Galea Advisors Client Service Presentation

Galea Advisors: Realty Analytics

VALUE CREATION. PERFORMANCE ENHACEMENT. REAL ESTATE SOLUTIONS

Commercial Real Estate Client Services
Underwriting & Investment Valuation,
And Due Diligence Services for
Commercial Real Estate Transactions
December 1, 2009

© Copyright 2009 Galea Advisors, Inc. All rights reserved.

Galea Advisors: Realty Analytics 2

Galea Advisors, Inc (“Galea”) is pleased to present this presentation outlining the commercial real estate outsourcing and
support services we offer in underwriting & investment valuation, and due diligence services. To date, we have completed
comparable services on engagements for lenders, advisory firms, and investment funds of various size and scope including,
most recently, an FDIC structured transaction encompassing over seven hundred loans collateralized by assets located in
fourteen states. This presentation outlines our project approach, typical work plan, staffing plan, firm credentials and professional
biographies.
We believe that Galea represents the best alternative for performing this work due to our:
• Composition as a "white-label" resource that bolsters internal resources discreetly without altering or disrupting the Client!s
corporate culture;
• Highly experienced staff, all of whom have bulge bracket financial firm backgrounds, deep real estate financial and analytical
skill-sets, and/or principal-level commercial real estate development and investment experience;
• Expertise in each of the major property types (office, retail, hospitality and multifamily);
• Service-oriented firm that focuses on providing services uniquely tailored to meet the specific needs of each individual
Client, respectively.
• Capacity to provide assistance on short notice with varying time commitments and with limited potential for Client conflicts;
• Competitive hourly, weekly, or project/asset-based fee structures.
Galea!s professionals have prior experience completing due diligence/underwriting services on billions of dollars of real
estate assets and transactions for commercial real estate groups at the following companies: Deloitte & Touche, Credit Suisse,
Capital Trust, Ernst & Young, Babcock & Brown, Jones Lang LaSalle and Alvarez & Marsal.
Galea is dedicated to providing each Client with in-depth real estate expertise in a highly efficient and cost effective manner.
We would be pleased to meet with you and review our service offerings in person or discuss other avenues for servicing your
commercial real estate needs.

Please call either Eric Andrew at (646) 662-3509 or Vernon Beckford at (914) 582-0450 if Galea can be of assistance.


Proposal Contents

Page
! Project Approach and Work Plan 6
4
! Stafﬁng Plan 13
11
! Summary Professional Biographies 13
15
! Appendix 16
18

Privileged and Conﬁdential


Project Approach and Work Plan

Project Approach

Galea!s approach to completing the underwriting & investment valuation, due diligence and lease
abstraction procedures is geared towards meeting your critical objectives in a timely and cost efficient
manner. Our approach integrates:

•Standardized Procedures and Work Program – At the outset, we will agree upon a base set of
procedures to be undertaken that will be modified, as required, dependent on the specific deal. A formal
work program will be established for each deal against which our progress will be tracked.
•Experienced Personnel – We will dedicate an experienced project team with the required skills to perform
all of the required procedures.
•Formal Weekly Status Updates – We will provide you with a formal status report each week that outlines
our progress against plan, hours incurred versus budget, and resolution status of any issues encountered.
•Ongoing Communication – We will provide you with continuous communications of any problems that we
encounter with respect to completing our work (e.g., difficulty obtaining data) or significant property-
specific issues that we identify as part of our work.

Following is our detailed work plan for completing the due diligence procedures.



Underwriting & Investment Valuation
Project Approach
And
Work Plan


Project Approach and Work Plan (cont!d)

Underwriting & Investment Valuation Work Plan Objectives
Revenue
Property and
and Market Property Other
Sponsor
Expense Analysis Valuation Activities
Assessment
Analysis

The objectives for each activity include:
• Property, Loan and Sponsor Assessment – Provide detailed summary of property historical operations and
sponsor/borrower for direct analysis and risk mitigation.
• Revenue and Expense Analysis – Compare reported in-place operating statement with available budget and
normalize to reﬂect existing market conditions and asset type benchmarks.
• Market Analysis – Research and summarize property MSA, including primary demand generators, major
employers and corporate presence, population and demographic composition, and available asset-type
performance indicators (rents/sf, occupancy rate, competitive set).
• Property Valuation – Create performance and valuation matrix showing vital operating metrics including,
income-capped valuation and LTV, appraised valuation and LTV, compare implied going-in, in-place, and
terminal cap rate. Detail debt yield (NCF/loan), DSCR (NOI/Loan).
• Other Activities – Detail investment strengths, risks, and mitigating factors at origination. Create suggested
asset management and monitoring plan. Provide state, regional and street mapping of property location.
Review applicable third-party (sponsor ﬁnancials, appraisal, engineering, environmental, seismic, STR)
reports.


