
3.62
0.47
3.62
0.38
2.98
$
Pure Multi may distribute to unitholders on each distribution date such percentage of the DI of Pure Multi for the
month immediately preceding the month in which the distribution date falls, as the board of directors of the
Governing GP may determine at their discretion. Currently, the board of directors of the Governing GP intends to
make an annual cash distribution to unitholders of $0.375 per Class A Unit. Monthly distributions will be paid on
the distribution date to unitholders of record on the last business day of such month. See “Financial Condition –
Partners’ Capital”.
28
Pure Multi-Family REIT LP
MD&A – December 31, 2014
The board of directors of the Governing GP looks beyond quarter-to-quarter fluctuations in working capital when
making decisions regarding monthly distributions. As a result, management believes that the measure of DI, which
excludes the impact of changes in non-cash working capital, is a better measure for determining operating
performance. Management believes that the calculation of Standardized Distributable Cash, defined as cash flow
from operations, distorts Pure Multi’s quarter-to-quarter distributable cash and payout ratios, as non-cash operating
working capital fluctuates.
For the purpose of this MD&A, management defines “Diluted DI per unit” as Distributable Income divided by the
diluted weighted average number of units outstanding.
STANDARDIZED DISTRIBUTABLE CASH
The following is a reconciliation of Pure Multi’s DI to standardized distributable cash.
Pure Multi’s interest
($000s)
Distributable income
IFRIC 21 property tax liability adjustment, net
Interest income
Interest expense
Distributions to subsidiary’s preferred
unitholders
Preferred units of subsidiary offering costs
(Increase) decrease in amounts receivable
(Increase) decrease in prepaid expenses
Increase (decrease) in rental deposits
Increase (decrease) in unearned revenue
Increase (decrease) in accounts payable and
accrued liabilities
Standardized Distributable Cash
(net cash from operating activities)
SEGMENTED INFORMATION
For the year ended
December 31,
2014
14,467
-
(5)
10,535
$
For the year ended
December 31,
2013
$ 8,437
-
(2)
6,990
For the three
months ended
December 31,
2014
4,413
1,709
(1)
2,942
$
For the three
months ended
December 31,
2013
2,650
752
-
2,438
$
16
-
(453)
(129)
235
247
1,989
15
51
329
(547)
333
565
3,827
4
-
(429)
(365)
(12)
252
(968)
4
-
100
(492)
24
238
(137)
$
26,902
$
19,998
$
7,545
$
5,577
Pure Multi currently operates in one business segment, the owning and operating of multifamily apartment
properties in the Sunbelt region in the United States. The primary format for segment reporting is based on
geographical region and is consistent with the internal reporting provided to the chief operating decision-maker,
determined to be the general partners.
FINANCIAL CONDITION
Assets
Investment Properties
Investment properties are stated at fair value. Fair value adjustments to investment properties arising from changes
in fair values are included in the statement of income and comprehensive income in the period which they arise.
The investment properties are pledged as security against the mortgages payable.
29
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Prepaid Expenses
Prepaid expenses primarily consist of insurance, utility deposits and property taxes.
Mortgage Reserve Fund
The mortgage reserve fund consists of cash on deposit requested by the lenders to be retained in escrow to pay for
any repairs to the properties and certain costs. These funds will be released to pay the respective obligations or once
certain conditions are met, such as completion of repairs. As at December 31, 2014, the term for the current
mortgage reserve fund is less than 12 months. The amortized cost of the mortgage reserve fund is $6,208,641, based
on Pure Multi’s interest, as at December 31, 2014, (December 31, 2013 - $5,672,435).
Liabilities
The LP Agreement limits the indebtedness of Pure Multi to a maximum of 70% of the gross book value. The gross
book value is defined as the total book value of the assets plus accumulated depreciation and amortization in respect
of such assets. The indebtedness is 57.9% of the gross book value as at December 31, 2014 (December 31, 2013 -
64.0%).
Mortgages Payable
The mortgages bear interest at a weighted average effective rate of 3.86%, based on Pure Multi’s interest, as at
December 31, 2014 (December 31, 2013 - 4.12%) and mature between 2017 and 2028. The scheduled mortgage
payments, principal maturities and weighted average effective rate are as follows:
Pure Multi’s interest
December 31, 2014
($000s)
Weighted Average
Effective Rate
(on expiry)
Scheduled
Principal
Repayments
Principal
Maturities
Total
Repayments
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
Thereafter
Unamortized mortgage transaction costs
Unamortized mark to market mortgage adjustment
$
-
-
3.28%
3.51%
4.23%
-
3.26%
3.53%
4.13%
-
3.90%
1,608
2,083
2,676
2,830
2,503
2,434
2,287
1,572
1,074
655
2,567
$
$
-
-
8,209
14,615
90,030
-
37,060
26,955
33,317
-
23,099
3.86% $
22,289
$
233,285
1,608
2,083
10,885
17,445
92,533
2,434
39,347
28,527
34,391
655
25,666
255,574
(2,048)
3,209
$
256,735
30
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Preferred Units of Subsidiary
During the year ended December 31, 2013, the US REIT issued 125 preferred units at $1,000 per unit for gross
proceeds of $125,000. On consolidation, the preferred units of the US REIT are reflected as a liability of Pure
Multi.
The preferred units are non-voting preferred units. Unitholders holding preferred units are entitled to receive
dividends from the US REIT at a per annum rate equal to 12.5%, payable on June 30 and December 31 of each year.
Unitholders holding preferred units will be allocated such return in priority to any allocations or distributions to all
other classes and series of units of the US REIT. However, after payment of such return to unitholders holding
preferred units, preferred unitholders are not otherwise entitled to share in the income of the US REIT.
The US REIT may redeem the preferred units at any time, for a price equal to $1,000 per preferred unit, plus
accumulated and unpaid distributions and a redemption premium if the preferred units are redeemed before January
1, 2015. The redemption premium is equal to $100 per preferred unit if redemption occurs on or before December
31, 2014. There is no redemption premium for redemptions after December 31, 2014.
Due to the fixed distributions and preferred treatment for preferred units, they meet the definition of a liability. In
addition, the board of directors of the Governing GP does not expect to redeem any preferred units within the next
year. Thus, the preferred units are classified as non-current liabilities.
31
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Convertible Debentures
On August 7, 2013, Pure Multi issued $23,000,000 of 6.5% convertible unsecured subordinated debentures (the
“6.5% convertible debentures”) due on September 30, 2020. Each of the 6.5% convertible debentures is
denominated with a face value of $1,000 and is convertible at the holder’s option at any time into Class A Units at
conversion price of $5.65 per Class A Unit, in accordance with the terms of the trust indenture dated August 7,
2013. On or after September 30, 2016, but prior to September 30, 2018, the 6.5% convertible debentures may be
redeemed by Pure Multi, in whole or in part, at a price equal to their principal amount plus accrued and unpaid
interest thereon, provided the weighted average trading price of the Class A Units for the 20 consecutive trading
days, ending on the fifth trading day immediately preceding the date on which notice of redemption is given, is at
least 125% of the conversion price. After September 30, 2018, the 6.5% convertible debentures may be redeemed
by Pure Multi at any time. During the year ended December 31, 2014, none of the 6.5% convertible debentures
were converted into Class A Units. At December 31, 2014, $23,000,000 of the face value of the 6.5% convertible
debentures was outstanding (December 31, 2013 - $23,000,000).
The following summarizes the face and carrying values of the 6.5% convertible debentures at December 31, 2014:
Balance as at December 31, 2013
Amortization of transaction costs
Accretion of liability component
Convertible
Debentures
Face Value
$ 23,000,000
-
-
Liability
Component
Carrying Value
$ 19,663,721 $ 1,985,429
Equity
Component
Carrying Value
144,000
68,388
-
-
Balance as at December 31, 2014
$ 23,000,000
$ 19,876,109 $ 1,985,429
Credit Facility
On July 19, 2013, Pure Multi established a revolving credit facility with a lender in the amount of $9,900,000,
bearing interest at a variable interest rate based at 2.00% plus the London Interbank Offered Rate (“LIBOR”). At
December 31, 2014, Pure Multi had drawn down $5,546,485 (December 31, 2013 - $5,396,485) of the revolving
credit facility bearing an interest rate at 2.1570% (December 31, 2013 – 2.1675%). The revolving credit facility is
secured by a charge in respect of Windsong Apartment Homes (“Windsong”), a multi-family apartment community
located in Dallas, Texas, and matures on July 19, 2016.
Partners’ Capital
The capital of Pure Multi consists of an unlimited number of Class A Units and Class B Units of Pure Multi and the
interest held by the Governing GP. The Governing GP has made a capital contribution of $20 to Pure Multi and has
no further obligation to contribute capital.
From the date of formation on May 8, 2012 to December 31, 2012, the Managing GP subscribed for 200,000 Class
B Units of Pure Multi, at a price of $5.00 per Class B Unit, for gross proceeds to Pure Multi of $1,000,000, which
entitles the Class B Unitholders, initially, to a 5% interest in Pure Multi. As of the date hereof, Pure Multi has
200,000 Class B Units outstanding.
From the date of formation on May 8, 2012 to December 31, 2013, Pure Multi issued 24,089,000 Class A Units for
gross proceeds of $121,283,350, less offering costs.
On May 21, 2014, Pure Multi completed the May 2014 Offering, a private placement offering of 4,395,824 Units, at
a price of $4.55 per Unit, for gross proceeds of $20,000,999. Each Unit consists of one Class A Unit and one-half of
one Warrant. Each Warrant entitles the holder to acquire one additional Class A Unit from Pure Multi at a price of
$5.15 per Class A Unit until November 20, 2016.
On July 29, 2014, Pure Multi completed the July 2014 Offering, a bought deal offering of 6,350,000 Class A Units,
at a price of $4.75 per Class A Unit for gross proceeds of $30,162,500.
32
Pure Multi-Family REIT LP
MD&A – December 31, 2014
As at December 31, 2014, Pure Multi has 34,834,824 Class A Units, 200,000 Class B Units and 2,197,912 Warrants
outstanding.
The capital of Pure Multi is divided into Class A Units and Class B Units. The Class A Units are the subject of the
public offerings described in Pure Multi’s prospectuses dated July 3, 2012, October 12, 2012, May 1, 2013 and July
22, 2014, available on SEDAR at www.sedar.com. The Class B Units were subscribed for by the Managing GP on
May 30, 2012. Except as set out in the LP Agreement, no Class A Unit or Class B Unit has any preference or
priority over another.
The Class A Units will share in a 95% equity interest in all distributions and all net assets of Pure Multi and the
Managing GP, as the holder of the Class B Units, will share in a 5% equity interest in all distributions and all net
assets of Pure Multi. These respective interests, which are called the “Class A Unit Percentage Interest” and “Class
B Unit Percentage Interest”, will remain fixed, notwithstanding the issue of further Class A Units, until the
occurrence of a Determination Event, as described below. Following the occurrence of a Determination Event, the
number of Class A Units to which the Class B Unitholder is entitled upon exercising the Conversion Rights (as
defined in the LP Agreement) attached thereto becomes fixed, and future issuances of Class A Units will result in a
decline in the Class B Unit Percentage Interest.
All distributions will be made to the holders of the Class A Units and the Class B Units in accordance with the Class
A Unit Percentage Interest and Class B Unit Percentage Interest, respectively. As described in the LP Agreement,
until a Determination Event occurs, distributions from Pure Multi will generally be made 95% to the Class A Units
and 5% to the Class B Units.
Pursuant to the LP Agreement, the Class B Unitholders as a class are entitled to convert some or all of their Class B
Units into Class A Units based on the Specified Ratio (as defined in the LP Agreement). Upon the Class B
Unitholders exercising their Conversion Rights, they will own that number of Class A Units which is equal to the
Class B Unit Percentage Interest (initially 5%) of all Class A Units outstanding after such conversion. The Class B
Unit Percentage Interest will remain fixed at 5% notwithstanding the issue of further Class A Units, until the
occurrence of a Determination Event. Following the occurrence of a Determination Event, the number of Class A
Units to which the Class B Unitholder is entitled upon exercising Conversion Rights becomes fixed, and future
issuances of Class A Units will result in a decline in the Class B Unit Percentage Interest. A Determination Event is
the earliest to occur of the following: (a) Pure Multi’s market capitalization exceeding $300,000,000 for a period of
10 consecutive trading days; (b) an arm’s length take-over bid being made for the Class A Units, provided that not
less than 51% of the Class A Units not held by the offer or are taken-up in such bid; and (c) substantially all of the
assets of Pure Multi being sold or Pure Multi being liquidated.
The Conversion Rights may be exercised by the Managing GP at any time provided that:
(a) Pure Multi is legally entitled to comply with its obligations in connection with the exercise of the Conversion
Rights; and
(b) the Class B Unitholder who exercises the Conversion Rights complies with all applicable securities laws.
Upon the exercise of the Conversion Rights, the Class B Unitholders will receive that number of Class A Units
which is equal to the Specified Ratio multiplied by the number of outstanding Class B Units. As such, pursuant to
the terms of the LP Agreement, the Class B Unitholders will receive such number of Class A Units representing the
same Class B Unit Percentage Interest in the net assets of Pure Multi as was previously designated in the form of
Class B Units. Subject to applicable laws, Pure Multi will redesignate all the interests of Class B Unitholders into
Class A Units at the Specified Ratio, as defined in LP Agreement, effective as of the date that Pure Multi receives a
notice of exercise of the Conversion Rights. Upon such occurrence, the interests of Class B Unitholders will be
redesignated as Class A Units. The Class B Units will not be required to be redeemed or cancelled.
33
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Pursuant to the LP Agreement, the Managing GP or any affiliate or associate of the Managing GP which is then the
Class B Unitholder, has agreed that it will not dispose of more than one-third of the Class A Units received by it
upon the conversion of the Class B Units in each consecutive twelve month period ending after the first anniversary
of the earlier of: (i) the date a Determination Event occurs; and (ii) the date upon which the conversion is completed.
This limitation will not apply where the Conversion Rights have been exercised in connection with a takeover bid or
a sale of substantially all of Pure Multi’s assets.
LIQUIDITY AND CAPITAL RESOURCES
Funds from Operations and Adjusted Funds from Operations
Funds from operations (“FFO”) is a non-IFRS measure, using Pure Multi’s interest as previously disclosed, and
should not be construed as an alternative to net earnings or cash flows, as applicable, determined in accordance with
IFRS. However, FFO is an operating performance measure which is widely used by the real estate industry and
Pure Multi has calculated FFO in accordance with the recommendations of the Real Property Association of Canada
(“REALpac”). Pure Multi’s method of calculating FFO may differ from other companies and accordingly may not
be comparable to similar measures presented by other companies.
The use of FFO, combined with the required IFRS presentations, has been presented for the purpose of improving
the understanding of operating results in the real estate industry by the investing public and in making comparisons
of the companies operating results more meaningful.
As FFO excludes fair value adjustments, amortization, and gains and losses from property dispositions, it provides a
performance measure that, when compared period over period, reflects the impact on operations of trends in
occupancy levels, rental rates, operating costs and realty taxes; acquisition activities; and interest costs, and provides
a perspective of financial performance that is not immediately apparent from net earnings determined in accordance
with IFRS.
FFO is a widely accepted supplemental measure of financial performance for real estate entities; however, it does
not represent amounts available for capital programs, debt service obligations, commitments or uncertainties. FFO
should not be interpreted as an indicator of cash generated from operating activities and is not indicative of cash
available to fund operating expenditures, or for the payment of cash distributions. FFO is simply one measure of
operating performance.
Adjusted funds from operations (“AFFO”) is also a non-IFRS measure, using Pure Multi’s interest as previously
disclosed, and should not be construed as an alternative to net earnings or cash flows, as applicable, determined in
accordance with IFRS. However, AFFO is widely accepted as a performance measurement tool in the real estate
industry. AFFO is calculated by adjusting the FFO for non-cash compensation items, and maintenance capital
expenditures. Pure Multi’s method of calculating AFFO may differ from other companies and accordingly may not
be comparable to similar measures presented by other companies.
