PENDO INVESTMENTS VALUE ADD APARTMENTS Pendo Investments (“Pendo”) is a private real estate investment company that seeks to provide superior isk adjusted returns in value-add and core plus apartment investments throughout the West and Southwest United States. Pendo is a Latin term for “value,” as we are a value investor focused on identifying under-performing properties with current cash flow. We target assets that can be purchased below replacement cost and repositioned 10 create significant value through increasing cash flow to “as-improved” market levels Building on a successful $4 billion track record, both in acquisition and “hands-on” management, we created Pendo to bea best-in-class real estate manager that would continue the success we achieved with our previous brands, including Legg Mason, Prudential, Morgan Stanley and LNR. Pendo’s principals are thoroughly experienced fiduciaries, having managed institutional capital across nine prior, value-add oriented funds over the past 20+ years. ‘The Pendo team has (1) a depth of knowledge across all property types, (2) an ability to source attractive deals, both on and off marker, (3) executed value-add strategies on a timely basis for 20+ years, in various markets and throughout all market cycles, (4) sourced and structured both debt and equity, and (6) successfully managed and leased over 5,000 properties throughout the US to enhance value for investors. We believe we are uniquely positioned to capitalize on the opportunities in the current real estate market INVESTMENT RETURN PROFILE Our investments offer significant and stable current cash flow returns of 6-10%+ (paid quacterly), with upside from below macket rents, cesulting in overall target net returns of 12-15%. + Target Returns ~ 12-15% annually + Target Dividends ~ 6-10%+ annually + Investor Preferred Return ~ 6-8% annual + Target Hold Period — 2-5 years + Pendo Co-Invest ~ 10-30% of total equity ‘The principals and family affiliates of Pendo invest 10% to 30% of the required equity in every transaction, thereby creating an absolute alignment of interest with each investor wonependoinvestments.comPENDO INVESTMENTS VALUE ADD APARTMENTS WHY PRIVATE REAL ESTATE IN YOUR PORTFOLIO Pendo believ mong the five primary investment asset classes (stocks, bonds, cash, commodities and real estate), private real estate (apartments, in particular) offers the most attractive combination of: * Current cash flow yield * Stable and attractive retuens + Inflation protection (able to increase rent to keep pace with inflation, if necessary) + Portfolio diversification + Lack of correlation to stocks and bonds * Access to private, mid-market transactions not publicly available (through REITs, etc) If analogous to the stock market, Pendo value-add apartments offer the best qualities of a dividend and value stock, without exposure to the general volatility of the equity markets ‘TRANSPARENCY/INVESTOR REPORTING Pendo strives t0 provide complete transparency to its investors with regular and detailed corcespondence and investment updates. For example, Pendo distributes dividends quarterly with an informative letter outlining our curzent progsess compared to the original forecast and budget and offers a 24/7 online investor datab; ‘which contains relevant property documents and statements to www:realeranet and use the following login information - organization: pendo; user name: guest; and password: guest to view an example). Additionally, each deal is held via a third party property manager and accountant, which assists with transparency and insulates investors separate, standalone LLC, with from certain risks associated with co-mingling assets. We understand and take seriously the faith and trust investors big or small place in us and work diligently and purposefully on each deal to meet or exceed investment expectations. www:pendoiavestments.com sn LAOdvINVESTMENTS INVESTMENT STRATEGY endo targets core-plus and value-add, class A and B apartment assets located throughout the West and Southwest United States, Investments are centered on cash flowing properties that provide strong current returns and significant upside potential as value-add capital improvements are completed and rental rates increased to market levels. Pendo underwriting is not dependent on market growth for upside potential, however, we target assets located in submarkets that are well positioned to benefit from favorable demographic and employment fundamentals. ‘Target Asset Characteristics + Asset Class:_A- to B- + Asset Size: $2 ~ 50 million + Transaction Type: Core-plus to value-add. + Well located, cash flowing assets, providing attractive current returns with upside potential * Assets suffering from undercapitalized and distressed ownership, mismanagement and lack of operational expertise + Value increase through capital improvements, re-tenanting, leasing and management expertise + Worst house on better block + Purchase below replacement cost ‘Target Market Characteristics + Positive population, demographic and employment trends + Multiple employment generators ~ no “one-horse towns” * Barriers to future