Royal Field will continue to pursue opportunistic real estate investments in and around New York City, with particular focus on Harlem and, to a lesser degree, on other gentrifying neighborhoods. Within these markets, Royal Field expects to focus on creating a portfolio that has a mix of rental properties and development work. In general, Royal Field makes an investment only if it believes that it can significantly change the income potential of a target investment. This can come through a number of forms including:

1. Retenanting

Investment properties such as those in which Royal Field has previously invested are valued primarily on the basis of their rent rolls. Increasing the rents therefore increases the value of a property. In New York City - and Harlem in particular - many buildings are subject to the City's Rent Stabilization Law. This law constrains - but does not eliminate - an owner's ability to remove low-paying tenants, and by doing so an owner can significantly increase a building's value.

2. Repositioning

Another means of increasing the income potential of a real estate investment is by repositioning it. Examples of this include converting a rental property into a condominium and changing a commercial property into a residential one.

3. Development & Redevelopment

Royal Field sees tremendous opportunities in development deals in Harlem, be it ground-up development or a gut renovation of an existing property, many lots in the neighborhood are severely underutilized.

Implementation

1. Market and Submarket Expertise

Royal Field has been involved in the Harlem market since 2002. During this time, it has experienced first-hand the sweeping changes that have occurred in the neighborhood. In particular, it understands the rental market and the potential value of properties that it considers for investment.

One example of this kind of expertise is the investment in the properties at 2252 Seventh Avenue and 200 West 133rd Street. Mr. Bisgaard has come to know and has had discussions with the owner of the buildings immediately between the two comprising the RF 2252 ACP investment. These buildings not owned by Royal Field are comparable in dimensions and exterior appearance to the RF 2252 ACP properties. From these discussions Mr. Bisgaard has learned that the units in the Royal Field properties rent for approximately 20% more per month than those in the neighboring buildings. These higher rents are a result of better marketing and superior renovations.

The second and third Royal Field investments also highlight the company's ability to spot value and react accordingly. In the current market, deals that are "fairly" valued are difficult to come by, and it is critical to move swiftly on opportunities that present themselves. To that end, when Royal Field located the properties on Edgecombe Avenue and West 133rd Street it acted immediately and secured the rights to these properties. Royal Field could have almost immediately capitalized on its acquisitions in both instances: it was offered $700,000 for the rights to the contract on the Edgecombe properties and it was offered roughly 25% more for the properties on West 133rd Street shortly after acquiring them.

2. Focus on Downside Protection

Up until the present, Royal Field has focused on acquiring rental properties where the rent roll could be increased to raise the asset's value, but where the investment would still be profitable even without a dramatic increase in the rent roll. Going forward, in addition to continue investing in rental properties, Royal Field intends to pursue opportunities in development and/or redevelopment, but only to the extent that such projects are not of an overly speculative nature.

3. Operational Expertise

Royal Field is an extremely active and involved manager of its investments. Generally, a member of the Royal Field team visits the properties three or more times a week during periods in which major work is being done. This type of involvement allows Royal Field to be aware of problems before they become major ones and to spot opportunities to increase revenues and add value on an immediate basis.