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HomeMy WebLinkAbout2010 07 28 Regular 600 American Core Realty Fund, LLC PresentationDate: July 28, 2010 The following presentation was provided to the Board of Trustees on July 28, 2010 by American Core Realty Fund, LLC. Winter Springs General Employee Retirement System AMERICAN CORE REALTY FUND, LLC A Diversified Open -End Real Estate Commingled Fund AMERICAN REALTY ADVISORS, Scott Darling 801 N. Brand Boulevard President/Executive Suite 800 Managing Director, Glendale, CA 91203 (818) 545 -1152 Portfolio Management July 28, 2010 www.americanreal.com Richelle Hayes Senior Manager, © 2010 American Realty Advisors®. All rights reserved. Marketing and Client Service 1"S717LIY OMAL DEAL EgT,a.TE kN - JEST" EVk "ANA60 EF-IEMT Table of Contents I. Firm Overview II. Current Economic and Real Estate Market Overview III. American Core Realty Fund, LLC Portfolio Review AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT ACA TY AD-BORs Mission Statement Our mission is to create and implement client focused institutional real estate investment strategies providing superior returns, capital preservation and growth, delivered with the highest level of integrity, communication, and service. :Z� AMERICAN REALTY ADVISORS. EL INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT MERICAN 9 American Realty Advisors American Realty Advisors ❖ One of the largest privately held real estate advisors in the U.S. ❖ $3.3 billion in assets under management* firmwide ❖ A focused selection of private real estate investment management products and services: .•. ➢ Open -end and closed -end core /value -added real estate funds ➢ Core /value -added separate accounts ➢ Takeover asset management services for assets /portfolios of assets ➢ Development consulting services ➢ Debt workout /restructuring services Offices in Los Angeles, Atlanta, Chicago, Santa Fe, and San Francisco Experience investing through all parts of the market cycle Assets under management represent gross market value of all assets and accounts managed by American as of March 31, 2010 (excluding partners'share of equity and partners' share of debt on partnership investments). AMERICAN ACA TY ADVP$URS. INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 9 Risk Management - The Foundation of Our Firm ❖ Extensive Experience acting as a fiduciary and "Prudent Person" investing in accordance with fiduciary guidelines ➢ Consistent long -term investment strategy — conservative use of debt ➢ Risk control forms the basis of our investment process ➢ No recent changes in the structure of the firm ➢ No debt on the firm's balance sheet ➢ Avoidance of conflicts of interest ➢ No litigation with clients concerning investment management services provided by American and no non - standard regulatory investigations ➢ Recognition of our role as a steward of the capital for plan participants and their beneficiaries INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT AMERICAN ACA TY ADVP$URS. J American Realty Advisors - Value Proposition ❖ Focus on Middle Market Multi- Tenant Properties ➢ Target $10 -$150 million assets ➢ Less volatility via staggered vacancies /turnover ➢ More liquidity /demand in this sector ❖ Conservative Use of Leverage ➢ Control downside risk through prudent debt use ➢ No "financial engineering" to underwrite deals ❖ Hands -on Management ➢ Two decades of experience in directly managing private real estate assets ➢ Strategy combines direct operational skill with understanding market drivers ➢ Value is created by hands -on asset management on assets located in markets with strong long -term performance and above average potential for rental growth AMERICAN ACA TY ADVP$URS. INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 5 Established Client Base in Florida ❖ Carpenters Local 140 Pension Fund ❖ Ft. Lauderdale Police and Fire Retirement System ❖ Central /North Florida Carpenters Regional Council Lakeland Police Officers' Retirement System Pension Plan ❖ Lauderhill Firefighters Pension Fund ❖ Cooper City Police Pension Fund . ❖ Palm Beach Gardens Firefighters' Pension Fund ❖ Dania Beach Police and Fire Pension Plan ❖ Pembroke Pines Police & Fire Retirement System ❖ Deerfield Beach Fire Pension System ;' ❖ Plumbers and Pipefitters Local 123 Welfare Fund ❖ Delray Beach Police and Firefighters' Retirement '. System ❖ Plumbers and Pipefitters Local Union No. 592 Pension Fund,. ❖ Florida Carpenters Regional Council Pension Fund �1: , • Y•• Sanibel GeneraF Employees Pension Fund ❖ Florida Millwrights, Piledrivers and Drivers Pension Fund ❖ .,...Tamarac Police Officers' Pension Trust Fund •'• Florida UBC Supplemental Pension and Health Funds enice Municipal Firefighters' Pension Trust Fund •'• Ft. Lauderdale General Employees Retirement System '•' Winter Springs General Employee Retirement System i F f The above list includes investors who have executed an agreement to invest with American Realty Advisors. It is not known whether the listed clients approve or disapprove of American or the advisory services provided. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 6 Signs of Real Estate Stabilization Have Begun to Surface Positive Signs ❖ First significant job gain since 2007 ❖ Consumer spending improving, especially for high income consumers ❖ Real estate demand starting to turn positive, up from sharp losses in early 2009 ❖ Capital market pricing shows transaction prices are rising Negative Signs ❖ Elevated vacancy rates ❖ Elevated real estate loan default and foreclosure rates ❖ Depth of recession /Slow recovery ❖ Government deficits ❖ Foreign debt issues ❖ Increased availability and improved terms on real estate debt capital Source: Economy.com, MIT, NCREIF, CBRE Economefnc Advisors, PPR, CoSfar, ARA Research AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT ACA TY A—BORs 7 Temporary Census Workers Driving Near Term Employment ❖ Job growth has been positive for six consecutive Monthly Change in U.S. Employment, in Thousands months, excluding 600 temporary census employment 400 ❖ The path of monthly job 200 growth is turning bumpy, 0 ■'_ which we expect to continue through the recovery -200 -400 Temporary Census -600 Employment ■ Job Trend -800 -1000 - Source: BLS, Economy.com, ARA Research AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT REALTY A —PBORs s Due to the Recession's Depth, the Recovery Could Take Time 101 100 99 98 97 96 95 94 93 Year of Peak Employment 74 --81 90 '01 —'08 — Forecast Index of Employment = 100 at Peak Quarter 2013 New O)nn4 Peak Recession ZZ 2010 Bottom 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Quarters From Market Peak Source: Economy.com, ARA Research AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT ACA TY ADVP$URB. 9 Transaction Data Indicates a Stabilization Real Estate Transaction Data $140 $120 (Billions) $100 $80 $60 $40 $20 $0 O� O� Off' Off' O� O� O O O� O� O O 0 0 0 ti Dd tid Dd tid Dd tid Dd tid Dd tid Dd tid Dd tid Dd tid Dd ti Data represents closed real estate deals of office, multi- family, retail and industrial properties, which are commonly referred to as institutional quality and valued over $5 million each ** Source: Real AMERICAN ACA TY ADVP$UR5 tics, ARA Research INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT $185 $170 $155 $140 $125 $110 $95 $80 10 QTR Volume In Billions Price PSF Core Real Estate Investment Opportunities ❖ Opportunity to capture new investments at lower prices should result in favorable returns 300 ❖ Market is starting to price in a 275 recovery for core assets 250 ❖ Significant upside for "distressed owner assets, as pricing 225 includes a negative outlook 200 ❖ Restructure of existing capital stack and purchase of debt offer 175 attractive opportunities 150 125 23% 100 1 Q80 1 Q821 Q841 Q86 1 Q88 1 Q901 Q92 1 Q941 Q96 1 Q981 Q00 1 Q02 1 Q04 1 Q061 Q08 1 Q10 Source: NCREIF, ARA Research AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT ACA TY ADVP$URS. Index of NCREIF Real Estate Prices = loo as or 1Q78 12 Investment During Economic Downturns Has Done Well ❖ In previous periods of weak economic performance such as 1982, 1994 and 2002, total returns invested in NCREIF private real 16% estate averaged 12.5% over the 14% following three years 12% This is over 4% higher than the 10% long -term average for real estate 8% 6% 4% 2% 0% AMERICAN ACA TY ADVP$U Source: NCREIF, ARA Research Average 3 -Year Unleveraged Total Return NCREIF Property Index 5 G �P Q� INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 8.2% Long -Term Average 12 Opportunities for Real Estate Investment ❖ Market is starting to price in a recovery for stabilized core assets ❖ Attractive opportunities to acquire "distressed owner" assets (not distressed assets) ❖ Strong upside for "distressed owner" assets, as pricing includes a more negative outlook ❖ Carefully underwrite risk to capture strongest returns and protect downside exposure ❖ As we move from the 2009 downturn to slow recovery in 2010, American is looking to make select investments in stabilized markets with positive occupancy outlook 0 ELMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 13 American Core Realty Fund A Diversified Core Equity Real Estate Strategy 165 clients $1.4 billion Gross Market Value invested in 55 properties nationwide (06/30/10) ELMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 14 Focused on a Pure Core Strategy to Manage Risk ❖ Open -end core commingled fund ❖ Consistent long -term investment strategy — no style drift — focusing on core assets ❖ Fund Strategy: ➢ Diversified pool of stable core operating real estate assets: Stable, predictable income representing majority of expected long -term total return Highly liquid assets that are easily sold — middle market focus Diversified rent rolls • Multi- tenant ` • Economically diverse n • Staggered lease expirations n n ➢ Conservative use of leverage n 11 q r ELMERICAN Ih18TITYJTYOF•iAL REAL ESTATE YFJVESTNIEMT M,4hJ,4CEME14T N i1 �r 15 High Quality Well- Positioned Assets Nationwide Fund Strategy - low risk approach in today's market: ➢ Existing institutional quality office, retail, industrial, and multi - family properties in strong, growing, and /or supply- constrained diversified metropolitan areas nationwide ➢ Geographic, property type, and economic diversification to reduce risk ➢ Target properties that: are substantially leased have limited or no deferred maintenance, minimal