supply ~ infill locations, limited developable land, below replacement cost * Close proximity to major ports, distribution and transportation centers * Presence of research facilities, universities and government centers + Strong school districts and convenient access to amenities. (grocery stores, recreation areas, public transportation, etc.) www:pendoinvestments.com‘TRACK RECORD Pendo’s principals have a successful track record, managing over $4 billion of institutional capital across nine prior, value-add oriented funds. Previous funds were managed under various banners, including Legg Mason, Prudential, ING and Morgan Stanley RECENT FUNDS UNDER MANAGEMENT + Pendo Investments. Pendo’s principals have acquired and managed a number of single-asset, multifamily equity transactions. ‘These represent over $45MM in assets, with a combined annual net return to-date exceeding 30%. + Legg Mason Real Estate Investors, Inc. (now Latitude Management Real Estate Investors) (SLMRED”), LMREI is a Los Angeles based equity and debt fund manager with over $2 billion in value-add real estate investments across four funds. ‘The funds invest in all major property cypes wi multifamily, hospitality, and office. Investments were made throughout the United States with primary concentrations in the West, Southwest and Texas, PRIOR FUNDS ‘The WMF Funds. Prior to joining LMREI, Pendo’s principals managed three funds that invested in value-add real estate debt, with over $432MM in aggregate assets. During the time the WMP funds were managed by the principal’s of Pendo, the funds generated a combined annual yield of 18.5% to investors. ING Real Estate Investors. (“INGREI”). INGREI managed and invested over $700 million in both real estate equity and sub-performing debt. In addition to its traditional equity investments, the fund managed over $350 million in pecforming, non-performing and sub-performing debt in partnership with the FDIC (Mountain AMD ~ discussed below. INGREI funds yielded 40% annual returns to investors Mountain AMD. The Mountain AMD portfolio was one of only ewo previous Public-Private Investment Partnerships formed with the FDIC in 1994. This portfolio of over $350MM in real estate and distressed real estare debt was acquired in 1993 from the failure of two banks (Columbia S&L, Englewood, CO and First Nationwide Bank) through a pactaership with the FDIC. The fund generated approximately 40% geturas 10 investors. ‘These outstanding returns were largely a result management’s experience dealing with real estate operations and workouts. Instead of immediately disposing of the assets and hurriedly winding down the portfolio, management evaluated individual borrower quality, business plans, and market data realizing value in a strengthening market. By doing this the fund exhibited a slower disposition sate than the other FDIC partnership, but had a much higher recovery ratio of 178% compared to 135 Kearny Street Real Estate Company/MSREE. The Keasny Stccet Real Listate Company portfolio consisted of over $1.4 billion in distzessed real estate debt and was acquited by the Morgan Stanley Real Estate Fund in 1993. ‘The team proceeded to acquite portfolios from Union Bank, Industrial Bank of Japan and Bank of fornia, comprising over $360 million in properties and loans. All of these fands exceeded retuen expectations, generating over 50% yields per annum in aggregate wonependoinvestments.com SNUNLAU TVOIMOLSIH/AYOOAA MOVULCurrent and Past Funds Under Management ‘All numbers in 000% (1) Portfolio is 55% realized. Realized retums have yielded 30% IRR (2) Estimated by management as of 30 2010. Fund not yet fully realized www:pendoiavestments.com “sets uncer Reatzed Fund Year Fund Management |#ofinvestments| Unrealized IRR Pendo Investments. 2002-2012 Equity ‘$45,500 20 Barta 30%(1) Realized Pally LMREC II 2005 Debt $1,710,000 12 Realized 9.0%6(2) Parily umREC 2002 Debt 861,000 60 eaiaty 70%) WME Funds 1008 Debt 492,000 70 | FullyReaizes | 10% ING RE tnvestors 1996 EauiyiDebt $850,000 50 | FulyReaized | 40% Mountain AMD 1098 EauiyiDebt $340,000 1200 | FulyRealed | 40% MSREFiKeamy Sues! RE ares 1003 Eauityebt | $1,400,000 100 | FulyReotzed | 50% Totaiweighted Ave NA NA $5,236,500 sie NA 2%Recent Pendo Transactions sige ste | reste | rosmtynge | rowcow | source | comine | Ses Asquos | “Bapssnoncere | Sat om su roicomnmnon | mses | AMAR. | parce | ssemomm | srommom | 2m | sane som | ae | nor | agen serene mwone | 14 | Gwsmnca | sammy | sisraer | stasoom | som | soso saan are | tase | mmo aeapernnans [| tommca | manny | siszom | simoe | am | swae ses aoe | verae | vere werremare | | owamce | tammy | searzom | sammao | sem | sxe sma zen | mao | copes woe ranenur | vem | ssamnom | rose | wm wa NA wa | maa | Aras rssatmizasne| 1 | cnmnca | wann | stanon | svanoa | com | sao we are | see | apo won tenendiet | 11 | cmmca | mntonny | staraa | sarooom | om | sion Er om | toe | wars wemcombeene |e | wana | manny | sis om | mee = ae | mar | vee aaromcasmet | 2 | cca | manny | signa | rama | «em | susro ‘sme we | ae asoainons | 101 [amanom rx) manny | saomom | rama) | wm | ene 0 am | owe | aorvenvonn | 2 | pete | manny | seam | rome) | vom» | soso 7 ze | om erieammyienm | 10 | leo ca] manny | sisoiom | raarone) | raamem | anne var | oe | omn | mesotonmman | at | ronroncn| maronny | sion | rovone | roamecn | eae wor | | won | ee ee ee 8 oe | oem sowsecaraneaceed| 22 | emoweca | tanamy | s2<070 | roomowe | roam | _mozmr an | om | oan | torsreavensont | 12 | eatorn.ca | mnmmny | stare | rimae ea) | romeo | S770 waa | | ee ‘wsrtwciiomn | 29 | tame ca | wassinay | e270 | Femme | Feoncem| eee ee wa] ame | ‘wrameninvews] =| oatone ca] wmamay | e20m00 | Feareew) [rome | mae ame wa | owe westenimaeesrea| © | eoowcca| manana | sree | roanone | reaem| se 909 wa | owe | wetxnene | 1 | mamwea cx) maanay | s2zooom | roaron) | rearaeo | sree 0788 wa | mite All Footnoted deals excluded from IRR calculation as they have not been sold (1) Purchase of discount CMBS bonds that pad of at par. (2) Alleptalrtumed plus 40%%t tum, ‘Curent aan ie equal to origina! ttl cos, (3) 45% ot orginal eqllyrtured via FNWA oan, Projoctod fra realzed RR (@) Bulking on short term ground aso. $5% of captalrtumod plus 8 rtumn. Estimated IRR fom DCF analyis (5) Purchased sanuary 2071, Completed al enovato (7) Preferred Ratu of 63 to 5 (8) Deals wore purchased iy 2201 ‘oorent (8) Brought "dour ont one 45 days ae losing, "Renovation work underway, www:pendoiavestments.com ‘and sabized popety a protoma wncerien rents ind ments, Improved NOI 28% since cosng (6) Renovation werk underway and aeieving proforma rents. projects witwn budget and business plan ahead of underwitan scheduleBRIAN BUCHHAGEN President Brian Buchhagen is the President and founding principal of Pendo Investments, LLC (“Pendo”). Me. Buchhagen oversees the acquisition, management, structuring and closing of all Pendo investments. Prior to founding Pendo, Mr. Buchhagen was Co-founder and Managing Director of Legg Mason Real Estate Investors, Inc. (LMREI”). Ar LMREI, Mr. Buchhagen was a member of the Investment Committee and responsible for originating and asset managing equity and debt investments. Me Buchhagen successfully led the investment of over $2.5 billion in investments on behalf of fund investors, which included major pension funds, insurance companies, corporations and sovereign funds, Portfolio investments consisted of all major property types, including multifamily, hospitality office, industrial, retail and student housing, Mr, Buchhagen was also responsible for over $600 million in loan restructuring and led the asset management of a portfolio of over $800 million CRE. assets, including $380 million as a sponsor/operator (6,300 multifamily units; 560,000 sF office; 2,500 hotel rooms). Prior to forming LMRET in 2000, Mr. Buchhagen was a Principal with Prudential Carbon Mesa (“PCM”), where he worked as a Managing Director in the structured finance division. At PCM, Mr. Buchhagen was responsible for pricing, structuring, underwriting and managing bridge and mezzanine loans. PCM's portfolio consisted of $432 million of value-add real estate debt investments. Prior to PCM, Me. Buchhagen was a Vice President for ING Barings Real Estate Finance (ING). At ING, he worked in both an acquisition and asset management capacity with assets in the United States and Canada. In that role, he was responsible for equity investments in excess of $500 million. ING managed and invested in both real estate equity and sub-performing debt. Additionally, Mr. Buchhagen managed assets in a $325 million fund of performing, non-performing and sub-performing debt in partnership with the FDIC. Prior to ING, Mr. Buchhagen worked in both an asset management and acquisitions capacity at Lennar Partners, Inc. and the Morgan Stanley Real Estate Fund (“MSREF”). In that sole, he was responsible for equity and debt investments in excess of $400 million and participated in the securitization of loan portfolios and ““B” piece acquisitions. During Mr. Buchhagen’s tenure, MSREF’s portfolio consisted primarily of real estate equity and distressed debr, including assets acquired from Union Bank, Industrial Bank of Japan and Bank of California. In addition to his institutional experience, Mr. Buchhagen has successfully managed a $25 million “friends and family” portfolio since 1997, acting as the Managing Member for each of the individual partnerships and is responsible for the acquisition, financing, asset management and disposition of the properties. On average, the properties have generated 25%+ returns to the investors wonependoinvestments.comMATT KARDOS Executive Vice President Matt Kardos is an Executive Vice President of Pendo Investments (“Pendo”) and is responsible for sourcing, structuring and closing equity and debt investments Prior to joining Pendo, Ms. Kardos was a Vice President at Legg Mason Real Estate Investors, Inc. (SLMRED’) and was responsible for sourcing, pricing, structuring, underwriting and closing equity and debt investments. At EMRET, Me. Kardos led the originations team for the West and Southwest regions of the United States and was involved in the origination and closing of over $700 million in transactions for property types including