A Lee & Associates Roundtable

NavigatingToday’s Commercial Real Estate Market

Lee & Associates®-LA North/Ventura, Inc. • November 2009 Page 1

At Lee We’re Always Making News(...But Our Clients Are the Real Headliners)

Lee & Associates-LA North/Ventura, Inc.Corporate ID #01191898

Sherman Oaks Calabasas Ventura Antelope Valley

15250 Ventura Blvd, #100 26050 Mureau Rd, #101 1000 Town Center Dr, #125 38460 5th St W, #GSherman Oaks, CA 91403 Calabasas, CA 91302 Oxnard, CA 93036 Palmdale, CA 93551P 818.986.9800 P 818.223.4388 P 805.626.1200 P 616.341.3300F 818.783.9260 F 818.591.1450 F 805.413.7000 F 661.341.3200

RiverPark Gateway Opens With 34,713 SF of Leases Completed

Since opening, Lee & Associates has completed 34,713 square feet of leases at RiverPark Gateway, filling nearly half the space at Ven-tura County’s premier office park, developed by Martin Teitelbaum Construction Inc. The park, located at 2775-2861 N. Ventura Road in Oxnard, totals 73,472 square feet of free standing office build-ings and condominiums for sale or lease and office suites for lease. Lease with an option to purchase arrangements are also available.

More Than 100 Local Business Executives and City Officials Attend Patriot Commerce

Center Grand OpeningA grand opening celebra-tion for the Patriot Com-merce Center co-hosted by Lee & Associates and developer M.W. Ossola & Associates, Inc. drew more than 100 business executives and city of-ficials to Moorpark, CA. The 300,000 square foot business park includes 22,000 square feet of office and medical of-fice space and 140,000 square feet of industrial and R&D space in its first phase. Condominium and building sizes range from 734 square feet to 21,676 square feet with many of the units in the 1,500 square feet to 5,000 square feet range.

Lee & Associates-LA North/Ventura Inc. Principals Mike Tingus, Christine Deschaine, Jim Fisher, Mark Leonard, Jay Martinez and Brett Warner speak candidly to tenants, landlords, buyers and sellers about what to expect, where the opportunities are and how to capitalize on them.

Lee & Associates®-LA North/Ventura, Inc. • November 2009Page 4

Q: Does the recent uptick in commercial real estate demand indicate that we have reached the bottom of the market, or are we experi-encing a false bottom?

Tingus: We’ve definitely seen a shift and an up-ward trend in commercial real estate transac-tions in the last three months. But the proof of the pudding will come in the months of No-vember through January when the most im-portant retail selling season will give us a bet-ter read on what consumers are thinking. The final quarter of the year is also traditionally the highest for job losses, and a number of high-profile companies have already announced plans for sizeable layoffs. So with that, we will see additional fracturing of the market, further declines in rents and property values and more foreclosures.

The good news is that each re-setting of the market drives an uptick in commercial real es-tate activity. A survey of thousands of real estate professionals and investors conducted by Mark Larson, Vice Chairman of Lee & Associates-Investment Services Group, in the 3rd quarter found that 73 percent view real estate, along with cash, as preferred investments today. So

the smart money is looking at taking advantage of the fractured real estate market, and as the market continues to re-set, it will help with the recovery, provided we get the finance markets back on track. So far, SBA-financed owner-user sales of $15 million and under have been get-ting us through this recession, and what we now need is to see the CMBS credit markets restored so that investors re-enter the market.

Parts of the market are showing signs of sta-bilization now, but there is more to occur, es-pecially in some submarkets and certainly in the office and retail sectors, which have been the hardest hit in this recession. So as we look ahead, we will probably see rents and asset values continue to decline through mid-2010. By the latter part of 2010 we should see lease rates stabilize and asset values begin to grow again, followed by a more robust recovery in 2011. That said, the scarcity of small industrial and office properties for sale – which are best suited to our entrepreneurial culture in the Los Angeles North and Ventura markets--may be the exception and, as they have throughout this recession, will likely continue to do well even as we work through what will be a long, sustained recovery.

INVESTMENT

Q: With so few sales, how can an investor determine the value of a property in today’s market?