need for capital expenditures and no functional obsolescence show strong and consistent long -term tenant and buyer demand occupy superior locations within each market ➢ No forward commitments A,MERICAFV INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 16 ACA TY ADVP$URS. American Core Realty Fund Investment Objectives ➢ Steady income returns ➢ Long -term appreciation ❖ Fiduciary Responsibility ➢ American is a fiduciary with respect to the investments made by the American Core Realty Fund NOTE: All investments such as the American Core Realty Fund may be subject to loss of capital and there is no guarantee that the above goals will be achieved over all time periods. A,MERICAFV INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 17 ACA TY ADVP$URS. American Core Realty Fund - Valuations Each property is appraised by an independent MAI appraiser at least once every 12 months Approximately 25% of the portfolio is externally valued each quarter Internal valuations are completed quarterly PricewaterhouseCoopers (PwC) — Independent Valuation Advisor — third - party oversight of all valuations American claims compliance with GIPS° on a firm -wide basis American Realty Advisors' compliance with the GIPS" standards has been verified on a firm -wide basis for the period January 1, 2001 through December 31, 2009 by Ashland Partners & Company, LLP. Please see the Core Equity Real Estate Investments Composite Annual Disclosure Presentation at the end of this presentation. A complete list and description of American's composites and verification reports are available upon request. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT M, NAOEMENT 18 ACA TY AD-BORs Diversification Across Major Markets Nationwide >000° Seattle Portland East Bay San Francisco San Jose 1 Los Angeles l Orange County L Inland Empire Denver Minneapolis Chicago /Cook County _ Suburban Chicago _ Cincinnati San Diego Phoenix a Dallas Austin Miami Boston Long Island, NY Northern NJ Philadelphia Baltimore Washington, DC Northern Virginia Raleigh Nashville Atlanta Jacksonville Property Type % Leased as of June 30, 2010 Office Industrial NOTE: Represents the American Core Realty Fund's investments as of June 30, 2010. Information provided is supplemental to the attached Core Equity Real Estate Investments Composite Annual Disclosure Presentation. AMERICAN INERTITLITIE3NAL REAL ESTATE INVESTMENT M,4NAE;EMEMT ACA TY ADVP$URS. 19 Broad Property Type, Size and Geographic Diversification Office 35.7 %� Retail 14.5% AMERICAN ACA TY ADVP$U Property Type Industrial 22.6% M ulti- Fam ily 27.2% $0- 1*25 P" 27.5' $50 M - $100 M 20.4% Property Size Geographic Region NOTE: Portfolio Diversification is based on the American Core Realty Fund's gross market value of properties. The Information presented above is based on data as of June 30, 2010. Information provided is supplemental to the attached Core Equity Real Estate Investments Composite Annual Disclosure Presentation. INERTITLITIE3NAL REAL ESTATE INVESTMEMT MANACEMEMT 20 East West 30.0 %� 31.3% V'14� $25 M - $50 M $50 IV 52.1% Midwest South 12.1 % 26.6% NOTE: Portfolio Diversification is based on the American Core Realty Fund's gross market value of properties. The Information presented above is based on data as of June 30, 2010. Information provided is supplemental to the attached Core Equity Real Estate Investments Composite Annual Disclosure Presentation. INERTITLITIE3NAL REAL ESTATE INVESTMEMT MANACEMEMT 20 Economic Diversification Diversification by Tenant Industry Type 10% 10% 12% 2% D �0 • Financial /Insurance /Real Estate ❑ Professional /Business Services • Health ■ Retail • Warehouse /Delivery ■ Manufacturing ❑ Wholesale ■ Information Technology ■ Leisure /Hospitality ❑ Education ❑ Construction ❑ Government ❑ Other NOTE: The Information presented above is based on data as of March 31, 2010. Information provided is supplemental to the attached Core Equity Real Estate Investments Composite Annual Disclosure Presentation. AMERICAN INERTITLITIE3NAL REAL ESTATE INVESTMENT M,4NAE;EMEMT 21 ACA TY A—BORs 1'4/0 15% 1% —" American Core Realty Fund - Highlights in 2033 K Street 120,778 sq. ft. Of Washington, DC Percent Leased: Year Built: Major Tenants: Tice Building 99% 1976, renovated in 1996 George Washington University International Food Policy Research Institute ALARA® Harbour Pointe 230 -Unit Multi - Family Community Mukilteo, WA Percent Leased: 92% Year Built: 1998 ✓ 2033 K Street is located in Washington, DC's most desirable commercial submarket. ✓ Property is corner situated along the K Street Corridor, providing convenient access to the Metro and prominent visibility. ✓ Potential for long -term gains due to its coveted location in a supply- constrained market, its premium construction and its prestigious tenant base. ✓ Property has stabilized occupancy with minimal lease rollover during the next six years. ✓ ALARA Harbour Pointe is located near Everett, Washington, home to a diverse range of corporate employers, including Boeing, TRW, JanSport and Allied Technology. ✓ Property has an appealing location at the north end of Seattle's Technology corridor. ✓ Strategically positioned location with high barriers -to- entry limiting potential competition, severe shortage of multi - family land, and arduous environmental regulations. ALARA is a registered service mark owned by American Realty Advisors and is used under license. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT ACA TY ADVP$URS. 22 American Core Realty Fund - Highlights SoCal Industrial Portfolio 358,910 sq. ft. Industrial Portfolio South Bay of Los Angeles and North Orange County in Southern California Percent Leased: 89% Year Built: 1954 to 1991 Major Tenants: Rubbercraft Corporation Kraft Foods ✓ All properties in the portfolio enjoy excellent functionality with considerable storage capacity and flexibility along with close proximity to a diverse labor force. ✓ The properties are well - located with exceptional access to southern California ports and transportation infrastructure. ✓ All properties were fully leased at acquisition and have enjoyed a long history of high occupancy. Waldorf Marketplace II 168,177 sq. ft. Shopping Center Waldorf, MD Percent Leased: 95% Year Built: 2007 Major Tenant: TJ Maxx/Home Goods ✓ Waldorf Marketplace II is a newly constructed retail shopping center located approximately 15 miles south of the Capital Beltway (1 -495) in Waldorf, MD. ✓ Property is anchored by major, national retail tenants including TJ Maxx/Home Goods, DSW, and includes two out - parcels ground leased to TGI Fridays and Mimi's Cafe. ✓ This investment complements Waldorf Marketplace I, a community shopping center that American purchased for the Fund in 2005. AMERICAN ACA TY ADVP$URS. INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 23 Winter Springs General Employee Retirement System $1,000,000 commitment with initial investment made on October 1, 2007 Account Balance as of June 30, 2010: $607,887.77 CONTRIBUTIONS 2007 $ 250,000 2008 $ 750,000 Inception -to -Date Original Commitment $ 1,000,000 Withdrawals $ - Distributions $ (74,536) Net Income $ 83,920 Realized Losses $ (15,088) Unrealized Losses $ (386,408) I Ending Net Asset Value $ 607,888 1 ELMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 24 Winter Springs General Employee Retirement System - Performance Gross of Fees Since Inception* 2Q10 Year -to -Date One -Year (10/01/2007) Income 1.70% 3.15% 6.05% 5.16% Appreciation 1.54% -0.57% - 16.48% - 16.69% Total Return 3.25% 2.56% - 11.20% - 12.19% NFI -ODCE 4.40% 5.18% -5.90% - 13.14% Net of Fees Since Inception* 2Q10 Year -to -Date One -Year (10/01/2007) Income 1.44% 2.62% 5.00% 4.11% Appreciation 1.54% -0.57% - 16.48% - 16.69% Total Return 2.98% 2.03% - 12.12% - 13.10% NFI -ODCE 4.16% 4.69% -6.80% - 13.88% *Annualized 7191 7LLVi /e10IN Uf 116181 we11LLVi14:; The returns above are for the Winter Springs General Employee Retirement System's investment in the American Core Realty Fund, LLC and include leveraged returns before (gross) and after (net) the deduction of investment management fees. The above performance is considered supplemental information and complements the Core Equity Real Estate Investments Composite performance in the attached Annual Disclosure Presentation. The sum of annualized component returns may not equal the total return due to the chain - linking of quarterly returns. The NFI -ODCE is an unmanaged index published by the National Council of Real Estate Investment Fiduciaries. NFI - ODCE returns are shown before (gross) and after (net) the deduction of any investment management fees and include leverage. 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. Past performance is not a guarantee of future results and it is important to understand that investments of the type made by the Fund pose the potential for loss of capital over any time period. The figures provided above are preliminary and subject to revision. