Timbercreek Global Real Estate Fund

Annual Report 2013 Timbercreek Global Real Estate Fund

Letter to Unitholders Corrado Russo Global real estate securities underwent a challenging year in 2013 as uncertainty around the direction of interest rates resulted in yield-oriented asset classes, such as real estate, to underperform. Despite these market conditions, the Timbercreek Global Real Estate Fund delivered strong results in 2013. The Fund generated a net Total Return of 4.3%, outperforming its custom benchmark by approximately 130 basis points, driven by all three asset classes: Common Equity, Preferred Shares and Direct. Since its inception in 2010, the Fund has generated an annualized net Total Return of 10.1%, inclusive of the quarterly distributions made to investors. The Fund met its targeted distribution in 2013, which was $0.84 per unit, continuing the Manager s track record of achieving the Fund s investment objectives. The Fund s allocation to common equities was 64.0% of gross assets as of December 31, 2013. The Fund s common equity positions in the United States, Europe and Japan positively contributed to performance. In the United States, Starwood Property Trust, Sabra Health Care REIT and Spirit Realty Capital generated strong shareholder returns, up 29.3%, 26.9% and 13.1%, respectively in local currency. In each case, robust acquisition activity served as a positive catalyst for the shares. In Europe, Befimmo and Vastned Retail generated returns of 10.6% and 8.4%, respectively in local currency, and increases of 23.4% and 20.1% in CAD. After years of challenging market conditions, green shoots started to form in the Belgium office market in 2013, having a positive impact on Befimmo s share price while Vastned Retail s repositioning strategy led to a re-rating of the company s multiple. In Japan, Premier Investment Corp delivered a 33.9% return in local currency. Premier benefited from improved leasing prospects and the backfilling of vacant space. Looking ahead to 2014, we expect a 12.0% to 14.0% total return from global real estate securities. Our expected return consists of 9.0% to 10.0% in capital appreciation and 3.5% to 4.0% in dividend yield for the overall global REIT market. Capital appreciation is driven by 6.0% to 7.0% earnings growth, the narrowing of discounts to NAV and modest changes in valuation. Growth is being led by the United States and United Kingdom, with the highest yields being in Singapore, Australia and Canada and the most attractive valuations being in Australia, Hong Kong, the United States and France. Potential negative risks include (i) slower than expected growth in China, which would negatively impact Hong Kong, (ii) an acute rise in interest rates in the U.S., which would negatively impact Singapore and the United States, (iii) a cooling of demand for condos in Canada resulting in slower economic growth, (iv) consumer spending in Japan being negatively impacted by the consumption tax hike, (v) the Australian Dollar depreciating more than expected, thus negatively impacting residential sales, and (vi) renewed political and/or monetary policy instability in Europe. Potential upward surprises include (i) economic growth in Europe increasing faster than expected, resulting in a broadening in demand for commercial real estate, (ii) interest rates in the United States remaining flat or only modestly rising, which would prove positive for future refinancing s, (iii) M&A activity in Canada increasing, (iv) growth in China and inflation in Japan accelerating above expectations, (v) employment rate recovery in Australia driving office rents higher, and (vi) acquisition activity in Singapore accelerating, allowing the listed REITs to drive earnings higher. The Fund aims to generate attractive, stable income for investors and preserve capital, while providing the opportunity for long-term market appreciation. Timbercreek Global Real Estate Fund (the Fund) is a closed-end fund established to provide investors with the opportunity to participate in a diversified portfolio of premier global real estate assets and securities that offer superior risk-adjusted returns while limiting volatility and preserving capital. The Fund invests in high quality real estate opportunities across all major property types and major markets around the world. The Fund s U.S. REIT Preferred holdings performed well, both on an absolute and relative basis, generating a 7.1% return in CAD. The Fund s allocation to U.S. REIT Preferred shares was 19.7% of gross assets as of year-end 2013. We believe U.S. real estate fundamentals are strengthening, characterized by a broadening of demand, limited supply, strong occupancies and rising rents. Under these conditions, we see the best opportunities today in the Preferred shares of retail and lodging REITs with fundamentals that are poised to perform strongly in an improving economy. Private investments represented 16.3% of the Fund s gross assets as of December 31, 2013. The Fund harvested a portion of its holdings in AMC Communities, its largest direct real estate position. AMC Communities owns a high quality portfolio of 16 manufactured housing properties representing over 5,900 sites in the United States across Colorado, Texas, Arizona and Michigan. The Fund initially established an investment in AMC Communities at year-end 2010. Over the full holding period, we expect to generate double digit annualized returns from AMC Communities. We are confident in the Fund s ability to continue to meet our investment objectives of preserving capital while providing unitholders with stable quarterly cash distributions and attractive long term capital appreciation. There are a number of people to thank for our success this year. The dedication of our internal investment team continues to pay off with great results. More importantly, I would like to express our enormous appreciation to all our unitholders for your continued support. We look forward to sharing our continued growth and progress with you over the coming year. Corrado Russo Managing Director, Investments & Global Head of Real Estate Securities, Timbercreek Asset Management March 2014 2 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 3

Annual Management Report of Fund Performance As at December 31, 2013 This annual management report of fund performance contains financial highlights but does not contain the audited annual financial statements of Timbercreek Global Real Estate Fund (the Fund ). You can obtain a copy of the audited annual financial statements at your request, at no cost, by any of the following: PHONE Calling the Fund at (416) 306-9967 ext. 7250 (collect if long distance), Carrie Morris, Managing Director, Capital Markets & Corporate Communications INTERNET Visiting SEDAR at www.sedar.com; or MAIL Writing to the Fund at: Timbercreek Global Real Estate Fund Attention: Corporate Communications 1000 Yonge Street, Suite 500 Toronto, Ontario M4W 2K2 Unitholders may also contact us using one of these methods to request a copy of the Fund s proxy voting policies and procedures, proxy voting disclosure record, or quarterly portfolio disclosure. 2013 Annual Management Report of Fund Performance and Financial Statements 4 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 5

FORWARD-LOOKING STATEMENTS Caution regarding forward-looking statements The terms the Fund, we, us and our in the following Management Report of Fund Performance refer to the Fund and its financial position and results of operations for the year ended December 31, 2013 (the Year ). Financial data provided has been prepared in accordance with Canadian Generally Accepted Accounting Principles ( GAAP ) as issued by the Accounting Standards Board ( AcSB ) of the Chartered Professional Accountants Canada ( CPA Canada ). This MRFP should be read in conjunction with the Fund s audited annual Financial Statements for the years ended December 31, 2013 and 2012, both of which have been prepared in accordance with Canadian GAAP. Copies of these documents have been filed electronically with securities regulators in Canada through the System for Electronic Document Analysis and Retrieval ( SEDAR ) and may be accessed through the SEDAR website at www.sedar.com. Historical results and percentage relationships contained in the Fund s Financial Statements and MRFP related thereto, including trends which might appear, should not be taken as indicative of future operations. Forward-looking statement advisory This document may contain forward-looking statements relating to anticipated future events, results, circumstances, performance or expectations that are not historical facts but instead represent our beliefs regarding future events. These statements are typically identified by expressions like believe, expects, anticipates, would, will, intends, projected, in our opinion and similar expressions. By their nature, forward-looking statements require us to make assumptions which include, among other things, that (i) the Fund will have sufficient capital under management to effect its investment strategies and pay its targeted distributions, (ii) the Fund s investment strategies will produce the results intended by Timbercreek Asset Management Ltd. (the Manager ), (iii) markets will react and perform in a manner consistent with the investment strategies, and (iv) the Fund is able to acquire publicly traded real estate securities and invest in private direct real estate that will generate returns that meet and/or exceed the Fund s targeted investment returns. Forward-looking statements are subject to inherent risks and uncertainties. There is significant risk that forecasts and other forward-looking statements will prove to not be accurate. We caution readers of this document not to place undue reliance on our forward-looking statements as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed or implied in the forward-looking statements. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including but not limited to, general global market conditions, general risks relating to real estate and the risks detailed from time to time in the Fund s prospectus. We caution that the foregoing list of factors is not exhaustive and that when relying on forwardlooking statements to make decisions with respect to investing in the Fund, investors and others should carefully consider these factors, as well as other uncertainties, potential events and the inherent uncertainty of forward-looking statements. Due to the potential impact of these factors, the Fund and the Manager do not undertake, and specifically disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law. MANAGEMENT DISCUSSION OF FUND PERFORMANCE This Management Report of Fund Performance ( MRFP ) presents management s view of the significant factors and developments during the past year that have affected the performance and outlook of the Fund and should be read in conjunction with the audited annual Financial Statements of the Fund for the years ended December 31, 2013 and 2012, together with the notes related thereto. This MRFP is not intended to provide legal, accounting, tax or investment advice. Investment Objectives and Strategies The Fund was created under the laws of the Province of Ontario pursuant to a Declaration of Trust dated August 5, 2010 and commenced operations on August 26, 2010. Timbercreek Asset Management Ltd. is the trustee, manager and portfolio advisor of the Fund (the Trustee or Manager ). The fundamental investment objectives of the Fund are to: Provide unitholders with quarterly cash distributions; and Preserve capital while providing the opportunity for long-term capital appreciation for unitholders. The Fund intends on meeting its investment objectives by investing in a globally diversified portfolio of securities issued in respect of real estate situated primarily in the world s industrialized economies. While the bulk of the portfolio consists of publicly traded real estate securities, the Fund intends to invest up to 20% of its total assets directly in real estate where the Manager believes it is the most efficient way to access the desired real estate. Further, the Fund invests across the capital structure including common equity, preferred shares and debt of both public and private real estate companies. Risk The risks associated with investing in the Fund remain as disclosed in its prospectus dated April 27, 2012. Any changes to the Fund for the Year have not affected the overall risk of the Fund. Results of Operations During the Year, the Class A and Class B units of the Fund generated total returns of 4.2% and 4.8% respectively (December 31, 2012 22.4% and 23.1%). The differences in total return amongst the two classes of units are a result of operating expenses that are applicable to a particular class. These Fund returns are reported net of all management fees and expenses for all classes, which should be considered when comparing the returns to indices, which do not pay fees or incur expenses. The Fund also paid quarterly distributions to unitholders during the Year of approximately $5.7 million (December 31, 2012 $6.3 million), or $0.84 per Class A unit and Class B unit (December 31, 2012 $0.84). The Fund was able to achieve this distribution from the net investment income of $3.6 million and net distributions received on positions held through equity swaps of $2.3 million. Global economic conditions continued to improve in 2013 culminating with the U.S. Federal Reserve formally beginning the process of winding down its quantitative easing measures. In the United States, demand for commercial real estate broadened as consumer spending and job growth strengthened. In the U.K., unemployment declined, resulting in a recovery in London s office market, while on the Continent tail risk meaningfully decreased as central bank policies remained accommodative and the economy found its footing despite soft economic conditions. In Asia, strong policy action in Japan resulted in a resurgence in confidence leading to an expansion in transaction activity, which drove asset values higher. In Australia, economic growth was sub-optimal yet accommodative central bank policy positively impacted consumer sentiment. Finally, Singapore and Hong Kong benefited from broader growth across Asia. Global equity markets, as measured by the MSCI World Index, returned 36.2% in CAD terms for the year ended December 31, 2013. The equity markets continued to be supported by rising confidence at a consumer and business level as well as low interest rates. Despite a synchronized global expansion materializing across the U.S., Europe and Asia, global real estate securities meaningfully underperformed global equities in 2013 as the asset class moved inversely to changes in bond yields. During the Year, the FTSE/EPRA NAREIT Developed World Index increased by 11.5% in CAD and 4.4% in USD terms, highlighting the weakness of the CAD versus most other currencies. From a regional perspective, the United Kingdom produced the strongest return, up 36.2% in CAD and 27.5% in USD terms. Canada was the weakest performing country during the Year with a decline of 5.5% in CAD terms. The returns of Europe, Developed Asia, and the United States were in between those two extremes, increasing by 23.6%, 11.5% and 9.5%, respectively, in CAD terms. The Fund continues to make investments across the capital stack including common equity, preferred shares, debt and direct real estate. During the Year, the Fund increased its allocation 6 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 7

