Annual Review - Amazon S3...delivering on the fundamentals of real estate. we are one of canada’s largest privately-held real estate companies. 02 04 06 08 10 12 16 18 20 22 23 24

2016 Annual Review

Our vision for 2017 and beyond

“Creating value

others can’t by seeing

what others don’t.”

o u r m a n t r a

Strategic Group owns, manages and develops office, retail and apartment properties across Canada. Our approach is unconventional and creative while

delivering on the fundamentals of real estate.

we are one of canada’s largest privately-held real estate companies.

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Who We Are

Our Business

2016 Accomplishments

Letter to Stakeholders

Our Approach to Real Estate

Residential Properties

Retail Properties

Office Properties

Reinvesting in our Real Estate

Repurposing Assets

New Vertically Integrated Solution

Commitment to Our Tenants

Development Team

Completed Projects

Current Projects

Future Projects

Team Strategic

Community

Our Portfolio

Table of Contents

Who We Are

a n e m p o w e r e d a n d e x p e r i e n c e d t e a m w i t h a b o l d v i s i o n f o r c a n a d a ' s r e a l e s t a t e i n d u s t r y

Strategic Group owns, manages and develops office, retail and apartment properties across Canada.

Our company is fully integrated, which means we own, manage, lease, develop, re-develop and re-purpose our portfolio on our own, for ourselves. We have national reach with real estate ownership from Vancouver Island to Atlantic Canada.

Our plan is to own real estate for the long term, which is why we focus on sustainability and recurring revenue. Our approach is creative and unconventional while delivering on the fundamentals of real estate. Our creative and unconventional approach is reflected in our Mantra, "Creating value others can't by seeing what others don't”.

Real estate is our focus but we own businesses in other industries including Construction, Building Services, Oilfield Services, Hospitality, Pet Care, Agriculture, Technology and Corporate Finance.

5/5 Building • calgary, alberta strategic group's team members collaborating in the leasing area

Strategic Group develops and owns projects in exceptional locations with a focus on strong

amenities, proximity to transit, and easy access to major commuter roadways. We are committed to sustainable and innovative properties that meet

and exceed the needs of our Customers.

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Our Business by the Numbers

2 0 1 6 K E Y A C C O M P L I S H M E N T S

Strategic Group’s positive results in 2016 are a testament to the strength of our team. We have made it a priority to build a highly qualified and capable leadership group and empower our people

to continue to guide our growth in 2017 and beyond.

154

7,086,029 334

$1.6

2,907,853

2,951

2,972,004

1,206,172

number of properties

residential portfolio

office portfolio

retail portfolio

total leasable area

dollar value of assets

total residential units

a privately-held company

billion

tea m member s

squa r e feet

squa r e feet

squa r e feet

5

1 243 5

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Building on Our Success:Key Accomplishments 2016

1 Launched Strategic Builders, which will act as a construction manager for Strategic Group development projects.

2 Increased our residential portfolio through the completion of Centro, Entro and Aqua and through the acquisition of Aura (28% Y-o-Y increase).

3 Divested three non-core assets achieving premium returns.

4 Reinvested over $20 million in our existing portfolio.

5 Acquired projects in both Calgary and Edmonton.

6 Started construction on ONE6, a new residential and retail complex.

barron building concept • calgary, alberta

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Dear Stakeholders,Strategic Group met the tough economic challenges of 2016 and I am proud of our accomplishments. We lived our mantra “Creating value others can’t by seeing what others don’t” and through our creative and unconventional approach, we delivered positive real estate results. We were able to outperform a difficult office market in Alberta and continue our plan to grow through diversification into the purpose-built multi-family residential asset class.

I believe that one of the keys to our success has been, and will continue to be, a corporate-wide commitment to goal setting and measurement. Setting goals has always been an important part of the executive culture at Strategic Group. In 2016, it was our priority to drive goal setting to every level of the organization. In January 2016, our Executive Team set 71 corporate goals that were published to our entire organization. Primary accountability for each goal was assigned to an Executive and cascaded to members of their Team. This process gave every Team Member a clear path and direction, true understanding of the organization’s priorities, and a command of how their role fits into Strategic Group’s overall strategy. In November 2016, we further refined the goal-setting process by involving every person in the organization in workshops to help set our priorities and goals for 2017. This process culminated on December 16,

2016 with the announcement of 69 goals for 2017 around the following themes:

• Strengthen Commercial

• Spend Wisely

• Grow Residential

• Take Pride

• Improve Effectiveness

The struggles of the Calgary office segment in 2016 are well known. Vacancy rates reached 25% in the fourth quarter of 2016. The office market statistics are heavily weighted towards Class A downtown core office buildings with large floor plates; these are the buildings that bore the brunt of the downsizing by oil and gas related companies. However, our portfolio continued to outperform the market. This is largely due to the fact

that our downtown office portfolio consists largely of Class B “small suite” office space and that our tenants are generally smaller and more resilient.

Our retail properties continued to perform well. We were proud this year to add (among others) Jysk, Five Guys Burgers and Fries, and Blaze Pizza as Strategic Group Tenants. But I am most excited about our continued diversification and growth in the multi-family residential asset class.

In the early years, Strategic Group was focused on growing a strong office and retail portfolio. That strategy worked well and we benefited from high oil prices and businesses actively seeking office space. In 2014, we began to implement a strategy for aggressive growth in the multi-family rental asset class, through both acquisition and development. Many are surprised to learn that, as a result of this strategy, multi-family is larger than any other asset class in our portfolio.

F U T U R EV I S I O N

Riaz Mamdanic e o , s t r a t e g i c g r o u p

We continue to believe that there are many excellent opportunities in the Alberta residential rental asset class and this will continue to be the focus of our growth strategy. The investment thesis for this approach is based on demographic trends that have and will continue to exist, notwithstanding the cycles in the energy market.

