Sequoia Real Estate Partners

The second quarter witnessed con1nued and signicant progress in the Pacic Opportuni1es Value Fund I, as we have completed the sale of one asset and near the sale of a second, both single-family homes we acquired and renovated. Moreover, residen1al rental market fundamentals con1nue to improve, just as we predicted. In fact, according to REIS, a well regarded real estate data collec1on rm, second quarter average rents increased in all 82 markets they track, while the na1on's apartment vacancy rate fell to 4.7% (the lowest level seen since 2001). The good news is that we expect these favorable market fundamentals to persist due to con1nued 1ght credit, market uncertainty (Europe, elec1ons, taxes, employment, etc.), and a persistence in the trends we have discussed in prior updates (e.g., high transporta1on costs, need for labor mobility, excessive student debt). We con1nue to see signicant opportuni1es in both the single family and apartment markets. Since the vast majority of this funds capital has been deployed, no new assets were acquired during the quarter, but we con1nue to evaluate and aggressively pursue select opportuni1es for other large investors. We will soon announce the opening of PVOF II and invite you to par1cipate. We are very pleased with the Fund's performance to date, and are excited by the possibili1es that lie ahead. Our two core assets - the apartment buildings - con1nue to achieve increasing rents, net opera1ng income, and value. Con1nued unit turns and renova1ons should drive results higher s1ll. With the sale of two Fund assets, we have demonstrated the prudence of our strategy, and will likely make a modest cash distribu1on this quarter. We will keep you posted in that regard. Details of the Fund assets are as follows: APARTMENT ASSETS 318 S. Commonwealth Avenue, Los Angeles 90020 Three stories, 24 units (18 singles, 6, one bedroom, one bath) Purchase price: $1.329 million ($53K per unit) Acquired November 2011 Equity deployed $400,000 Year built: 1927 (rent-controlled) Construc1on: Brick Es1mated Value increase to date approximately $650,000

During the rst quarter, we renovated and re-leased one unit, while we are currently renova1ng two addi1onal units. Although we are able to drive substan1ally higher rents with each unit that is vacated, renovated, and re-leased (thirty percent increase in rents, on average), because the property is subject to rent control, we cannot turn all 24 units immediately, but must wait for units to become vacant. However, we will have reposi1oned over 20 percent of the building within nine months. As a result of our eorts, we have increased the net opera1ng income of the property signicantly to an annualized $140,000 or so (based on recent results), which would likely place the value of the property in excess of $2 million. At some point, if we are unable to generate enough unit turn naturally, we may oer "cash for keys", essen1ally a monetary incen1ve for those tenants with leases signicantly below market to voluntarily vacate. At this point, we will likely market the project for sale some1me in 2013, once we turn and increase rents on addi1onal units.

245 N. Alvarado Avenue, Los Angeles 90026 Three stories, 60 units (36, one bedroom, one bathroom; 19, two bedroom, two bathroom; ve two bedroom + loi, one bathroom; and, one non-conforming) Purchase price: $7.525 million ($125K/unit) Equity deployed $2.7 million Renova1on costs to date: approximately $500,000 Acquired November 2010 Year built: 1990 (not rent-controlled) Construc1on: wood-frame stucco Es1mated Value increase to date approximately $2.0 million

We have now renovated well over half of the building units (38), including eight in the rst quarter, while one addi1onal unit is currently undergoing renova1ons. Projected 2012 net opera1ng income for the

building approximates $560,000 (annualizing recent results), likely transla1ng to a property value above $9.0 million, and perhaps as high as $10 million (depending on cap rate applied). Although we originally thought we might market the property for the sale in the rst half of this year, I believe the marke1ng and sale will be a second half 2012 or rst half 2013 event. There are a couple of minor common area improvements that are s1ll needed, and we would like to drive net opera1ng income even higher before sale.

SINGLE-FAMILY RESIDENCES/OTHER ASSETS 4161 Mandalay Drive, Los Angeles 90063 - no change Single-Family home Four bedrooms, three bathrooms Acquired March 2011 Purchase price of $212,000 Renova1on costs = approximately $45,000 Currently leased for $2,250 per month Es1mated fair market value = $325,000

908 Frigate Avenue, Wilmington 90744 - no change Single-Family Home Six bedrooms, three bathrooms Acquired August 2011 Purchase price of $220,000 Renova1on costs = approximately $11,000 Currently leased for $2,600 per month Es1mated fair market value = $356,000

3118 Palo Verde Avenue, Long Beach 90808 Single-family home Three bedrooms, two bathrooms (1,186 sq. feet) Acquired September 2011 Purchase price of $317,000 Renova1on costs = approximately $35,000 We will be lis1ng this property for sale shortly, and an1cipate that the gross sales proceeds will approximate $440,000, resul1ng in a net prot of $72,000, an ROI of 21%, and an IRR of approximately 23%.

3137 W. 108th Street, Los Angeles, CA 90303 Single-family home Two-bedrooms, one bathroom (969 sq. feet) Acquired November 2011 Cost of Acquisi1on $162,000 Renova1on costs = $36,000 Other holding costs: $5,000 Net Selling Price= $414,000 Net Prot= $32,000 ROI of 15.8% Pre-tax IRR exceeding 21%.