DENVER, COLORADO MARKET OVERVIEW & MULTIFAMILY HOUSING UPDATE

DENVER, COLORADO MARKET OVERVIEW & MULTIFAMILY HOUSING UPDATE RED Capital Group 14 September 2014 PAYROLL JOB SUMMARY Total Payrolls 1,329.9m Annual Change 35.7m (2.8%) 2014 Forecast 38.7m 2015 Forecast 44.0m 2016 Forecast 34.1m 2017 Forecast 30.3m Unemployment 5. (July) 14 PAYROLL TRENDS AND FORECAST The pace of job creation remained brisk during the spring quarter as Denver payrolls increased at a 35,700-job, 2.8% year-on-year rate, representing the tenth consecutive quarter of 2.5% or faster annual job growth. Gains were well balanced across sectors: goods producing industries expanded at a 5,200-job, 3.7% rate, while skilled services employers hired workers at a combined 17,600-job, 4.5% pace, incorporating a 5,500-job, 4.8% surge in the tech- and energy-driven professional, technical and scientific services sub-sector. Growth in consumer-driven industries also was robust as retail trade and leisure services employers increased headcount at a combined 8,300-job, 3.1% rate. Seasonally-adjusted data recorded a moderate slowing trend, with net gains of 8,800 jobs during the April-to-June period, down from 11,200 and 9,800 job adds in the previous and year earlier quarters, respectively. Preliminary July reports suggest that a vigorous mid-summer rebound may be underway, however, as establishments added a net of 8,400 workers during the month. RED Research specified a 99. adjusted-r 2 payroll growth model using two lags of the dependent variable and U.S. payroll and metro personal income and home price variables. The model forecasts faster y-o-y expansion in 2H14 and 2015 averaging about 3.3%. The pace of growth is likely to decelerate gradually during the backend of the forecast, falling below in 2017 and 2018 as the U.S. recovery enters its late innings. OCCUPANCY RATE SUMMARY Occupancy Rate (Reis) 96. RED 50 Rent Chg. Rank Annual Chg. (Reis) 23 rd Unch d RCR YE14 Forecast 95. RCR YE15 Forecast 95.3% RCR YE16 Forecast 95.1% RCR YE17 Forecast 94.3% 14 ABSORPTION AND OCCUPANCY RATE TRENDS Tenant demand was moderately softer across the Denver area during the second quarter as renters net leased 804 vacant units, down from 1,282 and 1,352 in the prior and year-earlier quarters, respectively, according to Reis. A decrease in new supply delivered to market was partially responsible, as households were offered 1,093 units of coveted new space in 14, down from 1,549 during the first quarter. Still, occupancy declined sequentially for the second consecutive quarter, dropping 20 basis points to 96.. Axiometrics surveys of larger, stabilized same-store properties found that average 14 occupancy was about 95.8%, reflecting a 70 bps sequential and 30bps year-on-year advance. Class-C assets posted the highest average occupancy (96.), followed by class-b (95.7%) and class-a (95.3%). Lower occupancy was observed in core urban infill submarkets feeling the greatest amount of supply pressure: units in stabilized Central and Downtown submarket buildings were 92.7% and 94.9% occupied in 14. Nevertheless, absorption of space in new properties was strong, averaging about 15 units per month, in line with recent market norms. RCR s absorption model foresees further strong Denver apartment demand, filling an average of nearly 5,000 units annually over the forecast. But supply is likely to be heavier (over 6,000 units/year), pushing metro occupancy down to the mid-9 range by 2018. EFFECTIVE RENT SUMMARY Mean Rent (Reis) $928 Annual Change 4.7% RED 50 Rank RCR YE14 Forecast 3. RCR YE15 Forecast 5. RCR YE16 Forecast 3.7% RCR YE17 Forecast 3. 7 th 14 EFFECTIVE RENT TRENDS Reis report that rent trends among the 182,000 units it surveys reaccelerated during the second quarter, rising $10 (1.1%) sequentially, up from s $6 (0.7%) advance. Expressed on a year-onyear basis, rents increased 4.7%, ranking 7th among the RED 50 peer group, down from 6th during the previous quarter. Axiometrics report considerably stronger rent growth. Among the 87,600 units it has surveyed consistently since 20, effective rent averaged $1,153 during, up 5.3% sequentially and 9.3% year-onyear. Each metric was the fastest recorded in the past eight years. Class-B properties notched the most robust overall results, rising 5.8% sequentially and 9.7% y-o-y. Class-C assets increased only 3. sequentially, but still managed to post a class-leading 9.9% y- o-y gain. Class-A properties trailed but showed late speed, advancing 5. sequentially and 7. y-o-y. Double-digit increases were recorded in Aurora, Littleton and Lakewood neighborhoods, but supply burdened Downtown failed to achieve a 1% annual advance. Using the Reis series as foundation data, RCR specified a 96.5% A- R 2 rent forecast model using metro and U.S. home prices, metro personal income growth and vacancy rates and six lags of the dependent variable. Denver home values are projected to rise at an 8.1% average annual rate. Rents are likely to follow with gains ranging from 3.5% - 5. in 2014 16 and 3.3% - 3.7% in 2017-18. TRADE & RETURN SUMMARY $5mm+ Sales 16 Approx. Proceeds $670mm Avg. Cap Rate (FNM) 4.8% Avg. Price/Unit $134,883 Expected Total Return 6. RED 46 ETR Rank RED 46 RAI Rank 21 st Risk-adjusted Index 4.84. 19 th 14 PROPERTY MARKETS AND TOTAL RETURNS Sales velocity accelerated during the second quarter, rising from eight trades valued at $5 million or more during the first quarter to sixteen transactions. Total proceeds reached about $670mm, largest since 12 (when properties valued at more than $1 billion exchanged hands). The unit average price of 14 trades was $134,883, immaterially different to 14 s $133,486 metric. Approximately one-half of transactions closed during 14 involved class-b or C assets built prior to 1980. Buyers were primarily local and regional owner/managers. Prices for these properties ranged from the equivalent of $100 to $150 per square foot. Institutional and private equity investors focused on class-b+ and A assets completed after 2003 at values topping $200/sf. Going-in yields among the older assets ranged from the mid-5s for properties in infill and Lakewood locations to the mid-7s for second -tier suburban sites. Newer assets mostly traded in the 4.5% to 5.5% range, with infill mid-rises commanding the lowest cap rates. In view of the B+ institutional quality trades observed at cap rates in the low to mid-5s, we chose to back the generic cap rate assumption back to the 5.25% level used in 13. Employing model derived occupancy, rent and terminal cap rate (6.) assumptions, RCR concludes that an investor in a generic Denver asset would expect to achieve a 6. unlevered 5-year total return, ranking 21st among the R46 peer group. Below average forecast model standard error boosts the risk-adjusted index to R46 19th rank.

MARKET OVERVIEW 14 DENVER, COLORADO YoY Rent Trend 97% 9 95% 9 93% 9 91% 9 Denver Occupancy Rate Trends Source: Reis History, RCR Forecasts 96. 95. 95. 95.1% RED 46 AVERAGE DENVER (REIS/RCR) 09 10 11 12 13 14f 15f 16f 17f 18f 94. 93. Denver Absorption and Supply Trends Source: Reis History, RCR Forecasts Units (T12 Months) 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0-1,000 ABSORPTIONS COMPLETIONS 09 10 11 12 13 14f 15f 16f 17f 18f Denver Cap Rate Trends Source: efannie.com, RCR Calculations Average Cap Rate 8.5% 8. 7.5% 7. 6.5% 6. 5.5% 5. 4.5% 8.1% MOU NTAIN REGION 7. DENVER 6. 6. 6.5% 6.5% 6. 6.5% 6. 6.1% 5.9% 5.9% 4.8% 5.5% 5. 11 11 11 11 12 12 12 12 13 13 13 13 14 14 14 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class/Type (Constr.) Approx. Date of Transaction Total Price / <Appr. Value> (in millions) Price / <Appr. Value> per unit Estimated <Underwritten> Cap Rate City Gate Apartments (Downtown/Five Points) B+ / MR (2004) 18-Apr-2014 $52.1 $216,183 4.7% Griffis Fitzsimons South (Aurora North) B / GLR (2008) 1-May-2014 $40.8 $141,493 6.1% The Wellshire (Denver South / Glendale) A / HR (1962) 8-May-2014 $20.7 $193,458 5.1% Verve (Downtown / LoDo) A+ / MR (2014) 23-Jul-2014 $94.8 $322,456 NA / 5.5% p.f. 21 Fitzsimons (Aurora-No./ Fitzsimons Village) B+/MR+RET (2008) 9-Aug-2014 $115.3 (MF only) $269,349 4.3% Waterfield Court Apts. (Aurora-South / Knolls) B- / GLR (1987) 23-Aug-2014 $57.5 $119,295 6. RED Capital Research September 2014

MARKET OVERVIEW 14 DENVER, COLORADO YoY Rent Trend - - Denver Effective Rent Trends Sources: Reis, Inc., History, RCR Forecasts 4.7% 4.7% 3. 3.7% 3. 2.9% RED 46 AVERAGE DENVER (REIS/RCR) 09 10 11 12 13 14f 15f 16f 17f 18f Y-o-Y % Change 15% 13% 1 8% 5% 3% -3% -5% Denver Home Price Trends Source: FHFA Home Price Indices, S&P Case-Shiller HPI and RCR Forecasts 10. 9.1% 2011 2012 2013 2014f 2015f 2016f 2017f 2018f 12.3% 8.5% 13.1% 10.5% 12. 9. 10.3% 6.5% U.S.A. DENVER (FHFA) DENVER (CASE-SHILLER) 9.1% 4.8% Denver Payroll Employment Trends Source: BLS, Institute for Economic Competitiveness at UCF & RCR U.S.A. DENVER Y-o-Y % Change 3% 1% 2.7% 3. 2.9% 2. 1.8% 1.7% 2011 2012 2013 2014 2015f 2016f 2017f 2018f The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED Capital Group. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors. RED Capital Research September 2014

MARKET OVERVIEW 14 DENVER, COLORADO SUBMARKET TRENDS Effective Rent Physical Vacancy Submarket 13 14 Change 13 14 Change Arapahoe County $1,138 $1,181 3.7% 4. 3.5% -50 bps Arvada / Broomfield $824 $872 5.8% 4.8% 4.7% -10 bps Aurora-Central-Southeast $722 $778 7.8% 3. 2.7% -50 bps Aurora-Central-Southwest $737 $753 2. 5. 3.9% -110 bps Aurora-North $670 $709 5.8% 3. 2. -80 bps Aurora-South $1,016 $1,031 1.5% 4.1% 3.1% -100 bps Denver-Central $968 $1,016 4.9% 3.5% 5. 210 bps Denver-Downtown $1,118 $1,172 4.9% 7.9% 7. -50 bps Denver-Far Southeast $757 $819 8. 3. 5. 140 bps Denver-North $1,452 $1,518 4.5% 10. 13.3% 270 bps Denver-Northeast $908 $958 5.5% 4.7% 3.8% -90 bps Denver-South $819 $841 2.7% 4. 3.1% -110 bps Denver-Southeast $799 $829 3.8% 2.3% 2.1% -20 bps Douglas County $1,088 $1,115 2. 3. 3.7% 50 bps Englewood / Sheridan $754 $775 2.8% 4. 3. -120 bps Golden / Wheat Ridge $829 $858 3. 2. 1.8% -20 bps Lakewood-North $776 $801 3. 3.3% 3.9% 60 bps Lakewood-South $944 $984 4.3% 2. 2.7% 70 bps Littleton $851 $874 2.7% 4.5% 3.8% -70 bps North Glenn / Thornton $835 $877 5.1% 3.8% 3.7% -10 bps Westminster $8 $848 5. 3. 2.1% -110 bps Metro $886 $928 4.7% 3.8% 3.8% Unch d RED46 µ = 6.7% RED46 µ = 3. Recession Probability Probability of Longterm avg. Growth or Faster 3% 5% 7% 8% 9% 1 1.5% 2. 2.5% 3. 3.5% 4. 4.5% 5. 5.5% - -3% - -1% 1% 3% 5% FOR MORE INFORMATION ABOUT RED S RESEARCH CAPABILITIES CONTACT: Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com +1.614.857.1416 office +1.800.837.5100 toll free James P. Hensley Senior Managing Director Head of Multifamily Originations jphensley@redcapitalgroup.com +1.770.753.6472 office +1.800.837.5100 toll free THE FACE OF LENDING RED Capital Group, LLC RED Mortgage Capital, LLC RED Capital Markets, LLC (Member FINRA/SIPC) RED Capital Partners, LLC T w o M i r a n o v a P l a c e, C o l u m b u s, O h i o 4 3 2 1 5 r e d c a p i t a l g r o u p. c o m + 1. 8 0 0. 8 3 7. 5 1 0 0 2014 RED Capital Group, LLC

RED CAPITAL GROUP MARKET OVERVIEW Denver, Colorado Multifamily Housing Update 13 October 2013 Payroll Job Summary Total Payrolls 1,281.1m Annual Change 33.2(2.7%) 2013 Forecast 32.8m 2014 Forecast 36.9m 2015 Forecast 38.8m 2016 Forecast 39.0m Unemployment 6.8% (Aug.) 13 Payroll Trends and Forecast The Denver labor market exhibited strong momentum during the second quarter as establishments added workers at a robust 33,200-job, 2.7% yearover-year pace, representing the sixth consecutive quarter of 2.5% annual growth or faster. The 13 result was on par with 13 s 32,700-job advance, paced by rapid hiring among construction, energy and professional and technical service firms as well as food service and lodging concerns. Seasonally-adjusted data suggest that year-overyear comparisons may understate the strength of the labor market. This series indicates that Denver employers created 16,600 jobs during 13, the largest one-quarter add recorded since 1999. RCR found that home prices as well as the usual national income and payroll variables strongly effect Denver payroll growth, and in this case in a very positive way as metro home prices are expected to grow at 5.7% to 7.5% annual rates through 2017. Consequently, the forecast calls for sustained annual employment gains in the mid to high-30,000-job range for the next several years. Occupancy Rate Summary Occupancy Rate (Reis) 96. RED 50 Rank 21 st Annual Chg. (Reis) 0. RCR YE13 Forecast 96.5% RCR YE14 Forecast 96.8% RCR YE15 Forecast 97.3% RCR YE16 Forecast 97.9% 13 Absorption and Occupancy Rate Trends Robust space demand persisted in the second quarter as tenants net leased 1,134 units, according to Reis, in line with 13 s exceptional 1,154- unit absorption performance and more than three times the 12 net total. Supply was largely offsetting, however, as developers completed 991 units, limiting sequential and occupancy growth to 10 basis points to 96.. Axiometrics same-store surveys of larger properties uncovered a 95. 13 average occupancy rate, up 50 bps sequentially and 50 bps year-on-year. Every Reis submarket posted positive absorption with the exceptions of Aurora-South and Englewood, where total leased units were flat. Two submarkets posted occupancy rate declines (Denver-South and -North) entirely due to supply. Reis project that heavy supply will trim occupancy 110 bps by 2017. Our absorption model is considerably more optimistic, forecasting that strong payroll growth and home price increases will drive further heavy apartment demand, contributing to a 170 bps tightening to 97.9% by YE2016. Effective Rent Summary Mean Rent (Reis) $885 Annual Change 3.5% RED 50 Rank 8 th RCR YE13 Forecast 4.9% RCR YE14 Forecast 5.7% RCR YE15 Forecast 4. RCR YE16 Forecast 3.9% 13 Effective Rent Trends Reis report that effective rents increased $9 (1.1%) sequentially in 13, representing the fastest growth recorded in a year. Expressed on a year-over-year basis, rents were higher by 3.5%, ranking Denver 8th among the RED 50 markets. Axiometrics surveys unearthed evidence of still faster growth in the large, professionally-managed strata. This service found that same-store properties achieved a $71, 7. year-over-year advance to an average of $1,085, up from a 6.3% 13 metric. Properties constructed since 2012 recorded 2. sequential and 5.9% y-o-y advances, reaching a 13 average rent of $1,444. Reis rent forecasts also are relatively conservative, foreseeing peak gains of 4. in 2014, followed by gradual cooling to the low- range in 2017. RCR models are considerably more optimistic again. The models suggest that strong absorption and supply trends and rapid home price appreciation will drive rents sharply higher in 2H3 and 2014. Gains in the mid- range are possible in 2H13, accelerating to the 5%- area in 2014, Trade & Return Summary $5mm+ Sales 13 Approx. Proceeds $322mm Avg. Cap Rate (FNM) 6.5% Avg. Price/Unit $116,878 Expected Total Return 8. RED 46 ETR Rank RED RAI Rank 4 th Risk-adjusted Index 3.61 21 st 13 Property Markets and Total Returns Sales velocity decelerated during the spring quarter as buyers and sellers regrouped following an extraordinary six-month period in which more than 50 investment quality assets exchanged hands for total proceeds of approximately $1.7 billion. Thirteen transactions valued at $5 million or more closed during 13 for total proceeds of about $322mm. The average price of units sold was $116,978, up from $90,892 during 13. Trade picked-up over the summer as 17 properties exchanged hands during 13 for over $475mm of proceeds and average price of $109,764/unit. Recent trade was heavily weighted toward suburban garden properties. B and B+ class properties were valued at cap rates in the low to mid- 5% range. Infill trophies are likely to continue to trade in the mid- area. To reflect the strong demand for Denver assets, RCR elected to edge the generic B+ cap rate down 15 bps to 5.. Applying this level and model derived occupancy, rent and terminal cap rate forecasts, we estimate that a Denver investor would expect to earn an 8. 5-year unlevered IRR, 4th highest among the RED 46 markets.

MARKET OVERVIEW 13 DENVER, COLORADO Metro Occupancy Rate Trends Source: Reis History, RCR Forecasts Average Occupancy Rate 98% 9 9 9 9 88% 8 RED 46 AVERAGE DENVER 96. 96.8% 97. 97.8% 98.1% 08 09 10 11 12 13 14 15 16 17 Metro Absorption and Supply Trends Source: Reis History, RCR Forecasts 8,000 ABSORPTIONS COMPLETIONS Units (T12 Months) 6,000 4,000 2,000 0-2,000 08 09 10 11 12 13 14 15 16 17 Average Cap Rate 9. 8.5% 8. 7.5% 7. 6.5% 6. 5.5% 5. MOUNTAIN REGION 6. 6.5% 6. 5. Metro Cap Rate Trends Source: efannie.com, RCR Calculations 5.8% DENVER 6. 6.3% 11 11 11 11 12 12 12 12 13 13 13 5.9% 7.7% 8.5% 6.5% NOTABLE TRANSACTIONS Property Name (Submarket) Property Class/ Type (Constr.) Date of Transaction Total Price / <Appr. Value> (in millions) Price / <Appr. Value> per unit Estimated Cap Rate Legends at Lowry (Glendale) A-/GLR (2012) 30-Apr-2013 $27.8 $185,000 5.8% Broadstone Cornerstar (Aurora-South) B+/GLR (2009) 22-Jul-2013 $68.1 $170,282 5.1% Belmar Villas (Lakewood-South) B / GLR (1970) 28-Jul-2013 $40.6 $127,516 5. Arabella (Aurora-South) B-/GLR (1980) 31-Aug-2013 $20.2 $129,167 5.3% Avena Apartments (Northglenn/Thornton) B / GLR (2008) 25-Sep-2013 $61.3 $159,091 5.1% RED CAPITAL Research October 2013

MARKET OVERVIEW 13 DENVER, COLORADO YoY Rent Trend 8% - - - -8% Metro Effective Rent Trends Sources: Reis, Inc., Axiometrics, RCR Forecast 08 09 10 11 12 13 14 15 16 17 3.5% 5.8% 4.5% RED 46 AVERAGE DENVER AXIOMETRICS SAME-STORE DENVER (REIS/RCR) 4.3% 3.8% Y-o-Y % Change 15% 1 9% 3% -3% - -9% Metro Home Price Trends Source: FHFA Home Price Indices and RCR Forecasts 8.9% 7.5% U.S.A. DENVER MOUNTAIN REGION 2011 2012 2013f 2014f 2015f 2016f 2017f 3.5% Metro Payroll Employment Trends Source: BLS, Institute for Economic Competitiveness at UCF & RCR 3. Y-o-Y % Change 2.5% 2. 1.5% 1. U.S.A. DENVER 0.5% 0. 2011 2012 2013f 2014f 2015f 2016f 2017f The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors. RED CAPITAL Research October 2013

SUBMARKET TRENDS Effective Rent Physical Vacancy Submarket 12 13 Change 12 13 Change Arapahoe County $1,094 $1,138 4. 5. 4. -120 bps Arvada / Broomfield $786 $824 4.8% 3.9% 4.8% 90 bps Aurora-Central-Southeast $711 $722 1. 5. 3. -180 bps Aurora-Central-Southwest $709 $737 3.9% 6.8% 5. -180 bps Aurora-North $643 $670 4.3% 2.8% 3. 40 bps Aurora-South $986 $1,016 3. 4. 4.1% -50 bps Denver-Central $943 $968 2.7% 4. 3.5% -50 bps Denver-Downtown $1,5 $1,118 4. 1.8% 7.9% 610 bps Denver-Far Southeast $740 $757 2. 4.3% 3. -70 bps Denver-North $1,440 $1,452 0.8% 8. 10. 220 bps Denver-Northeast $878 $908 3.5% 4. 4.7% 70 bps Denver-South $782 $819 4.7% 5. 4. -80 bps Denver-Southeast $767 $799 4.1% 3.8% 2.3% -150 bps Douglas County $1,058 $1,088 2.9% 3.5% 3. -30 bps Englewood / Sheridan $741 $754 1.7% 4. 4. 0 bps Golden / Wheat Ridge $805 $829 3.1% 3. 2. -100 bps Lakewood-North $760 $776 2. 4.8% 3.3% -150 bps Lakewood-South $918 $944 2.9% 2.5% 2. -50 bps Littleton $829 $851 2.7% 7.1% 4.5% -260 bps North Glenn / Thornton $801 $835 4.3% 4. 3.8% -80 bps Westminster $782 $8 3. 4.3% 3. -110 bps Metro $855 $876 2.5% 3.9% 3.8% -10 bps RED CAPITAL GROUP For more information about RED s research capabilities contact: Daniel J. Hogan, Director of Research djhogan@redcapitalgroup.com 614-857-1416 James P. Hensley, Senior Managing Director Head of Mortgage Originations jphensley@redcapitalgroup.com 800-837-5100

RED CAPITAL GROUP MARKET OVERVIEW Denver, Colorado Multifamily Housing Update 11 April 2012 Payroll Job Summary Total Payrolls 1,225.6m 11 Y-o-y Chg. 18.8m FY 2011 18.1m 2012 Forecast 25.7m 2013 Forecast 18.8m 2014 Forecast 25.5m Unemployment 8. (Jan) 11 Payroll Trends and Forecast Denver was among the biggest beneficiaries of the BLS payroll re-benchmark released in March. After initially posting an 8,800-job year-on-year gain for 11, the Bureau upwardly revised Denver growth to an 18,800-job, 1. rate, a 10 increase. The revision was largely attributable to faster than previously reported hiring in the construction and business, health care and education services industries. The New Year got off to a flyer as seasonallyadjusted data indicate that metro establishments created 14,300 new payroll positions Decemberto-January, the largest one-month add since 1990 by 6,300! Although the datum is likely to be revised down it reflects considerable forward momentum in the local labor market. RCR models expect robust hiring for the remainder of the year, producing a 25,700-job gain overall. Conditions are likely to be weaker next year, but we anticipate a rebound to 25,500 jobs in 2014. Vacancy Rate Summary Vacancy Rate 4. RED 50 Rank 23rd Annual Change <1.8%> YE12 Forecast 4.5% YE13 Forecast 4.8% YE14 Forecast 4.9% YE15 Forecast 5. 11 Absorption and Vacancy Rate Trends Apartment space demand rebounded from a soft third quarter as tenants moved into a net of 985 units in, up from ten-quarter low absorption of 542 during the prior 3-month period. Developers completed no corresponding supply, allowing occupancy to surge 60 basis points sequentially and 180bps year-on-year to 95., a 10-year high. Occupancy increased sequentially in every submarket with the exception of Arapahoe Co. Urban infill areas recorded the strongest gains, especially Downtown Denver, where renters absorbed more than 50 units to drive vacancy 200 bps lower to 2.9%, and Central Aurora, where about 200 vacant units were tenanted. RCR models project incremental gains in 2012 as constructive demand fundamentals are partially offset by rising supply. Supply is forecast to become a greater impediment to occupancy improvement beginning next year as deliveries are projected to reach the annual equivalent of about of stock. Consequently, our models forecast moderately lower occupancy from 2013 2016. Effective Rent Summary Mean Rent $835 Annual Change 2. RED 50 Rank 15th 2012 Forecast 4. 2013 Forecast 4.3% 2014 Forecast 4. 2015 Forecast 4.7% 11 Rent Trends Face rent growth moderated during 11, slowing from s robust 0.7% advance to 0.. Concession costs declined, however, falling to the lowest percentage of asking rent since 2002. Thus, average effective rents increased 0. ($5) to $835. Expressed on a year-on-year basis, rents were nearly 2. higher, ranking 15th among the R50. Effective rents increased sequentially in every submarket save Arapahoe, North Glenn and Central and Southeast Denver. Five submarkets chalked down 1% or greater gains, led by Far Southeast (2.1%), Aurora-North (1.9%) and Downtown (1.). On a year-on-year basis, rents in the luxury infill Denver-North submarket advanced 5.9% on a same-store basis, the largest submarket effective rent increase by 130 basis points. RCR models are very constructive regarding Denver rents, forecasting 4.5% annual compound growth through 2016. This trails only NYC and San Francisco among the R45. Reis are still more optimistic, foreseeing a 6.7% gain in 2012, followed by 4. to 4.7% increases through 2016. Trade & Return Summary 11 $8mm+ Sales 22 Approx. Proceeds $891mm Average Cap Rate 5.7% Avg. Price / Unit $122,670 Expected Total Ret 8. RED 45 ETR Rank 3rd Risk-adjusted Index 1.84/31st Recent Property Market Review and Total Return Estimates After showing relative indifference to Denver assets during 11, investors dove in head first during the final three months of the year. A total of 22 trades valued at $8mm or more were consummated during the period for aggregate proceeds of $819.2mm. This compared to only 4 transactions closed in 11 totaling $77.2mm. Buyers moved up the quality spectrum. The average price per unit was $122,670, up from $75,922 in the prior quarter. Nine of the trades involved properties constructed since 2000, accounting for 47% of total proceeds. Cap rates averaged about 5. and ranged from 3.8% to 8.8%. Properties built since 2000 traded universally below 5%, however, averaging about 4.3%. Employing a 5. generic A/B hybrid cap rate assumption, the RCR model generates an 8. expected total return for Denver MFH investments. This ranks 3rd among the R45, indicating potentially attractive relative value. Denver NOI growth is more volatile than average through, causing the risk-adjusted index to fall to 31 st among the peers.

MARKET OVERVIEW 11 DENVER, COLORADO Metro Vacancy Rate 1 9% 8% 7% 5% 3% Metro Vacancy Rate Trends DENVER 08 09 10 11 12 13 14 15 5. 4. RED 45 AVERAGE 4.9% 5. 7.5% Metro and Region Cap Rate Trends Sources: Fannie Mae MBS & RCR Average Cap Rate 7. 6.5% 6. 5.5% MOU NTAIN REGION DENVER MSA 7.1% 6.8% 6.3% 6. 6.3% 6.3% 6. 6.5% 6.1% 10 10 10 10 11 11 11 11 12 Annual Chg (000) 30 15 0-15 -30-45 -60 Metro Payroll Employment Trends Sources: BLS & RCR Forecasts 2003 2004 2005 20 20 2008 2009 2010 2011 2012f 2013f 2014f DENVER (14.2) 9.2 22.8 25.0 26.1 11.9 (53.3) (6.3) 18.1 25.7 18.8 25.5 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class/Type (Construction Year) Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Broadstone Avena (Thornton) A (2008) 3-Mar-2012 $50.5 $131,168 4.5% Renaissance (Denver-Southeast) A (2000) 31-Dec-2011 $70.8 $126,339 4.1% Greenwood Pointe (Englewood) B (1987) 31-Dec-2011 $33.2 $1,410 4.7% Alton Green (Denver-Southeast) B (1987) 10-Feb-2012 $28.5 $91,346 4.8% Alexan Broadway (Denver-South) A (20/10) 7-Dec-2011 $82.0 $195,704 4. RED CAPITAL Research April 2012

MARKET OVERVIEW 11 DENVER, COLORADO Metro Effective Rent Trends, RCR Forecasts 2. 4.7% YoY Rent Trend 2. - RED 45 AVG DENVER - 08 09 10 11 12 13 14 3.7% Y-o-Y % Change 8% - -8% -1-1 -2 Metro Home Price Trends Source: S&P Case-Shiller Home Price Index U.S.A. Metro Home Price Trends Source: FHFA Home Price Index. DENVER 2009 2010 2011 2012 0. Y-o-y Growth Rate 4.5% 3. 1.5% 0. -1.5% -3. -4.5% Metro Payroll Employment Growth Trends Sources: BLS data, IEC at UCF and RCR Forecasts DENVER -6. 2009 2010 2011f 2012f 2013f 2014f USA The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors. RED CAPITAL Research April 2012

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 10 11 Change 10 11 Change Arapahoe County $1,050 $1,8 1.7% 10. 5.9% -410 bps Arvada / Broomfield $755 $768 1.7% 4.8% 3.9% -90 bps Aurora-Central-Southeast $681 $695 2. 6. 4.7% -190 bps Aurora-Central-Southwest $684 $694 1.5% 11. 6. -520 bps Aurora-North $6 $635 4. 5.5% 3.8% -170 bps Aurora-South $933 $967 3.7% 6.9% 5. -130 bps Denver-Central $922 $923 0.1% 4. 4. -40 bps Denver-Downtown $1,051 $1,3 1. 6.1% 2.9% -320 bps Denver-Far Southeast $688 $714 3.8% 5. 4. -80 bps Denver-North $1,332 $1,410 5.9% 7. 4.8% -220 bps Denver-Northeast $839 $861 2. 6.3% 4. -170 bps Denver-South $754 $764 1.3% 9.5% 5.7% -380 bps Denver-Southeast $738 $756 2.5% 6. 4.9% -170 bps Douglas County $985 $1,025 4. 6. 4. -240 bps Englewood / Sheridan $710 $711 0.1% 6.7% 5. -170 bps Golden / Wheat Ridge $780 $801 2.7% 4.7% 3.8% -90 bps Lakewood-North $729 $743 1.9% 6. 4.7% -150 bps Lakewood-South $869 $887 2. 4.8% 3.3% -150 bps Littleton $791 $815 3. 5. 4. -120 bps North Glenn / Thornton $771 $787 2.1% 6.7% 5. -130 bps Westminster $743 $762 2. 6. 5. -140 bps Metro $814 $835 2. 6. 4. -180 bps RED CAPITAL GROUP For more information about RED s research and origination capabilities contact: Kenneth H. Bowen Daniel J. Hogan President, Red Mortgage Capital, LLC. Director, Research khbowen@redcapitalgroup.com djhogan@redcapitalgroup.com 614-857-1482 614-857-1416

RED CAPITAL GROUP MARKET OVERVIEW Denver, Colorado Multifamily Housing Update 11 September 2011 Payroll Job Summary Total Payrolls: 1,199.7m Annual Change: +2.5m 2011 Forecast +5.9m 2012 Forecast +3.8m 2013 Forecast +10.2m Unemployment 8.5% 11 Payroll Trends and Forecast Metro employment trends weakened in the second quarter as the pace of year-over-year payroll growth decelerated from 9,200 (0.8%) in 11 to 2,500 (0.) in 11. Additionally, payroll headcounts declined 1,200 and 1,300 in July and August, respectively. Seasonally-adjusted job trends also were weak. Payroll headcounts were unchanged in the first eight months of 2011 after employers created 8,000 jobs in the comparable period of 2010. Economy.com foresee robust employment growth through 2013. Indeed, the source projects job gains of 22,970, 30,090 and 24,660 in 2011, 2012 and 2013, respectively. Conversely, RCR expect slower progress over the forecast period. Our model projects a modest 5,900-job increase in 2011, followed by 3,800- and 10,200-job advances in 2012 and 2013. Vacancy Rate Summary Vacancy Rate (Reis) 5. RED 50 Rank 24th Annual Chg (Reis) -2.7% RCR YE11 Forecast 5.7% RCR YE12 Forecast 5.5% RCR YE13 Forecast 5.3% 11 Absorption and Vacancy Rate Trends Apartment demand slowed in the second quarter. Property managers net leased 1,371 units during the first quarter but only 577 units in the second. Despite slower tenant demand, the metro vacancy rate declined 40 basis points to 5. as no units were completed from April to June. Vacancy improvement was widespread among submarkets. Only the Douglas County submarket experienced rising vacancy year-over-year. In the balance of the submarkets, vacancy declines ranged from 130 basis points (North Glenn / Thornton) to 1,430 basis points (Arapahoe County). Reis expect tenants to absorb another 1,124 units in 2H11 and 1,017 in 2012, raising occupancy 60 bps by YE11. The RCR forecast models expect a 30 basis point occupancy decrease over the next six months, largely because of our more cautious near-term payroll outlook. Effective Rent Summary Mean Rent (Reis) $823 RED 50 Rank 6th Annual Change 3.7% RCR 2011 Forecast 1.3% RCR 2012 Forecast 0.5% RCR 2013 Forecast 2. 11 Rent Trends The pace of year-over-year effective rent growth decelerated slightly from 3.8% in 11 to 3.7% in 11. Much of the annual gain was banked in the second half of 2010. Indeed, effective rent rose 2.5% in 2H10 and only 1.1% in the first six months of 2011. Five metro submarkets (Denver-North, Aurora- North, Littleton, Arapahoe County and Denver- Downtown) experienced year-over-year effective rent growth of 6. or better. Effective rent trends in the other 16 submarkets ranged from 0.7% (Denver-Central) to 5.7% (Denver- Southeast). Reis believe that stout effective rent growth will persist, averaging 3.9% per year from 2011 to 2015. By contrast, the RCR models predict moderately slower gains of only 1.3% and 0.5% in 2011 and 2012, respectively. For the five-year period ended in 2015, our model foresees a compound average annual growth rate of 1.9%. Trade & Return Summary $5mm+ Sales 33 Approx. Proceeds $589mm Median Cap Rate 5.9% Avg. Price/Unit $96,546 Expected Total Return 2.5% RED 50 Rank 45th 11 Property Markets and Total Returns Real Capital Analytics count 33 investor-grade transactions involving properties priced at or above $5 million. Sales volume totaled $589 million and the average price per unit was $96,546. CBRE report that cap rates for stabilized Class-A assets ranged from 5. to 5.5% in March. Employing an 4.8% acquisition cap rate, RCR estimate that the expected five-year un-levered total return for Denver assets is 2.5% The metric ranks 45th highest among the RED 46. In regard to risk-adjusted returns, Denver assets rank 45th overall. The RCR integrated performance and total return model indicates that Denver investments have a 37.9% probability of achieving a total return of 5% or higher over five years. The model projects typical assets will trade at a 6. cap rate (up 120 bps) after 5 years, with a 10.7% probability of cap rates at or below the current level.

