Real estate For current investors ab investment funds and consultants only UBS Trumbull Property Fund Quarterly report For the quarter ended June 30, 2014 UBS Trumbull Funds The featured property for the Fund’s 2014 quarterly reports is Water Tower Place, an 818,000-square-foot iconic top- tier regional mall located in the heart of Chicago. The property’s location on North Michigan Avenue is a premier retail and tourist destination surrounded by high-end retail, office buildings, hotels and world-class medical facilities. The site provides a daytime employment base of greater than 240,000 people within a one-mile radius and immediate access to high-end residential properties. This 12-story trophy asset was 96% leased as of June 30, 2014, and provides tenant sales of over USD 700 per square foot. The mall is anchored by flagship Macy’s and American Girl stores, with over 100 specialty retailers and restaurants. The photos on this page highlight the unique location of Water Tower Place. This investment occupies an entire block on North Michigan Avenue at the heart of Chicago’s “Magnificent Mile.” The Magnificent Mile is a premier retail and tourist destination seeing approximately 40,000 pedestrians and 42,000 vehicles per day. The block fronting Water Tower Place routinely records the highest traffic counts for the entire district. This retail submarket contains 7.1 million square feet with over 450 stores and 275 restaurants, providing seemingly limitless shopping options for Chicago area residents, guests and tourists. In addition to retail offerings, the submarket contains 11.9 million square feet of office space and is home to several iconic buildings including the John Hancock Center (pictured above on the left, behind Water Tower Place). A stone’s throw from Lake Shore Drive and activities on Lake Michigan, Water Tower Place is truly in the center of downtown Chicago. Cover and above photos: Water Tower Place, Chicago, IL Dear Investor, This report presents the results of the UBS Trumbull Property Fund (“UBS-TPF” or the “Fund”) for the second quarter of 2014. During the second quarter, commercial real estate performance reflected the underlying positive trend in the economy and labor markets. Improvement in Gross Domestic Product (GDP) during the second quarter has returned the economy to a pace of growth in the range of 3% to 4%, which could persist for the balance of the year. The labor market is especially strong with 760,000 new jobs added during the quarter. Expansions in the apartment and hotel sectors remain steady, while office, industrial and retail have experienced greater recoveries in rent and occupancy rates. Appreciation return in the NFI-ODCE had been decelerating, but in the second quarter, it increased as a percentage of total return. Over the long run, it is appropriate (and expected) for income to account for the majority of total return in commercial real estate, comprising 70% to 90% of total return. During the year ended June 2014, Real Capital Analytics reported commercial and multifamily real estate transactions totaled nearly USD 395 billion, an increase of 19% over the prior 12-month period. Looking at the performance of UBS-TPF as of the second quarter of 2014, the Fund outperformed the NFI-ODCE benchmark for the long term, but underperformed in the short term. The Fund’s underperformance over the shorter term was due primarily to its lower leverage ratio as compared to the NFI-ODCE. As of June 30, 2014, the Fund’s 12.8% leverage ratio was 9.3 percentage points lower than the 22.1% NFI-ODCE leverage ratio. The portfolio offers compelling mid- to long-term risk-adjusted eturns,r with a Number 1 ranking (as reported by NCREIF) for the five- and ten-year Sharpe Ratio and Standard Deviation risk/volatility measures. The Fund has a greater allocation to multifamily properties, and a lower allocation to office assets relative to the NFI-ODCE. Our allocation is in line with our proprietary Investable Universe Inventory Model1, and also reflects our above-average outlook for multifamily assets. During the first half of the year, we committed USD 993.5 million into high quality investments for the Fund. All of the investment during the first half of the year was made into the multifamily (90%) and industrial (10%) property types, with a number of retail and office transactions in the current pipeline. The greatest investment volume by region was in the West (at 52%) and the South (at 29%). During the quarter, we continued to execute our strategy to increase our West region allocation, bringing the allocation up from 31% to 32% during the quarter. We increased value-added investment during the quarter, bringing the Fund’s value-added allocation to over 9% at quarter end. Value-added investing