Bay Appraisal

Redacted for commercially sensitive
information - November 15, 2019
APPRAISAL OF REAL PROPERTY

The Bay - Downtown Winnipeg Store
450 Portage Avenue
Winnipeg, MB
R3C 0E7
IN A SELF-CONTAINED APPRAISAL REPORT

As of July 15, 2019
Prepared For:
Chairman of the Special Committee
of the Board of Directors
Hudson’s Bay Company
401 Bay Street, Suite 500
Toronto, Ontario M5H 2Y4
Prepared By:
Cushman & Wakefield ULC
Valuation & Advisory
250 – 6 Avenue SW, Suite 2400
Calgary, AB T2P 3H7
C&W File ID: 19-614-900202

CONFIDENTIAL
CUSHMAN & WAKEFIELD ULC
VALUATION & ADVISORY
250 – 6 AVENUE SW, SUITE 2400
CALGARY, AB T2P 3H7

450 Portage Avenue
Winnipeg, MB R3C 0E7
Cushman & Wakefield ULC
Bow Valley Square
250 – 6 Avenue SW, Suite 2400
Calgary, AB T2P 3H7
(403) 261 1111 Tel
www.cushmanwakefield.com
October 15, 2019
Mr. David Leith

Chairman of the Special Committee of the Board of Directors
Hudson’s Bay Company
401 Bay Street, Suite 500
Toronto, Ontario
M5H 2Y4
Re: Appraisal of Real Property

In a Self-Contained Report

450 Portage Avenue, Winnipeg, MB R3C 0E7
C&W File ID: 19-614-900202
Dear Mr. Leith:
In fulfillment of our agreement as outlined in the Letter of Engagement, we are pleased to transmit our appraisal
of the above property in a self-contained report based on an effective date of July 15, 2019.
This appraisal report has been prepared in accordance with our interpretation of your institution’s guidelines and
FIRREA and the Uniform Standards of Professional Appraisal Practice (USPAP). This document has been
prepared in accordance with the Code of Ethics & Standards of Professional Practice, and the Canadian Uniform
Standards of Professional Appraisal Practice (The Standards) promulgated by the Appraisal Institute of Canada
and L’Ordre des Évaluateurs Agrées du Québec.
Based on the agreed-to Scope of Work, and as outlined in the report, we developed the following opinions:
Value Conclusions
Real Property
Appraisal Premise Interest Date of Value Value Conclusion
Market Value As-If-Leased at Economically Viable Rate Leased Fee July 15, 2019 $0
As Dark Market Value As if Leased to an Alternative Single Tenant Leased Fee July 15, 2019 $8,000,000
As Dark Market Value As if Subdivided and Leased to Multiple Alternative Tenants Leased Fee July 15, 2019 $10,800,000
Market Value As If Dark Leased Fee July 15, 2019 $10,800,000
Compiled by Cushman & Wakefield
CALGARY, AB T2P 3H7
Each value opinion was arrived at as follows:
1. Market Value as if Leased at Market: This premise is based on the assumption that the space will be
leased to Hudson’s Bay Company at a contract rental rate that is economically viable for Hudson’s Bay
Company, based on their forecast store sales, and as part of a new multi-property master lease.
2. Market Value as if Leased to an Alternative Single Tenant: This premise is based on the assumption
that the space is leased to an alternative (unknown) tenant a market rental rate. Rental rates have been
determined based on our analysis of comparable leases, with additional consideration given to
occupancy costs.
3. Market Value as if Subdivided and Leased to Multiple Alternative Tenants: This premise is based on
the assumption that the space is subdivided and leased to multiple alternative (unknown) tenants at
market rental rates. Rental rates have been determined based on our analysis of comparable leases.
4. Market Value as if Dark: This is based on the assumption that the space is not leased, and that a
prudent purchaser would recognize lease-up costs for the external space not currently occupied by third-
party tenants. This is consistent with a “Dark Value” methodology.
EXTRAORDINARY ASSUMPTIONS
For a definition of Extraordinary Assumptions please see the Glossary of Terms & Definitions. The use of
extraordinary assumptions, if any, might have affected the assignment results.
This appraisal does not employ any extraordinary assumptions.
Our opinion of Market Value as if Subdivided and Leased to Multiple Alternative tenants is based on an estimated
reconfiguration of the building into multiple tenant spaces. We assumed the proposed division of the building is
possible and that the various tenant spaces would all have direct access. We have not inspected the property
and are not qualified to provide precise costs for dividing and renovating this space. Furthermore, the exact
configuration under a multi-tenant scenario is highly speculative and would likely be dependent upon specific
tenant demand. This valuation assumes the property will be reconfigured as summarized in our report and at a
cost consistent with the our estimate of landlord costs.
CALGARY, AB T2P 3H7
HYPOTHETICAL CONDITIONS
For a definition of Hypothetical Conditions please see the Glossary of Terms & Definitions. The use of
hypothetical conditions, if any, might have affected the assignment results.
Our opinions of value related to an alternative tenant or tenants are based on the Hypothetical Condition that the
existing master lease has been terminated and the property is leased to an alternative tenant or tenants at market
terms and has achieved stabilized occupancy.
Our opinion of Market Value As If Vacant is based on the Hypothetical Condition that the existing master lease
has been terminated and the property is available for immediate occupancy by an alternative tenant or tenants.
Our opinion of Market Value as if Subdivided and Leased to Multiple Alternative tenants is based on an estimated
reconfiguration of the building into multiple tenant spaces. It is unknown whether this would be restricted under
any REA agreement or whether consent from the shopping center owner or other tenants would be required. We
have appraised the property under the hypothetical condition that any such consent is not required or has been
granted.
This letter is invalid as an opinion of value if detached from the report, which contains the text, exhibits, and
Addenda.
Respectfully submitted,
(signed) Vicki Arista

Vicki Arista MSc, MRICS, AACI
Associate Vice President
Valuation & Advisory
THE BAY - DOWNTOWN WINNIPEG STORE, MB EXECUTIVE SUMMARY I
EXECUTIVE SUMMARY
BASIC INFORMATION
Common Property Name: The Bay Downtown Store Report Type: Narrative
Address: 450 Portage Avenue Interest Appraised: Leased Fee Interest
City: Winnipeg Date of Value: Monday, July 15, 2019
Province: Manitoba Date of Inspection: Thursday July 18, 2019
CW File Reference: 19-614-900xxx Date of Report: Thursday, August 01, 2019
SALES HISTORY
Sale Date: No sale activity within the past Ownership: Hudson's Bay Company
3 years
SITE INFORMATION
Land Area Gross SF: 95,832 Site Utility: Good
Land Area Acres: 2.20 Site Topography: At street level
Is there additional Excess Land? No Site Shape: Rectangular
Excess Land Area SF: 0 Frontage: Good
Excess Land Area Acres: 0.00 Access: Good
Total Land Area SF: 95,832 Visibility: Good
Total Land Area Acres: 2.20 Location Rating: Good
Flood Zone: None Number of Parking Spaces: 0
Parking Ratio (per 1,000 sf): N/A Parking Type: Outdoor
BUILDING INFORMATION
Type of Property: Department store Actual Age: 93 Years
Type of Construction: Reinforced concrete and limestone Quality: Good
Number of Buildings: 1 Condition: Average
Net Rentable Area: 515,523 SF Year Built: 1926
Number of Levels: 6 Year Renovated: Ongoing
MUNICIPAL INFORMATION
Assessor's Parcel Identification: 12091532500 Subject's assessment is: Above market
Assessing Authority: Winnipeg Municipality Governing Zoning: Winnipeg
Current Tax Year: 2019 Current Zoning: M - Multiple Use
Current Tax Liability: $302,298 Current Use Compliance: Complying use
Taxes per square foot: $0.59 Zoning Change Applied For: No
Are taxes current? Taxes are current Zoning Variance Applied For: Not applicable
Is a grievance underway? Not to our knowledge
HIGHEST & BEST USE

As Vacant: As Improved:
Commercial Retail and Office Commercial Retail and Office
THE BAY - DOWNTOWN WINNIPEG STORE, MB EXECUTIVE SUMMARY II
VALUATION INDICES Winnipeg Downtown Store
Gross GLA (sq ft): 655,755

1. STABILIZED VALUE - SUSTAINABLE GROSS SALES BASIS
Market Rent psf (Year 1): $0.00
Net Operating Income (Year 1): N/A
Capitalization Rate: N/A
Capitalized Value : $0
Direct Cap Value (Rounded): $0
IRR / TCR: N/A
DCF Value: N/A
Final Value: N/A
2. VALUE - Alternative Single Tenant
Net Operating Income (Year 1): $6,485,605
Capitalization Rate: 6.50%
Capitalized Value : $99,778,538
Less: Lease-Up Costs: ($91,803,340)
As If Dark Value: $7,975,198
As If Dark Value (Rounded): $8,000,000
3. VALUE - Multi-Tenant Scenario
Net GLA (sq ft): 515,523
Net Operating Income (Year 1): $7,932,814
Capitalization Rate: 6.50%
Capitalized Value : $122,043,292
Less: Lease-Up & ReDevelopment Costs: ($111,272,578)
As If Dark Value: $10,770,714
As If Dark Value (Rounded): $10,800,000
THE BAY - DOWNTOWN WINNIPEG STORE, MB EXECUTIVE SUMMARY III
S WOT A NALYSIS
SWOT ANALYSIS
The SWOT or Strengths, Weaknesses, Opportunities, Threats, analysis provides general and specific insight
relative to a particular asset or entity; in this case, the subject property. The chart below outlines our
conclusions.
Strengths Weakness
 The subject benefits from an excellent  The property is an older department store built
retail location along Portage Avenue in in 1925 and 1926 and requires continual
downtown Winnipeg. maintenance and upkeep.
 Extensive renovations to the building  Only 3 floors are currently occupied. The
were made in 1986 and 1987. HBC remaining 3 are permanently closed.
invested $4 million to update the first,
second, and third floors, $200,000 on the
sixth floor, and a further $700,000 on the
basement and fourth floor.
Opportunities Threats
 The subject has the opportunity for future  Competition for retail shopping would come
redevelopment in the medium to long mostly from other retail stores mainly from
term given the particular location and downtown shopping centres such as Portage
redevelopment occurring in proximity to Place, Portage and Main and Cityplace.
the subject, particularly relating to multi- Winnipeg also has various shopping options
residential projects. within an 8 km radius such as Polo Park,
Kildonan Place and St Vital Centre
E XTRAORDINARY A SSUMPTIONS
This appraisal does not employ any extraordinary assumptions.
H YPOTHETICAL C ONDITION
None invoked.
THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY PHOTOGRAPHS IV
PROPERTY PHOTOGRAPHS
INT E R S ECT IO N O F P O RT AG E AV E AN D M EM O RI AL BL VD
VI EW AL O NG V AU G H AN , E AS T EL E V AT I O N O F T H E B AY
THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY PHOTOGRAPHS V
ST O R E INT E RI O R – G RO U ND FLO O R
ST O R E INT E RI O R – F O URT H FLO O R

THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY PHOTOGRAPHS VI
BUILDING FLOOR PLANS

LE V EL 1
LE V EL 2
THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY PHOTOGRAPHS VII
LE V EL 3
LE V EL 4
THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY PHOTOGRAPHS VIII
LE V EL 5
5T H FL O O R
THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY PHOTOGRAPHS IX
SITE PLAN
THE BAY - DOWNTOWN WINNIPEG STORE, MB TABLE OF CONTENTS
TABLE OF CONTENTS
INTRODUCTION ------------------------------------------------------------------------------------------------------------------------------------------------- 1
REGIONAL MAP --------------------------------------------------------------------------------------------------------------------------------- 3
LOCAL AREA MAP ----------------------------------------------------------------------------------------------------------------------------- 4
LOCAL AREA ANALYSIS ----------------------------------------------------------------------------------------------------------------------------------- 5
LOCATION ---------------------------------------------------------------------------------------------------------------------------------------- 5
ACCESS ------------------------------------------------------------------------------------------------------------------------------------------- 5
NEARBY AND ADJACENT USES ---------------------------------------------------------------------------------------------------------- 5
AERIAL MAP-------------------------------------------------------------------------------------------------------------------------------------- 6
COMPETITION OVERVIEW ------------------------------------------------------------------------------------------------------------------ 7
ENCLOSED SHOPPING CENTRE COMPETITORS ---------------------------------------------------------------------------------- 8
PROPERTY ANALYSIS------------------------------------------------------------------------------------------------------------------------------------ 27
SITE DESCRIPTION--------------------------------------------------------------------------------------------------------------------------- 27
IMPROVEMENTS DESCRIPTION --------------------------------------------------------------------------------------------------------- 29
ASSESSMENT AND PROPERTY TAXES ----------------------------------------------------------------------------------------------- 31
ZONING ------------------------------------------------------------------------------------------------------------------------------------------- 32
VALUATION AND FINANCIAL ANALYSIS ------------------------------------------------------------------------------------------------------- 35
HIGHEST AND BEST USE ------------------------------------------------------------------------------------------------------------------ 35
RENTAL ANALYSIS --------------------------------------------------------------------------------------------------------------------------- 37
DIRECT CAPITALIZATION METHOD ---------------------------------------------------------------------------------------------------- 42
1. STABILIZED VALUE - ALTERNATIVE SINGLE TENANT ----------------------------------------------------------------------- 44
2. STABILIZED VALUE - ALTERNATIVE MULTI-TENANT ------------------------------------------------------------------------- 45
3. GO DARK VALUATION-------------------------------------------------------------------------------------------------------------------- 46
ADDENDA CONTENTS ------------------------------------------------------------------------------------------------------------------------------------ 48
ADDENDUM A: ASSUMPTIONS AND LIMITING CONDITIONS -------------------------------------------------------------- 49
ADDENDUM B: CERTIFICATION OF APPRAISAL ------------------------------------------------------------------------------- 52
ADDENDUM C: GLOSSARY OF TERMS AND DEFINITIONS ----------------------------------------------------------------- 53
THE BAY - DOWNTOWN WINNIPEG STORE, MB INTRODUCTION 1
INTRODUCTION
SCOPE OF WORK
This appraisal, presented in a Self-contained (Full narrative) report, is intended to comply with the reporting
requirements outlined under the USPAP for a self-contained appraisal report.
The scope of this appraisal required collecting primary and secondary data relevant to the subject property.
Improved sales and rental rates were researched in the subject’s market, rental data was analyzed, and the input
of buyers, sellers, brokers, property developers and public officials was considered. A physical inspection of the
property was made. In addition, the general regional economy as well as the specifics of the subject’s local area
was investigated.
This appraisal employs 1 variation of the Income Approach - the Direct Capitalization Method (primary approach)
Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion
that this approach would be considered applicable and/or necessary for market participants. Typical purchasers
do not generally rely on the Cost Approach when purchasing a property such as the subject of this report.
Therefore, we have not utilized the Cost Approach to develop an opinion of market value.
T ERM S O F R EF E R EN CE
IDENTIFICATION OF PROPERTY
Common Property Name: The Bay Downtown Winnipeg Store