MARKET OVERVIEW 11 DENVER, COLORADO Metro Vacancy Rate 1 9% 8% 7% 5% Apartment Vacancy Trends DENVER U.S.A. 5.9% 5. 05 08 09 10 11 Average Cap Rate 8. 7.5% 7. 6.5% 6. Metro Multifamily Cap Rate Trends Source:s: Fannie, Freddie, RCR, Reis FNM / FM C US FNM / FM C M OUNTAIN REGION REIS DENVER (T12 AVG) 5.5% 08 08 08 08 09 09 09 09 10 10 10 10 11 11 Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 Annual Chg (000) 40 20 0-20 -40 5.9 3.8 10.2-60 00 01 02 03 04 05 08 09 10 11f 12f 13f NOTABLE TRANSACTIONS Property Name (Submarket) Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rae Landing at Bear Creek (Lakewood-South) A August 2011 $28.0 $124,777 5. Hamden Heights (Aurora-South) B/C July 2011 $22.8 $60,505 6.3% Conifer Creek (Aurora-Central-SW) B/C June 2011 $38.2 $79,479 5. Trailside Apartments (Douglas County) A June 2011 $33.6 $119,929 4.8% RED CAPITAL Research September 2011

MARKET OVERVIEW 11 DENVER, COLORADO Apartment Effective Rent Trends 5% 3% 3.7% YoY Rent Trend 1% -1% - -3% - DENVER U.S.A. 2. 05 08 09 10 11 Metro Median Single Family Home Prices 2 Source: S&P Case-Shiller Index 15% 1 Y-o-Y % Change 5% -5% -1-15% -2-25% DENVER SPX20 2001 2002 2003 2004 2005 20 20 2008 2009 2010 2011 Year-over-year Payroll Growth Rate Source: BLS, RCG Research Forecasts Rate - - - DENVER USA 03 04 05 08 09 10 11f 12f The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors. RED CAPITAL Research September 2011

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 10 11 Change 10 11 Change Arvada / Broomfield $745 $761 2.3% 6.1% 4.5% -160 bps Westminster $732 $753 2.9% 7.3% 5.7% -160 bps North Glenn / Thornton $759 $787 3.8% 7. 6.1% -130 bps Golden / Wheat Ridge $751 $787 4.8% 7.9% 4. -350 bps Denver-North $1,269 $1,393 9.8% 7.3% 5. -170 bps Denver-Northeast $831 $854 2.8% 8.1% 5.1% -300 bps Lakewood-North $713 $733 2.7% 7.5% 6.1% -140 bps Denver-Central $923 $916-0.7% 7.7% 4. -310 bps Aurora-North $582 $618 6.3% 7.9% 4.8% -310 bps Lakewood-South $832 $864 3.9% 6. 4. -200 bps Denver-South $746 $755 1.3% 14.3% 7.5% -680 bps Denver-Southeast $710 $750 5.7% 7.9% 5.7% -220 bps Littleton $762 $808 6. 6.3% 4.7% -160 bps Englewood / Sheridan $693 $715 3. 10.7% 5.7% -500 bps Denver-Far Southeast $687 $692 0.7% 7. 4.9% -270 bps Arapahoe County $997 $1,2 6. 20.3% 6. -1,430 bps Aurora-Central-SW $685 $686 0.3% 11.7% 8. -310 bps Aurora-Central-SE $655 $692 5. 8. 5.7% -270 bps Aurora-South $908 $946 4. 8. 5.5% -250 bps Denver-Downtown $979 $1,044 6.7% 6.3% 4.7% -160 bps Douglas County $955 $995 4. 5.3% 5. 30 bps Metro $794 $823 3.7% 8.1% 5. -270 bps RED CAPITAL GROUP For more information about RED s research capabilities contact: Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update May 2011 EXECUTIVE SUMMARY Among institutional investors, Denver is one of the most actively pursued multifamily markets in the country and it is likely to gain even more attention over the next several months. An 8,000-unit Colorado property portfolio was offered for sale in mid-may, and it may become one of most widely followed asset dispositions in the apartment space in some time. Investors favor Denver because of its economic growth potential the Mile High City is ideally situated at the intersection of three of the most robust domestic industries: energy, high tech and health care and lifestyle appeal to the Gen Y renter. With solid prospects for high-wage job creation and a steady inflow of young professionals seeking the kind of class-a, urban infill space that institutional investors favor these days, it s no wonder that trust and private equity players can t acquire enough assets in this region. Belying common perceptions, the Denver labor market was late to join the national recovery. Payrolls increased at 0.3% year-on-year pace in 10, a metric that compared unfavorably to the nation s 0.5% advance. While metro job creation accelerated in 11 to a 10,000-job, 0.9% pace, this merely pulled it even with the national average and did not measure up to the performances of high tech peers San Jose (2.1%); Seattle (1.), Raleigh (2.7%); and Austin (1.7%). First quarter hiring in the professional service, health care and energy sectors was constructive, accounting for creation of about 7,900 jobs expressed on a y-o-y basis. But housing remained a significant drag on the labor market overall, the source of 6,800-job cuts in construction and further weakness in the financial service sector. RED Research s econometric payroll model forecasts 2011 growth near the 1.3% national average or roughly 16,000 jobs. The model projects considerably stronger job growth in 2012 and 2013, however: metro establishment should hire a net of 32,900 workers next year and as many as 37,000 in 2013, assuming the U.S. economic recovery remains intact. By contrast, apartment demand was exemplary as tenants net leased 1,371 units in the seasonally soft first quarter, one of the strongest winters on record. Against supply of 328 units occupancy improved 60 basis points sequentially and 260 bps y-o-y, the latter metric ranking 13th among the RED 50. Occupancy increased quarter-to-quarter in each submarket, with Arapahoe Co areas posting the strongest gains ranging from 80 to 400 bps. Asking rent growth was consistent with seasonal norms: average metro rents increased $3 (0.3%) sequentially to $910, in line with the eight year first quarter average. Concessions burn-off contributed to a $5 (0.) effective rent gain, representing the smallest increase recorded in this series since 09. Six metro submarkets recorded sequential rent declines, including several key infill markets: Denver Central and Downtown, as well as North and South Lakewood. Reis models foresee moderate occupancy and rent improvement over the 5-year forecast period. Occupancy is expected to hover around the 9 level while rents advance at a 3.9% compound annual rate, a bit slower than the 4. forecast national norm. Quality assets are trading in the 4.5% to 5% cap rate range. Using a 4.75% generic cap rate assumption, RCR estimate 7. metro expected annual total returns: 160 bps below the RED 50 mean, ranking 44th overall. Riskadjusted returns also rank 44th highest among the RED 50 peer group. SNAP SHOT Vacancy (5.8% - 11) Effective Rents ($819 11) Cap Rate (5.3% - 11) Employment (1,177.9m - 11) K EY POINTS Y-o-y Projected change 2011 2. 0.5% 3.8% 5.1% 1.3% 10.0m 15.9m The Denver area economic recovery gained momentum in 11, adding to total payrolls at a 10,000-job, 0.9% year-on-year pace, in line with the national average but lagging key high tech metro peers. By contrast, seasonally-adjusted data painted a more robust picture, recording a 9,400-job payroll gain during 11, representing the best onequarter result posted in four years. The median price of a Denver home sold in 11 declined only 0. y-o-y, comparing favorably to 4. and 4.7% respective decreases in the U.S. and Western Region. Metro apartment owners continued to enjoy healthy demand. Tenants absorbed 1,371 units in 11, boosting average occupancy 60 basis points sequentially to 94.. Rent trends leveled off, rising 3.8% y-o-y, in line with the 10 metric, and 0. q-o-q. Sales transaction velocity and the value of properties traded were steady quarter to quarter. Investors acquired 8 Denver area properties in 11 for total proceeds of about $215mm compared to 10 transaction for about $200mm during 10. Cap rates ranged from the mid-4s to about.

Denver - Aurora - Broomfield, CO MSA - Q1 2011 11 VACANCY TRENDS Tenants absorbed 1,371 metro units, according to Reis, moderately below the 1,434-unit and 1,8-unit performances recorded in 10 and 10, respectively. Average occupancy gained 60 basis points sequentially and 260 bps year-on-year to 94., a 10-year high. Weighted average same store occupancy of 12,371 Denver units owned by public REIT declined 30 bps sequentially to 95.3%. Average occupancy was 10 bps higher on a year-over-year basis. Aurora submarket average occupancy improved 70 bps sequentially and 310 bps y-o-y to 94., topping the metro average in each case. Arapahoe Co. submarket occupancy increased 400 bps sequentially and 1,030 bps y-o-y, in each case the strongest metric in the metro area. Metro Vacancy Rate 1 9% 8% 7% 5% Apartment Vacancy Trends DENVER U.S.A. 6. 5.8% 08 09 10 11 11 RENT TRENDS Asking and effective rents increased $3 (0.3%) and $5 (0.) sequentially to $910 and $819. Relative to the year-earlier period, asking and effective rents increased $18 (3.1%) and $25 (3.8%). Denver properties owned by public REIT recorded weighted average rent gains of $43 (4.) year-over-year to $981, but only $4 (0.) of the advance was chalked down from December to March. Three submarkets recorded sequential effective rent increases averging 1.5% or greater: Denver-SE (1.5%); Denver North (2.9%) and Aurora- North (2.). Above average over-the-year rent growth was observed in several Arapahoe County submarkets, including Arapahoe Co (7.); Aurora-North (6.) and Aurora-South (5.1%). Reis expect metro rents to increase 5.1% in 2011; 4.3% in 2012. RANK: 5 th out of 50 PROPERTY MARKET & CAP RATE TRENDS According to RCA, 29 Denver trades valued at $593 million were closed in 2010. Loopnet data suggest that investors stepped up the pace of acquisition activity recently as at least 18 trades valued at $3mm or greater were closed in the six-month period ended in March for total value of approximately $410 million. The second quarter got off to a flying start with five transactions valued at more than $100mm consummated by the third week of May. Going-in yields applicable to institutional quality assets were mostly in the mid- to 5% range. One exception was a 14-year old garden project in Littleton that exchanged hands at an estimated mid-5% cap rate. The investment was described as a value-add play, suggesting that the property may not be of class-a quality. Employing a 4.75% generic cap rate, RCR estimate that institutional quality assets will generate a 7. un-levered return over 5 years, ranking 44th among the RED 50. Risk-adjusted returns rank also rank 44th. YoY Rent Trend Avg Px/Unit (T) 5% 3% 1% -1% - 7. 6.5% 6. 5.5% 5. 4.5% 4. Apartm Rent Trends Asking Effective 08 09 10 08 Metro Multifamily Cap Rate Trends Trade Median 08 09 09 5.8% 10 10 3.8% 3. 11 4.5% 11 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class Date of Total Price Estimated Price per unit Transaction (in millions) Cap Rate Flats Whisper Sky (Denver SE) A 26-Apr-2011 $35.4 $166,981 4. Dakota Gov. Ranch (Lakewd So) A- 16-May-2011 $24.6 $99,797 5.5% Terra Vista Apts (Littleton) B+ 2-Apr-2011 $28.5 $87,856 4. Parc Belmar (Lakewood-South) A- 21-Mar-2011 $70.5 $137,695 5. RED CAPITAL Research

Denver - Aurora - Broomfield, CO MSA - Q1 2011 Y-o-Y % Change Metro Median Single Family Home Prices Source: S&P Case-Shiller Index 1 5% -5% -1-15% -2 DENV -25% Jan- May- Sep- Jan- 09 09 09 10 SPX20 May- 10 Sep- 10 Jan- 11 DEMOGRAPHICS & HOUSING MARKET According to Census estimates, the population of Adams, Arapahoe, Denver, Douglas and Jefferson counties increased by 48,868 persons in 2010 or 2.. This compares to a gain of 49,134 (2.1%) in 2009. Denver Co. population increased 17,850 (2.9%) last year, the leader in both absolute and percentage terms. Metro home price trends were more stable than the national and regional norms. N.A.R. data indicate that the median price of a metro home sold in 11 was $223,800, a decrease of -0. from 2010. U.S. and Western Region medians declined by -4. and -4.7%, respectively. Trulia.com report that the median price of a Denver home sold in the three-month period ended in April was $187,000, representing a $7,500 or 4. increase from the prior quarter and a 1. gain year-on-year. Home sales fell below 2,000 units in April, slowest velocity in 10 years or more. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast 15.9 32.9 00 01 02 03 04 05 08 09 10 11f 12f Year-over-year Payroll Growth Rate Source: BLS DENVER USA 03 04 05 08 09 10 11f 12f EMPLOYMENT TRENDS Non-Seasonally Adjusted After getting off to a slow start last year, the Denver area economic recovery gained momentum in 11. Establishments added payroll employees at a 10,000-job, 0.9% rate, up from 10 s 3,900-job, 0.3% advance and in line with the national average pace. The manufacturing, retail trade and business services sector were primarily responsible. Creation of about 7,600 jobs were attributable to these sectors in 11, up from 3,700 during the prior quarter. Professional, scientific and technical service employers added workers to payrolls at a brisk 2,900-job, 2.9% rate in, up from 1,700 in 10 and net attrition of 4,100 (-4.) in the year-earlier period. The unemployment rate declined to 9.3% in March from 9.7% in the year-earlier period. According to BLS Household Survey data, the decline was entirely due to a workforce reduction of 9,884. Total employment actually fell 3,235 jobs. Seasonally-Adjusted Seasonally-adjusted payroll data were more upbeat than the NSA payroll and total employment series. The BLS report that on a seasonally-adjusted basis, payroll employment increased by 9,400 jobs in the first quarter, representing the equal best three-month period recorded since 05. The data also compare well to the prior two quarters wherein Denver establishments trimmed 2,400 positions. Forecast The RED Reasearch econometric payroll model for Denver projects that job growth will mirror the national average in 2011, adding about 15,900 workers to payrolls or about 1.3%. Denver should materially outperform the nation in 2012, however, chalking down a 32,900-job, 2.7% gain, roughly 90 bps faster than the U.S. average. 1 1 8% RED Estimated Generic Unlevered Asset Total Return Probabilities DENV (RAI=2.01) SEA (RAI=2.41) 9. 5. 6. 7.7% 9. 7.3% 2. 3. 11.9% 9 7 5 3 1 P ro bability o f A chieving Stated R eturn o r Greater 11.7% RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 10 11 Change 10 11 Change Arapahoe County $983 $1,054 7. 16.3% 6. -1,030 bps Arvada / Broomfield $747 $761 1.9% 6.7% 4.8% -190 bps Aurora-Central Southeast $658 $688 4. 8.7% 6.1% -260 bps Aurora-Central Southwest $689 $681-1. 13. 10. -280 bps Aurora-North $580 $618 6. 8.9% 5. -390 bps Aurora-South $899 $945 5.1% 9. 6. -300 bps Denver-Central $916 $920 0. 8.7% 4.5% -420 bps Denver-Downtown $1,004 $1,037 3.3% 6.7% 5. -130 bps Denver-Far Southeast $691 $696 0.7% 8. 5. -320 bps Denver-North $1,359 $1,371 0.9% 6.7% 5.8% -90 bps Denver-Northeast $821 $848 3.3% 8.3% 5.5% -280 bps Denver-South $698 $760 8.9% 9. 7.9% -130 bps Denver-Southeast $7 $746 5.5% 8.3% 6. -210 bps Douglas County $963 $996 3. 6. 5.9% -30 bps Englewood / Sheridan $698 $710 1.7% 8.8% 5.9% -290 bps Golden / Wheat Ridge $736 $781 6.1% 7.9% 4. -330 bps Lakewood-North $702 $728 3.7% 7. 5.9% -170 bps Lakewood-South $828 $863 4. 6. 4.5% -170 bps Littleton $757 $805 6.3% 5.8% 4.7% -110 b[s North Glenn / Thornton $768 $775 0.9% 8.1% 6. -210 bps Westminster $717 $746 4. 8. 6.1% -210 bps Metro $789 $819 3.8% 8. 5.8% -260 bps SUPPLY TRENDS Developers delivered 2,335 units to the Denver market last year, materially fewer than the 3,530-unit 2000-09 average. Supply will drop sharply again this year, falling to a near record low 508 units, according to Reis. The data provider projects 1,926 units in 2012. 8,000 6,000 Completions and Absorption Source: Reis, Inc Completions Absorption Reis identify five market rate projects with respect to which construction is now underway. Each is expected to be completed during 2012. The projects encompass a total of 1,084 units. The South Side will receive the largest share, divided as follows: Aurora-Central-Southeast (242 units); Aurora-South (168 units) and Littleton (282 units). Plenty of entitled projects remain on the shelf, awaiting financing or other contingencies. Twenty-nine projects with an aggregate of 8,229 units are listed by Reis as in the planning phase. Only one is assigned a projected completion date, however, a 231-unit Downtown infill mid-rise sustainable loft building. A summer 2013 delivery date is forecast. Units 4,000 2,000 0 04 05 08 09 10 11f 12f A 309-units REIT-sponsored garden project in Englewood (Aurora-South) delivered in 2009 was 93. occupied in March at rents averaging $1,240. Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2010 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update April 2011 EXECUTIVE SUMMARY The Denver economic recovery gathered momentum in early 2011, powered by stronger consumer spending and rejuvenated manufacturing activity. Orders for high tech devices, transportation equipment and raw materials surged, leading companies across the supply chain to rebuild depleted inventories and stockpile materials in anticipation of strengthening future demand. Establishments in several industries accelerated hiring, most notably the hospitality and business service and retail trade sectors, which together added workers at a 9,900-job year-onyear pace in 11, up from 6,400 jobs in 10. Smaller gains were chalked down by wholesalers and durable goods manufacturers. Overall, payroll employment increased at a 9,900-job annual pace, up from 3,900- and 2,900-job gains recorded during 10 and 10, respectively. Seasonally-adjusted figures also pointed to a faster rate of growth. Denver establishments created a net of 9,400 jobs from January to March, representing the largest single quarter advance since 2005. Consequently, the metro unemployment rate declined sharply in March, falling to 8.9% from January s 21-year record high 9.9% and 9. during February. The RED CAPITAL Research payroll model suggests that the pace of progress will continue to accelerate over the next two years The model foresees a 17,800-job, 1.5% advance this year, followed by a 29,800-job, 2.5% expansion in 2012. Economy.com are still more optimistic, forecasting 18,330- and 34,990-job gains in 2011 and 2012, respectively. Apartment demand during the fourth quarter was commensurate. Reis report that metro property owners leased a net of 1,809 units, the second largest total for an October to December period in the 12-year Reis quarterly data series. Accounting for 520 new units added to metro stock, average occupancy increased 70 basis points from September to December and 250 bps year-on-year, reaching 93., the highest rate since 2001. Preliminary 11 data from Reis indicate that further gains were made over the winter. According to this source, occupancy increased another 60 bps to 94. during the period, rendering the firm s cautious 93.7% year-end 2011 occupancy forecast published in February utterly moot. The powerful demand conditions were not accompanied by comparable increases in average rents. Reis report that the average asking rent increased $7 (0.8%) sequentially to $904 during, while concession levels increased slightly, holding effective rent growth to $6 (0.7%) to $812. Asking rent trends slowed during 11, rising $3 (0.) December to March, according to a preliminary Reis estimate. Property revenue growth was particularly strong in the Englewood submarket, where occupancy increased by 270 bps sequentially in to 93.3% while average effective rent surged 2.1%. Useful gains also were posted in the infill Central Denver submarket, perhaps at the expense of the newer, higher rent Downtown and Denver - North inventories, where both average occupancy and effective rent declined quarter-to-quarter. Based on Reis s conservative February forecasts and a 5.25% generic cap rate assumption, RCR estimate expected 5-year holding period annual total returns of only 7., well below the 9. RED 50 average. But the Reis forecasts underestimate the potential for revenue growth in the Denver market. Fresh projections due in May are likely to form the foundation of a substantially higher return metric. SNAP SHOT Vacancy (6.9% - 10) Effective Rents ($812-10) Cap Rate (5. - 10) Employment (1,199.4m - 10) K EY POINTS Y-o-y Projected change 2011 2.5% 0.1% 3.8% 4.5% 0.8% 3.9m 17.8m Denver households expressed some of the most intense apartment demand ever observed during an October to December period last year. Tenants net leased 1,809 units during the period, well above the approximate 520-unit 1999-2009 average. Occupancy increased 70 basis points sequentially in 10 and 60 bps in 11 to 94., according to preliminary Reis data, the highest rate recorded since 2001. In contrast, asking and effective rent trends were only moderately stronger, rising 0.7% and 0.8% sequentially in 10. Asking rents increased another 0. in 11, the smallest advance posted since 10. Payroll trends accelerated over the winter, transforming Denver s heretofore lackluster recovery into a fledgling boom. Seasonallyadjusted data suggest that metro employers created a net of 9,400 jobs in the first three months of 2011, the most in any calendar quarter since 2005. RCR expect growth to continue to accelerate over the next 2 years. Cap rates plunged over the past two quarters, falling to the low- area or lower for stabilized class-a assets.

Denver - Aurora - Broomfield, CO MSA - Q4 2010 VACANCY TRENDS Improving job prospects encouraged household formation in the Denver area. Anxious about the stability of home values, households favored rental options overwhelmingly. The vacancy rate for Denver area rented homes and condos fell to a record low 2.9% in December, according to the state government, down from 5.5% in 2009. Likewise, vacancy in the apartment sector also evaporated falling 70 basis points sequentially and 250 bps year-over-year to 93. in. Vacancy rates fell further in 11, according to a preliminary Reis report, falling 60 bps to 5.8%, the lowest recorded level since 2001. The average occupancy of 2,553 mostly class-b units owned by publicly-traded trust was 98. in December, up 230 bps from 2009. RANK: 26 th out of 50 Reis forecasted a 6.3% metro vacancy rate at YE11 in February, but the 11 market performance renders it meaningless. Vacancy in the low 5% area is likely. Metro Vacancy Rate 1 1 8% Apartment Vacancy Trends DENV U.S.A. 8.9% 6. 6. 04 05 08 09 10 RENT TRENDS Rents trends continued to accelerate in the typically soft fourth quarter. According to Reis, average asking and effective rents advanced at 3. and 3.8% respective rates, ranking sixth among the RED 50 markets in each case. Asking rents increased $7 (0.8%) sequentially in 10 and 0. sequentially in 11, according to preliminary data. The Denver Apartment Association report that the average metro rent was $846 in the fourth quarter, up 7.5% from the same quarter of 2009. Three public REIT with a total of 12,163 Denver units reported a 3.1% unit-weighted average rent increase for the 12 months ended in December, incorporating a $7, 0.7% 10 sequential quarter advance. RANK: 6 th out of 50 In February, Reis projected 2011 effective rent growth of $36 (4.5%) to $848, comparing favorably to the service s 4. projection for the top 80 U.S. markets. YoY Rent Trend 5% 3% 1% -1% - -3% Metro Rent Trends Asking Effective 3.8% 3. 04 05 08 09 10 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend After a quiet first half, Denver property markets sparked to life last summer. At least nine trades for properties valued at $5.0mm or more were closed during the third quarter for total proceeds of about $165mm. Trade velocity was moderately slower during 10 and 11, but dollar volume increased in both periods as institutional investors seeking large class-a assets came to dominate trade. Two transactions valued at more than $60mm were closed over the winter. The first was a 480-unit, 2000 construction garden complex in North Glenn. Priced at $61.93mm, the initial property yield was about 4.5% The second trade involved a 512-unit Lakewood property that changed ownership for the third time in five years. The latest acquirer, a Boston-based fund manager, paid $70.5mm for the asset, about $1mm more than the previous value established in April 2010. RCR estimate a 5. cap rate for this transaction. Cap Rate 7. 6.5% 6. 5.5% 5. 4.5% 4. 3.5% 3. 08 08 09 09 10 10 NOTABLE TRANSACTIONS Property Name Property Class Date of Total Price Estimated Price per unit Transaction (in millions) Cap Rate Remington West (Broomfield) B+ 20-Mar-2011 $30.25 $114,583 4. Champions Park (Northglenn) A 01-Mar-2011 $61.93 $129,019 4.5% Parc Belmar (Lakewood-South) A 23-Mar-2011 $70.5 $137,695 5. Terra Vista Apts (Littleton) B 31-Mar-2011 $28.5 $87,856 4.9% RED CAPITAL Research

Denver - Aurora - Broomfield, CO MSA - Q4 2010 Y-o-Y % Change Metro Median Single Family Home Prices Source: S&P Case-Shiller Index 1 5% -5% -1-15% -2 DENV -25% Jan- May- Sep- Jan- 09 09 09 10 SPX20 May- Sep- 10 10 Jan- 11 DEMOGRAPHICS & HOUSING MARKET Denver MSA population continued to expand at a steady pace throughout the Great Recession. According to Census Bureau data, the metro area gained between 50,345 and 50,450 residents annually from 2008 through 2010, representing 2. average annual growth. Although Denver home values were more stable than the national average over the past several years, prices exhibited a weakening trend here as well in recent months. As illustrated in the Case-Shiller repeat sales index data to the left, home values declined on a year-over-year basis in 7 consecutive months, from July to January, following eight consecutive y-o-y advances recorded from November 2009 to June. According to the NAR, the median price of a metro home sold in was $234,700, up 4.9% from the year earlier period. Last year, one of every 35 Denver metro households received a notice of foreclosure, representing the 47th highest rate among the 2 largest US metros. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast 17.8 29.8 00 01 02 03 04 05 08 09 10 11f 12f Year-over-year Payroll Growth Rate Source: BLS DENV USA 03 04 05 08 09 10 11f 12f EMPLOYMENT TRENDS Non-Seasonally Adjusted After recording positive but weak job growth metrics during the second half of 2010, the Denver labor market heated up during the winter. Establishments added workers to payrolls at a 9,900-job, 0.9% year-on-year rate in 11, representing the fastest rate of growth observed in two and one-half years. Manufacturing was partially responsible as factories hired a net of 600 (1.) workers in 11, the first quarterly advance posted in this sector in over four years. Retail trade and professional and technical business service employers also contributed, hiring at a net 4,800-job annual rate, up from 2,400 jobs in the fourth quarter. Weakness persisted in the construction and financial service sectors, which posted collective aggregate 11 losses of 4,700 jobs year-onyear following a 5,000-job loss performance in the prior quarter. According to preliminary state data, the Denver unemployment rate fell to 8.9% in March, down from a 21-year high 9.9% in January. Seasonally-Adjusted Denver employers created a net of 9,400 jobs in the first quarter, according to seasonally-adjusted payroll data, following two consecutive quarters characterized by net payroll job losses. Forecast The RED Research econometric payroll forecast model for Denver produces an optimistic forecast for the metro economy. The model projects average monthly payroll gains totaling 17,800 jobs in 2011, and faster growth averaging 29,800 jobs in 2012. Preliminary results for 2013 show further gains (based on an assumed 2.8% GDP growth rate in that year) of approximately 34,000 jobs. 15% 1 5% 1.9% RED Estimated Generic Unlevered Asset Total Return Probabilities 11.5% 9. 10. 7.3% 8.8% 4.7% 6.9% 4.9% D EN ( R A I = 1. 85 ) SEA ( R A I = 2. 79 ) 9 7 5 3 1 P ro bability o f A chieving Stated R eturn o r Greater 13.1% RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 09 10 Change 09 10 Change Arapahoe County $954 $1,050 10.1% 14.8% 10. -480 bps Arvada / Broomfield $739 $755 2. 7. 4.8% -220 bps Aurora-Central Southeast $654 $681 4. 9. 6. -240 bps Aurora-Central Southwest $690 $684-0.9% 15.9% 11. -470 bps Aurora-North $576 $6 5. 10.3% 5.5% -480 bps Aurora-South $888 $933 5. 10. 6.9% -310 bps Denver-Central $880 $922 4.8% 9. 4. -480 bps Denver-Downtown $978 $1,051 7. 7. 6.1% -150 bps Denver-Far Southeast $699 $688-1. 7.9% 5. -270 bps Denver-North $1,232 $1,193-3. 7. 7. -20 bps Denver-Northeast $831 $839 1. 9.3% 6.3% -300 bps Denver-South $672 $754 12. 9.3% 9.5% 20 bps Denver-Southeast $709 $738 4. 9.3% 6. -270 bps Douglas County $952 $985 3.5% 6.7% 6. -10 bps Englewood / Sheridan $711 $710-0.1% 9. 6.7% -250 bps Golden / Wheat Ridge $745 $780 4.7% 8. 4.7% -370 bps Lakewood-North $708 $729 3. 7.8% 6. -160 bps Lakewood-South $825 $869 5. 6.5% 4.8% -170 bps Littleton $758 $791 4.3% 5.3% 5. -10 bps North Glenn / Thornton $755 $771 2. 8. 6.7% -190 bps Westminster $717 $743 3. 8. 6. -180 bps Metro $782 $812 3.8% 8.9% 6. -250 bps SUPPLY TRENDS Completions and Absorption A 328-unit four-story garden project entered the inventory in late 2010, offering 1-, 2-, and 3-bedroom floor plans at rents ranging from $952 to $1,619 or about $1.00 to $1.15 per square foot. 7,000 6,000 Source: Reis, Inc Completions Absorption Reis identify three Denver market-rate projects encompassing a total of 658 units underway in the spring. None is projected to be completed before December. Units 5,000 4,000 3,000 A 400-unit 5-story mid-rise located near Union Station was 83% occupied in December after leasing for about nine months. Rents averaged $1,6. Lease-up at Denver s first LEED-Gold certified rental located about one-half mile away was moderately slower. After debuting in late July, the 11-story, 120-unit property was 3 occupied at rents averaging $1,998. 2,000 1,000 0 04 05 08 09 10 11f 12f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2010 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update January 2011 EXECUTIVE SUMMARY T he Federal Reserve s January Beige Book contained plenty of felicitous news for Coloradans. Consumer spending was surprisingly strong during the Christmas shopping season, most prominently for major appliances and household items, lifting retailer expectations for future sales. Orders for durable goods increased, leading manufacturers to consider hiring new workers and accelerating capital spending. Also, energy exploration and agricultural income continued to grow, reflecting rising oil, gas and food prices, boding well for prospective consumption, capital investment and hiring. Fall payroll trends also took on a more encouraging hue. After posting a year-on-year loss of 23,100 (-1.9%) jobs in the second quarter, attrition slowed to a 6,800-job pace in. Moreover, early 10 data suggest that Denver finally posted sustainable net job growth late in the year. Indeed, total payrolls in November reflected a 2,200-job advance over the comparable period of 2009, the first positive annual comparison registered since October 2008. Recent gains were largely attributable to expansion in the energy and skilled service sectors. Industries associated with oil and gas exploration, skilled business, health care and education services added a net of 7,500 jobs over the 12 months ended in November, comparing favorably to a 2,700- job headcount reduction recorded from June 2009 and June 2010. Seasonally-adjusted data also were constructive. Expressed on this basis, Denver establishments expanded payrolls in five consecutive months from June to November, adding 4,100 worker during the period and 4,500 year-to-date. RED Research expect the virtuous trend to continue through at least 2013. Our econometric payroll model projects that employers will create 13,300 jobs this year, followed by 33,300 (2.8%) and 43,100 (3.5%) job gains in 2012 and 2013. Improved employment prospects encouraged hundreds of Denver residents to express their pent-up demand for independent housing and bid parents and roommates adieu. Reis report that owners net leased 2,242 units during, the third largest total recorded in the service s 12-year quarterly data series and 2 1/2 times the 10-year third quarter average. Accounting for 643 new units completed during the period, average occupancy increased 90 basis points sequentially to 92.8%. Over the prior 12 months, tenants absorbed a net of 3,998 units, trimming 220 bps form average vacancy, representing the second strongest performance recorded among the RED 50 over this period of time. Rent trends were commensurate. The average metro face rent increased $12 (1.) sequentially to $897, while effective rents surged $14 (1.8%) to $8, representing the fourth fastest RED 50 advance. On a year-on-year basis, average effective rent grew 2.5%, ranking as the 6th fastest rate of increase observed in the peer group. Reis projections suggest performance gains will moderate in 2011. After posting an expected 3.8% effective rent gain last year, the service predicts that rents will advance at a 2.9% annual rate through 2014, 0.1% faster than the RED 50 mean, and occupancy will hold steady at about 93%. Cap rates for high-quality assets gravitated around the level during 10, producing expected metro total returns of about 7.7%, 50 bps below the R50 mean. Competitive pressures sent cap rates plunging to the 4.5% to 5% area during, however, suggesting that current expected returns are considerably lower than this now. SNAP SHOT Vacancy (7. - 10) Effective Rents ($969-10) Cap Rate (5.3% - 10) Employment (1,388.6m - 10) Y-o-y Projected change YE 2010 2. 0. 4. 2.3% 0. 0.5% 6.8m 21.6m KEY POINTS The number of Denver residents in the market for apartment space increased with the improved economy, giving rise to the most intense rate of absorption observed in recent history. Tenants net leased 2,242 units during, trimming 90 basis points from the metro vacancy rate sequentially to 7.. The intense demand provided owners with a degree of pricing power not enjoyed in several years. Effective rents increased $14 (1.8%) sequentially (the largest 3-month gain in 2 years) to $8, a Reis data series high. The Denver labor market exhibited some forward momentum late in the year. After falling at a 6,800-job, (-0.) annual pace during, total payroll levels pierced yearon-year parity in November for the first time in 25 months, advancing 2,200 (0.) jobs. Investors exhibited a hardy appetite for metro assets, closing on 18 properties ($344mm) July to November, according to data published by Real Capital Analytics. Trophy cap rates plunged, falling from the 5.5% - area during the summer to a - 5% range in the fall. Expected investment total returns probably declined accordingly.