Finally, I am very proud of Strategic Group’s continued commitment to our community. In 2016 we sponsored 37 charitable organizations, including: Theatre Calgary, Calgary Opera, Mayor’s Lunch for Arts Champions, the Calgary Food Bank, Aga Khan Foundation and the Project Warmth Society of Alberta. I am grateful, in particular, to our Team Members and Tenants who volunteered and participated in these initiatives and made them a success.

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Our Approach to Real Estate

Strategic Group’s approach to real estate encompasses three phases: Visioning, Creating and Optimizing. In each of these phases, we remain

focused on delivering a product that provides the best possible customer experience.

Visioningim agining • pl anning • analy zing

Visioning takes place when an idea or opportunity is formed, researched and explored. Land and asset purchases are made when our

vision for an asset’s possibilities become a proven business case.

Creatingdesigning • cons truc ting • s tabilizing

Creating is the action that follows an approved plan. It is where the Team is mobilized and empowered to turn ideas into reality.

Optimizingm anaging • le a sing • reinves ting

We create long term value across our entire portfolio through the insight of our experienced Management Team, effective leasing

strategies and capital investment in our assets. Our fully-integrated real estate platform allows for synergies across our organization.

Strategic Portfolio Mixbased on gross leasable area

7,086,029 sftotal

retail1,206,172 SF

—

17%

calgarydt office

670,110 SF—

9%edmontondt office

479,065 SF—

7%

residential2,907,853 SF

—

41%

suburbanoffice

1,822,829 SF—

26%

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Throughout 2016, Strategic Group continued to see rental demand in Alberta increase, resulting in exceptional lease-up timeframes of our new residential projects. A significant factor impacting this trend is the dramatic increase in the millennial population in both Calgary (+40%) and Edmonton (+48%) over the past 15 years. As a result of this and other trends, we see significant opportunity to continue investing in the Alberta multi-family residential sector.

fluctuating commodity prices and the cyclical economy, both Calgary and Edmonton top the list of fastest growing metropolitan areas in Canada over the past three years.

We recognized the need to diversify our portfolio as well as the opportunity to invest in an underserviced residential rental market in Alberta. Today, Strategic Group owns and operates 95 purpose-built, multi-family buildings comprising of over 2,951 units in Calgary, Airdrie, Edmonton and Atlantic Canada. Our residential suites cover 2.9 million square feet and represent 41% of our total portfolio. Notwithstanding


entro • stony plain, alberta

Paradoxically, there has been a 24% decline in the number of purpose-built residential units in Calgary since 2001; a combination of both condominium conversions and demolitions. Of the available rentals on the market, over 65% of the apartments are about 50 years old.

In August 2016, we reached a significant milestone in our residential development pipeline with the completion of three projects.

Centro is comprised of retail, one bedroom apartments, two bedroom apartments and live-work units. Situated in the inner-city community of Tuxedo Park, Centro is close to parks, schools and shopping malls in a desirable location just north of the downtown core. Aqua is three 4-storey apartment buildings with 158 units. Aqua is located in Airdrie’s Gateway district; a fast-growing neighbourhood in close proximity to full-service amenities. Entro is a 4-storey

“I worked with a great team to develop and build Aqua. It’s truly a testament to the quality of a project when you work on a development and then choose to live there too, as I do.” dan mclean • project manager and resident, aqua

complex of 126 multi-family units located in Stony Plain; a thriving community 20 minutes west of Edmonton.

In addition to our new construction projects, we grew our residential portfolio further in December 2016 through the acquisition of a 285-unit apartment complex in Airdrie.

Our rapidly growing residential portfolio also includes units under construction at ONE6, Calgary and Terra Townhomes, Airdrie, as well as our 1,243-unit development pipeline.

We continue to expand our dedicated residential Property Management and Leasing Teams have strengthened the Strategic Residential brand by providing superb customer service to our Tenants. We will continue to build best-in-class amenity-rich buildings, each with a strong sense of community.

Calgary Apartment Market: By Building Age

Edmonton Apartment Market: By Building Age

Population Growth: Top 5 CMAs 2011–2016

5,000

5,000

10,000

10,000

15,000

15,000

20,000

20,000

25,000

25,000

30,000 45,000

perc

ent

gro

wth

40,000

35,000

30,000

before1960

before1960 c

alg

ary

edm

on

ton

sask

ato

on

reg

ina

leth

brid

ge

1980– 1999

1980– 1999

1960– 1979

1960– 1979

2000 or later

2000 or later

0

6%

68%

19%

7%5%

66%

14% 15%

1,243-unit development

pipeline

one: 379

creekside: 96

marda: 67

shelbourne: 110

watt road: 261

harley court: 177

terra: 153

0

14.6%

13.9%

12.5%

11.8%

10.8%

construction year construction year

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A N N U A L R E V I E W 2 0 1 6

O N E

O F

C A N A D A’ S

FA S T E S T

G R O W I N G

E C O N O M I E S

Residential Case Study:Atlantic Canada

2016 proved to be a strong year for the Atlantic Canada region. The Conference Board of Canada cited Halifax to be one of the fastest growing economies in the country in 2016.

This economic strength benefited our Atlantic Canada portfolio. We delivered on the 1,746 units in Nova Scotia and New Brunswick and on our key strategies:

• We increased our occupancy from 92.8% in January 2016 to 96% by December 31st, 2016.

• Injected capital to improve the quality of the product.

• Our operating expenses per unit decreased by 15% while improving customer experience.

One of our top initiatives was focused on Energy Optimization. We explored different avenues to meet our energy conservation goals in conjunction with Efficiency Nova Scotia. This resulted in the replacement of all common area lighting to LED bulbs and all units replaced with energy efficient lighting. The project was completed in 2016 and resulted in a rebate from the provincial government due to the project savings of 327,587 kWh.

Following this initiative, we implemented water and waste reduction strategies in Q4 of 2016.

