Below we have provided some of the more frequently asked questions and answers relating to Clarke Real Estate’s various limited partnership offerings.  Please see an investment program’s prospectus for more detailed information related to a particular offering. 

Q:  Who will select the investment a Clarke Real Estate-sponsored program makes?

A:  Each Clarke Real Estate-sponsored limited partnership is externally managed by a general partner. The general partner undertakes to use its best efforts to present the investment program with investment opportunities that are consistent with its investment policies and objectives.  

Q: What is the experience of Clarke Real Estate’s key personnel?

A:  Clarke Real Estate’s senior management team have significant experience acquiring, financing, developing and managing both commercial real estate with over 25 years of experience.

Q:  In what types of property do you invest?

A:  Clarke Real Estate-sponsored limited partnership will invest in multifamily that are already well-positioned and producing rental income as well as opportunistic or value-added properties in various stages of development, redevelopment or in need of repositioning.  Depending upon the program’s investment goals, a fund may target a specific property class or may focus on existing “core” properties.  Please refer to an investment program’s prospectus for information regarding the program’s investment focus.

Q:  Do you invest in anything other than real property?

A:  Clarke Real Estate-sponsored REITs will only invest in real property 

Q:  What specific criteria are used in the selection of potential investments?

A:  In selecting properties, relevant real property and financial factors, including condition and location of the property, its income-producing capacity and the prospects for its long-term appreciation are considered. Acquisitions or originations of loans are evaluated for the quality of income, and the quality of the borrower and the security for the loan or the nature and possibility of the acquisition of the underlying real estate asset. Investments in other real estate-related securities will adhere to similar principles. In addition, Clarke Real Estate consider the impact of each investment as it relates to our portfolio as a whole.

Q:  How will you determine whether tenants have the appropriate creditworthiness for each building? 

A:  The investment programs intend to use credit rating and tenant screening services to the extent available to determine creditworthiness of potential tenants and any personal guarantor or corporate guarantor of each potential tenant to the extent available.  The investment programs will review the reports produced by these services together with relevant financial and other data collected from these parties before consummating a lease transaction. 

Q:  What steps do you take to make sure you invest in environmentally compliant property?

A:  For acquisitions located in the United States, Clarke Real Estate-sponsored programs will always obtain a Phase I environmental assessment of each property purchase and for each property secured by a mortgage loan. A Phase I environmental site assessment consists of a visual survey of the building and the property in an attempt to identify areas of potential environmental concern, visually observing the neighboring properties to asses surface conditions or activities that may have an adverse environmental impact of the property, and contacting local governmental agency personnel and performing a regulatory agency file search in an attempt to determine any known environmental concerns in the immediate vicinity of the property.  A Phase I environmental site assessment does not generally include any sampling or testing of soil, groundwater or building materials from the property.  With respect to international investments, Clarke Real Estate-sponsored programs will seek to obtain an environmental assessment that is customary in the location where the property is being acquired. 

Q:  How does each Clarke Real Estate-sponsored limited partnerships provide for improvement and other working capital needs and maintain the viability of your asset if cash flow is decreased?

A:  During the acquisition process, the progam will establish estimates for working capital needs throughout the life of each acquired asset.  For each property acquisition, upon the closing of the investment in the property, all or a portion of these amounts are reserved from initial capital and placed in an interest-bearing (typically money market) account as reserve for working capital for use during the life of the asset.  Additional amounts for these purposes may be reserved or otherwise retained from the cash flow of the asset or from general cash flow.  Working capital reserves are adjusted through continual re-projection and annual budgeting processes.  If depleted during the course of the asset’s holding period, unless otherwise budgeted, the reserve requirement may be replenished from excess cash flow to provide for the financial endurance of the asset.  Working capital reserves are typically utilized for non-operating expenses such as improvements, leasing commissions, and major capital expenditures.  In addition, any reserves established, a lender may require escrow of working capital reserves in excess of established reserves. 

Q: What real estate fundamentals should I consider before investing?

