Investment Fund Presentation

1

Opportunity Partners Fund II, LP

“Current opportunity for value creation in the distressed Twin Cities real estate

market”

2


Opportunity

Expertise

Opportunity PartnersFund II, LP

Strategy

3


Opportunity

Expertise


Strategy

4

US Economy Today

Stock market has rebounded some, but remains volatile

Unemployment elevated Home foreclosures remain high Home prices remain depressed Commercial real estate values weak Financing for real estate (especially

commercial) difficult

S&P 500 Index

5

59%

57%

31%

S&P/Case-Shiller Home Price Index

6

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10100

120

140

160

180

200

MSPUS

MSP 29%

US 29%

Source: Standard & Poor’s

US

32%

MSP 36%

Moodys/REAL Commercial Property Price Index (CPPI)

7

39%

8

2009 Holders of Commercial Mortgage Loans

Commercial Banks

Life Companies

S&L

Other

CMBS Issuers

GSE

42%28%

10%

9%7%

4%

Source: Mortgage Bankers Association

9

CMBS Issuance 2000-2010

$0

$50

$100

$150

$200

$250

CM

BS

Issu

an

ce (

$ i

n b

illi

on

s)

Source: Mortgage Bankers Association

* As of 07/23/2010

CRE Loans at US Banks

10

Gro

ss L

oan

s (

$ i

n m

illi

on

s)

Source: Federal Reserve

Oct-

08

Dec-0

8

Feb-0

9

Apr-0

9

Jun-

09

Aug-0

9

Oct-

09

Dec-0

9

Feb-1

0

Apr-1

0

Jun-

101450000

1500000

1550000

1600000

1650000

1700000

1750000

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Opportunity

As real estate has historically been a very leveraged asset class, this lack of credit is greatly impacting real estate values

The combination of the challenging economy and credit market turmoil is creating huge and continuing downward pressure on real estate values (all types)

History suggests that this distressed market will provide many opportunities to make excellent buys on real estate

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Opportunity

Expertise


Strategy

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Cycle of Emotions

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Strategy

Make opportunistic buys of real estate and real estate related assets

Focus on assets in which our group has particular knowledge and/or expertise

Attention to downside protection Remain patient – majority of value created on

the buy

70 73 76 79 82 85 88 91 94 97 0 3 6 90

100

200

300

400

500

General Partner Pro-jection

Bank Failures, 1970-2010

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S&L Crisis:2,935 Bank Failures

Annual U.S. Bank Failures

2009:140

Banks

2010:*Current -110

Est. - 172

Source: FDIC

* As of 08/20/2010

70

71

72

73

74

75

76

77

78

79

80

81

82

83

84

85

86

87

88

89

90

91

92

93

94

95

96

97

98

99

0 1 2 3 4 5 6 7 8 9 10

$0

$100

$200

$300

$400

General Partner Projection

Total Assets

To

tal A

ss

ets

($

in b

illio

ns

)

*As of 08/20/2010

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Bank Failures, 1970-2010

S&L Crisis:$924B Total Assets

2008:$372B

1989:$164B

Annual U.S. Bank Failures – Total Assets

Source: FDIC

Se-ries1

$0

$100,000

$200,000

$300,000

$400,000

$500,000

Total Assets ($M)

48 50 47 50 53 61 65 76 90 117171

252

305

416552

702775

# of Problem Banks

Banks

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Total Number of Problem FDIC-Insured Institutions, with Assets ($M)

Source: FDIC Quarterly Banking Profile

Banks

18

4Q 2

004

2Q 2

005

4Q 2

005

2Q 2

006

4Q 2

006

2Q 2

007

4Q 2

007

2Q 2

008

4Q 2

008

2Q 2

009

4Q 2

009

0

1

2

3

4

5

Non Performing Loans / Loans (%) All Banks

Source: FDIC

Banks

19

4Q 2

004

2Q 2

005

4Q 2

005

2Q 2

006

4Q 2

006

2Q 2

007

4Q 2

007

2Q 2

008

4Q 2

008

2Q 2

009

4Q 2

009

0.00

50.00

100.00

150.00

200.00

250.00

300.00

Reserves / Non Performing Assets (%)All Banks

Source: FDIC

Banks

20

Banks

21

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Strategy

Much of real estate we intend to buy is owned by (or mortgaged to) regional and community banks

We will utilize Strong bank relationships Proprietary bank research Government bank programs – loss sharing

agreements

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Strategy - Example

Skyscape

Minneapolis, MN

Investment ~$11.6MM

72 units purchased

50% below 2006 development cost

55% below 2007 prices

Expecting a 25% unlevered return (net profit of ~$7 million)

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Strategy - Example

Skyscape

Minneapolis, MN

Patience – 2 year pursuit

Relationships – negotiated deal

Downside protection – 50% below replacement cost

Area of expertise

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Strategy

Asset Types Residential real estate Commercial real estate Land assets Performing and non-performing loans secured

by the above Purchase Formats

Negotiated Auction

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Strategy

Assets acquired to be aggressively managed during hold period (2-4 years)

Assets sold as markets allow

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Opportunity

Expertise


Strategy

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General Partner

Kim A. Culp, President, The Excelsior GroupKim A. Culp is founder and President of the Excelsior Group. He was formerly Regional Chairman of Marshall & Ilsley Bank. Mr. Culp was an original investor, Vice Chairman and President of Century Bank prior to its sale to Marshall & Ilsley Bank of Milwaukee. Previously, he was co-owner, President and Chief Executive Officer of The Shelard Group, a Twin Cities-based commercial real estate services company that provided leasing, brokerage and property management services. Mr. Culp currently has office, multi-family and industrial real estate holdings. Mr. Culp holds a B.A. from the University of St. John’s and currently serves on the Board of Directors of Ryan Companies, Cote Family Companies, and Catholic Charities.

