Investment Funds - AZNORTH Capital - Private Investment Management Group

Investment Fund

AZNORTH Capital Equity Investment Fund, L.L.C., is a long-term fund that anticipates capitalizing on real-estate investment opportunities made available by prevailing market conditions. We concentrate our efforts and resources mostly in smaller markets based in the Southwest, primarily Northern Arizona, and create and develop real-estate based long-term value for our investors.

The Manager, Capital Resources, is a real estate investment management company based in Northern Arizona that invests in and manages real estate for high net worth and institutional investors. Capital Resources investment strategies focus on smaller market investment opportunities, mainly in Northern Arizona. Through its affiliated entities, Capital Resources has the ability to control an asset at every stage of the investment cycle, therefore managing risk more effectively and ultimately generating strong risk-adjusted rates of return for investors. The management of Capital Resources has historically proven effective in structuring and executing complex deals that require a strong understanding of the local markets in which they operate and an extensive network of reliable partners. In addition, Capital Resources has adequate infrastructure to assume the management of and ensure the completion of, projects where the developers are unable to execute the strategic purpose of a given joint venture.

AZNORTH Development Inc., an affiliate of Capital Resources, has a full range of real estate development capabilities and has acquired, developed, managed and sold residential, multi-family and commercial real estate in Northern Arizona since 1993. Development Inc. estimates that over the past nine years it has averaged in excess of 20% in income and asset appreciation on properties and assets under management. This statistic is important because Development Inc. is in the business of long-term investing and understands that real estate investment requires long-term planning and patience in order to truly take advantage of the benefits that investing in real estate provides. For more information on the existing projects of Development Inc. visit www.aznorth.com.

Market Environment The states in which the Company anticipates operating, particularly Arizona, continue to have sustained residential growth. Arizona is one of the fastest growing states in the country. Since the 1950's, Arizona has ranked within the top five nationally in population, employment and personal income growth and many surveys predict that Arizona and the Phoenix-metro markets will continue to lead the U.S. in these demographics for the foreseeable future.

Generally speaking, over the past several years real estate markets, particularly residential markets, have experienced significant distress related in part to reduced credit availability, declining prices and increased mortgage delinquencies, defaults and foreclosures. As a result, unprecedented levels of distressed properties are or will be available. We believe that the severity of the residential real estate crisis has created opportunities for experienced development companies because many participants in the distressed residential real estate market do not have the staff, infrastructure or financial resources to handle the volume of foreclosure properties. This has exacerbated price volatility as owners of distressed real estate inventory, including surplus homebuilder inventory, bank owned real estate and mortgage company foreclosures, cannot afford to keep the properties on their books and struggle to find ways to unload these properties at favorable prices.

Despite the general distressed conditions of real estate markets, particularly residential markets, we believe that smaller residential markets have remained relatively stable and have not experienced the dramatic price fluctuations that have destabilized other larger markets nationwide. This is due, in part, to the fact that during real estate booms most smaller markets do not experience volatile and dramatic growth when compared to larger counterparts. Accordingly, Capital Resources will continue focusing its primary energies to identify development projects in smaller markets, particularly Northern Arizona, that fit within the Company's objectives. However, as opportunities present themselves in larger markets, particularly as they come to the attention of the Company throughout the Manager's existing or future network, the Company will also look to capitalize on deflated values in larger markets. Our strategy in larger markets is to focus on shorter project/investment timelines.