Location: 450 Portage Avenue, Winnipeg, Manitoba
Legal Description: Parcels A and B, Plan 21796 WLTO
Exc Out of Said Parcel B Air Space Parcel A Plan 21797 WLTO
In RL 1 Parish of St. John
PROPERTY OWNERSHIP AND RECENT HISTORY
Current Ownership: Hudson’s Bay Company

Sale History: To the best of our knowledge, the property has not transferred within the
past three years. The subject property has been under Hudson Bay
Company ownership since initial construction.
DATES OF INSPECTION AND VALUATION
Date of Valuation: July 15, 2019

Date of Inspection: July 18, 2019
Property inspected by: Lorena Garcia, Candidate
CLIENT, INTENDED USE AND USERS OF THE APPRAISAL
Client: Hudson’s Bay Company

Intended Use: Lending and / or financial reporting purposes.
Intended User: This Appraisal or a reference to this Appraisal may not be included or
quoted in any offering circular, private placement memorandum, registration
statement, or prospectus without the prior written approval of Cushman &
Wakefield ULC.
REGIONAL MAP
LOCAL AREA MAP

THE BAY - DOWNTOWN WINNIPEG STORE, MB LOCAL AREA ANALYSIS 5
LOCAL AREA ANALYSIS

LOCATION
In 1881, the city’s first HBC retail store was completed at the corner of Main Street and York Avenue. By 1910,
Winnipeg’s main shopping district had shifted to Portage Avenue. A new store was built with construction
commencing in 1925. It was located in the west part of Winnipeg’s Downtown core, on the south side of Portage
Avenue at the corner of Memorial Boulevard. Not only was it situated directly on Portage Avenue, but it sat at the
corner of Portage and the access road leading to the new provincial Legislature.
Downtown Winnipeg has been a particular focus of redevelopment over the past few years with over $900 million
invested in or committed to 140 projects including the Bell MTS arena, Millennium Library and Manitoba Hydro’s
office tower. Many best in class multi residential condominium and rental projects, including Sterling Lofts and
Avenue on Portage, have been completed in proximity to the subject with 300 Main currently under development.
ACCESS
The subject property has frontage on Portage Avenue, Vaughan Street and Memorial Boulevard. The property is
accessible by traffic routes, pedestrian walkways/crossings, and local public transit. There are several Impark
parking lots available nearby and close to adjoining office and retail developments.
NEARBY AND ADJACENT USES

The subject property is predominantly surrounded by medium to high density commercial developments. It is
bounded as follows:
North: Portage Place Shopping Center and University of Winnipeg

East: Power Building (office and retail development)
South: Memorial Blvd Parking Garage and Manitoba Archives Building
West: Plug In Institute of Contemporary Art and Winnipeg Art Gallery
AERIAL MAP
COMPETITION OVERVIEW
Competitive Market - Nearby Large Retailers

Property / Store Competitive
No. Property/Store Area (sf) Location Ranking
Hudson's Bay - Downtown Winnipeg
Subject 450 Portage Avenue 655,755 450 Portage Avenue
1 Hudson's Bay 212,086 CF Polo Park 1

2 HomeSense/Winners 47,920 The Plaza at Polo Park 2
3 Forever 21 37,080 CF Polo Park 3
4 Marshalls 27,975 CF Polo Park 4
5 Giant Tiger - Kensington 24,222 1450 Ellice Ave 5
6 Giant Tiger - Downtown 15,575 345 Donald Street 6
ENCLOSED SHOPPING CENTRE COMPETITORS
Competitive Market - Winnipeg Enclosed Shopping Centres

Property / Store Year Built/
No. Property/Store Area (sf) Reno Sector
Hudson's Bay - Downtown Winnipeg
Subject 450 Portage Avenue 655,755 1926/1987 Downtown
1 Portage Place 439600 1987 Downtown

2 CityPlace Winnipeg 118,598 1979/2014 Downtown
3 Winnipeg Square 600,151 1979 Downtown
4 CF Polo Park 930,000 2014 West
5 Kildonan Place 460,000 2004/2017 East
6 Grant Park Shopping Centre 400,000 1962/2011 South
7 Outlet Collection Winnipeg 406,500 2017 South
THE BAY - DOWNTOWN WINNIPEG STORE, MB MARKET ANALYSIS 9
MARKET ANALYSIS
CANADIAN ECONOMIC OVERVIEW
K EY I NDIC ATORS
The economy slowed to a crawl in 2018 Q4, weakening more than expected mainly due to sharply lower
investment. Looking ahead, reduced business investment combined with higher inventories in Q4 do not bode
well for growth. We think the economy will eke out a similarly modest gain in Q1 before gradually improving. On
an annual basis, GDP growth is forecast to slow from 1.8% in 2018 to 1.1% in 2019 and 1.2% in 2020. The
weak, below-potential outlook reflects waning demand in interest-sensitive housing and autos, oil production cuts
in Alberta, and sluggish business investment and trade. While we expect below-potential growth for the economy
over the next two years, we still do not foresee a recession.
On a more positive note, the Canadian economy added 290,000 jobs (1.6%) in the last half year – that’s almost
50,000 a month. Surprisingly strong job growth in recent months will provide a near-term boost to household
disposable income. However, we expect only modest gains in consumer spending as the unsustainable pace of
job creation slows, and past increases in lending rates increase debt servicing costs and curb spending on big-
ticket items.
A more broadly-based economic slowdown than expected led the Bank of Canada to keep its policy rate
unchanged at its March meeting. As noted by the Bank, many central banks recognize the global economy is
now facing increasing headwinds, and have eased monetary conditions as a result. We think the Bank of Canada
will remain on hold this year as it awaits a sustainable improvement in growth before raising rates again. Should
growth not pick up, however, we will see pressure build to cut rates.
FORECAST OVERVIEW
S OFT LANDING RISK S GE TTING ROUGH

The economy came to a virtual standstill in late 2018 and is
expected to show another weak performance in early 2019.
Growth will slow from 1.8% last year to 1.1% in 2019 and 1.2%
in 2020 – below its underlying potential of about 1.5%.
Slower momentum reflects reduced fixed investment and

moderating spending growth by consumers. Spending on
interest-sensitive housing and consumer durables, such as
autos, continues to decline. Cutbacks in oil output and
transportation bottlenecks will still weigh on growth, despite
Alberta easing its oil production cap and additional rail
capacity. Potential savings to consumers and businesses
from low but firming oil prices will be largely negated by the
new carbon tax which comes into effect on April 1st, though
the proceeds will be returned to the economy. Negative direct
and spill-over effects of GM’s Oshawa plant closure and
Bombardier’s planned cuts are also key concerns.
Along with various external risks such as escalation of China-

US trade tensions, a synchronized global downturn, or a
collapse in oil prices, key domestic risks that could trigger a
made-in-Canada recession include: an economy more
sensitive to interest rates due to high house prices and
household indebtedness; lack of a sustained pick-up in
business investment to build capacity and support exports as
the down-cycle continues for households; and continued
weakness in Canada’s oil producing regions from a protracted
period of production cutbacks, low prices, and distribution
challenges.
G REATER SLAC K LOWERS INFLATIONARY

PRESSURES
Growth below potential will create additional slack in the
economy. The output gap is forecast to reach 1.0% in 2020,
and keep core CPI inflation just below the 2.0% target during
the next two years. We expect the Bank of Canada to hold
interest rates steady for the rest of 2019, given sluggish growth, reduced inflationary pressures, and dovish
monetary policy at the US Fed and other central banks. As growth gradually improves, the Bank of Canada will
resume lifting interest rates in 2020, and gradually raise rates to 2.5% by 2022 – the low end of its neutral rate
range.
K EY MED IUM - TERM CONCERNS

Renewed growth requires a transition in the economy away
from a reliance on consumer spending and housing, and
towards growth led by business investment and trade. And
while a prolonged period of low oil prices could curtail energy
investment longer term, it could also lead to a redirected focus
on opportunities in non-energy sectors. Canada’s export
performance has been disappointing, and while reduced North
American trade uncertainty and a competitive currency should
support stronger net exports, slower growth in the US and rest
of world are constraints on the upside. In the medium term,
growth will be influenced by:
Persistent drag from high household debt: household

indebtedness will ease over the medium term, but remain well
above levels in many developed economies. The
deleveraging process will be protracted, and higher debt
servicing costs will divert funds from other spending.
Housing activity will slow: in recent years, housing was

supported by solid job gains, strong growth in the prime home-
buying population (ages 25-44), robust investor demand, and
historically-low interest rates. We expect housing activity to
ease reflecting slower job growth, reduced expectations for
house price inflation, higher financing costs, and strict policy
measures.
Reasonable external backdrop: world trade, weighted by

Canadian export shares, is expected to grow by 3.4% annually
over the next two years. New federal tax measures to spur
business investment, and the USMCA will support exports.
However, the US administration’s protectionist agenda and a
possible trade war with China remain risks.
K EY LONG - TERM ADVANTAGES

Energy sector opportunities: Canada’s vast energy reserves
mean it will benefit from rising oil and gas prices over the long
term.
Healthy government finances: the federal budget deficit

remains manageable. The government is boosting spending,
notably on infrastructure, to bolster the economy. Nonetheless, government debt as a percentage of GDP should
still decline over time.
Growing labor supply: although slowing, Canada’s working age population is expected to grow at a faster rate
than in most other advanced economies, supporting long-term potential growth.
W HAT TO WATCH OUT FOR

US policy uncertainty: the US administration has injected a
high degree of uncertainty surrounding the US economic
outlook. In particular, protectionist trade policies could lead to
weaker Canadian export growth, even with the USMCA.
High household indebtedness: household debt metrics,

including debt-to-disposable income, are historically high.
Excessively-high house prices: house price pressures

appear to have stabilized in the Greater Toronto and Greater
Vancouver areas, however prices remain overvalued in both
metro areas.
Pick up in business investment: stronger investment is

needed to add capacity, support growth in exports, and help
transition the economy from household-led growth.
Oil prices: a persistent decline in oil prices could slow activity

in the resources sector and hurt the growth outlook for the
energy-intensive provinces.
Financial sector stability: Canada’s banking system remains
largely stable and well-fortified, although the real estate sector
and high household debt are risks.
Higher interest rates: sharply higher rates could choke off

Canada’s economic growth – particularly with an economy
more interest-sensitive given high household debt levels.
E XPOSURE TO KEY GLOBA L RISK S

Full-blown global trade war: in this scenario we assume
trade policy tensions escalate dramatically. The US
implements a number of additional major trade policy
measures, affecting not only China, but also other key trading
partners, including the EU, Japan and (despite the USMCA
agreement) Canada and Mexico. World growth falters to 2.2%
in 2019 and 1.4% in 2020, while Canadian growth drops to
0.7% this year, and -0.5% in 2020.
China slowdown: this scenario assumes the Chinese

economy slows markedly, as deteriorating confidence hits both household consumption and private investment.
While government investment continues to pick up, the overall offset from policy stimulus is limited, as
policymakers initially misjudge the extent of the slowdown. World economic growth eases to 2.3% this year and
2.4% next year, slowing Canadian growth to 0.9% in 2019 and 0.8% in 2020.
BACKGROUND
E CONOMIC DEVELOPMENT
Canada is a market economy, where most decisions are taken by private individuals and firms. The economy is
diversified, though huge deposits of tar sands give Canada the second largest reserves of oil in the world, and
have increased the importance of the country’s energy sector in recent years (however, the price of oil has to
remain quite high to make such production economically viable). Although commodities and manufacturing
account for relatively small shares of total output and employment, they account for over half of Canada’s exports.
S TRUCTURE OF THE ECON OMY

Canada has a reputation as a resource-based economy, but that is misleading. While it is certainly rich in
resources, from energy commodities to lumber and minerals, the economy is actually services-based. About two-
thirds of the nation’s output originates in the services sector, and nearly three-quarters of workers are employed
there. Key service sub-sectors include retail trade, business services (financial services, real estate, and
communications), education, and health services. The main manufacturing industry is motor vehicles and parts,
which is centered in the province of Ontario. The manufacturing sector is responsible for less than 10% of total
employment, while agriculture accounts for less than 2%.
B ALA NCE OF PAYM ENTS A ND STRUCTURE O F TRADE

Trade is a very important sector of the economy – both imports and exports represent more than a third of GDP.
About 75% of exports go to the US, and over 60% of imports originate there, so changing economic conditions in
the US economy can be critically important to Canada. Services are an increasingly important part of Canadian
trade with foreign countries, stressing Canada’s competitive advantage as a knowledge-based economy with a
highly-skilled workforce.
P OL ITIC S
Canada is a parliamentary democracy and constitutional monarchy. Parliament is comprised of three distinct
parts: the Queen, the Senate, and the House of Commons. The House of Commons, containing 338 sitting
members, is the main seat of power of Parliament, and is able to propose, debate, and vote on bills before they
become law. Importantly, only the House of Commons can propose changes to fiscal policy. Federal elections
are conducted every four years, with an election now on the horizon in October 2019.
S UMMARY
PROVINCIAL AND METRO MARKETS ECONOMIC OVERVIEW

