Municipal Capital Appreciation Partners Funds

Summary

Municipal Capital Appreciation Partners I, L.P. (MCAP I), Municipal Capital Appreciation Partners II, L.P. (MCAP II) and Municipal Capital Appreciation Partners III, L.P. (MCAP III) were launched in 1996, 1999 and 2003, respectively. The MCAP Funds offer investors a unique way to access an unexploited market niche through their high value added investment strategy. MCAP investment returns are largely in the form of long term capital gains and tax-exempt income. Accordingly, Zephyr believes that this investment opportunity may be particularly interesting to high net worth families.

Investment strategy and objectives

MCAP invests in distressed, defaulted and non-rated municipal revenue bonds (and related investments) secured by real estate, such as low-to-moderate income housing, senior housing and retirement facilities, assisted living facilities, healthcare facilities and commercial facilities. MCAP may also purchase real estate that may be refinanced with municipal bonds. MCAP’s strategy targets properties that will benefit from financial restructuring, including facilities that are experiencing financial challenges (such as too much debt) rather than problems in their operations. The Manager’s goal is to enhance significantly the value of MCAP investments by taking a proactive role in achieving financial restructurings.

MCAP seeks control positions in investments to minimize delays in executing its investment strategy. MCAP investments may take the form of debt (e.g., municipal bonds, promissory notes, mortgages), equity (e.g., direct interests in real estate) or a combination of debt and equity. MCAP does not invest in general obligation municipal bonds. The MCAP Funds are currently closed to new investors. Information relating to the Funds is provided solely for the purpose of describing Zephyr Management L.P.’s global capabilities.

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