as a percentage of gross assets to Canada, Australia, Netherlands and United Kingdom, while decreasing its exposure to the United States, Singapore, Japan, Hong Kong, South Africa, New Zealand and Belgium. The Manager allocates the Fund s capital to the best risk-adjusted opportunities in its investable universe and the changes in the country allocations are a reflection of this strategy. During the Year, the Fund s investment in common equities increased to 62.2% of net assets from 57.4% at December 31, 2012, an increase of 4.8%. Approximately 14.8% of Fund s investments are in preferred shares, a 0.8% decrease from 15.6% at December 31, 2012. The Fund has continued to utilize total return equity swaps to gain exposure to preferred shares and common equities held in the United States. The Manager determined that these instruments allowed the Fund to gain the same economic exposure to the underlying investments while reducing its financing costs. If the total notional exposure of the positions held on swap was included within net assets, the Fund s preferred shares allocation would increase to 23.8% (December 31, 2012 25.4%) of net assets and common equities would increase to 77.4% (December 31, 2012 79.5%) of net assets. Approximately 19.7% of the Fund s investments at Year end are invested in direct real estate and mortgage and loan investments, a decrease of 1.9% from 21.6% at December 31, 2012. The decrease is mainly a result of the sale of its interest in AMC REIT. This transaction will close in two tranches, the first of which occurred in December 2013. The Fund s direct real estate investments are focused on multi-residential buildings, or direct mortgage investments secured by income-producing assets where interest on the loan can be serviced from cash flows generated by the underlying assets. For the Year, the Fund had investment income of $5.8 million (December 31, 2012 $6.0 million), TIMBERCREEK which consisted mainly GLOBAL of dividends REAL net of ESTATE withholding FUND tax, totaling $4.4 million (December 31, 2012 $4.6 million). The Fund also experienced a decrease in distributions and interest from $1.4 million to $1.3 million (December 31, 2012 increase of $0.7 million), resulting mainly from Management its decreased exposure in mortgage Report investments. of Fund Total operating Performance expenses were $2.2 million (December 31, 2012 $2.7 million), of which $1.3 million (December 31, 2012 $1.9 million) related As at December 31, 2013 to management fees. During the Year, the Fund had a net gain on investments, after commission and transaction costs, of $1.4 million (December 31, 2012 $14.8 million), of which $6.9 million (December 31, 2012 $7.5 million) was realized, which was offset by an unrealized loss of $5.1 (December 31, 2012 $7.5 million) was realized, which was offset by an unrealized loss of $5.1 million (December million (December 31, 2012 gain of $7.5 million). Of note, from a distribution perspective, the 31, 2012 gain of $7.5 million). Of note, from a distribution perspective, the dividends received from the equity dividends received from the equity swaps are included within realized capital gains. The decrease swaps are included within realized capital gains. The decrease in the size of the gain versus the prior year is in the size of the gain versus the prior year is attributable to the performance of the Fund s attributable common equity to the performance and preferred of the share Fund s positions, common which equity were and preferred hindered share by the positions, increase which in interest were hindered rates that by occurred the increase across in interest the financial rates that system occurred starting across in the May financial 2013. system starting in May 2013. The Fund s net assets were $84.3 million at December 31, 2013, a decrease of $17.8 million from December 31, The Fund s net assets were $84.3 million at December 31, 2013, a decrease of $17.8 million from 2012. The decrease is directly attributed to redemptions of Class A and B shares of $15.3 million (December 31, December 31, 2012. The decrease is directly attributed to redemptions Class A and B shares of 2012 $15.3 million $1.0 million) (December and $1.9 31, million 2012 (December $1.0 million) 31, 2012 and $1.0 $1.9 million) respectively. (December 31, 2012 $1.0 million) respectively. Income available available for for distribution distribution The following is a reconciliation of income available for distribution generated on the investment The following is a reconciliation of income available for distribution generated on the investment portfolio. The portfolio. The increase in net assets from operations is adjusted for the unrealized and realized increase in net assets from operations is adjusted for the unrealized and realized gains on the sale of gains on the sale of investments, equity swaps and forward contracts and management fees in investments, equity swaps and forward contracts and management fees in excess of 1.25%. For distribution excess of 1.25%. For distribution purposes, the Fund includes dividends received on positions held purposes, through equity the Fund swaps includes as income dividends available received for on positions distribution, held through which are equity included swaps as within income the available net gain for distribution, investments which in are the included statement within of the operations. net gain on investments in the statement of operations. 2013 2012 Increase in net assets from operations 4,982,060 18,100,441 Less: Net gain on investments (1,399,608) (14,781,909) Add: Management fees in excess of 1.25% - 575,038 Add: Net dividends received on positions held through equity swaps 2,318,112 2,286,861 Distributable income 5,900,564 6,180,431 Actual distributions 5,720,669 6,340,899 Under/ (over) distribution 179,895 (160,468) Borrowing The Fund may utilize various forms of leverage, including a margin facility that will allow the Borrowing Fund to borrow funds from time to time that the Manager determines appropriate. The aggregate The amount Fund of may leverage utilize various by the forms Fund of may leverage, not exceed including 25% a margin of the aggregate facility that value will allow of the assets Fund to of borrow the funds Fund from (the Total time to Assets ) time that at the the Manager time of determines use. In the appropriate. event that The the aggregate leverage amount exceeds of 25% leverage of Total by the Fund Assets, may the not Manager exceed 25% will of take the aggregate reasonable value measures of the assets to reduce of the Fund the total (the Total borrowings, Assets ) at such the time that it of is use. below 25% of Total Assets. In the event that the leverage exceeds 25% of Total Assets, the Manager will take reasonable measures to reduce The Fund has provided its prime broker an interest in all of the assets of the Fund held as collateral for leverage purposes. For the Year, the Fund s highest and lowest borrowings were approximately $15.1 million and 3.0 million, respectively (or 16.1% and 3.1%, respectively of Total Assets). For the Year ended December 31, 2012, the Fund s highest and lowest borrowings were approximately $9.7 million and nil, respectively (9.5% and nil, respectively, of Total Assets). Recent Developments Future Accounting Change On February 13, 2008, the Accounting Standards Board ( AcSB ) confirmed that publicly accountable enterprises would be required to adopt International Financial Reporting Standards ( IFRS ), as published by the International Accounting Standards Board ( IASB ), on January 1, 2011. However, the AcSB deferred the mandatory IFRS changeover date for Canadian investment funds to January 1, 2014. Consequently, the Fund will publish its first annual audited financial statements in accordance with IFRS for the year ending December 31, 2014, with comparatives for the year ending December 31, 2013, and prepare an opening IFRS statement of net assets at January 1, 2013. The Fund will also be publishing unaudited interim financial statements in accordance with IFRS for the 6-month period ending June 30, 2014. IFRS is also expected to affect the overall presentation of financial statements and would require enhanced disclosures in the financial statements. Upon adoption of IFRS the Fund will apply IFRS 13 Fair Value Measurement. IFRS 13 defines fair value, sets out a single IFRS framework for measuring fair value and requires disclosure about fair value measurements. It applies when other IFRSs require or permit fair value measurement. If an asset or a liability measured at fair value has a bid price and an ask price, it requires valuation to be based on a price within the bid-ask spread that is most representative of fair value. It allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurements within a bid-ask spread. This may result in eliminating the difference between the NAV per unit and net assets per unit under current Canadian GAAP. On October 31, 2012, the IASB published Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), which provides an exemption from consolidation of subsidiaries under IFRS 10, Consolidated Financial Statements, for entities which meet the definition of an investment entity. A qualifying investment entity is required to account for investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit or loss; the only exception would be subsidiaries that are considered an extension of the investment entity s investing activities. The consolidation exception is mandatory, not optional. Related Party Transactions Management Fees The Fund pays the Manager a management fee for providing all general management and administration services, including management of the Fund s assets, bookkeeping, coordinating capital markets activities and other administrative services of the Fund. This fee also includes acting as the Trustee of the Fund. During the Year, the Manager earned management fees of $1.3 million (December 31, 2012 $1.9 million). See management fees for additional explanation. Trailer Fees The Fund also pays a fee to the Manager equal to 0.40% annually of the net asset value per Class A unit. The Manager will in turn pay to each registered dealer a service fee (the Trailer Fee ) equal to 0.40% annually of the net asset value per Class A unit for each Class A unit held by clients of such registered dealer (calculated and paid at the end of each calendar quarter). This Trailer Fee is reflected in the calculation of the net asset value for the Class A units. There is no Trailer Fee applicable to Class B units. During the Year, the Fund paid Trailer Fees on Class A units of $0.3 million (December 31, 2012 $0.4 million). Investments As opportunities arise, the Fund may co-invest in private direct mortgage and loan investments secured by multi-family and/or commercial properties with Timbercreek Mortgage Investment Corporation ( TMIC ) and Timbercreek Senior Mortgage Investment Corporation ( TSMIC ), related parties by virtue of common management. As at December 31, 2013, the Fund has coinvested in private direct mortgage and loan investments through the Fund directly totaling nil (December 31, 2012 $4.1 million) and is co-invested in three mortgage investments totaling $1.8 million (December 31, 2012 $2.0 million) through TCD LP. The parent company of the Manager is responsible for the day-to-day operations and management and administration of TMIC and TSMIC s mortgage and loan investments portfolio. During the Year, the Fund earned interest income on these investments of $0.7 million (December 31, 2012 $0.7 million). the total borrowings, such that it is below 25% of Total Assets. 8 Timbercreek Global Real Estate Fund The Fund has provided its prime broker an interest in all of the assets of the Fund held as collateral for leverage Timbercreek Global Real Estate Fund 9 purposes. For the Year, the Fund s highest and lowest borrowings were approximately $15.1 million and 3.0 million, respectively (or 16.1% and 3.1%, respectively of Total Assets). For the Year ended December 31, 2012, the

redemptions, distribution or other optional charges that would have reduced returns or performance. How the Fund has performed in the past does not necessarily indicate how it will perform in the future. The Fund invested $2.4 million in TC Core 2 LP, a limited partnership formed for the purpose of acquiring an 11.22% interest in Restier LP ( Restier ). Restier is a limited partnership formed for the purpose of acquiring core, multi-family real estate located throughout Canada. The parent company of the Manager is the general partner of TC Core 2 LP and is the asset manager, property manager and general partner of Restier, all related parties by virtue of common management. During the Year, the Fund received a partnership distributions from TC Core 2 LP of $0.02 million (December 31, 2012 $0.06 million). The Fund has invested $5.8 million in TCD LP, a limited partnership formed for the purpose of coinvesting in direct multi-family real estate and private mortgage and loan investments. The Fund is the sole limited partner of TCD LP and has retained the Manager to provide fund management and investment advisory services. During the year, the Fund received a partnership distributions from TCD LP of $0.4 million (December 31, 2012 - $0.5 million). The above noted related party transactions are in the normal course of operations and are TIMBERCREEK measured at the exchange GLOBAL amount, REAL which ESTATE is the amount FUND of consideration established and agreed to by the related parties. Management Report of Fund Performance MANAGEMENT FEES As at December 31, 2013 Pursuant to the Management Agreement, the Fund pays the Manager a management fee in years where the Fund earns a positive Total Return (as defined below) for that year. The Management Fees are calculated and accrued on a daily basis on the year-to-date annualized total returns, MANAGEMENT FEES including applicable taxes. The Manager will charge a fee, plus applicable taxes (the Management Pursuant Fee ), subject to the to Management certain restrictions Agreement, of: the Fund pays the Manager a management fee in years where the Fund earns a positive Total Return (as defined below) for that year. The Management Fees are calculated and accrued 0% on of net a daily asset basis value on the per year-to-date annum in annualized years in which total returns, the Total including Return applicable is negative; taxes. The Manager will charge a fee, plus applicable taxes (the Management Fee ), subject to certain restrictions of: 1.25% of net asset value per annum in years in which the Total Return is between 0% and 7.99%; 0% of net asset value per annum in years in which the Total Return is negative; 1.25% 1.5% of net asset value per per annum annum in years in years in which in which the Total the Return Total is Return between is between 0% and 7.99%; 8% and 11.99%; 1.5% andof net asset value per annum in years in which the Total Return is between 8% and 11.99%; and 1.8% of net asset value per annum in years in which the Total Return is in excess of 12%. 1.8% of net asset value per annum in years in which the Total Return is in excess of 12%. Total Return means the return generated on the units, including income from distributions declared, as well as the Total appreciation Return means or depreciation the return in generated the net asset on value the per units, unit, including over the calendar income period, from distributions calculated December declared, 31 as of well each as year. the appreciation or depreciation in the net asset value per unit, over the calendar period, calculated on December 31 of each year. In addition to the Management Fees disclosed above, the Fund will pay for all expenses incurred by it in connection In addition with to the Management operation and management Fees disclosed of the above, Fund, the including Fund will but not pay limited for all to expenses any additional incurred fees by payable it in connection to the Manager with for the performance operation and of extraordinary management services of the on Fund, behalf including of the Fund but for not services limited outside to any the scope additional of the fees Management payable to Agreement. the Manager During for the performance Year, no additional of extraordinary fees were paid services to the Manager. on behalf of the Fund for services outside the scope of the Management Agreement. During the Year, no additional A summary of the Management Fees paid and a breakdown of the services received in consideration of the fees were paid to the Manager. Management Fees, as a percentage of Management Fees during the Year includes: A summary of the Management Fees paid and a breakdown of the services received in consideration of the Management Fees, as a percentage of Management Fees during the Year includes: 2013 2012 $ % $ % Management fees 1,293,692 80.4 1,881,940 83.8 Trailer fees 314,620 19.6 363,837 16.2 1,608,312 100.0 2,245,777 100.0 PAST PERFORMANCE The performance information shown assumes that all distributions made by the Fund in the period shown were reinvested in additional securities of the Fund. The performance information does not take into account sales, redemptions, distribution or other optional charges that would have reduced returns or performance. How the Fund has performed in the past does not necessarily indicate how it will perform in the future. Year-by-Year Year-by-Year Returns Returns (1) (1) The following bar bar chart shows the the Fund s Fund s performance for the for period the shown. period In shown. percentage In percentage terms, the bar terms, chart the shows bar how chart much shows an investment how much made an investment on the first day made of the on financial the first period day of would the financial have grown period or decreased would have by the grown last day or of decreased the financial by period. the last day of the financial period. CLASS A 25.0% 20.0% 15.0% 10.0% 5.0% 2.4% 22.4% 4.2% CLASS B 0.0% 0.0% TIMBERCREEK 2011 GLOBAL 2012 REAL 2013 ESTATE FUND (1) In accordance with NI 81-106, no performance data has been shown for the period from August 26, 2010 to December 31, 2010 as the Fund was not a reporting issuer at all times during the year. (1) In accordance with NI 81-106, no performance data has been shown for the period from As at August December 26, 201031, to 2013 December 31, 2010 as the Fund was not a reporting issuer at all times during the year. FINANCIAL HIGHLIGHTS FINANCIAL HIGHLIGHTS The following tables show selected key financial information about the Fund and are intended to help you The following tables show selected key financial information about the Fund and are intended to understand the Fund s financial performance for the periods shown. help you understand the Fund s financial performance for the periods shown. Total increase (decrease) from operations (2) 0.70 2.35 0.28 0.64 TIMBERCREEK GLOBAL REAL ESTATE FUND 9 Distributions (3) : 25.0% 20.0% 15.0% 10.0% 5.0% 2.7% 23.1% 4.8% 2011 2012 2013 Management Report of Fund Performance The Fund s Net Assets per unit (1)(8) CLASS A 2013 2012 2011 2010 Net assets, beginning of period $ 12.60 $ 11.03 $ 11.57 $ 11.21 Increase (decrease) from operations: Total revenue 0.82 0.78 0.76 0.32 Total expenses (0.36) (0.38) (0.33) (0.19) Realized gains (losses) for the period 0.97 0.98 (0.20) 0.15 Unrealized gains (losses) for the period (0.73) 0.97 0.05 0.36 From income (excluding dividends) (9) 0.23 0.11 0.72 From dividends (9) 0.04 0.03 0.04 0.05 From capital gains (10) 0.57 0.70 0.23 Return of capital 0.08 Total distributions for the period (3) 0.84 0.84 0.84 0.28 Net assets, at end of period $ 12.30 $ 12.60 $ 11.03 $ 11.57 Ratios and supplemental data Total net asset value (000 s) (4) $ 73,526 $ 88,772 $ 62,227 $ 52,507 Number of units outstanding (4) 5,966,278 7,031,089 5,632,234 4,521,300 Management expense ratio* (5) 2.46% 2.98% 2.58% 3.75% Management expense ratio before waivers or absorptions* 2.46% 2.98% 2.58% 3.75% Trading expense ratio* (6) 0.35% 0.23% 0.35% 1.02% Portfolio turnover rate (7) 115.35% 142.88% 159.75% 52.40% Net asset value per unit $ 12.32 $ 12.63 $ 11.05 $ 11.61 Closing market price $ 12.12 $ 12.30 $ 10.98 $ 12.00 * Amounts have been annualized for 2010 as the Fund commenced operations on August 26, 2010. (1) This information is derived from the Fund s annual audited financial statements. The net financial assets statements per unit differ presented from the in net the asset financial value calculated statements for fund differ pricing from purposes. the net An explanation asset value of these calculated differences for fund can pricing be found purposes. in the notes An to the explanation financial statements. of these differences can be found in the notes to the financial statements. (1) This information is derived from the Fund s annual audited financial statements. The net assets per unit presented in the (2) Net assets and distributions are based on the actual number of units outstanding for the relevant class at the relevant time. The increase/decrease from operations is based on the weighted average number of units outstanding for the relevant class over the financial period. This table is not intended to be a reconciliation of beginning to ending net assets per unit. (3) Distributions were paid in cash. 10 Timbercreek Global Real Estate Fund TIMBERCREEK GLOBAL REAL ESTATE FUND 8 Timbercreek Global Real Estate Fund 11 TIMBERCREEK GLOBAL REAL ESTATE FUND 10

