MORGUARD CORPORATION 2015 ANNUAL REPORT FOCUSED ON PERFORMANCE

SPOTLIGHT

STRONG FINANCIAL PERFORMANCE

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INCREASING OUR PRESENCE IN

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TOP HONOURS FOR A TOP-QUALITY DEVELOPMENT

PAGE 15 CORPORATION

Morguard Corporation (“Morguard” or the “Company”) is a real estate operating company listed on the Stock Exchange (TSX) under the symbol MRC. At December 31, 2015, the Company’s owned and managed portfolio of assets was valued at nearly $19 billion.

Morguard’s primary business strategy is to create shareholder value through stable and increasing cash flow and asset value. This is achieved by improving the performance of the real estate portfolio and by acquiring and developing real estate properties in sound economic markets.

The Company has three diversified lines of business:

Investments in Real Property: Morguard owns and manages a diversified portfolio of high-quality residential, retail, office, industrial and hotel properties in North America.

Real Estate Investment Trusts: Morguard owns a significant interest in two real estate investment trusts (REITs): Morguard REIT (TSX: MRT.UN), a closed-end trust with a diversified portfolio of Canadian commercial real estate assets, and Morguard North American Residential REIT (TSX: MRG.UN), an open-end trust with a diversified portfolio of multi-suite residential properties across North America.

Advisory and Investment Services: Morguard provides real estate advisory services and portfolio management services, specializing in publicly traded equities and fixed income securities, to institutional clients and private investors.

ON OUR COVER The Heathview, Toronto, ON, recipient of FRPO’s Rental Development of the Year Award for 2015. FELLOW SHAREHOLDERS

2015 WAS ANOTHER YEAR OF ACHIEVEMENT AS WE MAINTAINED OUR FOCUS ON CREATING VALUE IN OUR CORE LINES OF BUSINESS AND STRENGTHENED THE COMPANY THROUGH STRATEGIC INVESTMENTS.

Our goal is to be a leading owner and manager of real estate while providing our investors with a high level of diversification. Our business model includes ownership and management of real estate assets, including substantial interests in two real estate investment trusts, Morguard REIT and Morguard North American Residential REIT. Further diversification comes from our portfolio of managed equities and fixed income products recently enhanced by our acquisition of a 60% interest in Lincluden Investment Management Limited.

In 2015, we successfully grew Morguard’s portfolio with investments in the multi-suite residential segment and in the hotel industry, and through our ongoing development activities. For the long term, our focus is on increasing value for our shareholders while management continues to search for attractive real estate investment opportunities in markets across North America. Our core portfolio of assets and conservatively leveraged balance sheet continue to provide a high level of cash flow, allowing Morguard to grow without accessing capital markets.

It is expected, in general, that real estate performance in 2016 will be similar to that seen in 2015, and that the oil sector will continue have a negative impact on overall growth. In 2016, management is actively working on remerchandising at a number of our enclosed retail centres with the prospect of achieving increased rental rates and securing long-term tenancies.

Morguard’s achievements are made possible by the dedication and professionalism of our management team and employees and through the guidance of our directors. I express my appreciation to them all and I thank our shareholders sincerely for their support.

K. RAI SAHI Chairman and Chief Executive Officer 2015 HIGHLIGHTS

OUR STRONG PERFORMANCE FLOWS DIRECTLY FROM THE STRENGTH OF OUR REAL ESTATE PORTFOLIO.

In 2015, Morguard again delivered strong financial results, building on its long record of success. At the same time, Morguard also strengthened its portfolio through development and strategic investments and earned recognition for its activities and for the quality of its properties.

REVENUE AND EARNINGS

Morguard’s sources of revenue and earnings are diversified, including rental revenue from owned properties, fees earned from the advisory services business, changes in property values, and management fees from investment clients, in both and the United States. At December 31, 2015, our portfolio of owned real estate assets was valued at 20% INCREASE $8.1 billion, while our managed portfolio was valued at an IN MORGUARD’S additional $7.5 billion. SHARE OF FUNDS FROM OPERATIONS Our key financial metric is Morguard’s share of funds from (IN MILLIONS OF DOLLARS) operations (“FFO”). In 2015, Morguard’s share of FFO reached $183 million, up from $152 million a year earlier, $183 or 20%. Morguard’s share of FFO per common share $153 $152 reached $14.96 in 2015, an increase of 23% over 2014. $144 The key reasons for the year-over-year increase were the $129 continued growth in net operating income (“NOI”) and the refinancing of maturing term debt at prevailing low level interest rates.

In 2015, Morguard’s total revenues increased to $884 million from $566 million the previous year, an increase of 56%. Revenue from our real estate properties accounted for 92% of total revenues, while management and advisory fees accounted for 7% of total revenues. On December 31, 2014, 11 12 13 14 15

2 MORGUARD CORPORATION the portfolio of real estate properties that the Company reports was significantly altered because of the consolidation of Morguard REIT. This accounting change, which added $292 million of revenues for 2015, required the Company to combine Morguard REIT’s real estate portfolio with 81% INCREASE Morguard Corporation’s portfolio and to eliminate the 56% INCREASE IN IN NET OPERATING reporting of the investment in Morguard REIT. TOTAL REVENUE INCOME (IN MILLIONS OF DOLLARS) (IN MILLIONS OF DOLLARS) Another key metric for Morguard is NOI, which is made up of revenue from real estate properties less operating costs, $884 $436 utilities and realty taxes. Increases in NOI demonstrate $292 $172 our ability to grow and to manage our properties efficiently. During 2015, NOI increased to $436 million from $241 million $592 a year earlier, which represents a rise of 81%. In addition to $566 $517 the consolidation of Morguard REIT, which added $172 million, $241 $264 $414 the increase in NOI was driven by higher same-property $393 $201 results, particularly in the multi-suite residential and office $164 $171 segments, acquisitions and contributions from completed developments. Excluding the impact of the consolidation of Morguard REIT, the Company has reported an increase in NOI in each of the past five years; and over this five-year period the compound annual growth rate in NOI was 12%. 11 12 13 14 15 11 12 13 14 15

SPOTLIGHT MANAGING GROWTH ACROSS THE BORDER

One of Morguard’s successful business models in Canada has been to partner, or co-invest, with institutional clients in the purchase and management of major properties. Now that same model has been applied in the U.S.

In 2015, Morguard and a Canadian pension fund client acquired for $74 million (US$56 million) 2940 Solano at Monterra, a newly- constructed, 252-suite, garden-style apartment property located in Cooper City, Florida, about 16 miles southwest of Fort Lauderdale. Morguard arranged for the sale of a 49% interest to one of its Canadian pension fund clients, and continues to hold the remaining 51%. This transaction represents Morguard’s first mandate to manage a U.S. asset for a Canadian client.

The property has more than 281,000 square feet of space and offers its residents a clubhouse, pool, summer kitchen, fitness centre, and walking trails. Monterra itself is a community spanning more than 500 acres, and has been described as a “family paradise.” It is located near fine dining, exclusive shopping, and entertainment venues.