Our Atlantic Canada Energy Optimization project resulted in savings

of 327,587 kWh, which is equivalent to taking 47 cars off the road, reducing coal consumption by 241,892 lbs or reducing

CO2 by 226 tonnes.

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Strategic Group’s retail portfolio is comprised of approximately 1.2 million square feet of space across Western Canada.

Retail Properties

20/20 • calgary, alberta

Our retail portfolio varies from suburban strip malls to large retail centres with national anchor Tenants who provide stable cash flows.

We placed an increased emphasis on utilizing our retail spaces in our mixed-use projects to provide superior amenities for our Tenants and their customer. With the increasingly competitive market environment, premium retail amenities have a significant impact on Tenant attraction, retention and overall experience.

In 2016, we welcomed new Best-in-Class Tenants:

• YYC Cycle added its third location to Avenida Village in south Calgary.

• Shelbourne Place on 17th Avenue SW saw the opening of Made by Marcus, a popular Calgary ice cream and coffee shop.

• Five Guys Burgers and Fries and Blaze Pizza opened in our 20/20 building on 4th Street SW adding to the already vibrant culinary scene.

• Foreign Concept, the brain child of Calgary’s respected and award-winning chef Duncan Ly, opened in our Paramount building on 11th Avenue SW in Calgary.

foreign concept • paramount, calgary, alberta

“It has been an amazing experience being a Tenant in the Paramount Building. The Management Team has been very professional and supportive in making sure that we have everything we need.” duncan ly • owner, chef, foreign concept

Congratulations to our Tenants Shokunin and Foreign Concept for making Top 100 Restaurants in Canada!

Foreign Concept voted Best New Restaurant in 2016john gilchrist • restaurant critic, calgary herald

Foreign Concept voted Best Restaurants to Watch 2017avenue magazine

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A N N U A L R E V I E W 2 0 1 6

Office Properties

petro fina • calgary, alberta

2016 was an exciting year of growth for our Leasing Team. We grew from a Team of five to a robust group of twelve in Calgary and Edmonton. Our focus continues to be on office and retail commercial space and on specialty leasing which includes: parking, signage and telecommunications.

Our Tenants take up smaller office space and are leaner and therefore less likely to downsize. Our buildings feature “small suite office space” with 68% of our Tenants occupying 5,000 SF or less. Strategic Group's Tenant retention remains strong because the large downtown Class A vacant floor plates are not suitable for our Tenants. While most landlords in Calgary focused on clearing floor plates for large energy Tenants, Strategic Group focused on building out small suites. Calgary has the largest number of small businesses per capita in Canada, which continually drives demand in our office portfolio.

Strategic Group's office portfolio is primarily Class B space in Calgary and Edmonton. A cyclical market by nature, the Alberta office sector continued to face challenges in 2016. Depressed commodity prices had a pronounced impact on the commercial real estate market. However, Strategic Group maintained over 89% occupancy across its commercial portfolio through 2016. This is due, in part, to a focus on Class B small-suite suburban office space. Strategic Group is committed to an emphasis on our unconventional leasing approach, which has strengthened occupancy and filled vacancies.

9%of Strategic Group's real estate

portfolio is downtown Calgary office

Strategic Group's relationships with Tenants kept our rollover modest.

As a vertically integrated real estate company, our business model allows us

to work with Tenants directly to address their needs and to remain committed to

them during all economic cycles.

With only 9% of our real estate portfolio exposed to downtown

Calgary office, we remain positioned to withstand the cyclical nature of the

Alberta economy. As a landlord in a commodity based economy, we believe

that our commitment to providing best-in-class Tenant experience will

ultimately drive stable cash flows during these times.

“I have been nothing but pleased with the service at Macleod Place. Everyone at Strategic Group has been welcoming and easy to work with. It has been a pleasure to move into this location, a move that was initially met with trepidation by my team, coming from an industrial setting.” mr. jeremy ray • tenant, macleod place

We Manage Risk

minimum exposureto Class A downtown

office space

class b small-suite space

is the majority of Strategic Group’s portfolio

68%of Tenants have under 5,000 SF of leased space

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A N N U A L R E V I E W 2 0 1 6

Improvement of our real estate portfolio has always been an important part of our business plan. By investing in our existing assets and maintaining them at the highest standard, we are able to provide a superior Tenant experience.

Reinvesting in our Real Estate

the property The 2014 acquisition of the Duncan Shopping Centre in Duncan, British Columbia, continues to evolve as the centre is repositioned and stabilized. The acquisition expanded Strategic Group's operating footprint to Vancouver Island and captured new cash flow from a strong mix of retail Tenants.

reinvestment strategy

Our work in 2016 focused on the continuation of the Duncan Mall “de-malling” project that will see the removal of a small, largely vacant and very inefficient interior mall. The area has been reimagined to create approximately 30,000 SF of premium space for an additional national retailer. A milestone in this process was achieved with the execution of a lease between JYSK and Strategic Group.

proven results This redevelopment has triggered the termination, relocation, expansion and consolidation of various Tenants.

Case StudyDuncan Shopping Centre Reinvestment

centre 1000, new exterior and lobby

before

after

Case StudyCentre 1000: Aesthetic Upgrade

location1000 Centre Street NE, Calgary, Alberta

challengeCentre 1000 is a very prominent building just north of downtown Calgary. The mid-‘80s building was in need of a refresh to take better advantage of its excellent location and exposure.

solutionTo achieve our goal, we addressed a number of items:• We started by expanding the lobby and created a

prominent architectural feature to clearly identify the main entrance.

• This was followed by applying new metal cladding to the lower portion of the building.

