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Sault Ste. Marie

Station Mall revenue decreased by 2% in 2009 compared to 2008 due mainly from decreased rental income as the occupancy level decreased to 93% from 94% at the end of 2008. The retail sector is expected to remain challenging for 2010 as growth in consumer spending remains soft. We continually review tenant mix with respect to the corresponding benefits of box-store and discount retailers versus the more traditional retailers in a regional shopping centre setting such as this.

Our full-service hotel, which was managed and operated as the Sault Ste. Marie Waterfront Hotel & Conference Centre from February 1, 2009, until October 12, 2009, has undergone a complete modernization program at a total cost of approximately $6,700. The closure of hotel suites during the modernization program including the complete closure of the hotel in October 2009 resulted in a loss from operations for the hotel operation for the year. We finalized an agreement with Delta Hotels Limited in 2009 to renovate the hotel to their standards and for them to manage the hotel upon reopening. This program included enhancements to the building envelope, numerous building upgrades, esthetical and amenity improvements as well as design changes to increase operational effectiveness. The above, in addition to completely new furnishings and fixtures throughout the building, has resulted in a first-class, like-new facility. On January 18, 2010, the modernization program was completed and the hotel opened as the Delta Sault Ste. Marie Waterfront Hotel and Conference Centre under the management of Delta Hotels Limited. We are optimistic that with the new Delta brand, in addition to this facility being the only four-star hotel in the region, we will experience significant improvement in the hotel’s financial performance.

Although revenue from our Station Tower office building decreased in 2009 by 1% compared to 2008, the lease-up of a new tenant in the fall of 2009 has increased our occupancy to 95% from 92% at the end of 2008 which should provide for an increase in revenue for 2010. Our 289 Bay Street office building, which remains at the 100% occupancy level, had a revenue increase of 7% in 2009 over 2008 due to an increase in rental rates.

The Station ‘49’ apartment building is currently 100% leased with increased revenue of 3% in 2009 over 2008 mainly due to increases in rental rates. Occupancy commonly fluctuates throughout the year due to typical tenant turnover.

 Station Mall

 Station Tower

 Bruce & Bay Building

 Station '49'

 Delta Waterfront Hotel & Conference Centre