Denver - Aurora - Broomfield, CO MSA Q3 2010 10 VACANCY TRENDS Tenants absorbed 2,242 units during 10 and 3,998 units in the twelve-month period ended in September. Metro vacancy declined 90 basis points sequentially and 2. year-over-year to 7. as a result. Only one of Denver s 22 Reis-defined submarkets experienced a sequential vacancy rate increase in : Douglas County. Sequential occupancy rate gains of 200 bps or more were chalked down by Arapahoe County (4.), Denver-South (3.3%) and Golden (2.). MPF Research report total calendar year 2010 net absorption of 8,700 units, raising average occupancy 240 bps to 94.7% at year-end. Three publicly-traded real estate trusts with 11,600 metro units report 96. average occupancy, up 20 bps q-o-q and 155 bps y-o-y. RANK: 32 nd out of 50 Metro Vacancy Rate 11% 1 9% 8% 7% 5% Apartment Vacancy Trends DENVER U.S.A. 7. 7. 04 05 08 09 10 10 RENT TRENDS After drifting sideways for two years, rents surged over the summer. Reis report that average asking and effective rent increased $12 and $14 quarter-to-quarter, respectively, representing 1. and 1.8% gains. Submarket trends were broadly mixed. Rent trends in city of Denver submarkets remained soft, falling in four of seven. By contrast, rent growth in suburban areas was vigorous, especially southwest and northwest of Denver (Lakewood, Littleton, Westminster and Golden). MPF aver that effective rent increased 4. during calendar 2010. Public trusts disclosed 1. and 1.1% weighted average sequential quarter and year-over-year rent increases during the third quarter. RANK: 3 rd out of 50 Reis expect average real rent to reach $812 by YE10 and $837 by YE11. YoY Rent Trend 5% 3% 1% -1% - Metro Rent Trends ASKING EFFECTIVE 3. 2. 04 05 08 09 10 PROPERTY MARKET & CAP RATE TRENDS Real Capital Analytics report that 26 investment-quality Denver apartment assets exchanged hands from January to November valued at an aggregate of $530mm. Investor interest intensified after mid-year. Eighteen trades valued at $340mm closed from July to November. 7. 6.5% Metro Multifamily Cap Rate Trend Trade Composite RCA report that the average initial yield of trades closed January to November was 6.9%. The average asking cap rate applicable to 33 properties currently listed for sale was 7.1%. Cap rates of trades observed during the spring and summer were largely in the area. Buyers grew increasingly aggressive recently and the competition drove asset price higher and cap rates down. As indicated in the trade summary below, recent-construction class-a trophy assets traded to sub-5% going-in yields during the fall quarter. Cap Rate 6. 5.5% 5. 4.5% In January, a 20-construction Southeast Denver trophy was offered for sale. RED Research estimate a 5% to 5.5% cap rate at the asking price. 08 08 09 09 10 10 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Water Tower Flats (Arvada) A 27-Dec-2010 $44.0 $135,802 4. Broadstone Ranch (Westminster) B 29-Oct-2010 $21.8 $85,156 5.8% Alexan at Arista (Broomfield) A 16-Sep-2010 $55.6 $155,168 4.5% Lamberston Farm (North Glenn) B+ 12-Oct-2010 $45.0 $103,211 5.8% RED CAPITAL Research

Denver - Aurora - Broomfield, CO MSA - Q3 2010 Annual Chg (000) Appreciation Year-over-year Home Value Change Source: S&P Case-Shiller Index, RCR DENVER CSX20 5% -0.8% -5% -1.8% -1-15% -2 Apr- Aug- Dec- Apr- Aug- Dec- Apr- Aug- 08 08 08 09 09 09 10 10 Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 43.1 40 20 33.3 13.3 0-20 -18.1-40 DEMOGRAPHICS & HOUSING MARKET The expiration of the federal homebuyers credit brought the Denver for-sale housing market to a screeching halt in September, according to DQ News. Sales velocity fell -23. year-over-year to 3,113 units, the lowest September total in 12 years. Price trends were firmer, however, as the median price of homes and condos sold in September was $217,000, representing a 5.9% year-over-year advance. NAR statistics were consistent with the Data Quick findings. The NAR report that the median price of single-family metro homes sold during 10 was $238,500, an increase of 4.1% year-on-year. After rallying solidly for more than one year, the Denver Case-Shiller index fell sequentially and year-over-year in each of July, August, September and October. The index declined 1.8% y-o-y in October, comparing unfavorably to a 0.8% decline in the CSX20 benchmark. Foreclosure frequency increased 4.1% q-o-q in to an average of 0.85%. EMPLOYMENT TRENDS Non-Seasonally Adjusted Year-over-year payroll job losses slowed from a 23,100-job, -1.9% rate during 10 to a 6,800-job, -0. pace in. Improving trends in the construction, trade and business service sectors were largely responsible. The foregoing super-sectors hemorrhaged 17,600 workers y-o-y during 10 but trimmed headcounts by 4,200 in. Employment trends continued to improve in the fall. The rate of attrition slowed to -1,900 jobs in October, and November saw the first positive annual payroll comparison since October 2008 when establishments hired a net of 2,200 workers over the previous 12 months. -60-54.6 99 00 01 02 03 04 05 08 0910f11f12f13f Recovering oil and gas exploration activity bodes well for the future. Tenth FRB District rig counts are back up to recent highs and drilling equipment wholesalers, field service firms and downstream energy companies began to rebuild staff. Rate - - - Year-over-year Payroll Growth Rate Source: BLS, IEC/UCF, RCR DENV ACTUAL DENV FORECAST USA ACTUAL USA FORECAST 03 04 05 08 09 10 11f 12f 13f The unemployment rate was a contrary indicator. In November, 8.7% of the workforce was unemployed, an equal record high last breeched in June 2009. The rate was 160 bps above the year-earlier metric and 100 bps above the 7.7% May 2010 cycle low. Seasonally-Adjusted Seasonally-adjusted data showed slow but steady progress. Sequential payroll counts increased in each month from June to November, rising 4,100 jobs overall during this period. Year-to-date through November, metro establishments created a total of 4,500 positions. Forecast The current consensus among professional economists regarding 2011 and 2012 U.S. GDP growth is 3. to 3.3%. Consistent with this outlook, our econometric payroll model forecasts annual payroll job growth averaging 13,300 jobs in 2011 and 33,300 jobs in 2012. Assuming further growth along these lines during 2013, the model forecasts the pace of job growth accelerating to roughly 43,100 jobs in that year. 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilities DENV (RAI=1.89) SLC (RAI=3.14) 9. 5. 5. 7. 8.7% 10. 7. 2.1% 12. 9 7 5 3 1 Probability of Achieving Stated Return or Greater 12. RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 09 10 Change 09 10 Change Arapahoe County $967 $1,035 7.1% 15.8% 15.9% 10 bps Arvada / Broomfield $736 $753 2. 7. 5.3% -190 bps Aurora-Central-Southeast $658 $674 2.5% 9. 7. -200 bps Aurora-Central-Southwest $685 $682-0. 16.7% 11.7% -500 bps Aurora-North $581 $605 4.1% 11.7% 6.7% -500 bps Aurora-South $893 $925 3. 10.9% 7. -350 bps Denver-Central $890 $915 2.8% 10.8% 6. -440 bps Denver-Downtown $954 $1,052 10.3% 6. 5. -100 bps Denver-Far Southeast $690 $679-1.5% 7. 6. -80 bps Denver-North $1,2 $1,248 3. 7.3% 6. -130 bps Denver-Northeast $822 $818-0.5% 9. 7. -240 bps Denver-South $673 $750 11.5% 8. 11. 300 bps Denver-Southeast $718 $727 1.3% 8.9% 6.8% -210 bps Douglas County $949 $978 3. 7. 6.9% -30 bps Englewood / Sheridan $738 $696-5.7% 7.3% 9. 210 bps Golden / Wheat Ridge $730 $776 6. 8.8% 5.5% -330 bps Lakewood-North $698 $720 3. 9. 6.7% -250 bps Lakewood-South $818 $858 4.9% 7. 5. -200 bps Littleton $737 $785 6.5% 4.9% 5. 70 bps North Glenn / Thornton $738 $775 5. 8. 7.1% -110 bps Westminster $719 $756 5.1% 8. 6. -200 bps Metro $780 $8 3. 9. 7. -220 bps SUPPLY TRENDS The Reis pipeline report identifies 10 major rental multifamily developments completed during 2010 encompassing a total of 2,919 units. The firm s 10 metro futures report estimates total 2010 deliveries at 2,483 units. By way of forecast, the service estimates supply of 1,565 units in 2011 and 1,964 units in 2012. The pipeline report indicates that only two projects containing 496 total units are currently underway. The list of permitted projects is long, however, and many are likely to break ground as the apartment market tightens further and construction financing becomes more readily accessible. In all, Reis identify 31 deals in the planning phase encompassing a total of 8,771 units. 10,0 0 0 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,0 0 0 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 08 09 10f 11f After leasing for about 12 months, a nationally-branded 479-unit (419 market rate) mixed-income mid-rise located in South Denver was 8 occupied in September at rents averaging $1,466. A 194-unit Uptown loft also came on line in fall 2009. The property was 88% occupied in September at $2,022 average rent. Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2010 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update October 2010 EXECUTIVE SUMMARY T he American Legislative Exchange Council ranked Colorado s economic growth prospects second strongest among the 50 states after Utah, citing the Centennial State s Taxpayer Bill of Rights, which places meaningful constraints on expansion of government spending. Although there is merit to this thinking, the benefits haven t materialized yet. Colorado ranked 45th in personal income growth in 10, and tied 48th in year-on-year payroll growth over the 12 months ended in August, topping only recession-plagued Nevada. The Denver economy also searched to find traction. Metro payrolls declined at a 23,100-job, -1.9% year-on-year pace in 10, comparing unfavorably to the Nation s 0.5% slide; and job losses persisted at an 8,200 (-0.7%) job pace over the 12-months ended in August, badly trailing the U.S. s +0. comparison. Goods producing industries were the principal culprits. Construction, manufacturing and wholesale trade headcounts plunged at 14,100-job year-on-year rate in, accounting for 61% of metro attrition. Transportation and business service payroll trends also were soft, contributing 9,900 y-o-y job losses in the quarter. Attrition decelerated during the summer, benefiting from rising temporary worker usage, improved hospitality service sector trends and faster hiring in the health care sector. Otherwise, weak conditions prevailed, especially in the goods producing and transportation sectors, which collectively contributed 10,100 job losses. The near term outlook is guarded. The RCR econometric payroll model indicates that y-o-y job losses are likely to persist into 11. Moreover, operational consolidation likely to ensue from the United / Continental merger may add to prospective job losses. The intermediate term outlook is brighter, however; the model projects an 8,500-job gain next year; and a 34,200-job surge in 2012. Renter behavior suggested that the job market may be stronger than the BLS data indicate. Tenants net leased 994 units in 10, the third consecutive quarter of positive absorption (although down from s powerful 1,547-unit tally) and just shy of the 1,024-unit ten-year second quarter average. Developers completed 620 units during the quarter, limiting the occupancy rate gain to 20 basis points to 91.9%. Three metro submarkets chalked down 100 bps increases or more, each covering ground in the city of Aurora (Central-SE, North and South). Infill demand was mixed, same store occupancy in the Denver North submarket fell 60 bps, while Downtown occupancy advanced 40 bps after submarket properties trimmed rents by an average of -2.7%. Metro asking rents increased an average of $6 (0.7%) to $885, representing the largest sequential advance in two years. Concession costs increased slightly, however, reducing the effective rent gain to $5 (0.) to $791. Trendy Denver North submarket posted the best results, posting a same store sequential growth metric of 4. to $1,269. Tenants in the tech flavored Aurora South submarket also endured sharp hikes as same store rents increased $16 (1.8%) to $923. Reis expect ample supply and moderate demand conditions to contribute to mediocre market performance over the next several years. Occupancy is expected to stay roughly at current levels through 2014, and rents are projected to rise at a compound rate of 2. from YE10 to YE14, 30 bps below the R50 mean. Consequently, Denver total returns are expected to lag the 7. group mean at just 6.3%. SNAP SHOT Vacancy (8.1% - 10) Effective Rents ($791-10) Cap Rate (6. - 10) Employment (1,181.8m - 10) Y-o-y Projected change YE 2010 1. 1.5% 1.9% 40 bps 11 0.3% 23.1m 22.3m KEY POINTS Renters decoupled from parents and roommates with brio in 10, absorbing a near first quarter record net of 1,610 metro units. Traffic wasn t as heavy in the seasonally stronger second quarter: tenants net leased 994 units, below average for. Metro occupancy increased 20 basis points sequentially and 130 bps year-on-year in. The latter metric was the second fastest upmove recorded among the 64 largest metro apartment markets in the country. Effective rent increased 0. sequentially and 1.5% y-o-y. The y-o-y advance ranked 7th fastest among the RED 50 markets. The Denver area labor market continued to underperform the national average. Payroll job totals declined at a 1.9% year-on-year rate in 10, and at a 0.7% pace in August. Seasonally-adjusted data also exhibited weakness. Establishments created a net of only 600 jobs January to August. Moreover, July and August data were disappointing. Investors greeted property sales with enthusiasm, sending cap rates lower.

Denver - Aurora - Broomfield, CO MSA Q2 2010 10 VACANCY TRENDS Reis report that tenants absorbed 994 units in the second quarter, down from 10 s useful 1,610-unit tally. Developers delivered two projects consisting of 620 market rate units, holding the average occupancy improvement to 20 basis points sequentially to 91.9%. M/PF Research report that occupancy averaged 94. in June, up 1.9% from December. The service recorded a 94.7% 10 average. Reis data show that properties in Douglas County enjoyed the highest average occupancy (94.7%), while properties in the fast growing Arapahoe County submarket struggled with the lowest: 79.7%. Reis expect metro occupancy to decline 30 bps by YE10 but recover the lost ground in 2011. Occupancy is likely to hover near that level through 2014. RANK: 32 nd out of 50 Metro Vacancy Rate 11% 1 9% 8% 7% 5% Apartment Vacancy Trends DENVER U.S.A. 8.1% 7.8% 04 05 08 09 10 10 RENT TRENDS Average asking rent increased $6 quarter-to-quarter to $885, the largest percentage advance in two years. Concessions levels inched slightly higher, however, holding effective rent growth in $5 (0.) to $791. Three publicly-traded REIT with 9,600 Denver area units saw rents rise 0. sequentially and fall -2. year-over-year in the quarter. M/PF Research recorded a 2.5% sequential quarter and 5.1% year-todate effective rent increase for the Denver area during 10. Denver-North submarket posted a 4.1% same-store sequential rent increase to a unit average of $1,268, according to Reis, fueled by strong demand for class-a rental units in this trendy urban area. RANK: 27 th out of 50 Reis forecast a $6 (0.8%) effective rent gain in 2H10, and a 1.9% advance in 2011. YoY Rent Trend 5% 3% 1% -1% - -3% Metro Rent Trends ASKING EFFECTIVE 1.5% 0. 04 05 08 09 10 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend According to Real Capital Analytics, investors closed on 12 $5mm+ Denver area properties January through September for total sales proceeds of $292mm. The average price per unit was $79,000 and the average reported cap rate was 5.8%. In September, a nationally-branded merchant builder sold a stabilized 2008-vintage class-a project in Broomfield for $55.5mm or $155,600 per unit. Property asking rents averaged about $1,145 and occupancy was 9. RCR estimate that the going-in yield was about 5.. Investors pounced on distressed asset situations. RCR noted two trades for low-occupancy properties. Pro forma yields after economic occupancy is returned to 83% range from 7. to 8.5%. Cap Rate 7. 6.5% 6. 5.5% 5. 4.5% 4. Below average projected occupancy and rent growth hamper expected Denver total returns. RCR estimate ETR at only 6.3%, 110 bps below the R50 mean. 08 08 09 09 10 10 NOTABLE TRANSACTIONS Property Name (submarket) Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Alexan Arista (Arvada/ Brmfield) A 23-Sep-2010 $55.5 $155,600 5. Legend Oaks (Aurora Cent SW) B+ 20-Aug-2010 $43.9 $89,980 6.5% Hickory Ridge (Aurora Cent SW) B 25-Aug-2010 $33.0 $47,965 6.1% / 8.5% pf Lakes at Monaco Pt (Den Far SE) B- 22-Aug-2010 $17.4 $40,845 5.5% / 7. pf RED CAPITAL Research

Denver - Aurora - Broomfield, CO MSA Q2 2010 Appreciation Annual Chg (000) Rate 5% -5% -1-15% -2 60 40 20 0-20 -40-60 - - - Year-over-year Home Value Change Source: S&P Case-Shiller Index, RCR DENVER CSX20 Payroll Employment Growth Source: BLS Data & RCG Research Forecast Year-over-year Payroll Growth Rate Source: BLS, Woodley Park Research, RCR DENV ACTUAL DENV FORECAST USA ACTUAL USA FORECAST 03 04 05 08 09 10 11f 12f 3. -0.1% 8.5-22.3 Mar- 08 Jul- 08 Nov- Mar- 08 09 Jul- 09 Nov- Mar- 09 10 Jul- 10 34.2-54.6 99 00 01 02 03 04 05 08 09 10f11f12f DEMOGRAPHICS & HOUSING MARKET Data published by the N.A.R. support the view that the Denver for-sale housing market is recovering. The median price of a metro home sold in 10 was $234,700, an increase of 4.9% year-on-year. Prices also were firmer in Colorado Springs and Boulder, which posted 4.1% and 3. gains, respectively. Case-Shiller repeat sales index data suggest that the market recovery lost momentum during the summer. After posting a 4. y-o-y advance in April, price appreciation decelerated in May and June and turned negative in July. HousingTracker.net report that the median listing price of Denver homes for sale declined -3.5% from 9//10 to 10/4/10, while the supply of homes for sale plummeted -5.1%. Approximately 1.6 of Denver households were in a stage of foreclosure in 1H10, the 49th highest rate among the nation s top 2 metro areas. EMPLOYMENT TRENDS Non-Seasonally Adjusted The Denver economy stopped deteriorating during the spring but failed to find enough traction to achieve meaningful growth. Year-on-year comparisons improved for the fourth consecutive quarter in 10. After recording a 65,300-job, -5.3% loss in 09, payroll losses diminished steadily to a 23,100-job, -1.9% pace in 10. Recent improvement was largely attributable to firmer conditions in the business, hospitality, education and health care service sectors. Conversely, rapid payroll job attrition in the goods producing and transportation industries continued to plague the local economy. Payrolls in August were 8,200 jobs lower than the year-earlier comparison. The August datum was the best comparison registered since November 2008. The unemployment rate in August was 8.1%, up 10 bps from 2009. Seasonally-Adjusted With a helpful boost from the Census Bureau, which hired about 3,500 temporary data collection workers in April and May, Denver posted a 3,000-job seasonally-adjusted payroll gain in 10, the first quarterly job increase since 08. Payroll trends lost momentum in July and August as temporary Census jobs were terminated. After adding 4,600 jobs February to June, seasonally-adjusted payroll totals advanced only 300 jobs in July and dropped 100 jobs in August. Forecast Results from the RED CAPITAL Research econometric payroll model suggest that apartment owners should not expect the metro economy to recover quickly. The model forecasts a 22,300-job loss this year, followed by an anemic 8,500-job gain in 2011. 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilities DENV (RAI=1.49) SEA (RAI=2.09) 7.3% 8.3% 9. 5. 6.1% 2.7% 3.9% 0.5% 11. 9 7 5 3 1 Probability of Achieving Stated Return or Greater 11.7% RED CAPITAL Research

S Submarket Effective Rent Physical Vacancy 09 10 Change 09 10 Change Arapahoe County $970 $997 2.7% 17. 20.3% 330 bps Arvada / Broomfield $737 $745 1. 7. 6.1% -110 bps Aurora-Central-Southeast $675 $655-2.9% 9. 8. -60 bps Aurora-Central-Southwest $686 $685-0. 17.3% 11.7% -560 bps Aurora-North $578 $582 0.7% 12.3% 7.9% -440 bps Aurora-South $880 $908 3. 11. 8. -360 bps Denver-Central $899 $923 2.7% 8.8% 7.7% -110 bps Denver-Downtown $976 $979 0.3% 7. 6.3% -130 bps Denver-Far Southeast $663 $687 3.7% 7.3% 7. 30 bps Denver-North $1,175 $1,269 8. 13.8% 7.3% -650 bps Denver-Northeast $838 $831-0.9% 8.7% 8.1% -60 bps Denver-South $647 $746 15.3% 8. 14.3% 570 bps Denver-Southeast $711 $710-0. 7. 7.9% 50 bps Douglas County $949 $955 0. 7. 5.3% -230 bps Englewood / Sheridan $734 $693-5. 7. 10.7% 370 bps Golden / Wheat Ridge $721 $751 4. 9.5% 7.9% -160 bps Lakewood-North $713 $713 Unchd 9.5% 7.5% -200 bps Lakewood-South $827 $832 0. 7.3% 6. -110 bps Littleton $761 $762 0. 5. 6.3% 130 bps North Glenn / Thornton $745 $759 1.9% 7.8% 7. -40 bps Westminster $715 $732 2.3% 8.5% 7.3% -120 bps Metro $779 $791 1.5% 9.3% 8.1% -120 bps SUPPLY TRENDS Two apartment projects were completed during 10: a 201-unit 3-story courtyard walk-up near the Denver Tech Center and a 479-unit mixed income transit-oriented project in South Denver near U.D. The former rents from $860 ($1.40/sf) to $1,800 ($1.43/sf); the latter from $1,029 ($1.51/sf) to $1,720 ($1.47/sf). 10,000 Completions and Absorption Source: Reis, Inc Completions Absorption Reis identify only one apartment complex under construction: a 328-unit property located near Cherry Hills Country Club. The mixed-use project is expected to be complete early next year. A 228-unit mid-rise loft building near Coors Field completed in early 2009 was 95% occupied in June at rents averaging $2,003. A 17-story, 223-unit tower in the Golden Triangle District near DHMC was 77% occupied in June at rents averaging $3,325. The property debuted in spring 2009. Units 8,000 6,000 4,000 2,000 0 02 03 04 05 08 09 10f 11f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2010 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update June 2010 EXECUTIVE SUMMARY A ccording to the Brookings Institute, Denver s gross metropolitan product increased for the second consecutive quarter in 10, by 1. in this case. The Mile High City out performed the Intermountain Region (1.1%) and the U.S. (0.9%) on this basis, suggesting that the metro economy is poised to emerge from the recession with greater than average vigor. Although 10 GMP grew faster than 80 of the nation s top 100 MSA, Denver continued to lag in respect to job creation. By the numbers, payroll employment declined at a 43,200-job, -3. year-on-year rate, up from a 59,400-job, -4.7% pace in the prior quarter. By way of comparison, U.S. job attrition proceeded at a -2.3% rate. Sequential quarter gains stemmed from firmer conditions in the financial services sector and intensified use of temporary workers. Consumer driven industries, especially retail trade and leisure services also contributed. Moderately better metrics were recorded in the spring. May payrolls were down 24,900 (-2.1%) jobs from the comparable period of 2009, the smallest y-o-y loss registered in 16 months. Progress was attributable to steadier conditions in the skilled business services; further growth in the use of contract labor; and hiring by the federal government. Seasonally-adjusted data were nearly stable, showing net attrition of only 1,400 (-0.1%) jobs in the January to May period, up sharply from 34,600 net cuts in the year-earlier period. But April and May data were disappointing on balance as Denver managed to create only 1,200 jobs, inclusive of nearly 5,000 temporary Federal government Census positions. RED Research expect hiring to accelerate in 2H10. Our econometric payroll model projects a return to year-on-year parity by 10, leading to net creation of 22,700 jobs next year and 43,600 jobs in 2012. Rising consumer confidence unleashed powerful pent-up demand for apartment space among metro residents. Renters net leased 1,155 units in 10, the largest one-quarter total posted since 20, and the largest first quarter total harvested since 2000. Accounting for the delivery of 202 units of new product, average occupancy surged 60 basis points sequentially (30 bps y-o-y) to 91.7%. Notable gains were made in the city of Aurora and in infill Denver neighborhoods, suggesting that young professional renters were making their presences felt in the marketplace. Only the suburban Arapahoe Co. submarket exhibited material weakness, largely due to supply pressures. Pricing power improved, producing higher average face and effective rents. Metro average asking rents increased for the first time in 18 months, rising $2 (0.) to $879. Rent concessions receded as well, boosting effective rents $4 (0.5%) to $786, thereby lifting the y-o-y comparison above parity (0.1%) and Denver to 9 th rank among the RED 50. Despite recent above-average occupancy and rent gains, Reis forecast models project below average performance over the next several years. The service expects supply pressures to prohibit occupancy gains and limit rent increases through 2014, hampering property NOI growth. Consequently, annual total returns are likely to lag the R50 average. Indeed, using a fairly generous 6.3% generic cap rate assumption, RCR project a 5- year unlevered expected total return for metro assets of only 6.1%, 90 bps below the R50 mean, ranking 46th in the group. Risk-adjusted returns are comparable, ranking 44th over all. SNAP SHOT Vacancy (8.3% - 10) Effective Rents ($791-10) Cap Rate (5.8% - 10) Employment (1,157.6m - 10) KEY POINTS Y-o-y Projected change YE 2010 30 bps 0.1% 1.9% 10 bps 50 bps Neutral 43.2m 19.7m Denver job trends continued to lag the nation as payrolls fell at a 43,200-job, -3. rate in and proceeded sluggishly in the spring. RED Research expect the metro recovery to accelerate as the year progresses, ultimately yielding strong payroll job creation totaling more than 65,000 jobs in 2011-2012. Consumer sentiment brightened over the winter, unleashing pent-up space demand. Rental agents inked 1,155 net leases in the period, giving rise to a 60 basis point sequential quarter occupancy rate advance. Owner pricing power improved accordingly, creating the conditions necessary to raise sequential quarter average asking and effective rents 0. and 0.5%, respectively. The pace of acquisitions by institutional investors intensified. National players closed on three 2000-era properties in May for aggregate proceeds exceeding $70 million. RCR estimate that investors acquired the market rate assets at cap rates. The median price of a Denver County home increased 29.7% y-o-y to $194,454 in 10, according to DQ News.

