IGW REIT: Here We Grow Again!

Monday, June 7, 2010

Greetings Member-Partners of the IGW REIT and the IGW REIT LP,

Today, we are pleased to announce the IGW REIT's latest acquisition — an indirect investment in a portfolio of 10 retail assets. These properties fulfill the REIT's acquisition criteria — namely, stabilized assets, producing positive cash flow, and the potential for additional upside appreciation.

The properties comprising the portfolio of assets are:

• three single-tenant Rona stores located in Exeter, Seaforth, and Zurich, Ontario;
• three single-tenant Canadian Tire stores located in Brockville, Strathroy, and Wasaga Beach, Ontario; and,
• four shopping centres located in Quebec and Ontario. Two of these, a power centre and a mixed-used strip mall, are located in Montreal, while other two, a grocery-anchored plaza is located in Sudbury, Ontario  and a large enclosed mall is located in Cornwall, Ontario.

The Deal in Summary
The portfolio of retail properties is held in the Charter REIT (TSX-V:CRH-UN) a publicly-traded REIT, of which IGW Public LP, a wholly-owned subsidiary of the IGW REIT LP, has purchased 33% of all issued and outstanding units. The investment itself is a relatively small one — equaling less than 10% of the total current IGW REIT Net Asset Value (NAV) dollar value — so we expect it will not have a significant impact on the distribution to the IGW REIT unitholders at this time. Our shorter-term strategy continues to be to focus creating value, which means utilizing cash for strategic acquisitions and property improvements. Over the longer term, however, we plan to increase the distribution amount when prudent to do so.

A major advantage is that the cash flow provided is significantly higher than any other Canadian property currently in our sights for acquisition. Beginning immediately, based on Charter's current distributions, we expect the IGW REIT to receive an 11% annualized cash return from this investment, as well as a proportionate share of any value increase in the portfolio.

Thus, we remain true to the eight tenet of Our Credo where we affirm that we will undertake no investment that is beyond our expertise.

As part of the terms of the purchase, LAPP Global Asset Management Corp., an affiliate of the IGW Public LP (an affiliate of LEAGUE), will enter into an asset management agreement with the Charter REIT. As per Our Credo, incentives are aligned, and we will apply all of our value-adding strategies and efforts to these properties to ensure this investment delivers the highest possible return on investment in the shortest possible time frame for the other unitholders and the IGW REIT's Member-Partners.

Will it change the way the Pricing NAV is calculated?
In a word: no. Despite that these properties held within a public entity, all of the properties will be appraised semi-annually (as usual) by Colliers International, and 33% of that value will be reflected in the IGW REIT's Pricing NAV — just as with any other property. And although the addition of these properties may affect the value of the IGW REIT post-acquisition just as adding any new project to the REIT, daily fluctuations in Charter's unit price will not affect the IGW REIT's quarterly unit revaluations or ongoing distributions. The IGW REIT will continued to be revalued quarterly, with complete portfolio revaluations conducted by Colliers International semi-annually.

Our Values Remain
In reading about this acquisition, some of you may be wondering what this means for the IGW REIT: in short, absolutely nothing. The acquisition will not introduce volatility to the IGW REIT's unit price, nor will it impact the REIT's distributions negatively. Nor does it mean we are taking the IGW REIT public, or that we are abandoning our belief in privately-held real estate. We will use the same third-party appraisal method at the same semi-annual and quarterly intervals to value the traditional IGW REIT Units. Any change in appraised value derived from this portfolio of properties will be reflected in future IGW REIT Unit Revaluations — just the same as every other IGW REIT asset.

It is a fact that the stock price of many public REITs does not adequately reflect the underlying value of their real estate portfolios. And so, we see the acquisition of the Charter portfolio and through our affiliates, the entering into of the asset management contract, as an opportunity to add potentially significant value to our holdings on your behalf, which has always been one of our goals.

Positive Interdependence at Work
As a result of the positively-interdependent opportunity-sharing agreement between the Charter REIT and the IGW REIT, we expect that both entities will have a stronger ability to acquire bigger and better assets and take even greater advantage of the economies of scale.

For the IGW REIT, we believe these properties increase the potential for unit value growth, along with a potential for a proportionate share of distributions.

The Results of Synergy
This is an especially compelling story for LEAGUE as it continues to represent "LEAGUE's Way" and potentially benefits us in ways that otherwise may not have been available.

For LEAGUE, our 33% interest in the Charter REIT gives both us and our investment entities a higher public profile. This could translate into to a lower cost for capital and mean potential greater net returns for all unitholders in the future. Further, as the value of the Charter REIT grows, so potentially will the value of the IGW REIT's investment in it. Working with Charter will also mean that we can access new relationships, along with the possibility of working with larger capital partners as we go forward, all of which is perfectly consistent with our goal of providing and supporting Intergenerational Wealth™ to our Member-Partners and friends.

We are proud to provide our Member-Partners with this extraordinary opportunity, and look forward to updating you with the results of this acquisition in future IGW REIT updates. In the interim, should you have any questions, please don't hesitate to speak with your Member Services Manager, or call us directly.

Warmest regards and best wishes for your financial future.