Disclosures Related to Strategies

Investment in Real Estate Generally. Real estate investments are subject to various risks, many of which are beyond the control of ASB, such as adverse changes in national or local economic and demographic conditions; local conditions (such as an oversupply of space or a reduction in demand for space); the quality and philosophy of management; competition based on rental rates; adverse changes in financial conditions of tenants, buyers and sellers of properties; quality of maintenance, insurance and management services; reduction or change in sources of debt or equity financing, including changes in interest rates; increases in real estate taxes and operating expenses, including energy prices; changes in law, regulations and governmental policies, including environmental laws, health and safety laws, zoning laws and governmental fiscal policies; potential liability under changing environmental and other laws; changes in the relative marketability of properties; cyclical over-building in property sectors; risks due to dependence on cash flow; risks and operating problems arising out of the presence of certain construction materials; structural or property latent defects; natural and unnatural disasters; acts of terrorism; uninsurable losses; condemnations; and others. Such risks could significantly impact the cost of operations, cash flow and results of operations, thereby leading to losses. No assurance exists that ASB can achieve its return objectives. Investments in existing entities (e.g., buying out a distressed partner or acquiring an interest in an entity that owns a real property) could also create risks of successor liability.

Development Competition. The development of undeveloped and/or partially developed properties is a highly competitive business. Success, therefore, will depend in part upon the ability of the ASB and its affiliates to select investments that will be competitive in their markets.

Risks of Leverage. The use of leverage will increase the exposure of investments to adverse economic factors, such as rising interest rates, economic downturns, or deteriorations in the condition of the investments or their respective markets. In the event an investment is unable to generate sufficient cash flow to meet debt service payments or there are other defaults under any loan documents underlying its indebtedness, the lender will be entitled to exercise the remedies specified under the loan documents, as well as its remedies under law. These remedies may include acceleration of the indebtedness and foreclosure on any collateral securing the loan. A lender seeking to enforce its claims may have recourse to a portfolio generally and not be limited to any particular investment, such as the asset giving rise to or securing the liability. Debt also may not be available on the terms and conditions and at the rates or in amounts that are consistent with the particular ASB investment strategy.

Debt Investment Risks. The value of debt investments, including construction, participating and other real estate-related loans (collectively, “Debt Investments”) and the ability to realize full repayment on a Debt Investment may be adversely affected by all of the factors that affect an investment. Risks of Debt Investments include (i) dependency for repayment on successful operation of the underlying property and tenant businesses operating therein; (ii) the fact that such loans are often non-recourse to the borrower; and (iii) amortization schedules that are often longer than the stated maturity and provide for balloon payments at stated maturity rather than periodic principal payments.
In addition, the market value of Debt Investments may be affected by changes in interest rates. Accordingly, in a period of declining interest rates, Debt

Investments without adequate call protection may benefit less than other fixed income securities due to accelerated prepayments. Interest rate changes may also affect a return on new investments. If there is a period of declining rates, the amounts becoming available for investment due to repayment of Debt Investments may be re-invested at lower rates than had been possible in prior investments. Increases in the interest rates on debt incurred in originating or acquiring investments may not be reflected in increased rates of return on the related investments, adversely affecting the return on those investments. Accordingly, interest rate changes may adversely affect the total return on investments.

Market Conditions. ASB’s strategy in some investments may be based, in part, upon the premise that real estate businesses and assets will be available for purchase at prices that ASB or its affiliate considers favorable. Further, a strategy for an investment may rely, in part, upon the continuation of existing market conditions (including, for example, supply and demand characteristics) or, in some circumstances, a local market recovery or improvement in market conditions over the projected holding period for the investments. No assurance can be given that real estate businesses and assets can be acquired or disposed of at favorable prices or that the market for such assets will either remain stable, or, as applicable, recover or improve, since this will depend, in part, upon events and factors outside the control of ASB.

Dependence on Property Managers. Although ASB will monitor the performance of investments, it will be the responsibility of unaffiliated property managers to manage the investments on a day-to-day basis. The results of operations, including the ability to make payments on any indebtedness, will depend to some degree on the ability of the property managers to operate investments on economically favorable terms. There can be no assurance that the management teams of property management firms will be able to operate each of the investments successfully. Moreover, the risks of dependence on property management firms are different by property type and by investment stage.

Any property manager may provide management services to properties owned by others that compete with one or more other ASB investments. As a result, such property manager may at times face conflicts of interest in the management of ASB investments managed by such property managers.

Inflation Risks. Increases in the rate of inflation may adversely affect net operating income from leases with stated rent increases or limits on the tenant’s obligation to pay its share of operating expenses, which could be lower than the increase in inflation at any given time. Inflation could also have an adverse effect on consumer spending, which may impact tenants’ sales and, with respect to those leases including percentage rent clauses, average rents.