LAPACO PAPER PRODUCTS LTD.

LAPACO PAPER PRODUCTS LTD. 5200 J.A. Bombardier Street Longueuil, Quebec

TABLE OF CONTENTS Section Photographs & Location Maps 1 Project Summary 2 The Location 3 Lapaco Paper Products Ltd. 4 Investment Highlights 5 Financial Analysis 6 This document does not purport to be all-inclusive or to contain all the information that a prospective investor may require in deciding whether or not to invest in the limited partnership referred to herein. Information contained herein has been obtained and complied from various sources deemed reliable. We have no reason to doubt its accuracy but we do not make any representation, declaration or warranty, expressed or implied, as to the accuracy or completeness of the information or statements contained herein. We expressly disclaim any and all liability for any errors or omissions in this document or any other written or oral communication transmitted or made available to the investor. These highlights are for information purposes only and do not constitute an offer to sell or solicitation to buy partnership interests referred to herein. 1

Section 1 PHOTOGRAPHS & LOCATION MAPS 2

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Section 2 Project Summary 6

PROJECT SUMMARY Lexington Realties is in the process of acquiring a property situated in a newly developed industrial park in a strategic location of Longueuil, Québec consisting of a 46,320 sq. ft. industrial building situated on 182,000 sq. ft. of land. The building is in the final stages of construction and will be ready for tenant occupancy in late April. The building has been developed and constructed by the vendor, Reliance Construction of Canada Ltd. ( Reliance ), one of Montreal s leading developers. Lexington is pleased to offer investors the opportunity to invest in this project. Lexington Realties has a strong and experienced acquisition and management team. We have been actively involved in real estate acquisitions throughout Canada and the United States. Further, we have managed office, industrial and retail projects in many different cities. The building is 100% leased to Lapaco Paper Products Ltd. ( Lapaco ) for 10 years. The commencement date of the lease is to be on or about May 1, 2006. We will be completing the acquisition concurrently with the lease commencement date in order to benefit from the full 10 years of the term of the lease. Firstly therefore, we are acquiring a 10-year stable investment. Secondly, there is the potential of an expansion. The significant appeal of this investment is the upside that results from the very real possibility that the tenant will exercise the option in its lease to expand its premises. The initial indication from the tenant is that the expansion will be required; it is just a matter of when this will take place. To accommodate the 7

expansion, the building has been constructed with this in mind and preliminary plans for the expansion have already been prepared. We anticipate that the only requirement for further capital would be in the case of a Phase 2 expansion. Lapaco is a privately owned paper converter company which has been consistently profitable. Its intention is to combine its two existing plants on this site. Its lease is triple-net with rental rates at $6.25 per sq ft for the first 5 years and $6.60 for years 6 to 10. These rents are at market given the new construction. The year 1 Net Operating Income is projected to be $289,500. The purchase price is $3,350,000 which equates to a capitalization rate of 8.64% and $72 per sq. ft. (One of Canada s leading appraisers has indicated to us that in his opinion, the market value of the property is $3,675,000) We have projected two scenarios for this investment. The first scenario assumes the tenant does not expand its premises during the 10-year term. The second scenario is that the tenant does expand. At this price and assuming that the tenant does not expand, the average 10-year cash on cash returns are projected to be 10.9% per annum. If, however, the expansion is completed, the 10-year cash on cash returns are projected to rise to 14.1% per annum. In addition to the cash on cash returns, we believe in both cases there will be significant capital appreciation based on a future sale due in part to the contractual increase in rental rates and, in the expansion scenario, to the dynamics of the expansion. 8

Benefits of Investing in Real Estate When comparing an investment in real estate versus investments of other types, it is important to note a number of key differences that have an effect on the overall return on investment: Firstly, there is the cash on cash return. This is the return to investors on an annual basis from the cash flows of the property after debt service and before taxes. Secondly, there is the potential that the value of a property will appreciate over time. Thirdly, throughout the holding period, we will be paying debt service on the mortgage. That debt service is made up of both interest and principal payments. The portion that is principal repayment is effectively reducing the debt on the property. This repayment of principal will increase the percentage of the funds that will be paid to the investor upon a sale or refinancing as the proportion of debt to value has been reduced. Fourthly, real estate is a depreciable asset for tax purposes. This means that a portion of the income is sheltered each year when paying taxes. This has not been taken into account in any of our projections, and we would advise that investors seek the advice of their tax advisors to determine the overall benefit to their annual returns. 9