C A NADA ’ S L ARGEST C ITIES F ACE T OUGH T IMES A HEAD
Canada’s economy will experience below-potential growth over the next two years, as soft commodity prices, a
weak global backdrop, and consumer deleveraging all weigh on private consumption and investment. Having
come to a virtual standstill in late 2018, we expect annual GDP growth to stay in the low-1% range during 2019-
20.
Despite Alberta easing its oil production cap, transportation bottlenecks continue to weigh on output. As a result,
we expect its economic growth to stall this year, but then to average 2% annually from 2020-23 – still Canada’s
best-performing province in the longer term.
The key drivers that propelled the housing market during the past several years are unwinding. Our outlooks for
Vancouver and Toronto are weaker than for other Canadian metros, with house prices in these core cities
projected to grow by only 0.6% and 0.9% per year through 2023.
The good news for many peripheral regions is that they lack the housing malaise of Canada’s largest. However,
they face downside risks from weakened global commodity prices – notably potash in Saskatchewan, and
uranium in Manitoba. Atlantic Canada remains the country’s slowest-growing region in our five-year forecast.
T HE KEY MACRO ASSUMPT IONS THAT DRIVE OUR REGIONAL VIEW

We expect Canada’s economy to continue to underperform over the next two years. Having come to a virtual
standstill in late 2018, we forecast growth to be only in the low-1% range during 2019-20. Given this backdrop,
monetary policymakers will likely put further interest rates hikes on hold. However, we still expect interest rate-
sensitive industries, such as housing and autos, to experience slower growth as consumers grapple with higher
debt service costs, relative to recent history. Consequently, we expect consumption to contract in coming years.
Canada’s commodities sector remains under pressure – in particular from cutbacks in oil output, heightened US
production, and softer global demand (Oxford Economics forecasts the West Texas Intermediate oil price to
remain stuck in the high-$50/barrel range for the next few years.). But this outlook isn’t exclusive to crude oil:
industrial metals production in Saskatchewan and Manitoba is also facing waning global demand.
Weaker energy production, which is an extremely capital-intensive activity, will weigh on overall business
investment this year. At the same time, Canada must contend with weakened international demand for durable
exports, such as transport equipment and machinery. Private business investment is therefore projected to
decline by 1.7% in 2019, while export growth is decelerating. Furthermore, production cuts at General Motors
and Bombardier will cause ripple effects throughout their supply chains in Ontario and Quebec. With the
collection of downside risks mounting, our probability forecast of a major downturn in the Canadian economy
within the next 12 months has increased.
V ANCO UVER AND T ORONTO HIT BY C ANADA ’ S CONSUMER DEBT PROB L EM

The key drivers of recent house price appreciation and household debt across metropolitan Canada are
unwinding. Interest rates have increased, tighter policy is constraining mortgage credit, and overall economic
growth is slowing – with cities such as Vancouver and Toronto expected to see a notable slowdown in house
price appreciation.
The volume of home sales is therefore trending down, and price appreciation has stalled. Canadian consumers
are deleveraging to reduce their debts, and mortgage growth is at its slowest pace since 2002. On the upside,
however, overall credit quality may be improving. The share of new high-ratio borrowers (with loan-to-value ratios
above 80%, or mortgages in excess of 450% of income) dropped to less than 10% of all new mortgages in 2018,
according to research from the Bank of Canada.
Consumer debt levels are unsustainable, and deleveraging will be healthy in the long-run, but it will take its toll on
Canadian metros in the near-term. According to Canada Mortgage and Housing Corporation, the debt-to-
personal disposable income ratio in Vancouver and Toronto was 242% and 208% respectively, compared to
178% for Canada overall as of 2018 Q2. The Bank of Canada’s recent Monetary Policy Report stated: “The
combined effect of tighter mortgage guidelines and higher interest rates has been larger than previously
estimated” – suggesting the effects of this deleveraging are indeed being felt.
Our outlook in Vancouver and Toronto is weaker than in other Canadian cities, with their house prices forecast to
grow by average annual rates of 0.6% and 0.9% respectively through 2023. This represents a significant
deceleration from recent history. Indeed, a weaker outlook for the housing market – the primary source of wealth
for most households – will also weigh on discretionary spending. During 2019-21, annual consumer spending
growth in these two cities will slow more than Canada overall.
O IL PRIC E VOLATILITY HAUNTS A LBERTA ’ S ECONOMY AGA IN

Alberta’s increased oil output in 2018, coupled with its limited pipeline capacity to deliver the raw product to
refineries across North America, has resulted in a supply glut of Albertan crude oil causing the price of Western
Canada Select heavy crude to drop. Provincial policymakers responded by imposing a production cut – a bold
move for a traditionally pro-market, laissez-faire province.
However, while Alberta is now easing its oil production cap, transportation bottlenecks will continue to weigh on
its output. We therefore forecast the province’s economic growth to stall this year, before averaging around 2%
annually from 2020-23.
The upshot is that, while Alberta’s economic growth will be slow in the immediate future, the province should
avoid the dramatic cuts to employment and income suffered during its last supply glut. Over the longer term, we
continue to expect slower growth relative to previous cycles, when US$100/barrel oil made Canadian oil sands’
extraction much more profitable. Nonetheless, the Wild Rose province is still expected to outperform all other
regions over our forecast period.
T HE OUTLOOK FOR PERIP HERAL C ANADIAN REGIONS

Canada’s other two Prairie Provinces, Saskatchewan and Manitoba, should see improved growth in coming
years, after an anticipated soft 2019, with average annual GDP growth of 1.3% and 1.4% during the next five
years. These provinces may lack the concentration of oil and gas in Alberta, but commodities are still an
important driver of growth. Saskatchewan is one of the world’s few suppliers of potash, and prices have
plummeted in recent years due to industry-specific changes (and recent policy in China impacting Canadian
imports). While these prices remain depressed compared to 2015, the industry’s fundamentals are beginning to
firm, and local production is expected pick up slightly in the near term.
Furthermore, Saskatchewan’s uranium industry faces weak global fundamentals, and its McArthur River Mine is
shuttering for the foreseeable future. Neighboring Manitoba faces similar pressures, with its iron ore and nickel
mines having paused production in recent quarters. But on the upside, both provinces have sizable agricultural
and food manufacturing sectors that could be supported by the soft Canadian dollar, and both also have less
exposure to mortgage credit than Ontario and British Columbia.
Atlantic Canada remains the country’s slowest-growing region over our latest forecast period. Some of its
provinces will experience a continued decline in population. Key industries such as fishing, lumber, and energy,
will continue to struggle. GDP growth for the entire region is unlikely to surpass an annual average of 1% per
through 2023. Halifax, Atlantic Canada’s largest city, should outperform the broader region, however, thanks to
its superior demographics. Its shipbuilding industry, presently driven by naval contracts, should support growth in
its manufacturing sector at an average annual rate of 1.7% over the next five years.
MANITOBA – ECONOMIC OVERVIEW

T HE E CONOMY
Manitoba is a Canadian prairie province with an area of 649,950 square kilometres.
In 2015, Manitoba’s population reached 1.3 million, and is estimated to grow to 1.4
million by the end of 2019, according to the Conference Board of Canada.
Although the province is rich in natural resources and fertile farmland, its
manufacturing sector is the largest segment, and accounts for 11% of total GDP. Manitoba is home to Canada’s
largest manufacturing plants for furniture, doors, windows and cabinetry. It is also North America’s largest
producer of intercity and urban buses. The province is also home to many major service sector operations,
including the head offices of two of Canada’s major financial corporations – Great-West Lifeco and IGM Financial,
and one of the country’s largest media companies - CanWest
Global Communications Corp. Manitoba’s economy Manitoba Economic Indicators Change Q2 2019
continues to be recognized as one of the most diversified in 2018 2019 YOY
Indicator
Canada. Estimate Forecast Change
Real GDP 1.60% 1.30%
Canada’s only agricultural commodity exchange is located in
Winnipeg, making the city the centre of Canada’s grain trade. Unemployment 6.00% 5.50%
The province is also a major North American transportation
Employment Growth 0.60% 1.60%
hub. Manitoba’s competitive operating costs and taxes have
made Manitoba one of the least expensive provinces in Home Sales -5.90% 4.30%
Canada to do business. Among representative North
Housing Starts (000's) 7.4 5.7
American cities, both small and large manufacturers in
Brandon and Winnipeg rank at or near the best on start-up Source: TD Economics, June 2019
costs, net income, overall taxes and return on investment.
G ROSS D OMEST IC P RODUCT (GDP)

Manitoba has a moderately strong economy based largely on natural resources. Manitoba's economy relies
heavily on agriculture, tourism, energy, oil, mining, and forestry. Agriculture is vital and is found mostly in the
southern half of the province, although grain farming occurs as far north as The Pas. Around 12.0 percent of
Canadian farmland is in Manitoba. Manitoba is the nation's largest producer of sunflower seeds and dry
beans, and one of the leading sources of potatoes.
Manitoba’s economy grew at a slower pace in 2018 compared to the 2.9% GDP growth in 2017. The
unemployment rate increased slightly in 2018 to 6.0% and is forecasted to decrease by the end of 2019 to 5.5%.
The first half of 2018 however experienced decreased retail spending, weaker home building and strained rail
capacity. GDP growth is expected to slow down further into 2019, with an expected GDP growth of 1.3%.
E MPLOYMENT
According to Statistics Canada, employment in Manitoba increased by 6,000 positions or 0.08% in May 2019 from
the previous month. This trend correlated on a year by year basis with employment seeing an increase of 1.12%
as compared to May 2018.
Labour Force Characteristics - Seasonally Adjusted 3-Month Moving Average

April April 2019 - May May 2018 - May April 2019- May May 2018 - May
May 2019
2019 2019 2019 2019 2019
thousands change (thousands) % change
Population 1,034.4 1,035.2 0.8 11.5 0.08% 1.12%
Employment 654.2 654.8 0.6 8.2 0.09% 1.27%
Unemployment Rate (%) 5.2% 5.0% --- --- -0.20% -1.50%
Participation Rate (%) 66.7% 66.6% --- --- -0.10% -0.90%
Source: Statistics Canada, June 2019
H OUSING STARTS
According to Canada Mortgage and Housing Corporation (CMHC), housing starts were estimated at 1,336 units
as of Q1 2019, up from 1,228 units in the same timeframe in the previous year. However, completions have
decreased slightly from Q1 2018, with 2,418 unit completions vs. 2,073 unit completions in the same time frame
in 2019.
WINNIPEG - ECONOMIC OVERVIEW

T HE W INNIPEG E CONOMY
Winnipeg is Manitoba’s capital city, and it also represents the province’s largest
city. It lies 40 miles south of Lake Winnipeg and 60 miles north of the Canada /
US border, with its location putting it midway between the Atlantic and Pacific
Oceans. Winnipeg has become a significant centre in North America, and is the
financial, commercial, wholesale, and manufacturing heart of the Canadian mid-
west. Its geographical position has equipped Winnipeg with extensive railway
facilities that branch out to the rest of Canada.
According to national census conducted by the Statistics Canada, the City of Winnipeg’s’ population was
estimated at 705,244 people, up from 663,617 as per the census in 2011. The City of Winnipeg forecasts the
population to grow at 1.2% yearly growth through 2035.
Winnipeg’s economy is highly diverse, with key sectors including Advanced Manufacturing, Agri-Business,
Aerospace, Cultural Industries, Energy & Environment, Financial Services, ICT, Life Sciences, Tourism, and
Transportation & Distribution. The city has the most diversified manufacturing sector in Western Canada. As well,
Winnipeg has a strong financial sector which contributes approximately 7.7% of the metropolitan area’s gross
domestic product.
Winnipeg’s age distribution suggests that an increasing

number of people will be entering retirement in the coming
decades. The median age in Winnipeg is 38.8, slightly below
the Canada wide median. Additionally, baby boomer
retirement trends will be offset by increased immigration
levels, allowing for continued labour force growth. Positive net
migration, increasing natural birth rates, and strong
international migration policies are expected to drive
Winnipeg’s continued growth.
K EY E CONOMIC I NDICATORS
EMPLOYMENT VS. UNEMPLOYMENT
Employment totals saw a slight increase of 1.6% as of May 2019, year-over-year. The unemployment rate
experienced a 1.2% increase during the same time period.
Labour Force Characteristics - Seasonally Adjusted 3-Month Moving Average

May 2018-May May 2018-May
May 2018 May 2019
2019 2019
thousands change (thousands) % change
Employment 63.3 64.3 1.0 1.6%

Unemployment Rate (%) 5.5% 6.7% 1.2% ---
Participation Rate (%) 67.8% 67.8% 0.0% ---
Source: Statistics Canada, June 2019
BUILDING PERMITS
For April 2019, residential building permits saw an overall decrease while the non-residential sector witnessed an
overall increase. The year-to-date values saw an increase in the total value of building permits in both residential
and the non-residential sectors.
Winnipeg Building Permits Value (in Thousands of Dollars)
Sector April 2018 April 2019 Change (%) YTD April 2018 YTD April 2019 Change (%)
Residential 219,531 88,982 -59.47% 389,113 519,890 33.61%

Non-Residential 41,333 71,355 72.63% 264,636 313,084 18.31%
Industrial 2,099 4,359 107.67% 64,477 23,242 -63.95%
Commercial 31,922 33,498 4.94% 170,270 236,155 38.69%
Institutional & Governmental 7,312 33,498 358.12% 29,889 53,687 79.62%
Total Permits and Values 260,864 160,337 -38.54% 653,749 832,974 27.41%
Source: Winnipeg Building Statistics, June 2019
HOUSING STARTS
YTD May 2019 housing starts totaled 2,144 units, up 22.94% from the 1,744 starts seen in in the same time
frame in 2018. Year-to-date completions also experienced an increase year-over-year from 1,899 from January
2018-May 2018 to 1,952 from January 2019-May 2019.
Winnipeg CMA - Housing Starts