TIMBERCREEK GLOBAL REAL ESTATE FUND (2) Net assets and distributions are based on the actual number of units outstanding for the relevant class at the relevant time. The increase/decrease from operations is based on the Management weighted average number Report of units outstanding of Fund for the Performance relevant class over the financial period. As at This December table is not 31, intended 2013 to be a reconciliation of beginning to ending net assets per unit. (3) Distributions were paid in cash. The Fund s Net Assets per unit (1)(8) CLASS B 2013 2012 2011 2010 Net assets, beginning of period $ 13.22 $ 11.47 $ 11.95 $ 11.56 Increase (decrease) from operations: Total revenue 0.86 0.87 0.93 0.35 Total expenses (0.38) (0.42) (0.41) (0.21) Realized gains (losses) for the period 1.02 1.09 (0.24) 0.17 Unrealized gains (losses) for the period (0.77) 1.08 0.06 0.40 Total increase (decrease) from operations (2) 0.73 2.62 0.34 0.71 Distributions: From income (excluding dividends) (9) 0.04 0.06 0.72 From dividends (9) 0.13 0.03 0.04 0.05 From capital gains (10) 0.67 0.75 0.24 Return of capital 0.08 Total distributions for the period (3) 0.84 0.84 0.84 0.29 Net assets, at end of period $ 12.94 $ 13.22 $ 11.47 $ 11.95 Ratios and supplemental data Total net asset value (000 s) (4) $ 10,962 $ 13,580 $ 12,218 $ 10,509 Number of units outstanding (4) 841,085 1,025,494 1,063,693 875,727 Management expense ratio* (5) 2.00% 2.50% 2.10% 3.21% Management expense ratio before waivers or absorptions* 2.00% 2.50% 2.10% 3.21% Trading expense ratio* (6) 0.35% 0.24% 0.41% 1.09% Portfolio turnover rate (7) 115.35% 142.88% 159.75% 52.40% Net asset value per unit $ 13.03 $ 13.24 $ 11.49 $ 12.00 Closing market price N/A N/A N/A N/A (4) This information is provided at period end of the year shown. (4) This information is provided at period end of the year shown. (5) (5) Management expense expense ratio is based ratio on is total based expenses on total (excluding expenses commissions (excluding and other commissions portfolio transaction and other costs) for the portfolio stated period transaction and is expressed costs) as an for annualized the stated percentage period of and the daily is expressed average net as asset an value annualized during the percentage stated period. of the daily average net asset value during the stated period. (6) (6) The The trading trading expense expense ratio represents ratio represents total commissions total and commissions other portfolio and transaction other costs portfolio expressed transaction as annualized costs percentage of the daily average net asset value during the stated period. expressed as an annualized percentage of the daily average net asset value during the stated (7) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages its portfolio investments. period. A portfolio turnover rate of 100% is equivalent to the Fund buying and selling all of the securities in its portfolio once in the (7) The Fund s portfolio turnover rate indicates how actively the Fund s portfolio advisor manages course of the stated period. The higher the Fund s portfolio turnover rate in a period, the greater the trading costs payable its portfolio investments. A portfolio turnover rate of 100% is equivalent to the Fund buying by the Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not and necessarily selling a relationship all of the securities between a high in its turnover portfolio rate and once the performance in the course of the of Fund. the stated period. The (8) Amounts higher shown the Fund s for 2010 are portfolio for the period turnover from August rate in 26, a 2010, period, the date the of greater commencement the trading of operations, costs payable to December by 31, the 2010. Fund in the period, and the greater the chance of an investor receiving taxable capital gains in the period. There is not necessarily a relationship between a high turnover rate and the performance of the Fund. (8) Amounts shown for 2010 are for the period from August 26, TIMBERCREEK 2010, the date GLOBAL of REAL commencement ESTATE FUND 11 of operations, to December 31, 2010. (9) The expenses of the Fund are offset against income and dividends. (10) With respect to distributions, the dividends received from the positions held through equity swaps are included in realized capital gains. (10) With respect to distributions, the dividends received from the positions held through equity swaps are included in realized capital gains. ANNUAL COMPOUND RETURNS ANNUAL COMPOUND RETURNS The following table table shows shows the Fund s the Fund s historical historical annual annual compound compound total returns total for returns the periods for the indicated periods ending indicated on December ending 31, 2013, on compared December with 31, the 2013, Fund s compared Blended Benchmarks with the Fund s (hedged Blended and unhedged), Benchmarks as described (hedged and below: unhedged), as described below: 2013 2012 2011 Since inception Class A 4.2% 22.4% 2.4% 37.8% Class B 4.8% 23.1% 2.7% 40.0% Product benchmarks: Blended benchmark (hedged) 1,2,3 3.6% 22.5% (0.8%) 35.9% Blended benchmark (unhedged) 2,3 8.4% 20.8% 1.3% 38.5% Notes on the Blended Benchmark Notes on the Blended Benchmark 1. The Fund s Blended Benchmark comprises a customized index composed as to 70% by 1. the The FTSE Fund s EPRA Blended NAREIT Benchmark Developed comprises World a customized Index and index as to 30% composed by the as Wells to 70% Fargo by the Hybrid FTSE EPRA & Preferred NAREIT Developed Securities World REIT Index. and as to 30% by the Wells Fargo Hybrid & Preferred Securities REIT Index. The The FTSE EPRA NAREIT Developed World World Index Index represents represents the universe the universe of real estate of real companies estate listed companies in the developed listed countries in the developed while the Wells countries Fargo while Hybrid the and Wells Preferred Fargo Securities Hybrid REIT and Index Preferred represents the universe of REIT preferred stock listed in the United States. The underlying securities of these two Securities REIT Index represents the universe of REIT preferred stock listed in the United indices represent the bulk of the Fund s investable universe and the aforementioned weightings closely States. reflect The the Fund s underlying allocation securities to each of security these type. two indices represent the bulk of the Fund s investable universe and the aforementioned weightings closely reflect the Fund s allocation 2. Blended Benchmark (hedged). The customized index is further adjusted to remove 90% of the impact of to movements each security in the type. major currency exchange rates. This currency adjustment reflects the Fund s target strategy of hedging up to 90% of its exposure to movements in the major currency exchange rates. The 2. Blended Fund is Benchmark not always 90% (hedged). hedged, but The the customized adjustment index the customized is further adjusted index is fixed to remove at 90% each 90% month. of the The impact Class A of and movements Class B units in outperformed the major currency the Blended exchange Benchmark rates. (hedged) This currency by 60 bps and adjustment 120 bps, reflects respectively, the Fund s in 2013, target and by strategy 190 bps of and hedging 410 bps, up respectively, to 90% of since its exposure inception. to The movements Class A and in Class the B units underperformed the Blended Benchmark (unhedged) by 420 bps and 360 bps, respectively, during major currency exchange rates. The Fund is not always 90% hedged, but the adjustment 2013, and since inception, the Class A Units have underperformed by 70 bps, and the Class B Units have in the customized index is fixed at 90% each month. The Class A and Class B units outperformed by 150 bps, reflecting the appreciation in the USD/Euro against the CAD during the outperformed period. the Blended Benchmark (hedged) by 60 bps and 120 bps, respectively, in 2013, and by 190 bps and 410 bps, respectively, since inception. The Class A and Class B units 3. The Fund returns are reported net of all management fees and expenses for all classes (including the underperformed costs of currency the hedging), Blended which Benchmark should be considered (unhedged) when by comparing 420 bps and the 360 Fund s bps, returns respectively, to the during Blended 2013, Benchmarks, and since which inception, does not the pay Class fees or A Units incur such have expenses. underperformed by 70 bps, and the Class B Units have outperformed by 150 bps, reflecting the appreciation in the USD/Euro against the CAD during the period. 3. The Fund returns are reported net of all management fees and expenses for all classes (including the costs of currency hedging), which should be considered when comparing the Fund s returns to the Blended Benchmarks, which does not pay fees or incur such expenses. TIMBERCREEK GLOBAL REAL ESTATE FUND 12 12 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 13

As at December 31, 2013 SUMMARY OF INVESTMENT PORTFOLIO SUMMARY OF INVESTMENT PORTFOLIO The Summary of of Investment Portfolio Portfolio may change may change due to ongoing due to ongoing portfolio transactions. portfolio transactions. Updates are available Updates are quarterly available on our quarterly website at on www.timbercreek.com. our website at www.timbercreek.com. Summary of Top 25 Holdings** Asset Class % of NAV* Timbercreek Global AMC Holdings Partnership Direct 4.3% AIMS AMP Capital Industrial REIT Common Equity 4.1% Eurocommercial Properties NV Common Equity 4.0% CFS Retail Property Trust Common Equity 3.8% AMC REIT Investor Note Direct 3.7% Vastned Retail NV Common Equity 3.7% InnVest REIT Trust Units Common Equity 3.6% Dundee International Real Estate Investment Trust Common Equity 3.6% TC Core Multi-Family 2 LP Direct 3.5% Spirit Realty Capital Inc. Common Equity 3.4% Mapletree Industrial Trust Common Equity 3.2% Timbercreek Canadian Direct LP Direct 3.1% MFA Financial Inc. Common Equity 3.1% Charter Hall Retail REIT Common Equity 3.1% Sunstone Hotel Investors Inc. - Series D Preferred Shares 3.0% Leisureworld Senior Care Corp. Common Equity 2.9% Two Harbors Investment Corp. Common Equity 2.8% DuPont Fabros Technology, Inc. - Series A Preferred Shares 2.8% Fortune REIT Common Equity 2.6% Keppel REIT Common Equity 2.5% Apollo Commercial Real Estate Finance, Inc. Series A Preferred Shares 2.5% Befimmo S.C.A. Sicafi Common Equity 2.5% Cache Logistics Trust Common Equity 2.5% Pennsylvania REIT Series A Preferred Shares 2.3% Ashford Hospitality Trust, Inc. Series D Preferred Shares 2.2% * This refers to transactional net asset value; therefore weightings presented in the Statement of Investments will differ from the ones disclosed above. ** The Summary of Top 25 Holdings includes notional value of positions held through equity swaps. By Asset Type % of NAV* Investments 97.4% Margin deposit, net 1.5% Other assets/liabilities, net 1.1% Total 100.0% By Country % of NAV* United States 51.7% Canada 25.2% Singapore 12.3% Australia 9.7% Netherlands 7.7% Japan 4.3% Hong Kong 3.9% Belgium 2.5% Britain 1.4% New Zealand 1.4% By Sector % of NAV* Mortgage 16.0% Office 15.8% Hotel 15.6% Regional Mall 13.3% Shopping Center 12.1% Industrial 9.7% Multifamily 9.7% Manufactured Home 8.1% Diversified 7.2% Health Care 6.3% Triple Net Lease 3.4% Data Center 2.8% By Asset Class % of NAV* Common Equity 76.8% Preferred Shares 23.6% Private Real Estate 19.6% TIMBERCREEK GLOBAL REAL ESTATE FUND 13 Independent Auditors Report To the Unitholders of Timbercreek Global Real Estate Fund (the Fund ) We have audited the accompanying financial statements of the Fund, which comprise the statements of net assets as at December 31, 2013 and 2012, the statements of operations, changes in net assets and cash flows for the years then ended, the statement of investment portfolio as at December 31, 2013, and notes, comprising a summary of significant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Canadian Generally Accepted Accounting Principles, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors Responsibility Our responsibility is to express an opinion on these 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity s preparation and fair presentation of the 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 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. Opinion In our opinion, the financial statements present fairly, in all material respects, the net assets of Timbercreek Global Real Estate Fund as at December 31, 2013 and 2012, and its results of operations, changes in net assets and cash flows for the years then ended, in accordance with Canadian generally accepted accounting principles. Chartered Professional Accountants, Licensed Public Accountants March 19, 2014 Toronto, Canada 14 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 15

