1. Real Estate Funds explained
Mike Zlotnik | | | Aug 2019

2. Disclaimer
This presentation and its contents are not an attempt to sell securities, nor to sell anything at all, nor provide legal, nor tax accounting, nor any other advice.
The presenter is a private lending and real estate fund management business, and the information represented herein are purely for educational purposes and represents the opinions of the presented. Prior to making any investment or legal decision you should seek professional opinions from a licensed attorney, and a financial advisor.
Investments in Tempo Opportunity Fund LLC are offered via the Private Placement Memorandum (PPM) to accredited investors only. Please request and review the above mention PPM before making any decisions. Consult with your Investment professional before making any decisions.
Past results do not guarantee future performance.
Information provided is approximate in nature and for educational purposes only.

3. Who is Big Mike? Married, 4 kids and a cat
CEO of TF Management Group LLC
Co-Manager of TF Investment Fund II LLC was founded in 2014.
Co-Manager Tempo Opportunity Fund LLC was founded in 2017.
Retired Software executive ( career)
Real Estate Investor since 2000
Part Time Investor
Full Time fund Manager since 2009

4. Why consider Real Estate Funds? Roller Coaster Ride vs Smooth Sailing

5. Diversified portfolio building blocks
Funds
Syndications
Partnerships
Direct ownership

6. Diversification elements / dimensions
Type
Self-Storage, Multifamily, Office, Industrial, Residential
Strategy
Value-add vs. Stabilized
Income vs. Growth
Duration
Short Term vs. Long Term
Location
Sponsor / Fund Manager / Operator
Equity / Debt

7. Public vs. Private funds
Publicly traded REITs (Real Estate Investment Trust)
Privately offered via PPMs (Private Placement Memorandum)

8. Fund Objective and Investment Philosophy
Wall Street terms
Conservative Income
Moderate Growth & Income
Aggressive Growth
Main Street terms
Investment grade Cashflow
Speculative grade Growth

9. Investment Quadrants Quadrant 1 Investment Grade : CASHFLOW focused
Good down side protection
Low / moderate risk
Good initial Cashflow
e.g. 1st lien perming notes, moderately leverage equity deals, funds like TOF
Quadrant 2
Investment Grade: GROWTH focused
No/Limited initial cashflow
e.g. 1st lien NPN, light-moderate value-add projects
Quadrant 3
Speculative Grade (Risk is high) – CASHFLOW focused
Limited down side protection
Strong initial Cashflow
e.g. 2nd lien notes, highly leveraged equity deals
Quadrant 4
Speculative Grade (Risk is high): GROWTH focused
e.g. Development, Redevelopment, Land Speculation

10. Focus on Risk Adjusted Return
Risk Adjusted Return = Projected Return – Loss Reserves
Note: Many funds and syndications state projected returns, but they don’t mention “Risk Adjusted Return”. You should always lower your expectations by the level of risk in a given investment – that will give you your target Risk Adjusted Return.

11. Diversified vs. Focused Funds
Diversified funds:
Broad set of investment strategies, various asset types, geographies, mix of debt and equity investments, etc.
Focused Funds:
Single strategy, e.g. Multifamily, Office Space, Non-Performing Notes, Self- Storage, Retail, Hard Money Lending on Fix-n-flips, Gas stations real estate holdings
Certain limited geography, e.g. single State or City
Strong Value-add vs. Performing

12. Tempo Opportunity Fund example (mid-June)
Debt Investments:
Loans outstanding: 64
Equity Investments:
Projects outstanding: 22
Multifamily 5
Self-Storage 4
Shopping Centers 6
Office 1
Residential 1
Corporate Debt 2
Funds 1
Distressed Debt 1

