jamestown 28, l.p. and subsidiaries (a limited partnership ... · (a limited partnership)...

JAMESTOWN 28, L.P. AND SUBSIDIARIES

(A LIMITED PARTNERSHIP)

CONSOLIDATED FINANCIAL STATEMENTS WITH

INDEPENDENT AUDITOR’S REPORT

DECEMBER 31, 2015


(A LIMITED PARTNERSHIP)

Table of Contents

Page

Independent Auditor’s Report

Consolidated Financial Statements:

Consolidated statement of net assets ....................................................................................................1

Consolidated schedule of investments ..................................................................................................2

Consolidated statement of operations ...................................................................................................3

Consolidated statement of changes in net assets ..................................................................................4

Consolidated statement of cash flows ...................................................................................................5

Notes to consolidated financial statements ..................................................................................... 6-25

INDEPENDENT AUDITOR’S REPORT

To the Partners of

JAMESTOWN 28, L.P. and subsidiaries

We have audited the accompanying consolidated financial statements of JAMESTOWN 28, L.P., a

Georgia limited partnership, and subsidiaries (the “Partnership”), which comprise the consolidated

statement of net assets, including the consolidated schedule of investments, as of December 31, 2015,

and the related consolidated statements of operations, changes in net assets and cash flows for the year

then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial

statements in accordance with U.S. generally accepted accounting principles; this includes the design,

implementation, and maintenance of internal control relevant to the preparation and fair presentation of

consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States of

America. Those standards require that we plan and perform the audit to obtain reasonable assurance about

whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the

assessment of the risks of material misstatement of the consolidated financial statements, whether due to

fraud or error. In making those risk assessments, the auditor considers internal control relevant to the

Partnership’s preparation and fair presentation of the consolidated financial statements in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion

on the effectiveness of the Partnership’s internal control. Accordingly, we express no such opinion. An

audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of

significant accounting estimates made by management, as well as evaluating the overall presentation of the

consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects,

the consolidated financial position of JAMESTOWN 28, L.P. and subsidiaries as of December 31, 2015,

and the consolidated results of their operations and their cash flows for the year then ended in accordance

with U.S. generally accepted accounting principles.

Marietta, Georgia

April 20, 2016

e n e r g y .

i n s i g h t .

g r o w t h .

p 770.989.0028

f 770.989.0201

1640 powers ferry road

governor’s ridge

building 11

suite 300

marietta, ga 30067

www.moorecolson.com

CONSOLIDATED STATEMENT OF NET ASSETS

DECEMBER 31, 2015

Assets:

Real estate investments, at fair value:

Real estate (cost: $321,428,006) 362,731,072$

Unconsolidated real estate partnerships (cost plus equity

in undistributed earnings: $228,785,413)252,570,903

Total real estate investments 615,301,975

Cash and cash equivalents 15,105,499

Restricted cash 9,791,575

Accrued investment income 405,361

Due from related parties 258,941

Due from limited partners 28,676

Prepaid expenses and other assets 77,267

Withholding taxes recoverable from future distributions to limited partners 5,790,871

Deferred financing costs, net of accumulated amortization of $1,240,819 1,327,768

Total assets 648,087,933

Liabilities:

Mortgage loan payable 188,000,000

Interest rate swap, at fair value 1,623,626

Accrued real estate expenses and taxes 411,542

Accrued capital and leasing costs 177,790

Tenant security deposits 912,644

Due to related parties 145,402

Deferred income 874,870

Total liabilities 192,145,874

Commitments and contingencies (See Note 10)

Net assets 455,942,059$


See notes to consolidated financial statements.

- 1 -

Real Estate Investments Ownership*

Ownership

Percentage City, State Type

Rentable Square

Feet (unaudited) Cost Fair Value

Percent of Fair

Value

JAMESTOWN 450 West 15th Street, L.P. ("Milk Studios") EP 53.0% New York, NY Mixed-Use 330,000 74,510,552$ 84,525,152$ 13.74%

JAMESTOWN Lantana North, L.P. and JAMESTOWN Lantana South, L.P. ("Lantana") CO 99.9% Santa Monica, CA Office 470,000 321,428,006 362,731,072 58.95%

JAMESTOWN MCH, L.P. ("Millennium") EP 23.6% Various Mixed-Use 1,470,000 154,274,861 168,045,751 27.31%

550,213,419$ 615,301,975$ 100.00%

* CO - ConsolidatedEP - Partnership accounted for under the equity method


CONSOLIDATED SCHEDULE OF INVESTMENTS

DECEMBER 31, 2015


- 2 -

CONSOLIDATED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2015

Revenues:

Revenue from real estate 23,734,466$

Equity in income from unconsolidated real estate partnerships 14,741,094

Other income 6,344

Total revenues 38,481,904

Expenses:

Real estate operating expenses 6,753,518

Real estate taxes 3,889,141

Interest expense 6,833,130

Asset management fee 1,912,177

Fund administration fee 1,629,216

Fund administrative expenses 5,648

Total expenses 21,022,830

Net investment income 17,459,074

Realized and unrealized gains (losses):

Realized gain on contingent liability 155,332

Change in unrealized gain on real estate 66,316,997

Change in unrealized gain on unconsolidated real estate partnerships 7,420,608

Change in unrealized loss on interest rate swap (563,065)

Net realized and unrealized gain 73,329,872

Increase in net assets resulting from operations 90,788,946$



- 3 -

General

Partner

Limited

Partners Total

Beginning balance - December 31, 2014 -$ 384,681,733$ 384,681,733$

From operating activities:

Net investment income 1,698 17,457,376 17,459,074

Net realized and unrealized gain 4,363,258 68,966,614 73,329,872

Increase in net assets resulting from operations 4,364,956 86,423,990 90,788,946

From capital transactions:

Distributions - (19,151,922) (19,151,922)

Interest income disbursed to the General Partner (1,698) - (1,698)

Redemptions - (375,000) (375,000)

Decrease in net assets resulting from capital transactions (1,698) (19,526,922) (19,528,620)

Ending balance - December 31, 2015 4,363,258$ 451,578,801$ 455,942,059$


CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS



- 4 -

CONSOLIDATED STATEMENT OF CASH FLOWS

Cash flows from operating activities:

Increase in net assets resulting from operations 90,788,946$

Adjustments to reconcile increase in net assets resulting from operations

to net cash flows provided by operating activities:

Net realized and unrealized gain (73,329,872)