Financial Statements of Timbercreek Global Real Estate Fund As at December 31, 2013 and 2012 TIMBERCREEK GLOBAL REAL ESTATE FUND STATEMENTS OF NET ASSETS As at December 31, 2013 and 2012 STATEMENTS OF NET ASSETS As at December 31, 2013 and 2012 ASSETS 2013 2012 Investments, at fair value (note 8) $ 82,254,117 $ 98,647,513 Margin deposited on equity swaps and forward contracts 8,330,000 11,190,000 Unrealized gain on equity swaps (note 8) 433,809 934,952 Due from Timbercreek Asset Management Inc. (note 3(e)) 1,558,894 Due from broker 273,647 808,617 Dividends and interest receivable 985,272 640,339 LIABILITIES 93,835,739 112,221,421 Margin facility (note 5) 7,087,382 8,058,496 Unrealized loss on forward contracts (note 8) 602,328 226,759 Management fees payable (note 3(a)(i)) 26,411 17,038 Accounts payable and accrued liabilities 30,435 84,035 Liabilities for portfolio assets purchased (note 2) 398,789 Distributions payable (note 6) 1,429,546 1,691,882 9,574,891 10,078,210 Net assets, representing unitholders equity $84,260,848 $102,143,211 Net assets: Class A units $ 73,374,487 $ 88,590,786 Class B units 10,886,361 13,552,425 Units outstanding (note 6): Class A units 5,966,278 7,031,089 Class B units 841,085 1,025,494 Net assets per unit (note 9): Class A units $ 12.30 $ 12.60 Class B units 12.94 13.22 Subsequent events (note 3(e)) STATEMENTS OF OPERATIONS Years ended December 31, 2013 and 2012 STATEMENTS OF OPERATIONS Years ended December 31, 2013 and 2012 Investment income: 2013 2012 Dividends $ 4,903,995 $ 5,209,306 Foreign dividend withholding tax (471,002) (609,098) Interest 944,907 814,244 Distributions from income trusts and partnerships 321,888 592,965 Other income 85,550 2,993 Expenses: 5,785,338 6,010,410 Management fees (note 3(a)(i)) 1,293,692 1,881,940 Trailer fee (note 3(a)(ii)) 314,620 363,837 Other operating costs 166,968 205,001 Interest and borrowing fees 154,572 46,100 Audit fees 110,000 109,440 Unitholder reporting 45,563 64,801 Legal fees 117,471 20,759 2,202,886 2,691,878 Net investment income 3,582,452 3,318,532 Realized and unrealized gain (loss) on investments and transaction costs: Commissions and other portfolio transaction costs (317,482) (213,772) Net realized gain on sale of investments, including foreign exchange adjustments, equity swaps and forward contracts 6,853,757 7,528,427 Unrealized appreciation (depreciation) in value of foreign exchange adjustments, equity swaps and forward contracts (5,136,667) 7,467,254 Net gain on investments 1,399,608 14,781,909 Increase in net assets from operations $ 4,982,060 $ 18,100,441 Increase in net assets from operations for each class: Class A units $ 4,335,673 $ 15,416,155 Class B units 646,387 2,684,286 Increase in net assets from operations per unit: Class A units 0.71 2.36 Class B units 0.74 2.61 The accompanying notes are an integral part of these financial statements. TIMBERCREEK GLOBAL REAL ESTATE FUND 3 The accompanying notes are an integral part of these financial statements. On behalf of the Board of Directors of Timbercreek Asset Management Ltd., as Manager: R. Blair Tamblyn Director Ugo Bizzarri Director TIMBERCREEK GLOBAL REAL ESTATE FUND 2 16 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 17

STATEMENTS OF CHANGES IN NET ASSETS Years ended December 31, 2013 and 2012 STATEMENTS OF CASH FLOWS Years ended December 31, 2013 and 2012 STATEMENTS OF CHANGES IN NET ASSETS STATEMENTS OF CASH FLOWS Years ended December 31, 2013 and 2012 Years ended December 31, 2013 and 2012 2013 Class A units Class B units Total Net assets, beginning of year $ 88,590,786 $ 13,552,425 $ 102,143,211 Increase in net assets from operations 4,335,673 646,387 4,982,060 Distributions to unitholders (note 6(b)) (5,011,008) (709,661) (5,720,669) Redemption of units (15,270,590) (1,873,164) (17,143,754) Net exchange of units 729,626 (729,626) Net assets, end of year $73,374,487 $10,886,361 $84,260,848 2012 Class A units Class B units Total Net assets, beginning of year $ 62,129,425 $ 12,199,132 $ 74,328,557 Increase in net assets from operations 15,416,155 2,684,286 18,100,441 Distributions to unitholders (note 6(b)) (5,493,290) (847,609) (6,340,899) Net proceeds from issuance of units 16,886,169 1,136,684 18,022,853 Redemption of units (973,096) (994,645) (1,967,741) Net exchange of units 625,423 (625,423) Net assets, end of year $88,590,786 $13,552,425 $102,143,211 The accompanying notes are an integral part of these financial statements. Cash provided by (used in): OPERATING ACTIVITIES 2013 2012 Increase in net assets from operations $ 4,982,060 $ 18,100,441 Net gain on investments (1,399,608) (14,781,909) Proceeds from sale of investments 106,247,502 89,527,278 Purchase of investments (87,153,109) (117,610,660) Net (payments) proceeds from maturity of forward contracts (2,239,687) 1,791,918 Net payments received from equity swaps 1,809,905 4,513,698 Change in non-cash operating items: Increase in dividends and interest receivable (344,933) (214,557) Increase (decrease) in accounts payable and accrued liabilities (53,600) 73,393 Increase in management fees payable 9,373 8,247 Increase in liabilities for portfolio assets purchased 398,789 Decrease in assets for portfolio assets sold 695,381 Increase in due from Timbercreek Asset Management Inc. (1,558,894) Decrease in due from broker 534,970 1,248,237 FINANCING ACTIVITIES 21,232,768 (16,648,533) Net proceeds from issuance of units 18,022,853 Redemption of units (17,143,754) (1,967,741) Distributions to Unitholders (5,983,005) (6,055,162) (23,126,759) 9,999,950 Net foreign exchange gain (loss) on cash accounts 5,105 (57,539) Decrease in margin facility/deposits (1,888,886) (6,706,122) Margin facility/deposits, beginning of period 3,131,504 9,837,626 Margin facility/deposits, end of period $ 1,242,618 $ 3,131,504 Net margin facility is comprised of: Margin deposited on equity swaps and forward contracts $ 8,330,000 $ 11,190,000 Margin facility (7,087,382) (8,058,496) $ 1,242,618 $ 3,131,504 The accompanying notes are an integral part of these financial statements. TIMBERCREEK GLOBAL REAL ESTATE FUND 4 TIMBERCREEK GLOBAL REAL ESTATE FUND 5 18 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 19

STATEMENT OF INVESTMENTS December 31, 2013 STATEMENTS OF INVESTMENTS December 31, 2013 Description COMMON EQUITIES Australia Number of shares units Average cost Fair value % of net assets CFS Retail Property Trust 1,747,174 $ 3,500,218 $ 3,210,390 3.81 Challenger Diversified Property Group 421,447 1,045,852 992,511 1.18 Charter Hall Retail REIT 770,278 2,383,554 2,625,927 3.12 Westfield Retail Trust 465,855 1,419,600 1,309,433 1.55 Belgium 8,349,224 8,138,261 9.66 Befimmo S.C.A. Sicafi 28,324 1,782,761 2,083,328 2.47 Canada Artis Real Estate Investment Trust 94,500 1,255,535 1,402,380 1.66 Dundee International Real Estate Investment Trust 194,599 1,756,031 1,634,632 1.94 Dundee Real Estate Investment Trust 105,800 3,392,035 3,044,924 3.61 InnVest Real Estate Investment Trust 653,998 2,782,391 3,021,471 3.59 Leisureworld Senior Care Corp. 213,600 2,421,182 2,437,176 2.89 True North Commercial Real Estate Investment Trust 214,250 1,499,750 1,276,930 1.52 Hong Kong Japan 13,106,924 12,817,513 15.21 Champion Real Estate Investment Trust 2,408,000 1,061,285 1,132,956 1.34 Fortune Real Estate Investment Trust 2,556,000 1,650,108 2,156,246 2.56 2,711,393 3,289,202 3.90 Activia Properties Inc. 109 879,843 906,938 1.08 Frontier Real Estate Investment Corp. 222 1,024,911 1,167,098 1.39 Premier Investment Corp. 386 1,575,505 1,588,301 1.88 Netherlands 3,480,259 3,662,337 4.35 Eurocommercial Properties NV 74,283 2,981,386 3,291,979 3.91 Vastned Retail NV 64,867 2,918,819 3,125,658 3.71 New Zealand 5,900,205 6,417,637 7.62 Precinct Properties New Zealand Ltd. 1,327,820 774,383 1,150,356 1.37 STATEMENT OF INVESTMENTS (cont d) December 31, 2013 Description Singapore Number of shares units Average cost Fair value % of net assets AIMS AMP Capital Industrial REIT 2,842,625 $ 2,926,232 $ 3,425,130 4.06 Keppel REIT 697,800 713,307 693,800 0.82 Cache Logistics Trust 2,220,000 1,956,145 2,076,335 2.46 Mapletree Industrial Trust 2,393,000 2,717,928 2,691,816 3.19 United Kingdom 8,313,612 8,887,081 10.53 British Land Company PLC 110,100 1,055,948 1,220,721 1.45 United States of America Apollo Commercial Real Estate Finance, Inc. 39,442 650,107 681,696 0.81 MFA Financial Inc. 54,000 421,066 404,913 0.48 Sabra Health Care REIT Inc. 47,044 941,129 1,306,940 1.55 Two Harbors Investment Corp. 240,600 2,474,202 2,374,772 2.82 4,486,504 4,768,321 5.66 Total common equities 49,961,213 52,434,757 62.22 PREFERRED SHARES United States of America Apollo Commercial Real Estate Finance, Inc. Preferred Series A 8.625% 79,437 2,022,052 2,086,883 2.48 Ashford Hospitality Trust, Inc. Preferred Series D 8.45% 70,103 1,692,937 1,871,495 2.22 DuPont Fabros Technology, Inc. Preferred Series A 7.875% 72,953 1,843,887 1,847,485 2.19 Glimcher Realty Trust Preferred Series G 8.125% 9,356 230,928 249,274 0.30 Hudson Pacific Properties Inc. Preferred Series B 8.375% 30,900 780,148 861,398 1.02 Kite Realty Group Trust Preferred Series A 8.25% 42,297 1,085,259 1,135,924 1.35 Pennsylvania Real Estate Investment Trust Inc. Preferred Series A 8.25% 71,052 1,892,743 1,896,830 2.25 Sunstone Hotel Investors Preferred Series D 8.0% 95,300 2,306,022 2,523,891 3.00 Total preferred shares 11,853,976 12,473,180 14.81 Total equities 61,815,189 64,907,937 77.03 TIMBERCREEK GLOBAL REAL ESTATE FUND 6 TIMBERCREEK GLOBAL REAL ESTATE FUND 7 20 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 21

