CAP RATE SURVEY CAPITAL MARKETS. A Capital Markets Publication. March Click to Enter

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1 CAPTAL MARKETS CAP RATE SURVEY A Capital Markets Publication n This ssue: pg 2 pg 4 pg 11 pg 15 ndustrial pg 19 s pg 23 pg 26 Click to Enter

2 N THS SSUE: United States What a difference a year makes! Total U.S. investment transaction volume is up by 120% in 2010 compared to the same period in 2009, overall cap rates are down 30 basis points (bps) to 7.4% according to Real Capital Analytics (RCA). nvestment activity compared to 2007 is still down from the lofty heights by 77% and cap rates are still higher by 80 bps, however the trend is steadily moving downward. The majority of activity took place in office and apartment properties and in prime investment products mainly in the larger markets. There was a noticeable increase in buyer activity by buyers that have their own source of capital such as nstitutional and Private nvestors. Despite the increase in investment velocity, opportunities remain scarce, especially for prime assets, and there continues to be reluctance for buyers to invest in the secondary markets and asset types. The U.S. economy expanded by 3.2% in the fourth quarter of 2010 and is expected to grow 3.4% to 4.0% in t remains to be seen whether ndustrial the economy will continue to expand without the extended government stimulus which is expected to end in The increase in investment activity in 2010 was due to the gradual return of mergers and acquisitions, portfolio sales and the availability of capital from private, public and institutional investors also saw the increase of Commercial Mortgage Backed Securities (CMBS) has started off with a bang with the announcement of AMB and Prologis combining into a $129 billion behemoth focused on combining operating efficiencies and maximizing their leverage in the market. n 2011, investment activity is expected to continue to increase, especially as financial institutions start to loosen restrictions on their lending criteria and as buyers start to expand their scope to secondary assets and markets due to the increasing price for primary assets. Other Positive ndicators Transaction activity revived significantly during the second half of According to Real Capital Analytics, total investment volume for the five major property types rose to $85 billion, well above the $37 billion recorded during the first half year. December was a particularly active month, when nearly $27 billion in transactions closed. The final tally for 2010 indicated that transaction volume more than doubled over 2009 levels. All five sectors posted significant gains in activity, with the office and apartment sectors leading transaction volumes. 2

3 N THS SSUE: United States (continued) The growth in transaction volumes has been aided by continued healing in the real estate debt capital markets. Significant increases in life company lending have supplemented renewed interest by large commercial banks to tap into improving borrower demand. n addition, the CMBS market began to revive in Total CMBS issuance reached $11 billion, with the bulk of the activity coming in the second half of the year. Some twenty-five CMBS platforms are now actively seeking lending business, up from a handful during Many market participants believe that CMBS will expand significantly in 2011, with estimates of anticipated issuance volume ranging from $30 to $50 billion. n addition to narrowing bid ask spreads and overall higher values for investment property, investors are encouraged by stabilizing property fundamentals. According to CBRE-EA, the net absorption of space turned positive in all major property sectors by the third quarter of The multifamily sector has demonstrated the best recovery so far, posting the second consecutive year of growth in demand, which forced the vacancy rate down 120 basis points from peak to an average of 6.3% during the fourth quarter of The office sector ndustrial gained momentum during the fourth quarter, as the vacancy rate fell to 16.4%, down 30 basis points from peak. Rents are also stabilizing across the property sectors. While the economic outlook is still clouded by uncertainty, the prospects for job growth are improving, which will likely accelerate the recovery in commercial space demand. nstitutional investors have improving outlooks for real estate returns and appear to be allocating a significant amount of new dollars (an estimated $30 billion for 2011) to real estate investments, according to the nstitutional Real Estate Letter. n addition, institutional investor s portfolio allocation to real estate is currently below targeted levels, according to their survey, a feature that may support higher levels of future real estate equity capital flows. 3