34
Pure Multi-Family REIT LP
MD&A – December 31, 2014
The following table provides the analysis of Pure Multi’s FFO and AFFO performance:
Pure Multi’s interest
($000s, except per unit basis)
For the year ended
December 31,
2014
For the year ended
December 31,
2013
For the three
months ended
December 31,
2014
For the three
months ended
December 31,
2013
Net income and comprehensive income
$ 41,949
$ 14,202
$ 19,216
$ 8,252
Adjustment:
Amortization of transaction costs
Amortization of mark to market mortgage
adjustments
Valuation (gain) loss from investment
properties
Loss on disposal of investment property
Property tax adjustments on acquisition or sale
IFRIC 21 fair value adjustment to investment
properties
IFRIC 21 property tax liability adjustment, net
Funds from operations
Maintenance capital provision (1)
Accretion of convertible debentures
Capital expenditures (recoveries) related to
acquisition of investment properties (1)
1,218
(890)
(27,534)
235
(580)
-
-
242
(669)
(3,916)
-
(1,423)
-
-
200
(174)
(14,790)
235
(342)
1,709
(1,709)
104
(173)
(4,821)
-
(712)
752
(752)
$ 14,399
(1,187)
$ 8,437
(826)
68
-
-
80
$
4,345
$ 2,650
(333)
68
-
(271)
-
34
Adjusted funds from operations
$ 13,280
$ 7,691
$
4,080
$ 2,413
Weighted average number of units (000s)
Class A units
Class B units
Diluted weighted average number of units (000s)
Class A units
Class B units
FFO per unit - Basic
Class A units
Class B units
FFO per unit - Diluted
Class A units
Class B units
Payout Ratio on FFO
AFFO per unit - Basic
Class A units
Class B units
AFFO per unit – Diluted
Class A units
Class B units
Payout Ratio on AFFO
29,513
200
29,513
200
0.46
3.60
0.46
3.60
82.8%
0.43
3.32
0.43
3.32
89.8%
$
$
$
$
21,653
200
21,653
200
34,835
200
34,835
200
24,089
200
24,089
200
$ 0.37
$ 0.12
$ 0.10
2.11
1.09
0.66
$ 0.37
$ 0.12
$ 0.10
2.11
99.2%
1.09
79.1%
0.66
89.7%
$ 0.34
$ 0.11
$ 0.10
1.92
1.02
0.60
$ 0.34
$ 0.11
$ 0.10
1.92
108.8%
1.02
84.3%
0.60
98.5%
35
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Notes:
(1) Based on an industry estimate of $300 per residential unit per year. This maintenance capital provision is estimated to be
incurred on the property portfolio as to sustain its current revenue rental income-generating potential into future periods.
Pure Multi does not include capital expenditures that increase the value of the current rental revenue, or initial capital
expenditures that are required to be performed upon acquisition of an investment property.
The following is a reconciliation of the Pure Multi’s AFFO and FFO to cash provided by operations:
For the year ended
December 31,
2014
$ 13,280
1,187
(68)
For the year ended
December 31,
2013
7,691
826
-
$
For the three
months ended
December 31,
2014
$ 4,080
333
(68)
For the three
months ended
December 31,
2013
2,413
271
-
$
Pure Multi’s interest
($000s)
Adjusted funds from operations
Maintenance capital provision
Accretion of convertible debentures
Capital expenditures (recoveries) related to
acquisition of investment properties
Funds from operations
(Increase) decrease in accounts receivable
(Increase) decrease in prepaid expenses
Increase (decrease) in rental deposits
Increase (decrease) in accounts payable and
accrued liabilities
Increase (decrease) in unearned revenue
IFRIC 21 property tax liability adjustment, net
Accretion of convertible debentures
Interest income
Interest expense
Distributions to subsidiary’s preferred unitholders
Preferred units of subsidiary offering costs
-
14,399
(453)
(129)
235
1,989
247
-
68
(5)
10,535
16
-
(80)
8,437
329
(547)
333
3,827
565
-
-
(2)
6,990
15
51
-
4,345
(429)
(365)
(12)
(968)
252
1,709
68
(1)
2,942
4
-
Net cash provided from operating activities
$ 26,902
$
19,998
$ 7,545
$
Capital Resources
Cash generated by investment properties represents the primary source of funds to fund total distributions to limited
partners of $11,918,901 for the year ended December 31, 2014 (year ended December 31, 2013 - $8,371,037).
There are no significant working capital requirements that currently exist and there are no pending items that may
affect liquidity. There are no legal or practical restrictions on the ability of Pure Multi’s properties to transfer funds
to Pure Multi.
Proceeds from the issuance of Class A Units, Warrants, Convertible Debentures, a revolving credit facility and
conventional mortgage financing have been used mainly to fund property acquisitions. Pure Multi intends to
refinance any mortgages which mature within six months of maturity.
Management expects to be able to meet all of Pure Multi’s ongoing obligations and to finance future growth through
cash generated by operations, the issuance of securities and by using conventional mortgages. Pure Multi is not in
default or arrears on any of its obligations including distribution payments, interest or principal payments on debt.
(34)
2,650
100
(492)
24
(137)
238
752
-
-
2,438
4
-
5,577
36
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Distributed Cash
In accordance with National Instrument 41-201, Pure Multi is required to provide additional disclosure relating to
cash distributions.
For the three months and year ended December 31, 2014, cash provided from operating activities less interest paid
(“adjusted cash provided from operating activities”), was more than cash distributions declared. Management
expects that adjusted cash provided from operating activities will continue to exceed cash distributions declared.
Pure Multi’s interest
($000s)
Cash provided from operating activities
Less interest paid
Adjusted cash provided from operating activities
Actual cash distributions paid or payable
Surplus (shortfall) of cash provided from
operating activities over cash distributions paid
For the year ended
December 31,
2014
26,902
(10,605)
16,297
11,919
$
$
For the year ended
December 31,
2013
19,998
(6,091)
13,907
8,371
For the three
months ended
December 31,
2014
7,545
(2,576)
4,969
3,438
$
For the three
months ended
December 31,
2013
5,577
(2,033)
3,544
2,377
$
$
4,378
$
5,536
$
1,531
$
1,167
For the three months and year ended December 31, 2014, net income was more than cash distributions declared.
Management expects net income to continue to exceed cash distributions declared.
Pure Multi’s interest
($000s)
Net income
Actual cash distributions paid or payable
Surplus (shortfall) of net income over cash
distributions paid
CAPITAL STRUCTURE
For the year ended
December 31,
2014
41,949
11,919
$
For the year ended
December 31,
2013
14,202
8,371
$
For the three
months ended
December 31,
2014
19,216
3,438
$
For the three
months ended
December 31,
2013
8,252
2,377
$
$
30,030
$
5,831
$
15,778
$
5,875
Pure Multi defines capital as the aggregate of partners’ capital, preferred units of subsidiary and long term debt.
Pure Multi’s objectives in managing capital are to maintain a level of capital that complies with investment and debt
restrictions pursuant to the initial offering prospectus; complies with existing debt covenants, if any; funds its
business strategies; and builds long-term partners’ value. Pure Multi’s capital structure is approved by the board of
directors of the Governing GP through its periodic reviews.
The LP Agreement provides for a maximum indebtedness (or “loan”) level of up to 70% of the gross book value.
The term “indebtedness” means any obligation of Pure Multi for borrowed money (including the face amount
outstanding under any convertible debentures and any outstanding liabilities of Pure Multi arising from the issuance
of subordinated notes but excluding any premium in respect of indebtedness assumed by Pure Multi for which Pure
Multi has the benefit of an interest rate subsidy), but excludes trade accounts payable, distributions payable to
unitholders, preferred units of subsidiary, accrued liabilities arising in the ordinary course of business and short-term
acquisition credit facilities. The LP Agreement defines “gross book value” as the book value of the assets of Pure
Multi plus the amount of accumulated depreciation and amortization in respect of such assets (and related intangible
assets), the amount of future income tax liability arising out of indirect acquisitions and excluding the amount of any
receivable reflecting interest rate subsidies on any debt assumed by Pure Multi. Pure Multi’s indebtedness is 57.9%
as at December 31, 2014 (December 31, 2013 – 64.0%).
37
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Maintaining a relatively low indebtedness ratio is important in current economic conditions because it allows Pure
Multi to access additional financing, if necessary.
The LP Agreement allows the board of directors of the Governing GP, at their discretion, to allocate to the
unitholders in each year all or a portion of Pure Multi’s income for the year, as calculated in accordance with the
Tax Act, after all permitted deductions under the Tax Act have been taken. The board of directors of the Governing
GP also reviews the cash distribution paid to the unitholders on a regular basis. The total distributions declared to
Class A unitholders during the year ended December 31, 2014 was $11,322,956 (year ended December 31, 2013 -
$7,952,485). The total distributions declared to Class B unitholders during the year ended December 31, 2014 was
$595,945 (year ended December 31, 2013 - $418,552).
Pure Multi was in compliance with all restrictions during the years ended December 31, 2014 and 2013.
The capital structure consisted of the following components at December 31, 2014 and 2013:
Pure Multi’s interest
($000s)
Capital
Mortgages payable
Convertible debentures
Preferred units of subsidiary
Partners’ capital
Total Capital
December 31, 2014
December 31, 2013
Change
$ 256,735
19,876
125
197,798
$ 474,534
$ 196,333
19,664
125
119,793
$ 335,915
$
60,402
212
-
78,005
$ 138,619
The total capital of Pure Multi increased during the year ended December 31, 2014 primarily due to the issuance of
additional Class A Units, proceeds of mortgages related to the acquisitions and net income earned from operations.
These increases were partially offset by the repayment of mortgages payable and distributions to the limited
partners.
FINANCIAL INSTRUMENTS
For certain of Pure Multi’s financial instruments, including cash and cash equivalents, amounts receivable, mortgage
reserve fund, credit facility, and accounts payable and accrued liabilities, the carrying amounts approximate the fair
values due to the short-term nature of the instruments.
The fair values of the mortgages payable and preferred units of subsidiary have been calculated based on discounted
future cash flows using discount rates that reflect current market conditions for instruments having similar terms and
conditions. Discount rates are either provided by lenders or are observable in the open market. The fair value of the
convertible debentures has been calculated using quoted prices in active markets.
Pure Multi’s interest
($000s)
Mortgages payable
Preferred units of subsidiary
Convertible debentures
December 31, 2014
Carrying
Amount
$ 256,735
125
19,876
Fair Value
$ 262,023
125
22,885
December 31, 2013
Carrying
Amount
$ 196,333
125
19,664
Fair Value
$ 201,598
125
21,390
OFF-BALANCE SHEET ITEMS
Pure Multi does not have any off-balance sheet items.
38
Pure Multi-Family REIT LP
MD&A – December 31, 2014
SECTION III
SUMMARY OF SELECTED ANNUAL INFORMATION
Pure Multi’s interest
($000s, except per unit basis)
Rental revenue
Net rental income
Net income and comprehensive income
Total assets
Total non-current assets
Total liabilities
Total non-current liabilities
Distributions
Per Class A Unit
Per Class B Unit
Basic and diluted net income per Class A Unit
Basic and diluted net income per Class B Unit
For the
year ended
December 31, 2014
For the
year ended
December 31, 2013
From date of formation
on May 8, 2012 to
December 31, 2012
$ 48,475
$ 31,583
$
26,111
41,949
492,791
468,518
294,993
275,128
11,919
$ 0.38
$ 2.98
$ 1.35
$ 10.49
16,357
14,202
351,007
337,603
231,214
215,279
8,371
$ 0.37
$ 2.09
$ 0.62
$ 3.55
6,071
3,097
1,700
194,636
175,916
115,309
111,188
2,599
$ 0.18
$ 0.65
$ 0.12
$ 0.42
Pure Multi’s total assets and liabilities have increased significantly during the year ended December 31, 2014 due to
acquisitions and fair value increases of its investment properties. As at December 31, 2014, Pure Multi held 14
investment properties comprising 4,308 residential units and 3,830,279 gross rentable square feet, compared to 13
investment properties with 3,614 residential units and 3,145,166 gross rentable square feet as at December 31, 2013.
Total rental revenue from the investment properties was $48.5 million in 2014 compared to $31.6 million in 2013.
This increase is reflective of the increase in the number of days the investment properties were operating during
2014 compared to 2013, due to the timing of acquisitions, coupled with the organic growth in rental revenue
achieved at the investment properties operated during both periods.
SUMMARY OF QUARTERLY RESULTS
During the three months ended December 31, 2014, based on Pure Multi’s interest:
(cid:120)
Assets increased to $492,790,552 from $480,829,616 as at September 30, 2014. This increase was
primarily due to the fair value increase adjustment on current investment properties. As at December 31,
2014, Pure Multi had cash and cash equivalents of $16,490,085 and amounts receivable of $486,118,
compared to $11,280,271 and $57,063, respectively, as at September 30, 2014. The increase in cash and
cash equivalents is primarily due to the net proceeds received from the sale of Windscape.
39
Pure Multi-Family REIT LP
MD&A – December 31, 2014
(cid:120)
(cid:120)
(cid:120)
(cid:120)
(cid:120)
Liabilities decreased to $294,992,745 from $298,809,924 as at September 30, 2014. This decrease was
primarily due to the Windscape mortgage being paid upon sale of the investment property.
Partners’ capital increased to $197,797,807 from $182,019,692 as at September 30, 2014. This increase
was primarily due to the net income earned by Pure Multi during the period, and was partially offset by the
distributions declared to unitholders.
Pure Multi earned rental revenue of $13,995,547 from investment properties held during the quarter (three
months ended December 31, 2013 - $10,443,174). These properties incurred operating expenses of
$6,335,869, resulting in net rental income of $7,659,678 during the same period (three months ended
December 31, 2013 - $4,910,324 and $5,532,850, respectively). The significant increase in rental revenue,
operating expenses and net rental income was as a result of Pure Multi operating additional investment
properties in the current period compared to the comparative period.
Pure Multi incurred interest expense of $3,035,975 and distributions to subsidiary’s preferred unitholders of
$3,906 (three months ended December 31, 2013 - $2,368,995 and $3,907, respectively). This resulted in
net finance expenses of $3,038,989 during the same period (three months ended December 31, 2013 -
$2,372,453). The significant increases in net finance expenses was a direct result the additional number of
mortgages and investment properties operated by Pure Multi in the current period compared to the
comparative period.
Pure Multi incurred general and administrative expenses of $208,671, fair value gain on investment
properties of $15,132,158, incurred franchise tax expense of $93,608 and incurred a loss on disposal of
investment property of $235,421 (three months ended December 31, 2013 - $186,460, $5,533,088,
$255,670 and $nil, respectively).
During the three months ended December 31, 2014, based on Pure Multi’s interest, Pure Multi had net income of
$19,215,762 (three months ended December 31, 2013 - $8,251,860), as a result of the above transactions.
