Transcontinental Realty Investors (TCI) SC 13E3/A Going private transaction (amended)

EXHIBIT 99.2

ARL / IORI / TCI Merger

EXHIBITS TO THE BOARD PRESENTATION

January 2002

	HOULIHANLOKEYHOWARD &ZUKIN
	Investment Bankers
	1930 Century Park West
	Los Angeles, California 90067
	(310) 553-8871 •http://www.hlhz.com Los Angeles • New York • Chicago • San Francisco Washington, D.C. • Minneapolis • Dallas • Atlanta • Toronto

ARL/IORI/TCI Merger

Table of Contents

	Section
ARL Valuation Detail		A
IORI Valuation Detail		B
TCI Valuation Detail		C
Joint Venture Properties Valuation		D
Market Analysis		E
Public Companies Analysis		F

Houlihan Lokey Howard & Zukin i

ARL Valuation Detail

ARL Income Producing, Real Estate Portfolio Approach

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Portfolio Approach

ARL Portfolio Approach

($ in Thousands)

	Latest Twelve Months		Selected
	Net Operating Income		Capitalization Rate Range(1)						Valuation Indication Range
Apartment Portfolio	$	24,200		9.5	%	—	10.5	%	$	230,500	—	$	254,700
Office Portfolio	$	5,579		10.0	%	—	11.0	%	$	50,700	—	$	55,800
Shopping Center Portfolio	$	8,482		11.0	%	—	12.0	%	$	70,700	—	$	77,100
Hotel Portfolio	$	9,630		12.0	%	—	14.0	%	$	68,800	—	$	80,300
Total ARL Portfolio									$	420,700	—	$	467,900

(1) Based upon comparable public companies implied capitalization rates.

Houlihan Lokey Howard & Zukin 5

ARL Income Producing, Real Estate Net Asset Approach

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Apartment Assets Net Asset Value Approach Summary

($ in Thousands)

						NAV Valuation Indication				Valuation Indication Range
	Rentable
ARL Apartment Asset	Square Feet		Occupancy			LTM		2002		Low			High		HLHZ Selected Value
Arlington Place		205,476		93	%	$	5,909	$	5,969	$	5,909	—	$	5,969	$	5,90	—	$	6,000
Bay Anchor		10,700		100	%		288		276		276	—		288		300	—		300
Blackhawk		190,520		94	%		6,859		6,255		6,255	—		6,859		6,300	—		6,900
Bridgestone		65,519		99	%		2,325		2,473		2,325	—		2,473		2,300	—		2,500
Chateau		99,220		97	%		3,497		3,494		3,494	—		3,497		3,500	—		3,500
Chateau Bayou		105,536		89	%		4,449		4,427		4,427	—		4,449		4,400	—		4,400
Confederate Point		277,860		96	%		10,166		9,682		9,682	—		10,166		9,700	—		10,200
Conradi House		49,900		98	%		1,635		1,488		1,488	—		1,635		1,500	—		1,600
Da luce		95,432		96	%		3,898		3,564		3,564	—		3,898		3,600	—		3,900
Falcon House		71,220		95	%		2,898		2,884		2,884	—		2,898		2,900	—		2,900
Foxwood		212,000		90	%		7,145		6,597		6,597	—		7,145		6,600	—		7,100
Georgetown		36,160		100	%		1,074		1,073		1,073	—		1,074		1,100	—		1,100
Governor Square		146,550		95	%		5,307		5,569		5,307	—		5,569		5,300	—		5,600
Grand Lagoon		47,460		93	%		2,296		2,290		2,290	—		2,296		2,300	—		2,300
Greenbriar		36,600		98	%		1,910		1,806		1,806	—		1,910		1,800	—		1,900
La Mirada		341,400		88	%		8,007		7,931		7,931	—		8,007		7,900	—		8,000
Lake Chateau		65,800		95	%		1,641		1,556		1,556	—		1,641		1,600	—		1,600
Lake Shore Villas		259,176		95	%		8,790		14,981		8,790	—		14,981		14,00	—		16,000
Landings/Marina		34,484		96	%		1,771		1,781		1,771	—		1,781		1,800	—		1,800
Lee Hills		14,720		97	%		492		479		479	—		492		500	—		500
Mallard Lake		295,560		97	%		13,527		12,642		12,642	—		13,527		12,60	—		13,500
Mediterranean Villas		158,960		96	%		3,886		3,742		3,742	—		3,886		3,700	—		3,900
Morning Star		41,000		99	%		1,994		1,893		1,893	—		1,994		1,900	—		2,000
Northside Villas		134,000		97	%		5,326		4,986		4,986	—		5,326		5,000	—		5,300
Oak Hill		81,240		95	%		3,378		3,156		3,156	—		3,378		3,200	—		3,400
Oak Tree		160,591		89	%		4,135		4,151		4,135	—		4,151		4,100	—		4,200
Park Avenue		78,979		98	%		5,315		5,167		5,167	—		5,315		5,200	—		5,300
Pheasant Ridge		243,960		94	%		8,946		9,340		8,946	—		9,340		8,900	—		9,300
Pinecrest		46,400		100	%		1,592		1,442		1,442	—		1,592		1,400	—		1,600
Quail Point		202,602		90	%		4,505		4,340		4,340	—		4,505		4,300	—		4,500
Regency Apartments		111,700		93	%		4,371		4,318		4,318	—		4,371		4,300	—		4,400
Regency On Kennedy		55,810		97	%		3,210		3,205		3,205	—		3,210		3,200	—		3,200
Rolling Hills		115,730		96	%		4,461		4,365		4,365	—		4,461		4,400	—		4,500
Seville		63,360		97	%		2,368		2,273		2,273	—		2,368		2,300	—		2,400
Stonebridge		140,576		97	%		4,097		3,954		3,954	—		4,097		4,000	—		4,100
Stonegate		34,900		99	%		1,628		1,495		1,495	—		1,628		1,500	—		1,600
Sun Hollow		156,000		97	%		5,610		5,080		5,080	—		5,610		5,100	—		5,600
Sunset		160,400		85	%		1,692		1,993		1,692	—		1,993		1,700	—		2,000
Tavel Circle		2,271	NA			NA		NA		NA		—	NA			400	—		400
Valley Hi		27,800		98	%		1,254		1,152		1,152	—		1,254		1,200	—		1,300
Villa Del Mar		128,004		91	%		3,216		3,381		3,216	—		3,381		3,200	—		3,400
Villager		22,840		91	%		835		839		835	—		839		800	—		800
Villas OF Plano		156,632		94	%		8,235		8,149		8,149	—		8,235		8,100	—		8,200
Waters Edge III		212,216		92	%		7,894		8,151		7,894	—		8,151		7,900	—		8,200
Westwood		93,000		93	%		4,629		4,520		4,520	—		4,629		4,500	—		4,600
Westwood Parc		55,950		99	%		2,544		2,379		2,379	—		2,544		2,400	—		2,500
Whispering Pines		299,264		97	%		8,836		8,574		8,574	—		8,836		8,600	—		8,800
White Pines		17,000		93	%		541		531		531	—		541		500	—		500
Windsor Tower		66,000		98	%		2,294		2,240		2,240	—		2,294		2,200	—		2,300
Woodhollow		348,692		89	%		9,726		9,251		9,251	—		9,726		9,300	—		9,700
Woodlake		210,208		99	%		10,638		10,697		10,638	—		10,697		10,60	—		10,700
Woodsong II		207,460		97	%		8,616		8,849		8,616	—		8,849		8,600	—		8,800
Woodstock		222,112		94	%		9,221		9,666		9,221	—		9,666		9,200	—		9,700
Portfolio		6,716,950								$	231,950	—	$	247,420	$	237,00	—	$	248,800

Houlihan Lokey Howard & Zukin 7

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Apartment Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent/		Market			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
ARL Apartment Asset	City	State	Year Built		Occupancy			Sq. Ft.		Monitor			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
Arlington Place	Pasadena	TX		1973		93	%	$	0.43		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Bay Anchor	Panama City	FL		1979		100	%		0.27		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Blackhawk	Ft. Wayne	IN		1972		94	%		0.26		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Bridgestone	Friendswood	TX		1979		99	%		0.34		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Chateau	Bellevue	NE		1968		97	%		0.36		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
	Ocean
Chateau Bayou	Springs	MS		1973		89	%		0.25		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Confederate Point	Jacksonville	FL		1969		96	%		0.20		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Conradi House	Tallahassee	FL		1968		98	%		0.35		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Da luce	Tallahassee	FL		1974		96	%		0.26		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Falcon House	Ft. Walton	FL		1969		95	%		0.27		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Foxwood	Memphis	TN		1974		90	%		0.25		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Georgetown	Panama City	FL		1974		100	%		0.33		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Governor Square	Tallahassee	FL		1974		95	%		0.28		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Grand Lagoon	Panama City	FL		1979		93	%		0.31		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Greenbriar	Tallahassee	FL		1985		98	%		0.27		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
La Mirada	Jacksonville	FL		1971		88	%		0.28		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Lake Chateau	Thomasville	GA		1972		95	%		0.26		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
	Harris
Lake Shore Villas	County	TX		2000		95	%		0.33		9.4	%		9.0	%		9.4	%		-0.5	%		8.9	%		0.5	%		9.4	%
Landings/Marina	Pensacola	FL		1979		96	%		0.34		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Lee Hills	Tallahassee	FL		1974		97	%		0.25		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Mallard Lake	Greensboro	NC		1974		97	%		0.23		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Mediterranean Villas	San Antonio	TX		1967		96	%		0.27		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Morning Star	Tallahassee	FL		1970		99	%		0.37		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Northside Villas	Tallahassee	FL		1973		97	%		0.28		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Oak Hill	Tallahassee	FL		1974		95	%		0.25		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Oak Tree	Grandview	MO		1968		89	%		0.32		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Park Avenue	Tallahassee	FL		1985		98	%		0.27		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Pheasant Ridge	Bellevue	NE		1974		94	%		0.31		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Pinecrest	Tallahassee	FL		1978		100	%		0.29		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Quail Point	Huntsville	AL		1960		90	%		0.23		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Regency Apartments	Lincoln	NE		1973		93	%		0.28		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Regency On Kennedy	Tampa	FL		1967		97	%		0.38		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Rolling Hills	Tallahassee	FL		1972		96	%		0.28		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Seville	Tallahassee	FL		1972		97	%		0.25		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Stonebridge	Florissant	MO		1975		97	%		0.21		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Stonegate	Tallahassee	FL		1972		99	%		0.36		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Sun Hollow	El Paso	TX		1977		97	%		0.31		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Sunset	Odessa	TX		1981		85	%		0.27		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Tavel Circle	Dallas	TX	NA		NA			NA			9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Valley Hi	Tallahassee	FL		1980		98	%		0.35		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Villa Del Mar	Wichita	KS		1971		91	%		0.29		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Villager	Ft. Walton	FL		1972		91	%		0.37		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Villas Continental	Clay County	FL		1965-1974		99	%		0.34		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Villas OF Plano	Plano	TX		1977		94	%		0.42		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Waters Edge III	Gulfport	MS		1968		92	%		0.26		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Westwood	Mary Ester	FL		1972		93	%		0.29		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Westwood Parc	Tallahassee	FL		1974		99	%		0.33		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Whispering Pines	Topeka	KS		1972		97	%		0.25		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
White Pines	Tallahassee	FL		1974		93	%		0.40		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Windsor Tower	Ocala	FL		1982		98	%		0.22		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Woodhollow	San Antonio	TX		1974		89	%		0.33		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Woodlake	Carrollton	TX		1979		99	%		0.36		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Woodsong II	Smyrna	GA		1975		97	%		0.24		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Woodstock	Dallas	TX		1977		94	%		0.32		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%

Houlihan Lokey Howard & Zukin 8

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Apartment Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
ARL Apartment Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/ Sq. Ft.
Arlington Place			205,476	$	613	$	95	$	58	$	58	$	555		9.4	%	$	5,909	$	28.76
Bay Anchor			10,700		29		4		3		3		26		9.1	%		288		26.93
Blackhawk			190,520		697		144		52		52		645		9.4	%		6,859		36.00
Bridgestone			65,519		238		34		19		19		219		9.4	%		2,325		35.49
Chateau			99,220		361		69		29		29		332		9.5	%		3,497		35.24
Chateau Bayou			105,536		453		121		31		31		423		9.5	%		4,449		42.16
Confederate Point			277,860		977		196		52		52		925		9.1	%		10,166		36.59
Conradi House			49,900		173		43		25		25		149		9.1	%		1,635		32.76
Da luce			95,432		383		104		28		28		355		9.1	%		3,898		40.84
Falcon House			71,220		284		39		21		21		264		9.1	%		2,898		40.69
Foxwood			212,000		734		137		55		55		679		9.5	%		7,145		33.70
Georgetown			36,160		109		16		11		11		98		9.1	%		1,074		29.71
Governor Square			146,550		525		56		42		42		483		9.1	%		5,307		36.21
Grand Lagoon			47,460		222		23		14		14		209		9.1	%		2,296		48.38
Greenbriar			36,600		186		9		13		13		174		9.1	%		1,910		52.19
La Mirada			341,400		809		439		80		80		729		9.1	%		8,007		23.45
Lake Chateau			65,800		180		41		25		25		156		9.5	%		1,641		24.94
Lake Shore Villas			259,176		860		102		78		78		782		8.9	%		8,790		33.91
Landings/Marina			34,484		174		20		13		13		161		9.1	%		1,771		51.36
Lee Hills			14,720		49		5		4		4		45		9.1	%		492		33.41
Mallard Lake			295,560		1,369		203		84		84		1,285		9.5	%		13,527		45.77
Mediterranean Villas			158,960		400		70		35		35		365		9.4	%		3,886		24.45
Morning Star			41,000		202		54		21		21		181		9.1	%		1,994		48.63
Northside Villas			134,000		505		112		20		20		485		9.1	%		5,326		39.74
Oak Hill			81,240		330		36		23		23		307		9.1	%		3,378		41.58
Oak Tree			160,591		440		193		47		47		393		9.5	%		4,135		25.75
Park Avenue			78,979		514		74		30		30		484		9.1	%		5,315		67.29
Pheasant Ridge			243,960		916		292		66		66		850		9.5	%		8,946		36.67
Pinecrest			46,400		157		22		12		12		145		9.1	%		1,592		34.31
Quail Point			202,602		474		79		46		46		428		9.5	%		4,505		22.23
Regency Apartments			111,700		442		86		27		27		415		9.5	%		4,371		39.13
Regency On Kennedy			55,810		312		44		20		20		292		9.1	%		3,210		57.52
Rolling Hills			115,730		439		64		34		34		406		9.1	%		4,461		38.55
Seville			63,360		231		20		16		16		215		9.1	%		2,368		37.37
Stonebridge			140,576		414		113		25		25		389		9.5	%		4,097		29.14
Stonegate			34,900		169		17		21		21		148		9.1	%		1,628		46.66
Sun Hollow			156,000		581		84		54		54		527		9.4	%		5,610		35.96
Sunset			160,400		219		85		60		60		159		9.4	%		1,692		10.55
Tavel Circle			2,271	NA		NA		NA		NA		NA			9.4	%	NA		NA
Valley Hi			27,800		128		17		14		14		114		9.1	%		1,254		45.11
Villa Del Mar			128,004		343		159		41		41		302		9.4	%		3,216		25.12
Villager			22,840		84		15		8		8		76		9.1	%		835		36.57
Villas OF Plano			156,632		826		142		52		52		774		9.4	%		8,235		52.58
Waters Edge III			212,216		809		209		60		60		750		9.5	%		7,894		37.20
Westwood			93,000		451		51		30		30		421		9.1	%		4,629		49.78
Westwood Parc			55,950		255		25		24		24		232		9.1	%		2,544		45.48
Whispering Pines			299,264		911		156		80		80		831		9.4	%		8,836		29.52
White Pines			17,000		71		17		21		21		49		9.1	%		541		31.85
Windsor Tower			66,000		225		25		16		16		209		9.1	%		2,294		34.76
Woodhollow			348,692		1,051		399		137		137		914		9.4	%		9,726		27.89
Woodlake			210,208		1,064		268		64		64		1,000		9.4	%		10,638		50.61
Woodsong II			207,460		866		171		48		48		819		9.5	%		8,616		41.53
Woodstock			222,112		947		66		80		80		867		9.4	%		9,221		41.51
	Portfolio		6,716,950	$	24,200	$	5,062	$	1,961	$	1,961	$	22,240				$	238,875	$	35.56

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $250 per unit annually.

Houlihan Lokey Howard & Zukin 9

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Apartment Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
ARL Apartment Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/Sq. Ft.
Arlington Place			205,476	$	648	$	141	$	58	$	58	$	591		9.9	%	$	5,969	$	29.05
Bay Anchor			10,700		29		7		3		3		26		9.6	%		276		25.79
Blackhawk			190,520		671		206		52		52		619		9.9	%		6,255		32.83
Bridgestone			65,519		264		71		19		19		245		9.9	%		2,473		37.74
Chateau			99,220		378		158		29		29		349		10.0	%		3,494		35.21
Chateau Bayou			105,536		473		61		31		31		443		10.0	%		4,427		41.95
Confederate Point			277,860		981		245		52		52		930		9.6	%		9,682		34.85
Conradi House			49,900		167		53		25		25		143		9.6	%		1,488		29.83
Da luce			95,432		370		92		28		28		342		9.6	%		3,564		37.35
Falcon House			71,220		297		54		21		21		277		9.6	%		2,884		40.49
Foxwood			212,000		715		212		55		55		660		10.0	%		6,597		31.12
Georgetown			36,160		114		21		11		11		103		9.6	%		1,073		29.68
Governor Square			146,550		577		183		42		42		535		9.6	%		5,569		38.00
Grand Lagoon			47,460		233		29		14		14		220		9.6	%		2,290		48.25
Greenbriar			36,600		186		33		13		13		173		9.6	%		1,806		49.34
La Mirada			341,400		841		711		80		80		761		9.6	%		7,931		23.23
Lake Chateau			65,800		180		54		25		25		156		10.0	%		1,556		23.65
Lake Shore Villas			259,176		1,486		114		78		78		1,408		9.4	%		14,981		57.80
Landings/Marina			34,484		184		22		13		13		171		9.6	%		1,781		51.65
Lee Hills			14,720		50		10		4		4		46		9.6	%		479		32.54
Mallard Lake			295,560		1,348		260		84		84		1,264		10.0	%		12,642		42.77
Mediterranean Villas			158,960		405		58		35		35		370		9.9	%		3,742		23.54
Morning Star			41,000		202		34		21		21		182		9.6	%		1,893		46.18
Northside Villas			134,000		499		94		20		20		479		9.6	%		4,986		37.21
Oak Hill			81,240		326		54		23		23		303		9.6	%		3,156		38.85
Oak Tree			160,591		462		196		47		47		415		10.0	%		4,151		25.85
Park Avenue			78,979		526		60		30		30		496		9.6	%		5,167		65.43
Pheasant Ridge			243,960		1,000		190		66		66		934		10.0	%		9,340		38.29
Pinecrest			46,400		150		41		12		12		138		9.6	%		1,442		31.08
Quail Point			202,602		480		152		46		46		434		10.0	%		4,340		21.42
Regency Apartments			111,700		458		91		27		27		432		10.0	%		4,318		38.66
Regency On Kennedy			55,810		327		48		20		20		308		9.6	%		3,205		57.42
Rolling Hills			115,730		453		139		34		34		419		9.6	%		4,365		37.72
Seville			63,360		234		63		16		16		218		9.6	%		2,273		35.88
Stonebridge			140,576		420		145		25		25		395		10.0	%		3,954		28.13
Stonegate			34,900		164		38		21		21		144		9.6	%		1,495		42.85
Sun Hollow			156,000		557		132		54		54		503		9.9	%		5,080		32.57
Sunset			160,400		257		92		60		60		197		9.9	%		1,993		12.43
Tavel Circle			2,271	NA		NA		NA		NA		NA			9.9	%	NA		NA
Valley Hi			27,800		124		22		14		14		111		9.6	%		1,152		41.45
Villa Del Mar			128,004		375		113		41		41		335		9.9	%		3,381		26.41
Villager			22,840		89		32		8		8		81		9.6	%		839		36.75
Villas OF Plano			156,632		859		77		52		52		807		9.9	%		8,149		52.03
Waters Edge III			212,216		875		105		60		60		815		10.0	%		8,151		38.41
Westwood			93,000		464		90		30		30		434		9.6	%		4,520		48.60
Westwood Parc			55,950		252		59		24		24		228		9.6	%		2,379		42.51
Whispering Pines			299,264		929		167		80		80		849		9.9	%		8,574		28.65
White Pines			17,000		72		22		21		21		51		9.6	%		531		31.23
Windsor Tower			66,000		231		30		16		16		215		9.6	%		2,240		33.94
Woodhollow			348,692		1,052		288		137		137		916		9.9	%		9,251		26.53
Woodlake			210,208		1,123		77		64		64		1,059		9.9	%		10,697		50.89
Woodsong II			207,460		932		98		48		48		885		10.0	%		8,849		42.65
Woodstock			222,112		1,037		95		80		80		957		9.9	%		9,666		43.52
	Portfolio		6,716,950	$	25,531	$	5,639	$	1,961	$	1,961	$	23,570				$	240,495	$	35.80

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $250 per unit annually.

