WPV II intends to acquire a diverse portfolio of properties including residential, office, retail, industrial/distribution, parking, mixed-use and special-purpose properties. In general, WPV II will develop/acquire properties in which its entity investment ranges in value from $5 million to $15 million. The General Partners will seek to limit the equity investment in any single property to 10% of the portfolio's total capital commitments.

Several risk factors will be monitored and evaluated on an ongoing basis to confirm the viability of the investment strategy. These factors include the following:

• Softening market demand for real estate products, such as office, housing or retail space. This often leads to declining rental rates and the potential for increased vacancy rates.
  
  
• Overbuilding may occur if a glut of space is brought onto the market by developers out of pace with demand for space by users.
  
  
• Inflation and interest rate increases by the Federal Reserve.
  
  
• Duration-revitalization strategies can take many years to "grow" an area and achieve substantial returns.
  
  
• Liquidity risk may occur if assets in the portfolio do not attract buyers once the market has matured.
  
  
• Project risks: market, capital, entitlements, and design and construction. Each of these forms of risk and examples are described below.

Real estate developers and investors face several definitive forms of project risk. These fall into four main categories: market risk, capital risk, entitlement risk and design/construction risk.

Market risk refers to overbuilding (oversupply), softening demand and the disjunction between development costs and the pricing of space. Market risk cannot be eliminated entirely; however, proper planning and due diligence can reduce market risk considerably.

Capital risk relates to the potential for inflationary pressure and rising interest rates to make otherwise viable projects financially unfeasible. Another form of capital risk occurs when product types or locations fall out of favor with the capital markets. This usually coincides with fluctuations in market demand and supply, and can be anticipated.

Entitlement risk may become a significant obstacle to the success of a project if local government or community leadership opposes the intended development program. As a rule,

Design/construction risk pertains to all facets of the design and building process. The most significant form of design/construction risk is the potential for construction costs to increase dramatically between the feasibility phase of a project and construction commencement.