Firm Capital Mortgage Investment Corporation Announces

TORONTO, ONTARIO--(Marketwire - Nov. 1, 2011) - Firm Capital Mortgage Investment Corporation (the "Corporation") (TSX:FC), today released its financial statements for the third quarter ended September 30, 2011.

EARNINGS

Comprehensive income and profit ("Profit") for the nine months ended September 30, 2011 totaled $10,816,059 compared to Operations profit of $10,478,496 for the nine months ended September 30, 2010. Profit for the nine months ended September 30, 2011 exceeded dividends by $515,738 or $0.035 per share. Comprehensive income and profit ("Profit") for the quarter ended September 30, 2011 totaled $3,807,725 compared to Operations profit of $3,876,688 for the quarter ended September 30, 2010. Profit for the quarter ended September 30, 2011 exceeded dividends by $318,693 or $0.021 per share. The third quarter Profit represents an annualized return on average Shareholders' equity of 10.54% per annum. This return on Shareholders' equity equates to 954 basis points per annum over the average one year Government of Canada Treasury bill yield for the quarter and is well in excess of the Corporation's target yield objective of 400 basis points per annum over the one year Treasury bill yield.

DIVIDEND OVERVIEW:

Monthly dividends for the third quarter totaled $0.234 per share ($0.078 per share per month).

MORTGAGE PORTFOLIO HIGHLIGHTS:

Details on the Corporation's mortgage portfolio as at September 30, 2011 are as follows:

The gross portfolio totaled $275,288,812 ($272,308,812 net of impairment provision of $2,980,000).
Conventional first mortgages, being those mortgages with loan to values less than 75%, comprise 70.1% of our total portfolio, and total conventional mortgages with loan to values less than 75% comprise 83.5% of our total portfolio.
Non-conventional mortgages and related debt investments total 16.5% of the portfolio.
Approximately 54% of the portfolio matures within 12 months. This results in a continuously revolving portfolio, allowing management to assess market conditions.
The average face interest rate on the portfolio is 9.14% per annum.
Regionally, the portfolio is diversified approximately as follows: Ontario 82.2%, Alberta 10.8%, British Columbia 6.3%, with the balance (0.7%) being in other provinces.
Mortgage portfolio breakdown by investment is as follows:

Mortgage Portfolio Breakdown

Amount	Number of Mortgages		Total Amount
$0-$1,000,000	53	$	27,575,817
$1,000,001-$2,000,000	22		34,850,584
$2,000,001-$3,000,000	12		29,527,028
$3,000,001-$4,000,000	6		20,592,746
$4,000,001-$5,000,000	10		44,383,946
$5,000,001 +	16		118,358,691
Total	119	$	275,288,812

IMPAIRMENT PROVISION UPDATE:

Management has always taken a proactive approach to impairment provisions. This is a prudent method of protecting our Shareholders' equity. Impairment provisions remain unchanged at $2,980,000, representing 1.08% of the gross loan portfolio as at September 30, 2011.

DIVIDEND AND SHARE PURCHASE PLAN:

The Corporation has in place a Dividend Reinvestment Plan (DRIP) and Share Purchase Plan that is available to its Shareholders. The plans allows participants to have their monthly cash dividends reinvested in additional Corporation units and grants participants the right to purchase, without commission, additional units, up to a maximum of $12,000 per annum.

ABOUT THE CORPORATION

The Corporation, through its mortgage banker, Firm Capital Corporation, is a non-bank lender providing residential and commercial short-term bridge and conventional real estate financing, including construction, mezzanine and equity investments. The Corporation's investment objective is the preservation of Shareholders' equity, while providing Shareholders with a stable stream of monthly dividends from investments. The Corporation achieves its investment objectives through investments in selected niche markets that are under-serviced by large lending institutions. Lending activities to date continue to develop a diversified mortgage portfolio, producing a stable return to Shareholders. Full reports of the financial results of the Corporation for the year are outlined in the audited financial statements and the related management discussion and analysis of Firm Capital, available on the SEDAR website at www.sedar.com. In addition, supplemental information is available on Firm Capital's website at www.firmcapital.com.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of applicable securities laws including, among others, statements concerning our objectives, our strategies to achieve those objectives, our performance, our mortgage portfolio and our dividends, as well as statements with respect to management's beliefs, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook", "objective", "may", "will", "expect", "intent", "estimate", "anticipate", "believe", "should", "plans" or "continue" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.

These statements are not guarantees of future performance and are based on our estimates and assumptions that are subject to risks and uncertainties, including those described in our Annual Information Form under "Risk Factors" (a copy of which can be obtained at www.sedar.com), which could cause our actual results and performance to differ materially from the forward-looking statements contained in this circular. Those risks and uncertainties include, among others, risks associated with mortgage lending, dependence on the Corporation's mic manager and mortgage banker, competition for mortgage lending, real estate values, interest rate fluctuations, environmental matters, Unitholder liability and the introduction of new tax rules. Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include, among others, that the Corporation is able to invest in mortgages at rates consistent with rates historically achieved; adequate mortgage investment opportunities are presented to the Corporation; and adequate bank indebtedness and bank loans are available to the Corporation. Although the forward-looking information continued in this new release is based upon what management believes are reasonable assumptions, there can be no assurance that actual results and performance will be consistent with these forward-looking statements.

All forward-looking statements in this news release are qualified by these cautionary statements. Except as required by applicable law, the Corporation undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

NOTICE UNDER NATIONAL INSTRUMENT 51-102

National Instrument 51-102: Continuous Disclosure Requirements requires that these interim financial statements be accompanied by this notice which indicates that these financial statements have not been reviewed by the auditors of Firm Capital Mortgage Investment Corporation.

Unaudited Interim Condensed Financial Statements of

FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION

For the Three and Nine Months Ended September 30, 2011 and 2010

(Unaudited)

FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION
Unaudited Interim Condensed Balance Sheets

		Sept. 30, 2011 (unaudited)		Dec. 31, 2010 (unaudited)			Jan. 1, 2010 (unaudited)

Assets

Cash		-		-		$	1,444,339
Amounts receivable and prepaid expenses (note 5)	$	3,793,225	$	2,371,563			1,706,383
Mortgage investments (note 6)		272,308,812		202,330,929			167,128,297
	$	276,102,037	$	204,702,492		$	170,279,019

Liabilities and Equity

Bank indebtedness (note 7)	$	39,344,291	$	5,005,825			-
Accounts payable and accrued liabilities		1,947,657		1,482,580		$	410,064
Unearned income		587,388		372,514			202,481
Shareholder dividend and unitholder distribution payable		1,163,396		2,127,845			2,543,120
Loans payable (note 8)		15,718,403		4,289,249			10,714,637
Convertible debentures (note 9)		72,534,817		53,628,803			23,681,244
Conversion option of convertible debentures (note 4(e)(ii))		-		-			222,182
Total liabilities excluding net assets attributable to unitholders		131,295,952		66,906,816			37,773,728

Net assets attributable to unitholders (note 10)		-		-			132,505,291

Shareholders' / Unitholders' equity		144,612,173		138,117,502			-
Retained earnings / (deficit)		193,912		(321,826	)		-
Total equity		144,806,085		137,795,676			-
Commitments (note 6)
Contingent liabilities (note 17)

	$	276,102,037	$	204,702,492		$	170,279,019

See accompanying notes to unaudited interim condensed financial statements.


FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION
Unaudited Interim Condensed Statements of Comprehensive Income

			Three Months Ended				Nine Months Ended
			Sept. 30/11 (unaudited)		Sept. 30/10 (unaudited)		Sept. 30/11 (unaudited)		Sept. 30/10 (unaudited)

Interest and fees earned (notes 3 (b) and 15)			$	5,549,965	$	4,790,238	$	15,065,851	$	12,839,797
Less interest expense (note 16)				1,512,029		683,135		3,697,121		1,788,601

Net interest and fee income				4,037,936		4,107,103		11,368,730		11,051,196

General and administrative expenses				230,211		230,415		552,671		572,700
Impairment loss on mortgages (note 6)				-		-		-		-
				230,211		230,415		552,671		572,700

Operations profit for the period			$	3,807,725	$	3,876,688	$	10,816,059	$	10,478,496

Finance costs

	Change in fair value of the conversion option of convertible debentures (note 4(e)(ii))			-		-		-		(321,826
				-		-		-		(321,826	)
	Distributions to unitholders (note 10)			-		-		-		(5,731,903	)
				-		-		-		(6,053,729	)
Comprehensive income and profit for the
period, and change in net assets attributable
to unitholders for the period, respectively			$	3,807,725	$	3,876,688	$	10,816,059	$	4,424,767

Profit per share (note 12)
		Basic	$	0.257		N/A	$	0.739		N/A
		Diluted	$	0.252		N/A	$	0.731		N/A

See accompanying notes to unaudited interim condensed financial statements.

FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION
Unaudited Interim Condensed Statements of Changes in Equity

	Sept. 30, 2011 (Unaudited)		Dec 31, 2010 (Unaudited)		Sept. 30, 2010 (Unaudited)
Shareholders' / Unitholders' Equity

Shares / Units (note 11):

Balance, beginning of period	$	137,343,502		-	$	132,275,299

Reclassification of trust units from liability to equity (note 10)		-	$	132,505,299		-

Proceeds from issuance of shares / units		549,599		4,818,203		3,343,882

Conversion of debentures to shares		5,798,000		20,000		20,000

Balance, end of period	$	143,691,101	$	137,343,502	$	135,639,181

Equity component of convertible debenture (note 9):

Balance, beginning of period	$	774,000		-		-

Conversion of debentures to shares		(128,928)		-		-

Reclassification of trust units from liability to equity (note 10)		-	$	544,000	$	544,000

Equity component of debenture issued during the period		276,000		230,000		230,000

Balance, end of period	$	921,072	$	774,000	$	774,000

Total Shareholders' / Unitholders' equity	$	144,612,173	$	138,117,502	$	136,413,181

Retained earnings / deficit

Retained earnings, beginning of period	$	(321,826)		-		-

Dividends / distributions to shareholders / unitholders (note 13)		(10,300,321)		($8,503,941)		($4,136,591)

Comprehensive income and profit for the period		10,816,059		8,182,115		4,424,767

Retained earnings / (deficit), end of period	$	193,912	$	(321,826)	$	288,176

Shares / units issued and outstanding (note 11)		14,915,341		14,377,333		14,231,004


See accompanying notes to unaudited interim condensed financial statements.

FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION
Unaudited Interim Condensed Statements of Cash Flows

				Three Months Ended		Nine Months Ended
				Sept. 30/11	Sept. 30/10	Sept. 30/11	Sept. 30/10
				(unaudited)	(unaudited)	(unaudited)	(unaudited)
Cash provided by (used in):

Operating activities:
	Profit for the period			$3,807,725	$3,876,688	$10,816,059	$4,424,767
	Adjustments for:
		Distribution to unitholders		-	-	-	5,731,903
		Change in fair value of conversion option for
			Convertible debentures	-	-	-	321,826
		Implicit interest rate in excess of
			Coupon rate – convertible debentures	21,531	13,729	66,253	40,558
		Deferred finance cost amortization
			– convertible debentures	115,632	43,099	307,899	127,890
	Net changes in non-cash items:
		Increase in amounts receivable and
			prepaid expenses	(596,769)	(343,092)	(1,421,662)	(331,134)
		Increase in accounts payable
			and accrued liabilities	1,166,597	379,072	465,078	300,486
		Increase in unearned income		96,092	68,421	214,874	104,871
				4,610,808	4,037,917	10,448,501	10,721,167

Financing activities:
	Proceeds from issuance of shares			181,462	590,613	549,699	3,343,883
	Proceeds from convertible debenture issued			25,738,000	-	25,738,000	-
	Debenture offering costs			(1,261,167)	-	(1,261,167)	-
	Increase in bank indebtedness			1,123,113	13,694,832	34,338,466	26,618,488
	Increase (decrease) in loans payable (net)			11,865,974	(870,730)	11,429,154	(4,036,983)
	Increase (decrease) in dividend and distributions payable			18,417	4,614	(964,449)	(1,433,102)
	Dividends to shareholders paid during the period			(3,489,032)	(3,325,962)	(10,300,321)	(4,136,592)
	Distribution to unitholders			-	-	-	(5,731,903)
Net cash flow from financing activities				34,176,767	10,093,367	59,529,382	14,623,791

Investing activities:
	Funding of mortgage investments			(95,129,712)	(40,981,397)	(186,602,507)	(113,521,680)
	Discharge of mortgage investments			56,342,137	26,850,113	116,624,624	88,176,722
Net cash flow used in investing activities				(38,787,575)	(14,131,284)	(69,977,883)	(25,344,958)

Increase in cash, being cash, beginning and end of period				$-	$-	$-	$-

Cash flows from operating activities include:

	Interest received			$4,541,590	$3,840,328	$12,715,223	$10,992,098
	Interest paid (note 16)			$447,418	$265,927	$2,488,066	$1,281,329

See accompanying notes to unaudited interim condensed financial statements.

FIRM CAPITAL MORTGAGE INVESTMENT CORPORATION

Notes to unaudited interim condensed Financial Statements

Three and nine months ended September 30, 2011 and 2010

Firm Capital Mortgage Investment Corporation (the "Corporation"), through its mortgage banker, Firm Capital Corporation, is a non-bank lender providing residential and commercial short-term bridge and conventional real estate financing, including construction, mezzanine and equity investments. The shares of the Corporation are listed on the Toronto Stock Exchange under the symbol "FC".

1. Organization of Corporation:

On November 30, 2010, Firm Capital Mortgage Investment Trust (the "Trust") entered into a plan of arrangement ("Reorganization"), whereby the Trust was converted from an income trust structure into the public corporation, Firm Capital Mortgage Investment Corporation, effective January 1, 2011. The Corporation was incorporated pursuant to the laws of the Province of Ontario on October 22, 2010 for the purposes of participating in the Reorganization.

Pursuant to the Reorganization, units of the Trust ("Units" or "Trust Units") were exchanged on a one-for-one basis for common shares of the Corporation. Holders of Units therefore became the sole shareholders of the Corporation effective January 1, 2011.

As part of the Reorganization, the Trust was wound up and its assets were distributed to the Corporation. The Reorganization was treated as a change in business form rather than a change in control, and therefore, has been accounted for as a continuity of interest. The carrying amounts of assets, liabilities, and unitholders' equity in the financial statements of the Trust immediately prior to the Reorganization were the same as the carrying values of the Corporation immediately following the Reorganization. References to common shares, shareholders and dividends of the Corporation were formerly referred to as units, unitholders, and distributions under the Trust. Comparative amounts in these and future financial statements during 2011 are those of the Trust.

The Corporation's mortgage banker is Firm Capital Corporation and the Corporation's manager is FC Treasury Management Inc.

2. Basis of presentation:

(a) Statement of compliance:

These condensed interim financial statements have been prepared in accordance with International Accounting Standards ("IAS") 34, Interim Financial Reporting and using the accounting policies described herein. The three months ended March 31, 2011 interim financial statements were the Corporation's first International Financial Reporting Standards ("IFRS") condensed financial statements for part of the period covered by the first IFRS annual financial statements and IFRS 1 First-time Adoptions of International Financial Reporting Standards ("IFRS 1"). The unaudited interim condensed financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the notes to the Corporation's audited financial statements for the year ended December 31, 2010.

