Q2 2010 State of the Units

Font Size

Thursday, August 12, 2010

Dear Member-Partners and Friends,

I am pleased to report that the foundations that support LEAGUE and your investments with us remain strong. It also is time to look forward to the revaluation of the units of the IGW REIT, which will occur in just three weeks.

If you wish to purchase IGW REIT units at their current value, you only have a limited time in which to do so.

The Highlights

The values for the "traditional" (Class A, AA, and AAA) IGW REIT units currently stand at $1.004 per unit, with distributions of 7.25 cents per unit per annum. On September 1, the new unit value will be announced, based on the property appraisals and calculations provided by Colliers International. It's worth noting that although past performance is no indicator of future performance, over the last three quarters, unit values for Class AA IGW REIT Units have risen by 2.97%, despite the current economic uncertainty.

Equally impressive is the fact that when the financial statements were audited, as required for SegDebt 1 and 2 this past quarter, we found that the value of the notes we had bought between $0.19 and $0.20 on the dollar had risen to over $0.42 on the dollar. This is good news for unitholders, according to my partner Adam Gant, because the market is heading in the right direction. Adam says this indicates that there has been a substantial increase in the value of mortgage-backed securities due to an easing of credit that is enabling more people to obtain first mortgages.

Some First Steps

This quarter, the fruits of our labour began to appear:

The launch of Miracle Mile LP, our first Limited Partnership that aims to invest in a U.S. property. LEAGUE will hold, upon closure of the transaction, a shared interest in a suburban Pittsburgh, Pennsylvania shopping centre.

The acquisition of a 49.9% indirect interest in the Charter REIT, a publicly listed REIT, with a portfolio of 10 retail and mixed use assets in Ontario and Quebec, that currently pays a monthly distribution of $0.01333 per unit which is approximately 11% on the capital invested by IGW REIT. For regulatory reasons all updates regarding the Charter REIT will be made from time to time by Charter as part of its continuous disclosure requirements and will not be specifically discussed in the IGW REIT's State of the Units report. On a semi-annual basis, Charter will be responsible for issuing their own press releases to announce the Net Asset Value of the Charter REIT units.

Analysis and Discussion

Meanwhile, Canada's reported hiring boom was simply a bit too good to be true. That's the message in a 9,300 decline in employment in July, including a much larger 139,000 shedding of full time positions, and a slight uptick in the unemployment rate to 8.0%. Going into this report, We are skeptical that Canada had really racked up more than 200,000 new positions in only the prior three months, particularly with GDP growth barely better than flat since March. But even with July's dip, the six-month trend shows an average monthly gain of more than 40,000, easily enough to have the jobless rate improve over time.

In Conclusion

As always, it has been the greatest pleasure of my partner and Adam and I, along with everyone here at LEAGUE, to serve you in the cause of furthering the Intergenerational Wealth™ of you and your families. In the last few months, as we made the final stops on our cross-country tour, we were greatly pleased and humbled to make the acquaintance of so many Member-Partners, new and old. We hope you will continue to honour us by recommending your friends and family to LEAGUE.

Attached you will find a property-by-property account of the state of those properties within the IGW REIT and in each of our development LPs.

Warmest Regards,

Emanuel Arruda
Founding Partner

LEAGUE Financial Partners

Progress Reports

Part A: IGW REIT Properties

Arbutus Industrial Park - Parksville, BC

This property is now being managed by Gulf Pacific Group. The company's expertise in commercial leasing and accounting is expected to improve this strip mall's performance over the next few years. Eventually, we plan to refinance the property.

Vinet's Village Shopping Centre - Edmonton, AB

The centre is 99% leased.
Refinancing completed.

Sobey's Centre (formerly Camrose IGA Garden Market) - Camrose, AB

While plans and permits remain in place for the construction of 13,000-sq-ft of commercial/retail space, we are considering selling the freestanding "pad site" after severing it from the rest of the complex. This will reduce leasing and construction risks while still offering potential for profit.

Kensington Shopping Centre - Edmonton, AB

The centre is fully leased and all improvements are complete.
Previous accepted offer to purchase did not proceed.

The Lindholm Building - Victoria, BC

We are actively marketing the building for sale. This is in line with our aim to replace a number of smaller properties, with easier to manage, larger ones. Only profitable offers will be considered.
New long-term lease signed with travel agency.

Merivale Business Park - Ottawa, ON

Bingoland's lease has been renewed for five years.
Leasing activities continue.

