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HomeMy WebLinkAbout2021 02 11 City of Winter Springs General Employee Retirement System - American Core Realty FundAmerican Core Realty Fund City of Winter Springs General Employee Retirement System February 11, 2021 STRICTLY PRIVATE AND CONFIDENTIAL American Realty Advisors www.aracapital.com 2 The coronavirus outbreak (“COVID-19”)has been declared a pandemic and public health emergency by the World Health Organization and has spread to the United States and many other parts of the world and may have material adverse effects on the operations and financial performance of the Fund and one or more of its investments. The number of positive cases continues to grow worldwide,adversely impacted global commercial activity and contributed to significant volatility in certain equity and debt markets.The global impact of the outbreak is rapidly evolving,and many countries,states,and municipalities have reacted by instituting quarantines,curfews, prohibitions on travel,social distancing measures,eviction moratorium orders and the closure of offices,businesses,schools,and other public venues,including certain infrastructure structures and facilities.Businesses are also implementing similar precautionary measures.Such measures,as well as the general uncertainty surrounding the dangers and impact of COVID-19,are creating significant disruption in supply chains and economic activity and are having a particularly adverse impact on transportation,hospitality,tourism,retail and entertainment,among other industries. As COVID-19 continues to spread,the potential impacts,including a global,regional or other economic recession,are increasingly uncertain and difficult to assess.The extent of such impact on the Fund and its investments will depend on many factors including,but not limited to,the duration and scope of the COVID-19 public health emergency;the extent of the government and business measures described above;the impact on overall supply and demand,goods and services,investor liquidity, consumer confidence and levels of economic activity;any resulting litigation and the extent to which insurance coverages may apply;and the potential adverse effects on the health of ARA’s personnel,all of which are highly uncertain and cannot be predicted.These factors may have material and adverse effects on the Fund’s ability to source,manage and divest investments and achieve its investment objectives and could result in significant losses to the Fund. This presentation does not constitute an offer to sell or the solicitation of an offer to buy any security,product,or service including interests in the American Core Realty Fund,LP (the “Fund”)for which an offer can be made only by the Confidential Offering Memorandum (as amended from time to time,the “Fund Offering Memorandum”). Any interests in the Fund have not been,and will not be registered under the U.S.Securities Act of 1933,as amended (the “Securities Act”),any other U.S.federal or state or non-U.S.securities laws or the laws of any non-U.S.jurisdiction.The information in these materials is intended solely for “Accredited Investors”within the meaning of Rule 501 of Regulation D under the Securities Act and sophisticated investors who fully understand and are willing to assume the risks involved in the Fund’s investment program.Any security,product or service referred to herein may not be suitable for any or all investors. The information in this presentation has been prepared from original sources,including as provided by American Realty Advisors (“ARA”),and is believed to be reliable and current as of the date specified,and ARA is under no obligation to inform you if any of this information becomes inaccurate.All information in this presentation is subject to and qualified in its entirety by reference to more detailed information appearing in the Fund Offering Memorandum,the Fund’s Amended and Restated Limited Partnership Agreement,the Fund’s most recent Quarterly Report,the ERISA Service Provider Disclosure Statement and the Fund’s Adoption Agreement (collectively,the “Fund Offering Documents”),which should be carefully read prior to any investment in the Fund and may be amended or supplemented from time to time. This presentation is for informational purposes only,is confidential and may not be reproduced or distributed,or used for any purpose other than evaluating an initial or ongoing investment in the Fund.For a description of certain risk factors associated with an investment in the Fund,please refer to the risk factors and conflicts of interests sections of the Fund Offering Memorandum.This presentation is not for distribution in isolation and must be viewed in conjunction with the Fund Offering Documents.To the extent there is any inconsistency between this presentation and the Fund Offering Documents,the Fund Offering Documents govern in all respects. No investment should be made based on this presentation.Any investment decision should be based solely upon the information in the Fund Offering Documents. Please also refer to the disclosures at the end of this presentation. Disclosures American Realty Advisors www.aracapital.com 3 www.aracapital.com | American Realty Advisors Committed to Excellence Our mission is to create and implement client-focused institutional real estate investment strategies designed to provide superior returns, capital preservation, and growth, delivered with a high level of integrity, communication, and service. Putting Our Clients First ARA is 100% employee owned and client focused. The firm was registered in 1990 with the U.S. Securities and Exchange Commission as an Investment Advisor under the Investment Advisers Act of 1940. ARA is also a fiduciary to its clients and acts in the best interests of our investors. American Realty Advisors www.aracapital.com 4 About ARA Years of investment experience: 25 years Education: University of Central Florida: B.S.; Webster University: M.B.A., M.A., Health Services Richelle Hayes is ARA’s Senior Vice President,Investor Relations,responsible for developing and maintaining new and existing client and consultant relationships for ARA’s commingled fund clients.She is based out of the firm’s Orlando office.Prior to joining ARA,Ms.Hayes was Vice President of Client Services for ICC Capital Management,where she worked closely with clients and consultants based in the Southeast U.S.Prior to that,she was Vice President, Corporate Relations for the American Hospital Association in Florida,responsible for developing client relationships with senior executives of member hospitals,following various positions in financial relationship management within the national managed health care industry.Ms. Hayes is currently the Chairman on the Advisory Board of the Florida Public Pension Trustee Association. Richelle Hayes Senior Vice President, Investor Relations About American Realty Advisors American Realty Advisors www.aracapital.com 6 Who We Are •100% employee-owned private firm. •Real estate investment management is our only business. •Active product offerings in core, value-add, and debt strategies. •Deep experience investing throughout multiple market cycles •Focused entrepreneurial spirit that capitalizes on operational efficiencies. •Broadly diversified client base has entrusted capital to ARA. Strength of Our Team •Over 13 years of senior management working together providing stability of leadership. •Risk-management is deeply instilled in our processes and policies. •Collaborative process integrating research, investment, asset management, portfolio management and compliance to achieve success. •Commitment to sustainable practices to achieve positive social impact and to promote diversity in our workplace. operating history as a real estate investment management fiduciary 31 YEARS senior management average experience 37 YEARS nationwide; headquartered in Los Angeles, CA 5 OFFICES $10.0 BILLION in Assets Under Management 40+ active consultant firm relationships 500+ INSTITUTIONAL INVESTORS dedicated to delivering results for our investors 90+ EMPLOYEES About ARA All data in this presentation is as of September 30, 2020 unless specified otherwise. American Realty Advisors www.aracapital.com 7 www.aracapital.com 7 •Defined culture of teamwork and integrity that promotes professional development and diversity. •Active community and charitable partnership in local and national organizations that promote helping those in need. •Dedication to open and frequent communication on everything related to our policies, process, and results. Corporate and Community Responsibility Our Core Values:The Foundation of our Firm About ARA •Extensive experience acting as an ERISA fiduciary. •Risk control forms the basis of our investment process with no conflicts of interest. •Focus on capital preservation and thorough investment risk assessment. •No litigation with clients concerning investment management services provided by ARA. •Sole focus on institutional real estate investment builds strong alignment of