multi-family, retail, office, industrial and hospitality. Mr. Kardos’ duties also included asset management and loan restructuring, in which he was actively involved in over $150 million in loan restructurings and managed a portfolio of over $400 million CRE assets, including $140 million as a sponsot/ operator. Mr. Kardos graduated magna cum laude from the University of Southern California, BS. with a concentration in finance. CLARK PERKINS Executive Vice President Clask Perkins is an Executive Vice President of Pendo Investments (“Pendo”) and is responsible for sourcing, underwriting, and closing equity and debt investments. Prior to joining Pendo, Mr. Perkins was an Associate Vice President at Legg Mason Real Estate Investors, Inc. (“LMRET”) and was responsible for sourcing, pricing, structuring, underwriting and closing equity and debt investments. At LMREI, Mr. Perkins was involved in the origination and closing of over $175 million in transactions for property types including multi-family, retail, office, industrial and hospitality. Mr. Perkins’ duties also include asset management and loan restructuring, in which he was actively involved in over $150 million in loan resteuctusings and managed a portfolio of over $250 million in CRE. assets, including $150 million as a sponsor/opesator, Prior to LMREI, Mr. Perkins worked in land acquisitions for KB Home where he was involved in the sourcing, underwriting, and closing of over $150 million in vacant and in-fill land acquisitions for residential development. Mr. Perkins received Bachelor of Arts degrees in Business Economics and History from the University of California, Los Angeles. wonependoinvestments.comDear Potential Investor, This letter serves as an introduction to my firm, Pendo Investments, which specializes in private real estate investments. You may have invested in private real estate in the past and/or already be familiar with the asset class, Private real estate has an extremely low correlation to stocks and bonds, provides overall portfolio. diversification, reliable current cash flow stre ble returns (without the volatility of today’s equities markets), and ‘serves as an excellent inflation hedge (particularly apartments and hotels). Pendo is not a typical private real estate firm and I hope, as you continue to read, you will consider us as an alternative investment for your portfolio. believe most investors will agree that the quality of the manager for any real estate investment is key to the success of the project. ‘This applies to both sourcing attractive, high quality investments and effectively executing the business plan to maximize value and investor returns. A good manager can make a tough deal ‘or market better while the converse is not true. Pendo Investments is a best-in-class manager with a proven, | track record throughout all market cycles and has been a fiduciary to both large and small investors ‘The principals and family affiliates of Pendo invest 10% to 30% of the required equity in every tion in order to demonstrate our confidence in our projects and establish an additional alignment oF interest with our investors. In short, we believe in our investments and are not afraid to “put our money where ‘our mouth is” Many private seal estate managers in the market have a reputation for a lack of transparency and communication with their investors. By contrast, Pendo strives to provide complete transparency to its investors with regular and detailed correspondence and investment updates. For example, we distribute aividends quartet ih a informative lng outing out carte pogieascompased to the crginalforeos and budget and offer a 24/7 online investor database, which contains all relevant property documents and statements (go to www:sealera.net and use the following login information - organization: pendo; user name: guest; and password: guest to view an example). Additionally, each deal is held via a separate, standalone LLC ‘with a third party property manager and accountant, which assists with transparency and insulates investors from certain risks associnged with co-mingling assets. We understand and take seriously the faith and trust investors big or small place in us and work diligently and purposefully on each deal to meet or exceed investment expectations. Pendo is a Latin word for “value,” as we are a value investor focused on identifying under-performing properties with current cash flow. We target assets that can be purchased below replacement cost and repositioned ro create significant value through increasing cash flow to “as-improved” market levels. Building, ‘ona successful $4 billion track record (both in acquisition and “hands-on” management), we created Pendo to be a be real estate manager that would continue the success we have achieved with our previous brands (Legg Mason, Prudential, Morgan Stanley, LNR). The Pendo team hi epth of knowledge across all property types, (2) an ability to source attractive deals (on and off market), (3) executed value-add strategies on a timely basis for 20+ years, in various markets and throughout all marker cycles, (4) sousced and