"LEAGUE'S IGW REIT INVESTMENT GRADE," SAYS ANALYST

Tuesday, September 28, 2010

Dear Friend,

You'll remember that since May 2009, we've had the Net Asset Value (NAV) of our IGW REIT units independently verified by Colliers International Realty Advisors. Now, we have gone one step further, by having the IGW REIT's regular and Income Priority units "bond rated."

A bond rating is a ranking of a bond's quality based on its value as a sound investment. Bonds are rated from a high of "AAA" (highly unlikely to default) through a low of "D" (companies already in default). The rating is based on such factors as the issuer's reputation, management, debt, and the bond's record of paying interest.

Operating under a business model similar to Standard and Poor's, Exempt Analyst Inc. (EAI) of Calgary recently examined the audited financial statement of our IGW REIT, tested its structure and its fundamentals, and then compared it with Canada's largest public REITs.

The analyst's determination: LEAGUE's IGW REIT is "investment grade" and on par with Canada's biggest and best publicly traded REITs.

To put this in perspective, a bond is considered "investment grade" (or IG) if its credit rating is BBB- or higher by Standard & Poor's or Dominion Bond Rating Service (DBRS). Generally they are bonds rated as likely to meet payment obligations that will allow banks to invest in them. Here's what EAI said in its report: "EA Analyst considers (LEAGUE's) Income Priority Units to be investment grade and has rated this second position debt as BBB. This is a similar rating that DBRS assigns to RioCan's second position debt..."¹ EA Analyst also rates our IGW Class A, AA, and AAA units as STA-2 "investment grade," indicating its confidence that we can maintain distribution stability. This is similar to the DBRS rating on RioCan. EA Analyst feels that investing in the IGW REIT "is a similar risk to RioCan, but allows investors to purchase at NAV without the volatility of publicly traded units."² According to DBRS, Income funds rated STA-2 have very good distribution stability and sustainability.

The BBB rating awarded to our Income Priority units stands us well in relation to our peers. Only the larger REITs with assets under management in the billion-dollar range score AA and AAA ratings.

Overall, EAI noted that the IGW REIT "...is less leveraged than publicly-traded comparables. This makes the IGW REIT less susceptible to changes in the capital markets."³ Similarly, EAI also found that "IGW REIT's cost structure is extremely low... IGW REIT management has been very conscious of keeping fees low in order to produce higher returns for investors."⁴

To download a copy of the report, click below:
http://league.ca/images/reit/reit_rating_full_report_september_2010.pdf.

I am very proud that yet another independent evaluator has seen fit to write such a positive report on us. I am also extremely grateful for the hard work of many people who have brought us to the point where we can confidently have a third party verify what we've been saying all along. It is yet another vote of confidence in LEAGUE and our IGW REIT.

If you have any questions or wish to discuss the EAI report in more detail, please contact your Member Services Manager. She or he will be pleased to talk with you.

Warmest regards,

Emanuel F. Arruda
Founding Partner
LEAGUE Financial Partners