interests with our investors. •Even during economic dislocation, such as COVID-19, we work collaboratively with our investors to deliver all services seamlessly and with no disruption. •We are stewards of the capital of others and hold ourselves to high standards. Transparency IntegrityFiduciary standards Our five core values guide all decision making, define character and culture, and ensure what we stand for. Collaboration American Realty Advisors www.aracapital.com 8 About ARA www.aracapital.com 8 is to provide superior risk-adjusted real estate returns and capital preservation through a broad spectrum of real estate investment strategies designed to meet each 1. The Value Fund expects to target a portfolio of investments that, in aggregate, will be projected to generate gross leveraged internal rates of return of 11%-14%. Data as of September 30, 2020. The return targets above are estimates based on information available at the time of forecasting and are not guarantees of future results. Please refer to the performance disclaimer and other disclosures at the end of this presentation. Our primary goal American Core Realty Fund Focuses on strong income and potential for long-term appreciation through investment in high-quality income-oriented core office, industrial, retail, and multi-family properties located in major markets nationwide. Fund Type Gross AUM Return Target Liquidity Open-End $6.88B Gross 7-9% Gross Quarterly American Strategic Value Realty Fund Focuses on a value creation investment strategy through exploiting market inefficiencies, operational improvement, and redeveloping or manufacturing core real estate product. Fund Type Gross AUM Return Target1 Liquidity Open-End $2.02B Gross 11-14% Gross Quarterly Separate Accounts ARA also offers customized core/core-plus/value strategies through separate accounts as well as specialized portfolio takeover/repositioning/disposition services. ARA Funds www.aracapital.com 9 American Realty Advisors The American Core Realty Fund is an open-ended, private commercial real estate fund investing exclusively in the U.S. It consists of a diversified portfolio investing primarily in high-quality core income-producing industrial, multi-family, office, and retail properties. The long-term total gross return target of the fund is 7-9% through a full market cycle. Fund Snapshot American Core Realty Fund Mission: to provide broad-based exposure and attractive risk-adjusted returns through the investment in commercial properties with durable income, the ability to preserve capital, and provide upside potential by making intentional data-driven allocation, investment selection, and risk decisions with a view towards peer-group outperformance. www.aracapital.com 10 American Realty Advisors Fund Snapshot American Core Realty Fund As of December 31, 2020 Number of Investments 66 Cash (percentage of NAV)1 3.4% Leverage Ratio2 23.5% Total Commercial SF 14.8 million Total Commercial Tenants 475 Units (Residential)2,673 Leased Percentage3 94.6% Inception Date 4Q 2003 Proven Over 17 Years |GAV and NAV since Inception $6.92 billion Gross Asset Value $5.14 billion Net Asset Value 1 Totalavailable cash,including $400 millionof available proceeds under theFund’s line of credit,totals 11%ofNAV. 2 Leverage ratio representstheFund’s effective ownership shareof total debt as a percentage of total gross assets. 3 Leasedpercentageis based on leasedsquarefootage and weighted based uponeach property’s effective ownership share ofgross fair values. 4 Due tothe uncertaintyremaining in 2021,redemptionpayments may be restricted moving forward. Note:Use ofleveragemaycreate additional risks.Please referto disclosures at the end of this presentation.Squarefootageandunits excludesdevelopments. Capital Flows Number of Investors 460 Contribution Queue $55.4 million Redemption Queue4 $223.0 million USD Billions$5.14 billion Net Asset Value $6.92 billion Gross Asset Value 2006 2008 2010 2012 20142004 2016 2018 2020 $0.0 $7.0 $8.0 $2.0 $4.0 $5.0 $6.0 $3.0 $1.0 www.aracapital.com 11 American Realty Advisors City of Winter Springs General Employee Retirement System American Core Realty Fund The returns above are for theInvestor’sinvestmentin theAmerican Core Realty Fund,includeleveraged returns before(gross)andafter (net)the deduction of investment managementfees and may includethe reinvestmentofsome income.The sum of annualized component returns may not equal the total return due to the chain-linking of quarterly returns.Please refer to the NFI-ODCE benchmark information,performance disclaimer and other disclosures at the end of thispresentation. Contributions/(Redemptions) 2007 Contribution $250,000 2008 Contribution $750,000 2014 Contribution $438,000 2015 Contribution $562,000 2020 Redemption ($300,606) NET INVESTMENT $1,699,394 Investment Summary as of December 31, 2020 Inception-to-Date Contributions $2,000,000 Redemptions ($300,606) NET INVESTMENT $1,699,394 Net Income $545,412 Distributions ($755,067) Appreciation $214,610 ENDING NET ASSET VALUE $1,704,349 Returns greater than one year are annualized. Inception: October 1, 2007 Performance History (%) Through December 31, 2020 Q4 2020 1 Year 3 Year 5 Year 10 Year Since Inception Income (Gross)0.94 3.97 3.89 3.93 4.52 4.67 Appreciation 0.48 -2.33 1.54 2.31 4.95 0.28 Total Portfolio (Gross)1.42 1.57 5.47 6.30 9.64 4.97 NFI-ODCE (Gross)1.30 1.19 4.92 6.21 9.88 5.07 Total Portfolio (Net)1.14 0.46 4.32 5.14 8.45 3.85 NFI-ODCE (Net)1.10 0.34 3.99 5.27 8.87 4.12 $699,394 remaining from redemption request to be considered for March 31, 2021 www.aracapital.com 12 American Realty Advisors Strong Rent Collection Results American Core Realty Fund •Outperformed on rent collection rates collecting an average of 4%more rent each month than core peers.1 •Retail widely outperformed largely due to our overweight to grocery-anchored retail properties and avoidance of malls and other discretionary retail formats. •Fourth quarter to-date rent collections are tracking in line with the third quarter. •We continue to work with tenants undergoing hardships and business disruption during these uncertain times while maintaining our focus on creating positive outcomes for the Fund. Core Fund Variance to Core Peers1 Multi-family 96% Industrial 100% Office 99% Retail 91% Total 97% 2Q 20 Rent Collections 3Q 20 Rent Collections 4Q 20 To-Date Rent Collections 1 Rent collectiondata forCore Peers constitutessurveyedresults frommost ofthe other coremanagers.ARA does not guarantee theaccuracy of the underlying information providedbythe Core Peers. Core Fund Variance to Core Peers1 Multi-family 95% Industrial 98% Office 97% Retail 83% Total 94% Core Fund Variance to Core Peers1 Multi-family 95% Industrial 99% Office 98% Retail 88% Total 96% www.aracapital.com 13 American Realty Advisors Industrial •Pandemic increased e- commerce’s share of total retail sales, thus increasing demand for warehouse space. •Longer term, may move away from “just-in-time” supply chain models to a “just-in-case” approach, further buoying demand. •Cold storage increasingly in demand. Multi-family •Rent payments have remained intact, though cracks beginning to emerge; absent further stimulus, certain households may struggle once enhanced unemployment benefits expire. •Retention elevated, but lease- up to stabilization extended. •Lower-density rental housing may benefit. Office •Companies may adapt to remote work (some permanently) the longer WFH goes on. •Greater SF per employee may serve to partially counterbalance. •Consolidation of co-working operator space expected as cash flows are challenged, though segment likely to gain in the mid-term. Retail •Return of foot traffic will be slow as long as risks of contagion continue. •Experiential retail will see major near-term impacts. Newer concepts may close entirely. •Grocery-anchored centers are faring better. Sectors Face Transitional Changes as a Result of COVID-19 Market Outlook •Hotel fundamentals to remain suppressed, particularly in internationally driven markets; some flags may become insolvent. •Senior housing to suffer due to skilled care exposure to virus; this, coupled with elevated supply pipeline, suggests the sector will struggle for some time. •Data centers poised to benefit. Dislocations may emerge as sectors adjust to the transition opportunities. Specialty Sectors www.aracapital.com 14 American Realty Advisors Diversification Across Target Markets and Property Types American Core Realty Fund Data is based on gross fair value as of September 30,2020 and excludes investments in mortgage-backed certificates.San Francisco Bay Area includes San Francisco,San Jose and East Bay.Los Angeles Area includes Los Angeles,OrangeCountyand Inland Empire.Washington,DCAreaincludes WashingtonDC and Baltimore,Maryland. Top 10 Metros $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 San Francisco Bay Area New York Boston Los Angeles Area Chicago Seattle Washington, DC Area South Florida Austin AtlantaMillions Office Industrial Multi-family Retail Washington,D.C.AreaSanFrancisco Bay Area Seattle Denver Chicago Houston Dallas South Florida Jacksonville Atlanta Boston New York Philadelphia Minneapolis Austin Portland Los Angeles Area San Diego Investment Exposure per Market <$100M $100M-$300M $300M-$500M >$500M www.aracapital.com 15 American Realty Advisors American Core Realty Fund Information hereinis as of September 30,2020unlessnotedotherwise. 