is done selectively and managed within a 5% to 15% overall guideline for the Fund. We carefully evaluate and manage risk in these investments – primarily executing apartment and industrial development strategies, as well as apartment and retail repositioning strategies. Based on the projected stabilized values provided by third-party appraisers, we believe the Fund will benefit from strong appreciation gains from the value-added assets which will be stabilizing in the near term. Continued on next page... At this time, over USD 1.4 billion of additional investments are in various stages of the acquisition process. While pricing has been extremely competitive for core investments, we maintain our disciplined underwriting process and invest only where we feel that the expected returns are in line with the anticipated risks of new investments. We were active in financing activities during the first half of 2014, taking advantage of current favorable interest rates, and continuing to reduce UBS-TPF’s cost of debt. During the quarter, we closed three refinance transactions for a total of USD 354.0 million at an average interest rate of 4.15% for 10-year loans. These financings will save the Fund nearly USD 6 million in interest per year. We also placed our third line of credit on the portfolio at attractive pricing of 105 basis points over LIBOR. The current total line of credit capacity of USD 600 million has allowed us to reduce the level of cash held by the Fund from a 4.6% average during 2013, down to 1.7% as of second quarter 2014, which should enhance portfolio returns. The Fund’s consistent core strategy execution and strong relative performance over the mid- to long-term has driven significant investor interest for deposits into UBS-TPF. On July 1, 2014, after accepting deposits of USD 419 million, the Fund had a remaining registered interest list for deposits of approximately USD 1.4 billion. Thank you for the opportunity to continue managing real estate investments on your behalf. Kind regards, Kevin M. Crean Stephen J. Olstein Pamela J. Thompson Managing Director Executive Director Executive Director Contents Page Executive summary 1 Fund benchmark comparison 3 Portfolio strategy and activity 4 Mission 4 Strategy 4 Return objectives 4 Acquisitions 4 Sales 6 Asset management 6 Financing 8 Debt summary 8 Leasing summary and trends 9 Commercial lease expirations 9 Return analysis 10 Same-property net operating income 10 Realized and unrealized gains and losses (2Q14) 10 Performance analysis 11 Returns by property type 11 Returns by geographic region 11 Performance discussion 11 Market perspective 12 Economic viewpoint 12 Commercial real estate 12 The UBS (US) Trumbull Property Fund LP (“UBS-TPF” or All information furnished in this report is confidential the “Fund”) is an open-end, commingled private real and proprietary information of UBS-TPF, its general estate portfolio advised by UBS Realty Investors LLC. The and limited partners and UBS Realty Investors LLC. This REIT-based fund is structured as a limited partnership. material should not be shared with third parties without the prior written permission of UBS Realty Investors LLC. A supplemental information package containing UBS- TPF financial statements, performance by region and Sections of this report relating to future prospects that property type, and a property listing is included for are “forward-looking statements” are based upon certain clients. To request other information, call Kevin Crean assumptions. Actual results may be materially different. at 860-616 9039, Steve Olstein at 860-616 9139, Variances may include, but are not necessarily limited Pam Thompson at 860-616 9014, Peter Juliani at to, forecast versus actual revenues, market rents, lease 860-616 9219, Michael Byrne at 860-616 9363, or renewals, operating expenses, capital expenditures, your portfolio and client services representative. discount rates and capitalization rates. The material content of this report is based upon information obtained This communication is not a recommendation, an by UBS Realty Investors LLC through June 30, 2014. offer, or the solicitation of an offer to buy any security, or an offer to any person in any jurisdiction in which Any updates to the information will be made in the such offer, solicitation, purchase or sale could be next quarterly report. Unless otherwise noted, income unlawful under the law of such jurisdiction. returns, realized and unrealized gains and losses, and property level returns are presented before the deduction of advisory fees and before any contract charges that were in effect through February 29, 2008. Executive summary Table 1 – Return summary Annualized Since inception Periods ended June 30, 2014 Quarter (%) 12 months (%)