An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Corporation is provided in note 4. This note includes reconciliations of equity and total comprehensive income for comparative periods and of equity at the date of transition, being January 1, 2010, from reporting under Canadian generally accepted accounting principles ("Canadian GAAP" or "previous GAAP") to those reported for those periods and at the date of transition under IFRS.

These unaudited interim condensed financial statements were approved by the Board of Directors on November 1, 2011.

(b) Basis of measurement:

The unaudited interim condensed financial statements have been prepared on the historical cost basis, except for financial instruments classified as fair value through profit or loss, which are measured at fair value.

These unaudited interim condensed financial statements are presented in Canadian dollars, which is the Corporation's functional currency.

(d) Use of estimates and judgements:

The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Actual amounts may differ from these estimates.

Significant judgement made by the Corporation relates to the classification of trust units between equity and liability (see note 10).

The most significant estimates that the Corporation is required to make relate to the impairment of the mortgage investments (notes 3(a) and 6). These estimates may include assumptions regarding local real estate market conditions, interest rates and the availability of credit, cost and terms of financing, the impact of present or future legislation or regulation, prior encumbrances and other factors affecting the mortgage and underlying security of the mortgage investments.

These assumptions are limited by the availability of reliable comparable data, economic uncertainty, ongoing geopolitical concerns and the uncertainty of predictions concerning future events. Illiquid credit markets and volatile equity markets have combined to increase the uncertainty inherent in such estimates and assumptions. Accordingly, by their nature, estimates of impairment are subjective and do not necessarily result in precise determinations. Should the underlying assumptions change, the estimated fair value could vary by a material amount.

3. Summary of significant accounting policies:

The Corporation's accounting policies and its standards of financial disclosure set out below are in accordance with IFRS and have been applied consistently to all periods presented in these consolidated interim condensed financial statements and in preparing the opening IFRS balance sheet as at January 1, 2010 for the purposes of the transition to IFRS.

(a) Mortgage investments:

Mortgage investments are classified as loans and receivable investments. Such investments are recognized initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition the mortgage loans are measured at amortized cost using the effective interest method, less any impairment losses.

The mortgage investments are assessed at each reporting date to determine whether there is objective evidence of impairment. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of an asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

An impairment loss in respect of the mortgage investments measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Losses are recognized in the statement of comprehensive income and reflected in an allowance account against the mortgage investments. Interest on the impaired asset continues to be recognized through the unwinding of the discount if it is considered collectable. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(b) Revenue recognition:

	(i) Interest and fee income:

	Interest income is accounted for on the accrual basis, and is recorded net of the Corporation Manager interest spread described in note 15. Commitment fees received are amortized over the expected term of the mortgage.

	(ii) Special investments:

	Special profit participations earned by the Corporation on special investments are recognized and included in interest and fees earned only once the receipt of such amounts is certain.

The Corporation has share-based compensation plans (i.e. incentive option plan) which are described in note 11. The expense of the equity-settled incentive option plan is measured based on fair value of the awards of each tranche at the grant date. The expense is recognized on a proportionate basis consistent with the vesting features of each tranche of the grant.

(d) Income taxes:

The Corporation is a mortgage investment corporation pursuant to the Income Tax Act (Canada). As such, the Corporation is entitled to deduct from its taxable income dividends paid to shareholders during the year or within 90 days of the end of the year. The Corporation intends to maintain its status as a mortgage investment corporation and intends to distribute sufficient dividends in the year and in future years to ensure that the Corporation is not subject to income taxes. Accordingly, for financial statement reporting purposes, the tax deductibility of the Corporation's dividends results in the Corporation being effectively exempt from taxation and no provision for current or future income taxes is required.

(e) Financial assets and liabilities:

Financial assets includes the Corporation's cash, amounts receivable and mortgage investments. Financial liabilities include the bank indebtedness, accounts payable and accrued liabilities, unearned income, shareholder dividend and unitholder distribution payable, loans payable, liability component of convertible debentures and trust units (until June 8, 2010).

Recognition and measurement of financial instruments

The Corporation determines the classification of its financial assets and liabilities at initial recognition. Financial instruments are recognized initially at fair value and in the case of financial assets and liabilities carried at amortized costs, adjusted for directly attributable transaction costs.

The Corporation has designated its cash as held-for-trading, which is measured at fair value. Amounts receivable and mortgage investments are classified as loans and receivables, which are measured at amortized cost.

Bank indebtedness, accounts payable and accrued liabilities, unearned income, shareholder dividend and unitholder distribution payable, loans payable, liability component of convertible debentures and trust units (until June 8, 2010) are classified as other financial liabilities, which are also measured at amortized cost.

The Corporation had neither available-for-sale, nor held-to-maturity instruments as at or during the nine months ended September 30, 2011 and 2010.

(f) Compound financial instruments:

Compound financial instruments issued by the Corporation comprise convertible debentures that can be converted to share capital at the option of the holder, and the number of shares to be issued does not vary with changes in their fair value. The liability component of a compound financial instrument is recognized initially at the fair value of a similar liability that does not have an equity conversion option. The equity component is recognized initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the liability component. Any directly attributable transaction costs are allocated to the liability and equity components in proportion to their initial carrying amounts. Subsequent to initial recognition, the liability component of a compound financial instrument is measured at amortized cost using the effective interest method. The equity component of a compound financial instrument is not re-measured subsequent to initial recognition. Interest, dividends, losses and gains relating to the financial liability are recognized in profit or loss. Distributions to the equity holders are recognized in equity, net of any tax benefit.

(g) Hybrid financial instruments:

Hybrid financial instruments comprise convertible debentures which contain an embedded derivative related to the conversion feature to Trust units from its issuance to June 8, 2010. The embedded derivative is measured at fair value at initial recognition, and subsequently at every reporting period with fair value changes recorded in profit or loss. The difference between the consideration received and the fair value of the embedded derivatives, is attributed to the debt host contract at initial recognition which is subsequently measured at amortized cost using the effective interest method.

(h) Share capital:

Common shares are classified as equity. Incremental costs directly attributable to the issue of common shares are recognized as a deduction from equity.

(i) Trust Units:

Trust units are classified as a liability from January 1, 2010 to June 8, 2010 and as equity from June 9, 2010 to December 31, 2010, as further detailed in note 10.

(j) Basic and diluted per share calculation:

The Corporation presents basic and diluted earnings profit or loss per share data for its common shares. Basic per share amounts are calculated by dividing the profit or loss attributable to common shareholders of the Corporation by the weighted average number of common shares outstanding during the period. Diluted per share amounts are calculated using the "if converted method" and are determined by adjusting the profit or loss attributable to common shareholders and the weighted average number of common shares outstanding, adjusted for the effects of all dilutive potential convertible debentures and granted incentive option plan.

(k) New standards and interpretations not yet adopted:

The following new or amended IFRS have been issued by IASB: IFRS 7, Financial Instruments – Disclosures; IFRS 9, Financial Instruments; IFRS 10, Consolidated Financial Statements; IFRS 11, Joint Arrangements; and IFRS 13, Fair Value Measurements. The Corporation is assessing the impact of these standards.

4. Transition to IFRS:

The Corporation has adopted IFRS effective January 1, 2010 ("the transition date") and has prepared its opening IFRS statement of financial position as at that date. Prior to the adoption of IFRS, the Corporation prepared its financial statements in accordance with Canadian GAAP.

The accounting policies set out in note 3 have been applied in preparing the financial statements for the three and nine months ended September 30, 2011, the comparative information presented in these financial statements for the three and nine months ended September 30, 2010 and the year ended December 31, 2010 and in the preparation of an opening IFRS balance sheet at January 1, 2010.

In preparing its opening IFRS balance sheet, the Corporation has adjusted amounts reported previously in financial statements prepared in accordance with Canadian GAAP. An explanation of how the transition from Canadian GAAP to IFRS has affected the Corporation's financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables:

(a)	Exemptions from full retrospective application:


	First-time adopters of IFRS must apply the provisions of IFRS 1. IFRS 1 requires adopters to retrospectively apply all IFRS standards as of the reporting date with certain optional exemptions and certain mandatory exemptions.