1.U.S.Census. 2.Bureau of Economic Analysis–U.S.DepartmentofCommerce. 3.World Bank. Commitment by Property Type (Millions) 4.Moody’s Analytics. 5.National Council of Real Estate Investment Fiduciaries.Please refer to the NPI benchmark information,performance disclaimer and other disclosures at the end ofthispresentation. 6.Tax Foundation2021State BusinessTaxClimateIndex]. *Build-to-coreinvestment.Represents the expected fullydeveloped size. $218 $196 $60 Industrial Retail Retail/Office Jacksonville Delray Beach Miami Weston Doral $60M $40M $218M $42M $114M ARA has committed $479 million of capital in the state of Florida Property Name City Type SF Kendall Place Miami Retail 287,896 St. John’s Town Center Jacksonville Retail 104,262 Weston Lakes Plaza Weston Retail 96,451 4th Street at Delray Beach Delray Beach Retail/Office 98,400 Miami Central Commons Doral Industrial 999,677* Transal Park Doral Industrial 134,175 We Believe in Florida •Strong projected population growth, economic potential, favorable real estate fundamentals, and competitive tax environment. •The third fastest state population growth rate from 2010 to 2019 at 14.0%.1 •Booming GDP which reached approximately $1.1 trillion in 2019 has grown over 50% in the last 10 years.2 Florida trails only California, Texas, and New York, and as a country, its GDP would rank 18th in the world.3 •Miami, Ft. Lauderdale, Orlando, Tampa, Jacksonville, and West Palm Beach employment gains have outpaced the nation over the last five years.4 •The largest industrial real estate markets in Florida (Fort Lauderdale, Miami, Orlando and Tampa) consistently outperformed the NPI in the 1-, 3-, 5-, 10-and 20-year periods through Q3 2020.5 •Ranked as the fourth most business tax-friendly state in the country.6 •ARA has committed $278 million of capital since May 2017, consisting of industrial, office and retail properties in several South Florida cities. •Two recent build-to-core projects: Miami Central Commons, a 999,677 square foot industrial property and 4th Street at Delray Beach, a 98,400 square foot mixed-use property have helped create jobs and provide the infrastructure needed to support a competitive business landscape. www.aracapital.com 16 American Realty Advisors Stable and Diverse Tenancy American Core Realty Fund ARA Internal research and estimates. Percentages in Percentage of Total Base Rent and Expiring Commercial Portfolio charts are based on the fund's commercial portfolio gross fair value as of September 30, 2020. Other represents the following business segments: National Chain Restaurant, Non-Profit, Legal, Real Estate Services, Other Professional Services, Telecommunications, National Health and Beauty, Large Retail Trade, Architecture and Engineering, Housing and Construction, Government, Education, Pharmacy and Utilities. Note: Ten Largest Tenants represent the Fund’s largest tenants based on percentage of total Fund revenue presented in alphabetical order. Technology 15% Financial Services & Insurance 14% Logistics & Transportation 13% Durable Goods Manufacturing 6%Grocery Store 6% E-Commerce 6% Local Services (Retail/Food)5% Health Care 4% Energy and Mining 3% National Apparel 3% National Home/Hobby 3% Other 18% Ten Largest Tenants •59% of commercial tenants have in excess of $1 billion in annual revenue. •6.4 years of weighted average lease term. •No single tenant comprises more than 4% of the portfolio's total revenue. •Focusing on tenant credit and in-place lease term has benefited the Fund through COVID-19. •Continued engagement with near-term lease roll tenants to avoid costly vacancies during the pandemic. Percentage of Total Base Rent by Business Segment Expiring Commercial Portfolio by Property Type 2.1% 8.4%7.1%5.8% 9.1%8.5%5.9%3.4% 9.2% 35.8% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029+ OfficeRetail Industrial www.aracapital.com 17 American Realty Advisors Consistently High Leasing Rates American Core Realty Fund Dataas of September 30,2020.ARAinternalresearch.Q1 2006 to Q4 2013 percentageleased is based on its occupiedpercentageplus1.31%which is the averagedelta between leased and occupied from Q12014 to Q32020. 1.Reduced,in part,due toa new building completioninlease-up. 92.0%94.5%98.8%93.4%94.8% 0% 25% 50% 75% 100% Multi-family Office Industrial Retail Total Portfolio 0% 20% 40% 60% 80% 100%Percent Leased Percentage Leased –Q3 2020 Percentage Leased –Over 14 Years –Q1 2006 to Q3 2020 1 2006 2008 2010 2012 2014 2016 2018 2020 •Average leased percentage over the last ten years is 92.6%. •During 2008-2009 GFC, leased percentage was 86%. •Leasing rates have been resilient through COVID-19. Long Term Stability www.aracapital.com 18 American Realty Advisors Conservative Debt Management American Core Realty Fund Dataas of September 30,2020 unless noted otherwise. 1.MSCI ACOE informationas of September 30,2020.Please refer to theMSCI ACOEbenchmarkinformationand theother disclosures at theendof thispresentation. 2.NFI-ODCE peer groupinformationis provided byChatham FinancialServices and represents21 of the 25 NFI-ODCE funds. Useof leverage may createadditionalrisks.Pleaserefer to the NFI-ODCE and MSCI benchmark information and other disclosures at the end of this presentation. $ Millions 1 Year 3 Year 5 Year 10 Year American Core Realty Fund 23.8%22.9%21.7%20.4% NFI-ODCE-VW 22.1%21.6%21.7%22.4% Difference (in bps)+170 +130 0 -200 Relative Leverage Impact (in bps)1 +5 +9 -2 -30 •Weighted average cost of debt including the line of credit is 3.5%, in line with the NFI-ODCE peer group.2 82% is fixed rate. •$400 million line of credit. Current cost of borrowing is below 2%. Results in available cash of approximately 10% of NAV. Lenders are national banks who have honored multiple draw requests since COVID began. •72% of Fund assets have no debt. •4.5 years of average remaining term. 0.0% 1.9% 6.1% 3.0% 1.0% 2.2%2.2% 0.7% 3.6% 0.0% 2.9% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030+ 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030+ $0 $132 $422 $210 $66 $150 $150 $50 $246 $0 $200 Staggered Debt Expiration Schedule Percentage of Fund GAV •Next upcoming debt maturity is June 2021 allowing us to avoid financing while debt markets are unsettled. •Planning a slight increase in leverage level in 2021/2022 if rates remain favorable. www.aracapital.com 19 American Realty Advisors 2020-2021 Activity and Outlook American Core Realty Fund •The Fund is well positioned to outperform in the current environment. •Although ARA did not predict the current global pandemic,we took steps to reposition the Fund over the past several years to reduce risk,transacting $5.5 billion of real estate to reposition the portfolio. •Pre-COVID-19 increased industrial and multi-family allocations and reductions in office and retail exposure continue to benefit our returns. •No exposure to hospitality or discretionary retail formats. •Focus on high-quality assets and tenant credit,increased lease terms,reduced leasing exposure,lower NOI dilution from capital expenditures,and favorable debt terms. •Our build-to-core portfolio has transitioned to operating during 2020. •The Fund has the ability to act on compelling new investment opportunities as they are uncovered.Select dispositions have resumed. •New investment opportunities include suburban multi-family,last-mile industrial,data centers,cold-storage warehouse, and possibly single-family rental housing. •The Fund’s total gross return target over a full market cycle remains at 7-9%,although 2020 returns are likely to be lower. We remain confident that the Fund will outperform NFI-ODCE in the near term. Please refer tothePerformance Disclaimer and other disclosures at the end of this presentation. www.aracapital.com 20 American Realty Advisors Most Recent Core Transaction Strategic Last Mile Distribution Center American Core Realty Fund Data as of September 30, 2020 unless specified otherwise. The income yield and 10-Yr Unlevered IRR are estimates based on information available as of the date of the underwriting of the investment and are not a guarantee of future results. Please refer to the performance disclaimer and other disclosures at the end of this presentation. •State-of-the-art Industrial Warehouse Investment in a 12-acre Class A infill industrial asset with an oversized parking field and market leading specifications. Many industrial properties in this area have been converted to other uses such as creative office, leading to reduced supply and the potential for outsized appreciation. •Lease Fully Guaranteed by an Investment-Grade Public Company The Fortune 50 logistics company occupying 100% of the building signed a 15 year lease with two 10-year renewal