YTD May YTD May YOY Change YTD Completions YTD Completions YOY Change
2018 2019 (%) May 2018 May 2019 (%)
Single 759 689 -9.22% 783 728 -7.02%
Semi 56 114 103.57% 158 120 -24.05%
Row, Apt & Other 929 1,341 44.35% 958 1,104 15.24%
Total Permits and Values 1,744 2,144 22.94% 1,899 1,952 2.79%
Source: CMHC Housing Now - Winnipeg, June 2019
CPI
From March 2019 to April 2019, prices paid by consumers for goods and services, as measured by the Consumer
Price Index (CPI) basket, increased marginally by 0.4% in Winnipeg, Manitoba increased by 0.9% and Canada’s
CPI increased by 0.3%.
W INNIPEG O FFIC E
Winnipeg’s overall office vacancy rate increased to 9.0% in the first quarter of 2019, up from 6.7% in Q4 2018.
Overall CBD vacancy in Q1 2019 increased to 10.3% from 10.0% in the previous quarter. This was primarily due
to leasing activity the Class B buildings of the CBD, which experienced vacancy rate increase of 1.2%.
In the suburban market, Winnipeg’s overall vacancy rate increased slightly to 9.0% in Q1 2019, up from 8.9% the
previous quarter.
WINNIPEG OFFICE STATISTICS

Overall Current WTD. AVG WTD Avg
Under
Submarket Inventory Vacancy Quarter Net Rental Gross Rental
Construction
Rate Absorption Rate* Rate*
Class A 3,284,540 10.5% 0 0 $25.97 $43.85
Class B 3,587,840 10.2% 0 (42,444) $15.13 $29.29
Class C 3,667,669 10.3% 0 12,791 $11.38 $21.48
CBD Total 10,540,049 10.3% 0 (29,653) $17.43 $30.77
Class A 202,385 4.4% 89,000 6,550 $21.24 $31.01
Class B 1,407,068 2.7% 0 15,124 $13.52 $24.40
Class C 1,535,457 5.9% 0 (2,580) $11.71 $21.34
Suburban Total 3,144,910 4.4% 89,000 19,094 $14.01 $23.93
Winnipeg Totals 13,684,959 9.0% 89,000 (10,559) $16.99 $29.81
Rental rates reflect asking $PSF/Year
Source: Cushman & Wakefield Winnipeg Q1 2019 Office MarketBeat
OFFICE MARKET OUTLOOK

The opportunities for tenants in the CBD will continue throughout 2019. Their negotiating position with existing
landlords will remain strong and those prepared to relocate will receive very attractive proposals from competing
landlords. Tenants are well advised to begin the search process at least eighteen months in advance of their
lease expiring. Likewise, landlords may benefit from initiating early renewal discussions with their existing tenants
to understand their future facility plans and be able to react accordingly.
W INNIPEG I ND USTRIAL
Winnipeg exhibited strong growth levels as 2018 came to a close. The northwest and east submarkets in
Winnipeg experienced 110,000 square feet of new supply, mostly consisting of new generation warehousing. The
city was able to attract more out of town, new to Winnipeg clients through the new developments offering
modernized buildings.1
Market Snapshot
Q3 2018 Q4 2018 Trend
Net Absorption 101,355 (96,672) DOWN
Vacancy Rate 2.7% 3.0% UP
Average Asking Rent $7.01 $7.34 UP
Average Additional Rent $3.29 $3.39 UP
Source: Colliers Winnipeg Industrial Market Report Q4 2018
A summary of the current industrial market conditions for Winnipeg is provided in the table previously.
The biggest hindrance for new developments of industrial space is the lack of serviced land in the city. However,
the northwest quadrant has been bringing in serviced land in the CentrePort Canada area with a high amount of
land sales sold within the area in the latter part of 2018. Tenants and owners have actively been pursuing these
land parcels, however, it will still be sometime before Winnipeg’s industrial market feels the effects of the new
growth. 2
1 Colliers International, Winnipeg Industrial Market Report Fourth Quarter 2018

2 Colliers International, Winnipeg Industrial Market Report Fourth Quarter 2018
VACANCY RATES
Winnipeg industrial vacancy rates have remained Fully Serviced Industrial Parks - Winnipeg
Industrial Park Park Owner Acres
persistently low in recent years, with slight uptick in Privately owned (originally)
Q4 2018 with a 3.0% vacancy from the 2.7% Murray Industrial Park Developed by the City of Winnipeg 180
recorded in Q3 2018. Two of Winnipeg’s industrial Privately owned (originally)

Developed by the City of Winnipeg 8,000
Inkster Industrial Park
submarkets, the southwest and northwest,
St. Boniface Industrial Park - Phase 1 City of Winnipeg 700
experienced increase in their vacancy. The St. Boniface Industrial Park – Phase 2 City of Winnipeg n/a
southwest sector doubled in vacancy to 1.3% CentrePort Canada Industrial Parks CentrePort Canada Inc. 20,000
130
largely due to the addition of 1530 Gamble Place’s CN Transcona Yard
West Fort Garry Business Park
Canadian National Railway Company
Bentall Group 200
64,400 square foot unit. However, the southwest. Inksbrook Park Bentall Group 36
Keewatin Estates Bentall Group 50
The east sector experienced a decrease in its
Terracon Business Park Terracon Development Ltd. 200
vacancy from 2.8% to 2.6%. The Waters Business Park Terracon Development Ltd. 125
Tuxedo Business Park Terracon Development Ltd. 75
W INNIPEG R ETA IL
32
Headingley Business Park RM of Headingley Industrial lots
Source: Economic Development Winnipeg
According to Colliers International, Winnipeg
experienced a notable decrease of 1.63% in vacancy and finished 2018 at 6.56%. The market experienced a
decrease in vacancy in all property categories except Convenience Centres. With portions of the Sears vacancy
absorbed and the last remaining Target building being largely occupied, the Regional Mall category experienced
a decrease in vacancy of 5.37%, however Regional Mall vacancy still remains high at 13.43%. If the remaining
Sears vacancy of 421,000 square feet is removed from the index the Regional Mall category would have been
3.64% bringing the overall market vacancy down to a very respectable rate of 3.81 %. 3
3 Colliers International, Winnipeg Retail Market Report Fourth Quarter 2018

MANITOBA RETAIL OVERVIEW

According to the Government of Manitoba, in 2018 there was a 2.9% increase in retail sales, making Manitoba
the second ranked among all the provinces. Retail sales across all industries was reported at 1.76 billion for April
2019, representing a 0.2% increase from the previous year. Gasoline stores continue to be the leader in retail
sales, while electronics and appliances, furniture, and sporting goods are declining on a year-over-year basis.
According to the Retail Council of Canada, Manitoba reported total retail sales of $20.4 billion, with core-retail
sales of $12.5 billion across 4,712 stores. As of June 2019, there are approximately 65,960 jobs in the retail
sector.
According to Statistics Canada:

THE BAY - DOWNTOWN WINNIPEG STORE, MB PROPERTY ANALYSIS 27
PROPERTY ANALYSIS
SITE DESCRIPTION
Location: 450 Portage Avenue, Winnipeg, Manitoba.

Shape: Rectangular/irregular shape
Topography: Generally level at street grade
Land Area: The site encompasses 2.2 acres or approximately 95,832 square feet.
Frontage: The subject property has excellent frontage (70.958 metres or 232.8 feet along Portage Avenue,
123.203 metres or 404.2 feet along Vaughan Street, and 153.263 metres or 502.83 feet along
Memorial Boulevard).
Access: The subject property has excellent vehicular access from adjoining streets.
Visibility: The subject property has excellent visibility.
Soil Conditions: We were not given a soil report to review. However, we assume that the soil's load-bearing capacity is
sufficient to support existing and/or proposed structure(s). We did not observe any evidence to the
contrary during our physical inspection of the property. Drainage appears to be adequate.
Utilities: All municipal utilities are available to the subject property.
Site Improvements: The site improvements include curbing, signage, lighting and drainage.
Land Use Restrictions: A title search was considered beyond the scope of this appraisal. We do not know of any easements,
encroachments, or restrictions that would adversely affect the site's use. However, we recommend a
title search to determine whether any adverse conditions exist.
Flood Zone Description: There is no information to indicate that the subject property resides in a flood zone.
Wetlands: We were not given a wetlands survey to review. If subsequent engineering data reveal the presence of
regulated wetlands, it could materially affect property value. We recommend a wetlands survey by a
professional engineer with expertise in this field.
Hazardous Substances: We observed no evidence of toxic or hazardous substances during our inspection of the site. However,
we are not trained to perform technical environmental inspections and recommend the hiring of a
professional engineer with expertise in this field.
Overall Site Utility: The subject site is functional for its current use.
LEGAL LOT PLAN

IMPROVEMENTS DESCRIPTION
The following description of improvements is based on our physical inspection of the improvements and our
discussions with the subject property’s owner’s representative.
BUILDING OVERVIEW
The Bay building is a reinforced concrete structure with concrete roof and floor slabs. Over 2
million feet of lumber and 125,000 cubic feet of limestone also went into the original construction.
The retail building has two traction passenger elevators, four traction freight elevators and various
pairs of escalators.
BUILDING AREAS
According to the client, the building area measurements are as follows (in sq ft):
The Bay - Winnipeg
Per HBC Plans - March 2019
Floor Gross Area (sf) Net Area (sf) Non-Selling (sf)
Level 1 63,855 38,930 29,277
Level 2 66,792 49,002 17,177
Level 3 - - 80,136
Level 4 17,023 11,197 80,093
Level 5 1,716 - 80,102
Level 6 - - 80,128
Gross Area Per Information Provided by Client: 655,755 sf
DEVELOPMENT HISTORY
The Bay building was originally constructed in 1925 and 1926. Extensive renovations to the
building were made in 1986 and 1987.
PHYSICAL CONDITION
At the time of inspection, the property was in average physical condition.
ENVIRONMENTAL ISSUES
Any environmental issues were not considered within this valuation. It should be noted that the
appraiser is not qualified to detect, test for, investigate, or otherwise ascertain the existence of
such substances. The appraiser does not assume any responsibility for the existence of such
substances or any costs associated with their removal, correction, or treatment, in the event that
they are found to exist on the subject property, or on adjacent lands. Determination of such
information was not part of the appraiser's mandate and no funds were provided for such an
undertaking.
SUMMARY
Condition: Average
Quality: Average
Property Rating: After considering all of the physical characteristics of the subject, we have concluded that this
property has an overall rating that is average, when measured against other properties in this
marketplace.
Roof & Mechanical Inspections: We did not inspect the roof nor did we make a detailed inspection of the mechanical systems. The
appraisers are not qualified to render an opinion regarding the adequacy or condition of these
components. The client is urged to retain an expert in this field if detailed information is needed.
CAPITAL EXPENDITURES
Future Costs None noted
Historical Costs According to HBC Heritage, Extensive renovations to the building were made in 1986 and 1987.
HBC invested $4 million to update the first, second, and third floors, $200,000 on the sixth floor,
and a further $700,000 on the basement and fourth floor.
In 2010, HBC converted the basement of the downtown Winnipeg building into a Zellers store,
which was closed in March 2013.
FUNCTIONAL OBSOLESCENCE
Description: Subject mechanical and vertical transportation as well as layout and flow is somewhat dated and
inefficient relative to new generation department stores.
ASSESSMENT AND PROPERTY TAXES

The subject property appears in the 2019 assessment roll of the City of Winnipeg, as indicated below:
Address 450 Portage Avenue , Winnipeg

Roll Number 12091532500
Legal Address Lot A-B, Plan 21796, Parish 1 St J
Registered Owner Hudson's Bay Company/Compagnie De La Baie D'Hudson
Municipal Assessment 2019
Assessed Value $10,747,000

Portioned Value $6,985,550
Prior Assessment 2017 $9,197,000
Percent Change From Prior Assessment 17%
Realty Taxes
Municipal Taxes $128,008.03
School Taxes $174,289.47
Total Realty Taxes $302,297.50
Existing GLA 655,755
Per Sq. Ft. GLA $0.46

ZONING
G ENERAL I NFORMATION
The Zoning By-Law must conform to the Official Plan. It is a site-specific document, which governs and controls
the maximum density of development on any given site. The subject property is currently zoned as M - Multiple-
Use Sector, according to the City of Winnipeg’s By-Law No. 100/204, which provides for a wide range of
commercial, office and retail uses. The main zoning characteristics can be described as follows:
Z ONING D ESIGNATION
Multiple-Use Sector.
A UTHORIZ ED U SES
M – Multiple-Use Sector. This sector demonstrates a diversity of uses, including: office, retail, services,
restaurants, entertainment opportunities, public institutions, multiple-family residential, and mixed-use parking
facilities.
M AX IMUM H EIGHT
Not applicable.
Building heights in the Downtown Core may be limited by ‘Building Height Control Area: Legislative Core –
Winnipeg’ Public Works Act restrictions. The Subject is located outside of this restriction zone.
M AX IMUM S IT E C OVERAGE
100%.
M AX IMUM D ENSITY
The Subject property has a floor area ratio maximum of 15. In general, Downtown properties are allocated a floor
area ratio maximum of 12, excluding Portage Avenue and Main Street properties which are allocated a ratio of 15.
H ISTORICAL D ESIGNATION
The Subject property is not known to have a historical designation.
Z ONING C OMPL IANCE

Property value is affected by whether or not an existing or proposed improvement complies with zoning
regulations, as discussed below.
C OMPLY ING U SES