	In preparing these unaudited interim condensed financial statements in accordance with IFRS 1, the Corporation has applied the mandatory exemption from full retrospective application of IFRS for estimates. The mandatory exemption requires that estimates previously determined under Canadian GAAP cannot be revised due to the application of IFRS, except when necessary to reflect differences in accounting policies.

(b)	Reconciliation of equity as reported under Canadian GAAP and IFRS:

	The following is a reconciliation of equity as previously reported under Canadian GAAP to IFRS on January 1, 2010:

	Canadian GAAP	Effect of transition to IFRS		Restated under IFRS
	January 1, 2010

Assets

Cash	$1,444,339	-		$1,444,339
Amounts receivable and prepaid expenses	1,706,383	-		1,706,383
Mortgage investments	167,128,297	-		167,128,297
	$170,279,019	-		$170,279,019

Liabilities and Equity

Bank indebtedness	-	-		-
Accounts payable and accrued liabilities	$410,064	-		$410,064
Unearned income	202,481	-		202,481
Shareholder dividend and unitholder distribution payable	2,543,120	-		2,543,120
Loans payable	10,714,637	-		10,714,637
Convertible debentures (note 4(e)(ii))	23,681,244	-		23,681,244
Conversion option of convertible debentures (note 4(e)(ii))	-	$222,182		222,182
Total liabilities excluding net assets attributable to unitholders	37,551,546	222,182		37,773,728

Net assets attributable to unitholders (note 4(e)(i))	-	132,505,291		132,505,291

Shareholders' / Unitholders' equity (note 4(e)(i))	132,727,473	(132,727,473	)	-
Retained earnings / (deficit)	-	-		-
Total equity	132,727,473	(132,727,473	)	-

	$170,279,019	-		$170,279,019

Three and nine months ended September 30, 2011 and 2010

The following is a reconciliation of equity as previously reported under Canadian GAAP to IFRS on September 30, 2010:

	Canadian GAAP	Effect of transition to IFRS		Restated under IFRS
	September 30, 2010

Assets

Cash	-	-		-
Amounts receivable and prepaid expenses	$2,037,517	-		$2,037,517
Mortgage investments	192,473,255	-		192,473,255

	$194,510,772	-		$194,510,772

Liabilities and Equity

Bank indebtedness	$25,174,149	-		$25,174,149
Accounts payable and accrued liabilities	710,550	-		710,550
Unearned income	307,352	-		307,352
Shareholder dividend and unitholder distribution payable	1,110,018	-		1,110,018
Loans payable	6,677,654	-		6,677,654
Convertible debentures (note 4(e)(ii))	23,829,692	-		23,829,692
Conversion option of convertible debenture (note 4(e)(ii))	-		-	-
Total liabilities excluding net assets attributable to unitholders	57,809,415		-	57,809,415

Net assets attributable to unitholders (note 4(e)(i))	-		-	-

Shareholders' / Unitholders' equity (note 4(e)(i))	136,701,357	($288,176)		136,413,181
Retained earnings / (deficit)	-	288,176		288,176
Total equity	136,701,357		-	136,701,357

	$194,510,772	-		$194,510,772


The following is a reconciliation of equity as previously reported under Canadian GAAP to IFRS on December 31, 2010:

	Canadian GAAP	Effect of transition to IFRS	Restated under IFRS
	December 31, 2010

Assets

Cash	-	-	-
Amounts receivable and prepaid expenses	$2,371,563	-	$2,371,563
Mortgage investments	202,330,929	-	202,330,929

	$204,702,492	-	$204,702,492

Liabilities and Equity

Bank indebtedness	$5,005,825	-	$5,005,825
Accounts payable and accrued liabilities	1,482,580	-	1,482,580
Unearned income	372,514	-	372,514
Shareholder dividend and unitholder distribution payable	2,127,845	-	2,127,845
Loans payable	4,289,249	-	4,289,249
Convertible debentures (note 4(e)(ii))	53,628,803	-	53,628,803
Conversion option of convertible debentures (note 4(e)(ii))	-	-	-
Total liabilities excluding net assets attributable to unitholders	66,906,816		66,906,816

Net assets attributable to unitholders (note 4(e)(i))	-	-	-

Shareholders' / Unitholders' equity (note 4(e)(i))	137,795,676	$321,826	138,117,502
Retained earnings / (deficit) (note 4(e)(i))		(321,826)	(321,826)
Total equity	137,795,676	-	137,795,676

	$204,702,492	-	$204,702,492

The following is a reconciliation of comprehensive income as previously reported under Canadian GAAP to IFRS for the three months ended September 30, 2010:

	Canadian GAAP	Effect of transition to IFRS	Restated under IFRS
	Three Months Ended September 30, 2010


Interest and fees earned	$4,790,238	-	$4,790,238
Less interest expense	683,135	-	683,135

Net interest and fee income	4,107,103	-	4,107,103

General and administrative expenses	230,415	-	230,415
Impairment loss on mortgages (note 4(e)(iii))	-	-	-
	$230,415	-	$230,415

Operations profit for the period	3,876,688	-	3,876,688

Finance costs

Change in the fair value of the conversion option of convertible debentures (note 4(e)(ii))	-	-	-
Distributions to unitholders (note 4(e)(i))	-	-	-

Comprehensive income and profit for the period, and changes in net assets attributable to unitholders for the period, respectively	$3,876,688	-	$3,876,688

The following is a reconciliation of comprehensive income as previously reported under Canadian GAAP to IFRS for the nine months ended September 30, 2010:

	Canadian GAAP	Effect of transition to IFRS	Restated under IFRS
	Nine Months Ended September 30, 2010

Interest and fees earned	$12,839,797	-	$12,839,797
Less interest expense	1,788,601	-	1,788,601

Net interest and fee income	11,051,196	-	11,051,196

General and administrative expenses	572,700	-	572,700
Change in unrealized loss in value of mortgages (4(e)(iii)	-	-	-

Impairment loss on mortgages (4(e)(iii)	-	-	-
	572,700	-	572,700

Operations profit for the period	10,478,496	-	10,478,496

Finance costs

Change in the fair value of the conversion option of convertible debentures (note 4(e)(ii))	-	(321,826)	(321,826)
Distributions to unitholders (note 4(e)(i))	-	(5,731,903)	(5,731,903)

Comprehensive income and profit (loss) for the period, and changes in net assets attributable to unitholders for the period, respectively	$10,478,496	($6,053,729)	$4,424,767

Reconciliation of comprehensive income as previously reported under Canadian GAAP to IFRS for the year ended December 31, 2010:

	Canadian GAAP	Effect of transition to IFRS	Restated under IFRS
	Year Ended December 31, 2010

Interest and fees earned	$18,703,612		$18,703,612
Less interest expense	2,877,078		2,877,078

Net interest and fee income	15,826,534		15,826,534

General and administrative expenses	1,310,690		1,310,690
Change in unrealized loss in value of mortgages (4(e)(iii)	280,000	($280,000)	-
Impairment loss on mortgages (4(e)(iii)	-	280,000	280,000
	1,590,690	-	1,590,690

Operations profit for the period	14,235,844		14,235,844

Finance costs

Change in fair value of conversion option of convertible debentures (note 4(e)(ii))		(321,826)	(321,826)
Distributions to unitholders (note 4(e)(i))		(5,731,903)	(5,731,903)

Comprehensive income and profit (loss) for the period, and changes in net assets attributable to unitholders for the period, respectively	$14,235,844	($6,053,729)	$8,182,115

(d) Impact on the statement of cash flows:

The IFRS adjustments made to the comparative statement of comprehensive income for the three and nine months ended September 30, 2010 (as described above) have been made to the statement of cash flows as at the same date. Consistent with the Corporation's accounting policy choice under IAS 7, Statement of Cash Flows, interest paid and interest received have been included in cash flow from operating activities in the statement of cash flows. There were no other significant IFRS transition differences noted.