Houlihan Lokey Howard & Zukin 10

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Hotel Assets Net Asset Value Approach Summary

($ in Thousands)

						NAV Valuation Indication				Valuation Indication Range
	Number		Average
ARL Hotel Asset	of Rooms		Occupancy			LTM		2002		Low			High		HLHZ Selected Value
Best Western		110		60.0	%	$	7,830	$	8,346	$	7,830	—	$	8,346	$	7,800	—	$	8,300
Grand Hotel Sofia		145		*			8,032		12,067		8,032	—		12,067		10,000	—		12,000
Holiday Inn		196		72.0	%		6,106		5,385		5,385	—		6,106		5,400	—		6,100
Piccadilly Airport		185		61.0	%		1,950		4,198		1,950	—		4,198		3,500	—		4,500
Piccadilly Chateau		78		58.0	%		1,751		1,503		1,503	—		1,751		1,500	—		1,800
Piccadilly Shaw		194		69.0	%		6,494		6,272		6,272	—		6,494		6,300	—		6,500
Piccadilly University		190		55.0	%		6,890		6,335		6,335	—		6,890		6,300	—		6,900
Quality Inn		161		69.0	%		3,364		3,338		3,338	—		3,364		3,300	—		3,400
Williamsburg Hospitality House		296		60.0	%		15,339		15,491		15,339	—		15,491		15,300	—		15,500
Portfolio		1,555								$	55,983	—	$	64,706	$	59,400	—	$	65,000

Houlihan Lokey Howard & Zukin 11

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Hotel Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
					Average			Avg. Revenue		Implied			Cushman &			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
ARL Hotel Asset	City	State	Year Built		Occupancy			Per Room		Comps(1)			Wakefield			Rate			Adj.(2)			Rate			Adjustment			Rate
Best Western	Virginia Beach	VA		1983		60	%	$	21.81		13.6	%		10.9	%		10.9	%		2.5	%		13.4	%		0.5	%		13.9	%
Grand Hotel Sofia	Sofia, Bulgaria	NA		1969		*			26.41		13.6	%		10.9	%		10.9	%		5.0	%		15.9	%		0.5	%		16.4	%
Holiday Inn	Kansas City	MO		1974		72.0	%		25.10		13.6	%		10.9	%		10.9	%		2.5	%		13.4	%		0.5	%		13.9	%
Piccadilly Airport	Fresno	CA		1970		61.0	%		27.68		13.6	%		10.9	%		10.9	%		3.0	%		13.9	%		0.5	%		14.4	%
Piccadilly Chateau	Fresno	CA		1989		58.0	%		12.62		13.6	%		10.9	%		10.9	%		3.0	%		13.9	%		0.5	%		14.4	%
Piccadilly Shaw	Fresno	CA		1973		69.0	%		23.02		13.6	%		10.9	%		10.9	%		3.0	%		13.9	%		0.5	%		14.4	%
Piccadilly University	Fresno	CA		1984		55.0	%		21.15		13.6	%		10.9	%		10.9	%		3.0	%		13.9	%		0.5	%		14.4	%
Quality Inn	Denver	CO		1974		69.0	%		13.66		13.6	%		10.9	%		10.9	%		4.0	%		14.9	%		0.5	%		15.4	%
Williamsburg Hospitality House	Williamsburg	VA		1973		60.0	%		28.09		13.6	%		10.9	%		10.9	%		2.0	%		12.9	%		0.5	%		13.4	%

(1)	Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.
(2)	Capitalization rate adjustment is based upon several factors including age, location, flag, type and financial performance of the hotels. In addition adjustment reflects additional risk related to lodging properties resulting from the September, 11 attacks.

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ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Hotel Assets LTM Net Asset Value Approach

($ in Thousands)

			LTM		LTM			Normalized		Selected				Selected					Implied
	Number		Net Operating		Capital			Capital		Capital		Selected		Capitalization			Valuation		Valuation
ARL Hotel Asset	of Rooms		Income		Expenditures			Expenditures		Expenditures		NOI (1)		Rate			Indication		/Room
Best Western		110	$	1,157	$	133		$	108	$	108	$	1,049		13.4	%	$	7,830	$	71.18
Grand Hotel Sofia		145		1,449		0			172		172		1,277		15.9	%		8,032		55.39
Holiday Inn		196		1,040		(4	)		221		221		818		13.4	%		6,106		31.15
Piccadilly Airport		185		501		951			230		230		271		13.9	%		1,950		10.54
Piccadilly Chateau		78		288		98			44		44		243		13.9	%		1,751		22.45
Piccadilly Shaw		194		1,104		223			201		201		903		13.9	%		6,494		33.47
Piccadilly University		190		1,139		58			181		181		958		13.9	%		6,890		36.26
Quality Inn		161		600		33			99		99		501		14.9	%		3,364		20.90
Williamsburg Hospitality House		296		2,353		(222	)		374		374		1,979		12.9	%		15,339		51.82
Portfolio		1,555	$	9,630	$	1,268		$	1,631	$	1,631	$	7,999				$	57,755	$	37.14

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of 4.5% of revenue annually.

Houlihan Lokey Howard & Zukin 13

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Hotel Assets 2002 Net Asset Value Approach

($ in Thousands)

			2002		2002		Normalized		Selected				Selected					Implied
	Number		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
ARL Hotel Asset	of Rooms		Income		Expenditures		Expenditures		Expenditures		NOI (1)		Rate			Indication		/Room
Best Western		110	$	1,276	$	119	$	115	$	115	$	1,160		13.9	%	$	8,346	$	75.87
Grand Hotel Sofia		145		2,191		47		212		212		1,979		16.4	%		12,067		83.22
Holiday Inn		196		965		181		216		216		748		13.9	%		5,385		27.47
Piccadilly Airport		185		865		215		261		261		604		14.4	%		4,198		22.69
Piccadilly Chateau		78		262		41		45		45		216		14.4	%		1,503		19.27
Piccadilly Shaw		194		1,110		174		207		207		903		14.4	%		6,272		32.33
Piccadilly University		190		1,100		145		188		188		912		14.4	%		6,335		33.34
Quality Inn		161		617		89		103		103		514		15.4	%		3,338		20.73
Williamsburg Hospitality House		296		2,456		295		380		380		2,076		13.4	%		15,491		52.33
Portfolio		1,555	$	10,842	$	1,306	$	1,728	$	1,728	$	9,114				$	62,934	$	40.47

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of 4.5% of revenue annually.

Houlihan Lokey Howard & Zukin 14

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Office Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication						Valuation Indication Range					HLHZ Selected Value
		Rentable
ARL Office Asset		Square Feet		Occupancy			LTM		2002		DCF		Low			High
56 Expressway			54,649		66	%	$	1,498	$	913	$	2,355	$	913	—	$	2,355	$	900	—	$	1,500
Centura			410,901		47	%		5,252		23,376		51,955		5,252	—		51,955		65,000	—		65,000	(1)
Cooley Building			27,000		69	%	NMF			1,844		1,425		1,425	—		1,844		1,400	—		1,800
Encino Executive Plaza			177,211		94	%		29,617		24,471		28,505		24,471	—		29,617		24,500	—		29,600
Executive Court			41,840		73	%		2,386	NMF			1,990		1,990	—		2,386		2,000	—		2,400
Melrose Business Park			124,200		80	%		1,294		960		2,180		960	—		2,180		1,000	—		2,200
One Hickory Centre			102,615		96	%		7,106		10,456	NMF			7,106	—		10,456		8,000	—		10,000
Rosedale Towers			84,798		91	%		6,499		7,277		6,850		6,499	—		7,277		6,500	—		7,300
Two Hickory Centre			167,981		49	%	NMF			8,783		9,895		8,783	—		9,895		8,800	—		9,900
Sesame Square (University Square)			22,260		100	%		1,275		1,777		1,385		1,275	—		1,777		1,300	—		1,800
	Portfolio		1,213,455										$	58,674	—	$	119,742	$	119,400		$	131,500

(1) Valued at the “As is” appraisal value of $65 million, per discussions with management.

Houlihan Lokey Howard & Zukin 15

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Office DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
ARL Office Asset	Occupancy			Rate(1)			Rate			Adjustment(2)			Discount Rate			Valuation Indications
56 Expressway		66	%		10.7	%		14.3	%		2.0	%		16.3	%	$	2,200	—	$	2,510
Centura Tower		47	%		10.7	%		14.3	%		4.0	%		18.3	%		48,850	—		55,060
The Collections		91	%		10.0	%		12.0	%		1.0	%		13.0	%		21,010	—		24,000
Cooley Building		69	%		10.7	%		14.3	%		2.0	%		16.3	%		1,340	—		1,510
Encino Executive Plaza		94	%		10.6	%		12.0	%		1.0	%		13.0	%		26,690	—		30,320
Executive Court		73	%		10.7	%		14.3	%		0.0	%		14.3	%		1,850	—		2,130
Melrose Business Park		80	%		10.6	%		13.3	%		3.5	%		16.8	%		2,040	—		2,320
One Hickory Center		96	%		10.6	%		12.0	%		2.5	%		14.5	%		11,930	—		13,660
Rosedale Towers		91	%		10.6	%		12.0	%		0.0	%		12.0	%		6,390	—		7,310
Sesame Square		100	%		10.6	%		12.0	%		1.5	%		13.5	%		1,300	—		1,470
Two Hickory Center		49	%		10.7	%		14.3	%		2.5	%		16.8	%		9,260	—		10,530

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

Houlihan Lokey Howard & Zukin 16

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Office Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent/		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
ARL Office Asset	City	State	Year Built		Occupancy			Sq. Ft.		Comps(1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
56 Expressway	Oklahoma City	OK		1981		66	%	$	0.64		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Centura	Farmers Branch	TX		1999		47	%		0.64		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Cooley Building	Farmers Branch	TX		1996		69	%		0.04		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Encino Executive Plaza	Encino	CA		1986		94	%		2.31		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
Executive Court	Memphis	TN		1980		73	%		1.04		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Melrose Business Park	Oklahoma City	OK		1980		80	%		0.21		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
One Hickory Centre	Farmers Branch	TX		1998		96	%		1.35		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
Rosedale Towers	Minneapolis	MN		1974		91	%		1.35		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
Two Hickory Centre	Farmers Branch	TX		1999		49	%		0.42		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Sesame Square (University Square)	Anchorage	AK		1981		100	%		1.25		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%

(1) Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.

Houlihan Lokey Howard & Zukin 17

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Office Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM			LTM		Normalized		Selected					Selected						Implied
		Rentable		Net Operating			Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
ARL Office Asset		Square Feet		Income			Expenditures		Expenditures		Expenditures		NOI(1)			Rate			Indication			/ Sq. Ft.
56 Expressway			54,649		160			29	$	8	$	8	$	152			10.2	%	$	1,498		$	27.41
Centura			410,901		595			823		62		62		533			10.2	%		5,252			12.78
Cooley Building			27,000		(179	)		0		4		4		(183	)		10.2	%		(1,808	)		(66.94	)
Encino Executive Plaza			177,211		3,018			0		27		27		2,991			10.1	%		29,617			167.13
Executive Court			41,840		248			103		6		6		242			10.2	%		2,386			57.04
Melrose Business Park			124,200		149			6		19		19		131			10.1	%		1,294			10.42
One Hickory Centre			102,615		733			23		15		15		718			10.1	%		7,106			69.25
Rosedale Towers			84,798		669			0		13		13		656			10.1	%		6,499			76.64
Two Hickory Centre			167,981		53			43		25		25		28			10.2	%		276			1.65
Sesame Square (University Square)			22,260		132			0		3		3		129			10.1	%		1,275			57.27
	Portfolio		1,213,455	$	5,579		$	1,026	$	182	$	182	$	5,397					$	53,396		$	44.00

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.

Houlihan Lokey Howard & Zukin 18

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Office Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002			2002		Normalized		Selected					Selected						Implied
		Rentable		Net Operating			Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
ARL Office Asset		Square Feet		Income			Expenditures		Expenditures		Expenditures		NOI(1)			Rate			Indication			/Sq. Ft.
56 Expressway			54,649		105			63	$	8	$	8	$	97			10.7	%	$	913		$	16.72
Centura			410,901		2,551			3,115		62		62		2,490			10.7	%		23,376			56.89
Cooley Building			27,000		200			147		4		4		196			10.7	%		1,844			68.28
Encino Executive Plaza			177,211		2,621			1,879		27		27		2,594			10.6	%		24,471			138.09
Executive Court			41,840		(149	)		240		6		6		(156	)		10.7	%		(1,462	)		(34.95	)
Melrose Business Park			124,200		120			18		19		19		102			10.6	%		960			7.73
One Hickory Centre			102,615		1,124			0		15		15		1,108			10.6	%		10,456			101.89
Rosedale Towers			84,798		784			308		13		13		771			10.6	%		7,277			85.82
Two Hickory Centre			167,981		961			344		25		25		935			10.7	%		8,783			52.29
Sesame Square (University Square)			22,260		192			47		3		3		188			10.6	%		1,777			79.83
	Portfolio		1,213,455	$	8,509		$	6,160	$	182	$	182	$	8,327					$	78,395		$	64.60

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.

Houlihan Lokey Howard & Zukin 19

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Retail Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication						Valuation Indication Range					HLHZ Selected Value
		Rentable
ARL Retail Asset		Square Feet		Occupancy			LTM		2002		DCF		Low			High
Collection			267,812		91	%	$	20,361	$	20,032	$	22,505	$	20,032	—	$	22,505	$	20,000	—	$	22,500
Cross County Mall			304,575		94	%		13,005		9,920		12,655		9,920	—		13,005		12,000	—		13,000
Cullman			92,466		98	%		2,882		2,570		3,145		2,570	—		3,145		2,600	—		3,100
Oaktree Village			45,623		89	%		3,299		3,727		3,905		3,299	—		3,905		3,300	—		3,900
Westwood			149,855		93	%		8,889		8,555		9,355		8,555	—		9,355		8,600	—		9,400
Denver Mart			509,008		92	%		38,682		37,884	NA			37,884	—		38,682		37,900	—		38,700
	Portfolio		1,369,339										$	82,260	—	$	90,596	$	84,400		$	90,600

Houlihan Lokey Howard & Zukin 20

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Retail DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
ARL Retail Asset	Occupancy			Rate(1)			Rate			Adjustment(2)			Discount Rate			Valuation Indications
Cross Country Shopping Mall		94	%		10.0	%		12.0	%		1.0	%		13.0	%	$	11,810	—	$	13,500
Cullman Shopping Center		98	%		10.0	%		12.0	%		0.5	%		12.5	%		2,930	—		3,360
Oak Tree Village Shopping Center		89	%		10.0	%		12.5	%		0.0	%		12.5	%		3,640	—		4,170
Westwood Shopping Center		93	%		10.0	%		12.0	%		1.5	%		13.5	%		8,710	—		10,000
Denver Mart	NA			NA			NA			NA			NA			NA		—	NA

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

Houlihan Lokey Howard & Zukin 21

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Retail Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent/		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
ARL Retail Asset	City	State	Year Built		Occupancy			Sq. Ft.		Comps(1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
Collection	Denver	CO		1955		91	%	$	0.84		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Cross County Mall	Mattoon	IL		1971		94	%		0.54		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Cullman	Cullman	AL		1979		98	%		0.32		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Oaktree Village	Lubbock	TX		1981		89	%		0.85		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Westwood	Tallahassee	FL		1980		93	%		0.69		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Denver Mart	Denver	CO		1965/1986		92	%		2.00		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%

(1) Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.

Houlihan Lokey Howard & Zukin 22

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Retail Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
ARL Retail Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/Sq. Ft.
Collection			267,812	$	1,974	$	15	$	40	$	40	$	1,934		9.5	%	$	20,361	$	76.03
Cross County Mall			304,575		1,281		13		46		46		1,235		9.5	%		13,005		42.70
Cullman			92,466		288		0		14		14		274		9.5	%		2,882		31.17
Oaktree Village			45,623		320		8		7		7		313		9.5	%		3,299		72.32
Westwood			149,855		867		7		22		22		844		9.5	%		8,889		59.32
Denver Mart			509,008		3,751		669		76		76		3,675		9.5	%		38,682		75.99
	Portfolio		1,369,339	$	8,482	$	712	$	205	$	205	$	8,276				$	87,118	$	63.62

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.

Houlihan Lokey Howard & Zukin 23

ARL/IORI/TCI Merger

ARL Income Producing, Real Estate Net Asset Approach

ARL Retail Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
ARL Retail Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/Sq. Ft.
Collection			267,812	$	2,043	$	15	$	40	$	40	$	2,003		10.0	%	$	20,032	$	74.80
Cross County Mall			304,575		1,038		13		46		46		992		10.0	%		9,920		32.57
Cullman			92,466		271		0		14		14		257		10.0	%		2,570		27.79
Oaktree Village			45,623		380		8		7		7		373		10.0	%		3,727		81.69
Westwood			149,855		878		7		22		22		855		10.0	%		8,555		57.09
Denver Mart			509,008		3,865		669		76		76		3,788		10.0	%		37,884		74.43
	Portfolio		1,369,339	$	8,474	$	712	$	205	$	205	$	8,269				$	82,688	$	60.39

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.

Houlihan Lokey Howard & Zukin 24

ARL Land

ARL/IORI/TCI Merger

ARL Land

Land Valuation Summary — American Realty Investors, Inc.

($ in thousands)

			12/31/00
			Book
Land	City	State	Value		Value Range
Katrina Land	Palm Desert	CA		34,154	$	43,000	$	50,000
Pioneer Crossing(1)	Austin	TX		18,182	$	25,000	$	49,000
Las Colinas	Irving	TX		9,948	$	18,000	$	27,000
Desert Wells	Palm Desert	CA		13,395	$	18,000	$	22,000
Elm Fork	Plano	TX	NA		$	17,000	$	25,000
Vista Ridge	Lewisville	TX		14,417	$	15,000	$	24,000
Nashville	Nashville	TN		7,315	$	7,000	$	15,000
Mason/Goodrich	Houston	TX		8,813	$	11,000	$	14,000
Katy Road	Houston	TX		5,919	$	7,000	$	10,000
Centura Holdings	Farmers Branch	TX		8,691	$	8,700	$	8,700
Monterey	Riverside	CA		4,564	$	7,000	$	8,000
Messick	Palm Springs	CA		3,610	$	5,000	$	6,000
Willow Springs	Riverside	CA		4,070	$	4,100	$	4,100
McKinney Corners	McKinney	TX		1,168	$	4,000	$	4,000
Rasor	Plano	TX		1,825	$	3,000	$	4,000
Clark	Farmers Branch	TX	NA		$	3,000	$	3,000
Valley View 34	Farmers Branch	TX		2,687	$	2,700	$	2,700
Keller	Fort Worth	TX		618	$	2,500	$	3,400
Marine Creek	Tarrant County	TX		2,416	$	2,400	$	2,900
Varner Road	Riverside	CA		2,042	$	2,000	$	2,000
Jeffries Ranch	Oceanside	CA		1,178	$	1,800	$	2,600
Chase Oaks	Plano	TX		3,281	$	1,800	$	2,900
Leone	Irving	TX		1,625	$	1,800	$	2,700
Frisco Bridges	Frisco	TX		6,021	$	1,900	$	2,200
Eldorado Parkway	Collin County	TX		1,022	$	0	$	0
Santa Clarita	Santa Clarita	CA		1,418	$	2,100	$	2,300
Scout	Fort Worth	TX		2,067	$	900	$	1,100
Others	Various	NA		750	$	800	$	800
Woolley	Farmers Branch	TX		6	$	0	$	0
Plano Parkway(2)	Plano	TX		3,049	$	0	$	0
Scoggins(2)	Tarrant County	CA		2,545	$	0	$	0
Yorktown(2)	Harris County	TX		6,380	$	0	$	0

(1)	Includes the Sladek land parcel which was broken out separately on the 12/31/00 10-K.
(2)	Sold during 2001.

Houlihan Lokey Howard & Zukin 26

ARL/IORI/TCI Merger

ARL Land

Land Valuation Summary — American Realty Investors, Inc. (Continued)

($ in thousands)

				12/31/00
				Book
Land		City	State	Value		Value Range
Mercer Crossing
	Valwood	Dallas County	TX		12,209
	Lacy Longhorn	Farmers Branch	TX		1,908
	Tree Farm LBJ	Dallas County	TX		2,568
	Thompson	Farmers Branch	TX		948
	Dalho	Farmers Branch	TX		331
	Tomlin	Farmers Branch	TX		1,878
	Hollywood Casino	Farmers Branch	TX		11,582
	Stagliano	Farmers Branch	TX		566
	JHL Connell	Carrollton	TX		1,426
	Bonneau	Dallas County	TX		1,102
	FRWM Cummings	Farmers Branch	TX		1,284
	Thompson II	Dallas County	TX		505
	Walker	Dallas County	TX		13,534
	HSM Tract	Farmers Branch	TX		2,361
	Croslin Tract	Dallas County	TX		333
	Mendoza Tract	Dallas County	TX		192
	Kelly Lots	Collin County	TX		131
Total Mercer Crossing					52,858	$	57,000	$	74,000
Valley Ranch		Irving	TX		584
	Valley Ranch	Irving	TX		584
	Valley Ranch III	Irving	TX		2,248
	Valley Ranch IV	Irving	TX		2,187
Total Valley Ranch					5,019	$	3,500	$	4,800
Vineyards		Grapevine	TX		4,982
	Vineyards	Grapevine	TX		4,982
	Vineyards II	Grapevine	TX		6,934
Total Vineyards					11,916	$	12,000	$	18,000
TOTAL					242,969	$	290,000	$	400,000

Houlihan Lokey Howard & Zukin 27

Other Assets & Minority Interest

ARL/IORI/TCI Merger

Other Assets & Minority Interest

ARL – Other Real Estate Assets Valuation

($ in Thousands)

Asset		Asset Type	Concluded Value Range
Bee Street		Land	$	500	—	$	500
	Total Value of TCI’s Other Real Estate Assets		$	500	—	$	500

Houlihan Lokey Howard & Zukin 29

ARL/IORI/TCI Merger

Other Assets & Minority Interest

ARL — Pizza World Valuation

($ in Thousands)

		9 Months Ended					LTM			FYE December 31,
			9/30/01		9/30/00			9/30/01			12/31/00		12/31/99			12/31/98
Operating Revenue			25,282		24,388			33,445			32,551		30,781			28,883
Operating Expenses			20,715		20,138			27,344			26,767		26,278			24,840
Operating Income			4,567		4,250			6,101			5,784		4,503			4,043
	Operating Income Margin		18.1	%	17.4	%		18.2	%		17.8	%	14.6	%		14.0	%
Depreciation			931		982			1,279			1,330		1,288			1,273
EBITDA			5,498		5,232			7,380			7,114		5,791			5,316
	EBITDA Margin		21.7	%	21.5	%		22.1	%		21.9	%	18.8	%	��	18.4	%

		Representative
		Level		Selected Multiple Range				Value Range
LTM Net Operating Income		$	7,380		4.5x	—	5.5x	$	33,210	—	$	40,590
	Concluded Value Range							$	33,200	—	$	40,600

Houlihan Lokey Howard & Zukin 30

ARL/IORI/TCI Merger

Other Assets & Minority Interest

Net Other Assets Analysis

($ in Thousands)

		Balance at		Percentage			Recoverable
		9/30/01		Recoverable			Value
Other Assets
	Accounts Receivable	$	2,344		75.0	%	$	1,758
	Escrows		12,419		100.0	%		12,419
	Earnest Money		2,838		100.0	%		2,838
	Deferred Borrowing Costs		10,854		0.0	%		0
	Other		6,615		25.0	%		1,654
Total Other Assets		$	35,070				$	18,669
Other Liabilities
	Accounts Payable	$	13,667		100.0	%	$	13,667
	Property Taxes Payable		8,170		100.0	%		8,170
	Accrued Expenses		9,957		100.0	%		9,957
	FF&E Reserve		3,134		0.0	%		0
	Security Deposits		3,165		100.0	%		3,165
	Deferred Revenue		1,838		0.0	%		0
	Other		4,582		100.0	%		4,582
Total Other Liabilities		$	44,513				$	39,541
Net Other Assets								($20,872	)

Houlihan Lokey Howard & Zukin 31

ARL/IORI/TCI Merger

Other Assets & Minority Interest

Minority Interest Calculation

($ in Thousands)