2015 ANNUAL REPORT 3 SPOTLIGHT

STRONG FINANCIAL PERFORMANCE OVER FIVE YEARS

Strong financial performance over the longer term is a key objective of Morguard Corporation and the results for the past five years demonstrate its achievement. Key factors include a strategic focus on growth, a prudent approach to financial management and an increasingly diversified portfolio and revenue streams.

FINANCIAL HIGHLIGHTS

(IN THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS) 2011 2012 2013 2014 2015

Revenue from real estate properties $297,265 $315,590 $417,376 $472,808 $808,595 Total revenue 392,958 414,439 516,882 566,326 883,559 Net operating income 164,330 170,989 201,496 241,193 435,899 Morguard’s share of FFO1 128,609 144,133 153,073 152,053 183,139 Morguard’s share of FFO per common share $9.92 $11.22 $12.07 $12.14 $14.96 Total assets 3,486,107 4,409,816 5,452,995 7,993,684 8,602,132 Shareholders’ equity 1,683,100 2,048,288 2,329,972 2,498,605 2,697,724 Shareholders’ equity per common share $129.98 $160.37 $185.12 $202.27 $224.94 Number of common shares 12,949 12,772 12,586 12,353 11,993

1 Morguard’s share of FFO eliminates the non-controlling interests of Morguard North American Residential REIT.

4 MORGUARD CORPORATION 72% CANADA

% NET OPERATING INCOME 28 IS DIVERSIFIED BY U.S. GEOGRAPHY

THE MORGUARD PORTFOLIO NET OPERATING INCOME IS FURTHER DIVERSIFIED Morguard management is committed to maintaining the BY ASSET CLASS diversified nature of the Company’s real estate portfolio. YEAR ENDED DECEMBER 31, 2015 We believe this diversification is a key strength as it helps to insulate shareholders from any cyclical downturns in Multi-suite Residential a particular asset class or location and enhances the 34% long-term reliability of the revenue stream.

The Company’s portfolio of real estate properties is highly diversified by asset class and by geography, with Retail 28% (by value and NOI) of the Company’s real estate 34% properties located in the U.S. at December 31, 2015. The Canadian and U.S. properties are further diversified, with NOI being generated from seven Canadian provinces Other and eight U.S. states. 4% Office 28%

2015 ANNUAL REPORT 5 Centerpoint Mall, Toronto, ON

The composition of Morguard’s real estate properties at FAIR VALUE BY SEGMENT December 31, 2015, is shown in the table to the right, AS AT DECEMBER 31 2014 2015 with a comparison to December 31, 2014. Multi-suite residential 38% 41% At December 31, 2015, Morguard owned a portfolio of Retail 33% 32% 173 multi-suite residential, retail, office, industrial and hotel properties, comprising 17,225 residential suites, approximately Office 26% 24% 16.3 million square feet of commercial leasable space and Other 3% 3% 1,056 hotel rooms.

At December 31, 2015, Morguard’s total assets were

$8.6 billion, compared with $3.5 billion at December 31, 2011.

The increase in total assets has been driven by the TOTAL ASSETS consolidation of Morguard REIT’s assets on December 31, (IN BILLIONS OF DOLLARS) 2014, by significant acquisition and development programs and by increases in the value of the Company’s real estate $8.6 properties. The compound annual growth rate over the $8.0 past five years in total assets is 23%.

$5.5

CAPITAL MANAGEMENT $4.4 $3.5 Morguard management devotes considerable attention to the quality of the Company’s balance sheet, including prudent management of debt financing because it is a vital element in the Company’s success. Again in 2015, the Company took advantage of the prevailing low level of interest rates. 11 12 13 14 15

6 MORGUARD CORPORATION 5.1%

2011 4.7% 4.5% 2012 4.2% 2013 3.9% 2014 2015

During the year, Morguard refinanced $290 million of maturing term debt that yielded approximately $406 million of gross financing proceeds. The mortgage refinancing program lowered Morguard’s weighted average interest rate at December 31, 2015, to 3.91%, compared with 4.17% a year earlier. It also extended its weighted average term to maturity to 5.5 years. In addition, the Company has credit facilities of nearly $350 million, which provide liquidity for further investment opportunities. 11 12 13 14 15 Another important metric for Morguard is shareholders’ equity per common share. Shareholders’ equity per common share is defined as shareholders’ equity, excluding non-controlling interest, divided by the number of common SPOTLIGHT shares outstanding. At December 31, 2015, Morguard’s shareholders’ equity per common share was $225, compared with $130 at December 31, 2011. The increase in shareholders’ equity per common share over the past five TAKING ADVANTAGE years, represents a compound annual growth rate of 16%. OF LOW INTEREST RATES

Minimizing operating costs is a key SHAREHOLDERS’ EQUITY PER business strategy for Morguard, and COMMON SHARE that applies to the cost of financing the Company’s portfolio of properties. $225 $202 Over the past several years, as the general level $185 of interest rates have declined to historical lows, management has taken the opportunity to refinance $160 many of the portfolio’s properties. By reducing $130 the interest rates paid on debt, management has realized significant savings for the Company.

The 2015 mortgage refinancing program lowered Morguard’s weighted average interest rate at December 31, 2015, to 3.9%.

11 12 13 14 15

2015 ANNUAL REPORT 7 SPOTLIGHT

INCREASING OUR PRESENCE IN THE HEART OF CHICAGO

Since 2012, Morguard Corporation’s real estate portfolio in the U.S. has included an important multi-suite residential property in Chicago, . Our first purchase was a LEED Gold certified high-rise residential rental complex known as Alta at K Station in the West Loop area of Chicago. Now our presence in the Windy City is being dramatically increased, with the addition of a major residential tower that is being constructed atop an existing mixed-use development known as Block 37.

The property, at 108 North , comprises a commercial centre that features shopping, dining and entertainment venues. It takes its unusual name from one of the original 58 Chicago city blocks established in 1830.

For $62 million (US$44 million), Morguard purchased a 49% stake in the residential building being built atop the northern end of Block 37. The residence will be known as The Marquee at Block 37 and will include 691 luxury suites in a 34-storey tower. Leasing began in March 2016, with the first occupancies set for June.

8 MORGUARD CORPORATION A major attraction for potential tenants will be the access provided to transportation, retail, dining and entertainment. The Marquee at Block 37 will have direct access to the complex’s retail centre, as well as access to a major Chicago Transit Authority station.

The Marquee at Block 37 is designed as a sleek, glass-clad tower with modern living spaces and several recreation and relaxation areas, including a rooftop spa and fitness centre, taking advantage of the building’s city views. There will also be a fifth floor amenity deck, offering residents an outdoor pool and spa, cabanas, grilling stations and an outdoor terrace.

Morguard’s investment in The Marquee at Block 37 is indicative of its willingness to seek out unique development opportunities in Canada and the U.S. In this case, Morguard has leveraged its relationship with a U.S.-based investment principal that is known for its luxury, multi-suite residential projects.