options. The 5.54% income yield is accretive to the Fund’s overall income return. •Strategic Last-Mile Location Located within five miles from Midtown Manhattan, with access to both the I-278 and I-495, the property is accessible for air freight and same-day delivery distribution and provides tenant access to eight million customers within a 10-mile radius. This industrial market has outperformed NCREIF’s industrial sub-index for 13 of the last 19 years. NYC Urban Logistics Center New York, NY Quarter Acquired Q3 2019 Asset Type Industrial Year Built 2017 Size 362,474 SF Leased 100% Income Yield 5.54% 10-Yr Unlevered IRR (projected at acquisition)5.55% 1-Yr Unlevered Return (actual)9.53% www.aracapital.com 21 American Realty Advisors Key Terms American Core Realty Fund 1.The Fund bears all expenses related to acquisition and divestment of investments,taxes,insurance,legal expenses,valuation expenses,administration and accounting expenses,among others,as further described in the Fund's Offering Memorandum.The return target above isbased on information availableat the timeof forecasting and is not a guaranteeof future results.Use ofleverage may create additional risks.Pleaserefer to the performance disclaimer and other disclosures at the end of thispresentation.Pleasenote that the Asset ManagementFeeisbased on NetAsset Value as outlined inthe Limited Partnership Agreement.No other feeschargedtoinvestors. Fund Structure Open-end commingled real estate fund structured as a Delaware Limited Partnership. Sponsor American Realty Advisors registered in 1990 with the U.S. Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940. Minimum Investment $1 million. U.S. investors in the American Core Realty Fund must be an “Accredited Investor” (as defined in Rule 501(a) of Regulation D under the Securities Act). Return Objective 7-9% gross annual leveraged total gross return over a full market cycle. Leverage Target 10 –30% in aggregate with a maximum of 35%. Typical Transaction Size $50 -$250 million. Distribution 4% annual gross declared distribution. May be automatically reinvested in the Fund or paid out quarterly. Valuation Quarterly independent appraisals managed by Fund’s independent Valuation Manager. Reporting ARA claims compliance with the Global Investment Performance Standards (GIPS). Liquidity Quarterly redemptions subject to available cash flow. Asset Management Fee1 Based on net total investment commitment: •1.10% -Commitment up to $25 million •0.95% -Commitment of $25 to $75 million •0.85% -Commitment of $75 million and up Appendix www.aracapital.com 23 American Realty Advisors Summary of Holdings: Office American Core Realty Fund 1 ReflectsAmerican Core Realty Fund’s effective ownership share of the grossfair valueofthe real estate investment less the gross fair value of themortgage loan. 2 ReflectsAmerican Core Realty Fund’s effective ownership share of the grossfair valueofthe real estate investment. 3 Joint ventureinvestmentpartnershipaccounted for using the equity method.4 Investment inpreferredequity. 5 Joint ventureinvestmentpartnership(consolidated). Investments Metro Investment Date SF Stated Ownership Net Fair Value1 Gross Fair Value2 Ballston Gateway Washington, DC 12/23/2003 145,388 100%$49,200,000 $49,200,000 Deerbrook Corporate Center Chicago, IL 07/01/2006 133,985 100%$16,000,000 $16,000,000 K Street Office3 Washington, DC 03/19/2007 126,953 85%$39,402,029 $55,712,237 Energy Center Houston, TX 06/27/2011 306,721 100%$41,200,000 $41,200,000 153 Townsend Street San Francisco, CA 12/04/2012 179,054 100%$173,816,589 $220,000,000 499 Park Avenue New York, NY 06/28/2013 304,769 100%$453,000,000 $453,000,000 2201 Westlake Seattle, WA 07/21/2015 317,102 100%$274,000,000 $274,000,000 One Freedom Plaza4 Washington, DC 06/24/2016 283,481 100%$42,749,523 $42,749,523 1K Fulton Chicago, IL 07/01/2016 531,190 100%$338,000,000 $338,000,000 Foundry Square III San Francisco, CA 12/13/2016 292,069 100%$417,000,000 $417,000,000 4th Street at Delray Beach3 Miami/ Fort Lauderdale, FL 05/16/2017 98,400 92%$36,818,394 $36,818,394 385 Sherman Avenue San Jose/ Santa Clara, CA 01/18/2018 67,974 100%$142,000,000 $142,000,000 Moda Tower5 Portland, OR 09/28/2018 414,244 50%$46,656,931 $91,000,000 121 Seaport5 Boston, MA 12/13/2018 400,730 55%$259,600,000 $259,600,000 TOTAL OFFICE REAL ESTATE INVESTMENTS $2,329,443,466 $2,436,280,154 As of September 30, 2020 www.aracapital.com 24 American Realty Advisors Summary of Holdings: Industrial American Core Realty Fund 1 ReflectsAmerican Core Realty Fund’s effective ownership share of the grossfair valueofthe real estate investment less the gross fair value of any mortgage loan. 2 ReflectsAmerican Core Realty Fund’s effective ownership share of the grossfair valueofthe real estate investment. Investments Metro Investment Date SF Stated Ownership Net Fair Value1 Gross Fair Value2 California Rosslynn Orange County, CA 08/05/2005 257,246 100%$51,400,000 $51,400,000 Marquardt Distribution Center Los Angeles, CA 12/13/2005 123,058 100%$32,500,000 $32,500,000 Broadway Center Business Park Los Angeles, CA 08/05/2008 188,910 100%$32,000,000 $32,000,000 Walnut Avenue Industrial Park Orange County, CA 08/05/2008 170,331 100%$34,600,000 $34,600,000 SouthWoods Business Center Atlanta, GA 12/31/2011 531,774 100%$51,200,000 $51,200,000 Rancho Cucamonga Distribution Center Inland Empire, CA 03/31/2012 434,871 100%$38,917,012 $57,000,000 Sumner 167 Logistics Center - Building 1 Seattle, WA 12/03/2013 234,750 100%$35,000,000 $35,000,000 Arrow Center I & II Inland Empire, CA 12/20/2013 430,972 100%$41,878,200 $72,000,000 Sumner 167 Logistics Center - Building 2 Seattle, WA 03/24/2014 358,598 100%$68,100,000 $68,100,000 3100 West Segerstrom Orange County, CA 06/11/2014 159,163 100%$33,100,000 $33,100,000 GSW Gateway 1 & 2 Dallas, TX 06/11/2014 423,330 100%$34,500,000 $34,500,000 McCook Logistics Center Chicago, IL 08/08/2014 365,359 100%$36,797,215 $50,500,000 Shoemaker Distribution Center Los Angeles, CA 12/18/2014 174,342 100%$38,600,000 $38,600,000 As of September 30, 2020 www.aracapital.com 25 American Realty Advisors Summary of Holdings: Industrial American Core Realty Fund 1 Reflects AmericanCoreRealty Fund’s effective ownership share of thegross fairvalue of the realestate investment lessthe grossfair valueof anymortgage loan.2 Reflects AmericanCoreRealty Fund’s effective ownership share of thegross fairvalue of the realestate investment. 3 Jointventure investment partnership accounted for using the equitymethod. Investments Metro Investment Date SF Stated Ownership Net Fair Value1 Gross Fair Value2 Dulles Woods III Washington, DC 06/16/2015 101,880 100%$19,500,000 $19,500,000 I-88 Gateway Logistics Center Chicago, IL 11/13/2015 604,565 100%$54,900,000 $54,900,000 Crossroads Logistics Center Harrisburg, PA 11/20/2015 398,250 100%$43,600,000 $43,600,000 Pacific Commons Logistics Center West East Bay, CA 12/28/2015 814,901 100%$205,000,000 $205,000,000 King Mill Distribution Center Atlanta,GA 04/18/2017 846,496 100%$57,800,000 $57,800,000 Park 78 Logistics Harrisburg, PA 10/18/2017 345,600 100%$40,000,000 $40,000,000 Logan Logistics Center Philadelphia, PA 11/01/2017 1,016,116 100%$122,000,000 $122,000,000 Miami Central Commons3 Miami, FL 12/15/2017 656,634 99%$138,385,964 $138,385,964 Transal Park Miami, FL 01/09/2018 134,175 100%$28,000,000 $28,000,000 1730 South Anaheim Way Orange County, CA 05/03/2018 143,930 100%$36,600,000 $36,600,000 NYC Urban Logistics Center New York, NY 09/26/2019 362,474 100%$274,000,000 $274,000,000 TOTAL INDUSTRIAL REAL ESTATE INVESTMENTS $1,548,378,391 $1,610,285,964 As of September 30, 2020 www.aracapital.com 26 American Realty Advisors Summary of Holdings: Multi-family American Core Realty Fund 1 Reflects AmericanCoreRealty Fund’s effective ownership share of thegross fairvalue of the realestate investment lessthe grossfair valueof anymortgage loan. 2 Reflects AmericanCoreRealty Fund’s effective ownership share of thegross fairvalue of the realestate investment. 3 Jointventure investment partnership accounted for using the equitymethod. 