PORTFOLIO PERFORMANCE

Since its founding in 2004, JHI and its affiliates have purchased over 1.5 million square feet of industrial and office space for an aggregate purchase price of over $50 million. To-date, all properties have been located in the greater Atlanta MSA, and, predominantly, in its northern quadrant. All properties were purchased with the intention of a holding period of over seven years. However, with the significant influx of capital into all sectors of the commercial real estate industry, four of these properties were brought to market early to take advantage of material capitalization rate compression that existed through 2007. A fifth was sold in 2009. The aggregate internal rate of return to investors from investing in all five properties is in excess of 31%.

Since 2005, Jay Young has partnered with JHI on most of the subsequent JHI investments as a joint partner. Previous to this, Mr. Young had spent 20 years in commercial leasing and investment. Prior to partnering with JHI, Mr. Young had sponsored seven separate transactions aggregating 367,000 square feet of industrial and office space, for an aggregate purchase price of $7,750,000 requiring $1,720,000 of equity. Five of these properties have been sold resulting in an aggregate IRR to investors of in excess of 30%.

Properties suitable for purchase fit into one of two categories. (1) Core, income producing properties, where 75% of the total return over the holding period is anticipated to come from current income distributions. (2) Value-add properties, where only 25% or less of the total return is anticipated to come from current income distributions and 75%+ is anticipated to come from appreciation upon sale.

Of the seven investments made since 2004 which were underwritten as core, income producing acquisitions, the annual cash flow distribution has averaged 8.35%. Notable to this discussion, especially in the face of unprecedented volatility in the stock and bond markets, is that this distribution rate has held steady since the first acquisition in late 2004.