• The project was completed by refreshing the existing lobby finishes and refurbishing the building’s numerous patios to take advantage of their exceptional views.

statusCompleted December 2016

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Repurposing AssetsCase Study: Store and Go, Before and After Repurposing

"Creating value others can’t by seeing what others don’t."

location1216 10th Avenue SW

challengeThis purpose-built building was uniquely designed for a now obsolete cheque processing facility. When the building was vacated, it was determined to be unsuitable as office space. Numerous scenarios were reviewed to repurpose the property, taking into account the exceptional location, excellent access and the high population density in the immediate area.

solutionThe creation of a self-storage facility allowed Strategic Group to backfill a significant vacancy, providing an important service to the surrounding community and taking full advantage of the building’s unique design.

Store & Go provides:• 271 climate-controlled units.• Great Beltline location.• In-store packing, shipping and storage

supplies for purchase.• 24/7 unit access.

before

after

New Vertically Integrated SolutionStrategic Builders

strategic builders on-site at one6

Our corporate strategy around multi-family residential rental growth resulted in the company challenging itself to discover the best possible delivery model.

challengeTo incorporate developer-led design including the mission-critical expert participation of construction management services at the very inception of the development concept.

solutionConsistent with our goal of a vertically integrated model, we created a construction management company, Strategic Builders (SBI), to provide pre-construction and construction services, allowing us to bring product to market faster and at a lower cost.

SBI will further showcase Strategic Group’s strength by delivering quality

and innovation when executing on our integrated vision.

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Commitment to Our Tenants

caring for our customers

Our Team is focused on proactively managing our properties. Across our portfolio, we have been focused on improved performance, Customer experience and value engineering at our properties.

customer satisfaction surveysFeedback gained through our Customer Satisfaction Surveys has given us overall guidance about where we need to focus our energies. Over the past year we have reviewed the way we care for our buildings, including but not limited to elevator maintenance, energy management, light bulb replacements, garbage and recycling, filter types, procurement of day-to-day items and Customer relationship management meetings. Fundamentally, all of our decisions have come back to one question: “How will this make the

communication is keyOur quarterly newsletters are customized to each building. This program has provided a method of communicating with our Customers by updating them on important matters including: renovations, capital improvements, Team Member changes, energy saving programs, general real estate issues and government regulation changes that impact our business.

54B U I L D I N G S

Receive CustomizedQuarterly Newsletters

overall experience for our Customers in our building better?” This may mean capital investment to provide better value through qualitative items such as updating the aesthetics of a washroom or lobby.

We have been able to use our size to our Customers' advantage. Our buying power has permitted us to obtain better overall pricing on contracts while maintaining elevated service levels. This helps keep our operating costs as low as possible.

introducing strategicfix.ca

In November, we launched our web portal for service requests. This system automatically directs every new request to the correct Team Member. This has created several important efficiencies and benefits:

• A service request is now immediately dispatched to a specific Team Member and does not wait at the service desk for the operator to answer an email or be available by telephone.

• We are able to track and meter service request times.

• We can data mine our service requests to proactively address building issues.

• We engage our Team Members, Customers and Service Providers to proactively address matters and concerns.

• We effectively manage our Team to spend more time focused on preventative maintenance and less time on repairs.

$

31%propert y tax

5%carbon tax

15%buildingrepairs &maintenance

12%wages

17%util it ies

1%insurance

17%cleaning, securit y &landscaping

2%overhead

Typical Breakdown of Tenant Operating Costs

A N N U A L R E V I E W 2 0 1 6

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T H R E E M O V E - I N S .T H R E E C I T I E S .

O N E A M A Z I N G D A Y .

Four new properties representing a total increase of 638 units, with three new communities opening on the same day—September 1, 2016. While onboarding one new facility has its challenges, our Development/Construction/Leasing and Property Management teams made this exciting and hectic time run smoothly. Each move-in was approached with a sense of service, a sense of humour and a commitment to introducing our new communities in alignment with Strategic Group’s high standards for quality and professionalism.

Our Team welcomed hundreds of new residents to our communities throughout 2016 and look forward to retaining them throughout 2017 and beyond, as a result of our dedication and commitment to service and community spirit.

ren

tabl

e u

nit

s in

str

ateg

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rou

p's

albe

rta

port

foli

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before2016 2016

341exist ing

units

353units brought

to market in one day

(aqua , entro, centro)

285units

from aura acquis it ion

A 187% Increase in Alberta Rental Units in One YearOn September 1st, in three different cities, three brand new Strategic Group residential properties opened their doors to Tenants for the first time. In Calgary, Centro opened 69 units. A little further north, in Airdrie, Aqua opened 158 units and even further north in Stony Plain, Entro opened 126 units.

s e p t e m b e r 1 , 2 0 1 6

Move-In Dayq u i c k s tat i s t i c s

SOAP

6

1. WATER BOTTLES 2. HAND SOAP 3. BASKET WITH BOW

4. GROUP OF DIVERSE PEOPLE 5. CLOCK 6. HAMBURGER AND HOT DOG 7. PERSON CLIMBING STAIRS

- 600+ -Strategic Group branded water delivered to residents, movers

and Team Members

SOAP

6



SOAP

6



- 300+ -Toiletry kits

SOAP

6



- 300+ -Welcome gift packages

SOAP

6



- 10+ -Team Members per site

SOAP

6



- 480 -Hamburgers and ...

SOAP

6



- 3,400 -Stairs climbed by Team

Members at Centro

Development TeamOur in-house Development Team is focused on projects that add value. Our goal is to create amenity-rich and attractive buildings in an environmentally responsible way.

Many of our developments are mixed-use (integration of uses such as residential, office, hotel and retail spaces), which allow residents to live, work and play in their own community. Sustainability is a key priority, so implementing energy efficiency, water conservation, recycling and sustainable cleaning programs, as well as attaining LEED and Built Green certification, are integral to our developments. We consistently implement local, provincial, North American and global development best practices and are always innovating to ensure our Tenants’ experience is superior to other competing developments.

