Trust News - 2011

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Third Quarter 2011:

IN THE THIRD QUARTER, MEPT ACQUIRED 200 WEST MADISON, A 928,040 SQUARE FOOT, CLASS A OFFICE BUILDING IN CHICAGO’S WEST LOOP NEIGHBORHOOD, FOR A TOTAL PRICE OF $217.5 MILLION. The acquisition helps MEPT achieve its strategic objective of increasing the Fund’s allocation to central business district offi ce assets as it reduces its suburban offi ce weighting. Th e 45-story building has excellent access to public transportation; is a short walk to restaurants, shopping and hotels; has award winning lobby and building renovations; and has earned Leadership in Energy & Environmental Design (LEED) Silver certifi cation from the U.S. Green Building Council. Demand for offi ce space in Chicago has been led by companies relocating to and expanding in downtown Chicago, and MEPT expects this trend will continue. Th e building is 88 percent leased to a diverse base of approximately 70 tenants including law fi rms, fi nancial services groups, a design school, and other service-oriented businesses. MEPT plans to solidify the building’s competitive position by completing certain capital improvements and modernizations. Th e transaction was the tenth largest offi ce transaction in the U.S. in the third quarter, according to Real Capital Analytics.

IN SEPTEMBER, MEPT ACQUIRED PENN MAR SHOPPING CENTER FOR A GROSS PURCHASE PRICE OF $60.2 MILLION. Penn Mar Shopping Center, a 387,028 square foot grocery-anchored center, is located in a densely populated submarket of Washington, D.C., which has solid demographics. Th e retail asset is 95 percent leased to a mix of discount and convenience retailers. Anchored by Shoppers Food & Pharmacy, Penn Mar Shopping Center’s other retailers include Burlington Coat Factory, Dollar Tree, Staples, Party City and Petco, which all attract a consistent fl ow of value-oriented shoppers. Th e MEPT management team expects that consumer demand for necessity goods will continue to drive sales growth at grocery-anchored, neighborhood centers such as Penn Mar. Th e acquisition advances MEPT’s strategic objective to increase its retail allocation.

MEPT ACQUIRED ENSO PEARL DISTRICT IN PORTLAND, OREGON DURING THE QUARTER FOR A GROSS PURCHASE PRICE OF $55.5 MILLION. Th e acquisition of Enso Pearl District furthers MEPT’s strategic plan to acquire transit-oriented, multi-family assets in urban, infi ll locations that are attractive to the “Echo Boom” population. Enso Pearl District’s unit mix is weighted to studio and one-bedroom units, which fi ts well with this demographic. Additionally, the property has proximity to mass transit, cultural attractions, and retail/lifestyle centers. Th e 95 percent leased property was built in 2010 and currently has 152 units with approved plans to add eight additional units at the ground level.

MEPT IS ON TRACK TO ACHIEVE ITS 2011 DISPOSITION TARGET OF $400–$500 MILLION IN TOTAL NET PROCEEDS. Year-to-date, through September 30, 2011, MEPT has received $332.6 million in net proceeds from the sale of one hotel, four offi ce assets, four industrial properties, two land assets, and a partnership interest—in addition to the payoff of a mezzanine loan. In the third quarter, MEPT nearly doubled the sale proceeds from the fi rst six months, receiving its share of proceeds totaling $208.1 million from six transactions: the mezzanine loan payoff at 200 Fift h Avenue; 5901 College Boulevard in Kansas City; KS, 35/13 Crossing in Minneapolis, MN; 1800 Arch Street in Philadelphia, PA; and the partial sale of the remaining building in the Kirkland Flex offi ce park in Seattle, WA. MEPT has several other assets on the market for sale this year and expects to close additional dispositions before year-end.

MEPT RANKED 1ST IN AMERICAS AND 5TH GLOBALLY FOR SUSTAINABILITY AND ENVIRONMENTAL PERFORMANCE IN COMMERCIAL REAL ESTATE

GRESB Report Awards MEPT “Green Star” Status

MEPT, one of the largest open-end core private real estate equity funds in the U.S., earned the top spot on the Global Real Estate Sustainability Benchmark (GRESB) Foundation's survey of real estate funds in the Americas. Additionally, MEPT ranked #5 on the GRESB's "Global Top Ten" list, according to the survey, which measures the social and environmental performance of listed and private property funds around the world. MEPT was the only U.S. fund ranked in the Global Top Ten.