(e) Details of the material adjustments to the balance sheet and statement of comprehensive income:

(i) Previously under Canadian GAAP, the Trust Units were classified as equity instruments. In accordance with IAS 32, Financial Instruments: Presentation, the Trust Units are classified as a liability from January 1, 2010 to June 8, 2010 as the units impose an obligation requiring distribution of taxable income to unitholders until that date. Thereafter the Trust Units are classified as equity as further detailed in note 10.

The Corporation measures its Trust Unit liability at amortized cost and presents it at the amount of residual net assets.

As a result, the Corporation has recorded the liability at the cash amount originally exchanged for the Trust Units plus cumulative earnings and distributions to unitholders. The effect of classification is to reduce the shareholders' equity and increase liabilities (net assets attributable to unitholders) by $132.5 million at January 1, 2010.

At September 30, 2010 and December 31, 2010, the Corporation reclassified $0.3 million for the impact of change in fair value of the conversion option from January 1, 2010 to June 8, 2010 as further detailed in note 4(e)(ii).

Consistent with the classification of the Trust Units as a liability, distributions paid to unitholders are considered as financing cost in the statement of comprehensive income for these periods.

As the Trust Units are treated as floating rate liability, any changes in the distributions based on changes to income levels are expensed in the period in which they occur.

(ii) For the period from January 1, 2010 to June 8, 2010, the convertible debentures contain an option to convert into the liability classified trust units. As the conversion option of convertible debt is not otherwise closely related to the debt host, it constitutes a liability-classified embedded derivative, which is carried at fair value. Fair value is calculated using market prices at the end of each reporting period. The fair value adjustment is recorded as part of finance costs on the unaudited interim condensed statements of comprehensive income.

On June 9, 2010, the fair value of the conversion option of convertible debt is reclassified to equity as the convertible debentures are now accounted for as compound financial instruments. For the period from June 9, 2010 to December 31, 2010, the equity portion is not re-measured.

(iii) The Corporation has reviewed its mortgage investments for impairment and adjusted the unaudited interim condensed financial statements for impairment losses on mortgages previously reported. Amounts for change in unrealized losses of mortgages have been removed to conform with Corporation's presentation under IFRS.

5. Amounts receivable and prepaid expenses:

The following is a breakdown of amounts receivable and prepaid expenses as at September 30, 2011, December 31, 2010 and January 1, 2010:

	Sept. 30, 2011	Dec. 31, 2010	Jan. 1, 2010
Interest receivable	$3,243,966	$1,803,224	$1,450,807
Prepaid expenses	122,848	111,800	160,903
Special income receivable	389,198	389,198	-
Fees receivable	37,213	67,341	94,673
Amounts receivable and prepaid expenses	$3,793,225	$2,371,563	$1,706,383

6. Mortgage investments:

The following is a breakdown of the mortgage investments as at September 30, 2011, December 31, 2010 and January 1, 2010:

	Sept. 30, 2011		Dec. 31, 2010		January 1, 2010
	Amount	%	Amount	%	Amount	%
Conventional first mortgages	$192,918,638	70.1	$179,004,150	87.2	$135,464,430	79.8
Conventional non-first mortgages	36,869,679	13.4	13,785,737	6.7	12,768,832	7.5
Special mortgage investments	45,500,495	16.5	12,521,042	6.1	21,595,035	12.7
Total mortgage investments (at cost)	$275,288,812	100.0	$205,310,929	100.0	$169,828,297	100.0

Impairment provision	(2,980,000)		(2,980,000)		(2,700,000)

Mortgage investments	$272,308,812		$202,330,929		$167,128,297

Conventional first mortgages are loans secured by a first priority mortgage charge with loan to values not exceeding 75%. Conventional non-first mortgages are loans with mortgages not registered in first priority with loan to values not exceeding 75%. Special mortgage investments are loans that in some cases have loans to value that exceed or may exceed 75% and are the investments that are the source of all special profit participations earned by the Corporation.

Mortgages are stated at amortized cost as discussed in note 3(a). The impairment loss in the amount of $2,980,000 as at September 30, 2011 represents the total amount of management's estimate of the shortfall between the mortgage investment principal balances and the estimated net realizable recovery from the collateral securing the mortgage loans.

The majority of the loan investments are secured by real property, bear interest at the weighted average rate of 9.14% (2010 – 9.30%) and mature between 2011 and 2015.

The un-advanced funds under the existing mortgage portfolio (which are commitments of the Corporation) amounted to $32,432,685 as at September 30, 2011 (December 31, 2010 - $18,406,862 and January 1, 2010 - $12,709,686).

Principal repayments based on contractual maturity dates are as follows:


2011	$49,621,986
2012	109,550,055
2013	75,625,305
2014	35,517,508
2015	4,973,958

	$275,288,812

Borrowers who have open mortgages have the option to repay principal at any time prior to the maturity date.

7. Bank indebtedness:

The Corporation has entered into credit arrangements of which $39,344,291 as at September 30, 2011 (December 31, 2010 - $5,005,825 & January 1, 2010 - nil) has been drawn. Interest on bank indebtedness is predominately charged at a formula rate that varies with bank prime and may have a component with a fixed interest rate established based on a formula linked to Bankers Acceptance rates. The credit arrangement comprises a revolving operating facility, a component of which is a demand facility and a component of which has a committed term to September 30, 2012. Bank indebtedness is secured by a general security agreement. The credit agreement contains certain financial covenants that must be maintained. As at September 30, 2011, December 31, 2010 and January 1, 2010, the Corporation was in compliance with all financial covenants.

8. Loans payable:

First priority charges on specific mortgage investments have been granted as security for the loans payable. The loans mature on dates consistent with those of the underlying mortgages. The loans are on a non-recourse basis and bear interest at rates ranging from 3.50% to 6.45% as at September 30, 2011 (December 31, 2010 - 3.50% to 6.45%). The Corporation's principal balance outstanding under the mortgages for which a first priority charge has been granted is $26,440,534 as at September 30, 2011 (December 31, 2010 - $5,392,156 & January 1, 2010 - $14,224,566).

The loans are repayable at the earlier of the contractual expiry date of the underlying mortgage investment and the date the underlying mortgage is repaid. Repayments based on contractual maturity dates are as follows:


2011	$ 1,721,798
2012	-
2013	-
2014	13,843,759
2015	152,846
	$15,718,403

9. Convertible debentures:

	Nine Months Ended Sept. 30, 2011	Year-Ended Dec. 31, 2010	Jan. 1, 2010
	Total Debentures	Total Debentures	Total Debentures
Principal balance, Beginning of period	$53,628,903	$23,681,244	$23,681,244
Issued	24,200,834	29,680,929
Conversions	(5,798,000)	(20,000)
Adjustment to fair value of conversion option	128,928
Implicit interest rate in excess of coupon rate	66,253	57,689
Deferred finance cost amortization	307,899	228,941

Principal balance, end of period	$72,534,817	$53,628,803	$23,681,244

The breakdown of the Total Debentures for nine months ended September 30, 2011 presented in the above table is as follows:

	6.00% Convertible Debentures	5.75% Convertible Debentures	5.40% Convertible Debentures	Total
Principal balance, Beginning of period	$23,886,736	$29,742,167	-	$53,628,903
Issued	-	-	$24,200,834	24,200,834
Conversions	(5,798,000)	-	-	(5,798,000)
Adjustment to fair value of conversion option	128,928	-	-	128,928
Implicit interest rate in excess of coupon rate	43,159	23,094	-	66,253
Deferred finance cost amortization	127,890	162,104	17,905	307,899
Principal balance, end of period	$18,388,713	$29,927,365	$24,218,739	$72,534,817

In the second quarter of 2006, the Corporation completed a public offering of 25,000 6% convertible unsecured subordinated debentures at a price of $1,000 per debenture for gross proceeds of $25,000,000. The debentures mature on June 30, 2013 and interest is paid semi-annually on June 30 and December 31. The debentures are convertible at the option of the holder at any time prior to the maturity date at a conversion price of $11.75. On and after June 30, 2010 and prior to the maturity date, the debentures are redeemable at a price equal to the principal amount plus accrued interest, at the Corporation's option on not more than 60 days' and not less than 30 days' prior notice. On redemption or at maturity, the Corporation may, at its option, elect to satisfy its obligation to pay all or a portion of the principal amount of the debenture by issuing that number of shares of the Corporation obtained by dividing the principal amount being repaid by 95% of the weighted average trading price of the shares for the 20 consecutive trading days ending on the fifth trading day preceding the redemption or maturity date.