													ARI's			Others
						9/30/01							Ownership			Ownership			Minority Interest Value
	HLHZ Valuation Range					Debt		Equity Value Range					Interest			Interest			Range
Valley Ranch	$	3,500	—	$	4,800	$	0	$	3,500	—	$	4,800		74.2	%		25.8	%	$	903	—	$	1,239
Best Western		7,800	—		8,300		4,266		3,534	—		4,034		0.2	%		99.8	%		3,526	—		4,025
Vineyards		12,000	—		18,000		2,744		9,256	—		15,256		100.0	%		0.0	%		0	—		0
Encino Executive Plaza		24,500	—		29,600		34,177		0	—		0		62.2	%		37.8	%		0	—		0
Denver Merchandise Mart		37,900	—		38,700		28,616		9,284	—		10,084		63.4	%		36.6	%		3,395	—		3,688
Collection		20,000	—		22,500		14,593		5,407	—		7,907		61.7	%		38.3	%		2,071	—		3,028
Katrina		43,000	—		50,000		18,606		24,394	—		31,394		56.3	%		43.7	%		10,665	—		13,725
Messick		5,000	—		6,000		1,500		3,500	—		4,500		56.3	%		43.7	%		1,530	—		1,967
Monterey		7,000	—		8,000		0		7,000	—		8,000		56.3	%		43.7	%		3,060	—		3,497
Valley View 34		2,700	—		2,700		0		2,700	—		2,700		56.3	%		43.7	%		1,180	—		1,180
Governor’s Square Apts		5,300	—		5,600		3,210		2,090	—		2,390		53.9	%		46.1	%		963	—		1,101
Oak Hill Apts		3,200	—		3,400		1,886		1,314	—		1,514		53.9	%		46.1	%		605	—		698
Stonegate Apts		1,500	—		1,600		1,040		460	—		560		53.9	%		46.1	%		212	—		258
Villager Apts		800	—		800		533		267	—		267		53.9	%		46.1	%		123	—		123
White Pines Apts		500	—		500		0		500	—		500		53.9	%		46.1	%		230	—		230
Bay Anchor Apts		300	—		300		0		300	—		300		5.6	%		94.4	%		283	—		283
Conradi House Apts		1,500	—		1,600		1,061		439	—		539		5.6	%		94.4	%		414	—		509
Daluce Apts		3,600	—		3,900		2,529		1,071	—		1,371		5.6	%		94.4	%		1,012	—		1,295
Grand Lagoon Apts		2,300	—		2,300		1,215		1,085	—		1,085		5.6	%		94.4	%		1,025	—		1,025
Lee Hills Apts		500	—		500		125		375	—		375		5.6	%		94.4	%		354	—		354
Morning Star Apts		1,900	—		2,000		1,206		694	—		794		5.6	%		94.4	%		655	—		750
Park Avenue Apts		5,200	—		5,300		2,774		2,426	—		2,526		5.6	%		94.4	%		2,291	—		2,385
Pinecrest West Apts		1,400	—		1,600		951		449	—		649		5.6	%		94.4	%		424	—		613
Windsor Tower Apts		2,200	—		2,300		1,135		1,065	—		1,165		5.6	%		94.4	%		1,006	—		1,100
Falcon House Apts		2,900	—		2,900		2,015		885	—		885		32.4	%		67.6	%		598	—		598
Georgetown Apts		1,100	—		1,100		913		187	—		187		32.4	%		67.6	%		126	—		126
Greenbriar Apts		1,800	—		1,900		993		807	—		907		32.4	%		67.6	%		546	—		613
Lake Chateau Apts		1,600	—		1,600		1,089		511	—		511		32.4	%		67.6	%		346	—		346
Landings & Marina Apts		1,800	—		1,800		1,187		613	—		613		32.4	%		67.6	%		415	—		415
Northside Villas Apts		5,000	—		5,300		2,849		2,151	—		2,451		32.4	%		67.6	%		1,455	—		1,658
Regency Apts		4,300	—		4,400		1,726		2,574	—		2,674		32.4	%		67.6	%		1,741	—		1,809
Rolling Hills Apts		4,400	—		4,500		2,865		1,535	—		1,635		32.4	%		67.6	%		1,038	—		1,106
Seville Apts		2,300	—		2,400		1,276		1,024	—		1,124		32.4	%		67.6	%		693	—		761
Valley Hi Apts		1,200	—		1,300		885		315	—		415		32.4	%		67.6	%		213	—		280
Westwood Apts		4,500	—		4,600		2,490		2,010	—		2,110		32.4	%		67.6	%		1,360	—		1,427
Westwood Parc Apts		2,400	—		2,500		1,386		1,014	—		1,114		32.4	%		67.6	%		686	—		754
TOTAL																			$	45,100	—	$	53,000

Houlihan Lokey Howard & Zukin 32

ARL — Deferred Tax Analysis

ARL/IORI/TCI Merger

ARL – Deferred Tax Analysis

ARL Deferred Tax Analysis

						Book		Implied Capital
	Value Range					Value		Gain (Loss) Range					Taxes @ 40%
Apartments
Arlington Place	$	5,900	—	$	6,000	$	1,457	$	4,443	—	$	4,543	$	1,777	—	$	1,817
Bay Anchor		300	—		300		121		179	—		179		72	—		72
Blackhawk		6,300	—		6,900		1,609		4,691	—		5,291		1,876	—		2,116
Bridgestone		2,300	—		2,500		998		1,302	—		1,502		521	—		601
Chateau		3,500	—		3,500		933		2,567	—		2,567		1,027	—		1,027
Chateau Bayou		4,400	—		4,400		2,788		1,612	—		1,612		645	—		645
Confederate Point		9,700	—		10,200		1,722		7,978	—		8,478		3,191	—		3,391
Conradi House		1,500	—		1,600		1,193		307	—		407		123	—		163
Da luce		3,600	—		3,900		2,647		953	—		1,253		381	—		501
Falcon House		2,900	—		2,900		2,038		862	—		862		345	—		345
Foxwood		6,600	—		7,100		2,067		4,533	—		5,033		1,813	—		2,013
Georgetown		1,100	—		1,100		1,062		38	—		38		15	—		15
Governor Square		5,300	—		5,600		4,915		385	—		685		154	—		274
Grand Lagoon		2,300	—		2,300		1,553		747	—		747		299	—		299
Greenbriar		1,800	—		1,900		1,134		666	—		766		266	—		306
La Mirada		7,900	—		8,000		2,818		5,082	—		5,182		2,033	—		2,073
Lake Chateau		1,600	—		1,600		1,430		170	—		170		68	—		68
Lake Shore Villas		14,000	—		16,000		13,653		347	—		2,347		139	—		939
Landings/Marina		1,800	—		1,800		1,301		499	—		499		200	—		200
Lee Hills		500	—		500		0		500	—		500		200	—		200
Mallard Lake		12,600	—		13,500		3,361		9,239	—		10,139		3,696	—		4,056
Mediterranean Villas		3,700	—		3,900		3,358		342	—		542		137	—		217
Morning Star		1,900	—		2,000		1,396		504	—		604		202	—		242
Northside Villas		5,000	—		5,300		3,915		1,085	—		1,385		434	—		554
Oak Hill		3,200	—		3,400		2,182		1,018	—		1,218		407	—		487
Oak Tree		4,100	—		4,200		2,077		2,023	—		2,123		809	—		849

Houlihan Lokey Howard & Zukin 34

ARL/IORI/TCI Merger

ARL – Deferred Tax Analysis

ARL Deferred Tax Analysis (continued)

					Book		Implied Capital
	Value Range				Value		Gain (Loss) Range						Taxes @ 40%
Park Avenue		5,200	—	5,300		3,454		1,746		—	1,846			698		—	738
Pheasant Ridge		8,900	—	9,300		2,472		6,428		—	6,828			2,571		—	2,731
Pinecrest		1,400	—	1,600		924		476		—	676			190		—	270
Quail Point		4,300	—	4,500		1,036		3,264		—	3,464			1,306		—	1,386
Regency Apartments		4,300	—	4,400		1,554		2,746		—	2,846			1,098		—	1,138
Regency On Kennedy		3,200	—	3,200		4,224		(1,024	)	—	(1,024	)		(410	)	—	(410	)
Rolling Hills		4,400	—	4,500		3,158		1,242		—	1,342			497		—	537
Seville		2,300	—	2,400		1,748		552		—	652			221		—	261
Stonebridge		4,000	—	4,100		977		3,023		—	3,123			1,209		—	1,249
Stonegate		1,500	—	1,600		1,769		(269	)	—	(169	)		(108	)	—	(68	)
Sun Hollow		5,100	—	5,600		2,027		3,073		—	3,573			1,229		—	1,429
Sunset		1,700	—	2,000		1,629		71		—	371			28		—	148
Tavel Circle		400	—	400		411		(11	)	—	(11	)		(4	)	—	(4	)
Valley Hi		1,200	—	1,300		863		337		—	437			135		—	175
Villa Del Mar		3,200	—	3,400		1,875		1,325		—	1,525			530		—	610
Villager		800	—	800		1,174		(374	)	—	(374	)		(150	)	—	(150	)
Villas OF Plano		8,100	—	8,200		2,326		5,774		—	5,874			2,310		—	2,350
Waters Edge III		7,900	—	8,200		1,572		6,328		—	6,628			2,531		—	2,651
Westwood		4,500	—	4,600		2,979		1,521		—	1,621			608		—	648
Westwood Parc		2,400	—	2,500		1,537		863		—	963			345		—	385
Whispering Pines		8,600	—	8,800		2,264		6,336		—	6,536			2,534		—	2,614
White Pines		500	—	500		702		(202	)	—	(202	)		(81	)	—	(81	)
Windsor Tower		2,200	—	2,300		2,116		84		—	184			34		—	74
Woodhollow		9,300	—	9,700		3,832		5,468		—	5,868			2,187		—	2,347
Woodlake		10,600	—	10,700		3,317		7,283		—	7,383			2,913		—	2,953
Woodsong II		8,600	—	8,800		1,176		7,424		—	7,624			2,970		—	3,050
Woodstock		9,200	—	9,700		2,990		6,210		—	6,710			2,484		—	2,684

Houlihan Lokey Howard & Zukin 35

ARL/IORI/TCI Merger

ARL — Deferred Tax Analysis

ARL Deferred Tax Analysis (continued)

					Book		Implied Capital
	Value Range				Value		Gain (Loss) Range						Taxes @ 40%
Hotels
Best Western		7,800	—	8,300		7,195		605		—	1,105			242		—	442
Grand Hotel Sofia		10,000	—	12,000		28,189		(18,189	)	—	(16,189	)		(7,276	)	—	(6,476	)
Holiday Inn		5,400	—	6,100		5,404		(4	)	—	696			(2	)	—	278
Piccadilly Airport		3,500	—	4,500		7,587		(4,087	)	—	(3,087	)		(1,635	)	—	(1,235	)
Piccadilly Chateau		1,500	—	1,800		3,609		(2,109	)	—	(1,809	)		(844	)	—	(724	)
Piccadilly Shaw		6,300	—	6,500		11,997		(5,697	)	—	(5,497	)		(2,279	)	—	(2,199	)
Piccadilly University		6,300	—	6,900		11,140		(4,840	)	—	(4,240	)		(1,936	)	—	(1,696	)
Quality Inn		3,300	—	3,400		2,273		1,027		—	1,127			411		—	451
Williamsburg Hospitality House		15,300	—	15,500		20,289		(4,989	)	—	(4,789	)		(1,996	)	—	(1,916	)
Office
56 Expressway		900	—	1,500		372		528		—	1,128			211		—	451
Centura		66,500	—	66,500		43,400		23,100		—	23,100			9,240		—	9,240
Cooley Building		1,400	—	1,800		2,792		(1,392	)	—	(992	)		(557	)	—	(397	)
Encino Executive Plaza		24,500	—	29,600		39,580		(15,080	)	—	(9,980	)		(6,032	)	—	(3,992	)
Executive Court		2,000	—	2,400		1,220		780		—	1,180			312		—	472
Melrose Business Park		1,000	—	2,200		536		464		—	1,664			186		—	666
One Hickory Centre		8,000	—	10,000		20,316		(12,316	)	—	(10,316	)		(4,926	)	—	(4,126	)
Rosedale Towers		6,500	—	7,300		3,843		2,657		—	3,457			1,063		—	1,383
Two Hickory Centre		8,800	—	9,900		0		8,800		—	9,900			3,520		—	3,960
Sesame Square (University Square)		1,300	—	1,800		665		635		—	1,135			254		—	454
Retail
Collection		20,000	—	22,500		18,641		1,359		—	3,859			544		—	1,544

Houlihan Lokey Howard & Zukin 36

ARL/IORI/TCI Merger

ARL — Deferred Tax Analysis

ARL Deferred Tax Analysis (continued)

						Book			Implied Capital
	Value Range					Value			Gain (Loss) Range							Taxes @ 40%
Cross County Mall		12,000	—	13,000			3,949			8,051		—		9,051			3,220		—		3,620
Cullman		2,600	—	3,100			760			1,840		—		2,340			736		—		936
Oaktree Village		3,300	—	3,900			1,448			1,852		—		2,452			741		—		981
Westwood		8,600	—	9,400			2,092			6,508		—		7,308			2,603		—		2,923
Denver Mart		37,900	—	38,700			20,687			17,213		—		18,013			6,885		—		7,205
Other
Bee Street		500	—	500			472			28		—		28			11		—		11
Land
Katrina Land		43,000		50,000			34,154			8,846		—		15,846			3,538		—		6,338
Pioneer Crossing		25,000		49,000			18,182			6,818		—		30,818			2,727		—		12,327
Las Colinas		18,000		27,000			9,948			8,052		—		17,052			3,221		—		6,821
Desert Wells		18,000		22,000			13,395			4,605		—		8,605			1,842		—		3,442
Elm Fork		17,000		25,000	NA			NA				—	NA		NA				—	NA
Vista Ridge		15,000		24,000			14,417			583		—		9,583			233		—		3,833
Nashville		7,000		15,000			7,315			(315	)	—		7,685			(126	)	—		3,074
Mason/Goodrich		11,000		14,000			8,813			2,187		—		5,187			875		—		2,075
Katy Road		7,000		10,000			5,919			1,081		—		4,081			432		—		1,632
Centura Holdings		8,700		8,700			8,691			9		—		9			4		—		4
Monterey		7,000		8,000			4,564			2,436		—		3,436			974		—		1,374
Messick		5,000		6,000			3,610			1,390		—		2,390			556		—		956
Willow Springs		4,100		4,100			4,070			30		—		30			12		—		12
McKinney Corners		4,000		4,000			1,168			2,832		—		2,832			1,133		—		1,133
Rasor		3,000		4,000			1,825			1,175		—		2,175			470		—		870
Clark		3,000		3,000	NA			NA				—	NA		NA				—	NA

Houlihan Lokey Howard & Zukin 37

ARL/IORI/TCI Merger

ARL — Deferred Tax Analysis

ARL Deferred Tax Analysis (continued)

				Book		Implied Capital
	Value Range			Value		Gain (Loss) Range						Taxes @ 40%
Valley View 34		2,700	2,700		2,687		13		—	13			5		—	5
Keller		2,500	3,400		618		1,882		—	2,782			753		—	1,113
Marine Creek		2,400	2,900		2,416		(16	)	—	484			(6	)	—	194
Varner Road		2,000	2,000		2,042		(42	)	—	(42	)		(17	)	—	(17	)
Jeffries Ranch		1,800	2,600		1,178		622		—	1,422			249		—	569
Chase Oaks		1,800	2,900		3,281		(1,481	)	—	(381	)		(592	)	—	(152	)
Leone		1,800	2,700		1,625		175		—	1,075			70		—	430
Frisco Bridges		1,900	2,200		6,021		(4,121	)	—	(3,821	)		(1,648	)	—	(1,528	)
Eldorado Parkway		0	0		1,022		0		—	0			0		—	0
Santa Clarita		2,100	2,300		1,418		682		—	882			273		—	353
Scout		900	1,100		2,067		(1,167	)	—	(967	)		(467	)	—	(387	)
Others		800	800		750		50		—	50			20		—	20
Woolley		0	0		6		0		—	0			0		—	0
Plano Parkway		0	0		3,049		0		—	0			0		—	0
Scoggins		0	0		2,545		0		—	0			0		—	0
Yorktown		0	0		6,380		0		—	0			0		—	0
Mercer Crossing		57,000	74,000		52,858		4,142		—	21,142			1,657		—	8,457
Valley Ranch		3,500	4,800		5,019		(1,519	)	—	(219	)		(608	)	—	(88	)
Vineyards		12,000	18,000		11,916		84		—	6,084			34		—	2,434
TOTAL							167,543		—	301,843			67,017		—	120,737

Houlihan Lokey Howard & Zukin 38

IORI Valuation Detail

IORI Income Producing Real Estate — Portfolio Approach

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Portfolio Approach

IORI Portfolio Approach

($ in Thousands)

	Latest Twelve Months		Selected
	Net Operating Income		Capitalization Rate Range (1)						Valuation Indication Range
Apartment Portfolio	$	2,500		9.5	%	—	10.5	%	$	23,800	—	$	26,300
Office Portfolio	$	4,188		10.0	%	—	11.0	%	$	38,100	—	$	41,900
Total IORI Portfolio									$	61,900	—	$	68,200

(1) Based upon comparable public companies implied capitalization rates.

Houlihan Lokey Howard & Zukin 41

IORI Income Producing Real Estate —
Net Asset Value Approach

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Apartment Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication				Valuation Indication Range					HLHZ Selected Value
		Rentable
IORI Apartment Asset		Square Feet		Occupancy			LTM		2002		Low			High
Brighton Court			90,672		93	%	$	3,103	$	2,990	$	2,990	—	$	3,103	$	3,000	—	$	3,100
Del Mar Villas			113,758		97	%		2,972		2,920		2,920	—		2,972		2,900	—		3,000
Enclave			89,734		93	%		3,157		2,994		2,994	—		3,157		3,000	—		3,200
Meridian			264,000		95	%		4,266		4,864		4,266	—		4,864		4,300	—		4,900
Signature Place			72,480		86	%		2,601		2,551		2,551	—		2,601		2,600	—		2,600
Sinclair Place			91,529		96	%		2,228		2,125		2,125	—		2,228		2,100	—		2,200
Treehouse			88,957		95	%		3,848		3,590		3,590	—		3,848		3,600	—		3,800
	Portfolio		811,130					22,175		22,035	$	21,437	—	$	22,773	$	21,500	—	$	22,800

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ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Apartment Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent /		Market			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
IORI Apartment Asset	City	State	Year Built		Occupancy			Sq. Ft.		Monitor			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
Brighton Court	Midland	TX		1983		93	%	$	0.51		9.4	%		9.0	%		9.4	%		1.0	%(1)		10.4	%		0.5	%		10.9	%
Del Mar Villas	Midland	TX		1983		97	%		0.45		9.4	%		9.0	%		9.4	%		1.0	%(1)		10.4	%		0.5	%		10.9	%
Enclave	Midland	TX		1983		93	%		0.53		9.4	%		9.0	%		9.4	%		1.0	%(1)		10.4	%		0.5	%		10.9	%
Meridian	Midland	TX		1983		95	%		0.41		9.4	%		9.0	%		9.4	%		1.0	%(1)		10.4	%		0.5	%		10.9	%
Signature Place	Midland	TX		1983		86	%		0.58		9.4	%		9.0	%		9.4	%		1.0	%(1)		10.4	%		0.5	%		10.9	%
Sinclair Place	Midland	TX		1983		96	%		0.51		9.4	%		9.0	%		9.4	%		1.0	%(1)		10.4	%		0.5	%		10.9	%
Treehouse	San Antonio	TX		1975		95	%		0.77		9.4	%		9.0	%		9.4	%		1.0	%(2)		10.4	%		0.5	%		10.9	%

(1)	Capitalization rate adjustment of 100 basis points reflects asset concentration risk and size of Midland market relative to other major Texas cities.
(2)	Capitalization rate adjustment of 100 basis points is attributed to all apartments built prior to 1980.

Houlihan Lokey Howard & Zukin 44

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Apartment Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
IORI Apartment Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/ Sq. Ft.
Brighton Court			90,672	$	338	$	12	$	15	$	15	$	323		10.4	%	$	3,103	$	34.23
Del Mar Villas			113,758		332		54		23		23		309		10.4	%		2,972		26.12
Enclave			89,734		345		18		17		17		328		10.4	%		3,157		35.18
Meridian			264,000		514		96		70		70		444		10.4	%		4,266		16.16
Signature Place			72,480		285		24		14		14		270		10.4	%		2,601		35.88
Sinclair Place			91,529		260		36		29		29		232		10.4	%		2,228		24.34
Treehouse			88,957		427		38		27		27		400		10.4	%		3,848		43.25
	Portfolio		811,130	$	2,500	$	278	$	194	$	194	$	2,306				$	22,175	$	27.34

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $250 per unit annually.

Houlihan Lokey Howard & Zukin 45

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Apartment Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
IORI Apartment Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/ Sq. Ft.
Brighton Court			90,672	$	341	$	71	$	15	$	15	$	326		10.9	%	$	2,990	$	32.98
Del Mar Villas			113,758		341		81		23		23		318		10.9	%		2,920		25.67
Enclave			89,734		343		63		17		17		326		10.9	%		2,994		33.37
Meridian			264,000		600		110		70		70		530		10.9	%		4,864		18.42
Signature Place			72,480		292		43		14		14		278		10.9	%		2,551		35.20
Sinclair Place			91,529		260		38		29		29		232		10.9	%		2,125		23.22
Treehouse			88,957		418		44		27		27		391		10.9	%		3,590		40.36
	Portfolio		811,130	$	2,596	$	450	$	194	$	194	$	2,402				$	22,035	$	27.17

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $250 per unit annually.

Houlihan Lokey Howard & Zukin 46

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Office Assets Net Asset Value Approach Summary

($ in Thousands)

								NAV Valuation Indication								Valuation Indication Range					HLHZ Selected Value
		Rentable
IORI Office Asset		Square Feet		Occupancy				LTM			2002		DCF			Low			High
2010 Valley View			39,568		87	%		$	2,347		$	3,105	$	3,315		$	2,347	—	$	3,315	$	2,300	—	$	3,300
5600 Mowry			56,120		95	%			8,688			4,234		7,710	(1)		4,234	—		8,688		6,000	—		8,000
Akard Plaza			42,895		94	%			2,616			2,879		3,550			2,616	—		3,550		2,600	—		3,600
Chuck Yeager			6,060		100	%	NMF					7,712		6,635			6,635	—		7,712		6,600	—		7,700
Daley Plaza			122,795		99	%			14,417	NA				15,705			14,417	—		15,705		15,500	—		15,500
La Mesa Village			92,611		62	%			6,805			7,741		8,205			6,805	—		8,205		6,800	—		8,200
Westlake Village			45,500		62	%			1,484			2,943		3,910			1,484	—		3,910		1,500	—		3,900
	Portfolio		405,549													$	38,539	—	$	51,084	$	41,300		$	50,200

(1) Adjusted DCF assumes 50% rent reduction and stable margins.

