2012 Management Discussion

Hi Everyone:

I write with a Quick Update on Clarameda Fund.  By now you should all have received your K1s.  We have filed taxes at the Partnership level.

I'm happy to report that we are issuing a Special Distribution based on 2012 results.  This is being transmitted via EFT (or check) to your accounts.  The Special Distribution will add 0.25% to last years return.  It will be pro-rated based on when Funds came into the Partnership.  

Just a few quick comments on the Partnership's Finances for FY 2012, ending Dec. 31, 2012:

Note - at the Management Level (GAAP would account for things like Accumulated Depreciation, etc).  

Balance Sheet

Assets:  

• 8 Properties

• About $925K in Book Value

• About $5K in Cash/Receivables

• $930K Total

Liabilities:

• $60K in 3.25% Notes 

• $18K due to Sandalstone (working capital line)

• $2K in Security Deposits (Oak properties only)

• $80K Total Liabilities

Shareholder Equity

• $850K in Partner Capital

Net Income

Net Rent:  $84,462

Less Expenses

Taxes:  $9,135

Insurance:  $3,783

Operations:  $41,620 (includes up-front Repairs, one-time Acquisition Fees, etc.)

Operating Expenses:  $54,538

Net Operating Income:  $29,924  

Interest:  $2,241

Depreciation:  $21,703

Net Income:  $5,980

Distributions Paid

• $40,913

• More than Net Income Why?

  • Addback Depreciation

  • One-Time Costs Expensed vs Capitalized

• Going forward, On-going Operations support current Distribution levels plus growth

  • The usual caveats of not having excess vacancy, evictions, repairs, etc...

  • So far, we are on plan - one vacancy at Back Woods in Vegas lingering, some repair expenses in Oakland

Partner Taxes

• Very low for 2012 - Net Income of $5,980 vs $40,913 in Distributions 

• Going Forward - Depreciation will still help, Slowing of Acquisitions will hurt

Thanks for everyone's continued support,  this is an Accounting Update, the Q1 2013 Update will be more market focused - and in that I will discuss the rapid rise in market values - we are doing quite well!   

Cheers,

Biren