4 N THS SSUE: Total office investment transactions more than doubled in 2010 compared to 2009 reaching $134.1 billion, but represented only 29% of the activity recorded in 2007 according to RCA. The increase in 2010 activity was due to the availability of capital from a number of different sources including the return of the CMBS market. Transaction activity in 2010 was more geographically diverse and was not limited to New York, Washington and San Francisco, but also included other major markets across the U.S. According to the CBRE Cap Rate survey, rates are down by 100 to 150 basis points for prime assets and 50 to 75 bps for secondary assets. Cap rates are forecasted to continue to fall in 2011 especially for the prime assets. market fundamentals are slowly recovering; CBRE Econometric Advisors shows office vacancy rates dropping by another 20 bps to 16.4% nationally from the 3rd to 4th quarter The East is recovering quickly especially with the growth in the financial and business service sectors. Select from the list below to access the current CBD office cap rates, forecast and investor interests. ndustrial Download a Complete CBD Current Cap Rates Chart (PDF) Download a Complete CBD Cap Rate Forecast and nvestor nterests Chart (PDF) Select from the list below to access the current suburban office cap rates, forecast and investor interests. Download a Complete Suburban Current Cap Rates Chart (PDF) Download a Complete Suburban Cap Rate Forecast and nvestor nterests Chart (PDF) 4

5 N THS SSUE: CBD Eastern Region ndustrial Atlanta 7.00% % Baltimore 8.25% % Boston 6.50% % Charlotte 7.00% % Jacksonville Memphis Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Atlanta Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville New York City N/A N/A Pittsburgh Philadelphia Raleigh Tampa Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 9.25% % 7.00% % 7.75% % 8.50% % 7.50% % 8.00% % Miami 6.75% % 7.75% % 7.25% % Nashville 7.75% % New York City 5.50% % Orlando 7.50% % Pittsburgh 7.50% % Philadelphia 6.50% % 8.50% % 6.00% % 7.00% % 6.00% % 7.50% % Washington, DC ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market % % 8.75% % 8.25% % 6.50% % Raleigh 8.25% % 8.75% % 9.00% % Tampa 7.25% % Washington, DC 5.50% % 5.00% % 8.25% % 6.00% % 7.00% % 10.00% % 9.00% % 8.75% % 10.50% % 8.25% % 10.50% % 11.00% % 6.50% % 12.00% % 12.00% % 11.00% % 9.50% % 12.00% % 12.00% % 9.25% % N/A N/A N/A N/A 10.75% % 12.00% % 9.50% % 6.50% % ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 5

6 N THS SSUE: CBD Central Region Austin 6.25% % Chicago 6.25% % Cincinnati Columbus Dallas Detroit 8.50% % Houston 6.00% % ndianapolis 8.25% % Kansas City 8.50% % Minneapolis 7.00% % San Antonio 7.25% % St. Louis Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 8.25% % 6.50% % 9.00% % 9.00% % 7.00% % 9.50% % 8.75% % 8.25% % 7.50% % 7.75% % 10.00% % 9.75% % 9.00% % 10.50% % 9.75% % 10.50% % 9.00% % 8.00% % 9.00% % 8.75% % 10.50% % 9.75% % 9.25% % 12.00% % 10.25% % 10.50% % 11.00% % 10.00% % 10.00% % 10.00% % 11.00% % 12.00% % 11.75% % 10.50% % 11.00% % 12.00% % 12.00% % 12.00% % 11.00% % 12.75% % 14.00% % ndustrial Austin Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Chicago Cincinnati Columbus Dallas Detroit Houston ndianapolis Kansas City Minneapolis San Antonio St. Louis ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 6