The GRESB Foundation, an initiative of some of the world's largest institutional investors, gathered data from 340 respondents globally to create a science-based sustainability benchmark. Respondents represented close to US$1 trillion in commercial real estate assets or 35% of the global real estate market.

After submitting extensive data and information on its $5.1 billion portfolio, MEPT was awarded top rankings both in the Americas and globally based on the Fund's score on more than 50 metrics of environmental and social performance. The report identifies MEPT as earning a "Green Star", a fund with "an integrated organizational approach towards measurement and management of environmental key performance indicators" resulting in a reduction of resource consumption and innovation in measures beyond energy efficiency. Only 65 of the 340 respondents were ranked "Green Stars."

"To see the Fund's sustainability efforts recognized through the results of this extensive global survey is very gratifying for MEPT and its investors," stated David Antonelli, Executive Vice President and MEPT Portfolio Manager at Bentall Kennedy, MEPT's real estate advisor. "Since its inception in 1982, MEPT has been a leader in identifying and successfully integrating environmental, social and governance principles into its investment strategy. Now, more than ever, we firmly believe that the ability to execute a responsible investment strategy is critical to the long-term success of the Fund."

The GRESB Foundation provides a tool for institutional investors to assess real estate funds on their environmental and governance performance which the Foundation believes helps investors fulfill their fiduciary responsibility. The industry-led initiative has the goal to enhance shareholder value by increasing transparency in environmental and social practices in the property sector.

"The commercial real estate sector is poised to move towards full integration of environmental management in daily operations with great opportunities lying ahead," says Dr. Nils Kok, executive director of the GRESB Foundation. "Our benchmark puts the environmental performance of fund managers in perspective and provides investors with a tool for engaging with the property sector."

For further information, including list of participating companies and funds and their scores, and to download the report, visit the GRESB Foundation website at www.gresb.com.

About the GRESB Foundation: The Global Real Estate Sustainability Benchmark (GRESB) Foundation, an initiative of some of the world’s largest institutional investors, leading academics and industry bodies, provides a science-based sustainability benchmark for commercial property portfolios; a tool with which institutional investors can start a dialogue on social and environmental issues with their real estate managers. The Teachers Retirement System of Texas, the Paramount Group, the National Association of Real Estate Investment Trusts (NAREIT) and Ceres are active members of the Foundation.

Second Quarter 2011:

IN THE SECOND QUARTER, MEPT COMMITTED $102 MILLION FOR THE DEVELOPMENT OF SIXTH AND LENORA, A MULTI-FAMILY PROJECT IN SEATTLE. Sixth & Lenora is a joint venture with Canada Pension Plan Investment Board (CPPIB). MEPT had this site under control for many years and closely monitored the Seattle market for signs that demand for apartments warranted new construction. With an anticipated increase in renters, conditions now support development. The planned two-tower, 654-unit project has access to public transit, retail and entertainment. In addition, the property is within walking distance of major employers, including Amazon. com and the Gates Foundation. The project will seek to achieve U.S. Green Building Council Leadership in Energy and Environmental Design (LEED) Silver certification. Consistent with the Fund’s strategic plan, the investment will further increase MEPT’s allocation to the multi-family sector.

MEPT COMMITTED $40.8 MILLION TO DEVELOP MILESTONE BUSINESS PARK V, A BUILD-TO-SUIT OFFICE PROJECT IN THE WASHINGTON, D.C. MARKET. A subsidiary of the Boeing Company will lease the majority of Milestone V. A Groundbreaking Ceremony was held in June to mark the start of construction of the 162,876 square foot office building. MEPT acquired Milestone Business Park, a 45-acre site with two existing buildings, in 2004 and completed the construction of Milestone IV in 2010. Milestone V will seek to achieve LEED-Silver certification, and construction, expected to be completed in the fall of 2012, will create more than 300 “green” jobs.