Theodore G. Glasrud, Jr., Chief Manager, Opportunity AdvisorsTheodore G. Glasrud, Jr. is the Chief Manager of Opportunity Advisors, and currently devotes the majority of his time to this concern. Mr. Glasrud is also President of Glasrud Financial Corporation, a Twin Cities-based financial services firm he founded in 2002. Mr. Glasrud’s career includes 17 years of financial services experience including several years of commercial real estate lending experience for Twin Cities-based lenders. Mr. Glasrud has specific experience as a buyer and seller of RTC loan paper in the early 1990s and has particular knowledge of the Twin Cities loan participation market. Mr. Glasrud Jr. holds a B.S. and an M.B.A from Duke University.

Kirt Woodhouse, President, Sterling GroupKirt Woodhouse is President of Sterling Group, a Minneapolis-based real estate investment company. Prior to co-founding Sterling Group, he was North Central Regional Partner for Trammell Crow Company and served on its Management Board. Mr. Woodhouse holds a B.S. degree in Economics from Dartmouth College.

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General Partner

Stanford Baratz, President, Baratz Financial, Inc.Stan Baratz is the founder and President of Baratz Financial, Inc., a Minneapolis-based company specializing in the private placement of debt and equity for growing Midwestern companies. Prior to founding Baratz Financial, he served as a partner and executive vice president of one of Minnesota's largest full-service real estate firms, Welsh Companies. During his tenure at Welsh Companies, the company grew to become the largest property management firm in the state with over 16 million sq. ft. of industrial, office, retail, and multifamily properties under management. Baratz received his MBA from the University of Minnesota's Carlson School of Management and his B.A. from American University.

Christopher K. Culp, Principal, The Excelsior GroupChris Culp is a Principal and founding partner of The Excelsior Group. With Excelsior, Mr. Culp has been responsible for the disposition of multiple investment real estate properties totaling approximately $110 million. He has provided financing and acquisition services for more than $50 million of investment real estate assets. Additionally, he has managed a 1,700 unit multifamily real estate portfolio as well as other office and retail properties. Mr. Culp has also been active in acquiring and repositioning multifamily real estate. Previously, Mr. Culp was a Commercial Banking Associate at US Bank. Mr. Culp has a bachelor’s degree in finance from Villanova University.

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General Partner

More than 100 years collectively of real estate experience

Bank ownership and management Impressive track record with Fund I Proven ability to remain patient Proven ability to close deals

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Fund I Investments

Skyscape

Minneapolis, MN

Investment ~$11.6MM

72 units purchased

50% below 2006 development cost

55% below 2007 prices

Expecting a 25% unlevered return

SummercrestBrooklyn Park, MNInvestment ~$2.3MM18 units purchased25% below 2004 development cost45% below 2007 pricesExpecting a 15% levered return

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Fund I Investments

Residential 1st mortgage land loan

Bloomington, MN

Investment ~$1.25MM

Performing

< 50% LTV at today’s values

Expecting a 19% unlevered return

SFH Foreclosure PortfolioMinneapolis, MNInvestment ~$750kBuy and fix-up for ~$80k averageSell at ~$120k averageExpecting a 30% unlevered return

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Fund I Returns

Overall, Fund I expects to deliver a 16% IRR to limited partners Consistent with original expectation With limited downside risk In spite of very limited leverage

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Fund I Experience

Fund II investors will benefit from Fund I experience Proven investment methodology Established relationships Market research Market credibility Deal pipeline

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Opportunity

Expertise

StrategyOpportunity Partners

Fund II, LP

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Fund II

Traditional limited partnership structure Up to $25MM in total equity commitments Five (5) year term Investment period of 24 months Leverage not greater than 67% Market fees cover costs 5% initial capital call, then called as needed GP members will collectively invest 5% of

fund capital (minimum $1 million)

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Fund II

Return allocation LPs receive return of capital invested; then LPs receive 10% preferred return; then GP receives “catch up”; then Split 80% LP, 20% GP to 15% IRR to LPs After LPs receive 15% IRR, profit split is

70% LP, 30% GP LP target return is 18-20%

Allocation Example

Assume: $1,000,000 purchase Sell in (1) year for $1,250,000 Profit is $250,000

Distribution: $1,000,000 to LPs (return of capital) $100,000 to LPs (preferred return) $25,000 to GP (“catch up”) $62,500 to LPs/GP in 80/20 ratio $62,500 to LPs/GP in 70/30 ratio

Profit to LPs: $193,750 Profit to GP: $56,250 38

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Summary

Opportunity

Expertise

Strategy

…Using our deep relationships, experience and proven track record

to select the best opportunities!

…To purchase at historic lows…

Huge opportunity now exists…

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Summary

Opportunity

Expertise


Strategy

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“Current opportunity for value creation in the distressed Twin Cities real estate

market”

Sample Opportunity

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Sample Opportunity

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Sample Opportunity

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Investment Fund Presentation

Documents

Transcript of Investment Fund Presentation