OPPORTUNITY FUND I. August 31, Dear Investor:

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1 August 31, 2012 Dear Investor: We are pleased to provide the Quarterly Report of DeBartolo Opportunity Fund I, LP ( DOFI or the Fund ) covering the period of time from April 1, 2012 through June 30, 2012 (2Q). Executive Summary DOFI operating metrics continue to strengthen and as a result the General Partner approved the Fund s second distribution of approximately $3 million to Limited Partners, outlined in detail below. Though we have enough capital for a small investment opportunity, the Fund is fully invested and our focus has shifted from making new acquisitions to asset management. Our strategy is to increase the underlying value of each investment by enhancing operating cash flow and pursuing market-driven disposition opportunities that will maximize investor returns. In fact, we are currently exploring the sale of one of our strongest performing assets, Copper Lake Apartments in Houston, Texas, which would generate potential reinvestment proceeds. The following are additional DOFI updates from this quarter: - As of August 30, 2012, the Fund has approximately $4.6 million in capital. Our pipeline is strong and we are currently underwriting multifamily, retail and hospitality opportunities in Florida, Georgia, North Carolina, California, Texas and New Jersey. - We successfully closed on the sale of a retail parcel at Prairie Stone Crossing in Hoffman Estates, IL for $1.675 million on April 16. Proceeds from this sale are included in September s distribution to Limited Partners. Distribution A $3 million distribution will be made in September 2012, and was calculated from the following transactions: - $1.4M in operating cash flow primarily from Falls at Copper Lake - $1.610M from Prairie Stone lot 6a sale Cumulatively, distributions to the Limited Partners will total approximately $5M. Future distributions will be made from excess operating cash flow and proceeds from sales as they occur until the fund is fully liquidated. Quarterly Conference Call The Fund s quarterly investor call with Ed Kobel, President of the Fund s General Partner, will be September 10 at 3 p.m. EST. The following are teleconference dial-in numbers: - United States: (800) International: (612) Confirmation Number:

2 A transcript, as well as a recording, will be available after the call. Below are access numbers for the replay, which will be accessible September 10 at 5:30 p.m. through November United States: (USA) (800) International: (320) Access Code: Acquisitions The Fund did not make any acquisitions during this quarter. As mentioned in the Executive Summary, the Fund is fully invested and has enough capital for a small investment opportunity. DOFI s portfolio currently consists of: - 6 multifamily properties Falls at Copper Lake (Houston, Texas), Arbor Walk Apartments (Tampa, Florida), Landmark at Woodland Trace (Casselberry, FL); Landmark at Garden Square (Palm Beach Gardens, FL), Landmark at Waverly Place (Melbourne, FL) and Landmark at Grayson Park (Tampa, FL) - 3 limited service hotels Holiday Inn Express & Suites Sarasota East (Sarasota, FL), Hampton Inn (The Villages/Lady Lake, Florida) and Holiday Inn Express (Tampa North Telecom Park) - 2 retail centers Intracoastal Mall (North Miami, FL) and Prairie Stone Crossing (Hoffman Estates, IL) - 1 land development Tinley Park Retail Development Site (Tinley Park, IL) - 1 yield-driven investment International Hot Rod Association (IHRA) Entertainment (Palm Beach Asset Management The following is a 2Q update related to the asset management of the Fund s investments. Landmark at Garden Square (formerly Union Square Apartments) Palm Beach Gardens, FL - Acquisition date: March 22, Price: The JV Partnership acquired the Property in an exclusive off-market transaction directly sourced via a proprietary relationship with the seller for $59.4 million (approximately $109,000 per door). DOFI s investment totaled $767, NOI: $794,185 (2Q); YTD not available as we acquired the property during Q Occupancy: 79% - Average Revenue Per Unit: $1,465/month - Update on improvements: We have started our rehab and are also focused on clearing out the delinquent resident base. Occupancy and financials will trend higher as we improve the property. Landmark at Waverly Place (formerly Sunbreeze Apartments) Melbourne, FL - Acquisition date: March 29, Price: The JV Partnership acquired the Property in an exclusive off-market transaction directly from the seller for $9.25 million (approximately $44,400 per unit as-is and $51,500 asrenovated). DOFI s investment was $300,000.