STATEMENT OF INVESTMENTS (cont d) December 31, 2013 Description OPTIONS Number of shares units Average cost Fair value % of net assets Put ishares Dow Jones U.S. Real Estate Index Fund Ma 62 3,500 845,342 465,325 0.55 Put ishares Dow Jones U.S. Real Estate Index Fund Ma 63 1,750 505,729 303,392 0.36 Total rights 1,351,071 768,717 0.91 PRIVATE INVESTMENTS Canada Private Direct Real Estate: TC Core Multi-Family 2 LP 2,400,000 2,219,543 3,126,935 3.71 Timbercreek Canadian Direct LP 581,500 5,797,500 6,190,145 7.35 Total direct real estate 8,017,043 9,317,080 11.06 United States of America Investor note and common equity: Timbercreek Global AMC Holdings Partnership 2,951,493 3,640,451 4.32 AMC REIT Investor Note 3,030,792 3,167,902 3.76 Total investor note and common equity 5,982,285 6,808,353 8.08 Fixed income: Delavaco Properties Inc. 7.5% 425,000 422,535 452,030 0.54 Total fixed income 422,535 452,030 0.54 Total private investments 14,421,863 16,577,463 19.68 Total investments 77,588,123 82,254,117 97.62 Commissions and other portfolio transaction costs (note 1(g)) (119,178) Total net investments $77,468,945 82,254,117 97.62 Foreign exchange forward contracts (Schedule 1): Unrealized loss (602,328) (0.71) Equity swaps (Schedule 2): Unrealized gain 433,809 0.51 Other assets, net 2,175,250 2.58 NET ASSETS $84,260,848 100.00 TIMBERCREEK GLOBAL REAL ESTATE FUND STATEMENT OF INVESTMENTS (cont d) December 31, 2013 The accompanying notes are an integral part of these financial statements. Schedule SCHEDULE 1 1 Foreign FOREIGN Exchange EXCHANGE Forward FORWARD Contracts CONTRACTS Forward Contract Unrealized TIMBERCREEK GLOBAL REAL ESTATE FUND Settlement date Counterparty rates price Fair value gain (loss) 8 USD contracts: January 8, 2014 CIBC World Markets 1.063751 $ (7,025,080) $ (7,233,507) $ (208,427) February 5, 2014 CIBC World Markets 1.064457 (6,892,380) (7,025,416) (133,036) March 6, 2014 CIBC World Markets 1.065230 (6,299,135) (6,284,857) 14,278 (327,185) Euro contracts: January 8, 2014 CIBC World Markets 1.465664 (5,058,864) (5,276,389) (217,525) January 8, 2014 CIBC World Markets 1.465664 1,125,600 1,172,531 46,931 February 5, 2014 CIBC World Markets 1.466645 (2,117,100) (2,199,967) (82,867) March 6, 2014 CIBC World Markets 1.467679 (1,886,300) (1,907,982) (21,682) (275,143) Total unrealized loss on foreign exchange forward contracts $ (602,328) STATEMENT OF INVESTMENTS (cont d) December 31, 2013 SCHEDULE SCHEDULE 2 2 EQUITY EQUITY SWAPS* SWAPS* Security name U.S. Dollar Swaps: American Capital Agency Corp. Annaly Capital Management Inc. Apollo Commercial Real Estate Finance Inc. Ashford Hospitality Trust, Inc. Preferred Series E 9.0% Dupont Fabros Technology Preferred Series A 7.875% Glimcher Realty Trust Preferred Series G 8.125% Hersha Hospitality Trust Preferred Series B 8.0% MFA Financial Inc. Pebblebrook Hotel Trust Preferred Series A 7.875% Pebblebrook Hotel Trust Preferred Series B 8.0% Maturity date Counterparty Contract price Fair value Unrealized gain (loss) 2014 J.P. Morgan $ 1,879,626 $ 1,792,120 $ (87,506) 2014 J.P. Morgan 1,840,932 1,729,116 (111,816) March 10, 2014 J.P. Morgan 826,050 875,665 49,615 2014 J.P. Morgan 1,767,065 1,868,739 101,674 2014 J.P. Morgan 528,396 518,857 (9,539) 2014 J.P. Morgan 1,211,505 1,234,595 23,090 2014 J.P. Morgan 1,750,473 1,783,559 33,086 2014 J.P. Morgan 2,250,417 2,358,361 107,944 2014 J.P. Morgan 663,155 675,955 12,800 2014 J.P. Morgan 1,491,699 1,491,598 (101) Spirit Capital Realty Inc. July 21, 2014 J.P. Morgan 2,825,022 2,941,525 116,503 Starwood Property Trust Inc. 2014 J.P. Morgan 1,380,318 1,639,558 259,240 Total unrealized gain on USD equity swaps 494,990 S.G. Dollar Swap: Keppel REIT January 20, 2014 J.P. Morgan 1,526,852 1,465,671 (61,181) Total unrealized gain on equity swaps $ 433,809 *Although the individual equity swaps are all maturing within three months, the Fund has the ability to extend these contracts for another year at their maturity date, thereby maintaining the underlying economic exposure of the position. The accompanying notes are an integral part of these financial statements. TIMBERCREEK GLOBAL REAL ESTATE FUND 10 The accompanying notes are an integral part of these financial statements. 22 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 23

Notes to Financial Statements Year ended December 31, 2013 and 2012 Timbercreek Global Real Estate Fund (the Fund ) is an investment fund which was created under the laws of the Province of Ontario pursuant to a Declaration of Trust dated August 5, 2010 (the Declaration of Trust ). Timbercreek Asset Management Ltd. is the trustee, manager (the Trustee or Manager ) and portfolio advisor of the Fund. The Manager has been retained to provide fund management and portfolio advisory services pursuant to a management agreement dated August 5, 2010 (the Management Agreement ). The investment objectives of the Fund are to: (i) provide unitholders with quarterly cash distributions; and (ii) preserve capital while providing the opportunity for long-term capital appreciation for unitholders. In order to achieve its objectives, the Fund invests in a globally diversified portfolio of securities issued in respect of real estate situated primarily in the world s industrialized economies. While the bulk of the portfolio will consist of publicly traded real estate securities, the Fund is able to invest up to 20% of its total assets directly in real estate. Further, the Fund is able to invest across the capital structure, including common equities, preferred shares and private direct investments. 1. SIGNIFICANT ACCOUNTING POLICIES These financial statements have been prepared in accordance with Part V of Canadian Generally Accepted Accounting Principles ( Canadian GAAP ). In applying Canadian GAAP, the Manager may make estimates and assumptions that affect the reported amounts of assets, liabilities, investment income and expenses reported during the year. Actual results could differ from those estimates. Those estimates are reviewed periodically by the Manager and as adjustments become necessary, they are reported in the statements of operations in the year in which they become known. The key area of estimation where management has made a difficult or subjective judgement, often as a result of matters that are inherently uncertain, is the valuation of private real estate investments. Significant changes in assumptions could materially change the recorded carrying values. The Fund s financial statements are presented in Canadian dollars. A net asset value is calculated daily for each class of units. The net asset value of a particular class of units is computed by calculating the value of that class proportionate share of the assets and liabilities of the Fund common to all classes less the assets and liabilities of the Fund attributable only to that class. Expenses directly attributable to a class are charged directly to that class. Income, realized and unrealized gains and losses from investment transactions and other expenses are allocated proportionately to each class based upon the relative net asset value of each class. (a) Financial instruments disclosure and presentation In accordance with the Chartered Professional Accountants Canada ( CPA Canada ) Handbook Section 3862, Financial Instruments Disclosures, the Fund is required to classify its financial instruments using a fair value hierarchy that reflects the significance of the inputs used to measure fair value into three broad levels. Investments measured at fair value are classified into one of three fair value hierarchy levels, based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. The three fair value hierarchy levels are as follows: Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); and Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs). (b) Valuation of investments In accordance with Accounting Guideline 18, Investment Companies, the Fund s investments are recorded at fair value as defined by CPA Canada Handbook Section 3855, Financial Instruments Recognition and Measurement ( Section 3855 ). The net assets of the Fund for financial reporting purposes ( Net Assets ) are calculated in accordance with Section 3855. (i) Public securities Investments in securities listed on a public securities exchange or traded on an over-the-counter market are valued at the closing bid price. Securities with no available closing bid price are valued at the last sale or close price. Securities for which a closing bid price or last sale or close price are unavailable or securities for which market quotations are unreliable or not reflective of all material information are valued at their fair values, as determined by the Manager using available sources of information and commonly accepted industry valuation techniques, including valuation models. Short-term investments, including short-term debt instruments maturing less than 90 days from the date of acquisition are stated at fair value, using amortized cost, which approximates fair value. (ii) Private direct real estate The Fund invests in private direct real estate investments through equity interests held in limited partnerships or trusts, which are recorded at net asset value per unit of the respective entity. The real estate investments underlying the entity s units are recorded at cost from the date of acquisition until receipt of the first appraisal; thereafter, they are valued at fair value based on appraisals. Appraisals for real estate investments are obtained from qualified independent appraisers up to twice per year for each property following the period of acquisition. Other real estate investments, including private mortgage and loan investments, may be held by these entities and are recorded at fair value, as outlined in (iii). (iii) Private mortgage and loan investments As there are no quoted prices in an active market for these mortgage or loan investments, the Manager makes its determination of fair value based on its assessment of the current lending market for mortgage or loan investments of same or similar terms. Typically, the fair values of these investments approximate their carrying values given the investments consist of short-term loans that are repayable at the option of the borrower without yield maintenance or penalties. When collection of the principal amount of a mortgage or loan is no longer reasonably assured, the fair value of the investment is reduced to the estimated net realizable value of the underlying security. Any unrealized change in the fair value of a mortgage or loan investment is recorded in the statements of operations as an unrealized gain or loss in value of investments. A realized change in the fair value of a mortgage or loan as a result of a disposition or repayment is recorded as a net realized gain or loss on sale of investments. (c) Foreign exchange forward contracts The Fund may enter into foreign exchange contracts for hedging purposes or to establish an exposure to a particular currency. Foreign exchange contracts are valued based on the difference between the contract forward rate and the forward bid rate (for currency held) and the forward ask rate (for currency sold short), on the valuation date. Upon closing of a contract, the gain or loss is included in net realized gain or loss on sale of investments. (d) Equity swaps An equity swap contract is an agreement between two parties to exchange periodic payments based upon a notional principal amount, with one party paying a fixed or floating amount and the other party paying the actual return of a stock, a basket of stocks or a stock index. The Fund as a buyer of an equity swap would receive the total return of the underlying stocks or stock index. In return, the Fund would be required to pay to the counterparty a fixed or floating amount on the agreed settlement dates. Any amount received for equity swaps contracts is included in the statements of operations in net realized gain or loss on sale of investments, including foreign exchange adjustments, equity swaps and forward contracts. The value of an equity swap contract is included in the statements of net assets in unrealized gain (loss) on equity swaps and the change in fair value of an equity swap is included in the statements of operations in unrealized gain (loss) in value of investments, including foreign exchange adjustments, equity swaps and forward contracts. When the equity swaps contracts are closed out, gains or losses are realized and included in the statements of operations in net realized gain or loss on sale of investments, including foreign exchange adjustments, equity swaps and forward contracts. Refer to note 8 for fair value measurements analysis. 24 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 25

