STATE OF THE UNITS: Q4/2010

Thursday, February 18, 2010


Dear Member-Partners and friends,

WE'RE BACK!!

In just a few weeks, we will be announcing the new unit valuations for the traditional Class AA IGW REIT units. But before that happens, I thought I would take a moment and provide you with this update.

First, as always, in accordance with the first tenet of Our Credo where we affirm, "We will do for others as we would have them do for us," I wanted to share with you how hard our different teams have been working for you. Their efforts are certainly borne out in the highlights of this report:

• Occupancy: UP 4% to 91%
• Revenue: UP 16%
• Interests costs: DOWN In excess of $1,000,000 per year
• Value: To be announced March 1

Considering just twelve months have passed since weathering unprecedented storms that rocked markets world-wide, the IGW REIT has shown its mettle! On a wider scale, the direction of commercial real estate markets gives us great confidence moving forwards, as we hope it signals a return to buying rather than just holding our ground.

Statistics Canada affirms this sentiment. According to that agency's most recent data, the value of commercial building permits rose for the third straight month last December by 29.2% to a total of $1.5 billion, representing a high point for the year. Additionally, residential real estate maintained its steady pace, with $3.9 billion worth of residential building permits issued during December.

While this was happening, we introduced the IGW Private Asset Management Program, a special service for those investors who want to take their privately-held investments to the next level and the IGW Mortgage Investment Corporation which invests in a diversified pool of Canadian mortgages. Both of these investment products represent new ways for you to further your goals for your Intergenerational Wealth^TM.

Attached, you'll find a property-by-property breakdown of the state of our properties and the improvements we've made and are making. My special thanks, this quarter, goes to:

• Jim Wallace, our VP Portfolio Management, for negotiating lease renewals for 17 of the IGW REIT's spaces, and thus ensuring the future revenues (many at higher rates!) from those tenants.
• Adam Gant, my partner and co-Founder, for successfully refinancing $45 million in debt over the last six months. Thereby achieving our stated goal of completely eliminating the existing higher-rate debt, and thereby improved the REIT's net cash flow. If you've ever wondered what kind of paperwork is involved by such a transaction, CLICK HERE to see what just $22.9 million of that financing generated. I estimate I signed my name 1200 times on your behalf!

On behalf of everyone at League, I want to tell you how proud I am of our team for consistently doing just what they say they will. I also want to express to you how glad all of us here at League are to continue to have you as a Member-Partners with us.

We look forward to our upcoming IGW REIT Unit value announcement on March 1. Until then, I wish you my warmest regards and many happy returns!

Emanuel F. Arruda
Founding Partner

• This property is now being managed by the 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.
  

• The centre is 99% leased.
• Refinancing completed.

• 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.

• The Centre is fully leased and all improvements are complete.
  
• There is an accepted offer in place and the prospective buyer is in the due diligence phase.

• We are actively leasing the building to position 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.
  
• We are tendering offers from contractors for facade upgrades.

• Bingoland's lease has been renewed for five years at more favourable terms.
  
• Leasing activities continue.

• 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.

• 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.

• Installed new environmental membrane roof.
• Part of the former Durham Portfolio.
  

• As per our preference of larger easier to manage centres over smaller ones, 1916 Dundas St. is under contract for sale.
• Part of the former Durham Portfolio.

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

• Giant Tiger opened on September 26, 2009.
• 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.

• Suites continue to be upgraded as per our original plan.

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

• Leased 6,000 square foot space with Province of Ontario, January, 2010.

• Lease renewals with existing tenants are ongoing, resulting in increased revenue.
  
• New leases have been signed for 2 new tenants totalling 2,069 sq. ft.

• Reviewing opportunity to add new PAD commercial units to replace existing Turbo Gas Bar with higher rent paying tenants.

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

• 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.

• 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 work to begin in the spring of 2010.

• The Winners store is open for business and the Petsmart store will be handed over in the next two months for them to start their interior upgrades.
• The Sport Check renovations are underway and we expect to have the final facade upgrades and the interior of the Sport Check store ready for them to open up for business for September.

• 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.

• 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.

• 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.
• 2,800 square foot pet store leased.

• Leasing is advancing and we will have new tenants to announce in the next two months.
• Our site preparations is proceeding as planned and the ground for Walmart will be ready for them to start construction this spring.

• It is being marketed for lease and is under negotiations with a sports association to see if an additional training facility can be built in the back of the property to provide cash flow while we continue to pursue Walmart.

• As of October 10, Wellington Suites was transferred to the IGW Residential Capital LP.
• 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.

• As of October 20, Rosewood Towers was transferred to the IGW Residential Capital LP.
• Refinancing complete; pre-sales of condo units has begun.
• 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.

• Having been sold to the IGW Residential Capital LP, this property can now be converted into a condominium complex. Plans are underway for the sale of suites to investors and homeowners.

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