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 25 American Core Realty Fund - Performance Gross of Fees Income Appreciation Total Return NPI NFI -ODCE Net of Fees Income Appreciation Total Return NFI -ODCE 1Q10 One -Year Three -Year* Five -Year* Since Inception* 1.42% 5.68% 5.05% 5.23% 5.06% -2.09% - 24.79% - 14.17% -5.14% -2.86% -0.67% - 20.19% -9.65% -0.10% 2.09% 0.76% -9.59% -4.31% 4.19% 6.18% 0.75% - 18.02% - 10.77% -0.04% 2.67% 1Q10 One -Year Three -Year* Five-Year Since Inception* 1.19% 4.73% 4.09% 4.26% 4.07% -2.09% - 24.79% - 14.17% -5.14% -2.86% -0.90% - 20.97% -10.51% -1.04% 1.13% 0.51% - 18.76% - 11.56% -0.96% 1.73% *Annualized; Inception Date: 11/21/03 PERFORMANCE DISCLAIMER: The American Core Realty Fund returns above include leveraged returns before (gross) the deduction of investment management fees and reflect the reinvestment of some income. The above returns are calculated at the Fund level and may not be reflective of the actual performance returns experienced by any one investor. The sum of annualized component returns may not equal the total return due to the chain - linking of quarterly returns. The above performance is considered supplemental information and complements the Core Equity Real Estate Investments Composite performance in the attached Annual Disclosure Presentation. The NCREIF Property Index ( "NPI ") and the NFI -ODCE are unmanaged indices published by the National Council of Real Estate Investment Fiduciaries. The NPI returns are calculated unleveraged and are shown before (gross) the deduction of any investment managementfees. The NFI -ODCE returns are shown before (gross) and after (net) the deduction of any investment managementfees and include leverage. Although the Fund may invest in similar property types as the NPI and the NFI -ODCE, the weighting of each property type will differ from the NPI and NFI -ODCE in any measurement period. Past performance is not a guarantee of future results and it is important to understand that investments of the _ type made by the Fund pose the potential for loss of capital over any time period. AMERICAN INERTITLITIE3NAL REAL ESTATE INVESTMEMT M,4NAE;EMEMT REALTY ADVP8UAa. 26 American Core Realty Fund - Committed Capital ➢ Up to $25 million ➢ $25 million up to $75 million ➢ $75 million and above * Based on Net Asset Value as outlined in the Fund's Operating Agreement 1.10% 0.95% 0.85% INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT AMERICAN ACA TY ADvPBCR5 Fee Schedule Asset Management Fee* 27 Real Estate Investment - Challenges and Opportunities Challenges ➢ Pricing is strong reflecting interest in the asset class but also due to limited transaction availability ➢ Fundamentals remain weak and will be driven by the strength in the economic recovery Opportunities ➢ In the coming year, there will be opportunities to acquire assets with the potential for good returns over the next three years ➢ We recommend that clients who are underweighted to the asset class move back to their long -term strategic guidelines ➢ Dollar -cost averaging over several quarters to achieve this may be the most prudent strategy ➢ American is well - positioned to take advantage of new opportunities with low leverage, good occupancy and cash flow liquidity AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 28 ACA TY A—BORs American Strategic Value Realty Fund A Risk Controlled Value -Added Real Estate Strategy ELMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 29 American Strategic Value Realty Fund - Strategy "A risk controlled investment strategy targeting enhanced yield and value -added real estate investment opportunities nationwide" ❖ Strategy is consistent with current market outlook: CAUTIOUS ❖ Create value at the property level: ➢ Identify value potential through a research -based investment process ➢ Create value by completing transactions at favorable (mispriced, undermanaged, distressed, undervalued) terms ➢ Realize value by implementing pro- active asset management strategies that change physical and financial characteristics of the investments and "re- deliver" stabilized institutional assets to the marketplace NOTE. All investments such as the American Strategic Value Realty Fund may be subject to loss of capital and there is no guarantee that the above goals will be achieved over all time periods. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 30 ACA TY ADVP$URs American Strategic Value Realty Fund - Strategy ❖ Open -end commingled real estate portfolio ➢ Provides flexibility over time — no cut off dates for investment ❖ Alignment of interests: American co- invests in the Fund with its clients ❖ $112 million in commitments to date ready to work ➢ No legacy investments or embedded valuation issues ❖ Focus on return opportunity with diversification a secondary criteria ➢ Target return — 11 -13% annual return (net) to Fund investors over investment cycle ❖ Conservative use of leverage ➢ Estimate to average 50% — all leverage at the property level ➢ No Fund level leverage A AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 31 ACA TY ADVP$URB. Multi- Faceted Investment Strategy Sustainable Through All Phases of the Real Estate Cycle ➢ Under - Managed Assets ➢ Capital Constrained Assets ➢ Renovation / Retenanting / Repositioning of existing assets ➢ Under capitalized assets ➢ Lease-Up ➢ Re- Capitalization ➢ Under - Marketed Opportunities ➢ Development ❖ Focus on office, retail, industrial and multi - family properties, with select investment in alternative property sectors ❖ Middle market properties ➢ Fund investment of $5 - $50 million in each transaction ➢ Middle market has greatest level of liquidity in all market cycles AMERICAN ACA TY AD-BORs INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 32 American Strategic Value Realty Fund Terrace Tower - Denver, CO t r m - K ■ 4 E AMERICAN ACA TY ADVP$URS. Investment ❖ 241,211 sf Class A office building with an adjacent parking structure located on 7.56 acres and a 5.45 acre undeveloped parcel in Greenwood Village, south of Denver, CO ❖ Located in the prestigious Denver Tech Center complex Investment Strategy ❖ Acquisition of existing debt at significant discount ❖ Provide needed capital for leasing and tenant improvement costs ❖ Some lease -up opportunity (property was 83% leased at time of investment) ❖ Moderate renovation opportunities to add value ❖ Intermediate term hold through expected local market recovery INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 33 American Strategic Value Realty Fund Client- Oriented Fund Structure ❖ Dividend Reinvestment ❖ Levera_pe ❖ Redemption ❖ Co- investment ❖ Reportin p ❖ Valuation Income may be automatically reinvested in the Fund or paid out quarterly Prudent use of leverage at the property level providing flexibility for a wide range of opportunities to enhance returns Quarterly liquidity subject to available cash flow after a 24 -month investment period American will co- invest in the Fund — the firm's interests are clearly aligned with its clients American is GIPS® compliant and returns are externally examined. American adheres to the highest reporting standards Appraisal manager; annual external appraisals with quarterly updates American Realty Advisors' compliance with the GIPS' standards has been verified on a firm -wide basis for the period January 1, 2001 through December 31, 2009 by Ashland Partners & Company, LLP. Please see notes at the end of this presentation. A complete list and description of American's composites and verification report are available upon request. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT M,4NAE;EMENT 34 Value -Added Performance Record Gross of Fees Income Appreciation Total Return NCREIF Townsend Value -Added Fund Index Net of Fees 4Q09 One -Year Three -Year* Five - Year` Since Inception* 1.15% 5.48% 6.21% 6.57% 9.63% -6.23% - 34.48% - 11.02% -5.28% -2.97% -6.08% - 30.47% -6.34% 1.01% 6.41% - 13.53% - 40.66% - 17.50% -3.07% 2.83% 4Q09 One -Year Three -Year* Five -Year` Since Inception* Income 0.83% 4.31% 4.84% 4.84% 7.58% Appreciation -6.23% - 34.48% - 11.02% -5.28% -2.97% Total Return F - - 6.41% - 31.32% -6.67% -0.64% 4.43% "Annualized; Inception Date: 01/01/2001 PERFORMANCE DISCLAIMER: American Realty Advisors' value -added composite performance above includes leveraged returns for all value -added assets managed by American, is shown before (gross) and after (net) the deduction of investment management fees and expenses and reflects the reinvestment of some income. Acquisition fees and disposition fees paid to American are treated as transaction fees in both the gross and net calculations and not as investment management fees. The returns are calculated at the individual property level and may not be reflective of performance returns experienced by any one investor. Actual performance achieved for the Fund may deviate from this composite as a result of general market conditions, and the fact that the Fund's investment guidelines, investment objectives and tolerance for risk may be different from the accounts included in this composite. American's value -added real estate investments composite is comprised of real estate assets or fixed income assets secured by real estate or real estate operating companies. The composite is comprised primarily of real estate assets (or fixed income assets secured by real estate related interests as noted above) that have not reached full stabilization or involve efforts to increase value such as releasing, repositioning, redevelopment or development, and tend to have more inherent risk than Core or Enhanced Equity investments. The composite includes investments in direct real estate that are in various stages of development, mezzanine debt,and other similar investments, located throughout the United States in or near major markets with above - average growth potential. The composite excludes speculative land investments but includes investments in entitled land that is pending development. In most cases, the use of leverage will be a primary component of the value -added investment return strategy. Leverage will be used primarily for real estate improvements, construction activities and for additional acquisitions. While fixed rate leverage is preferred, floating rate debt may also be used. Interest rate caps and swaps may be used when obtaining variable rate debt with the intention of fixing the variable rate when the overall pricing is favorable. The American Strategic Value Realty Fund's leverage strategy will take into account a wide variety of factors and will be designed to control for risks associated with the development, operating and leasing strategies of the underlying investments. The NCREIF Townsend Value Added Index is jointly produced by the National Council of Real Estate Investment Fiduciaries (NCREIF) and The Townsend Group (TTG). Although the Value Fund and the Index may invest in similar types of properties, the characteristics of the Value Fund may differ substantially from the Index in any or all reporting periods. Returns for periods greater than one year are _ annualized. The sum of annualized component returns may not equal the total returns due to the chain - linking of quarterly returns. Past performance is not a guarantee of future results and it is important to understand that the investments of the type included above pose the potential for loss of capital over any time period. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT REALTY ADVP8UAa. 35 American Strategic Value Realty Fund - Fee Schedule Net Asset Value ➢ First $10 million ➢ Next $15 million ➢ Next $25 million ➢ Thereafter Performance Fee Asset Management Fee 1.25% 1.20% 1.10% 1.00% ➢ American can earn 20% of the Fund return above achievement of a 10% IRR to the Fund over a three -year period with a clawback on the incentive fee paid in shares if at the end of each three -year period the return does not meet the hurdle. Note: 'Based on Net Asset Value as outlined in the Fund's Limited Partnership Agreement. Acquisition Fee: American will be paid a fee of 0.60% of each new investment INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT AMERICAN ACA TY ADVP$URS. 36 American Realty Advisors - Competitive Advantages ❖ Real Estate Focus: Firm philosophy and process focused exclusively on private real estate transactions — 22 -year firm track record ❖ Working with Decision Makers: Firm is 100% owned by senior management ❖ Disciplined Process: Research -based investment management focusing on risk control and value - realization ❖ Client Orientation: Core and value -added strategies available in separate accounts and commingled funds to meet specific needs ❖ Performance: Strong long -term performance. Experience in investing in all phases of the real estate cycle ❖ Risk Control: Long -term record of understanding and underwriting risk DISCIPLINE COMMITMENT EXCELLENCE INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT AMERICAN ACA TY AD-BORs 37 Today's Presenters Scott W. Darling, President /Executive Managing Director, Portfolio Management Scott Darling is a Principal of the firm and is the Executive Managing Director for the firm's Portfolio Management Team. Mr. Darling is responsible for the portfolio management of American Realty Advisors' pension fund clients, and the implementation of their investment strategies. Mr. Darling is also a member of the firm's Investment and Management Committees. He has over 31 years of experience in the acquisition, management, and disposition of income - producing investment real estate. Prior to joining American, Mr. Darling was employed by the Resolution Trust Corporation. At RTC, he was Director of Asset Management and Sales for the California Office, where he was the senior asset officer, responsible for the management and sale of over $60 billion in assets from failed savings and loans. Mr. Darling graduated from Florida State University with a B.S. in Real Estate and Finance, and received his J.D. from the University of Southern California. Richelle Hayes, Senior Manager, Marketing and Client Service Richelle Hayes is responsible for developing and expanding client and consultant relationships for American's commingled fund clients, and is based out of American's Orlando office. She has over 19 years of experience in the financial services industry. Most recently, she was Vice President of Client Services for ICC Capital Management in Orlando, where she worked closely with clients and consultants based in the Southeast. Prior to joining ICC, she was Vice President, Corporate Relations with the American Hospital J;r Association in Florida, and was responsible for developing client relationships with senior executives of member hospitals, following I various positions in financial relationship management within the national managed health care industry. Ms. Hayes graduated from University of Central Florida with a degree in Business Administration and a concentration in Finance, and earned an M.A. in Health Services Management and an M.B.A. from Webster University. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 38 Biographies Stanley L. lezman, Chairman and Chief Executive Officer Stanley lezman is responsible for the strategic planning and direction of American Realty Advisors, an SEC registered investment advisor and ERISA fiduciary for tax - exempt investors. He has directed the acquisition, structuring and management 1 of approximately $10 billion of real estate located throughout the United States. Mr. lezman is a member of the Executive Committee of the USC Lusk Center for Real Estate and an Adjunct Professor at the University of Southern California's School of Planning, Policy, and Development where he teaches real estate asset management in the Master of Real Estate Development Program. A noted speaker in the real estate arena, he has addressed a number of industry groups, and has authored numerous articles for real estate, pension, and legal industry publications. Mr. lezman received his B.A. from the University of California, Santa Barbara and his J.D. from the University of Southern California School of Law. He is a member of The Urban Land Institute and serves on their Industrial & Office Park Development Council; International Council of Shopping Centers; National Association of Real Estate Investment Managers; Pension Real Estate Association; International Foundation of Employee Benefit Plans; Los Angeles County Bar Association; American Bar Association; and was the Chair of the New York University Real Estate Institute's Annual "Conference on Pension Fund Investment in Real Estate" for ten years. Kirk V. Helgeson, EVP /Executive Managing Director, Investments Kirk Helgeson is a Principal of the firm and is the Executive Managing Director for the firm's Investment Group, responsible for overseeing all acquisition /disposition activity for the firm's investment portfolios. In addition, Mr. Helgeson manages the development, implementation and oversight for American's value -added strategy, through its open -end commingled fund, the American Strategic Value Realty Fund, LP as well as through separate accounts and closed -end commingled funds. Mr. Helgeson is the Chairman of the firm's Investment Committee and a member of the Management Committee. Mr. Helgeson has over 20 years of diversified real estate experience that encompasses the sourcing, structuring and underwriting of new equity and debt investments, as well as the management of existing assets and portfolios. Prior to joining American, Mr. Helgeson worked for AFP Properties USA, Inc. as the Investment Manager. At AFP, Mr. Helgeson was responsible for all aspects of the acquisition and disposition process and asset management for a multi -class real estate portfolio in excess of $450 million. Before AFP, Mr. Helgeson was a Senior Appraiser for Eichel Inc., where he was responsible for completing complex appraisal and consulting assignments encompassing a wide range of property types. Mr. Helgeson graduated from the University of Southern California with a B.S. in Business Administration (Real Estate Finance Emphasis) and received his M.B.A. from the University of Southern California. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 39 Biographies Raymond E. Kivett, Chief Investment Officer, CPA Ray Kivett is the Chief Investment Officer for the firm and is responsible for overseeing all acquisition /disposition activity for the firm's investment portfolios. In addition, Mr. Kivett oversees the solicitation, analysis, underwriting and negotiation of debt and equity real estate acquisitions and investments on a nationwide level. Mr. Kivett is also a member of the firm's Investment Committee. Mr. Kivett has over 25 years of experience in the commercial real estate space. Prior to joining American, Mr. Kivett served as Executive Vice President - Chief Investment Officer of Ridge Property Trust, a subsidiary of Prudential Financial, Inc., where he oversaw the firm's acquisition activity, and under his leadership, assets experienced impressive growth, tripling in size. Prior to Ridge Property Trust, Mr. Kivett was the Vice President of Acquisitions at Prudential Real Estate Investors. Mr. Kivett graduated from the University of Iowa with a Bachelor's Degree in Accounting and is a Certified Public Accountant. Mr. Kivett is a member of the Association of Industrial Real Estate Brokers, the National Association of Industrial and Office Properties, the American Institute of Certified Public Accountants, and the Real Estate Financial Executives Association. Gregory A. Blomstrand, Managing Director, Portfolio Management Greg Blomstrand is a Principal of the firm and a Managing Director for the firm's Portfolio Management Team. Mr. Blomstrand is responsible for overseeing the portfolio and asset management and acquisition /disposition activity for American's core open -ended commingled portfolio, the American Core Realty Fund, LLC as well as the development of the Fund's investment strategy. In addition, Mr. Blomstrand is responsible for managing one core and one value -added separate account relationship, as well as the development, implementation and oversight of those accounts' investment strategies. Mr. Blomstrand is a member of the firm's Investment Committee. Prior to joining American, Mr. Blomstrand worked for Prentiss Properties Trust, where he was responsible for overseeing the operations for a portfolio of office, retail and industrial properties. In addition, Mr. Blomstrand was involved in the acquisition and due diligence of real estate assets purchased on behalf of the real estate investment trust. Prior to joining Prentiss, Mr. Blomstrand was employed with The Merle D. Hall Company where he was responsible for the acquisition, leasing and management of office, retail and residential properties. Mr. Blomstrand graduated from the University of California, Los Angeles with a B.A. in History /Business. He is a member of the Pension Real Estate Association; National Association of Real Estate Investment Managers; Real Estate Investment Advisory Council; and NAIOP, where he serves as the 2010 SoCal President as well as on the National Board of Directors. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 40 ACA TY ADVP$URS. Biographies Jay Butterfield, CFA, Managing Director, Fund /Separate Account Operations Jay Butterfield is a member of the Portfolio Management Team overseeing American's open -ended commingled portfolios, is responsible for directing the fund level operations of American's commingled and separate accounts and heads up the Marketing and f Client Service team for American's real estate products and services to the institutional investment community. Mr. Butterfield is also a member of the firm's Management Committee. He has over 31 years of experience in working with pension plan sponsors in helping them to meet their investment needs. Prior to joining American, Mr. Butterfield was Vice - President with Prudential Investments, where he represented the firm's multi -asset investment capabilities to Taft - Hartley plans, public employee retirement systems and corporate plan sponsors in the Western United States and Canada. Mr. Butterfield graduated from the University of California, Berkeley with a B.A. in Economics and received his M.A. in Economics from the University of California, Los Angeles. He is a Chartered Financial Analyst and a member of the Los Angeles Society of Financial Analysts. Walter Page, Managing Director, Research and Strategy Walter Page is a Managing Director of the firm and is responsible for overseeing all research efforts for the firm. Mr. Page is also a member of the firm's Investment Committee. He has over 25 years of experience in the real estate industry with providing institutional market and property- specific research, as well as in -depth analysis of acquisition and disposition transactions. Prior to joining American, Mr. Page was employed by Equity Office Properties Trust, where he established and managed the firm's research /portfolio analysis team and served as the chief economic and real estate market forecaster. At Equity Office, he created a custom economic model to forecast the firm's occupancy at the building, submarket, metro and portfolio level, which was a key factor in establishing earnings guidance, as well as building lease -up assumptions. He was also a founding leader in establishing the operating expense database for the National Council of Real Estate Investment Fiduciaries ( NCREIF) and currently serves as the Vice Chairman of the NCREIF Data Products Council. Mr. Page graduated from Ripon College with a B.A. in Economics and received his M.B.A. from the University of Wisconsin - Milwaukee. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 41 ACA TY ADVP$URS. Biographies Paul Vacheron, CPA, Managing Director, Asset Management Paul Vacheron is the Managing Director for the firm's Asset Management Team. Mr. Vacheron is responsible for directing all aspects of the organization's nationwide asset management operations. Within this capacity, Mr. Vacheron oversees the management, leasing, financing and disposition of assets within the real estate investment portfolio. Mr. Vacheron is also a member of the firm's Investment and Management Committees. Prior to joining American, Mr. Vacheron held the position of Senior Vice President - Asset and Portfolio Management for PMRealty Advisors, where he served as Co -Head of Asset Management for the company's national real estate investment portfolio, as well as Portfolio Manager for several pension fund separate accounts. Previously, he held the position of Senior Vice President - Asset and Portfolio Management for KBS Realty Advisors, where he served as Portfolio Manager for both commingled and separate accounts, as well as handling asset management responsibilities within that company's real estate investment portfolio. Mr. Vacheron graduated from the University of California, Berkeley with a B.S. in Accounting and Finance and received his M.B.A. from the University of California, Los Angeles. Mr. Vacheron is a Certified Public Accountant in the state of California. law firm of Bronson, Bronson & McKinnon, where she was responsible for legal advice in the areas of real estate syndications, private placements and general Investment Advisers Act issues. Ms. Adrian graduated from the University of California, Irvine with a B.A. in Art History and received her J.D. from the University of California, Hastings College of Law. She is a member of the Executive Committee of the Kristin Adrian, General Counsel and Chief Compliance Officer Kristin Adrian is the General Counsel and Chief Compliance Officer for American Realty Advisors and is responsible for overseeing R compliance with the Investment Advisers Act of 1940, as amended, and for overseeing legal issues related to the firm's operations. She is also responsible for the firm's SEC filings, its business recovery plan, and its records retention program. Prior to joining American, Ms. Adrian was Senior Vice President, General Counsel for Nestle USA, where she was responsible for legal matters IJ associated with its US operations, including those related to acquisitions and divestitures. Before Nestle, she was a Partner with the a Corporate Law Departments Section of the Los Angeles County Bar Association. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 42 Biographies Daniel S. Robinson, Managing Director, Finance /Investment Consulting Daniel Robinson is the Managing Director for the firm's Finance /Investment Consulting division. Mr. Robinson leads American's consulting division, which provides real estate consulting services to pension plans throughout the United States. These services include Qualified Professional Asset Manager ( "QPAM ") services provided to ERISA governed pension plans. Mr. Robinson oversees the origination, underwriting, and management of American's senior mortgage investment portfolios and manages all borrowing activity for the firm. Mr. Robinson is also a member of the firm's Investment Committee. Mr. Robinson has over 26 years of experience in the real estate industry. Prior to joining American in 1993, Mr. Robinson held senior positions at American Real Estate Group and Metropolitan Life. Mr. Robinson graduated from Utah State University with a B.S. in Economics, and received his M.B.A. from Brigham Young University. He is also a licensed real estate broker in the state of California. Political Education Harvard University AMERICAN Robert H. Samuel, Director, Marketing and Client Service Robert Samuel is responsible for marketing American Realty Advisors' full line of real estate investment management services, including commingled fund and separate account investment programs to the Taft - Hartley, multi - employer, and public pension fund communities. Prior to joining American, Mr. Samuel was a consultant to the following firms and institutions: the Amalgamated Bank of New York (owned by UNITE), the AFL -CIO Executive Committee 2000, the Union Labor Life Insurance Company, and the Australian Conference of Major Superannuation Funds. Prior to this, he was the Taft - Hartley marketing representative for AmCal Advisors, a real estate investment management firm that serviced Taft - Hartley pension plans. Mr. Samuel has also worked for a variety of labor retiree organizations and began his career as a Congressional Legislative Assistant in 1974 after a brief period as a field coordinator for the AFL -CIO Committee on Mr. Samuel attended Washington University where he majored in Philosophy and American History, the University of Rhode Island and He holds a Series 7 Securities license. INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 43 Biographies Jennifer S. Lundmark, Director, Marketing and Client Service Jennifer Lundmark is a Director for the firm's Marketing and Client Service Team. Ms. Lundmark is responsible for developing and maintaining new and existing institutional business relationships for the firm's full range of real estate investment products. She is based in American's Central Region Office in Chicago, IL. Prior to joining American, Ms. Lundmark was Vice President with Goldman Sachs Asset Management, where she developed new business opportunities in their multi - product platform with Taft - Hartley plan sponsors nationwide. She had previously marketed GSAM's global liquidity investment products to corporations, and prior to that was an Account Executive for Heller Financial, a middle market corporate lender in Chicago. Ms. Lundmark graduated from Miami University (OH) with a B.S. in Finance. She holds Series 7, 63 and 3 licenses and is a member of Women Investment Professionals. David K. Hubbs, Senior Portfolio Manager David Hubbs is responsible for the management of four commercial real estate portfolios, and as the Senior Portfolio Manager for American, has a leadership role in the acquisition and management of properties acquired on behalf of American's separate account clients. Mr. Hubbs has over 29 years of experience in the real estate industry. Prior to joining American, Mr. Hubbs was an Owner /Principal of Cadence Realty Advisors, where he was responsible for commercial real estate acquisitions and dispositions primarily in the Southern California region. Previously, he had held positions in portfolio and asset management with The Garrett Group, CRG West (a subsidiary of The Carlyle Group), and PMRealty Advisors. Mr. Hubbs graduated from the University of Southern California with a B.S. in Business /Accounting. He holds a California Real Estate Brokers license and was awarded the Certified Property Manager (CPM) designation by IREM. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 44 Biographies Neal Stump, Director, Asset Management Neal Stump oversees asset management services for the firm's portfolio of real estate properties in Florida, Georgia, and Tennessee. Mr. Stump is also involved in the strategic planning, leasing, and financial analyses for each of the assets in the portfolios. Prior to joining American, Mr. Stump was the Director of Asset Management for Gregory Greenfield & Associates, where he was responsible for overseeing a portfolio of Midwest regional mall assets owned in limited partnerships. Mr. Stump was previously at Morgan Stanley and its predecessor companies for 13 years, where he was most recently Executive Director of Retail Asset Management for Prime Property Fund, responsible for managing the acquisition, disposition and redevelopment of the fund's institutionally owned trophy assets. Mr. Stump graduated from Wake Forest University with a B.A. in Liberal Arts and received his M.B.A. from the Babcock Graduate School of Management at Wake Forest University and his M.S.R.E. from Georgia State University. He is an active member of the ICSC and has been awarded the CCIM, CSM and CLS designations from the Commercial Investment Real Estate Institute and the International Council of Shopping Centers. David B. Cook, CPM, Senior Asset Manager David Cook provides asset management services to a portfolio of commercial and residential properties located nationwide. Prior to joining American, Mr. Cook held the title of Managing Officer for CB Richard Ellis, L.L.C. where he was responsible for integrating a brokerage and management operations in CBRE's Tokyo office. Prior to his work in Japan, Mr. Cook managed a brokerage office and was responsible for property management operations in Los Angeles. Before CBRE, he was a Building Manager for Equitable Real Estate, where he was responsible for leasing and management operations of a high rise office building in Los Angeles. Mr. Cook graduated from Utah State University with a B.A. in Accounting and minors in Business