In 2009, $536,000 of debentures were converted by the debenture holders to 45,617 shares of the Corporation. In 2010, $20,000 of debentures were converted by the debenture holders to 1,702 shares of the Corporation. During the first nine months of 2011, $5,798,000 of debentures were converted by the debenture holders to 493,440 shares of the Corporation.

In the fourth quarter of 2010, the Corporation completed a public offering of 31,443, 5.75% convertible unsecured subordinated debentures at a price of $1,000 per debenture for gross proceeds of $31,443,000. The debentures mature on October 31, 2017 and interest is paid semi-annually on April 30 and October 31. The debentures are convertible at the option of the holder at any time prior to the maturity date at a conversion price of $15.90. The debentures may not be redeemed by the Corporation prior to October 31, 2013. On and after October 31, 2013, but prior to October 31, 2014, the debentures are redeemable at a price equal to the principal, plus accrued interest, at the Corporation's option on not more than 60 days' and not less than 30 days notice, provided that the weighted average trading price of the shares on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the conversion price. On and after October 31, 2014 and prior to the maturity date, the debentures are redeemable at a price equal to the principal amount plus accrued interest, at the Corporation's option on not more than 60 days' and not less than 30 days prior notice. On redemption or at maturity, the Corporation may, at its option, elect to satisfy its obligation to pay all or a portion of the principal amount of the debenture by issuing that number of shares of the Corporation obtained by dividing the principal amount being repaid by 95% of the weighted average trading price of the shares for the 20 consecutive trading days ending on the fifth trading day preceding the redemption or maturity date.

In the third quarter of 2011, the Corporation completed a public offering of 25,738, 5.40% convertible unsecured subordinated debentures at a price of $1,000 per debenture for gross proceeds of $25,738,000. The debentures mature on February 28, 2019 and interest is paid semi-annually on February 28 and August 31. The debentures are convertible at the option of the holder at any time prior to the maturity date at a conversion price of $14.35. The debentures may not be redeemed by the Corporation prior to August 31, 2014. On and after August 31, 2014, but prior to February 29, 2016, the debentures are redeemable at a price equal to the principal, plus accrued interest, at the Corporation's option on not more than 60 days' and not less than 30 days notice, provided that the weighted average trading price of the shares on the Toronto Stock Exchange for the 20 consecutive trading days ending five trading days preceding the date on which the notice of redemption is given is not less than 125% of the conversion price. On and after February 29, 2016 and prior to the maturity date, the debentures are redeemable at a price equal to the principal amount plus accrued interest, at the Corporation's option on not more than 60 days' and not less than 30 days prior notice. On redemption or at maturity, the Corporation may, at its option, elect to satisfy its obligation to pay all or a portion of the principal amount of the debenture by issuing that number of shares of the Corporation obtained by dividing the principal amount being repaid by 95% of the weighted average trading price of the shares for the 20 consecutive trading days ending on the fifth trading day preceding the redemption or maturity date.

As at September 30, 2011, debentures payables bear interest at weighted average effective rate of 5.69% per annum.

Notwithstanding the carrying value of the convertible debentures, the principal balance outstanding to the debenture holders is $75,827,000.

10. Net assets attributable to unitholders

During the period, the Corporation performed an assessment of the characteristics of the Trust units in existence during the period from January 1, 2010 to December 31, 2010 (the "Units"), against the criteria set forth per IAS 32, Financial Instruments: Presentation.

For the period from January 1, 2010 to June 8, 2010, the Trust Units are presented as a liability due to the Trust's requirement to distribute taxable income to the unitholders and distributions made on the Trust Units is recorded as finance costs in the statement of comprehensive income. The liability was measured at amortized cost of the Trust Units, which includes any residual net assets attributable to unitholders.

On June 9, 2010, the distribution policy set out in the Trust's Declaration of Trust was modified such that there was no longer a requirement for the Trust to distribute cash. As such, equity classification criteria were determined to be met from that point.

Changes in the number of trust units and in their carrying amounts were as follows during the nine months ended September 30, 2010:

		Units	Amounts

Balance, beginning of period		13,896,829		$141,463,944
New units from exercise of options to June 8, 2010		100,500		994,950

New units issued up to June 8, 2010 under
	Distribution Reinvestment Plan	22,671		248,778
Trust units re-classified as equity (June 9, 2010)		(14,020,000)		(142,707,672)
Balance, end of period		-	$	-

11. Shareholders' equity:

On January 1, 2011, all outstanding Units were exchanged on a one-for-one basis for common shares of the Corporation.

The beneficial interests in the Corporation are represented by a single class of shares which are unlimited in number. Each share carries a single vote at any meeting of shareholders and carries the right to participate pro rata in any dividends.

(a) Shares and Units issued and outstanding:

	The following shares were issued and outstanding as at September 30, 2011:


Balance, beginning of period		14,377,333

New shares from conversion of debentures (note 9)		493,440

New shares issued during the period under
	Dividend Reinvestment Plan	44,568

Balance, end of period		14,915,341


	The following units were issued and outstanding as at December 31, 2010:

Balance, beginning of year		13,896,829

New units from conversion of debentures (note 9)		1,702

New units from exercise of options		427,500

New units issued during the period under
	Distribution Reinvestment Plan	51,302

Balance, end of year		14,377,333


	The following units were issued and outstanding as at September 30, 2010:

Balance, beginning of period – Trust units
	re-classified as equity (June 9, 2010)	14,020,000
New units issued after June 9, 2010		211,004


Balance, end of period		14,231,004

(b) Incentive option plan:

In 2005, 415,000 options were issued to directors, officers and employees of the Corporation Manager and Mortgage Banker, with an exercise price of $9.90 per share. The options were exercisable any time up to November 17, 2010. The options vested on the grant date. At December 31, 2010, 415,000 share options have been exercised.

In 2008, 35,000 options were issued to directors with an exercise price of $9.94. The options were exercisable any time up to October 7, 2013. The fair value of those share options, given the small number of options issued and given the low volatility in the Corporation's share trading price, is not material and therefore no related compensation expense has been recorded by the Corporation. At December 31, 2010, 35,000 options have been exercised.

As at September 30, 2011, no options remained outstanding (December 31, 2010 - NIL & January 1, 2010 - 427,500).

The Corporation has a dividend reinvestment plan and direct share purchase plan for its shareholders which allows participants to reinvest their monthly cash dividends in additional Corporation shares at a share price equivalent to the weighted average price of shares for the preceding five day period.

12. Per share amounts:

(a) Profit per share calculation:

As the trust units were liability-classified until June 8, 2010 and the full change for the period from January 1, 2010 to June 8, 2010 in net assets is allocated thereto, there is no profit per unit presented for the nine months ended September 30, 2010.

The following tables reconcile the numerators and denominators of the basic and diluted profit per share for the three and nine months ended September 30, 2011 and the three months ended September 30, 2010.