Houlihan Lokey Howard & Zukin 47

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Office DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
IORI Office Asset	Occupancy			Rate(1)			Rate			Adjustment(2)			Discount Rate			Valuation Indications
2010 Valley View		87	%		10.6	%		13.3	%		3.5	%		16.8	%	$	3,110	—	$	3,520
5600 Mowry		95	%		10.6	%		12.0	%		2.0	%		14.0	%		7,210	—		8,210
Akard Plaza		94	%		11.6	%		12.0	%		2.0	%		14.0	%		3,340	—		3,760
Daley Corporate		99	%		10.6	%		12.0	%		0.0	%		12.0	%		14,680	—		16,730
Daley Office	NA				10.0	%		12.0	%		4.0	%		16.0	%		3,440	—		3,970
Westlake Village		62	%		10.7	%		14.3	%		2.0	%		16.3	%		3,650	—		4,170
Yeager Building		100	%		10.6	%		12.0	%		2.0	%		14.0	%		6,230	—		7,040
Eton Square		73	%		10.7	%		14.3	%		4.0	%		18.3	%		11,530	—		13,140
La Mesa		62	%		9.7	%		14.3	%		3.5	%		17.8	%		7,660	—		8,750

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

Houlihan Lokey Howard & Zukin 48

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Office Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
IORI			Year					LTM Rent /		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
Office Asset	City	State	Built		Occupancy			Sq. Ft.		Comps(1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
2010 Valley View	Farmers Branch	TX		1998		87	%	$	1.28		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
5600 Mowry	Newark	CA		1987		95	%		2.37		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
Akard Plaza	Dallas	TX		1942		94	%		1.31		11.1	%		10.1	%		10.1	%		1.0	%(2)		11.1	%		0.5	%		11.6	%
Chuck Yeager	Chantilly	VA		1991		100	%		9.87		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
Daley Plaza	San Diego	CA		1987		99	%		1.47		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%		10.6	%
La Mesa Village	La Mesa	CA		1991		62	%		1.30		11.1	%		10.2	%		10.2	%		-1.0	%		9.2	%		0.5	%		9.7	%
Westlake Village	Westlake Village	CA		1982		62	%		0.88		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%

(1)	Capitalization rate adjustment of 100 basis points is due to the age of the property.
(2)	Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.

Houlihan Lokey Howard & Zukin 49

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Office Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
IORI Office Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI (1)		Rate			Indication		/ Sq. Ft.
2010 Valley View			39,568	$	243	$	3	$	6	$	6	$	237		10.1	%	$	2,347	$	59.32
5600 Mowry			56,120		886		0		8		8		877		10.1	%		8,688		154.81
Akard Plaza			42,895		297		14		6		6		290		11.1	%		2,616		60.99
Chuck Yeager			6,060		493		0		1		1		493		10.1	%		4,876		804.69
Daley Plaza			122,795		1,475		40		18		18		1,456		10.1	%		14,417		117.41
La Mesa Village			92,611		637		2		14		14		623		9.2	%		6,805		73.48
Westlake Village			45,500		157		15		7		7		151		10.2	%		1,484		32.62
	Portfolio		405,549	$	4,188	$	75	$	61	$	61	$	4,127				$	41,235	$	101.68

(1)	Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.
(2)	Income and valuation account for the 10.0% ownership stake that IORI owns in Eton Square.

Houlihan Lokey Howard & Zukin 50

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Office Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected					Selected						Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
IORI Office Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI (1)			Rate			Indication			/ Sq. Ft.
2010 Valley View			39,568	$	335	$	53	$	6	$	6	$	329			10.6	%	$	3,105		$	78.47
5600 Mowry			56,120		457		145		8		8		449			10.6	%		4,234			75.44
Akard Plaza			42,895		340		22		6		6		334			11.6	%		2,879			67.12
Chuck Yeager			6,060		818		0		1		1		817			10.6	%		7,712			1,272.54
Daley Plaza			122,795		0		0		18		18		(18	)		10.6	%		(174	)		(1.42	)
La Mesa Village			92,611		761		717		14		14		747			9.7	%		7,741			83.58
Westlake Village			45,500		320		359		7		7		313			10.7	%		2,943			64.69
	Portfolio		405,549	$	3,032	$	1,295	$	61	$	61	$	2,971					$	28,440		$	70.13

(1)	Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.
(2)	Income and valuation account for the 10.0% ownership stake that IORI owns in Eton Square.

Houlihan Lokey Howard & Zukin 51

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Retail DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
IORI Retail Asset	Occupancy			Rate (1)			Rate			Adjustment(2)			Discount Rate			Valuation Indications
Walmart Malden		100	%		10.0	%		12.0	%		0.0	%		12.0	%	$	1,680	—	$	1,920

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

Houlihan Lokey Howard & Zukin 52

ARL/IORI/TCI Merger

IORI Income Producing Real Estate — Net Asset Value Approach

IORI Retail Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent /		Implied			CB Richard			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
IORI Retail Asset	City	State	Year Built		Occupancy			Sq. Ft.		Comps(1)			Ellis			Rate			Adjustment			Rate			Adjustment			Rate
Walmart — Malden	Malden	MO		1982		100	%	$	1.00		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%

(1) Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.

Houlihan Lokey Howard & Zukin 53

IORI — Land

ARL/IORI/TCI Merger

IORI — Land

Land Valuation Summary — IORI

($ in thousands)

			Book			Appraisal			Management's
Land	City	State	Value			Value			Estimate		Value Range
Frankel	Midland County	TX		625	NA			NA				600	600	(1)
Travelers	Farmers Branch	TX		7,469			21,650			40,000		24,000	31,000	(2)
Total				8,094								24,600	31,600

(1)	Concluded value based on book value.
(2)	Concluded value based on same price/acre as other Mercer Land, and considers appraisal.

Houlihan Lokey Howard & Zukin 55

IORI — Other Assets

ARL/IORI/TCI Merger

IORI — Other Assets

Net Other Assets Analysis — Income Opportunity Realty Investors, Inc.

($ in Thousands)

		Balance at		Percentage			Recoverable
		9/30/01		Recoverable			Value
Other Assets
	Accounts Receivable	$	425		75.0	%	$	319
	Prepaid Expenses		624		0.0	%		0
	Escrow Deposits		927		100.0	%		927
	Utilities		47		0.0	%		0
	Other		208		0.0	%		0
	Deferred Borrowing Costs		322		0.0	%		0
Total Other Assets		$	2,553				$	1,246
Other Liabilities
	Accounts Payable	$	487		100.0	%	$	487
	Accounts Payable — BCM		802		100.0	%		802
	Management Fees		40		100.0	%		40
	Accrued Property Tax		1,089		100.0	%		1,089
	Security Deposits		546		100.0	%		546
	Prepaid Rents		13		100.0	%		13
	Payroll Payables		13		100.0	%		13
	Other Accrued Expenses		69		100.0	%		69
Total Other Liabilities		$	3,059				$	3,059
Net Other Assets							$	(1,813	)

Houlihan Lokey Howard & Zukin 57

IORI — Deferred Tax Analysis

ARL/IORI/TCI Merger

IORI — Deferred Tax Analysis

IORI Deferred Tax Analysis

						Book		Implied Capital
	Value Range					Value		Gain (Loss) Range							Taxes @ 40%
Apartments
Brighton Court	$	3,000	—	$	3,100	$	3,346	$	(346	)	—	$	(246	)	$	(138	)	—	$	(98	)
Del Mar Villas		2,900	—		3,000		0		2,900		—		3,000			1,160		—		1,200
Enclave		3,000	—		3,200		3,201		(201	)	—		(1	)		(80	)	—		(0	)
Meridian		4,300	—		4,900		5,567		(1,267	)	—		(667	)		(507	)	—		(267	)
Signature Place		2,600	—		2,600		2,619		(19	)	—		(19	)		(8	)	—		(8	)
Sinclair Place		2,100	—		2,200		2,182		(82	)	—		18			(33	)	—		7
Treehouse		3,600	—		3,800		2,008		1,592		—		1,792			637		—		717
Office
2010 Valley View		2,300	—		3,300		3,120		(820	)	—		180			(328	)	—		72
5600 Mowry		6,000	—		8,000		6,256		(256	)	—		1,744			(102	)	—		698
Akard Plaza		2,600	—		3,600		3,783		(1,183	)	—		(183	)		(473	)	—		(73	)
Chuck Yeager		6,600	—		7,700		6,071		529		—		1,629			212		—		652
Daley Plaza		15,500	—		15,500		7,679		7,821		—		7,821			3,128		—		3,128
La Mesa Village		6,800	—		8,200		8,310		(1,510	)	—		(110	)		(604	)	—		(44	)
Westlake Village		1,500	—		3,900		4,042		(2,542	)	—		(142	)		(1,017	)	—		(57	)
Land
Frankel		600	—		600		625		(25	)	—		(25	)		(10	)	—		(10	)
Travelers		24,000	—		31,000		7,469		16,531		—		23,531			6,612		—		9,412
TOTAL																8,449		—		15,329

Houlihan Lokey Howard & Zukin 59

TCI Valuation Detail

TCI Income Producing Real Estate — Portfolio Approach

ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Portfolio Approach

TCI Portfolio Approach

($ in Thousands)

	Latest Twelve Months		Selected
	Net Operating Income		Capitalization Rate Range(1)						Valuation Indication Range
Apartment Portfolio	$	23,204		9.5	%	—	10.5	%	$	221,000	—	$	244,300
Office Portfolio	$	22,068		10.0	%	—	11.0	%	$	200,600	—	$	220,700
Shopping Center Portfolio	$	3,076		11.0	%	—	12.0	%	$	25,600	—	$	28,000
Industrial Portfolio	$	5,469		10.0	%	—	11.0	%	$	49,700	—	$	54,700
Hotel Portfolio	$	1,960		13.0	%	—	15.0	%	$	13,100	—	$	15,100
Total TCI Portfolio									$	510,000	—	$	562,800

Houlihan Lokey Howard & Zukin 62

TCI Income Producing Real Estate —
Net Asset Value Approach

ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Apartment Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication					Valuation Indication Range					HLHZ Selected Value
		Rentable
TCI Apartment Asset		Square Feet		Occupancy			LTM		2002			Low			High
4242 Cedar Springs			60,600		97	%	$	2,629	$	3,041		$	2,629	—	$	3,041	$	2,600	—	$	3,000
Apple Lane			30,000		97	%		1,521		1,781			1,521	—		1,781		1,500	—		1,800
Arbor Pointe			178,920		89	%		2,331		3,033			2,331	—		3,033		2,300	—		3,000
Ashton Way			138,964		89	%		664		1,484			664	—		1,484		700	—		1,500
Autumn Chase			58,652		97	%		1,318		1,268			1,268	—		1,318		1,300	—		1,300
Baywalk			161,440		84	%	NA		NA				NA	—		NA		6,600	—		6,600
By the Sea			123,945		94	%	NA		NA		NA			—		NA		6,200	—		6,200
Cliffs of Eldorado			182,888		89	%		10,174		9,790			9,790	—		10,174		9,800	—		10,200
County Crossing			199,952		93	%		6,252		6,999			6,252	—		6,999		6,300	—		7,000
Courtyard			111,576		85	%		177		1,907			177	—		1,907		200	—		1,900
Coventry Pointe			105,608		94	%		630		1,475			630	—		1,475		600	—		1,500
Country Club Villas (Camelot)			141,024		97	%		5,225		5,213			5,213	—		5,225		5,200	—		5,200
El Chapparal			174,220		94	%		5,498		5,968			5,498	—		5,968		5,500	—		6,000
Fairway View Estates			204,000		80	%		6,305		7,286			6,305	—		7,286		6,300	—		7,300
Fairways			134,176		85	%		3,951		4,256			3,951	—		4,256		4,000	—		4,300
Forty-Four Hundred			94,472		91	%		1,722		1,996			1,722	—		1,996		1,700	—		2,000
Fountain Lake			161,220		86	%		3,497		4,485			3,497	—		4,485		3,500	—		4,500
Fountains of Waterford			129,200		47	%		1,836		3,248			1,836	—		3,248		1,800	—		3,200
Gladstell Forest			121,536		93	%		4,216		4,810			4,216	—		4,810		4,200	—		4,800
Grove Park			143,556		96	%		7,975		8,266			7,975	—		8,266		8,000	—		8,300
Harper’s Ferry			112,500		88	%		3,732		3,984			3,732	—		3,984		3,700	—		4,000
Heritage on the River			289,490		95	%		12,874		13,297			12,874	—		13,297		12,900	—		13,300
Hunters Glen			174,180		89	%		1,212		1,865			1,212	—		1,865		1,200	—		1,900
In the Pines			294,860		97	%		9,900		10,339			9,900	—		10,339		9,900	—		10,300
Island Bay			374,088		89	%	NA		NA				NA	—		NA		20,400	—		20,400
Limestone Canyon			216,000		90	%		16,371		14,476			14,476	—		16,371		14,500	—		16,400
Madison at Bear Creek			138,448		93	%		4,725		5,222			4,725	—		5,222		4,700	—		5,200
Marina Landing			205,504		89	%	NA		NA				NA	—		NA		12,100	—		12,100
Mountain Plaza			220,710		93	%		4,514		5,383			4,514	—		5,383		4,500	—		5,400
Oak Park IV			78,708		87	%		1,249		1,470			1,249	—		1,470		1,200	—		1,500
Paramount Terrace			123,840		94	%		3,051		3,650			3,051	—		3,650		3,100	—		3,600
Plantation			103,500		93	%		2,296		2,746			2,296	—		2,746		2,300	—		2,700
Primrose			144,836		93	%		4,380		5,168			4,380	—		5,168		4,400	—		5,200
Quail Creek			113,416		97	%		4,023		4,442			4,023	—		4,442		4,000	—		4,400
Quail Oaks			72,848		96	%		3,227		3,489			3,227	—		3,489		3,200	—		3,500
Sandstone			363,079		93	%		8,804		8,640			8,640	—		8,804		8,600	—		8,800
Somerset			163,368		89	%		6,253		6,456			6,253	—		6,456		6,300	—		6,500
South Cochran			43,100		98	%		4,535		4,946			4,535	—		4,946		4,500	—		4,900
Southgate			151,656		90	%		1,617		2,095			1,617	—		2,095		1,600	—		2,100
Southgreen			66,000		94	%		2,998		3,050			2,998	—		3,050		3,000	—		3,100
Stone Oak			187,686		90	%		6,177		7,085			6,177	—		7,085		6,200	—		7,100
Summerfield			204,116		91	%		9,895		10,873			9,895	—		10,873		9,900	—		10,900
Summerstone			188,734		95	%		7,622		8,017			7,622	—		8,017		7,600	—		8,000
Sunchase			223,048		91	%		4,189		4,594			4,189	—		4,594		4,200	—		4,600
Terrace Hills			233,192		95	%		9,544		9,484			9,484	—		9,544		9,500	—		9,500
Timbers			101,666		93	%		2,508		2,971			2,508	—		2,971		2,500	—		3,000
Trails at Windfern			173,376		96	%		7,349		7,173			7,173	—		7,349		7,200	—		7,300
Treehouse			153,072		94	%		5,900		7,033			5,900	—		7,033		5,900	—		7,000
Westwood Square			49,001		97	%		384		669			384	—		669		400	—		700
Willow Creek			103,140		87	%		2,822		2,935			2,822	—		2,935		2,800	—		2,900
Willow-Wick			94,128		95	%		2,533		2,793			2,533	—		2,793		2,500	—		2,800
Willow-Wick Gardens			153,360		85	%		3,823		4,112			3,823	—		4,112		3,800	—		4,100
Woodview			165,840		91	%		3,477		3,751			3,477	—		3,751		3,500	—		3,800
	Portfolio		8,136,439									$	225,164	—	$	251,256	$	270,400	—	$	296,600

(1)	TCI purchased this property in 2001 for $6.590 million.
(2)	TCI purchased this property in 2001 for $6.175 million.
(3)	TCI purchased this property in 2001 for $20.360 million.
(4)	TCI purchased this property in 2001 for $12.050 million.

Houlihan Lokey Howard & Zukin 64

ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Apartment Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
			Year					LTM Rent/		Market			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
TCI Apartment Asset	City	State	Built		Occupancy			Sq. Ft.		Monitor			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
4242 Cedar Springs	Dallas	TX		1984		97	%	$	0.82		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Apple Lane	Lawrence	KS		1989		97	%		0.95		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Arbor Pointe	Odessa	TX		1975		89	%		0.37		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Ashton Way	Midland	TX		1978		89	%		0.36		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Autumn Chase	Midland	TX		1985		97	%		0.48		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Baywalk	Galveston	TX		1979		84	%	NA			9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
By the Sea	Corpus Christi	TX		1969		94	%	NA			9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Cliffs of Eldorado	McKinney	TX		1997		89	%		0.82		9.4	%		9.0	%		9.4	%	-	0.5	%(1)		8.9	%		0.5	%		9.4	%
County Crossing	Tampa	FL		1973		93	%		0.56		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Courtyard	Midland	TX		1976		85	%		0.13		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Coventry Pointe	Midland	TX		1977		94	%		0.35		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Country Club Villas(Camelot)	Largo	FL		1975		97	%		0.53		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
El Chapparal	San Antonio	TX		1963		94	%		0.65		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Fairway View Estates	El Paso	TX		1977		80	%		0.53		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Fairways	Longview	TX		1980		85	%		0.51		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Forty-Four Hundred	Midland	TX		1981		91	%		0.41		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Fountain Lake	Texas City	TX		1975		86	%		0.50		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Fountains of Waterford	Midland	TX		1977		47	%		0.43		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Gladstell Forest	Conroe	TX		1985		93	%		0.64		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Grove Park	Plano	TX		1979		96	%		0.81		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Harper’s Ferry	Lafayette	LA		1972		88	%		0.54		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Heritage on the River	Jacksonville	FL		1973		95	%		0.63		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Hunters Glen	Midland	TX		1982		89	%		0.34		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
In the Pines	Gainesville	FL		1972		97	%		0.50		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Island Bay	Galveston	TX		1973		89	%	NA			9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Limestone Canyon	Austin	TX		1997		90	%		0.97		9.4	%		9.0	%		9.4	%	-	0.5	%(1)		8.9	%		0.5	%		9.4	%
Lincoln Court	Dallas	TX		1985		97	%		1.10		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Madison at Bear Creek	Houston	TX		1975		93	%		0.63		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Marina Landing	Galveston	TX		1985		89	%	NA			9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Mountain Plaza	El Paso	TX		1972		93	%		0.43		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Oak Park IV	Clute	TX		1981		87	%		0.46		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Paramount Terrace	Amarillo	TX		1983		94	%		0.53		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Plantation	Tulsa	OK		1968		93	%		0.55		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Primrose	Bakersfield	CA		1979		93	%		0.52		8.8	%		9.0	%		8.8	%		0.0	%		8.8	%		0.5	%		9.3	%
Quail Creek	Lawrence	KS		1969		97	%		0.54		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Quail Oaks	Balch Springs	TX		1982		96	%		0.76		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Sandstone	Mesa	AZ		1986		93	%		0.33		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Somerset	Texas City	TX		1985		89	%		0.59		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
South Cochran	Los Angeles	CA		1928		98	%		1.26		8.8	%		9.0	%		8.8	%		0.0	%		8.8	%		0.5	%		9.3	%
Southgate	Odessa	TX		1976		90	%		0.38		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Southgreen	Bakersfield	CA		1985		94	%		0.72		8.8	%		9.0	%		8.8	%		0.0	%		8.8	%		0.5	%		9.3	%
Stone Oak	San Antonio	TX		1978		90	%		0.58		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Summerfield	Orlando	FL		1971		91	%		0.67		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Summerstone	Houston	TX		1984		95	%		0.64		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Sunchase	Odessa	TX		1981		91	%		0.43		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Terrace Hills	El Paso	TX		1985		95	%		0.62		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Timbers	Tyler	TX		1973		93	%		0.52		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Trails at Windfern	Houston	TX		1975		96	%		0.71		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Treehouse	Irving	TX		1974		94	%		0.71		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Westwood Square	Odessa	TX		1977		97	%		0.43		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Willow Creek	El Paso	TX		1972		87	%		0.48		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%
Willow-Wick	North Augusta	SC		1973		95	%		0.54		9.5	%		9.0	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Willow-Wick Gardens	Pensacola	FL		1974		85	%		0.45		9.1	%		9.0	%		9.1	%		0.0	%		9.1	%		0.5	%		9.6	%
Woodview	Odessa	TX		1981		91	%		0.46		9.4	%		9.0	%		9.4	%		0.0	%		9.4	%		0.5	%		9.9	%

(1) A negative adjustment of 50 basis points has been made to account for the age of the asset.

