Institutional Asset Management

Introduction

As of May 2011, LEAGUE has accumulated $920+ million in assets under management with build out of over $2 billion. LEAGUE’s unique ability of finding and acquiring profitable real estate assets has been noted in such publications as the globe and mail, profit magazine, Canadian Apartment Magazine and Strategize Magazine, and even earned its founders a feature chapter in the book Dynamic Entrepreneurs of the 21st Century.

LEAGUE is a principled-centered company and the business model works on the premise of building long term relationships with institutions and high net worth individuals. Specifically what sets LEAGUE a part from other asset managers are the following five key items:

1. Independently confirmed to have Lowest fees of any real estate syndicator in Canada.
2. Demonstrated track record of providing returns of between 15% - 30% IRR
3. Our credo and core values we live and honor daily. Our vision of being the world’s intergenerational wealth institution will provide lasting value to communities, families and institutions
4. World class executive management team and advisors
5. Stringent due diligence process

In the following tabs you will find additional background on LEAGUE Capital Partners including:

a. Our Legacy of Success
b. Our Credo and Core Values
c. How we earn our share
d. Our process for selection of assets
e. Our track record

Leveraging a Legacy of Success

LEAGUE Capital Partners is built upon LEAGUE Asset Corp’s solid foundation of trust, and it’s unblemished track-record of success.

As of April, 2011, LEAGUE has approximately $920 million in assets under management, with total build-out value of approximately $2 billion. This includes a plethora of individual Limited Partnerships, as well as the IGW REIT, a $270 million Real Estate Investment Trust, comprised of a portfolio of Canadian commercial, industrial and residential properties—which was independently given two “Investment Grade” ratings, and later, in a second independent report, confirmed to have the lowest management fees of any private asset management in Canada.

Leaders, Not Followers

LEAGUE Capital Partners stands head and shoulders above the competition by virtue of the way we do business and the opportunities and services we provide to our partners.

Our Stringent Qualifications for Every Property

As part of its responsibilities, LEAGUE identifies acquisitions prospects for the various entities it manages. To merit consideration for acquisition, each property must exhibit all of the following characteristics:

• advance successfully through each stage of our rigorous due diligence, risk, and future income analyses;
• have the potential for revenue growth and capital appreciation;
• have the potential to deliver our targeted return on investment of at least 15% per annum; and,
• exhibit strong upside potential by filling current vacancies, adding new leasable space, increasing rental rates, and/or re-developing the property to produce additional income and value.

Our criteria for selection, methods of measurement, and standards for approval are all predetermined and inflexible. If the property cannot reasonably be expected to achieve the prescribed results, the acquisition will not proceed.

Our Corporate Strategy

LEAGUE pursues a twofold strategy in the sphere of real estate syndication. Our first priority is to manage the current property portfolio in an optimal manner. Second, we concentrate on improving the portfolio by undertaking selective property acquisitions and disposals, and by developing new opportunities, including construction of new buildings and the renovation of older ones, while improving management, financing structures, and lease agreements.

Our Investment Strategy

We acquire properties with high-yield potential, finance them optimally, and manage them productively.

We concentrate on the fundamentals. The key to a property's attraction to tenants is its suitability, location and efficiency of operation. LEAGUE's asset management and development teams understand this and can anticipate the needs, expectations and technical requirements to keep occupants happy.

Our Acquisition Strategy

Our acquisition and value-adding strategy is straight-forward: we target investment opportunities with the potential to deliver high yields in a range of commercial, industrial, and residential sectors in key geographical areas.

When qualified acquisition targets are identified, syndication groups are formed, legal entities are created and capital is raised to purchase the properties for the benefit of the participating investors. Once acquired, new financial targets are set, and the existing management personnel are augmented or replaced. The properties are managed by LEAGUE's property management partners to ensure meeting our stringent financial targets.

Our opportunistic but risk-averse strategy seeks to achieve long-term growth in investment value by:

• focusing on prime assets in the commercial and residential sectors;
• negotiating the lowest-possible purchase price from third-party vendors, and using vendor-financing whenever prudent to do so;
• restructuring debt to lower our overall exposure to it;
• creating long-term investments with strong covenants, long lease terms, and growth potential;
• enhancing returns through active management and development; and,
• maximizing equity returns through optimal financing strategies.