An existing or proposed use that complies with zoning regulations implies that there is no legal risk and that the
existing improvements could be replaced “as-of-right.”
P RE -E X IST ING , N ON -C OMPLY ING U SES

In many areas, existing buildings pre-date the current zoning regulations. When this is the case, it is possible for
an existing building that represents a non-complying use to still be considered a legal use of the property.
Whether or not the rights of continued use of the building exist depends on local laws. Local laws will also
determine if the existing building may be replicated in the event of loss or damage.
N O N -C OMPLY ING U SES

A proposed non-complying use to an existing building might remain legal via variance or special use permit.
When appraising a property that has such a non-complying use, it is important to understand the local laws
governing this use.
O THER R ESTRICT IONS

We know of no deed restrictions, private or public, that further limit the subject property's use. The research
required to determine whether or not such restrictions exist is beyond the scope of this appraisal assignment.
Deed restrictions are a legal matter and only a title examination by an attorney or Title Company can usually
uncover such restrictive covenants. We recommend a title examination to determine if any such restrictions exist.
Z ONING C ONCLUSIONS
We analyzed the zoning requirements in relation to the subject property, and considered the compliance of the
existing or proposed use. We are not experts in the interpretation of complex zoning ordinances but based on our
review of public information, the subject property appears to be a complying use.
Detailed zoning studies are typically performed by a zoning or land use expert, including attorneys, land use
planners, or architects. The depth of our study correlates directly with the scope of this assignment, and it
considers all pertinent issues that have been discovered through our due diligence.
We note that this appraisal is not intended to be a detailed determination of compliance, as that determination is
beyond the scope of this real estate appraisal assignment.
IBI P LA NNING R EPORT

An IBI Group preliminary planning review (Phase 2) identifies additional unused or excess density (mixed-use
retail, office and or residential) of approximately 150,000 sf of buildable floor area calculated based on an FSI of
7.6 times the site area. Other possible redevelopment options were explored but it is beyond the scope of this
appraisal to comment on this or the other scenarios.
Z ONING M AP
THE BAY - DOWNTOWN WINNIPEG STORE, MB VALUATION AND FINANCIAL ANALYSIS 35
VALUATION AND FINANCIAL ANALYSIS

HIGHEST AND BEST USE
H IG HEST A ND B EST U SE D EFINITION
The Dictionary of Real Estate Appraisal, Fifth Edition (2010), a publication of the Appraisal Institute, defines the
highest and best use as:
The most probable use of a property which is physically possible, appropriately justified,
legally permissible, financially feasible, and which results in the highest value of the
property being valued.
To determine the highest and best use we typically evaluate the subject site under two scenarios: as
thoughvacant land and as presently improved. In both cases, the property’s highest and best use must meet the
four criteria described above.
L EGALLY P ERMISSIBLE
The zoning regulations in effect at the time of the appraisal determine the legal permissibility of a potential use of
the subject site. As described in the Zoning section, the subject site is zoned for a wide range of commercial,
services and recreational uses. We are not aware of any further legal restrictions that limit the potential uses of
the subject. In addition, rezoning of the site is not likely due to the character of the area.
P HYSICALLY P O SSIBLE
The physical possibility of a use is dictated by the size, shape, topography, availability of utilities, and any other
physical aspects of the site. The subject site is at street level and has good frontage, good access, as well as
good visibility. The overall utility of the site is considered to be good. All public utilities are available to the site
including public water and sewer, gas, electric and telephone. Overall, the site is considered adequate to
accommodate most permitted development possibilities.
F INANC IALLY F EASIBLE AND M AX IMALLY P RODUCTIVE

In order to be seriously considered, a use must have the potential to provide a sufficient return to attract
investment capital over alternative forms of investment. A positive net income or acceptable rate of return would
indicate that a use is financially feasible. Financially feasible uses are those uses that can generate a profit over
and above the cost of acquiring the site, and constructing the improvements. Of the uses that are permitted,
possible, and financially feasible, the one that will result in the maximum value for the property is considered the
highest and best use.
C ONCL USION
As Vacant: If the subject site was vacant, it would likely be developed with retail and other commercial uses such
as offices or multi-residential development.
As Improved: Based upon an analysis of the preceding information and giving primary consideration to the
existing subject improvement, it is our opinion that redevelopment including: office, retail, services, restaurants,
entertainment opportunities, public institutions, multiple-family residential, and mixed-use parking facilities would
be the highest and best use. In our opinion, the unused or excess density that may exist on the property (as per
IBI planning report) has no additional value due to the weak prevailing economic conditions in Winnipeg and
estimated high costs in order to realize this incremental increase in floor area.
VALUATION
The market value of the subject property is contingent upon a number of factors such as location, replacement
cost, physical condition and utility of the improvements, the market climate and general economic conditions. In
the valuation process, these factors are incorporated into several approaches to value. Traditionally, the three
most common approaches to the valuation of real property are:
 The Direct Comparison Approach involves comparing or contrasting recent sales, and current listings of
comparable properties to the subject and adjusting for any significant differences between them.
 The Income Approach is one in which the value is estimated by capitalizing the net rental which the property
can reasonably be expected to produce over the remaining economic life of the improvements.
 The Cost Approach involves estimating the replacement cost of the improvements located on the subject,
estimating and deducting the accrued depreciation from the cost estimate and then adding the land value.
M ET HODOLOGY U TIL IZED

The subject property is an owner-occupied property. The likely buyer for the subject would be either being a local
or national developer, or institutional investor or a joint venture partnership between an institution and specialized
development company. In order to estimate the market value of the subject, we have employed the Income
Approach to value. We will investigate the Direct Capitalization Method as the primary valuation methodology.
This method is a valuation technique that converts a stabilized net operating income into an estimate of value
using a stipulated yield rate.
The Cost Approach is not typically utilized by market participants for this type of property and has not been
included herein.
F INANC IAL A NALYSIS

This section outlines the assumptions and procedures adopted in the development of our Direct Capitalization
Analysis.
RENTAL ANALYSIS
I NTRODUCTION
The subject property is owner occupied. An imputed market rental analysis represents an important element in
the valuation of the asset. In order to determine reasonable market rental levels, we have undertaken the
following analysis:
i) Review the past and future sales performance of the subject property and determine the market rent
on this basis (sales affordability basis);
ii) Reviewed comparable rental rates taken from competing buildings;
I) R EV IEW S AL ES P ERFORMANC E AND D ETERMINE M ARKET R ENT O N T HIS B ASIS

Analyze the Historical and Projected Store Performance
During this step, the sales per square foot levels were taken from 2018 (actual) and 2019 (projected). Thereafter,
we reviewed the specific store characteristics to determine the sustainability of the retail sales performance.
Deduct All Applicable Costs
Following the calculation of a sustainable sales level, the estimated applicable costs have been deducted. These
costs include the Costs of Goods Sold, as well as, Selling Costs, General and Other Administrative Expenses,
which would include occupancy related expenses. These costs have been derived from an analysis of numerous
Department Store companies found in the United States as well as Canada. Based on our market research, all of
these costs will typically run in the 80 to 100 percent spectrum, leaving a profit range of up to 20 percent.
Cost of Goods Sold: Specifically, costs of goods sold costs ranged from from our research. In the
case of a sample of HBC stores, including the subject, our range was at between of
sales for the last 2-year period and at for the subject (2017-2018YTD). We therefore concluded at
for purposes of this analysis.
Selling Costs, General and Other Administrative Costs: This cost category addresses all other expenses
including distribution, marketing, occupancy costs, etc. If we include occupancy costs, we would estimate these
costs in the order of based on information provided.
Determine a Reasonable Return Expectation for the Store as a Percentage
Generally speaking, returns for typical Department Stores ranged from on Department Stores
reviewed in our survey. This is after the deduction of all direct and indirect costs and before taxes.
also falls within this range. For the purpose of this report, we have applied an profit margin as a reasonable
amount to maintain viability and sustainability for a Department Store. To ensure that store operations were viable
and profitable, the required return of was also considered as a necessary deduction, prior to determining our
market rent.
Estimate a market rental structure for each property.
Following the calculations and deductions listed above, an approximate market rental rate was determined with
any necessary adjustments made based on recent and historical trends in the sales performance.
Asset Sales Performance
The sales performance has been over the past five years, reflecting the
of the downturn in the economy. From a physical standpoint, the subject is an older, large downtown
department store in average condition. Only 3 of the 6 floors are currently in use, the remaining floors being
permanently closed. The property suffers from any functional issues as a consequence of its age, size and layout
being inefficient relative to new generation department stores. Functional obsolescence is however mitigated
somewhat by its location at the intersection of Portage Avenue and Memorial Boulevard. While the location is
towards the west of the core, the area is experiencing significant redevelopment, particularly within the multi-
residential sector.
Summary of Market Rental Rate Estimate

Market Rent - Downtown Winnipeg HBC Store
655,755 sq ft
Sales Performance
Sales Gross
Year Sales Psf Rent GROC
2018
2019 $0.61
Traditional Rent Determination
Sales per sq ft (2019) 100.0%
Less: Costs of Goods

Selling Costs General Adm/Occupancy
Total
Less: Estimated Return on Sales
Estimated Market Rent -$0.50

Rounded $0.00
GROC at Market
Occupancy Costs 2019 PSF
Operating costs (CAM) n.a. $0.00
Realty Taxes $402,310 $0.61
Ground Rent $0 $0.00
Net Occupancy Costs $402,310 $0.61
NOTES:
1. Use actual HBC Occupancy Costs as per P & L
2. Used Actual Sales for 2018 (12 months) and 2019 Projected
III ) R EV IEWED C OMPARABLE R ENTAL R ATES

In analyzing the contractual rents within the subject property, we surveyed other large department store leases in
major urban centres across Western Canada. A summary of the buildings and lease information are provided
below:
RECENT LEASING IN COMPARABLE PROPERTIES IN WESTERN CANADA

Net Rent
No Tenant City Start Date Area (SF) Term (yrs)
PSF
RETAIL RENTS
1 H&M Midtown Plaza Saskatoon, SK 2019 27,275 10 $17.00

2 TJX Midtown Plaza Saskatoon, SK 2019 23,000 10 $16.75
3 Shoppers Midtown Plaza Saskatoon, SK 2019 15,000 15 $43.00
4 Winners Pine Centre Prince George, BC May-20 41,792 10 $14.00
5 Makami College Bonnie Doon Edmonton, AB Jun-19 108,406 15 $6.00
6 Marshalls Prairie Mall Grande Prairie, AB Sep-17 24,500 10 $16.50
7 Ardene Prairie Mall Grande Prairie, AB Dec-17 17,000 10 $28.50
8 Urban Plant Prairie Mall Grande Prairie, AB Jul-17 21,717 10 $32.50
9 Shoppers Drug Mart Nordel Crossing Surrey, BC Mar-19 19,157 5 $22.50
10 Roots Coquitlam Centre Coquitlam, BC Dec-18 30,000 5 $14.75
11 Winners/HomeSense Lougheed Super Centre Coquitlam, BC Mar-16 18,072 10 $21.60
12 Ardene Circle Centre Mall Saskatoon, SK Jul-17 20,000 10 $18.00
13 Goodlife Circle Centre Mall Saskatoon, SK Aug-17 11,635 15 $18.00
14 Holt Renfrew Holt Renfrew Calgary, AB Oct-09 151,000 - $22.56
15 Simons Core SC Calgary, AB Mar-17 92,000 - $15.00
16 Simons Park Royal Vancouver, BC Oct-15 100,000 - $30.00
17 Indigo Books & Music Southland Mall Regina, SK May-19 25,172 10 $18.50
18 Safeway Lawson Heights Saskatoon, SK Jan-18 63,477 20 $21.00
19 Planet Fitness McCallum Centre Abbotsford, BC Feb-18 24,650 10 $13.50
20 Home Depot Strawberry Hill Surrey, BC Feb-16 103,879 5 $16.67
21 Save-On Foods River District Vancouver, BC Apr-19 38,000 20 $25.00
22 Walmart Central at Garden City Richmond, BC Oct-16 164,430 10 $24.41
11,635 5.0 $6.00

Total Area Surveyed 164,430 20.0 $43.00
1,140,162 SF 26,224 10.0 $18.25
51,826 11.1 $20.72
SUBJECT - HBC Downtown Winnipeg

ALTERNATIVE SINGLE USE TENANCY - M ARKET RENT
As confirmation to the market rent estimate using the sales affordability analysis previously, we have also reviewed
rents of various Department Stores in major Urban Centres. The rents indicated were as follows:
Rental Range: $6.00 to $43.00 psf
Average: $20.72 psf
As indicated the average rate is $20.72 psf, much higher than appropriate for the subject given its Winnipeg
location characteristics which would be considered inferior to the majority of our sample rents. In addition, the
subject is significantly larger than the sample analyzed.
In our opinion, there is no retail department store tenant in the Canadian market that we know of that can lease the
entire subject department store given its large size. As noted above, the largest potential retailers in the Canadian
market are less than 200,000 sf in size (typically 100,000 to 150,000 sf) and include Simons and Holt Renfrew. As
such, our market rent estimate of $9.75 psf for an alternative single use basis is cognizant of the challenge posed
by the subject’s large size and real possibility that a large part of the store, will likely be not be utilized and possibly
subleased to other tenant(s).
In conjunction with our single user market rent and to entice a new tenant, we have allowed for an improvement
allowance of $75.00 psf - typically this can range from $50 to $175 psf in today’s market.
ALTERNATIVE MULTIPLE USE TENANCY - M ARKET RENTS
We have also investigated local area rental rates for generally smaller sized premises (see below) in order to
gauge the relative weight of market rents if they were applied to the subject property on a level by level basis,
considering that the lowest retail levels are typically the most valuable in the subject property:
RECENT LEASING IN COMPARABLE PROPERTIES

Retail Rents - Manitoba's Two Largest Cities
Winnipeg Yr 1
No Address Tenant City Start Date Area (SF) Term (yrs)
PSF
RETAIL RENTS
1 1711 Kenaston Boulevard Starbucks Winnipeg, MB Jan-18 1,648 10 $38.00

