Pembroke Capital Inc. - Structured Investment Solutions

The limited availability and high cost of debt and equity capital for commercial real estate has created a favorable supply-demand environment for investment. However, short-term and long term uncertainties in the capital markets make it difficult to underwrite exit strategies. Additionally, the economic downturn has decreased demand for space and lessened tenant credit-worthiness, increasing the risk inherent in real estate cash flows.

Pembroke Capital purchases loans and provides debt and equity to quality owner/operators of commercial properties. Through its emphasis on long-term structured investment, Pembroke is able to meet the challenges of the current environment, combining appreciation potential with the ability to endure extended periods of weakness in the economy and capital markets.

Pembroke invests in well-located, good quality office, industrial, retail and hospitality properties. The contraction in the conventional mortgage market resulting from the collapse of securitized lending has led to difficulty in financing most properties at a reasonable cost relative to the long term value of the assets. Pembroke's investment structures serve as alternatives and supplements to conventional mortgage financing.

Pembroke sources investments directly and through intermediaries focused on:

Monetization of unencumbered assets owned by public companies (REIT's or owner-users);

Discounted purchases or partial purchases of first mortgage loans to assist commercial real estate lenders meet portfolio management imperatives;

Co-investment with qualified investor/operators.

Pembroke offers a range of terms and pricing structures tailored to the risk characteristics of the investment and objectives of partners/sellers. Investments will be sized based upon an evaluation of the market value and replacement cost of existing improvements. Yields will reflect the short and long term stability of the income stream to be derived from the investments. Holding periods of 5 to 20 years will be considered. Investments will be structured to provide multiple recapitalization/exit opportunities during the holding period.

Utilizing a conservative valuation approach and structuring to maximize security of the invested capital, Pembroke expects to generate unleveraged internal rates of return in excess of 12%. Leverage may be employed to enhance these returns. Cash on cash returns will vary widely by investment but are expected to average more than 7% at inception with regular increases.

Investments will range from $3 million to $25 million.