4 Investmentin preferred equity.5 Investmentsin mortgage-backed certificates. ALARA is a registered service mark of American Realty Advisors andisusedunder license. Investments Metro Investment Date SF Stated Ownership Net Fair Value1 Gross Fair Value2 Mural Apartments Seattle, WA 03/22/2012 139 units 100%$38,499,404 $53,200,000 Link Apartments Seattle, WA 03/22/2012 199 units 100%$54,061,062 $78,900,000 ALARA Uptown Dallas, TX 09/30/2013 294 units 100%$48,281,813 $71,600,000 Continuum3 Boston, MA 03/14/2014 325 units 80%$102,186,601 $170,451,000 The Chrystie4 New York, NY 09/12/2014 361 units 100%$84,507,924 $84,507,924 Accent Los Angeles, CA 10/07/2014 196 units 100%$92,598,808 $122,000,000 K1 San Diego, CA 03/04/2016 222 units 100%$130,000,000 $130,000,000 ALARA Union Station Denver, CO 05/03/2016 314 units 100%$93,188,732 $165,000,000 Madison At Racine Chicago, IL 03/14/2017 216 units 100%$79,105,725 $108,000,000 Northshore Austin, TX 08/23/2018 439 units 100%$320,000,000 $320,000,000 Azure on the Park Atlanta, GA 09/07/2018 329 units 100%$114,163,423 $135,000,000 Multi-family Loan Portfolio5 National Portfolio 2016-2018 Various 100%$96,878,855 $96,878,855 TOTAL MULTI-FAMILY REAL ESTATE INVESTMENTS $1,253,472,347 $1,535,537,779 As of September 30, 2020 www.aracapital.com 27 American Realty Advisors Summary of Holdings: Retail American Core Realty Fund 1 Reflects AmericanCoreRealty Fund’s effective ownership share of thegross fairvalue of the realestate investment lessthe grossfair valueof anymortgage loan. 2 Reflects AmericanCoreRealty Fund’s effective ownership share of thegross fairvalue of the realestate investment. Investments Metro Investment Date SF Stated Ownership Net Fair Value1 Gross Fair Value2 Waldorf Marketplace I Washington, DC 06/29/2005 205,285 100%$47,900,000 $47,900,000 Kendall Place Miami, FL 03/15/2007 287,896 100%$114,000,000 $114,000,000 Waldorf Marketplace II Washington, DC 06/28/2007 168,519 100%$29,600,000 $29,600,000 Jacksonville, FL 01/07/2010 104,262 100%$25,937,918 $40,200,000 Festival at Riva Baltimore/Towson, MD 12/29/2010 300,963 100%$108,728,567 $158,000,000 Shops at Waterford East Bay, CA 01/27/2011 124,826 100%$57,249,180 $93,000,000 Alexandria Commons Washington, DC 06/30/2011 154,310 100%$57,435,132 $85,400,000 Weston Lakes Plaza Miami/ Fort Lauderdale, FL 03/31/2012 96,451 100%$41,900,000 $41,900,000 @First Retail Center San Jose/ Santa Clara, CA 05/03/2012 84,271 100%$52,100,000 $52,100,000 Mission Hills Vons San Diego, CA 07/24/2012 63,992 100%$21,727,283 $34,600,000 Admiral Safeway Seattle, WA 07/24/2012 67,992 100%$22,139,509 $35,900,000 Criterion on the Promenade Los Angeles, CA 12/10/2015 52,980 100%$84,600,000 $84,600,000 University Station Boston, MA 08/16/2016 401,402 100%$217,000,000 $217,000,000 Central Park Commons Minneapolis, MN 12/20/2017 402,598 100%$124,000,000 $124,000,000 TOTAL RETAIL REAL ESTATE INVESTMENTS $1,004,317,590 $1,158,200,000 As of September 30, 2020 www.aracapital.com 28 American Realty Advisors Florida Investor List Appendix The abovelist includespublic pension fund investorsfrom Floridawho have executed an agreement to invest inproducts sponsoredbyAmerican RealtyAdvisors and whose nameisnot restrictedfrom beingincludedin this list. It is notknown whether thelisted investorsapprove ordisapprove of ARA or theadvisoryservicesprovided.The above list includes investorsasofSeptember30,2020. •Bartow General Employees Retirement System •Baptist Health South Florida, Inc. •Cape Coral Municipal Firefighters' Retirement Plan •Cape Coral Municipal Police Officers' Retirement Plan •Casselberry Police Officers' and Firefighters' Pension Plan •City of Arcadia Police Officers' and Firefighters' Retirement System •City of Auburndale Retirement Plan for General Employees •City of Avon Park Firefighters’ Retirement System •City of Avon Park Police Officers' Retirement System •City of Bradenton Police Officers’ Pension Plan •City of Brooksville Firefighters' Retirement Trust Fund •City of Dania Beach General Employees' Retirement System •City of Delray Beach Firefighters' and Police Officers' Retirement System •City of Edgewater General Employees' Retirement Plan •City of Edgewater Police Officers' Retirement Plan •City of Fort Walton Beach Police Officers' Retirement Fund •City of Gulfport General Employees’ Pension Plan •City of Gulfport Municipal Police Officers' Trust Fund •City of Haines City General Employees' Pension Plan •City of Homestead New Elected Officials & Senior Management Retirement System •City of Lake Wales Police Officer’s Pension Plan and Trust Fund •City of Lake Wales Firefighter’s Pension Plan and Trust Fund •City of Lauderhill Confidential and Managerial Employee Defined Benefit Retirement Plan •City of Lynn Haven Police Officers’ Retirement System •City of Lynn Haven General Employees' Retirement System •City of Marco Island Firefighters' Pension Fund •City of Naples General Employees Retirement Trust •City of Naples Police Officers and Firefighters’ Retirement Trust •City of Palm Beach Gardens Police Officers' Pension Fund •City of Punta Gorda General Employees' Pension Fund •City of Quincy, Florida Police and Firemen's Supplemental Pension Plan •City of Sebring Police Officers' Retirement Trust Fund •City of South Pasadena Firefighters' Retirement System •City of Tamarac General Employees' Pension Trust Fund •City of Winter Park Firefighters’ Pension Trust Fund •City of Winter Park Police Officers’ Pension Plan •Clair T. Singerman Employees’ Retirement Fund •City of Sebring Police Officers' Retirement Trust Fund •City of Sebring Municipal Firefighters' Pension Plan •Clearwater Firefighters’ Supplemental Trust Fund •Cocoa General Employees' Retirement Plan •Community Foundation for Palm Beach and Martin Counties, Inc. •Cooper City General Employees Pension Plan •Cooper City Police Pension Fund •Coral Springs Firefighters' Retirement Plan •Coral Springs Police Officers' Pension Plan •Dania Beach Fire and Police Pension Plan •Davie Firefighters' Pension Trust Fund •Davie Police Pension Fund •DeLand Municipal Police Officers’ Retirement Plan •Deerfield Beach Municipal Firefighters' Pension Trust Fund •Deerfield Beach Municipal Police Officers' Retirement Trust Fund •Destin Fire Control District Firefighters' Retirement Trust Fund •Englewood Area Fire Control District Firefighters' Pension Trust Fund •Fernandina Beach General Employees’ Pension Plan •Fernandina Beach Police Officers' & Firefighters' Pension Plan •FOP Ft. Lauderdale Lodge #31 Insurance Trust Fund •Fort Lauderdale General Employees’ Retirement System •Fort Lauderdale Police and Fire Retirement System •Grace Contrino Abrams Peace Education Foundation •Fort Walton Beach Municipal Firefighters’ Pension Trust Fund •Greater Naples Fire Rescue District Firefighters' Pension Plan •H. Lee Moffitt Cancer Center and Research Institute, Inc. •H. Lee Moffitt Cancer Center and Research Institute Foundation, Inc. •Hollywood Police Officers’ Retirement System •Jupiter Police Officers' Retirement Plan •Key West General Employees' Pension Plan •Key West Utility General Employees Retirement System •Kissimmee General Employees' Retirement Plan •Lake Mary Firefighters’ and Police Officers' Pension Trust Funds •Lake Worth Firefighters' Pension Trust Fund •Lake Worth General Employees' Retirement System •Lake Worth Police Officers' D1 Pension Fund •Lakeland Police Officers' Retirement System •Lauderhill Firefighters Retirement System •Leesburg Municipal Firemen's Retirement Trust •Miami Dade College Foundation •Miami Springs General Employees' Retirement System •Miami Springs Police and Firefighters' Retirement System •Milton General Employees' Retirement System www.aracapital.com 29 American Realty Advisors Florida Investor List Appendix The abovelist includespublic pension fund investorsfrom Floridawho have executed an agreement to invest inproducts sponsoredbyAmerican RealtyAdvisors and whose nameisnot restrictedfrom beingincludedin this list. It is notknown whether thelisted investorsapprove ordisapprove of ARA or theadvisoryservicesprovided.The above list includes investorsasofSeptember30,2020. •Milton Police Officers' Pension Fund •Miramar Fire Local 2820 VEBA Trust Fund •Miramar Management Retirement Plan •Miramar Retirement Plan for General Employees •New Smyrna Beach Police Officers’ Retirement Plan •North Brevard County Hospital District Operating Fund •North Brevard County Hospital District Pension Plan •North Miami Retirement System -Ordinance Number 748 •North Port Firefighters' Pension -Local Option Trust Fund •North Port Police Officers' Pension -Local Option Trust Fund •North River Fire District Firefighters' Retirement Trust Fund •Ocala Firefighters' Retirement System •Ocala Police Officers' Retirement System •Ocoee Municipal General Employees' Retirement Trust Fund •Ocoee Police Officers' and Firefighters Retirement Trust Fund •Okaloosa Island Fire District Firefighters' Retirement Trust Fund •Orlando Utilities Commission Defined Benefit Pension Plan •Orlando Utilities Commission Other Post-Employment Benefit Section 115 Trust •Oviedo Firefighters' Pension Trust Fund •Palm Beach Atlantic University, Inc. •Palm Beach Gardens Firefighters' Pension Fund •Palm Beach Gardens Police Officers' Pension Fund •Pembroke Pines Fire and Police Pension Fund •Panama City Municipal Firefighters’ and Police Officers’ Pension Trust Funds •Plant City Safety Employees Retirement Plan •Pompano Beach General Employees' Retirement System •Port Orange Fire and Rescue Pension Fund •Port St. Lucie Municipal Police Officers' Retirement Trust Fund •Riviera Beach Municipal Firefighters' Pension Trust Fund •Riviera Beach Police Pension Fund •Sanibel General Employees Pension Fund •St. Cloud General Employees' Retirement System •St. Cloud Police Officers' and Firefighters Retirement System •St. Lucie County Fire District Firefighters' Pension Trust Fund •St. Lucie County Fire District General Employees Retirement System •St. Pete Beach Firefighters' Retirement System •Tamarac Police