MARKET OVERVIEW

With $85.7 billion worth of projects planned for Northern Alberta, the outlook for Edmonton remains positive. The city continues to be the dominant force in supplying services to support developments in the oil sands. Edmonton has experienced a decade of strong economic growth, with 2006 being no exception. Edmonton's economy grew by 5.9% in 2006 and is expected to maintain growth well above 3.0% over the next five years. Unemployment in the city dropped to 3.6% in 2006 and remains one of the lowest in the country. Robust job gains continue to fuel consumer spending growth and increased personal wealth.

The demand for all classes of real estate should remain strong for the foreseeable future. With strong construction activity, solid business climate, low unemployment and positive consumer attitudes, future growth prospects for the Edmonton economy remain very positive.

Office Market Highlights
Edmonton's office market performed exceptionally well in 2006, with an overall vacancy rate of 4.9% and increasing demand for office space. Leasing activity was largely driven by the expansion of local businesses.

Class A vacancy in the downtown financial core decreased 1.1% over the year to end 2006 at 2.9%. With vacancy continuing to tighten, net rental rates in Class A buildings increased by nearly 70.0%, climbing as high as $24.00 per square foot. The suburban market also performed well, with the vacancy rate dropping to 8.5%. currently there is 1.0 million square feet of suburban office development proposed.

The current trend of decreasing vacancy and increasing rental rates is not anticipated to change over the near term. Expect rental rates to reach $27.00 to $29.00 per square foot in the downtown Class A office market, $16.00 to $18.00 for suburban office and as high as $24.00 per square foot for new suburban developments in 2007.

Industrial Market
Edmonton's industrial market has reached record high levels with respect to lease rates, land prices and facility sale prices. These levels are expected to trend even higher in 2007, as Edmonton's industrial vacancy rate approaches 1.0%.

Average industrial lease rates for existing buildings range from $5.75 to $8.50 net per square foot in south Edmonton and $5.50 to $7.00 in the northwest. New projects are achieving $7.75 to $9.00 net per square foot on the south side and $7.25 to $8.50 in the northwest. Tenants should expect minimal improvements and fewer tenant inducements as Edmonton's industrial sector continues to be a landlord controlled market. Prices for industrial zoned land have increased to an average of approximately $350,000 per acre and as high as $525,000 for fully serviced parcels on major transporation routes in the city.

Retail Market
Retail sales in Edmonton grew by 8.2% in 2006 and are expected to remain solid over the near term. Accordingly, with vacancy on the decline over the past two years there is little retail space available in the city at this time.

With strong retail demand from a growing residential population, Edmonton's retail landscape continues to develop. Expansion plans are underway at South Edmonton Common and RioCan's Home Depot anchored "Meadows" project is well under construction and should open in 2007. In addition, site work at Windermere Crossing, a substantial (117 acre) new retail development "Hybrid Centre" mixing traditional big box development with a lifestyle centre in Edmonton's southwest, is underway.

Investment Market
Investors perceive Edmonton as one of the top growth markets in Canada and this has translated into a very active investment market. REIT's and pension funds continue to lead the charge for larger assets, with private investors dominating the activity on smaller properties.

Sales volumes continued to grow, with 2006 totals up 20.0%. However, the number of buildings sold has actually declined over prior years, suggesting that pricing for buildings that do trade is at a premium. Land is now the dominant product trading in the Edmonton market, accounting for over half of the activity for 2006. Continued upward pressure on rental rates across all product types, combined with strong competition for product, had pushed pricing to record levels. Expect to see continued but slowing yield compression in 2007, with stable interest rates projected over the medium term.

Population Total Office Space Total Vacancy CBD Class A Industrial Space Industrial Vacancy # of Multi Family Residential Units Multi Family Residential Unit Vacancy

1,032,000 21.5 million sq. ft. 4.9% 2.9% 78 million sq. ft. 1.5% ~75,000 1.2%