Denver - Aurora - Broomfield, CO MSA - Q1 2010 VACANCY TRENDS Following three solid quarters of apartment demand wherein tenants absorbed 2,145 units, leasing activity exploded during the typically soft winter season. Investor grade properties absorbed 1,155 units in, towering above the 60-unit 10-year first quarter average. Metro vacancy declined 60 basis points sequentially and 30 bps y-o-y to 8.3%, ranking 4th and 5th among the RED 50, respectively. MPF also report powerful 10 apartment demand, estimating 3,400 units were absorbed, raising occupancy 110 bps q-o-q to 93.. Demand was particularly strong in submarkets near the Downtown core. Occupancy increased usefully in the Denver North, Downtown and close-in city of Aurora submarkets. Conversely, high vacancy rates persisted in some southeast suburban submarkets. RANK: 31 st out of 50 Metro Vacancy Rate 1 1 8% Apartment Vacancy Trends DENVER U.S.A. 8.3% 8. 04 05 08 09 10 RENT TRENDS Asking rents increased sequentially for the first time since 08, rising by an average of $2 (0.) to $879. Reduced concession levels helped effective rents jump $4 (0.5%) to $786. Marcus & Millichap report that concessions averaged 5.9 weeks of free rent or 11.3% of gross rent revenue. Concessions varied by submarket, ranging from 3.5 to 4.5 weeks in city of Denver and Northwest metro submarkets to 6.5 to 7.0 weeks in Aurora and the southern suburbs. MPF Research data show average metro effective rents popping 1.1% above their year-end 2009 levels in March. Reis forecast that metro rents will rise vigorously ($5 or 1.) by yearend, but advance at a mediocre 2.3% p.a. pace from YE10 to YE14. RANK: 9 th out of 50 YoY Rent Trend 5% 3% 1% -1% - -3% Metro Rent Trends ASKING EFFECTIVE 0.1% -0.8% 04 05 08 09 10 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend Large institutional investors returned to big game hunting in the Denver area in recent months. After ceding ground to local and regional players in 2008 and 2009, large trusts and money managers re-engaged in the spring. A Chicago-based private equity fund fronting domestic and international money acquired a 2003-vintage garden project in Central Aurora for $22.0mm to yield an estimated 6. (a 5.5% cap rate was quoted). Days later, a hyper-active Dallas based private REIT closed on a super-luxury infill property in Lakewood for $41.0mm. RED Research estimate this deal also was priced to a 6. initial yield. Cap Rate 7. 6.5% 6. 5.5% 5. 4.5% 5.9% 5.8% Marcus & Millichap aver that cap rates range widely based on property class and location. Well located class-b or B+ assets trade in the 7% range, while class-c assets may yield 9% or more. RED Research calculate a 6.1% expected five-year unlevered total return for generic Denver assets, 90 basis points below the mean of the RED 50 markets. 4. 08 08 09 09 10 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class (Vintage) Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Retreat City Center (Aurora Cent) A (2004) 25-May-2010 $22.0 $97,556 6. Alexan Belmar (Lakewood So) A (20) 26-May-2010 $41.0 $133,117 6. VistaLofts (Denver So-Glendale) A (Student Hsg) 26-Mar-2010 $11.0 $129,651 Distressed Diamond at Prospect (Denv No) LIHTC Interest 18-May-2010 NA NA NA RED CAPITAL Research

Denver - Aurora - Broomfield, CO MSA - Q1 2010 Appreciation Year-over-year Home Value Change Source: S&P Case-Shiller Index, RCR 5% DENVER CSX20-5% -1-15% DEMOGRAPHICS & HOUSING MARKET City of Denver population increased by 13,7 (2.3%) in 2009, easily the fastest rate of growth observed in this decade. The metro population expanded by 51,811 (2.1%), the second largest gain of the decade and the third consecutive year of or greater growth. Home prices in Denver County rebounded sharply in the first quarter. According to DQ News, the median price of home sold in was $194,454, up 29.7% from 2009. Prices in outlying counties weren t as robust, however; Arapahoe and Jefferson Counties saw prices rise 8.8% and 3.8%, respectively, while Douglass County prices fell -1.7%. -2 Mar- 08 Jul- 08 Nov- 08 Mar- 09 Jul- 09 Nov- 09 Mar- 10 The Denver Case-Shiller repeat sales index was up 4.1% year-on-year in March, the seventh strongest metric posted among the 20 metro markets included in the CSX20 index. Denver s 0. month-onmonth advance in March was the fourth strongest performance among the CSX 20 markets. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast 22.7-19.7 43.6-54.6 99 00 01 02 03 04 05 08 09 10f11f12f Year-over-year Payroll Growth Rate Source: BLS, Woodley Park Research, RCR DENV ACTUAL DENV FORECAST USA ACTUAL USA FORECAST 03 04 05 08 09 10 11f 12f EMPLOYMENT TRENDS Non-Seasonally Adjusted Denver crawled its way out of the depths of the Great Recession during the first quarter. Year-on-year payroll losses slowed to a 43,200- job, -3. rate, up from 2H09 s 62,400-job, -5. pace. The improvement observed during the first quarter reflected stabilizing conditions across major industries as opposed to actual growth. Three NAICS super-sector notched year-on-year advances in : health care and education services, other services and government. But the aggregate gain among the three (2,300 jobs) was down quarter-to-quarter from 09 s 2,600-job advance. The unemployment rate averaged 8. in 10, up only 40 basis points from 2009. To some degree, the rate was held down by a 36,600 decrease in the number of people looking for work. Year-over-year payroll losses declined to a 24,900-job rate in May. Seasonally-Adjusted Expressed on a seasonally-adjusted basis, Denver area workers lost a net of 2,600 jobs during 10, up from 7,300 in the prior quarter and 25,300 in the year-earlier period. Moreover, the metro area chalked down sequential-month gains in February (600) and March (1,000). Following a -1,000-job setback in April, Denver registered a disappointing 2,200-job advance in May. The statistic was troubling by virtue of the fact it included 5,000 temporary Census worker hires. Forecast: The GDP forecasts that RCR use as the basis of its payroll forecasts are quite bullish about the intermediate term, predicting economic growth rates in the mid-to-high 3% range in 2011 and 2012. Our payroll forecast for Denver is commensurate, foreseeing gains of 22,700 jobs and 43,600 jobs in 2011 and 2012, respectively, following an expected loss of 19,700 jobs this year. The out-year projections are susceptible to prospective downward GDP forecast revisions; likely events. 2 1 0.3% RED Estimated Generic Unlevered Asset Total Return Probabilities DENV (RAI=1.43) 2. 3.7% RALEIGH (RAI=1.91) 4.8% 5.9% 6. 8.1% 8. 11. 9 7 5 3 1 Probability of Achieving Stated Return or Greater 11. RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 09 10 Change 09 10 Change Arapahoe County $961 $979 1.9% 14. 16.3% 170 bps Arvada / Broomfield $746 $745-0.1% 6.7% 6.7% Unchd Aurora-Central-Southeast $685 $658-3.9% 8. 8.7% 30 bps Aurora-Central-Southwest $692 $692-0.1% 13.5% 13. -30 bps Aurora-North $587 $581-1. 11. 8.9% -270 bps Aurora-South $885 $897 1.3% 9. 9. -60 bps Denver-Central $895 $9 1.3% 7.9% 8.3% 40 bps Denver-Downtown $1,012 $1,0-0. 6.7% 6.7% Unchd Denver-Far Southeast $679 $694 2. 6.7% 8. 170 bps Denver-North $1,175 $1,218 3.7% 14.5% 6.7% -780 bps Denver-Northeast $826 $821-0. 7.8% 8.3% 50 bps Denver-South $662 $700 5.7% 8.5% 9. 70 bps Denver-Southeast $724 $704-2.8% 7.8% 8.3% 50 bps Douglas County $953 $960 0.8% 7. 6. -100 bps Englewood / Sheridan $744 $696-6.5% 7.9% 8.8% 90 bps Golden / Wheat Ridge $731 $735 0.5% 9.3% 7.9% -140 bps Lakewood-North $724 $703-3. 8.9% 7. -130 bps Lakewood-South $822 $824 0. 7.7% 6. -150 bps Littleton $782 $759-3. 4. 5.8% 120 bps North Glenn / Thornton $753 $766 1.7% 8.1% 8.1% Unchd Westminster $721 $718-0. 7. 8. 100 bps Metro $785 $786 0.1% 8. 8.3% -30 bps SUPPLY TRENDS Reis identify 6 projects currently under construction incorporating 1,891 units. Three of the foregoing, consisting of a total of 920 units, are located in an in-demand urban infill submarket (Denver North or Downtown). The balance is sited in the suburban Aurora South, Denver Far Southeast and Douglas County submarkets. Reis expect five deals (1,563 units) presently underway to officially debut in August or September 2010, pressuring occupancy down. Two projects were delivered since March: a 479-unit mixed income project in Denver-South/Glendale, and a 201-unit, transit-oriented mid-rise on Union Avenue in the Arapahoe County submarket. A 194-unit Uptown loft conversion was 81% occupied in March at rents averaging $1,915. A two-month free concession was offered on some units. Property began leasing in the late summer 2009. Units 10,000 8,000 6,000 4,000 2,000 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 08 09 10f 11f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2010 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update May 2010 EXECUTIVE SUMMARY T he pending sale of iconic Denver telecom company Qwest to a little-known Louisianabased local phone service provider highlights the changes in local employment trends that evolved over the past decade. The telecom industry was the backbone of Denver s hightech services sector during the 1990 s boom, driving rapid regional economic growth. But its fortunes have been in decline for years, giving rise to the question of which industry will fuel the next Denver area expansion? During the past decade, the energy sector was a partial answer, initially in the guise of the oil and gas industry and more recently in the form of the green power movement. But with the collapse of energy prices in 2008 and the uneven fortunes of sustainable power, energy hasn t proved so far to be much of an economic catalyst. Indeed, employment in energy-related industries continued to decline during the winter months. Goods producing employment dropped at a 21,700-job year-over-year pace in 10, while attrition in the professional and technical business services sub-sector persisted at a discomforting 6,400- job, -6. pace. Overall, metro payrolls declined at a 43,600-job, -3. YoY rate in, an improvement from 09 s 59,400-job loss, but weaker than the comparable 2. national average. Seasonally-adjusted data also were relatively weak, showing a net loss of 9,600 jobs in, down from s 8,900-job bleed. The RED Research econometric payroll forecast model indicates that Denver isn t likely to see a meaningful recovery before the fall. The model projects year-on-year payroll attrition through the first quarter 2011, contributing to a net loss of 20,800 jobs this year, giving way grudgingly to a 12,300-job advance in 2011. By contrast, metro demographic trends were robust. Denver population growth actually accelerated last year and the YoY gain (51,811 residents) was the largest recorded since 2001. Domestic in-migration fueled the advance, demonstrating the broad appeal of the quality of life in the metro area and its ability to retain residents even under adverse circumstances. Many households hedged their bets by renting rather than purchasing homes. Apartment owners net leased 705 units in, raising the 2H09 net move-in total to 1,532 units. Average occupancy increased 40 basis points September-to-December to 91.1%. Class-A properties garnered the lion s share, filling 469 units, thereby reducing class vacancy 50bps to 8.8%, Suburbs southeast of Downtown (Aurora, Arapahoe Co.) benefited most, combining to backfill a net of 501 units. Apartment demand shifted up a gear over the winter. Preliminarily, Reis report that occupancy rose 60 bps during, while M/PF counted metro-wide absorption of 3,400 units, raising metro occupancy by 110 bps. Likewise, a state Division of Housing survey recorded a 120 bps occupancy advance during the first quarter. Submarket rents were mixed during 09, but early 10 reports suggest a broad winter rebound Reis reported $1 (0.1%) sequential asking and effective rent increases 09, and posted a preliminary 0. gain in. Similarly, the Colorado DoH recorded a $2 (0.3%) advance, while M/PF posted a 1.1% effective rent pop. In January, Reis forecasted a 0.3% effective rent increase for 2010, but that figure is likely to be revised up later. Supply will present an obstacle to 2010 occupancy as more than 2,000 new units are expected, but results suggest a gain of 30 to 50 bps is within the realm of possibilities. SNAP SHOT Vacancy (8.9% - 09) Effective Rents ($781-09) Cap Rate (6. - 09) Employment (1,191.2m - 09) KEY POINTS Y-o-Y Projected change 2010 1.3% 0. 1.1% 20 bps 0.3% 59.4m 20.8m After posting an impressive 827-unit positive absorption performance in 09, the Denver market enjoyed another strong leasing season in the fall. Metro apartments filled 705 units from October to December, sending average occupancy 40 basis points higher sequentially to 91.1%. Rent trends also were stronger. Owners boosted average asking rents by $1 (0.1%) to $877 and held the line on concessions, producing a parallel $1 (0.1%) effective rent increase to an average of $781. Early reports of first quarter 2010 results were constructive. Occupancy increased from 60 to 120 bps sequentially, and rents increased by as much as one percent. The Denver economy continued to struggle during the winter. After hemorrhaging 8,900 (seasonally-adjusted) jobs in 09, metro employers eliminated 9,600 positions in the first quarter 2010. Six properties traded hands in both 09 and 10, valued at $111mm in the former and $96mm in the latter. Cap rates for class-a properties were mostly in the 6.5% to 7. range, and prices averaged $84,600 per unit.

Denver - Aurora - Broomfield, Colorado MSA - 2009 VACANCY TRENDS Denver owners encountered robust apartment demand in the fourth quarter, net leasing 705 units. As no new stock was added to inventory, occupancy increased 40 basis points quarter-to-quarter. For the year, occupied stock increased by 4 units, falling short of supply of 2,770 units, generating a 1.3% vacancy rate increase for the year. Positive absorption was recorded in 15 of Denver s 21 Reis submarkets in. Southeastern suburban properties garnered the lion s share, filling over 500 units in properties located in Aurora and Arapahoe Co. First quarter occupancy increased 60 bps, according to the Reis Flash Report. Only Charlotte posted a better number among the RED 50. Occupancy increased from 91.1% in December to 91.7% in March. RANK: 32 th out of 50 Metro Vacancy Rate 1 1 8% Apartment Vacancy Trends DENVER U.S.A. CL-A CL-BC 8.9% 8. 04 05 05 08 08 09 09 RENT TRENDS Metro Rent Trends Following an $8 (-0.9%) cut in average face rents in 09, Denver apartment owners posted a $1 sequential increase in 09. Reis report that concession levels remained unchanged, yielding a $1 (0.1%) advance in effective rents. For the year, effective rents fell -1.1% to an average of $781, while asking rents declined 0.3% to an $876 average. Downtown and its northern suburbs posted the strongest rent gains. The Downtown, Denver-North and North Glenn submarkets posted 2.1% sequential effective rent gains or greater in 09. M/PF Research estimate that average metro effective rents increased by 1.1% in the first quarter. Reis report a 0. asking rent advance. RANK: 20 th out of 50 COMMENT: Effective rent increased by $4 or 0. (Reis) in 10. YoY Rent Trend 5% 3% 1% -1% - -3% 04 05 ASKING EFFECTIVE CL-A ASK CL-BC ASK 05 08 08-0.3% -1.1% 09 09 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend Sales of Denver properties were steady during the six months ended in March. Investors acquired 13 institutional quality properties for total proceeds of $212mm. This compares to 14 trades for proceeds totaling $130mm in the comparable period of 2008 2009. Buyers closed on six projects in 10 valued at $94mm, after acquiring six assets in 09 for total proceeds of $116mm. Cap rates were mostly in the mid- range. The bellwether was the acquisition of a 24-story high-rise by an opportunistic Texas-based fund. Buyer paid $183,333 per unit. At reported occupancy and rent levels of approximately $8 and $1,940, the purchase produced an estimated 5.5% yield. A 5. yield was quoted by the broker. Using a 7. generic cap rate, RCR estimate that the typical Denver asset will generate a 6. annual total return over 5 years, 50 bps below the R50 mean. Cap Rate 7. 6.5% 6. 5.5% 5. 4.5% 4. Trade Median 6. 6. 08 08 09 09 10 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate 4550 Cherry Creek (Glendale) A 25-Jan-2010 $52.8 $183,333 5.5% Village Creek Brookhill (Broomf) B 08-Dec-2009 $19.2 $59,259 7.8% Summit Ridge (Aurora-South) B 15-Dec-2009 $22.7 $63,056 5.8% Ralston Park (Arvada) B 04-Feb-2010 $16.0 $65,041 6. RED CAPITAL Research

Denver - Aurora - Broomfield, Colorado MSA - 2009 Year-over-year Home Value Change 5% Source: S&P Case-Shiller Index CSX20 DENVER DEMOGRAPHICS & HOUSING MARKET The for-sale real estate market rally stalled in the fall. After rising in six consecutive months through August, the Case-Shiller Denver index declined in each of the subsequent six months, falling from 130. (Jan. 2000 = 100) to 124.54 in February, an absolute decline of -4.3%. Appreciation -5% -1-15% -2 May- 08 Aug- 08 Nov- 08 Feb- 09 May- 09 Aug- 09 Nov- 09 Feb- 10 Nevertheless, year-over-year comparisons were positive from November to February, with the latest month posting a 3. advance. Metro population increased 51,811 persons in 2009, a 2.1% gain. An average of 2.78% of Denver households were involved in a mortgage foreclosure situation in 2009, 46th highest among the top 203 metro areas in America, but down -1 from 2008. The median price of a Denver County home rose 18.3% YoY to $194,000 in 09, although sales fell 6., according to DQ News. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast -20.8 12.3 99 00 01 02 03 04 05 08 09 10f 11f Year-over-year Payroll Growth Rate Source: BLS DENVER USA 99 00 01 02 03 04 05 08 09 10 EMPLOYMENT TRENDS Non-Seasonally Adjusted Metro payrolls declined at a 59,400-job, -4.7% rate in 09, a moderate improvement from s 65,300, -5. performance. By way of comparison, U.S. establishment payrolls declined at -4. and -4. rates in 09 and 09, respectively. The rate of recovery accelerated in the first quarter 2010. Denver payrolls declined at a 43,600-job, -3. pace. Over-the-year, the March 2010 payroll employment aggregate reflected a 35,300-job loss from the comparable period of 2009, a -2.7% decline. The net improvement of over-the-year comparisons was broad based across industry super-sectors, reflecting moderating contraction rather than a material rebound in any key sector. The not-seasonally adjusted unemployment rate was 8. in March, only 20 basis points above the level twelve months earlier. Seasonally-Adjusted The incremental improvement evident in the not-seasonally adjusted data was harder to discern in the adjusted series. Expressed in this way, job losses slowed only slightly in 09, declining from an 8,200-job loss in 09 to a 7,300-job setback in. But gains were reversed in 10, when cuts re-accelerated to 9,600 jobs. All of the 10 losses were incurred in January, when 10,00 jobs disappeared. A net of 600 jobs were created in February, and job aggregates were unchanged in March, boding well for the future. Forecast RED Research expect Denver to make further incremental progress toward recovery over the next couple of quarters, returning to net year-on-year payroll growth by late 2010 or early 2011. The metro will lose about 20,800 jobs this year, then add 12,300 jobs in 2011. 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilities 11.5% DEN (RAI=1.40) SLC (RAI=2.28) 10.3% 8.3% 8. 6.7% 5.1% 6. 2.7% 3.7% 0.1% 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 09 Change 08 09 Change Arvada / Broomfield $765 $739-3. 6. 7. 60 bps Westminster $730 $717-1.8% 6. 8. 200 bps North Glenn / Thornton $758 $755-0. 7.8% 8. 80 bps Golden / Wheat Ridge $737 $745 1.1% 7. 8. 120 bps Denver - North $1,198 $1,232 2.8% 8.1% 7. -90 bps Denver - Northeast $836 $831-0. 7. 9.3% 230 bps Lakewood - North $731 $708-3.1% 9.3% 7.8% -150 bps Denver - Central $889 $880-1. 6.7% 9. 270 bps Aurora - North $6 $576-5. 11. 10.3% -90 bps Lakewood - South $822 $825 0. 7. 6.5% -110 bps Denver - South $675 $672-0. 6. 9.3% 290 bps Denver - Southeast $734 $709-3. 7. 9.3% 190 bps Littleton $765 $758-0.9% 4.7% 5.3% 60 bps Englewood / Sheridan $751 $711-5.3% 6.9% 9. 230 bps Denver - Far Southeast $689 $699 1.5% 6.3% 7.9% 160 bps Arapahoe County $984 $954-3. 6.5% 14.8% 830 bps Aurora-Central-Southwest $700 $690-1. 10. 15.9% 530 bps Aurora-Central-Southeast $682 $654-4.1% 8. 9. 80 bps Aurora - South $881 $888 0.8% 9. 10. 100 bps Denver - Downtown $1,000 $978-2. 6. 7. 120 bps Douglas County $967 $952-1. 7.1% 6.7% -40 bps Metro $790 $781-1.1% 7. 8.9% 130 bps SUPPLY TRENDS Developers delivered no new properties in 09, capping off the 2009 vintage of 2,770 units. The figure is up nearly 1,000 units from 2008 and represents the largest single year delivery total since 2003. Supply will continue to make its way to market at a robust pace. Reis report that 2,887 units were under construction in early April, each expected to receive final C-o-O in 2010. This does not include 621 units added to the metro stock during the first four months of 2010. Fortunately, many of the projects in the in process pipeline are located in popular infill locations. The Downtown, Denver-Central and Denver North submarkets account for 1,8 units or 4 of the units under construction. The balance is located in the Arapahoe Co. (201 units); Aurora-South (400); Douglas Co. (243); and Englewood (350) submarkets. Another 243 are being built in Broomfield outside of the boundary of the Reis coverage area. Units 10,000 8,000 6,000 4,000 2,000 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 08 09 10f 11f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2010 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update January 2010 EXECUTIVE SUMMARY W eak natural gas prices and faltering exploration activity depleted the Colorado economy s dwindling reserve of kinetic energy late in last year, sending state payrolls tumbling at a 92,900-job, -4. year-on-year pace in. Although a considerable improvement from s 1,900-job loss avalanche, the metric compared unfavorably to the nation s uninspired 3. rate of decline. Conditions in the Denver metro area were marginally stronger, but tell-tale evidence of a renewed downward trend was discernible in the latest data. In 09, Denver payrolls declined at a 55,900 (-4.) job rate, down from a 52,800-job loss in the prior quarter. But trends improved in 09, when losses were pared to a 43,700-job pace on the strength of firmer conditions in the construction and business service sectors and hiring by state and local governments. But seasonally-adjusted figures were less sanguine. These data showed attrition rising from 5,600 jobs in to 6,600 in, largely due to a stunning 7,000-job setback recorded in December. The soft December print was consistent with observations in the Fed s January Beige Book that the Tenth District s recovery faltered in late-november and December. In October, RED Research forecast that Denver payrolls would decline at a 49,900-job annual pace in, slightly more pessimistic than actual results (-43,700 jobs). At the time, we didn t expect positive annual comparisons before 10, leading to a net gain of only 1,900 jobs for the year. Based on recent performance, Denver should begin to see positive year-onyear comparisons by May and chalk down a net gain of about 4,000 jobs during the full year. Our forecast of 27,900 jobs for 2012 remains intact. Households expressed strong apartment demand, absorbing 570 units in 09, a welcome rebound following three consecutive quarters of negative net absorption in which 1,857 units were vacated. Then again, 435 units were added to the market inventory, holding sequential occupancy gains to 10 basis points to 90.9%. In spite of the advance, occupancy remained 240 bps below the year-earlier level. Tenant demand was concentrated in urban infill areas. Properties in trendy Downtown and Denver-North submarkets net leased 223 units, trimming submarket vacancy rates 90 and 650 bps, respectively, in the process. Preliminary Reis findings indicate that Denver occupancy increased 20 bps to 91.1% at year end. Reis expect conditions to deteriorate this year, however, as at least 2,500 units are in the pipeline tipped for 2010 delivery. Reis report that face rents tumbled $9 (-1.) to $877 in, the onequarter decline in the service s 20- year data series. Fortunately, concession levels also declined, in this case by the equivalent of $10/mo, giving rise to a $1 (0.1%) effective rent advance to $781. Submarket trends varied widely, ranging from a 3. effective rent retreat in Littleton to a 4. gain in Denver-South. Preliminary data indicate that asking rents were stable in at $877. The longer view is moderately positive as asking and effective rents are projected to rise in both 2010 and 2011. Property trade continued at a steady pace in 2H09. Real Capital Analytics count 15 trades valued at a total of $260mm, up from 11 sales for about $95mm in 1H09. Cap rates were firm, averaging about 7%, with class-a institutional quality product trading in the mid- range. The bellwether was a LoDo mid-rise that traded at a 27% discount to its 2005 sale price. SNAP SHOT Vacancy (9.1% - 09) Effective Rents ($781-09) Median Cap Rate (6. - 09) Employment (1,205.3m - 09) KEY POINTS Y-o-y change 2. 1.8% 0. 56m Projected YE09 Metric 0. 2.9% 0.1% 50m After posting a disappointing 55,900 (-4.) job year-on-year payroll decline in 09, payroll trends firmed in. Losses declined to a 43,700-job, -3.5% annual rate. RCR expect Denver to begin posting YoY job gains by late spring, leading to the achievement of a 1,700- to 4,000-job pick-up in 2010, accelerating to 27,900 in 2011. After suffering through three dreadful quarters in which Denver properties hemorrhaged a net of 1,857 leased tenants and saw average occupancy plummet 250 basis points, the apartment market found its footing in. Tenants absorbed a net of 570 units, boosting occupancy 10 bps to 90.9%. Rent trends varied widely by submarket but were steady on average. The mean metro effective rent increased $1 (0.1%) to $781, Reis report that 09 occupancy and asking rent increased 10 bps and 0., respectively. Employing a 7. generic purchase cap rate and Reis performance forecasts, RCR estimate a 4.8% unlevered 5-year holding period expected rate of total return for Denver assets, 60 bps below the R50 mean.

Denver - Aurora - Broomfield, CO MSA- 2009 VACANCY TRENDS Following three exceptionally weak quarters during which Denver area apartment properties lost a net of 1,857 leased tenants, demand improved materially during 09. A net of 570 units were leased, propelling average occupancy 10 basis points higher to 90.9%. Retail demand was concentrated in the urban core and Western suburbs. Apartments in Denver-North submarket attracted 195 net tenants generating a 650 bps advance of average occupancy to 92.7%. Class-B/C rentals endured a fourth consecutive quarter of negative net absorption, losing 154 tenants to push classe vacancy up 20 bps to 9.. Class-A properties net leased 726 units and sliced 40 bps from the class vacancy rate to 9.1%. The trend is likely to persist in 2010. RANK: 36 tst out of 50 Comment: Reis report preliminarily that occupancy gained 20 bps in 09 to Metro Vacancy Rate 1 1 1 8% 00 Apartment Vacancy Trends DENVER U.S.A. 6.7% 7.8% 9.1% 01 02 03 04 05 08 09 RENT TRENDS Metro Rent Trends Reis reported widely variant rent trend data for 09, with respect to average metro face and effective rents and submarket conditions. The service recorded a $9 (-1.) decline in average face rents quarter-toquarter, while posting a $1 (0.1%) net advance in effective rent levels. Reis estimate that asking rents were nearly unchanged in 09, giving rise to a 1.3% fade for the full-year 2009. M/PF Research aver that effective rents fell -1.1% in and about -5. during full-year 2009. Class-A properties lowered average face rent by $12 (-1.1%) in 09 to $1,138. Class-B/C complexes trimmed rent $6 (-0.8%) to $729. Denver North rents surged $32 (2.7%) to a submarket high $1,2. RANK: 25 th out of 50 Comment: Reis report that asking rents were nearly flat in the fourth quarter. YoY Rent Trend 18% 1 1 - - -1 00 01 ASKING EFFECTIVE 02 03 04 05-1.3% -1.8% 08 09 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend (Trade Median) Trade was fairly active in the third and fourth quarters as fifteen significant-sized trades were consummated, including three recent construction, life company quality trophies. Aggregate proceeds approached $260mm, up significantly from less than $100mm in 1H09. The most interesting trade was the purchase of a 7-year old mid-rise in LoDo near Coors Field. The seller, a pension fund manager, purchased the property for $75.6 million in 2005. The asset was liquidated in December for $55.0 million, representing a 27% discount from the previous sale price. RCR estimate the going in yield at about 7.. Another class-a recent construction property exchanged hands in early January. The 20, nationally-branded property sold for $28.5mm, an 18.5% discount from the price paid by the seller in June 20. Cap Rate 7. 6.5% 6. 5.5% 5. 4.5% 4. 08 08 09 09 Class-A assets traded at cap rates ranging from 6.5% to 7.5%. NOTABLE TRANSACTIONS Property Name (Submarket) Property Class Date of Total Price Price per unit Estimated Cap Cherry Creek Pl (Denver - SE) A 24-Nov-2009 $53.0 $184,028 7.5% The Metro (Denver - North) A 16-Dec-2009 $55.0 $132,530 7. Jefferson @ Arvada Ridge A 10-Jan-2010 $28.5 $1,898 6.5% Village Creek (Broomfield) B 08-Dec-2009 $19.2 $59,259 7.3% RED CAPITAL Research

Denver - Aurora - Broomfield, CO MSA - 2009 Appreciation Year-over-year Home Value Change 5% -5% -1-15% -2 Jan- 08 Source: S&P Case-Shiller Index Apr- 08 Jul- 08 CSX20 Oct- 08 Jan- 09 Apr- 09 DENVER Jul- 09 Oct- 09 DEMOGRAPHICS & HOUSING MARKET Among the largest metro areas in America the Denver real estate market was among the least volatile in the last decade, neither experiencing the post-nasdaq bubble or its subsequent deflation. Of the 20 metros in the headline Case-Shiller index, Denver enjoyed the best year-over-year comparison in October, having fallen in value by only 0.1%. The October metric was only -7.7% below the metro s series peak. By contrast, the index was 29. below its series high. The N.A.R. report that the median price of a Denver metro home sold in 09 was $229,100, an increase of 1.8% YoY. This datum compared to decreases of -11. and -16. in the U.S. and Western Region, respectively. According to DQNews, Denver, Arapahoe and Jefferson County median prices in the period were $193,500, $190,000 and $220,000, respectively, representing YoY declines of 0.8%, - 1. and 3.1%. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - Payroll Employment Growth Source: BLS Data, RCG Research Forecast -49.7 1.9 27.9 00 01 02 03 04 05 08 09f 10f 11f Year-over-year Payroll Growth Rate Source: BLS -3. - DENVER -3. - USA 99 00 01 02 03 04 05 08 09 10 EMPLOYMENT TRENDS Third Quarter 2009 Payroll job totals declined at a 55,900-job, -4. pace in 09, down from s 52,800-job, -4. loss rate. Further deterioration of trends in the construction, manufacturing and wholesale trade sectors was principally responsible. Reported on a seasonally-adjusted basis, payrolls declined -5,600 jobs during the three months ended in September, up from an -8,600 job decline recorded during the April to June period. The unemployment rate averaged 7.5%, down from 7. in. Fourth Quarter 2009 Year-over-year comparisons were firmer in the fourth quarter. Payroll job losses slowed to a 43,700-job, -3. pace, boosted by smaller job losses in the goods producing, trade and service sectors. Seasonally-adjusted data told a slightly less encouraging story. Weak retail hiring during the Christmas shopping season contributed to a net attrition of 7,000 jobs in December, the weakest monthly print recorded since January 2009. In all, payrolls declined by - 6,600 jobs in, down from 09 s 5,600-job setback. Metro unemployment declined materially in November, falling to 6.8%. This was the lowest metric registered since December 2008. Forecast Year-over-year payroll trends in 09 compared favorably to the our forecast level developed in October. Rather than the posted 43,700-job loss, RCR s model projected a loss rate of 49,900 jobs. This performance leads us to revise our 2010 outlook up slightly. Initially, we expected YoY comparisons to turn positive in 10, leading to a 1,900-job advance for the full year. Positive comparisons should be visible during the spring, leading to a 4,000-job advance for the year, giving way to a strong 27,800-job rally in 2011. 15% 1 5% -5% RED Estimated Generic Unlevered Asset Total Return Probabilities DEN (RAI=1.10) SEA (RAI=1.43) 2.3% 3. 0. -1.3% 6.9% 6. 4. 4.8% Probability of Realizing Stated Return or Higher 9.9% 9. 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 09 Change 08 09 Change Arvada / Broomfield $768 $736-4. 6. 7. 60 bps Westminster $738 $719-2. 5. 8. 240 bps North Glenn / Thornton $775 $738-4.8% 5.8% 8. 240 bps Golden / Wheat Ridge $766 $730-4.7% 6.3% 8.8% 250 bps Denver - North $1,173 $1,2 2.9% 6.9% 7.3% 40 bps Denver - Northeast $846 $822-2.8% 6. 9. 340 bps Lakewood - North $722 $698-3.3% 7. 9. 160 bps Denver - Central $9 $890-1.9% 6.1% 10.8% 470 bps Aurora - North $586 $581-0.9% 9.9% 11.7% 180 bps Lakewood - South $832 $818-1.7% 7.3% 7. -10 bps Denver - South $688 $673-2. 5.3% 8. 270 bps Denver - Southeast $732 $718-1.9% 7.3% 8.9% 160 bps Littleton $802 $737-8.1% 5. 4.9% -10 bps Englewood / Sheridan $757 $738-2.5% 6.1% 7.3% 120 bps Denver - Far Southeast $689 $690 0.1% 5.8% 7. 160 bps Arapahoe County $992 $967-2.5% 5.8% 15.8% 1,000 bps Aurora-Central-Southwest $715 $685-4. 10.3% 16.7% 640 bps Aurora-Central-Southeast $675 $658-2.5% 7.3% 9. 190 bps Aurora - South $864 $893 3. 6. 10.9% 450 bps Denver - Downtown $1,013 $954-5.8% 4.9% 6. 170 bps Douglas County $979 $949-3.1% 6. 7. 80 bps Metro $795 $781-1.8% 6.7% 9.1% 240 bps SUPPLY TRENDS Reis identify eleven projects under construction in January 2010, all scheduled for 2010 delivery. The sites incorporate a total of 3,005 units. Two Broomfield projects (673 units) are located outside the Reis coverage area. Four projects (705 units) underway are located in the urban core. The largest is a nationally-branded 400-unit loft-style mid-rise in the Prospect District. Exterior work was largely complete in November. Pre-leasing should begin in summer. The second phase of a two-tower development near Cherry Creek is in lease-up. The 148-unit, green high-rise offers units at rents averaging about $2.00 per square foot. A nine-story loft building in LoDo was about 9 occupied after leasing for less than one year. Rents range from $1,600 to $2,400, equating to about $1.60 to $2.10 per square foot. Developer offered two months free on some smaller units. Units 10,000 8,000 6,000 4,000 2,000 0-2,000 Completions and Absorption Source: Reis, Inc Completions Absorption 2,949 2,035-321 1,469 02 03 04 05 08 09f 10f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2009 RED CAPITAL GROUP The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update September 2009 EXECUTIVE SUMMARY p eering into the late summer skies over Colorado one could discern a faint silver lining in the clouds, despite the onset of some premature winter weather. The state s unemployment rate stood at 7.3% in August, down 50 basis points from July and the lowest figure posted since February. Mass layoff events fell sharply from spring levels; first time unemployment claims tumbled to the lowest level since December; and the number of workers receiving unemployment benefits slipped to the fewest since February. But most of the data relating to the Denver MSA weren t quite so rosy. Headline payroll job losses continued to accelerate, for one, at least expressed on a year-over-year basis, rising from a 38,700-job, -3.1% rate in 09 to a 52,800-job, -4. pace in. Comparisons continued to deteriorate in the summer, as losses rose to 58,000 jobs during the twelve months ended in August, representing the weakest metric posted to date in the Denver s 20-year BLS data series. Seasonally-adjusted data were more encouraging: payroll losses decelerated from 18,700 jobs in 09 to 8,600 in the second quarter and 4,300 during the three months ended in August. By the same token, the unemployment rate held steady June to July at 8., standing materially lower than the U.S. average and only 10 bps higher than the February level. RED Research expect weak conditions to prevail for the duration of 2009. Year-over-year job losses will remain above 40,000 through, giving rise to attrition of 46,100 jobs for the year. But RCR s econometric model divines an inflexion point emerging early next year, leading to the return of y-o-y job growth by 10, and ultimately to creation of 6,900 jobs in 2010; 32,600 in 2011. Home prices continued to firm following weak conditions in 2008. The N.A.R. reported that the median home price in 09 was $223,700, up 1 from and down only 0.7% y-o-y. July data published by S&P Case- Shiller also were constructive, as the seasonally-adjusted Denver index climbed 1.5% from June and declined only 2.9% from July 2008, the best outcome posted in nearly two years. Apartment demand was soft, however, as metro owners suffered a third consecutive quarter of negative net absorption. In this case, tenants vacated a net of 130 units, bringing the nine month total to 1,852. Accounting for delivery of 931 new units, occupancy fell an average of 60 basis points sequentially to 90.9%. Suburban submarkets located southeast of Downtown recorded some of the weakest results, with vacancy rising as much as 990 bps since 08. Revenue trends were commensurate, as average asking and effective rents fell $1 (-0.1%) and $6 (-0.8%) sequentially to $885 and $770, respectively. Effective rent fell $10 (-1.3%) y-o-y, the 26th best result among the RED50 markets. Conditions were weakest in suburban submarkets, especially Aurora, Westminster and Littleton, while firmer trends were observed in central infill submarkets. Reis expect the Denver market to post above average rent and occupancy performance over the next several years. The service s forecasting models indicate that market performance will reach the bottom of the current cycle by YE09 and embark on a moderate recovery next year. By contrast, Reis do not expect the national market to begin to improve before 2011. RCR estimate mediocre 5-year total returns nevertheless. Using a 7.3% cap rate assumption, we estimate Denver returns averaging only 4.7%. SNAP SHOT Vacancy (9.1.% - 09) Effective Rents ($780-09) Cap Rate (6.5%- 09) Employment (1,208.6m - 09) Y-o-y change 220 bps Projected YE09 Unchd 1.3% 2.1% 50 bps 30 bps 52.8m 46.1m KEY POINTS Apartment demand was disappointing in the spring leasing season: properties suffered negative net absorption (-130 units) for the third consecutive quarter. Delivery of 931 units compounded the effect on occupancy, which plummeted 0. sequentially and 2. year-over-year to 90.9%. Rents trended down, largely due to increased concessions. Face rents fell only $1 quarterto-quarter, but concessions increased to the degree necessary to trim $6 (-0.8%) from effective rents to an average of $770. Supply will remain an impediment in 2H09. Five projects are scheduled to debut, adding 1,168 units to the Denver inventory. Seasonally-adjusted payroll job trends improved, signaling that the Denver economy is near the bottom of its recessionary cycle. RCR expect positive y- o-y payroll trends to re-emerge next spring. The property market wasn t a mile high but picked up considerable steam. Five deals were closed in August totaling $75mm in proceeds. Pricing was constructive. RCR estimate expected total returns at 4.7%.