Martinez: The comparables data we are begin-ning to see on the commercial real estate side is coming from bank-owned properties and it is mostly for owner-user deals. We are still about 24 months away from CMBS workout efforts, which are typically $5 million-plus and are leased-investment deals. When the dust settles, we’ll see a normalized market at 2002 or 2003 values which were about an 8-plus cap rate on actual income, not on pro forma. If you have to sell a leased investment today, you would be wise to begin marketing sooner rath-er than later so that you avoid competing with REO inventory. There are a number of active, cash buyers in the market now, but remember, these investors are looking for deeply discount-ed deals. You should evaluate your needs real-istically and work with a broker to determine how to maximize your return. Once the REOs begin to flood the market, your opportunities will be much more limited.

Lee & Associates-LA North/Ventura, Inc.Corporate ID #01191898

Sherman Oaks Calabasas Ventura Antelope Valley

15250 Ventura Blvd, #100 26050 Mureau Rd, #101 1000 Town Center Dr, #125 38460 5th St W, #GSherman Oaks, CA 91403 Calabasas, CA 91302 Oxnard, CA 93036 Palmdale, CA 93551P 818.986.9800 P 818.223.4388 P 805.626.1200 P 616.341.3300F 818.783.9260 F 818.591.1450 F 805.413.7000 F 661.341.3200

Michael TingusPresident / Industrial

Christine DeschainePrincipal / Retail

Jim FisherPrincipal / Multi-Family

Mark LeonardPrincipal / Office

Jay MartinezPrincipal / Investments

Brett WarnerPrincipal / Industrial

(continued on page 2)

Lee Brokers Transact Largest Multifamily Sale in Santa Clarita Since ‘06

Lee Principals Jim Fisher and Craig Stevens and Associate Mike Smith closed the larg-est multifamily sale to date in Santa Clarita. The team rep-resented the buyer in the $23 million purchase of Canyon Crest, a 158-unit apartment complex located at 23639 San Fernando Road.

Prominent Woodland Hills Site Sold by Lee Multihousing Investments Group

The Lee & Associates Multihousing Investments Group transacted the purchase of an 8-acre land site in Woodland Hills. The property, the former site of the Jehovah’s Witnesses Assembly Hall at 20600 Ventura Blvd, has sold three times in the past four years, and Lee Principals Craig Stevens and John Battle transacted each of the sales. The other agents for the latest transaction are Lee Principal Jim Fisher and Associate Mike Smith. All represented the buyer, an Orange County developer who plans to re-entitle the parcel for apartment units.

Lee & Associates Honored by Co-Star and Southern California Real EstateThis year, Lee & Associates was honored by Co-Star as one of the top-producing brokerage firms in the office and investment sales market. Co-Star also ranked Lee Principal John Ochoa SIOR among the year’s top producing brokers. Lee Principal Christine Deschaine was honored as one of the Women of Influence by Southern California Real Estate.

ABOUT LEE & ASSOCIATES®Lee & Associates – LA North/Ventura, Inc., a member of the Lee & Associates Group of Companies, is a full-service real estate brokerage serving clients’ needs for industrial, office, retail and investment/multi-family property across the San Fernando, Conejo and Antelope Valleys and throughout Ventura County.Since opening in Sherman Oaks in 1994 Lee has added three offices in Calabasas, Ventura County and Antelope Valley. This year, Lee & Associates was ranked the No. 2 commercial real estate brokerage in California by California Real Estate Journal. Our local know-how and expertise gives us a distinct advantage in the LA North/Ventura commercial real estate markets. At the same time, as members of the Lee & Associates Group of Companies, brokers in each office are able to access and share in the local knowledge, contacts and relationships of the 38 offices that make up the Lee organization across the country. Our brokerage teams are led by 30 Lee principals, each with an ownership stake in the company. This unique, shared-ownership business model fosters teamwork and loyalty from associates and shareholders alike, and clients can be assured they are working with real estate professionals with a vested interest in the swift, successful completion of assignments and transactions. This year, the Lee & Associates group of companies is celebrating its 30th year of assisting clients with their commercial real estate needs. For more information call us at (818) 986-9800 or visit our website, www.lee-associates.com.

As seen in the

November 23, 2009

What Our Clients Say About US

“We’ve been dealing with Lee & Associates for over 10 years. They don’t pester me with ev-ery deal that comes along. But they do call me when they have something juicy that fits our profile. All I can tell you is the deals they have brought me make us a lot of money.”