Pure Multi’s interest
Quarter ended
($000s, except per unit amounts)
Rental revenue
Operating expenses
Net rental income
Interest expense
General and administrative expenses
Net income and comprehensive income
Basic net income per unit
Class A units
Class B units
December 31,
2014
September 30,
2014
$ 13,996
$ 12,953
June 30,
2014
$ 10,900
March 31,
2014
$ 10,626
6,336
7,660
(3,036)
(209)
19,216
0.52
4.80
5,990
6,963
(3,213)
(141)
10,637
0.31
2.66
5,118
5,782
(2,356)
(226)
5,565
0.33
2.25
4,919
5,707
(2,326)
(194)
3,110
0.12
0.78
40
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Pure Multi’s interest
Quarter ended
($000s, except per unit amounts)
Rental revenue
Operating expenses
Net rental income
Interest expense
General and administrative expenses
Net income and comprehensive income
Basic net income per unit
Class A units
Class B units
Pure Multi’s interest
As at
($000s)
Total assets
Total liabilities
Partners’ capital
Investment properties
Mortgages payable
Pure Multi’s interest
As at
($000s)
Total assets
Total liabilities
Partners’ capital
Investment properties
Mortgages payable
December 31,
2013
September 30,
2013
$ 10,443
$
4,910
5,533
(2,369)
(186)
8,252
0.33
2.06
9,269
4,461
4,808
(1,954)
(156)
2,609
0.10
0.65
$
June 30,
2013
6,371
3,296
3,075
(1,206)
(152)
1,647
0.07
0.41
December 31,
2014
September 30,
2014
June 30,
2014
$ 492,791
$ 480,830
$ 403,967
294,993
197,798
468,518
256,735
298,810
182,020
462,725
262,183
257,326
146,641
389,797
223,995
December 31,
2013
September 30,
2013
June 30,
2013
$ 351,007
$ 341,174
$ 282,265
231,214
119,793
337,603
196,333
227,254
113,920
325,725
193,795
170,402
111,863
262,943
165,380
March 31,
2013
$
5,500
2,560
2,940
(1,034)
(122)
1,695
0.09
0.42
March 31,
2014
$ 347,489
226,963
120,525
337,945
196,046
March 31,
2013
$ 202,321
122,919
79,403
193,469
119,997
41
Pure Multi-Family REIT LP
MD&A – December 31, 2014
SECTION IV
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in accordance with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the
reporting period. Pure Multi’s significant accounting policies are described in note 3 to the December 31, 2014
audited consolidated financial statements.
The policies that are most subject to estimation and judgment are outlined below.
Valuation of Investment Properties
The fair value of the investment properties is determined by management, using recognized valuation techniques
supported, in certain instances, by independent real estate valuation experts.
The determination of the fair value of investment properties requires the use of estimates such as future cash flows
from assets (based on factors such as tenant profiles, future revenue streams and overall repair and condition of the
property), capitalization rates and discount rates applicable to those assets. These estimates are based on market
conditions existing at the reporting date.
The following approaches, either individually or in combination, are used by management, together with the
appraisals, in their determination of the fair value of the investment properties:
The Income Approach derives market value by estimating the future cash flows that will be generated by the
property and then applying an appropriate capitalization rate or discount rate to those cash flows. This approach can
utilize the direct capitalization method and/or the discounted cash flow analysis.
The Direct Comparison Approach involves comparing or contrasting the recent sale, listing or optioned prices of
properties comparable to the subject and adjusting for any significant differences between them.
Management reviews each appraisal obtained and ensures the assumptions used by the appraisers are reasonable and
the final fair value amount reflects those assumptions used in the various approaches above. Where an appraisal is
not obtained at the reporting date, management uses the approaches described above, for each investment property,
and estimates the fair value.
FUTURE ACCOUNTING CHANGES
Pure Multi’s significant accounting policies are described in note 3 to the December 31, 2014 audited consolidated
financial
statements, available on SEDAR at www.sedar.com or on Pure Multi’s website at
www.puremultifamily.com.
Adoption of new accounting policies
(a) IAS 32 – Financial instruments: presentation
In December 2011, the IASB made amendments to IAS 32, Financial Instruments: Presentation. The
amendments to IAS 32 clarify the requirements for offsetting financial instruments. The amended version of
IAS 32 is effective for Pure Multi’s year-end beginning January 1, 2014, with early adoption permitted. The
adoption of amendments to IAS 32 did not have an impact on Pure Multi’s consolidated financial statements.
42
Pure Multi-Family REIT LP
MD&A – December 31, 2014
(b)
IFRIC 21 – Levies
January 1, 2014, Pure Multi has retrospectively adopted IFRIC interpretation 21, Levies (“IFRIC 21”) for the
period beginning January 1, 2013. IFRIC 21 clarifies that an entity recognizes a liability for a levy when the
activity that triggers payment occurs, as identified by the relevant legislation. IFRIC 21 is applicable to all
levies imposed by governments under legislation, including property taxes, but does not apply to accounting
for income taxes, fines and penalties or for the acquisition of assets from governments. The adoption of IFRIC
21 requires Pure Multi to recognize the full amount of annual property tax liabilities at the point in time when
the property tax obligation is imposed. Pure Multi previously recognized property tax liabilities and related
expenses on a pro rata basis throughout the year. Therefore, the adoption of IFRIC 21 has resulted in Pure
Multi recording an annual property tax expense earlier than previously recognized. Typically property taxes
are adjusted for when the property is sold between buyer and seller based on days of ownership in the year. To
avoid double counting, a fair value adjustment to investments properties has been recorded by an amount
equivalent to the property tax expense which pertains to the periods beyond the current reporting period. The
effect of the implementation of IFRIC 21 has been applied retrospectively to the comparative periods and is
disclosed in note 4 to the December 31, 2014 audited consolidated financial statements.
Standards issued but not yet effective
(c)
IFRS 9 - Financial instruments
In November 2009, as part of the IASB’s project to replace International Accounting Standard (“IAS”) 39,
Financial Instruments: Recognition and Measurement, the IASB issued the first phase of IFRS 9, Financial
Instruments, which introduces new requirements for the classification and measurement of financial assets.
The standard was revised in October 2010 to include requirements regarding classification and measurement of
financial liabilities and is applicable for annual periods starting on or after January 1, 2018. The full impact of
the changes in accounting for financial instruments will not be known until the IASB’s project has been
completed.
(d)
IFRS 15 – Revenue from Contracts with Customers
In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). The new
standard provides a comprehensive five-step revenue recognition model for all contracts with customers and
requires management to exercise significant judgment and make estimates that affect revenue recognition.
IFRS 15 is effective for annual periods beginning on or after January 1, 2017, with earlier adoption permitted.
Pure Multi has not yet reviewed the impact of IFRS 15 on the consolidated financial statements.
SECTION V
RISKS AND UNCERTAINTIES
All income producing property investments are subject to a degree of risk and uncertainty. They are affected by
various factors including general market conditions and local market circumstances. An example of general market
conditions would be the availability of long-term financing whereas local conditions would relate to factors affecting
specific properties in a particular geographic location, such as changes in market lease rates as a result of an over-
supply of space or a reduction in demand for real estate. Management attempts to manage these risks by acquiring
investment properties in various cities with strong economic and growth indicators, and engaging property
management groups with local knowledge and experience.
43
Pure Multi-Family REIT LP
MD&A – December 31, 2014
The board of directors of the Governing GP has the overall responsibility for the establishment and oversight of Pure
Multi’s risk management framework. Pure Multi’s risk management policies are established to identify and analyze
the risks faced by Pure Multi, to set appropriate risk limits and controls, and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and in
response to Pure Multi’s activities.
In the normal course of business, Pure Multi is exposed to a number of risks that can affect its operating
performance. These risks, and the actions taken to manage them, are as follows:
Interest Rate and Financial Risk
Interest rate risk arises from the possibility that the value of, or cash flows related to, a financial instrument will
fluctuate as a result of changes in market interest rates. Pure Multi is exposed to financial risk from the interest rate
differentials between the market rate and the rates used on these financial instruments.
Pure Multi manages its financial instruments and interest rate risks based on its cash flow needs. Pure Multi
minimizes interest rate risk by obtaining long-term, fixed rate mortgages whenever possible. It targets a
conservative ratio of debt to gross book value within the range of 55% to 65% and is restricted under the LP
Agreement to a maximum of 70%. The credit facility is the only financial instrument that bears interest at a variable
rate, as currently all mortgages payable bear interest at fixed rates; therefore Pure Multi currently is not exposed to
significant interest rate risk.
The profile of Pure Multi’s interest-bearing financial instruments was:
Pure Multi’s interest
Fixed rate instruments
Mortgages payable
Convertible debentures
Preferred units of subsidiary
Variable rate instruments
Credit facility
Credit Risk
Face Value
December 31, 2014 December 31, 2013
$ 255,573,769
23,000,000
125,000
278,698,769
$ 194,160,399
23,000,000
125,000
217,285,399
5,546,485
5,396,485
Credit risk is the risk of financial loss to Pure Multi if a tenant, customer or counterparty to a financial instrument
fails to meet its contractual obligations, and arises principally from Pure Multi’s receivables from tenants.
Pure Multi’s exposure to credit risk is influenced mainly by the individual characteristics of each tenant. Pure Multi,
through the US REIT, minimizes the risk by checking tenants’ credit histories, requesting security deposits and
initiating a prompt collection process. In addition, there is no concentration of credit risk due to the large number of
individual tenants.
44
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Currency Risk
Pure Multi is exposed to minimal currency risk since a small portion of the expenses is in Canadian dollars.
Lease Rollover Risk
Lease rollover risk arises from the possibility that Pure Multi may experience difficulty renewing leases as they
expire or in re-leasing space vacated by tenants upon lease expiry. All leases of Pure Multi’s investment properties
have lease terms of one year or less. Typically, Pure Multi instructs its property managers to initiate the renewal
process before the existing leases expire. For any vacant spaces, Pure Multi uses qualified leasing agents to actively
market the spaces.
Class A Unit Prices
It is not possible to predict the price at which units will trade and there can be no assurance that an active trading
market for the Class A Units will be sustained. The Class A Units will not necessarily trade at values determined
solely by reference to the value of the investment properties of Pure Multi. Accordingly, the Class A Units may
trade at a premium or discount to the value implied by the value of Pure Multi’s investment properties. The market
price for the Class A Units may be affected by changes in general market conditions, fluctuations in the markets for
equity securities and numerous other factors beyond Pure Multi’s control.
Environmental Risk
As an owner of real property, Pure Multi is subject to various federal, state and municipal laws relating to
environmental matters.
Management carries out environmental inspections, by qualified environmental consultants, before a property is
purchased. Management is not aware of any material non-compliance with environmental laws with respect to the
current portfolio and is not aware of any pending or threatened investigations or actions by environmental regulatory
authorities in connection with the current portfolio.
Liquidity Risk
Real property investments tend to be relatively illiquid, with the degree of liquidity generally fluctuating in relation
to demand for and the perceived desirability of such investments. Such illiquidity may tend to limit Pure Multi’s
ability to vary its portfolio promptly in response to changing economic or investment conditions. If Pure Multi were
required to liquidate a real property investment, the proceeds to Pure Multi might be significantly less than the
aggregate carrying value of such property.
Liquidity risk is the risk that Pure Multi will not be able to meet its financial obligations as they fall due. Pure
Multi’s approach to managing liquidity is to ensure that it will have sufficient cash available to meet its liabilities
when due. In addition, Pure Multi intends to refinance any mortgages which mature within six months.
45
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Pure Multi’s interest
Oakchase Apartments
Windscape Apartment Homes
Stoneleigh at Valley Ranch
Sunset Point Apartment Homes
Prairie Creek Villas
Stoneleigh at Bear Creek
Fairways at Prestonwood
Vistas at Hackberry Creek
The Boulevard at Deer Park
Fountainwood Apartments
Livingston Apartments
San Brisas Apartments(1)
Walker Commons
Preserve at Arbor Hills
Nominal
interest rate
3.28%
3.52%
3.51%
3.54%
6.02%
3.45%
3.46%
3.90%
4.21%
4.46%
3.51%
3.26%
3.11%
3.26%
Year of
maturity
2017
-
2022
2022
2019
2019
2023
2028
2023
2023
2018
2021
2019
2021
Total mortgages principal payable
Unamortized mortgage transaction costs
Unamortized mark to market mortgage adjustment
December 31, 2014 December 31, 2013
Face value
$ 8,882,920
5,090,000
13,680,000
15,970,000
32,158,701
32,080,000
8,670,000
29,500,000
16,480,000
13,000,000
15,900,000
2,748,778
-
-
Face value
$ 8,706,995
-
13,680,000
15,921,585
31,712,271
32,080,000
8,670,000
29,500,000
16,480,000
12,948,076
15,824,842
16,980,000
28,470,000
24,600,000
255,573,769
(2,048,215)
3,209,439
194,160,399
(1,926,918)
4,099,337
Total carrying value of mortgages payable
$ 256,734,993
$ 196,332,818
Notes:
(1)On August 28, 2014, Pure Multi acquired a new mortgage payable on San Brisas Apartments and repaid its’ previous mortgage
payable, bearing an interest rate of 5.63%.
Tax Risk
The US REIT currently qualifies as a real estate investment trust for U.S. federal income tax purposes. Thus, the US
REIT is not subject to U.S. federal income tax. If the US REIT does not qualify or ceases to qualify as a REIT under
the REIT exception, adverse consequences could arise including a material reduction of distributions to unitholders
and Pure Multi.
There can be no assurance that Canadian or U.S. federal income tax laws regarding the treatment of REITs will not
be changed, or that administrative and assessment practices of the Canada Revenue Agency or IRS will not develop
in a manner which adversely affects Pure Multi or its unitholders.
RELATED PARTY TRANSACTIONS
Managing GP
Pure Multi is related to the Managing GP, by virtue of having an officer and director in common (Stephen Evans).
During the year ended December 31, 2014, Pure Multi declared distributions to the Managing GP in the amount of
$595,945 (year ended December 31, 2013 - $418,552). Included in accounts payable and accrued liabilities at
December 31, 2014 was $495,630 (December 31, 2013 - $357,956).
46
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Sunstone U.S. Opportunity Realty Trust
Pure Multi is related to Sunstone U.S. Opportunity Realty Trust, by virtue of having officers and directors in
common (Stephen Evans, Robert King and James Redekop).
There have been no related party transactions between Pure Multi and Sunstone U.S. Opportunity Realty Trust
during the year ended December 31, 2014. During the year ended December 31, 2013, Pure Multi acquired the
following investment properties from Sunstone U.S. Opportunity Realty Trust:
(cid:120) Windsong acquired on July 19, 2013;
(cid:120)
(cid:120)
(cid:120)
Fountainwood acquired on August 30, 2013;
Livingston acquired on August 30, 2013; and
20% interest in San Brisas acquired on October 1, 2013.
Pure Multi negotiated the purchase price of the properties above with reference to independently prepared third
party appraisals.
Sunstone U.S. Opportunity (No. 2) Realty Trust
Pure Multi is related to Sunstone U.S. Opportunity (No. 2) Realty Trust, by virtue of having officers and directors in
common (Stephen Evans, Robert King and James Redekop).
During year ended December 31, 2014, Pure Multi acquired the following investment properties from Sunstone U.S.
Opportunity (No. 2) Realty Trust:
(cid:120) Walker Commons acquired on June 27, 2014;
(cid:120)
(cid:120)
50% interest in Preserve acquired on August 28, 2014; and
80% interest in San Brisas acquired on August 28, 2014.
Pure Multi negotiated the purchase price of the properties above with reference to independently prepared third
party appraisals.
As part of the closing adjustments on the acquisitions of Walker Commons and the 80% interest in San Brisas, Pure
Multi paid to Sunstone U.S. Opportunity (No. 2) Realty Trust an amount equal to the fair market value adjustment
that Pure Multi would have incurred if it had assumed the mortgage as part of the acquisition. The total amount
paid, related to these adjustments, to Sunstone U.S. Opportunity (No. 2) Realty Trust during the year ended
December 31, 2014 was $2,926,438.
Sunstone U.S. Opportunity (No. 3) Realty Trust
Pure Multi is related to Sunstone U.S. Opportunity (No. 3) Realty Trust, by virtue of having officers and directors in
common (Stephen Evans, Robert King and James Redekop).
During the year ended December 31, 2014, Pure Multi acquired the following investment property from Sunstone
U.S. Opportunity (No. 3) Realty Trust:
(cid:120)
50% interest in Preserve acquired on August 28, 2014.
Pure Multi negotiated the purchase price of the property above with reference to an independently prepared third
party appraisal.
47
Pure Multi-Family REIT LP
MD&A – December 31, 2014
Tipton Asset Group, Inc.