Market Square - Fort Saskatchewan, AB

Planning has commenced for an additional pad for approximately 6,000-sq-ft of commercial retail space. Construction scheduling will commence once the property gains sufficient pre-leasing.
Lease renewed with anchor bank tenant.

Westlock Shopping Centre - Westlock, AB

A lease amendment is being negotiated to reconfigure the Bargain Shop's space so that there will be a new storefront and direct access to the shopping centre's front door. This will allow removal of the mall's enclosed section and the creation of new front-facing storefronts making it more attractive to customers. The plan has been approved by the City and a development permit granted.

843 King St. - Toronto, ON

New lease with 6,900-sq-ft restaurant signed.
New lease with 1,400-sq-ft fashion boutique signed.
Anchor tenant signs for 20-year renewal.

1916 Dundas St. - Toronto, ON

Sold as of July 26, 2010.

Fort Saskatchewan Industrial Park - Fort Saskatchewan, AB

We are awaiting completion of a sewer line extension by the City, before making further improvements to this property.

Londondale Shopping Centre - Edmonton, AB

Giant Tiger opened successfully and continues to act as anchor for mall. On the strength of Giant Tiger, leasing renewals continue.
New 2,500-sq-ft freestanding commercial retail unit (CRU) is approved for construction, and pre-leasing is underway.
Re-merchandising and renovations are complete and the centre is now 100% leased.
Parking lot realignment completed and new landscaping will also be done. The site's appearance continues to improve.

Tiffany Suites - Victoria, BC

Suites continue to be upgraded as per our original plan.

Stettler Town Mall - Stettler, AB

The mall's remaining vacant space is being marketed for lease.

Seaway Village - Cornwall, ON

On behalf of new tenant, Province of Ontario, improvements to 6,000-sq-ft space are underway.

Carlton Court - Prince Albert, SK

Lease renewals for two professional services tenants complete.
New leases have been signed for 2 new tenants totalling 2,069-sq-ft

Dodson Plaza - Drayton Valley, AB

Reviewing opportunity to add new PAD commercial units to replace existing Turbo Gas Bar with higher rent paying tenants.
Recent 3,000-sq-ft vacancy is being marketed for lease.

Westwinds Shopping Centre - Cochrane, AB

Current centre is 100% leased.
Planned 14,000-sq-ft expansion is in pre-leasing stage.

Part B: Development Limited Partnerships

The Cygnet Apartment Building - Port Alberni, BC

Cygnet is 100% occupied.
Management has been moved to Brown Bros. a property management company with a local connection. Brown Bros. has started a program further increase service to the tenants and maximize the return on the property.

Colwood City Centre LP - Colwood, BC

Feasibility studies have been completed and we can now lease to commercial occupants. Lease marketing is underway.
Proposals have been made to the new anchor tenants and a construction phasing plan will allow site development work to begin in the fall of 2010 with construction expected to begin in early 2011.
PriceWaterhouseCoopers has completed the 2008 audited statements.

Duncan Mall - Duncan, BC

SportChek, The Source now open.
Lease negotiations for the smaller spaces are in the final stages.
Two new national restaurants have opened on stand-alone pads.

473 Albert Office Tower - Ottawa, ON

The energy retrofit is complete and an application for "Boma Go Green" designation is underway.
We have closed the new financing from Concentra Finance.
Only 8,500 square feet of ground floor space remains vacant. An offer of lease from the federal government is expected.

80 Aberdeen - Ottawa, ON

We continue to backfill space unoccupied by our tenant on floors one, two and three. We are effectively bringing new tenants into the building while receiving income.

Fort St. John Power Centre - Fort St. John, BC

The purchase has not been completed because subdivision approval has not yet been obtained by the vendors, with whom we are currently engaged in litigation.
Interest of 15% on the capital invested in this property continues to accrue, pending resolution of the dispute.

Place Trans Canadienne Commercial - Montreal, QC

The site was recently rezoned to allow large-format retail shopping complexes.
We have leased space to three new retail tenants. Although the tenancies are necessarily short term, to provide us flexibility with our redevelopment plans, they are retail tenants, continuing the properties transition from industrial to retail use.

Eagle Landing Retail Centre LP - Chilliwack, BC

Numerous tenants in serious negotiations
Many offers to lease in the works, such as Subway, East Side Mario’s, Pier 1 Imports, Tim Hortons, etc.

Tyee Plaza - Campbell River, BC

With redevelopment completed, the original commitment to transfer ownership of the plaza to the IGW REIT can proceed. A separate letter is forthcoming to the unit-holders of this LP.
Multiple lease renewals, totalling over 12,000-sq-ft signed.
Major energy update and energy efficient lighting retrofit underway.