Section 3 The Location 10

THE LOCATION The property is located at 5200 J.A. Bombardier Street in Longueuil, Québec, a suburb of Montreal on the south shore. The City of Longueuil has recently opened this area and the buildings located on this street are all of very recent construction. The property is strategically situated less than 3km from the intersection of highway 30 and highway 10, both of which are major highways in the region. It is minutes from the Champlain Bridge. Longueuil has a population of 386,000 making it Quebec s 3 rd largest city. It stands at the crossroads of Quebec s main highways from across the province and toward the United States. Its industrial zone offers a substantial supply of available land, and its labour force is skilled and stable. Longueuil has attracted corporate leaders owing to its strategic location, providing access to its comprehensive highway, marine, air and rail transportation network. The dynamic economy of Longueuil is exemplified by the over 500 companies that operate in its industrial parks. Well serviced by all necessary utilities, these parks offer easy access to the roughly 22,000 daily workers. Of considerable importance to Longueuil s overall development plan is the Quebec government s intention to extend highway 30 to form a beltway around the island of Montreal. Longueuil is therefore well positioned to attract future industrial concerns to locate in the area around this major expressway. 11

Section 4 Lapaco Paper Products Ltd. 12

The Tenant LAPACO PAPER PRODUCTS LTD The subject property is a new industrial building housing the head office and one of the two plants for Lapaco Paper Products Ltd. Lapaco is a privately owned paper converter company. (Please visit its website at www.lapaco.com.) Lapaco has a niche product line with little competition. It manufactures a wide range of tabletop products as well as other items for the hospitality and lodging industry (such as doilies, placemats, tray covers, baking cups, and napkins). Its customer base includes clients from all over North America and into Central and South America. Lapaco has a solid history of over 50 years in business. The company has been consistently profitable and is itself investing substantial funds in new production equipment and premises with state of the art production facilities in order to capture a larger market share. The intention is to consolidate the two plants into one centralized up-to-date operation. Its financial statements were examined by our accountants, and they are comfortable with the statements. The company has strong financials for the size of the business. 13

The Project This project materialized as part of Lapaco s expansion plans. Its initial intention was to construct a facility that was double the size of the building presently under construction, which would replace its two existing facilities. Due to the leases at these other facilities, it was determined that a better course of action would be to build the new facility in phases as the existing leases expired at the other locations. Lexington will be buying the new building that will be leased for 10 years to Lapaco, as well as all of the land upon which the expansion would be constructed. Lapaco is required under the lease to pay for all costs, including taxes, associated with all of the land, whether or not it expands. The new building ( Phase 1 ) consists of a 46,320 sq. ft. industrial building situated on 182,000 sq ft of land. The lease allows for and preliminary plans have been prepared for an expansion of Phase 1 by up to 45,000 sq. ft. ( Phase 2 ). It should be noted that it is a very real possibility that the tenant will exercise its option to expand its premises. Under the terms of the lease, the tenant may exercise its expansion option at any time within the 10 years of the lease. The landlord has 6 months to build the building after notice from the tenant 1. In addition, the lease states that should Lapaco exercise its expansion option within the first 2 years of the lease, the term of the lease for the Phase 2 premises would expire at the same time as the existing lease; ie. in 2016. If, however, the option is exercised after 2 years have elapsed on the term of the lease, then 1 Six months is achievable as plans already exist for Phase 2. 14

the terms for both Phase 1 and Phase 2 will be immediately extended out to 10 years from the time of completion of Phase 2. The lease also contains terms that protect the landlord from potential rising construction costs and interest rates in that the corresponding rental rate on the Phase 2 space is a function of both of these factors. The rental rate is the product of the construction cost per square foot (from a base of $65 per sq. ft. indexed to inflation) multiplied by a factor made up of the Royal Bank of Canada s prime rate plus 5.25%. For example, if the construction costs are $65 per square foot, and the RBC prime rate is 5.50%, as it is today, then the rental rate per square foot would be determined as follows: $65 x (5.50% +5.25%) = $6.99 per sq. ft. If construction costs were to increase to $70 per sq. ft., and the prime rate were to increase by 1% to 6.50%, then the rental rate would be: $70 x (6.50% + 5.25%) = $8.23 per sq. ft. Further there is an automatic increase of 35 cents for the last 5 years of the term for Phase 2, as well as an increase for the Phase 1 portion if the term is extended beyond the initial 10 years. An integral part of this acquisition from Reliance is that Reliance is obligated to build the building for us at the then existing market construction costs but in no event can it charge more than $65 plus the index used to establish the rental rate. The costs include all costs except for Lexington s development fee and the broker s fee. It should be noted that at the time the tenant exercises its option to expand, there is an opportunity for the landlord to review the tenant s financial condition. The expansion would only proceed if there was no adverse change, determined by the landlord, acting reasonably. 15