Denver-Aurora-Broomfield, CO MSA - 2009 VACANCY TRENDS From 2000 to 2008, spring was the season when Denver owners filled the most units, averaging 1,183 net move-ins during the second quarter. But 2009 was an exception, as tenants vacated a net of -130 units, bringing losses over the last three quarters to -1,852 units. Developers received final C.O. on 3 projects of 689 units, sending the Reis estimate of average occupancy down 60bps sequentially to 90.9%. Occupancy levels were relatively firm in infill areas but suburban markets were generally weak. Conditions in Southwest Aurora were notably soft, as vacancy surged 410 bps quarter-to-quarter to 17.3%. Reis are of the view that occupancy is 30 bps away from this cycle s bottom. A moderate recovery is projected to begin next year. RANK: 37 th out of 50 RENT TRENDS Revenues were generally lower as face rents fell $1 sequentially to $885 and concessions increased by the equivalent of $5 per month to an average of $105 (11.9% of G.R.R.). Denver trailed only Atlanta with respect to concessions percent, and Atlanta ($1) and San Francisco ($120) in terms of absolute amortized concessions level. Effective rent dropped $6 (-0.8%) sequentially and $10 (-1.3%) y-o-y. At $780, average effective rent remains $36 below the $816 series record high established in the fourth quarter of 2001. Rents fell in 14 of 21 submarkets quarter-to-quarter. The largest decline was recorded Downtown, where real rents slipped $37 (-3.). Reis expect effective rents to recover next year, rising $3 or 0.. RANK: 26 th out of 50 Metro Vacancy Rate YoY Rent Trend 1 1 1 8% 1 8% - - - -8% Apartment Vacancy Trends DENVER U.S.A. 9.1% 6.9% 00 01 01 02 03 04 04 05 08 09 Metro Rent Trends ASKING EFFECTIVE 0.1% -1.3% 00 01 01 02 03 04 04 05 08 09 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend Property markets heated up in the summer. After closing only five trades during the first five months of the year, investors acquired 12 properties from June to August, including five transactions consummated in August valued collectively at $75.4mm. 7. 6.5% A large publicly traded trust divested a 324-unit Littleton project in August for $21mm, a price equating to $64,815 per unit. RCR reverse engineered the trade to a 6.5% cap rate based on estimated current NOI. A class-a Arapahoe project closed at a similar yield on August 7. Cap Rate 6. 5.5% 5. RCR are of the view that an appropriate generic cap rate for institutional quality class-b assets is about 7.3%. Using this rate we derived an expected annual 5-year unlevered return of 4.7% for Denver apartments, exactly equal to the RED 50 mean. The Mile High City s risk-adjusted index was somewhat below the 1.73 R50 mean at 1.11. 4.5% 4. 08 08 09 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Remington Place (Far Southeast) B 28-Jul-2009 $8.4 $70,924 6. (est.) Brentwood Tower (Glendale) B 10-Jun-2009 $5.4 $53,500 8. (Reis) Enclave @ Belleview (Arapahoe) A -Aug-2009 $20.2 $84,874 6.5% (est.) Highland Point (Aurora-SoWest) B 31-Aug-2009 $16.5 $51,724 8. (est.) Terra Vista @ Park (Littleton) B 28-Aug-2009 $21.0 $64,815 6.5% (est.) RED CAPITAL Research

Denver-Aurora-Broomfield, CO MSA - 2009 Appreciation Year-over-year Home Value Change Source: S&P Case-Shiller Index, RCR 5% DENV CSX20-5% -1-2.9% -13.3% -15% -2 Jan- 08 Apr- 08 Jul- 08 Oct- 08 Jan- 09 Apr- 09 Jul- 09 DEMOGRAPHICS & HOUSING MARKET The National Association of Realtors report that the median price of a home sold in the Denver MSA during 09 was $223,700. The figure represented a 0.7% year-over-year decline, comparing favorably to the 15. U.S. and -26. Western Region price change metrics. The NAR median home price increased 1 from 09 to 09. The S&P Case-Shiller Index increased 1.5% from June to July, representing the fifth consecutive sequential month advance. On a year-on-year basis, the Case-Shiller Index declined only 2.9% in July, representing the best metric posted since October 20. RealtyTrac.com report that 1.5% of Denver households were embroiled in a mortgage foreclosure action in 1H09, the 45th highest rate recorded among the nation s top 203 metro areas. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast -46.1 6.9 32.6 99 00 01 02 03 04 05 08 09f 10f 11f Year-over-year Payroll Growth Rate Source: BLS DENVER USA 99 00 01 02 03 04 05 08 09 EMPLOYMENT TRENDS Second Quarter 2009 Metro payrolls declined at a 52,800-job, -4. rate in the second quarter, down from a 38,700-job, -3.1% pace in 09. The construction and business services industries accounted for approximately one-half of the metro s payroll losses in the quarter. The latter super-sector posted its worst ever quarterly loss: 14,000 (- 6.) jobs. Several sector components were responsible, but the professional, technical and scientific service component s 4,100-job, - 4. decline was most notable. A decrease in energy exploration activity was partially responsible for the development. Plummeting consumer spending was a factor in Denver s soft results. Retail employment fell at a 7,000-job, -5.5% rate, while attrition in the leisure and hospitality industry proceeded at a 5,600, -4. pace. Twelve Months ended August 2009 Payroll losses in the 12 months ended in August ballooned to 58,000 jobs or -4.. This was the first month when losses exceeded the worst comparison observed during the 2002 high tech/energy slump. Deteriorating trade and construction trends were responsible. Seasonally-adjusted data were more encouraging. The BLS reported that workers lost only 600 jobs net in July and August, down from 8,600 jobs during 09. The unemployment rate dropped 40 bps July to August to 7.. Forecast The RCR model suggests that Denver is near a point of inflexion with regard to over-the-year payroll comparisons. Figures will remain weak through year-end, but recover in 10 and finally pierce the parity level in 10. The metro will lose 46,100 jobs in 2009, add 6,900 jobs next year, before producing a solid 32,600 jobs in 2011. 15% 1 5% -5% RED Estimated Generic Unlevered Asset Total Return Probabilities 10.1% 10.9% DENV (RAI=1.11) 7. 6.9% AUST (RAI=0.71) 4.7% 2.3% 4. 0.9% -1.1% -4.1% 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 09 Change 08 09 Change Arvada / Broomfield $756 $739-2. 7. 7. 20 bps Westminster $725 $711-1.9% 6. 8.5% 230 bps North Glenn / Thornton $777 $740-4.8% 6.8% 7.8% 100 bps Golden / Wheat Ridge $736 $724-1. 7. 9.5% 250 bps Denver-North $1,181 $1,179-0.1% 7.8% 13.8% 60 bps Denver-Northeast $814 $836 2.7% 8. 8.7% 50 bps Lakewood-North $739 $714-3. 6.7% 9.5% 280 bps Denver-Central $909 $903-0.7% 5. 8.8% 340 bps Aurora-North $6 $576-5.1% 11. 12.3% 70 bps Lakewood-South $808 $830 2.7% 5.8% 7.3% 150 bps Denver-South $676 $651-3.7% 6. 8.5% 250 bps Denver-Southeast $717 $713-0. 8.1% 7. -70 bps Littleton $801 $757-5.5% 5.5% 5. -50 bps Englewood / Sheridan $763 $729-4. 6.8% 7. 20 bps Denver-Far Southeast $701 $662-5. 6. 7. 100 bps Arapahoe County $1,029 $966-6. 4.9% 14.8% 990 bps Aurora-Central-Southwest $7 $681-3.5% 7.8% 17.3% 950 bps Aurora-Central-Southeast $669 $680 1. 5.9% 8.8% 290 bps Aurora-South $862 $882 2.3% 6.9% 11. 430 bps Denver-Downtown $995 $972-2.3% 5. 7.5% 210 bps Douglas County $973 $950-2. 7. 7. Unchd Metro $790 $780-1.3% 6.9% 9.1% 220 bps SUPPLY TRENDS Presently, Reis identify 12 underway apartment projects incorporating a total of 2,935 units. Three complexes with 689 units are scheduled to receive final C.O. in 09, after two properties encompassing 435 units were added to the Denver inventory during the third quarter. Infill submarkets will add a disproportionate percentage of the pipeline supply. Developers will deliver one property each to the Denver Central, North and Downtown submarkets in 2010, expanding the aggregate apartment inventory by 667 units or 4.. Lease-up proceeded at a leisurely pace at recent construction North- Aurora submarket projects. A 240-unit mid-rise completed in 08 was less than 5 occupied at June 30; a 288-unit garden complex delivered in 08 was about 2 occupied at the same date. Units Completions and Absorption Source: Reis, Inc 10,000 Completions Absorption 8,000 6,000 4,000 2,000 0 A high-end loft in the Lower Downtown Historical District ( LoDo ) leased at a faster pace. More than 60 of the project s 226 units were leased by June 30 after fewer than five months on the market. -2,000 02 03 04 05 08 09f 10f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2008 RED CAPITAL GROUP (11/08) The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update July 2009 EXECUTIVE SUMMARY M ile High City employers continued to trim staffs in the first five months of 2009, albeit at a moderately slower pace. On a seasonally-adjusted basis, a net of -21,300 jobs were lost from January to May, better than the -25,700 jobs cut in the final five months of 2008. Moreover, preliminary data show that payroll headcounts advanced 2,400 jobs monthover-month in May, the first gain since August 2008. Additionally, non-seasonally adjusted data show that Denver lost -51,600 (-4.1%) positions from payrolls in the twelvemonth period ended in April and -49,200 (-3.9%) y-o-y in May. Evidence that the metro economy reached a bottom was apparent in the retail, finance and business service sectors. The sectors lost a combined -28,700 jobs y-o-y in April and -23,400 in the year ended in May. Conversely, job losses in the leisure travel sector accelerated from -4,000 y-o-y in April to -5,600 y-o-y in May. Data from the BLS s household survey lend support. The series show that the pace of y-o-y job loss reached a -4. nadir in March, before improving to -4. in April and only -3.3% in May. RED CAPITAL Research (RCR) expect job trends to remain negative through 2010. In July, our econometric model produced point estimates of -40,100 (-4.) jobs lost in 2009 and a less severe -500 job loss next year. Data from the National Association of Realtors show that the 09 median price of a single-family MSA home fell -13.7% y-o-y to $192,200. On the other hand, data from the Case-Shiller and FHFA home price indices portray greater stability. At -4.9% in April, Denver reported the slowest y-o-y decrease in the 20-market Case- Shiller index. Furthermore, based on the 09 FHFA purchase-only index, home values were unchanged y-o-y. Persistent job loss was largely responsible for weak tenant demand in the first quarter. Tenants vacated 802 units and developers completed 624 units from January to March. Consequently, the average occupancy rate fell 80 basis points sequentially to 91.7%. The 09 occupancy rate was 130 bps below the figure from the comparable period last year. Preliminary data for 09 show occupancy down another 60 bps. In an effort to stem tenant outflows, apartment managers trimmed asking rent and increased concessions. The metro average asking rent fell -0.1% sequentially in 09 and the size of the average concession package rose from 10.8% of asking rent to 11.3%. As a result, the average effective rent fell -0. from $791 in 08 to $786. Preliminary data indicate asking rents fell $1 to $885. Reis are relatively pessimistic with regard to 2009 market fundamentals. The service expects falling employment headcounts to limit tenant demand and produce a 60 basis point decrease in the average occupancy rate, while falling occupancy and declining income growth give rise to a -1. y-o-y decrease in effective rent by year-end. Real Capital Analytics identified three properties priced at $5 million or more that traded in 1H09. Sales volume totaled $35.7 million and the average price was $80,587 per unit. CBRE brokers conclude that stabilized Class-A cap rates ranged from 6.5% to 7. in March, up about 90 bps from November. Based on the upper bound of the range, RCR calculate a 4.5% expected rate of total return from generic metro assets investment. SNAP SHOT Vacancy (8.3% - 09) Effective Rents ($786-09) Cap Rate (6. - 09) Employment (1,199m - 09) Y-o-y Projected change 2009 130bps 1.3% 1. 40bps 60bps 38.7m 50.1m KEY POINTS Negative net absorption was partially to blame for rising vacancy in the first quarter. Tenants vacated 802 units during the period, resulting in an 80 basis point increase in vacancy from 7.5% in 08 to 8.3% in 09. Vacancy rose 130 bps year-over-year as demand (92 units) fell short of supply (2,419 units). Reis were aware of 16 apartment properties totaling 4,212 units that were under construction in July. A total of 1,555 units were completed in the first half of 2009. Rents deteriorated this year. The average effective rent fell -0. quarter-over-quarter in 09 and rose 1.3% from the same period of 2008. Reis forecast a -1. year-overyear decline in effective rent this year. Three investor-grade properties traded in 1H09, totaling $35.7 million in sales proceeds. The average price was $80,587 per unit. Based on an assumed 7. going-in yield, RCR calculate a 4.5% expected rate of total return.

Denver - Aurora, Colorado MSA - 2009 VACANCY TRENDS The metro vacancy rate increased 80 basis points sequentially to 8.3% in 09, due to increased supply and tenant outflows. Negative net absorption totaled 802 units and developers completed 624 units during the period. On a year-over-year basis, the vacancy rate increased 130 basis points as supply (2,419 units) outpaced demand (92 units). Marcus & Millichap report that the average vacancy among Class-A properties increased 250 basis points year-over-year to 8.9%, due to weak employment trends and supply. By comparison, Class B/C vacancy rose 120 basis points to 7.7%. Reis expect construction activity to accelerate through year-end, giving rise to a 60 basis point increase in vacancy. RANK: 36 th out of 50 COMMENT: Preliminary 09 vacancy rate: 9.1%. Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends Denver U.S.A. 7. 8.3% 00 00 01 02 03 03 04 05 08 09 RENT TRENDS The average effective rent declined for the second consecutive quarter in 09, falling -0. to $786. As a result, the pace of year-over-year effective rent growth decelerated to 1.3%. According to Marcus & Millichap, Class B/C asking rents advanced 2.1% year-over-year to $739 in 09, outpacing the 1. increase among Class-A properties. Nine of the metro s 21 submarkets posted a year-over-year decrease in effective rent in the first quarter. The largest decline (-3.7%) was observed in the Arapahoe County submarket. Reis predict that effective rent will fall to $780 by year-end, and rebound slightly to $782 in 2010. RANK: 14 th out of 50 YoY Rent Trend 1 8% - - - -8% Metro Rent Trends Asking Effective 2. 1.3% 00 00 01 02 03 03 04 05 08 09 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend RCA identify three trades involving properties priced at or above $5 million in 1H09. Sales volume totaled $35.7 million and the average price was $80,587 per unit. Marcus & Millichap calculate a $59,000 median price per unit in the twelve-month period ended in March. Furthermore, the source reports that cap rates from closed transactions in the past year ranged from around 6.75% to about 7.25%. But properties listed in May were offered at going-in yields above 7% for newer assets and above 8% for older vintage properties. CBRE estimate a cap rate range of 6.5% to 7. for stabilized Class-A assets in March, up 90 basis points from November. Stabilized Class- B going-in yields ranged from 7. to 8.. Cap Rate 6.8% 6. 6. 6. 6. 5.8% 5. 5. 5. 5. 08 08 08 08 09 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Boulders A January 2009 $20.9 $129,814 6.5% RED CAPITAL Research

Denver - Aurora, Colorado MSA - 2009 Prices (000) Metro Median Single Family Home Prices Source: National Association of Realtors $260 $240 MSA US $220 $200 $180 $160 $140 $120 $100 05 Y Y Y 08 08 08 08 09 DEMOGRAPHICS & HOUSING MARKET Population growth in the Denver MSA accelerated from 2. in 20 to 2. in 2008, due to an uptick in net domestic migration. Denver home price data were mixed year-to-date. According to the National Association of Realtors, the median price of a single-family MSA home fell -13.7% year-over-year to $192,900 in 09. But the market registered a tame -4.9% decrease in the April Case-Shiller home price index, much better than the -18.1% drop in the 20-market composite index. Furthermore, the 09 FHFA purchase-only index was unchanged year-over-year, following a -3.3% annual decline in the previous period. Denver possessed the 60 th highest 09 foreclosure rate among the 203 markets tracked by RealtyTrac.com. Moreover, Zillow.com report that 25% of 09 sales were foreclosure sales. Annual Chg (000) Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 40 20 0-20 -40-0.5 EMPLOYMENT TRENDS First Quarter 2009 Establishment payrolls fell -38,700 (-3.1%) year-over-year in 09, down from the -14,300 (-1.) year-over-year job decline in the previous quarter. Faster attrition among business service firms was partially responsible. Sector firms eliminated -4,100 positions from payrolls year-overyear in 08, and -11,600 jobs year-over-year in 09. Cuts among providers of professional, technical and scientific services totaled -3,500 year-over-year in 09, after employers posted a net gain of 700 workers in 08. Rate -60-50.1 99 00 01 02 03 04 05 08 09f 10f Year-over-year Payroll Growth Rate Source: BLS Denver USA - - - 99 00 01 02 03 04 05 08 09 Year-over-year job trends also deteriorated in the construction sector as establishments eliminated -6,600 jobs in 08, increasing to an -11,000 job rate in 09. April and May Job market conditions remained weak in as payroll headcounts declined -49,200 (-3.9%) in the twelve-month period ended in May. In the leisure service sector, firms cut -5,600 jobs year-over-year in May, after posting a monthly average year-over-year decrease of -3,900 job in the first four months of 2009. The metro unemployment rate rose to 7.5% in May, up from 4.5% in the same month last year. Forecast RCR predict a loss of -50,100 (-4.) jobs this year and a -500 payroll job decline in 2010. RANK: 27 th out of 50 15% 1 5% -5% RED Estimated Generic Unlevered Asset Total Return Probabilities De nver Seattle 9.5% 6.5% 6.7% 4.3% 4. 2. 2. 0.5% -1. -2. 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 09 Change 08 09 Change Arvada / Broomfield $744 $744-0.1% 6.7% 6.7% uncgh Westminster $720 $720 0. 6. 7. 120 bps North Glenn / Thornton $754 $753-0.1% 7. 8.1% 50 bps Golden / Wheat Ridge $730 $731 0.1% 7.7% 9.3% 160 bps Denver-North $1,151 $1,180 2.5% 7.3% 12. 530 bps Denver-Northeast $794 $823 3. 7.8% 7.8% uncgh Lakewood-North $711 $724 1.8% 6.7% 8.9% 220 bps Denver-Central $890 $898 0.9% 5.3% 7. 230 bps Aurora-North $592 $585-1.1% 8.8% 11.5% 270 bps Lakewood-South $795 $824 3. 5.8% 7.5% 170 bps Denver-South $666 $661-0.8% 6. 6. 20 bps Denver-Southeast $700 $723 3.3% 8.3% 7.7% -60 bps Littleton $788 $780-1. 5.9% 4. -130 bps Englewood / Sheridan $747 $745-0.3% 7. 7.7% 50 bps Denver-Far Southeast $685 $676-1. 6. 6.5% 10 bps Arapahoe County $993 $956-3.7% 6.1% 14. 850 bps Aurora-Central-Southwest $692 $695 0. 8.7% 13. 450 bps Aurora-Central-Southeast $655 $687 4.8% 6.5% 8.1% 160 bps Aurora-South $858 $882 2.9% 7.3% 9.1% 180 bps Denver-Downtown $972 $1,009 3.8% 5. 6. 100 bps Douglas County $952 $948-0.3% 8.5% 7. -130 bps Metro $776 $786 1.3% 7. 8.3% 130 bps SUPPLY TRENDS Developers completed five apartment properties totaling 1,555 units in 1H09. Two of the assets (572 units) are located in the Aurora-South submarket. 10,000 Completions and Absorption Source: Reis, Inc Completions Absorption As of July, 4,212 apartment units were under construction, of which 1,544 were scheduled to open later this year. In three of the metro s submarkets (Arapahoe County, Aurora - South and Englewood / Sheridan) more than 600 units were under construction. According to ARA, nearly 6,000 rental units were under construction in April. The source counts a total of 41,345 units completed from January 2000 to April 2009. Units 8,000 6,000 4,000 2,000 COMMENT: Finance constraints are likely to limit multifamily construction starts. ARA predict that 2,453 units in the planned pipeline are probable. 0 02 03 04 05 08 09f 10f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2008 RED CAPITAL GROUP (11/08) The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update April 2009 EXECUTIVE SUMMARY A fter nearly four years of robust expansion, the Denver metro economy tumbled back to earth in the fourth quarter. Annual payroll growth decreased from 08 s above average 9,500- job, 0.8% pace to a quite ordinary net loss of 14,300 (-1.1%) jobs in and a 38,500-job catastrophe in 09. The performance represented one of the most abrupt downturns recently registered by a major US metro area. Each of the pillars of Denver s economy construction, oil & gas, telecommunications, skilled services and tourism - was adversely affected by the global recession. Plunging energy prices and soon to be effective environmental rules led to a sharp decline in energy exploration activity as evidenced by a 5 decrease in the active rig count since September. Field service companies began laying off workers, and Denver-based geology and engineering firms serving the industry stopped hiring and began to shrink in December. Homebuilding activity was off substantially, sending construction payrolls down at a -1 annual rate, while professional and financial service concerns, retailers, hoteliers and restaurateurs also tightened their belts in the face of falling consumer and traveler spending. The unemployment rate reached a 56- month high 6.3% in December and series record 7.9% in February. March payrolls fell 46,000 from the year earlier period, the worst annual comparison since 2002, and a -16. decline in state sales tax receipts in February point to larger cuts in store and manufacturing headcounts in the months to come. RED Research don t foresee a quick reversal of fortunes for the Mile High City. The group s econometric payroll model yields a 2009 payroll forecast of 16,500, with losses continuing through 10. Next year RED foresee a modest 3,100-job advance. After absorbing 1,462 total units April to September, apartment demand faltered in 08 as tenants vacated a net of 401. At the same time developers delivered 798 new institutional quality units, causing metro vacant stock to balloon 10.5%. Average metro vacancy rose 70 basis points sequentially to 7. as a result, representing the 9th largest absolute metro vacancy rate increase recorded among the R50. Only three of Denver s 21 submarkets chalked down occupancy rate advances, in each case an area characterized by below metro average rent. Denver owners were quick to adjust pricing to conform to weaker demand conditions, cutting asking and effective rents $2 (-0.) and $4 (-0.5%), respectively, from 08. In turn, over-the-year rent trends were reduced from 08 s robust 3. advance to 2.. Fourteen Denver submarkets recorded negative sequential rent trends and 11 saw effective rents decline -1. or more. The largest reductions were recorded in outer suburban submarkets like Littleton (- 4.), Golden (-3.8%) and North Glen (-2.). Weakness also was evident in areas attracting professional and tech tenants, including areas near Downtown and Aurora. Reis expect metro occupancy to fall 90 bps to 91.7% by YE09, and effective rent to drop $9 (-1.1%) for the year to an average of $782. Over the following four years the service foresees steady occupancy and 2. average annual effective rent growth. Asset sales slowed to a trickle. Only four properties exchanged hands from September through January for $78mm, according to RCA, compared to $612mm of sales closed earlier in the year. Institutional quality cap rates fell in the 6.5% - 7.5% range. SNAP SHOT Vacancy (7. - 08) Effective Rents ($791-08) Cap Rate (6. - 08) Employment (1,199.2m - 09) Y-o-y Projected change 2009 50 bps 2. 170 bps 90 bps 1.1% Unchd 38.5m 36.5m KEY POINTS The recession was late to arrive in Denver, but it made quick work of the Mile High City s once thriving energy, skilled-service and high tech driven economy. Thus, after materially out-performing the US average payroll growth rate for two years, Denver headcounts declined at a 14,300-job, -1.1% pace in 08, and at a 38,500-job, -3.1% rate (preliminary) in the first quarter 2009. Apartment market trends reflected the abrupt change in economic fortune. Tenants vacated a net of 401 units in 08, which (in combination with 798 units of supply) sent vacancy 70 basis points higher to 7.. The rate rose another 80 bps to 8. in 09. Owners shifted pricing priorities from revenue maximization to tenant retention. Average metro effective rent fell $4 (-0.5%) to $791, the first sequential quarter decline recorded since. Face rent fell $1 in. Trade was thin in 09, but data suggested that cap rates were higher. The range of observed initial yields was unusually wide, however, suggesting that Denver is a market still in the process of price discovery. Buyers should proceed with unusual caution.

Denver-Aurora-Broomfield, Colorado MSA - 2008 VACANCY TRENDS Weak employment trends caused apartment demand to slump in. Tenants vacated a net of 401 units in the period, lowering the trailing 12-month absorption total to 741 units, a 21-month low. The impact of weak demand was exacerbated by 798 units of new supply, the largest one-quarter vintage harvested since. Occupancy dropped 70 basis points to 92. as a result. Supply was concentrated in the city of Aurora. Two luxury projects entered lease up with average asking rents in the $1,500/mth area, roughly twice the average rent of properties within a two-mile radius. Reis forecast a 90 bps decrease in occupancy to 91.7% by YE09. Denver was 80 bps along after 09, according to pre-release data. RANK: 31 st out of 50 Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends DENVER USA 6.9% 7. 99 00 01 02 02 03 04 05 05 08 08 RENT TRENDS Many owners reduced rents with a view toward tenant retention. Average asking rents fell $2 (-0.3%) to $887, and the typical concession offer increased $2 to $96 (10.8% of face rent), causing effective rent to drop $4 (-0.5%) to $791. On a percentage basis, concessions were highest among the RED 50. Effective rents increased sequentially in only six of 21 Denver submarkets. Gains in two were attributable to the addition of new luxury supply. Only Denver North posted meaningful same store gains, rising 2.1% to $1,098. This submarket s benefit came perhaps at the expense of adjacent Downtown, where rent declined 1.3% to $1,000. Reis expect rents to fall -1.1% this year, before rising at a 2. compound rate from 2010-2013. Face rents fell 0.1% in 09. RANK: 24 th out of 50 YoY Rent Trend 1 8% - - - -8% Metro Rent Trends Asking Effective 2.3% 2. 99 00 01 02 02 03 04 05 05 08 08 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend According to Real Capital Analytics, investors purchased four properties valued at $5mm or more during the four months ended in January 2009. Proceeds totaled $78mm. This compares to $613mm of sale proceeds recorded in the first nine months of 2008. Recent transactions were more down market than the typical trade consummated earlier in 2008. RCA aver that the average price per unit of October January sales was $75,464, about 2 below the $93,742 figure applicable to the January September 2008 period. Cap Rate 7. 6.5% 6. 5.5% 5. Going-in yields applicable to recent trades reverse engineered by RCR vary widely, from the mid-5s to the high-9s. The data imply that Denver property values are being determined on a unit price basis, rather than a yield basis. The phenomenon suggests that many buyers are value-add players, an investment strategy that may not comport well with current and expected market conditions. 4.5% 4. 08 08 09 NOTABLE TRANSACTIONS Property Name (Submarket) Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Boulders (Boulder, CO) A Jan-2009 $20.9 $129,814 6. Turnberry Hthr Rdg (Aurora-So) B Dec-2008 $14.8 $55,037 9.8% Riva Ridge (Lakewood-North) B Jan-2009 $8.3 $80,583 6.5% Stratford Commons II (Littleton) B- Feb-2009 $3.8 $38,366 6.8% RED CAPITAL Research