Houlihan Lokey Howard & Zukin 65

ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Apartment Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
TCI Apartment Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/Sq. Ft.
4242 Cedar Springs			60,600	$	266	$	121	$	19	$	19	$	247		9.4	%	$	2,629	$	43.39
Apple Lane			30,000		162		28		19		19		143		9.4	%		1,521		50.71
Arbor Pointe			178,920		268		69		49		49		219		9.4	%		2,331		13.03
Ashton Way			138,964		107		51		45		45		62		9.4	%		664		4.77
Autumn Chase			58,652		140		47		16		16		124		9.4	%		1,318		22.46
Baywalk			161,440		NA		NA		48		48		NA		9.4	%		NA		NA
By the Sea			123,945		NA		NA		38		38		NA		9.4	%		NA		NA
Cliffs of Eldorado			182,888		958		71		52		52		906		8.9	%		10,174		55.63
County Crossing			199,952		626		79		57		57		569		9.1	%		6,252		31.27
Courtyard			111,576		50		19		33		33		17		9.4	%		177		1.58
Coventry Pointe			105,608		89		58		30		30		59		9.4	%		630		5.97
Country Club Villas (Camelot)			141,024		505		73		30		30		475		9.1	%		5,225		37.05
El Chapparal			174,220		564		112		48		48		517		9.4	%		5,498		31.56
Fairway View Estates			204,000		659		97		66		66		593		9.4	%		6,305		30.91
Fairways			134,176		409		54		38		38		371		9.4	%		3,951		29.44
Forty-Four Hundred			94,472		185		30		23		23		162		9.4	%		1,722		18.23
Fountain Lake			161,220		370		116		42		42		329		9.4	%		3,497		21.69
Fountains of Waterford			129,200		216		73		43		43		173		9.4	%		1,836		14.21
Gladstell Forest			121,536		438		61		42		42		396		9.4	%		4,216		34.69
Grove Park			143,556		797		66		47		47		750		9.4	%		7,975		55.56
Harper’s Ferry			112,500		385		63		31		31		355		9.5	%		3,732		33.17
Heritage on the River			289,490		1,247		210		75		75		1,171		9.1	%		12,874		44.47
Hunters Glen			174,180		167		63		53		53		114		9.4	%		1,212		6.96
In the Pines			294,860		961		175		61		61		901		9.1	%		9,900		33.58
Island Bay			374,088		NA		NA		115		115		NA		9.4	%		NA		NA
Limestone Canyon			216,000		1,522		28		65		65		1,457		8.9	%		16,371		75.79
Madison at Bear Creek			138,448		489		55		45		45		444		9.4	%		4,725		34.13
Marina Landing			205,504		NA		NA		64		64		NA		9.4	%		NA		NA
Mountain Plaza			220,710		471		223		47		47		424		9.4	%		4,514		20.45
Oak Park IV			78,708		144		34		27		27		117		9.4	%		1,249		15.87
Paramount Terrace			123,840		332		192		45		45		287		9.4	%		3,051		24.64
Plantation			103,500		250		119		35		35		216		9.4	%		2,296		22.18
Primrose			144,836		426		137		41		41		385		8.8	%		4,380		30.24
Quail Creek			113,416		402		120		24		24		378		9.4	%		4,023		35.47
Quail Oaks			72,848		336		42		33		33		303		9.4	%		3,227		44.30
Sandstone			363,079		896		65		60		60		836		9.5	%		8,804		24.25
Somerset			163,368		638		57		50		50		588		9.4	%		6,253		38.27
South Cochran			43,100		415		34		16		16		399		8.8	%		4,535		105.21
Southgate			151,656		197		75		45		45		152		9.4	%		1,617		10.67
Southgreen			66,000		284		35		20		20		264		8.8	%		2,998		45.43
Stone Oak			187,686		644		76		63		63		581		9.4	%		6,177		32.91
Summerfield			204,116		956		300		56		56		900		9.1	%		9,895		48.48
Summerstone			188,734		777		62		61		61		716		9.4	%		7,622		40.38
Sunchase			223,048		469		69		75		75		394		9.4	%		4,189		18.78
Terrace Hills			233,192		975		126		78		78		897		9.4	%		9,544		40.93
Timbers			101,666		281		42		45		45		236		9.4	%		2,508		24.67
Trails at Windfern			173,376		751		64		60		60		691		9.4	%		7,349		42.39
Treehouse			153,072		595		161		40		40		555		9.4	%		5,900		38.54
Westwood Square			49,001		56		56		20		20		36		9.4	%		384		7.83
Willow Creek			103,140		293		100		28		28		265		9.4	%		2,822		27.36
Willow-Wick			94,128		267		56		26		26		241		9.5	%		2,533		26.91
Willow-Wick Gardens			153,360		386		50		38		38		348		9.1	%		3,823		24.93
Woodview			165,840		385		48		58		58		327		9.4	%		3,477		20.97
	Portfolio		8,136,439	$	23,204	$	4,161	$	2,379	$	2,379	$	21,090				$	227,904	$	28.01

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $250 per unit annually.

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TCI Apartment Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
TCI Apartment Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI (1)		Rate			Indication		/Sq. Ft.
4242 Cedar Springs			60,600		301	$	121	$	19	$	19	$	301		9.9	%	$	3,041	$	50.17
Apple Lane			30,000		176		28		19		19		176		9.9	%		1,781		59.36
Arbor Pointe			178,920		300		69		49		49		300		9.9	%		3,033		16.95
Ashton Way			138,964		147		51		45		45		147		9.9	%		1,484		10.68
Autumn Chase			58,652		126		47		16		16		126		9.9	%		1,268		21.61
Baywalk			161,440		613		NA		48		48		NA		9.9	%		NA		NA
By the Sea			123,945		609		NA		38		38		NA		9.9	%		NA		NA
Cliffs of Eldorado			182,888		920		71		52		52		920		9.4	%		9,790		53.53
County Crossing			199,952		672		79		57		57		672		9.6	%		6,999		35.00
Courtyard			111,576		189		19		33		33		189		9.9	%		1,907		17.09
Coventry Pointe			105,608		146		58		30		30		146		9.9	%		1,475		13.96
Country Club Villas (Camelot)			141,024		500		73		30		30		500		9.6	%		5,213		36.97
El Chapparal			174,220		591		112		48		48		591		9.9	%		5,968		34.26
Fairway View Estates			204,000		721		97		66		66		721		9.9	%		7,286		35.72
Fairways			134,176		421		54		38		38		421		9.9	%		4,256		31.72
Forty-Four Hundred			94,472		198		30		23		23		198		9.9	%		1,996		21.13
Fountain Lake			161,220		444		116		42		42		444		9.9	%		4,485		27.82
Fountains of Waterford			129,200		322		73		43		43		322		9.9	%		3,248		25.14
Gladstell Forest			121,536		476		61		42		42		476		9.9	%		4,810		39.57
Grove Park			143,556		818		66		47		47		818		9.9	%		8,266		57.58
Harper’s Ferry			112,500		398		63		31		31		398		10.0	%		3,984		35.42
Heritage on the River			289,490		1,277		210		75		75		1,277		9.6	%		13,297		45.93
Hunters Glen			174,180		185		63		53		53		185		9.9	%		1,865		10.71
In the Pines			294,860		993		175		61		61		993		9.6	%		10,339		35.07
Island Bay			374,088		1,990		NA		115		115		NA		9.9	%		NA		NA
Limestone Canyon			216,000		1,361		28		65		65		1,361		9.4	%		14,476		67.02
Madison at Bear Creek			138,448		517		55		45		45		517		9.9	%		5,222		37.72
Marina Landing			205,504		1,180		NA		64		64		NA		9.9	%		NA		NA
Mountain Plaza			220,710		533		223		47		47		533		9.9	%		5,383		24.39
Oak Park IV			78,708		146		34		27		27		146		9.9	%		1,470		18.68
Paramount Terrace			123,840		361		192		45		45		361		9.9	%		3,650		29.47
Plantation			103,500		272		119		35		35		272		9.9	%		2,746		26.53
Primrose			144,836		481		137		41		41		481		9.3	%		5,168		35.68
Quail Creek			113,416		440		120		24		24		440		9.9	%		4,442		39.17
Quail Oaks			72,848		345		42		33		33		345		9.9	%		3,489		47.89
Sandstone			363,079		864		65		60		60		864		10.0	%		8,640		23.80
Somerset			163,368		639		57		50		50		639		9.9	%		6,456		39.52
South Cochran			43,100		460		34		16		16		460		9.3	%		4,946		114.75
Southgate			151,656		207		75		45		45		207		9.9	%		2,095		13.81
Southgreen			66,000		284		35		20		20		284		9.3	%		3,050		46.22
Stone Oak			187,686		701		76		63		63		701		9.9	%		7,085		37.75
Summerfield			204,116		1,044		300		56		56		1,044		9.6	%		10,873		53.27
Summerstone			188,734		794		62		61		61		794		9.9	%		8,017		42.48
Sunchase			223,048		455		69		75		75		455		9.9	%		4,594		20.60
Terrace Hills			233,192		939		126		78		78		939		9.9	%		9,484		40.67
Timbers			101,666		294		42		45		45		294		9.9	%		2,971		29.23
Trails at Windfern			173,376		710		64		60		60		710		9.9	%		7,173		41.37
Treehouse			153,072		696		161		40		40		696		9.9	%		7,033		45.94
Westwood Square			49,001		66		56		20		20		66		9.9	%		669		13.65
Willow Creek			103,140		291		100		28		28		291		9.9	%		2,935		28.45
Willow-Wick			94,128		279		56		26		26		279		10.0	%		2,793		29.68
Willow-Wick Gardens			153,360		395		50		38		38		395		9.6	%		4,112		26.81
Woodview			165,840		371		48		58		58		371		9.9	%		3,751		22.62
	Portfolio		8,136,439	$	28,657	$	4,161	$	2,379	$	2,379	$	24,266				$	248,516	$	30.54

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $250 per unit annually.

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TCI Hotel Assets Net Asset Value Approach Summary

($ in Thousands)

				NAV Valuation Indication				Valuation Indication Range
		Number
TCI Hotel Asset		of Rooms		LTM		2002		Low			High		HLHZ Selected Value
Majestic Hotel			52	$	3,444	$	3,590	$	3,444	—	$	3,590	$	3,400	—	$	3,600
City Suites			45		4,835		4,874		4,835	—		4,874		4,800	—		4,900
Majestic Inn			57		514		2,056		514	—		2,056		5,000	—		5,000	(1)
Willows Hotel			55		4,384		5,060		4,384	—		5,060		4,400	—		5,100
	Portfolio		209					$	13,177	—	$	15,580	$	17,600	—	$	18,600

(1) Hotel valued at Book Value as its current and forecasted operating results are not representative of the properties intrinsic value.

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Hotel Assets Capitalization Rate Selection Schedule

								Capitalization Rate
								Indications
																				Selected LTM			2002			Selected 2002
TCI			Year		Average	Avg. Revenue		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
Hotel Asset	City	State	Built		Occupancy	Per Room		Comps (1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
Majestic Hotel	Chicago	IL		1995	NA	$	27.06		13.6	%		10.9	%		10.9	%		1.5%	(2)		12.4	%		0.5	%		12.9	%
City Suites	Chicago	IL		1995	NA		35.09		13.6	%		10.9	%		10.9	%		1.5%	(2)		12.4	%		0.5	%		12.9	%
Majestic Inn	San Francisco	CA		1902	NA		47.84		13.6	%		10.9	%		10.9	%		1.5%	(2)		12.4	%		0.5	%		12.9	%
Willows Hotel	Chicago	IL		1995	NA		27.83		13.6	%		10.9	%		10.9	%		1.5%	(2)		12.4	%		0.5	%		12.9	%

(1)	Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.
(2)	Capitalization rate adjustment is due to hotels not having a major flag and being operated as independent boutique properties. In addition adjustment reflects additional risk related to lodging properties resulting from the September, 11 attacks.

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TCI Hotel Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM			Normalized		Selected				Selected					Implied
		Number		Net Operating		Capital			Capital		Capital		Selected		Capitalization			Valuation		Valuation
TCI Hotel Asset		of Rooms		Income		Expenditures			Expenditures		Expenditures		NOI(1)		Rate			Indication		/Room
Majestic Hotel			52	$	490	$	54		$	63	$	63	$	427		12.4	%	$	3,444	$	66.23
City Suites			45		671		34			71		71		599		12.4	%		4,835		107.44
Majestic Inn			57		186		(4	)		123		123		64		12.4	%		514		9.02
Willows Hotel			55		612		174			69		69		544		12.4	%		4,384		79.71
	Portfolio		209	$	1,960	$	259		$	326	$	326	$	1,634				$	13,177	$	63.05

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of 2% of revenue annually.

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Hotel Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected				Selected					Implied
		Number		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
TCI Hotel Asset		of Rooms		Income		Expenditures		Expenditures		Expenditures		NOI (1)		Rate			Indication		/Room
Majestic Hotel			52	$	530	$	45	$	67	$	67	$	463		12.9	%	$	3,590	$	69.04
City Suites			45		702		49		74		74		629		12.9	%		4,874		108.31
Majestic Inn			57		399		115		134		134		265		12.9	%		2,056		36.07
Willows Hotel			55		727		49		74		74		653		12.9	%		5,060		92.00
	Portfolio		209	$	2,358	$	258	$	348	$	348	$	2,010				$	15,580	$	74.55

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of 2% of revenue annually.

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Industrial/Warehouse Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication							Valuation Indication Range						HLHZ Selected Value
		Rentable
TCI Industrial Asset		Square Feet		Occupancy			LTM			2002		DCF		Low				High
5360 Tulane			30,000		100	%	$	651		$	609	$	705	$	609		—	$	705	$	600	—	$	700
5700 Tulane			67,850		9	%	NMF			NMF			1,360		1,360		—		1,360		700	—		1,000
Addison Hanger			23,650		100	%		765			1,464		3,920		765		—		3,920		2,400	—		2,400	(1)
Addison Hanger II			29,000		8	%		(384	)		766	NA			(384	)	—		766		1,200	—		1,200	(2)
Central Freight Warehouse			216,035		100	%		3,566			4,329		4,490		3,566		—		4,490		4,000	—		4,000
Encon			256,410		100	%		5,074			5,387		4,695		4,695		—		5,387		4,700	—		5,400
Kelly Portfolio			330,334		100	%		7,668			5,619		7,640		5,619		—		7,668		6,500	—		8,500
McLeod			110,914		95	%		5,813			5,902		5,940		5,813		—		5,940		5,800	—		5,900
Ogden Industrial			107,112		83	%		2,361			2,258		2,590		2,258		—		2,590		2,300	—		2,600
Plaza on Bachman Creek			80,278		89	%		5,410			7,106		7,050		5,410		—		7,106		5,400	—		7,100
Space Center			101,500		77	%		2,290			1,226		2,220		1,226		—		2,290		1,500	—		2,000
Texstar			97,846		100	%		1,807			1,922		1,975		1,807		—		1,975		1,800	—		2,000
Tricon Portfolio			570,877		91	%		15,386			14,834		17,880		14,834		—		17,880		14,800	—		17,900
	Portfolio		2,021,806											$	47,577		—	$	62,077	$	51,700	—	$	60,700

(1)	Valued at Book Value due to recent construction of the asset.
(2)	Valued at Book Value per Green Street analysis.

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TCI Industrial/Warehouse DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
TCI Industrial Asset	Occupancy			Rate(1)			Rate			Adjustment (2)			Discount Rate			Valuation Indications
5000 Space Center		77	%		11.1	%		12.3	%		2.0	%		14.3	%	$	2,080	—	$	2,360
5360 Tulane		100	%		10.7	%		11.3	%		0.0	%		11.3	%		660	—		750
5700 Tulane		9	%		10.1	%		13.3	%		4.0	%		17.3	%		1,270	—		1,450
Addison Hangar		100	%		10.7	%		11.3	%		4.0	%		15.3	%		3,660	—		4,180
Central Freight Warehouse		100	%		9.7	%		11.3	%		0.5	%		11.8	%		4,190	—		4,790
Encon Warehouse		100	%		10.7	%		11.3	%		0.0	%		11.3	%		4,400	—		4,990
Kelly Portfolio		100	%		10.7	%		11.3	%		0.0	%		11.3	%		7,130	—		8,150
Ogden Industrial Park		83	%		11.1	%		12.3	%		1.0	%		13.3	%		2,430	—		2,750
Texstar Warehouse		100	%		10.7	%		11.3	%		0.0	%		11.3	%		1,840	—		2,110
Tricon Portfolio		91	%		10.7	%		11.3	%		0.0	%		11.3	%		16,700	—		19,060
Addison Hangar II		8	%		10.1	%		13.3	%		4.0	%		17.3	%	NA		—	NA

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

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TCI Industrial/Warehouse Assets Capitalization Rate Selection Schedule

									Capitalization Rate
									Indications
																					Selected LTM			2002			Selected 2002
TCI			Year				LTM Rent/		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
Industrial Asset	City	State	Built	Occupancy			Sq. Ft.		Comps (1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
5360 Tulane	Atlanta	GA	1970		100	%	$	0.24		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%
5700 Tulane	Atlanta	GA	1998		9	%		0.06		10.2	%		9.6	%		9.6	%		0.0%	(2)		9.6	%		0.5	%		10.1	%
Addison Hanger	Addison	TX	1992		100	%		0.64		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%
Addison Hanger II	Addison	TX	2001		8	%		0.06		10.2	%		9.6	%		9.6	%		0.0%	(2)		9.6	%		0.5	%		10.1	%
Central Freight Warehouse	Dallas	TX	2000		100	%		0.18		10.2	%		9.2	%		9.2	%		0.0%	(2)		9.2	%		0.5	%		9.7	%
Encon	Fort Worth	TX	1966		100	%		0.19		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%
Kelly Portfolio	Dallas	TX	1958		100	%		0.28		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%
McLeod	Orlando	FL	1966/1973		95	%		0.64		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%
Ogden Industrial	Ogden	UT	1985		83	%		0.27		10.2	%		9.6	%		9.6	%		1.0%	(2)		10.6	%		0.5	%		11.1	%
Plaza on Bachman Creek	Dallas	TX	1979		89	%		1.07		10.2	%		9.6	%		9.6	%		1.0%	(2)		10.6	%		0.5	%		11.1	%
Space Center	San Antonio	TX	1970		77	%		0.27		10.2	%		9.6	%		9.6	%		1.0%	(2)		10.6	%		0.5	%		11.1	%
Texstar	Arlington	TX	1967		100	%		0.18		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%
Tricon Portfolio	Atlanta	GA	1971		91	%		0.32		10.2	%		9.2	%		9.2	%		1.0%	(2)		10.2	%		0.5	%		10.7	%

(1)	Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.
(2)	Capitalization rate adjustment is for age of asset.

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Industrial/Warehouse Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM			LTM		Normalized		Selected					Selected						Implied
		Rentable		Net Operating			Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
TCI Industrial Asset		Square Feet		Income			Expenditures		Expenditures		Expenditures		NOI (1)			Rate			Indication			/Sq. Ft.
5360 Tulane			30,000	$	71		$	0	$	5	$	5	$	66			10.2	%	$	651		$	21.71
5700 Tulane			67,850		32			0		10		10		22			9.6	%		230			3.40
Addison Hanger			23,650		82			2		4		4		78			10.2	%		765			32.33
Addison Hanger II			29,000		(32	)		11		4		4		(37	)		9.6	%		(384	)		(13.24	)
Central Freight Warehouse			216,035		360			0		32		32		328			9.2	%		3,566			16.51
Encon			256,410		556			33		38		38		518			10.2	%		5,074			19.79
Kelly Portfolio			330,334		832			7		50		50		782			10.2	%		7,668			23.21
McLeod			110,914		610			0		17		17		593			10.2	%		5,813			52.41
Ogden Industrial			107,112		265			0		16		16		249			10.6	%		2,361			22.04
Plaza on Bachman Creek			80,278		583			20		12		12		571			10.6	%		5,410			67.40
Space Center			101,500		257			33		15		15		242			10.6	%		2,290			22.56
Texstar			97,846		199			0		15		15		184			10.2	%		1,807			18.47
Tricon Portfolio			570,877		1,655			0		86		86		1,569			10.2	%		15,386			26.95
	Portfolio		2,021,806	$	5,469		$	106	$	303	$	303	$	5,165					$	50,636		$	25.05

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.

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TCI Industrial/Warehouse Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected					Selected						Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
TCI Industrial Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)			Rate			Indication			/Sq. Ft.
5360 Tulane			30,000	$	70	$	28	$	5	$	5	$	65			10.7	%	$	609		$	20.30
5700 Tulane			67,850		7		49		10		10		(3	)		10.1	%		(30	)		(0.45	)
Addison Hanger			23,650		160		2		4		4		157			10.7	%		1,464			61.92
Addison Hanger II			29,000		81		0		4		4		77			10.1	%		766			26.43
Central Freight Warehouse			216,035		452		0		32		32		420			9.7	%		4,329			20.04
Encon			256,410		615		0		38		38		576			10.7	%		5,387			21.01
Kelly Portfolio			330,334		651		236		50		50		601			10.7	%		5,619			17.01
McLeod			110,914		648		75		17		17		632			10.7	%		5,902			53.21
Ogden Industrial			107,112		266		19		16		16		249			11.1	%		2,258			21.08
Plaza on Bachman Creek			80,278		797		62		12		12		785			11.1	%		7,106			88.52
Space Center			101,500		151		66		15		15		135			11.1	%		1,226			12.08
Texstar			97,846		220		182		15		15		206			10.7	%		1,922			19.65
Tricon Portfolio			570,877		1,673		393		86		86		1,587			10.7	%		14,834			25.98
	Portfolio		2,021,806	$	5,791	$	1,112	$	303	$	303	$	5,488					$	51,392		$	25.42

(1) Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.