Work Plan Activities
Revenue
Property, Loan
Activity and Market Property Other
and Sponsor
Expense Analysis Valuation Activities
Assessment
Analysis

Work • Summarize Property, Loan and • Summarize and review historical • Summarize property location • Prepare valuation matrix • Highlights: Summarize asset
Sponsor information: property operating statements and/or MSA, demand generators, detailing the following metrics: strengths, weaknesses, and
Steps type & sub-type, city, state, year property tax returns employment and transportation • Operations: NCF DSCR, NOI mitigating factors, or go forward
built, year purchased, lien type, • Review real estate taxes and centers DSCR issues to monitor
lien amount, loan status, insurance policies for actual • Research and summarize local • Investment: Debt yield, ROI, • Proximity Mapping: Provide local,
origination date, sponsor name, amounts and potential changes demographics (income, age, COC, total return state, and regional map of
borrower name, guarantor info, • Summarize and review existing ethnicity) • Going-in Valuation: Appraised & property location
loan assumption status, loan operating budget • Research and summarize LTV • Review Third Party Reports and
cash management/sweep/lock • Create in-place reported asset type/class market • In-place Valuation: Income- detail reporting firm/inspector,
box provisions, going-in and operating statement conditions (rate/sf, market size, capped, replacement cost, unit- contact info, report date, and the
current loan (A, B, mezz) • Create in-place risk-adjusted occupancy rates) cost derived, max debt-load. following vital factors:
balances, LTV’s and maturity operating statement • Research property competitive Year 1 cap rate • Appraisal Review: direct cap-rate,
dates, amortization type, lock- • Create stabilized best and worst set (sales/leasing) • Terminal Valuation: Stabilized reported vac, reported rent/unit,
out expiration case operating statement capped NOI, cap-rate sensitivity sub-market rents, NOI, and value
valuation • Engineering Review: condition,
est. reserves/annum, est repairs.
• Environmental:phase type, action
recommended, est. cost to cure,
cost/unit

• Sponsor and guarantor financial • Property Tax Returns and bank • City and state websites • Operating Statements • Third Party Reports
statements statements • Census reports • Underwritten year 1
Reports & • Sponsor Credit Report & Bank • Rent Roll and Leases • Market research via agents, • Client Analytical models
Data References • Reported Operating Statements internet, brokers, cold calls,
Utilized • Borrower entity docs • Insurance and Tax Bills listings, property visits.
• Originating Loan docs • Research reports • Other Market data and
• Appraisal • Other Source Documents available, applicable research
• Management & Franchise reports (suggested: costar,
Agreements reis, Claris, ESRI, MRIS, STR)



Due Diligence and Lease Abstraction
Project Approach
And
Work Plan



Work Plan Objectives

Lease Revenue Disbursements Financial Other
Abstraction Analysis Analysis Analysis Activities

The objectives for each activity include:
• Lease Abstraction – Provide detailed lease information for direct analysis and comparison to the Seller!s
reports.
• Revenue Analysis – Ensure that the tenant base rent and other income items are billed and collected
accordingly, as stated in the tenant's lease agreement, and the confirm that first year base rents for each
tenant are accurate.
• Disbursements Analysis – Verify the general reasonableness of property operating expenses by identifying
unusual and / or major fluctuations in operating expense accounts, identifying any deferred operating
maintenance items and verifying contractual payments to the service vendors.
• Financial Analysis – Highlight, on a comparative basis, the historical trends of the operating accounts and
provides an analytical review for the variance in account balances. The analysis also provides information for
evaluation of the accounting records and identifies potential misstatements that may exist.
• Other Activities – Provide miscellaneous additional information on the property as disclosed during the
financial due diligence review process. Includes reviewing information that may provide detail supporting
unusual property activities.


Work Plan Activities

Activity Lease Revenue Disbursement Financial Other
Abstraction Analysis Analysis Analysis Activities