7 N THS SSUE: CBD Western Region Albuquerque Denver 6.25% % Los Angeles 5.50% % Orange County 7.00% % Phoenix 7.00% % Portland 7.50% % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 7.50% % 7.50% % 6.00% % 7.25% % Sacramento 7.00% % Salt Lake City San Diego 6.25% % San Francisco 6.00% % Seattle 6.25% % 8.25% % 6.75% % 6.75% % 7.00% % 8.50% % 6.50% % 8.00% % 10.00% % 8.25% % 6.75% % 6.50% % 7.25% % 8.00% % 7.00% % 8.25% % 12.00% % 9.25% % 10.00% % 7.50% % 8.75% % 9.00% % 7.25% % 7.00% % 8.25% % 7.25% % 6.75% % 11.00% % 9.75% % 11.00% % 13.00% % 9.50% % 7.75% % 7.00% % N/A N/A N/A N/A ndustrial Albuquerque Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Denver Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco Seattle N/A N/A ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 7

8 N THS SSUE: Suburban Eastern Region ndustrial Atlanta 7.50% % Baltimore 7.75% % Boston 7.25% % Charlotte 7.75% % Jacksonville Memphis Miami 7.00% % Nashville 7.50% % Orlando 7.50% % Pittsburgh 7.50% % Philadelphia 7.00% % Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Atlanta Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville Orlando Pittsburgh Philadelphia Raleigh Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 8.25% % 7.75% % 8.25% % 10.00% % Tampa Washington, DC ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market % % 10.00% % 12.00% % 10.00% % 9.50% % 10.50% % 8.00% % 7.75% % 8.75% % Raleigh 8.25% % Tampa 7.00% % Washington, DC 6.25% % 8.50% % 9.75% % 8.75% % 8.75% % 7.50% % 10.00% % 8.75% % 8.50% % 10.00% % 10.50% % 10.50% % 11.00% % 13.00% % 11.00% % 10.00% % 11.00% % 10.00% % 10.50% % 10.75% % 10.50% % 9.25% % 7.50% % 10.50% % 8.75% % ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 8

9 N THS SSUE: Suburban Central Region Austin 6.75% % Chicago 7.50% % Cincinnati Columbus 9.00% % Dallas Detroit 8.50% % Houston 6.50% % ndianapolis 8.50% % Kansas City 8.25% % Minneapolis 7.50% % San Antonio 7.50% % St. Louis Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 7.50% % 8.50% % 9.00% % 9.00% % 9.25% % 8.75% % 8.25% % 8.00% % 9.00% % 9.75% % 9.25% % 9.00% % 8.75% % 8.75% % 8.75% % 8.75% % 10.00% % 9.75% % 10.25% % 9.00% % 10.50% % 9.50% % 10.25% % 9.75% % 12.00% % 10.25% % 11.00% % 10.50% % 10.00% % 10.00% % 10.00% % 12.00% % 9.75% % 9.75% % 11.75% % 12.00% % 11.50% % 12.50% % 11.00% % 10.00% % 12.00% % 12.00% % 12.50% % 10.50% % 12.50% % 14.00% % ndustrial Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Austin Chicago Cincinnati Columbus Dallas Detroit Houston ndianapolis Kansas City Minneapolis San Antonio St. Louis ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 9

10 N THS SSUE: Suburban Western Region Albuquerque Denver 7.25% % Las Vegas Los Angeles 5.50% % Orange County 7.25% % Phoenix 7.75% % Portland 8.00% % Sacramento 7.50% % Salt Lake City San Diego 6.25% % San Francisco 6.25% % Seattle 6.50% % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 7.50% % 8.25% % 6.00% % 7.50% % 8.75% % 8.50% % 6.75% % 6.25% % 7.25% % 8.50% % 8.25% % 6.00% % 8.25% % 8.25% % 6.75% % 6.50% % 7.50% % 8.00% % 9.25% % 6.50% % 8.50% % 12.00% % 9.25% % 10.00% % 10.50% % 10.00% % 7.50% % 10.00% % 8.50% % 13.00% % 10.00% % 8.00% % 11.00% % 14.00% % 9.00% % 9.50% % 7.25% % 6.50% % 8.00% % 7.25% % 7.00% % 7.75% % 6.75% % N/A N/A N/A N/A ndustrial Albuquerque Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Denver Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco Seattle N/A N/A ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 10