(e) Margin deposited on equity swaps and forward contracts These amounts relate to cash collateral held by the counterparties on the foreign exchange forward contracts and equity swap contracts. (f) Other assets and liabilities Margin deposited on equity swaps and forward contracts, due from Timbercreek Asset Management Inc., due from broker, dividends and interest receivable are recorded at amortized cost, which approximates their fair value due to their short-term nature. Liabilities for portfolio assets purchased, margin facility, management fees payable, accounts payable and accrued liabilities and distributions payable are designated as other financial liabilities and reported at amortized cost, which approximates their fair value. (g) Transaction costs Commissions and other portfolio transaction costs, which are incurred on the purchase and sale of an investment, such as fees and commissions paid to agents, advisors, brokers and dealers and exchange fees, are expensed and included in commissions and other portfolio transaction costs in the statements of operations. (h) Investment transactions and income recognition Investment transactions are accounted for on a trade date basis; that is, on the day that a buy or sell order is executed. Interest income is accrued daily and dividend income is recognized on the ex-dividend date along with withholding taxes on foreign dividends, if any. Distributions from investment trusts are recorded when declared. Realized gains and losses from investment transactions are calculated as proceeds of disposition less their average cost. The cost of investments represents the amount paid for each security and is determined on an average cost basis, excluding transaction costs. (i) Translation of foreign currencies The fair values of investments and other assets and liabilities denominated in foreign currencies are translated into Canadian dollars at the exchange rate prevailing on each business day, except for the historical costs of investments, which are translated at the exchange rate prevailing on the date of purchase. The proceeds from the sale of investments, dividends and interest income in foreign currencies are translated into Canadian dollars at the approximate exchange rate prevailing on the dates of such transactions. Gains and losses from transactions, and the translation of foreign currencies are considered to be investment transactions and, accordingly, are included in the net realized gain or loss on sale of investments or in the unrealized gain in the value of investments. (j) Capital management The Manager manages the capital of the Fund, which consists of the Net Assets of the Fund, in accordance with the investment objectives set out in the Fund s prospectus. The Fund is not subject to externally imposed capital requirements. The Manager has not identified any changes that will impact NAV per unit as a result of the changeover to IFRS. However, this determination is subject to change as the Manager finalizes its assessment of the impact of IFRS, and the impact of new standards issued by the IASB prior to the Fund s adoption of IFRS (see commentary below). The criteria contained within IAS 32 Financial Instruments: Presentation may require unitholders equity to be classified as a liability within the Fund s Statement of Net Assets, unless certain conditions are met. The Manager is currently assessing the Fund s unitholder structure to confirm the appropriate classification in accordance with IFRS. IFRS is also expected to affect the overall presentation of financial statements and would require enhanced disclosures in the financial statements. Upon adoption of IFRS the Fund will apply IFRS 13 Fair Value Measurement. IFRS 13 defines fair value, sets out a single IFRS framework for measuring fair value and requires disclosure about fair value measurements. It applies when other IFRSs require or permit fair value measurement. If an asset or a liability measured at fair value has a bid price and an ask price, it requires valuation to be based on a price within the bid-ask spread that is most representative of fair value. It allows the use of mid-market pricing or other pricing conventions that are used by market participants as a practical expedient for fair value measurements within a bid-ask spread. This may result in eliminating the difference between the NAV per unit and net assets per unit under current Canadian GAAP. On October 31, 2012, the IASB published Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27), which provides an exemption from consolidation of subsidiaries under IFRS 10, Consolidated Financial Statements, for entities which meet the definition of an investment entity. A qualifying investment entity is required to account for investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit or loss; the only exception would be subsidiaries that are considered an extension of the investment entity s investing activities. The consolidation exception is mandatory, not optional. 2. LIABILITIES FOR PORTFOLIO ASSETS PURCHASED Liabilities for portfolio assets purchased represent amounts payable for unsettled trades. 3. RELATED PARTY TRANSACTIONS (a) Timbercreek Asset Management Ltd. (i) Management fee The Fund has entered into a Management Agreement, whereby the Fund pays the Manager a management fee in years where the Fund earns a positive Total Return (as defined below) for that year. The Manager will charge a fee, plus applicable taxes (the Management Fee ), of: 0% of net asset value per annum in years in which the Total Return is negative; (k) Net Assets per unit The Net Assets per unit is calculated by dividing the Net Assets of a particular class of units by the total number of units of that particular class outstanding at the end of the year. (l) Increase in net assets from operations per unit Increase in net assets from operations per unit is based on the increase in net assets from operations attributed to each class of units, divided by the weighted average number of units outstanding of that class during the year. (m) Derivative transactions The Fund may use derivative contracts to enhance returns of the Fund and to manage risks associated with its investments. The value of the contracts are market to market on the valuation date and the resultant gains and losses, both realized and unrealized, are recognized in the statements of operations. (n) Future accounting standards issued and not yet adopted On February 13, 2008, the Accounting Standards Board ( AcSB ) confirmed that publicly accountable enterprises would be required to adopt International Financial Reporting Standards ( IFRS ), as published by the International Accounting Standards Board ( IASB ), on January 1, 2011. However, the AcSB deferred the mandatory IFRS changeover date for Canadian investment funds to January 1, 2014. Consequently, the Fund will publish its first annual audited financial statements in accordance with IFRS for the year ending December 31, 2014, with comparatives for the year ending December 31, 2013, and prepare an opening IFRS statement of net assets at January 1, 2013. The Fund will also be publishing unaudited interim financial statements in accordance with IFRS for the 6-month period ending June 30, 2014. 1.25% of net asset value per annum in years in which the Total Return is between 0% and 7.99%; 1.5% of net asset value per annum in years in which the Total Return is between 8% and 11.99%; and 1.8% of net asset value per annum in years in which the Total Return is in excess of 12%. Total Return means the return generated on the units, including income from distributions declared, as well as the appreciation or depreciation in the net asset value per unit, over the calendar year, calculated on December 31 of each year. The Management Fee shall not be paid in respect of the net asset value of the Fund invested in assets or securities for which the Manager and/or its affiliates is paid an investment management fee. The Management Fee is calculated and accrued daily based on the year-to-date annualized Total Return, paid monthly in arrears. In circumstances where the application of this graduated Management Fee applied to the Total Return would result in returns to investors being lower than they would have been under a lower Management Fee, the Management Fee shall be reduced until investors would receive a return at least equal to what they would have received had the Total Return of the Fund implied a lower percentage Management Fee. In consideration for the services received from the Manager for the year ended December 31, 2013, the Fund incurred a Management Fee of $1,293,692 (December 31, 2012 $1,881,940). As at December 31, 2013, $26,411 (December 31, 2012 $17,038) was payable to the Manager. 26 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 27

(ii) Trailer fee The Fund pays the Manager, who will pay to each registered dealer, a trailer fee (the Trailer Fee ) equal to 0.40% annually of the net asset value per Class A unit for each unit held by clients of such registered dealer, plus applicable taxes. The Trailer Fee is calculated and payable at the end of each calendar quarter. There is no Trailer Fee applicable to the Class B units. During the year ended December 31, 2013, the Fund incurred Trailer Fees of $314,620 (December 31, 2012 $363,837). As at December 31, 2013, $6,521 (December 31, 2012 $2,911) is included in accounts payable and accrued liabilities. (b) Timbercreek Mortgage Investment Corporation and Timbercreek Senior Mortgage Investment Corporation The Fund, Timbercreek Mortgage Investment Corporation ( TMIC ) and Timbercreek Senior Mortgage Investment Corporation ( TSMIC ) are related by virtue of common management. To achieve the Fund s investment objectives, the Fund may co-invest in private direct mortgage and loan investments secured by multi-family and/or commercial properties with TMIC and TSMIC. As at December 31, 2013, the Fund has co-invested in private direct mortgage and loan investments through the Fund directly totaling nil (December 31, 2012 $4.1 million) and has co-invested in three mortgage investments through Timbercreek Canadian Direct LP ( TCD LP ) totaling $1.8 million (December 31, 2012 $2.0 million). The parent company of the Manager is responsible for the day-to-day operations, providing all general management and administration services and management and administration of TMIC and TSMIC s mortgage and loan investments. During the year ended December 31, 2013, the Fund earned interest income on these investments of $657,450 (December 31, 2012 $663,289). (c) TC Core 2 LP The Fund invested $2,400,000 in TC Core 2 LP, a limited partnership formed for the purpose of acquiring an 11.22% interest in Restier LP ( Restier ). Restier is a limited partnership formed for the purpose of acquiring core, multi-family real estate located throughout Canada. The Manager is the general partner of TC Core 2 LP and is the asset manager, property manager and general partner of Restier all related parties by virtue of common management. During the year ended December 31, 2013, the Fund received a partnership distributions from TC Core 2 LP of $24,270 (December 31, 2012 $59,840). (d) Timbercreek Canadian Direct LP ( TCD LP ) The Fund has invested $5,797,500 (December 31, 2012 $5,797,500) in TCD LP and is the sole limited partner. The partnership was formed for the purpose of holding direct multi-family real estate and private mortgage and loan investments. TCD LP has retained the Manager to provide fund management and investment advisory services. TCD LP and the Fund are related parties by virtue of common management. During the year ended December 31, 2013, the Fund received a partnership distribution from TCD LP of $360,000 (December 31, 2012 - $450,997). (e) Timbercreek Asset Management Inc. ( TAMI ) On December 31, 2013, TAMI, the parent company of the Manager, received the proceeds of $1,558,894 from AMC REIT on behalf of the Fund and other related parties. The proceeds were relating to a special distribution by AMC REIT from the sale of a portion of its assets. The proceeds were transferred from TAMI to the Fund subsequent to year end. On January 6, 2014, AMC REIT repaid the total balance relating to the investor note with accrued interest amounting to $3,575,335. 5. MARGIN FACILITY The Fund may utilize various forms of leverage, including a margin facility that will allow the Fund to borrow funds from time to time that the Manager determines appropriate. The aggregate amount of leverage by the Fund may not exceed 25% of the aggregate value of the assets of the Fund (the Total Assets ) at the time of use. In the event that the leverage exceeds 25% of Total Assets, the Manager will take reasonable measures to reduce the total borrowings, such that it is below 25% of Total Assets. The Fund has provided its prime broker an interest in all of the assets of the Fund as collateral for leverage purposes. For the year ended December 31, 2013, the Fund s highest and lowest borrowings were approximately $15.1 million and $3.0 million, respectively (or 16.1% and 3.1%, respectively of Total Assets). For the year ended December 31, 2012, the Fund s highest and lowest borrowings were approximately $9.7 million and nil, respectively (or 9.5% and nil, respectively of Total Assets). 6. UNITS OF THE FUND The Fund is authorized to issue an unlimited number of redeemable units of three classes, including Class A units, Class B units and Class I units, each of which represents an equal, undivided, beneficial interest in the Net Assets of the Fund. The Class A units are publicly listed on the Toronto Stock Exchange (the TSX or Exchange ) under the symbol TGF.UN. Class B units are privately held and there is no market through which these units may be sold. The Class I units are privately held and automatically convert into Class B units on the first business day after TIMBERCREEK four months from the date GLOBAL of issuance. As at REAL December ESTATE 31, 2013 and 2012, FUND there are no Class I units TIMBERCREEK outstanding. Each unit of GLOBAL each class entitles REAL the holder ESTATE to one vote and FUND to participate equally with respect to any and all distributions made by the Fund. Notes to Financial Statements (cont d) Notes to Financial Statements (cont d) During Years ended the year December ended December 31, 2013 31, 2013, and the 2012 Fund did not issue any Class A and Class B units (December Years ended 31, 2012 December 1,429,716 31, Class 2013 A and units 2012 for net proceeds of $16.9 million and 92,000 Class B units for net proceeds of $1.1 million). During the year ended December 31, 2013, 31, 2013, the Unitholders the Unitholders redeemed redeemed 1,120,399 Class 1,120,399 units for Class net units amount for of net During $15,270,590 amount the year and of ended 131,428 $15,270,590 December Class B and units 31, 131,428 2013, for net the Class amount Unitholders B of units $1,873,164 redeemed for net (December amount 1,120,399 of 31, Class $1,873,164 2012 units 82,320 for (December net Class amount A units 31, of for 2012 $15,270,590 net amount 82,320 and of $973,096 131,428 Class A Class and units 80,872 B for units net Class for amount net B units amount for of net $973,096 of $1,873,164 amount and of (December $994,645). 80,872 Class 31, 2012 B units 82,320 for Class net amount A units for of $994,645). net During amount the years of $973,096 ended December and 80,872 31, Class 2013 B and units 2012, for net the amount Class A of units $994,645). and Class B units issued and outstanding During changed the as years follows: ended December 31, 2013 31, and 20132012, and the 2012, Class the A units Class and A units Class B and units Class issued B units and outstanding issued and outstanding changed as follows: changed as follows: Class A units Class B units Units outstanding, January 1, 2013 Class 7,031,089 A units Class 1,025,494 B units Units Redeemed outstanding, January 1, 2013 (1,120,399) 7,031,089 1,025,494 (131,428) Redeemed Exchanged (1,120,399) 55,588 (131,428) (52,981) Exchanged Units outstanding, December 31, 2013 5,966,278 55,588 841,085 (52,981) Units outstanding, December 31, 2013 5,966,278 841,085 On February 24, 2014, the Fund received a second special distribution of $1,680,430 by AMC REIT from the sale of a portion of its assets. During the year, the Fund transferred the common shares of AMC REIT to Timbercreek AMC Holdings Limited Partnership and own its interest through Timbercreek Global AMC Holdings Partnership. Class A units Class B units Units outstanding, January 1, 2012 Class 5,632,234 A units Class 1,063,693 B units Units Issued outstanding, January 1, 2012 5,632,234 1,429,716 1,063,693 92,000 Issued Redeemed 1,429,716 (82,320) (80,872) 92,000 Redeemed Exchanged (82,320) 51,459 (80,872) (49,327) All transactions with related parties have occurred in the normal course of operations and are Exchanged Units outstanding, December 31, 2012 7,031,089 51,459 1,025,494 (49,327) recorded at the exchange amount, which is the amount of consideration established and agreed Units outstanding, December 31, 2012 7,031,089 1,025,494 to by the related parties. (a) Redemptions Subject (a) Subject Redemptions to to suspension suspension of redemptions of redemptions by the by Trustee the Trustee in certain in circumstances certain circumstances as outlined as in outlined the Declaration in the of Declaration of Trust, a unitholder is entitled to require payment of the redemption price of all or Subject Trust, a to unitholder suspension is entitled of redemptions to require by payment the Trustee of the in redemption certain circumstances price of all as or outlined any of their in the units Declaration by giving of 4. OPERATING EXPENSES any of their units by giving written notice to the registrar and transfer agent as follows: Trust, written a notice unitholder to the is registrar entitled to and require transfer payment agent as of follows: the redemption price of all or any of their units by giving The Fund is responsible for its operating expenses, including legal, audit, unitholder reporting, transfer agency services and the cost of financial and other reports in compliance with all (i) written Annual notice to the registrar and transfer agent as follows: (i) Annual applicable laws, regulations and policies. Such expenses are calculated and accrued daily based Commencing in 2012, Class A units and Class B units may be redeemed on the last business day in (i) Commencing February Annual in 2012, Class A units and Class B units may be redeemed on the last business day in February of on the average net asset value of each class. The Manager pays for such expenses on behalf of the of each year at a redemption price per Class A unit equal to the net asset value per each Class Commencing year at a redemption A unit and in 2012, a redemption Class price A units per Class price and Class A unit per Class B units equal B may to the unit be net equal redeemed asset value to the on net the per asset last Class business A unit and value per day a Class in redemption Fund, except for certain expenses, such as interest and taxes, which are reimbursed by the Fund February B unit. of on a monthly basis. each price year per Class at a redemption B unit equal price to the per net Class asset A value unit equal per Class to the B unit. net asset Units value must per be Class surrendered A unit and for a annual redemption price redemption per Class by B February unit equal 1 of to each the net year.on asset February value per 3, Class 2014, B 259,732 unit. Units Class must A shares be surrendered and 11,100 for Class annual B shares 28 Timbercreek Global Real Estate Fund redemption were submitted by February for redemption. 1 of each The year.on redemption February date 3, is 2014, February 259,732 28, Class 2014 A and shares the payment and 11,100 date Class is March B shares 31, Timbercreek Global Real Estate Fund 2014. were submitted for redemption. The redemption date is February 28, 2014 and the payment date is March 31, 29 2014. (ii) Monthly