Work • Read Signed Leases for Each • Confirm Rent Receipts Against • Note Unusual Expense Items • Prepare Comparative Statement • Review Financial Reports and
Tenant Source Docs • Confirm Payments and Coding of Operations Balance Sheet and Note Unusual
Steps • Identify Early Termination • Confirm Rent Receipts Against for Significant Items • Compare to General Ledger and Observations
Rights, Right of First Refusal, General Ledger • Confirm Payments and Coding Note Variances • Verify Each Tenant Security
Expansion Options and / or • Compare Tenant Receipts to for Service Contracts • Review Accounts Receivable Deposit to the Lease Abstract
Renewal Options Lease Abstracts • Confirm Proper Allocations of Aging Report and Note • Document the Asset
• Enter information into Client • Compare Base Rent and Other Shared Expenses Historical Write-Offs Management Cycles Under the
Data Input Template per Data Income to Rent Roll • Confirm Tax Payments and • Review Sponsor’s Explanations Current Property Management
Entry Procedures and • Confirm Miscellaneous / Other Increases of Variances and Verify Company
Definitions Income • Confirm Real Estate Tax Accuracy • Obtain Current Owner’s
• Extract Appropriate Information • Compare Abstracts to Base Year Appeals and SALT Incentives Insurance Documentation
for Due Diligence Procedures Projections • Confirm Budgeted CapEX, TI • Obtain Current Property
• Confirm Recoverable and Leasing Commissions Management Agreement and
Calculations, Billings and • Note Unfunded Tenant Mgmt. Fee Calculations
Receipts Improvement Allowances • Obtain Other Financial Docs (Job
• Compare Reconciliation Billings • Note Deferred Maintenance Costing, Notes Receivable)
to Underwriting Model • Extrapolate Full Year Property • Obtain Information Related to
Operating Expenses and “Captive Subsidiaries” that
Compare to Underwriting Provide Services to the Property

• Signed Tenant Leases • General Ledgers • General Ledgers • General Ledgers • Seller’s Monthly Reports to
• Lease Abstract Template • Rent Roll / Lease Abstracts • Statement of Operations • Balance Sheets Owner
Reports & • Commercial Lease Data Input • Projections • Seller’s Current Year Budget • Operating Statements • Detailed Tenant Security Deposit
Data Form • Billing Statements / Expense • Final Base Year Model • Accounts Receivable Aging Report
Utilized Reconciliation True-ups • Check Registers / Vendor Report • Other Seller’s Reports and
• Cash Receipts / Tenant Payment History • Variance Analysis Reports for Correspondence Files
Receivables Ledger • List of Service Contracts Prior Periods
• Other Source Documents • CapEx Schedules


Stafﬁng Plan
The sample stafﬁng plans outlined below identify the proposed roles and responsibilities for both Galea and the Client!s personnel during an
offsite and onsite service engagement.

Galea will bring a highly seasoned, multi-disciplinary team to this engagement with deep due diligence, lease abstraction and underwriting
experience. The Galea team includes a Project Management Team, Core Engagement Team and Advisory Team. The Project Management
Team will have overall responsibility for managing the Galea team and ensuring delivery of a quality work product. The Core Engagement Team
will be responsible for conducting the analyses and for producing deliverables. Finally, the Advisory Team will provide functional support on an
as-needed basis, as well as, serve as an internal quality control audit system to provide secondary review of the deliverables.

Galea anticipates ongoing involvement from the Client!s personnel throughout the engagement including participation in meetings and review of
deliverables. We would expect an Oversight Manager to be assigned to this engagement as the primary contact for managing the relationship
with Galea and in approving deliverables.
Client
Onsite Staffing Plan Commercial Real
Offsite Staffing Plan
Client
Estate Group
Commercial Real
Estate Group Galea Project
Client Galea Project
Management Team
Oversight Mgr. Management Team
• Managing
• Managing
Consultant(s) Client HR Personnel
Consultant(s)
Galea Core
Engagement Team Galea Core
Galea Advisory Team
• Project Consultant Engagement Team
• Project Consultant (Quality Control)
(1 to 10 Project
Consultants based on (1 to 10 Project
• Advisor
Client!s needs) Consultants based on
• Advisor
Client!s needs)


Galea Credentials

Real Estate Advisory Services
Galea Advisors, Inc. (“Galea”), headquartered in New York City, was formed in 2008 to provide
specialized operational and ﬁnancial services to underperforming, over-leveraged or otherwise
distressed property owners and investors of related assets. In addition to advising distressed real
estate companies and investors, Galea provides direct or “white label” creditor advisory services and
liquidation-related services.
Galea!s Real Estate Advisory Group is comprised of a dedicated team of consultants who deliver
independent and objective consultation and analysis to owners, investors, lenders, operators and
corporate users of real estate. Building on Galea!s operational and problem-solving team, our
professionals develop and implement detailed real estate strategies that improve operations, unlock
value and minimize risk. We offer comprehensive solutions that address the need for objective and
independent real estate counsel and execution.

Our real estate advisory services include:
" CRE Transaction Services
" Owner Advisory Services
" Interim and Crisis Management Consulting
" Strategy and Operations Consulting


Summary Professional Biographies
Overview
As indicated in the Staffing Plan, Galea is prepared to dedicate a core team of highly seasoned professionals to provide
underwriting and investment valuation or financial due diligence and lease abstraction services. Following is a summary
professional biographies for these personnel.