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TCI Office Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication								Valuation Indication Range						HLHZ Selected Value
		Rentable
TCI Office Asset		Square Feet		Occupancy			LTM			2002			DCF		Low				High
1010 Common			494,579		35	%	NMF			$	16,297		$	18,105	$	16,297		—	$	18,105	$	16,300	—	$	18,100
225 Baronne			416,834		75	%		6,691			2,183			9,020		2,183		—		9,020		6,000	—		7,000
4135 Beltline Road			90,000		1	%		(1,271	)		(765	)		6,200		(1,271	)	—		6,200		2,600	—		2,600
Wilshire Medical Building (9033 Wilshire)			44,253		93	%		6,571			5,980			8,815		5,980		—		8,815		6,000	—		7,000
Ambulatory Surgery Center			33,832		100	%		6,904			7,350			6,750		6,750		—		7,350		6,800	—		7,400
Amoco			378,244		84	%		11,772			14,120			12,810		11,772		—		14,120		11,000	—		13,000
Atrium			74,603		79	%		4,254			4,004			2,645		2,645		—		4,254		3,000	—		4,000
Bay Plaza			75,780		98	%		6,812			5,368			6,425		5,368		—		6,812		5,400	—		6,800
Bay Plaza II			78,882		91	%		4,467			2,907			4,605		2,907		—		4,605		2,900	—		4,600
Bonita Plaza			47,777		92	%		7,410			7,597			8,440		7,410		—		8,440		7,400	—		8,400
Brandeis			319,234		88	%		11,772			15,899			13,815		11,772		—		15,899		12,000	—		14,000
Corporate Pointe			65,918		100	%		8,978			8,813			8,305		8,305		—		8,978		8,300	—		9,000
Countryside Retail Center			133,422		90	%		17,677			17,885			18,410		17,677		—		18,410		17,700	—		18,400
Durham Center			207,171		94	%		21,445			22,753			19,155		19,155		—		22,753		19,200	—		22,800
Forum			79,791		60	%		6,227			5,376			7,220		5,376		—		7,220		5,500	—		6,500
Harmon			72,062		66	%		6,928			5,663			8,465		5,663		—		8,465		6,000	—		8,000
Hartford			174,513		40	%		(1,614	)		(2,559	)		5,105		(2,559	)	—		5,105		4,000	—		4,000
Institute Place			144,915		90	%		13,409			12,736			11,880		11,880		—		13,409		11,900	—		13,400
Jefferson			71,877		90	%		13,016			14,755			14,505		13,016		—		14,755		13,000	—		14,800
Lexington Center			74,603		80	%		5,785			7,293			7,045		5,785		—		7,293		5,800	—		7,300
Mimado			35,127		74	%		2,945			3,933			4,020		2,945		—		4,020		2,900	—		4,000
NASA			78,159		68	%		1,804			2,188			3,710		1,804		—		3,710		2,000	—		3,000
One Steeplechase			103,376		100	%		10,410			10,945			12,260		10,410		—		12,260		10,400	—		12,300
Parkway North			71,041		78	%		3,602			4,228			6,410		3,602		—		6,410		4,000	—		5,000
Plaza Towers Portfolio			187,108		98	%		14,508			14,178			15,155		14,178		—		15,155		14,200	—		15,200
Remington Tower			90,009		91	%		4,002			2,889			4,710		2,889		—		4,710		3,000	—		4,000
Washington Mutual Building (Savings of America)			68,634		87	%		2,087			2,884			2,875		2,087		—		2,884		2,100	—		2,900
Valley Rim			54,194		91	%		3,800			5,887			4,960		3,800		—		5,887		5,500	—		5,500
Venture Center			38,272		100	%		4,325			3,996			4,220		3,996		—		4,325		4,000	—		4,300
View Ridge			25,062		100	%		1,970			(35	)		2,120		(35	)	—		2,120		2,000	—		2,000
Westgrove Air Plaza			78,326		73	%		4,083			2,979			5,045		2,979		—		5,045		3,000	—		4,000
Windsor Plaza			80,522		64	%		2,282			1,518			4,180		1,518		—		4,180		2,000	—		2,500
	Portfolio		3,988,120												$	206,283		—	$	280,714	$	225,900	—	$	261,800

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TCI Office DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
TCI Office Asset	Occupancy			Rate (1)			Rate			Adjustment(2)			Discount Rate			Valuation Indications
1010 Common		35.0	%		10.7	%		14.3	%		2.0	%		16.3	%	$	16,580	—	$	19,630
225 Baronne		75.0	%		10.7	%		13.3	%		3.0	%		16.3	%		8,380	—		9,660
4135 Beltline		1.0	%		10.7	%		14.3	%		0.0	%		14.3	%		5,860	—		6,540	��
Amoco Building		84.0	%		10.6	%		13.3	%		0.5	%		13.8	%		11,900	—		13,720
Atrium Office Building		79.0	%		10.7	%		13.3	%		0.5	%		13.8	%		2,460	—		2,830
Bay Plaza I		98.0	%		10.6	%		12.0	%		1.0	%		13.0	%		6,010	—		6,840
Bay Plaza II		91.0	%		10.6	%		12.0	%		2.5	%		14.5	%		4,290	—		4,920
Bonita Plaza		92.0	%		10.6	%		12.0	%		1.0	%		13.0	%		7,900	—		8,980
Brandeis Building		88.0	%		10.6	%		13.3	%		1.5	%		14.8	%		12,890	—		14,740
Chesapeake Center	NA				10.0	%		12.0	%		4.0	%		16.0	%		4,530	—		5,180
Corporate Pointe		100.0	%		10.6	%		12.0	%		0.0	%		12.0	%		7,780	—		8,830
Durham Center		94.0	%		10.6	%		12.0	%		0.0	%		12.0	%		17,840	—		20,470
Eton Square		72.7	%		10.7	%		14.3	%		4.0	%		18.3	%		11,530	—		13,140
The Forum Building		60.0	%		10.7	%		14.3	%		2.0	%		16.3	%		6,780	—		7,660
Hartford Building		40.0	%		10.7	%		14.3	%		0.0	%		14.3	%		4,720	—		5,490
Jefferson Building		90.0	%		10.6	%		13.3	%		0.0	%		13.3	%		13,540	—		15,470
Institute Place		90.0	%		10.6	%		13.3	%		0.0	%		13.3	%		11,110	—		12,650
Lexington Center		80.0	%		10.6	%		13.3	%		3.0	%		16.3	%		6,610	—		7,480
McLeod Commerce Center		95.0	%		10.7	%		12.0	%		0.0	%		12.0	%		5,540	—		6,340
Nasa Office Building		68.0	%		10.7	%		14.3	%		4.0	%		18.3	%		3,470	—		3,950
One Steeplechase		100.0	%		10.6	%		12.0	%		0.0	%		12.0	%		11,480	—		13,040
Parkway North		78.0	%		10.7	%		13.3	%		4.0	%		17.3	%		6,010	—		6,810
Plaza Tower Portfolio		97.5	%		10.6	%		12.0	%		1.0	%		13.0	%		14,120	—		16,190
Remington Building		91.0	%		10.6	%		12.0	%		4.0	%		16.0	%		4,380	—		5,040
Valley Rim		91.0	%		10.6	%		12.0	%		1.0	%		13.0	%		4,620	—		5,300
Venture Center		100.0	%		10.6	%		12.0	%		0.5	%		12.5	%		3,950	—		4,490
Viewridge Building		100.0	%		10.6	%		12.0	%		2.0	%		14.0	%		1,980	—		2,260
Washington Mutual		87.0	%		10.6	%		13.3	%		3.5	%		16.8	%		2,700	—		3,050
Waterstreet Complex	NA				10.0	%		12.0	%		4.0	%		16.0	%		17,490	—		19,960
Westgrove Air Plaza		73.0	%		10.7	%		14.3	%		0.0	%		14.3	%		4,700	—		5,390
Wilshire Medical		93.0	%		10.6	%		12.0	%		2.0	%		14.0	%		8,240	—		9,390
Windsor Executive Plaza		64.0	%		10.7	%		14.3	%		2.0	%		16.3	%		3,910	—		4,450
Ambulatory Surgery Center		100.0	%		10.6	%		12.0	%		0.0	%		12.0	%		6,330	—		7,170
Harmon		66.0	%		10.7	%		14.3	%		4.0	%		18.3	%		7,970	—		8,960
Mimado		74.0	%		10.7	%		14.3	%		3.0	%		17.3	%		3,780	—		4,260

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

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TCI Office Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent/		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
TCI Office Asset	City	State	Year Built		Occupancy			Sq. Ft.		Comps (1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
1010 Common	New Orleans	LA		1970		35	%	$	0.42		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
225 Baronne	New Orleans	LA		1960		75	%		0.66		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
4135 Beltline Road	Addison	TX		1981/1982		1	%		0.11		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Wilshire Medical Building (9033 Wilshire)	Los Angeles	CA		1957		93	%		2.18		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Ambulatory Surgery Center	Sterling	VA		1991		100	%		2.02		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Amoco	New Orleans	LA		1974		84	%		0.95		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Atrium	Palm Beach	FL		1985		79	%		0.91		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Bay Plaza	Tampa	FL		1988		98	%		1.30		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Bay Plaza II	Tampa	FL		1985		91	%		1.07		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Bonita Plaza	Bonita	CA		1991		92	%		1.85		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Brandeis	Omaha	NE		1921		88	%		0.83		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Corporate Pointe	Chantilly	VA		1992		100	%		1.77		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Countryside Retail Center	Sterling	VA		1986		90	%		1.54		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Durham Center	Durham	NC		1988		94	%		1.50		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Forum	Richmond	VA		1987		60	%		0.97		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Harmon	Sterling	VA		1987		66	%		1.47		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Hartford	Dallas	TX		1980		40	%		0.52		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Institute Place	Chicago	IL		1910		90	%		1.40		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Jefferson	Washington	DC		1979		90	%		2.70		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Lexington Center	Colorado Springs	CO		1986		80	%		1.21		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Mimado	Sterling	VA		1986		74	%		1.44		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
NASA	Clear Lake	TX		1979		68	%		0.68		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
One Steeplechase	Sterling	VA		1987		100	%		1.73		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Parkway North	Dallas	TX		1980		78	%		1.14		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Plaza Towers Portfolio	St. Petersburg	FL		1979		98	%		1.45		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Remington Tower	Tulsa	OK		1982		91	%		0.99		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Washington Mutual Building (Savings of America)	Houston	TX		1979		87	%		0.87		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Valley Rim	San Diego	CA		1988		91	%		1.20		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Venture Center	Atlanta	GA		1979		100	%		1.50		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
View Ridge	San Diego	CA		1981		100	%		0.98		11.1	%		10.1	%		10.1	%		0.0	%		10.1	%		0.5	%
Westgrove Air Plaza	Addison	TX		1982		73	%		1.04		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Windsor Plaza	Windcrest	TX		1984		64	%		0.77		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Eton Square Portfolio	Tulsa	OK		1985		73	%		0.70		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%
Red Cross Building	Dallas	TX		1983		0	%		0.03		11.1	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%

(1) Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Office Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM			LTM		Normalized		Selected					Selected						Implied
		Rentable		Net Operating			Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
TCI Office Asset		Square Feet		Income			Expenditures		Expenditures		Expenditures		NOI(1)			Rate			Indication			/ Sq. Ft.
1010 Common			494,579	$	133		$	1,084	$	74	$	74	$	59			10.2	%	$	580		$	1.17
225 Baronne			416,834		742			582		63		63		679			10.2	%		6,691			16.05
4135 Beltline Road			90,000		(116	)		0		14		14		(129	)		10.2	%		(1,271	)		(14.12	)
Wilshire Medical Building (9033 Wilshire)			44,253		670			101		7		7		664			10.1	%		6,571			148.48
Ambulatory Surgery Center			33,832		702			30		5		5		697			10.1	%		6,904			204.07
Amoco			378,244		1,246			24		57		57		1,189			10.1	%		11,772			31.12
Atrium			74,603		443			14		11		11		432			10.2	%		4,254			57.02
Bay Plaza			75,780		699			71		11		11		688			10.1	%		6,812			89.89
Bay Plaza II			78,882		463			42		12		12		451			10.1	%		4,467			56.63
Bonita Plaza			47,777		756			0		7		7		748			10.1	%		7,410			155.09
Brandeis			319,234		1,237			127		48		48		1,189			10.1	%		11,772			36.88
Corporate Pointe			65,918		917			17		10		10		907			10.1	%		8,978			136.21
Countryside Retail Center			133,422		1,805			10		20		20		1,785			10.1	%		17,677			132.49
Durham Center			207,171		2,197			36		31		31		2,166			10.1	%		21,445			103.51
Forum			79,791		644			10		12		12		632			10.2	%		6,227			78.04
Harmon			72,062		714			2		11		11		703			10.2	%		6,928			96.14
Hartford			174,513		(138	)		108		26		26		(164	)		10.2	%		(1,614	)		(9.25	)
Institute Place			144,915		1,376			171		22		22		1,354			10.1	%		13,409			92.53
Jefferson			71,877		1,325			89		11		11		1,315			10.1	%		13,016			181.09
Lexington Center			74,603		596			2		11		11		584			10.1	%		5,785			77.55
Mimado			35,127		304			13		5		5		299			10.2	%		2,945			83.83
NASA			78,159		195			48		12		12		183			10.2	%		1,804			23.08
One Steeplechase			103,376		1,067			0		16		16		1,051			10.1	%		10,410			100.70
Parkway North			71,041		376			56		11		11		366			10.2	%		3,602			50.70
Plaza Towers Portfolio			187,108		1,493			59		28		28		1,465			10.1	%		14,508			77.54
Remington Tower			90,009		418			57		14		14		404			10.1	%		4,002			44.46
Washington Mutual Building (Savings of America)			68,634		221			53		10		10		211			10.1	%		2,087			30.41
Valley Rim			54,194		392			0		8		8		384			10.1	%		3,800			70.13
Venture Center			38,272		443			0		6		6		437			10.1	%		4,325			113.00
View Ridge			25,062		203			0		4		4		199			10.1	%		1,970			78.59
Westgrove Air Plaza			78,326		426			77		12		12		414			10.2	%		4,083			52.12
Windsor Plaza			80,522		244			12		12		12		232			10.2	%		2,282			28.34
Red Cross Building			30,000		(125	)		0		5		5		(129	)		10.2	%	NA			NA
	Portfolio		4,018,120	$	22,068		$	2,893	$	603	$	603	$	21,466					$	213,628		$	53.17

(1)	Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.
(2)	Income and valuation account for the 90.0% ownership stake that TCI owns in Eton Square.

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Office Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002			2002		Normalized		Selected					Selected						Implied
		Rentable		Net Operating			Capital		Capital		Capital		Selected			Capitalization			Valuation			Valuation
TCI Office Asset		Square Feet		Income			Expenditures		Expenditures		Expenditures		NOI(1)			Rate			Indication			/ Sq. Ft.
1010 Common			494,579		1,810			4,491	$	74	$	74		1,736			10.7	%	$	16,297		$	32.95
225 Baronne			416,834		295			2,911		63		63		233			10.7	%		2,183			5.24
4135 Beltline Road			90,000		(68	)		1,583		14		14		(81	)		10.7	%		(765	)		(8.50	)
Wilshire Medical Building (9033 Wilshire)			44,253		641			398		7		7		634			10.6	%		5,980			135.13
Ambulatory Surgery Center			33,832		784			0		5		5		779			10.6	%		7,350			217.25
Amoco			378,244		1,553			1,215		57		57		1,497			10.6	%		14,120			37.33
Atrium			74,603		438			91		11		11		426			10.7	%		4,004			53.67
Bay Plaza			75,780		580			77		11		11		569			10.6	%		5,368			70.84
Bay Plaza II			78,882		320			203		12		12		308			10.6	%		2,907			36.85
Bonita Plaza			47,777		812			81		7		7		805			10.6	%		7,597			159.02
Brandeis			319,234		1,733			334		48		48		1,685			10.6	%		15,899			49.80
Corporate Pointe			65,918		944			67		10		10		934			10.6	%		8,813			133.70
Countryside Retail Center			133,422		1,916			164		20		20		1,896			10.6	%		17,885			134.05
Durham Center			207,171		2,443			119		31		31		2,412			10.6	%		22,753			109.83
Forum			79,791		585			640		12		12		573			10.7	%		5,376			67.38
Harmon			72,062		614			299		11		11		603			10.7	%		5,663			78.58
Hartford			174,513		(246	)		773		26		26		(272	)		10.7	%		(2,559	)		(14.66	)
Institute Place			144,915		1,372			196		22		22	��	1,350			10.6	%		12,736			87.89
Jefferson			71,877		1,575			389		11		11		1,564			10.6	%		14,755			205.29
Lexington Center			74,603		784			191		11		11		773			10.6	%		7,293			97.76
Mimado			35,127		424			34		5		5		419			10.7	%		3,933			111.95
NASA			78,159		245			101		12		12		233			10.7	%		2,188			27.99
One Steeplechase			103,376		1,176			0		16		16		1,160			10.6	%		10,945			105.87
Parkway North			71,041		461			135		11		11		450			10.7	%		4,228			59.51
Plaza Towers Portfolio			187,108		1,531			350		28		28		1,503			10.6	%		14,178			75.77
Remington Tower			90,009		320			477		14		14		306			10.6	%		2,889			32.10
Washington Mutual Building (Savings of America)			68,634		316			80		10		10		306			10.6	%		2,884			42.02
Valley Rim			54,194		632			26		8		8		624			10.6	%		5,887			108.63
Venture Center			38,272		429			190		6		6		424			10.6	%		3,996			104.40
View Ridge			25,062		0			0		4		4		(4	)		10.6	%		(35	)		(1.42	)
Westgrove Air Plaza			78,326		329			137		12		12		317			10.7	%		2,979			38.03
Windsor Plaza			80,522		174			226		12		12		162			10.7	%		1,518			18.85
Red Cross Building			30,000		(232	)		0		5		5		(236	)		10.7	%	NA			NA
	Portfolio		4,018,120	$	24,689		$	15,978	$	603	$	603	$	24,086					$	229,245		$	57.05

(1)	Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.
(2)	Income and valuation account for the 10.0% ownership stake that TCI owns in Eton Square.

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ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Retail Assets Net Asset Value Approach Summary

($ in Thousands)

							NAV Valuation Indication						Valuation Indication Range					HLHZ Selected Value
		Rentable
TCI Retail Asset		Square Feet		Occupancy			LTM		2002		DCF		Low			High
Fruitland Park			6,722		100	%		439		352		505		352	—		505		400	—		500
Kmart Plaza — San Angelo		NA			100	%		179		169		150		150	—		179		200	—		200
Dunes Plaza			223,869		63	%		5,809		6,358		9,125		5,809	—		9,125		6,000	—		6,500
K-Mart — Cary			92,033		100	%		2,947		2,764		2,825		2,764	—		2,947		2,800	—		2,900
Parkway Center			28,374		75	%		3,570		2,676		3,845		2,676	—		3,845		2,700	—		3,800
Promenade			133,558		77	%		11,556		10,822		14,745		10,822	—		14,745		11,000	—		13,000
Sadler Square			70,295		98	%		4,094		3,544		3,985		3,544	—		4,094		3,500	—		4,100
Kmart Plaza — Sheboygan			74,532		100	%		1,360		1,436		1,520		1,360	—		1,520		1,400	—		1,500
	Portfolio		629,383										$	27,477	—	$	36,960	$	28,000		$	32,500

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TCI Income Producing Real Estate — Net Asset Value Approach

TCI Retail DCF Analysis

($ in Thousands)

							Discount Rate Selection
				Selected Exit			C&W
				Capitalization			Discount			HLHZ			Selected			Discounted Cash Flow
TCI Retail Asset	Occupancy			Rate(1)			Rate			Adjustment(2)			Discount Rate			Valuation Indications
Plaza on Bachman Creek		89.0	%		11.1	%		12.5	%		1.0	%		13.5	%	$	6,620	—	$	7,480
Countryside		90.0	%		10.6	%		12.5	%		0.0	%		12.5	%		17,260	—		19,560
Dunes Plaza		63.0	%		10.7	%		13.5	%		2.5	%		16.0	%		8,510	—		9,740
Fruitland Park		100.0	%		10.0	%		12.0	%		0.5	%		12.5	%		470	—		540
K-Mart Cary		100.0	%		10.0	%		12.0	%		0.0	%		12.0	%		2,640	—		3,010
K-Mart San Angelo		100.0	%		10.0	%		12.0	%		0.0	%		12.0	%		140	—		160
K-Mart Sheboygan		100.0	%		10.0	%		12.0	%		0.0	%		12.0	%		1,420	—		1,620
Parkway Center		75.0	%		10.7	%		12.5	%		2.0	%		14.5	%		3,600	—		4,090
Promenade Shopping Center		77.0	%		10.7	%		12.5	%		1.5	%		14.0	%		13,810	—		15,680
Sadler Square		98.0	%		10.0	%		12.0	%		0.5	%		12.5	%		3,720	—		4,250
Chelsea Square		77.0	%		10.7	%		12.5	%		3.0	%		15.5	%		4,980	—		5,630
1925 Valley View Lane		10.0	%		10.7	%		13.5	%		4.0	%		17.5	%	NA		—	NA

(1)

Based upon selected 2002 capitalization rate.

(2)

Capitalization rate adjustment of up to 400 bps based upon the properties LTM performance and budgeted 2001 performance in relation to the comparable period DCF projections. For the properties where the DCF projection was 10% higher than the comparable period performance or updated budget, a 50 bps adjustment was made. For the properties where the DCF projection was 20% higher than the comparable period performance or updated budget, a 100 bps adjustment was made. And so on, up to a 200 bps point adjustment per period.

Houlihan Lokey Howard & Zukin 83

ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Retail Assets Capitalization Rate Selection Schedule

										Capitalization Rate
										Indications
																						Selected LTM			2002			Selected 2002
								LTM Rent /		Implied			Cushman			Capitalization			HLHZ			Capitalization			Cap Rate			Capitalization
TCI Retail Asset	City	State	Year Built		Occupancy			Sq. Ft.		Comps(1)			& Wakefield			Rate			Adjustment			Rate			Adjustment			Rate
Fruitland Park	Fruitland Park	FL		1970		100	%		0.83		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Kmart Plaza — San Angelo	San Angelo	TX		1992		100	%	NA			10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Dunes Plaza	Michigan City	IN		1978		63	%		0.38		10.8	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
K-Mart — Cary	Cary	NC		1981		100	%		0.28		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Parkway Center	Dallas	TX		1979		75	%		1.64		10.8	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Promenade	Highland Ranch	CO		1986		77	%		1.07		10.8	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%
Sadler Square	Amelia Island	FL		1987		98	%		0.68		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Kmart Plaza — Sheboygan	Sheboygan	WI		1977		100	%		0.17		10.8	%		9.5	%		9.5	%		0.0	%		9.5	%		0.5	%		10.0	%
Chelsea Square	Houston	TX		1985		77	%		0.85		10.8	%		10.2	%		10.2	%		0.0	%		10.2	%		0.5	%		10.7	%

(1)	Implied cap rates from comparable public REITs as stated in the November 2001 issue of SNL Real Estate Securities Monthly.
(2)	Property is listed as a Miscellaneous/Bakery.

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ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Retail Assets LTM Net Asset Value Approach

($ in Thousands)

				LTM		LTM		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
TCI Retail Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/ Sq. Ft.
Fruitland Park			6,722		43		0		1		1		42		9.5	%		439		65.32
Kmart Plaza — San Angelo			0		17		0		0		0		17		9.5	%		179	NMF
Dunes Plaza			223,869		623		219		34		34		590		10.2	%		5,809		25.95
K-Mart — Cary			92,033		294		0		14		14		280		9.5	%		2,947		32.02
Parkway Center			28,374		367		20		4		4		362		10.2	%		3,570		125.81
Promenade			133,558		1,193		0		20		20		1,173		10.2	%		11,556		86.52
Sadler Square			70,295		400		2		11		11		389		9.5	%		4,094		58.25
Kmart Plaza — Sheboygan			74,532		140		0		11		11		129		9.5	%		1,360		18.25
	Portfolio		629,383	$	3,076	$	241	$	94	$	94	$	2,982				$	29,953	$	47.59

(1)	Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.
(2)	Property is listed as a Miscellaneous/Bakery.
(3)	Income and valuation account for the 1.0% ownership stake that TCI owns in Walmart Malden.
(4)	Income and valuation account for the 63.7% ownership stake that TCI owns in Chelsea Square.

Houlihan Lokey Howard & Zukin 85

ARL/IORI/TCI Merger

TCI Income Producing Real Estate — Net Asset Value Approach

TCI Retail Assets 2002 Net Asset Value Approach

($ in Thousands)

				2002		2002		Normalized		Selected				Selected					Implied
		Rentable		Net Operating		Capital		Capital		Capital		Selected		Capitalization			Valuation		Valuation
TCI Retail Asset		Square Feet		Income		Expenditures		Expenditures		Expenditures		NOI(1)		Rate			Indication		/ Sq. Ft.
Fruitland Park			6,722		36		0		1		1		35		10.0	%		352		52.40
Kmart Plaza — San Angelo			0		17		0		0		0		17		10.0	%		169	NMF
Dunes Plaza			223,869		711		189		34		34		677		10.7	%		6,358		28.40
K-Mart — Cary			92,033		290		0		14		14		276		10.0	%		2,764		30.04
Parkway Center			28,374		289		88		4		4		285		10.7	%		2,676		94.33
Promenade			133,558		1,173		164		20		20		1,153		10.7	%		10,822		81.03
Sadler Square			70,295		365		85		11		11		354		10.0	%		3,544		50.41
Kmart Plaza — Sheboygan			74,532		155		0		11		11		144		10.0	%		1,436		19.27
	Portfolio		629,383	$	3,036	$	526	$	94	$	94	$	2,941				$	28,122	$	44.68

(1)	Selected Net Operating Income equals Net Operating Income after Normalized Capital Expenditures of $0.15 per square foot annually.
(2)	Property is listed as a Miscellaneous/Bakery.
(3)	Income and valuation account for the 1.0% ownership stake that TCI owns in Walmart Malden.
(4)	Income and valuation account for the 63.7% ownership stake that TCI owns in Chelsea Square.

