1. Mining a Market Segment Patrick G. O’Healy, SIOR, CRE O’Healy Commercial Real Estate Services Los Angeles, CA 562-492-9234pohealy@ohealycommercial.com

2. SIOR Brokers Always Innovating!

3. A Rich Target Market  Property Owner Characteristics Age:70+ Age:70+ Owned property 20 years or longer Owned property 20 years or longer Likely fully depreciated Likely fully depreciated Possibly management intensive Possibly management intensive

4. A Rich Target Market  Relatives Co-Owners  Divergent objectives  Older partners risk adverse  Younger partners seeking: Greater return Greater return Willing to accept more risk Willing to accept more risk More leverage More leverage Expanded asset base Expanded asset base

5. Depreciation Laws  All real estate 1981 to 3-16-84, 15 yrs  3-16-84 to 5-8-85, 18 yrs  5-8-85 to 12-31-86, 19 yrs.  5-8-85 to 12-31-86, 19 yrs.  Residential real estate (MACRS) 1-1-87 to current, 27.5 yrs.  Non residential real estate (MACRS) 1- 1-87 to 5-12-93, 31.5 yrs, 5-13-93 to current 39 yrs.

6. Depreciation Calculation By Purchase Date  All real estate purchased prior to 1986 is fully depreciated  Residential real estate (MACRS) purchased after 1987 has depreciation left  Non residential real estate (MACRS) purchased after 1987 has depreciation left

7. The Approach  Sell the Asset  Divide the proceeds  Older partners Un-leveraged investment Un-leveraged investment Charitable alternatives Charitable alternatives Seeking maximum wealth transfer Seeking maximum wealth transfer Seeking predictable after tax income Seeking predictable after tax income

8. The Approach  Younger Partners New leveraged investment New leveraged investment New depreciation schedule New depreciation schedule Likely doubling of net after tax income Likely doubling of net after tax income Shelter makes net after tax cash flow go upShelter makes net after tax cash flow go up

9. The Plan  Property owner target list  Develop alternative structures  Develop hypothetical outcomes  Tailor packages to seller specifics Leverage for younger partners Leverage for younger partners Safety and charitable alternatives for older partners Safety and charitable alternatives for older partners  Develop upleg alternatives for prospects  Linkage with charitable entity Preparation for targets and knowledge of possibilities Preparation for targets and knowledge of possibilities

10. Differentiation From Competition  Targeting specific segments  Developed plan  Understanding the target market  Satisfying market needs  Showing new alternatives

11. Two Pathways to Success  Linkage with the charity Sale of the asset for the owner Sale of the asset for the owner Sale of the donated asset for the charity Sale of the donated asset for the charity Referrals to other donors Referrals to other donors  Sale to younger partners Immediate transaction Immediate transaction New relationships developed New relationships developed Ongoing transactions and referrals Ongoing transactions and referrals