LEAGUE'S STATE OF THE UNITS REPORT: Q1 2009

• Strategy and results review
• Creating increased value
• Property Progress Report

Wednesday, June 17, 2009
 
Greetings fellow Member-Partners and friends,

I am pleased to provide herewith progress reports for the properties in the REIT pool as well as the individual Limited Partnerships managed by League on your behalf.

Effective today, the REIT will be issuing units pursuant to the offering memorandum dated June 16.

This quarter, the REIT unit value decreased for the first time since its inception February 2007. Even so, the returns of the IGW REIT have outperformed the TSX by approximately 29.2% and the Bloomberg REIT index by 52.8% for the same period. Still, we would be doing you a disservice, both as Member-Partners and as our friends, to attempt to sugar-coat the fact that the impact of the world financial crisis has finally been felt in our portfolio.

The effects were minimized to a great extent, however, by the hard work of our leasing and redevelopment staff, which have been working diligently to create value in our properties. The benefits of our long-range plan of buying undervalued properties and adding value to them continue to be borne out. And thanks to the complete portfolio revaluation by Colliers International, our unit values have now been independently re-calibrated according to the current economic situation, and thereby providing us a point of reference as we go forward.

It's important to note that although the REIT portfolio appraisal has been in the works for more than a year, its timing with the economic slowdown is an unfortunate coincidence. I should also point out that although both firms offer similar services and have excellent reputations internationally, the decision to switch from Altus Helyar to Colliers International was made for two primary reasons: Colliers not only performed the same services at a 10% cost savings to the REIT, but they also were willing to go several steps further than Altus.

Rather than just revaluing the properties, they also looked at all of the assets and liabilities of the REIT to determine the current value - right down to the value of a single REIT unit - and presented the verified unit value on their letterhead. This level of independent verification and disclosure is what we at League have been looking to provide our Member-Partners all along. We're proud to be the only private real estate syndicator to go to such lengths to provide accountability, disclosure, and transparency.

In summary, despite the adverse economic conditions we anticipated that the improvements we made would be more than enough to completely offset the effects of the world-wide economic slow-down. The results show that we did not fully reach our goals. Nevertheless, the properties are all in better - not worse - condition than when we acquired them and, we believe, well poised for value recovery when the economy returns to normal.

On the other hand, the one and two-year Income Priority Units (IPUnits) remained stable at 8.5% and 9.25% respectively. However, these rates and terms have now been replaced with three new IPUnit choices. The IPUnits now come in a one-year term at 6.5%, three years at 8% and five years at 9.25%. At their new levels, the IPUnits still provide a more attractive yield than any other comparable investment product that we can find and an excellent alternative to investing in volatile markets.

Never a follower, always a leader
Another League strategy that has proven itself in this turbulent economic climate is the wisdom of our positively interdependent remuneration policy, where we earn our pay through creating increased value in our investments. Thus, according to the 11th tenet of Our Credo:

"WE BELIEVE that League's compensation should be linked to results. Thus, our
remuneration will be linked to the increase in income and value we create in our investments, the resources we expend to acquire them, and the risk and responsibility we assume in managing them."

As always, we are constantly seeking to maximize value for you, our Member-Partners. I'm pleased to report that our Asset Management team has secured a reduction on a portion of the REIT's highest-rate mezzanine and bridge financing, through cash realized in the sale of certain properties. The proceeds of the sales have reduced interest costs.

We have also changed one of our property management providers to the Gulf Pacific Group, a Canadian company with extensive experience in commercial property management. This firm is familiar with REITs and we hope they will help us achieve significant cost savings. As well, we have undertaken to reduce insurance costs through an umbrella policy with Aon Reed, and hired additional in-house legal counsel, thus reducing the need for, and cost of, outside counsel.

All of the steps outlined above are prudent inasmuch as they serve to increase both the REIT's unit price and the revenue from operations; make the REIT more attractive to lenders, given the current restrictive lending environment; and position the REIT to act quickly on new real estate acquisitions once prices bottom out and credit markets rebound.

We strive to keep you up to date on all developments - be they good, bad, or something in between. We believe that we have a responsibility to be utterly transparent and to keep you informed, as stated in the 17th tenet of Our Credo:

"WE BELIEVE that as leaders in the investment community we must operate our business affairs with transparency, and in the light of accurate knowledge. We will continually strive to keep our Member-Partners informed of all matters that affect the value of their investment, and do so in a manner that is clear, fair, truthful, timely, and complete."

Our faith is borne out by the fact that many of you have written in the past few months, showing your understanding and support for our direction. As fellow Member-Partner Curtis G., writes:

"I just wanted to say that I'm not worried about the drop in unit value ... I'm happy as long as you guys keep doing what you're doing, improving properties, and securing great anchor tenants.  I see our current "capital loss" as an opportunity to purchase more (units) of an awesome investment ..."

From other e-mails, I am gratified to see that the vast majority of you share Curtis's point of view. As my partner Adam and I, along with other members of the League team, travelled across the country  the last week of May to meet with you, I was touched by how many came up to us to express their faith in both us and our shared Credo.

It is my pleasure to provide you with this report, and I trust it will suffice for now. As always, if you have any questions, call your Member Services Manager who will be happy to help you. In the event he or she cannot answer your question, please do not hesitate to contact me or my partner Adam Gant.

In the following pages, progress reports are presented for each of the properties in the REIT pool, as well as the stand-alone Limited Partnerships.

Warmest regards,

Reminders...

The State of the Units Report for the REIT is published quarterly in March, June, September and December on this web page. This includes detailed updates on ongoing activities at each property.

Distribution payments for the REIT begin on the 21st day of the month following the day you invest. You need not wait until the next revaluation to subscribe and begin receiving your distribution payment.

Tax slips are issued for Limited Partnership and REIT unitholders by March 31st each year. Please note that electronic filing is not possible for Limited Partnerships less than one year old.

New unit values for the REIT are announced on the last day of February, May, August and November. Complete portfolio reappraisals take place prior to the May and November revaluations. At the February and August revaluations, only those properties that we expect to have changed in value are selected for reappraisal. To review how the revaluations are performed, click here or review the Frequently Asked Questions section of the current Investment Overview available in the Members Area.