CDLAF 2nd Quarter Update to the US Housing Markets and current opportunities

In our last written correspondence we suggested in the fourth quarter of 2009, that the best time and the worst time to procrastinate were right now. We have seen since then an increase in the US transferrable that have real estate in their underlined values increasing from 75-100% in the past 9 months.

We have witnessed a rally in the REIT Stocks, The US homebuilders, CMBS and bid values for most marketable securities. These values have risen despite the wall of worry of job losses and surplus deficits. Warren Buffets famous saying “that the worst of times is the best for the prudent investor”.

CDLAF now see a significant opportunity to still participate while the wall of worry remains in their sector of the real estate market, the physical ownership of income producing properties such as apartment buildings, single family tracts, and the ownership of distressed first charge mortgages.

While the values in the transferable have risen, the underlined physical real estate has just now begun a clear upward trend that just recently started in the fourth quarter of 2009. Historically real estate does not act like transferable securities in that they typically move in one direction until the market finds stability. Once achieving this point where buyers and seller are transacting business the market normally remains within a very tight trading range. In the 2nd quarter of 2010 we are, and will likely stay for the next several years, in this tight range. Markets are local driven in the US and the job market being weak will prevent any likely moderation in this pattern for several years. The secret today’s is for investors to align themselves with local operators who have access to distressed real estate and the local expertise to turn around and create value. CDLAF and its portfolio managers have done exactly this for more than 25 + years.

As a investor who may not have participated in the significant rally in real estate stocks and bonds through CDLAF you will today be able to allocate funds to a sector that has been risk adjusted and will likely produce outsized returns for the next five to six years. Recent articles support the position of the Sponsor in that markets are finding some housing shortages when the prices have fallen to a point of affordability, that home ownership can be less than the cost of rents in many US markets.

The US has seen greater swings in value than most of the EU, and today finds itself well positioned given that 77% of the American Family of four can now afford a single family homes, as opposed to 17% at the peak of the last cycle. Home velocity, has exceed the rate of new home production and that of new foreclosures for the past six months by a factor of 2. We are seeing home inventories falling rapidly as has been recently reported in ------------ WSJ, LA Times , Bloomberg,

It might seem odd that we can now forecast housing shortages in some markets in 2011 which we believe is going to be a surprised to most of the readers. We again repeat our fourth quarter forecast and wish to remind you that CDLAF is now perfectly aligned to take advantage of this clear opportunity.

“We believe that right now is the time to invest- no bell is going to ring any louder, than the clear economic and statistical signals we are now seeing. “

CDLAF Sponsor and Portfolio managers have been for more than 25 years producing excellent results in the physical ownership of real estate having completed 300 past partnerships for over$ 7 billion of past projects. We strive to repeat the same success we have seen in past markets where a recovery is in the initial stages. Meetings are underway in London and ? for the initial CDLAF first closing on “30th of April 2010. …..