structured both debr and equity, and (5) successfully managed and leased over 5,000 properties throughout the US to enhance value for investors. We believe we ate uniquely positioned to capitalize on the opportunities in the current real estate market. While Pendo has experience with all major property types and markets, today we are primarily focused on investing in Southern California apartments for the following reasons: 1. Strong current yields and upside potential from below market rents. Offer an excellent inflation hedge Benefit from a strong and improving rental market ‘Typically purchased 30 to 40% below replacement cost (so no new supply) Excellent and highly accretive debr financing available Offer defensive characteristics — i: diversification in the tenant base and corresponding rental income wonependoinvestments.com SUOLSHANI TVLLNA.LOd OL WALLATOverall, the local Southern California apartment market is very healthy and exhibiting strong rental and occupancy characteristics. ‘This is reflected in the robust rental rate growth and tightening occupancy trends over the past 12-18 months, which clearly indicate the local apartment market has rebounded off of its 2008-2010 bottom and is continuing its positive trajectory of improvement, We have witnessed both increased tenant demand and tenant's ability and willingness to pay higher rental rates across our entire portfolio. “The infill nature of the local apartment market, lack of new consteuction (resulting in litte to no new supply), and continued population growth are all strong drivers of the recent tenant rent and demand grow Supporting the local economy is over $4 billion in construction spending at the ports of Los Angeles/Long. Beach and LAX. Additionally, the local ports are expected to double their present shipping capacity over the next five years, adding signilicantly more jobs and renter demand to the local market. These projects should bode very well for the future of the local cental market. Personally, I have no doubt that within the five primary investment asset classes (stocks, bonds, cash, commodities and real estate), private real estate (apartments, in particular) offer the best combination of rrent cashflow yield, table fetuens inflation protection able ro increase rent to keep pace with inflation, if necessary), and overall profitability. As I like to say, if analogous to the stock market, Pendo value-add apartments offer the best of a dividend and value stock, without exposure to the general volatility of the equity markets. Pendo Investments is capitalizing on what we believe is a real estate market ripe with opportunity and we are actively working to take advantage of the inefficiencies present in the current market environment. In short, wwe want to buy properties before prices start to reflect the improved matket fundamentals, as is the case today. We continue to selectively source new acquisitions and grow both our portfolio and investor group, which will benefit both Pendo and investors alike. Our typical offering is underwritten to 12%+ net annual investor returns with current property cash flow supporting, an initial 7%+ annual investor dividend (paid quacterly), increasing to 10%+ as we renovate the properties and increase cash flow through higher rents. Our past apartment investments with individual investors in Southern California were marketed with similar net investor returns and actually delivered 20% +, annually (I:am happy to provide our detailed track record information upon request). However, we prefer to be conservative in our forecasts and believe in the old adage, “under promise and over deliver” Of course, historical performance in not necessarily indicative of future performance, but we are optimistic about each and every deal we acquire, We are very fortunate to have such a strong existing investor base and to have quickly sold out of every investment we have offered to-date. However, the current market warrants growing our portfolio and exploiting the many opportunities available to Pendo today. For example, Pendo has executed definitive purchase agreements and expects to offer $15 million in equity units to investors over the next 30 days. As such, we view the current time as appropriate to make new introductions and expand our existing investor base For each of the new deals, Pendo currently owns several other properties within the same submarket and all are performing very well. We have extensive knowledge of these submarkets and believe the new apartment properties will deliver similasly attractive cash flow streams and returns. ‘The transactions have been privately. sourced and are being purchased at the right time in the market, at below market prices. 1 will gladly send you a copy of our standard offering book upon request. Our website is ysripendoinvestments.com and Tcan be reached anytime a (310)597-1419 (cll) ot (310) 606-8422 (office Tam happy to provide any additional information that may help qualify your interest in Pendo. ‘Thank you in advance for your time and consideration. Best regards, bebe Brian Buchhagen President wonependoinvestments.com 10