SOAP

6



- 60 -Man-hours per person,

during move-in week

SOAP

6


4. GROUP OF DIVERSE PEOPLE 5. CLOCK 6. HAMBURGER AND HOT DOG 7. PERSON CLIMBING STAIRS- 245 -hotdogs served at

welcome BBQs

A N N U A L R E V I E W 2 0 1 6

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A N N U A L R E V I E W 2 0 1 6

20/20 office & retail property

—

Developed, Owned & Managed by Strategic Group

calgary, alberta

Completed Projects

We were excited to watch our developments—such as Centro, Entro and Aqua—come to fruition and further service Alberta’s multi-family residential rental market. We remain committed to seeking opportunities for redevelopment of existing assets, expansion of current properties, new construction and acquisitions.

CentroCalgary, Alberta

statusComplete

description• Located in Tuxedo Park, one of

Calgary’s oldest and most desirable neighbourhoods.

• Centro is a 5-storey apartment complex comprised of 69 residential units including five Work/Live units and a coffee shop.

EntroStony Plain, Alberta

statusComplete

description• Located in Stony Plain, one of Canada’s

fastest growing communities.• Entro is 20 minutes west of Edmonton. • Entro is a 4-storey residential complex

comprised of 126 multi-family units.

AquaAirdrie, Alberta

statusComplete

description• Located in Airdrie’s Gateway district,

Aqua is surrounded by some of the city’s most popular amenities, all within walking distance.

• Aqua is a three 4-storey apartment complex comprised of 158 residential units.

1.

1. centro • calgary, alberta / 2. entro • stony plain, alberta / 3. aqua • airdrie, alberta

3.

2. 2016

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A N N U A L R E V I E W 2 0 1 6

Current Projects

Through research, creative foresight, first-class design and best-in-class construction, we are creating new developments that benefit the community and provide our Customers with rental homes and amenities to meet their evolving needs.

TerraAirdrie, Alberta

statusUnder Construction

description• Terra, located next to Strategic Group’s Aqua

Apartments in Airdrie, Alberta, will include 153 townhome rentals ranging from 2 and 3 bedroom units, plus a den.

• Phase 1 will be complete June 2017, with the total project expected to be completed 2018.

ONE6Calgary, Alberta

statusUnder Construction

description• The development is a 5-storey mixed-use project.• ONE6 is located on the Trans Canada Highway at

14th Street; directly across the street from North Hill Mall and within a few short blocks of the Jubilee Auditorium and Southern Alberta Institute of Technology (SAIT).

• Construction commenced in 2016 and will be completed August 2017.

1. one6 • calgary, alberta / 2. terra • airdrie, alberta

2017

2.

1.

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A N N U A L R E V I E W 2 0 1 6

ONECalgary, Alberta

statusPre-development and planning. Expected start early 2018—completion 2020.

description• The development will be situated in the heart of

Calgary’s Beltline community on 10th Avenue and 1st Street SE.

• The proposed development is a 36-storey retail and residential building, comprised of approximately 9,251 square feet of retail space and 379 residential units.

• The development is in conceptual design.

MardaCalgary, Alberta

statusPre-development and planning. Expected start late 2017—completion early 2019.

description• The development is situated in the heart of Marda

Loop, which is centered on 33rd and 34th Avenues SW, between Crowchild Trail and 19th Street SW.

• Marda is a 6-storey mixed use retail and residential building.

Future Projects

total development

budget

$200+million

Watt RoadEdmonton, Alberta

statusPre-development and planning. Expected start early 2018—completion early 2020.

description• Watt Road Development is located within the

Walter Lakes neighbourhood in Edmonton. The neighbourhood is bordered by 50th Street on the east and 66th Street on the west, Ellerslie Road to the north and 25th Avenue SW to the south.

• The proposed development is a 6-storey residential building, consisting of 261 units.

• The development is in the design phase.

CreeksideAirdrie, Alberta

statusPre-development and planning. Expected start late 2017—completion late 2018 or early 2019.

description• Airdrie is located 30 kilometers north of the city of

Calgary and is part of the Greater Calgary Metropolitan Area.

• The proposed development is a 4-storey residential building, consisting of 96 residential units.

• The development is in the design phase.

A N N U A L R E V I E W 2 0 1 6

looking towards a bright future

Our creative, unconventional and

entrepreneurial approach pushes

us forward.

2018& BEYOND

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L E A R N I N G , G R O W I N G A N D H A V I N G F U N

strategic group's executive team

Strategic Group’s Executive Team, under Mr. Mamdani’s leadership, is comprised of talented and experienced individuals who together offer a wealth of real estate acumen. Together, they are dedicated to ensuring each Team Member at Strategic Group has access to the resources and necessary support to learn, grow and have fun.

We are excited to have been selected as one of Canada's Top Small and Medium Employers!

learningStrategic Group supports an open, inclusive and healthy working environment for its Team Members, based on mutual respect. We recognize it is our responsibility as corporate citizens to promote a culture where our Team contributes to challenging and meaningful work. Our open door policy, collaborative workspace and entrepreneurial spirit, continue to contribute to a positive learning experience for all.

We seek out individuals who are a good fit with our culture, who embody our core values around Business, Community and People and are committed to our mantra of “Creating value others can’t by seeing what others don’t.”

Since 2011, Strategic Group has implemented a continuing education program. Strategic Group’s approach is that when we find the right person with the right aptitude and attitude, we provide them with the right tools and training to grow and learn.

Our Investment in professional and personal development has allowed us to provide our Customers better service, maintain our properties to a higher standard and to better control our costs at each and every property.

We have implemented an online training program that teaches our Team strategies for improving our safety standards, working with Customers and safely dealing with challenging situations. Over the past year, our Building Operations Team completed just under 800 courses. These courses are providing an ever-increasing foundation for our Team to build upon in the future.

growingAt Strategic Group, we use the words "Team Members" because it best describes our people values. We surround ourselves with goal-oriented, self-motivated people who think creatively and unconventionally. Everyday our people learn, grow and have fun.