Basic profit per share calculation:

		Three months ended Sept. 30, 2011	Nine months ended Sept. 30, 2011

Numerator for basic profit per share:
	Profit	$3,807,725	$10,816,059

Denominator for basic profit per share:
	Weighted average shares	14,840,699	14,625,573


Basic profit per share		$0.257	$0.739


	Diluted profit per share calculation:

		Three months ended Sept. 30, 2011	Nine months ended Sept. 30, 2011

Numerator for diluted profit per share:
	Profit	$3,807,725	$10,816,059
	Interest on convertible debentures	1,027,681	2,848,172

Net profit for diluted profit per share:		$4,835,406	$13,664,231



Denominator for diluted profit per share:
	Weighted average shares	14,840,699	14,625,573
	Net units that would be issued assuming debentures are converted	4,355,606	4,056,279


Diluted weighted average shares		19,196,305	18,681,852

Diluted profit per share		$0.252	$0.731

(b) Pro forma per unit calculation

Management has chosen to disclose pro forma basic and diluted profit per unit for the nine months ended September 30, 2010 in order to provide an indication of the Trust's business performance that is comparable to how performance is otherwise measured when the instruments that represent residual interests in the entity qualify as equity instruments. The calculation eliminates "change in fair value of the conversion option of convertible debentures" and "distributions to unitholders" from the numerator and uses the liability classified units as denominator. For disclosure purposes only, the Corporation has determined the operations profit per share using the same basis that would apply in accordance with IAS 33 Earnings Per Share.

The following tables reconcile the numerators and denominators of pro forma basic and diluted operations profit per unit:

Basic operations profit per share calculation:

			Three months ended Sept. 30, 2010	Nine months ended Sept. 30, 2010

Numerator for basic operations profit per share:
	Operations profit		$3,876,688	$10,478,496


Denominator for basic operations profit per unit:
	Weighted average units		14,204,798	14,041,297


Pro forma profit per unit			$0.273	$0.746


Diluted pro forma profit per unit calculation:

			Three months ended Sept. 30, 2010	Nine months ended Sept. 30, 2010

Numerator for diluted pro forma profit per share:
	Operations profit		$3,876,688	$10,478,496
	Interest on convertible debentures		423,613	1,269,153

Net operations profit for diluted operations profit per unit			$4,300,301	$11,747,649



Denominator for diluted operations profit per unit:
	Weighted average units		14,204,798	14,041,297
	Net units that would be issued:
		Assuming the proceeds from incentive options are used to repurchase units at the average unit price	20,538	16,746
		Assuming convertible debentures are converted	2,080,340	2,080,340

Diluted weighted operations profit per unit			16,305,676	16,138,383

Diluted pro forma profit per unit			$0.264	$0.728

13. Dividends:

The Corporation intends to make dividend payments to the shareholders on a monthly basis on or about the 15^thday of each month. The operating policies of Corporation set out that the Corporation intends to distribute to shareholders within 90 days after the year end at least 100% of the net income of the Corporation determined in accordance with the Income Tax Act (Canada), subject to certain adjustments. The net income of the Corporation determined in accordance with the Income Tax Act (Canada), for the period ended September 30, 2011 was $10,938,632 (2010 - $10,523,617).

For the nine months ended September 30, 2011, the Corporation recorded dividends of $10,300,321 (2010 - $9,868,495) to its shareholders. Dividends were $0.702 (2010 - $0.702) per share.

14. Income taxes:

The Income Tax Act (Canada) contains legislation (the "SIFT Rules") affecting the tax treatment of "specified investment flow-through" ("SIFT") trusts. A SIFT includes a publicly traded trust. The SIFT Rules provide for a transition period unit 2011 for publicly traded trusts like the Trust, which existed prior to November 1, 2006. Under the SIFT Rules, distributions of certain types of income by a SIFT are not deductible in computing the SIFT's taxable income, and a SIFT is subject to tax on such income at a rate that is substantially equivalent to the general tax rate applicable to a Canadian corporation. The SIFT rules do not apply to a corporation that qualifies as a mortgage investment corporation under the Income Tax Act (Canada). The Trust completed the necessary tax restructuring to qualify as a mortgage investment corporation effective January 1, 2011.

15. Related party transactions and balances:

Transactions with related parties are in the normal course of business and are recorded at the exchange amount, which is the amount of consideration established and agreed to by the related parties, and in management's view represents fair market value.

The Corporation Manager (a company controlled by some of the directors) receives an allocation of mortgage interest, referred to as Corporation Manager spread interest, calculated as 0.75% per annum of the Corporation's daily outstanding performing mortgage investment balances. For the nine months ended September 30, 2011, this amount was $1,255,165 (2010 - $967,405), and for the three month period ending September 30, 2011 this amount was $465,237 (2010 - $337,882), and was deducted from interest and fees earned.

The Mortgage Banker (a company controlled by a director) receives certain fees from the borrowers as follows: loan servicing fees equal to 0.10% per annum on the principal amount of each of the Corporation's mortgage investments; 75% of all the commitment and renewal fees generated from the Corporation's mortgage investments; and 25% of all the special profit income generated from the non- conventional mortgage investments after the Corporation has yielded a 10% per annum return on its investments. Interest and fee income is net of the loan servicing fees paid to the Mortgage Banker of approximately $167,000 for the nine month period ended September 30, 2011 (2010 - $129,000). The Mortgage Banker also retains all overnight float interest and incidental fees and charges payable by borrowers on the Corporation's mortgage investments. The Corporation's share of commitment and renewal fees recorded in income for the nine months ended September 30, 2011 was $691,579 (2010 - $642,816) and for the three month period ended September 30, 2011 was $295,867 (2010 - $178,408) and applicable special profit income for the nine months ended September 30, 2011 was $218,307 (2010 - $796,979) and for the three month period ended September 30, 2011 was $67,932 (2010 - $479,132).

The Corporation Management Agreement and Mortgage Banking Agreement contains provisions for the payment of termination fees to the Corporation Manager and Mortgage Banker in the event that the respective agreements are either terminated or not renewed.

Several of the Corporation's mortgages are shared with other investors of the Mortgage Banker, which may include members of management of the Mortgage Banker and/or Officers or directors of the Corporation. The Corporation ranks equally with other members of the syndicate as to receipt of principal and income.

Mortgages totalling $15,560,000 (December 31, 2010 - $8,760,000 and January 1, 2010 - $1,760,000) were issued to borrowers controlled by certain directors of the Corporation. Each mortgage is dealt with in accordance with the Corporation's existing investment and operating policies and is personally guaranteed by the related directors.

16. Interest expense:

	Three months ended				Nine months ended
	Sept. 30, 2011		Sept. 30, 2010		Sept. 30, 2011		Sept. 30, 2010

Bank interest expense	$	366,199	$	190,904	$	651,043	$	312,187
Loans payable interest expense		118,149		68,618		197,906		207,261
Debenture interest expense		1,027,681		423,613		2,848,172		1,269,153
Interest expense	$	1,512,029	$	683,135	$	3,697,121	$	1,788,601

Deferred finance cost amortization – convertible debenture		(115,632)		(43,099)		(307,899)		(127,890)
Implicit interest rate in excess of coupon rate – convertible debentures		(21,532)		(13,730)		(66,253)		(40,558)
Change in accrued interest		(927,447)		(360,379)		(834,903)		(338,824)

Cash interest paid	$	447,418	$	265,927	$	2,488,066	$	1,281,329

17. Contingent liabilities:

The Corporation is involved in certain litigation arising out of the ordinary course of investing in mortgages. Although such matters cannot be predicted with certainty, management believes the claims are without merit and does not consider the Corporation's exposure to such litigation to have an impact on these financial statements.

18. Fair value of financial instruments:

The fair value of amounts receivable, bank indebtedness, accounts payable and accrued liabilities and shareholder dividend payable approximate their carry values due to their short-term maturities.