Amortization of deferred financing costs 513,975

Equity in income from unconsolidated real estate partnerships (14,741,094)

Bad debt expense 25,040

Changes in assets and liabilities:

Restricted cash (561,614)

Accrued investment income 376,667

Due from related parties 107,547

Prepaid expenses and other assets (27,591)

Withholding taxes recoverable from future distributions to limited partners 10,947,225

Accrued real estate expenses and taxes (1,302,184)

Tenant security deposits (296,260)

Due to related parties (2,593,876)

Deferred income 49,553

Net cash provided by operating activities 9,956,462

Cash flows from investing activities:

Additions to real estate (2,561,648)

Decrease in accrued capital and leasing costs (1,832,590)

Distributions from unconsolidated real estate partnerships 13,643,000

Decrease in restricted cash 1,441,784

Net cash provided by investing activities 10,690,546

Cash flows from financing activities:

Capital redemptions (375,000)

Receipt of due from limited partners 2,884,256

Distributions to partners (19,153,620)

Net cash used in financing activities (16,644,364)

Net increase in cash and cash equivalents 4,002,644

Cash and cash equivalents, beginning of year 11,102,855

Cash and cash equivalents, end of year 15,105,499$

Supplemental cash flow information:

Cash paid for interest 6,319,155$

Supplemental disclosure of noncash investing activity:

Reversal of liability in connection with acquisition of real estate due to lease termination (155,332)$




- 5 -


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2015

- 6 -

1. ORGANIZATION AND PURPOSE

JAMESTOWN 28, L.P. (the “Partnership”), a Georgia limited partnership, has multiple subsidiaries for its

real estate investments (collectively referred to as the “Fund”). The Partnership was formed in December

2012 for the purpose of acquiring, investing, redeveloping, owning, operating and selling income producing

properties with the intention of achieving current income, capital appreciation or both. The Partnership

terminates on the earlier of December 31, 2031 or the occurrence of certain events as defined in the Amended

and Restated Agreement of Limited Partnership (herein referred to as the Partnership Agreement, inclusive

of all subsequent amendments and restatements). JAMESTOWN, L.P. (JAMESTOWN), a Georgia limited

partnership, is the General Partner.

The stated objectives of the Partnership are as follows:

a. To preserve and protect the partners’ investments in the Partnerships;

b. To realize an initial preferred return equal to 1.5% per annum of contributed capital from the date of

payment of contributed capital up to December 31, 2013 and 5.25% per annum thereafter; and

c. To return to the limited partners an amount equal to 110% of their total capital contributions

(including such capital contributions) from Net Proceeds of Sale or Refinancing and cash reserves

existing at the time the Partnership is liquidated.

The Partnership has two classes of limited partnership units available for subscription, A limited partnership

units (A Units) and B limited partnership units (B Units). The Partnership is authorized to issue between

80,000,000 and 500,000,000 A Units and 50,000,000 and 100,000,000 B Units, each having a subscription

price of $1.00. On November 15, 2013, the Fund closed for further purchase of A Units. At the close of the

fund, 384,703,000 A Units had been issued. During 2015, 375,000 units were redeemed in accordance with

the provisions in the Partnership Agreement.

Limited partners who purchased A Units had the option of either (i) paying the subscription price for their

units in full upon the acceptance by the General Partner of their subscription or (ii) paying a portion of the

subscription price upon the acceptance of their subscription and subsequently paying the remaining balance.

At December 31, 2015 $28,676 was due from limited partners relating to their capital contributions.

B Units are only available for subscription by JAMESTOWN. Once 250,000,000 A Units have been

subscribed, JAMESTOWN shall subscribe for at least one additional B Unit for every five A Units up to a

maximum of 100,000,000 B Units. B Units will be used to meet the capital needs of the Partnership or its

properties, including expansion of existing properties, tenant leasing costs, and capital projects at the

properties. Upon payment in full of the required B Unit contribution, such B Units shall automatically be

converted to A Units. At the time of a request for B Units, the amount payable is equal to the adjusted capital

contribution of A Units, as defined by the Partnership Agreement. At December 31, 2015, 76,940,600 B

Units had been subscribed and -0- B Units had been paid for under the provisions of the Partnership

Agreement.

All capitalized terms not defined herein shall have the meaning ascribed to them in the Partnership

Agreement.



DECEMBER 31, 2015

- 7 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S.

generally accepted accounting principles (GAAP). The Partnership is considered an investment

company under GAAP.

(b) Basis of Consolidation

The consolidated financial statements of the Fund include the accounts of the Partnership and its real

estate partnerships for which it has control over the major operating and financing policies. All

significant intercompany accounts and transactions among the Partnership and its subsidiaries have

been eliminated in consolidation.

(c) Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP requires

management to make estimates and assumptions that affect the reported amounts of assets and liabilities

and disclosures of contingent assets and liabilities at the date of the consolidated financial statements,

and the reported amounts of revenues, expenses, and realized and unrealized gains (losses) during the

reporting period. These estimates and assumptions are based on management’s best estimates and

judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical

experience and other factors, including the current economic environment. Management adjusts such

estimates when facts and circumstances dictate. As future events and their effects cannot be determined

with precision, actual results could differ from those estimates. The most significant estimates and

assumptions for the Fund relate to the valuation of its real estate investments and derivative instruments.

Real estate investment values are affected by, among other things, the availability of capital, occupancy

rates, rental rates and interest and inflation rates. As a result, determining the real estate investment

values involve many assumptions. Amounts ultimately realized from the investment may vary

significantly from the fair values presented.

(d) Real Estate Investments

Real Estate

Real estate property acquisitions, sales and dispositions are recorded as of the date of closing. Real

estate investments are carried at fair value. Costs incurred in connection with the acquisition of the real

estate investment have been capitalized.

Expenditures that extend the economic life of the property or directly relate to revenues of future

periods, including tenant improvements and leasing commissions, are capitalized. Capitalized amounts

are not depreciated or amortized since appraisals take into account the estimated effect of physical

depreciation. Expenditures for maintenance and repairs are expensed as incurred.



