Commercial Real Estate:A Practical Guide from Cap Rates to

Portfolio Structures

Scott CrowePortfolio Manager, Resource Real Estate

Larry SullivanPresident, Passco Companies

Bill WinnPresident, VaueRock Realty Partners

Paul Dunn, ModeratorSr. Managing Director, Bluerock Capital Markets

• Firm Profiles

• Definitions:• 1031, Cap Rates, MFFO, Interval Fund

• Where to invest, avoid today

• Change in return expectations from 2006, 2010

• Cap rates in 5 years?

• Higher interest rate impact on cap rates &returns?

• NT REITs, Private Placements, Interval Funds

5www.rresecurities.com

Funds From Operations (NAREIT) Modified Funds From Operations (IPA)

Net Income FFO

Depreciation Acquisition costs

Gains on Sale

Losses on debt/hedging

FFO

Non cash lease adjustments

MFFO

MODIFIED FUNDS FROM OPERATIONS

What is an Interval Fund?

40 Act, Hybrid Mutual Fund

Purchased and Priced Daily (Electronic)

Provides Quarterly Liquidity* (Paper)

Not Subject to 15% Limitation

Allows an Individual to Invest in Unique, Illiquid Assets, While

maintaining Liquidity Options

* Liquidity provided only through quarterly repurchase offers for no less than 5% of shares at net asset value, and there is no guarantee that an investor will be able to sell all the shares that the investor desires to sell in the repurchase offer.

• Firm Profiles

• Definitions:• 1031, Cap Rates, MFFO, Interval Fund

• Where to invest, avoid today

• Change in return expectations from 2006, 2010

• Cap rates in 5 years?

• Higher interest rate impact on cap rates &returns?

• NT REITs, Private Placements, Interval Funds