Sunstone Multi-Family Management Inc. provides property management services to the US REIT pursuant to a
Property Management Agreement, dated May 9, 2012, as amended July 9, 2012. Sunstone Multi-Family
Management Inc. has subcontracted Tipton Asset Group, Inc. (“Tipton”) as the property manager for Pure Multi.
Pure Multi is related to Tipton by virtue of having an officer and director in common with a subsidiary of Pure Multi
(Bryan Kerns). Tipton charged $1,454,305 in property management fees during the year ended December 31, 2014
(year ended December 31, 2013 - $942,461). Included in accounts payable and accrued liabilities at December 31,
2014 was $nil (December 31, 2013 - $nil).
Compensation
Currently, the directors of the Governing GP who are not affiliated with or employees of the Managing GP receive
annual compensation in the amount of $12,500, plus $500 for attendance at meetings of the directors or any
committee. As well, the Governing GP indirectly reimburses such directors for any out of pocket expenses,
including out of pocket expenses for attending meetings. Pure Multi reimburses the Governing GP for such
amounts. In addition, Pure Multi has obtained insurance coverage for such directors. Compensation is reviewed on
an annual basis, giving consideration to Pure Multi’s growth and the extent of its portfolio.
Pure Multi compensates the directors of the Governing GP, who are not affiliated with or employees of the
Managing GP, through annual compensation. The amount incurred during the year ended December 31, 2014 was
$96,797 (year ended December 31, 2013 - $67,335).
Asset Management Agreement
The Managing GP, pursuant to the Asset Management Agreement, provides asset management, administrative and
reporting services to Pure Multi as its managing general partner. The Asset Management Agreement also requires
the Managing GP to provide Pure Multi with support services consisting of office space and equipment and the
necessary clerical and secretarial personnel for the administration of its day-to-day activities, at no cost. The Asset
Management Agreement may be terminated by Pure Multi at any time upon the occurrence of certain events of
default and at any other time upon not less than 60 days notice, without bonus or penalty. In lieu of the fees
typically associated with a third party asset management agreement, the Managing GP will only be entitled to a
reimbursement of any reasonable costs and expenses (including legal and audit costs but excluding personnel costs)
that it incurs providing asset management services to Pure Multi and will not be entitled to any other remuneration
or compensation for its services.
OUTSTANDING UNIT DATA
Except as set out in the LP Agreement, no Class A Unit or Class B Unit has any preference or priority over another.
The Class A Units and the Class B Units have voting rights as set out in the LP Agreement.
Upon completion of the offerings and exercise of the over-allotment option, holders of Class A Units share in a 95%
equity interest in all distributions and all net assets of Pure Multi, and the Managing GP, as the holder of Class B
Units, shares in a 5% equity interest in all distributions and all net assets of Pure Multi.
48
Pure Multi-Family REIT LP
MD&A – December 31, 2014
As at March 6, 2015, the following of Pure Multi’s securities were outstanding:
(a) 200,000 Class B Units. Pursuant to the LP Agreement, the Class B Unitholders as a class are entitled to
convert some or all of their Class B Units into Class A Units based on the Specified Ratio (as defined in the
LP Agreement). See “Financial Condition – Partners’ Capital”;
(b) 34,834,824 Class A Units;
(c) 2,197,912 Warrants; and
(d) 23,000 Convertible Debentures. The Convertible Debentures are convertible at the option of the holder and
redeemable by Pure Multi in accordance with the terms of the trust indenture dated August 7, 2013. See
“Financial Condition – Convertible Debentures”.
SECTION VI
SUBSEQUENT EVENTS
On January 14, 2015, Pure Multi, through the US REIT, sold Sunset Point Apartments (“Sunset Point”), a multi-
family apartment community, located in Arlington, Texas, for a sale price of $27,950,000, plus standard closing
costs and adjustments. The mortgage payable, secured by Sunset Point, was assumed by the purchaser on the same
date.
ADDITIONAL INFORMATION
Additional information relating to Pure Multi is available on SEDAR at www.sedar.com or on Pure Multi’s website
at www.puremultifamily.com.
TRADING SYMBOLS
TSX Venture Exchange: RUF.U, RUF.UN, RUF.DB.U
OTCQX: PMULF
49
PURE MULTI-FAMILY REIT LP
Consolidated Financial Statements
Year ended December 31, 2014
Expressed in United States dollars
The Preserve at Arbor Hills, Dallas TX
50
KPMG LLP
PO Box 10426 777 Dunsmuir Street
Vancouver BC V7Y 1K3
Canada
Telephone (604) 691-3000
(604) 691-3031
Fax
www.kpmg.ca
Internet
INDEPENDENT AUDITORS' REPORT
To the Directors of Pure Multi-Family REIT (GP) Inc.
We have audited the accompanying consolidated financial statements of Pure Multi-Family REIT LP,
which comprise the consolidated statement of financial position as at December 31, 2014 and 2013,
the consolidated statements of partners’ capital, income and comprehensive income, and cash flows
for the years then ended, and notes, comprising a summary of significant accounting policies and other
explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial
statements in accordance with International Financial Reporting Standards, and for such internal
control as management determines is necessary to enable the preparation of the consolidated financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our
audits. We conducted our audits in accordance with Canadian generally accepted auditing standards.
Those standards require that we comply with ethical requirements and plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial statements are free from
material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the consolidated financial statements. The procedures selected depend on our judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error. In making those risk assessments, we consider internal control relevant to the
entity’s preparation of the consolidated financial statements 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 entity’s internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to
provide a basis for our audit opinion.
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG
network of independent member firms affiliated with KPMG International Cooperative
(“KPMG International”), a Swiss entity.
KPMG Canada provides services to KPMG LLP.
51
Pure Multi-Family REIT LP
Page 2
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of Pure Multi-Family REIT LP as at December 31, 2014 and 2013, and its financial performance
and its cash flows for the years then ended in accordance with International Financial Reporting
Standards.
Chartered Accountants
March 5, 2015
Vancouver, Canada
52
ASSETS
Non-current assets
Investment properties (note 5)
Equity-accounted investment (note 6)
Current assets
Prepaid expenses
Mortgage reserve fund (note 7)
Amounts receivable
Cash and cash equivalents (note 8)
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Mortgages payable (note 9)
Convertible debentures (note 10)
Preferred units of subsidiary (note 11)
Current liabilities
Mortgages payable – current portion (note 9)
Credit facility (note 12)
Rental deposits
Unearned revenue
Accounts payable and accrued liabilities
Pure Multi-Family REIT LP
Consolidated Statement of Financial Position
Expressed in United States dollars
December 31, 2014
December 31, 2013
$ 468,518,077
-
468,518,077
$ 332,002,818
2,830,709
334,833,527
1,087,631
6,208,641
486,118
16,490,085
24,272,475
949,752
5,657,019
33,051
6,673,381
13,313,203
$ 492,790,552
$ 348,146,730
$ 255,126,917
19,876,109
125,000
275,128,026
$ 192,732,808
19,663,721
125,000
212,521,529
1,608,076
5,474,301
802,296
910,674
11,069,372
19,864,719
797,854
5,280,990
558,862
649,867
8,544,775
15,832,348
TOTAL LIABILITIES
294,992,745
228,353,877
PARTNERS’ CAPITAL (note 13)
197,797,807
119,792,853
TOTAL LIABILITIES AND PARTNERS’ CAPITAL
$ 492,790,552
$ 348,146,730
Nature of business and basis of presentation (note 1 and 2)
Subsequent event (note 21)
Approved on behalf of the Board of Directors of the General Partner,
Pure Multi-Family REIT (GP) Inc.:
“Robert W. King”
Robert W. King
Director
“Stephen J. Evans”
Stephen J. Evans
Director
The accompanying notes are an integral part of these consolidated financial statements
53
Pure Multi-Family REIT LP
Consolidated Statement of Partners’ Capital
Expressed in United States dollars
Limited
Partners
Class A
Limited
Partners
Class B
General
Partner
Other Equity
Items (Note 13)
Accumulated
Earnings (Deficit)
Total
Balance, January 1, 2014
$ 111,876,144
$ 1,000,000
$ 20
$ 1,985,429
$ 4,931,260
$ 119,792,853
Issuance of units
49,460,167
Issuance of warrants
Offering costs
Distributions to limited
partners
Net income for the
period
Balance,
December 31, 2014
-
(2,183,184)
-
-
-
-
-
-
-
-
-
-
-
-
-
703,332
(5,737)
-
-
-
-
-
49,460,167
703,332
(2,188,921)
(11,918,901)
(11,918,901)
41,949,277
41,949,277
$ 159,153,127
$ 1,000,000
$ 20
$ 2,683,024
$ 34,961,636
$ 197,797,807
Limited
Partners
Class A
Limited
Partners
Class B
General
Partner
Other Equity
Items (Note 13)
Accumulated
Earnings (Deficit)
Total
Balance, January 1, 2013
$ 79,226,619
$ 1,000,000
$ 20
$ -
$ (899,911)
$ 79,326,728
Issuance of units
Equity component of
convertible debentures
35,000,000
-
Offering costs
(2,350,475)
Distributions to limited
partners
Net income for the
period
Balance,
December 31, 2013
-
-
-
-
-
-
-
-
-
-
-
-
-
1,985,429
-
-
-
-
-
-
35,000,000
1,985,429
(2,350,475)
(8,371,037)
(8,371,037)
14,202,208
14,202,208
$ 111,876,144
$ 1,000,000
$ 20
$ 1,985,429
$ 4,931,260
$ 119,792,853
The accompanying notes are an integral part of these consolidated financial statements
54
Pure Multi-Family REIT LP
Consolidated Statement of Income and Comprehensive Income
Expressed in United States dollars
December 31, 2014
December 31, 2013
(Restated – note 4)
$ 48,132,585
$ 31,455,849
Year ended
REVENUES
Rental
OPERATING EXPENSES
Insurance
Property management
Property taxes
Property operating expenses
NET RENTAL INCOME
NET FINANCE INCOME (EXPENSES)
Interest income
Interest expense (note 14)
Distributions to subsidiary’s preferred unitholders
Preferred units of subsidiary offering costs
NET OTHER INCOME (EXPENSES)
Other income
General and administrative
Fair value adjustments to investment properties (note 5)
Loss on disposal of investment property (note 5)
Franchise taxes
1,286,961
1,443,890
6,696,196
12,217,725
21,644,772
26,487,813
4,851
(10,343,424)
(15,625)
-
(10,354,198)
1,263
(769,883)
27,506,544
(235,421)
(329,145)
26,173,358
760,574
942,461
3,466,948
8,583,507
13,753,490
17,702,359
2,298
(6,525,823)
(14,888)
(50,454)
(6,588,867)
6,101
(617,168)
4,141,486
-
(255,670)
3,274,749
SHARE OF LOSS OF EQUITY-ACCOUNTED
INVESTMENT (note 6)
(357,696)
(186,033)
NET INCOME AND COMPREHENSIVE INCOME
$ 41,949,277
$ 14,202,208
Earnings per Class A unit
Basic and diluted
Weighted average number of Class A units
Basic and diluted
Earnings per Class B unit
Basic and diluted
Weighted average number of Class B units
Basic and diluted
$ 1.35
$ 0.62
29,512,727
21,653,384
$ 10.49
$ 3.55
200,000
200,000
The accompanying notes are an integral part of these consolidated financial statements
55
Year ended
Cash provided by (used in)
OPERATIONS
Net income
Items not involving cash:
Amortization of transaction costs and accretion of convertible
debentures
Amortization of mark to market mortgage adjustment
Fair value adjustments to investment property (note 5)
Property tax adjustments on acquisition
Property tax adjustments on sale
Share of loss of equity-accounted investee (note 6)
Loss on disposal of investment property (note 5)
Interest income
Interest expense
Distributions to subsidiary’s preferred unitholders
Preferred units of subsidiary offering costs
Net change in non-cash working capital items (note 15)
Pure Multi-Family REIT LP
Consolidated Statement of Cash Flows
Expressed in United States dollars
December 31, 2014
December 31, 2013
(Restated – note 4)
$
41,949,277
$ 14,202,208
586,744
(687,895)
(27,506,544)
(587,949)
7,453
357,696
235,421
(4,851)
10,444,575
15,625
-
1,923,977
26,733,529
239,053
(664,099)
(4,141,486)
(1,423,429)
-
186,033
-
(2,298)
6,950,869
14,888
50,454
4,472,509
19,884,702
INVESTING
Acquisitions of investment properties
(110,625,439)
(147,904,162)
Transfer of investment property from equity-accounted investment
Capital additions to investment properties
Proceeds received on disposal of investment property
Disposition costs on disposal of investment property
Investments (to) from equity-accounted investment
Interest received
FINANCING
Distributions paid to subsidiary’s preferred unitholders
Distributions paid to limited partners
Interest paid
Credit facility proceeds received
Convertible debenture proceeds received
Mortgage proceeds received
Mortgage reserve fund
Payment of finance transaction costs
Proceeds from the issuance of limited partner units
Proceeds from the issuance of subsidiary units
Proceeds from the issuance of warrants
Repayment of mortgages
Unit offering costs
(5,660,000)
(2,157,679)
10,500,000
(720,522)
2,473,013
4,851
(106,185,776)
(15,625)
(11,348,066)
(10,501,496)
150,000
-
70,050,000
(551,622)
(600,966)
49,460,167
-
703,332
(5,887,852)
(2,188,921)
89,268,951
The accompanying notes are an integral part of these consolidated financial statements
-
(2,617,282)
-
-
(3,016,742)
2,298
(153,535,888)
(14,888)
(7,828,952)
(6,064,945)
5,396,485
23,000,000
83,550,000
(2,672,502)
(2,248,165)
35,000,000
125,000
-
(477,144)
(2,400,929)
125,363,960
56
Pure Multi-Family REIT LP
Consolidated Statement of Cash Flows (continued)
Expressed in United States dollars
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
9,816,704
6,673,381
(8,287,226)
14,960,607
CASH AND CASH EQUIVALENTS, END OF PERIOD
$ 16,490,085
$
6,673,381
Supplemental cash flow information:
Non-cash financing and investing activity:
Cash distributions to the limited partners included in accounts
payable and accrued liabilities
$ 1,584,218
$ 1,110,736
The accompanying notes are an integral part of these consolidated financial statements
57
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
1.
PURE MULTI-FAMILY REIT LP INFORMATION
Pure Multi-Family REIT LP (“Pure Multi”) is a limited partnership formed under the Limited Partnership Act
(Ontario) to invest in multi-family real estate properties in the United States. Pure Multi was established by
Pure Multi-Family Management Limited Partnership (the “Managing GP”), its managing general partner, and
Pure Multi-Family REIT (GP) Inc. (the “Governing GP”), its governing general partner, pursuant to the terms
of the Limited Partnership Agreement (“LP Agreement”). Pure Multi’s head office and address for service is
located at 910 – 925 West Georgia Street, Vancouver, British Columbia, V6C 3L2. A copy of the Limited
Partnership Agreement can be obtained from Pure Multi or on SEDAR at www.sedar.com.
Pure Multi was established, among other things, for the purposes of:
a)
b)
c)
acquiring Common Shares and a Series A Preferred Share of Pure US Apartments REIT Inc. (the “US
REIT”);
temporarily holding cash and investments for the purposes of paying the expenses and liabilities of Pure
Multi and making distributions to Unitholders;
in connection with the undertaking set out above, reinvesting income and gains of Pure Multi and taking
other actions besides the mere protection and preservation of Pure Multi property.
The US REIT was established, among other things, for the purposes of acquiring, owning and operating multi-
family real estate properties in the United States.
These consolidated financial statements for the year ended December 31, 2014 were authorized for issue by
the Board of Directors of the Governing GP (the “Board”) on March 5, 2015.
2.
