Investment Strategy:	Multi-family Repositioning
	Class 'A' Multi-family Development

Stonehill-PRM acquired a 172-unit, Class 'A' quality, garden-style multi-family property and the adjacent Phase II land located in Killeen, Texas for a purchase price of $9.1 million. Stonehill-PRM is developing the Phase II land, adding an additional 128 units. This strategy will result in better operating efficiencies, upside potential and an enhanced exit strategy.

Based upon the allocated purchase price for the existing units, ($8.45 million), Stonehill-PRM is purchasing Phase I for an 8.25% cap rate due to the above market rate first mortgage (HUD) that encumbers the property. This cap rate is significantly higher than the cap rate that could be achieved by this asset if it could be delivered free and clear of financing to the purchaser. The price for the Phase I units equates to $49,127 per unit. This valuation translates into a +/- $8,000 per unit savings affording a good 'asset buy' for a Class 'A' property. The HUD mortgage that ownership is assuming is pre-payable without penalty 26 months from the date of closing.

The Phase II development is being financed with a regional bank.

Stonehill-PRM intends to develop and stabilize the Phase II units and sell the 300-unit complex within 24-30 months from the initial closing.

The local apartment supply/demand characteristics support this strategy. NOI growth for this property has exceeded 8% during the last 18 months of operation. The macro-economic conditions for the Temple-Killeen MSA are favorable. Killeen is home to Fort Hood, the largest military installation in the free world. Fort Hood has consistently benefited from consolidation trends created by BRAC. The property has enjoyed 97-98% occupancy with no concessions. There is no new product in the pipeline. A low land basis for the Phase II development (128 units) creates an excellent opportunity to create value.

The institutional equity investor is a Dallas-based investment management company. The projected internal rate of return to institutional investor is 27.21% over a 37-month holding period. The projected average annual return to all of the equity partners from cash flow is 8.42%.