DECEMBER 31, 2015

- 8 -

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(d) Real Estate Investments (Continued)

Unconsolidated Real Estate Partnerships

Investments in the unconsolidated real estate partnerships are stated at fair value and are presented in

the consolidated financial statements using the equity method of accounting, as the control of the

investments is not held by the Fund. Under the equity method, the investments are initially recorded at

the original investment amount, plus additional amounts invested, reduced by distributions received

and adjusted for the Fund’s share of undistributed earnings or losses (including realized and unrealized

gains and losses) from the underlying partnerships. The Fund’s share in the net assets of the investment

in the unconsolidated real estate partnerships includes the estimated fair value of the real estate

investments, net of the cost of any debt and related derivatives and gives consideration to any

preferential return provisions in the applicable partnership agreements. The economic substance of the

investments is also taken into consideration in determining the Fund’s share of the fair value of the

investments. Capital contributions to the Fund’s investments in unconsolidated real estate partnerships

are recorded as of the date the funds are advanced. Distributions of income and return of capital from

the Fund’s investment in the unconsolidated real estate partnerships are recorded as of the date funds

are received.

(e) Investment Income and Expenses

Rental income is recognized and recorded when due in accordance with the terms of the respective

lease agreements. Additional rents which are provided for in individual tenant leases primarily relate

to the reimbursement of certain operating expenses of the real estate properties and rents based on a

percentage of the tenant’s revenues. The Fund recognizes such reimbursement of expenses and

percentage rents as revenue when earned and the amounts can be reasonably estimated.

Equity in income from the Fund’s unconsolidated real estate partnerships represents the Fund’s share

of the partnerships’ net investment income.

Expenses are recognized when incurred.

(f) Deferred Financing Costs

Deferred financing costs connected with obtaining the mortgage loan payable are amortized over the

term of the loan.

(g) Fair Value of Assets, Liabilities, and Derivative Instrument

The Fund reports the fair value of its real estate investment and its derivative on the consolidated

financial statements. The Fund has elected not to fair value the mortgage loan payable which is

presented at cost on the consolidated financial statements and the fair value is disclosed separately (see

Notes 3 and 6).



DECEMBER 31, 2015

- 9 -


(h) Cash and Cash Equivalents

The Fund classifies short-term, highly liquid investments purchased with maturities of 90 days or less

and money market accounts, as cash equivalents. These investments are stated at cost, which

approximates fair value. The Fund invests its cash primarily in deposits and money market funds with

commercial banks. At times, cash balances may exceed federally insured amounts. Management

believes it mitigates credit risk by depositing cash in and investing through major financial institutions.

(i) Restricted Cash

The Fund retained the services of an escrow agent in Germany. This agent released funds to the Fund

after the agent determined that each investment identified for purchase was in compliance with the

provisions of the Partnership Agreement. The agent’s supervision covered the investment phase of the

Fund and was terminated upon the complete release of the Fund’s equity which occurred during 2015.

Restricted cash consists of amounts required under the mortgage loan agreement for property taxes,

insurance, and debt service. Restricted cash also includes reserves required under the mortgage loan

agreement as a result of non-compliance with certain financial covenants (see Note 6).

(j) Accrued Investment Income - Allowance for Doubtful Accounts

In the normal course of business, the Fund extends unsecured credit to its tenants. The Fund performs

on-going credit evaluations of its tenants and maintains an allowance for doubtful accounts when

considered necessary. Accounts receivable are generally due under normal trade terms requiring

payment within 30 days from the invoice date. Unpaid accounts receivable do not bear interest.

Bad debts are provided using the allowance for doubtful accounts method based on historical

experience and management’s evaluation of outstanding accounts receivable at the end of each

year. The allowance for doubtful accounts was $-0- as of December 31, 2015.

(k) Withholding Taxes Recoverable From Future Distributions to Limited Partners

Amounts remitted on behalf of limited partners for withholding taxes are recognized as an asset that

will be recovered from future distributions to those limited partners.



DECEMBER 31, 2015

- 10 -


(l) Income Taxes

No provision for income taxes is required by the Fund since the partners report their respective share

of the taxable income or loss of the Fund in determining their individual taxable income.

Section 1446 of the Internal Revenue Code (IRC) requires that a partnership with nonresident partners

remit withholding tax payments directly to the Internal Revenue Service. The withholding tax

payments are based upon the nonresident partners’ allocable share of the Fund’s consolidated income

that is effectively connected with a U.S. trade or business times the applicable income tax rate as

determined by the classification of income. The withholding tax payments are creditable against the

individual partner’s income tax liability and, to the extent the payments exceed the partner’s actual

income tax liability for the year, the excess will be refunded to the partner upon the filing of a U.S.

income tax return.

California Regulations require that a partnership with nonresident partners remit withholding tax

payments directly to the State of California Franchise Tax Board. The withholding tax payments are

remitted based upon distributions paid or distributable California source income allocable to a partner

under IRC Section 704. The withholding rates are between 7.00% and 12.30% depending upon the

entity type and residency status. To the extent that payments exceed the partner’s actual income tax

liability for the year, the excess will be refunded to the partner upon filing of a California state income

tax return. In the event that a partner provides the Partnership with a withholding exemption certificate,

no withholding is required.

Under tax regulations in the United States of America, the Fund itself is not subject to federal, state,

and local income taxes and, accordingly, such taxes have not been provided for in the accompanying

consolidated financial statements. Each partner is responsible for reporting its allocable share of the

Fund's income, gains, losses, deductions, and credits. The Fund accounts for income taxes in

accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification

(ASC) 740, Income Taxes (ASC 740). ASC 740 prescribes a recognition threshold and measurement

attribute for recognizing tax return positions in the consolidated financial statements as those which are

"more likely than not" to be sustained upon examination by the taxing authority. ASC 740 also provides

guidance on derecognition, classification, interest, penalties, accounting for income tax uncertainties in

interim periods and the level of disclosures associated with any recorded income tax uncertainties.

Management has concluded that it has no material uncertain tax liabilities to be recognized at December

31, 2015. The Fund files U.S. federal, state and local tax returns. The 2012 through 2015 tax years of

the Fund remain subject to examination by U.S. federal, state and local tax authorities.

The Fund's policy is to record tax related interest and penalties as a component of real estate operating

expenses in the consolidated statement of operations. As of December 31, 2015, no interest or penalties

have been recognized. Under the tax regulations in the United States of America, any liability for

payment of federal and state income taxes on the Fund's earnings will be the responsibility of its

partners, rather than that of the Fund. Net income (loss) allocated to partners on the Fund's income tax

returns will differ from the accompanying consolidated financial statement amounts due to differences

between GAAP and the federal income tax basis of accounting.