Administration and Japanese. He is a member of the Institute of Real Estate Management and is a Certified Property Manager. Mr. Cook is a member of the Los Angeles Council of Boy Scouts of America. AMERICAN INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMENT 45 Biographies Carrie DeWees, Senior Asset Manager Carrie DeWees is a Senior Asset Manager for the firm's Asset Management Team. Ms. DeWees is responsible for managing and providing asset management services to commercial real estate assets in the Midwest region of the United States. Prior to joining American, Ms. DeWees served as Director of Acquisitions and Dispositions with Henderson Global Investors, where she was responsible for the overall acquisition and disposition process for over 30 joint venture and direct investments. While at Henderson, Ms. DeWees was also an asset manager responsible for 30 retail- focused and 15 mixed asset portfolios. Prior to joining Henderson, Ms. DeWees served as a Regional Asset Manager at Meridian Industrial Trust and was a Portfolio Manger and Analyst at Heitman Capital Management/JMB Realty Corporation. Ms. DeWees received her B.S. in Accountancy from Northern Illinois University and her M.B.A. from DePaul University in Chicago. Jennifer K. Glover, CRE, Senior Asset Manager Jennifer Glover is a Senior Asset Manager for the firm's Asset Management Team. Ms. Glover is responsible for managing and providing F asset management services to commercial real estate assets in the Eastern region of the United States. Prior to joining American, Ms. Glover served as a Principal of the Emerging Manager Program, Housing /Land Program & Strategic Initiatives at MacFarlane Partners, where she oversaw an $8 billion housing /land business portfolio, created strategic business plans, operations strategies, budgets and negotiated joint venture partnership transactions. While at MacFarlane, Ms. Glover also served as Vice President of Risk Management for the firm's Urban Program which at the time, exceeded $11 billion in assets under management. Previously, she was a Senior Portfolio Manager with American Realty Advisors. Ms. Glover received her B.B.A. from Ambassador College, is a member of NCREIF and PREA, a Counselor of Real Estate, and past Chairman of the Board of Directors of Rebuilding Together -San Francisco. A,MERICAFV INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 46 ACA TY ADVP$ORS. Biographies Frank P. Coari, Portfolio Manager Frank Coari is responsible for the portfolio, asset management and acquisition activities of Eastern region assets for American's core open -ended commingled portfolio, the American Core Realty Fund, as well as two separate accounts. Prior to joining American, Mr. Coari established and operated Tenant Retention Services, providing specialized real estate consulting and valuation services to commercial real estate owners. Prior to that, he was a Director and Manager for SNK Realty Corporation, where he was responsible for asset management, post - development disposition of multi - family assets, the formation of development ventures and the evaluation of multi - family development sites for acquisition. Prior to SNK, Mr. Coari was a Vice President of JMB Properties, Inc., where he was responsible for the management, leasing and marketing of office buildings in the Midwest and Western regions. Mr. Coari graduated from Stanford University with a B.A. in Economics and earned a California Appraiser's license. AMERICAN ACA TY ADVP$ORS. Albert A. Pura, Portfolio Manager Albert Pura is responsible for the portfolio, asset management and acquisition activities of Western region assets for American's core open -ended commingled portfolio, the American Core Realty Fund, as well as two separate accounts. Prior to joining American, Mr. Pura was a Vice President of RREEF, where he co- managed a private REIT and was in charge of fund operations. Additional responsibilities included management of industrial assets in the San Francisco Bay Area and Denver regions. He began his career in real estate as a Market Research Analyst at Julien J. Studley. Mr. Pura graduated from the University of California, San Diego with a B.A. in Economics. INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 47 Biographies Christina Hill, Asset Manager Christina Hill provides asset management services for a portfolio of real estate properties located in the Northeast, Texas and Southern California. Ms. Hill is also involved in the strategic planning, leasing, and financial analyses for each of the assets in the portfolios. Prior to joining American, Ms. Hill was a commercial real estate broker at Daum Commercial Real Estate Services. Before Daum, she was a real estate analyst for Grubb & Ellis, where she was responsible for financial and market analysis for the Milwaukee market. Ms. Hill graduated from the University of Colorado with a B.S. in Sociology and received a Masters in Real Estate Development from the University of Southern California. A,MERICAFV INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 48 ACA TY ADVP$ORS. Disclosures This presentation is for your information only and is neither an offer to sell nor a solicitation of an offer to buy any securities or financial instruments. The information in this presentation has been obtained or derived from sources believed by American Realty Advisors ( "American ") to be reliable but American does not represent that this information is accurate or complete. Any opinions or estimates contained in this presentation represent the judgment of American at the time this presentation was prepared and are subject to change without notice. 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. Performance results are often based on mathematical models that use inputs to calculate results. As with all models, results may vary significantly depending upon the value of the inputs given. Models used in any analysis may be proprietary, making the results difficult for any third party to reproduce. 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 American. This presentation is intended for Fund 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 American and may lose value. 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 ( "American ") 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 American 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. In addition to factors previously disclosed in the Fund's disclosure documents and those identified elsewhere in this presentation, the following factors, among others, could cause actual results to differ materially from forward- looking statements or historical performance: (1) the introduction, withdrawal, success and timing of business initiatives and strategies by American on behalf of the Fund and /or by others in its industry; (2) changes in political, economic or industry conditions, the interest rate environment or financial and capital markets; (3) the relative and absolute investment performance and operations of the Fund's investments; (4) the impact of increased competition in the financial, capital and real estate markets; (5) the impact of capital improvement projects in the real estate markets; (6) the impact of future acquisitions and divestitures by the Fund, its competitors and other participants in the financial, capital and real estate markets; (7) the favorable or unfavorable resolution of legal proceedings affecting the Fund's investments; (8) the impact, extent and timing of technological changes; (9) the impact of legislative and regulatory actions and reforms and increasing regulatory, supervisory or enforcement actions of government agencies relating to the Fund's investments; (10) terrorist activities, which may adversely affect the general economy, real estate, financial and capital markets and specific industries; (11) the ability of American to attract and retain highly talented professionals; and (12) the impact of changes to the tax code and tax legislation in general. A,MERICAFV INSTITUTIONAL REAL ESTATE INVESTMENT MANACEMEMT 49 ACA TY ADVP$URS. Core Equity Real Estate Investments Composite Annual Disclosure Presentation Year End Total Firm Assets* (millions) Composite Assets Annual Performance Results U.S. Dollars (millions) Number of Accounts ** Composite NPI Dispersion High Low Income Appreciation Total 2009 3,337 2,445 95 6.06% (33.30 %) (28.83 %) (16.85%) 3.71% (103.30 %) 2008 4,219 3,264 94 4.94% (10.04 %) (5.48%) (6.46%) 16.98% (60.84%) 2007 4,363 3,337 88 5.50% 14.65% 20.74% 15.85% 69.41% (18.27 %) 2006 3,392 2,622 84 5.71% 9.94% 16.07% 16.60% 51.17% (26.60%) 2005 2,523 2,038 74 6.16% 14.61% 21.43% 20.06% 73.93% (35.67 %) 2004 1,423 1,290 51 7.37% 4.23% 11.83% 14.49% 53.78% (39.46%) 2003 1,194 896 46 8.71% 1.50% 10.31% 9.00% 249.64% (49.65%) 2002 983 690 37 8.69% (1.12%) 7.50% 6.75% 23.77% (15.07 %) 2001 1,058 589 35 9.49% (2.23%) 7.10% 7.28% 14.58% (9.04%) *Assets under management represent the gross value of all assets and accounts managed by American Realty Advisors (excluding partners' share of equity and partners' share of debt on partnership investments). Prior to March 31, 2008, American reported total firm assets as the amount of assets under management plus undrawn capital commitments and noted the amount of such undrawn commitments in a footnote. Effective March 31, 2008, American has restated year end total firm assets from 2001 -2007 to omit such undrawn commitments. ** Each account in the composite represents a single property investment. Core Equity Real Estate Investments Composite is comprised primarily of fully operational, stabilized, income - producing properties of four property types: institutional office, industrial, retail and multi - family, diversified nationwide in markets with above - average growth potential. For comparison purposes this composite is measured against the NCREIF Property Index (NPI). The NPI is an unmanaged index published by the National Council of Real Estate Investment Fiduciaries. NPI returns are calculated unleveraged and are shown before (gross) the deduction of any investment management fees. Although the Core Equity Real Estate Investments Composite may invest in similar property types as the NPI, the weighting of each property type will differ from the NPI in any measurement period. Unlike the NPI, the portfolios in the composite are actively managed. Furthermore, the portfolios are invested in substantially fewer assets than the number of investments comprising the NPI. The NPI does not reflect payment of investment management or other fees or expenses. Because of these differences, the NPI should not be relied upon as an accurate measure of comparison. It is important to understand that investments of the type included in the composite pose the potential for loss of capital over any time period. American Realty Advisors has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPSF). American Realty Advisors, founded in 1988, is a registered investment advisor with the U.S. Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940 and has qualified as a Qualified Professional Asset Manager (QPAM), investment manager and fiduciary under ERISA. The firm maintains a complete list and description of composites, which is available upon request. Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. All accounts managed by American Realty Advisors are considered "discretionary" for purposes of determining composite membership, except those that contain investment guidelines significantly restricting the management team's ability to manage the assets according to the applicable product mandate. Past performance is not a guarantee of future results and it is important to understand that investments of the type included above pose the potential for loss of capital over any time period. AMERICAN INISTITLITIONAL REAL ESTATE INVESTMENT M, NAOEMEMT 50 ACA TY ADVP$ORS. Core Equity Real Estate Investments Composite Annual Disclosure Presentation The U.S. Dollar is the currency used to express performance. Income and capital appreciation component returns are presented, in addition to the total composite. The income return measures the portion of the composite's total return that is generated by the income from the operations during the period. The appreciation return measures the portion of the composite's total return that is generated from the change in the market value of the assets during the period. Performance returns are computed using the NCREIF mandated property level return formulas, which calculate time - weighted returns for real estate investments by geometrically linking component returns. The sum of income return and the capital return may not equal the total return for annualized periods due to the chain - linking of quarterly returns. Real estate values are based upon independent appraisals performed for commingled funds annually on or about the asset's acquisition anniversary date and for separate accounts every three years, or otherwise as required by each account's Investment Management Agreement. Internal valuations are conducted quarterly and are used on an interim basis. Market values represent the value at which a willing buyer and seller would agree upon in an arm's length transaction, without any pressure to consummate the transaction on the imposed deadline. The market value does not include costs to consummate the transaction. Various approaches have been used to determine market value, including the Cost, Sales Comparison and Income approaches. Additional information regarding valuation methods is available upon request. All valuations of real estate involve subjective judgments, as the actual market price of real estate can be determined only by negotiations between independent parties in sales transactions. As of December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, 87 %, 82 %, 53% and 51 %, respectively, on a market value basis, of the real estate assets in the composite had been appraised by independent appraisal firms during the year ended on such dates. All composite returns are presented gross of management fees and include the reinvestment of some income. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The collection of fees produces a compounding effect on the total rate of return net of management fees. As an example, the effect of investment management fees on the total value of a client's portfolio assuming (a) quarterly fee assessment, (b) $1,000,000 investment, (c) portfolio return of 8% a year, and (d) 1.00% annual investment advisory fee would be $10,416 in the first year, and cumulative effects of $59,816 over five years and $143,430 over ten years. The highest and lowest annual gross of management fee property returns are shown as a measure of composite dispersion. Additional information regarding the policies for calculating and reporting returns is available upon request. As discussed below, asset management fees vary for each fund and portfolio managed by American Realty Advisors. The fees are based on a variable which generally consists of original acquisition cost, net asset value, net operating income or gross value. Some fee arrangements provide for the lower or higher of two variables. The low end of the range is equal to 0.45% of acquisition cost with the high end of the range based on 0.80% of gross value. The fee structure for the largest fund that American Realty Advisors manages is dependent on the level of commitment made by the investor and ranges from 0.85% to 1.10% of net asset value. Incentive fees may also be charged. Incentive fee structures differ for each client; however, such fees are generally based upon achieving stipulated internal rate of return hurdles. In most cases, the use of leverage is not a primary component of the investment return strategy. Leverage is used primarily for making additional acquisitions. While fixed rate leverage is preferred, floating rate debt with interest rate caps is considered when pricing is favorable. The firm's leverage strategy takes into account a wide variety of factors and is designed to control for risks associated with the operating and leasing strategies of the underlying properties. Leverage in separate account portfolios would only be used if approved by the client's investment guidelines and only when there is a significant positive spread between the capitalization rate for the acquisition of the asset and the cost of the loan. Fixed rate leverage would be used, but only if it enhances the overall yield of the investment and provides for enhanced disposition opportunities associated with the use of leverage. The Core Equity Real Estate Investments Composite was created on January 1, 1992. American Realty Advisors' compliance with the GIPS standards has been verified for the period January 1, 2001 through December 31, 2009 by Ashland Partners & Company LLP. In addition, a performance examination was conducted on the Core Equity Real Estate Investments Composite beginning January 1, 2001. A copy of the verification report is available upon request. AMERICAN INERTITL , ITIONAL REAL ESTATE INVESTMENT M NAOEMEMT 51 REALTY AnV18009- Value -Added Real Estate Investments Composite Annual Disclosure Presentation *Assets under management represent the gross value of all assets and accounts managed by American Realty Advisors (excluding partners' share of equity and partners' share of debt on partnership investments). Prior to March 31, 2008, American reported total firm assets as the amount of assets under management plus undrawn capital commitments and noted the amount of such undrawn commitments in a footnote. Effective March 31, 2008, American has restated year end total firm assets from 2001 -2007 to omit such undrawn commitments. .. Each account in the composite represents a single property investment. Value -Added Real Estate Investments Composite is comprised of real estate assets or fixed income assets secured by real estate or real estate operating companies. The composite is comprised primarily of real estate assets (or fixed income assets secured by real estate related interests as noted above) that have not reached full stabilization or involve efforts to increase value such as releasing, repositioning, redevelopment or development, and tend to have more inherent risk than Core or Enhanced Equity investments. The composite includes investments in direct real estate that are in various stages of development, mezzanine debt, and other similar investments, located throughout the United States in or near major markets with above - average growth potential. The composite excludes speculative land investments but includes investments in entitled land that is pending development. For comparison purposes, this composite is measured against the NCREIF Fund Index - All -Value -Added Index (NFI). Prior to December 31, 2009, the composite was measured against the NCREIF Property Index (NPI). The NFI is currently the only index that solely tracks the performance of value -added investments. As such, American believes that the NFI is the most representative index for the composite and effective as of December 31,2009, implemented this benchmark on a retroactive basis. The NFI is an unmanaged index published by the National Council of Real Estate Investment Fiduciaries. NFI returns are include leverage and are shown before (gross) the deduction of any investment management fees. Although each of the portfolios included in the composite may invest in similar property types as the NFI, the weighting of each property type will differ from the NFI in any measurement period. The investment activities and performance of the underlying assets in the composite may be considerably more volatile than and have material differences from the performance of the NFI. Unlike the NFI, the portfolios in the composite are actively managed. Furthermore, the portfolios are invested in substantially fewer assets than the number of investments comprising the NFI. The NFI does not reflect payment of investment management or other fees or expenses. Because of these differences, the NFI should not be relied upon as an accurate measure of comparison. The NFI is reported on a lagged quarter basis, therefore, the annual return for the fourth quarter of each year will not be available until the subsequent quarter. It is important to understand that investments of the type included in the composite pose the potential for loss of capital over any time period. American Realty Advisors has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPSF). American Realty Advisors, founded in 1988, is a registered investment advisor with the US Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940 and has qualified as a Qualified Professional Asset Manager (QPAM) investment manager and fiduciary under ERISA. The firm maintains a complete list and description of composites, which