11 N THS SSUE: Total apartment transactions totaled $31.6 in 2010 more than doubling the activity witnessed in 2009, according to RCA, up by 112% compared to Cap rates continued to fall, as a result of higher capital markets liquidity and property incomes. Private buyers accounted for nearly half of all volume in nstitutional investors and publicly traded companies accounted for another third of the total volume. Apartments is the first property type to see an increase in activity in the tertiary markets and secondary assets as cap rates fall and investors seek alternative opportunities to add to their portfolios. Overall cap rates dropped from 7% in December of 2009 to 6.6% in December of 2010 according to RCA. The spread over 10-year Treasuries has declined only slightly over the same period however from 350 to 330 bps. Prime apartment asset cap rates are lower by at least 75 bps and in some markets the decrease is steeper. According to CBRE Econometric Advisors, recent declines in homeownership rate, along with improving labor market conditions are contributing to near-record growth in rental demand. With occupancy continuing to rise and very few new apartment properties being delivered in 2011, apartment operators are likely to be more ndustrial aggressive than usual in terms of eliminating rent discounts and raising asking rents this year. Select from the list below to access the current multi-housing cap rates, forecast and investor interests. Download a Complete Current Cap Rates Chart (PDF) Download a Complete Cap Rate Forecast and nvestor nterests Chart (PDF) 11

12 N THS SSUE: Eastern Region ndustrial Atlanta % Baltimore % Boston % Charlotte % Jacksonville % Memphis % South Florida % Nashville % New York City % Orlando % Philadelphia % Pittsburgh % Raleigh % Tampa % Washington, DC % Atlanta Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville New York City Orlando Philadelphia Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % Pittsburgh Raleigh Tampa Washington DC ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 12

13 N THS SSUE: Central Region Austin % Chicago % Cincinnati % Columbus % Dallas % Detroit % Houston % ndianapolis % Kansas City % Minneapolis % San Antonio % St. Louis % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % ndustrial Austin Chicago Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Cincinnati Dallas Detroit Houston ndianapolis Kansas City Minneapolis San Antonio St. Louis ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 13

14 N THS SSUE: Western Region ndustrial Albuquerque % Denver % nland Empire % Las Vegas % Los Angeles % Orange County % Phoenix % Portland % Sacramento % San Diego % San Francisco % Seattle % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % Stabilized Value Add Stabilized Value Add Stabilized Value Add % % % % % % % % % % NVESTOR NTERESTS** Albuquerque Denver Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco Seattle ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market % % % % % % % % % % % % ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 14

15 N THS SSUE: Total retail investment activity did not improve at the same pace as the office or apartment sectors, although it did increase by 51% to $22.6 billion from 2009 to Most sales activity involved strip centers which represented 58% of the overall retail transactions according to RCA. The CBRE Cap Rate Survey shows most cap rates continuing to decline in the second half of 2010, but not at the same rate as office and industrial. Cap rates for retail are down by 75 to 100 bps and are expected to decline moderately or remain flat over the next six months. market fundamentals continue to improve with the national retail availability rate decreasing to 13.0% at year end Consumers are spending more but are still cautious while remaining focused on debt reduction and savings. The lowest retail availability rates remain in San Francisco, Oakland, Long sland and Miami. t is expected that with limited new supply and an improving economy that availability rates will continue to fall in Select from the list below to access the current retail cap rates, forecast and investor interests. ndustrial Download a Complete Current Cap Rates Chart (PDF) Download a Complete Cap Rate Forecast and nvestor nterests Chart (PDF) 15