DECEMBER 31, 2015

- 11 -


(m) Risks and Uncertainties

In the normal course of business, the Fund encounters economic risk, including interest rate risk, credit

risk, and market risk. Interest rate risk is the result of movements in the underlying variable component

of the mortgage financing rates. Credit risk is the risk of default on the Fund’s real estate investments

that results from an underlying tenant’s inability or unwillingness to make contractually required

payments. Market risk reflects changes in the valuation of real estate investments held by the Fund.

(n) Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers

(Topic 606). The guidance in this update supersedes the revenue recognition requirements in Topic 605,

Revenue Recognition, most industry-specific guidance throughout the Industry Topics of the

Codification, and some cost guidance included in subtopic 605-35, Revenue Recognition -

Construction-Type and Production-Type Contracts. The core principle of the guidance is that an entity

should recognize revenue to depict the transfer of promised goods or services to customers in an amount

that reflects the consideration to which the entity expects to be entitled in exchange for those goods or

services. The guidance provides five steps for an entity to achieve that core principle and provides

disclosure requirements for revenue recognition. The guidance also specifies the accounting for some

costs to obtain or fulfill a contract with a customer. The FASB issued ASU No. 2015-14, Deferral of

Effective Date, which amended the effective date to be for reporting periods beginning after

December 15, 2018 for nonpublic entities. Management is currently evaluating the impact of adopting

this new accounting standards update on the Fund’s consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, Amendments to the Consolidation Analysis,

which changes the way reporting enterprises evaluate whether (a) they should consolidate limited

partnerships and similar entities, (b) fees paid to a decision maker or service provided are variable

interests in a variable interest entity (VIE), and (c) variable interests in a VIE held by related parties of

the reporting enterprise require the reporting enterprise to consolidate the VIE. The ASU is effective

for reporting periods beginning after December 15, 2016 for nonpublic entities. Early adoption is

allowed, including early adoption in an interim period. A reporting enterprise may apply a modified

retrospective approach or full retrospective application. Management is currently evaluating the impact

of adopting this new accounting standards update on the Fund’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, Interest – Imputation of Interest (Subtopic 835-30),

Simplifying the Presentation of Debt Issuance Costs. The new standard requires that debt issuance costs

related to a recognized debt liability be presented in the consolidated statement of net assets as a direct

deduction from the carrying amount of the debt liability. The adoption of this guidance will be effective

January 1, 2016, and is not expected to have a material impact on the Fund’s consolidated financial

statements.



DECEMBER 31, 2015

- 12 -

3. FAIR VALUE MEASUREMENTS

The Fund’s real estate investments and derivative instrument are reported at fair value in accordance with

ASC 820, Fair Value Measurements. ASC 820 establishes a hierarchy for inputs used in measuring fair value

that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that

the most observable inputs be used when available. Observable inputs are inputs that the market participants

would use in pricing the asset or liability developed based on market data obtained from sources independent

of the Fund. Unobservable inputs are inputs that reflect the Fund’s assumptions about the assumptions market

participants would use in pricing the asset or liability developed based on the best information available in

the circumstances. ASC 820 establishes a three-tier hierarchy to classify fair value measurements. The

hierarchy is broken down based on the reliability of inputs as follows:

Level 1 – Valuations based on quoted prices in active markets for identical assets or liabilities that

the Fund has the ability to access. Valuation adjustments and block discounts are not applied to

Level 1 instruments.

Level 2 – Valuations based on quoted prices in markets that are not active or for which all

significant inputs are observable, either directly or indirectly.

Level 3 – Valuations based on inputs that are unobservable and significant to the overall fair value

measurement. Level 3 valuations incorporate certain assumptions and projections that are not

observable in the market and significant professional judgment is used in determining the fair value

assigned to such assets and liabilities.

The availability of observable inputs can vary from instrument to instrument and is affected by a wide variety

of factors, including the type of instrument, whether the instrument is new and not yet established in the

marketplace, and other characteristics particular to the transaction. In instances where the determination of

the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the

fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input

that is significant to the fair value measurement in its entirety. Investments in real estate are generally

classified within Level 3 of the fair value hierarchy. These fair value measurements are based primarily upon

judgmental estimates and are based on the current economic and competitive environment, characteristics of

the investment, credit, interest, and other factors. Therefore, fair value cannot be determined with precision,

cannot be substantiated by comparison to quoted prices in active markets, and may not be realized in a current

sale or immediate settlement of the asset and/or liability. Additionally, there are inherent uncertainties in any

fair value measurement technique, and changes in the underlying assumptions used, including discount rates,

liquidity risks, and estimates of future cash flows, could significantly affect the fair value measurement

amounts.

Fair value is a market-based measure considered from the perspective of a market participant rather than an

entity-specific measure. Therefore, even when market assumptions are not readily available, the Fund’s own

assumptions are set to reflect those that market participants would use in pricing the asset or liability at the

measurement date. The Fund uses prices and inputs that are current as of the measurement date, including

during periods of market dislocation. In periods of market dislocation, the observability of prices and inputs

may be reduced for many instruments. This condition could cause an instrument to be reclassified between

the levels.



DECEMBER 31, 2015

- 13 -

3. FAIR VALUE MEASUREMENTS (Continued)

The following is a description of the valuation techniques used for assets and liabilities measured at fair value:

Real Estate

The fair value of the real estate investment has been determined giving consideration to the income, cost and

sales comparison approaches of estimating property value. The income approach estimates an income stream

for a property (typically 10 years) and discounts this income plus a reversion (presumed sale) into a present

value at a risk adjusted rate. Yield rates and growth assumptions utilized in this approach are derived from

market transactions as well as other financial and industry data. The cost approach estimates the replacement

cost of the building less physical depreciation plus the land value. Generally, this approach provides a check

on the value derived using the income approach. The sales comparison approach compares recent transactions

to the property. Adjustments are made for dissimilarities which typically provide a range of value. Generally,

the income approach carries the most weight in the value reconciliation.

As of December 31, 2015, the fair value of the property was determined using an internal valuation which

gives consideration to the approaches listed above, as well as appraisals, broker’s opinion of value, and other

external sources. Management uses all sources of market data in the internal valuation to ensure that the

valuation is reasonable. Transaction costs that the Fund will incur as real estate investments are sold are not

included in the December 31, 2015 fair value measurements, rather they are recorded in the year that the

transaction occurs. The Fund’s real estate investment is classified within Level 3 of the valuation hierarchy.