BASIS OF PRESENTATION AND STATEMENT OF COMPLIANCE
a. Statement of compliance and basis of presentation
These consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”)
incorporating interpretations issued by the IFRS Interpretations Committee (“IFRICs”).
b. Basis of measurement
These consolidated financial statements have been prepared on a historical cost basis, except for investment
properties which have been measured at fair value.
The preparation of these consolidated financial statements requires the use of certain critical accounting
estimates. It also requires management to exercise judgment in the process of applying Pure Multi’s
accounting policies. Areas involving a higher degree of judgment or complexity, or areas where
assumptions and estimates are significant to the financial statements are disclosed in note 3(P).
c. Functional and presentation currency
These consolidated financial statements are presented in United States dollars, which is Pure Multi’s
functional currency.
58
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
d. Presentation of financial statements
Pure Multi uses a classified statement of financial position. The consolidated statement of financial position
distinguishes between current and non-current assets and liabilities. Current assets and liabilities are those
expected to be recovered or settled within twelve months from the reporting date and non-current assets
and liabilities are those where the recovery or settlement is expected to occur more than twelve months
from the reporting date. Pure Multi classifies the statements of income and comprehensive income using
the function of expense method, which classifies expenses according to their functions, such as costs of
operations or administrative activities.
3.
SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies applied in the preparation of these consolidated financial statements are set
out below. The accounting policies have been applied consistently by group entities unless otherwise stated.
A. Basis of consolidation
The consolidated financial statements comprise the financial statements of Pure Multi and its subsidiaries,
over which Pure Multi has control. Control exists when Pure Multi has the power to govern the financial
and operating policies of an entity so as to obtain benefit from its activities. The financial statements of
subsidiaries are consolidated from the date that control commences and continue to be consolidated until
the date that control ceases.
On October 1, 2013, Pure Multi entered into a co-ownership agreement with another party in the form of a
limited partnership. The entity operated in the same way as other entities, except that contractual
arrangements between the two partners established joint control over the economic activities of the entity.
Each partner did not have rights to individual assets or liabilities of the entities, but was entitled to a share
of the outcome of activities of the arrangement. Pure Multi accounted for its interest in the jointly controlled
entity using the equity method. Under the equity method, the interest in the joint venture is carried in the
consolidated statement of financial position at purchase price plus any post acquisition changes in Pure
Multi`s share of the net assets. On August 28, 2014, Pure Multi acquired the remaining ownership interest
in the jointly controlled entity, giving it 100% control of the entity and its underlying investment property.
As of August 28, 2014, the date control was established, Pure Multi began accounting for this investment
property using the consolidation method.
Intra-group transactions and balances are eliminated in preparing the consolidated financial statements.
The consolidated financial statements reflect the financial position, results of operations and cash flows of
Pure Multi and its subsidiaries.
B. Property acquisitions and business combinations
Where property is acquired, management considers the substance of the agreement in determining whether
the acquisition represents the acquisition of a property or a business combination. The basis of the judgment
is set out in note 3(P).
Where such acquisitions are not judged to be a business combination, they are treated as asset acquisitions.
The cost to acquire the property, including transaction costs, is allocated between the identifiable assets
acquired and liabilities assumed based on their relative fair values at the acquisition date. Otherwise,
acquisitions are accounted for as a business combination.
59
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
C. Investment properties
Investment properties are comprised of properties held to earn rental revenue or for capital appreciation or
both. Investment properties are measured initially at cost including transaction costs. Transaction costs
include transfer taxes, professional fees for legal services and initial leasing commissions to bring the
property to the condition necessary for it to be capable of operating.
Subsequent to initial recognition, investment properties are measured at fair value and related gains or
losses on the disposal of an investment property are determined as the difference between net disposal
proceeds and the carrying value of the asset on the date the transaction occurred. Pure Multi defines fair
value to be the price received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. Therefore, the fair value of recently acquired investment
property would be the purchase price. Any subsequent valuations performed on an investment property,
after the acquisition date, would be the new basis for the fair value recorded on the investment property.
Gains or losses arising from changes in fair values are included in the statement of income and
comprehensive income in the period in which they arise.
An investment property is derecognized when it has been disposed of or permanently withdrawn from use
and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or
disposal of an investment property are recognized in the statement of income and comprehensive income
in the period of retirement or disposal.
D. Leases
Leases are classified according to the substance of the transaction. Leases that transfer substantially all the
risks and benefits of ownership from Pure Multi to the lessees are accounted for as finance leases. All
current leases of Pure Multi are operating leases.
E. Convertible debentures
Convertible debentures issued by Pure Multi are converted into Class A units (each a “Class A Unit”) of
Pure Multi at the option of the holder, and the number of Class A units to be issued does not vary with
changes in their fair value.
Upon issuance, convertible debentures are separated into their debt and conversion feature components.
The debt component of the convertible debenture is recognized initially at fair value of a similar debt
instrument without a conversion feature. Subsequent to initial recognition, the debt component of a
compound financial instrument is measured at amortized cost using the effective interest method.
The conversion feature of the convertible debentures is initially recognized at fair value. The convertible
debentures are convertible into Class A Units at the holder’s option. As a result of this obligation, the
convertible debentures are exchangeable into equity (the Class A Units are equity by definition) and
accordingly the conversion feature component of the convertible debentures is also equity. Accordingly,
the conversion feature component of the convertible debentures is recorded in the consolidated statement
of partners’ capital.
Any directly attributable transaction costs are allocated to the debt and conversion components of the
convertible debentures in proportion to their initial carrying amounts.
60
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
F. Revenue recognition
Rental revenue is recognized on a straight line basis over the term of the lease subject to ultimate collection
being reasonably assured. Revenue includes recoveries of specified operating expenses, in accordance with
the terms of the lease agreements. Recoveries are recognized in the period in which the related operating
expense was incurred and collectability is reasonably assured.
G. Finance income (expenses)
Finance income (expenses) consists of interest income, mortgage interest, credit facility interest, convertible
debenture interest, distributions to preferred unitholders and preferred unit offering costs. Finance income
is recognized in the period in which it is earned, while finance expenses are recognized in the period in
which they are incurred.
H. Translation of foreign currency
The functional and reporting currency of Pure Multi is United States dollars. Pure Multi has certain
transactions in Canadian dollars. Monetary items are translated at the exchange rate in effect at the
statement of financial position date and non-monetary items are translated at historical exchange rates.
Revenue and expense items are translated at the exchange rate in effect on the dates they occur. Realized
and unrealized exchange gains and losses are included in earnings.
I. Financial instruments
Non-derivative financial assets and non-derivative financial liabilities are initially recognized at fair value,
and their subsequent measurement is dependent on their classification as described below. The
classification depends on the purpose for which the financial instruments were acquired or issued, their
characteristics and Pure Multi’s designation of such instruments.
Pure Multi classifies its financial instruments as follows:
Cash and cash equivalents
Amounts receivable
Mortgage reserve fund
Accounts payable and accrued liabilities
Credit facility
Convertible debentures
Preferred units of subsidiary
Mortgages payable
Loans and receivables
Loans and receivables
Loans and receivables
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Other financial liabilities
Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an
active market. These assets are recognized initially at fair value plus any directly attributable transaction
costs. Subsequent to initial recognition, they are accounted for at amortized cost, using the effective interest
rate method, less any impairment losses.
Non-derivative financial liabilities are recognized initially at fair value plus any directly attributable
transaction costs. Subsequent to initial recognition, these financial liabilities are accounted for at amortized
cost, using the effective interest rate method.
61
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
J. Fair value
Pure Multi measures investment properties at fair value at each balance sheet date. The fair value is the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date under current market conditions. In certain circumstances, the
initial fair value may be based on other observable current market transactions, without modification or on
a valuation technique using market based inputs.
Fair value measurements recognized in the statement of financial position are categorized in accordance
with the following levels:
(cid:120) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(cid:120) Level 2: Quoted prices in active markets for similar assets or liabilities or valuation techniques where
significant inputs are based on observable market data.
(cid:120) Level 3: Valuation techniques for which any significant input is not based on observable market data.
K. Impairment of financial assets
At each reporting date, Pure Multi assesses whether there is objective evidence that a financial asset is
impaired. If a financial asset carried at amortized cost is impaired, the amount of the loss is measured as
the difference between the amortized cost of the loan or receivable and the present value of the estimated
future cash flows, discounted using the instrument’s original effective interest rate. The loss is recognized
in impairment expense.
L. Cash and cash equivalents
Cash and cash equivalents consist of cash on hand, and cash held at banks or other financial institutions
where cash is readily available to access.
M. Earnings per unit
Basic and diluted earnings per Class A and Class B unit have been calculated based on the proportion of
the earnings allocated to the respective class of units, and the respective weighted average number of Class
A units and Class B units outstanding.
N. Taxes
a.
Income Taxes
Pure Multi is not subject to tax under Part I of the Income Tax Act (Canada) (the “Tax Act”). Each partner
of Pure Multi is required to include in computing the partner’s income for a particular taxation year the
partner’s share of the income or loss of Pure Multi for its fiscal year ending in or on the partner’s taxation
year-end, whether or not any of that income or loss is distributed to the partner in the taxation year.
Accordingly, no provision has been made for Canadian income taxes under Part I of the Tax Act.
62
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
The Tax Act contains rules regarding the taxation of certain types of publicly listed or traded trusts and
partnerships and their investors (the “SIFT Measures”). A specified investment flow-through partnership
(a “SIFT partnership”, as defined in the Tax Act) will be subject to SIFT tax on its “taxable non-portfolio
earnings” (as defined in the Tax Act) at a rate that is substantially equivalent to the general tax rate
applicable to Canadian corporations. The “taxable non-portfolio earnings” less SIFT tax payable by a SIFT
partnership will also be included in computing income of the Unitholder for purposes of the Tax Act as
though it were a taxable dividend from a taxable Canadian corporation, subject to the detailed provisions
of the Tax Act. The SIFT Measures do not apply to a partnership that does not hold any “non-portfolio
property” throughout the taxation year of the partnership. Management believes that the Pure Multi does
not hold any “non-portfolio property” and should not be a SIFT partnership and therefore not subject to the
SIFT Measures. Accordingly, no provision has been made for tax under the SIFT Measures. Management
intends to continue to operate Pure Multi in such a manner so as to remain exempt from the SIFT Measures
on a continuous basis in the future. If Pure Multi becomes a SIFT partnership it will be generally subject
to income taxes at a rate that is substantially equivalent to the general tax rate applicable to Canadian
corporations on its taxable non-portfolio earnings, if any.
Pure Multi made a protective election to be treated as a partnership for U.S. federal income tax purposes.
In addition, at least 90% of Pure Multi’s gross income is expecting to be qualifying income within the
meaning of U.S. Internal Revenue Code (the “Code”) section 7704 and Pure Multi is not required to register
as an investment company under the Investment Company Act of 1940. As such, it is generally not subject
to U.S. federal income tax under the Code. Furthermore, Pure Multi’s subsidiary, the US REIT, timely
made and intends to maintain an election to be taxed as a U.S. real estate investment trust (“REIT”) under
the Code and to take the necessary steps to qualify as a REIT pursuant to the Code. In order for the US
REIT to qualify as a REIT, the US REIT must meet a number of organizational and operational
requirements, including a requirement to make annual dividend distributions to its shareholders equal to a
minimum of 90% of its REIT taxable income, computed without regards to a dividends paid deduction and
net capital gains. As a REIT, the US REIT generally will not be subject to U.S. federal income tax on its
taxable income to the extent such income is distributed as a dividend to shareholders annually. Management
believes that all REIT conditions necessary to eliminate income taxes for the reporting period have been
met, and accordingly no provision for US federal and state income taxes has been made.
Management intends to operate the US REIT in such a manner so as to qualify as a REIT on a continuous
basis in the future. However, actual qualification as a REIT will depend upon meeting, through actual
annual and quarterly operating results, the various conditions imposed by the Code. If the US REIT fails
to qualify as a REIT in any taxable year, it will be subject to US federal and state income taxes at regular
US corporate rates, including any applicable alternative minimum tax. In addition, the US REIT may not
be able to requalify as a REIT for the four subsequent taxable years. Even if the US REIT qualifies for
taxation as a REIT, the US REIT may be subject to certain US state and local taxes on its income and
property, and to US federal income and excise taxes on its undistributed taxable income and/or specified
types of income in certain circumstances.
b. Texas Franchise Tax
Texas Franchise Tax applicable to Pure Multi, for its investment properties operated in Texas, is equal to
1% of the lesser of: (i) 70% of total revenue; (ii) 100% of total revenue less cost of goods sold; or (iii) 100%
of total revenue less compensation expense. Pure Multi has recorded a provision for Texas Franchise Tax
of $329,145 for the year ended December 31, 2014 (year ended December 31, 2013 - $255,670), which is
included within other expenses in the consolidated statement of income and comprehensive income.
63
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
O. Operating segments
Pure Multi currently operates in one business segment, the owning and operating of multifamily apartment
properties in the sun-belt area in the United States. The primary format for segment reporting is based on
geographical region and is consistent with the internal reporting provided to the chief operating decision-
maker, determined to be the general partners.
P. Significant accounting judgments and estimates
Judgments, estimates and assumptions that affect the application of accounting policies and the reported
amounts of revenues, expenses, assets and liabilities are reviewed on an ongoing basis. Actual results may
differ from these estimates.
a.
Judgments
In the process of applying Pure Multi’s accounting policies, management has made the following critical
judgments, which have the most significant effects on the amounts recognized in the consolidated
financial statements:
(i) Asset acquisitions
Pure Multi, through the US REIT, acquires individual real estate properties. At the time of
acquisition, Pure Multi considers whether or not the acquisition represents the acquisition of a
business. Pure Multi accounts for an acquisition as a business combination where an integrated set
of activities is acquired in addition to the property. More specifically, consideration is made to the
extent to which significant processes are acquired and, in particular, the extent of ancillary services
provided by the property (e.g., maintenance, cleaning, security, bookkeeping, etc.).
When the acquisition of a property does not represent a business, it is accounted for as an acquisition
of a group of assets and liabilities. The cost of the acquisition, including transaction costs, is
allocated to the assets and liabilities acquired based upon their relative fair values, and no goodwill
or deferred tax is recognized.
All acquisitions to date by Pure Multi have been determined to be asset acquisitions.
b. Estimates
The significant areas of estimation include the following:
(i) Valuation of investment properties
The fair value of the investment properties is determined by management, using recognized
valuation techniques supported, in certain instances, by independent real estate valuation experts.
The determination of the fair value of investment properties requires the use of estimates such as
future cash flows from assets (based on factors such as tenant profiles, future revenue streams and
overall repair and condition of the property), capitalization rates and discount rates applicable to
those assets. These estimates are based on market conditions existing at the reporting date.
The following approaches, either individually or in combination, are used by management, together
with the appraisals, in their determination of the fair value of the investment properties:
64
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
The Income Approach derives market value by estimating the future cash flows that will be
generated by the property and then applying an appropriate capitalization rate or discount rate to
those cash flows. This approach can utilize the direct capitalization method and/or the discounted
cash flow analysis.
The Direct Comparison Approach involves comparing or contrasting the recent sale, listing or
optioned prices of properties comparable to the subject and adjusting for any significant differences
between them.
Management reviews each appraisal obtained and ensures the assumptions used by the appraisers
are reasonable and the final fair value amount reflects those assumptions used in the various
approaches above. Where an appraisal is not obtained at the reporting date, management uses the
approaches described above, for each investment property, and estimates the fair value.
The significant assumptions used by management in estimating the fair value of investment
properties are set out in note 5.
Q. Provisions
Provisions are recognized by Pure Multi when: i) Pure Multi has a present legal or constructive obligation
as a result of past events; ii) it is probable that an outflow of resources will be required to settle the
obligation; and iii) the amount can be reasonably estimated. If the time value of money is material,
provisions are discounted using a current rate that reflects the risk profile of the liability, and the increase
to the provision due to the passage of time will be recognized as interest expenses.