2 Transcona Square MLCC Winnipeg, MB Jan-18 5,700 10 $21.00
3 Grant Shopping Centre Winners Winnipeg, MB Oct-17 22,081 10 $14.50
4 Grant Shopping Centre Goodlife Fitness Winnipeg, MB Oct-17 34,187 20 $14.10
5 Corydon Avenue Shopper's Drug Mart Winnipeg, MB Jan-17 12,300 10 $27.50
6 Crossroad Station Mark's Work Warehouse Winnipeg, MB Jan-17 19,999 5 $19.00
7 St. Vital Goodlife Fitness Winnipeg, MB 2019 25,000 15 $19.00
8 St. Vital TJX Winnipeg, MB 2019 42,270 10 $12.50
9 Brandon Shoppers Mall Shopper's Drug Mart Brandon, MB Oct-18 18,072 15 $28.00
10 Brandon Shoppers Mall Ardene Brandon, MB Dec-18 9,951 10 $30.15
11 Brandon Shoppers Mall Dollarama Brandon, MB Jul-17 8,320 10 $26.00
12 Brandon Shoppers Mall Sobeys Brandon, MB Nov-17 63,246 20 $22.50
Minimum 1,648 5.0 $12.50

Total Area Surveyed Maximum 63,246 20.0 $38.00
262,774 SF Median 19,036 10.0 $21.75
Average 21,898 12.1 $22.69
SUBJECT - HBC Downtown Winnipeg Market Rent Estimate
Rental Range: $12.50 to $38.00 psf
Average: $22.69 psf
The average rate at $22.69 psf, is considered reasonable for the subject given the majority of comparables are
within the greater Winnipeg market.
In conjunction with our multiple user market rent and to entice a new tenant, we have allowed for an improvement
allowance of $50.00 psf.
DIRECT CAPITALIZATION METHOD
In order to determine a capitalization factor for the subject we have examined yields for largely Urban retail properties
across Canada. Our research is summarized in the table below:
BUILDING DATE OF OCCUPA CAP

NO. ADDRESS/PROJECT CITY PROVINCE SALE PRICE $ PSF DESCRIPTION
AREA (SF) SALE NCY RATE
Four tenant street front retail located along Calgary's
1 Venator Bldg, 224 - 8 Ave SW Calgary Alberta 26,758 Dec-18 $14,450,000 100% 5.56% $540
Stephen Avenue. One 4,093 sf tenant know n to be vacating
Three tenant street front retail located along Calgary's
2 Kraft Bldg, 224 - 8 Ave SW Calgary Alberta 6,839 Dec-18 $4,000,000 88% 5.53% $585
Stephen Avenue. One small 800 sf second floor charactrer
Single tenant retail building located in Marda Loop. 100%
3 2018 - 33rd Avenue SW Calgary Alberta 6,081 Sep-18 $3,800,000 100% 6.00% $625
occupied by Mad Rose Pub. 8 year remaining term.
4 5288-130 Avenue SE Calgary Alberta 6,517 Jun-18 $4,800,000 100% 6.05% $736 Multi-tenanted retail occupied by four tenants
5 600 Manning Crossing Edmonton Alberta 12,349 Jun-18 $2,820,000 100% 6.23% $228 Single tenant occupied by Goodw ill
6 3301-17th Avenue S.E. Calgary Alberta 21,201 Jan-18 $12,200,000 100% 4.60% $575 Single tenant retail built in 1958- Rexall drug store
135 Yorkville Avenue (Units 101- Loocated w ithin the “older” Four Seasons Hotel, leased to
7 Toronto Ontario 3,000 Aug-18 $9,571,744 100% 4.50% $3,191
103) local tenancies on ground & upper floor
8 2211 Brant Street Burlington Ontario 13,911 Aug-18 $7,800,000 100% 5.30% $561 Single tenant-Shoppers built in 2008
Sale includes 6 retail units in a 12 storey condo building.

9 700 King Street West (Units 1-7) Toronto Ontario 7,746 May-18 $15,120,000 100% 3.47% $1,952
Tenants include Subw ay, McDonald's and Second Cup.
10 1141 Kennedy Road Scarborough Ontario 34,338 Apr-18 $10,750,000 100% 5.80% $313 Single tenant- Good Life Fitness- built in 2003
Sale includes 6 retail units in a 12 storey condo building.

11 700 King Street West (Units 1-7) Toronto Ontario 7,746 Mar-18 $14,000,000 100% 3.75% $1,807
Tenants include Subw ay, McDonald's and Second Cup.
Former Elgin Theatre now leased to 4 retail main street
12 216 Elgin Street Ottaw a Ontario 12,371 Mar-18 $12,000,000 100% 4.10% $970
tenants including Jonny Farina’s restaurant, Harvey's &
1 Bloor Street East (Units 1, 3, 4, Property is at the base of the a 76-storey, condo building.
13 Toronto Ontario 84,479 Nov-17 $192,359,707 46% 4.10% $2,277
5, 6, 8) 46% Leased to Nordstroms w ith balance available for rent.
Bank of Nova Scotia retail bank branch sold on a sale lease
14 186 Bank Street Ottaw a Ontario 14,806 Jul-17 $6,444,251 100% 4.10% $435
back agreement.
Sale-leaseback w ith BNS - street-front retail building
15 17-19 Bloor Street West Toronto Ontario 17,087 Dec-16 $74,000,000 100% 3.50% $4,331
renovated in 1995 and offering redevelopment options.
Older building renovated in 2015 to accommodate COS (7
16 85 Bloor Street West Toronto Ontario 13,810 Jan-16 $37,000,000 100% 4.00% $2,679
years remaining lease term). 3 storeys and a retail low er
17 351-353 Victoria Avenue Westmount Quebec 1,764 May-19 $1,800,000 n.a. n.a. $1,020 2 storey multi tenant retail building constructed 1918
18 7150 Jarry Street East Anjou Quebec 2,905 Apr-19 $1,970,000 100% 5.80% $678 Tim Horton's single tenant retail building constructed in 1993
3-storey multi tenant retail built in 1974, main tenant is

19 1433 Crescent Street Montreal Quebec 6,787 Apr-19 $4,200,000 100% n.a. $619
Hooters
Vacant one-storey single tenant retail building constructed
20 539 Sainte-Catherine Street West Montreal Quebec 4,840 Feb-19 $8,700,000 0% n.a. $1,798
circa 1900, renovated in 2013.
21 1476 Crescent Street Montreal Quebec 17,356 Sep-18 $8,335,000 100% 5.34% $480 3-storeys, built in 2001, 2 tenants.
Single-tenant constructed in 2009 leased to Shoppers Realty

22 1337 Iberville Boulevard Montreal Quebec 17,050 Jun-18 $6,250,000 100% 6.27% $367
Inc. (Pharmaprix) for a 15-year term to June 2024.
23 Le Sofia 7055-85 St-Laurent Montreal Quebec 24,195 Jun-18 $8,000,000 100% 5.25% $331 Retail condo ground floor, 4 tenants, 2006 built
1909 TAVERNE 1280 Des Single tenant (restaurant) next to Bell Centre in Tour des
24 Montreal Quebec 25,714 Apr-18 $24,900,000 100% 5.29% $968
Canadiens Canadiens 1 condo tow er built 2016
350-360 DeMaisonneuve W & Retail condo ground floor, multi-tenant, 2010 built (Louis
25 Montreal Quebec 15,169 Feb-18 $9,250,000 n.a. 5.08% $610
1500-08 Bleury Boheme).
26 1321 Ste-Catherine West Montreal Quebec 9,570 Jan-18 $25,000,000 100% 3.35% $2,612 2 storeys leased to Apple. Built in 1928, renovated in 2008.
Part of a mixed use new 2017 condo apt building comprising
27 L'Avenue des Canadiens Montreal Quebec 118,200 Jun-17 $85,936,000 75% 4.31% $727
the retail & office section of the building over 7 levels.
620 - 630 Ste Catherine W, 1240 1894 built, 4 storeys, to be renovated & expanded into a
28 Montreal Quebec 76,270 Nov-16 $38,000,000 100% n.a. $498
Du Square Phillips (Birks) boutique hotel, jew elry store & restaurant ($32M cost).
Street front retail w ith Banana Republic (renew ed to July
29 777 Ste-Catherine St West Montreal Quebec 19,553 Sep-16 $41,800,000 100% 4.91% $2,138
2021) & law yers offices above.
Single tenant 2015 built Shoppers (Pharmaprix) leased for a
30 1120 Ste-Catherine St West Montreal Quebec 13,200 Jan-16 $34,600,000 100% 4.75% $2,621
20 year term w ith annual rent escalations.
Galileo on Robson - 350 Robson Dow ntow n strata retail & office in a 16 storey 1989 built.
31 Vancouver BC 17,689 Jun-17 $16,200,000 100% 3.76% $916
St, 806 - 820 Homer St (21 strata Tenants include Starbucks & Global Village English Centre.
A 4-storey retail facility built in 2005. Leased to Canadian
32 2200 - 2290 Cambie St Vancouver BC 148,215 Jun-17 $94,200,000 100% 3.29% $636
Tire and Best Buy.
Averages 25,235 Jan-18 $25,945,522 94% 4.79% $1,213

C AP ITALIZAT ION R ATE C ONCLUSION

We considered all aspects of the subject property that would influence the overall rate. Our analysis suggests that
a capitalization rate of 6.50% percent represents reasonable investor criteria under current market conditions
supported. The following analysis supports this rate:
BENCHMARK COMPARISON Capitalization Rate Range 4.50% to 5.00%

Characteristics Benchmark Asset Ranking Subject Property Characteristics
AAA AA+ AA A+ A B+

Wholly owned freehold
Ownership development with no Wholly owned freehold asset with no
Structure B C+ C D+ D E ownership encumbrances.
ownership encumbrances.
AAA AA+ AA A+ A B+
A modern good quality

facility offering tenant(s), Older character downtown Department Store
Physical
the latest amenities and B C+ C D+ D E in average condition. Functionally too large
Characteristics
functional space. and inefficient.

AAA AA+ AA A+ A B+
Located in a major urban 

Market & centre in a suitable sector Located in Downtown Winnipeg, along
Locational node with sound supply B C+ C D+ D E Portage Avenue, slightly west of main retail
Attributes and demand balance. and office hub.
AAA AA+ AA A+ A B+

Rental structure at market,
Performance & with reasonable cash flow Owner occupied. Significantly below average
Cash Flow B C+ C D+ D E sales performance.
assumptions.
AAA AA+ AA A+ A B+

Leased long term (15 yrs.)
Tenant/Property to institutional grade Owner-occupied property with good locational
Covenant B C+ C D+ D E features but limited alternative use or user.
covenant.
2019 Base Rate for “A” Ranking Asset 4.50% to 5.00%

Ownership -
Physical +75
Locational +50
Performance & Cash Flow +50
Tenant Covenant -
Indicated Range 6.25% to 6.75%
Say 6.50%
1. STABILIZED VALUE - ALTERNATIVE SINGLE TENANT

D IRECT C AP ITALIZAT ION S UMMARY
INCOME & EXPENSE PRO-FORMA - GO DARK SINGLE-TENANT

POTENTIAL GROSS REVENUE Assumptions Annual Rent $/SF
Gross GLA - all floors 655,755 $6,393,611 $9.75
Total Minimum Rent 655,755 $6,393,611 $9.75
Expense Reimbursement Revenue 5,888,680 $8.98

Total Gross Potential Revenue $12,282,291 $18.73
Vacancy and Collection Loss 0.0% 0 $0.00
Effective Gross Revenue $12,282,291 $18.73
Expenses PSF
Property Insurance $0 $0.00
Common Area Mainternance 5,246,040 $8.00
Management Fee 245,646 $0.37
Real Estate Taxes $305,000 $0.47
Total Expenses $5,796,686 $8.84
NET OPERATING INCOME $6,485,605 $9.89
DIRECT CAPITALIZATION METHOD - GO DARK

Sensitivity Analysis (0.25% OAR Spread) Value $/SF
Based on Low-Range of 6.25% $103,769,685 $158.24
Based on Most Probable Range of 6.50% $99,778,543 $152.16
Based on High-Range of 6.75% $96,083,042 $146.52
Stabilized Market Value (Unrounded) $99,778,543 $152.16
Rounded to nearest $1,000,000 $100,000,000 $152.50
2. STABILIZED VALUE - ALTERNATIVE MULTI-TENANT

D IRECT C AP ITALIZAT ION S UMMARY
INCOME & EXPENSE PRO-FORMA - GO DARK MULTI-TENANT

POTENTIAL GROSS REVENUE Assumptions Annual Rent $/SF
Ground floor net - retail small and medium size 81,266 $2,844,308 $35.00
2nd floor net - retail - medium & large size 64,727 $1,812,342 $28.00
3rd floor net - office 62,118 $931,770 $15.00
4th floor net - office 62,127 $931,905 $15.00
Total Minimum Rent 396,203 $8,409,808 $21.23
Expense Reimbursement Revenue 1,311,432 $3.31

Total Gross Potential Revenue $9,721,240 $24.54
Vacancy and Collection Loss 5.0% 486,062 $1.23
Effective Gross Revenue $9,235,178 $25.76
Expenses PSF
Property Insurance $0 $0.00
Common Area Mainternance 812,660 $2.05
Management Fee 2% 184,704 $0.47
Real Estate Taxes $305,000 $0.77
Total Expenses $1,302,363 $3.29
DIRECT CAPITALIZATION METHOD - GO DARK

