September 25, 2008

Some thoughts on The Week That Was

Greetings Member-Partners and friends of League,

To say that last week on the world's financial markets was an historic one is an understatement, as I am sure you will agree. Rob Arnott, a market historian with California-based Research Affiliates, called it "the largest financial crisis since the Great Depression". Many others have echoed that assertion.

After months of volatility, markets plunged to new lows in reaction to the demise of two of the United States' most prestigious financial institutions - bankruptcy in one case, and the other swallowed up by the Bank of America. Next we saw the American government bail out insurance behemoth AIG, followed by further bail-out pledges that some estimate will reach $1 trillion. Think 12 zeroes!

As the week went on, markets around the world went into free-fall. In Canada, the S&P/TSX composite index closed last Wednesday down 21% from its record high three months earlier. Then it rebounded on Friday by 7%, the second-largest percentage gain in the history of the TSX. Trading was frantic - 861 million shares Thursday, 831 million Friday.

Member-Partners are protected from extremes

Such frenetic ups and downs -- and the extreme anxiety that stock market investors world-wide are experiencing -- are what you, as Member-Partners, do not have to experience. Since the IGW REIT is a private trust, and therefore not traded on any stock market, your investment is insulated from the extremes of the markets. You are protected as well because you are invested in tangible, real property assets.

It is no secret that the greatest wealth-builder has always been real estate. But real estate is more than just a fallback investment during a bear market. Carefully selected income properties have safe long-term value because they are secured by physical assets, and thus are largely immune from stock market volatility. They can provide a levered 10% return even when markets are flat.

Although past results are no guarantee of future performance, you will be happy to know that the annualized return since the IGW REIT's inception is 16.62%, which includes your cash distribution plus a 10.4% increase in the unit value. With current mortgage rates so low and vacancy rates in prime areas hovering at 1.5%, investing in a private syndication such as League's IGW REIT has never made more sense.

Furthermore, Canada has not undergone declines in real estate values comparable to those in other countries, among them the U.S. and the U.K. In fact, the International Monetary Fund not long ago cited Canada and Denmark as the only undervalued real estate markets in the world. Which tells us that there is still upside potential in Canadian real estate.

We at League continue to monitor world economic conditions, just as we continually assess local markets where we see opportunity. And rest assured, we are in it for the long haul. After all, our commitment to positive-interdependence and adherence to Our Credo perpetually bind our success to yours.

Thank you for your continuing trust and commitment to League.

Kind regards,

Emanuel F. Arruda
Chairman & Co-Founder
League Assets Corp.

--------------------------------------------------------------------------
"If you are going through hell, keep going."
- Winston Churchill -
--------------------------------------------------------------------------