Section 5 Investment Highlights 16

General Investment Merits: Strategic location. Brand new state of the art construction Significant upside potential (see below) Long-term lease for 100% of the property. Strong financial covenant of the tenant Contractual rental increases will allow for increasing returns over time. Possibility for expansion. Financial Investment Merits: Under the projections for the scenario in which the Phase 2 expansion does not take place, the 10-year cash on cash average, on a project basis, is 10.9% per annum and is 10.6% per annum, after the Lexington Performance Bonus (as discussed below). In addition to the cash on cash return, the possibility exists of capital appreciation upon the eventual sale of the property. Our scenario, based on our assumptions, demonstrates a potential capital appreciation of 95.9% on a project basis and 67.2% after the Lexington Performance Bonus. Annualizing the cash on cash 17

return and the capital appreciation, the projections for the scenario in which Phase 2 does not occur show an overall return of 20.5% per annum on a project basis, and 17.3% per annum after the Performance Bonus. As previously mentioned, there is a significant possibility that Phase 2 will be constructed. In this scenario in which the Phase 2 expansion does take place, the 10- year cash on cash average, on a project basis, is 14.1% per annum and is 12.9% per annum, after the Lexington Performance Bonus. In this scenario, again, based upon our assumptions, the capital appreciation is projected at 127.9% on a project basis and 89.3% after the Lexington Performance Bonus. Annualizing the cash on cash return and the capital appreciation, the projections for the scenario in which Phase 2 does occur show an overall return of 26.9% per annum on a project basis, and 21.8% per annum after the Lexington Performance Bonus. Potential Upside: There is upside in this property that has not been taken into account in the projections set out in the pro forma. In the scenario in which Phase 2 occurs, we have assumed that we would obtain a takeout loan of 75% loan to value based on the net operating income of both Phase 1 and 18

Phase 2 capitalized at 9% ( cap rate ). It is entirely possible that the appraised value, at the time we need the take-out loan, could be determined using a lower cap rate. In fact, in the market today we are buying the property based on an 8.64% cap rate, and the appraiser has valued the property using a 7.5% cap rate. Should the cap rate be lower than 9%, we will be able to obtain a larger take-out loan which would reduce the amount of equity that remains in the project resulting in an increase of the annual cash on cash returns. In addition to the possibility of a lower cap rate on the take-out loan, it may be possible that we could achieve a lower interest rate on this loan. If we were to place a 7.5 year loan today, the rate would be closer to 6% as opposed to the 6.6% that we assumed for the take-out loan. Lastly, in both cases, we have assumed only a 10-year lease. A major source of potential upside to the deal would come if the tenant exercised its expansion immediately after 2 years were completed on the initial lease term. Should this occur, then the term on both Phase 1 and Phase 2 would extend to 10 years from the point that Phase 2 is completed. While this alone does not increase the returns, it would allow us to potentially extend the amount of contractual time that the property is leased. 19

The Risks: An investor s return on the investment depends on the financial success of the project, which cannot be predicted with accuracy. We anticipate that the only requirement for further capital would be in the case of a Phase 2 expansion. In this event, investors are expected to contribute on a pro rata basis. If an investor does not contribute, the necessary funds will be obtained from other sources and a dilution to that investor s percentage of interest in the project will occur. We do not anticipate that any further capital will be required for other reasons. In the event that additional funds are required, investors will be asked to contribute but there is no obligation to do so. In the event that an investor does not contribute, the necessary funds will be obtained from other sources, and a dilution of that investor s percentage of interest in the property will occur. Investing in a commercial property is subject to numerous risks which we have considered in our projections including competition, local economic conditions, uninsurable risks, acts of God and other factors. 20

