CORVA transacts business throughout the United States and is generally recognized as having great experience in real estate financing by XR4Ulx5

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									                                       FACT SCENARIO


       Mega Mall, a large regional mall located in suburban Maryland, just outside of
Washington, DC, has become available for purchase. Mega Mall contains almost 500,000
square feet of retail space, including four department store anchor tenants and a collection of the
usual suspects for virtually every mall in America, circa 2004. Mega Mall was built in 1996 and
operated profitably from the date it opened until recently. Mega Mall is currently in need of
modernization and renovation, and in recent months, tenants have elected not to renew leases,
leaving an existing vacancy rate in excess of 20%.

       Consolidated Real Estate Values Associates (“CORVA”), a national retail mall developer
with offices located in Maryland, desires to acquire Mega Mall. CORVA transacts business
throughout the United States and is generally recognized as having great experience in real estate
financing, development and management. CORVA is also aware that there is a parcel of land
located adjacent to Mega Mall that could be acquired, and, upon acquisition, improved to
become a part of Mega Mall, adding at least another 150,000 square feet of retail space.

        CORVA, because of its many other commitments, desires an investor partner for the
acquisition of Mega Mall and approaches General Office for National and International Funds
(“GONIF”), a well-known venture capital investment firm with no experience in the
management of real estate assets, to participate. GONIF is highly interested in expanding its real
estate holdings and has sought out CORVA. While CORVA has neither the capital strength nor
liquidity of GONIF, it has a very strong financial statement based on its ownership of prime
retail properties throughout the Mid-Atlantic States, and has close connections to several other
potential equity investors. The potential venture by and among CORVA and GONIF is not one
of necessity and for all practical purposes, the negotiations are effectively by and between
equals.

        The acquisition of Mega Mall will be primarily financed through a third-party loan.
However, both CORVA and GONIF expect to invest significant cash, although GONIF’s capital
contribution will equal 75% of the initial capital and CORVA’s 25%. Both CORVA and GONIF
are interested in expanding Mega Mall with the acquisition of the adjoining property. Further,
some substantial capital improvements must be made to the mall in order to cure and correct
defects that were allowed to occur by the former owners and to make the mall more attractive to
new tenants. In addition, several important leases are due to expire and additional tenant
improvements will have to be made to those premises. In so planning, both parties want to know
that if desired, the acquisition of the additional property and construction of renovated and
additional retail space can be financed internally and, to that end, the parties agree upon the need
for additional capital.

        CORVA, with long experience in the retail business nationally, is selected as the manager
of the mall and administrative member of the limited liability company.




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