Strategic Group supports advancement and promotes an entrepreneurial approach where Team Members “own” their work, while being supported by like-minded creative and unconventional leaders. This gives all Team Members a chance to add value and be part of every solution. We recognize that a well-rounded Team is instrumental to our growth.

In 2015, the Team Strategic Award was created to recognize individuals who demonstrate and exemplify our core values. The Executive Team selects a winner each quarter from nominations submitted by Team Members. Winners are rewarded with a gift and are recognized publicly by their peers.

having funLaughter, enthusiasm and excitement are a daily Team requirement. Strategic Group supports this atmosphere by frequently engaging in a variety of activities and celebrations including: monthly rooftop BBQs, Sinulog, Diwali, Valentine's Day, St. Patrick's Day, Cinco de Mayo, Stampede, Kwanzaa, Holi, Chinese New Year, Halloween, Election days and Christmas.

Our Team Members are active in the community and take time to volunteer. Our volunteers helped at the Mayor’s Lunch, made Beakerhead at Mission Centre a success, ran booths at both Lilac Festival and Marda Gras Street Festival, stocked tonnes of food for the Calgary Food Bank and much more.

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Team Strategic Awards

Trevor Armishaw Operations Supervisor

For his unwavering commitment to the overall operations of Strategic Group’s portfolio. Trevor is named the “fountain of Strategic knowledge”—he is extremely dedicated and always brings his humour to work!

Kevin Kazan Manager, Office Operations

For his hardworking spirit. Kevin supports all departments, is extremely positive and never asks “why”, he just does it!

Denise McCaughtrie Executive Assistant

For her energy and supportive nature. Denise is the glue to the Property Management Team and illustrates everyday what it means to be a Team player.

kraig kilen Building Operator, Property Management

“I recently completed my Fifth Class Power Engineer Certificate through BOMA which helps me with the day-to-day operations of a commercial building. By understanding how boilers and various building equipment perform and operate, I feel confident in assisting and performing repairs and maintenance. I think it's important to always learn and not become complacent in your job. Strategic Group allows and encourages this type of growth.”

o u r t e a m m e m b e r s s a y i t b e s t

brittany rempel Leasing Associate, Leasing

“I have had a pretty cool opportunity and experience at Strategic Group. I started at reception, moved into the Leasing Department as Transaction Coordinator and am now the Specialty Leasing Associate. I love that Team Members are valued at this company and there is much opportunity to grow at Strategic Group. This company really does promote from within…there is a ladder and you can climb it.”

derek kuntz Senior Mortgage Analyst, Strategic Atlantic and Real Estate Finance

“At Strategic Group, the Executive Team has found value in their Team Members by seeing what others don’t. They see that events such as weekly popcorn days, monthly rooftop patios and catered quarterly Corporate Updates, among others, all help create a culture where Team Members feel appreciated and have fun. A fun culture leads to a productive, efficient and proud organization.”

strategic group team members

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Community

c a r i n g f o r c o m m u n i t i e s

A Lasting Impact on the Well-Being of Our People, Our Customers, Our Communities and Our Environment

At Strategic Group, we are committed to building strong, sustainable communities by giving back and improving where we live and work through our continued support of the arts, community programs, health and safety programs and charitable organizations. We make it a priority to implement environmentally friendly programs and policies that make as much sense for the planet as they do for our business.

We believe in providing healthy buildings that embrace innovative environmental practices and energy efficiencies. Our Strategically Green initiative helps us identify building improvements, new technology and social initiatives aimed at taking better care of our environment, the earth’s resources and each other.

making an impactThe community organizations Strategic Group supports have relevance and importance to us. We are committed to giving back and improving the communities where we live and work through our continued support of arts, education, community-building programs and charitable organizations.

Our community values of Impact, Pride and Legacy reflect the values of our Team.

Here’s what just a few of the community groups we work with have to say about us:

Health and Safetyour commitment

We are strongly committed to the health and safety of our team, customers and community. Our Operations and Maintenance teams

are first aid certified, participate in hands-on training and ensure that everyone is safe. We are in the 92nd percentile in WCB ratings. Twice a

year, Strategic Group hosts the Calgary Police Services for safety sessions where our Team Members learn to focus on safety and security.

Caring for Community

“Theatre Calgary is honoured to count Strategic Group as a valued community partner since 2012. Strategic Group’s support of Theatre Calgary has not wavered since. In fact, they have only increased and expanded both their involvement and their financial commitment.” — colleen smith, Executive Director, Theatre Calgary

“The truly wonderful thing is that the staff at Strategic Group takes a holistic view of their involvement. It's not just about donating food and funds, but it is also about taking the time to run the campaigns in-house and then come to the warehouse and volunteer for a day packing Emergency Hampers for hundreds of families to ensure that they are there for the Calgary Food Bank's clients from start to finish. This is true dedication and it takes a special and supportive work environment to promote this level of involvement.” — keoma duce, Development Coordinator, Calgary Food Bank

41

Our Team Members are proud to support organizations like the Project Warmth Society of Alberta and The Calgary Food Bank, where our contributions have a true impact on our community’s well-being. Every year we are committed to building on our caring legacy by growing our campaigns and the impact we make.

calgary operaStrategic Group entered into a partnership that saw the renaming of the Calgary Opera Centre to the Mamdani Opera Centre in October 2015. This commitment came about in an effort to keep the Calgary Opera at its historical location while plans developed around the Opera’s future new location.

mayor’s lunch for arts champions“Hatch your ideas” was the theme of our table gift at the Mayor’s Lunch for Arts Champions. We love being the Champion Sponsor

of this important city event, as it allows us to embrace our creative and unconventional spirit. Where else can you put

Play-Doh on an elegantly dressed table and have City Councillors, the Mayor, CEOs and civic leaders try to out-create

artists? The video of our CEO, COO and CFO hatching their ideas is still one of our most popular videos on strategicgroup.ca.