Interest rates are another risk. We have built a contingency into the projections so that interest rates can rise by 70 basis points higher than the current rates without any impact on the pro forma. If, however, interest rates rise higher by the time of refinancing in year 3, then the pro forma will be negatively impacted. (Please refer to our discussion of the financing in the section entitled Financial Analysis.) In any transaction involving a single tenant building, the success of the tenant s business is critical. Mitigating this risk is the fact that, as mentioned earlier, this tenant has been in business for many years, through many up and down cycles. In addition, the location of the property is a very good one, and therefore we should be able to re-tenant the building if necessary. If, at the time the tenant wishes to expand, its financial position has deteriorated, it may be that financing cannot be obtained for the construction of Phase 2. It would appear logical, however, that in such a case the tenant would not proceed with an expansion, since it would be focused on other matters. More importantly, the landlord is only obliged to construct Phase 2 if it is satisfied, acting reasonably, that there has been no adverse change in the financial condition of the tenant since the commencement date of the lease. 21

Exit Strategy: Acquisition Fee: Manager: Financial Terms: We expect that this would be a long-term hold. However, either the completion of Phase 2, or the expiry of the first mortgage in year 3, will be an opportune times to consider our options to hold or to sell. Lexington Realties shall earn an acquisition fee of $100,000. Lexington Realties will perform the property and asset management services. All investors will receive an annual return on their investment from the operational net cash flow, if any. There will be a preferred, cumulative return of 10% 2 per annum on existing equity for the investors. In the event that at any given time of distribution there exists an outstanding accrued amount of the preferred return, it shall be distributed prior to any "bonus" distribution as set forth hereinafter. After all accumulated preferred returns have been paid to the investors, the remaining net cash flow will be distributed as follows: 2 It should be noted that the preferred return is not guaranteed. It is only used as a basis for the bonus factor. 22

Investors: 70% Lexington Realties bonus: 30% At the time of sale or refinance, the cash flow will be distributed as follows: Investors: - any shortfall on the preferred return - return of capital contributions - 70% of remaining funds Lexington Realties: - 30% of remaining funds 23

Section 6 Financial Analysis 24

FINANCIAL ANALYSIS Assumptions As previously indicated, we have prepared two pro formas. The first assumes that the Phase 2 expansion does not occur, whereas the second pro forma assumes that the Phase 2 expansion does occur, and that the notice for exercising the option to expand is given at the end of the 2 nd year 3. The following are assumptions that are used in both pro formas unless otherwise indicated. Projection Period: 10 years commencing May 1, 2006. Purchase Price: $3,350,000 Initial Equity: The investment calls for initial equity of approximately $558,000 which includes closing costs. Areas: Phase 1 Building: 46,320 sq. ft. Total Land: 182,000 sq. ft. Price / Square Foot: $ 72.32 per sq. ft. Capitalization Rate: 8.64% Inflation Rate: 2% per annum. 3 This means that Phase 2 is completed and the tenant is paying rent on the space 6 months into the 3rd year of the lease. This also means that since the notice is given within the first 2 years of the Phase 1 lease, both the Phase 1 and Phase 2 leases will terminate 10 years from the start of the Phase 1 lease. 25

Lease Terms: The lease is a triple net lease meaning that the tenant is responsible to pay for all costs associated with the land and the building, including structural repairs and real estate taxes. Phase 1 Rental Rates: Years 1-5 $6.25psf Years 6-10 $6.60psf Phase 2 (Pro Forma 2 Only) Option Exercised: On the last day of the second year of the term of the Phase 1 lease. The Phase 2 term commences six months later. Building Size: Approximately 45,000 square feet General Vacancy: 0% Rental Rates: Years 2.5-7.5 $7.64 Year 7.5-10 $7.99 Rental rates assumes a RBC Prime rate of 6.50% Structural Allowance: None, as this is a triple net lease, the tenant will be responsible for structural repairs. 26

Management Fee: The lease provides for a $10,000 management fee. We have assumed that $7,500 will go the property manager, and that $2,500 will be passed on to the investors. Financing: We have received a term sheet that will allow us to borrow 75% of the appraised value of the Phase 1 Building and Lands and the Phase 2 Lands, up to $3,000,000. This is equivalent to 89.5% of the purchase price. In determining the type of financing to place one must consider the strong possibility that the tenant will exercise its option to expand. The loan must therefore contain a favorable repayment clause or provide for construction financing to build Phase 2, as well as take out financing on Phase 1 and Phase 2. Lenders will not pre-commit to finance the construction and provide a longterm mortgage too far in advance. Therefore we need the flexibility to repay the Phase 1 loan, in order to obtain other financing. Therefore we have chosen a 3-year term. The loan may be repaid without penalty after 2.5 years. We believe that the tenant will exercise its option to expand in the time frame of 2 to 3 years from now. If it does so earlier, we can still repay the loan by paying 27