Houlihan Lokey Howard & Zukin 86

TCI — Land

ARL/IORI/TCI Merger

TCI — Land

Land Valuation Summary — Transcontinental Realty Investors, Inc.

($ in thousands)

				Book
Land		City	State	Value		Value Range
1013 Common		New Orleans	LA		625	$	600	$	600
Alamo Springs		Dallas	TX		1,385	$	1,400	$	1,400
Dominion		Dallas	TX		3,931	$	1,600	$	2,000
Eagle Crest		NA	NA		2,634	$	2,500	$	3,300
Fiesta		NA	NA		44	$	0	$	0
Folsom		NA	NA		1,781	$	4,000	$	5,100
Fruitland		NA	NA		153	$	200	$	600
Lamar/ Parmer		Austin	TX		1,665	$	1,700	$	2,000
Las Colinas		Las Colinas	TX		1,000	$	1,000	$	3,300
Lemmon Carlisle		Dallas	TX		3,606	$	3,600	$	3,600
Limestone Canyon II		Austin	TX		694	$	700	$	700
Limestone Ranch		Lewsiville	TX		—	$	0	$	0
Manhattan		Farmers Branch	TX		11,186	$	11,900	$	15,400
MicKinney 36		Collin County	TX		2,077	$	2,000	$	7,500
Mira Lago		Farmers Branch	TX		—	$	0	$	0
Moss Creek		NA	NA		85	$	0	$	0
Pac Trust		NA	NA		—	$	800	$	1,000
Red Cross		Dallas	TX		8,383	$	8,400	$	10,700
Round Mountain		NA	NA		1,542	$	1,200	$	1,500
Seminary West		Fort Worth	TX		—	$	0	$	0
Solco Valley Ranch		Dallas	TX		—	$	0	$	0
State Highway 121		Collin County	TX		1,773	$	1,800	$	1,800
West End		Dallas	TX		7,469	$	7,500	$	7,500
McKinney/Allen Assemblage
	OPUBCO I	NA	NA	NA
	Watters Road	Collin County	TX		1,587
	Stacey Road	Allen	TX		2,472
	McKinney 140	NA	NA	NA
	Whisenant	Collin County	TX		572
	Solco	Collin County	TX		1,308
	Sandison	Collin County	TX		4,629
Total McKinney/Allen Assemblage					10,568	$	17,000	$	29,000
TOTAL						$	67,900	$	97,000
SELECTED VALUE					60,601	$	68,000	$	97,000

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TCI — Other Assets

TCI — Other Real Estate Assets Valuation

($ in Thousands)

Asset		Asset Type	Conluded Value Range
Signature Atheletic Club		Athletic Club		$	1,500	—	$	2,300
Alamo Springs Parking		Parking
West End Parking Lot		Parking
	Combine Parking Lots			$	700	—	$	1,000
Total Value of TCI’s Other Real Estate Assets				$	2,200	—	$	3,300

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TCI Signature Athletic Club Valuation

($ in Thousands)

		Budget			LTM
		12/31/02			9/30/01
Operating Revenue		$	2,492			2,267
Operating Expenses			2,202			1,889
Net Operating Income		$	290		$	378
	Operating Income Margin		11.6	%		16.7	%

	Representative
	Level		Selected Multiple Range				Value Range
LTM Net Operating Income	$	378		4.0x	—	6.0x	$	1,510	—	$	2,266
			Concluded Value Range				$	1,500	—	$	2,300

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TCI — Other Assets

TCI Consolidated Parking Assets Valuation

($ in Thousands)

Alamo Springs Parking

		Budget			LTM			FYE
		12/31/02			9/30/01			12/31/00
Operating Revenue		$	2		$	2
Operating Expenses			39			57
Net Operating Income		$	(36	)	$	(55	)	$	(30	)
	Operating Income Margin	NMF			NMF

TCI Consolidated Parking Lots Statements

		Budget			LTM			FYE
		12/31/02			9/30/01			12/31/00
Operating Revenue		$	422		$	448
Operating Expenses			293			305
Net Operating Income		$	129		$	143		$	311
	Operating Income Margin		30.6	%		32.0	%

West End Parking Lot

		Budget			LTM			FYE
		12/31/02			9/30/01			12/31/00
Operating Revenue		$	420		$	447
Operating Expenses			254			248
Net Operating Income		$	166		$	198		$	341
	Operating Income Margin		39.5	%		44.4	%

	Representative
	Level		Selected Multiple Range				Value Range
LTM Net Operating Income	$	143		5.0x	—	7.0x	$	717	—	$	1,004
			Concluded Value Range				$	700	—	$	1,000

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TCI — Other Assets

Net Other Assets Analysis — Transcontinental Realty Investors, Inc.

($ in Thousands)

		Balance at		Percentage			Recoverable
		9/30/01		Recoverable			Value
Other Assets
	Advances to Affiliates	$	4,193		100.0	%	$	4,193
	Accounts Receivable		5,365		75.0	%		4,024
	Prepaid Expenses		4,129		0.0	%		0
	Escrow Deposits		10,590		100.0	%		10,590
	Pending Purchases		1,222		100.0	%		1,222
	Utilities		306		0.0	%		0
	Payroll Deposits		5		0.0	%		0
	Other		629		0.0	%		0
	Inventory		30		50.0	%		15
	Deferred Borrowing Costs		4,603		0.0	%		0
Total Other Assets		$	31,072				$	20,044
Other Liabilities
	Accounts Payable	$	6,656		100.0	%	$	6,656
	Accrued Property Tax		7,914		100.0	%		7,914
	Security Deposits		3,823		100.0	%		3,823
	Note Receivable Escrow		17		100.0	%		17
	Deferred Gains on Sales		1,905		100.0	%		1,905
	Deferred Revenues		47		100.0	%		47
	Net Income Fee Payable		946		100.0	%		946
	Incentive Fee Payable		1,326		100.0	%		1,326
	Management Fee Payable		356		100.0	%		356
	Prepaid Rents		178		100.0	%		178
	Payroll Payables		334		100.0	%		334
	Other Accrued Expenses		2,476		100.0	%		2,476
							��
Total Other Liabilities		$	25,978				$	25,978
Net Other Assets							$	(5,934	)

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TCI — Deferred Tax Analysis

TCI Deferred Tax Analysis

							Book		Implied Capital
	Value Range						Value		Gain (Loss) Range							Taxes @ 40%
Apartments
4242 Cedar Springs		$	2,600	—	$	3,000	$	1,072	$	1,528		—	$	1,928		$	611		—	$	771
Apple Lane			1,500	—		1,800		1,640		(140	)	—		160			(56	)	—		64
Arbor Pointe			2,300	—		3,000		1,614		686		—		1,386			274		—		554
Ashton Way			700	—		1,500		1,847		(1,147	)	—		(347	)		(459	)	—		(139	)
Autumn Chase			1,300	—		1,300		1,382		(82	)	—		(82	)		(33	)	—		(33	)
Baywalk			6,600	—		6,600		0		6,600		—		6,600			2,640		—		2,640
By the Sea			6,200	—		6,200		0		6,200		—		6,200			2,480		—		2,480
Cliffs of Eldorado			9,800	—		10,200		12,640		(2,840	)	—		(2,440	)		(1,136	)	—		(976	)
County Crossing			6,300	—		7,000		2,429		3,871		—		4,571			1,548		—		1,828
Courtyard			200	—		1,900		0		200		—		1,900			80		—		760
Coventry Pointe			600	—		1,500		615		(15	)	—		885			(6	)	—		354
Country Club Villas (Camelot)			5,200	—		5,200		3,408		1,792		—		1,792			717		—		717
El Chapparal			5,500	—		6,000		1,905		3,595		—		4,095			1,438		—		1,638
Fairway View Estates			6,300	—		7,300		1,759		4,541		—		5,541			1,816		—		2,216
Fairways			4,000	—		4,300		5,347		(1,347	)	—		(1,047	)		(539	)	—		(419	)
Forty-Four Hundred			1,700	—		2,000		1,652		48		—		348			19		—		139
Fountain Lake			3,500	—		4,500		2,766		734		—		1,734			294		—		694
Fountains of Waterford			1,800	—		3,200		2,430		(630	)	—		770			(252	)	—		308
Gladstell Forest			4,200	—		4,800		2,316		1,884		—		2,484			754		—		994
Grove Park			8,000	—		8,300		3,877		4,123		—		4,423			1,649		—		1,769
Harper’s Ferry			3,700	—		4,000		1,498		2,202		—		2,502			881		—		1,001
Heritage on the River			12,900	—		13,300		6,886		6,014		—		6,414			2,406		—		2,566
Hunters Glen			1,200	—		1,900		2,618		(1,418	)	—		(718	)		(567	)	—		(287	)
In the Pines			9,900	—		10,300		5,153		4,747		—		5,147			1,899		—		2,059
Island Bay			20,400	—		20,400		0		20,400		—		20,400			8,160		—		8,160
Limestone Canyon			14,500	—		16,400		15,786		(1,286	)	—		614			(514	)	—		246

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TCI Deferred Tax Analysis (Continued)

					Book		Implied Capital
	Value Range				Value		Gain (Loss) Range						Taxes @ 40%
Madison at Bear Creek		4,700	—	5,200		3,160		1,540		—	2,040			616		—	816
Marina Landing		12,100	—	12,100		0		12,100		—	12,100			4,840		—	4,840
Mountain Plaza		4,500	—	5,400		4,013		487		—	1,387			195		—	555
Oak Park IV		1,200	—	1,500		696		504		—	804			202		—	322
Paramount Terrace		3,100	—	3,600		3,351		(251	)	—	249			(100	)	—	100
Plantation		2,300	—	2,700		3,356		(1,056	)	—	(656	)		(422	)	—	(262	)
Primrose		4,400	—	5,200		4,208		192		—	992			77		—	397
Quail Creek		4,000	—	4,400		3,344		656		—	1,056			262		—	422
Quail Oaks		3,200	—	3,500		1,261		1,939		—	2,239			776		—	896
Sandstone		8,600	—	8,800		7,790		810		—	1,010			324		—	404
Somerset		6,300	—	6,500		2,869		3,431		—	3,631			1,372		—	1,452
South Cochran		4,500	—	4,900		2,225		2,275		—	2,675			910		—	1,070
Southgate		1,600	—	2,100		1,619		(19	)	—	481			(8	)	—	192
Southgreen		3,000	—	3,100		3,618		(618	)	—	(518	)		(247	)	—	(207	)
Stone Oak		6,200	—	7,100		2,209		3,991		—	4,891			1,596		—	1,956
Summerfield		9,900	—	10,900		5,168		4,732		—	5,732			1,893		—	2,293
Summerstone		7,600	—	8,000		5,090		2,510		—	2,910			1,004		—	1,164
Sunchase		4,200	—	4,600		3,687		513		—	913			205		—	365
Terrace Hills		9,500	—	9,500		6,067		3,433		—	3,433			1,373		—	1,373
Timbers		2,500	—	3,000		2,332		168		—	668			67		—	267
Trails at Windfern		7,200	—	7,300		3,637		3,563		—	3,663			1,425		—	1,465
Treehouse		5,900	—	7,000		3,422		2,478		—	3,578			991		—	1,431
Westwood Square		400	—	700		417		(17	)	—	283			(7	)	—	113
Willow Creek		2,800	—	2,900		2,022		778		—	878			311		—	351
Willow-Wick		2,500	—	2,800		3,440		(940	)	—	(640	)		(376	)	—	(256	)
Willow-Wick Gardens		3,800	—	4,100		980		2,820		—	3,120			1,128		—	1,248
Woodview		3,500	—	3,800		3,452		48		—	348			19		—	139

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TCI Deferred Tax Analysis (Continued)

					Book		Implied Capital
	Value Range				Value		Gain (Loss) Range						Taxes @ 40%
Hotels
Majestic Hotel		3,400	—	3,600		4,095		(695	)	—	(495	)		(278	)	—	(198	)
City Suites		4,800	—	4,900		5,376		(576	)	—	(476	)		(230	)	—	(190	)
Majestic Inn		5,000	—	5,000		4,982		18		—	18			7		—	7
Willows Hotel		4,400	—	5,100		5,479		(1,079	)	—	(379	)		(432	)	—	(152	)
Industrial
5360 Tulane		600	—	700		352		248		—	348			99		—	139
5700 Tulane		700	—	1,000		557		143		—	443			57		—	177
Addison Hanger		2,400	—	2,400		2,385		15		—	15			6		—	6
Addison Hanger II		1,200	—	1,200		0		1,200		—	1,200			480		—	480
Central Freight Warehouse		4,000	—	4,000		1,145		2,855		—	2,855			1,142		—	1,142
Encon		4,700	—	5,400		2,145		2,555		—	3,255			1,022		—	1,302
Kelly Portfolio		6,500	—	8,500		4,599		1,901		—	3,901			760		—	1,560
McLeod		5,800	—	5,900		4,747		1,053		—	1,153			421		—	461
Ogden Industrial		2,300	—	2,600		2,671		(371	)	—	(71	)		(148	)	—	(28	)
Plaza on Bachman Creek		5,400	—	7,100		1,129		4,271		—	5,971			1,708		—	2,388
Space Center		1,500	—	2,000		925		575		—	1,075			230		—	430
Texstar		1,800	—	2,000		1,535		265		—	465			106		—	186
Tricon Portfolio		14,800	—	17,900		8,488		6,312		—	9,412			2,525		—	3,765
Office
1010 Common		16,300	—	18,100		27,303		(11,003	)	—	(9,203	)		(4,401	)	—	(3,681	)
225 Baronne		6,000	—	7,000		14,334		(8,334	)	—	(7,334	)		(3,334	)	—	(2,934	)
4135 Beltline Road		2,600	—	2,600		4,527		(1,927	)	—	(1,927	)		(771	)	—	(771	)

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TCI Deferred Tax Analysis (Continued)

					Book		Implied Capital
	Value Range				Value		Gain (Loss) Range						Taxes @ 40%
Wilshire Medical Building (9033 Wilshire		6,000	—	7,000		9,403		(3,403	)	—	(2,403	)		(1,361	)	—	(961	)
Ambulatory Surgery Center		6,800	—	7,400		9,027		(2,227	)	—	(1,627	)		(891	)	—	(651	)
Amoco		11,000	—	13,000		6,538		4,462		—	6,462			1,785		—	2,585
Atrium		3,000	—	4,000		5,557		(2,557	)	—	(1,557	)		(1,023	)	—	(623	)
Bay Plaza		5,400	—	6,800		3,917		1,483		—	2,883			593		—	1,153
Bay Plaza II		2,900	—	4,600		4,989		(2,089	)	—	(389	)		(836	)	—	(156	)
Bonita Plaza		7,400	—	8,400		6,141		1,259		—	2,259			504		—	904
Brandeis		12,000	—	14,000		13,012		(1,012	)	—	988			(405	)	—	395
Corporate Pointe		8,300	—	9,000		3,235		5,065		—	5,765			2,026		—	2,306
Countryside Retail Center		17,700	—	18,400		18,674		(974	)	—	(274	)		(390	)	—	(110	)
Durham Center		19,200	—	22,800		15,367		3,833		—	7,433			1,533		—	2,973
Forum		5,500	—	6,500		4,572		928		—	1,928			371		—	771
Harmon		6,000	—	8,000		9,428		(3,428	)	—	(1,428	)		(1,371	)	—	(571	)
Hartford		4,000	—	4,000		2,545		1,455		—	1,455			582		—	582
Institute Place		11,900	—	13,400		3,515		8,385		—	9,885			3,354		—	3,954
Jefferson		13,000	—	14,800		9,803		3,197		—	4,997			1,279		—	1,999
Lexington Center		5,800	—	7,300		4,311		1,489		—	2,989			596		—	1,196
Mimado		2,900	—	4,000		5,203		(2,303	)	—	(1,203	)		(921	)	—	(481	)
NASA		2,000	—	3,000		1,022		978		—	1,978			391		—	791
One Steeplechase		10,400	—	12,300		5,367		5,033		—	6,933			2,013		—	2,773
Parkway North		4,000	—	5,000		4,987		(987	)	—	13			(395	)	—	5
Plaza Towers Portfolio		14,200	—	15,200		6,126		8,074		—	9,074			3,230		—	3,630
Remington Tower		3,000	—	4,000		4,321		(1,321	)	—	(321	)		(528	)	—	(128	)
Washington Mutual Building (Savings of America)		2,100	—	2,900		1,900		200		—	1,000			80		—	400
Valley Rim		5,500	—	5,500		5,140		360		—	360			144		—	144
Venture Center		4,000	—	4,300		2,512		1,488		—	1,788			595		—	715

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TCI Deferred Tax Analysis (Continued)

					Book		Implied Capital
	Value Range				Value		Gain (Loss) Range						Taxes @ 40%
View Ridge		2,000	—	2,000		1,974		26		—	26			10		—	10
Westgrove Air Plaza		3,000	—	4,000		2,041		959		—	1,959			384		—	784
Windsor Plaza		2,000	—	2,500		2,956		(956	)	—	(456	)		(382	)	—	(182	)
Retail
Fruitland Park		400	—	500		0		400		—	500			160		—	200
Kmart Plaza — San Angelo		200	—	200		0		200		—	200			80		—	80
Dunes Plaza		6,000	—	6,500		6,180		(180	)	—	320			(72	)	—	128
K-Mart — Cary		2,800		2,900		2,589		211		—	311			84		—	124
Parkway Center		2,700		3,800		1,659		1,041		—	2,141			416		—	856
Promenade		11,000	—	13,000		4,315		6,685		—	8,685			2,674		—	3,474
Sadler Square		3,500	—	4,100		7,528		(4,028	)	—	(3,428	)		(1,611	)	—	(1,371	)
Kmart Plaza — Sheboygan		1,400	—	1,500		1,359		41		—	141			16		—	56
Other
Signature Athletic Club		1,500	—	2,300		4,086		(2,586	)	—	(1,786	)		(1,034	)	—	(714	)
Alamo Springs Parking
West End Parking Lot
Total Parking Lots		700		1,000		0		700		—	1,000			280		—	400
Land
1013 Common		600		600		625		(25	)	—	(25	)		(10	)	—	(10	)
Alamo Springs		1,400		1,400		1,385		15		—	15			6		—	6
Dominion		1,600		2,000		3,931		(2,331	)	—	(1,931	)		(932	)	—	(772	)
Eagle Crest		2,500		3,300		2,634		(134	)	—	666			(54	)	—	266

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TCI — Deferred Tax Analysis

TCI Deferred Tax Analysis (Continued)

				Book		Implied Capital
	Value Range			Value		Gain (Loss) Range						Taxes @ 40%
Fiesta		0	0		44		(44	)	—	(44	)		0		—	0
Folsom		4,000	5,100		1,781		2,219		—	3,319			888		—	1,328
Fruitland		200	600		153		47		—	447			19		—	179
Lamar/ Parmer		1,700	2,000		1,665		35		—	335			14		—	134
Las Colinas		1,000	3,300		1,000		0		—	2,300			0		—	920
Lemmon Carlisle		3,600	3,600		3,606		(6	)	—	(6	)		(2	)	—	(2	)
Limestone Canyon II		700	700		694		6		—	6			2		—	2
Limestone Ranch		0	0		0		0		—	0			0		—	0
Manhattan		11,900	15,400		11,186		714		—	4,214			286		—	1,686
MicKinney 36		2,000	7,500		2,077		(77	)	—	5,423			(31	)	—	2,169
Mira Lago		0	0		0		0		—	0			0		—	0
Moss Creek		0	0		85		(85	)	—	(85	)		0		—	0
Pac Trust		800	1,000		0		800		—	1,000			320		—	400
Red Cross		8,400	10,700		8,383		17		—	2,317			7		—	927
Round Mountain		1,200	1,500		1,542		(342	)	—	(42	)		(137	)	—	(17	)
Seminary West		0	0		0		0		—	0			0		—	0
Solco Valley Ranch		0	0		0		0		—	0			0		—	0
State Highway 121		1,800	1,800		1,773		27		—	27			11		—	11
West End		7,500	7,500		7,469		31		—	31			12		—	12
McKinney/Allen Assemblage		17,000			10,568		6,432		—	(10,568	)		2,573		—	0
TOTAL													56,433		—	91,780

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Joint Venture Properties Valuation

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Joint Venture Properties Valuation

Apartment Joint Venture Properties Valuation

($ in Thousands)

					Selected
			Representative		Capitalization			Valuation
Asset	Asset Type	Valuation Approach	Levels		Rate			Indication
Villas Continental	Apartment	LTM Net Asset Value Approach	$	667		9.1	%	$	7,331
		2002 Net Asset Value Approach		669		9.6	%		6,973
			Enterprise Value Range					$	6,973	—	$	7,331
			Less: Debt						3,682	—		3,682
			Equity Value Range					$	3,292	—	$	3,649
			ARL Ownership @ 50.4%					$	1,700	—	$	1,800

					Selected
			Representative		Capitalization			Valuation
Asset	Asset Type	Valuation Approach	Levels		Rate			Indication
Lincoln Court	Apartment	LTM Net Asset Value Approach	$	284		9.4	%	$	3,022
		2002 Net Asset Value Approach		289		9.9	%		2,922
			Enterprise Value Range					$	2,922	—	$	3,022
			Less: Debt						2,631	—		2,631
			Equity Value Range					$	291	—	$	392
			TCI Ownership @ 55.0%					$	200	—	$	200

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Joint Venture Properties Valuation

Commercial Joint Venture Properties Valuation

($ in Thousands)

					Selected
			Representative		Capitalization			Valuation
Asset	Asset Type	Valuation Approach	Levels		Rate			Indication
Eton Square Portfolio	Office	LTM Net Asset Value Approach		839		10.2	%		8,264
		2002 Net Asset Value Approach		739		10.7	%		6,938
		Discounted Cash Flow Approach							12,335
			Enterprise Value Range					$	10,000	—	$	12,000
			Less: Debt						10,247	—		10,247
			Equity Value Range					$	0	—	$	1,753
			IORI Ownership @ 10.0%					$	0	—	$	200
			TCI Ownership @ 90.0%					$	0	—	$	1,600
Walmart — Malden	Retail	LTM Net Asset Value Approach		172		9.5	%		1,812
		2002 Net Asset Value Approach		173		10.0	%		1,731
		Discounted Cash Flow Approach							1,800
			Enterprise Value Range					$	1,731	—	$	1,812
			Less: Debt						902	—		902
			Equity Value Range					$	829	—	$	909
			IORI Ownership @ 40.0%					$	300	—	$	400
			TCI Ownership @ 1.0%					$	8	—	$	9
Chelsea Square	Retail	LTM Net Asset Value Approach		432		10.2	%		4,260
		2002 Net Asset Value Approach		323		10.7	%		3,033
		Discounted Cash Flow Approach							5,305
			Enterprise Value Range					$	3,033	—	$	5,305
			Less: Debt						2,043	—		2,043
			Equity Value Range					$	991	—	$	3,262
			IORI Ownership @ 36.3%					$	400	—	$	1,200
			TCI Ownership @ 63.7%					$	600	—	$	2,100

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Market Analysis

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Market Analysis

Apartment Market Information — Market Monitor

	Capitalization			Price /		Rent /
Region	Rate			Sq. Ft.		Sq. Ft.
Southwest(1)		9.4	%	$	51.17	$	8.24
Southeast		9.5	%	$	48.71	$	7.84
Florida		9.1	%	$	53.12	$	8.32
California		8.8	%	$	105.62	$	15.73
Midwest		9.4	%	$	56.81	$	9.42

(1)	Includes Texas and Oklahoma
Source: Market Monitor, Second Quarter 2001.

