US $ 67.2 million Offering to Participate in the Investment in - PowerPoint PPT Presentation

US $ 67.2 million Offering to Participate in the Investment in Markaz U.S. Multifamily Fund IV Investor Presentation Investor Presentation December 2007 Asset Management | Investment Banking Centred around your success

Disclaimer The information in this document is in draft form and is subject to updating, completion, revision, verification and amendment. Recipients of this document who intend to subscribe for Units following publication of the final document relating to the Fund are reminded that any issue will be made solely on the basis of the information contained in the final document, which may substantially differ from the information contained in this document. This document shall not be construed as offer, or as providing legal, financial or diff f th i f ti t i d i thi d t Thi d t h ll t b t d ff idi l l fi i l tax opinions or guidance. To the extent the information is to be used by a Recipient to make legal, financial or investment determinations, Recipient shall seek advice from its own legal counsel, investment, tax and financial advisors. No representation or warranty, expressed or implied, is given by Kuwait Financial Centre, S.A.K. (“Markaz”), the Fund, the Fund Manager, or its respective directors, officers, representatives and/or employees (the “Parties”) as to the accuracy or completeness of the material, information or opinions contained in this document and the Parties shall have, and accept, no liability for any statements, the material, information or opinions contained in this document and the Parties shall have, and accept, no liability for any statements, opinions, information or matters (expressed or implied) arising out of, contained in or derived from this document or any omissions from this document, or any other written or oral communication transmitted or made available to any other party in relation to the subject matter of this document. Where indicated, portions of this document contain conclusions and projections based on Markaz research and intelligence. Markaz’s views and conclusions are the results of the exercise of its best professional judgment, based in part upon materials and information gathered by Markaz (Kuwait Financial Centre S.A.K.) and others. Use of this report or the content extracted there from by any other party for whatever purpose is at such party’s own risk and shall not, and does not, absolve such other party from using due diligence in verifying the report’s content or any of the information extracted there from. Any forward-looking statements in this Presentation such as “will”, “may”, “expect”, “project” and any other words of similar effect whatsoever are the results of the exercise of personal professional judgments. There is no guarantee that such statements would be materialized or ever occur and the Fund Manager materialized or ever occur and the Fund Manager, Markaz (Kuwait Financial Centre, S.A.K.), or its respective directors, officers, Markaz (Kuwait Financial Centre S A K ) or its respective directors officers representatives and/or employees accept no liability whatsoever as a result of such forward-looking statement. Therefore, Recipients should not rely on such forward looking statements. This document and its contents are confidential and should not be distributed, published or reproduced in whole or in part or disclosed to any other person, party and/or entity without the written consent of Kuwait Financial Centre S.A.K. (“Markaz”). 2

The Fund US$ 67.2 Million Offering in M Markaz U.S. Multifamily Fund IV k U S M ltif il F d IV Investment Period of 5 years, extendable by 4 additional one-year periods Minimum Subscription: 10 units S b 0 Class A Units Class B Units Price per Unit Price per Unit US$ 13,200 per Unit US$ 13,200 per Unit US$ 11,200 per Unit US$ 11,200 per Unit Annual Cash Yield (paid semi-annually) 7.0% 0.0% Expected IRR 13.0% 14.0% Investment Unit Manager: I t t U it M Kuwait Financial Centre S.A.K. (Markaz) General Partner: BCRE Fund IV GP, LLC (an affiliate of Boston Capital) (an affiliate of Boston Capital) 3

OUTLINE OUTLINE Investment Highlights Investment Overview Portfolio Overview Management Management Summary A Appendices di 4

Investment Highlights

Investment Highlights The Offering: Markaz U.S. Multifamily Fund IV (the “Fund”) seeks to raise US$ 67.2 million to selectively invest in the development of apartment properties in the US. The investments will be made in a manner consistent with the principles of Islamic Shari’ah. The Objective: The Fund's objective is to develop, lease-up and deliver for sale multifamily properties to capitalize on the market risk premium assigned to new construction investments relative to those in completed, occupied assets. l d d The Portfolio: The Fund will invest in approximately 4 to 8 individual projects: • The Fund has already invested in two transactions: o 344 unit Class A development in Seattle, MSA; o 240 unit Class A development in Phoenix, MSA; • Currently conducting due diligence on a 212 Class A development in Denver, MSA. Return Expectations: Target net IRRs to End Investors: • Class A Units : 13.0% + • Class B Units : 14.0% + Management Fee and Carried Interest: • Placement Fee : 2% of amount invested in projects • Management Fee : 10% mark-up over amount invested in projects g p p j • Carried Interest : 20% over an IRR of 10% 6

Investment Overview

Investment Overview The Opportunity The Opportunity Real Estate Fundamentals Capital Market Environment Real estate fundamentals support the multi-family sector: Capital markets support the development and subsequent sale of The sector is poised for substantial NOI growth. apartment properties: Yield arbitrage between low cap rates (high market prices) and high build rates (lower development costs). Multifamily Development Projects Retail Industrial Office Existing Product Largest beneficiary Capital Markets have driven valuations of changes in the higher: it is substantially cheaper to economy and develop apartment properties than to demographics acquire existing product Exorbitant House Prices; Capital Inflows into • • Multifamily Properties; Mortgage Crisis; • Significant Cap Rate • Shift in Demographics; • Compression. Employment Growth. • 8

Balance tilting towards renting Investment Overview due to affordability and sub- prime woes… p The Opportunity: Real Estate Fundamentals… The Opportunity: Real Estate Fundamentals High House Prices and Mortgage Crisis • Choices for households: (a) Purchase homes; • The on-going sub-prime mortgage crisis and rising or (b) Rent apartments (multifamily). number of defaults is leading to: • Over the past 6 years, house prices have o Tighter lending standards, larger down- risen significantly making it increasingly payments and fewer mortgage originations; expensive for households to purchase homes; o Declining housing sales volumes; and • Result: a greater number of households are o Expectations of declines in house prices, forced to rent apartments. deterring would-be buyers. Owner vs. Renter Costs Owner vs. Renter Volume 1,300 2006 US$) 1,200 rtments using: 1,100 Rent 1 000 1,000 R e Demand for Hou Renter Costs (2 Apa 900 ship + Rental] 800 ousing 700 600 600 Total Sustainable [Owners Owner and Purchase of H 500 400 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Owner Costs Renter Costs Before After 9 Crisis Crisis Sources: The State of Nation’s Housing (JCHS, 2007), Markaz Analysis and Illustrations

… Rental pool also expands due Investment Overview to demographics, immigration and employment… p y The Opportunity: Real Estate Fundamentals… The Opportunity: Real Estate Fundamentals Demographics, Immigration and Employment • 20 – 29 age group displays low home • Immigration is expected to further increase ownership rates (33% or half of national the potential target market by 12 million. average) and high propensity to rent. This • Non-farm employment has increased by 8.4 age group is expected to increase by 5.5 million people since May 2003; translating million over the next 10 years as the echo ll h 0 h h into significant growth in potential renter boomers come of age. population. Apartment Intense Age Group (20 – 29) Non-Farm Employment 45 45 140 140 44 nt (millions) Group, Millions 135 43 130 42 41 125 125 n in 20 - 29 Age G m Employmen 40 120 39 38 115 37 110 110 Non-Farm Population 36 105 35 34 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 10 Sources: Economy.com, US Census Bureau, Marcus & Millichap