the yield maintenance 4 from the time of repayment (when the tenant exercises its option) until the loan becomes open (the 2.5 year mark). It should be noted that yield maintenance only apply if interest rates decline, which we are not expecting. Indeed if that occurs, interest rates for the take out on Phase 2 should be less thereby offsetting any penalty we had to pay. (See below for an explanation of the take out loan.) Due to the risk of a rise in interest rates we have elected to take a fixed rate of interest over a floating rate. The amortization will be 25 years and the spread will be 155 bps over the current 3 year bond rate of 4.15% plus a 15bps contingency for a total rate of 5.85%. For the construction financing for Phase 2, we have assumed that we would be able to obtain $2,301,989, which is 75% of construction costs and land value. The lender has actually indicated that it will lend 75% of the economic value of the expansion once completed. It will not give a figure at this time. So we calculated that amount but this is only a projection, so to be prudent we used the lower amount, as detailed about. 4 The yield maintenance penalty is an amount of money that would be paid to the lender upon early repayment of the loan that would allow the lender to receive the same yield for balance of the loan term if they were to re-lend the money today at a lower rate. For example, if we were paying 6% interest and repaid 1 year early, and at the time of repayment the interest rates had dropped to 5.5%, then the yield maintenance penalty would be 0.5% of the loan balance for 1 year. 28

The take out loan at the end of phase 2 construction is assumed to be 75% of the economic value of the expansion once completed. The key assumptions are a capitalization rate of 9%, a 75% loan to value, a 23-year amortization, and an interest rate of 6.6% for a 7-year term. If phase 2 is not constructed, we have assumed that we would be able to refinance the outstanding balance at the end of year 3 for the remaining 7 years of the projection period. The amortization is assumed to be 22 years, and the interest rate is assumed to be 6.6%. Phase 2 Construction Cost: Broker s Fee due on Construction: Reliance, a very well known and reputable contractor, is obligated to build Phase 2 at market rates but not greater than $65 (indexed to inflation). We anticipate that this amount will cover all construction costs including the opportunity costs on investor s equity for the 6-month construction period and the penalty to repay the loan on Phase 1, but does not include Lexington s development fee nor the broker s fee on construction. For the projections, we have assumed that the construction costs will be $65 per square foot. $25,000 to be paid at the time the tenant executes a lease amending agreement to incorporate Phase 2. 29

Lexington s Developer s Fee: $125,000 to be paid once the tenant is occupying and paying rent on Phase 2. Additional Equity Required for Phase 2: In the event Phase 2 is to be constructed, there will be an additional equity requirement estimated to be between $750,000 and $950,000. Investors will, therefore, be asked to contribute additional funds to pay for Phase 2 on a pro rata basis. If an investor does not contribute his pro rata share, that investor s proportionate share in the entire project will be diluted. 30

Lapaco Pro Forma Projections No Phase 2 Expansion From May 2006 to April 2017 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending 30-Apr-07 30-Apr-08 30-Apr-09 30-Apr-10 30-Apr-11 30-Apr-12 30-Apr-13 30-Apr-14 30-Apr-15 30-Apr-16 30-Apr-17 POTENTIAL GROSS REVENUE Base Rental Revenue $289,500 $289,500 $289,500 $289,500 $289,500 $305,712 $305,712 $305,712 $305,712 $305,712 $337,531 Absorption & Turnover Vacancy $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Scheduled Base Rental Revenue $289,500 $289,500 $289,500 $289,500 $289,500 $305,712 $305,712 $305,712 $305,712 $305,712 $337,531 Expense Reimbursement Revenue $10,000 $10,000 $10,000 $10,000 $10,000 $11,000 $11,000 $11,000 $11,000 $11,000 $0 TOTAL POTENTIAL GROSS REVENUE $299,500 $299,500 $299,500 $299,500 $299,500 $316,712 $316,712 $316,712 $316,712 $316,712 $337,531 General Vacancy $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 EFFECTIVE GROSS REVENUE $299,500 $299,500 $299,500 $299,500 $299,500 $316,712 $316,712 $316,712 $316,712 $316,712 $337,531 OPERATING EXPENSES Management Fee $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 Misc $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 TOTAL OPERATING EXPENSES $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 NET OPERATING INCOME $289,500 $289,500 $289,500 $289,500 $289,500 $306,712 $306,712 $306,712 $306,712 $306,712 $327,531 LEASING & CAPITAL COSTS Tenant Improvements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Leasing Commissions $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Asset Mgmt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL LEASING & CAPITAL COSTS $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 CASH FLOW BEFORE DEBT SERVICE $289,500 $289,500 $289,500 $289,500 $289,500 $306,712 $306,712 $306,712 $306,712 $306,712 & TAXES ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== Debt Service -$227,130 -$227,130 -$227,130 -$241,865 -$241,865 -$241,865 -$241,865 -$241,865 -$241,865 -$241,865 Cash Flow After Debt Service $62,370 $62,370 $62,370 $47,635 $47,635 $64,847 $64,847 $64,847 $64,847 $64,847 Return on Equity 11.2% 11.2% 11.2% 8.5% 8.5% 11.6% 11.6% 11.6% 11.6% 11.6% Project Averages 10 Year Cash on Cash Average Return on Equity 10.9% Return from Net Proceeds of Sale (Capital Appreciation) 95.9% Average Combined Annual Return on Equity 20.5% Averages after Performance Bonus 10 Year Cash on Cash Average Return on Equity 10.6% Return from Net Proceeds of Sale (Capital Appreciation) 67.2% Average Combined Annual Return on Equity 17.3%