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Market Analysis

Apartment Market Information — Cushman & Wakefield

								Terminal
	Capitalization Rate							Capitalization Rate							Discount Rate
Asset Type	Low				High			Low				High			Low				High
Class A-Leased Asset		8.3	%	—		8.5	%		8.7	%	—		9.0	%		10.6	%	—		10.9	%
Class A-Value Added		8.4	%	—		8.7	%		9.0	%	—		9.2	%		11.4	%	—		11.6	%
Class B-Leased Asset		8.8	%	—		9.1	%		9.3	%	—		9.6	%		11.4	%	—		11.7	%
Class B-Value Added		8.7	%	—		9.0	%		9.4	%	—		9.6	%		12.1	%	—		12.4	%

Source: Cushman & Wakefield Real Estate Outlook, Fall 2001

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Market Analysis

Hotel Market Information — Cushman & Wakefield

											Terminal
	Capitalization Rate										Capitalization Rate										Discount Rate
Asset Type	Low				High			Average			Low				High			Average			Low				High			Average
Luxury Hotels		8.5	%	—		11.0	%		10.1	%		9.5	%	—		11.5	%		10.7	%		12.0	%	—		15.0	%		13.7	%
Full Service Hotels		9.5	%	—		12.0	%		10.9	%		10.0	%	—		12.5	%		11.2	%		12.0	%	—		16.0	%		14.0	%
Limited Service Hotels		10.5	%	—		13.0	%		11.8	%		11.0	%	—		14.0	%		12.1	%		14.0	%	—		16.0	%		14.9	%

Source: Cushman & Wakefield Real Estate Outlook, Fall 2001

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Market Analysis

Warehouse/Distribution Market Information — Cushman & Wakefield

								Terminal
	Capitalization Rate							Capitalization Rate							Discount Rate
Asset Type	Low				High			Low				High			Low				High
Class A-Leased Asset		8.7	%	—		8.9	%		9.1	%	—		9.3	%		10.8	%	—		10.9	%
Class A-Value Added		8.9	%	—		9.0	%		9.3	%	—		9.5	%		11.2	%	—		11.3	%
Class B-Leased Asset		9.1	%	—		9.3	%		9.4	%	—		9.7	%		11.2	%	—		11.3	%
Class B-Value Added		9.5	%	—		9.6	%		9.9	%	—		10.1	%		12.2	%	—		12.4	%

Source: Cushman & Wakefield Real Estate Outlook, Fall 2001

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Market Analysis

Office Market Information — Cushman & Wakefield

								Terminal
	Capitalization Rate							Capitalization Rate							Discount Rate
Urban/CBD Asset Type	Low				High			Low				High			Low				High
Class A-Leased Asset		8.9	%	—		9.2	%		9.2	%	—		9.5	%		11.4	%	—		11.9	%
Class A-Value Added		9.2	%	—		9.3	%		9.5	%	—		9.5	%		12.4	%	—		12.9	%
Class B-Leased Asset		9.5	%	—		9.9	%		9.7	%	—		10.0	%		12.4	%	—		13.0	%
Class B-Value Added		9.8	%	—		9.9	%		10.3	%	—		10.4	%		12.7	%	—		13.0	%
Suburban Asset Type
Class A-Leased Asset		9.2	%	—		9.5	%		9.5	%	—		9.8	%		11.3	%	—		11.5	%
Class A-Value Added		9.5	%	—		9.6	%		9.9	%	—		10.1	%		12.3	%	—		12.5	%
Class B-Leased Asset		9.9	%	—		10.3	%		10.2	%	—		10.7	%		11.9	%	—		12.1	%
Class B-Value Added		10.0	%	—		10.3	%		10.2	%	—		10.6	%		13.1	%	—		13.4	%

Source: Cushman & Wakefield Real Estate Outlook, Fall 2001. An alternative source of cap rate information, the Market Monitor, provides only Class A office but a significant number of the assets are Class B and Value Added assets and therefore the C&W information was considered more relevant.

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Market Analysis

Retail Market Information — Cushman & Wakefield

								Terminal
	Capitalization Rate							Capitalization Rate							Discount Rate
Neighborhood Center Asset Type	Low				High			Low				High			Low				High
Class A-Leased Asset		9.1	%	—		9.4	%		9.6	%	—		9.8	%		11.0	%	—		11.3	%
Class A-Value Added		9.1	%	—		9.3	%		9.7	%	—		9.9	%		11.6	%	—		11.8	%
Class B-Leased Asset		9.3	%	—		9.7	%		9.9	%	—		10.3	%		11.7	%	—		12.2	%
Class B-Value Added		10.1	%	—		10.2	%		10.8	%	—		10.9	%		12.8	%	—		13.2	%
Specialty Retail Asset Type
Class A-Leased Asset		10.0	%	—		10.0	%		11.0	%	—		11.0	%		11.0	%	—		11.0	%
Class A-Value Added		10.5	%	—		10.5	%		11.5	%	—		11.5	%		12.0	%	—		12.0	%
Class B-Leased Asset		10.5	%	—		10.5	%		11.5	%	—		11.5	%		11.5	%	—		11.5	%
Class B-Value Added		11.0	%	—		11.0	%		12.0	%	—		12.0	%		12.5	%	—		12.5	%

Source: Cushman & Wakefield Real Estate Outlook, Fall 2001

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Public Companies Analysis

ARL/IORI/TCI Merger

Public Companies Analysis

Apartment Properties Public Company Comparable Analysis

												Premium /
		01/18/02		Enterprise		Implied			Dividend			Discount			Loan to
Company	Ticker	Price		Value(1)		Cap Rate(2)			Yield(2)			to NAV(3)			Value(1)
Amli Residential Pptys Tr	AML	$	24.60	$	843.7		9.8	%		7.8	%		-12.0	%		48.4	%
Apartment Invt &Mgmt -Cl A	AIV		43.88		7,654.3		9.4	%		7.0	%		-7.1	%		58.4	%
Archstone-Smith Tr	ASN		25.13		5,196.1		8.7	%		6.3	%		-9.2	%		44.2	%
Associated Estates Rlty Corp	AEC		9.27		712.7		10.7	%		11.2	%		-20.8	%		77.1	%
Avalonbay Communities Inc	AVB		45.34		4,908.9		8.9	%		5.3	%		-8.5	%		42.4	%
Bre Properties -Cl A	BRE		29.54		2,251.7		8.2	%		5.9	%		-7.4	%		39.4	%
Camden Property Trust	CPT		35.24		2,622.2		9.3	%		6.7	%		-2.7	%		45.5	%
Century Realty Trust	CRLTS		11.42		53.0		9.9	%		4.7	%	NA				65.3	%
Cornerstone Rlty Income Tr I	TCR		10.58		992.2		9.7	%		9.9	%	NA				50.5	%
Equity Residential Pptys Tr	EQR		27.20		12,796.8		9.2	%		6.0	%		-2.3	%		44.5	%
Essex Property Trust	ESS		47.31		1,519.0		8.6	%		5.9	%		-9.7	%		44.3	%
Gables Residential Trust	GBP		28.94		1,589.4		8.6	%		8.2	%		-10.2	%		56.5	%
Home Properties New York Inc	HME		32.75		1,654.9		10.6	%		7.6	%		-2.5	%		59.0	%
Investors Real Estate Trust	IRETS		9.65		643.9	NA				6.6	%	NA				66.3	%
Mid-America Apt Cmntys Inc	MAA		26.55		1,213.0		9.5	%		9.1	%		-3.9	%		63.9	%
Post Properties Inc	PPS		33.51		2,485.7		9.6	%		9.0	%		-16.9	%		50.6	%
Roberts Realty Investors Inc	RPI		7.24		119.5		9.6	%		0.0	%	NA				78.1	%
Summit Properties Inc	SMT		23.52		1,392.7		8.8	%		7.8	%		-15.8	%		54.9	%
Town & Country Trust	TCT		21.45		808.9		9.4	%		8.0	%		11.3	%		57.8	%
United Dominion Realty Trust	UDR		14.15		3,429.7		9.9	%		7.5	%		5.9	%		60.3	%
		High		$	12,796.8		10.7	%		11.2	%		11.3	%		78.1	%
		Low		$	53.0		8.2	%		0.0	%		-20.8	%		39.4	%
		Median		$	1,554.2		9.4	%		7.3	%		-8.0	%		55.7	%
		Mean		$	2,644.4		9.4	%		7.0	%		-7.0	%		55.4	%

(1)	Enterprise Value and Loan to Value calculations are based on current Factset Statistics.
(2)	Source: SNL Real Estate Securities Monthly, December 2001 issue with stock prices as of November 30, 2001
(3)	Source: Realty Stock Review, November 7, 2001 issue with stock prices as of November 2, 2001

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Public Companies Analysis

Hotel Properties Public Company Comparable Analysis

												Premium /
		01/18/02		Enterprise		Implied			Dividend			Discount			Loan to
Company	Ticker	Price		Value(1)		Cap Rate(2)			Yield(2)			to NAV(3)			Value(1)
Boykin Lodging Co	BOY	$	8.13	$	446.7		13.7	%		19.7	%	NA				69.5	%
Equity Inns Inc	ENN		7.49		648.7	NA				13.8	%		-6.5	%		58.1	%
Felcor Lodging Tr Inc	FCH		17.32		2,672.8	NA				13.3	%		-35.4	%		80.2	%
Hersha Hospitality Trust	HT		6.00		74.1		16.1	%		12.0	%	NA				83.5	%
Hospitality Properties Trust	HPT		29.07		2,257.2		12.4	%		10.4	%		-0.2	%		20.6	%
Host Marriott Corp	HMT		9.75		8,120.4	NA				0.0	%		-42.0	%		72.2	%
Humphrey Hospitality Tr Inc	HUMP		2.79		147.2		14.3	%		0.0	%	NA				80.2	%
Innkeepers Usa Trust	KPA		10.21		598.4		15.8	%		0.0	%		-30.4	%		42.1	%
Innsuites Hospitality Tr	IHT		1.31		40.5	NA				0.0	%	NA				97.7	%
Jameson Inns Inc	JAMS		4.65		275.2		11.4	%		20.4	%	NA				82.5	%
La Quinta Corp	LQI		6.85		1,931.7	NA				0.0	%	NA				56.8	%
Lasalle Hotel Properties	LHO		11.85		556.2		5.4	%		0.4	%	NA				60.9	%
Meristar Hospitality Corp	MHX		14.08		2,271.3	NA				15.3	%		-54.2	%		75.5	%
Rfs Hotel Investors Inc	RFS		12.40		608.0	NA				3.5	%		-33.1	%		49.8	%
Winston Hotels Inc	WXH		7.97		302.2		13.4	%		7.5	%	NA				55.7	%
		High		$	8,120.4		16.1	%		20.4	%		-0.2	%		97.7	%
		Low		$	40.5		5.4	%		0.0	%		-54.2	%		20.6	%
		Median		$	598.4		13.6	%		7.5	%		-33.1	%		69.5	%
		Mean		$	1,396.7		12.8	%		7.8	%		-28.8	%		65.7	%

(1)	Enterprise Value and Loan to Value calculations are based on current Factset Statistics.
(2)	Source: SNL Real Estate Securities Monthly, December 2001 issue with stock prices as of November 30, 2001
(3)	Source: Realty Stock Review, November 7, 2001 issue with stock prices as of November 2, 2001

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Industrial Properties Public Company Comparable Analysis

												Premium /
		01/18/02		Enterprise		Implied			Dividend			Discount			Loan to
Company	Ticker	Price		Value(1)		Cap Rate(2)			Yield(2)			to NAV(3)			Value(1)
Amb Property Corp	AMB	$	26.10	$	3,961.1		11.6	%		6.2	%		-11.4	%		50.7	%
Centerpoint Properties Trust	CNT		49.10		1,686.4		6.7	%		4.3	%		12.6	%		35.5	%
Eastgroup Properties	EGP		23.15		647.9		11.5	%		7.5	%		-18.1	%		43.5	%
First Indl Realty Trust Inc	FR		30.40		2,434.1		10.4	%		8.6	%		-18.9	%		53.0	%
Keystone Property Trust Corp	KTR		13.43		667.6		10.4	%		9.8	%		-19.7	%		66.1	%
Liberty Property Trust	LRY		28.92		3,890.5		11.4	%		8.1	%		-14.3	%		45.8	%
Maxus Realty Trust Inc	MRTI		12.87		32.3		9.4	%		7.0	%	NA				60.4	%
Monmouth Re Invest Cp -Cl A	MNRTA		6.75		137.8		9.9	%		8.8	%	NA				49.8	%
Prologis Trust	PLD		21.15		6,096.1		8.7	%		6.3	%		-13.5	%		40.8	%
Stonehaven Realty Trust	RPP		0.45		5.9		6.5	%		0.0	%	NA				117.7	%
		High		$	6,096.1		11.6	%		9.8	%		12.6	%		117.7	%
		Low		$	5.9		6.5	%		0.0	%		-19.7	%		35.5	%
		Median		$	1,177.0		10.2	%		7.3	%		-14.3	%		50.3	%
		Mean		$	1,956.0		9.7	%		6.7	%		-11.9	%		56.3	%

(1)	Enterprise Value and Loan to Value calculations are based on current Factset Statistics.
(2)	Source: SNL Real Estate Securities Monthly, December 2001 issue with stock prices as of November 30, 2001
(3)	Source: Realty Stock Review, November 7, 2001 issue with stock prices as of November 2, 2001

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Office Properties Public Company Comparable Analysis

													Premium /
		01/18/02		Enterprise			Implied			Dividend			Discount			Loan to
Company	Ticker	Price		Value(1)			Cap Rate(2)			Yield(2)			to NAV(3)			Value(1)
Alexandria R E Equities Inc	ARE	$	40.95	$	1,201.7			9.5	%		4.4	%		10.3	%		46.0	%
Amerivest Properties Inc	AMV		5.65		70.0			10.2	%		8.8	%	NA				59.8	%
Arden Realty Inc	ARI		27.08		2,930.6			11.1	%		7.6	%		-13.6	%		42.2	%
Bedford Ppty Invs Inc	BED		23.10		718.8			12.2	%		8.6	%	NA				46.7	%
Boston Properties Inc	BXP		37.42		7,458.3			10.3	%		6.2	%		-17.7	%		56.9	%
Brandywine Realty Trust	BDN		20.82		1,718.4			11.1	%		8.6	%		-19.4	%		58.5	%
Carramerica Realty Corp	CRE		29.96		2,974.5			11.2	%		6.4	%		-17.5	%		37.4	%
Cedar Income Fund Ltd	CEDR		4.40		14.0			10.8	%		0.0	%	NA				128.1	%
Corp Office Pptys Tr Inc	OFC		12.56		754.5			11.5	%		7.1	%		-0.9	%		67.4	%
Crescent R E Equities Inc	CEI		18.27		3,947.5			10.1	%		8.6	%	NA				52.8	%
Duke Realty Corp	DRE		23.81		4,855.4			9.8	%		7.3	%		-6.5	%		36.3	%
Equity Office Properties Tr	EOP		29.98		24,060.9			10.9	%		6.7	%		-12.7	%		50.3	%
Glenborough Realty Trust Inc	GLB		20.27		1,155.4			10.8	%		9.3	%		-27.3	%		53.5	%
Great Lakes Reit Inc	GL		15.56		502.5			10.8	%		10.1	%		-18.8	%		48.8	%
Highwoods Properties Inc	HIW		25.91		2,999.1			11.9	%		9.2	%		-20.1	%		56.0	%
Hrpt Pptys Trust	HRP		8.80		2,157.0			12.5	%		9.5	%		-24.9	%		50.9	%
Kilroy Realty Corp	KRC		25.61		1,414.3			10.7	%		7.7	%		-23.3	%		51.1	%
Koger Equity Inc	KE		15.85		753.7			14.0	%		8.0	%	NA				44.8	%
Mack Cali Realty Corp	CLI		30.72		3,392.5			13.0	%		8.5	%		-12.7	%		50.5	%
Mission West Properties Inc	MSW		12.81		434.7			9.6	%		8.0	%	NA				50.8	%
Parkway Properties Inc	PKY		32.65		691.5			10.5	%		7.9	%		-15.0	%		56.4	%
Prentiss Properties Trust	PP		28.21		1,916.8			12.5	%		8.1	%		-14.8	%		46.4	%
Prime Group Realty Trust	PGE		8.96		939.7			11.6	%		13.5	%	NA				96.6	%
Reckson Assocs Rlty Corp	RA		23.50		2,832.2			12.0	%		7.6	%		-15.9	%		51.5	%
Sl Green Realty Corp	SLG		31.36		1,395.6			11.1	%		5.1	%		-4.8	%		35.8	%
		High		$	24,060.9			14.0	%		13.5	%		10.3	%		128.1	%
		Low		$	14.0			9.5	%		0.0	%		-27.3	%		35.8	%
		Median		$	1,414.3	%		11.1	%		8.0	%		-15.5	%		50.9	%
		Mean		$	2,851.6	%		11.2	%		7.7	%		-14.2	%		55.0	%

(1)	Enterprise Value and Loan to Value calculations are based on current Factset Statistics.
(2)	Source: SNL Real Estate Securities Monthly, December 2001 issue with stock prices as of November 30, 2001
(3)	Source: Realty Stock Review, November 7, 2001 issue with stock prices as of November 2, 2001

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Public Companies Analysis

Shopping Center Public Company Comparable Analysis

												Premium /
		01/18/02		Enterprise		Implied			Dividend			Discount			Loan to
Company	Ticker	Price		Value(1)		Cap Rate(2)			Yield(2)			to NAV(3)			Value(1)
Acadia Rlty Tr	AKR	$	6.32	$	401.7		12.7	%		7.6	%	NA				62.7	%
Aegis Realty Inc	AER		11.22		151.9		12.2	%		8.6	%	NA				43.8	%
Agree Realty Corp	ADC		15.55		172.4		10.7	%		9.7	%	NA				60.2	%
Atlantic Rlty Tr	ATLRS		8.00	NA		NA				0.0	%	NA			NA
Burnham Pacific Ppty Inc	BPP		4.00		249.1	NA				0.0	%	NA				52.2	%
Center Tr Inc	CTA		4.38		515.8		12.5	%		4.0	%	NA				77.5	%
Developers Diversified Rlty	DDR		18.55		2,399.6		9.8	%		7.8	%		-0.1	%		57.8	%
Equity One Inc	EQY		14.18		760.9		12.2	%		8.5	%	NA				48.1	%
Federal Realty Invs Trust	FRT		24.37		2,152.3		10.8	%		8.6	%		-18.2	%		55.4	%
Glimcher Realty Trust	GRT		17.77		1,714.3		10.1	%		10.4	%		-14.8	%		70.5	%
Irt Property Co	IRT		11.00		653.2		10.4	%		8.6	%		-2.9	%		48.9	%
Kimco Realty Corp	KIM		31.15		4,294.1		8.7	%		6.3	%		21.2	%		31.0	%
Konover Ppty Tr Inc	KPT		1.70		260.4		18.1	%		0.0	%	NA				88.3	%
Kramont Realty Trust	KRT		13.05		734.9		10.2	%		9.7	%	NA				68.0	%
Malan Realty Investors Inc	MAL		5.40		215.9		11.1	%		14.5	%	NA				92.1	%
Mid-Atlantic Realty Trust	MRR		14.92		450.1		11.6	%		8.3	%	NA				51.6	%
New Plan Excel Realty Tr	NXL		18.89		2,591.7		10.6	%		8.8	%		9.0	%		41.1	%
Pan Pac Retail Pptys Inc	PNP		28.15		1,546.1		9.9	%		6.8	%		7.5	%		41.4	%
Philips Intl Realty Corp	PHR		2.30		16.2	NA				0.0	%	NA				0.0	%
Price Legacy Corp	XLG		3.15		370.1		9.3	%		0.0	%	NA				71.9	%
Ramco-Gershenson Properties	RPT		17.65		460.3		12.0	%		10.2	%	NA				73.7	%
Regency Centers Corp	REG		28.20		2,878.2		10.8	%		7.7	%		-2.7	%		44.8	%
Saul Centers Inc	BFS		21.40		656.4		10.6	%		7.7	%	NA				53.4	%
Urstadt Biddle Properties	UBP		10.00		180.0		15.0	%		7.6	%	NA				36.6	%
Weingarten Realty Invst	WRI		49.25		2,656.0		9.4	%		6.5	%		14.5	%		40.5	%
		High		$	4,294.1		18.1	%		14.5	%		21.2	%		92.1	%
		Low		$	16.2		8.7	%		0.0	%		-18.2	%		0.0	%
		Median		$	584.5		10.8	%		7.7	%		-0.1	%		52.8	%
		Mean		$	1,103.4		11.3	%		6.7	%		1.5	%		54.6	%

(1)	Enterprise Value and Loan to Value calculations are based on current Factset Statistics.
(2)	Source: SNL Real Estate Securities Monthly, December 2001 issue with stock prices as of November 30, 2001
(3)	Source: Realty Stock Review, November 7, 2001 issue with stock prices as of November 2, 2001

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Public Companies Analysis

Parking Comparable Company Analysis

($ in Millions)

		Current		Enterprise		LTM EV /		LTM EV /
Company	Ticker	Price		Value		Revenue		EBITDA
Central Parking Corp	CPC	$	19.15	$	1,030.0		1.46x		9.5x
Imperial Parking Corp	IPK		26.75		41.3		0.51x		6.7x
		Mean		$	535.7		0.98x		8.1x

Source: Factset

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Public Companies Analysis

Athletic Club Comparable Company Analysis

($ in Millions)

		Current		Enterprise		LTM EV /		LTM EV /
Company	Ticker	Price		Value		Revenue		EBITDA
Bally Total Fitness Hldg Cp	BFT	$	21.94	$	1,210.7		1.28x		5.7x
Sports Club Co Inc	SCY		2.73		161.1		1.68x		-28.7x
		Mean		$	685.9		1.48x		-11.5x

Source: Factset

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