HIGHLIGHTS OF THIS LETTER:
- Investment Assurance Update
- Project Updates including: Federal Government tenant absorbs Ottawa
building vacancy!
- Preview of NEW INCOME PRIORITY UNITS option being added to the
IGW REIT (enclosed) and the new look of the IGW REIT Portfolio Profile
- Preview of the new look for League's Advertising
Monday, December 01, 2008
Greetings Member-Partners,
After months of extreme volatility, of market plunges and minor rebounds, and the ever-present dark cloud of terrifying financial news, I realize you may be feeling anxious about your investments - even those you've made with League. So I'm writing today to provide some comfort, as well as some extremely good news.
First, I want to reassure you that as a Member-Partner in any of League's investments, you are well insulated from these market extremes. Neither the IGW REIT nor any of League's Limited Partnership investments are traded on any stock exchange, and are therefore shielded from the extreme volatility of the public markets. Additionally, your investments are in tangible and real property assets. They will always have value, and, history shows us, increasingly so.
We are confident that the criteria by which we selected our acquisitions, and the performance incentives we've instituted to align our interests with yours as we work to improve their value, will allow League investments to weather financial storms far better than most. We endeavour to prove this out in each of your account statements.
Here's some more reassuring news to keep in mind while you're watching the news:
Those of you with investments in the IGW REIT, the Duncan, Tyee, Cygnet, and Londondale Limited Partnerships, will be happy to know we have no plans to halt or reduce distributions. We anticipate that your regular monthly payments will continue for the foreseeable future. Furthermore, as reflected in your account statement - viewable online by logging onto the Members Area of League's website - all your League investments are continuing to make good progress!
Feeling better? I hope so.
Project Update
It's been a few weeks since my last IGW REIT project update, and I'm happy to report some significant progress in a number of our renovation and tenancy improvements:
- Ottawa Office Building LP: We are thrilled to announce that the Federal Government has agreed to lease all of the existing vacancy (exclusive of the first floor). This is what we hoped and planned for. By our calculations, this lease adds approximately $10 million to the building's market value. The government's expected move-in date is April 1, 2009. We will review our options for holding, selling, or rolling the property into the IGW REIT at that time. Less than $800,000 remains available for new subscriptions. Don't delay!
- Duncan LP: Leasing is progressing ahead of schedule. All the major anchor tenants have signed on - thus increasing the attractiveness to remaining in-fill tenant suitors, and increasing the probability of a complete lease-out before construction begins. Only $2 million remains to be subscribed to this LP. If you wish to subscribe, call now to avoid disappointment.
- Fort St. John LP: We continue to work through service agreements with the vendor. More news will follow soon.
- Tyee Mall LP: Once the final appraisal is received, we expect to announce the new value and proposed rollover of this Campbell River shopping centre into the IGW REIT. Meanwhile, unitholders continue to enjoy the 10% distribution. This LP is closed to new subscriptions.
- City Centre Colwood LP (formerly CityZen LP): We're pleased to have added a new partner to our development team: Property Development Group. These are the same people who helped us lease anchor tenants in Tyee Plaza and Duncan Mall, and were responsible for the development of the massive Metropolis at Metrotown centre in Burnaby, BC. They will now be focusing on retail leasing for City Centre Colwood LP. Those who invested in this LP will recall that capital was raised in two rounds. Please note: the first-round unit bonus of 50% appears on your current account statements, but the second-round 15% bonus is not yet shown. This will appear after the updated Offering Memorandum is filed with the BCSC, along with the delivery of your bonus unit certificates. We expect to file the new OM within the next 60 days. No new subscriptions will be accepted until the new OM is filed.
- IGW REIT: Giant Tiger is now open in the Kensington Shopping Centre, and Dollarama has opened in both the Stettler and Drayton Valley centres. At the current REIT unit value of $1.116, the annual return for the preceding 12 months is 15.31%. The annualized return since January 01, 2007 is 16.23%, which includes a cash distribution plus an 11.6% increase in the unit value since inception. Subscriptions for the IGW REIT are still open. Any made in December will have monthly distributions that begin on January 21, 2009. The next unit revaluation is February 1.
- Cygnet PP 376 LP: The strata disclosure statement has now been filed, which allows us to begin selling individual condo units to existing tenants and investors for rental income. Member-Partners interested in advance purchases of a fully-managed rental condo, please call League's CEO, Adam Gant, directly for details. The Cygnet continues to pay out a 10% distribution. This LP is closed to new subscriptions.
- Londondale PP 337 LP: Giant Tiger has signed on as the main anchor tenant. Once they move in, the Centre will be fully leased and occupied. Londondale continues to pay out a 12% distribution. This LP is closed to new subscriptions.
Resolutions approved; the new Income Priority Units forthcoming
I've been saving the best news for last. Many thanks to our Member-Partners for their overwhelming approval of both the IGW REIT and the IGW REIT LP resolutions. This means that the original IGW REIT LP unitholders now have liquidity equal to that of IGW REIT investors. It also allows us to create the proposed new class of units: the Income Priority Units.
We are designing the Income Priority Units to have a fixed distribution of 10% per annum, paid monthly, but no unit value appreciation. This is in contrast to the REIT Unit's current yield of 9.01% - based on purchasing at today's unit price of 1.116 per unit - plus unit value increases that have exceeded 6% per annum, meeting our targeted total return of at least 15% for these units.
So, along with your subscriptions to the current IGW REIT units, we are immediately accepting your advance Notice of Interest for the IGW REIT's new Income Priority Units. (No subscriptions for the Income Priority Units will be accepted or processed until the new Offering Memorandum, including the required disclosure, is filed and distributed to everyone who has submitted an advance Notice of Interest for these new units.)
These new units will not only help us to improve the overall performance of the REIT by reducing our cost of capital over time, and will also allow Member-Partners to tailor their REIT investment to match their preference for:
- capital growth along with monthly cash flow, through investment in the existing REIT Units; and/or:
- even higher monthly cash flows, but with a fixed maximum rate of return, through investment in the Income Priority Units.
The new IGW REIT Investment Overview outlines how the Income Priority Units work and how they may benefit you.
Rest assured, we're in it for the long haul
Finally, let me reiterate: we continually monitor world economic conditions, just as we continually assess local markets where we see opportunities. Please rest assured, we are in it for the long haul. After all, our commitment to positive-interdependence and adherence to Our Credo bind our success to yours.
When making decisions we always do so with the best interests of League's Member Partners in mind. We are well aware of the trust you have placed in our management and staff, and assure you that the safety of your capital is our highest priority.
We thank you for your continuing commitment to League, and sincerely hope that your other investment providers are bringing you similar good news. We also hope you will continue recommending League to your friends and co-workers whose investments may not be faring as well.
If you have any questions, concerns, or comments - as always - either Adam Gant or I, and any of our Members' Services Managers, are available to speak with you personally. We at League will always be here to help.
Warmly and sincerely,
Emanuel.
Emanuel F. Arruda
Chairman & Co-Founder
League Assets Corp.
P.S. We're changing our newspaper advertisement. Take a look and let me know what you think. The new ad that will begin appearing in the Globe and Mail next week.
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