Unconsolidated Real Estate Partnerships

Unconsolidated real estate partnerships are stated at the fair value of the Fund’s ownership interest of the

underlying partnerships. The Fund’s ownership interests are valued based on the fair value of the underlying

real estate, any related mortgage loans payable and other factors, such as ownership percentage, ownership

rights, distribution provision and capital call obligations. The underlying assets and liabilities are valued

using the same methods the Fund uses for those assets and liabilities it holds directly. The Fund’s investments

in unconsolidated real estate partnerships are generally classified within Level 3 of the valuation hierarchy.

Mortgage Loan Payable

The Fund carries its mortgage loan payable at cost as permitted by the Fair Value Option under ASC subtopic

825-10. The Fund’s debt valuation methodology, for disclosure purposes, focuses on transactions between

market participants using an investor’s cost of equity capital based on current market conditions.

The fair value disclosure of the mortgage loan payable is determined by discounting the difference between

the contractual loan payments and estimated market loan payments at an equity discount rate based on asset

appraisals that reflect how a typical third-party investor would value the cash flows. Market loan payments

are derived from overall market lending rates, debt origination and assumption transactions in the market,

and property specific factors, including loan to value and cap rate changes. The significant unobservable

inputs used in the fair value measurement of the Fund’s mortgage loan payable are the selection of certain

market interest rates and implied equity discount rates. The difference in the calculated fair value and the

balance outstanding is the market valuation adjustment.



DECEMBER 31, 2015

- 14 -


Derivative Instrument

The fair value of the interest rate swap is based on the notional, payment frequency, day count fraction, fixed

and floating rates, and other factors, including the credit strength of both counterparties. The present value of

expected cash flow differences is calculated based on prevailing market and contractual interest rates and

credit spreads. The valuation is performed by an independent appraiser consistent with market standards for

valuing derivatives. Management reviews the valuation of the interest rate swap as needed but no less

frequently than once per year. The Fund’s derivative instrument is classified within Level 2 of the valuation

hierarchy.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following fair value hierarchy table presents information about the Fund’s assets and liabilities measured

at fair value on a recurring basis as of December 31, 2015:

Significant Other

Observable

Inputs (Level 2)

Significant

Unobservable

Inputs (Level 3)

Total as of

December 31,

2015

Assets

Real estate, at fair value $ - $ 362,731,072 $ 362,731,072

Unconsolidated real

estate partnerships, at fair value - 252,570,903 252,570,903

Total assets $ - $ 615,301,975 $ 615,301,975

Liabilities

Interest rate swap, at fair value $ 1,623,626 $ - $ 1,623,626

Total liabilities $ 1,623,626 $ - $ 1,623,626

The following table presents additional information about Level 3 assets measured at fair value on a recurring

basis as of December 31, 2015:

Real Estate

Unconsolidated

Real Estate

Partnerships

Total

Level 3 Assets

Beginning balance - December 31, 2014 $ 293,852,427 $ 244,052,201 $ 537,904,628

Additions to real estate investments 2,561,648 - 2,561,648

Equity in income - 14,741,094 14,741,094

Distributions received - (13,643,000) (13,643,000)

Change in unrealized gain 66,316,997 7,420,608 73,737,605

Ending balance - December 31, 2015 $ 362,731,072 $ 252,570,903 $ 615,301,975

Change in unrealized gain relating to assets

held at December 31, 2015 $ 66,316,997 $ 7,420,608 $ 73,737,605



DECEMBER 31, 2015

- 15 -


The following table shows quantitative information about unobservable inputs related to the Level 3 value

measurements used during the year ended December 31, 2015:

Type Asset Class Valuation Technique

Unobservable Inputs Weighted

Average

Real Estate and Mixed-Use Discounted Cash Flow Discount rate 8.67%

Unconsolidated

Real Estate Partnership

Terminal capitalization rate 6.00%

Office Discounted Cash Flow Discount rate 7.00%

Terminal capitalization rate 7.09%

Mortgage Loans Mixed-Use Discounted Cash Flow Market interest rate 3.81%

Payable Implied equity discount rate 10.35%

Office Discounted Cash Flow Market interest rate 2.15%

Implied equity discount rate 10.90%

Significant increases (decreases) in any of the inputs in isolation would result in a significantly lower (higher)

fair value, respectively.

At December 31, 2015, approximately 61%, 36% and 3% of the Fund’s investments in fair value were located

in the West, East and South regions of the United States, respectively, as defined by the National Council of

Real Estate Investment Fiduciaries.

4. REAL ESTATE

On July 26, 2013, the Partnership acquired Lantana for a purchase price of $313.7 million. Lantana is

comprised of four office buildings located in Santa Monica, California and is titled and owned through two

single purpose U.S. subsidiary partnerships, JAMESTOWN Lantana North, L.P. and JAMESTOWN Lantana

South, L.P. (the “Lantana Partnerships”), with the Partnership owning a 99.9% limited partnership interest in

each partnership.

In connection with the acquisition of Lantana, the Lantana Partnerships were assigned all rights and

obligations relating to the Property under the Declarations of Covenants, Conditions and Restrictions and

Easements (CCREs), which are recorded agreements governing the use of certain shared facilities, including

parking. Under these recorded agreements, a California nonprofit mutual benefit corporation is established

(collectively, the “Associations”), and these Associations hold title to the Lantana parking facilities and other

shared infrastructure. The Lantana Partnerships are members of the Associations and under these recorded

agreements are granted certain rights for the portions of the parking allocated to the Property and rights to the

revenue from such parking through May 17, 2108. All direct costs incurred in connection with the acquisition

of these parking rights have been capitalized and are included as a component of real estate investment in the

accompanying consolidated financial statements. Parking revenue totaled $3,440,140 for the year ended

December 31, 2015 which is included in revenue from real estate in the accompanying consolidated financial

statements.



DECEMBER 31, 2015

- 16 -

4. REAL ESTATE (Continued)

At December 31, 2015, Lantana’s cost basis and fair value basis was $321,428,006 and $362,731,702,

respectively.

Two tenants individually accounted for approximately 10% and 34% of revenue from real estate for the year

ended December 31, 2015. Their leases are scheduled to expire in 2020 and 2025, respectively.

