570 DUNSMUIR
LENDERS COMMITTEE

 Telephone (604) 263-4423
e-mail - caljura@shaw.ca

Update March 2003

Dear Sir/Madame:

The building continues to operate smoothly and maintains its full tenancy. One tenant will not be renewing their lease, which expires in July 2003. We are negotiating with LSC, our anchor tenant, about taking over this space.

BC Hydro, which leased the 8th floor, totalling 6,698 sq. ft, in conjunction with their sponsorship of the Olympic Bid Committee, has moved on to larger premises. Their lease expires in May 2005. They will continue to pay rent for this period unless they are successful in sub-leasing to a suitable tenant.

For the year ending December 31, 2002, there was a net beneficial interest to the Dunsmuir investors of approximately $600,000.00 by way of revenues and mortgage principal reduction.

The results of the vote on the issue of marketing the building for sale or holding it indefinitely subject to judicial instruction, were as follows:

Number of investments - 454

Number of Lenders that returned ballots - 215
% of investments that returned ballots - 47%

Number of investments voting "Yes" to list building for sale - 73
% of investments that voted "Yes" - 34%

Number of investments voting "No" to list building for sale - 142
% of investments that voted "No" - 66%


Reference:
Total amount of investments - $9,467,280

Amount of investments that returned ballots - $ 5,419,410
% of investments that returned ballots - 57%

Amount of investments voting "Yes" to list building for sale - $1,539.288
% of investments that voted "Yes" - 28%

Amount of investments voting "No" to list building for sale - $3,880,122
% of investments that voted "No" - 72%


The results were presented to Justice Tysoe who ruled in favour of the majority subject to the following conditions.

1. That the Trustee closely monitors the downtown Vancouver real estate market and if they deem it necessary due to perceived negative market conditions approach the court for further instructions.

2. That 570 Dunsmuir will pay interest at an equivalent rate to the 1st mortgage on direct and indirect costs for which it is ultimately found responsible.

3. Should the holding of the 570 Dunsmuir Building adversely effect the distributions of financial entitlement due to investors in other projects that have realized, then the Trustee will have leave to approach the Court for direction.

Presently there is no scheduled date for a distribution of funds. However, when the Trustee does have occasion to attend Court on the next distribution of funds, the fore mentioned conditions will be most certainly reviewed.

Those investors who have shown an interest in acquiring the asset as a sole entity, separate and apart of the Trustee, may well be afforded the opportunity to fulfill their aspirations.

Justice Tysoe, totally conversant with Dunsmuir matters, will determine the options open to the investors. Should it be ascertained an option to hold as outlined above becomes a possibility, it will then be a matter of determining which investors wish to partake. There will not be a vote, simply a personal choice to participate or not. Without going into too much detail at this point, I cannot envision anything other than the investors being advised of their options along with the relevant legal and financial information (i.e. updated appraisal, etc.) relating to 570 Dunsmuir in order that they are able to make an informed decision. Obviously, a key factor will be determining a fair price for the building. From there it would basically be a matter of those wishing to retain the asset finding the adequate financing to release those who do not wish to participate in holding the building.

This is something to think about in the next while pending the outcome of the next application by the Trustee for the distribution of funds.

Again, please direct your enquiries to me and not to PWC.

Yours truly,

Duncan MacKechnie
570 Dunsmuir Chair





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