Distressed Multifamily Opportunities

Green Pearl Chicago Distressed Real Estate Summit May 2010 May 2010 Confidential & Proprietary

Questions 1. Are the spike in values justified ? • What kind of deals and related cap rates are in the market ? • Are you seeing a V-shaped recovery at your properties ? Is the revenue increase driven by occupancy gains or real rent increases ? 2. Debt ? • What type of deals are out there to buy from servicers and constr. lenders ? • What are the pitfalls ? • How are buyers, sellers, or lenders reacting to terms in the market ? • Are banks or servicers going to get more aggressive in foreclosures /DPOs ? • Is buying loans getting played out or is there more room to run ? • Current lending environment and terms for Agencies, or mezz, or hard money investors ? • What is the outlook for Fannie /Freddie ? Will they merge, shrink ? 3. Have we forgotten the impact of the debt bubble still ahead of us ? • How will the large amount of construction debts play out ? • How will the maturing CMBS products get refinanced, or flushed through ? • Who are the buyers going to be for the “non–A” grade products ? Confidential & Proprietary Page 2

Questions 4. Legal side • Any major changes in players, deal terms, client sentiments ? 5. Development of apartment/condos going forward • What is the time frame to start building again ? • What type of terms will investors get on equity and construction debt ? • Any new ways to look at this model ? Looking ahead • Where does the new equity come from for acquisitions when the supply of assets gets larger ? What type of returns would investors expect ? • What have we learned in the past 24 months ? • NOI – Buyers are all underwriting significant growth due to recovery and lack of new construction – What are your thoughts on this assumption ? • Where do new jobs come from ? • Wrap up Confidential & Proprietary Page 3

Apartment transactions Apartment Transaction Volume through April 2010 $120 B 5,000 3,795 3,814 3,871 Number of Transactions $100 B $99.6 4,000 Total $ Amount $88.8 $91.7 $80 B 2,462 3,000 $60 B $51.0 2,055 1,649 2,000 $40 B 1,251 $37.3 1,169 $30.3 975 $22.7 868 $20.4 1,000 $20 B $14.1 $17.3 $0 B 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Annualized Garden Mid/highrise Total Price Transactions Source: Real Capital Analytics Confidential & Proprietary Page 4

Detailed Multifamily Maturities $ billions Multifamily Maturities - by Investor Types: 2010 to 2017 (Does not include commercial lenders/ thrifts or savings institutions) $60 $50.8 $47.2 $50 $39.9 $7.9 $40.5 Average- $37 billion $33.8 $1.8 $5.6 $40 $1.7 $7.5 $6.0 $28.1 $29.3 $1.8 $23.6 $3.2 $30 $6.5 $21.1 $25.3 $1.6 $5.1 $5.9 $16.0 $12.8 $7.1 $1.6 $4.5 $4.0 $20 $8.3 $7.4 $10.7 $10 $17.0 $18.6 $18.8 $7.4 $14.3 $16.1 $15.8 $7.5 $4.3 $0 2010 2011 2012 2013 2014 2015 2016 2017 Fannie, Freddie, FHA and Ginnie Mae CMBS, CDO or other ABS Credit Companies, Warehouse, and Other Life Insurance Companies Source: Mortgage Bankers Association (“MBA”). Note: Does not include commercial banks which have over The December 2009 MBA Survey covered most multifamily $200 billion in apartment debt O/S loans outstanding from the investor pool except for Commercial Banks/Thrifts. Confidential & Proprietary Page 5

Current Apartment Mortgage Holders $400 Commercial Banks Can the Agencies $379 Savings institutions continue to deploy capital $357 $350 Life Insurance to make up for the lack of Private mtg Cond uits CMBS and Life $300 $302 Insurance originations ? Total Gov't backed entities $250 $244 $229 $215 $210 Increase from 2005 $200 (billions) $ % $168 Fannie/Freddie $140 77.5% $158 Gov't entities (non Fannie $150 $139 & Freddie) $9 4.1% $125 $114 $108 $103 Commercial Banks $71 51.3% $98 $100 $93 $89 $96 Savings Institutions ($38) -39.1% $65 $60 Life Companies $7 17.7% $50 $52 $52 $50 $46 $42 Conduits $19 21.2% $0 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 Source: Federal Reserve Confidential & Proprietary Page 6