16 N THS SSUE: Eastern Region ndustrial Neighborhood/ Comm Center (Grocery Anchored) Atlanta 6.50% % Baltimore 6.50% % Boston 6.25% % Charlotte 7.00% % Trend* Power Centers Trend* 7.25% % 7.00% % 6.75% % 7.50% % Neighborhood/ Comm Center (Grocery Anchored) 7.75% % 7.25% % 7.75% % Trend* Power Centers Trend* 8.25% % Neighborhood/ Comm Center (Grocery Anchored) 9.00% % Trend* Power Centers Trend* 9.50% % 9.25% % 8.25% % Jacksonville 6.50% % 7.00% % 7.25% % 7.50% % Memphis 7.00% % Miami 6.25% % 6.75% % 6.75% % Nashville 7.00% % Orlando 6.50% % 7.00% % 7.25% % Philadelphia 6.50% % Raleigh 7.00% % 7.50% % 8.50% % 7.25% % 7.50% % 8.75% % 9.00% % 8.00% % 9.50% % 8.00% % 8.00% % 8.00% % 8.00% % 8.25% % 9.50% % 7.75% % Tampa 6.50% % 7.00% % 7.25% % Washington, DC 5.85% % 6.00% % 7.50% % 7.50% % 8.25% % 9.00% % 8.00% % 8.00% % 10.00% % 9.50% % 8.00% % 9.25% % Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Power Centers nvestor nterests Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Power Centers nvestor nterests Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Atlanta Baltimore Boston Charlotte Jacksonville Memphis Miami Nashville Orlando Philadelphia Raleigh Tampa Washington, DC ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. Power Centers ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps nvestor nterests 16

17 N THS SSUE: Central Region ndustrial Chicago 6.75% % Cincinnati 7.25% % Dallas 6.75% % Detroit Houston 6.75% % ndianapolis 7.25% % Minneapolis 6.75% % San Antonio 7.00% % St. Louis 7.25% % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests 7.00% % 7.75% % 7.00% % 7.00% % 7.75% % 7.00% % 7.25% % 7.75% % 7.75% % 7.75% % 9.25% % 7.75% % 7.75% % 7.75% % 9.75% % 10.00% % 10.50% % 10.50% % 10.50% % 10.50% % 10.50% % Power Centers nvestor nterests Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Power Centers nvestor nterests Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Chicago Cincinnati Dallas Detroit Houston ndianapolis Minneapolis San Antonio St. Louis ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. Power Centers nvestor nterests ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 17

18 N THS SSUE: Western Region ndustrial Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Las Vegas 7.50% % 8.00% % 8.00% % Los Angeles 5.75% % Orange County 5.75% % Phoenix 7.25% % Portland 6.00% % Sacramento 6.50% % San Diego 5.75% % San Francisco 5.75% % Seattle 6.00% % 6.25% % 6.25% % Power Centers nvestor nterests 7.25% % 7.25% % 7.50% % 8.00% % 6.25% % 6.75% % 6.25% % 6.25% % 6.25% % 7.50% % 7.75% % 7.25% % 7.25% % 7.50% % Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Power Centers nvestor nterests Neighborhood/ Comm Center (Grocery Anchored) nvestor nterests Las Vegas Los Angeles Orange County Phoenix Portland Sacramento San Diego San Francisco Seattle ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. 8.75% % 10.00% % 10.00% %+ 8.00% % 9.25% % 10.00% %+ 8.00% % 9.25% % 10.00% %+ 8.75% % 10.00% % 10.00% %+ 8.25% % 9.50% % 10.00% %+ 8.00% % 10.00% % 10.00% %+ 8.00% % 9.25% % 10.00% %+ 8.00% % 9.25% % 10.00% %+ 8.25% % 9.25% % 10.00% %+ Power Centers nvestor nterests ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 18