The fair value of loans payable approximate their carrying values due to the fact that the majority of the loans are (i) short-term in nature with terms of 12 months or less, (ii) repayable in full, at any time upon the borrower under the underlying mortgage that secures the loan payable repaying their mortgage without penalty, and (iii) have floating interest rates linked to bank prime.

The fair value of the convertible debentures, including their conversion option, has been determined based on the closing price of the debentures of the Corporation on the TSX for the respective date. The fair value has been estimated at September 30, 2011 to be $73,655,835 (September 30, 2010 - $25,079,544, December 31, 2010 - $56,305,890).

The fair value of the trust units as at September 30, 2010 has been determined based on the September 30, 2010 closing price of the units of the Corporation on the TSX. The fair value has been estimated at September 30, 2010 to be $170,772,048. The fair value of the shares as at September 30, 2011 has been determined based on the September 30, 2011 closing price of the shares of the Corporation on the TSX. The fair value has been estimated at September 30, 2011 to be $186,590,916. The fair value of the units as at December 31, 2010 has been determined based on the December 31, 2010 closing price of the units of the Corporation on the TSX. The fair value has been estimated at December 31, 2010 to be $171,090,263.

19. Risk management:

(a) Interest rate risk:

The Corporation's operations are subject to interest rate fluctuations. The interest rate on the majority of mortgage investments is set at the greater of a floor rate and a formula linked to bank prime. The floor interest rate mitigates the effect of a drop in short term market interest rates while the floating component linked to bank prime allows for increased interest earnings where short term market rates increase.

The Corporation's debt comprises bank indebtedness and loans payable, with the majority of such debt bearing interest based on bank prime and/or based on short term Bankers Acceptance interest rates as a benchmark. Convertible debentures have fixed interest rates.

At September 30, 2011, if interest rates at that date had been 100 basis points lower or higher, with all other variables held constant, net income for the three month period would be affected as follows:

		Carrying Value	-1%	+1%
Financial assets
	Mortgage investments	$275,288,812	($4,400)	$97,819
Financial liabilities
	Bank indebtedness	39,344,291	98,361	(98,361)
	Accounts payable and accrued liabilities	1,947,657	-	-
	Unearned income	587,388	-	-
	Shareholder dividend payable	1,163,396
	Loans payable	15,718,403	(34,059)	34,059

Total increase (decrease)			$59,902	$33,517

At September 30, 2010 if interest rates at that date had been 100 basis points lower or higher, with all other variables held constant, net income for the three month period would be affected as follows:

		Carrying Value	-1%	+1%
Financial assets
	Mortgage investments	$192,473,255	$(39,013)	$124,325
Financial liabilities
	Bank indebtedness	25,174,149	188,806	(188,806)
	Accounts payable and accrued liabilities	710,550
	Unearned income	307,352
	Unitholder distribution payable	1,110,018
	Loans payable	6,677,654	(33,348)	33,348

Total increase (decrease)			$116,445	($31,133)

(b) Credit and operational risks:

Any instability in the real estate sector and an adverse change in economic conditions in Canada could result in declines in the value of real property securing the Corporation's mortgage investments. The Corporation mitigates this risk by adhering to the investment and operating policies set out in its Declaration of Corporation.

The Corporation's maximum exposure to credit risk is represented by the fair values of amounts receivable and mortgage investments.

The Corporation's liquidity requirements relate to its obligations under its bank indebtedness, loans payable, convertible debentures and its obligations to make future advances under its existing mortgage portfolio. Liquidity risk is managed by ensuring that the sum of (i) availability under the Corporation's bank borrowing line, (ii) the sourcing of other borrowing facilities, and (iii) projected repayments under the existing mortgage portfolio, exceeds projected needs (including funding of further advances under existing and new mortgage investments).

As at September 30, 2011, the Corporation had not utilized its full leverage availability, being a maximum of 60% of its conventional first mortgage investments. Un-advanced committed funds under the existing mortgage portfolio amounted to $32,432,685 as at September 30, 2011 (2010 - $14,887,396). These commitments are anticipated to be funded from the Corporation's credit facility and borrower repayments. The Corporation has a revolving line of credit with its principal banker to fund the timing differences between mortgage advances and mortgage repayments. The bank borrowing line is a committed facility with a maturity date of September 30, 2012. If the loan is not renewed on September 30, 2012, the terms of the facility allow for the Corporation to repay the balance owed on September 30, 2012 within 12 months. In the current economic climate and capital market conditions, there are no assurances that the bank borrowing line will be renewed or that it could be replaced with another lender if not renewed. If it is not extended at maturity, repayments under the Corporation's mortgage portfolio would be utilized to repay the bank indebtedness. There are limitations in the availability of funds under the revolving line of credit. The Corporation's mortgages are predominantly short-term in nature, and as such, the continual repayment by borrowers of existing mortgage investments creates liquidity for ongoing mortgage investments and funding commitments. Loans payable relate to borrowings on specific mortgages within the Corporation's portfolio and only have to be repaid once the specific loan is paid out by the Borrower.

If the Corporation is unable to continue to have access to its bank borrowing line and loans payables, the size of the Corporation's mortgage portfolio will decrease and the income historically generated through holding a larger portfolio by utilizing leverage will not be earned.

Contractual obligations as at September 30, 2011 are due as follows:

	Total		Less than 1 year		1 – 3 years		4 – 6 years
Bank indebtedness	$	39,344,291	$	39,344,291
Loans payable		15,718,403		1,721,799			$	13,996,604
Convertible debentures		75,827,000			$	18,646,000		57,181,000
Subtotal – Liabilities		130,889,694		41,066,090		18,646,000		71,177,604
Future advances under mortgages		32,432,686		32,432,686
Liabilities and contractual obligations	$	163,322,380	$	73,498,776	$	18,646,000	$	71,177,604

The bank indebtedness and loans payable are liabilities resulting from the funding of the Corporation's mortgage investments. Repayment of mortgage investments results in a direct and corresponding pay down of the bank indebtedness and/or loans payable. The obligations for future mortgage advances under the Corporation's mortgage portfolio are anticipated to be funded from the Corporation's credit facility and borrower mortgage repayments. Upon funding of same, the funded amount forms part of the Corporation's mortgage investments.

(d) Capital risk management:

The Corporation defines capital as being the funds raised through the issuance of publicly traded securities of the Corporation. The Corporation's objectives when managing capital/equity are:

to safeguard the Corporation's ability to continue as a going concern, so that it can continue to provide returns for shareholders, and
to provide an adequate return to shareholders by obtaining an appropriate amount of debt, commensurate with the level of risk.

The Corporation manages the capital/equity structure and makes adjustments to it in light of changes in economic conditions. In order to maintain or adjust the capital structure, the Corporation may issue new shares or repay bank indebtedness (if any) and loans payable.

The Corporation's investment guidelines, which can be varied at the discretion of the Board of Directors, incorporate various guideline restrictions and investment operating policies. The Corporation's guideline states that the Corporation (i) will not invest more than 5% of the amount of its capital in any single conventional first mortgage, (ii) will not invest more than 2.5% of the amount of its capital in any single non-conventional mortgage or conventional mortgage that is not a first mortgage, and (iii) will only borrow funds in order to acquire or invest in mortgage investments in amounts up to 60% of the book value of the Corporation's portfolio of conventional first mortgages.

The Corporation is required by its Bank lender to maintain various covenants, including minimum equity amount, interest coverage ratios, indebtedness as a percentage of the performing first mortgage portfolio size and indebtedness to total assets. The Corporation has complied with all such Bank covenants.

20. Financial statement review:

These unaudited interim condensed financial statements have not been reviewed by the Corporation's auditors.

Contact Information:

Firm Capital Mortgage Investment Corporation
Eli Dadouch
President & Chief Executive Officer
(416) 635-0221
www.firmcapital.com

Firm Capital Mortgage Investment Corporation Announces Third Quarter Results