Trepp Multifamily Delinquencies 30 days 60 days 90 days Non perf Forclose/ REO 90 days+ non-perf + REO Total 14 13.32 13.17 12 11.22 11.55 9.72 9.86 10 9.26 8.74 8.29 8 7.66 7.69 7.06 7.06 6.67 6.74 6.79 6.14 5.66 6 5.61 5.23 5.39 5.16 5.08 4.85 4.04 4.37 3.74 3.86 3.79 4 3.52 3.66 3.44 3.33 3.37 2.82 3.81 3.79 3.88 2.58 2.90 2.65 3.34 2.20 2 1.88 2.54 1.43 0 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 Source: Trepp Confidential & Proprietary Page 7

Multifamily Delinquencies 12.00% 11.55% Trepp CMBS - Trepp- 11.22% multifamily Fannie- multifamily 10.00% Freddie -multifamily Fannie- single family 8.29% 8.00% Freddie- single family 7.69% 6.72% 6.14% Fannie 6.00% 5.66% 5.69% 5.52% 5.29% 5.38% 5.08% 4.85% 4.72% 4.98% 4.37% 4.04% 3.94% Freddie- 4.00% 3.42% 3.37% 4.15% 4.20% 4.13% 3.15% 3.87% 2.96% 3.72% 3.33% 3.54% 2.65% 3.30% 3.13% 2.95% 2.78% 2.62% 2.00% 2.44% 2.13% Fannie Multi 0.66% 0.63% 0.69% 0.73% 0.50% 0.51% 0.56% 0.56% 0.62% 0.61% 0.32% 0.34% 0.36% 0.25% 0.24% 0.08% 0.09% 0.10% 0.12% 0.11% 0.11% 0.10% 0.11% 0.17% 0.19% 0.19% 0.21% 0.00% Freddie Confidential & Proprietary Page 8

Non-current Multifamily C&D loans Percentage of Multifamily- non current (90 days past due or non accrual status) Multifamily Non $ o/s current % (billions) 5.00% Dec-05 0.25% $188 4.44% Mar-06 0.28% $191 4.50% $192 Jun-06 0.29% Sep-06 0.31% $193 4.00% 3.58% Dec-06 0.41% $193 3.50% Mar-07 0.60% $192 3.13% Jun-07 0.66% $190 3.00% Sep-07 0.68% $193 2.45% Dec-07 0.76% $202 2.50% Mar-08 0.98% $207 2.00% 1.74% Jun-08 1.20% $211 1.47% Sep-08 1.47% $205 1.50% 1.20% Dec-08 1.74% $206 0.98% Mar-09 2.45% $211 1.00% 0.68% 0.76% 0.60% 0.66% Jun-09 3.13% $213 $ NC 0.41% 0.50% 0.25% 0.28% 0.29% 0.31% Sep-09 3.58% $216 $7.73 Dec-09 4.44% $211 $9.39 0.00% Note: In the past 6 quarters the amount of outstanding apt loans has remained virtually the same. Source: Federal Reserve However, total C&D for all real estate has dropped $170 billion . Confidential & Proprietary Page 9

Conclusion 1. Should we jump back into the pool now ? • Will NOI increases offset any increases in interest rates and cap rates ? • Has the market been too conservative over the past 24 months ? • What type of returns (IRR or COC) for apartment acquisitions ? 2. Debt • Will Fannie/Freddie continue to fuel the market ? • Is there a real risk that Fannie/Freddie will slow down, or even consolidate ? • Will CMBS come back to save B and C grade properties market ? 3. What is ahead of us ? • What keeps you up at night ? Confidential & Proprietary Page 10

Caldera Asset Management Caldera Asset Management is a turnaround and restructuring consulting working exclusively with multifamily assets. We offer lenders, equity investors, developers and lawyers the convenience and efficiency of one-stop shopping. We provide solutions that fit their individual needs.  Caldera brings a wealth of experience that covers virtually all aspects of apartments: – Asset management – Restructuring and recapitalization of portfolios as well as one-off assets – Executive experience • Public REITS • Private REITS • Pension fund advisors • Entrepreneurial firms – Experience in direct ownership of all classes of apartment assets (A,B and C) – Financing – Accounting – Brokerage – Portfolio acquisition / disposition www.CalderaAssetManagement.com Confidential & Proprietary Page 11

Distressed Multifamily Opportunities

by Ryan Slack on May 17, 2010

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