Borelli Investment Company Begins Presales At Club Auto Sport in North San Jose

Innovative Concept Offers Commercial Condominiums with Concierge Services and an Exclusive Club for Car Enthusiasts

Some people who possess a true passion for auto racing or a love of vintage automobiles become serious car collectors. In the past, these growing collections have in turn created growing problems for their owners. Where does one store all these cars? Stashing autos at friends’ homes or in parking garages typically proves to be an impractical and expensive proposition.

Now, there is Club Auto Sport—Silicon Valley’s first purpose-built commercial condominium facility designed for racing and car enthusiasts—with a full line of timesaving concierge services and an exclusive club for owners.

The two-building, 120,000 square foot complex at 521 Charcot Avenue in North San Jose—which is being developed by a partnership led by avid car collectors and vintage racecar owners John Davis, Ralph Borelli and long-time local racecar driver, IRL and CART team owner, John Della Penna— will be undergoing $15 million in renovations. When completed, it will feature a clean high-tech design, 10,000 square foot state-of- the-art showroom and lounge area for watching televised motor sports events, a large conference room with audio and video conferencing, banquet and hospitality facilities, sophisticated electronic security with CCTV inside and out, and automated roll-up truck doors hidden from the street.

The Place for Auto Enthusiasts

Club Auto Sport promises to be a gathering place for fans of racing’s top Formula One, IRL, Champ Car, NASCAR, and other events—as well as dedicated car collectors. Condo owners will be able to store and care for their cars in the purpose-built units, getting together in the showroom or lounge to view some of the club members’ most notable cars on display or to cheer on their favorite drivers and race teams.

One of the biggest benefits of Club Auto Sport is the wide variety of services available to save time. Need to have one of your cars detailed, taken in for service, or filled up before you come to pick it up? Want your RV cleaned out, the tanks serviced, the refrigerator turned on, and the fuel and oil checked so it’s ready to go? Our “arrive-anddrive” services are for you. Plus, owners can have their cars delivered to their homes whenever they wish. All they have to do is call the Club Auto Sport concierge to arrange it.

Club Auto Sport’s banquet and hospitality facilities will be some of the best in the area, making the club ideal for charitable, political, corporate, or social gatherings of all kinds. Ample onsite parking will accommodate up to 100 cars outside the security gates for visitors. The complex’s central location in the Golden Triangle makes it easily accessible for owners and invited guests via I-880 or Hwy 101 or 237, or even flying in to Mineta San Jose International Airport—five minutes away.

“Club members will be able to participate in organized automobile and racing-related activities,” noted John Davis, founder of Air Systems, Inc. and president of Davis Motorsports. “These could include instructional track driving days, touring events, celebrity guest appearances, dinners, or high-profile charity events.”

Benefits of Condominium Ownership

Buyers at the Club Auto Sport condominium complex can purchase as much or as little space as needed, with units from 800 to 10,000 square feet. The smallest units will accommodate up to 4 cars, and more if stacking systems are used. All units have full-height demising walls, with built-in ventilation systems. The complex meets the strictest building codes, including the latest fire protection systems. Owner amenities can include private bathrooms (in addition to the building’s common restrooms with showers), kitchens, offices, and more. Utilities are Borelli Investment Company Begins Presales At Club Auto Sport in North San Jose Innovative Concept Offers Commercial Condominiums with Concierge Services and an Exclusive Club for Car Enthusiasts A members-only club for your car. And you. separately metered, and individually climatecontrolled condos are available. Borelli Investment Company, the developer of the project, is also offering turnkey units with standard or customized interiors.

Because owners are purchasing space—not leasing it—they receive a number of benefits: • Quick, but secure 24×7 access to vehicles • Control over occupancy costs • Ability to customize the space in any way desired, subject to Club Auto Sport bylaws • Potential long-term appreciation

“Plus, if the space is being purchased as part of a business, owners enjoy significant tax write-offs,” Borelli commented. “These benefits include cost segregation, the $112,000 Section 179 tax incentive, interest deductions, and other write-offs.”

Construction won’t start until early fall, with the first units available in late spring of 2008. However, presales are already underway, with Phase I approximately 30 percent sold out.

