Kensington prides itself on the thoroughness and flexibility of its reporting systems. It has been used as a standard of excellence by our clients. The accounting policies and procedures which we have established as outlined below are consistently applied to both the portfolio and property levels of accounting. In order to enhance productivity, efficiency and investment performance, we have made a major resource commitment to high-level technological systems. These systems are utilized in investment analysis, portfolio management, asset management, property management, client reporting (qualitative and quantitative), communications, cash management, and funds transfer.

Our computer system is fully networked with work stations on all employees' desks and at the property level in the case of apartments. The hardware and software includes the most up-to-date technology. Complete access allows the staff to communicate from home or anywhere in the world by use of personal or portable computers. The ultimate benefit of the system is increased productivity and better reporting for utilization in decision making, which translates into value added for the client through improved performance.

Property Level Accounting
In accordance with our Financial Reporting Requirements, the property manager is to report all accounting activity on a monthly basis by the 15th day following the month end, unless otherwise specified by the client timeline. These reports and their supporting schedules are reviewed by the financial manager or other accounting staff of Kensington for errors, omissions, variances, misstatements, and compliance with the established requirements, policies, and procedures. The financial manager is responsible for communicating any findings to the asset manager, who also reviews the reports. Additional documentation, clarification, omitted statements, or restated/adjusted reports may be requested as needed.

In accordance with our Budget Reporting Requirements, the property manager submits its annual budget to sponsorship no later than 75 days prior to the budget year. The annual budget is prepared utilizing the same method of accounting used for financial reporting purposes. The approved budget is used as a basis of comparison with actual year-to-date financial and accounting data. The property level reports include a detailed variance analysis.

Properties managed by our Marquette Management affiliate use the Yardi Property Management and Maintenance Management software systems. These systems allow for the best accounting and property level tracking in the industry and all of the information can be "rolled up" to the asset management level at any time.

Asset Management Level Accounting
Accounting data derived from the property level reports and supporting schedules are used by Kensington as the basis for producing the asset management level accounting. The assets are accounted for on both an individual property and consolidated portfolio basis using the Yardi Asset Management Software system. The quarterly asset management reports are produced in compliance with our Reporting Policies and Procedures and submitted to the client within the required period of time, typically 30 to 45 days following the quarter end.

The individual property and consolidated portfolio reports are reviewed by senior management on a monthly basis. This involves a review of accounting variances from budgeted expectations, evaluation of property manager performance, review of portfolio returns, verification of compliance with client reporting and accounting requirements, and recommendations for further action, if necessary, in accordance with the asset management plan.

Yardi Asset Management Software System
Kensington has made a significant investment in what we believe is the best property and asset management software system available at any price. Yardi has taken their experience with their DOS-based property management software which has been used by over 15,000 management companies, revised it for Microsoft Windows in the mid-1990's, and added a state-of-the-art asset management module. This product helps us maximize investment returns by enabling our asset managers to capture operational, financial and performance data. The programs process diverse information from operations to review and analyze, utilizing a relational database.

Some benefits of the Yardi System include:

• Open Relational Database - supporting unlimited user-defined data and attachable by third party tools
• Upload Ability for Summary Data from Third Party Property Management Systems
• Portfolio Performance Review - including full occupancy analysis and projections
• Performance Benchmarking - NCREIF, AIMR, and Time Weighted Capital analysis
• Corporate General Ledger - providing simultaneous cash and accrual accounting formats
• Forecasting and Proforma Capabilities - including Net Present Valuations at the lease level
• OLE Interface with Word and Excel
• Drill Down Detail Retrieval
• Custom Portfolio Reporting - ability to scan photos, maps, floor plans, site plans, etc. into the database for use in client reports

For more information on this software, please visit Yardi Systems, Inc.