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Overview
Delma pursues a "value-added" investment strategy with a primary focus on acquiring office buildings, as well as (i) distressed first mortgage and/or mezzanine loans purchased at a discount and (ii) preferred equity investments made with real estate partners, both backed by properties with sound underlying fundamentals, with a secondary focus on apartment and retail opportunities in a select number of target markets in the US. Specifically, Delma seeks to acquire properties that have the potential to generate higher current income and/or capital appreciation as a result of capital improvements, market repositioning, new development, aggressive management and/or leasing. Investment opportunities targeted by Delma include the acquisition of existing properties with strong fundamentals which are undervalued due to ownership which is pressured to sell, poor management and leasing, deferred maintenance, inefficient capital structure and/or temporary market illiquidity. Delma also targets investments in properties requiring re-development or repositioning for alternative use or upgrade.

Value-added Investing

"Value-added" investments fall between lower risk, lower return investments such as "core" real estate, and higher risk, higher return opportunistic investments. (See diagram below.) Core real estate funds invest in stabilized, income- producing properties thereby generating sixty-seven to seventy-five percent (67% - 75%) of their total return from current income. Conversely, higher risk, opportunistic funds place an emphasis on investments where significant appreciation in market value will drive excess returns. As a result, total returns from opportunistic funds are predominantly driven by capital gains, not current income.

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Given its focus on underutilized and mispriced income-producing assets, Delma expects that total returns will be generated both by capital gains as well as improved current income resulting from physical, operational and financial "value-add" contributed by Delma. Consequently, investors profit from the Delma's strategic and operational expertise in the form of capital appreciation on investments while enjoying the benefits of downside protection afforded by significant, current income.