is available upon request. AMERICAN INISTITLITIONAL REAL ESTATE INVESTMENT M, NAOEMEMT 52 ACA TY ADVP$ORS. Total Firm Composite Assets Annual Performance Results Year End Assets* (millions) U.S. Dollars (millions) Number of Accounts Composite NFI Dispersion Income Appreciation Total High L- 2009 3,337 356 24 5.48% (34.48 %) (30.47%) n/a 17.60% (102.29 %) 2008 4,219 415 23 6.33% (6.20%) (0.18%) (19.38%) 85.35% (24.66 %) 2007 4,363 340 23 6.81% 14.65% 22.20% 17.37% 134.89% (49.23 %) 2006 3,392 229 15 7.39% 5.24% 12.92% 19.44% 49.64% 0.92% 2005 2,523 131 9 6.85% 2.80% 9.79% 27.53% 26.15% 3.98% 2004 1,423 25 4 14.54% 0.00% 14.54% 17.84% 22.54% 5.06% 2003 1,194 34 3 14.53% 0.00% 14.53% 11.61% 17.11% 12.41% 2002 983 22 2 14.15% 0.00% 14.15% 4.83% 19.88% 10.30% 2001 1 1,058 15 2 11.15% 0.00% 11.15% 9.03% 11.79% 5.11% *Assets under management represent the gross value of all assets and accounts managed by American Realty Advisors (excluding partners' share of equity and partners' share of debt on partnership investments). Prior to March 31, 2008, American reported total firm assets as the amount of assets under management plus undrawn capital commitments and noted the amount of such undrawn commitments in a footnote. Effective March 31, 2008, American has restated year end total firm assets from 2001 -2007 to omit such undrawn commitments. .. Each account in the composite represents a single property investment. Value -Added Real Estate Investments Composite is comprised of real estate assets or fixed income assets secured by real estate or real estate operating companies. The composite is comprised primarily of real estate assets (or fixed income assets secured by real estate related interests as noted above) that have not reached full stabilization or involve efforts to increase value such as releasing, repositioning, redevelopment or development, and tend to have more inherent risk than Core or Enhanced Equity investments. The composite includes investments in direct real estate that are in various stages of development, mezzanine debt, and other similar investments, located throughout the United States in or near major markets with above - average growth potential. The composite excludes speculative land investments but includes investments in entitled land that is pending development. For comparison purposes, this composite is measured against the NCREIF Fund Index - All -Value -Added Index (NFI). Prior to December 31, 2009, the composite was measured against the NCREIF Property Index (NPI). The NFI is currently the only index that solely tracks the performance of value -added investments. As such, American believes that the NFI is the most representative index for the composite and effective as of December 31,2009, implemented this benchmark on a retroactive basis. The NFI is an unmanaged index published by the National Council of Real Estate Investment Fiduciaries. NFI returns are include leverage and are shown before (gross) the deduction of any investment management fees. Although each of the portfolios included in the composite may invest in similar property types as the NFI, the weighting of each property type will differ from the NFI in any measurement period. The investment activities and performance of the underlying assets in the composite may be considerably more volatile than and have material differences from the performance of the NFI. Unlike the NFI, the portfolios in the composite are actively managed. Furthermore, the portfolios are invested in substantially fewer assets than the number of investments comprising the NFI. The NFI does not reflect payment of investment management or other fees or expenses. Because of these differences, the NFI should not be relied upon as an accurate measure of comparison. The NFI is reported on a lagged quarter basis, therefore, the annual return for the fourth quarter of each year will not be available until the subsequent quarter. It is important to understand that investments of the type included in the composite pose the potential for loss of capital over any time period. American Realty Advisors has prepared and presented this report in compliance with the Global Investment Performance Standards (GIPSF). American Realty Advisors, founded in 1988, is a registered investment advisor with the US Securities and Exchange Commission (SEC) under the Investment Advisers Act of 1940 and has qualified as a Qualified Professional Asset Manager (QPAM) investment manager and fiduciary under ERISA. The firm maintains a complete list and description of composites, which is available upon request. AMERICAN INISTITLITIONAL REAL ESTATE INVESTMENT M, NAOEMEMT 52 ACA TY ADVP$ORS. Value -Added Real Estate Investments Composite Annual Disclosure Presentation Results are based on fully discretionary accounts under management, including those accounts no longer with the firm. All accounts managed by American Realty Advisors are considered "discretionary" for purposes of determining composite membership, except those that contain investment guidelines significantly restricting the management team's ability to manage the assets according to the applicable product mandate. Past performance is not a guarantee of future results and it is important to understand that the investments of the type included above pose the potential for loss of capital over any time period. The U.S. Dollar is the currency used to express performance. Income and capital appreciation component returns are presented, in addition to the total composite. The income return measures the portion of the composite's total return that is generated by the income from the operations during the period. The appreciation return measures the portion of the composite's total return that is generated from the change in the market value of the assets during the period. Performance returns are computed using the NCREIF mandated property level return formulas, which calculate time - weighted returns for real estate investments by geometrically linking component returns. The sum of income return and the capital return may not equal the total return for annualized periods due to the chain - linking of quarterly returns. Real estate values are based upon independent appraisals performed for commingled funds annually on or about the asset's acquisition anniversary date and for separate accounts every three years, or otherwise as required by each account's Investment Management Agreement. In -house valuations are conducted quarterly and are used on an interim basis. Market values represent the value at which a willing buyer and seller would agree upon in an arm's length transaction, without any pressure to consummate the transaction on the imposed deadline. The market value does not include costs to consummate the transaction. Various approaches have been used to determine market value, including the Cost, Sales Comparison and Income approaches. Additional information regarding valuation methods is available upon request. All valuations of real estate involve subjective judgments, as the actual market price of real estate can be determined only by negotiations between independent parties in sales transactions. As of December 31, 2009, December 31, 2008, December 31, 2007 and December 31, 2006, 68 %, 47 %, 33% and 0 %, respectively, on a market value basis, of the real estate assets in the composite had been appraised by various independent valuation firms during the year ended on such dates. All composite returns are presented gross of management fees and include the reinvestment of some income. Actual returns will be reduced by investment advisory fees and other expenses that may be incurred in the management of the account. The collection of fees produces a compounding effect on the total rate of return net of management fees. As an example, the effect of investment management fees on the total value of a client's portfolio assuming (a) quarterly fee assessment, (b) $1,000,000 investment, (c) portfolio return of 8% a year, and (d) 1.00% annual investment advisory fee would be $10,416 in the first year, and cumulative effects of $59,816 over five years and $143,430 over ten years. The highest and lowest annual gross of management fee property returns are shown as a measure of composite dispersion. Additional information regarding the policies for calculating and reporting returns is available upon request. Asset management fees vary for each fund. The fees are based on a variable which generally consists of either original acquisition cost, net asset value, fair market value, gross value or total amount allocated to American for investment. Some fee arrangements provide for the lower of two variables. The low end of the range is equal to an annual rate of 1.00% of the lower of original investment cost or fair market value of the real estate acquired with the high end of the range based on annual rate of 1.25% of net asset value. Incentive fees may also be charged. Incentive fee structures differ for each client; however, such fees are generally based upon achieving stipulated internal rate of return hurdles. In most cases, the use of leverage is a primary component of the value added investment return strategy. Leverage is used primarily for real estate improvements, construction activities and for additional acquisitions. While fixed rate leverage is preferred, floating rate debt may also be used. Interest rate caps and swaps may be used when obtaining variable rate debt with the intention of fixing the variable rate when the overall pricing is favorable. The firm's leverage strategy takes into account a wide variety of factors and is designed to control for risks associated with the development, operating and leasing strategies of the underlying investments. The Value -Added Real Estate Investments Composite was created on January 1, 2001. American Realty Advisors' compliance with the GIPS standards has been verified for the period January 1, 2001 through December 31, 2009 by Ashland Partners & Company LLP. In addition, a performance examination was conducted on the Value -Added Equity Real Estate Investments Composite beginning January 1, 2001. A copy of the verification report is available upon request. Printed in -house AMERICAN INERTITIJTYONAL DEAL ESTATE YNVESTM €MT MANAC,EMEMT 53 REALTY ADVPs008_ F: \F \W\PowerPoint \Core Value Presentations \Winter Springs General Employee Retirement System_07- 28- 10.pdf 7/22/2010 4:20 PM