3 - NOI: $224,998 (2Q); YTD not available as we acquired the property during Q Occupancy: 90% - Average Revenue Per Unit: $1,082/month (2Q) - Update on improvements: We have started the rehab process and gained control of the operations. We appear to be on track and expect this asset to perform to pro forma or better. We are currently 90% occupied and will increase in occupancy as we rehab units for new residents lease up. Financials appear to have stabilized and will trend higher as we improve this asset. Landmark at Grayson Park (formerly Cypress Run Apartments) Tampa, FL - Acquisition date: March 30, Price: Total price was $22,135,400 ($55,147 per door); DOFI s investment was $981, NOI: 358,691 (2Q); YTD not available as we acquired the property during Q Occupancy: 83% - Average Revenue Per Unit: $879/month - Update on improvements: We have started the rehab process and gained control of operations. We appear to be on track and expect this asset to perform to pro forma or better. We are currently 83% occupied and will increase in occupancy as we rehab units for new residents lease up. Income is not where we want it and expenses are high with rehab costs. These financials will show improvement as we go forward and both income and NOI seem to have stabilized. - Landmark at Woodland Trace Casselberry, FL - Acquisition date: November 29, Price: $18,452,000; DOFI s investment totaled $704, NOI: $403,626 (2Q); $802,792 (YTD) - Occupancy: 95% - Average Revenue Per Unit: $1,051/month - Update on improvements: We are currently in the process of our rehab, which consists of a remodeled clubhouse, new interiors and new exterior paint. Our lease-up is progressing on track and is meeting our pro forma projections. We are fully staffed and feel this property will continue to meet our financial expectations. Income and occupancy were down in June but expenses have stabilized as our rehab is being completed and NOI should improve. International Hot Rod Association (IHRA) Entertainment Palm Beach, FL - Acquisition date: November 16, Price: $2 million; DOFI paid $1.9M for a Moroso Investment Partners ( MIP ) Series 2011 Convertible Subordinated Cash Flow Promissory Note and $100,000 for a 5% interest in Moroso Investment Partners IV ( MIP IV ), 5% equity interest in MIP IV and a 7.5% equity interest in Palm Beach International Raceway, Moroso Investment Partners, and ongoing acquisitions made by IHRA Entertainment. We currently have ownership interests in Memphis Motorsports Park and Palm Beach International Raceway with others currently in negotiations to acquire. The Fund s $1.9M note will earn an 18% accrued interest and compound quarterly.

4 - Investment Management: The venture continues to perform strongly with Palm Beach International Raceway and Memphis International Raceway hosting multiple events during the second quarter. Palm Beach hosted the Formula Drift event which was a success and revenues for the event were up 12% over last year despite rain during one of the sessions. Memphis International Raceway continues to build traction, and hosted its first IHRA Thunder Jam earlier in the quarter. Additionally, at the venture level, we are increasing our sales efforts and pursuing capital refinancing opportunities. Tinley Park Retail Development Site Tinley Park, IL - Acquisition date: July 7, Price: $1 million, an approximate 83% discount to the previous owner s original basis - Property Management: We continue to explore development options for the remaining parcels. As we mentioned last quarter, proceeds from the parcel sold in December 2011 was included in the March 2012 distribution. Intracoastal Mall North Miami, FL (Note Acquisition secured by Property) - Acquisition date: September 28, 2011 (note); March 19, 2012 (deed in lieu) - Price: $44.35 million, an approximate 25% percent discount to the $59.2 million outstanding commitment - NOI: $993,971 (2Q); $1,180,659 (YTD) - Occupancy: 89.5% - Average Rent Per Square foot: $ Property Management: We successfully refinanced the property in May and used the proceeds to repay our JV partner who had used their line of credit to initially fund the acquisition. We are currently working with our JV partner and our property manager to work on these primary objectives: (1) stabilize the property s operations and cash flow; (2) improve tenant relations; (3) retain and increase occupancy by closely coordinating and cooperating with the leasing teams; (4) enhance the aesthetics and integrity of the property through the implementation of a strategic maintenance and capital improvement plan; (5) extend the useful life of the property through cost-effective preventative maintenance programs; (6) increase overall asset value through combined resources; and (7) maximize operational efficiency while minimizing operating costs. Prairie Stone Crossing Hoffman Estates, IL - Acquisition date: April 29, Price: $8 million, an approximate 49% discount to the outstanding loan balance - NOI: $208,019 (2Q); $407,546 (YTD) - Occupancy: 92.9% - Average Rent Per Square foot: $ Property Management: As we mentioned in 1Q newsletter, we successfully closed on the sale of an 8,000 square foot pad for $1.675 million in April. The net proceeds are part of the September 2012 distribution to investors.