- Phil Bellomy, Managing PartnerBM Properties

“The brokers I work with at Lee are so in touch with the pulse of the market where we operate, and that’s very important to us. We’re a property management company and they help us with positioning our properties and leasing. They’re knowledge-able, accommodating and very reliable, and they give us great guidance.”

- Marilyn Springer, Property SupervisorMoss & Company

I trust Lee & Associates to give me accurate advice. Whether it’s the rental rates I should be asking or other aspects of the deal, I believe they have my best interest in mind and I never feel the deals are com-mission driven. I talk with these brokers almost every day and I must say that Mike Tingus has assembled a good team with great camaraderie and I enjoy working with them.”

- Nicholas M. Brown, PresidentWest American Construction Corp.

OFFICEQ: What are the key things office tenants need to know if their lease is coming up for renewal?

Leonard: In today’s market it is crucial for a ten-ant to know a great deal about their own lease as well as a great deal about the surrounding market. The office market is at an all time low and will con-tinue to drop a bit as well as stay soft through all of next year but bounce back well beginning in 2011, so NOW is the time to understand your lease and the market. Hiring a broker to review your lease and educate you on the market has never been as paramount as it is today.

INDUSTRIALQ: What are the dynamics affecting the indus-trial market?

Warner: From a manufacturing side, contracting orders and decreased import activity have com-promised many businesses in the greater San Fer-nando Valley. From a brokerage side, inventories are much higher than usual and demand is lagging. This has compromised pricing, which has been ex-acerbated by tighter credit and reduced access to capital, and it also leads companies to preserve resources normally used for retooling, machining and expanding into new facilities. Most of these issues have caused companies to stay idle and at-tempt to survive the pending downturn leaving a vulnerable employee base and growing unem-ployment. Companies on the move will find more opportunities than we have seen in years and can make acquisitions and find leasing arrangements that will shave operating costs for years to come, and sometimes, upgrade their space. The key for success today with our tenants and owners is clear communication and real expectations based upon market trends which shall likely continue through 2010.

RETAILQ: How can landlords compete in today’s retail market?

Deschaine: One of the most important elements is staying competitive with rental rates and the overall economics of the deal in the market where the landlord operates. Understanding comparable deals and not holding out for yesterday’s rents is key. Another aspect is working with existing ten-ants to avoid vacancies. Prospective tenants are looking closely at the vacancies in centers they are touring. They want to be a part of a success-ful center that has a proven ability to draw traffic, so landlords need to be very aware of that when they are negotiating a lease renewal. Last, under-standing your tenant’s business model is still criti-cal. Leasing to tenants who have experience and a good understanding of their core business lowers the risk of failure.

MULTIFAMILYQ: How is the current rental market affecting sellers of multifamily properties?

Fisher: Rents are contracting for every property class, and all of these properties are being under-written with the expectation that rents will decline further because of our unemployment levels. If you are a seller, you just have to be realistic because the situation will continue until the job market im-proves. The good news is that we are not overbuilt here in L.A. and the stricter rules for underwriting home loans means there are more renters in the market than ever. So when the employment pic-ture improves, demand could increase significant-ly and the values on these properties will likely rise accordingly. This is the best time to be a buyer.

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NAVIGATINGToday’s Commercial Real Estate Market

Lee & Associates®-LA North/Ventura, Inc. • November 2009Page 2

What Our Clients Say About US

“The Lee & Associates organi-zational structure provides for transactional accountability from top to bottom. It is also refreshing to see the senior brokers mentoring the younger brokers. All of this results in an energized marketing effort.”

- Martin Teitelbaum, PrincipalMartin Teitelbaum Construction, Inc.

“The Lee & Associates team represents some of the most se-nior and experienced brokers in the Southern California market. From my company’s perspec-tive, having brokers that have worked in these markets, some for as long as 30 years, brings not only insight and knowl-edge, but in today’s capital constrained markets my lend-ers and capital partners look at that experience as a key compo-nent to the sponsorship of my development activities.”

- Mark Ossola, Managing PartnerM.W. Ossola & Associates, Inc.

“Our Lee broker took the time to really understand our very specific needs and concerns and was able to locate a building and office space that fit our needs perfectly. His professionalism, knowledge and understand-ing of the marketplace really helped our company through this very stressful and exciting transition and he did it all with great patience and humor.”

