BARCLAY STREET REAL ESTATE LTD.Calgary, Alberta

YEAR END 2015

The Greater Calgary industrial market saw dramatic changes in 2015, with vacancy rising 53% year-over-year from

4.30% at the end of 2014 to 6.57% at the end of 2015. This marks a +15 year peak for Calgary’s industrial vacancy rate, which was previously set in Q4 2009 at 6.38%. Vacant space at the beginning of 2015 was 5,705,105 square feet, which rose to 9,079,126 square feet by the end of the year, an increase of almost 3.4 million square feet.

Industrial inventory numbers increased by 5.5 million square feet during the year, meaning that the market actually saw positive absorption of 2.15 million square feet for 2015. This is total inventory growth of approximately 1.6% in occupied space which is far below the 5.2 million square feet of positive absorption seen in 2014. It is also below the 10 year average absorption rate of 3.4 million square feet for the GCA. The past year was still significantly healthier than the 300,000 square feet of positive absorption witnessed in 2009, which is arguably the last comparable year for economic performance.

INDUSTRIAL REAL ESTATE MARKET OVERVIEW

SEMI-ANNUAL REPORT | BSRE INDUSTRIAL REAL ESTATE 1

OVERALL Q4 RATE6.57% +1.09%

FROM Q3 2015

Current Vacancy 2015 Absorption

STATUS:FOR SALE

SIZE: 76,345 sq. ft.on 5.48 acres

CRANES: 9 cranes5 to 15 TON24’ - 28’ hook height

FEATURE PROPERTY

2.15 MILLION SQUARE FEET

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Dec' 02 Dec' 03 Dec' 04 Dec' 05 Dec' 06 Dec' 07 Dec' 08 Dec' 09 Dec' 10 Dec' 11 Dec' 12 Dec' 13 Dec' 14 Dec' 15

Historical Vacancy & Absorption

Vacancy % Absorption

2SEMI-ANNUAL REPORT | BSRE INDUSTRIAL REAL ESTATE

MARKET UPDATECONSTRUCTIONOf the 5.5 million square feet of new construction, 1.5 million was completed in the NE quadrant (Stoney and Airport), 2.5 million was constructed in the SE quadrant (Great Plains and Dufferin), and the surrounding Rocky View County and Airdrie areas saw a total of 1.5 million square feet of inventory growth. Inventory growth in the surrounding area is most interesting, given that the area represents under 10% of the total inventory for the GCA. At year-end there is 1 million square feet of space under construction, of which 871,493 square feet is actively being marketed for lease.

The unprecedented growth in Rocky View over the past 10 years has been a dramatic change to the industrial dynamic of Calgary. The majority of available industrial raw land options in the GCA are not within City limits. Besides a handful of one-off pieces, there are only two parks offering industrial land in the City (one in the south and one in the north). In Balzac alone, (located between Calgary and Airdrie) there are four parks offering land options.

A greater number of lease options now exist regardless of square footage, location, and characteristics. Rental rates overall have decreased by as much as 10% for certain asset classes, with most product seeing rental rate reductions of +/-5% from the latest peak in Q3 2014.

Tenant inducements from landlords are increasing, and market dynamics have largely shifted in favor of the tenant. However, certain product types are still in short supply, and A-class real estate that is well-located has been most stable.

The largest hit will be C-class properties with challenged ceiling heights, loading depths, parking counts, and outdated interior improvements. A search of all industrial listings show a total of 529 listings on the market, which is just above the average of +/-500.

SALE MARKETThe building sale market has seen a reduction in activity, with a total of 65 industrial properties trading in 2015, which is down from the +/-80 properties that historically transact on average per year. Investment sales versus owner/user sales were relatively balanced with 35 transactions for the former and 30 for the latter.

Total dollar volume transacted was $285 million over a total of 2.975 million square feet, for a resulting average sale price of $96 per square foot. However, the 1.3 million square foot Balzac facility sale from Target to Sobeys for $50 million or $38 per square foot is a major outlier, as the sale transacted at a below-market price due to non-real estate factors. Removing this transaction alone, the average adjusted sale price increases to $140 per square foot.