5 Holiday Inn Express & Suites Sarasota East Sarasota, FL (Formerly Country Inn & Suites) - Acquisition date: June 22, Price: $4.85 million, an approximate 55% percent discount to the previous owner s investment - Revenues: $514,192 (2Q); $1,246,818 (YTD) - NOI: $135,112 (2Q); $421,239 (YTD) - Average Daily Rate (ADR): $95.28 (2Q) - Revenue Per Available Room (RevPAR): $55.55 (2Q) - Occupancy: 58.2% - Property Management: We had some capital improvements due to Hurricane Debbie and some resulting water damage that has been addressed at the property level. Despite this, we still had a strong quarter. We increased reservations due to continued stabilization of the new brand and the Holiday Inn Siesta Key soon to be deflagged by IHG as of July 1. For month s end, we outperformed financially relative to budget. Falls at Copper Lake Houston, Texas Acquisition Date: September 10, Price: $31.1 million - NOI: $582,869 (2Q); $1,172,882 (YTD) - Occupancy: $94.9% - Occupancy: 94.9%; Average occupancy in the sub-market in March was 94.3%, and Falls at Copper Lake closed the month of June just above the sub-market average. We anticipate occupancy to continue to increase with continued marketing efforts, which include print advertising in For Rent Magazine, Apartment Finder and Apartment Guide. The property is also advertised on several Internet sites including Forrent.com and Apartmentguide.com. Twenty leases were captured in March as a result of this advertising. - Average Revenue Per Unit: $1,028/month - Other: We recently updated some of the amenities including new pool furniture, grill station and imac computers. We are also exploring the sale of this asset which would generate potential reinvestment proceeds for the Fund. Arbor Walk Apartments Tampa, Florida - Acquisition Date: December 17, Price: $19.2 million - NOI: $328,435 (2Q); $682,784 (YTD) - Occupancy: 97%; Average occupancy in the sub-market for the month of June was 96%, and Arbor Walk closed the month above the average. Compared to the close of Q1, the property increased occupancy from the month of March by 4%. This asset in close proximity to the University of South Florida and primarily leased by young professionals and graduate students. - Average Revenue Per Unit: $914/month Hampton Inn The Villages/Lady Lake, Florida - Acquisition Date: December 28, Price: $3.5 million - Revenues: $314,642 (2Q); $811,270 (YTD) - NOI: $57,293 (2Q); $303,649 (YTD) - Average Daily Rate (ADR): $92.80 (2Q)