R. Future changes in accounting policies
(i) Adoption of new accounting policies
Offsetting financial assets and liabilities
In December 2011, the IASB made amendments to IAS 32, Financial Instruments: Presentation.
The amendments to IAS 32 clarify the requirements for offsetting financial instruments. The
amended version of IAS 32 is effective for Pure Multi’s year-end beginning January 1, 2014, with
early adoption permitted. The adoption of amendments to IAS 32 did not have an impact on Pure
Multi’s consolidated financial statements.
Levies
Effective January 1, 2014, Pure Multi has retrospectively adopted IFRIC interpretation 21, Levies
(“IFRIC 21”) for the period beginning January 1, 2013. IFRIC 21 clarifies that an entity recognizes
a liability for a levy when the activity that triggers payment occurs, as identified by the relevant
legislation. IFRIC 21 is applicable to all levies imposed by governments under legislation, including
property taxes, but does not apply to accounting for income taxes, fines and penalties or for the
acquisition of assets from governments. The adoption of IFRIC 21 requires Pure Multi to recognize
the full amount of annual property tax liabilities at the point in time when the property tax obligation
is imposed. Pure Multi previously recognized property tax liabilities and related expenses on a pro
rata basis throughout the year. Therefore, the adoption of IFRIC 21 has resulted in Pure Multi
recording an annual property tax expense earlier than previously recognized. Typically property
taxes are adjusted for when the property is sold between buyer and seller based on days of ownership
in the year. To avoid double counting, a fair value adjustment to investments properties has been
recorded by an amount equivalent to the property tax expense which pertains to the periods beyond
the current reporting period. The effect of the implementation of IFRIC 21 has been applied
retrospectively to the comparative periods and is disclosed in note 4.
65
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
(ii) Future accounting policy changes
Financial instruments: classification and measurement
In November 2009, as part of the IASB’s project to replace International Accounting Standard
(“IAS”) 39, Financial Instruments: Recognition and Measurement, the IASB issued the first phase
of IFRS 9, Financial Instruments, which introduces new requirements for the classification and
measurement of financial assets. The standard was revised in October 2010 to include requirements
regarding classification and measurement of financial liabilities and is applicable for annual periods
starting on or after January 1, 2018. The full impact of the changes in accounting for financial
instruments will not be known until the IASB’s project has been completed.
Revenue recognition
In May 2014, the IASB issued IFRS 15, Revenue from Contracts with Customers (“IFRS 15”). The
new standard provides a comprehensive five-step revenue recognition model for all contracts with
customers and requires management to exercise significant judgment and make estimates that affect
revenue recognition. IFRS 15 is effective for annual periods beginning on or after January 1, 2017,
with earlier adoption permitted. Pure Multi has not yet reviewed the impact of IFRS 15 on the
consolidated financial statements.
4.
ADOPTION OF IFRIC 21
Effective January 1, 2014, Pure Multi has adopted IFRIC 21, as disclosed in note 3, in accordance with the
transitional provisions. The following table provides a reconciliation of the impact of the adoption of IFRIC
21 on Pure Multi’s consolidated financial statements.
IFRS Impact on the consolidated statements of cash flows
The IFRS adjustments made to the comparative Statement of Income and Comprehensive Income for the year
ended December 31, 2013 have been made to the Statement of Cash Flows as at the same date.
66
Reconciliation of Net Income and Comprehensive Income for the year ended December 31, 2013:
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
Year ended December 31, 2013
REVENUES
Rental
OPERATING EXPENSES
Insurance
Property management
Property taxes
Property operating expenses
NET RENTAL INCOME
NET FINANCE INCOME (EXPENSES)
Interest income
Mortgage interest
Distribution to subsidiary’s preferred unitholders
Preferred units of subsidiary offering costs
NET OTHER INCOME (EXPENSES)
Other income
General and administrative
Fair value adjustments to investment properties
Franchise taxes
SHARE OF PROFIT (LOSS) OF EQUITY-
ACCOUNTED INVESTMENT
NET INCOME AND COMPREHENSIVE
INCOME
Earnings per Class A unit
Basic and diluted
Weighted average number of Class A units
As previously
reported
Adjustments
As restated
$ 31,455,849
$ -
$
31,455,849
760,574
942,461
4,890,377
8,583,507
15,176,919
16,278,930
2,298
(6,525,823)
(14,888)
(50,454)
(6,588,867)
6,101
(617,168)
5,564,915
(255,670)
4,698,178
-
-
(1,423,429)
-
(1,423,429)
760,574
942,461
3,466,948
8,583,507
13,753,490
1,423,429
17,702,359
-
-
-
-
-
-
-
(1,423,429)
-
(1,423,429)
2,298
(6,525,823)
(14,888)
(50,454)
(6,588,867)
6,101
(617,168)
4,141,486
(255,670)
3,274,749
(186,033)
-
(186,033)
$ 14,202,208
$ -
$
14,202,208
$ 0.62
$ -
$ 0.62
Basic and diluted
21,653,384
-
21,653,384
Earnings per Class B unit
Basic and diluted
Weighted average number of Class B units
$ 3.55
$ -
$ 3.55
Basic and diluted
200,000
-
200,000
67
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
5.
INVESTMENT PROPERTIES
Balance, at January 1, 2014
Acquisitions
Dispositions
Transfer from equity-accounted investment
Property tax adjustments on acquisitions and dispositions
Capital additions
Fair value adjustments to investment properties
IFRIC 21 property tax liability adjustment
IFRIC 21 fair value adjustment to investment properties
Balance, December 31, 2014
2014
$ 332,002,818
110,625,439
(10,014,899)
5,660,000
580,496
2,157,679
27,506,544
468,518,077
-
-
$ 468,518,077
On June 27, 2014, Pure Multi, through the US REIT, acquired Walker Commons, a multi-family apartment
community (“Walker Commons”), located in Houston, Texas, for a purchase price of $43,800,000, plus
standard closing costs and adjustments. As part of the adjustments made on closing, Pure Multi agreed to pay
to the seller, Sunstone U.S. Opportunity (No. 2) Realty Trust (see related party note 18), an amount of
$1,689,631, for a portion of the mortgage buyout costs that were equal to the fair market value adjustment that
Pure Multi would have incurred if it had assumed the mortgage as part of the acquisition. This additional cost
was treated as an acquisition cost at the time of the acquisition. This acquisition was financed with cash and a
new 5 year mortgage in the amount of $28,470,000.
On August 28, 2014, Pure Multi, through the US REIT, acquired Preserve at Arbor Hills, a multi-family
apartment community (“Preserve”), located in Plano, Texas, for a purchase price of $41,000,000, plus standard
closing costs and adjustments. This acquisition was financed with cash and a new 7 year mortgage in the
amount of $24,600,000.
On August 28, 2014, Pure Multi, through the US REIT, acquired the remaining 80% interest in San Brisas
Apartments, a multi-family apartment community (“San Brisas”), located in Chandler, Arizona, for a purchase
price of $22,640,000, plus standard closing costs and adjustments. As part of the adjustments made on closing,
Pure Multi agreed to pay to the seller, Sunstone U.S. Opportunity (No. 2) Realty Trust (see related party note
18), an amount of $1,236,807, for a portion of the mortgage buyout costs that were equal to the fair market
value adjustment that Pure Multi would have incurred if it had assumed the mortgage as part of the acquisition.
This additional cost was treated as an acquisition cost at the time of the acquisition. After this acquisition, Pure
Multi had a 100% ownership interest in San Brisas, as it first acquired a 20% interest in the investment property
on October 1, 2013. Pure Multi’s initial 20% ownership interest is reflected in the table above by way of a
transfer-in from an equity-accounted investment at fair market value of $5,660,000. This acquisition was
financed with cash and a new 7 year mortgage in the amount of $16,980,000.
On December 18, 2014, Pure Multi, through the US REIT, sold Windscape Apartment Homes, a multi-family
apartment community (“Windscape”), located in Dallas, Texas, for a sale price of $10,500,000, plus standard
closing costs and adjustments. The mortgage payable, secured by Windscape, was paid off in full as of the
same date.
The loss on disposal of Windscape as at December 31, 2014, is determined as follows:
68
Windscape
Sale price
Selling costs
Net proceeds
Fair value of investment property
Loss on disposal of investment property
Balance, at January 1, 2013
Acquisitions
Property tax adjustments on acquisition
Capital additions
Fair value adjustments to investment properties
IFRIC 21 property tax liability adjustment
IFRIC 21 fair value adjustment to investment properties
Balance, December 31, 2013
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
$ 10,500,000
(720,522)
9,779,478
(10,014,899)
$ ( 235,421)
2013
$ 175,916,459
147,904,162
1,423,429
2,617,282
4,141,486
332,002,818
-
-
$ 332,002,818
On March 15, 2013, Pure Multi, through the US REIT, acquired Laguna Luxury Apartments, which was
subsequently renamed as Fairways at Prestonwood (“Prestonwood”), located in Dallas, Texas, for a purchase
price of $17,500,000, plus standard closing costs and adjustments. This acquisition was financed with cash
and a new 10 year mortgage in the amount of $8,670,000.
On June 6, 2013, Pure Multi, through the US REIT, acquired Vistas at Hackberry Creek Apartments
(“Hackberry Creek”), located in Dallas, Texas, for a purchase price of $45,400,000, plus standard closing costs
and adjustments. This acquisition was financed with cash and a new 15 year mortgage in the amount of
$29,500,000.
On June 21, 2013, Pure Multi, through the US REIT, acquired Deer Park Apartments, which was subsequently
renamed as The Boulevard at Deer Park (“Deer Park”), located in Deer Park, Texas, for a purchase price of
$23,000,000, plus standard closing costs and adjustments. This acquisition was financed with cash and a new
10 year mortgage in the amount of $16,480,000.
On July 19, 2013, Pure Multi, through the US REIT, acquired Windsong Apartments (“Windsong”), located
in Dallas, Texas, for a purchase price of $16,500,000, plus standard closing costs and adjustments. This
acquisition was financed with cash and proceeds from a new credit facility.
On August 30, 2013, Pure Multi, through the US REIT, acquired Fountainwood Apartments (“Fountainwood”),
located in Euless, Texas, for a purchase price of $19,800,000, plus standard closing costs and adjustments.
This acquisition was financed with cash and a new 10 year mortgage in the amount of $13,000,000.
On August 30, 2013, Pure Multi, through the US REIT, acquired Livingston Apartments (“Livingston”),
located in Plano, Texas, for a purchase price of $25,500,000, plus standard closing costs and adjustments. This
acquisition was financed with cash and a new 5 year mortgage in the amount of $15,900,000.
The investment properties are pledged as security against the mortgages payable.
69
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
The fair value of the investment properties has been determined on a market value basis. As set out in note
3(P), in arriving at their estimates of market values, management and the independent appraisers have used
their market knowledge and professional judgment and did not rely solely on historical transactional
comparisons.
When obtained, appraisals were performed by accredited independent appraisers with recognized and relevant
professional qualifications and with recent experience in the location and category of the investment property
being valued. Management reviews each appraisal and ensures that the assumptions used below are reasonable
and the final fair value amount reflects those assumptions used in the determination of the fair market values
of the properties.
Pure Multi does not expect to obtain appraisals for each property at each reporting date. Where Pure Multi
does not obtain an appraisal for a specific investment property at the reporting date, management uses specific
indicators (i.e. market conditions, discount rate changes, etc.) and determines whether a change in fair value
has occurred. During the year ended December 31, 2014, Pure Multi obtained independent appraisals on 93%
of the investment properties at December 31, 2014 (December 31, 2013 – 100%). Therefore management
undertook its own valuation process, as described above, on the investment properties where no independent
appraisal was obtained.
The significant assumptions made relating to the valuations of the investment properties are set out below:
December 31, 2014
December 31, 2013
Weighted
average
Range
Weighted
average
Range
Capitalization rate*
6.16% 5.50% - 7.00%
*Capitalization rates are based on Pure Multi’s proportionate share of stabilized NOI of its entire portfolio,
including its equity-accounted investment.
5.35% - 6.25%
5.90%
6.
EQUITY-ACCOUNTED INVESTMENT
On October 1, 2013, Pure Multi, through the US REIT, acquired a 19.99% interest in Sunstone San Brisas LP
and a 20% interest in Sunstone San Brisas Apartments, LLC (collectively referred to as ”San Brisas”), located
in Chandler, Arizona, for a purchase price of $5,600,000, plus standard closing costs and adjustments. This
acquisition was financed with cash and the assumption of a mortgage in the amount of $2,755,967 bearing a
rate of interest of 5.63%. As the stated rate of the assumed mortgage is greater than the current market rate of
interest, an adjustment of $206,913 was determined to increase the assumed mortgage to market value and has
been included in the determination of the cost of this acquisition. The mark to market adjustment of the assumed
mortgage is amortized over the remaining term on an effective interest rate basis, which reduces the effective
interest rate over the current term of the mortgage.
On August 28, 2014, as described in note 5 to these consolidated financial statements, Pure Multi acquired the
remaining 80% interest in San Brisas, resulting in a 100% ownership interest of the investment property. As a
result of this transaction, as of August 28, 2014, Pure Multi’s interest in San Brisas is no longer measured using
the equity method but instead the consolidation method.
During the periods reported below, Pure Multi’s significant interest in the joint venture was a 20% share in the
ownership of a 208-unit property, San Brisas, located in Chandler, Arizona. This investment was measured
using the equity method:
70
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
Period from
January 1, 2014 to
August 28, 2014
December 31, 2013
Balance, beginning of period
$ 2,830,709
$ -
Additions
Share of net income (loss)
Equity value at time of acquisition of control
-
(357,696)
(2,473,013)
3,016,742
(186,033)
-
Balance, end of period
$ -
$ 2,830,709
As at
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Pure Multi’s share of net assets, before adjustments
Adjustment for Pure Multi’s unamortized mortgage
transaction fee
Adjustment for Pure Multi’s unamortized mark to market
mortgage adjustment
December 31, 2014
December 31, 2013
$ -
$ 452,939
-
-
-
-
-
-
-
28,000,000
(513,874)
(13,518,632)
14,420,433
2,884,087
148,624
(202,002)
Pure Multi’s share of net assets
$ -
$ 2,830,709
For the year ended December 31,
2014
2013
Revenues
Operating expenses
Net rental income
Net finance income (expenses)
Fair value adjustment to investment properties
Net income (loss) and comprehensive income (loss)
Pure Multi’s share of net income (loss) and comprehensive
income (loss), before adjustments
Adjustment for Pure Multi’s net finance income
(expenses) related to joint venture
Adjustment for Pure Multi’s fair value adjustment related
to joint venture
Pure Multi’s share of net income (loss) and
comprehensive income (loss), for the period
$ 1,710,348
$ 635,487
690,732
1,019,616
(453,183)
135,844
702,277
140,456
(498,152)
245,822
389,665
(198,008)
(28,486)
163,171
32,634
1,567
-
(220,234)
$ (357,696)
$ (186,033)
71
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
7.
MORTGAGE RESERVE FUND
The mortgage reserve fund consists of cash on deposit requested by the lenders to be retained in escrow to pay
for any repairs to the properties and certain costs. These funds will be released to pay the respective obligations
or once certain conditions are met, such as completion of repairs. The term of the mortgage reserve fund is
less than 12 months.
8.
CASH AND CASH EQUIVALENTS
Included in cash and cash equivalents is $4,720,490 of cash held in trust by an escrow agency. This cash
represents the net proceeds received from the sale of the Windscape investment property. This cash is readily
available and will be released in less than 12 months, therefore is classified as a current asset.
9.