FORECASTINGForecasting into 2016 has vacancy expecting to increase slightly through Q1 and Q2 due to construction completion and stagnant but stable leasing activity. Expectations are for positive absorption overall in 2016 with a reduction in the vacancy rate to +/- 6% by year end. General market dynamics will continue to favor the tenant and purchaser as deal activity will be lighter due to depressed commodity markets and a darkened global outlook for 2016. Sales of owner/user buildings, investment properties, and raw land are expected to be slow for at least the first two quarters of 2016 as few vendors are unduly motivated while purchasers still want to see a price reduction.

HISTORICAL VACANCY

VACANCY BY QUADRANT

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%9.00%

10.00%

SE Q4 CC Q4 NE Q4

2015

SE Q4

CC Q4

NE Q4

2.52%

5.29%

5.97%

4.76%

3.71%

2.42%

1.26%

1.82%

3.81%

6.19%

5.63%

4.91% 5.01%

5.77%

4.30%

6.57%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

Dec' 00 Dec' 01 Dec' 02 Dec' 03 Dec' 04 Dec' 05 Dec' 06 Dec' 07 Dec' 08 Dec' 09 Dec' 10 Dec' 11 Dec' 12 Dec'13 Dec' 14 Dec' 15 Dec' 16

6.00%(Est.)

SEMI-ANNUAL REPORT | BSRE INDUSTRIAL REAL ESTATE 3

ADDRESS 22 East Lake Crescent, Airdrie 6420 - 79th Avenue SE, CalgarySIZE 25,250 square feet on 2.6 acres 4 Condos Sold & 1 Leased in Q4 2015

ADDRESS 12181 - 44th Street SE 4025 - 9th Street SESIZE 19,600 square feet on 1.36 acres 26,167 square feet

ADDRESS 5441 - 52nd Avenue SE Fulton Industrial Park, Rocky View CountySIZE 54,248 square feet on 3.93 acres 2.5 acres and Greater

LEASED

FOR SALE | LEASE

FOR SUBLEASE LAND FOR SALE

FOR LEASE

NOTABLE TEAMTRANSACTIONS

NOTABLE TEAMLISTINGS

The BSRE Industrial Team would like to thank the following clients for their business in the last quarter:

CONDO SALES

PROPERTIES

2707- 61st Avenue SE Inc.803969 Alberta Ltd.1819928 Alberta Ltd.Accurate Screen Ltd.Cascade Vans & Interiors Ltd.Cococo Chocolatiers Inc.

Enerflex Ltd.Fulton Industrial JV Inc.George Courey Inc.Investors Group Trust Co. Ltd.ITRES Research LimitedPanterra (5830) Properties Inc.

Phoenix Technology Services Poirier Equipment Services Ltd. Skyway Canada LimitedSpira Systems Ltd.St. John’s Music Company Ltd.Tricor Great Plains Inc.

Trueman DistributionUnified Valve Ltd.Vista Gold Corp.

I N D U S T R I A L R E A L E S TAT E S O L U T I O N S

LEASING

LOCALEXPERTISE

MATTERS

SALES LAND DESIGNBUILD

WWW.BARCLAYSTREET.COMBay 117, 4950 - 106th Avenue SE, Calgary, AB T2C 5E9

This Short Financial Analysis (“SFA”) does not purport to be all inclusive or to contain all the information that the prospective purchaser may require in deciding whether or not to purchase the Property. This SFA provides selective information relating to certain physical, locational and financial characteristics of the property. The information on which this SFA is based has been obtained from various sources considered reliable. Barclay Street real Estate Ltd. makes no representations, declarations or warranties, express or implied, as to the accuracy or completeness of the information or statements contained herein or otherwise and such information or statements should not be relied upon by prospective purchasers without independent investigation and verification.

JON MOOK 403-616-5239j m o o k @ b a r c l a y s t r e e t . c o m

CASEY STUART 403-828-8669c s t u a r t @ b a r c l a y s t r e e t . c o m

ERIC BRENNER 403-714-4721e b r e n n e r @ b a r c l a y s t r e e t . c o m