By exploiting the strong local market knowledge of our experienced team, and through our strategic alliances and partnerships with various professionals, LEAGUE Capital Parnters is able to acquire, maintain, and dispose of strategic assets optimally.

Our Acquisition Targets

Regardless of the specific type, LEAGUE acquires and develops properties primarily to produce value in the short and long terms for its investment partners. Concurrently with managing our assets, we are always exploring new opportunities for additional income from new acquisitions or development, as well as from providing income-producing leasing or tenant services.

With a very diverse profile, LEAGUE offers investors many alternatives across a broad range of real estate sectors, including:

• shopping centres and malls;
• industrial parks and warehouses;
• apartment complexes;
• office buildings; and,
• sustainable energy projects.

Through the principle of positive interdependence, we offer investors a clear distinction as to how fund managers treat them.

Traditionally, a fund manager will skim off a percentage through front-loaded or back-loaded fees. Most investors have come to regard this, albeit begrudgingly, as the "cost of doing business."

At LEAGUE, we do things differently. We earn our share primarily from the improvements we make to the investment, and only after the investment partners have received their share.

This principle of Interdependence is one more reason why LEAGUE's founders, executives, and staff invest alongside the Member-Partners. We believe in our own investments! In this way, we are Member-Partners as well, sharing in the common good. In other words, we believe that maximum benefits can only be achieved for a group when the individuals in that group do what's best for themselves and what's best for the group at the same time.

In Conclusion

All investors have choices. Not only in the investment products available, but in how they are treated by the people who are managing the companies they invest in. We at LEAGUE, through our principled approach to investment partnership, offer a clear and certain choice to discerning investors.

423 Albert Street Office Building, Ottawa

This 11-storey 131,000-sq-ft building, located in the commercial core of downtown Ottawa, was 50% vacant when we acquired it. During the course of our due diligence, we learned that the owner was in dispute with the federal government, which at that point had moved its offices out and ceased negotiations. At the same time, we learned of a request for proposal (RFP) from the federal government for more office space. We put two and two together, acquired the property for $19.5 million, budgeted approximately $5 million to complete required upgrades, won the RFP and successfully leased virtually the whole building to the federal government. Using its latest appraised value of $32 million, we were then able to refinance the property and extract 18% of the total equity investment. The asset has appreciated in value by 18% compounded annually at the date of sale to IGW REIT. The next step is to have the LEAGUE's IGW REIT acquire the property in a tax-deferred rollover so that the original LEAGUE investors can exit the project and realize their return on investment.

Kensington Shopping Centre, Edmonton

When we purchased this property, the grocery store anchor tenant had moved out, and the largest remaining tenant (a gymnasium) was failing. Our leasing team went to work and found two new anchor tenants: a produce retailer and a large general merchandise store (Giant Tiger). The latter required an additional 6,000 sq. ft. added to their space, which we built to their specifications. Throughout the redevelopment, income levels were at break-even or better. Thanks to the draw created by the new anchors, we were able to find tenants for the remaining vacancies and negotiate better rates from existing tenants at renewal. Initially, we made a $5.4 million purchase, then invested $1.3 million in upgrades, and ended up with a $10 million asset.

Lindholm Professional Building, Victoria

The purchase price for this property was $4.3 million, and included the adjacent parking lot. We immediately found a buyer for the parking lot and sold it for $960,000. Thus we effectively acquired this asset for $3.4 million, and in the process increased its cash return significantly. Once vacancies were filled the building was re-appraised for $4.5 million.

Market Square Mall, Fort Saskatchewan, Alberta

When we found this property, the grocery store anchor tenant had moved out. A local developer had convinced its owners to move to his new mall by paying their rent at our location for the remainder of their lease term - four years. With this cash-flow secure for that length of time, we were confident we could find a new anchor. We purchased the property, found two large commercial tenants to take over the empty space, and divided it as per their requirements. Thanks to the attraction created by the new anchor tenants, we leased the remaining vacant space quickly. In summary, we purchased the property for $6.2 million, invested approximately another $600,000 in it, and two years later had it re-appraised for $8 million.