6 - Revenue Per Available Room (RevPAR): $41.26 (2Q) - Occupancy: 43.6% - Property Management: We had some capital improvements due to Hurricane Debbie and some resulting water damage that has been addressed at the property level. Despite this, we still had a strong quarter, are ahead of budget and continue to maintain our #1 position on Trip Advisor. We are now entering the slow season at this hotel. Holiday Inn Express (Formerly La Quinta Inn & Suites) Tampa North TelecomPark - Acquisition Date: September 30, Price: $3.65 million - Revenues: $299,191 (2Q); $736,083 (NOI) - NOI: $37,279 (2Q); $184,517 (YTD) - Average Daily Rate (ADR): $78.98 (2Q) - Revenue Per Available Room (RevPAR): $35.03 (2Q) - Occupancy: 44.4% - Property Management: We continue to experience strong year over year financial performance. For year to date, we are currently ahead of last year by $132,500 for room revenue. We continue to maintain our #1 position on Trip Advisor. Outlook The overall economy continues to recover, but is stuck in slow gear. According to economists, after a decline in second quarter growth to 1.5%, we can expect the overall economy to grow by only 2% this year, not enough to improve the U.S. labor markets and national unemployment rate currently around 8.2%. There is great uncertainty and speculation as we continue into the third quarter and the presidential election nears. Election results will certainly affect the economy over the next six to twelve months because of potential policy change, voter sentiment and consumer confidence. Though statistically there is no significant pattern of returns before, during, and after election years, the bold differences between President Obama and Mitt Romney have many investors on the fence whether to invest now or wait. Regardless of who is elected in November, the so-called fiscal cliff, a series of tax cuts that are scheduled to expire at the end of 2012, as well as a series of spending cuts that are set to take effect at the beginning of 2013, could have a dramatic impact on the economy. Assuming no changes to current law, the U.S. economy will be impacted by $600 billion in tax increases and spending cuts in 2013 and according to Congressional Budget Office estimates could lead the U.S back into recession and reduce the GDP by over 1%. All of these variables contribute to the uncertainty of the commercial real estate market and foster a distressed environment. We anticipate the quantity of distressed commercial real estate assets to increase globally as the deleveraging process unfolds in the coming years. In fact, this is a rare time in history, where we have the opportunity to buy assets at distressed prices one day, apply our core competencies and turn around and sell at premium pricing after a short period of time. This only further increases the spreads we are able to achieve in our returns.

7 However, despite this outlook and defying concerns about the economy and job growth, the U.S. commercial real estate market did show improving fundamentals across all property sectors in the second quarter of Below is an update on the three primary project types DOFI is invested in. - Multifamily: Leasing fundamentals are at record levels. Vacancy rates hit 4.7% in Q2, the lowest since the fourth quarter of 2001 and the average effective rent rose 1.2%, the highest rents have been since 2007, according to Reis. Vacancy rates below 5% are considered a landlord s market with demand justifying higher rents and fewer concessions. This trend is expected to continue as the shift in housing demand continues. According to The Demand Institute, more than 50% of those planning to move in the next two years say they intend to rent. Rental households comprise 34% of the housing stock and rentals are growing at the rate of 1.6 million households per year. Approximately 55% of new renters are renting single-family homes, while 45% are renting apartments. - Hospitality: The hotel industry continues its recovery in all major US hotel markets and posted a healthy second quarter. The industry reported increases in all three key performance metrics. Occupancy increased 3.1% to 65.1%, ADR rose 4.7% and RevPar was up 7.9%. Overall demand is at record levels, led by leisure and business travelers, and coupled with limited supply growth, the industry should continue to show improvement. - Retail: The retail sector has posted several straight quarters of improvement with occupied space 7.2 million square feet higher than last year. The retail availability rate declined slightly to 13% with absorption levels well above the low square footage of new space completed in Q2. REITS and private institutional equity continue to seek primary market and anchored (specifically grocery-anchored) retail centers pushing cap rates lower while private buyers continue to sift thought the class B market periphery which should drive cap rates lower in these markets. In closing, our pipeline remains very active and robust, as evidenced by a $1.1 billion distressed deal DeBartolo Development completed during the second quarter. Most of the opportunities we entertain are either off-market or situations where we have an early look. We continue to focus on institutional quality assets in desirable markets across multiple sectors with a specific emphasis on multifamily, retail and hospitality and as mentioned earlier are currently underwriting opportunities in Florida, Georgia, North Carolina, California, Texas and New Jersey. We thank you again for your support and investment, and look forward to talking to you during our investor quarterly call on September 10. Best regards, Edward M. Kobel President