Project Management Team
Vernon Beckford, Managing Consultant
Vernon Beckford is a Director at Galea, overseeing day-to-day operations. Most recently, Mr. Beckford worked at investment
firm Sarus Partners, where he was responsible for strategic repositioning of small and middle market companies pursuing
venture capital & private equity funding. Prior to that, he worked at Credit Suisse in the Real Estate Finance Group, engaging
in fixed and floating rate debt issuance. During his tenure, he performed credit analysis, coordinated due diligence & collateral
analysis for investors and assembled and reconciled pool level data tapes related to investor disclosure. In addition, he
prepared and reviewed cash flow underwritings for commercial and multifamily loans in excess of $5 billion. Vernon also
joined Credit Suisse Asia to help establish a Japanese structured finance platform and executed the first major transaction in
that office. Mr. Beckford holds a B.A. in Political Science with a concentration on Economics from Columbia University. He
holds Series 7 & 63 securities licenses and is a member of the NASD.

Eric Andrew, Managing Consultant
Eric Andrew is a Director at Galea, overseeing commercial real estate deal sourcing. Most recently, Mr. Andrew served as a
Director at Enterprise Community Developers, a real estate development firm specializing in urban development and
distressed asset repositioning. Mr. Andrew also managed the company's direct investment vehicle, Enterprise Capital
Partners, and aided in the development and operations of spin-off subsidiary companies offering third-party services in
construction and asset/property management. Prior to Enterprise, Mr. Andrew worked at Goldman Sachs as an Analyst in the
Investment Management Division. He later joined Capital Trust Real Estate Investment Company, a publicly traded REIT,
acting as Analyst and Deal Underwriter. During his tenure at Capital Trust, he analyzed and worked on underwriting teams for
more than $7 billion worth of commercial loans and equity participations. Mr. Andrew earned a B.A. from Columbia University
with a double major in Economics and History, holds a Venture Management Certification from the Harvard Business School
VMP, graduated with distinction from the New York ICSC Real Estate Associate Program and currently holds candidacy for
CCIM designation. He holds Series 7 & 63 securities licenses and is a member of the NASD.


Summary Professional Biographies (cont!d)
Galea Core Engagement Team

Joseph A. DeVenuta, Project Consultant
Prior to joining Galea, Mr. Devenuta worked for institutional real estate ﬁrms including Babcock & Brown, and Jones Lang
LaSalle where his various experiences included underwriting, acquisition and asset management of more than $4 billion in
commercial real estate investments across the United States, along with consulting on projects relating to management
structure, process improvement and management software selection and implementation. Sample assignments have
included conducting semi-annual internal valuations for a 28,000+ unit apartment portfolio, coordinating valuations and
investor reporting for a broad portfolio of assets (including retail, self storage, development and debt assets), and managing
a $330 million loan portfolio collateralized by real assets in all major property sectors. Mr. DeVenuta holds a B.S. in
Management and Organizational Behavior with a focus in Commercial Real Estate Finance from New York University!s
Stern School of Business.

Mike Zampetti, Project Consultant
Michael Zampetti has eight years of experience in the commercial real estate industry. Michael is currently an independent
advisor to buyers and sellers of commercial real estate and the debt thereon. In this capacity, he provides underwriting,
valuation, pricing, and marketing services to both buyers and sellers. Previously, Michael was a Vice President in the Real
Estate Finance & Securitization (REFS) group at Credit Suisse, where he oversaw the creation and issuance of
approximately $35 billion of commercial mortgage backed securities (CMBS). In this role, Michael was responsible for the
day-to-day management of small teams and processes including, but not limited to, commercial real estate underwriting
analysis, conducting large scale due diligence efforts, and the sales and marketing efforts of loans and bonds. Prior to
joining the REFS group, Michael worked as a consultant in Credit Suisse!s Realty Investment Group, which was charged
with liquidating a $300 million portfolio of performing and non-performing loans and equity positions. Michael graduated cum
laude from the University of Scranton with a ﬁnance major and economics minor. He holds Series 7 & 63 securities licenses
and is a member of the NASD.


Summary Professional Biographies (cont!d)
Galea Advisory Team

Dan Wolins, Advisor
Daniel Wolins is currently a partner in a New York-based private real estate equity company. Previously, Dan worked as a
Director for Deutsche Bank's Commercial Real Estate Group in London, where he was responsible for managing the team's
collateral risk in the origination and securitization process. His day-to-day activities included pricing new loans, participating
in lending decisions and working closely with origination, structuring and distribution to ensure consistency of lending
criteria and data dissemination in the distribution process. Prior to joining Deutsche Bank in 2006, Dan worked in the Real
Estate Finance and Securitization Group at Credit Suisse for eight years in New York. He was a deal manager for fixed and
floating rate CMBS securitizations and a member of their internal credit committee. Dan graduated from the University of
Vermont with a Bachelor of Science in Business Administration.