Community Impact, Pride and Legacy

Mamdani Opera Centre

project warmth society of albertaOur month-long Project Warmth campaign grew again in 2016, with new awareness activities and Tenant-organized events contributing to that growth. We delivered more than 15,300 individual pieces of clothing to The Project Warmth Society of Alberta, who then cleaned, repaired and redistributed the items to agencies, shelters, families and individuals.

We witnessed amazing generosity again this year as part of the campaign—from Calgary Farmers’ Market customers who left their shopping to go home and return with a coat to donate, to donors who continued to call and visit our offices with donations, even after the campaign was over. Knowing that we all helped keep our communities warm over the winter warms our hearts.

theatre calgaryAs the Stage Sponsor of the wonderful summer evening tradition that is Shakespeare by the Bow, our partnership with Theatre Calgary which allows Calgarians to bring their families to enjoy a picnic while being immersed in a medieval play.

Also in 2016, Strategic Group was proud to sponsor the facelift Theatre Calgary gave to the W.O. Mitchell Room.

PRO U DS P O N S O R

— of —Shakespeare

by the Bow

5400pou n ds o f fo od

15,300 pieces of

clothing donated to

over 30 agencies,

shelters, families and

individuals

calgary food bankFive years ago we launched our ‘Let’s Eat!’ campaign in support of the Calgary Food Bank and have watched this week-long campaign grow to become an initiative that involves our Tenants, as well as our own Team Members. This year, in addition to donation boxes in our buildings, several community food trucks, Sassi Kitchen and the Calgary Farmers’ Market joined the campaign. We were proud to donate 5,400 pounds of food, making a direct and positive impact.

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Caring for the Environment

energy optimization in the strategic group portfolioThere is a growing awareness across all industries in Canada about the rising cost of utilities. While abundant and inexpensive by international standards, the cost of water, gas and electricity—due to aging infrastructure, municipal growth and increasing taxation—are amongst the fastest rising cost categories that affect the operation of rental buildings in Canada today. We are determined to stay ahead of these costs with a number of efficiency initiatives that have already had a profound accelerated impact on portfolio operating cost savings.

ongoing projects that are now underway include:

• The retrofit of all commercial office buildings and parking lots to LED lighting.

• Residential water reduction initiatives including low-flush toilets, low-volume aerators and recirculation pump replacements.

• Ensuring that all building mechanical systems are operating as designed and that all utility ‘hot spots’ are identified with remediation plans established.

• System sequence of operation: all buildings are being reviewed to ensure the optimal sequence of operation is established to provide Customer comfort and economical operation.

• The efforts of the Strategic Group Team year-over-year have resulted in the reduction of utility usage by 7.7%.

201445.00 ekwh/ft²

st r at egic propert y el ec t r icit y usage , 2 01 4–2 016

201539.15 ekwh/ft²

201635.78 ekwh/ft²

boma bestIn the past 18 months, Strategic Group has received 50 BOMA BEST certifications across our portfolio.

BOMA Best recognizes excellence in energy and environmental performance and improvements in commercial real estate. We believe that benchmarking our properties provides insight into our buildings’ performance when compared to the competition and inspiration for continued growth and improvement.

customer satisfaction survey resultsOur annual Customer Satisfaction Survey permits us to direct our energies to specific high-priority and desirable projects, while actively communicating with our Customers and continuing to improve.

2 016 c ustom er satisfac tion

su rv e y r esu lts, com pa r ed to 2 015

waste and recyclingThroughout our portfolio, we have realized improvements in our overall waste reduction initiatives and in our diversion rates for recycling.

Since 2014, our diversion rates have improved by 22%. This change was a result of providing a recycling program that mirrors each local municipality’s residential recycling program.

energy star ratingWe are determined to achieve, then exceed Alberta and Canada's Energy Star guidelines. With our increased focus on energy savings and management in 2015 and 2016, we have seen significant reductions to the amount of energy consumption across our portfolio.

By providing significant cost reduction to our Customers, these results are not only good business, but are also equally good for our environment. In 2017, we are committed to achieving a 10% reduction in our energy consumption. Our initiatives include installation of occupancy sensors, LED retrofits and further building automation.

22%I M P R O V E M E N T

in diversion rates

A single-day challenge involving 38 buildings

5%R E D U C T I O N

I N O N E D A Y !