The aggregate minimum future rentals, scheduled to be received on real estate, for noncancelable operating

leases in effect as of December 31, 2015 are as follows:

Year Ending

December 31: Amounts Due

2016 $ 12,821,393

2017 11,543,974

2018 11,478,582

2019 11,726,315

2020 11,298,509

Thereafter 37,012,761

Total future minimum lease payments $ 95,881,534

The Fund was also entitled to additional rents, which are not included above, which are primarily based upon

escalations of real estate taxes and operating expenses over base period amounts. These are included as

revenue from real estate in the accompanying consolidated financial statements.

Under a certain lease, the Fund was entitled to receive additional rents, which are also not included above,

equal to a percentage of the tenants’ annual gross sales over minimum amounts specified in the lease. For

the year ended December 31, 2015, the Fund earned $-0- in percentage rents from the tenant.

5. UNCONSOLIDATED REAL ESTATE PARTNERSHIPS

The Partnership owns a 53% limited partnership interest in the Milk Studios building, a mixed-use building

in New York, New York. The remaining 47% limited partnership interest is held by an affiliate.

The Partnership owns a preferred equity partnership interest in MP/JAMESTOWN Core Holding Co., L.P.,

a limited partnership commonly known as the Millennium Core Fund, which owns a 1,470,000 square foot

real estate portfolio comprised of mixed-use properties located in New York, Boston, Miami, Washington,

D.C. and San Francisco. The Fund’s interest in the Millennium Core Fund is titled and owned through a

single purpose U.S. subsidiary partnership, JAMESTOWN MCH, L.P.

At December 31, 2015, the Fund’s cost basis and fair value basis in the unconsolidated real estate partnerships

was $228,785,413 and $252,570,903, respectively.



DECEMBER 31, 2015

- 17 -

5. UNCONSOLIDATED REAL ESTATE PARTNERSHIPS (Continued)

The following is 100% of the condensed financial statements of the unconsolidated real estate partnerships

as of and for the year ended December 31, 2015:

Condensed Statement of Net Assets

Assets:

Real estate investments, at fair value (cost: $937,814,750) $ 1,528,790,840

Other assets 201,377,585

Total assets 1,730,168,425 Liabilities:

Mortgage loans payable 891,857,000

Interest rate swap, at fair value 456,122

Other liabilities 13,667,591

Total liabilities 905,980,713

Net assets $ 824,187,712

Fund’s share of net assets $ 252,570,903

Condensed Statement of Operations

Revenues $ 115,675,206

Expenses 79,889,913

Net investment income 35,785,293

Change in unrealized loss on interest rate swap (1,472,753)

Change in unrealized gain on real estate 72,753,920

Increase in net assets resulting from operations $ 107,066,460

Fund’s equity in increase in net assets resulting from operations $ 22,161,702



DECEMBER 31, 2015

- 18 -

5. UNCONSOLIDATED REAL ESTATE PARTNERSHIPS (Continued)

The following table summarizes the principal amounts outstanding on the mortgage loans payable and the

calculated fair value as of December 31, 2015:

Loan Collateral

Principal Outstanding

December 31, 2015

Fair Value

December 31, 2015 (1)

Milk Studios (2) $ 168,500,000 $ 169,712,502

Millennium - Boston 104,357,000 104,384,200

Millennium 574,300,000 572,853,053

Millennium - Mezz 44,700,000 44,647,922

$ 891,857,000 $ 891,597,677

(1) The Fund carries its mortgage loans payable at cost as permitted by the fair value option of ASC subtopic ASC 825-10. The information is

provided as it relates to the disclosure of the mortgage loans payable.

(2) The Milk Studios loan contains a limited principal guaranty for amounts up to $17,861,000 provided by the Partnership. See Note 10.

Contributions, distributions and allocations of profits and losses from the unconsolidated real estate

partnerships will be funded, distributed and allocated to the partners in accordance with the provisions of the

partnership agreements and in proportion to their respective ownership percentages. The fair value of the

Fund’s ownership interest is based on the fair value of the net assets of the unconsolidated partnerships and

considers the distribution provisions of the related partnership agreements.

6. MORTGAGE LOAN PAYABLE

In connection with the acquisition of the property, the Lantana Partnerships entered into a mortgage loan

agreement in the amount of $188,000,000. The interest only mortgage loan has a maturity date of July 26,

2018 and bears interest at a rate of 1-month LIBOR (.43% at December 31, 2015) plus 1.85%. As of

December 31, 2015, the principal outstanding and the fair value of the mortgage loan payable was

$188,000,000 and $188,363,339, respectively. The mortgage loan payable requires monthly interest only

payments through the maturity date of July 26, 2018 at which time the principal, and any unpaid interest will

be due.

The mortgage loan payable contains prepayment penalty rights following the first loan year through the July

25, 2017. After July 25, 2017, the mortgage loan payable may be prepaid in accordance with the loan

agreement.

The mortgage loan payable also contains a guaranty of non-recourse carve-out stipulations provided by both

JAMESTOWN and the Fund and a limited principal guaranty with principal payments up to $5,400,000,

provided by JAMESTOWN and the Fund (see Note 10).

Under the terms of the mortgage loan agreement, the Lantana Partnerships are required to pay, in advance, a

quarterly administrative fee to the lender of $109,000 per year. For the year ended December 31, 2015, the

loan administrative fee totaled approximately $109,000 and is included in real estate operating expenses in

the accompanying consolidated financial statements.



DECEMBER 31, 2015

- 19 -

6. MORTGAGE LOAN PAYABLE (Continued)

For the year ended December 31, 2015, the Fund amortized financing costs of $513,975, which is included

as a component of interest expense in the accompanying consolidated financial statements.

The Lantana Partnerships are subject to certain financial and nonfinancial covenants under the mortgage loan

payable agreement. During 2014, the Lantana Partnerships did not meet the required minimum interest

coverage ratio (ICR) covenant as defined in the loan agreement. The failure of this covenant triggered a cash

management period which can be cured once the Lantana Partnerships pass the minimum ICR for two

consecutive quarters, as defined by the loan agreement. As of December 31, 2015, the Lantana Partnerships

remain under the cash management period.

During the cash management period, the Lantana Partnerships must deposit all Excess Cash Flow into a

reserve account equal to the amount required to cure the covenant failure. As of December 31, 2015, the

Lantana Partnerships are required to deposit approximately $41,100,000 (the “ICR Deposit Amount”) into

the reserve account. The Lantana Partnerships have the option to fulfill the required ICR Deposit Amount by

either cash deposits, a Letter of Credit, or repayment of principal. As of December 31, 2015, the reserve

account had a balance of approximately $4,000,000 and is included in restricted cash in the accompanying

consolidated financial statements. The Lantana Partnerships can draw from this account for certain allowable

capital costs, as detailed in the agreement.