Anthony Nazzaro, Advisor
Anthony Nazzaro is currently a principal of Layton Holdings, a commercial real estate investment and advisory firm with
Clients that include, TIAA-Cref, Brookfield Asset Management, and Rhodes Associates. Anthony has over 25 years
experience and his specialties include strategic planning, operational and organizational design, internal controls and
systems planning. Mr. Nazzaro has advised numerous real estate Clients including Homebuilders / Developers, Hospitality
Companies, Investment Managers, Opportunity Funds, Real Estate Investment Trusts (REITS), Real Estate Operating
Companies, and Corporates. His Client projects include designing and implementing asset management, budgeting
forecasting and valuation processes for a large investment manager and implementing a property and portfolio modeling
system to support the new asset management processes. He has also designed and implemented a centralized lease
administration function across office and retail portfolios of two large property management functions and designed a new
lease abstract process and template that was fully integrated with the property management system. Anthony!s Clients
include AMP Henderson, AMB Property Company and Deutsche Bank. Prior to joining the Galea Advisory Team, he
served as a Director at Alvarez & Marsal and also spent ten years in Los Angeles, New York and Sydney in the real estate
group of a Big Four firm where he served as Senior Manager. Anthony earned an M.B.A. from the University of California,
Irvine and a B.S. in Electrical Engineering from New Jersey Institute of Technology.


Appendix

Appendix


Representative Sampling of Client Deliverables

Sample Deliverables detailed herein are representative examples only. Pertinent details have been intentionally changed, deleted, or distorted to protect Client privacy and confidentiality.


Investor Reporting - Collateral Valuation Summary (Investment “1-Pager”)
COLLATERAL VALUATION SUMMARY
Loan Collateral Sponsor Relationship ID: 3
Loan ID # 100351 Property Name: Holiday Inn Express Borrower: Any Borrower LLC
Pool ID # 1234A City: Anyros Guarantor: John Doe, Jane Doe, & J&J Transportation
Portfolio: USA State: NM Loan ID# Pool ID # UPB Loan Status Lien Position
Bank Name: ABC Lending Prop. Sub Type / Yr. Built: Hotel 1999 Subject Loan: 100351 1234A 2,501,146 Non-Perf. First/DOT
Property Size (SF): 48,634 80 Keys Related Loan #1 100354 1234B 1,465,938 Non-Perf. First/DOT
Loan Status: Non-Performing Proposed Use: Hotel Related Loan #2 113578 6359A 1,085,431 Non-Perf. First/DOT
UPB / Per Key: $2,501,146 $31,264 Project Completion %: NAV Related Loan #3
Lien Position First Mortgage/DOT Site Inspection Review: YES Related Loan #4
Loan Purpose: Purchase/Acquisition Asset Summary: YES Related Loan #5
Origination Date: 2/3/2006 Appraisal Review: YES Related Loan #6
Maturity Date: 2/1/2031 NAV Legal/Environmental Review YES YES Related Loan #7
Last Payment Date: 5/4/2009 89 (Days Late) Original Appraisal Date: 5/20/05 Related Loan #8
Unfunded Commitment: $0 Original Appraisal Value: $5,000,000 $62,500 Related Loan #9
BPO/Recent Appraisal $3,570,000 $44,625 Related Loan #10
Galea UW Value / Per Key $2,880,000 $36,000 Total Exposure to Borrower $5,052,515
Asset Summary
Notes: Lien: The facility is a Non-Performing $2501146.06 First Mortgage/DOT. The purpose of the Loan was for Purchase/Acquisition
Collateral The Property is a Hotel with 80 Keys located in Anyros, NM
The Property is the newest hotel in the MSA.
Location The Property sits at the corner a major north/south arterial roadway and benefits from good visibility, and walking proximity to local amenities and an adjacent golf course.
Primary demand generators include, Eastern New Mexico University, New Mexico Military Institute, and oil and gas employers.
Market 1) The submarket offers roughly 20 competing limited service and extended stay hospitality properties. 2) Occupancy levels in the MSA are flat. 3) ADR levels in the submarket are trending down. 4) RevPAR
is expecting to trend down until 2011.
Other Issues 1) The Property condition at the time of site inspection (8/19/09) was noted as excellent. The Property has been well maintained and does not suffer from any deferred maintenance.
2) Competing flags in the operating area include the Hampton Inn, Days, Inn, Fairfield Inn, Candlewood Suites, Best Western, Econolodge and La Quinta Inn.
Borrower / Guarantor
Notes: The Borrower is Any Borrower LLC. The Sponsor for the transaction is John Doe, Jane Doe, & J&J Transportation.

