Business and Investment Strategy

U.S. Apartment Opportunity Fund 2008 (USAOF 2008) has identified the multifamily apartment property sector in the U.S. as a sector in which investors can take advantage of investment opportunities created by current economic circumstances. The tightening of credit markets in the U.S. over the past 12 months, arising as a result of the collapse of the “sub-prime” mortgage market, coupled with a general economic slowdown have caused an erosion of residential real estate prices in many areas of the U.S. USAOF 2008 is a fund created to take advantage of these opportunities in order to generate positive investment returns over the medium to long term investment horizon.

Multifamily Apartment Property focus
U.S. apartment fundamentals are quite strong, with effective rent growth in 2006 exceeding inflation for the first time since 2001. The availability and cost of debt has changed, but healthy occupancy levels, rent growth and a lack of overbuilding are the basis for an optimistic view of the sector. Apartments consistently outperform all other real estate asset classes in terms of risk-adjusted returns. USAOF 2008 believes these factors represent an excellent buying opportunity:

• Historical Stability– Over the past 3 decades, the U.S. multifamily apartment property sector has earned a very attractive 11.91% average annual total return, as compared to a 9.62% average annual return for other real estate property classes. 
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  Impact of Sub-Prime Mortgage Crisis Has Created A Unique Buying Opportunity– In recent years, mortgage financing became readily available to U.S. homebuyers who had not previously qualified based on their income (commonly referred to as the “sub-prime” mortgage market). As a result, many people who would traditionally have been renters were able to purchase homes, and the result was a decreased demand for rental housing. Housing prices have not yet adjusted significantly in most markets but mortgage qualification has already become substantially more difficult. As a result the affordability of single family housing has declined and home ownership is now out of reach for many people, favoring the apartment sector.  People still have to live somewhere, so they will rent apartments
• Increasing Demand for Rental Housing as a Result of Economic Downturn – After a decade of decline, the number of renter households is rising again as the nation’s homeownership trend is waning.  In an economic downturn, demand for rental housing can increase as consumer confidence erodes; job losses mount and potential home buyers postpone their purchase and elect to continue renting. USAOF 2008 expects rental occupancy rates in the multifamily sector to increase as a result of this increased demand for rental housing and expects the effects of this increased demand will be magnified by the removal of apartment stock over the past couple of years by condominium converters.
  
Lower HO rate... good for apartments, right?
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• Strong Population Growth– Despite current economic concerns, population growth in the U.S. continues at the rate of nearly 1% annually, with much of the growth coming in the Southwestern and Southeastern portions of the country, in which USAOF 2008 will target property acquisitions. USAOF 2008 expects that new immigrants to the U.S. will first seek out rental housing rather than buying homes, increasing demand for rental housing. Vacancy rates are at or below long-term averages in most markets, propelled by continued job growth and low unemployment.
• Limited Supply of New Properties – USAOF 2008 expects that another result of tightening credit markets will be a decrease in the new construction of multifamily apartment properties, thereby putting demand on existing properties and leading to increasing occupancy rates.  In addition, significant increases in building construction costs have reduced the levels of new supply.

• Abundance of Multifamily Property Supply– The U.S. multifamily apartment property sector is vast and there is an abundance of multifamily apartment property supply. USAOF 2008 expects that current economic circumstances will result in many owners being required to sell their properties in order to repay financing or repatriate capital for other properties or businesses. USAOF 2008 believes there will be significant opportunities to acquire high quality multifamily apartment property assets at attractive valuations and to further enhance their value through asset refurbishment and re-positioning in the marketplace.
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  Institutional Appetite is Strong – Excluding sales to condominium converters, apartment sales through the third quarter 2006 were up 16 percent, reflecting pent-up demand for rental apartments by institutional investors that are underweight to apartments as a result of selling in earlier years to aggressive condominium converters.  These institutions are now back in a net buying mode as condominium converters become less active.