IN MAY, MEPT ACQUIRED THE SHOPPING USA PORTFOLIO FOR $130 MILLION. The portfolio consists of 10 grocery-anchored retail centers, totaling 842,255 square feet and built between 1996 and 2001. Located in Atlanta, Austin, Miami, Orlando, and Tampa, the centers serve established demographic areas. At the time of acquisition, the portfolio was 93 percent leased, with prime national and regional grocers anchoring each center and 120 additional in-line necessitygoods/ service retailers. The acquisition of the Shopping USA Portfolio fulfills two of MEPT’s strategic goals by increasing the Fund’s allocation to the retail sector and adding to the Fund’s weighting to the South region of the U.S. With its high occupancy and minimal near-term rollover, the Shopping USA Portfolio is expected to contribute stable income to the Fund.

DURING THE QUARTER, MEPT SOLD BALDWIN PARK IN LOS ANGELES FOR GROSS PROCEEDS OF $8.2 MILLION. A fully-leased, 156,679 square foot, three building asset, Baldwin Park was acquired by MEPT in 2003 as part of a 17-asset industrial portfolio. The strategy for this portfolio of assets was to position and sell each asset individually, maximizing the sale price MEPT could obtain. Baldwin Park was sold to Harricci, LLC, owner of Exxel Outdoors, a manufacturer and distributor of outdoor gear, who will use the property for its operations. Consolidated, MEPT achieved an 8.5 percent IRR on the entire portfolio which was sold asset by asset.

First Quarter 2011:

DURING THE QUARTER, MEPT PURCHASED WESTWOOD VILLAGE IN SEATTLE FOR A GROSS PURCHASE PRICE OF $78.7 MILLION. The complex transaction included the assumption of debt as well as a seller requirement to purchase another retail asset. On behalf of MEPT, Bentall Kennedy (real estate advisor to MEPT) renegotiated the loan terms prior to purchase which lowered the rate and extended the term, and successfully sold the related asset prior to closing on Westwood Village, as that asset was not a fit with MEPT’s investment strategy. Anchored by grocer QFC, Westwood Village is a well-designed community retail center with convenient parking and is 96.2 percent leased to a diversified tenant roster. The center sits on a 19.9-acre site with 12 buildings totaling 306,038 square feet that were initially constructed in 1964 and redeveloped between 2001 to 2005. This acquisition furthers MEPT’s goal of increasing the Fund’s retail allocation and improving operating income.

IN MARCH, MEPT ACQUIRED 1900 CLARK ROAD FOR $26.5 MILLION. The single-story, 613,137 square foot industrial building is located in the Baltimore market and is within five miles of Interstate 95. Built in 1998 and expanded in 2010, the building will contribute stable income to MEPT since it is 100 percent leased to Sun Products Corporation under a long-term lease. Sun Products is the core operating unit of Spotless Holding Corp which is known for its brands in the laundry and dish care market including Wisk, All, Sunlight and Snuggle. Sun Products has a manufacturing facility in the Baltimore area and will distribute products from 1900 Clark Road to retailers throughout the East Coast. The bulk distribution facility with 104 parking spaces, 163 trailer spaces and 100 loading docks is in close proximity to Baltimore-Washington International Airport and the Ports of Baltimore and Wilmington.

AT THE START OF THE QUARTER, MEPT SOLD THE MADISON HOTEL AND ADJACENT OFFICE BUILDING IN WASHINGTON, D.C. FOR TOTAL GROSS PROCEEDS OF $123.0 MILLION. Strong demand for hotel properties in major U.S. markets drove appreciation in the asset in late 2009 and 2010. With near-term capital improvements needed at the hotel to maintain and improve occupancy, and concerns for tenant rollover in the office building, MEPT decided to realize the value recovery, not make any additional investments and put the assets on the market in mid-2010. After considering offers, MEPT sold the hotel and office building to Jamestown Properties, a U.S. based buyer of core, income producing properties in January 2011.

MEPT COMPLETED THE SALE OF A 50,511 SQUARE FOOT BUILDING IN THE KIRKLAND FLEX INDUSTRIAL PARK IN SEATTLE FOR GROSS PROCEEDS OF $4.3 MILLION DURING THE QUARTER. MEPT targeted this asset for sale as part of MEPT’s strategy to decrease its industrial property type allocation and to dispose of smaller, older assets. In addition, MEPT anticipated little near-term opportunity for the asset due to weak rental rate growth in the submarket. MEPT has been actively selling buildings in the park to local users and owners and sold Building W to a local investor to whom MEPT had previously sold two other buildings in the park.