-Cherie BalousekBullpen Integrated Marketing LLC

Lee & Associates®-LA North/Ventura, Inc. • November 2009 Page 3

Results You Can Depend On

CASE STUDY #1LANDLORD REPRESENTATION: GETTING CREATIVE WITH SPACE TO FILL A RETAIL VACANCY

After the spa that had occupied the ground floor of a two-story mixed use building in Santa Monica vacated, Lee Principal Christine Deschaine and Associate Stepha-nie Skrbin naturally wanted to move quickly to shore up the space. But the spa had occupied all of the ground floor, nearly 8,000 square feet, and in today’s economy, tenants of that size are rare. The team identified a ten-ant that wanted a portion of the space, and, because it is a startup, needed some economies in their first lease. The solution was to carve out the back portion of the space without the highly coveted —and more expensive —street frontage in the front portion of the building. By doing so, the team was able to offer the tenant a space the size it needed to design its yoga studio without having to pay a premium for street frontage. Just as important, the landlord now has available a premium location with incredible frontage in its building at a size that can accommodate a number of tenant needs.

CASE STUDY #2TENANT REPRESENTATION: TENANTS WITH AN EXACTING LIST OF REQUIREMENTS? NO PROBLEM

Lee Principal Steve Scott had a client who wanted to consolidate several of its satellite facilities, but it needed a space that was very close to its main facility and it needed a space that would be highly func-tional for its business. Specifically, the client, Preferred Media, a provider of storage and management of media assets including web-based access tools for the advertising and entertainment industries, needed a warehouse with 26’ clearance to meet its storage needs and a Burbank location close to the entertain-ment industry. Scott found exactly what the company needed in a 46,934-square foot warehouse across the street from its existing facility, and he transacted a 10-year lease on behalf of his client.

CASE STUDY #3INVESTMENT SALES: HELPING A CLIENT TRANSITION OUT OF MANAGEMENT INTENSIVE ASSETS

This client, a private real estate investor, had owned a San Fernando Valley office building which offered cash flow and appreciation. But, as with a number of investors, he was getting older and seeking to transition to a less management intensive asset. Lee & Associates President Mike Tingus and Principal Jay Martinez, conducted a national search to identify two, fully-occupied NNN retail buildings and ne-gotiated the purchase in a 1031 exchange transaction. The buildings offered the same cash flow and appreciation benefits without the responsibilities of handling maintenance and other costs associated with office building ownership. By identifying buildings outside the California area – one in Georgia and one in Houston – the client was able to purchase the properties at an 8.3 percent cap rate, a much better value than found in local properties.

estate professionals. In fact, our brokers have an average of 20 years of experience in the real es-tate industry.

LOCAL EXPERTISE: Each Lee office is staffed with brokers who specialize in the region where

they are based providing clients with superior, in-depth market data, research and analysis as well as a network of relationships that allows us to prosper during difficult economic cycles as well as good ones.

NATIONAL REACH: As a member of the Lee & Associates Group of Companies, each Lee

office is part of an organization of 38 Lee com-

panies, giving our brokers access to the same ex-pertise they enjoy locally in markets across the country. That means clients can enjoy the same benefits regardless of the markets they choose to work in.

STABILITY: At Lee, you won’t find a revolving door of brokers. Our shared ownership model

means that our associates are given the oppor-tunity to achieve shareholder status when they reach certain performance thresholds. As a result, Lee enjoys a culture of loyalty that is not found in many other companies.

PARTNERSHIP: Each Lee group office is owned and operated by the brokers in that office.

This unique, shared ownership model means that, as a client, you work directly with decision makers who know first hand the responsibilities and demands of running a business.

RESPONSIVENESS: Lee brokers manage their own businesses so they are influenced only

by what it takes to get the job done for the cli-ent, not by a bureaucracy.

TEAMWORK: Shared ownership means that each of our principals benefits from the

success of the whole company, fostering team-

work and a cooperative spirit that expedites the swift, successful completion of assignments and transactions.

SOLUTIONS: Our business model creates nimble, entrepreneurial brokers who are

creative problem-solvers by nature and who are driven to create long-term relationships with their clients. So we don’t offer canned so-lutions. We examine each client’s needs and fashion a strategy specifically tailored to their circumstances.

EXPERIENCE: Lee’s unique profit-sharing structure attracts the most seasoned real

What Can You Expect From Your Lee & Associates Broker?