©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

March 31, 2009

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; based on properties & portfolios $5 million and greater.

Robert M. White Jr., CRE, FRICS

Capital Markets and Valuation: Current Transactions and Valuation Implications for Buyers, Sellers, Lenders, & Borrowers

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Glimpse into 2009

listed for sale

$22.7b foreclosure initiated

$11.6b

foreclosure concluded

$1.7b

reported closed/sold

$5.6b

reported in contract

$2.4b

contractterminated

$3.0b

+ -

January-February 2009

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

J'06

F M A M J J A S O N D J'07

F M A M J J A S O N D J'08

F M A M J J A S O N D

Billions

-100%

-50%

0%

50%

100%

J'06

F M A M J J A S O N D J'07

F M A M J J A S O N D J'08

F M A M J J A S O N D J'09

Year-Over-Year Change in

Commercial Property Sales

Monthly US Commercial

Property Sales

Two Shocks to MarketFinancial

CrisisRecession

Credit Crunch

F

J'09

F

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Sales Rare, But Offerings Plentiful

Monthly Ratio of Offerings to Closings

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

'05 '06 '07 '08 '09

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

0.9

1.0

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

'01 '02 '03 '04 '05 '06 '07 '08 '09

Moody/Real CPPI – National, All Properties, Monthly

US Commercial Property Prices

Pricing Trends

21% from peak

~’05 levels

[Prior to Wave of Distressed Sales]

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

CMBS AAA39% of par

14.14% yield

Bricks or Paper?

An Investors Dilemma

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

When In Doubt, Use A Ten Cap

Historic Distribution of US Cap Rates

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Summary of Current Distress

By Property TypeAs of 3/20/09

$ in bil. # of Props $ in bil. # of Props $ in bil. # of Props

Retail $14.0 946 $2.5 192 $16.5 1,138

Development $10.4 247 $2.4 114 $12.8 361

Apartment $6.4 735 $3.9 278 $10.3 1,013

Office $5.9 266 $2.8 92 $8.7 358

Hotel $6.0 119 $2.7 71 $8.7 190

Other $1.6 101 $0.8 73 $2.4 174

Industrial $1.2 154 $0.6 84 $1.8 238

Grand Total $45.4 2,568 $15.7 904 $61.1 3,472

Total2008 2009 YTD

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Summary of Current Distress

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Debt Capital – No Replacements in Sight

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Composition of Sellers

34%

46%39%

14%

6%

8%

5%

11%11%

26%12%

16%

5%8%

6%

14% 14%16%

2% 3% 5%

PeakCreditCrunch

FinancialCrisis

Distressed

Institutional

Cross Border

Public

User/Other

Equity Fund

Private

Equity Capital

33%40%

55%

23% 10%

9%3%

6%

13%

11%9%

7%

10%9%

1%

21%25%

15%

Market PeakCreditCrunch

FinancialCrisis

Institutional

Cross Border

Public

User/Other

Equity Fund

Private

Composition of Buyers

©2008 Real Capital Analytics, Inc. All rights reserved. Data believed to be accurate but not guaranteed; subject to future revision; analyses based on properties & portfolios $10 million and greater.

Capitulation?

Equity Fund

Institutional

Private

Public

87%

88%

89%

90%

91%

92%

93%

94%

95%

96%

97%

1'06

2 3 4 1'07

2 3 4 1'08

2 3 4 1'09

market peak credit crunch crisis

Percent of Asking Price Achieved By Seller Type