MORTGAGES PAYABLE
Nominal
interest rate
Year of
maturity
December 31, 2014 December 31, 2013
Face value
Face value
Oakchase
Windscape
Valley Ranch
Sunset Point
Prairie Creek
Bear Creek
Prestonwood
Hackberry Creek
Deer Park
Fountainwood
Livingston
Walker Commons
Preserve
San Brisas
3.28%
3.52%
3.51%
3.54%
6.02%
3.45%
3.46%
3.90%
4.21%
4.46%
3.51%
3.11%
3.26%
3.26%
2017
-
2022
2022
2019
2019
2023
2028
2023
2023
2018
2019
2021
2021
Total mortgages principal payable
Unamortized mortgage transaction costs
Unamortized mark to market mortgage adjustment
$ 8,706,995
-
13,680,000
15,921,585
31,712,271
32,080,000
8,670,000
29,500,000
16,480,000
12,948,076
15,824,842
28,470,000
24,600,000
16,980,000
255,573,769
(2,048,215)
3,209,439
$ 8,882,920
5,090,000
13,680,000
15,970,000
32,158,701
32,080,000
8,670,000
29,500,000
16,480,000
13,000,000
15,900,000
-
-
-
191,411,621
(1,778,294)
3,897,335
Total carrying value of mortgages payable
$ 256,734,993
$ 193,530,662
The mortgages payable are recorded at amortized cost and bear a weighted effective interest rate of 3.86% as
at December 31, 2014 (December 31, 2013 – 4.10%).
The mortgages payable are secured by charges on Pure Multi’s investment properties.
Principal repayments, as of December 31, 2014, based on scheduled repayments to be made on the mortgages
payable over the next five years and thereafter are as follows:
72
2015
2016
2017
2018
2019
Thereafter
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
$ 1,608,078
2,083,032
10,884,833
17,444,944
92,532,719
131,020,163
$ 255,573,769
10.
CONVERTIBLE DEBENTURES
On August 7, 2013, Pure Multi issued $23,000,000 of 6.5% convertible unsecured subordinated debentures
(“6.5% convertible debentures”) due on September 30, 2020. Each of the 6.5% convertible debentures is
denominated with a face value of $1,000 and is convertible at the holder’s option at any time into Class A Units
at conversion price of $5.65 per Class A Unit, in accordance with the terms of the trust indenture dated August
7, 2013. On or after September 30, 2016, but prior to September 30, 2018, the 6.5% convertible debentures
may be redeemed by Pure Multi, in whole or in part, at a price equal to their principal amount plus accrued and
unpaid interest thereon, provided the weighted average trading price of the Class A Units for the 20 consecutive
trading days, ending on the fifth trading day immediately preceding the date on which notice of redemption is
given, is at least 125% of the conversion price. After September 30, 2018, the 6.5% convertible debentures
may be redeemed by Pure Multi at any time. During the year ended December 31, 2014, none of the 6.5%
convertible debentures have been converted into Class A Units. At December 31, 2014, $23,000,000 of the
face value of the 6.5% convertible debentures was outstanding.
The following summarizes the face and carrying values of the 6.5% convertible debentures at December 31,
2014:
Balance as at December 31, 2013
Amortization of transaction costs
Accretion of liability component
Convertible
Debentures
Face Value
$ 23,000,000
-
-
Liability
Component
Carrying Value
$ 19,663,721 $ 1,985,429
Equity
Component
Carrying Value
144,000
68,388
-
-
Balance as at December 31, 2014
$ 23,000,000
$ 19,876,109 $ 1,985,429
11.
PREFERRED UNITS OF SUBSIDIARY
During the year ended December 31, 2013, the US REIT issued 125 preferred units at $1,000 per unit for gross
proceeds of $125,000. On consolidation, the preferred units of the US REIT are reflected as a liability of Pure
Multi.
The preferred units are non-voting preferred units. Unitholders holding preferred units are entitled to receive
dividends from the US REIT at a per annum rate equal to 12.5%, payable on June 30 and December 31 of each
year. Unitholders holding preferred units will be allocated such return in priority to any allocations or
distributions to all other classes and series of units of the US REIT. However, after payment of such return to
unitholders holding preferred units, preferred unitholders are not otherwise entitled to share in the income of
the US REIT.
73
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
The US REIT may redeem the preferred units at any time, for a price equal to $1,000 per preferred unit, plus
accumulated and unpaid distributions and a redemption premium if the preferred units are redeemed before
January 1, 2015. The redemption premium is equal to $100 per preferred unit if redemption occurs on or before
December 31, 2014. There is no redemption premium for redemptions after December 31, 2014.
Due to the fixed distributions and preferred treatment for preferred units, they meet the definition of a liability.
In addition, the Board does not expect to redeem any preferred units within the next year. Thus, the preferred
units are classified as non-current liabilities.
Pure Multi declared distributions of $15,625 during the year ended December 31, 2014 to the preferred
unitholders (year ended December 31, 2013 – $14,888).
12.
CREDIT FACILITY
On July 19, 2013, Pure Multi established a revolving credit facility with a lender in the amount of $9,900,000.
At December 31, 2014 there was $5,546,485 outstanding (December 31, 2013 - $5,396,485). The revolving
credit facility is interest bearing at a variable interest rate based at 2.00% plus the London Interbank Offered
Rate (“LIBOR”). The revolving credit facility is secured by a charge in respect of Windsong and matures on
July 19, 2016.
Revolving credit facility
Less: Line of credit outstanding
Remaining unused credit facility
December 31, 2014 December 31, 2013
$ 9,900,000
$ 9,900,000
(5,396,485)
(5,546,485)
$ 4,353,515
$ 4,503,515
The amount payable on the credit facility at December 31, 2014 was $5,474,301 (December 31, 2013 -
$5,280,990). Included in this amount are the related unamortized transaction costs of $72,184 (December 31,
2013 - $115,495), which are amortized over the term of the credit facility, on a straight-line basis.
13.
PARTNERS’ CAPITAL
A.
Limited Partners and General Partner
The capital of Pure Multi consists of an unlimited number of units of Pure Multi and the interest held by the
Governing GP. The Governing GP has made a capital contribution of $20 to Pure Multi and has no further
obligation to contribute capital.
From date of formation on May 8, 2012 to December 31, 2012 (“period ended December 31, 2012”), the
Managing GP subscribed for 200,000 Class B units (each a “Class B Unit”) of Pure Multi, at a price of $5.00
per Class B Unit, for gross proceeds to Pure Multi of $1,000,000, which entitles the Class B Unitholders,
initially, a 5% interest in Pure Multi. Pure Multi did not issue any additional Class B Units subsequent to this.
From the date of formation, May 8, 2012, to December 31, 2013, Pure Multi issued 24,089,000 Class A Units
for gross proceeds of $121,283,350, less offering costs.
74
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
On May 21, 2014, Pure Multi issued, through a private placement, a total of 4,395,824 units (the “Units”), at a
price of $4.55 per Unit, for gross proceeds of $20,000,999, less offering costs. Each Unit consists of one Class
A Unit and one-half Class A Unit purchase warrant (each whole warrant, a “Warrant”). Each Warrant entitles
the holder to acquire one additional Class A Unit from Pure Multi at a price of $5.15 per Class A Unit until
November 20, 2016.
On July 29, 2014, Pure Multi completed the closing of a public offering of 6,350,000 Class A Units on a bought
deal basis, at a price of $4.75 per Class A Unit for gross proceeds of $30,162,500, less offering costs.
Pure Multi is authorized to issue an unlimited number of Class A Units and Class B Units.
The capital of Pure Multi is divided into Class A Units and Class B Units. The Class A Units are the subject
of the public offerings described in the Prospectus’ dated July 3, 2012, October 12, 2012, May 1, 2013 and
July 22, 2014. The Class B Units were subscribed for by the Managing GP on May 30, 2012. Except as set
out in the LP Agreement no Class A Unit or Class B Unit has any preference or priority over another.
The Class A Units share in a 95% equity interest in all distributions and all net assets of Pure Multi and the
Managing GP, as the holder of the Class B Units, share in a 5% equity interest in all distributions and all net
assets of Pure Multi. These respective interests, which are called the Class A Unit Percentage Interest and
Class B Unit Percentage Interest, will remain fixed, notwithstanding the issue of further Class A Units, until
the occurrence of a Determination Event, as described below. Following the occurrence of a Determination
Event, the number of Class A Units to which the Class B Unitholder is entitled upon exercising Conversion
Rights becomes fixed, and future issuances of Class A Units will result in a decline in the Class B Unit
Percentage Interest.
All distributions are made to the holders of the Class A Units and the Class B Units in accordance with the
Class A Unit Percentage Interest and Class B Unit Percentage Interest, respectively. As further detailed in the
LP Agreement, until a Determination Event occurs, distributions from Pure Multi will generally be made 95%
to the Class A Units and 5% to the Class B Units.
Pursuant to the LP Agreement, the Class B Unitholders as a class are entitled to convert some or all of their
Class B Units into Class A Units based on the Specified Ratio. Upon the Class B Unitholders exercising their
Conversion Rights, they will own that number of Class A Units which is equal to the Class B Unit Percentage
Interest (initially 5%) of all Class A Units outstanding after such conversion. The Class B Unit Percentage
Interest will remain fixed at 5% notwithstanding the issue of further Class A Units, until the occurrence of a
Determination Event. Following the occurrence of a Determination Event, the number of Class A Units to
which the Class B Unitholder is entitled upon exercising the Conversion Rights attached thereto becomes fixed,
and future issuances of Class A Units will result in a decline in the Class B Unit Percentage Interest. A
Determination Event is the earliest to occur of the following: (a) Pure Multi’s Market Capitalization exceeding
$300,000,000 for a period of 10 consecutive trading days; (b) an arm’s length take-over bid being made for the
Units, provided that not less than 51% of the Class A Units not held by the offer or are taken-up in such bid;
and (c) substantially all of the assets of Pure Multi being sold or Pure Multi being liquidated.
The Conversion Rights may be exercised by the Managing GP at any time provided that:
(a) Pure Multi is legally entitled to comply with its obligations in connection with the exercise of the
Conversion Rights; and
(b) the Class B Unitholder who exercises the Conversion Rights complies with all applicable securities laws.
75
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
Upon the exercise of the Conversion Rights, the Class B Unitholders will receive that number of Class A Units
which is equal to the Specified Ratio multiplied by the number of outstanding Class B Units. As such, pursuant
to the terms of the LP Agreement, the Class B Unitholders will receive such number of Class A Units
representing the same Class B Unit Percentage Interest in the net assets of Pure Multi as was previously
designated in the form of Class B Units. Subject to applicable laws, Pure Multi will redesignate all the interests
of Class B Unitholders into Units at the Specified Ratio, as defined in LP Agreement, effective as of the date
that Pure Multi receives a notice of exercise of the Conversion Rights. Upon such occurrence, the interests of
Class B Unitholders will be redesignated as Class A Units. The Class B Units will not be required to be
redeemed or cancelled.
Pursuant to the LP Agreement, the Managing GP or any Affiliate or Associate of the Managing GP which is
then the Class B Unitholder, has agreed that it will not dispose of more than one-third of the Class A Units
received by it upon the conversion of the Class B Units in each consecutive twelve month period ending after
the first anniversary of the earlier of: (i) the date a Determination Event occurs; and (ii) the date upon which
the conversion is completed. This limitation will not apply where the Conversion Rights have been exercised
in connection with a takeover bid or a sale of substantially all of Pure Multi’s assets.
Allocation of net income or net loss
Where Distributable Cash, as described in the LP Agreement, is paid in respect of Pure Multi’s year ended
December 31 (“Fiscal Year”), the Net Income of Pure Multi in respect of that Fiscal Year shall be allocated
among the Partners on the following basis:
a)
b)
first, to the Governing GP 0.01% of the Net Income of Pure Multi to a maximum of $100 per annum;
as to the balance:
(i)
to the Class A Unitholders, as a class, an amount equal to the balance multiplied by a fraction, the
numerator of which is the sum of the distributions received by the Class A Unitholders in respect of
the Fiscal Year and the denominator of which is the total distributions made by Pure Multi in respect
of the Fiscal Year and the amount so determined shall be allocated to each Class A Unitholder by
multiplying such amount distributed by a fraction, the numerator of which is the sum of distributions
received by such Class A Unitholder with respect to such Fiscal Year and the denominator of which
is the aggregate amount of distributions made by Pure Multi to the Class A as a group with respect
to such Fiscal Year; and
(ii)
to the Class B Unitholders, pro rata, an amount equal to the balance multiplied by a fraction, the
numerator of which is the sum of the distributions received by the Class B Unitholders in respect of
the Fiscal Year and the denominator of which is the total distributions made by Pure Multi in respect
of the Fiscal Year.
Where no Distributable Cash is paid in respect of a Fiscal Year, Net Income of Pure Multi in respect of that
Fiscal Year shall be allocated among the Partners on the following basis:
a)
b)
first, to the Governing GP 0.01% of the Net Income of Pure Multi to a maximum of $100 per annum;
as to the balance:
(i)
(ii)
to the Class A Unitholders of record at the end of each month ending in such Fiscal Year, pro rata
in accordance with their respective number of units held by such Unitholder divided by the aggregate
number of units outstanding in the same Class (“Proportionate Shares”), 95% (the “Class A Unit
Percentage”) of the balance divided by 12; and
to the Class B Unitholders of record at the end of each month ending in such Fiscal Year, pro rata
in accordance with their respective Proportionate Shares, 5% (the “Class B Unit Percentage”) of the
balance divided by 12. Net Loss of Pure Multi in respect of that Fiscal Year shall be allocated among
the Partners on the following basis:
76
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
c)
d)
to the Class A Unitholders who were holders of Units at the end of each month ending in such Fiscal
Year, pro rata in accordance with their respective Proportionate Shares and to the extent of their capital
accounts, the Class A Unit Percentage of the Net Loss divided by 12;
to the Class B Unitholders who were holders of Class B Units at the end of each month ending in such
Fiscal Year, pro rata in accordance with their respective Proportionate Shares and to the extent of their
capital accounts, the Class B Unit Percentage of the Net Loss divided by 12; and.
e)
as to the balance, to the Governing GP.
B. Other Equity Items
December 31, 2014
December 31, 2013
Convertible
Debentures
Equity
Component
(Note 10)
Warrants
Total
Convertible
Debentures
Equity
Component
(Note 10)
Warrants
Total
$ 1,985,429
$ -
$ 1,985,429
$ -
$ -
$ -
-
-
-
-
1,985,429
697,595
697,595
-
-
-
1,985,429
-
$ 1,985,429
$ 697,595
$ 2,683,024
$ 1,985,429
$ -
$ 1,985,429
Balance at
beginning of year
Issuance of
convertible
debentures, net of
offering costs
Issuance of
warrants, net of
offering costs
Balance at end of
period
As at December 31, 2014, Pure Multi had outstanding Warrants as follows:
Number of Warrants
2,197,912
Exercise Price
$5.15
Expiry
November 20, 2016
14.
INTEREST EXPENSE
Interest expense consists of the following:
Year ended
Mortgage interest
Credit facility interest
Convertible debenture interest
Amortization of transaction costs and accretion of
convertible debentures
Amortization of mark to market mortgage adjustment
December 31, 2014 December 31, 2013
$ 6,293,287
$ 8,815,187
55,486
134,284
602,096
1,495,104
586,744
(687,895)
239,052
(664,098)
$ 10,343,424
$ 6,525,823
77
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
15.
NET CHANGE IN NON-CASH WORKING CAPITAL ITEMS
Cash provided by (used in)
Amounts receivable
Prepaid expenses
Accounts payable and accrued liabilities
Unearned revenue
Rental deposits
16.
CAPITAL MANAGEMENT
Year ended
December 31, 2014
(453,067)
$
(137,879)
2,010,682
260,807
243,434
December 31, 2013
$ 329,573
(538,223)
3,805,566
551,129
324,464
$
1,923,977
$ 4,472,509
Pure Multi defines capital as the aggregate of partners’ capital, preferred units of subsidiary and long term debt.
Pure Multi’s objectives in managing capital are to maintain a level of capital that complies with investment
and debt restrictions pursuant to the initial offering prospectus; complies with existing debt covenants, if any;
funds its business strategies; and builds long-term partners’ value. Pure Multi’s capital structure is approved
by the board of directors of the Governing GP through its periodic reviews.