If the cash management period is not cured after four consecutive quarters by either meeting the minimum

interest coverage ratio or by fulfilling the reserve account with the ICR Deposit Amount, the lender has the

right, but not the obligation, to apply the balance in the reserve account towards any outstanding obligations

and the Lantana Partnerships will not be able to recoup these funds. As of December 31, 2015, the lender has

not exercised this right. Management believes the Lantana Partnerships will cure the cash management period

in 2017.

On May 28, 2014, a major tenant in the South Campus, IMAX Corporation, exercised their early termination

option effective as of April 30, 2015. Upon receipt of such notice, all Excess Cash Flow was required to be

deposited into a Vacancy Reserve account until a total of approximately $2,800,000 was funded. The

Vacancy Reserve was fully funded on October 15, 2014 and the balance is included in restricted cash in the

accompanying consolidated financial statements. In March 2016, the Lantana Partnerships executed a lease

with an existing tenant to expand into the former IMAX space. As a result, the Vacancy Reserve was released

to the Lantana Partnerships to cover tenant improvement and leasing costs associated with the new lease. The

cash flows related to the lease expansion are included in the internal valuation used to calculate the fair value

of Lantana at December 31, 2015.



DECEMBER 31, 2015

- 20 -

7. DERIVATIVE INSTRUMENT

To limit the Fund’s exposure to interest rate fluctuations on its variable rate debt, the Fund has entered into

an interest rate swap agreement on the mortgage loan payable.

The interest rate swap agreement fixed the LIBOR portion of the interest rate at 1.46% for a total all-in-rate

of 3.31% (after taking into consideration the administrative fee of $109,000 per year and a 365/360 interest

method, the all-in-rate is 3.41%). As of December 31, 2015, the interest rate swap agreement had a notional

amount of $188,000,000 and a recorded fair value liability of $1,623,626. The agreement expires on July 26,

2018. For the year ended December 31, 2015, the Partnership incurred $2,424,212 in interest expense related

to the derivative which is included as a component of interest expense in the accompanying consolidated

financial statements.

In accordance with ASC 815, Accounting for Derivative Instruments and Hedging Activities, the Fund has

not designated this interest rate swap as a cash flow hedge. Accordingly, the Fund recognizes any changes

in fair value as a component of unrealized gains (losses) in the accompanying consolidated financial

statements. For the year ended December 31, 2015, the total unrealized loss on the interest rate swap was

$563,065.

8. PARTNERSHIP AGREEMENT

The Partnership Agreement contains provisions relating to capital contributions, redemptions, distributions

of cash flow, distribution of proceeds from capital transactions and allocation of profits and losses.

Allocation of Profits and Losses

Net income of the Partnership is to be allocated to the partners as follows:

a) First, to the General Partner, until the cumulative net income to the General Partner is equal to the

cumulative subordinated General Partner distribution of cash flow, any specially allocated interest and

the amount necessary to offset any allocated losses, as defined by the Partnership Agreement.

b) Second, to the limited partners, equal to the sum of the cumulative initial preferred return, the

cumulative 5.25% preferred return, 10% of limited partners’ cumulative capital contributions and the

amount necessary to offset any allocated losses, as defined by the Partnership Agreement.

c) Third, to the partners, pro rata, 66.67% to the limited partners and 33.33% to the General Partner.

Net loss of the Partnership is to be allocated to the partners as follows:

a) First, to the partners to offset any net income previously allocated, pro rata, 66.67% to the limited

partners and 33.33% to the General Partner under the tranche described above.

b) Second, to the limited partners, to cause the cumulative net losses to each limited partner to equal such

limited partner’s capital contributions.



DECEMBER 31, 2015

- 21 -

8. PARTNERSHIP AGREEMENT (Continued)

Allocation of Profits and Losses (Continued)

c) Third, to the limited partners, in proportion to and to the extent necessary to offset any income allocated

to such partner equal to 10% of such partner’s cumulative capital contributions, cumulative 5.25%

preferred return, and cumulative initial preferred return, in that order.

d) Fourth, to the General Partner.

Distributions of Operating and Capital Cash Flows

Interest income is specially allocated to the General Partner (see Note 9). Cash flow, as defined by the

Partnership Agreement, is to be distributed to the A Unit limited partners and the General Partner annually

on May 15 of the following year, commencing on May 15, 2014, in the following priority:

a) First, to the limited partners, until the cumulative distributions to each limited partner are equal to such

limited partner’s initial preferred return. The initial preferred return shall be a non-compounding per

annum rate equal to $.0150 per unit from the time of payment of the subscription amounts until

December 31, 2013. This amount, totaling $2,160,499, was paid in May 2014.

b) Second, to the limited partners, until the cumulative distributions to each limited partner are equal to

such limited partner’s preferred return. The preferred return shall be a non-compounding per annum

rate equal to $.0525 per unit starting from the time of payment of the subscription amounts until

January 1, 2014. The amount has been paid for 2014. The distribution for 2015 will be paid in

May 2016.

c) Third, to the partners, pro rata, 66.67% to the limited partners and 33.33% to the General Partner. To

date, no amounts have been paid under this provision.

Net proceeds from a sale or refinancing are to be distributed in a priority specified in the Partnership

Agreement.

9. RELATED PARTY TRANSACTIONS

Due from Related Parties

Due from related parties consists of amounts due from the Associations for operating expense reimbursements

totaling approximately $219,000, and amounts due from JAMESTOWN related to administration of limited

partner accounts totaling approximately $40,000, which are included in due from related parties in the

accompanying consolidated financial statements.



DECEMBER 31, 2015

- 22 -

9. RELATED PARTY TRANSACTIONS (Continued)

General Partner Syndication Fees

Syndication fees equal to 4% of capital contributions made to the Partnership were paid to JAMESTOWN.

These fees are for the cost of equity acquisition, including all sales commissions payable to third parties,

marketing costs, sales coordination costs, prospectus preparation and reviews and costs associated with

obtaining fund ratings. From the inception of the Fund through December 31, 2015, syndication fees included

as a reduction of net assets totaled $15,388,120.