transactions are settled and paid for upon delivery using approved brokers. TIMBERCREEK GLOBAL REAL ESTATE FUND Units must be surrendered for annual redemption by February 1 of each year.on February 3, 2014, 259,732 Class A shares and 11,100 Class B shares were submitted for redemption. The redemption date is February 28, 2014 and the payment date is March 31, 2014. Notes to Financial Statements (cont d) (ii) Years Monthly ended December 31, 2013 and 2012 Class A units may be surrendered for redemption on the last business day of any month, other than February, by the 15th day of such month (the Redemption Date ). Payment of the proceeds of redemption will be made on or before the last business day of the following month (the Redemption Class A units tendered Payment for redemption Date ). Unitholders on such Redemption whose Class Date A will units also are be paid surrendered on the Redemption for redemption Payment will Date. be Trading entitled Price to means receive the a weighted redemption average price trading per Class price on A unit the Exchange equal to for the the lesser 10 trading of: (a) days 95% of the Trading immediately Price preceding (as defined the relevant below) Redemption of the Class Date. A units; Market and Price (b) means the Market the closing Price price (as of defined the Class below). A units Any on the declared Exchange and on the unpaid Redemption distributions Date or, payable if there was on no or trade before during a Redemption the relevant period Date in preceding respect a of Class A monthly units tendered Redemption for Date, redemption the average on of such the last Redemption bid and the last Date ask will price also of the be Class paid A on units the on Redemption the Exchange Payment Date. Trading Price means the weighted average trading price on the Exchange for the for each day during the relevant year. 10 trading days immediately preceding the relevant Redemption Date. Market Price means the closing The Class price B units of are the redeemable Class A units monthly the on the Exchange same terms on as the the Redemption Class A units, Date provided or, if that there redemption was no trade price per during Class the B unit relevant will be equal period to the preceding lesser of: a (a) monthly 95% of the Redemption Trading Price Date, of the the Class average A units multiplied of the last by bid and the Class the last B Exchange ask price Ratio of (as the defined Class A below); units and on (b) the the Exchange Market Price for multiplied each day by during the Class the B relevant Exchange year. Ratio. The Class B Exchange Ratio is determined by dividing the net asset value per Class B unit by the net asset value The Class B units are redeemable monthly on the same terms as the Class A units, provided that per Class A unit on such date. the redemption price per Class B unit will be equal to the lesser of: (a) 95% of the Trading Price of the Class A units multiplied by the Class B Exchange Ratio (as defined below); and (b) the Market (b) Distributions Price multiplied by the Class B Exchange Ratio. The Class B Exchange Ratio is determined by The Fund intends to pay distributions to unitholders on a quarterly basis within 15 days following the end of dividing the net asset value per Class B unit by the net asset value per Class A unit on such date. each calendar quarter end. (b) Distributions The Fund intends to pay distributions to unitholders on a quarterly basis within 15 days following the end of each calendar quarter end. Year ended December 31, 2013 Year ended December 31, 2012 Per Unit Total Per Unit Total Class A $ 0.84 5,011,008 $ 0.84 5,493,290 Class B 0.84 709,661 0.84 847,609 Total $ 5,720,669 $6,340,8992 As at December 31, 2013, $1,429,546 (December 31, 2012 $1,691,882) was payable to the As at December 31, 2013, $1,429,546 (December 31, 2012 $1,691,882) was payable to the unitholders. unitholders. 7. FINANCIAL INSTRUMENT RISKS 7. In FINANCIAL the normal course INSTRUMENT of business, the RISKS Fund is exposed to a variety of financial risks: credit risk, liquidity risk and In the normal course of business, the Fund is exposed to a variety of financial risks: credit risk, market risk (including interest rate risk, market price risk and currency risk). The value of investments within the liquidity risk and market risk (including interest rate risk, market price risk and currency risk). Fund s portfolio can fluctuate on a daily basis as a result of changes in interest rates, general economic The value of investments within the Fund s portfolio can fluctuate on a daily basis as a result of conditions and company news related to specific securities within the Fund. The level of risk depends on the changes in interest rates, general economic conditions and company news related to specific securities Fund s investment within objective the Fund. and The the level type of of securities risk depends in which on it the invests. Fund s investment objective and the type of securities in which it invests. Risk management Risk The Manager management seeks to minimize the potential adverse effects of risk on the Fund s performance by retaining The professional, Manager experienced seeks to minimize portfolio advisors the potential and analysts, adverse monitoring effects the of Fund s risk on positions the Fund s and performance market events, by and retaining diversifying professional, the investment experienced portfolio within portfolio the parameters advisors of and the investment analysts, monitoring objectives. To the assist Fund s in positions managing risk, and the market Manager events, uses internal and diversifying guidelines that the identify investment the target portfolio exposures within for each the parameters type of security of the investment objectives. To assist in managing risk, the Manager uses internal guidelines that and private real estate investments, while adhering to the investment restrictions of the Fund. identify the target exposures for each type of security and private real estate investments, while adhering to the investment restrictions of the Fund. TIMBERCREEK GLOBAL REAL ESTATE FUND 20 (a) Credit risk Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation or commitment to the Fund. The maximum exposure to credit risk is represented by total assets of the Fund. For publicly traded securities, the Fund minimizes concentration of risk by trading with a large number of brokers and counterparties recognized on the Exchange. The risk of default is considered minimal as all transactions are settled and paid for upon delivery using approved brokers. Credit risk may arise on private direct mortgage and loan investments where there is a possibility that a and borrower investment may be unable objectives to honour of the its Fund; mortgage (ii) ensuring or loan commitments a comprehensive that could due result diligence in a loss process to the Fund. is conducted The Fund mitigates on each this mortgage risk by: (i) or adhering loan prior to the to investment funding, which restrictions generally and investment includes, objectives but is not of limited the to, Fund; (a) (ii) engaging ensuring professional a comprehensive independent due diligence consultants, process is conducted lawyers and on each appraisers, mortgage and or (b) loan performing prior to credit funding, checks which on generally prospective includes, borrowers; but is not limited and (iii) to, actively (a) engaging monitoring professional the independent mortgage and consultants, loan portfolio lawyers and and appraisers, initiating and recovery (b) performing procedures credit checks where on required. prospective borrowers; and (iii) actively monitoring the mortgage and loan portfolio and initiating recovery procedures where required. Exposure to credit risk relating to the forward contracts and equity swaps is concentrated to two counterparties, Exposure to credit both risk relating of which to the have forward a Standard contracts & Poors and equity credit swaps rating is concentrated of A or higher. to two counterparties, both of which have a Standard & Poors credit rating of A or higher. The Fund is exposed to credit risk on preferred share securities which are disclosed in the Fund s statement The Fund is of exposed investments. to credit The risk on Fund s preferred credit share risk securities exposure which by credit are disclosed rating of in the Fund s preferred statement share of portfolio investments. is as The follows: Fund s credit risk exposure by credit rating of the preferred share portfolio is as follows: Percentage December 31, 2013 of net assets P-1 Best credit P-2 Second best credit 2.49 P-3 Third best credit Unrated 12.31 14.80 Percentage December 31, 2012 of net assets P-1 Best credit P-2 Second best credit 1.88 P-3 Third best credit 0.40 Unrated 13.37 15.65 Certain Certain preferred preferred share share securities securities are unrated. are unrated. Given Given the nature the of nature the real of estate the real industry, estate many industry, companies many companies traditionally obtain debt financing through mortgages secured by real property and traditionally obtain debt financing through mortgages secured by real property and in certain circumstances in certain circumstances will issue publicly listed debentures. For those companies which do will issue publicly listed debentures. For those companies which do not have public debt securities, they are not have public debt securities, they are typically not rated by the rating agencies. As such, to minimize typically not the rated risk by associated the rating agencies. with a fixed As such, return, to minimize preferred the share risk associated investment, with the a fixed Manager return, conducts preferred a thorough analysis of the issuer to determine their creditworthiness. Specifically, the Manager will conduct an analysis of each company analyzing the loan-to-value ratios, debt service coverage TIMBERCREEK GLOBAL REAL ESTATE FUND 21 ratio and the quality of the company s real estate holdings. (b) Liquidity risk Liquidity risk is defined as the risk that the Fund may not be able to settle or meet its obligation associated with financial liabilities. The Fund s exposure to liquidity risk is concentrated in the periodic cash redemptions of units. The Fund primarily invests in securities that are traded in active markets and can be readily disposed of to pay for redemptions. The Fund may employ the use of derivatives to moderate certain risk exposures. There is no guarantee that a market will exist for some derivatives and it is possible that the Exchange may impose limits on trading of derivatives. The Fund may invest in illiquid private direct real estate investments, including real property and mortgage and loan investments, and it is possible that it may not be able to sell such positions without facing adverse pricing. To minimize this risk, the Manager seeks to acquire stabilized, income-producing, multi-family properties in primary and secondary markets across Canada and only invest in mortgages or loans secured by cash-flowing security. In addition, the Fund is restricted to 20% of the Fund s total assets in private direct real estate and/or illiquid assets. Further, the Fund has the ability to borrow up to 25% of the total assets of the Fund to enhance investment returns and maintain liquidity. All financial liabilities mature within three months. Credit risk may arise on private direct mortgage and loan investments where there is a possibility that a borrower may be unable to honour its mortgage or loan commitments that could result in a loss to the Fund. The Fund mitigates this risk by: (i) adhering to the investment restrictions 30 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 31