Alta at K Station, Chicago, IL The Marquee at Block 37, Chicago, IL

2015 ANNUAL REPORT 9 GROWTH IN ASSETS OWNED AND UNDER MANAGEMENT

Assets under management (“AUM”) is another important GROWTH IN ASSETS metric for Morguard. Growth in AUM strengthens our UNDER MANAGEMENT management platform and increases operational efficiencies. (IN BILLIONS OF DOLLARS)

At December 31, 2015, Morguard’s real estate AUM totalled $15.6 billion. Included in the total are Morguard’s owned real $18.9 estate investments (including assets of Morguard Corporation, $3.3

Morguard REIT and Morguard North American Residential $15.1 $15.0

REIT) and the real estate assets that Morguard manages for $12.9 $15.6 third-party clients, valued at $7.5 billion. $11.2 In early 2015, Morguard began reporting AUM that includes the value of our portfolio of managed equities and fixed income. This addition to reported AUM results from Morguard’s acquisition of Lincluden Investment Management Limited (“Lincluden”), which closed on February 3, 2015. The Lincluden acquisition added $3.3 billion of AUM, increasing the critical mass of the Company’s existing 11 12 13 14 15 equity management entity, Morguard Financial Corp. As of December 31, 2015, Morguard’s total AUM, including real estate and managed equities, reached $18.9 billion. MORGUARD’S TOTAL ASSETS UNDER MANAGEMENT REAL ESTATE INVESTMENT TRUSTS REACHED $18.9 BILLION

Contributing to Morguard’s financial success are its stakes Owned in two substantial real estate investment trusts, which are Real Estate valued at over $1.1 billion. Distributions received from our $8.1 billion two REITs contribute to Morguard Corporation’s cash flow. During 2015, Morguard Corporation received distributions from the two REITs totalling $42 million. Managed Morguard has a significant interest in Morguard REIT, Real Estate $7.5 billion which, in turn, owns a Canadian portfolio of high-quality, income producing real estate assets comprising retail, office and industrial properties. The diversified portfolio of

50 commercial properties consists of 8.8 million square feet Managed of gross leasable area located in six Canadian provinces. Equities and Fixed Income Morguard Corporation acquired approximately 2.5 million $3.3 billion units of Morguard REIT during 2015 for $41 million, representing a weighted average price of $16.11 per unit, raising its interest in the REIT to 50.4%. Purchasing these units was seen as an attractive investment because the REIT has been a strong financial performer, delivering consistent distributions to unitholders. As well, because cap rates in the industry have remained relatively low,

10 MORGUARD CORPORATION Creekside Corporate Centre, Toronto, ON

the purchase of Morguard REIT units appeared attractive in management services to major institutional clients and relation to direct investments in real property. Morguard REIT private investors. As well, the Company co-invests in had total assets of $2.9 billion as at December 31, 2015, a variety of properties. Morguard also supports the two and for the year recorded NOI of $166 million, compared REITs in which it has substantial interests by providing with $170 million a year earlier. advisory services through its investment, property management and leasing groups. Morguard also owns a 48.7% effective interest in Morguard North American Residential REIT, which was launched In 2015, Morguard attracted a major provincial pension with Morguard’s sponsorship in 2012. This REIT was created fund as a new client and partner. Morguard was awarded to benefit from the demand for high-quality residential mandates to manage three properties located in rental properties in key markets across North America. and , , and in transactions that closed At December 31, 2015, Morguard North American Residential in December 2015, Morguard and the pension fund client REIT owned a portfolio of 13,102 residential suites, including became partners in two , Manitoba, office 31 apartment communities located in seven U.S. states properties. With these transactions, Morguard will have and 14 residential apartment communities located in two retained or added to its managed portfolio more than Canadian provinces, with a total appraised value of 790,000 square feet of office space. $2.1 billion. In 2015, Morguard North American Residential Morguard additionally offers a broad range of proven REIT recorded NOI of $104 million, up from $90 million investment vehicles and provides portfolio management in 2014. services, specializing in publicly traded equities and fixed income securities, through Lincluden. Morguard’s investment THIRD-PARTY SERVICES in Lincluden established a platform for equities and fixed income – and provides access to new capital and AND INVESTMENT VEHICLES enhanced products for Morguard’s institutional clients. Morguard’s extensive offering of third-party real estate Following the acquisition, Morguard transitioned advisory services earned fees of $60 million in 2015. Morguard Financial Corp. into Lincluden to add real Morguard provides a range of real estate investment and estate equity expertise to the product offerings.

2015 ANNUAL REPORT 11 INVESTMENTS AND ACQUISITIONS

Morguard continues to enhance its portfolio through residential building in downtown Chicago, Illinois. During judicious investments and acquisitions in a number of asset 2015, Morguard invested $38 million (US$30 million) toward classes. In the U.S. multi-suite residential market, Morguard its development. made strategic acquisitions and significant investments in During 2015, Morguard also increased its stake in the 2015, including the following. hotel industry through a series of investment transactions The Company acquired 2940 Solano at Monterra, a newly in the shares of Inc. (“Temple Hotels”). constructed, 252-suite, garden-style apartment property Temple Hotels, whose primary business activity is the located in Cooper City, Florida. This property, which ownership and development of hotel properties, owns complements our existing portfolio in the southern U.S., 30 hotels across six Canadian provinces and one territory. is owned by Morguard North American Residential REIT Management intends to employ our expertise to create and a Canadian pension fund client. The total acquisition value in Temple’s portfolio. Following the most recent share cost was $74 million (US$56 million). purchase, Morguard’s investment in Temple Hotels represents a 38.9% ownership interest. This investment has made The Company also acquired a 59% interest in Sunset & Morguard the largest shareholder of Temple Hotels. Gordon, a newly constructed, 299-suite high-rise apartment building with 47,500 square feet of commercial space in On November 12, 2015, Morguard also entered into Los Angeles, California, a new market for Morguard. an agreement to purchase three hotels that are adjacent Morguard purchased the 59% investment for $77 million to Pearson International Airport in Toronto, . (US$58 million). Leasing is expected to commence in the This $34 million acquisition complements Morguard’s fourth quarter of 2016. existing hotel portfolio. The acquisition closed on February 1, 2016. Morguard previously completed a 49% investment in The Marquee at Block 37, a 34-storey, 691-suite multi-suite

QUALITY ACROSS SPOTLIGHT THE BOARD MAKES THIS CENTRE A WINNER

Exceptional asset management, development activities and property management all came together in Morguard’s .

In 2015, it became the first super regional shopping centre in the world to be named The Outstanding Building of the Year. The TOBY Award is presented by BOMA, the international Building Owners and Managers Association.

Bramalea City Centre is the fourth-largest enclosed shopping centre in the province of Ontario. To remain competitive, Morguard undertook a 300,000-square-foot expansion to consolidate area trade, improve operational efficiencies and enhance the retail experience.

The benefits ranged from an enhanced retail mix to operational efficiencies to increased value. Retail trade conducted at the shopping centre increased by 42% since the renovation and expansion in 2010, and annual pedestrian traffic increased by four million visits. Improved operational efficiencies have meant impressive reductions in energy, water, gas emissions and waste.