The LP Agreement provides for a maximum indebtedness level of up to 70% of the gross book value. The
term "indebtedness" means any obligation of Pure Multi for borrowed money (including the face amount
outstanding under any convertible debentures and any outstanding liabilities of Pure Multi arising from the
issuance of subordinated notes but excluding any premium in respect of indebtedness assumed by Pure Multi
for which Pure Multi has the benefit of an interest rate subsidy), but excludes trade accounts payable,
distributions payable to unitholders, preferred units of subsidiary, accrued liabilities arising in the ordinary
course of business and short-term acquisition credit facilities. The LP Agreement defines “gross book value”
as the book value of the assets of Pure Multi plus the amount of accumulated depreciation and amortization in
respect of such assets (and related intangible assets), the amount of future income tax liability arising out of
indirect acquisitions and excluding the amount of any receivable reflecting interest rate subsidies on any debt
assumed by Pure Multi. Pure Multi’s indebtedness is 57.9% as at December 31, 2014 (December 31, 2013 –
64.0%). Pure Multi was in compliance with all restrictions during the years ended December 31, 2014 and
2013.
There were no changes in Pure Multi’s approach to capital management during the year ended December 31,
2014. The capital structure consisted of the following components at December 31, 2014 and December 31,
2013:
Capital
Mortgages payable
Convertible debentures
Preferred units of subsidiary
Partners’ capital
December 31, 2014
December 31, 2013
$ 256,734,993
19,876,109
125,000
197,797,807
$ 193,530,662
19,663,721
125,000
119,792,853
Total capital
$ 474,533,909
$ 333,112,236
78
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
17.
FINANCIAL INSTRUMENTS
Fair value of financial instruments
For certain of Pure Multi’s financial instruments, including cash and cash equivalents, amounts receivable,
mortgage reserve fund, credit facility, and accounts payable and accrued liabilities, the carrying amounts
approximate the fair values due to the short-term nature of the instruments.
The fair values of the mortgages payable and preferred units have been calculated based on discounted future
cash flows using discount rates that reflect current market conditions for instruments having similar terms and
conditions. Discount rates are either provided by lenders or are observable in the open market. The fair value
of the convertible debentures has been calculated using quoted prices in active markets.
The following table presents the carrying amounts and fair values of Pure Multi’s financial instruments:
December 31, 2014
Carrying
Amount
$ 256,734,993
125,000
19,876,109
Fair Value
$ 262,022,675
125,000
22,885,000
December 31, 2013
Carrying
Amount
$ 193,530,662
125,000
19,663,721
Fair Value
$ 198,636,203
125,000
21,390,000
Mortgages payable
Preferred units of subsidiary
Convertible debentures
Financial risk management
The board of directors of the Governing GP has the overall responsibility for the establishment and oversight
of Pure Multi’s risk management framework. Pure Multi’s risk management policies are established to identify
and analyze the risks faced by Pure Multi, to set appropriate risk limits and controls, and to monitor risks and
adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market
conditions and in response to Pure Multi’s activities.
In the normal course of business, Pure Multi, through the US REIT, is exposed to a number of risks that can
affect its operating performance. These risks include, but are not limited to, credit risk, interest rate risk,
liquidity risk, currency risk and environmental risk. These risks, and the actions taken to manage them, are as
follows:
a. Credit risk
Credit risk is the risk of financial loss to Pure Multi if a tenant, customer or counterparty to a financial
instrument fails to meet its contractual obligations, and arises principally from Pure Multi’s receivables
from tenants.
Pure Multi’s exposure to credit risk is influenced mainly by the individual characteristics of each tenant.
Pure Multi minimizes the risk by checking tenants’ credit histories, requesting security deposits and
initiating a prompt collection process. All trade receivables are current.
b. Interest rate risk
Interest rate risk arises from the possibility that the value of, or cash flows related to, a financial instrument
will fluctuate as a result of changes in market interest rates. Pure Multi is exposed to interest rate risk from
the interest rate differentials between the market rate and the rates used on these financial instruments.
79
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
Pure Multi manages its financial instruments and interest rate risks based on its cash flow needs and with a
view to minimizing interest expense. Whenever possible, Pure Multi, through the US REIT, tries to secure
fixed interest rate mortgages. As all of the mortgages payable bear interest at fixed rates and only the bank
credit facility bears a variable interest rate, Pure Multi does not face significant interest rate risk.
c. Liquidity risk
Liquidity risk is the risk that Pure Multi will not be able to meet its financial obligations as they fall due.
Real estate property investments tend to be relatively illiquid, with the degree of liquidity generally
fluctuating in relation to demand for and the perceived desirability of such investments. Such illiquidity
may tend to limit Pure Multi’s ability to vary its portfolio promptly in response to changing economic or
investment conditions. If Pure Multi were required to liquidate the investment properties, the proceeds to
Pure Multi might be significantly less than the aggregate carrying value of such property.
Pure Multi’s approach to managing liquidity is to ensure that it will have sufficient cash available to meet
its liabilities when due. In addition, Pure Multi intends to refinance any mortgages which mature within
six months.
d. Currency risk
Pure Multi is exposed to minimal currency risk since a small portion of the expenses is in Canadian dollars.
e. Environmental risk
Pure Multi, through the US REIT, is subject to various federal, state and municipal laws relating to the
environment. On acquisition, Pure Multi conducts environmental inspections of its properties and
appropriate testing by qualified environmental consultants when required to ensure compliance with all
applicable environmental laws.
18.
RELATED PARTY TRANSACTIONS AND COMMITMENTS
Managing GP
Pure Multi is related to the Managing GP, by virtue of having an officer and director in common (Stephen
Evans).
During the year ended December 31, 2014, Pure Multi declared distributions to the Managing GP in the amount
of $595,945 (year ended December 31, 2013 - $418,552). Included in accounts payable and accrued liabilities
at December 31, 2014 was $495,630 (December 31, 2013 - $357,956).
Sunstone U.S. Opportunity Realty Trust
Pure Multi is related to Sunstone U.S. Opportunity Realty Trust, by virtue of having officers and directors in
common (Stephen Evans, Robert King and James Redekop).
There have been no related party transactions between Pure Multi and Sunstone U.S. Opportunity Realty Trust
during the year ended December 31, 2014. During the year ended December 31, 2013, Pure Multi acquired
the following investment properties from Sunstone U.S. Opportunity Realty Trust:
(cid:120) Windsong acquired on July 19, 2013;
(cid:120)
(cid:120)
(cid:120)
Fountainwood acquired on August 30, 2013;
Livingston acquired on August 30, 2013; and
20% interest in San Brisas acquired on October 1, 2013
80
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
Pure Multi negotiated the purchase price of the properties above with reference to independently prepared third
party appraisals.
Sunstone U.S. Opportunity (No. 2) Realty Trust
Pure Multi is related to Sunstone U.S. Opportunity (No. 2) Realty Trust, by virtue of having officers and
directors in common (Stephen Evans, Robert King and James Redekop).
During the year ended December 31, 2014, Pure Multi acquired the following investment properties from
Sunstone U.S. Opportunity (No. 2) Realty Trust:
(cid:120) Walker Commons acquired on June 27, 2014;
(cid:120)
(cid:120)
50% interest in Preserve acquired on August 28, 2014; and
80% interest in San Brisas acquired on August 28, 2014
Pure Multi negotiated the purchase price of the properties above with reference to independently prepared third
party appraisals.
As disclosed in note 5 to these consolidated financial statements, as part of the closing adjustments on the
acquisitions of Walker Commons and the 80% interest in San Brisas, Pure Multi paid to Sunstone U.S.
Opportunity (No. 2) Realty Trust an amount equal to the fair market value adjustment that Pure Multi would
have incurred if it had assumed the mortgage as part of the acquisition. The total amount paid, related to these
adjustments, to Sunstone U.S. Opportunity (No. 2) Realty Trust during the year ended December 31, 2014 was
$2,926,438.
Sunstone U.S. Opportunity (No. 3) Realty Trust
Pure Multi is related to Sunstone U.S. Opportunity (No. 3) Realty Trust, by virtue of having officers and
directors in common (Stephen Evans, Robert King and James Redekop).
During the year ended December 31, 2014, Pure Multi acquired the following investment property from
Sunstone U.S. Opportunity (No. 3) Realty Trust:
(cid:120)
50% interest in Preserve acquired on August 28, 2014
Pure Multi negotiated the purchase price of the property above with reference to an independently prepared
third party appraisal.
Asset Management Agreement
The Managing GP, pursuant to the Asset Management Agreement, will provide asset management,
administrative and reporting services to Pure Multi as its managing general partner. The Asset Management
Agreement also requires the Managing GP to provide Pure Multi with support services consisting of office
space and equipment and the necessary clerical and secretarial personnel for the administration of its day-to-
day activities, at no cost. The Asset Management Agreement may be terminated by Pure Multi at any time
upon the occurrence of certain events of default and at any other time upon not less than 60 days notice, without
bonus or penalty. In lieu of the fees typically associated with a third party asset management agreement, the
Managing GP will only be entitled to a reimbursement of any reasonable costs and expenses (including legal
and audit costs but excluding personnel costs) that it incurs providing asset management services to Pure Multi
and will not be entitled to any other remuneration or compensation for its services.
81
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
Tipton Asset Group, Inc. (“Tipton”) is the property manager for Pure Multi. Pure Multi is related to Tipton by
virtue of having an officer and director in common with a subsidiary of Pure Multi (Bryan Kerns). Tipton
charged $1,454,305 in property management fees during the year ended December 31, 2014 (year ended
December 31, 2013 - $942,461). Included in accounts payable and accrued liabilities at December 31, 2014
was $nil (December 31, 2013 - $nil).
Compensation
Currently, the directors of the Governing GP who are not affiliated with or employees of the Managing GP will
receive annual compensation in the amount of $12,500, plus $500 for attendance at meetings of the directors
or any committee. As well, the Governing GP will indirectly reimburse such directors for any out of pocket
expenses, including out of pocket expenses for attending meetings. Pure Multi will reimburse the Governing
GP for such amounts. In addition, Pure Multi will obtain insurance coverage for such directors. Compensation
will be reviewed on an annual basis, giving consideration to Pure Multi’s growth and the extent of its portfolio.
Pure Multi compensates the directors of the Governing GP, who are not affiliated with or employees of the
Managing GP, through annual compensation. The amount incurred during the year ended December 31, 2014
was $96,797 (year ended December 31, 2013 - $67,335).
19.
LEASES
Pure Multi, through the US REIT, has entered into lease agreements on its investment properties. The
residential property leases typically have lease terms of 1 to 12 months. Future minimum rental revenue to be
earned under non–cancellable operating leases is $22,072,084 as at December 31, 2014 (December 31, 2013 -
$16,382,301).
20.
FAIR VALUE MEASUREMENT
Pure Multi measures investment properties at fair value at each balance sheet date, the fair value is the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date under current market conditions. In certain circumstances, the initial fair
value may be based on other observable current market transactions, without modification or on a valuation
technique using market based inputs.
Fair value measurements recognized in the statement of financial position are categorized in accordance with
the following levels:
(cid:120) Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
(cid:120) Level 2: Quoted prices in active markets for similar assets or liabilities or valuation techniques where
significant inputs are based on observable market data.
(cid:120) Level 3: Valuation techniques for which any significant input is not based on observable market data.
82
Pure Multi-Family REIT LP
Notes to Consolidated Financial Statements
Expressed in United States dollars
The fair value hierarchy of assets and liabilities measured at fair value on the consolidated statement of financial
position or disclosed in the notes to the financial statements is as follows:
December 31, 2014
December 31, 2013
(000’s)
Investment properties
Mortgages payable
Preferred units of subsidiary
Convertible debentures
Level 1
Level 2
Level 3
Level 1
Level 2
Level 3
$ -
$ -
$ 468,518
$ -
$ -
$ 332,003
-
-
22,885
262,023
125
-
-
-
-
-
-
21,390
198,636
125
-
-
-
-
There have been no transfers among all levels during the year.
As disclosed above, the fair value methodology for Pure Multi’s investment properties is considered Level 3,
as significant unobservable inputs are required to determine fair value. Refer to note 5, for a description of
how management determines fair value and for further details of the average capitalization rates and ranges for
investment properties, including equity-accounted investees.
Investment properties as at December 31, 2014 and December 31, 2013 have been valued using the overall
capitalization rate (“OCR”) method, an income based approach, whereby the stabilized net operating income
is capitalized at the requisite OCR.
Valuations determined by the OCR method are most sensitive to changes in capitalization rates. The table
below summarizes the sensitivity of the fair value of investment properties to changes in the capitalization rate
at December 31, 2014:
Rate sensitivity
+ 75 basis points
+ 50 basis points
+ 25 basis points
Base rate (5.90%)
- 25 basis points
- 50 basis points
- 75 basis points
OCR Sensitivity
Fair value
Change in fair value
$ 415,619,823
$ (52,898,254)
431,871,207
449,447,544
468,518,077
489,282,217
511,976,597
536,884,203
(36,646,870)
(19,070,533)
-
20,764,140
43,458,520
68,366,126
21.
SUBSEQUENT EVENT
On January 14, 2015, Pure Multi, through the US REIT, sold Sunset Point Apartments, a multi-family
apartment community (“Sunset Point”), located in Arlington, Texas, for a sale price of $27,950,000, plus
standard closing costs and adjustments. The mortgage payable, secured by Sunset Point, was assumed by the
purchaser on the same date.
83
MANAGEMENT
DIRECTORS
STEPHEN EVANS
Director and Chief Executive Officer
ROBERT KING
Lead Independent Director
SAMANTHA ADAMS
Vice President
SCOTT SHILLINGTON, CA
Chief Financial Officer
ANDREW GREIG
Director of Investor Relations
JAMES REDEKOP
Independent Director
DOUGLAS SCOTT, CA
Independent Director
JOHN O’NEILL
Independent Director
JAMES SPEAKMAN
Director
Corporate Legal Counsel
FRASER BERRILL
Independent Director
Fountainwood Apartments, Dallas, TX
84
CORPORATE INFORMATION
HEAD OFFICE
910-925 West Georgia Street
Vancouver, BC Canada V6C 3L2
604-681-5959
T:
E:
info@puremultifamily.com
www.puremultifamily.com
PROPERTY MANAGEMENT OFFICE
Suite 100 - 6529 Preston Road
Plano, Texas USA 75024
TRANSFER AGENT
Computershare Trust Company of Canada
100 University Avenue, 9th Floor
Toronto, ON M5J 2Y1
T:
TF:
F:
TFF:
514-982-7555
1-800-564-6253
1-866-249-7775
1-888-453-0330
AUDITORS
KPMG LLP Chartered Accountants
PO Box 10426, 777 Dunsmuir Street
Vancouver, BC V7Y 1K3
604-691-3000
T:
604-691-3031
F:
www.kpmg.ca
CORPORATE COUNSEL
Clark Wilson LLP
800-885 West Georgia Street
Vancouver, BC V6C 3H1
604-891-7767
T:
604-687-6314
F:
INVESTOR RELATIONS
Andrew Greig, Director of Investor Relations
T:
TF:
E:
www.puremultifamily.com
604-681-5959
1-888-681-5959
agreig@puremultifamily.com
STOCK EXCHANGE LISTING
TSX Venture
OTCQX
LISTING SYMBOL
TSX-V: RUF.U, RUF.UN, RUF.DB.U
OTCQX: PMULF
ANNUAL MEETING OF SHAREHOLDERS
9:00 am Pacific Daylight Time
Thursday May 28, 2015
Shangri-La Hotel
Mallinson Room, 6th Floor
1128 West Georgia Street
Vancouver, BC V6E 0A8
Prairie Creek Villas, Dallas, Texas
85
WWW.PUREMULTIFAMILY.COM