13. Open-ended vs. Close-ended funds
Open-ended funds, a.k.a. “Evergreen” funds
Raise capital ongoing basis, typically Quarterly (but could be monthly, etc.)
Re-invest capital coming from asset sales or repaid notes
“Mark to market” value of assets for the purpose of subscriptions / redemptions
Distribute “Realized gains” or Realized Income on Quarterly basis (same as subscriptions/redemptions)
Close-ended funds
Raise capital during a specific period of time, e.g. 12 months
Purchase assets / make investments
Run those assets through their life cycle and liquidate them
Distribute income and return capital at various times throughout life of the fund
Fund has typically projected exit date(s)

14. Fund structure examples
Fund example 1:
Preferred Return: 8%
Annual Mgnt fee: 2%
Performance Split (above Pref): 60/40 (investors/sponsor)
Fund example 2:
Preferred Return: 7%
Annual Mgnt fee: 1.5%
Performance Split (above Pref): 70/30 (investors/sponsor)
Fund example 3:
Preferred Return: 0%
Annual Mgnt fee: %
Performance Split (above Pref): 80/20 (investors/sponsor)

15. Tempo Opportunity Fund LLC – structure
Target Return = 10-13% NET to investors
Preferred return = 7%
Management fees = 2%
Performance split (above the 7% Pref):
A Units: 80/20 ($1,000,000+ invested)
B Units: 70/30 ($500,000 - $999,999 invested)
C Units: 60/40 ($100,000 - $499,999 invested)
Distributions: Quarterly
All pointes and fees collected on hard money loans go to the Fund, not Manager
Manager does not charge the Fund any Asset origination fees

16. How Funds derive income and growth
Income (Realized gains or Realized Returns)
Points + interest + fees on hard money loans
Cash distributions on equity projects
Any other current income
Note: Income is distributable on quarterly basis
Growth (Unrealized gains / Appreciation)
Forced Appreciation on Value-Add projects (e.g. Multifamily apartment renovations, Self- Storage development or redevelopment)
Natural Appreciation based on local and broader market conditions
Total return = Income (Realized gains) + Growth (Unrealized gains)
Note: Ultimately unrealized gains convert to realized gains on sale, and this produces Income.

17. Long-Term vs. Short-Term investing
Long Term investing
Short Term investing

18. Fund Summary and Performance, TOF example
Fund Type
Growth & Income
Fund Focus
Value-Add equity investments and
Fix-n-Flip hard-money loans
Preferred return 7%
Total return target:
10-13%
Average annual since inception (April 2017)
Total return / Realized return
A Units: 13.76% / 8.57%
B Units: 10.59% / 8.59%
C Units: 12.43% / 8.13%
Trailing 12 months
(as of 4/1/19)
A Units: 10.89% / 8.89%
B Units: 10.41% / 8.64%
C Units: 9.92% / 8.41%
Q1 2019
(annualized)
A Units: 14.29% / 9.48%
B Units: 13.43% / 9.21%
C Units: 12.54% / 8.92%
Fund Capital (NAV as of 1/1/19)
Fund Capital (projected 4/1/19)
$13,032,000
$15,232,000
Distributions
Quarterly (reinvestments allowed)

19. Tempo Opportunity Fund LLC - overview
Strong Cashflow and value-add Equity Appreciation
Mix of Hard Money loans and Equity deals with strong Pref, and forced appreciation play.
Network / Relationship driven deal-flow
Mastermind Group relationships
Diversification (Equity/Debt/Location/Deal Type/etc)
Investor favored Performance Split with no manager-only fees (all points/fees go into the split)
Better Risk Adjusted Returns, projected 10-13%

20. Should you invest in Individual Deal(s) vs. Fund(s)
Risk Concentration, High Volatility
Diversification, Low Volatility
Low Liquidity
Better Liquidity (depends of type of fund)
Actual Returns very often are worse than Pro Forma Returns
Returns could be better & more predictable (if fund structure supports it)
More Active involvement
Completely Passive Investment
Idle Funds between investments
Funds are always working
IRA investors - Risk of UBIT on debt leveraged deals
IRA Investors - No UBIT if there is no debt leverage of the fund level
Must Have the right amount of $$
Flexible (add / reinvest distributions)

21. Text to get more info Get Info on the Tempo Opportunity Fund LLC
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