12 MORGUARD CORPORATION

DEVELOPMENT ACTIVITIES SPOTLIGHT Development of properties is another key activity of Morguard. The market for acquisition of suitable properties remains very competitive and, therefore, development projects help enhance not only the size but also the quality MORGUARD’S of the Company’s real estate portfolio. During the past two GROWING STAKE IN years, Morguard has transferred over $310 million of HOTEL PROPERTIES properties under development to “income producing” status, mainly reflecting the completion of Performance Court, our During 2015, Morguard increased its office development in , Ontario, and The Heathview, Morguard’s 30-storey, twin-tower, multi-suite residential exposure to this asset class by entering project in Toronto, Ontario. into agreements to acquire three hotel properties and by purchasing shares Another recently completed project was the $25 million major renovation and capital upgrade at St. Laurent in of Temple Hotels Inc. Ottawa, Ontario, that has rejuvenated the centre – increasing In early 2016, Morguard completed an agreement its competitiveness, enhancing its focus on fashion and to purchase three hotels near Toronto’s Pearson improving the customer experience. The modernization is International Airport. The acquisition is in line with also expected to reduce operating costs. Looking forward, Morguard’s strategy to acquire hotels in desirable light rail transit is expected to arrive at St. Laurent in 2018 submarkets with established demand patterns. and the City of Ottawa is undertaking master planning The three hotels purchased are in close proximity to Morguard’s full-service hotel, the Toronto studies to ensure adjacent land is ready for growth and Airport Marriott hotel. With the completion of this optimized for transit-oriented development. acquisition Morguard directly owns a portfolio of Based on work completed during 2015, Morguard was nine hotels, located in high-demand submarkets within the Greater Toronto Area, comprised of awarded a mandate for the design, construction and 1,473 rooms. operation of an ancillary services office building as part of the Etobicoke General Hospital’s expansion plans. An additional element to our hotel strategy during The planned six-storey, LEED Gold, office building will 2015 was to acquire common shares and convertible debentures of Temple Hotels. At December 31, 2015, comprise 156,000 square feet of gross leasable area and Morguard owned 30.2 million Temple shares, will provide specialized care facilities as well as house representing a 38.9% interest and $3 million of doctors’ offices. Morguard has been contracted to provide Temple’s convertible debentures. facilities management for a 40-year term and, once tenant occupancy is achieved, Morguard has arrangements to sell a 50% interest to an institutional investor.

During 2015 the Company experienced the departure of from several of our retail properties. We have placed a strong focus on strategic redeployment of the space

2015 ANNUAL REPORT 13 St. Laurent, Ottawa, ON 77 Bloor Street West, Toronto, ON formerly leased to Target. With over 600,000 square feet of AWARDS AND RECOGNITION gross leasable area, the redevelopment will result in larger In 2015, Morguard Corporation continued to be recognized spaces being re-demised to suit multiple new tenants and is for its accomplishments, including the quality of its expected to generate increased revenue and improve cash development projects. flow over the long term.

During 2016, Morguard expects to commence a major restoration of its 328-room hotel property located at Coquitlam Centre Sustainability Innovator LEAP Award 361 Queen Street, Ottawa, Ontario. This project will include a complete renovation of all rooms, common areas and the 505 3rd St. SW Vitality Award exterior of the building. Plans are currently being finalized Penn West Plaza 5-Star Energy Cost Index Award for this project. Bramalea City Centre The Outstanding Building of the Year Award (TOBY) SUSTAINABILITY Holt Renfrew Centre Earth Award 60 Bloor St. W. Greatest Energy Reduction Award, At Morguard, our focus on sustainability has resulted in Race to Reduce continual improvements across environmental, social and 77 Bloor St. W. Lowest Energy Use Award, governance indicators. To support property sustainability, Race to Reduce Morguard works collaboratively with property owners to 77 Bloor St. W. Greatest Energy Reduction Award, define goals and actions in a formal plan. Race to Reduce For 2015, Morguard’s sustainability initiatives resulted in a The Heathview Rental Development of the Year measurable reduction in energy, water and waste, since the Centre de la Cité The Outstanding Building of the baseline year of 2010. These results were achieved through Year Award (TOBY) the identification and delivery of sustainable projects that were Morguard Corporation Gold Award, right-sized for each property within the owned and managed Canada’s Safest Employers Canadian office and enclosed shopping centre portfolio.

In addition, Morguard works to achieve BOMA and LEED certifications and participates in Ontario’s Certified Rental TENANT SATISFACTION Building Program in order to remain competitive in local Morguard continually measures the effectiveness of real estate markets. These designations result in improved property programs designed to maintain high levels of tenant valuation and are attractive to tenants who are seeking satisfaction. In 2015, Morguard conducted an office tenant sustainable workplaces and living spaces. satisfaction survey through Altus Insite (a commercial real Visit Morguard.com for the full report. estate research firm). Overall, Morguard managed properties scored notably high service levels – outperforming the industry benchmark of market norms in every key area.

14 MORGUARD CORPORATION SPOTLIGHT Most recently, a major Morguard residential development, The Heathview in Toronto, Ontario, took top honours for the 2015 Rental Development of the Year, announced by the FRPO. The awards recognize the province’s top landlords and property managers for excellence in the rental housing industry.

TOP HONOURS Development of The Heathview was a long-term effort that involved considerable planning, as well as discussion with FOR A TOP-QUALITY members of the local community. The Heathview replaced two end-of-life residential buildings with a new Class A DEVELOPMENT LEED-designed project that has revitalized the community. The completed project is a 30-storey, twin-tower, multi-suite The strength of Morguard’s development and residential development located in Forest Hill, one of Toronto’s most sought-after neighbourhoods. The transit-oriented management teams continues to attract attention development is within steps of the St. Clair West subway – and win acclaim. station and the St. Clair streetcar line.

2015 ANNUAL REPORT 15

THE LONG-TERM GROWTH IN THE VALUE OF MORGUARD SHARES (AS AT DECEMBER 31)

$150

$133 $125

$115

$76 RESULTS FOR SHAREHOLDERS

The long-term growth in the value of Morguard shares $49 is an important goal for the Company’s management. $44 $39 During 2015, the Company’s stock price decreased from $33 $150 on January 1, 2015, to $133 at year-end, likely reflecting investor concerns about weakness in the Canadian $18 and U.S. economies. Management continues to build the Company with a sharp focus on the long-term health of the balance sheet. In fact, the long-term performance of our 06 07 08 09 10 11 12 13 14 15 stock price has been strong. Over the past 10 years the compound annual growth rate of Morguard’s stock is 16%. The long-term appreciation in our stock price is a validation of management’s strategy to build a strong, conservatively leveraged company.

Morguard has regularly made use of a normal course issuer bid to repurchase common shares. During 2015, Morguard Corporation purchased 368,051 common shares for a total of $54 million, representing an average price of $146 per common share.

Morguard believes that its common shares have been trading in price ranges that do not adequately reflect their value in relation to the Company’s current business and its future prospects. As a result, depending upon future price movements and other factors, management believes that the purchase and cancellation of common shares represent a prudent use of the Company’s financial resources.