Club Auto Sport is truly a new concept in commercial condominiums, with Borelli Investment Company, a trendsetter in business condominiums, guiding the development.

“People who are passionate about auto racing and car collecting have had few options in the past,” remarked John Della Penna, of Della Penna Motor Sports. “Club Auto Sport is a unique place for cars—and their owners.”

For more information about Club Auto Sport, contact Ralph Borelli at (408) 453-4700, or e-mail ralph@borelli.com.

Local Commercial Real Estate Market Largely Unaffected by Residential Difficulties

Vacancy Rates and Late Loan Payments Among Lowest in 5 Years

Tighter Money Creating Some Challenges

Unless you have been stranded on a desert island lately, you are no doubt aware of theturmoil that has been created in the residential real estate market by the relatively large numbers of nonprime mortgages that have defaulted over the past              year. The difficulties have impacted home loan borrowers, lending institutions, investors in subprime mortgage securities, and the various financial markets themselves. But what has remained largely untouched todate has been commercial real estate. Even with the recent announcement that the deal to buy Carl Berg’s $1.8 billion Mission West Properties’ portfolio of commercial real estate had fallen through due to the inability of the prospective buyer  to secure financing, the commercial real estate market remains strong and largely untroubled.

“Thus far, the fallout from the subprime residential loan crisis appears to have had a limited effect on the local commercial real estate market,” said Edwin K.S. Ryu, principal and co-founder of Legacy Wealth Advisors, LLC, a San Jose-based investment advisory and wealth management firm.

Underpinnings Still Strong In examining the commercial real estate market, virtually every pillar supporting the industry in Silicon Valley remains solid. Recent earnings reports by Silicon Valley leaders such as Cisco Systems and Apple have been almost uniformly positive. Unemployment rates in the Valley have been trending steadily downward, even as job creation rates have been rising. The conversion of older R&D and industrial space into residential space in large areas of the Valley coupled with comparatively little new construction the past few years has resulted in a shrinking supply of commercial space. Increasing demand in the face of a decreasing supply has led to significant declines in commercial real estate vacancy rates in Silicon Valley, according to a Grubb & Ellis report. Vacancy rates for the Valley as a whole have broken through the 10 percent threshold for the first time in several years, spurring the construction of new office space. In the meantime, according to the same Grubb & Ellis report, lease rates for premium Class A commercial space rose nearly 6 percent in the most recent quarter, while lease rates for Class B space have increased approximately 3 percent. Clearly, this is not the case for residential property, where recent defaults have driven home prices considerably lower, and reduced loan availability as lenders try to increase liquidity as quickly as possible.

What It All Means While taking a wait-and-see approach or making low offers on desired properties may be a viable approach in the current residential real estate market, it is not likely to be a successful strategy in commercial real estate in Silicon Valley, according to Ryu—who was recently selected as one of the top 150 financial advisors to doctors in the nation by Medical Economics magazine. “Value comes from scarcity, and there is only so much commercial real estate available here in Silicon Valley, perhaps the choicest place in the world to do business,” Ryu remarked. “There will continue to be cycles, which we need to understand and respect. But in the long run, I view the overall market as a bullish one.” For further details or to review the latest commercial real estate information, contact Borelli Investment Company at (408) 453-4700, or e-mail info@borelli.com.

Silicon Valley Commercial Real Estate Market              at a Glance 5.67 – 6.76 million sq. ft.: range of 2006 qrtly. gross absorption 1 5.71 million sq. ft.: 1st qtr. 2007 gross absorption 1 $2.2 billion of venture capital invested in 1st qtr. 2007 2 21,500 new jobs added in 12 mos. ended 3/30/07 1 4.4% unemployment rate in 3/07, down from 4.6% in 2/07 1 .03% delinquency on comml. real estate loans, lowest in 5 yrs.3 Less than 10% vacancy rate on comml. real estate4 6% increase in rental rates on Class A office space4 3% increase in rental rates on Class B office space4 Sources               1 Colliers International 2007 1st Quarter Report               2 Dow Jones Venture Capital               3 California Mortgage Banker Association               4 Grubb & Ellis

Staff Spotlight: Mike Kronzer and Joe Vieira

This issue of the Insider features two of Borelli’s newest property managers, Mike Kronzer and Joe Vieira. Both men bring an extensive background in managing family real estate holdings to Borelli Investment Company. This makes them an ideal fit for Borelli’s long-time property management philosophy that it manages real estate for third-party owners as if it owned the property itself.

