"Success Breeds Success" Is A Maxim That Promises
To Make Landstar Properties A Rising Star

By Marc Davis, Managing Editor
May, 2003

"One of the best ways to build a successful business involves starting out small, thinking big and giving people exactly what they want, when they want it, and where they want it." -- Richard Branson, British business tycoon and billionaire.

These words of wisdom are an appropriately serendipitous analogy to sum up the business strategy of Landstar Properties Inc. (TSX-LPI), a small but dynamic Canadian real estate development company. Indeed, Landstar is poised for significant income growth by forging strategic alliances for construction projects in several of Canada's hottest housing markets. They include Greater Vancouver, where the company is headquartered, and Calgary.

In addition, the company benefits from the involvement of several seasoned and very successful entrepreneurs who have proven highly adept at managing risk capital - especially in real estate. Moreover, the timing of these new ventures appears to be ideal as housing starts in the Greater Vancouver area are experiencing a sustained boom. According to the Canada Housing and Mortgage Corporation, this has been precipitated by pent-up demand, low mortgage rates and strong growth signals in the provincial economy.

In fact, the most recent statistics concerning this trend show that investment in British Columbia's (BC) housing sector soared 18.8% year-over-year in the fourth quarter of 2002. This was the sixth straight quarter in which spending on residential construction has increased at double-digit rates. The building boom has even extended across most parts of the country, including Alberta, with spending on new housing increasing 17 per cent or more in almost every province.

Hence, the near-term focus of Landstar is to capitalize on this scenario by acquiring and developing residential lands in the Greater Vancouver area. The company is also broadening its operations to include Calgary and its suburbs. And by taking on successful, well-established partners, Landstar is able to reduce the development time cycle, leverage its capital and spread the risk. Meanwhile, Landstar's management has an aggressive growth plan that expects to employ both private and public funding. Its building projects are also designed to offer payback within a one to three year time frame. This allows capital to be expeditiously rolled over to realize income growth and to leverage the company's entry later this year into key US markets.

Accordingly, Landstar recently announced a joint venture with Springer Land Corp of Surrey, BC to construct 22 homes in the Willoughby area of Langley, BC. The joint venture has entered into an agreement for a parcel of 22 single-family lots at a total cost of $2.86 million (US $2 million) subject to approval and registration by the City of Langley. Landstar has two-thirds of the equity in this venture, part of which is being financed privately by Landstar's management group. Springer is providing the remaining equity funding. Construction of these homes, which are designed to sell in the Can. $300,000 to $350,000 range (US $210,000 to US $245,000), is scheduled to commence in July, 2003. Notably, the lot market in Langley is very buoyant and there are indications of sales of similar lots at higher prices. The project will be managed by Springer and is expected to take 12-15 months to complete.

Springer has 20 years of building experience in Alberta, Greater Vancouver and Vancouver Island and has recently completed 60 houses in the award-winning Genstar Development in Langley.

Furthermore, Landstar recently commenced funding its second joint development agreement with Paradigm Contracting Inc., a subsidiary of Paradigm Homes of Abbotsford, BC. This project follows the successful completion and sale of the first development undertaken jointly with Paradigm in September, 2002, in which two high-end homes were constructed and subsequently sold.

The new joint venture has entered into a purchase and sale agreement for seven premium lots in the city's most prestigious neighbourhood, Eagle Mountain. The lots are located immediately adjacent to the recently-constructed Street of Dreams homes, all of which have already been sold at prices ranging from $750,000 (US $525,000) to nearly a million dollars (US $700,000). The partnership's new homes are expected to reflect these values. Construction of the homes will be managed by Paradigm with Landstar acting as the principal funding partner. Profits from this venture will be evenly split between the two companies. The construction process is already underway with the completion of the first home scheduled for September, 2003. The remaining homes are expected to be completed by the summer of 2004.

Paradigm is a well-established builder of higher-end residential homes in the Abbotsford area, one of Canada's fastest growing and wealthier municipalities. Landstar anticipates that this venture is another step in building an expanding working relationship with Paradigm to capitalize on this burgeoning housing market in Vancouver's ever-growing suburbs.

Finally in western Canada, a minority interest has been taken in a townhouse development project in Airdrie, near Calgary, Alberta. Other similar opportunities are being considered with a view to capitalizing on Greater Calgary's vibrant housing market.

In terms of the bigger picture, Landstar is in advanced negotiations for a multi-million dollar land acquisition project in Lakeland, Florida, which is located between the cities of Tampa and Orlando. Projected sales from this venture are expected to begin in 2004 and will be substantial. As the company's cash flow grows, it intends to grow in large U.S. markets where other similarly-sized projects will be targeted in 2004 and beyond.

As previously stated, Landstar's prospects of success are underscored by the accomplishments of a proven management team. It's no surprise that the company's business strategy is not unlike that of Richard Branson, one of the world's most successful, self-made entrepreneurs. Company president and director John McCutcheon may never have crossed paths with Branson but he is nonetheless no stranger to business tycoons and the rarified world of high finance. In fact, prior to 1980, Mr. McCutcheon spent ten years as Executive Vice President of Cemp Investments, the US $3 billion-plus holding company of the family of Samuel Bronfman whose principal holding was the Seagram liquor empire. During Mr. McCutcheon's tenure, Cemp Investments held a majority interest in Cadillac Fairview, one of North America's biggest real estate development companies. He was also a principal figure in a number of corporations that were affiliated with Cemp Investments.

For the past two decades, Mr. McCutcheon has been very active in raising capital for private and public energy, real estate and pharmaceutical ventures. This includes partnering a successful residential land development operation in Phoenix during the 80s. He was a co-founder of Zargon Oil and Gas Limited in 1989 and remains a director and active Chairman of the Board of this highly successful publicly traded energy company (TSX-ZAR), which has a market cap of approximately Can. $175 million (US $123 million) and produced highly impressive revenues of Can. $26 million (US $18 million) in the first quarter of 2003.

Mr. McCutcheon's skills and depth of experience are paralleled by fellow director Wayne Sawatsky. He has been active in residential real estate development since 1977, principally in the Greater Vancouver area. Mr. Sawatsky is also credited with being involved in the creation of more than 1,000 lots and homes. Moreover, he is a principal of the Martinique group of companies and, while primarily a land developer, he has also participated in a significant number of home-building projects. Also, he was responsible for finding and overseeing Landstar's first two property developments in Abbotsford and is committed to an active role in future projects.

Another key member of Landstar's management team is William Work, Landstar's secretary and director. Mr. Work brings 20 years of experience with public companies to Landstar. He was a member of the British Columbia Law Society for 18 years, specializing in general corporate, real estate, commercial and securities matters. He subsequently left the practice of law to pursue private business opportunities such as Landstar. He currently also serves as a director of the very successful Great Canadian Casinos (TSX.V-GCD), which has a market cap of over Can. $200 million (US $140 million).

Collectively, the directors hold majority control of the outstanding stock and have given evidence of their commitment to the Company by providing a significant amount of private funds to finance current operations.

On a technical note, Landstar Properties has been thinly traded since its public vehicle was revitalized from inactive status in October, 2002. This is primarily due to a lack of significant news and a tight share structure. It currently trades at around Can. $0.09 (US $0.06) but has considerable upside potential now that its new business ventures are set to gather momentum in the coming months. Also, the company has not been promoted and consequently has yet to show up on the radar screens of most stockbrokers and investors, alike. But once it does, Landstar's impressive board of directors and its shrewd business model are sure to win over a loyal following. And that should translate into a steady (albeit not dramatic) up-trend in the company's share price during the balance of 2003 and in 2004.