1) John and Jane Doe signed full guarantees.
2) J&J transportation signed full guarantees.
3) As of October 2007, the Guarantors joint PFS stated a net worth of $13.02M based on assets of $17.2M, including $390k in cash, and total liabilities of $4.2.
4) The credit rating for John Doe showed a score of 630 as of 11/07 and reflected nine late payments, but all of his accounts were current. The credit score for Jane Doe as of 11/07 was 740 and reflected no
late payments.
Legal Summary
Mortgage None Title Policy Title Policy includes Note None Issue #1: Mechanics Liens Issue #2: None Issue #3: None
Issue (Y/N): (Y/N): material exceptions Issue: filed
Issue #4: None Issue #5: None Issue #6: None Issue #7: None Issue #8: None Issue #9: None

Tape Notes: Loan assigned from Silver State Bank to Sec. Savings - All assignment documentation in file; Title Date Down dated 8/21/09

Notes: Recent communication from 6/09 through 7/09 indicate that the Any Lender was negotiating the sale of their loan position to Any Buyer.

Environmental Summary
Asbestos (Y/N): NAP Soil Contamination X UST (Y/N): X Ground Water X Mold (Y/N): NAP Other (Y/N): NAP
(Y/N): (Y/N):
Dry Cleaner (Y/N): NAP Gas Station (Y/N): X Cost to Cure Environmental Issues: 250000

Tape Notes: 1950-91 site occupied by gasoline station. Low levels of BTEX in soil & groundwater. Results questionable because of location of samples. No doc on UST removals.
Notes: The Borrower signed an environmental indemnity agreement. Possible economic risk resulting from sites prior use pattern.
Asset Plan
Notes: UW Multiplier @ 2.5x to 3x (2.0x for quick sale), Cap Rates @ 13-14%, ADR @ $65-80/
Galea Revenue Drivers: ADR @ $75 Cap Rates: 14.0% Multiplier 2.0x Value $36,000 /key
Resolution The anticipated Loan resolution is a DPO in which the borrower refinances the existing lien within 18 months at par.
Underwriter: Galea UW Value $2,880,000 8/30/09 Reviewer 1: Client TBD Reviewer 2: Client TBD