Officers' Pension Trust Fund •Temple Terrace Police Officers Retirement Trust Fund •Titusville General Employees Pension Fund •Town of Bay Harbor Islands' Pension Fund •Town of Golden Beach Employees' Pension Plan •Town of Indialantic Police Officers' and Firefighters' Retirement System •Town of Longboat Key Consolidated Retirement System •Venice Municipal Firefighters' Pension Trust Fund •Vero Beach Police Officers' Pension Plan •Village of North Palm Beach Fire and Police Retirement Fund •West Manatee Fire and Rescue District Firefighters' Retirement Plan •West Palm Beach General Employees' Restated Defined Benefit Retirement System •Winter Haven Firefighters' Retirement System •Winter Haven General Employees' Retirement System •Winter Haven Police Officers' Retirement System •Winter Springs General Employee Retirement System www.aracapital.com 30 American Realty Advisors COMPOSITE RETURN DATA NCREIF NFI-ODCE COMPOSITE STATISTICS AT YEAR-END Gross-of-Fees Net-of-Fees Equal Weight (2003-2015) Value Weight (2016-Forward)# of Accounts ** Composite Assets ($ Millions) Total Firm Net Assets* ($ Millions) % Externally AppraisedYearTotal Return Income Appreciation Total Return Income Appreciation Total Return 2019 6.30%3.85%2.39%5.26%4.18%1.12%5.34%1 5,161 7,387 100% 2018 8.71%3.89%4.69%7.65%4.21%4.00%8.35%1 5,106 6,784 97% 2017 8.07%4.01%3.94%7.01%4.35%3.15%7.62%1 4,754 6,177 94% 2016 7.09%3.96%3.04%6.04%4.50%4.12%8.77%1 4,488 6,067 93% 2015 15.35%4.76%10.23%14.22%4.83%9.97%15.17%1 3,935 5,588 95% 2014 11.61%5.23%6.13%10.51%5.07%7.03%12.38%1 3,458 5,083 95% 2013 12.36%5.24%6.85%11.25%5.28%7.74%13.34%1 2,935 4,385 98% 2012 11.26%5.14%5.89%10.18%5.40%5.38%11.03%1 2,576 3,853 97% 2011 15.04%5.29%9.39%13.91%5.52%9.99%15.96%1 2,168 3,496 100% 2010 11.21%5.79%5.19%10.18%6.55%9.11%16.14%1 1,339 2,718 95% Annualized Returns 3 year 7.69%3.92%3.67%6.64%4.25%2.75%7.09% 5 year 9.06%4.09%4.82%7.99%4.41%4.43%9.00% 10 year 10.66%4.71%5.75%9.58%4.99%6.12%11.35% Since Inception 11/21/2003 7.40%4.83%2.48%6.37%5.31%2.38%7.80% COMPLIANCE STATEMENT:American Realty Advisors (“ARA”)claims compliance with the Global Investment PerformanceStandards(GIPS®)andhas prepared and presented this report in compliance withGIPS.ARA has been independently verifiedfortheperiodsJanuary1,2001 through December 31,2019.The verification report is available upon request.Verification assesses whether (1)the firm has complied with all the composite construction requirements of the GIPS standards on a firm- wide basis and (2)thefirm’s policies and procedures aredesigned tocalculate and present performance in compliancewith the GIPS standards.Verificationdoesnot ensuretheaccuracyof any specific compositepresentation. THE FIRM:ARA is an investment advisor registered with the U.S.Securities and Exchange Commission under the Investment AdvisersActof1940,as amended. THE COMPOSITE:The CoreCommingledReal EstateInvestments Composite,createdon November21,2003,consistsof all fullydiscretionaryopen-endcommingled portfolios managed by the firm using a core strategy.ARA defines a Core portfolio as one consisting primarily ofdirect or indirect investmentsin institutional quality,stabilized,income-producingoffice,industrial,retail andmulti-familyproperties and other similar investmentsnationwide.ARA defines adiscretionary portfolio as anyportfolio over whichARA has full discretionregarding investment decisions.The firm definesa non-discretionaryportfolio asanyportfolio over which ARA does not have full discretionregarding investment decisions.The firm maintains a complete list and description of composites,whichis availableupon request. BENCHMARK:Forthe period beginning January 1,2007through December 31,2015the composite was benchmarked againsttheNCREIFFundIndex–Open-End DiversifiedCore Equity(NFI-ODCE)Equal Weight Index.NFI-ODCEEqual Weight Indexreturnswereequal-weightedandshownleveraged beforethe deductionof any fees.As ofJanuary1,2016,the composite’sbenchmarkforperformanceistheNFI-ODCE Value Weight Index.NFI-ODCE Value Weight Index returns will be value-weighted and shown leveraged before the deduction of any fees.The change conforms the Composite’s benchmark to a majority of the other core commingled funds includedintheIndex. LEVERAGE:The sole portfolio in this composite includes portfolio-level debtandassets that are leveraged usingeitherfixed or variable debt.Total leverage on the portfolio in this composite does not exceed 40%of the gross fair value of such portfolio.Some debt may be hedged using derivative securities,may require interest-only payments,or may mature before it is fullyamortized. CALCULATION OF PERFORMANCE RETURNS:Performance is stated in U.S.Dollars,is presented both gross and net ofmanagementfees,and includes the reinvestment of some income and the effect of cash and cash equivalents.Net of feereturnsarereducedbyactualassetmanagementfees,and otherexpenses incurred inthe operation of the realestateandthe sole portfolio included in the composite.Performance returns are computed using investment level return formulas,which calculate time-weighted returns for real estate investments by geometricallylinking componentreturnsand have been adjusted for external cash flows.The sum of incomeand appreciation may not equal the total return for annualized periodsdue to the chain-linkingofquarterlyreturns.Pastperformanceisnot aguaranteeoffutureresults. VALUATIONS:Thesole portfolio included in thecomposite consists primarilyofrealestate,investmentsinjointventures investedinrealestate,debt investments secured by real estate,and some cash.Real estate values are based upon independentappraisalsperformedquarterlybyathird-party valuation manager/appraiser in three quarters in any given year and by a third-party appraiserin the remaining quarter of such year.Thethird-party valuation manager/appraiserandthe third-partyappraiser are not affiliated with ARA or each other.Consistent with methodologies used by typical institutional investors,various approachesare considered during thedetermination of fair value,including theIncome Approach,Sales Comparison Approach, and/or Cost Approach or methods applicable to the asset class and geographic region.Valuations of real estate involve subjective judgments and unobservable inputs,as the actual fair value price of real estate can be determined only by negotiations between independent parties in sales transactions.Policies for valuing portfolios,calculating performance,and preparing compliantpresentationsareavailableuponrequest. FEES:Asset management fees arepaidto ARAquarterlyinarrears,arecalculated separately for eachinvestorinthe fund at anannualratedeterminedbasedoncapitalcommitmentsbyeachinvestoradmittedtothefundpriortoJanuary1,2015 andcommitmentamountlessamountsredeemedtodateforinvestorsadmittedafterJanuary1,2015 (ranging from 1.10%downto .80%). *Assets under management represent the net value of all assets and accountsmanagedbyAmericanRealtyAdvisors(“ARA”)(excluding partners'share of equity anddebtonpartnershipinvestmentsandnon-real estate debt assets through 12/31/10).Prior toMarch 31,2008,ARA reported total firmassets as the amount of assets undermanagementplusundrawncapitalcommitmentsandnotedtheamountofsuch undrawn commitments in a footnote.Effective March 31,2008,ARA restated year-end totalfirmassetsfrom 2001-2007toomit such undrawncommitments. **Theportfolio in thecompositerepresents anopen-end commingled fund. Core Commingled Real Estate Investments Composite www.aracapital.com 31 American Realty Advisors American Core Realty Fund -Certain Key Risk Factors Prospective investors should be aware that an investment in the Fund is speculative and involves a high degree of risk,including a risk of total loss.The following is a summary of only certain risks of an investment in the Fund and is not an exhaustive list and is qualified in its entirety by the “Risk Factors”section in the Fund’s Offering Memorandum.Capitalized terms not defined herein shall be as defined in the Fund’s Offering Memorandum.Prospective investors should not construe the performance of the Fund in prior years as providing any indication of the future performance of the Fund. Unspecified Use of Proceeds.The Fund intends to use the proceeds of the Offering to acquire and/or make investments in existing income-producing real property and to a limited degree development projects intended to produce income upon completion.Investors must rely upon the ability of the Manager in making such investments on behalf of the Fund.Except for the general investment guidelines provided in this presentation,there is no information as to the nature and terms of any investments that a purchaser of Units can evaluate when determining whether to invest in the Fund. Real Estate Investments.The Fund’s investments are expected to involve the economic and business risks generally inherent in real estate investments of the type the Fund generally intends to make.A major risk of owning income-producing properties is the possibility that the properties will not generate income sufficient to meet operating expenses,to