In September 2015, Morguard renewed its normal course issuer bid for the purchase for cancellation of up to 602,752 common shares. Performance Court, Ottawa, ON

16 MORGUARD CORPORATION BALANCE SHEETS

IN THOUSANDS OF CANADIAN DOLLARS

AS AT DECEMBER 31, 2015 2014

ASSETS

Non-current assets Real estate properties $7,925,645 $7,453,226 Equity-accounted and other investments 329,320 147,635 Other assets 158,245 146,130 8,413,210 7,746,991 Current assets Mortgages and loans receivable 26,579 62,949 Amounts receivable 52,050 48,522 Prepaid expenses and other 16,789 12,074 Cash 93,504 123,148 188,922 246,693 $8,602,132 $7,993,684

LIABILITIES AND SHAREHOLDERS’ EQUITY

Non-current liabilities Mortgages payable $3,367,638 $3,016,549 Unsecured debentures 134,228 133,964 Convertible debentures 154,440 154,758 Morguard Residential REIT units 229,416 215,211 Deferred income tax liabilities 538,197 446,546 4,423,919 3,967,028

Current liabilities Mortgages payable 231,916 316,170 Construction financing payable 143,489 165,271 Loans payable 9,568 2,320 Accounts payable and accrued liabilities 175,840 179,381 Bank indebtedness 135,403 4,927 696,216 668,069 Total liabilities 5,120,135 4,635,097

EQUITY

Shareholders’ equity 2,697,724 2,498,605 Non-controlling interest 784,273 859,982 Total equity 3,481,997 3,358,587 $8,602,132 $7,993,684

2015 ANNUAL REPORT 17 STATEMENTS OF INCOME

IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT PER COMMON SHARE AMOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2015 2014

Revenue from real estate properties $808,595 $472,808 Property operating expenses Property operating costs 195,548 137,519 Utilities 54,053 34,671 Realty tax expense 123,095 59,425 Net operating income 435,899 241,193

OTHER REVENUE

Management and advisory fees 59,536 73,440 Interest and other income 7,819 14,970 Sales of product and land 7,609 5,108 74,964 93,518

EXPENSES

Interest 148,784 105,377 Property management and corporate 72,558 68,977 Cost of sales of product and land 5,130 3,541 Amortization of capital assets and other 8,276 5,375 234,748 183,270

OTHER INCOME (EXPENSE)

Fair value gain (loss), net (87,301) 24,277 Equity income from investments 6,258 52,921 Loss on business combination, net — (16,254) Other expense (12,822) (8,488) (93,865) 52,456 Income before income taxes 182,250 203,897

Provision for income taxes Current 14,005 20,690 Deferred 64,725 45,950 78,730 66,640 Net income for the year $103,520 $137,257

Net income attributable to: Common shareholders $80,542 $136,703 Non-controlling interest 22,978 554 $103,520 $137,257

Net income per common share attributable to: Common shareholders – basic and diluted $6.58 $10.92

18 MORGUARD CORPORATION

STATEMENTS OF COMPREHENSIVE INCOME

IN THOUSANDS OF CANADIAN DOLLARS

FOR THE YEARS ENDED DECEMBER 31, 2015 2014

Net income for the year $103,520 $137,257

OTHER COMPREHENSIVE INCOME

Items that may be reclassified subsequently to net income: Unrealized gain on investments in real estate funds 9,898 4,732 Unrealized foreign currency translation gain 150,928 59,231 Other (432) 11,812 160,394 75,775 Deferred income tax provision (4,330) (3,084) 156,064 72,691

Items that will not be reclassified subsequently to net income: Actuarial loss on defined benefit pension plans (5,698) (1,401) Deferred income tax recovery 1,494 349 (4,204) (1,052) Other comprehensive income 151,860 71,639 Total comprehensive income for the year $255,380 $208,896

Total comprehensive income attributable to: Common shareholders $230,893 $208,216 Non-controlling interest 24,487 680 $255,380 $208,896

STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

IN THOUSANDS OF CANADIAN DOLLARS

ACCUMULATED OTHER TOTAL NON- RETAINED COMPREHENSIVE SHARE SHAREHOLDERS’ CONTROLLING EARNINGS INCOME CAPITAL EQUITY INTEREST TOTAL

Shareholders’ equity, January 1, 2015 $2,265,779 $122,616 $110,210 $2,498,605 $859,982 $3,358,587 Changes during the period: Net income 80,542 — — 80,542 22,978 103,520 Other comprehensive income — 150,351 — 150,351 1,509 151,860 Dividends (7,305) — — (7,305) — (7,305) Distributions — — — — (33,000) (33,000) Contribution from non-controlling interest — — — — 17,354 17,354 Issuance of common shares — — 1,201 1,201 — 1,201 Repurchase of common shares (50,387) — (3,314) (53,701) — (53,701) Change in ownership of Morguard REIT 28,031 — — 28,031 (89,208) (61,177) Business combination — — — — 4,658 4,658 Shareholders’ equity, December 31, 2015 $2,316,660 $272,967 $108,097 $2,697,724 $784,273 $3,481,997

2015 ANNUAL REPORT 19

STATEMENTS OF CASH FLOWS

IN THOUSANDS OF CANADIAN DOLLARS

FOR THE YEARS ENDED DECEMBER 31, 2015 2014

OPERATING ACTIVITIES

Net income $103,520 $137,257 Add (deduct) items not affecting cash 138,046 (16,465) Distributions from equity-accounted investments 4,445 29,049 Land held for residential development and sale 713 45 Additions to tenant incentives and leasing commissions (7,434) (2,198) Net change in operating assets and liabilities (13,794) (5,694) Cash provided by operating activities 225,496 141,994

INVESTING ACTIVITIES

Additions to real estate properties and tenant improvements (177,921) (60,726) Additions to capital assets (7,174) (1,863) Proceeds from sale of real estate properties 20,751 15,634 Investment in properties under development (21,004) (43,731) Contributions to equity-accounted investments, net (120,514) (20,190) Investment in publicly traded securities (26,051) (15,611) Decrease (increase) in mortgages and loans receivable, net 34,313 (44,672) Proceeds from sale of publicly traded securities 310 71,781 Business combination (8,427) — Cash assumed on business combination 853 12,612 Cash used in investing activities (304,864) (86,766)

FINANCING ACTIVITIES

Proceeds from new mortgages 405,749 467,593 Financing costs on new mortgages (5,342) (7,100) Repayment of mortgages Repayments on maturity (230,704) (332,492) Repayments due to early extinguishments — (75,670) Principal instalment repayments (85,880) (46,251) Proceeds from (repayment of) bank indebtedness, net 123,564 (111,157) Proceeds from (repayment of) construction financing, net (21,782) 61,405 Proceeds from loans payable 8,122 — Dividends paid (7,277) (7,423) Contribution from non-controlling interest 15,762 — Distributions to non-controlling interests (33,000) (1,372) Payments from Morguard REIT, net — 30,000 Common shares repurchased for cancellation (53,701) (32,160) Investment in Morguard REIT (61,177) (8,362) Increase in restricted cash (10,527) (2,486) Cash provided by (used in) financing activities 43,807 (65,475)

Net decrease in cash during the year (35,561) (10,247) Net effect of foreign currency translation on cash balance 5,917 4,034 Cash, beginning of year 123,148 129,361 Cash, end of year $93,504 $123,148

20 MORGUARD CORPORATION SPOTLIGHT

PORTFOLIO SUMMARY

The real estate portfolio of Morguard Corporation is broadly diversified and includes high-quality residential, retail, office, industrial and hotel properties in Canada and the United States.