Lapaco Pro Forma Projections From May 2006 to April 2017 With Phase 2 Expansion Notice Given in April 2008 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 For the Years Ending 30-Apr-07 30-Apr-08 30-Apr-09 30-Apr-10 30-Apr-11 30-Apr-12 30-Apr-13 30-Apr-14 30-Apr-15 30-Apr-16 30-Apr-17 POTENTIAL GROSS REVENUE Base Rental Revenue $289,500 $289,500 $461,344 $633,188 $633,188 $649,400 $649,400 $657,275 $665,150 $665,150 $716,990 Absorption & Turnover Vacancy $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Scheduled Base Rental Revenue $289,500 $289,500 $461,344 $633,188 $633,188 $649,400 $649,400 $657,275 $665,150 $665,150 $716,990 Expense Reimbursement Revenue $10,000 $10,000 $10,000 $10,000 $10,000 $11,000 $11,000 $11,000 $11,000 $11,000 $0 TOTAL POTENTIAL GROSS REVENUE $299,500 $299,500 $471,344 $643,188 $643,188 $660,400 $660,400 $668,275 $676,150 $676,150 $716,990 General Vacancy $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 EFFECTIVE GROSS REVENUE $299,500 $299,500 $471,344 $643,188 $643,188 $660,400 $660,400 $668,275 $676,150 $676,150 $716,990 OPERATING EXPENSES Management Fee $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 $7,500 Misc $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 $2,500 TOTAL OPERATING EXPENSES $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 $10,000 NET OPERATING INCOME $289,500 $289,500 $461,344 $633,188 $633,188 $650,400 $650,400 $658,275 $666,150 $666,150 $706,990 LEASING & CAPITAL COSTS Tenant Improvements $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Leasing Commissions $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Asset Mgmt $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 TOTAL LEASING & CAPITAL COSTS $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 CASH FLOW BEFORE DEBT SERVICE $289,500 $289,500 $461,344 $633,188 $633,188 $650,400 $650,400 $658,275 $666,150 $666,150 & TAXES ========== ========== ========== ========== ========== ========== ========== ========== ========== ========== Mortgage on Phase 1 -$214,212 -$214,212 -$107,106 Temporary Mortgage on Phase 2 Lands -$12,918 -$12,918 -$6,459 Mortgage on Phase 2 -$210,456 -$420,913 -$420,913 -$420,913 -$420,913 -$420,913 -$420,913 -$420,913 Cash Flow After Debt Service $62,370 $62,370 $137,322 $212,275 $212,275 $229,487 $229,487 $237,362 $245,237 $245,237 Return on Equity 11.2% 11.2% 9.8% 14.4% 14.4% 15.5% 15.5% 16.1% 16.6% 16.6% Project Averages 10 Year Cash on Cash Average Return on Equity 14.1% Return from Net Proceeds of Sale (Capital Appreciation) 127.6% Average Combined Annual Return on Equity 26.9% Averages after Performance Bonus 10 Year Cash on Cash Average Return on Equity 12.9% Return from Net Proceeds of Sale (Capital Appreciation) 89.3% Average Combined Annual Return on Equity 21.8%