Denver-Aurora-Broomfield, Colorado MSA - 2008 Prices (000) Metro Median Single Family Home Prices Source: National Association of Realtors $260 $240 $220 $200 $180 $160 $140 $120 $100 05 Y Y Y 08 DENV US 08 08 08 DEMOGRAPHICS & HOUSING MARKET The for-sale housing market continued to weaken in 08. The median price of a Denver area home sold in the period dropped 12.7% year-over-year to $200,800, according to the NAR compared to 12. and 25.1% declines nationally and in the West, respectively. The 08 median was the lowest quarterly figure reported since 2000. OFHEO estimate that the typical conventionally-financed Denver home decreased in value by -0.71% in 2008, ranking as the 111th best performance among the 292 largest U.S. metro areas. On the other hand, home values increased by 6.3 over the past five years. RealtyTrack report that 3. of metro households were involved in a foreclosure action last year, the 19th highest rate among the top 100 U.S. metro areas. This was the sixth highest rate among metros not located in California or Florida. Annual Chg (000) Rate Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 40 20 3.1 0-20 -40-36.5-60 99 00 01 02 03 04 05 08 09f 10f Year-over-year Payroll Growth Rate Source: BLS DENV USA - - - 99 00 01 02 03 04 05 08 09 EMPLOYMENT TRENDS Past 12 Months Denver establishments created 9,800 new jobs last year, down from 26,100 in 20 and 25,000 in 20. Slower job growth in 2008 largely was attributable to a sharp decline in hiring by business services concerns, which added a net of 2,600 workers last year, down from 11,500 in 20. Trends also weakened in the financial service sector: employers trimmed headcounts by 2,600 jobholders last year after eliminating 1,000 positions in 20. Fourth Quarter 2008 Few U.S. metro areas experienced a more abrupt reversal of fortune in the fourth quarter than Denver. After posting a 9,500-job, 0.8% y- o-y advance in 08, employers trimmed payrolls at a 14,300 (-1.1%) job in. Virtually every industry exhibited slower growth or faster attrition. The worst offenders included construction, trade, transportation and financial and business services. Combined, the foregoing supersectors eliminated 21,600 jobs year-over-year compared to a 3,600- job net decline posted in 08. Lower oil and gas prices and costly pending environmental rules depressed previously robust energy exploration activities. The trend stymied hiring by geology and field service companies and probably contributed to cuts by manufacturers and employment service firms. Unemployment reached 6.3% in December, highest in five years. First Quarter 2009: The pace of losses accelerated to 38,500 (-3.1%). Forecast: RED CAPITAL Research do not expect the job market to stabilize before the second half of 2009. The group s econometric payroll model for Denver yields a forecast of 36,500 jobs for the year. Job growth measured on a year-over-year basis is not likely to develop before 10, leading to a small 3,100-job advance in 2010. 1 9% RED Estimated Generic Unlevered Asset Total Return Probabilities DEN (RAI=1.32) 7. 8. SLC (RAI=2.81) 6.9% 5. 5.5% 3.7% 3. 10. 10. -1% -0.3% 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 Change 08 Change Arvada / Broomfield $745 $765 2.7% 6.1% 6. 30 bps Westminster $718 $730 1.7% 6.3% 6. -10 bps North Glenn / Thornton $753 $758 0.7% 7. 7.8% 20 bps Golden / Wheat Ridge $727 $737 1. 8. 7. -80 bps Denver-North / Northeast $968 $1,020 5.3% 7. 7. -40 bps Lakewood $781 $799 2. 6. 7.9% 170 bps Denver-Central / Downtown $901 $916 1.7% 5.1% 6. 130 bps Denver-South - Southeast $708 $724 2.3% 7. 7. -40 bps Littleton $780 $765-1.9% 5.5% 4.7% -80 bps Englewood / Sheridan $739 $751 1. 6. 6.8% 60 bps Denver-Far Southeast $689 $689 0. 6. 6.3% -10 bps Arapahoe County $1,013 $984-2.9% 6. 6.5% 10 bps Aurora-Central $670 $691 3. 8. 8. 60 bps Aurora-North $593 $6 2. 6.9% 11. 430 bps Aurora-South $836 $881 5. 8.1% 8. 30 bps Douglas County $955 $967 1.3% 7.8% 7.1% -70 bps Metro $774 $791 2. 6.9% 7. 50 bps SUPPLY TRENDS Reis counted supply of 1,795 investor quality units in 2008, up from 478 units in 20. Some 798 units were competed in 08: each of the three completed properties is located in the North or South Aurora submarket. Reis s construction pipeline report takes a dimmer view of the supply situation than the service reports in its Metro Futures forecast. The pipeline report identifies 3,500 units currently under construction with delivery dates set in 2009. Another 1,100 are tipped for 2010 debut. The Broomfield / Arvada area stands to add the lion s share of pending supply. Some 358 units inside the confines of the submarket boundaries are on tap for 2009, along with another 673 located outside the Reis boundaries but on city of Broomfield addresses. Units Completions and Absorption Source: Reis, Inc 10,000 Completions Absorption 8,000 6,000 4,000 2,000 A number of new projects in Aurora North and South and in the vicinity of the Denver core will compete largely with older, dated apartment stock. This bodes well for lease up, but achieving target rents will be a difficult hurdle to surmount. 0 02 03 04 05 08 09f 10f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800.837.5100 2008 RED CAPITAL GROUP (11/08) The information contained in this report was prepared for general information purposes only and is not intended as legal, tax, accounting or financial advice, or recommendations to buy or sell currencies or securities or to engage in any specific transactions. Information has been gathered from third party sources and has not been independently verified or accepted by RED CAPITAL GROUP. RED makes no representations or warranties as to the accuracy or completeness of the information, assumptions, analyses or conclusions presented in the report. RED cannot be held responsible for any errors or misrepresentations contained in the report or in the information gathered from third party sources. Under no circumstances should any information contained herein be used or considered as an offer or a solicitation of an offer to participate in any particular transaction or strategy. Any reliance upon this information is solely and exclusively at your own risk. Please consult your own counsel, accountant or other advisor regarding your specific situation. Any views expressed herein are subject to change without notice due to market conditions and other factors.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update January 2009 EXECUTIVE SUMMARY T he Colorado economy absorbed a double blow as the recession strengthened its grip on the global economy. Centennial State employers confronted the same decline in product and service demand experienced by firms across the country, but the impact of the economic downturn was exacerbated here by the collapse of high energy prices that had fueled the resurgence of the oil and gas industry. Consequently, Denver s fairly robust payroll job growth recorded at mid-year rapidly degenerated to job losses in the fall. After posting a 15,700-job, 1. year-over-year advance in 08, and a 12,300-job gain in, metro payroll growth stalled in October and slipped into negative territory in November. The November comparison shows a 1,000-job decline, representing the first net loss recorded in nearly five years. Quick deterioration in annual comparisons was attributable to accelerating job cuts in construction, manufacturing, transportation, trade and business services. After posting aggregate annual gains of 100 jobs in August the foregoing sectors recorded cuts totaling 9,600 jobs in November. Continuing attrition in financial services and deceleration in tourism-sensitive sectors made matters worse. Only the socially-funded health care, education and government sectors managed to record steady growth. RED CAP Research expect further weakening to develop in the coming months. The latest output from our econometric payroll model indicates that quarterly job losses will rise steadily in 2009, going from 08 s projected 600-job setback to a cycle high 33,400-job, -2. year-over-year loss in 09. Payroll losses in 2009 will total an estimated 25,000 (-2.) jobs. Apartment demand was firm, however, as Reis recorded net absorption of 596 units in and an alternative service counted a net of 876. Although both figures fell below comparable levels in the previous quarter and in the year earlier period, tenant move-ins exceeded net supply, allowing average vacancy to decline. Reis report a 20 basis point improvement to 6.7%, representing the lowest vacancy rate posted in Denver in seven years. The alternative service recorded a 6. rate, also representing the lowest figure observed since 2001. By way of rents, Reis aver that owners hiked average effective rents by $5 (0.) to $796. The over-the-year comparison declined slightly from the 6-year high 3.8% recorded in 08 to 3.5%. Neighborhood trends were broadly mixed as 8 of 21 metro submarkets reported quarter-to-quarter asking rent declines, and nine posted negative sequential effective rent trends. Reis expect a combination of supply pressures and soft demand to contribute to higher vacancy and weaker rent growth in the near term. Delivery of 564 units in 08 and 3,041 units in 2009 will be met by net absorption of only 1,696 units, according to forecasts, pushing vacancy to 7.1% at YE08 and 7.9% at YE09. Rents are forecast to rise $1 (0.1%) in 08, before inching $13 (1.) higher in 2009, comparing unfavorably to the average 1.7% advance expected for the top 79 US markets. Property investors were less active in 08. RCR identified 8 $5mm+ trades completed July to September, totaling $178mm of proceeds, down from 23 trades and $781mm during. Cap rates applicable to 2008 trades were higher, averaging about 6., 100 bps above the mean, while the average price/unit declined -12. to $99,702. Denver offers above average expected total returns (6.1%), but relatively low risk-adjusted returns. Moreover, supply and economic pressures create risk of market underperformance relative to forecast levels. Therefore, we maintain our opportunistic investment rating. SNAP SHOT Vacancy (6.7% - 08) Effective Rents ($796-08) Cap Rate (6. - 08) Employment (1,264.1m - 08) KEY POINTS Y-o-y change 40 bps 100 bps Projected YE2008 40 bps 3.5% 2.8% 50 bps 12.3m 12.6m Economic prospects for the Intermountain states plummeted late in the year. The Mountain States Business Conditions Index fell to a record low 41.3 in December, tumbling from a 53.2 reading in October. Denver payroll growth stopped in its tracks during the fall. After posting a relatively healthy 12,300-job gain in 08, aggregate payrolls dropped 1,000-jobs year-over-year in November, the first decline in five years. Tenant demand slowed in 08 but remained constructive as a net of 596 units were absorbed, according to Reis. Occupancy improved 20 basis points as a result, rising to 93.3%, a seven-year high. Rent momentum decelerated, however, as average effective rents grew at a $5 (0.) rate, down from 08 s $15 (1.9%) surge. Tight credit and rising investor anxiety led to weaker asset sales in 08. Sales volume declined -77% to $178mm from. Constructive fundamentals and accessible pricing combine to produce above average total returns in Denver assets. But risks and volatility counter-balance the benefits.

Denver-Aurora, Colorado MSA - 2008 VACANCY TRENDS The gradual rise of average metro apartment occupancy that began five years ago was sustained into the third quarter 2008. Reis report that net absorption of 596 units exceeded new supply of 3 units, causing average occupancy to rise 20 basis points to 93.3%. The figure was the highest recorded since 01. According to an alternative data source, occupancy improved 13 bps sequentially and 36.5 bps year-over-year to 93.97% in 08. Tenants expressed a preference for class-a properties, absorbing 489 units to only 1 class-b&c units. Class-A occupancy improved 20 bps to 93.1%. Class-BC occupancy advanced 30 bps to 93.. Reis expect vacancy to rise 100 bps to 7.7% by year-end 2009. RANK: 32 nd out of 50 RENT TRENDS After exhibiting the second strongest rent surge among the RED 50 in 08 ($15/1.9%), rent trends subsided during the summer. Owners implemented effective rent hikes averaging $5 (0.) to $796 in. An alternative data source found that asking rents increased $5.28 (0.) to $890 in 08, and $11.30 (1.3%) to $901 in 08. Reis report that regional rent trends were broadly mixed. Nine of 21 Denver submarkets saw average effective rent decline quarter-toquarter, while asking rents in eight submarkets also declined. Reis expect Denver metro rents to underperform the RED 50 average in 2009, rising 1. to the group s 1.7% gain. But rents in the Mile High City are forecast to increase at a faster rate through 2012: Denver rents are expected to grow 2.9% vs. 2.8% for the group composite. RANK: 27 th out of 50 Metro Vacancy Rate YoY Rent Trend 1 1 1 1 8% 1 8% - - - -8% Apartment Vacancy Trends DENV CLASS-A CLASS-BC 7.1% 6.7% 00 01 01 02 03 04 04 05 08 Metro Rent Trends Asking-Reis Effective Asking-ALT 3.5% 3. 00 01 01 02 03 04 04 05 08 PROPERTY MARKET & CAP RATE TRENDS Investors seemed to have no end of appetite for Denver properties in 20, acquiring 71 assets for $1.7bn in the year s first eleven months. But the pace of acquisitions slowed substantially in 2008: Real Capital Analytics reports that 32 properties exchanged hands for $668mm in the comparable period of 2008. Transaction velocity decelerated throughout the year. RCR counted only 8 major brokered trades in 08 for aggregate proceeds of $178mm, representing 53% and 7 declines, respectively. Cap rates were materially higher, rising from the high- area in to high-5% range one year later. COMMENT: The fundamental outlook for occupancy and rent is constructive and pricing has come in line with the fundamental underpinnings of the market of late, but volatility and risk remain too high to recommend an active buying program. Cap Rate 6.5% 6. 5.5% 5. 4.5% 4. Metro Multifamily Cap Rate Trend 08 08 08 08 NOTABLE TRANSACTIONS Property Name Date of Total Price Estimated Cap Property Class Price per unit (Submarket) Transaction (in millions) Rate Alara Greenwood (Aurora S) A Sep-2008 $50.0 $163,853 5. Saddle Ridge Village (Aurora S) A Nov-2008 $32.3 $100,781 6.5% Cimarron Ridge (North Glen) BC Aug-2008 $21.7 $73,311 6. Uptown Boulder (Boulder) A Aug-2008 $22.9 $196,183 5. RED CAPITAL Research

Denver-Aurora, Colorado MSA - 2008 Prices (000) Metro Median Single Family Home Prices Source: National Association of Realtors $280 $260 $240 $220 $200 $180 $160 $140 $120 $100 DENV US 05 Y Y 08 08 08 DEMOGRAPHICS & HOUSING MARKET The median price of a Denver home sold in 08 was $225,100, down 11. year-over-year, according to data published by the N.A.R. S&P/Case-Shiller report that the value of the average Denver home decreased -1.5% in October, leaving Denver values -5. below the October 20 level. DQ News stated in January that Denver homes sales in November were the slowest in ten years. The median price was $192,500, representing a -14. decrease from November 20. Sales of homes fell 17%, including a -5 decline in new home sales. Price data are influenced by foreclosure sales and the paucity of financing, especially jumbo financing. DQ News report that 47% of Denver area sales consisted of homes in some stage of foreclosure. Annual Chg (000) Rate Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 40 20 13 0-20 -25-40 -60 99 00 01 02 03 04 05 08f 09f Year-over-year Payroll Growth Rate Source: BLS DENV USA - - - 99 00 01 02 03 04 05 08 EMPLOYMENT TRENDS Third Quarter 2008 Denver payroll metrics were reasonably stable in the third quarter. The metro posted a 12,300-job, 1. year-over-year advance, down marginally from a 15,700-job gain in the prior three-month period. The slowdown primarily was attributable to slower hiring by business services establishments and a modest acceleration of cuts by builders. Strength in the socially-funded industries was notable. Health, education and government services added workers at a 10,300-job pace. October and November 2008 Payroll trends deteriorated rapidly in the fall. After posting a 13,100- job year-over-year advance in August, the pace of payroll growth decayed to 3,200 jobs in October and 1,000 jobs in November. The year-over-year decline registered in November was the first observed in Denver MSA since February 2004. Fall data reflect rapid deceleration in tourism and energy related industries. With regard to the former, transportation payroll growth dipped from +1. in July to 2.9% in November. With regard to the latter, wholesale trade, a sensitive gauge of energy exploration activity, declined by 1. in November after rising 2.1% in March. A tectonic downward shift in employment services payrolls also hinted at energy and construction industry retrenchment. Unemployment stood at 5.9% in November, up from 4. last year. Forecast NCB chief economist Richard DeKaser revised his forecast for 08 and 2009 GDP to 5. and 1.1%, respectively. RED CAP Research forecast a net loss of 25,000 payroll jobs in 2009. Quarterly losses will peak in 09 but continue into 2010. 15% 1 9% 3% RED Estimated Generic Unlevered Asset Total Return Probabilities 12.8% 10.8% 9. DENVER (RAI=1.52) AUSTIN (RAI=1.40) 6.8% 7.9% 5.9% 3.7% 4.1% 0.7% 0. 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 Change 08 Change Arvada / Broomfield $740 $764 3.3% 5.9% 6. 0.7% Westminster $722 $739 2.5% 7.8% 5. -2. North Glenn / Thornton $738 $774 5. 7.3% 5.8% -1.5% Golden / Wheat Ridge $709 $765 7.8% 7. 6.3% -1.3% Denver-North / Northeast $949 $1,001 5. 7.3% 6. -0.9% Lakewood $780 $8 3. 6.3% 7.1% 0.8% Denver-Central / Downtown $884 $934 5.7% 6.3% 5.8% -0.5% Denver-South - Southeast $716 $723 1. 6.9% 7. 0.1% Littleton $764 $800 4.7% 5. 5. -0. Englewood / Sheridan $737 $757 2.7% 6. 6.1% -0.5% Denver-Far Southeast $679 $686 1. 8. 5.8% -2. Arapahoe County $1,033 $990-4. 6. 5.8% -0. Aurora-Central $663 $697 5. 7.3% 9.3% 2.1% Aurora-North $589 $587-0.3% 8. 9.9% 1.7% Aurora-South $820 $862 5. 7.8% 6. -1. Douglas County $951 $977 2.8% 7.5% 6. -1.1% Metro $769 $796 3.5% 7.1% 6.7% -0. SUPPLY TRENDS Reis identified 17 projects under construction in early January 2009, incorporating a total of 3,638 apartment units. Of this group, 13 properties encompassing 2,591 are expected to be delivered in 2009. Four projects with an aggregate total of 1,0 units are located in the Arapahoe County submarket. Three are scheduled for 2009 delivery. Rents in this submarket were under some degree of pressure in the third quarter. Asking rents fell $33 (2.8%) quarter-to-quarter, according to Reis, and effective rents declined 4. year-over-year. Further rent and occupancy pressure are likely to develop in 2009. An alternative data service expect developers to complete 3,131 units in 2009, representing a 1.5% increase in the metro apartment stock. Reis forecast 3,041 units or a 1.8% rise in the market rate inventory. Units 10,000 8,000 6,000 4,000 2,000 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 08f 09f RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800.837.5100 Columbus, OH_Boston, MA_Charlotte, NC_Chicago, IL Denver, CO_Fredericksburg, TX_Irving, TX_Jupiter, FL_Linwood, NJ_Nashville, TN Newport Beach,CA_Reston, VA_San Diego, CA_Syracuse, NY 2008 RED CAPITAL GROUP (11/08) Market Overview is a publication of RED CAPITAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update October 2008 EXECUTIVE SUMMARY T he Denver and Colorado economies continued to make headway in 08, adding payroll employment at 12,700 (1.) and 20,600 (0.9%) job year-over-year rates, respectively. By comparison, US employment receded at a 350,000 job, -0.3% pace. The relative health of the Denver economy was largely attributable to robust growth in service industry and government employment. The business, health care and leisure service sectors produced an aggregate 10,200 jobs in the period, while the public sector contributed another 4,700. By contrast, conditions were weaker in the goods producing and financial services industries. Construction and manufacturing employers trimmed headcount by 2,200 workers, the most since. Wholesale trade payrolls fell for the first time in four years and banks and mortgage lenders eliminated 2,200 (-7.) jobs. In September, metro payrolls were up 11,000 (0.9%) workers y-o-y, representing the smallest annual comparison since May 2004. The RED CAPITAL Research econometric payroll forecasting model suggests that conditions will deteriorate before they improve. For 2008, the model produces a forecast of 13,000 (1.) jobs, a -5 decline from 20. Conditions are likely to deteriorate further next year, as growth flips to an expected 12,000-job, -1. loss. The 2009 confidence band ranges from -18,000 to -7,000 lost jobs. The NAR reported a sharp, -11.8% year-over-year decline in Denver home prices in 08, but data from other sources showed more moderate losses. The more sensitive Case- Schiller index yielded a 4.7% average decrease of Denver home prices in June and July, comparing favorably to the -16. drop posted by the 20 largest metro areas in America. Positive job fundamentals and squirrelly housing markets proved to be a constructive formulation for apartment demand. Reis report that a net of 680 tenants signed new leases in 08, pushing occupancy up 20 basis points to 93.1%, despite delivery of 537 units. Preliminary reports from Reis indicate that occupancy improved another 20 bps in 08, overcoming supply of at least 500 units. Reis report that rents increased significantly as well. The average effective rent rose $15 (1.9%) sequentially to $791, representing the second fastest gain recorded among the RED 50 markets. On a year-over-year basis, effective rents increased $29 (3.8%), the strongest advance recorded in seven years. Nevertheless, Denver rents remained 3.1% below the $816 cyclical peak posted in 2001. Reis expect Denver rent trends to decelerate in 2H08, rising only $7 to $798, the equivalent of a 1.8% annualized rate. Rent growth is expected to gain momentum thereafter, rising at a 3.3% compound average rate through 2012, near the RED 50 mean. With regard to occupancy, the service forecast moderately weak conditions, with the average rate slipping to 92.7% by YE2008 and a further 120 bps over the next 24 months. Last year, Denver properties were among the most actively traded assets in the multifamily markets. Real Capital Analytics counted 46 trades valued at $1.1bn in the January August period. Trade is considerably slower this year, declining to 26 exchanges for a total of $477mm of proceeds. Cap rates are higher, rising from the high- area in late 20 to the mid to high-5% range in 2008. Denver was a richly-priced market. It represents good relative value now. SNAP SHOT Vacancy (6.9% - 08) Effective Rents ($791-08) Cap Rate (5.9% - 08) Employment (1,264.6m - 08) KEY POINTS Y-o-y Projected change 2008 90 bps 3.8% 3. 80 bps 12.7 m 40 bps Unchd 13m Payroll growth slowed for the third consecutive quarter during the three months ended in September, falling to a 12,700-job, 1. pace. Weakness in the goods producing industries and financial services was largely responsible. The unemployment rate was 5. in August, a 160 basis point increase over the year and the highest metric in three years. Home prices fell in July for the 20th consecutive month. The Case-Schiller Index declined -4.7% on a y-o-y basis. Apartment demand was constructive. Owners net leased 680 units, fueling a 20 bps occupancy rate increase to 93.1%. Rents were sharply higher, rising $15 (1.9%) sequentially in 08, the 2nd fastest sequential gain among the RED 50. Preliminary data show occupancy up another 20 bps. Rent trends were slower. Higher cap rates and positive fundamentals enhance the appeal of Denver properties. But the uncertain economic climate leads us to maintain our Opportunistic rating.

Denver-Aurora, Colorado - 2008 VACANCY TRENDS The strength of tenant demand was encouraging in 08, as 680 units were net-leased against supply totaling 537 units. By contrast, properties netted 1,1 new leases in, with no completions.. Occupancy increased 20 basis points to 93.1% in 08. Preliminary data for 08 indicate a further 20 bps advance to 93.3%. Seven of 21 metro submarkets reported occupancy gains of 150 bps or more over the 12 months ended in June. Arapahoe County (95.5%) and Downtown (94.) posted the highest rates of occupancy as well the second and third highest average effective rents in the metro area. Another commercial real estate service reports a 94.1% 08 average metro occupancy rate, up 80 basis points year-over-year. RANK: 35 th out of 50 Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends DENVER U.S.A. 7.8% 6.9% 00 01 02 03 03 04 05 08 RENT TRENDS Rent trends continued to gain momentum in the second quarter as yearover-year growth metrics rose from 2. in 08 to 3.8%. The average effective rent metric advanced $15 (1.9%) to $791 in 08, the second fastest sequential gain recorded among the RED 50 markets. Rent levels remain below the 2001 high-water mark, however. Two submarkets posted year-over-year effective rent growth of 7% or more: Central-Denver and Littleton. A second data source measured y-o-y metro asking rent growth at $39 (4.7%). This service forecasts 2.8% compound growth through 2012. Preliminary Reis data show asking rents up 0. in 08, about $5. RANK: 39 nd out of 50 COMMENT: After a slow 2H08, Reis expect 3%-3.5% rent growth 2009-12. YoY Rent Trend 1 8% - - - -8% 00 01 Metro Rent Trends Asking Effective 02 03 03 04 05 3.8% 3.3% 08 PROPERTY MARKET & CAP RATE TRENDS Metro Multifamily Cap Rate Trend Property market velocity decelerated from 20 s super-charged pace. RCA reported 26 sales 2008 prior to October 1 for total proceeds of $477mm. Investors acquired 46 assets for $1.1bn in the same time frame in 20. Also, the average price per unit declined from $97,147 in 20 to $83,624 this year, as investors shifted focus on B quality re-positioning plays rather than infill trophy assets. RCA estimate the average cap rate for 2008 trades at a surprising 7., up 200 bps from the 20. RED CAPITAL Research observed average cap rates of recent $15mm+ trades in the high-5% area, about 80 bps above the levels observed twelve months earlier. The recent rise in cap rate levels enhance the appeal of Denver assets. At cap rates in the 5.8% to 6. range for class-b properties, expected returns look enticing. Economic risks are now the primary concern. Cap Rate 6. 5.5% 5. 4.5% 4. Sources: Reis, Inc. and NCREIF REIS Composite NCREIF 08 08 08 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Gleneagles Apts (Northglenn) A Jul-2008 $60.8 $108,185 5.8% Camden Arbors (Westminster) A Jun-2008 $32.0 $89,411 6. Colinas Pointe (Central Aurora) A Jun-2008 $22.2 $81,639 6. Indian Tree Apts (Arvada) A May-2008 $16.8 $75,748 5.9% RED CAPITAL Research

Denver-Aurora, Colorado MSA - 2008 Year-over-year Home Price Trends (Monthly) DEMOGRAPHICS & HOUSING MARKET 3% Source: S&P Case Shiller Index Metro population increased by 53,030 (2.) persons in 20, the largest advance since 2001. According to estimates published by Tactician Corporation, population increased by more than 55,000 people in 2008. Prices (000) -3% - -9% -1 US 20 The median price of a metro home was $225,200 in 08, according to the National Association of Realtors, an -11.8% decrease from 20. Concurrently, the median priced Western Region home fell -17.. -15% DENVER The Case-Schiller index for Denver declined 4.7% y-o-y in July. -18% DQ News data reveal that the median price of a Denver County home fell -21. y-o-y in 08 to $191,150. Velocity declined 7.5%. Prices decline were less severe in surrounding counties. Payroll Employment Growth Source: BLS Data & RCG Research Forecast EMPLOYMENT TRENDS Second Quarter 2008 Annual Chg (000) 60 40 20 0-20 -40-60 13 (12) 99 00 01 02 03 04 05 08f 09f Year-over-year Payroll Growth Rate Source: BLS DENVER USA The rate of payroll job growth decelerated in the second quarter, largely due to weaker results posted by the goods producing and financial services industries. Employment increased at a 15,700-job, 1. pace, down from 23,100 jobs in 08 and 25,700 jobs in 20. Construction, manufacturing and wholesale trade establishments added 2,700 jobs collectively in 08, but eliminated 300 positions in 08. Hiring in the entertainment, software and telecom sectors also dropped significantly. After bringing on a net of 2,600 workers in 08, these industries added only 400 jobs in 08. Third Quarter 2008 The goods producing sectors continued to pull down overall metro payroll growth. Construction, manufacturing and wholesale trade establishments severed a net of 2,300 employees in the quarter, an increase of 2,000 from. A sharp decline in the use of temporary and contract employees (probably related to construction and light manufacturing) was primarily responsible for a decrease in hiring by business services firms from a 5,600-job pace in 08 to 2,300 in. Total payroll growth declined to 12,700-jobs or 1. in 08, the slowest pace of growth recorded in more than four years. Rate - - - 99 00 01 02 03 04 05 08 The unemployment rate hit a 3-year high 5. in August, up 160 bps year-over-year. Forecast RED CAPITAL Research expect Denver economic conditions to continue to deteriorate. The group s econometric model forecasts an 13,000-job add for the FY2008, followed by a net loss of 12,000- jobs next year. The confidence interval for 2009 is 18,000 to 7,000 jobs. This compares to a +23,000 point estimate published in May. 2 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilities Denver (RAI=1.46) Austin (RAI=1.74) 11. 10. 8.5% 7. 5.9% 5. 3. 0. 1.8% 9 7 5 3 1 14.5% RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 Change 08 Change Arvada / Broomfield $730 $755 3. 7. 7. Unchd Westminster $717 $727 1. 7.9% 6. -170 bps North Glenn / Thornton $745 $779 4. 8. 6.8% -120 bps Golden / Wheat Ridge $698 $736 5.5% 9.8% 7. -280 bps Denver-North $1,127 $1,181 4.8% 8.9% 7.8% -110 bps Denver-Northeast $771 $814 5. 8. 8. 20 bps Lakewood-North $708 $737 4.1% 7. 6.7% -90 bps Denver-Central $843 $909 7.8% 6. 5. -120 bps Aurora-North $589 $610 3. 9.9% 11. 170 bps Lakewood-South $787 $804 2.1% 6. 5.8% -60 bps Denver-South $661 $673 1.8% 6.7% 6. -70 bps Denver-Southeast $712 $715 0. 7.1% 8.1% 100 bps Littleton $746 $802 7. 6. 5.5% -110 bps Englewood / Sheridan $731 $765 4.7% 6.9% 6.8% -10 bps Denver-Far Southeast $681 $699 2.5% 7.1% 6. -110 bps Arapahoe Count $1,030 $1,028-0.1% 8.3% 4.9% -340 bos Aurora-Central-Southwest $672 $709 5. 7.8% 7.8% Unchd Aurora-Central-Southeast $625 $666 6.7% 7.9% 5.9% -200 bps Aurora-South $816 $861 5. 8.8% 6.9% -190 bps Denver-Downtown $951 $995 4.5% 7.7% 5. -230 bps Douglas County $953 $973 2.1% 9. 7. -160 bps Metro $762 $791 3.8% 7.8% 6.9% -90 bps SUPPLY TRENDS Completions and Absorption Source: Reis, Inc After experiencing significant over-building earlier in the decade, developers have become much more risk sensitive. Consequently, demand and supply are not expected to stray too far from relative equilibrium through the end of the decade. Supply in 2009 is forecast to rise to 3,592 units, up from 2,283 this year. But Reis expect demand to rise as well, limiting the addition of units to vacant stock to only 1,369 units. Average occupancy is projected to fall 60 basis points as a result. Another commercial data source expects developers to deliver nearly 14,000 units in the 2009 2011 period. RCR discount this risk. Units 10,000 8,000 6,000 4,000 2,000 0 Completions Absorption 02 03 04 05 08f 09f RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800_837_5100 Columbus, OH_Boston, MA_Charlotte, NC_Chicago, IL Fredericksburg, TX_Irving, TX_Jupiter, FL_Linwood, NJ_Nashville, TN Newport Beach,CA_Reston, VA_San Diego, CA_Syracuse, NY_Voorhees, NJ 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPITAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update May 2008 EXECUTIVE SUMMARY E conomic conditions remained robust in Denver last year as employers added 25,700 (2.1%) workers. The skilled service sectors contributed the most to the metro s job growth. Business service firms added 11,500 positions to payrolls and health service providers hired 4,000 net employees. Conversely, goods producing sectors cut 2,600 positions from payrolls. Job growth decelerated slightly in 08 as 22,600 (1.9%) jobs were netted. The nature of growth was different thus far this year. Business service firms added workers at a slower 6,500-job pace and construction firms added 1,700 workers rather than reducing headcounts. In addition, leisure service providers added workers at a faster rate. RED expect job growth to decelerate slightly this year. Our econometric model generates point estimates of 19,000 (1.5%) new jobs this year and 21,000 (1.7%) in 2009. The confidence intervals range from 15,000 (1.) to 22,000 (1.8%) in 2008 and from 16,000 (1.3%) to 27,000 (2.1%) in 2009. Home price trends in Denver compared favorably to the nation in 08. The median price of a single-family MSA home fell 6. y-o-y to $223,500. The national median price was down 7.7% to $196,300. Denver registered a 5.5% decrease in the February Case-Shiller home price index, better than the 12.7% reduction in the composite index of the top 20 metros. Seasonally weak demand in 08 resulted in a 10 basis point decrease in the metro occupancy rate from 93.1% to 93.. The occupancy rate rose 140 basis points y-o-y due to robust demand (2,478 units) and limited supply (154 units) in the twelvemonths ended in March. Apartment owners continued their struggle to produce meaningful rent growth. Effective rents rose 0.1% sequentially and 2. y-o-y to $870 in 08. The annual metric ranked 41 st among the RED 50. Likewise, asking rents posted only a 0. sequential increase and were 2. above year-ago levels. Reis are relatively pessimistic with regard to 2008 market fundamentals. The service expects sluggish job growth to limit tenant demand and result in a 60 basis point decrease in the average occupancy rate. Falling occupancy and decelerating household income growth is expected to reduce effective rent growth to 2.3%. RED are optimistic. We forecast stronger job growth than Economy.com and therefore hold an upward bias with regard to absorption. In addition, our rent growth model suggests that effective rent growth will accelerate to about 3. this year. The Denver-Central submarket posted the fastest rate of y-o-y effective rent growth in 08. Effective rents advanced 6.3% and the submarket also reported a 170 basis point occupancy improvement. According to Real Capital Analytics, 23 investor grade trades were recorded the six months ended in March. Property sales volume totaled $646 million and the average price per unit was $95,228. The source reports an average cap rate of 7.1%. According to NCREIF, the average cap rate was 4.9% in, unchanged from the previous quarter. RED estimate generic metro asset five-year holding period total returns of 5.1%, among the bottom 10 of the RED 50. As such, we recommend that investors take an opportunistic approach; buy assets at a discount. SNAP SHOT Vacancy (7. - 08) Effective Rents ($776-08) Cap Rate (5.8% - 08) Employment (1,233.6k - 08) Y-o-y Projected change 2008 140bps 2. 2.3% 20bps 60bps unch 22.6k 19k KEY POINTS The apartment vacancy rate rose 10 basis points sequentially to 7. in 08. The increase was attributable to negative net absorption; construction remained inactive. On a year-over-year basis the vacancy rate fell 140 basis points due to solid tenant demand. Asking and effective rents increased 2. and 2. year-over-year, respectively in 08. Concessions sliced 10.8% from asking rents in 08, down from 11. in the same period of 20. Data from Real Capital Analytics suggest that investor interest in Denver apartment assets slowed to a degree in the six months ended in March. Property trade volume averaged $1 million per month over the six month period, down from the $151 million average in calendar 20. At an assumed going-in yield of 4.9%, RED estimate generic metro asset five-year holding period total returns of 5.1%, among the lowest in the RED 50. Even under somewhat more optimistic rent trend and occupancy assumptions it is difficult to justify acquisition at current prices.