56 MULTI-SUITE RESIDENTIAL PROPERTIES

$ 69 8.1B OFFICE AND REAL ESTATE INDUSTRIAL PROPERTIES PROPERTIES 173 42 TOTAL RETAIL PROPERTIES PROPERTIES 6 HOTEL PROPERTIES

2015 ANNUAL REPORT 21 MULTI-SUITE RESIDENTIAL PORTFOLIO

Leaside Towers, Toronto, ON The Colonnade, Toronto, ON

CANADA

Ownership Interest Total Ownership Occupancy Property City Prov. Ownership (%) Suites Suites (%)

Mayfair Village South Edmonton AB MRC 100 237 237 98 Square 104 Edmonton AB MRG 100 277 277 98 Margaret Place Kitchener ON MRG 100 472 472 99 Aspen Grove I ON MRC 95 168 160 100 Aspen Grove II Mississauga ON MRC 95 168 160 100 Meadowvale Gardens Mississauga ON MRG 100 325 325 95 The Arista Mississauga ON MRG 100 458 458 100 The Elmwoods Mississauga ON MRG 100 321 321 99 The Forestwoods Mississauga ON MRG 89 300 267 96 The Maplewoods Mississauga ON MRG 87 300 261 97 The Valleywoods Mississauga ON MRG 91 373 339 99 Tomken Place Mississauga ON MRG 100 142 142 97 126 Sparks Ottawa ON MRC 100 36 36 84 Leaside Towers Toronto ON MRC 100 989 989 95 Rideau Towers I Toronto ON MRG 90 287 258 100 Rideau Towers II Toronto ON MRG 100 380 380 97 Rideau Towers III Toronto ON MRG 100 474 474 99 Rideau Towers IV Toronto ON MRG 100 400 400 97 Rouge Valley Residence Toronto ON MRG 100 396 396 98 The Bay Club Toronto ON MRC 100 293 293 98 The Heathview Toronto ON MRC 100 587 587 59 The Colonnade Toronto ON MRC 100 157 157 96 Condominium Suites Toronto ON MRC 100 4 4 100 SUBTOTAL 7,544 7,393 97

22 MORGUARD CORPORATION As at December 31, 2015

Village Crossing Apartment Homes, West Palm Beach, FL Barrett Walk Luxury Apartment Homes, Kennesaw, GA

U.S.

Ownership Interest Total Ownership Occupancy Property City State Ownership (%) Suites Suites (%)

Sunset & Gordon Los Angeles CA MRC 59 299 176 – Retreat at City Center Aurora CO MRG 100 225 225 94 Settlers’ Creek Fort Collins CO MRG 100 229 229 94 The Retreat at Spring Park Garland TX MRG 100 188 188 97 Grand Venetian at Las Colinas Irving TX MRG 100 514 514 93 Verandah at Valley Ranch Irving TX MRG 100 319 319 94 Garden Lane Gretna LA MRG 100 261 261 92 Colonial Manor Apartment Homes Harahan LA MRG 100 48 48 94 Steeplechase Apartment Homes Lafayette LA MRG 100 192 192 88 Magnolia Place Apartment Homes New Iberia LA MRG 100 148 148 89 The Georgian Apartments New Orleans LA MRG 100 135 135 93 Villages of Williamsburg Shreveport LA MRG 100 194 194 89 Greenbrier Estates Slidell LA MRG 100 144 144 92 Alta at K Station Chicago IL MRC 100 848 848 92 Bel Air Apartment Homes Mobile AL MRG 100 202 202 90 Hampton Park Mobile AL MRG 100 300 300 91 Pine Bend Mobile AL MRG 100 152 152 91 The Estates at Lafayette Square Mobile AL MRG 100 675 675 89 Briarhill Apartments Atlanta GA MRG 100 292 292 90 The Savoy Luxury Apartments Atlanta GA MRG 100 232 232 94 Barrett Walk Luxury Apartment Homes Kennesaw GA MRG 100 290 290 97 210 Watermark Bradenton FL MRG 100 216 216 97 Blue Isle Coconut Creek FL MRG 100 340 340 95 2940 Salano at Monterra Cooper City FL MRG 51 252 129 97 Emerald Lake Lake Worth FL MRC 100 337 337 96 Governors Gate I Pensacola FL MRG 100 240 240 93 Governors Gate II Pensacola FL MRG 100 204 204 97 Jamestown Estates Pensacola FL MRG 100 177 177 97 Woodcliff Apartment Homes Pensacola FL MRG 100 184 184 94 Woodbine Apartment Homes Riviera Beach FL MRG 100 408 408 94 Mallory Square Tampa FL MRG 100 383 383 91 Village Crossing Apartment Homes West Palm Beach FL MRG 100 189 189 92 The Lodge at Crossroads Cary NC MRG 100 432 432 95 Perry Point Raleigh NC MRG 100 432 432 91 SUBTOTAL 9,681 9,435 93

TOTAL MULTI-SUITE RESIDENTIAL 17,225 16,828 95

2015 ANNUAL REPORT 23 RETAIL PORTFOLIO

Centerpoint Mall, Toronto, ON Prairie Mall, Grande Prairie, AB

CANADA

Ownership Total Ownership Occu- Owner- Interest Area Area pancy Property City Prov. ship (%) (SF) (SF) (%) Top Tenants

Burquitlam Plaza Coquitlam BC MRT 100 67,500 67,500 89 , Dollarama, CIBC Pine Centre Mall Prince George BC MRT 100 476,000 476,000 100 Sears, Sport Chek, Shoppers Drug Mart Shelbourne Plaza Victoria BC MRT 100 57,000 57,000 100 Fairway Market, TD Canada Trust, Scotiabank Airdrie RONA Centre Airdrie AB MRT 100 44,000 44,000 100 RONA Airdrie Co-op Centre Airdrie AB MRT 100 65,000 65,000 100 Co-op Grocery Store, TD Canada Trust Heritage Towne Centre Calgary AB MRT 100 131,000 131,000 100 Home Outfitters, Dollarama Prairie Mall Grande Prairie AB MRC/MRT 100 297,000 297,000 98 Mark’s Work Wearhouse, Shoppers Drug Mart Parkland Mall Red Deer AB MRT 100 429,500 429,500 89 Walmart, GoodLife, Sport Chek, Dollarama The Centre SK MRT 100 489,500 489,500 99 Sport Chek, Shoppers Drug Mart Shoppers Mall Brandon MB MRT 100 367,000 367,000 98 Capitol Theatre, GoodLife, Sport Chek Charleswood Centre Winnipeg MB MRT 100 116,000 116,000 100 , Shoppers Drug Mart, Dollarama Southdale Centre Winnipeg MB MRT 100 175,500 175,500 98 Walmart, Dollarama, Rexall, Bank of Montreal Aurora Centre Aurora ON MRT 100 288,500 288,500 99 Canadian Tire, , Cineplex, GoodLife Bramalea City Centre ON MRC 21 1,407,000 295,500 94 Hudson’s Bay, Forever 21, Sport Chek Cambridge ON MRT 100 726,500 726,500 97 Sears, Hudson’s Bay, Galaxy, H&M Market Square Kanata ON MRT 100 58,000 58,000 95 Farm Boy, LCBO, TD Canada Trust Wonderland Corners London ON MRT 100 47,500 47,500 91 Swiss Chalet Kingsbury Centre Mississauga ON MRT 100 70,000 70,000 95 Longo’s, Shoppers Drug Mart Hampton Park Plaza Ottawa ON MRT 100 102,000 102,000 91 , Rexall, Swiss Chalet Home Base Ottawa ON MRT 100 10,000 10,000 100 Royal Bank St. Laurent Ottawa ON MRT 100 853,000 853,000 99 Hudson’s Bay, Sears, Toys “R” Us 100 Cavell Avenue1 Toronto ON MRC 100 5,500 5,500 84 Centerpoint Mall Toronto ON MRC 100 606,000 606,000 98 Hudson’s Bay, No Frills, Canadian Tire Toronto ON MRC 100 382,500 382,500 87 Food Basics, Shoppers Drug Mart, Fit4Less The Colonnade Toronto ON MRC 100 97,000 97,000 100 Prada, Chanel, Cartier Yonge & McGill1 Toronto ON MRC 100 7,500 7,500 100 Guildwood Village Toronto ON MRC 100 52,500 52,500 100 Valu-mart Woodbridge Square Vaughan ON MRT 50 113,000 56,500 99 Nations Fresh Foods, Scotiabank SUBTOTAL 7,541,500 6,373,500 97 2