Investor Reporting - Collateral Summary
ABC FUND, INC - COLLATERAL SUMMARY
1234 ANYWHERE AVENUE - NEW YORK, NY
PROPERTY & BORROWER INFORMATION
Property Type: Multifamily Lien Type: Mezzanine Sponsor: John Doe
Property Sub-Type: Elevator Apartments Loan Origination Date: 3/6/09 Borrower: John Doe Investments LLC
# of Units: 84 ABC Loan Acquisition Date: 3/6/09 Loan Assumable: No
City, State: New York NY Acquisition/Refinance: Refinance Carve Out Guarantor: John Doe
Year Built, Renov.: 1985 1996 Lock Box: No Cash Mgmt/Sweep: No/No ABC FUND, INC - COLLATERAL SUMMARY
LOAN INFORMATION
1234 ANYWHERE AVENUE - NEW YORK, NY
Loan Issuer
Balance Loan/ Appr. Fitch Moodys S&P NCF Init. Mat. Ext. Mat. Lock. PROPERTY CASH FLOW PROJECTIONS AT ORIGINATION (000s)
Note Holder (000s) Unit LTV(1) DSCR LTV LTV Yield Date Date Index(2) Spread Amort.(3) Exp. Year 1 Year 2 Year 3 Year 4 Maturity Year 6 Year 7 Year 8 Year 9 Year 10
Senior Loan XYZ Bank $5,900 $70,238 44.36% NAV NAV NAV 13.7% 4/1/14 4/1/14 Swaps 1.77% I/O, Fixed 4/1/14 12 Mos 12 Mos 12 Mos 12 Mos 5 Mos 12 Mos 12 Mos 12 Mos 12 Mos 12 Mos
Mezz. Loan ABC Fund 3,950 117,262 74.06% NAV NAV NAV 8.2% 4/1/14 4/1/14 Swaps 3.35% I/O, Fixed 4/1/14 FYE 12/09 FYE 12/10 FYE 12/11 FYE 12/12 ending 4/14 FYE 12/14 FYE 12/15 FYE 12/16 FYE 12/17 FYE 12/18
Economic Occupancy 96.2% 96.2% 96.2% 96.2% 96.2% 96.2% 96.2% 96.2% 96.2% 96.2%
Total $9,850 Base Rent
2.40% $1,614 $1,663 $1,712 $1,764 $780 $1,871 $1,927 $1,985 $2,045 $2,106
(1)
LTV is based on the appraised value of $13.3 MM, pursuant to the appraisal prepared by Leitner Group, Inc. dated December 08, 2008. Other Income 6 6 6 7 3 7 7 7 8 8
(2)
The Swaps rate will be locked-in at closing. Vacancy Loss/Collection Loss (61) (63) (65) (67) (69) (71) (73) (75) (77) (80)
(3)
The Loan is I/O during the first two years and amortizes based on a 30 year schedule thereafter. Total Revenue $1,559 $1,606 $1,654 $1,704 $753 $1,807 $1,862 $1,918 $1,975 $2,034
RE Taxes and Ins. 209 216 222 229 101 243 250 257 265 273
PROPERTY OPERATIONS Operating Expenses 469 483 497 512 226 543 560 577 594 612
Net Operating Income $881 $907 $935 $963 $426 $1,021 $1,052 $1,084 $1,116 $1,150
Property Statistics Actual Issuer U/W No. of CapEx Escrow
Avg. In-Place Galea Adj. (37) (37) (37) (37) (37) (37)
(000s) Actual 2006 2007 Actual 2008 NCF(1) Per Unit Unit Type Units (2) Avg. SF Adjusted NOI (NCF) % Occ.
Rent Market Rent $844 $871 $898 $926 $389 $985
Physical Occupancy 97.4% 99.2% 98.8% 98.0% 1 Bedroom 22 540 $1,208 $1,341 100%
Plus: CapEx Escrow $37 $37 $37 $37 $37 $37 0 0 0 0
Economic Occupancy 96.6% 98.4% 97.1% 98.0% 2 Bedroom 48 750 1,680 1,865 100%
Less: Actual CapEx (37) (37) (37) (37) (37) (36) (36) (36) (36) (36)
Base Rent $1,369 $1,369 $1,522 $1,614 $19,448 3 Bedroom 13 940 100%
2,100 Funding (Deficit) From Reserve
Net 2,331 $0 $0 $0 $0 $0 $0
Other Income 19 20 20 16 188 Total / Average 83 724 $1,621 $1,799 100%
Vacancy Loss (47) (21) (44) (33) (393) Rent roll data as of 11/28/08 0 0 Ending Loan Balance (Mezz. Loan)
$0 - $9,850 $9,850 $9,624 $9,391 $9,153 $9,153
Total Revenue $1,341 $1,368 $1,497 $1,597 $19,243 DSCR @ Actual Rate (Mezz. Loan)
HOUSING ASSISTANCE PAYMENTS ("HAP") CONTRACT 1.11x 1.15x 0.92x 0.96x 0.41x 1.39x
RE Taxes and Ins. 162 160 196 220 2,656 Term: NCF/Loan (Mezz. Loan)
Five years term with unlimited five-year extension options 8.6% 8.8% 9.3% 9.9% 10.2% 10.8%
Operating Expenses 622 605 606 529 6,373 Payments: HUD pays owner a portion of tenant's contract rent minus an amount equal to the greater of (i) 30% of
NOI $557 $604 $695 $848 $10,214 tenant adjusted income, (ii) 10% of gross income, or Thethe portion of projections were designated the following assumptions: (i) in-place rents according to the rent roll dated November 28, 2008, (ii) a 3.0% economic vacancy, (iii) historical
(iii) cash flow welfare assistance based on
Capital Expenditures 0 0 0 (37) (441) for housing. revenues grown at 3.0%, (iv) historical operating expenses grown at 3.0%, (v) management fees projected at 4.61% of effective gross revenue, and (vi) $436/Unit capital reserve ($36,610).
NCF $557 $604 $695 $811 $9,773 Eligibility: Families with income below 50% of the area median income.
Rent Adjustments: Contract rents are reset to market (upward or downward) every 5 years. They may also adjusted
Appraised Value/Per Unit/Date: $13,300 $158,333 11/15/08 annually (upward only).
Galea Value/Per Unit/Date: $13,070 $155,597 3/1/09 Termination Options: The owner may terminate contract with written notice to the CA and each tenant in according to law PROPERTY PERFORMANCE (000s)
and HUD requirements.
(1)
Based on XYZ Bank's underwriting. Galea UW
(2)
The property contains 84 units. The total number of units shown excludes one 3-bedroom unit occupied rent-free by the superintendent. Property Statistics Actual 2007 Actual 2008 Yr 1
GENERAL NARRATIVE Economic Occupancy 98.4% 97.1% 96.2%
The Property, known as John Doe Apartments, is a 100% occupied, 77M sf apartment building containing 84 units located at the southwest corner ofEffective Gross and 115th St. in northern
Anywhere Ave. Revenue $1,368 $1,497 $1,559
Manhattan. Built in 1985 for use as project-based Section 8 affordable housing, the Property generates 79% of the its income from HUD Section Operating Expenses Housing Assistance
8 subsidies under a 764 802 678
Payments ("HAP") contract through 2010. NOI $604 $695 $881
Actual CapEx 0 0 (36)
The Property's East Harlem neighborhood has seen significant revitalization over the past few years. The East Harlem submarket contained 40M Adjusted NOI (NCF)
households as of 2008, with an average $604 $695 $845
annual household income of $39M compared to $64M for the nation. Due to a housing shortage throughout the submarket, which has a residential vacancy Debt less than 3%, occupancy rates
Total rate Service 760 760 760
approach 100% in most properties, with only short-term vacancies. Contractual rents at the Property, which average $1,621 per unit per month, are set to be 20% below market rents in
Cash Flow After Debt Service ($156) ($65) $84
accordance with the HAP contract. Galea believes the market rents used by HUD may be high. Galea's analysis indicates market rents to be approximately DSCR for 1-bedroom
Senior $1,340 - Adjusted NOI apartments, 1.45 1.66 2.02
$1,870 for 2-bedroom apartments and $2,330 for 3-bedroom apartments based on broker rental listings for comparable apartments in market rate buildings, which meansNOI
Total DSCR - Adjusted in-place average 0.79 0.91 1.11
rents at the Property are closer to 10% below market. As part of the Section 8 program, the Property benefits from real estate tax savings as well as lower vacancy and collection loss than
NCF/Loan 6.1% 7.1% 8.6%
would be expected in a market-rate building. The Property currently pays a PILOT (payment in lieu of taxes) of $183M, which is estimated at $137M below market real estate taxes. The
Swaps 5.21% 5.21% 5.21%
Property does not require the capital outlay that would be necessary to convert and maintain the building at market rate levels within an area with suchImplied Going In Cap Rate
an abundance of new construction. The 4.62% 5.32% 6.46%
tax savings combined with lower maintenance costs and the HAP rents, which are close to market rate and on average 80% HUD-paid, makes continuing under the HAP contract more
Galea Value(1) $13,070
profitable for the owner than converting the Property to a market-rate building. Galea Value LTV 75.4%
(1) Value is based on a 10-year DCF with a 6.75% terminal cap rate and a 9.25% discount rate as of 12/31/08.
Jake Doe, Martin Doe and Jehoshua Doe (20% ownership) are the general partners responsible for management and operations. John Doe (required to maintain 25% ownership), who reports
Performance Comments
a net worth of $1.1B and $80MM liquidity as of 6/30/09, will be the recourse carveout guarantor of the loan and has extensive real estate experience through ownership and management of
over 21 Section 8 developments (9.5M units), more than 25M residential units and over 10MM sf of commercial and industrial space in the New York Metropolitan area. Alexander Doe (55%
ownership), whose net worth is reportedly in excess of $50MM, has no control over the operation of the property and will never be allowed to have a controlling interest due to his credit history, Galea VALUATION (000s)
including involuntary bankruptcy petitions that were filed against him and numerous properties being foreclosed upon. The Property is managed by XYZ Realty Corp., a Doe-owned company
which has been involved in the management of Section 8 housing since its inception in 1957. The company currently manages four buildings with a total GA654 units throughout Manhattan and the
of Value $13,070 GA LTV (Senior Loan) 45.1%
GA Value / Unit 157,471 GA LTV (Mezz. Loan) 75.4%
Bronx, all of which have been under their management for over 19 years. Cap-Rate (1st Year NCF) 6.46%