service any loans that are secured by the properties or to fund adequate reserves for capital expenditures.The income from properties may be affected by many factors,outside of the Manager’s control.Any return to the Limited Partners on their investment will depend upon factors that cannot be predicted at the time of investment,that may be beyond the control of the Fund,or that may be uninsurable or not economically insurable (such as losses caused by earthquakes,terrorism or floods).Such factors will also affect the return to the Limited Partners on their investment. Identification of Suitable Investments.The Fund may be unable to find a sufficient number of investment opportunities to meet its investment objectives.The performance of the Fund will depend on the Manager’s ability to identify,secure,manage and divest investments that meet the Fund’s stated objective.There can be no guarantee that a sufficient number of appropriate investments will be available and that the Fund will therefore be able to invest all funds committed for investment by the Limited Partners. General Economic Conditions.The Fund is exposed to the general economic and financial market conditions as well as the local,regional and national conditions that affect the markets in which it owns properties.For instance,the Fund’s operating performance is impacted by the economic conditions of the particular markets in which it has a concentration of properties.Any material oversupply of properties similar to those owned by the Fund or a material reduction of demand for such properties in markets involving similar types of use and/or customer base could adversely affect the Fund’s financial condition. Expiration of Leases.The Fund derives most of its income from rent received from tenants.The Fund’s financial condition could be adversely affected if the Fund’s agents are unable to promptly re-lease or renew these expiring leases or if the rental rates upon renewal or re-leasing are significantly lower than expected.If a tenant experiences a downturn in its business or other type of financial distress,which may occur as a result of events outside of the tenant’s or the Fund’s control,such condition could have a negative impact on the Fund’s performance. Use of Leverage.The use of leverage introduces the risk that cash flow from properties so encumbered,or from other sources,may not be sufficient to service the secured debt and therefore could result in the loss of the Fund’s equity through foreclosure or assets used to secure such indebtedness,the complete loss of capital invested in the particular real estate related to the indebtedness and,in some cases,recourse by the lender to foreclosure of assets.The Fund’s access to sources of financing will depend upon a number of factors over which the General Partner and/or Manager has little or no control.The Manager cannot assure investors that the Fund will have access to such equity or debt capital on favorable terms (including,without limitation,cost and term)at the desired times or at all,which could negatively affect the Fund’s results of operations.Changes in interest rates will affect the Fund’s operating results,as such changes will impact the interest the Fund receives on its floating-rate interest-bearing investments,the financing costs of the Fund’s debt,and any interest rate swaps that the Fund may utilize for hedging purposes. Potential Losses May Not Be Covered by Insurance.If the Fund experiences a loss that is uninsured,or which exceeds policy limits,the Fund could lose the capital invested in the damaged properties as well as the anticipated future cash flows and could potentially remain obligated under any recourse debt associated with the properties.It is also possible that an insurance carrier fails or delays covering a loss due to an inability to meet its obligations or a dispute between the Fund and an insurance carrier.Government coverage requirements may also change in the future and such requirements may adversely impact the cash flow and value of properties. www.aracapital.com 32 American Realty Advisors American Core Realty Fund -Certain Key Risk Factors Future Investments.The Manager continues to evaluate the market of available properties that fit the Fund’s investment objectives and will acquire properties on behalf of the Fund when opportunities that meet such objectives become available.The Fund’s ability to acquire properties on favorable terms and to operate them successfully may be affected by any number of factors,including,but not limited to,its potential inability to acquire a desired property,whether the Manager is able to complete due diligence investigations to its satisfaction,the risk that market conditions may result in higher than expected vacancy rates and lower than expected rental rates,among others At various times throughout the life of the Fund,as a result of competition,the Fund may be unable to acquire additional properties as the Manager desires or the purchase price may be significantly elevated.Any of the above risks could adversely affect the financial condition,results of operations or cash flow of the Fund. Environmental Matters.Under various laws relating to the protection of the environment,a current or previous owner or operator of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances at that property,and may be required to investigate and clean up such contamination at that property or emanating from that property.There can be no assurance that costs of future environmental compliance will not affect the Fund’s ability to make distributions to its Limited Partners or that such costs or other remedial measures will not have a material adverse effect on its business,assets or results of operations. Joint Ventures.The Fund may invest in properties through joint ventures,partnerships and other co-ownership arrangements (including senior and subordinate debt investments)with the sellers of the properties,developers,or with other persons.Such investments may involve risks not otherwise present,including,but not limited to,the Fund’s joint venturer or partner in an investment might become bankrupt,that such person might have economic or business goals that are inconsistent with the business interests or goals of the Fund,or that such person may be in a position to take action contrary to the instructions or the requests of the Fund or contrary to the Fund’s policies or objectives.The risk that the partner may take action contrary to the requests or objectives of the Fund are increased in those cases where the partner is the managing member of the partnership and the Fund’s consent is only required with regard to a limited number of major decisions.Action by such joint venturer or partner might have the result of subjecting the property to liabilities in excess of those contemplated by the Fund.It may also be more difficult for the Fund to sell an interest in a joint venture or partnership than a wholly-owned property. Dependence on Key Personnel.The success of the Fund will depend in substantial part upon the skill and management expertise of the real estate professionals of the Manager.Although the Manager operates using a variety of teams,there can be no assurance that the key real estate professionals of the Manager responsible for managing the day to day activities of the Fund will continue to be associated with the Manager.The loss of the key members,services of key members of the management group or a limitation in their availability could have an adverse effect on the operations of the Fund. Valuation of Fund Investments.The Manager has arranged for quarterly valuations of each of the Fund’s investments.Each real estate equity investment is appraised by an independent third party appraisal firm no less than quarterly,commencing the quarter after the investment is made.Appraisals and valuations are (i)inherently subjective in certain respects and rely on a variety of assumptions,including assumptions about projected cash flows for the remaining holding periods for the Fund’s investments and (ii)based in large part on information at the time of the appraisal/valuation,and market,property and other conditions may change materially after that date.Furthermore,real estate assets generally cannot be marked to an established market or readily tradable assets.Accordingly,the appraised values of the Fund’s investments may not accurately reflect the actual market values of the Fund’s investments,and the Fund’s value as determined in accordance with the appraisal/valuation procedures described above may be inexact and may not reflect the value of the Fund’s underlying investments,and,thus,investors may make decisions as to whether to invest in or redeem Units without complete and accurate valuation information. In addition,any valuation is a subjective analysis of the fair market value of an asset and requires the use of techniques that are costly and time-consuming and ultimately provide no more than an estimate of value.Accordingly,there can be no assurance that