The Los Angeles area is one of the country’s largest metropolitan areas and one of the world’s leading economies. This five-county area posted a 2005 gross domestic product of $754.8 billion, which ranked it 15th largest among the world’s countries ranked by economic size. This 2005 gross domestic product grew by 7.4% over 2004 levels and has grown at a 6.0% compounded annual growth rate during the last five years, compared to a national average of 4.9%.

The five-county region’s total population climbed above 18.0 million in 2005, which is a greater population than each state in the United States other than the rest of California, Texas and New York. The 2005 population grew by 257,000 residents, or 1.5% over 2004 levels, and represented 9.3% of the country’s total population growth in 2005, though the area only represents 6.1% of the total U.S. population. As of September 2006, the Los Angeles area had 8.2 million employed workers and a 4.5% unemployment rate.

A significant portion of the Los Angeles area economy can be traced to Los Angeles County, which ranked as the 17th largest economy in the world in 2005, just behind the Netherlands. Los Angeles County’s gross product in 2005 was $424.1 billion, an increase of more than 6.7% from 2004 and has grown at a 5.5% compounded annual growth rate during the last five years.

Los Angeles County had a population of 10.2 million people as of 2005, which would make it the eighth largest state in the nation, just behind Ohio. The 2005 population grew by 0.9% over 2004 levels and has grown at a 1.3% compounded annual growth rate over the last five years. As of September 2006, Los Angeles County had 4.6 million employed workers and a 4.8% unemployment rate.

The Company focuses on properties that have alternate, more profitable uses achievable through major renovation, redevelopment or development. The Company is involved in a wide range of project types, including food industry, wholesale market, small tenant industrial and residential properties.

These projects are predominantly located in a densely urban, multi-ethnic environment, involve numerous local entitlement, property assemblage and physical challenges and are opportunities frequently overlooked by mainstream institutional investors and developers.

Most of the Company’s projects are located in or around the downtown area of Los Angeles, and all of its projects are in Southern California. Downtown Los Angeles is commonly defined as an area of approximately 350 city blocks, or approximately 2,500 acres, ringed by the U.S. Highway 101/ Santa Ana Freeway on the north, the Los Angeles River on the east, U.S. Interstate 10/Santa Monica Freeway to the south and the State Highway 110/Pasadena Freeway to the west.

With approximately 80 acres of land in downtown Los Angeles owned or controlled through executory purchase and sale agreements or options to purchase, the Company is the largest non-government landowner in downtown Los Angeles. By comparison, a 27-block area in the financial district of downtown Los Angeles, often referred to as Bunker Hill, that contains the bulk of downtown’s class A high-rise office buildings and major hotels and retail properties is situated on approximately 143 acres.

Incidental to its ownership of one of its projects, the Company owns and operates a cold storage business in an approximately 85,799 square foot facility.

Management fees increased by $32,000, or 14.8%, to $247,700 for the nine months ended September 30, 2006 compared to $215,700 for the nine months ended September 30, 2005.

Interest and other income decreased by $0.2 million, or 38.1%, to $0.4 million for the nine months ended September 30, 2006 compared to $0.6 million for the nine months ended September 30, 2005.

Operating expenses related to rental properties increased by $1.2 million, or 21.9%, to $6.4 million for the nine months ended September 30, 2006 compared to $5.2 million for the nine months ended September 30, 2005.

Interest expense increased by $5.5 million, or 45.9%, to $17.6 million for the nine months ended September 30, 2006 compared to $12.1 million for the nine months ended September 30, 2005.