Opportunistic focus
The current dislocation in capital markets should provide attractive opportunities for well-capitalized investors to exploit mispricing of risks exposed by the withdrawal of highly leveraged buyers. Liquidity constraints will present a variety of opportunities: over-leveraged capital structures which are no longer sustainable; non-strategic owners and/or fatigued investors  will look to exit investments; mis-capitalized transactions and/or investors with liquidity events will create motivated sellers; and, misalignments between developers and their investors will unwind some investments.

Markets with higher concentrations of echo boomers and high levels of immigration should experience better-than-average growth especially in the renter-by-necessity apartment sector.

Experienced Management Team with a Strong Track Record of Creating Value
Investors will have the benefit of USAOF 2008’s experienced real estate management team with a breadth of experience in all facets of multifamily real estate, including acquisitions, asset management, property management, lease administration and finance. John Murphy, Lorne Borgal and Ian Mallmann are directors and senior officers of USAOF 2008 and have an extensive track record of successful property investments.

John Murphy
Mr. Murphy has grown the business from a start-up and has overseen the acquisition of over $900,000,000 worth of real estate projects in Canada, the United States and Mexico.   He has been directly involved in the acquisition, financing and re-development of 31 multifamily properties totaling over 3,000 residential units with a retail value in excess of $350,000,000; and five resort projects with a retail value in excess of $150,000,000.

Lorne Borgal
Mr. Borgal is the President of 20|20 Investment Inc is responsible for developing the overall strategy of the business, as well as engaging key resources, budgeting, developing the timing for each offering and the overall performance of these offerings. Mr. Borgal has been involved with real estate projects located in Canada, the United States and Mexico.   Since joining the company in 2005, Mr. Borgal has been instrumental in the acquisition of ten multifamily properties totaling 1,678 residential units with a retail value in excess of $300,000,000.

Ian Mallmann
Mr. Mallmann is the Chief Operating Officer of 20|20 Investments Inc.  Mr. Mallmann is an accomplished senior executive with an extensive background in corporate finance, real estate investment, finance, acquisitions, development and asset management gained over a 20 year career.  Most recently, he oversaw the acquisition and financing of a US$240,000,000 portfolio of Class A multifamily properties totaling 1,200 units for condominium conversion for the 20|20 Group of Companies. Mr. Mallmann also developed investment strategies focused on value-added opportunities, including the analysis and identification of condominium conversion and development opportunities in major U.S. markets, such as Dallas, Texas, Phoenix, Arizona, Las Vegas, Nevada and Atlanta, Georgia.  From 1998 to 2003, Mr. Mallmann was the President, Chairman and Chief Executive Officer of Del Cano Properties Trust where he led the successful turnaround of a distressed Real Estate Investment Trust (REIT) with a US$100,000,000 portfolio of 11 apartment properties located in Arizona and California.

Alignment of Interests Between Management and Trust Unitholders
An investment in Trust Units has been structured to align the interests of management (through the Property GP) with those of the Trust Unitholders. Accordingly, Trust Unitholders are entitled, by way of the Trust’s interests in the Investment Company, to an annual cumulative 8% return before any amount is paid to Property GP as a share of the income of the Property LP.

Prudent Use of Financial Leverage
The current real estate debt financing market offers long-term debt financing at attractive interest rates which the Property LP intends to fully utilize in order to increase its return on equity. USAOF 2008 expects that Properties will be available for acquisition at prices which provide an initial annual return on the unlevered purchase price of approximately 7%, while long-term mortgage financing will be available at annual interest rates of between 5.0% and 6.0%, providing positive financial leverage upon acquisition. As well, Property GP will target the overall loan to value ratio of the Mortgage Loans at not more than 75% of the purchase price of the Properties as a whole, plus the amount of any property improvement reserve account approved by the Lenders. Further, the Lender’s recourse under each Mortgage Loan is expected to be limited to the Property secured in respect of the Mortgage Loan, thereby insulating other Properties from recourse in the event that one Property suffers financial distress.