1 No major tenant listed due to GLA. 2 Excludes components of properties not available for occupancy due to redevelopment or remerchandising.

24 MORGUARD CORPORATION As at December 31, 2015

Westward Shopping Center, West Palm Beach, FL Boynton Town Center, Boynton Beach, FL

U.S.

Ownership Total Ownership Occu- Owner- Interest Area Area pancy Property City State ship (%) (SF) (SF) (%) Top Tenants

Westgate Shopping Center Alexandria LA MRC 100 168,000 168,000 97 Big Lots, AutoZone, Rite Aid, McDonald’s Gonzales Plaza Gonzales LA MRC 100 73,000 73,000 95 Big Lots, Dollar Tree, Aaron’s Rent Colonial Shopping Center Harahan LA MRC 100 44,000 44,000 43 Dollar General, Anytime Fitness Southland Mall Houma LA MRC 100 445,000 445,000 87 Sears, JC Penney, Dillard’s, Victoria’s Secret Westland Shopping Center Kenner LA MRC 100 109,000 109,000 87 Herzing University, Family Dollar Airline Park Shopping Center Matairie LA MRC 100 54,000 54,000 100 Dollar Tree, Rite Aid, McDonald’s North Shore Square Slidell LA MRC 100 429,500 429,500 67 JC Penney, Burlington Coat Factory, Dillards Alta at K Station Chicago IL MRC 100 13,000 13,000 100 Blue Agave Restaurant Boynton Town Center Boynton Beach FL MRC 100 209,500 209,500 95 Best Buy, Shoe Carnival, Michael’s, Total Wine Weeki Wachee Village Brooksville FL MRC 100 82,500 82,500 90 Winn Dixie Rainbow Square Dunnellon FL MRC 100 116,000 116,000 62 Beall’s Outlet, Tractor Supply Florida Shores Plaza Edgewater FL MRC 100 79,500 79,500 94 Winn Dixie, Beall’s Outlet Lantana Plaza Lake Worth FL MRC 100 245,500 245,500 100 Home Depot, Publix, Office Depot, Dollar Tree Town & Country Palatka FL MRC 100 196,500 196,500 100 Publix, K-Mart, Beall’s Outlet, Dollar Tree Westward Shopping Center West Palm Beach FL MRC 100 225,000 225,000 92 Burlington Coat Factory, Office Depot, Aldi SUBTOTAL 2,490,000 2,490,000 87

TOTAL RETAIL 10,031,500 8,863,500 94

2015 ANNUAL REPORT 25 OFFICE AND INDUSTRIAL PORTFOLIO

131 Queen Street, Ottawa, ON 201 City Centre Drive, Mississauga, ON

OFFICE

Ownership Total Ownership Occu- Prov./ Owner- Interest Area Area pancy Property City State ship (%) (SF) (SF) (%) Top Tenants

111 Dunsmuir BC MRT 100 222,000 222,000 100 AMEC Americas, Stantec Consulting Chancery Place Vancouver BC MRT 100 142,500 142,500 100 Province of British Columbia Seymour Place Victoria BC MRT 100 235,500 235,500 100 Province of British Columbia 505 3rd Street SW Calgary AB MRT 50 142,000 71,000 92 Horizon Logistics, Strike Energy, Step Energy 7315 8th Street NE Calgary AB MRT 100 19,500 19,500 100 Genesis Land Development Alberta Treasury Calgary AB MRT 100 41,500 41,500 100 Alberta Treasury Branches Centre 810 Calgary AB MRT 100 77,500 77,500 100 Tektelic Communications Inc., The MI Group Citadel West Calgary AB MRT 100 78,500 78,500 100 CH2M Hill Canada Deerport Centre Calgary AB MRT 100 47,500 47,500 100 Colleaux Engineering, Aerotek, State Farm Duncan Building Calgary AB MRT 100 81,000 81,000 100 RCMP Penn West Plaza Calgary AB MRT 100 636,500 636,500 98 Penn West Petroleum Petroleum Plaza Edmonton AB MRT 50 304,000 152,000 100 Alberta Infrastructure Scotia Place Edmonton AB MRT 20 567,500 113,500 89 City of Edmonton, APEGA, Grant Thornton Keewatin Square Regina SK MRC 100 37,500 37,500 100 Regina Health Region 400 St. Mary Winnipeg MB MRC 20 134,500 27,000 72 Taylor McCaffrey LLP, Public Works 444 St. Mary Winnipeg MB MRC 20 247,500 49,500 92 Great West Life Quinte Courthouse Belleville ON MRC 50 173,000 86,500 100 Superior Court of Justice, Legal Aid Ontario Bramalea City Centre (Office) Brampton ON MRC 21 78,570 16,500 53 Hanson International, Municipality of Peel 201 City Centre Drive Mississauga ON MRC 50 215,000 107,500 76 City of Mississauga, Merit Loyalty 2920 Matheson East Mississauga ON MRC 50 233,000 116,500 100 Bayer Inc. 33 City Centre Drive Mississauga ON MRC 50 213,000 106,500 72 Accenture, Easyhome, Royal Bank, Aviva 55 City Centre Drive Mississauga ON MRC 50 175,000 87,500 97 Morguard, Sunguard, Bier Markt 77 City Centre Drive Mississauga ON MRC 50 194,000 97,000 91 Mississauga Board of Trade, Pallett Valo LLP 131 Queen Street Ottawa ON MRC 100 329,500 329,500 100 Public Works 301 Laurier Avenue Ottawa ON MRT 50 26,000 13,000 100 Unifor 350 Sparks Street Ottawa ON MRC 100 173,000 173,000 74 Morguard, Morneau Shepell 525 Coventry Ottawa ON MRT 100 42,500 42,500 100 TD Waterhouse CBC Ottawa Broadcast Ottawa ON MRC 100 251,500 251,500 100 CBC Centre Green Valley Office Park Ottawa ON MRT 100 123,000 123,000 96 Canadian Centre for Ethics in Sports Heritage Place Ottawa ON MRT 50 218,000 109,000 93 Public Works Performance Court Ottawa ON MRC 50 367,000 183,500 85 Shopify, Canada Council for the Arts, KPMG St. Laurent Business Centre Ottawa ON MRT 100 88,000 88,000 68 Intact Insurance Company, The Pythian Group Standard Life Ottawa ON MRT 50 381,000 190,500 99 Public Works Time Square Ottawa ON MRT 100 111,000 111,000 92 Public Works, Le Droit, Empire Grill