Sensitivity Analysis (0.25% OAR Spread) Value $/SF
Based on Low-Range of 6.25% $126,925,032 $320.35
Based on Most Probable Range of 6.50% $122,043,300 $308.03
Based on High-Range of 6.75% $117,523,178 $296.62
Stabilized Market Value (Unrounded) $122,043,300 $308.03
Rounded to nearest $1,000,000 $122,000,000 $307.92
3. GO DARK VALUATION
S INGLE T ENANT OCCUPANCY
In order to estimate the “As Dark” value for the subject property, we first estimate a Stabilized Market Value
conclusion. The Stabilized Market Value estimate of $100,000,000 represents the value of the subject property
assuming that the property is leased at a market rent level as of the effective date of value.
Based on current market conditions and the availability of similar space in the regional and local marketplace, we
have estimated a 24-month lease-up period. The costs associated with leasing the property to a stabilized
occupancy level are calculated based upon this lease-up period. Therefore, the costs borne by the property
owner over the assumed lease-up period would include the following:
The total lease-up costs are deducted from the Stabilized Market Value of the property, are summarized below:
GO DARK VALUE - SINGLE-TENANT

Stabilized Market Value Conclusion $99,778,543 $152.16
Annual Rent $6,393,611
Leased Area 655,755
Timeframe for Lease to Start (Years) 2.0
Deductions:
NOI Loss $12,971,211
Demising Costs (Landlord Work) $25.00 $16,393,875
Tenant Improvements $75.00 $49,181,625
Add: Value of Excess density (N/A) $0.00 $0
Leasing Commissions $5.00 $3,278,775
Subtotal Lease-Up Costs $81,825,486
Entrepreneurial Profit on Stabilized Value: 10.0% $9,977,854
Total Lease-Up Costs $91,803,340
Go Dark Value Conclusion $7,975,203 $12.16
Rounded to nearest $100,000 $8,000,000 $12.20
M ULTI -T ENANT O CC UPANCY

As previously shown rental rates for smaller junior anchor space exceed that of large format retailers. Thus a
purchaser of the property as if vacant would also consider the potential to subdivide the space in their purchase
decision. Accordingly, we have analyzed the property assuming that it could be subdivided into multiple smaller
stores on the ground and 2nd floors and offices or other uses on the upper floors.
However, in order to achieve the higher rental rates the landlord would incur significant capital costs associated
with re-demising the space. Also, we have applied a tenant improvement allowance to $50.00 per square foot.
Finally, we believe there would be additional downtime associated with this scenario.
Deducting the appropriate lease-up cost and downtime results in the following as is value conclusion assuming
multi-tenant occupancy:
GO DARK VALUE - MULTI-TENANT

Stabilized Market Value Conclusion $122,043,300 $308.03
Annual Rent $8,409,808
Leased Area 396,203
Timeframe for Lease to Start (Years) 2.0
Deductions:
NOI Loss $15,865,629
Demising Costs (Landlord Work) $150.00 $59,430,443
Tenant Improvements $50.00 $19,810,148
Add: Value of Excess density (N/A) $0.00 $0
Leasing Commissions $10.00 $3,962,030
Subtotal Lease-Up Costs $99,068,248
Entrepreneurial Profit on Stabilized Value: 10.0% $12,204,330
Total Lease-Up Costs $111,272,578
Go Dark Value Conclusion $10,770,721 $27.18
Rounded to nearest $100,000 $10,800,000 $27.26
GO DARK VALUE CONCLU SION

We have considered a go dark analysis based on both single and multi-tenant occupancy. The results of our
analysis are presented in the following table:
GO DARK RECONCILIATION
Single-Tenant $8,000,000
Multi-Tenant $10,800,000
Value Conclusion $10,800,000
We have concluded to the higher of the two value indicators as a prudent investor would pursue the type of
tenancy which maximizes the value of the property.
THE BAY - DOWNTOWN WINNIPEG STORE, MB ADDENDA CONTENTS 48
ADDENDA CONTENTS
ADDENDUM A: ASSUMPTIONS AND LIMITING CONDITIONS ----------------------------------------------------------------- 49
ADDENDUM B: CERTIFICATION OF APPRAISAL-------------------------------------------------------------------------------------- 52
ADDENDUM C: GLOSSARY OF TERMS AND DEFINITIONS --------------------------------------------------------------------- 53
THE BAY - DOWNTOWN WINNIPEG STORE, BC ADDENDA CONTENTS 49
ADDENDUM A:
ASSUMPTIONS AND LIMI TING CONDITIONS
"Report" means the appraisal or consulting report and conclusions stated therein, to which these Assumptions
and Limiting Conditions are annexed.
"Property" means the subject of the Report.
"C&W" means Cushman & Wakefield or its subsidiary that issued the Report.
"Appraiser(s)" means the employee(s) of C&W who prepared and signed the Report.
The Report has been made subject to the following assumptions and limiting conditions:
 No opinion is intended to be expressed and no responsibility is assumed for the legal description or
for any matters that are legal in nature or require legal expertise or specialized knowledge beyond
that of a real estate appraiser. Title to the Property is assumed to be good and marketable and the
Property is assumed to be free and clear of all liens unless otherwise stated. No survey of the
Property was undertaken.
 The information contained in the Report or upon which the Report is based has been gathered from
sources the Appraiser assumes to be reliable and accurate. The owner of the Property may have
provided some of such information. Neither the Appraiser nor C&W shall be responsible for the
accuracy or completeness of such information, including the correctness of estimates, opinions,
dimensions, sketches, exhibits and factual matters. Any authorized user of the Report is obligated to
bring to the attention of C&W any inaccuracies or errors that it believes are contained in the Report.
 The opinions are only as of the date stated in the Report. Changes since that date in external and
market factors or in the Property itself can significantly affect the conclusions in the Report.
 The Report is to be used in whole and not in part. No part of the Report shall be used in conjunction
with any other analyses. Publication of the Report or any portion thereof without the prior written
consent of C&W is prohibited. Reference to the Appraisal Institute or to the MAI designation is
prohibited. Except as may be otherwise stated in the letter of engagement, the Report may not be
used by any person(s) other than the party(ies) to whom it is addressed or for purposes other than
that for which it was prepared. No part of the Report shall be conveyed to the public through
advertising, or used in any sales, promotion, offering or SEC material without C&W's prior written
consent. Any authorized user(s) of this Report who provides a copy to, or permits reliance thereon by,
any person or entity not authorized by C&W in writing to use or rely thereon, hereby agrees to
indemnify and hold C&W, its affiliates and their respective shareholders, directors, officers and
employees, harmless from and against all damages, expenses, claims and costs, including attorneys'
fees, incurred in investigating and defending any claim arising from or in any way connected to the
use of, or reliance upon, the Report by any such unauthorized person(s) or entity(ies).
 Except as may be otherwise stated in the letter of engagement, the Appraiser shall not be required to
give testimony in any court or administrative proceeding relating to the Property or the Appraisal.
 The Report assumes (a) responsible ownership and competent management of the Property; (b)
there are no hidden or unapparent conditions of the Property, subsoil or structures that render the
Property more or less valuable (no responsibility is assumed for such conditions or for arranging for
engineering studies that may be required to discover them); (c) full compliance with all applicable
federal, state and local zoning and environmental regulations and laws, unless noncompliance is
stated, defined and considered in the Report; and (d) all required licenses, certificates of occupancy
and other governmental consents have been or can be obtained and renewed for any use on which
the value opinion contained in the Report is based.
 The physical condition of the improvements considered by the Report is based on visual inspection
by the Appraiser or other person identified in the Report. C&W assumes no responsibility for the
soundness of structural components or for the condition of mechanical equipment, plumbing or
electrical components.
 The forecasted potential gross income referred to in the Report may be based on lease summaries
provided by the owner or third parties. The Report assumes no responsibility for the authenticity or
completeness of lease information provided by others. C&W recommends that legal advice be
obtained regarding the interpretation of lease provisions and the contractual rights of parties.
 The forecasts of income and expenses are not predictions of the future. Rather, they are the
Appraiser's best opinions of current market thinking on future income and expenses. The Appraiser
and C&W make no warranty or representation that these forecasts will materialize. The real estate
market is constantly fluctuating and changing. It is not the Appraiser's task to predict or in any way
warrant the conditions of a future real estate market; the Appraiser can only reflect what the
investment community, as of the date of the Report, envisages for the future in terms of rental rates,
expenses, and supply and demand.
 Unless otherwise stated in the Report, the existence of potentially hazardous or toxic materials that
may have been used in the construction or maintenance of the improvements or may be located at or
about the Property was not considered in arriving at the opinion of value. These materials (such as
formaldehyde foam insulation, asbestos insulation and other potentially hazardous materials) may
adversely affect the value of the Property. The Appraisers are not qualified to detect such
substances. C&W recommends that an environmental expert be employed to determine the impact of
these matters on the opinion of value.
 Unless otherwise stated in the Report, compliance with the requirements of the Americans with
Disabilities Act of 1990 (ADA) has not been considered in arriving at the opinion of value. Failure to
comply with the requirements of the ADA may adversely affect the value of the Property. C&W
recommends that an expert in this field be employed to determine the compliance of the Property with
the requirements of the ADA and the impact of these matters on the opinion of value.
 If the Report is submitted to a lender or investor with the prior approval of C&W, such party should
consider this Report as only one factor, together with its independent investment considerations and
underwriting criteria, in its overall investment decision. Such lender or investor is specifically
cautioned to understand all Extraordinary Assumptions and Hypothetical Conditions and the
Assumptions and Limiting Conditions incorporated in this Report.
 If the Report is referred to or included in any offering material or prospectus, the Report shall be
deemed referred to or included for informational purposes only and C&W, its employees and the
Appraiser have no liability to such recipients. C&W disclaims any and all liability to any party other
than the party that retained C&W to prepare the Report.
 Any estimate of insurable value, if included within the agreed upon scope of work and presented
within this report, is based upon figures derived from a national cost estimating service and is
developed consistent with industry practices. However, actual local and regional construction costs
may vary significantly from our estimate and individual insurance policies and underwriters have
varied specifications, exclusions, and non-insurable items. As such, we strongly recommend that the
Client obtain estimates from professionals experienced in establishing insurance coverage for
replacing any structure. This analysis should not be relied upon to determine insurance coverage.
Furthermore, we make no warranties regarding the accuracy of this estimate.
 By use of this Report each party that uses this Report agrees to be bound by all of the Assumptions
and Limiting Conditions, Hypothetical Conditions and Extraordinary Assumptions stated herein.
ADDENDUM B:
CERTIFICATION OF APP RAISAL
We certify that, to the best of our knowledge and belief:
 The statements of fact contained in this report are true and correct.
 The reported analyses, opinions, and conclusions are limited only by the reported assumptions and
limiting conditions, and are our personal, impartial, and unbiased professional analyses, opinions,
and conclusions.
 We have no present or prospective interest in the property that is the subject of this report, and no
personal interest with respect to the parties involved.
 We have no bias with respect to the property that is the subject of this report or to the parties involved
with this assignment.
 Our engagement in this assignment was not contingent upon developing or reporting predetermined
results.
 Our compensation for completing this assignment is not contingent upon the development or
reporting of a predetermined value or direction in value that favors the cause of the client, the amount
of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event
directly related to the intended use of this appraisal.
 The reported analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the requirements of the Code of Professional Ethics & Standards of
Professional Appraisal Practice of the Appraisal Institute.
 The use of this report is subject to the requirements of the Appraisal Institute relating to review by its
duly authorized representatives.
 Lorena Garcia did make a personal inspection of the property that is the subject of this report on July
18, 2019, Vicki Arista did not inspect the subject property.
 Vicki Arista is a licensed appraiser under the Real Estate Act of Alberta.
 The signatories have not performed a previous appraisal of the subject property within the three
years prior to this assignment.
 As of the date of this report, Vicki Arista has completed the continuing education program of the
Appraisal Institute of Canada. Lorena Garcia is a candidate with the Appraisal Institute of Canada.
(signed) Vicki Arista October 15, 2019

Vicki Arista, MSc, AACI, P.App., MRICS Date
Associate Vice President
ADDENDUM C:
GLOSSARY OF TERMS AN D DEFINITIONS
The following definitions of pertinent terms are taken from The Dictionary of Real Estate Appraisal, Fifth Edition
(2010), published by the Appraisal Institute, Chicago, IL, as well as other sources.
A S I S M ARKET V ALUE
The estimate of the market value of real property in its current physical condition, use, and zoning as of the
appraisal date. (Proposed Interagency Appraisal and Evaluation Guidelines, OCC-4810-33-P 20%)
B A ND OF I NVESTMENT
A technique in which the capitalization rates attributable to components of a capital investment are weighted and
combined to derive a weighted-average rate attributable to the total investment.
C A SH E QUIVALENCY
An analytical process in which the sale price of a transaction with nonmarket financing or financing with unusual
conditions or incentives is converted into a price expressed in terms of cash.
D EPRECIAT ION
In appraising, a loss in property value from any cause; the difference between the cost of an improvement on the
effective date of the appraisal and the market value of the improvement on the same date. 2. In accounting, an
allowance made against the loss in value of an asset for a defined purpose and computed using a specified
method.
E LLWOOD F ORMULA
A yield capitalization method that provides a formulaic solution for developing a capitalization rate for various
combinations of equity yields and mortgage terms. The formula is applicable only to properties with stable or
stabilized income streams and properties with income streams expected to change according to the J- or K-factor
pattern. The formula is:
RO = [YE – M (YE + P 1/Sn¬ – RM) – ΔO 1/S n¬] / [1 + ΔI J]

where
RO = Overall Capitalization Rate
YE = Equity Yield Rate
M = Loan-to-Value Ratio
P = Percentage of Loan Paid Off
1/S n¬ = Sinking Fund Factor at the Equity Yield Rate
RM =Mortgage Capitalization Rate
ΔO = Change in Total Property Value
ΔI = Total Ratio Change in Income
J = J Factor
Also called mortgage-equity formula.
E XPOSURE T IME
The time a property remains on the market. 2. The estimated length of time the property interest being appraised
would have been offered on the market prior to the hypothetical consummation of a sale at market value on the
effective date of the appraisal; a retrospective estimate based on an analysis of past events assuming a
competitive and open market. See also marketing time.
F EE S IMPLE E STATE
Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the
governmental powers of taxation, eminent domain, police power, and escheat.
H YPOTHETICAL C ONDITIONS
A hypothetical condition is “that which is contrary to what exists but is supposed for the purpose of analysis.
Hypothetical conditions assume conditions contrary to known facts about physical, legal, or economic
characteristics of the subject property; or about conditions external to the property, such as market conditions or
trends; or about the integrity of data used in an analysis.”
I NSURA BLE V AL UE
A type of value for insurance purposes.
L EASED F EE I NTEREST
A freehold (ownership interest) where the possessory interest has been granted to another party by creation of a
contractual landlord-tenant relationship (i.e., a lease).
L EASEHOLD I NTEREST
The tenant’s possessory interest created by a lease. See also negative leasehold; positive leasehold.
M ARKET R ENT
The most probable rent that a property should bring in a competitive and open market reflecting all conditions and
restrictions of the lease agreement, including permitted uses, use restrictions, expense obligations, term,
concessions, renewal and purchase options, and tenant improvements (TIs).
M ARKET V AL UE
As defined in the Agencies’ appraisal regulations, the most probable price which a property should bring in a
competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting
prudently and knowledgeably, and assuming the price is not affected by undue stimulus.
Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller
to buyer under conditions whereby:
 Buyer and seller are typically motivated;