the Fund’s Net Asset Value,as calculated based on such valuations,will be accurate on any given date,nor can there be any assurance that the sale of any investment would be at a price equivalent to the last estimated value of such investment. Liquidity of Investment.The Units may not be transferred without the prior written approval of the General Partner.Units may be redeemed at their current Per Unit Net Asset Value upon written notification to the General Partner.The effective date of redemption will be the next Valuation Date after receipt of a Redemption Notice.There may,however,be a significant delay in payment of the Redemption Price as the General Partner is not required to liquidate or encumber assets or defer investment in order to make redemption payments.In some instances,the General Partner may not be permitted to timely liquidate investments.Investments in real estate are subject to industry cycles,downturns in demand,market disruptions and the lack of available capital from potential lenders or investors (whether to finance or refinance portfolio properties or for potential purchasers of such properties).Lack of liquidity can also be due to REIT holding periods,limitations on the number of transactions a REIT can complete during a calendar year,contractual lock-ups or other restrictions.Accordingly,there can be no assurance that the Manager will be able to dispose of the Fund’s properties in a timely manner and/or on favorable terms.and investment in the Units should be viewed as an illiquid long-term investment. www.aracapital.com 33 American Realty Advisors Risks:Investments discussed in this presentation are expected to involve the economic and business risks generally inherent in real estate investments of the type the Fund intends to make.A major risk of owning income-producing properties is the possibility that the properties will not generate income sufficient to meet operating expenses,to service any loans that are secured by the properties or to fund adequate reserves for capital expenditures.The income from properties may be affected by many factors,including,but not limited to,fluctuations in occupancy levels, operating expenses and rental income (which in turn may be adversely affected by general and local economic conditions);the supply of and demand for properties of the type in which the Fund invests;energy shortages;compliance by tenants with the terms of their leases;collection difficulties;the enactment of unfavorable environmental or zoning laws;Federal and local rent controls;other laws and regulations;and changes in real property tax rates.The marketability and value of any properties of the Fund will depend on a number of factors beyond the control of the Fund,including,but not limited to,those previously described.Furthermore,there can be no assurance that a ready market for the properties of the Fund will exist at any particular time, since investments in real properties are generally considered to be more illiquid than publicly-traded securities.Any return to the investors on their investment will depend upon factors that cannot be predicted at the time of investment,that may be beyond the control of the Fund,or that may be uninsurable or not economically insurable (such as losses caused by earthquakes, terrorism,floods or public health emergencies).Such factors will also affect the return to the investors on their investment.Performance analysis is based on certain assumptions with respect to significant factors that may prove not to be as assumed.You should understand these assumptions and evaluate whether they are appropriate for your purposes.The description of certain risk factors in this presentation does not purport to be a complete enumeration or explanation of the risks involved in an investment in the Fund.Investors should read the Fund Offering Memorandum and consult with their own advisors before deciding to subscribe or invest.In addition,as the investment markets and Fund develop and change over time,an investment may be subject to additional and different risk factors.No assurance can be made that profits will be achieved or that substantial losses will not be incurred. Photos:Photos used in this presentation were selected based on visual appearance,are used for illustrative purposes only,and are not necessarily reflective of all the investments in the Fund or the investments the Fund will make in the future. Use of Leverage:American Core Realty Fund is authorized to borrow up to 35%of the total gross value of the real estate assets owned by the Fund and is not required to reduce debt in the event the total value of their real estate declines.Please review the applicable provisions in the limited partnership agreement and investment policy statement.The use of leverage introduces the risk that cash flow from properties so encumbered,or from other sources,may not be sufficient to service the secured debt and therefore could result in the loss of equity through foreclosure.This presentation should be considered confidential and may not be reproduced in whole or in part,and may not be circulated or redelivered to any person without the prior written consent of ARA.This presentation is intended for the Fund’s investors,their consultants,and prospective investors only.Past performance is not a guide to or otherwise indicative of future results.As with all investments there are associated inherent risks.The investments made by the Fund and described herein are not FDIC insured,are not bank guaranteed,are not guaranteed by ARA and may lose value. Performance Disclaimer:Performance information is considered supplemental information and complements the attached Core Commingled Real Estate Investments Composite performance. Any performance or projection may not be reflective of the actual performance returns experienced by any one investor.It is important to understand that investments of the type made by each fund pose the potential for loss of capital over any time period.Many factors affect fund performance,including changes in market conditions and interest rates in response to other economic, political,or financial developments.Investment returns,and the principal value of any investment,will fluctuate,so that,when an investment is sold,the amount received could be less than what was originally invested or that estimated at the time the investment was made.Use of leverage may create additional risks. NFI-ODCE Benchmark Information:The NFI-ODCE Value Weight (“NFI-ODCE”or “ODCE”)is an unmanaged index published by the National Council of Real Estate Investment Fiduciaries (“NCREIF”).Any NFI-ODCE income returns are shown before (gross)the deduction of any investment management fees.Any NFI-ODCE total returns are shown before (gross)and after (net)the deduction of any investment management fees.Although the Fund may invest in similar property types as the NFI-ODCE,the weighting of each property type will differ from the NFI-ODCE in any measurement period. Disclosures www.aracapital.com 34 American Realty Advisors NPI Benchmark Information: NPI is the NCREIF Property Index, an unmanaged index published by NCREIF. MSCI ACOE Benchmark Information: MSCI ACOE is an alternative U.S. private core real estate benchmark managed by MSCI in which the Core Fund participates along with 21 other core funds, 20 of which are in NFI-ODCE. ARA evaluates MSCI provided attribution analysis that differs from analysis possible from NCREIF data alone. Information provided in this presentation comparing the Core Fund to MSCI ACOE is provided in order to present additional information that is more ready available with this product. Although the Fund may invest in similar property types as the MSCI ACOE, the weighting of each property type will differ from the MSCI ACOE in any measurement period. Altus Group comparative core information: Information referenced from Altus incorporates metrics utilizing valuation and other data derived from NPI-ODCE contributing funds. Forward-Looking Statements: This presentation may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to future financial or business performance, strategies or expectations. Forward-looking statements are typically identified by words or phrases such as "trend," "potential," "opportunity," "pipeline," "believe," "comfortable," "expect," "anticipate," "current," "intention," "estimate," "position," "assume," "outlook," "continue," "remain," "maintain," "sustain," "seek," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. American Realty Advisors (“ARA”) cautions that forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made, and ARA assumes no duty to and does not undertake to update forward-looking statements. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. Disclosures Printedin-house Headquarters Office 515 S. Flower St. 49th Floor Los Angeles, CA 90071 T213.233.5700 F213.947.1480 LOS ANGELES | CHICAGO | ORLANDO | PHILADELPHIA | SAN FRANCISCO For More Information, Please Contact: Richelle Hayes | Orlando, FL 407.342.1432 rhayes@aracapital.com