Strategy and Objectives

The Partnership’s investment objective (the “Investment Objective”) is to acquire the Real Estate Portfolio (i) to achieve the potential for capital appreciation over the period of the Partnership, and (ii) on a quarterly basis with the first distribution to take effect six (6) months from the Final Closing to distribute any excess cash flow earned from rentals exceeding operating, property management and upgrade expenses from the properties in Real Estate Portfolio during the Hold Period. Based on estimates of other maintenance, rental, taxes and other costs, such quarterly distributions on average will be equal to a target range of six percent (6%) per annum. There is no assurance that actual distributions will be lesser or greater than this target amount.

The General Partner believes that despite recent weakness of the market and the large number of foreclosures, that the fundamentals of the Phoenix marketplace to drive value recovery over the longer period are intact, including the following attributes:

• Phoenix is the fifth largest city in the United States and continues to grow at a rapid rate. Between 1990 and 2005, Phoenix’s population grew by 47.7 percent.
• The greater Phoenix area is a U.S. $50 billion marketplace driven by the technology sector and to a lesser extent the aviation, travel, medical and financial services sectors. World-leading companies such as Intel, Avnet, Motorola, AlliedSignal, Honeywell and Boeing Company have chosen Phoenix for their corporate and regional headquarters.
• – Industry giants such as STMicroelectronics, American Express, Phelps Dodge, Sumitomo Sitix, Prudential, Charles Schwab and the Mayo Clinic have major operations in Phoenix.

Phoenix is a premier retirement and vacation destination with more than 300 sun-filled days a year and an average temperature of 73 degrees.

• Phoenix is known for its prominent recreational facilities. There are more than 250 golf courses in the Phoenix area that are open 365 days a year.

The General Partner feels that the rental market will be stable and attractive in the target markets based on the following market attributes:

• Many market participants who have found home ownership to be too expensive due to tightening lending criteria are being forced out of homes into the rental markets, as well as serving as an entry barrier for would-be home owners who cannot qualify for financing under tighter criteria and are staying in the rental pool.
• Financial difficulties for builders to complete new residences has lowered the supply of new homes for purchase

Prior to the sale of the properties in the Real Estate Portfolio, the Unit holder may receive periodic quarterly distributions from any amount of cash from rentals exceeding operating, property management and upgrade expenses from the Real Estate Portfolio, and not sufficient to be invested in additional properties. It is anticipated that such distributions, if any, will be characterized as a return of capital to the Unit holders and may exceed six percent (6%) of the original Unit price in any annual period.

Sample properties are included and detailed in the body of the Offering Memorandum for illustration purposes only as having some of the attributes of the target Properties of the Real Estate Portfolio. The properties profiled will NOT be part of the Real Estate Portfolio and there are no assurances that the General Partner will be able to identify properties with similar attributes.

Investment Criteria

The investment strategy and criteria used by the General Partner and the Investment Manager of the Fund (the “Investment Strategy and Criteria”) to meet the Investment Objective is as follows:

• Convert net proceeds of Subscriptions in Canadian Dollars to United States Dollars to purchase single-family homes in the Phoenix greater city area in the State of Arizona. Details, demographics and other real estate statistics related to these markets are detailed under “Business of the Partnership.”
• Purchase existing single-family homes in the purchase price range of U.S. $50,000-$200,000. The General Partner may also purchase existing multi-unit developments on an opportunistic basis if the price per door is no greater than the U.S. $50,000-$200,000 range (collectively the “Properties”). If opportunities exist slightly outside these ranges, the General Partner and the Investment Manager may make such an investment if opportunistic at their discretion.
• There is no limitation on which communities identified within the Greater Phoenix area where the Properties will be purchased.
• Other than purchase price range and potential, purchase criteria will include, without limitation: (i) proximity to major highways and infrastructure; (ii) attractive rental attributes; and (iii) availability and amount of Properties for sale in the area.
• The General Partner will use its local expertise and status as an investment that will make multiple purchases to secure the best possible prices for the Properties and the most favorable financing terms. Many of the Properties will be acquired as a result of foreclosures, where members of the General Partner have significant experience.
• Although the target hold period for the Properties is five to seven (5-7) years, there is no restriction based on the goal of maximizing capital appreciation over the period to sell certain Properties when they have increased in value prior to the end of the period and the proceeds reinvested in additional Properties, so long as such reinvestment is made within a six (6) month period; otherwise the proceeds will be distributed to the Limited Partners on the next available quarterly distribution date (see “Distributions”).
• Leverage in the range of fifty percent to sixty five percent (50%-65%) on a loan-to-value basis will be typical upon purchase of the Properties at the most favorable and flexible first mortgage rate or in the alternative the Real Estate Portfolio itself may be leveraged. The loans or, if applicable, first mortgages can be borrowed in Canadian Dollars or United States Dollars at any point at the discretion of the General Partner and the Investment Manager.
• Upon purchase, in addition to purchase commissions, the Properties will undergo basic improvements including cleaning and basic upgrades that on average will represent no more than five percent (5%) of the initial purchase price.
• Average taxes and maintenance costs will be less than three percent (3%) per property.
• The properties will be rented to third parties at an average anticipated monthly rent of purchase price multiplied by 0.08 (8%) divided by twelve (12) months.
• The Partnership will acquire short hold property investments (“Short Hold Property Investments”) on a selective basis for a small percentage of the assets. The Partnership aims to acquire Short Hold Property Investments in the U.S. $65,000-$75,000 range, upgrade and repair the properties with expenses of up to U.S. $5,000-$15,000, and sell the properties for an average target return on invested capital of 25% with a target interim hold period (the “Interim Hold Period”) of three to nine (3-9) months. On an opportunistic basis, these properties may be rented to third parties during the Interim Hold Period.

Manager

Accilent Capital Management Inc. (“Accilent”) is the Investment Manager of the Fund, whose role is to ensure that the Investment Objectives, Investment Strategy and Criteria of the Fund are adhered to, and to help select and monitor and manage the activities of the General Partner and Special Advisor in selecting and selling the Real Estate Portfolio.

Accilent is registered as an investment counselor and portfolio manager (ICPM), limited market dealer (LMD) and commodities trading manager by the Ontario Securities Commission and is licensed as a commodities trading adviser (CTA) under the National Futures Association that governs the United States of America.

Accilent has significant experience in developing, marketing and managing multiple investment styles across several funds, including assisting in dealing with approximately $65 million of real estate oriented funds, developing and managing a series of flow-through resource funds, managing a series of funds that invest in physical inventory of investment grade wines with a United Kingdom-based sub-advisor who is the leader in the asset class, assisting in the development of a commodities futures index, acting as the investment advisor to various funds including to the Canadian series of a Swiss-based fund of hedge funds and  being investment advisor and director of a private equity fund aimed at micro-cap funds where there is an income and growth investment objective. In conjunction with other co-managers, Accilent manages approximately $45 million in assets.

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