(c)market risk (i)interest rate risk Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or fair values of financial instruments. Interest rate risk arises when the Fund invests in interest-bearing financial instruments. The Fund is exposed to the risk that the value of such financial instruments will fluctuate due to changes in the prevailing levels of market interest rates. There is minimal sensitivity to interest rate fluctuations on any cash and cash equivalents invested at short-term market interest rates. In addition, the mortgage and loan investments held through the Fund and through TCD LP bear interest at fixed rates. (ii) Market price risk Market price risk is the risk that the fair value or future cash flows of financial instruments will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). TIMBERCREEK GLOBAL REAL ESTATE FUND All investments present a risk of loss of capital. The most significant exposure to market price risk Notes for the Fund to Financial arises from its Statements investment in (cont d) public securities. If equity prices on the respective stock Years exchanges ended for these December securities, 31, including 2013 and positions 2012 held through total rate of return swaps, have increased or decreased by 5% at December 31, 2013 with all other variables held constant, the Net Assets of the Fund would have increased or decreased, respectively, by approximately $3.3 million (3.9%) (December 31, 2012 $3.7 million (3.7%)). In practice, actual results may differ from this December sensitivity 31, analysis 2013 with and all other difference variables held could constant, be material. the Net Assets of the Fund would have increased or decreased, respectively, by approximately $3.3 million (3.9%) (December 31, 2012 $3.7 million (3.7%)). In The Manager aims to moderate this risk through careful selection and diversification of securities practice, actual results may differ from this sensitivity analysis and the difference could be material. and other financial instruments in accordance with the Fund s investment objective and strategy. The Manager Fund s overall aims to moderate market positions this risk through are monitored careful selection a regular and diversification basis by the of Manager. securities and Financial other financial instruments instruments held by in the accordance Fund are with susceptible the Fund s to investment market price objective risk and arising strategy. from The uncertainties Fund s overall about market future positions prices of are the monitored instruments. on a regular basis by the Manager. Financial instruments held by the Fund are susceptible to market price risk arising from uncertainties about future prices of the instruments. (iii) Currency risk (iii) Currency risk risk the risk that the value of a financial instrument will fluctuate due to changes in Currency foreign exchange risk is the risk rates. that the value of a financial instrument will fluctuate due to changes in foreign exchange rates. Currency risk arises from financial instruments (including cash and cash equivalents) that are Currency denominated risk arises in a from currency financial other instruments than Canadian (including dollars, cash and which cash equivalents) represents that the are functional denominated currency in a of currency the Fund. other The than Fund Canadian may enter dollars, into which forward represents contracts the functional for hedging currency purposes of the Fund. to reduce The Fund its may foreign enter currency into forward exposure contracts or to establish for hedging exposure purposes to reduce foreign its currencies. foreign currency exposure or to establish exposure to foreign currencies. As at December 31, 2013, if the Canadian dollar had strengthened or weakened by 1% in relation As to at the December foreign 31, currencies 2013, if the listed Canadian below dollar with had all strengthened other variables or weakened being held by 1% constant, in relation the to the Fund s foreign currencies Net Assets listed would below have with increased all other variables or decreased, being held respectively, constant, the by Fund s approximately Net Assets would $316,726 have (0.4%) increased or (December decreased, 31, respectively, 2012 $412,723 by approximately (0.4%)). In $316,726 practice, (0.4%) actual (December results 31, may 2012 differ $412,723 from (0.4%)). this sensitivity In practice, actual analysis results and may the differences from this could sensitivity be material. analysis and the differences could be material. December 31, 2013 Fair value Notional forward contracts Notional equity swaps Net foreign currency exposure Percentage of net assets United States Dollar $ 25,385,119 $ (20,543,780) $ 494,990 $ 5,336,329 6.3% Euro 8,583,651 (8,211,807) 371,844 0.4% Australian Dollar 7,739,472 7,739,472 9.2% Hong Kong Dollar 3,289,247 3,289,247 3.9% Japanese Yen 3,662,337 3,662,337 4.3% New Zealand Dollar 1,166,043 1,166,043 1.4% Singapore Dollar 8,947,782 (61,181) 8,886,601 10.5% British Pound 1,220,730 1,220,730 1.4% Notional Notional Net foreign Percentage December 31, forward equity currency of net 2012 December 31, Fair value contracts Notional forward Notional swaps equity Net exposure foreign currency Percentage assets of net 2012 United States Dollar $ Fair 29,289,861 value $ (27,986,880) contracts $ 606,377 swaps $ exposure 1,909,358 assets 1.9% Euro United States Dollar $ 10,576,517 29,289,861 $ (8,008,826) (27,986,880) $ 606,377 $ 2,567,691 1,909,358 2.5% 1.9% Australian Dollar Euro 8,283,186 10,576,517 (8,008,826) 8,283,186 2,567,691 8.1% 2.5% Hong Kong Dollar Australian Dollar 4,764,116 8,283,186 4,764,116 8,283,186 4.7% 8.1% Japanese Yen Hong Kong Dollar 6,304,318 4,764,116 6,304,318 4,764,116 6.2% 4.7% New Zealand Dollar Japanese Yen 5,824,439 6,304,318 5,824,439 6,304,318 5.7% 6.2% Singapore Dollar New Zealand Dollar 8,022,412 5,824,439 328,575 8,350,987 5,824,439 8.2% 5.7% South African Rand Singapore Dollar 3,268,204 8,022,412 328,575 3,268,204 8,350,987 3.2% 8.2% South African Rand 3,268,204 3,268,204 3.2% 8. CLASSIFICATION OF OF FINANCIAL INSTRUMENTS FAIR FAIR VALUE VALUE MEASUREMENTS The following table table shows shows an analysis analysis of financial of financial instruments instruments recorded recorded at fair value at by fair level value of the by fair level value of the 8. CLASSIFICATION OF FINANCIAL INSTRUMENTS FAIR VALUE MEASUREMENTS fair hierarchy value at hierarchy December at 31, December 2013: 31, 2013: The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy at December 31, 2013: Level 1 Level 2 Level 3 Total Financial assets: Level 1 Level 2 Level 3 Total Equities Financial assets: $ 64,907,937 $ $ $ 64,907,937 Forward contracts (602,328) (602,328) Equities $ 64,907,937 $ $ $ 64,907,937 TIMBERCREEK Equity swaps Forward contracts GLOBAL REAL 433,809 (602,328) ESTATE FUND 433,809 (602,328) Options 768,717 768,717 TIMBERCREEK Equity swaps GLOBAL REAL 433,809 ESTATE FUND 433,809 Notes Private Options to direct Financial real estate Statements 768,717 (cont d) 9,317,080 9,317,080 768,717 Private investor note Notes Years Private ended to direct Financial December real estate Statements 31, 2013 and (cont d) 2012 3,167,902 9,317,080 3,167,902 9,317,080 Private fixed income Years Private ended investor December note 31, 2013 and 2012 452,030 3,167,902 452,030 3,167,902 Private common equity Private fixed income 3,640,451 452,030 3,640,451 452,030 $65,676,654 $ (168,519) $16,577,463 $82,085,598 The following Private common table shows equity a reconciliation of the opening and closing balance of 3,640,451 financial instruments 3,640,451 recorded The in Level following 3 for the table year shows ended a reconciliation December $65,676,654 31, 2013: of the opening $ and (168,519) closing balance $16,577,463 of financial instruments $82,085,598 recorded The following table shows a reconciliation of the opening and closing balance of financial Level 3 for the year ended December 31, 2013: instruments recorded in Level 3 for the As year at ended Unrealized December 31, 2013: Net As at January 1, fair value advances/ December 31, As at Unrealized Net As at 2013 gain(loss) (repayments) 2013 January 1, fair value advances/ December 31, Financial assets: 2013 gain(loss) (repayments) 2013 Financial Private direct assets: real estate $ 8,895,035 $ 446,315 $ (24,270) $ 9,317,080 Private direct operating real facility estate $ 8,895,035 4,149,999 $ 446,315 4,149,999 $ (4,149,999) (24,270) $ 9,317,080 Private operating investor note facility 4,149,999 4,149,999 (4,149,999) 2,963,281 204,621 2,963,281 3,167,902 Private investor note TIMBERCREEK GLOBAL REAL ESTATE FUND 24 Private fixed income 2,963,281 422,833 204,621 29,197 2,963,281 422,833 3,167,902 452,030 Private fixed common income equity 5,681,125 422,833 (481,780) 29,197 422,833 5,681,125 (1,558,894) TIMBERCREEK GLOBAL 3,640,451 REAL ESTATE 452,030 FUND 24 Private common equity $ 22,112,273 5,681,125 $ 198,353 (481,780) 5,681,125 $ (5,733,163) (1,558,894) $16,577,463 3,640,451 $ 22,112,273 $ 198,353 $ (5,733,163) $16,577,463 The following table shows an analysis of financial instruments recorded at fair value by level of the fair value The following table shows an analysis of financial instruments recorded at fair value by level of the The hierarchy following at December table shows 31, an 2012: analysis of financial instruments recorded at fair value by level of the fair value fair value hierarchy at December 31, 2012: hierarchy at December 31, 2012: Level 1 Level 2 Level 3 Total Financial assets: Level 1 Level 2 Level 3 Total Financial Equities assets: Equities Forward contracts $ 74,592,189 $ 74,592,189 $ $ (226,759) $ $ $ 74,592,189 $ 74,592,189 (226,759) Forward Equity swaps contracts (226,759) 934,952 (226,759) 934,952 Equity Options swaps 33,827 934,952 934,952 33,827 Options Private direct real estate 33,827 8,895,035 8,895,035 33,827 Private direct operating real facility estate 8,895,035 4,149,999 8,895,035 4,149,999 Private operating investor note facility 4,149,999 4,149,999 and common shares Private investor note Private and fixed common income shares 2,963,281 2,963,281 422,833 2,963,281 2,963,281 422,833 Private fixed common income equity 5,681,125 422,833 5,681,125 422,833 Private SICAV common equity 1,909,224 5,681,125 1,909,224 5,681,125 SICAV $74,626,016 $ 2,617,417 1,909,224 $22,112,273 $99,355,706 1,909,224 TIMBERCREEK GLOBAL REAL ESTATE FUND 23 $74,626,016 $ 2,617,417 $22,112,273 $99,355,706 32 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 33

Notes to Financial Statements (cont d) Years ended December 31, 2013 and 2012 The following table table shows shows a reconciliation a reconciliation of the of opening the opening and closing and balance closing of balance financial of instruments financial recorded instruments Level 3 for the recorded year ended in Level December 3 for 31, the 2012: year ended December 31, 2012: The following table shows a reconciliation of the opening and closing balance of financial instruments recorded Net advances As at and Net December 31, in Level 3 for the year ended December 31, 2012: As at January 1, As 2012 at Financial assets: January 1, 2012 Unrealized fair value Unrealized gain loss fair value gain loss repayments advances As 2012 at and December 31, Private direct real estate $ 8,465,195 $ 429,840 repayments $ $ 2012 8,895,035 Financial assets: Private operating facility 2,593,103 4,149,999 1,556,896 4,149,999 Private direct real estate Private investor note $ 8,465,195 $ 429,840 $ $ 8,895,035 Private and operating common facility shares 2,969,640 2,593,103 (6,359) 4,149,999 2,963,281 1,556,896 2,963,281 4,149,999 Private investor fixed income note 422,833 422,833 422,833 and common shares Private common equity 2,969,640 5,743,867 (6,359) 2,963,281 (62,742) 5,681,125 2,963,281 5,681,125 Private fixed income $ 19,771,805 $ 422,833 422,833 360,739 $ 1,979,729 422,833 $22,112,273 Private common equity 5,743,867 (62,742) 5,681,125 5,681,125 During the year ended December 31, 2013 $ 31, and 19,771,805 2013 2012, and no 2012, financial $ no financial instruments 360,739 instruments were $ 1,979,729 transferred were between $22,112,273 transferred any between levels. any levels. During the year ended December 31, 2013 and 2012, no financial instruments were transferred between any levels. 9. COMPARISON OF NET ASSET VALUE AND NET ASSETS 9. COMPARISON OF NET ASSET VALUE AND NET ASSETS In accordance with with National Instrument 81-106, 81-106, the net the asset net value asset per value unit compared per unit to compared the net assets to the per net unit 9. COMPARISON OF NET ASSET VALUE AND NET ASSETS assets and an per explanation unit and of an the explanation differences between of the such differences amounts between is required such in the amounts notes to the is required financial in the In notes statements. accordance to the financial with National statements. Instrument 81-106, the net asset value per unit compared to the net assets per unit and an explanation of the differences between such amounts is required in the notes to the financial The difference between the net asset value per unit and the net assets per unit in the statements of net assets is statements. between the net asset value per unit and the net assets per unit in the statements of due net to different assets is pricing due to methodologies different pricing used methodologies to calculate the net used assets to for calculate financial the reporting net assets purposes for financial and the The reporting net asset difference value purposes between for fund and pricing the the net asset purposes. net asset value Specifically, value per unit for and fund for the investments pricing net assets purposes. per that unit are in traded Specifically, the statements in an active for of market investments net assets where is due that quoted to are different prices traded are pricing in readily an active methodologies and regularly market available, used where to calculate quoted Section prices the 3855 net requires are assets readily for bid financial prices and (for regularly reporting investments available, purposes held) and Section the ask net 3855 prices asset requires (for value investments for bid fund prices sold pricing (for short) purposes. investments to be used Specifically, held) the fair and for valuation investments ask prices of investments, (for that are investments traded rather than sold active the short) use market of to closing be where quoted used sale prices in prices the currently fair are readily valuation used and for of regularly the investments, purpose available, of determining rather Section than 3855 net the asset requires use value. of bid closing prices (for sale investments prices currently held) and used ask prices for the (for purpose investments of determining sold short) to net be used asset in value. the fair valuation of investments, rather than the use of closing Additional information on net asset value is described in note 1. sale prices currently used for the purpose of determining net asset value. Additional The reconciliation information of net asset on net value asset per unit value and is net described assets per in unit note is as 1. follows: Additional information on net asset value is described in note 1. The reconciliation of net asset value per unit and net assets per unit is Net as follows: asset Net assets The reconciliation of net asset value per unit and net assets per unit is as follows: value per unit per unit December 31, 2013: Net asset Net assets value per unit per unit Class A $ 12.32 $ 12.30 December 31, 2013: Class B 13.03 12.94 Class A $ 12.32 $ 12.30 December 31, 2012: Class B 13.03 12.94 Class A 12.63 12.60 December 31, 2012: Class B 13.24 13.22 Class A 12.63 12.60 Class B 13.24 13.22 TIMBERCREEK GLOBAL REAL ESTATE FUND 26 Forward Looking Information Certain statements in this report about the Timbercreek Global Real Estate Fund (the Fund ), and its investments and strategies, and financial performance and condition may constitute forward-looking information, future oriented financial information, or financial outlooks (collectively, forward-looking statements ). The forward-looking statements are stated as of the date of this report and are based on estimates and assumptions made by Timbercreek Asset Management Ltd. ( Timbercreek ) in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors that Timbercreek believes are appropriate and reasonable in the circumstances. There can be no assurance that such forward-looking statements will prove to be accurate, as actual results, performance and future events could differ materially from those anticipated in such statements. Past performance is not an indication of future returns, and there can be no guarantee that targeted returns or yields can be achieved. Timbercreek refers you to the public disclosure of the Fund for information regarding these forward-looking statements, including the assumptions made in preparing forward-looking statements and management s expectations, and the risk factors that could cause the Fund s actual results, yields, levels of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements. Such public disclosure is available on SEDAR and at the request of Timbercreek. This presentation does not represent an offer or solicitation to sell securities of the Fund. TIMBERCREEK GLOBAL REAL ESTATE FUND 26 10. INCOME TAXES: The Fund has qualified and is expected to continue to qualify as a mutual fund trust under the income Tax Act (Canada) (the Act ) and, accordingly, is not taxed on the portion of taxable income that is paid or made payable to Unitholders. Income tax on net realized capital gains not paid or made payable to Unitholders may be recoverable to the Fund in future periods. It is the intention of the Fund to distribute all of its income and sufficient net realized capital gains so that the Fund will not be subject to income tax. If the Fund acquires non-portfolio property, as defined in the Act, it will be subject to tax at a rate similar to the corporate tax rate on the taxable income earned from and net realized capital gains from the disposition of the property. At December 31, 2013 and 2012, the Fund does not hold any non-portfolio property. Non-capital losses are available to be carried forward for 20 years and applied against future years taxable income. Capital losses for income tax purposes may be carried forward indefinitely and applied against future capital gains. As of December 31, 2013 and 2012, there were no non-capital losses (2012 - nil), no capital losses of (2012 nil) and other temporary differences of $2,302,000 (2012 - $4,588,000). Head Office 1000 Yonge Street, Suite 500 Toronto, Ontario M4W 2K2 (t) 416-306-9967 (e) inquiries@timbercreek.com Website: www.timbercreek.com Stock Exchange Listing TSX: TGF.UN Transfer Agent & Registrar CST Trust Company 320 Bay Street Toronto, Ontario M5H 4A6 Auditors KPMG LLP Legal Counsel McCarthy Tétrault LLP 34 Timbercreek Global Real Estate Fund Timbercreek Global Real Estate Fund 35

TIMBERCREEK.COM