26 MORGUARD CORPORATION As at December 31, 2015

Heritage Place, Ottawa, ON 77 City Centre Drive, Mississauga, ON

Ownership Total Ownership Occu- Prov./ Owner- Interest Area Area pancy Property City State ship (%) (SF) (SF) (%) Top Tenants

200 Yorkland Toronto ON MRT 100 149,500 149,500 91 Ferring, Investors Group, AG Simpson 77 Bloor Street West Toronto ON MRT 50 393,000 196,500 98 TD Canada Trust, Harry Rosen, Realstar 945 Wilson Avenue Toronto ON MRC 32 228,125 73,000 100 Sevencontinents Corporation Creekside Corporate Centre Toronto ON MRC 100 301,500 301,500 100 TD Financial Group Leaside Corporate Centre Toronto ON MRC 95 94,211 89,500 100 OMVIC, Mount Pleasant Group Centre de la Cité Montreal QC MRT 100 128,500 128,500 90 On-Line Executive Centre, Sun Life Assurance Place Innovation Saint-Laurent QC MRC/MRT 100 894,000 894,000 100 Bombardier, AJW Technique, Amdocs Saint John City Hall Saint John NB MRC 50 157,000 78,500 52 City of Saint John Palm Aire1 Pompano Beach FL MRC 100 9,000 9,000 100 TOTAL OFFICE 8,761,906 6,185,000 95

INDUSTRIAL Ownership Total Ownership Occu- Owner- Interest Area Area pancy Property City Prov. ship (%) (SF) (SF) (%) Top Tenants

Maple Leaf Foods Puslinch ON MRC 59 282,203 166,500 100 Maple Leaf Foods Distribution Centre 1875 Leslie Toronto ON MRT 100 52,000 52,000 93 Body and Soul Fitness, Goose & Firkin 2041-2151 McCowan Toronto ON MRT 100 196,500 196,500 94 Canadian Standard Floor 279 Yorkland Toronto ON MRT 100 18,000 18,000 100 Loblaw Properties Ltd. 285 Yorkland Toronto ON MRT 100 25,000 25,000 100 Mitchell Partnership 825 Des Érables Salaberry-de- QC MRT 50 485,000 242,500 100 Diageo Valleyfield Industrial Portfolio Various Various MRC 100 525,500 525,500 88 Acklands Grainger, Carquest TOTAL INDUSTRIAL 1,584,203 1,226,000 93

1 No major tenant listed due to GLA.

2015 ANNUAL REPORT 27 HOTEL PORTFOLIO As at December 31, 2015

Courtyard Marriott, Mississauga, ON

Residence Inn Marriott, Markham, ON Courtyard Marriott Markham, Markham , ON

CANADA Ownership Interest Total Ownership Property City Province Ownership (%) Rooms Rooms

Courtyard Marriott Markham Markham ON MRC 100 144 144 Residence Inn Marriott Markham ON MRC 100 100 100 Courtyard Marriott Mississauga Mississauga ON MRC 100 144 144 Residence Inn Marriott Mississauga ON MRC 100 100 100 Toronto Airport Marriott Toronto ON MRC 95 424 403 Courtyard Marriott Vaughan Vaughan ON MRC 100 144 144 TOTAL HOTEL 1,056 1,035 Design: www.jumpcommunicationsinc.comDesign:

28 MORGUARD CORPORATION CORPORATE INFORMATION

BOARD OF DIRECTORS

3 2, 3 4 Chris J. Cahill Timothy J. Murphy K. Rai Sahi 1 Audit Committee Corporate Director Partner, McMillan LLP Chairman and 2 Human Resources, Compensation Chief Executive Officer and Pension Committee 2 1, 3 Andrew Edmundson Michael S. Robb 3 Corporate Governance and Corporate Director Corporate Director L. Peter Sharpe 1, 3, 4 Nominating Committee Corporate Director 4 Investment Committee David A. King 2, 4 Bruce K. Robertson 1, 2, 4 Vice Chairman Vice President, Investments Morguard Corporation The Woodbridge Company Corporate Director Limited

EXECUTIVE DIRECTORY

K. Rai Sahi Pamela McLean Gordon Vollmer Sanjay Ratejay Chairman and Chief Financial Officer Executive Vice President, Vice President, Chief Executive Officer Morguard REIT Office and Industrial Operations (Canada) Senior Vice President, Morguard Investments Limited Morguard North American Paul Miatello Finance, and Residential REIT Chief Financial Officer Chief Financial Officer Margaret Knowles Morguard Investments Limited Senior Vice President, John Talano Beverley G. Flynn Development Vice President, Vice President, John Levac Morguard Investments Limited Operations (U.S.), General Counsel Vice President, Morguard North American and Secretary Asset Management, W. Scott MacDonald Residential REIT Morguard REIT Executive Vice President, Robert Wright Retail Robert McFarlane Vice President, George Schott Morguard Investments Limited Vice President, Internal Audit Chief Financial Officer, President and Morguard North American Chief Operating Officer, Brian Athey Residential REIT Morguard Investments Vice President, Limited Development

INVESTOR INFORMATION

Registered Office Auditors Investor Relations Beverley G. Flynn 55 City Centre Drive Ernst & Young LLP Visit our website at Vice President, Suite 1000 www.morguard.com or view General Counsel Mississauga, ON Principal Bankers our filings on SEDAR at and Secretary L5B 1M3 Royal Bank of Canada www.sedar.com. T 905-281-3800 Toronto-Dominion Bank T 905-281-3800 [email protected] For additional [email protected] Share Listing information, please Transfer Agent Toronto Stock Exchange contact: Annual Shareholder Meeting Computershare Trust Paul Miatello Wednesday, May 11, 2016 Company of Canada Symbol Chief Financial Officer at 10:30 a.m. 1-800-564-6253 MRC Rattlesnake Point Golf Club www.computershare.com 5407 Regional Road 25 Milton, ON L9T 2X5

The selected annual financial information in the 2015 Annual Report highlights certain key metrics for the Company. As a result, this report should be read in Design: www.jumpcommunicationsinc.comDesign: conjunction with Morguard’s Consolidated Financial Statements for the year ended December 31, 2015, related Management’s Discussion and Analysis and the Annual Information Form.These documents are available on the Company’s website at www.morguard.com. All continuous disclosure documents required by securities regulators are also filed on the System for Electronic Document Analysis and Retrieval (SEDAR) and can be accessed electronically at www.sedar.com. 55 City Centre Drive Suite 1000 Mississauga, ON L5B 1M3 905-281-3800

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