In addition, syndication fees equal to 1% of capital contributions made to the Partnership were paid to

JAMESTOWN for reimbursement of expenses incurred in evaluating and pursuing investment opportunities

for the Partnership, due diligence costs incurred in connection with prospective investments not acquired by

the Partnership, organizational expenses, prospectus printing costs, and fees paid to escrow agents. From the

inception of the Fund through December 31, 2015, syndication fees expensed as fund administration expenses

totaled $3,847,030.

Special Interest Income Allocation to General Partner

As provided by the Partnership Agreement, JAMESTOWN receives interest income earned by the Fund,

which includes interest income allocated from property partnerships, for the management of the following

affairs of the Fund: the costs of the annual audits of the Fund’s financial statements, the preparation of the

tax returns of the Fund in the United States and Germany, and communications of the affairs of the Fund to

the limited partners. The cost of these affairs will be borne by the General Partner or an affiliate and paid

from the interest income of the Fund. For the year ended December 31, 2015, the Fund earned $1,698 in

interest income, all of which has been remitted to JAMESTOWN.

Fund Administration Fee

As provided for in the Partnership Agreement, JAMESTOWN is entitled to an annual fee, payable monthly,

equal to 0.42% of limited partner invested equity for the administration of the Fund. The fee shall increase

by 3% each year. For the year ended December 31, 2015, the Fund incurred a fund administration fee of

$1,629,216.



DECEMBER 31, 2015

- 23 -

9. RELATED PARTY TRANSACTIONS (Continued)

Asset Management Fee

As provided for in the Partnership Agreement, JAMESTOWN is entitled to an annual fee, payable monthly,

equal to 0.64% of limited partner invested equity for the supervision of the properties and the management

of the affairs of the Fund. The fee shall increase by 3% each year. For the year ended December 31, 2015,

the Fund incurred an asset management fee of $1,912,177.

As of December 31, 2015, approximately $74,000 remained payable to JAMESTOWN related to these

services and is included in due to related parties in the accompanying consolidated financial statements.

Insurance

During 2015, the Fund paid insurance premiums totaling approximately $7,000, to an affiliate of the General

Partner. This amount is included in real estate operating expenses in the accompanying consolidated financial

statements.

Real Estate Investment Level Services

The General Partner may retain one or more of their affiliates to perform services for Lantana including

property management, development and construction management, sustainability consulting, and other

services. A certain affiliate of the General Partner served as the property management company for Lantana

through May 31, 2015, and was entitled to receive a monthly management fee of 2.5% of Gross Receipts, as

defined by the agreement. On June 1, 2015, Lantana terminated this agreement and entered into a new

property management agreement with another affiliate. The affiliate is entitled to receive a monthly

management fee of 2.5% of Gross Receipts, as defined by the agreement. The agreement has an initial term

of one year and will be automatically renewed for successive one year periods unless terminated by either

party. For the year ended December 31, 2015, Lantana incurred property management fees totaling $562,132

and payroll reimbursements totaling approximately $782,000. These amounts are included in real estate

operating expenses in the accompanying consolidated financial statements.

Additionally, approximately $86,000 in fees and reimbursements were incurred by the Fund for services

performed by affiliates related to development and construction management, retail leasing, legal, and

marketing of Lantana. Of these amounts, approximately $26,000 is included in real estate operating expenses

and approximately $60,000 is capitalized as real estate in the accompanying consolidated financial

statements.

As of December 31, 2015, $71,000 remained payable to various affiliates related to these services and is

included in due to related parties in the accompanying consolidated financial statements.



DECEMBER 31, 2015

- 24 -

10. COMMITMENTS AND CONTINGENCIES

In the normal course of business, the Fund may be subject to various litigations and in some instances the

amount sought may be substantial. Although the outcome of such claims, litigation, and disputes cannot be

predicted with certainty, in the opinion of management, based on facts known at this time, the resolution of

such matters are not anticipated to have a material adverse effect on the consolidated financial position or

results of operations of the Fund.

The Partnership is contingently liable for a limited principal guaranty for amounts up to $17,861,000 on the

Milk Studios mortgage loan payable.

The Partnership is contingently liable for a guaranty of non-recourse carve-outs and a limited principal

guaranty up to approximately $5,400,000 on the Lantana North and Lantana South mortgage loan payable

described in Note 6. Under the non-recourse carve-out guarantee, the Partnership would be liable for the

obligations as defined, in addition to all interest, legal fees, and collection costs incurred enforcing any right

granted per the guaranty.

As of December 31, 2015, the Fund had an outstanding obligation to fund property level reserves totaling

approximately $7,000,000 to its real estate investments as outlined in the Fund’s prospectus. These reserves

are anticipated to be funded for capital and leasing projects or working capital, as needed.

As of December 31, 2015, the Fund has an additional outstanding unrecorded obligation to fund tenant

improvements totaling approximately $7,300,000. These amounts will be paid in accordance with the

tenants’ leases.

11. FINANCIAL HIGHLIGHTS

The following are certain financial highlights of the Fund for the year ended December 31, 2015:

Investment management expenses:

Asset management fee (1) 0.64%

Fund administration fee (1) 0.42%

1.06%

Net investment income ratio (2) 4.69%

Total return, before investment management expenses (2) 25.33%

Total return, after investment management expenses (2) 23.21%

Limited Partner expected distributions for 2015 (3) 5.25%

(1) Annual fee paid to the General Partner based on limited partner invested equity (see Note 9). Asset management fees and fund administration fees calculated on time weighted net assets of $372,412,118 as required by GAAP, are 0.51% and 0.44%, respectively.

(2) The net investment income ratio is calculated using total net investment income (loss) for the year ended December 31, 2015 over the December 31, 2014 net asset value less any time weighted redemptions made during the current year less any time weighted distributions

made during the current year. The total return is calculated using the increase (decrease) in net assets resulting from operations for the year

ended December 31, 2015 before and after investment management expenses over the December 31, 2014 net asset value less any time weighted redemptions made during the current year less any time weighted distributions made during the current year.

(3) Distributions relating to 2015 expected to be paid in May 2016.



DECEMBER 31, 2015

- 25 -

12. SUBSEQUENT EVENTS

In accordance with accounting standards, the Fund has evaluated events and transactions occurring from

January 1, 2016 through April 20, 2016, the date the consolidated financial statements were available for

issuance. Management has concluded that there were no other significant events requiring recognition and/or

disclosure in the consolidated financial statements other than those disclosed herein.

jamestown 28, l.p. and subsidiaries (a limited partnership ... · (a limited partnership)...

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