Denver - Aurora, Colorado MSA - 2008 VACANCY TRENDS Apartment Vacancy Trends The metro vacancy rate increased 10 basis points sequentially to 7. due to seasonally weak demand in 08. A net of 189 units were vacated. On the other hand, the metro vacancy rate fell 140 basis points yearover-year due to robust absorption and limited supply. Developers added only 154 units to the market in the twelve-month period ended in March. Reis are somewhat pessimistic regarding future vacancy trends. The service forecasts 2,367 unit completions this year to outpace demand, leading to a 60 basis point increase in vacancy. Metro Vacancy Rate 1 1 1 8% Denver U.S.A. 8. 7. RANK: 36 th out of 50 00 01 02 02 03 04 05 05 08 RENT TRENDS Metro Rent Trends The pace of sequential effective rent growth slowed from 0.8% in to 0.1% in 08. Effective rents advanced 2. year-over-year to $776, comparing favorably the gains posted through much of last year. Asking rents rose 0. sequentially and 2. year-over-year to $870. The value of the average concession package remained high at 10.8% of asking rent, approximately equal to 1.3 months free-rent on a twelve-month lease. Reis forecast effective rent growth to decelerate to 2.3% this year but rebound to 2. in 2009. YoY Rent Trend 1 8% - - - -8% Asking Effective 2. 2. RANK: 41 st out of 50 COMMENT: Our rent growth forecast models suggest that owners will achieve faster rates of rent growth than Reis forecast. 00 01 02 02 03 04 05 05 08 PROPERTY MARKET & CAP RATE TREND Metro Multifamily Cap Rate Trend Real Capital Analytics report 23 investor grade property trades totaling $646 million in the six-month period ended in March. The average price was $95,228 per unit and the average cap rate was 7.1%. According to NCREIF cap rates were largely stable over the past year. The source estimates a 4.9% average cap rate in, unchanged from and. Recent trade data suggests that cap rates remained relatively unchanged in 08. RED estimate generic metro asset five-year holding period total returns of 5.1%, ranking 10 th lowest among the RED 50. On this basis, it is difficult to justify an active buying program. On the other hand, buyers who view the Reis forecasts as overly conservative are more apt to consider acquisition. Cap Rate 6. 6. 5.8% 5. 5. 5. 5. 4.8% 4. 08 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Summit at Flatiron A January 2008 $76.3 $145,057 4.8% Red Rock Apartments A January 2008 $63.8 $110,000 5. District at Southmoor Station A January 2008 $60.9 $220,562 4.7% Estates at Mira Vista A February 2008 $30.2 $125,729 4.7% RED CAPITAL Research

Denver - Aurora, Colorado MSA - 2008 Prices (000) Metro Median Single Family Home Prices $280 $260 $240 $220 $200 $180 $160 $140 $120 $100 Source: National Association of Realtors 03 Y MSA 04 Y 05 US Y 08 DEMOGRAPHICS & HOUSING MARKET Population growth accelerated to 2. in 20 due to increased net domestic migration. Tactician Corp. forecast population growth of 1. per year from 20 to 2012. The National Association of Realtors report the median price of a single-family MSA home fell 6. year-over-year to $223,500 in 08. According to DataQuick, the median existing single-family home sale price decreased 9.1% year-over-year in January. Condo prices fell 9.8%. Sale prices of newly constructed homes were relatively firm although velocity decreased 44.5% year-over-year as 667 properties sold. The metro registered a 5.5% annual drop in the February Case-Shiller home price index. Homes priced below $203,763 exhibited the weakest trend with values falling 10.3% year-over-year. Annual Chg (000) Rate Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 40 19 21 20 0-20 -40-60 99 00 01 02 03 04 05 08f 09f Year-over-year Payroll Growth Rate Source: BLS Denver USA - - - 99 00 01 02 03 04 05 08 EMPLOYMENT TRENDS Past 12 Months The pace of job growth edged upward last year as 25,700 (2.1%) positions were added to payrolls. Employers added 25,000 workers in the previous year. First Quarter 2008 Payroll trends remained relatively firm in 08. Establishments added a net of 22,600 (1.9%) jobs, on par with the 22,300 job gain in the same period of last year but modestly lower than the 26,700 advance in. Construction sector firms added 1,700 workers year-over-year in 08, against weak year-over-year comparisons. The metric was the sector s first positive result since. Leisure service and local government hiring also accelerated in 08. The sectors combined to add 7,800 jobs, up from 5,700 in and 4,100 in. Banking sector attrition moderated to -1,800 year-over-year in March, the 19 th consecutive month of annual sector job losses. Business service firms reduced hiring efforts in 08 largely due to weaker demand for administrative support services. Forecast RED expect job growth to decelerate modestly to 19,000 (1.5%) in 2008. We expect slightly better performance next year as 21,000 (1.7%) jobs will be created. Economy.com project job growth of 3,330 (0.3%) in 2008 and 26,290 (2.1%) in 2009. RANK: 11 th out of 50 15% 1 5% -5% RED Estimated Generic Unlevered Asset Total Return Probabilities 9.8% Denver Phoenix 7. 7.9% 5. 2.9% 3. 4.5% 6. -0. 0.9% 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 08 Change 08 Change Arvada / Broomfield $741 $744 0.5% 7.3% 6.7% -60 bps Westminster $708 $720 1.7% 8.3% 6. -230 bps North Glenn / Thornton $719 $754 4.9% 8. 7. -100 bps Golden / Wheat Ridge $703 $730 3.9% 9. 7.7% -170 bps Denver-North $1,097 $1,151 4.9% 10.5% 7.3% -320 bps Denver-Northeast $766 $794 3. 9. 7.8% -120 bps Lakewood-North $709 $711 0.3% 6.5% 6.7% 20 bps Denver-Central $837 $890 6.3% 7. 5.3% -170 bps Aurora-North $586 $592 1.1% 11.3% 8.8% -250 bps Lakewood-South $780 $795 2. 7. 5.8% -140 bps Denver-South $665 $666 0.1% 5.1% 6. 130 bps Denver-Southeast $709 $700-1. 7. 8.3% 70 bps Littleton $752 $788 4.9% 6.1% 5.9% -20 bps Englewood / Sheridan $725 $747 3. 5.8% 7. 140 bps Denver-Far Southeast $668 $685 2.5% 8.1% 6. -170 bps Arapahoe County $1,012 $993-1.8% 11.3% 6.1% -520 bps Aurora-Central-Southwest $666 $692 3.9% 7.7% 8.7% 100 bps Aurora-Central-Southeast $617 $655 6. 7.8% 6.5% -130 bps Aurora-South $810 $858 5.8% 10.1% 7.3% -280 bps Denver-Downtown $935 $972 4. 9.3% 5. -390 bps Douglas County $939 $952 1.3% 11. 8.5% -270 bps Metro $756 $776 2. 8. 7. -140 bps SUPPLY TRENDS During the 2000 to 2003 construction boom, developers added an average of 6,263 units per year. Since then, an average of 1,308 units was completed per year. The lowest total was observed last year as only 154 units of supply were delivered. 10,000 8,000 Completions and Absorption Source: Reis, Inc Completions Absorption No units were completed in 08 but Reis expect 2,367 units to come on-line in the remainder of the year. Apartment Realty Advisors counted 6,224 units under construction at YE 20, a figure that included units targeted toward low-income households. The source also count 3,520 apartment units in the planning stage. Permits for 1,663 multifamily units were issued in 08, up from 1,483 units in the same period of 20. Units 6,000 4,000 2,000 0 02 03 04 05 08f 09f RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800_837_5100 Columbus, OH_Boston, MA_Bozeman, MT_Charlotte, NC_Chicago, IL Fredericksburg, TX_Irving, TX_Jupiter, FL_Linwood, NJ_Nashville, TN Newport Beach,CA_Reston, VA_San Diego, CA_Syracuse, NY_Voorhees, NJ 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPITAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update January 2008 EXECUTIVE SUMMARY P ayroll trends in Denver were remarkably solid in. Employers added 20,600 (1.7%) positions year-over-year, an increase from the 18,400 (1.5%) yearover-year gain posted in. Among the sectors that contributed to the faster than expected growth were retail trade, information and employment services. Establishments in these sectors hired a combined net of 4,800 employees in as compared to a monthly average of 1,200 jobs gained in 20. RED forecast payroll growth to remain stable in 2008. Our econometric model generates a point estimate of 19,000 (1.5%) jobs in 2008, near the estimated 19,800 (1.) gain in 20. Economists at Marcus & Millichap are less optimistic, forecasting net creation of 13,200 (1.1%) jobs. Conditions in the metro single-family housing market grew moderately weaker in. The National Association of Realtors report a median single-family home price of $254,100 in, a 0. y-o-y advance. Conversely, the metro posted a 0.3% y-oy decline in the OFHEO home price index. The metro occupancy rate rose 70 basis points sequentially to 92.9% in, ranking 41 st among the RED 50. The improvement was attributable to strong tenant demand and no supply; net absorption totaled 1,167 units in. In, effective rents increased 1. sequentially and 2.3% y-o-y to $770 in. Asking rents grew at a slower 1. y-o-y pace to $863. The value of the average concession package fell 70 bps y-o-y to 10.8% of asking rent, still the 3 rd highest ratio among the RED 50. Reis are somewhat pessimistic with regard to occupancy in Denver. Preliminary data show that occupancy rose 20 bps to 93.1% but the service forecasts a 20 basis point reduction in occupancy by YE 08. The outlook for effective rent growth is constructive. Reis expect y-o-y effective rent growth to accelerate to 2.7% in 2008 and average 3. per year through 2011. Due to similar growth in asking rents, however, concessions are not expected to significantly recede. Reis estimate the value of the average concession package will fall to 10.5% of asking rent by 2011. Market conditions in the Littleton submarket improved steadily in the twelve-months ended in September. Effective rents increased 5.7% y-o-y to $764 and the average occupancy rate rose 140 bps to 94.8%. The occupancy rate was the highest among the metro s 21 submarkets. According to Real Capital Analytics, 71 investor grade properties traded from January to November 20, totaling $1.65 billion in sales proceeds. This ranked 11 th among the top 53 metro areas tracked by RCA. The average price per unit was $97,525 and the average cap rate was 5.7%. Loopnet identified 37 trades involving properties priced at or above $5 million in 2H, selling for a total of $1.12 billion. The median sales price was $104,289 per unit. We estimate probable returns on generic metro assets of 6.1%, ranking 39 th among the RED 50. On a riskadjusted basis, Denver ranks lower (45 th ), as historic volatility is above average. RED assign a rating of Opportunistic for metro assets as current yields do not adequately compensate investors for inherent risks. SNAP SHOT Vacancy (7.1% - ) Effective Rents ($770 - ) Cap Rate (6. - ) Employment (1,242.0k - ) Y-o-y Projected change 2008 70bps 10bps 2.3% 2.7% unch unch 18.4k 19k KEY POINTS The metro vacancy rate fell 70 basis points sequentially to 7.1% in. The metric decreased 70 basis points year-over-year due to weak demand in and. Asking and effective rents increased 1. and 2.3% year-over-year, respectively. Reis forecast year-over-year effective rent growth to accelerate to 2.7% in 2008 and 2.9% in 2009. According to the National Association of Realtors, the median price of a Denver home rose 0. year-over-year to $254,100 in. The metro registered a 0.3% y-o-y price decrease in the OFHEO home price index. Real Capital Analytics report sales volume of $1.65 billion from January to November 20. This compares to $1.78 billion in calendar 20. The average price per unit fell from $101,296 in 20 to $97,525 in 20. RED expect job growth to range from 14,000 (1.1%) to 23,000 (1.9%) in 2008, with a point estimate of 19,000 (1.5%) jobs.

Denver-Aurora, Colorado MSA - 20 VACANCY TRENDS The metro vacancy rate fell 70 basis points sequentially to 7.1% in. The improvement was attributable to robust tenant demand and no supply. The vacancy rate decreased 70 basis points year-over-year despite negative net absorption in and. Unit demand was stout in the six months ended in September. Preliminary Reis data indicate that the vacancy rate declined 20 basis points to 6.9% as only 154 units of supply were added to the market. Reis expect completions to rise to 3,000 to 3,500 units in 2008. Consequently, vacancy is forecast to increase 20 basis points by year-end. Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends Denver U.S.A. 7.8% 7.1% RANK: 41 st out of 50 00 00 01 02 03 03 04 05 RENT TRENDS Metro Rent Trends Effective rents increased 1. sequentially and 2.3% year-over-year to $770 in. The year-over-year growth metric was the highest since 01 when effective rents advanced 4.7% year-over-year. Asking rents 0.7% sequentially and 1. year-over-year in. According to preliminary Reis data, Denver asking rents rose 0.5% sequentially and 2. over-the-year. According to ARA, the size of the typical concession package fell from 2 to 3 months free-rent in 20 to 1 to 1.5 months in. Reis data show a similar but less severe trend. The average concession package fell from 11.5% of asking rent in to 10.8% in. Reis expect year-over-year effective rent growth to accelerate to 2.7% in 2008 and 2.9% in 2009. YoY Rent Trend 1 8% - - - -8% Asking Effective 2.3% 1. RANK: 42 nd out of 50 00 00 01 02 03 03 04 05 PROPERTY MARKET & CAP RATE TREND Metro Multifamily Cap Rate Trend Real Capital Analytics report sales volume of $1.65 billion from January to November 20 as 71 investor grade properties traded. The average price per unit was $97,525 and the average cap rate was 5.7%. 7. 6.5% According to NCREIF, the metro cap rate fell 20 basis points from 5.1% in to 4.9% in. Loopnet identified 37 trades involving properties priced at or above $5 million in 2H totaling $1,122 million in sales proceeds. The median price per unit was $104,289. Cap Rate 6. 5.5% RED estimate generic metro asset 5-year holding period total returns of 6.1%, ranking 39 th among the RED 50. 5. 05 05 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Red Rocks A December 20 $63.8 $112,324 4.9% Legacy Gateway Park A December 20 $33.1 $100,762 4.5% Uptown Village BC November 20 $74.2 $180,535 4.8% Raccoon Creek A October 20 $50.0 $137,736 4.8% RED CAPITAL Research

Denver-Aurora, Colorado MSA - 20 Prices (000) Metro Median Single Family Home Prices $280 $260 $240 $220 $200 $180 $160 $140 $120 $100 Source: National Association of Realtors 03 Y MSA 04 Y 05 US DEMOGRAPHICS & HOUSING MARKET The population of the Denver metro area rose 2. in 20 due to positive net domestic migration. The median price of a single-family MSA home increased 0. yearover-year to $254,100 in. According to OFHEO, home prices fell 0.3% year-over-year, ranking 210 th among 287 metro markets. The number of permits issued for singe-family residences in the MSA fell 4 year-over-year to 7,149 units in the 12-months ended in November. The metric was the lowest in the metro s 13-year data history. COMMENT: Recently published data indicate that the median home price fell from 20 to 20. The data show that the largest percentage of foreclosures and short sales occurred in neighborhoods where properties are priced below $200,000. Annual Chg (000) Payroll Employment Growth Source: BLS Data & RCG Research Forecast 60 40 19 20 0-20 -40-60 99 00 01 02 03 04 05 f 08f Year-over-year Payroll Growth Rate Source: BLS Denver USA EMPLOYMENT TRENDS Past 12 Months The pace of job growth slowed moderately as 19,400 (1.) jobs were created year-over-year in December. This compares to 20,400 (1.7%) jobs gained in the same month last year. Third Quarter 20 A net of 18,400 (1.5%) positions were added to payrolls year-overyear in, down from a monthly average of 24,600 (2.1%) jobs in 20. The slowdown was largely attributable to job losses among construction and manufacturing establishments. The sectors combined to add 3,900 employees in 20 but lost 4,500 workers year-over-year in. Job growth among business service, health care, and leisure service firms improved in. The sectors combined to add 13,800 jobs in 20 and 16,900 year-over-year in. Forecast Preliminary data from the BLS show that 19,800 (1.) payroll jobs were created in Denver in 20. In October, we forecasted job growth of 17,900 (1.5%) for the year. Rate - - - 99 00 01 02 03 04 05 Our econometric model generates a point estimate of 19,000 (1.5%) payroll jobs in 2008. The confidence interval ranges from 14,000 (1.1%) to 23,000 (1.9%). RANK: 25 th out of 50 COMMENT: We are considerably more optimistic then we were in October. Payroll growth in was stronger than we expected, particularly in the information, retail trade and employment service sectors. 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilities 11.1% Denver Las Vegas 8.1% 8.5% 4.9% 5.9% 6. 7. 3. 3.7% 0. 9 7 5 3 1 RED CAPITAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy Change Change Arvada / Broomfield $738 $740 0. 7.3% 5.9% -140 bps Westminster $695 $722 3.8% 8.3% 7.8% -50 bps North Glenn / Thornton $738 $738-0.1% 8.1% 7.3% -80 bps Golden / Wheat Ridge $684 $709 3.7% 8. 7. -60 bps Denver-North $1,119 $1,134 1.3% 9.7% 7.7% -200 bps Denver-Northeast $761 $779 2.3% 9.3% 7. -230 bps Lakewood-North $7 $717 1.5% 6. 6.5% 30 bps Denver-Central $837 $860 2.7% 7.9% 6. -190 bps Aurora-North $592 $589-0.5% 7. 8. 60 bps Lakewood-South $785 $800 1.9% 6.3% 6. -10 bps Denver-South $658 $670 1.8% 5. 7.5% 230 bps Denver-Southeast $710 $725 2. 7.9% 6.8% -110 bps Littleton $723 $764 5.7% 6. 5. -140 bps Englewood / Sheridan $708 $737 4.1% 5.9% 6. 70 bps Denver-Far Southeast $674 $679 0.7% 8. 8. 0 bps Arapahoe County $1,013 $1,033 2. 9.1% 6. -270 bps Aurora-Central-SW $659 $691 4.9% 7.7% 7.5% -20 bps Aurora-Central-SE $617 $634 2.8% 6.1% 7. 90 bps Aurora-South $793 $820 3. 8.5% 7.8% -70 bps Denver-Downtown $917 $956 4. 7. 7.3% 10 bps Douglas County $948 $951 0.3% 11. 7.5% -350 bps Metro $753 $770 2.3% 7.8% 7.1% -70 bps SUPPLY TRENDS No units were completed in the first three quarters of 20. Recently released Reis data revealed that 154 units of supply were delivered in. This represents the lowest vintage in the metro s 17-year data history. 10,000 8,000 Completions and Absorption Source: Reis, Inc Completions Absorption Reis expect development to return to normal in 2008 as approximately 3,500 units are slated for delivery. Inventories in the Aurora North and Aurora South submarkets are expected to increase the most in 2008. Reis count 526 units under construction in the former and 528 units in the latter. Units 6,000 4,000 2,000 According to ARA, there were 3,612 units under construction as of September 20, including two LIHTC properties containing a total of 192 units. 0 02 03 04 05 f 08f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800_837_5100 Columbus, OH_Boston, MA_Bozeman, MT_Chicago, IL_Fredericksburg, TX Irving, TX_Jupiter, FL_Linwood, NJ_Nashville, TN_Newport Beach,CA 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPTIAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update October 20 EXECUTIVE SUMMARY O n the Road, Jack Kerouac s homage to Denver and its dubious favorite son Neal Cassady, was published 50 years ago in August. For the author, Denver was an American Delphi, the point where the freedom of the Western frontier met the audacious modernity of the post-war world. In the 1990s, Denver played the role to perfection. The economy thrived, creating jobs at a blistering per year pace from 1993 to 2000. Cassady s old haunt Larimer Street was transformed from skid row to a trendy playground and the economy effortlessly traded telecom engineers for cattlemen and oil and gas wildcatters. The current decade has been slower, as aftershocks from the 2001-03 tech wreck reverberate through the economy. Although the metro posted its best post-recession results last year when payrolls increased by 24,600 (2.1%), growth sagged in the first half of 20. Cuts in construction, transportation and retail trade headcounts caused payroll growth to slow to a 1. year-over-year rate, not faster than the national average. Hiring gained momentum in the third quarter, rising to an 18,100 (1.5%) year-over-year pace. Momentum was derived in large part from the highskilled services sectors, especially health care, computer systems design and managerial and technical consulting, with assistance from the tourism and air travel sector. Conversely, goods producing industries were weaker and retail trade and unskilled services were essentially flat. RED are skeptical that the tech, energy and health care sectors can by themselves sustain Denver s economic momentum. Rather, metro headcount growth is likely to decelerate in step with broader national market trends. By way of forecast, RED s payroll model forecasts creation of 17,900 jobs in 20. Next year, the model foresees headcount growth ranging from 9,000 to 17,000 jobs, with point estimate of 13,000 (1.1%) Metro occupancy trends have been among the more volatile in the RED 50. Absorption was negative in three of the past eight quarters, but exceeded +1,000 units in three others, including two quarters when more than 1,500 net units were leased. The volatility is now working to the benefit of owners. Average occupancy increased 60 basis points in to a 5-year high 92., and another 70 bps in to 92.9%, a 6-year high. The 130 bps upward move since March ranked first in the RED 50. Effective rent increased $6 (0.8%) in to an average of $762. Overthe-year, effective rent advanced $13 (1.7%), 3 rd slowest in the RED 50. The typical concession package fell $4. Nonetheless, Denver concession levels were the highest in the RED 50 at $95 or 11.1% of rent. In, asking rent increased $6 (0.7%), comparing unfavorably to the 1.3% U.S. average. The Reis forecast offers little succor. The service expects occupancy to drop to 91. by YE, and further to 91. by YE08. Effective rent is projected to rise only 2.5% next year and 2.8% in 2009, no match for anticipated 3. and 3.3% U.S. gains. RED are more optimistic, particularly with regard to occupancy rate. Sales velocity accelerated in when 20 properties traded hands compared to 17 in the prior quarter. Deal sizes were larger, however, increasing total proceeds by 79% to $613mm. Estimated going-in yields of institutional quality assets ranged from to 5%, in line with 1H observations. Buyers moved up in class though, pushing the average price per unit from $82m to roughly $110m. SNAP SHOT Vacancy (7.8% - ) Effective Rents ($768 - ) Cap Rate (5.9% - ) Employment (1,224.0m - ) KEY POINTS Y-o-y Projected change 20 30 bps 1.7% 2. unch 60 bps 18.1m 17.9m Hiring by smaller firms engaged in technical consulting, computer system design and health care services fueled faster growth in the third quarter. Metro payrolls increased at an 18,100-job (1.5%) year-over-year pace, slightly faster than the 17,400-job rate recorded in 1H. Larger employers were more cautious, trimming expansion plans or cutting headcounts around the margins. For example, First Data Corp. announced plans to outsource technology functions to cut costs in preparation for a leveraged buyout. Apartment occupancy trends are volatile but trending upward. Average occupancy metrics surged 60 basis points in and 70 bps in, reaching a 6-year high 92.9%. Below average rent trends persisted, but exhibited improved momentum. Effective rent increased 1.7% y-o-y in, strongest results in a year. A y-o-y gain approaching 2.5% is anticipated for. Fundamentals are improving but prices are too rich by our way of thinking. We continue to assign a hold rating, but we are prepared to upwardly revise if fundamentals continue to improve.

Denver-Aurora, CO MSA - 20 VACANCY TRENDS Apartment demand has been a here today, gone tomorrow affair over the past several years. Demand was in a strong phase in the six months ended in September as tenants absorbed a net of more than 2,000 units, thereby reducing the vacancy rate by 130 basis points. The 7.1% vacancy rate recorded in was the lowest in 6 years. The margin between the metro and U.S. average vacancy rates declined to 150 bps. The series record spread was 470 bps, set in 03. Reis forecast an 8. YE vacancy rate in August. A rate in the area of 7. is more likely. Supply of about 2,500 units in 2008 will exert upward pressure on vacancy, pushing the rate back to the 8. area. RANK: 45 th out of 50 COMMENT: Supply pressures likely to put an end to occupancy rally in 2008. Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends 7.8% 7.1% 00 00 01 02 03 DENVER U.S.A. 03 04 05 RENT TRENDS Metro Rent Trends At an average of $762, effective rents remain 6. below the 2001 series high; but owners are beginning to find some forward momentum. Effective rents increased $6 (0.8%) sequentially and $13 year-overyear in. The former metric was the strongest since 05 and the latter the highest in a year. The average concession declined $4 to $95. Rent momentum accelerated moderately in. Owners hiked asking rents $6 for a 1. over-the-year advance. RED expect Reis to show an effective rate increase near 2.5% when data are available 11/1. Reis forecast continued below average rent growth. The service project average advances of 2.5% in 2008 and 2.8% in 2009. YoY Rent Trend 1 8% - - - -8% Asking Effective 1.7% 1.1% RANK: 48 th out of 50 COMMENT: RED expect rent growth to be stronger than the Reis forecast. 99 00 01 02 02 03 04 05 05 PROPERTY MARKET & CAP RATE TREND Metro Multifamily Cap Rate Trend Loopnet recorded 17 trades of $5mm or more in for a total of $344mm of proceeds. Velocity increased to 20 transactions in, and total proceeds surged to $613mm. 7. 6.5% Eleven properties valued at more than $30mm exchanged hands in, evidencing increased institutional interest in Denver properties. Acquisition cap rates were low, ranging from to 5%. Investors appeared willing to bet that Denver will be the next Western U.S. metro to experience rapid rent growth. COMMENT: RED expect rent trends to improve in Denver, but not to the degree that would allow us to overcome our skepticism that initial cap rates of 5% or less are warranted. Therefore we maintain a hold rating, but allow that fundamentals are improved to the degree that acquisitions at higher cap rates may be strategic. Cap Rate 6. 5.5% 5. 05 05 05 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Raccoon Creek (Lakewood So.) A Sep-20 $49.6 $137,736 4.8% Commons Park West (Denv. No.) A Aug-20 $75.0 $220,588 3.8% Greenwood Park (Arapahoe Co.) A Sep-20 $42.7 $146,735 5. Terrace Park (Aurora Cent-SE) BC Jul-20 $39.0 $ 91,121 4.3% RED CAPITAL Research

Denver-Aurora, CO MSA - 20 Prices (000) Metro Median Single Family Home Prices Source: National Association of Realtors $280 $260 DENVER US $240 $220 $200 $180 $160 $140 03 Y 04 Y 05 DEMOGRAPHICS & HOUSING MARKET Denver enjoyed the first net domestic migration gain in 5 years last year. A net of 9,018 Americans relocated to Denver in 20, supporting net population growth of 45,232 (2.). Home price growth from 2002 20 was among the slowest in the West Region. The NAR report that the median price of a metro home increased 9. from $228,000 to $249,500, compared to 40. for the median American home. OFHEO aver that the value of the typical Denver home increased 1 during the period, while Mountain and Pacific Region homes appreciated 61% and 93%, respectively. According to DataQuick, new home sales fell 23.5% year-over-year in June, while existing home and condo sales dropped 11. and 3.8%. Single-family permitting fell 38% January to September. Multifamily permitting was essentially unchanged. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast 17 13 99 00 01 02 03 04 05 f 08f Year-over-year Payroll Growth Rate Source: BLS DENVER USA 99 00 01 02 03 04 05 EMPLOYMENT TRENDS Past 12 Months Denver added 19,900 (1.) payroll jobs in the 12 months ended in September, down from 24,600 (2.1%) during calendar 20. Deterioration in the goods producing industries was primarily responsible for the slowdown. A net gain of 5,800 jobs in the construction, manufacturing and wholesale trade super-sectors in 20 deteriorated to a 300-job loss during the 12 months ended in September. Brisk hiring in the business, health care and leisure services continued. These sectors created 16,900 jobs during the trailing-12, up from 14,600 in the comparable period of 2005-. Good momentum in the skilled services bodes well for 2008. Third Quarter 20 Denver establishments created jobs at a 17,400, 1. annual pace during 1H. Growth was slightly faster in the third quarter, when metro payrolls expanded at a 18,100-job, 1.5% rate. Faster growth among small businesses engaged in skilled business and health care services, as well as the tourism and travel sector contributed to the moderate acceleration observed in the past 3 months. Attrition in the goods producing sectors accelerated. The construction, manufacturing and wholesale trade sectors trimmed payrolls at a 4,000-job annual pace. That compares to year-over-year cuts at a 800-job annual pace during the six month period ending in June. Forecast The Denver economy will bend but not break. Growth will continue near the U.S. average in 2008. This year, our econometric model forecasts net growth of 17,900 jobs. For 2008, the model generates a forecast range of 8-19,000 jobs, with point estimate of 13,000 (1.1%) 15% 9% 3% RED Estimated Generic Unlevered Asset Total Return Probabilities DENVER AUSTIN 10.2 % 7.9% 7. 4.9% 4.9% 2.9% 0.8% 10.0 % 14.1% -3% -0.5% 9 7 5 3 1 RED CAPTIAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy Change Change Arvada/Broomfield $745 $730-2. 8.1% 7. -110 bps Westminster $687 $717 4.3% 9. 7.9% -150 bps N Glenn/Thornton $722 $745 3.1% 7.5% 8. 50 bps Golden/Wheat Ridge $684 $698 2. 8.8% 9.8% 100 bps Denver-North $1,129 $1,127-0. 10.7% 8.9% -180 bps Denver-Northeast $766 $771 0. 9.9% 8. -190 bps Lakewood-North $692 $708 2. 7. 7. 20 bps Denver-Central $820 $843 2.8% 8.8% 6. -220 bps Aurora-North $571 $589 3. 8.8% 9.9% 110 bps Lakewood-South $775 $787 1. 5.9% 6. 50 bps Denver-South $641 $661 3. 4. 6.7% 210 bps Denver-Southeast $724 $712-1. 7.7% 7.1% -60 bps Littleton $721 $746 3.5% 5.9% 6. 70 bps Englewood/Sheridan $722 $731 1. 6.5% 6.9% 40 bps Denver-Far SE $679 $681 0.3% 7.7% 7.1% -60 bps Arapahoe Cnty $998 $1,030 3. 9.3% 8.3% -100 bps Aurora-Central-SW $645 $672 4. 8.9% 7.8% -110 bps Aurora-Central-SE $610 $625 2. 5. 7.9% 230 bps Aurora-South $810 $816 0.7% 8.3% 8.8% 50 bps Denver-Downtown $905 $951 5.1% 7.1% 7.7% 60 bps Douglas County $933 $953 2.1% 11. 9. -240 bps Metro $749 $762 1.7% 8.1% 7.8% -30 bps SUPPLY TRENDS About 3,000 apartment units are currently under construction. Completion of 1,750 units is anticipated in 2008. Reis proffer a supply forecast of 2,700 units. Realized supply is likely to be less. 10,000 Completions and Absorption Source: Reis, Inc Completions Absorption Supply is concentrated in core Denver and Aurora submarkets. Downtown, Denver Central and Aurora South occupancy, already showing signs of deterioration, may weaken further in 2008. Reis expect an average of 2,000+ units per year from 2009-11. Units 8,000 6,000 4,000 2,000 0 02 03 04 05 f 08f RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800_837_5100 Columbus, OH_Boston, MA_Bozeman, MT_Chicago, IL_Fort Worth, TX Fredericksburg, TX_Jupiter, FL_Linwood, NJ_Nashville, TN_Newport Beach,CA Philadelphia, PA_Reston, VA_San Diego, CA_Syracuse, NY_Voorhees, NJ 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPTIAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update July 20 EXECUTIVE SUMMARY O il and gas are hot topics again in Colorado and exploration is adding energy to Denver s economy and commercial real estate markets. The metro area produced 24,600 (2.1%) payroll jobs in 20, an increase of 1,800 from the prior year and the best performance registered since 2000. The rate of growth moderated in the first half of 20, but persisted at an above average pace, rising at 20,700-job, 1.7% rate year-over-year through May. Strong demand for office space from energy companies like Anadarko drove tighter market conditions, especially Downtown. CBD vacancy averaged 8.9% at mid-year, down from 14. in early 20. Lease rates are up sharply, approaching $30/sf for CBD class-a space, as owners sought to bridge the void between local and coastal metro rents. First half absorption exceeded the volume of space under construction, igniting new office tower development and higher prospective construction payrolls. Conversely, the residential market was not so buoyant. Area homes sold at the slowest pace in 8 years, according to DataQuick News, and new home sales fell 3 y-o-y in May. Median sale prices dropped in each of the last 7 months, leaving the value of the typical home 3.3% below the May 20 comparison. One-family permit issue fell 4 through May, leading to a host of construction sector layoffs. Headcounts fell 1,400 (-1.5%); while related cuts at home furnishing and supply stores and mortgage lenders cost several hundred more jobs. Beside this singular sector, the metro economy proceeded at a brisk pace, stoked by hiring in energy exploration and high tech services, tourism and government. RED CAPITAL expect these components of the Denver economy to maintain a brisk clip through 2008. The firm s econometric model forecasts net payroll expansion of 19,000 to 23,000 jobs in 20, with point estimate of 21,000 (1.7%). For 2008, the model produces a most probably result of 20,000 (1.) jobs. Sluggish trade wasn t limited to new homes: apartment demand was weak in as well. Owners experienced negative absorption for the second consecutive quarter, losing 158 net tenants, dropping the average rate of occupancy 10 basis points to 91. Rent growth was stronger, however, as average asking and effective rents rose $4 (0.5%) and $5 (0.7%), respectively, to $851 and $756, after posting small reverses in. Indeed, these were the largest sequential advances posted in 18 months. Nevertheless, Denver concessions remained at an unpalatable 11. of gross revenue, ranking last in the RED 50. Reis expect better market performance in the future. The service forecasts the most robust effective rent growth in six years $16 (2.1%) in 20, and $19 (2.5%) next year and faster absorption by 2008. Unfortunately, supply promises to accelerate as well, pushing occupancy lower. Investors appear to have other thoughts in mind. Ten $5mm+ properties valued at $250mm were acquired in, at an average price of equating to $87,000/unit, nearly equaling the comparable period of 20. A-quality assets were priced in the $125m $150m/unit range at cap rates in the high area. Some high vacancy B&C assets traded at even lower initial yields. Investors are clearly expecting better performance than is incorporated in the Reis forecast. RED is skeptical, and therefore affirms its Hold rating. Fundamental trends are improving, but prices remain too dear. SNAP SHOT Vacancy (8. - ) Effective Rents ($756 - ) Cap Rate (6. - ) Employment (1,209.3k - ) Y-o-y Projected change 20 30 bps 1.5% 2.1% 50 bps 10 bps 20.6k 21k KEY POINTS Colorado s high tech, energy and tourism driven economy exhibited strength and resilience in the first half of 20. The metro added 24,600 (2.1%) payroll jobs in 20, and grew at a 20,700 (1.7%) yearover-year pace during the January to May period of 20. The unemployment rate plummeted to 3. in May, the lowest level registered in six years. RED CAPITAL expect Denver to add 19,000 to 23,000 payroll jobs in 20, with point estimate of 21,000 (1.7%). For 2008, job growth should approach 20,000 (1.). Strong demand for office space from energy and service companies is rapidly depleting vacant inventory The CBD vacancy rate slipped into the single digits in the spring, driving rents up sharply. Home sales and prices slumped. New home sales fell 3 and median home prices fell 3.3% year-over-year in May. Rental trends were comparably sluggish. Vacancy is up 60 bps since September, rent trends are stagnant and asset prices are high. RED therefore affirms its Hold rating.