 Both parties are well informed or well advised, and acting in what they consider their own best interests;
 A reasonable time is allowed for exposure in the open market;
 Payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable
thereto; and
 The price represents the normal consideration for the property sold unaffected by special or creative
financing or sales concessions granted by anyone associated with the sale. 4
4
“Interagency Appraisal and Evaluation Guidelines.” Federal Register 75:237 (December 10, 2010) p. 77472.
M ARKET ING T IME

An opinion of the amount of time it might take to sell a real or personal property interest at the concluded market
value level during the period immediately after the effective date of an appraisal. Marketing time differs from
exposure time, which is always presumed to precede the effective date of an appraisal. (Advisory Opinion 7 of the
Appraisal Standards Board of The Appraisal Foundation and Statement on Appraisal Standards No. 6,
“Reasonable Exposure Time in Real Property and Personal Property Market Value Opinions” address the
determination of reasonable exposure and marketing time.) See also exposure time.
M ORTGAGE -E QUITY A NALY SIS

Capitalization and investment analysis procedures that recognize how mortgage terms and equity requirements
affect the value of income-producing property.
O PERATING EXPENSES
Other Taxes, Fees & Permits - Personal property taxes, sales taxes, utility taxes, fees and permit expenses.
Property Insurance – Coverage for loss or damage to the property caused by the perils of fire, lightning,
extended coverage perils, vandalism and malicious mischief, and additional perils.
Management Fees - The sum paid for management services. Management services may be contracted for or
provided by the property owner. Management expenses may include supervision, on-site offices or apartments for
resident managers, telephone service, clerical help, legal or accounting services, printing and postage, and
advertising. Management fees may occasionally be included among recoverable operating expenses
Total Administrative Fees – Depending on the nature of the real estate, these usually include professional fees
and other general administrative expenses, such as rent of offices and the services needed to operate the
property. Administrative expenses can be provided either in the following expense subcategories or in a bulk total.
1) Professional Fees – Fees paid for any professional services contracted for or incurred in property operation; or
2) Other Administrative – Any other general administrative expenses incurred in property operation.
Heating Fuel - The cost of heating fuel purchased from outside producers. The cost of heat is generally a tenant
expense in single-tenant, industrial or retail properties, and apartment projects with individual heating units. It is a
major expense item shown in operating statements for office buildings and many apartment properties. The fuel
consumed may be coal, oil, or public steam. Heating supplies, maintenance, and workers’ wages are included in
this expense category under certain accounting methods.
Electricity - The cost of electricity purchased from outside producers. Although the cost of electricity for leased
space is frequently a tenant expense, and therefore not included in the operating expense statement, the owner
may be responsible for lighting public areas and for the power needed to run elevators and other building
equipment.
Gas - The cost of gas purchased from outside producers. When used for heating and air conditioning, gas can be
a major expense item that is either paid by the tenant or reflected in the rent.
Water & Sewer - The cost of water consumed, including water specially treated for the circulating ice water
system, or purchased for drinking purposes. The cost of water is a major consideration for industrial plants that
use processes depending on water and for multifamily projects, in which the cost of sewer service usually ties to
the amount of water used. It is also an important consideration for laundries, restaurants, taverns, hotels, and
similar operations.
Other Utilities - The cost of other utilities purchased from outside producers.
Total Utilities - The cost of utilities net of energy sales to stores and others. Utilities are services rendered by
public and private utility companies (e.g., electricity, gas, heating fuel, water/sewer and other utilities providers).
Utility expenses can be provided either in expense subcategories or in a bulk total.
Repairs & Maintenance - All expenses incurred for the general repairs and maintenance of the building,
including common areas and general upkeep. Repairs and maintenance expenses include elevator, HVAC,
electrical and plumbing, structural/roof, and other repairs and maintenance expense items. Repairs and
Maintenance expenses can be provided either in the following expense subcategories or in a bulk total. 1)
Elevator - The expense of the contract and any additional expenses for elevator repairs and maintenance. This
expense item may also include escalator repairs and maintenance. 2) HVAC – The expense of the contract and
any additional expenses for heating, ventilation and air-conditioning systems. 3) Electrical & Plumbing - The
expense of all repairs and maintenance associated with the property’s electrical and plumbing systems. 4)
Structural/Roof - The expense of all repairs and maintenance associated with the property’s building structure and
roof. 5) Pest Control – The expense of insect and rodent control. 6). Other Repairs & Maintenance - The cost of
any other repairs and maintenance items not specifically included in other expense categories.
Common Area Maintenance - The common area is the total area within a property that is not designed for sale
or rental, but is available for common use by all owners, tenants, or their invitees, e.g., parking and its
appurtenances, malls, sidewalks, landscaped areas, recreation areas, public toilets, truck and service facilities.
Common Area Maintenance (CAM) expenses can be entered in bulk or through the sub-categories. 1) Utilities –
Cost of utilities that are included in CAM charges and passed through to tenants. 2) Repair & Maintenance – Cost
of repair and maintenance items that are included in CAM charges and passed through to tenants. 3) Parking Lot
Maintenance – Cost of parking lot maintenance items that are included in CAM charges and passed through to
tenants. 4) Snow Removal – Cost of snow removal that are included in CAM charges and passed through to
tenants. 5) Grounds Maintenance – Cost of ground maintenance items that are included in CAM charges and
passed through to tenants. 6) Other CAM expenses are items that are included in CAM charges and passed
through to tenants.
Painting & Decorating - This expense category is relevant to residential properties where the landlord is
required to prepare a dwelling unit for occupancy in between tenancies.
Cleaning & Janitorial - The expenses for building cleaning and janitorial services, for both daytime and night-
time cleaning and janitorial service for tenant spaces, public areas, atriums, elevators, restrooms, windows, etc.
Cleaning and Janitorial expenses can be provided either in the following subcategories or entered in a bulk total.
1) Contract Services - The expense of cleaning and janitorial services contracted for with outside service
providers. 2) Supplies, Materials & Misc. - The cost any cleaning materials and any other janitorial supplies
required for property cleaning and janitorial services and not covered elsewhere. 3) Trash Removal - The
expense of property trash and rubbish removal and related services. Sometimes this expense item includes the
cost of pest control and/or snow removal .4) Other Cleaning/Janitorial - Any other cleaning and janitorial related
expenses not included in other specific expense categories.
Advertising & Promotion - Expenses related to advertising, promotion, sales, and publicity and all related
printing, stationary, artwork, magazine space, broadcasting, and postage related to marketing.
Professional Fees - All professional fees associated with property leasing activities including legal, accounting,
data processing, and auditing costs to the extent necessary to satisfy tenant lease requirements and permanent
lender requirements.
Total Payroll - The payroll expenses for all employees involved in the ongoing operation of the property, but
whose salaries and wages are not included in other expense categories. Payroll expenses can be provided either
in the following subcategories or entered in a bulk total. 1) Administrative Payroll - The payroll expenses for all
employees involved in on-going property administration. 2) Repair & Maintenance Payroll - The expense of all
employees involved in on-going repairs and maintenance of the property. 3) Cleaning Payroll - The expense of all
employees involved in providing on-going cleaning and janitorial services to the property 4) Other Payroll - The
expense of any other employees involved in providing services to the property not covered in other specific
categories.
Security - Expenses related to the security of the Lessees and the Property. This expense item includes payroll,
contract services and other security expenses not covered in other expense categories. This item also includes
the expense of maintenance of security systems such as alarms and closed circuit television (CCTV), and
ordinary supplies necessary to operate a security program, including batteries, control forms, access cards, and
security uniforms.
Roads & Grounds - The cost of maintaining the grounds and parking areas of the property. This expense can
vary widely depending on the type of property and its total area. Landscaping improvements can range from none
to extensive beds, gardens and trees. In addition, hard-surfaced public parking areas with drains, lights, and
marked car spaces are subject to intensive wear and can be costly to maintain.
Other Operating Expenses - Any other expenses incurred in the operation of the property not specifically
covered elsewhere.
Real Estate Taxes - The tax levied on real estate (i.e., on the land, appurtenances, improvements, structures and
buildings); typically by the state, county and/or municipality in which the property is located.
P ROSPECT IVE O PINION O F V ALUE

A value opinion effective as of a specified future date. The term does not define a type of value. Instead, it
identifies a value opinion as being effective at some specific future date. An opinion of value as of a prospective
date is frequently sought in connection with projects that are proposed, under construction, or under conversion to
a new use, or those that have not yet achieved sellout or a stabilized level of long-term occupancy.
P ROSPECT IVE V ALUE U PON R EAC HING S TABIL IZED O CC UPANCY

The value of a property as of a point in time when all improvements have been physically constructed and the
property has been leased to its optimum level of long-term occupancy. At such point, all capital outlays for tenant
improvements, leasing commissions, marketing costs and other carrying charges are assumed to have been
incurred.
S PEC IAL , UNUSUAL , OR E XTRAORDINARY A SSUMPTIONS

Before completing the acquisition of a property, a prudent purchaser in the market typically exercises due
diligence by making customary enquiries about the property. It is normal for a Valuer to make assumptions as to
the most likely outcome of this due diligence process and to rely on actual information regarding such matters as
provided by the client. Special, unusual, or extraordinary assumptions may be any additional assumptions relating
to matters covered in the due diligence process, or may relate to other issues, such as the identity of the
purchaser, the physical state of the property, the presence of environmental pollutants (e.g., ground water
contamination), or the ability to redevelop the property.

Bay Appraisal

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Bay Appraisal

Caricato da

Copyright:

Formati disponibili

Redacted for commercially sensitive

information - November 15, 2019

APPRAISAL OF REAL PROPERTY

IN A SELF-CONTAINED APPRAISAL REPORT

C&W File ID: 19-614-900202

The Bay - Downtown Winnipeg Store

October 15, 2019

Mr. David Leith

Re: Appraisal of Real Property

The Bay - Downtown Winnipeg Store

C&W File ID: 19-614-900202

Dear Mr. Leith:

Each value opinion was arrived at as follows:

This appraisal does not employ any extraordinary assumptions.

(signed) Vicki Arista

HIGHEST & BEST USE

VALUATION INDICES Winnipeg Downtown Store

Gross GLA (sq ft): 655,755

ST O R E INT E RI O R – F O URT H FLO O R

BUILDING FLOOR PLANS

Common Property Name: The Bay Downtown Winnipeg Store

Current Ownership: Hudson’s Bay Company

Date of Valuation: July 15, 2019

Client: Hudson’s Bay Company

LOCAL AREA MAP

LOCAL AREA ANALYSIS

NEARBY AND ADJACENT USES

North: Portage Place Shopping Center and University of Winnipeg

Competitive Market - Nearby Large Retailers

1 Hudson's Bay 212,086 CF Polo Park 1

ENCLOSED SHOPPING CENTRE COMPETITORS

Competitive Market - Winnipeg Enclosed Shopping Centres

1 Portage Place 439600 1987 Downtown

S OFT LANDING RISK S GE TTING ROUGH

Slower momentum reflects reduced fixed investment and

Along with various external risks such as escalation of China-

G REATER SLAC K LOWERS INFLATIONARY

K EY MED IUM - TERM CONCERNS

Persistent drag from high household debt: household

Housing activity will slow: in recent years, housing was

Reasonable external backdrop: world trade, weighted by

K EY LONG - TERM ADVANTAGES

Healthy government finances: the federal budget deficit

W HAT TO WATCH OUT FOR

High household indebtedness: household debt metrics,

Excessively-high house prices: house price pressures

Pick up in business investment: stronger investment is

Oil prices: a persistent decline in oil prices could slow activity

Higher interest rates: sharply higher rates could choke off

E XPOSURE TO KEY GLOBA L RISK S

China slowdown: this scenario assumes the Chinese

S TRUCTURE OF THE ECON OMY

B ALA NCE OF PAYM ENTS A ND STRUCTURE O F TRADE

PROVINCIAL AND METRO MARKETS ECONOMIC OVERVIEW

T HE KEY MACRO ASSUMPT IONS THAT DRIVE OUR REGIONAL VIEW

V ANCO UVER AND T ORONTO HIT BY C ANADA ’ S CONSUMER DEBT PROB L EM

O IL PRIC E VOLATILITY HAUNTS A LBERTA ’ S ECONOMY AGA IN

T HE OUTLOOK FOR PERIP HERAL C ANADIAN REGIONS

MANITOBA – ECONOMIC OVERVIEW

costs, net income, overall taxes and return on investment.

G ROSS D OMEST IC P RODUCT (GDP)

Labour Force Characteristics - Seasonally Adjusted 3-Month Moving Average

WINNIPEG - ECONOMIC OVERVIEW