Miracle Mile Shopping Center - Munroeville, PA

Pending.

North Vernon LP - Vernon, BC

Anderson Crossing at 74% occupancy.
Red Robin restaurant under construction.

Part C: IGW Residential Capital LP

125 North Condominiums (formerly Wellington Suites) - Hamilton, ON

Our aggressive leasing campaign continues to fill the remaining vacancies.
The City of Hamilton approved our condo-conversion proposal on Dec. 22, 2009.
Work has begun on the strata plan required for the condo-conversion and sale of suites. Member-partners interested in purchasing investment condos with rental pool option, can call their MSM to request information.
Name changed from Wellington Suites to reflect building's new direction and image.

Centre One Condominiums (formerly Rosewood Towers) - Hamilton, ON

Improvements to the common areas continue, and there is a plan for a vertical garden.
Our draft condominium application was signed by Hamilton City Council in January 2010.
Condo sales underway.
Name changed from Rosewood Towers to reflect building's new image.

Chimney Springs Apartments - Vegreville, AB

Having been sold to the "IGW Residential Capital Fund," this property can now be converted into a condominium complex. Sales of condominium units underway.

Sundel Square Shopping Centre - Langley, BC

Work is proceeding on releasing vacant spaces.
We are applying for a residential re-development project on this site.
New leases completed recently include: a produce store, "Cupcakes," and two new office tenants.
Future residential redevelopment site.

Part D: IGW SegDebt 1 and 2

IGW SegDebt 1

Annualized distributions of 15.33% since inception in June 2009 up to July 2010. Monthly distributions: 14.6%.
Mortgage on Woodbine Shopping Centre in Toronto is paid out, reducing our risk.

IGW SegDebt 2

Annualized distributions of 12.22% since inception in August 2009 up to July 2010. Monthly distributions: 12.10%.

Any statements in this report concerning future performance of the IGW REIT or any other entity administered indirectly by LEAGUE Financial Partners are subject to, among other things, risks, uncertainties and assumptions about the IGW REIT or other applicable entity, economic factors and real estate markets generally. They are not guarantees of future performance, and actual events and results may differ materially from those expressed or implied by forward-looking statements included in this report.

This document is for information purposes only and is not an offer to sell or a solicitation of an offer to purchase securities. Only persons who satisfy an exemption from the prospectus and registration requirements of applicable securities laws may invest in the securities of the issuers discussed herein.

Unless an investment is available via offering memorandum, in general this means that you must either be an accredited investor or invest a minimum of $150,000. Residents of Ontario and Quebec either must be accredited investors or invest a minimum of $150,000.

About LEAGUE

Watch:
An Introduction to LEAGUE [Video]

Listen:
The Blue Book of Real Estate Syndication [Audio]

Click to download:
The Blue Book of Real Estate Syndication [Form]
Why Trust In LEAGUE
LEAGUE's Commitments
Company Backgrounder
Sustainable Building Policy
LEAGUE Investment Product Comparison Booklet
Independent Analyst's Report for the IGW REIT Summary

LEAGUE: Delivering Intergenerational Wealth™

LEAGUE Investment Services Inc. commenced operations in September 2010 when it became an Exempt Market Dealer, registered in all Canadian jurisdictions across Canada. LEAGUE's mandate is to provide its 3,200 investor Member-Partners access to institutional style investments.

Founded in 2005, LEAGUE Financial Partners, has rapidly evolved into one of Canada's fastest growing real estate asset managers with over $1 billion in assets under management. This includes the IGW REIT, a $300 million Real Estate Investment Trust, comprised of a portfolio of Canadian commercial, industrial and residential properties and the $410-million Partners REIT (TSX: PAR.UN), an open-end real estate investment trust focused on acquiring and managing a portfolio of retail and mixed-use retail community and neighbourhood centres. LEAGUE Financial Partners. is also involved in a number of individual Limited Partnerships ranging from office buildings to Big Box retail power centres.

LEAGUE Financial Partners. finds, acquires, improves and operates investment properties on behalf of LEAGUE Investment Services Inc.’s more than 3,200 Member-Partner investors. This continuing growth and the exceptional performance of LEAGUE's investments are directly attributable to the values LEAGUE espouses in its corporate credo. For we at LEAGUE hold in highest regard the qualities of honour, friendship, and co-operation with our Member-Partners in the pursuit of our common goals. LEAGUE also donates five per cent of its profits to philanthropic causes.
Everything you need to know about LEAGUE is right here: www.league.ca/about