Trust News - 2008

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Third Quarter 2008:

DURING THE QUARTER, MEPT EXECUTED A FORWARD COMMITMENT OF $120 MILLION TO PURCHASE, UPON COMPLETION IN 2011, ONE FRANKLIN-LE MERIDIEN, a planned 250-room, four-star hotel property in Boston. The hotel will be part of a 1.4 million square foot, mixed-use development that will incorporate the former historic Filenes Basement clothing store into space for retail, hotel, residential, and office. The hotel will be built to LEEDSilver standards. The project will provide important economic activity in Boston—the hotel construction is expected to create over 1.1 million job hours for members of the Building Trades. MEPT believes the investment in One Franklin will diversify the portfolio and provide an attractive return on investment since Boston hotel market fundamentals are some of the strongest in the country and barriers to entry are expected to remain very high.

IN SEPTEMBER, MEPT PURCHASED AN ADDITIONAL OWNERSHIP INTEREST IN ARBORETUM LAKES WEST FOR $1.7 MILLION. The purchase of the outstanding 5 percent interest brings the total MEPT ownership to 100 percent. Arboretum Lakes West is a Class A, 190,361 square foot, mid-rise suburban office building located in Chicago. MEPT currently has 29 other assets in which a minority partner holds a portion of the ownership. It is the Fund’s intention over the long-term to purchase these minority interests in order to maximize flexibility and enable the Fund to fully benefit from the value created by these assets.

AT THE END OF THE THIRD QUARTER, MEPT SOLD TWO ASSETS, RED HILL AND MAGNOLIA, AND COMPLETED A PARTIAL SALE OF ONE ASSET, STAFFORD/NELSON, FOR TOTAL GROSS PROCEEDS OF $21.3 MILLION. Red Hill, a 57,962 square foot industrial building in Los Angeles, was purchased by SEBCO, a Seattle-based REIT. Magnolia, a 40,164 square foot industrial asset in Phoenix, was purchased by a tenant, Midwest Medical Supply. These properties were sold after MEPT made improvements and fully leased the buildings, which allowed MEPT to maximize the value of the assets. Also in Los Angeles, MEPT sold the 50 percent leased A and B buildings at Stafford/Nelson to a local owner/user when it was determined that long-term leasing risk in a market with competitive, newer space was greater than the potential upside performance for these buildings.

Second Quarter 2008:

IN APRIL, MEPT COMMITTED $27.8 MILLION TO BURLINGTON 100, a Class A office building development in suburban Boston. The site is located in the Burlington Centre Office Park, a current MEPT asset, and near a regional mall, restaurants, and other tenant amenities. MEPT will seek LEED Silver certification for the three-story, 106,887 square foot building. Construction on the asset is set to begin in the third quarter after demolition of an existing structure on the site, and completion is scheduled for mid 2009.

DURING THE SECOND QUARTER, MEPT COMMITTED TO PURCHASE THE ARDEA FOR $145.3 MILLION. Ardea, a former condominium project in the final stages of development in Portland, OR, was negatively impacted by the for-sale housing downturn. MEPT was able to acquire the project at a discount to replacement cost and plans to reposition the property as a LEED Gold certified rental project. The development, a transit-oriented site with proximity to Portland’s MAX light-rail network, will have lower-floor units available for rent in August, with the remainder of the building ready for occupancy in December 2008. It will be comprised of two towers with 323 units, 15,947 square feet of retail and 396 underground parking spaces.

AT THE END OF THE SECOND QUARTER, MEPT COMMITTED TO A $165 MILLION MEZZANINE DEBT INVESTMENT to finance the redevelopment of 200 Fifth Avenue in New York City. The former International Toy Center, in the Madison Square Park/Flatiron district, is being redeveloped into a state-of-the-art, multi-tenant, LEEDCertified, Class A office building with ground level retail space. The 14-story building is 40 percent pre-leased and will have 762,221 square feet of office, 55,476 square feet of retail, and additional storage space. As a lender in this project, MEPT will retain certain rights to the repayment of capital at the end of the threeyear loan, and expects to earn an attractive return on investment. In the unlikely event of default, MEPT would have rights to foreclose on interests in the property ownership.

First Quarter 2008:

IN JANUARY, MEPT ACQUIRED RENO INDUSTRIAL CENTER LAND FOR $10.3 MILLION in Reno, Nevada. The 104 acres of developable land is located in the Tahoe Reno Industrial Center (TRIC), where MEPT acquired USA Parkway Distribution Center I and II in December 2007. MEPT purchased the land to serve as expansion space for tenants at USA Parkway Distribution Center and the site can accommodate almost two million square feet. The first phase of new construction is scheduled to begin in approximately 18 months, dependent on market conditions, with the construction of a 806,520 square foot distribution facility that will pursue LEED certification. MEPT believes this acquisition is a way to leverage the Fund’s other assets in the TRIC, an attractive distribution hub for companies trying to capitalize on the region’s low cost of doing business, favorable tax environment, and ready access to the Western United States.

MEPT ACQUIRED 20 NORTH CLARK STREET FOR $58.9 MILLION IN FEBRUARY. The 383,030 square foot office building is located in Chicago’s Central Loop submarket with easy access to multiple public transportation alternatives, including the elevated train, suburban and commuter rail lines, and numerous bus lines. The Chicago CBD remains one of the best-performing office markets in the country, with occupancy rates increasing by 2.7 percent in 2007 and rental rates increasing by 4.2 percent. Market fundamentals in the Central Loop submarket are strong as well. 20 North Clark Street, a 64-story building built in 1981, is 93 percent leased to 64 tenants. Upon closing the sale, MEPT began evaluating the building to position it to achieve LEED-EB (Leadership in Energy and Environmental Design for Existing Buildings), a national rating system for building owners to measure operations, improvements and maintenance, with the goal of maximizing operational efficiency while minimizing environmental impacts.