Background:Mike — Has been a real estate broker and commercial property manager since 1992. Prior to joining Borelli, was responsible for more than 300,000 sq. ft. of office, R&D, and manufacturing space in Los Gatos and Campbell. Born and raised in Silicon Valley, Mike is a graduate of San Jose State University.

Background:Joe — Is a life-long resident of the Santa Clara Valley, who graduated from Bellarmine College Preparatory in San Jose and St. Mary’s College in Moraga. Was part of a public accounting firm for more than a decade, and also served as director of finance and administration with a major labor union, which covers four Western states and represents more than 40,000 members.

Responsibilities:Mike and Joe will both be responsible for managing and maintaining commercial properties in Borelli’s four million square foot portfolio to maximize their asset potential, while responding promptly and efficiently to tenant needs. Joe specializes in retail properties and uses his background as a CPA to maximize the ROI for owners. Mike efficiently manages a broad cross-section of properties in office, R&D, and industrial categories.

Business Philosophy:“We are committed to helping property owners and investors provide a safe and comfortable environment for tenants, stay within budgets, and generate the highest possible returns for their investment.”

Secret to Success:“We focus on providing personalized services and assistance evaluating and selecting properties, obtaining favorable lease terms, maximizing tax advantages, minimizing expenses and turnover, managing operations, and maintaining properties at their highest and best uses,” said Mike.

Hungry For a Tasty Deli Opportunity

If you (or a client) have a taste for the deli business, here’s an exciting new recipe for success. Don’t lease your space—buy it.

Delicatessens often face high labor costs and narrow margins, making it critical to manage expenses efficiently. One of a deli owner’s largest expenses is occupancy costs.

Now, at Junction Office Center, 2051 Junction Avenue in San Jose, you can purchase space for your deli—and lock-in your occupancy costs, while enjoying the significant tax advantages and other benefits of property ownership.

• High-quality, 1,286 sq. ft. facility
• Exclusive access to 400 sq. ft. outdoor dining area
• Only deli in 52 unit, 77,400 sq. ft. office complex—for built-in clientele
• Street signage provided
• Ideal Golden Triangle location—56,000 employees within 3 miles and 220,000 employees within 5 miles
• Plumbing and electrical infrastructure in place
• Plenty of customer parking
• Turnkey plan available

BIC-015 fund in conjunction with Aster Avenue Associates raises $10 million; Sunnyvale townhome project now underway

Opportunities are often fleeting, but this one was particularly short-lived.  Borelli Investment Company raised $10 million in only one week for its latest investment fund—BIC-015—offered in conjunction with Aster Avenue Associates.  Investors snapped up the $100,000 shares, which are projected to pay an annual return of 12 percent over the expected 18- to 24-month holding period.

With the money for the project now raised, KB Home—California’s largest builder of new homes and one of the nation’s top five—has begun construction of a community of 80 townhomes in a close-in location near Lawrence Expressway and Monroe in the heart of Sunnyvale. The townhomes will put residents close to high-tech jobs and near major transportation arteries, in addition to CalTrain. KB Home plans to price the townhomes toward the affordable end of the spectrum for Silicon Valley.

“Affordable housing remains critical for Silicon Valley’s vitality,” said Ralph N. Borelli.  “KB Home recognized that, and so did the investors who bought into the fund. We continue to look for other projects that make economic sense as the target vehicles for future investment funds.”

Interested parties who would like more information about the recently closed fund, or who would like to inquire about future investment opportunities, can reach Ralph Borelli at (408) 453-4700,  or e-mail ralph@borelli.com.

This is not an offer to sell, nor a solicitation of an offer to buy shares in any current or future investment funds offered by Borelli Investment Company. Investment shares in BIC funds are offered only in conjunction with the offering prospectus. Please read carefully before you make any investment decision, and consult with an investment professional for advice and guidance regarding your personal financial situation.