Appraised Value $13,300 Appraised Value LTV (Senior Loan) 44.4%
Appraised Value / Unit 160,241 Appraised Value LTV (Mezz. Loan) 74.1%
INVESTMENT STRENGTHS/ RISKS AT ORIGINATION Going-In Cap Rate 6.25%
(+)Occupancy: The Property is currently 100% with a waiting list in excess of 250 people and units that are generally rented within one month. The Galea underwritten value of $13.1MM is based on a 10-year DCF with a 6.75% terminal cap rate on yr. 11 NOI of $1.2MM and a 9.25% discount rate as of 12/31/08.
(+/-)HAP Contract: The Property generates nearly 80% of its income from government subsidies, which limits the risk of collection loss and tenant payment defaults, but also provides risk in the
event of a HAP contract default that could cause HUD to stop payment of all subsidies.
TAKE-OUT ANALYSIS (000s)
GA Terminal Cap Rate 6.75% Senior Loan Mezz. Loan
Required DSCR 1.25x Ending Loan Balance $5,443 $9,153
CT Value (Net Sale Proceeds EO Year 6) $15,585 Ending LTV 34.9% 58.7%
Breakeven Constant 15.15% 9.01%

LOAN ASSESSMENT/CAPITAL TRUST ASSET PLAN
Portfolio Management to perform quarterly review.
Monitor the level of rents in property submarket.


Galea Advisors Client Service Presentation

Galea Advisors Client Service Presentation

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