overall increase in general Customer satisfaction in all aspects of our business

11.5%

felt Strategic Group was doing the same or better than last year’s

result of 85% satisfaction

94%

were satisfied or very satisfied with our response times,

up from 84% in 2015

89%

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use sf

1112–1124 Calgary Office/Retail 8,435

12–10 - 1216 Calgary Office/Retail 72,586

12–10 - 1240 Calgary Office 11,434

1800/Missao Calgary Office/Retail 30,941

20/20 Calgary Office/Retail 128,293

411 Calgary Office 44,959

534 Calgary Office/Retail 24,965

5/5 Calgary Office/Retail 99,772

744 Calgary Office/Retail 49,590



Airways Business Plaza Calgary Office/Retail 66,549

Arriva Podium Calgary Office/Retail 23,364

Avenida Place Calgary Retail 60,900

Avenida Village Calgary Retail 107,612

Barclay Square Calgary Office 33,750

Barron Building Calgary Office/Retail 229,630

Blackfoot Centre Calgary Retail 138,693

Centre 1000 Calgary Office/Retail 55,669

Centre Eleven Calgary Office 62,515

building name city

Commercial Properties

O U RP O R T F O L I O

building name city use sf

Circle Square Edmonton Office/Retail 79,941

CN Tower Edmonton Office/Retail 280,646

Deerfoot 17 Calgary Office 67,976

Deerfoot Court Calgary Office 74,988

Duncan Mall Duncan Retail 255,827

Duncan Plaza Duncan Retail 30,002

Duncan Village Duncan Retail 75,665

First Street Plaza Calgary Office/Retail 71,773

Glenmore & Centre Calgary Retail 68,159

Glenmore Commerce Court Calgary Office/Retail 59,228

Harley Court Edmonton Office 153,334

Louise Block Calgary Office/Retail 26,295

Macleod Place I Calgary Office/Retail 80,779

Macleod Place II Calgary Office/Retail 103,421

Macleod 201 Calgary Retail 7,747

Macleod 205 Calgary Retail 3,712

Macleod 5918 Calgary Office 5,176

Macleod 6012 Calgary Office 6,016

Macleod 6016 Calgary Office/Retail 5,718

Mayfield Business Plaza Edmonton Office 102,442

Mission Centre Calgary Office/Retail 76,578

Northwood Mall Edmonton Retail 10,657

Parallel Centre Calgary Office/Retail 81,145

Paramount Building Calgary Office/Retail 53,008

Parkwood Office Centre Edmonton Office/Retail 41,764

Pegasus Calgary Office 14,205

Petro Fina Calgary Office/Retail 163,697

Petrowest Plaza Calgary Office/Retail 36,704

Place 9–6 Calgary Office 156,851

Shelbourne Place Calgary Office/Retail 27,290

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Claridge West Edmonton Residential 90,773

Lakeridge 99 Spruce Grove Residential 102,941

Lakeridge 143 Spruce Grove Residential 157,783

Missao Calgary Residential 58,230

Mission Apartments Calgary Residential 11,756

Shelbourne Residential Calgary Residential 2,752

105 Pinecrest Dartmouth Residential 6,827



117 Albro Dartmouth Residential 10,473



Stephenson Building Calgary Office/Retail 61,771

Strategic Centre Calgary Office/Retail 50,573

Sundance 1000 Calgary Office 171,422

Sundance 3000 Calgary Retail 11,862

Sundance 4000 Calgary Retail 13,433

Sundance 6000 Calgary Office/Retail 30,013

Sundance Place Calgary Office 159,672

Sundance Place Retail Calgary Retail 7,600

Sunpark Plaza Calgary Office 60,022

Village Square Mall Calgary Retail 61,541

Wesley Church Calgary Retail 28,269

Willow Park Centre Calgary Office/Retail 77,611


12 Trinity Dartmouth Residential 10,031



40 Brule Dartmouth Residential 7,932


117–119 Pinecrest Dartmouth Residential 11,380

4 Crystal Dartmouth Residential 10,500

9 & 11 Kennedy Dartmouth Residential 57,170

24 Roleika Dartmouth Residential 12,480

7 Kennedy Dartmouth Residential 25,566

67 Caledonia Dartmouth Residential 10,200

79 Lakecrest Dartmouth Residential 93,000

81 Lakecrest Dartmouth Residential 69,000

3 Autumn Halifax Residential 18,413

44 River Halifax Residential 10,290

451 Herring Halifax Residential 12,990


5 Forbes Halifax Residential 12,222






19 Primrose Dartmouth Residential 14,892


7 Jackson Dartmouth Residential 24,008


190 Oakdene Kentville Residential 39,135

39, 43 & 45 Jefferson Sydney Residential 34,074

65 Dominion Glace Bay Residential 8,400


A N N U A L R E V I E W 2 0 1 6

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6 Galaxy Dartmouth Residential 11,309




384.5 Portland Dartmouth Residential 23,875

175 Britain St. John Residential 22,856

100 Inverness St. John Residential 11,500

3, 4, 8 & 9 Shamrock St. John Residential 45,750

237 Roleika Dartmouth Residential 26,100

490 Wiley Windsor Residential 47,112

550 Herring Dartmouth Residential 20,700

611 Herring Dartmouth Residential 10,800


38 Trinity Dartmouth Residential 11,304

4 Alfred Dartmouth Residential 10,362

15 Kennedy Dartmouth Residential 117,536

104 & 106 Albro, 127 Slayter Dartmouth Residential 22,720

14 Jackson Dartmouth Residential 11,368




151 Queen Fredericton Residential 79,260

411 Ellerdale St. John Residential 114,552

155 Mystery St. John Residential 114,552

1 Alpha St. John Residential 11,484

5 Alpha St. John Residential 11,484

1 Reading St. John Residential 11,895












7 Roxbury St. John Residential 10,334

M17 Retail Calgary Retail 8,516

M17 Calgary Residential 34,221

1410 Inglewood Retail Calgary Retail 15,897

1410 Inglewood Calgary Residential 39,195

Centro Calgary Residential 45,715

Centro Retail Calgary Retail 1,138

Aqua Airdrie Residential 124,136

Entro Stoney Plain Residential 108,077

Aura Airdrie Residential 234,590

Aura Retail Airdrie Retail 23,815


A N N U A L R E V I E W 2 0 1 6

51

5/5office & retail property

—

Newly renovated Beltline building by Strategic Group

calgary, alberta

2017 & Beyond“As Strategic Group continues

to grow, evolve and address the challenges around market dynamics, technology infrastructure, corporate governance, risk mitigation, accountability, and transparency to our Team Members, Customers and stakeholders, we hold steadfast to retaining our creative and unconventional culture.”

Riaz Mamdaniceo, strategic group

calgary officeStrategic Centre

400, 630 – 8 Avenue SW

Calgary, AB t2p 1g6

t 403.770.2300

f 403.770.2289

edmonton officeCN Tower

104, 10004 – 104 Avenue NW

Edmonton, AB t5J 0k1

t 780.454.8018

f 780.454.8818

onlinestrategicgroup.ca

Strategic Group

StrategicGrp

StrategicGrp

Strategic Group

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