A: Investors should understand some of the fundamental factors that influence the value of real estate holdings. One critical factor is how well balanced the supply of new properties is with the demand for new space. When construction adds new space into a market more rapidly than it can be absorbed, building vacancy rates increase, rents can weaken, and property values decline, thereby depressing net asset values.

In a strengthening economy, growth in employment, capital investment, and household spending increase the demand for new office buildings, apartments, industrial facilities, and retail stores. However, the economy is not always equally strong in all geographic regions, and economic growth may not increase the demand for all property types. Thus, investors should compare the types of properties and the locations that make up a portfolio prior to investing. 

Q: What factors contribute to an investment program’s earnings?

A: The most immediate sources of revenue growth are higher rates of building occupancy and increasing rents. As long as the demand for new properties remains well balanced with the available supply, market rents tend to rise as the economy expands. Occupancy in under-utilized buildings can be increased when skilled owners upgrade facilities, enhance building services, and more effectively market properties to new types of tenants. Property acquisition and development programs also can create growth opportunities.

Q: For whom is an investment in a Clarke Real Estate program suitable?

A: Investors seeking to generate current income and explore opportunities for capital appreciation may find real estate investments such as Limited partnerships and REITs an attractive investment choice.  In addition, investors looking to diversify their investment portfolios beyond other stocks and bonds are attracted to the unique characteristics of non-listed REITs. Other typical investors in Limited partnerships and REITs are institutions, such as pension funds, endowment funds and foundations, insurance companies, bank trust departments, and mutual funds. Investors who require immediate liquidity or guaranteed income are cautioned that an investment in a Clarke Real Estate program may not meet those needs.

Q:  Is there any minimum investment required?

A:  Yes.  With respect to programs structured as Limited Partnerships Structure. $25,000 is the minimum.

Q:  May I make an investment through my IRA, SEP, or other tax-deferred account?

A:  Yes.  You may make an investment through your individual retirement account (IRA), a simplified employee pension (SEP) plan or other tax-deferred account.  In making these investment decisions, you should, at a minimum, consider (1) whether the investment is in accordance with the documents and instruments governing such IRA, plan or other account, (2) whether the investment satisfies the fiduciary requirements associated with such IRA, plan or other account, (3) whether the investment will generate unrelated business taxable income (UBTI) to such IRA, plan or other account, (4) whether there is sufficient liquidity for such investment under such IRA, plan or other account, (5) the need to value the assets of such IRA, plan or other account annually or more frequently, and (6) whether such investment would constitute a prohibited transaction under applicable law.

Q:  Have you arranged a custodian for investments made through IRA, SEP, or other tax-deferred accounts?

A:  Yes.  The Entrust Group Company has agreed to serve as custodian for investments made through IRA, SEP and certain other tax-deferred accounts.  Clarke Real Estate may make similar arrangement for investors with other custodians.   

Q:  What are your exit strategies?

A:  Depending upon then prevailing market conditions, Clarke Real Estate-sponsored programs will consider the process of listing or liquidation within the anticipated holding period after the termination of its primary offering. If the program does not begin the process of liquidating its asset or listing its shares within that time period, unless such offering is extended by a majority of the board of directors and a majority of the independent directors, the investment program will hold a unit holders meeting to vote on a proposal for an orderly liquidation, which proposal will include information regarding appraisals of the program’s portfolio. 

Q: How will I be notified of how my Limited Partnership investment is doing?

A:  You will receive periodic updates on the performance of your investment in a Clarke Real Estate-sponsored program, including an annual Form 1099.  Information contained in these materials and other information concerning the business of each fund and its affiliates will be available on the following Web Site: www.clarkefunds.com.

Q:  Who can help answer my questions?

A:  If you have any questions about the offering of a specific fund or if you would like to receive a copy of an investment program’s prospectus, please contact your registered representative or contact:

Clarke Real Estate Group

75 North Main Street

East Longmeadow, MA 01028

(860) 385-1234