Investor Letter July 2007

July 31, 2007

Dear Investor:

This is a real estate update to keep you abreast of the ongoing dynamic growth in the Victor Valley.

Washington, July 11, 2007 – Home prices are expected to recover in 2008 with existing-home sales picking up late this year and new-home sales rising early next year, according to the latest forecast by the National Association of Realtors. Great news for Victor Valley! We are already the most reasonable area in the State of California to buy a home.

San Bernardino Associated Governments voted to recommend the High Desert Corridor for funding under the next round of Proposition 1B Bonds. This will be a freeway between Victor Valley and Antelope Valley and is intended for trade corridor improvements.

Local manufacturers are expanding operations and building new facilities to keep pace with growing demand for steel pipe and concrete products. Northwest Pipe Co. and Hanson Structural Precast Pacific are among the regional manufacturing firms that are boosting payrolls in Adelanto. Hanson Structural Precast Pacific, the largest manufacturer of structural precast concrete products in California, has acquired 80 acres in Adelanto for the site of a new facility.

Caltrans continues construction along Interstate 15 from Barstow to the Nevada Stateline – good news for all who travel on Interstate 15.

The population of San Bernardino County expected to grow from 2 million to 3 million by 2020, and planners are pondering the future as Victor Valley has been consistently ranked as one of the fastest-growing regions in the state.

County valuation grows 15.9 percent –Value of all assessed property in San Bernardino County hits a record $172B. In percentage terms, the county’s growth in assessed valuation is the third largest since 1982. Among High Desert cities, Adelanto led the entire county, with a 32 percent increase in assessed valuation. Victorville recorded nearly 30 percent, Hesperia 26 percent, Apple Valley 18 percent and Barstow saw a 17 percent increase in assessed valuation.

Apple Valley OKs biggest budget ever – The town is planning an expansion of Town Hall, a new public works facility and an animal control and care facility. Some of the increase is for road improvements and police expenditures.

High Desert Federal Credit Union holds its groundbreaking ceremony on Jess Ranch Parkway. High Desert Federal Credit Union is the largest credit union headquartered in the California High

Desert with branch locations in Apple Valley, Victorville, Hesperia and Yucca Valley.

The High Desert is next frontier for industrial real estate. Commercial real estate developers and city officials are promoting the High Desert mostly in warehousing and distribution centers to service the growing international commerce at the ports in Los Angeles and Long Beach. The proposed intermodal rail facility at Southern California Logistics Airport is expected to drive industrial development in the Victor Valley. The facility is being designed for a million and a half lifts a year.

AMB Property Corp. acquired 400 acres in Adelanto and expects to break ground on new industrial facilities in 2008. The Corp. found this location to be the most attractive because of the pro-business nature of the City of Adelanto combined with the proximity to the future High Desert E220 corridor, which will tie Apple Valley with Palmdale. And, prices will rise as land becomes even more scarce than it already is, especially for the larger parcels. If a user wants a million-square-foot facility, the future of those deals will be in the Victor Valley.

City of Hesperia passes $229 million budget adding 21 new employees, including nine in Sheriff’s Department and five in Code Enforcement. The budget includes more than $105 million for capital improvement projects such as sewer and storm drainage and more than $60 million is planned for roads and over $38 million for public safety.

WinCo Foods breaks ground in High Desert – discount grocery store to open in Apple Valley. It will be a 92,000-square-foot store, which is the chain’s first location in the Victor Valley. The developer of Jess Ranch regards WinCo as a key component to the retail project, which will feature 700,000 square feet of space upon completion at the end of next year. WinCo looks to expand in areas with residential growth and population density to support the stores.

Assessment released for planning – High Desert must plan for 30,000 housing units by 2008 – for example, Hesperia will need 9,094 and Apple Valley will need 8,618. One unit doesn’t have to be an actual house; it can be an apartment or townhouse. All needs are for the planning period between 2006 and 2014. Growth is rampant in Victor Valley and the communities must be ready.

Super Target set to open in Apple Valley at the Commons. It is the first retail super-center (173,000-square-foot store) in the High Desert and will open on July 29, 2007. It will feature a full grocery, pharmacy, optical center, photo center, Starbucks and a Pizza Hut Express. Upon final build out of the Apple Valley Commons, it will feature 742,000 square feet of retail space, making it one of the largest power centers in the Victor Valley. But, the Apple Valley Commons may soon face competition from Wal-Mart, which has announced plans to build a 228,000-square-foot super-center on the east side of Dale Evans across from the new Super Target.

With jobs, people relocate and need housing – not all will be able to buy their own homes. Now is the time to seriously consider purchasing rental property. There are several fine management companies who can manage your rental property for you.

I would greatly appreciate the opportunity in helping you select the right rental properties and also, in selecting more vacant land that you need to strengthen your investment income and further your retirement dreams.

Sincerely,

Pamela Suzanne Johnson, REALTOR®

My finger is on the Pulse of Real Estate

(760) 646-3631