The success of the investment cannot be completely judged until the property is sold. Therefore, it is imperative that the exit strategy be clearly defined initially and monitored and updated as conditions change so the disposition opportunity can be maximized.

The exit strategy is based on the recognition that real estate investment is cyclical and investment performance can be maximized by taking advantage of timing. The obvious goal is to buy at the bottom and sell at the top. Our research and experience has shown that the cycle does not move in a smooth linear fashion, but instead, it moves in a "stair step" manner. In periods of oversupply, rents and occupancies will be flat or decreasing. As supply diminishes, rents and values will rise rapidly until new construction (supply) hits it peak, and then rents and values become flat or decrease and the cycle repeats. Therefore, it is optimal to sell at the peak of construction just prior to over-building. The length of these cycles can range from three to seven years. The property quality, physical age and financing is targeted for a holding period of usually one to two market cycles depending on the depth of the cycle of the specific market.

Kensington's Principals and staff have significant experience in the disposition of investment real estate. There are six major components of our marketing and disposition process:

1. Interview, select, and monitor the real estate firm to act as listing broker, if one is required. The proper negotiation of a listing agreement is an important function with which we are experienced.

2. Conduct a financial analysis to determine the price at which a property should be listed for sale. We go through the same type of analysis as if we were buying the property. When we use a listing broker we conduct our own analysis and compare it with the analysis conducted by the broker.

3. Coordinate the preparation of a formal sales package that is sent to potential buyers. It contains pictures, aerial photographs, property descriptions, market descriptions, financial analysis, and expected returns. In those cases where brokers are involved, we supervise the preparation of these packages. Also included is Internet-based marketing.

4. Evaluate offers and select the most appropriate potential buyer.

5. Negotiate with the buyer.

6. Close the transaction.

We are always "in the market" on both the debt and equity sides of the business. As a result, we know "when to hold 'em and we know when to fold 'em" (and at what price).