Denver Aurora, CO MSA - 20 VACANCY TRENDS The Denver market experienced the second consecutive quarter of negative net absorption in. Properties lost a net of 158 leases in the first quarter after attrition totaling 114 tenants was recorded. Occupancy fell 60 basis points during this six-month stretch to 91. The majority of the loss was suffered in, when weak demand was accompanied by supply totaling 708 units. Denver received no supply in the first quarter of this year. Reis expect occupancy to continue to drift downward through 2008. The service forecast a cyclical low of 91. in that year. Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends DENVER U.S.A. 8.7% 8. RANK: 45 th out of 50 2008 VACANCY RATE OUTLOOK: Rising moderately. 00 01 01 02 03 04 04 05 RENT TRENDS Metro Rent Trends Owners continued to struggle to find traction in the Denver market. Effective rents increased $5 to $756 in, a 0.7% sequential advance. Although this was the best quarterly increase achieved in 21 months and reversed a -0.3% decline suffered in the previous quarter, it left the market $60 short of the series high set in 01. Effective rents increased $11 (1.5%) year-over-year. Much of the gain was achieved by way of concession recession, however, as owners managed only a $6 (0.7%) face rent increase. The value of the average concessions package fell $5 to $95 per month or 11. of gross rent revenue. Denver ranked 50th in the RED 50 in this category.. YoY Rent Trend 1 8% - - - -8% Asking Effective 1.5% 0.7% RANK: 47 th out of 50 2008 RENT GROWTH RATE OUTLOOK: Slow progress. 00 01 01 02 03 04 04 05 PROPERTY MARKET & CAP RATE TREND Metro Multifamily Cap Rate Trend Investors were not put off by the sub-par performance of the Denver market. Trade was active and pricing was aggressive. Property sales in the first quarter were sluggish, as only seven $5mm+ properties exchanged hands for an aggregate of $91.8mm. But velocity and proceeds exploded in the second quarter, as 10 sales for a total of $250mm of proceeds were reported by Loopnet in early July. More second quarter trades may still be captured by this service. Cap Rate 7.5% 7. 6.5% Cap rates were surprisingly low in light of the modest expectations for market NOI growth. Acquisition cap rates below 5% relative to historical NOI were typical. Buyers apparently perceive substantial upside after years of sluggish performance. 2008 CAP RATE OUTLOOK: Rising as performance improves. 6. 5.5% 05 05 05 05 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Westward Look (in lease up) A Jun-20 $35.0 $132,576 2. / 4. pf Environs A Jun-20 $39.7 $124,686 4.8% West Hills A Apr-20 $35.8 $89,600 4.8% Jefferson at Citygate A Mar-20 $38.0 $157,676 4.8% RED CAPITAL Research

Denver Aurora, CO MSA - 20 Prices (000) Metro Median Single Family Home Prices Source: National Association of Realtors $260 $240 DENVER US $220 $200 $180 $160 03 Y 04 Y 05 05 DEMOGRAPHICS & HOUSING MARKET Local population increased by 45,232 (2.) in 20, the largest rise since 1999, and a 30. advance over 2005. The gain is attributable to a dramatic reversal in domestic migration trends. After losing 688 migrants in 2005, Denver attracted a net of 9,018 persons last year. The median price of an existing home sold in was $239,400, down -2. year-over-year. This was the lowest median price reported since 05. OFHEO report 1.09% average appreciation. Year-over-year median home price comparisons were negative in each of the seven months ending in May, according to DataQuick News. The May median was down 4. from the June 20 peak level. 2008 DEMOGRAPHIC OUTLOOK: Denver s turnaround continues. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast 21 20 99 00 01 02 03 04 05 f 08f Year-over-year Payroll Growth Rate Source: BLS DENVER USA 99 00 01 02 03 04 05 EMPLOYMENT TRENDS Past 12 Months Denver establishments formed 24,600 new payroll jobs in 20, a gain of 2.1%. Business, health care, education and leisure service industries were primarily responsible, combining for a net contribution of 14,600 jobs. Strength in these sectors was offset by some lingering attrition in the air transportation sector, reflecting the struggles of the domestic airline industry, and in the telecommunication industry. In the twelve months ended in May 20, the metro area added a monthly average of 22,400 (1.9%) jobs. The decline relative to FY 20 is an outgrowth principally of the diminution of construction sector payrolls, which declined from an apex of 98,200 jobs in June 20 to 93,600 in May 20. The oil and gas industry drove high wage job creation in recent periods. Geology, engineering and scientific services were an important component to the business service category s 7,800-job, 4. advance in the 12-months ended in May. The relevant sub-sectors accounted for 3,100 of these jobs. First Quarter 20 Denver employment growth decelerated to a 20,700-job, 1.7% y-o-y pace in. A decline in construction and retail trade jobs was the catalyst, with slower financial activities hiring contributing. Forecast RED expect Denver to produce 21,000 payroll jobs in 20. In 2008, the firm anticipates growth within a confidence interval of 16,000 to 24,000 jobs. We favor the high end of the range. RANK: 22 tnd out of 50 2008 EMPLOYMENT GROWTH RATE OUTLOOK: Favorable due in part to the positive outlook for the oil and gas industry. 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilites 13. 10.9% 11. DENVER SEATTLE AUSTIN 7.3% 8.1% 8.9% 9.7% 6.9% 7.1% 5. 3. 3.8% 4.3% 0.5% 0. 9 7 5 3 1 RED CAPTIAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy Change Change Arvada / Broomfield $732 $741 1. 8.7% 7.3% -140 bps Westminster $691 $708 2. 9.9% 8.3% -160 bps North Glenn / Thornton $717 $719 0.3% 8.9% 8. -30 bps Golden / Wheat Ridge $698 $703 0.7% 9.3% 9. 10 bps Denver-North $1,102 $1,097-0. 9.8% 10.5% 70 bps Denver-Northeast $751 $766 2. 10.8% 9. -180 bps Lakewood-North $688 $709 3. 8.7% 6.5% -220 bps Denver-Central $811 $837 3. 9.8% 7. -280 bps Aurora-North $577 $586 1.5% 8. 11.3% 270 bps Lakewood-South $775 $780 0. 6. 7. 80 bps Denver-South $649 $665 2.5% 5.1% 5.1% 0 bps Denver-Southeast $711 $709-0.3% 8.1% 7. -50 bps Littleton $718 $752 4.7% 6.3% 6.1% -20 bps Englewood / Sheridan $713 $725 1.7% 7. 5.8% -140 bps Denver-Far Southeast $670 $668-0.3% 7.7% 8.1% 40 bps Arapahoe County $1,010 $1,012 0.1% 9. 11.3% 170 bps Aurora-Central-Southwest $652 $666 2. 9.5% 7.7% -180 bps Aurora-Central-Southeast $614 $617 0.5% 6.3% 7.8% 150 bps Aurora-South $794 $810 2. 9. 10.1% 90 bps Denver-Downtown $922 $935 1. 7.5% 9.3% 180 bps Douglas County $941 $939-0. 12. 11. -120 bps Metro $749 $756 1.5% 8.7% 8. -30 bps SUPPLY TRENDS This market s modest occupancy and rent growth has not deterred developers from moving aggressively to build new apartment product. Currently, over 1,300 units are under construction, and at least 2,800 units are in the planning stage. Reis forecast delivery of 864 units in 20, followed by a 2,738 unit vintage in 2008. In addition, more than 3,000 condo units are under construction in large scale projects. Although condo reversions have not been a prominent feature in this market, competition from investor owned units is likely to constrain occupancy and rent growth for several years. 2008 SUPPLY TREND OUTLOOK: Apartment supply levels will be of sufficient volume to blunt meaningful average occupancy gains. Units 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 f 08f RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800_837_5100 Columbus, OH_Boston, MA_Bozeman, MT_Chicago, IL_Fort Worth, TX Fredericksburg, TX_Jupiter, FL_Nashville, TN_Newport Beach,CA Philadelphia, PA_Reston, VA_San Diego, CA 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPTIAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update April 20 EXECUTIVE SUMMARY T he strength of Denver s economic recovery moderated in, but maintained a healthy pace, largely due to expansion in the skilled service industries and the leisure and hospitality sector. Last year, Denver reported its largest payroll advance in six years, producing 24,600 (2.1%) jobs to reach a monthly average total of 1.214 million. Indeed, the metro set a new record for nonfarm jobs, eclipsing the previous high established in 2000. The largest advances were recorded in professional, scientific and technical services (2,100/3.1%); company management (1,400/7.); and health and education services (3,500/2.9%). But conditions were a bit weaker recently. Fourth quarter payrolls advanced at a 21,600-job (1.8%) pace, and year-over-year comparisons in January and February were slower at about 1.7%. Construction activity was largely to blame. Single-family permit issue was down 47% y-o-y in the past three months as builders sought to manage heavy inventories of unsold homes. Headcounts fell accordingly (1,500 y-o-y), the first quarterly super-sector setback since 2004. RED CAPITAL expect slower job growth trends to persist in 20 and 2008. RED s econometric model generates a 20 payroll forecast range of 15m and 22m with a point estimate of 18,000. For 2008, the model forecasts a range with midpoint of 16,000 jobs. The performance of the Denver apartment market is among the nation s most volatile. The metro average vacancy rate oscillated in a 240 basis point range over the past two years, from a 9. maximum to a 7.8% low. The measure was on an upward bounce in, rising 50 bps sequentially to 8.3%; placing Denver at 44th rank in the RED 50. The increase in vacant inventory was attributable to the weakest tenant demand in four years (negative absorption of 364 units) combined with delivery of 484 new units. This capped a year in which aggregate supply of 2,178 units outpaced absorption nearly 2-to-1, pushing the metro vacancy rate up 40 bps y-o-y. Reis expect supply pressures to persist. The service forecasts completion of a total of 5,150 investor grade units through 2009, a burden that is likely to hold average occupancy levels below 9 for the duration. Rent trends were commensurately dull. Respective sequential asking and effective rents fell $4 (0.5%) to $847 and $1 (0.1%) to $751 in. Effective rent remains 8% below the series record and was not higher than the level reported in 00. On a y-oy basis, effective rents were up only $4 (0.5%), ranking 48th in the RED 50. By way of concessions, the typical lease incentive was valued at 11.3% of gross rent, placing Denver at the bottom of the RED 50. Reis expect effective rents to increase $16 (2.1%) in 20 and $20 (2.) in 2008. The service forecasts a $883 2011 average, representing 2.8% annual compound growth. This contrasts to 1.3% CAGR recorded since 2001. Large ($5mm+) property sales velocity peaked in when 14 properties with 4,865 units traded for $460mm. Velocity was slower in and, when 12 trades were recorded for $318mm. Reis estimate a mean cap rate of 5.9%, 10 bps above the regional norm. Recent sales generated materially lower yields, however, generally in the high- to low-5% range. Expected total returns from Denver assets are too low (6.) to recommend a buying program. Therefore, the metro earns a hold rating, although an upgrade is possible if rent trends meet or exceed Reis forecasts. SNAP SHOT Vacancy (8.3% - ) Effective Rents ($751 - ) Cap Rate (5.9% - ) Employment (1,228.6k - ) KEY POINTS Y-o-y Projected change 20 40 bps 10 bps 0.5% 2.1% 50 bps 21.6k 18k Denver economic growth continued at a brisk pace in 20. The metro area produced 24,600 (2.1%) payroll jobs, up from 22,800 in 2005, and unemployment dipped to a five-year low. The professional and technical, leisure and hospitality and health care and education services sectors reported the strongest job creation trends. The median price of a metro home dropped 0.8% year-over-year in the fourth quarter to $245,600. Metro home values increased only 4.7% since 2003, comparing unfavorably to a 39. rise in the region. Single-family permit activity plummeted in the three months ended in February. Authorizations fell 47% from the comparable year-earlier period. Leasing activity was slow in. Net absorption totaled 346 units, and the vacancy rate increased 50 bps to 8.3%. Sequential asking (-0.5%) and effective (- 0.1%) rent trends were negative in.

Denver-Aurora, CO MSA - 20 VACANCY TRENDS Apartment Vacancy Trends Metro property experienced negative absorption in, losing a net of 346 tenants in the period. This was the weakest fourth quarter performance in five years. Developers completed 484 units in, according to Reis, including a 240-unit loft style mid-rise near City Park and a hip 244-unit mid-rise in suburban Aurora. The latter reported about 75 units under lease at year end. Reis forecast a moderate drop in average occupancy in 20 and 2008. Supply pressure will persist, blocking meaningful improvement for the balance of decade. RANK: 44 th out of 50 2008 VACANCY RATE OUTLOOK: Moderate rise Metro Vacancy Rate 1 1 1 8% 00 01 02 03 DENVER U.S.A. 03 04 7.9% 05 8.3% RENT TRENDS Metro Rent Trends Both asking and effective rents fell on a sequential basis in. Average asking rents dropped $4 (0.5%) to $847. Effective rents gave back $1 (0.1%) to $751. Year-over-year, effective rents were higher $4 or 0.5%. Asking rents were down 0. year-over-year, ranking Denver last among the RED 63 on this basis. Effective rents remain 8% below the series record set in 2001 and remain below the level recorded in Q300. Reis expect owners to find better pricing power in 20. The service forecast 2.1% and 2. effective rent growth in 20 and 2008, respectively. Denver ranked last in the RED 50 with regard to concessions levels. RANK: 48 th out of 50 2008 RENT GROWTH RATE OUTLOOK: Improving YoY Rent Trend 1 8% - - - -8% 00 01 02 03 Asking Effective 03 04 05 0.5% -0. PROPERTY MARKET & CAP RATE TREND Metro Multifamily Cap Rate Trend Interest in Denver properties skyrocketed in 1H, with sales velocity proceeds rising 77% and 133%, respectively over the comparable period of 2005. But sales were down about 3 by way of proceeds and 5 in respect to transactions in 2H. 7.5% 7. Loopnet recorded eight sales of properties valued at $5 million or more in for gross proceeds of $256mm. This compares to 14 sales for $460mm in. Preliminary statistics suggest that sales in were down again. A total of 4 closings were recorded for $63 million. Cap Rate 6.5% 6. 5.5% Although sales velocity is down, go-in yields remain at or near cyclical lows. Cap rates for recent sales were estimated in the high- to low- 5% range. 5. 2008 CAP RATE OUTLOOK: Moderate increase anticipated 05 05 05 05 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Jefferson at Aspen Ridge A 8-Dec-20 $52,000 $111,111 4.8% The Bluffs at Castle Rock BC 31-Oct-20 $19,800 $90,000 5.1% The Falls A 19-Mar-20 $25,500 $122,596 4.5% Retreat at the Park A 19-Jan-20 $45,600 $190,000 4.9% RED CAPITAL Research

Denver-Aurora, CO MSA - 20 Metro Median Single Family Home Prices Source: National Association of Realtors $275 DENVER US $250 DEMOGRAPHICS & HOUSING MARKET The ten-county Denver metro population increased by 48,028 (1.8%) in the year ended 7/1/, the largest advance in five years. The Census Bureau recorded domestic in-migration of 9,018 persons in the same period, the first net positive gain in this account since 2001. Prices (000) $225 $200 $175 $150 The improved demographic picture is attributable to Denver s healthier economy, high quality of life and relatively affordable housing costs by the standards of the West Region. The metro area should continue to experience above trend population growth in 20. The median price of a metro home was $249,500 in 20, up 1%. The median price declined to $245,600 in, however, representing a 1.8% decrease year-over-year. 04 Y 05 Y 05 05 2008 DEMOGRAPHIC OUTLOOK: Positive net domestic migration flows will keep demographic growth above trend in 20. Annual Chg (000) Rate 60 40 20 0-20 -40-60 - - - Payroll Employment Growth Source: BLS Data & RCG Research Forecast 18 16 99 00 01 02 03 04 05 f 08f Year-over-year Payroll Growth Rate Source: BLS DENVER USA 99 00 01 02 03 04 05 EMPLOYMENT TRENDS Past 12 Months According to re-benchmarked BLS data, Denver added 24,600 (2.1%) new payroll jobs in 20, up from 22,400 (2.) in 2005. Pursuant to the BLS exercise, 20 payroll growth was revised higher by 1,900 jobs. Service industries provided the principal impetus for Denver s growth. Professional, health care, education, leisure and hospitality services made the largest contributions. A degree of deceleration was evident in goods producing sectors, notably construction and manufacturing. Expansion in the retail trade sector also was materially slower. Year-to-Date Employment growth in slowed to a 21,600-job (1.8%) annual pace, largely due to cuts in the construction sector and softness in retail trade. Conversely, expansion in the business services, health care and education services and tourism and convention sectors proceeded at a healthy pace, in some cases accelerating relative to measures recorded earlier in the year. January and February 20 payroll estimates suggest that key patterns observed in gained momentum. Construction headcounts continued to decline on an over-the-year basis, presumably due to homebuilders efforts to control the size of growing unsold inventory levels. Other areas exposed to the housing sector were softer, including retail trade and financial services. Forecast RED CAPITAL forecasts moderately slower payroll job growth in 20 and 2008. RCR s econometric payroll forecast model produces an estimate of 20 job growth of 18,000. The forecast for 2008 is for job creation totaling 16,000. The Denver Development Corp. forecast 22,500 jobs for 20. RANK: 33 rd out of 50 2008 EMPLOYMENT GROWTH RATE OUTLOOK: Moderately slower 15% 1 5% RED Estimated Generic Unlevered Asset Total Return Probabilites Denver U.S. Metro Average 5.7% 3.8% 0.5% 7. 8.5% 9. 8.1% 6. 10.9% 11. 9 7 5 3 1 RED CAPTIAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 05 Change 05 Change Arvada/Broomfield $740 $738-0.3% 8.1% 8.1% unch Westminster $690 $697 1. 9. 9. -20 bps N Glenn/Thornton $721 $730 1. 8. 8.8% 20 bps Golden/Wheat Ridge $710 $695-2.1% 7.9% 9. 170 bps Denver-North $1,8 $1,104 2. 8. 11.9% 350 bps Denver-Northeast $751 $764 1.7% 9. 9.8% 20 bps Lakewood-North $692 $704 1.7% 7. 6.8% -40 bps Denver-Central $796 $834 4.8% 8. 7.8% -20 bps Aurora-North $572 $582 1.7% 8.7% 8.7% unch Lakewood-South $778 $777-0.1% 5.3% 6.9% 160 bps Denver-South $640 $662 3. 4.3% 4. 30 bps Denver-Southeast $718 $695-3. 7. 8. 100 bps Littleton $725 $744 2. 5. 7.1% 170 bps Englewood/Sheridan $710 $718 1.1% 6. 6. 20 bps Denver-Far SE $676 $667-1.3% 7. 7. unch Arapahoe Cnty $992 $1,003 1.1% 8.9% 9. 50 bps Aurora-Central-SW $663 $658-0.8% 8.9% 8.1% -80 bps Aurora-Central-SE $609 $615 1. 6.7% 6.5% -20 bps Aurora-South $808 $811 0. 8. 9. 80 bps Denver-Downtown $935 $933-0. 6.8% 10. 320 bps Douglas County $960 $932-2.9% 12.1% 10.7% -140 bps Metro $747 $751 0.5% 7.9% 8.3% 40 bps SUPPLY TRENDS Supply was up sharply in 20. Developers completed 2,175 units compared to only 846 units in the prior year. Supply levels will remain elevated through the end of the decade. Reis forecast deliveries totaling 1,646 and 2,327 units respectively in 20 and 2008. The service proffers an estimate of about 1,900 units per year from 2009 to 2011. As single-family permit issue diminished, multifamily authorization flourished. A total of 4,720 5+ units were permitted in the 12 months ended in February, up 58% from the year-earlier period. The early sale of the Retreat at the Park suggests good lease up trends and a good exit market for merchant builders. 2008 SUPPLY TREND OUTLOOK: Challenging Units 10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 f 08f RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 www.redcapitalgroup.com 800_837_5100 Columbus, OH_Boston, MA_Bozeman, MT_Fort Worth, TX Fredericksburg, TX_Jupiter, FL_Nashville, TN_Newport Beach,CA Philadelphia, PA_Reston, VA_San Diego, CA 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPTIAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.

RED CAPITAL GROUP Market Overview Denver, Colorado Multifamily Housing Update January 20 EXECUTIVE SUMMARY P ayroll job growth in Denver accelerated to 22,800 (2.) in 2005 after posting a gain of only 9,200 (0.8%) in 2004. Job growth strengthened in 1H as employers added 26,100 (2.) positions. Gains moderated to 21,000 (1.7%) in, however, ranking 25 th out of the 50 metro areas tracked by RED CAPTIAL (RED 50). Reduced hiring in construction, professional and business services, wholesale and retail trade, and financial services contributed to slower growth in the third quarter. The sectors combined to create 14,700 jobs in 1H, falling to 8,300 in. Conversely, job losses in the important telecommunications industry slowed. Attrition totaled 2,000 in 2005, 1,200 in 1H and 900 in, a signal that job trends may stabilize. After generating 22,900 (1.9%) jobs in 20, payroll growth is likely to decelerate slightly in 20. RED anticipate job growth between 15,000 (1.) and 24,000 (2.) with a point estimate of 19,000 (1.). Looking ahead to 2008, RED expect moderately faster growth of 21,000 (1.7%) jobs, with a confidence interval of 15,000 (1.) and 26,000 (2.1%). At 92., the occupancy rate was the metro s highest since 01, yet ranked 7 th lowest among the RED 50. The occupancy rate increased 40 basis points year-over-year owing to robust tenant demand (2,203) and attrition of 603 units by way of condo conversion. By the same token, apartment development activity was moderate, by metro standards, as only 1,691 units were completed in the twelve months ended in September. By comparison, deliveries averaged 4,425 annually over the past five years. Reis anticipate a less active leasing period to allow occupancy to slip 10 basis points to 92.1% in. The service anticipate weaker tenant demand in 20 to cause occupancy to drop another 10 basis points to 92.. Market tightness allowed owners to reduce concessions, causing effective rents to increase 1.3% year-over-year in, while asking rents remained relatively flat (0.). According to Apartment Realty Advisors, the typical concession package at mid-year was one to one and a half months free rent on a twelve month lease, down from two to three months a year ago. Reis data indicate that the value of the average concession package fell from 12.3% of asking rent ($104 per month) to 11. ($99 per month) between 05 and. Reis anticipate year-over-year effective rent growth of 0.9% in, 2.1% in 20 and 2.5% in 2008. At 6.5%, the third quarter Reis cap rate index for Denver is cheap to the West region average of 5.. First half 20 sales proceeds advanced 133% to $1,082.5mm while transaction velocity increased 77% to 39. Reis trade data indicate that investor grade properties traded at average and median cap rates of 6.1% and 6., respectively in, with class A properties typically trading at or below 5.5%. Denver does not compare favorably to other metros on the basis of market fundamentals. On the other hand, buyer interest surged in 2005 and 20, reflecting an expectation of improved market performance. Indeed, with effective rents $52 below the previous cyclical peak there is clearly rent growth potential. RED assign a cautious Accumulate ranking to Denver assets as the metro historically suffers from oversupply, a risk that remains the primary threat to future fundamental improvement. SNAP SHOT Vacancy (7.8% - ) Effective Rents ($752 - ) Cap Rate (6.5% - ) Employment (1,221.3k - ) KEY POINTS Y-o-y Projected change 20 40bps 1.3% 2.1% 30bps 10bps unch 21.0k 19.0k Metro vacancy fell 40 basis points year-overyear to 7.8% in. The increase is attributable to limited supply, robust demand and moderate condo conversion activity. Effective rents increased 1.3% year-overyear, ranking 46 th among the RED 50. Effective rent growth remained positive for the 8 th consecutive quarter. The Reis average cap rate index increased 20 basis points to 6.5% in, however; the metric remains 30 basis points below the comparable period of 2005. RED assign a cautious Accumulate ranking to metro assets. This indicates that we anticipate fundamental improvement, although supply risks remain a concern. RED anticipate payroll growth of 22,900 (1.9%) in 20, 19,000 (1.) in 20, and 21,000 (1.7%) in 2008.

Denver, Colorado MSA - 20 VACANCY TRENDS Metro vacancy fell 40 basis points year-over-year to 7.8% in. The decrease is primarily attributable to positive net absorption of 2,203 units over the past four quarters. The conversion of 603 apartment units to condominium also contributed. The vacancy rate is 370 basis points below the previous peak of 11.5%, recorded in 03, and the lowest rate since 01. Looking ahead, Reis anticipate vacancy to increase 10 basis points to 7.9% in. In 20, the service expect slower net absorption to push the vacancy rate up another 10 basis points to 8.. Metro Vacancy Rate 1 1 1 8% Apartment Vacancy Trends Denver U.S.A. 8. 7.8% RANK: 43 rd out of 50 20 VACANCY RATE OUTLOOK: Small Increase 00 01 02 02 03 04 05 05 RENT TRENDS Metro Rent Trends Asking rents increased $5 or 0. year-over-year in, down from 0.8% growth in. Owners reduced the value of the average concession package by $5 to $99 or 11. of asking rent. As a result, effective rents increased $10 or 1.3%, outpacing advances in asking rent for the sixth consecutive quarter. Despite recent improvement, concessions in Denver are the highest among the RED 50. Reis anticipate year-over-year effective rent growth of 0.9% in, 2.1% in 20 and 2.5% in 2008. RANK: 46 th out of 50 20 RENT GROWTH RATE OUTLOOK: Increasing YoY Rent Trend 1 8% - - - -8% Asking Effective 1.3% 0. 00 01 02 02 03 04 05 05 PROPERTY MARKET & CAP RATE TREND Metro Multifamily Cap Rate Trend The Reis average cap rate index increased 20 basis points sequentially from 6.3% to 6.5% in. The metric remains 30 basis points below the comparable period of 2005. According to Real Capital Analytics (RCA), properties valued at $1,082.5mm sold in 1H, an increase of 133% year-over-year. The number of transactions increased 77% to 39. According to Apartment Realty Advisors, 26 sales in 1H eclipsed the $10 million mark, compared to 34 sales in all of 2005. The brokerage service also reported that class A properties regularly trade at cap rates below 5. and class B assets often change hands at yields below 6.. Cap Rate 7. 7. 6.8% 6. 6. 6. 6. 5.8% 20 CAP RATE OUTLOOK: Stable 05 05 05 05 NOTABLE TRANSACTIONS Property Name Property Class Date of Transaction Total Price (in millions) Price per unit Estimated Cap Rate Saddle Rock Country Club A October 20 $34.7 $111,058 5.5% Archstone Dakota Ridge A September 20 $53.3 $110,938 4.3% Greenbriar at Saddle Rock A August 20 $31.8 $108,733 5.9% Post Uptown Square A August 20 $118.0 $169,540 5. RED CAPITAL Research

Denver, Colorado MSA - 20 Prices (000) Metro Median Single Family Home Prices Source: National Association of Realtors $280 $260 $240 $220 $200 $180 $160 $140 $120 $100 03 Y MSA 04 Y 05 US 05 05 DEMOGRAPHICS & HOUSING MARKET Metro population increased 1. in 2005, despite negative net domestic migration of 1,593. The rate of homeownership in the metro was 70.7% in 2005, up 250 basis points since 2000. The median price of a single family MSA home fell 0.1% year-overyear to $253,200 in. According to the Office of Federal Housing Enterprise Oversight home price index, home prices increased 2.3% year-over-year in, the lowest rate of growth since 03. 20 DEMOGRAPHIC OUTLOOK: Stable Reis forecast metro population to increase by 1. in 20. Annual Chg (000) 60 40 20 0-20 -40-60 3% Payroll Employment Growth Source: BLS Data & RCG Research Forecast 23 19 21 99 00 01 02 03 04 05 f f 08f Year-over-year Payroll Growth Rate Source: BLS Denver USA EMPLOYMENT TRENDS Past 12 Months Payroll growth totaled 22,800 in 2005, the metro s largest annual gain since 2000. Over the past twelve months, year-over-year payroll growth accelerated to an average of 23,400 jobs. Year-to-Date Year-over-year job growth averaged 21,000 in, down from 26,100 in 1H. The slowing rate of payroll growth is largely attributable to a slowdown in professional and business services, wholesale and retail trade, construction and finance. The sectors combined to create 14,700 jobs in 1H, falling to 8,300 in. Job growth in accommodation and food services accelerated in to an annual rate of 3,600, up 800 from the 1H rate of 2,800 jobs. Forecast RED anticipate payroll growth between 22,700 (1.9%) and 23,100 (1.9%) in 20. Rate -3% In 20, RED forecast job growth between 15,000 (1.) and 24,000 (2.) with a point estimate of 19,000 (1.). RED expect payroll growth between 15,000 (1.) and 26,000 (2.1%) in 2008, with a point estimate of 21,000 (1.7%). - 99 00 01 02 03 04 05 RANK: 25 th out of 50 20 EMPLOYMENT GROWTH RATE OUTLOOK: Small Decrease RED CAPTIAL Research

SUBMARKET TRENDS Submarket Effective Rent Physical Vacancy 05 Change 05 Change Arvada / Broomfield $736 $738 0.3% 10. 7.3% -270 bps Westminster $688 $695 1. 8.8% 8.3% -50 bps North Glenn / Thornton $713 $738 3.5% 9.5% 8.1% -140 bps Golden / Wheat Ridge $705 $684-3. 8.1% 8. 10 bps Denver-North $1,9 $1,119 3.7% 8.3% 9.7% 140 bps Denver-Northeast $740 $761 2.8% 10. 9.3% -110 bps Lakewood-North $688 $7 2.8% 8. 6. -220 bps Denver-Central $800 $837 4. 7. 7.9% 30 bps Aurora-North $569 $592 4. 8.1% 7. -50 bps Lakewood-South $778 $785 0.9% 6.3% 6.3% 0 bps Denver-South $644 $658 2. 4.8% 5. 40 bps Denver-Southeast $714 $710-0. 7. 7.9% 30 bps Littleton $719 $723 0. 4.8% 6. 180 bps Englewood / Sheridan $7 $708 0.3% 6.9% 5.9% -100 bps Denver-Far SE $671 $674 0. 6.9% 8. 110 bps Arapahoe County $1,0 $1,013 0. 9.1% 9.1% 0 bps Aurora-Central-Southwest $653 $659 0.9% 9. 7.7% -130 bps Aurora-Central-Southeast $612 $617 0.8% 7.3% 6.1% -120 bps Aurora-South $798 $793-0. 8.1% 8.5% 40 bps Denver-Downtown $928 $917-1. 7. 7. 20 bps Douglas County $935 $948 1. 11.8% 11. -80 bps Metro $742 $752 1.3% 8. 7.8% -40 bps SUPPLY TRENDS Completions totaled 846 units in 2005, a 0.5% increase in apartment inventories. Taking into account condo conversions, the metro inventory increased only 0. between 2004 and 2005. Reis project the delivery of 1,967 units in 20, 8 of which were delivered in the first three quarters. The remaining units are slated for completion in the Aurora South submarket. In 20, Reis anticipate 1,777 unit completions, representing a 1.1% increase in apartment stock. The largest gainers will be the Lakewood South (570), Denver Northeast (308), Aurora South (276) and Denver North (240) submarkets. 20 SUPPLY TREND OUTLOOK: Small Increase Apartment Realty Advisors identify 1,759 units under construction and 912 units in five proposed developments. Units 10,000 8,000 6,000 4,000 2,000 0 Completions and Absorption Source: Reis, Inc Completions Absorption 02 03 04 05 f f Daniel J. Hogan Director of Research djhogan@redcapitalgroup.com 614-857-1416 RED CAPITAL GROUP Two Miranova Place Columbus, OH 43215 www.redcapitalgroup.com 800_837_5100 William T. Hinga Business Development wthinga@redcapitalgroup.com 614-857-1499 Columbus, OH_Boston, MA_Bozeman, MT_Fort Worth, TX Fredericksburg, TX_Jupiter, FL_Nashville, TN_Newport Beach,CA 20 RED CAPITAL GROUP (8/9/) Market Overview is a publication of RED CAPTIAL GROUP. If you are interested in other metro areas we cover or would like to read about the research methodology we apply in our reports, please visit us at www.redcapitalgroup.com/research.