19 N THS SSUE: ndustrial Total industrial activity increased to $18.9 billion in 2010 up 77% from 2009 according to (RCA). CBRE Cap Rates for industrial properties from the first half of 2010 were down another 100 bps for prime assets although overall industrial cap rates are down marginally. nvestment activity in warehouse/distribution type facilities represented 67% of the industrial transactions in Most buyers, especially the smaller assets, were private firms. Large and portfolio transactions typically involved public institutions and RETs. The block buster merger of AMB and Prologis is an indicator of the level of interest in mergers and acquisition activity which will likely increase in Market fundamentals continue to improve with the national industrial availability rate decreasing by 30 bps from the third to fourth quarter Rental rates remain flat, but due to the limited amount of construction activity, this may change in 2011 as the economy begins to recover and the inventory levels diminish. Select from the list below to access the current industrial cap rates, forecast and investor interests. ndustrial Download a Complete ndustrial Current Cap Rates Chart (PDF) Download a Complete ndustrial Cap Rate Forecast and nvestor nterests Chart (PDF) 19

20 N THS SSUE: ndustrial Eastern Region ndustrial Atlanta 7.00% % Baltimore 6.75% % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 7.50% % 7.50% % 8.75% % Boston 7.00% % 10.00% % 11.50% % Charlotte 7.25% % 9.00% % 10.00% % Jacksonville 7.50% % 8.25% % 9.25% % 10.50% % Memphis Miami 5.75% % Nashville 7.75% % New Jersey (Central/North) 7.50% % 7.00% % 8.25% % 6.50% % 8.50% % 8.00% % 8.75% % 7.25% % 8.75% % 12.00% % 9.00% % 7.00% % 7.50% % 7.75% % 9.25% % 10.00% % Orlando 7.50% % 8.75% % 10.25% % 12.00% % Pittsburgh 8.00% % N/A N/A 9.00% % N/A 9.75% % N/A 10.50% % N/A 11.50% % N/A Philadelphia 7.00% % Raleigh 7.50% % Tampa 7.00% % 8.75% % 9.25% % 10.50% % 11.50% % 10.00% % 10.00% % 11.00% % 9.75% % Washington, DC 6.25% % N/A 6.25% % N/A 7.50% % N/A 8.25% % N/A N/A N/A Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Atlanta Baltimore Boston Charlotte Memphis Miami Nashville New Jersey (Central/North) Orlando Pittsburgh Philadelphia Raleigh Tampa Washington, DC ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 20

21 N THS SSUE: ndustrial Central Region Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Austin 7.50% % 8.25% % 9.00% % 12.00% % Chicago 6.50% % 7.50% % 7.00% % Cincinnati 7.50% % Columbus 7.25% % Dallas 6.75% % Detroit 8.50% % 8.00% % 9.00% % 8.00% % 8.00% % 9.00% % 8.00% % 10.00% % 9.25% % 9.00% % 10.00% % Houston 7.00% % 8.00% % 8.50% % 9.50% % ndianapolis Kansas City 7.25% % Minneapolis 7.50% % St. Louis 7.75% % 7.50% % 7.75% % 8.25% % 10.00% % 11.00% % 11.00% % 10.25% % 12.00% % 12.00% % 10.00% % 11.50% % 10.50% % 11.50% % 12.00% % 8.25% % 8.75% % 9.25% % 10.00% % 10.50% % 10.50% % 12.50% % ndustrial Stabilized Value Add Stabilized Value Add Stabilized Value Add NVESTOR NTERESTS** Austin Cincinnati Columbus Dallas Detroit Houston ndianapolis Kansas City Minneapolis St. Louis ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 21

22 N THS SSUE: ndustrial Western Region ndustrial Denver 7.75% % Las Vegas Los Angeles 5.50% % Orange County 6.00% % Phoenix 7.75% % Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 8.25% % 7.00% % 7.00% % 8.00% % 8.00% % 7.50% % 7.25% % 8.25% % 12.00% % 13.00% % 8.25% % 8.00% % 9.25% % 10.00% % Portland 9.50% % Sacramento 10.50% % Salt Lake City 8.25% % San Diego 6.50% % San Francisco 6.50% % Seattle 6.50% % 7.00% % 6.50% % 7.00% % 8.25% % 7.00% % 6.75% % 7.00% % 9.00% % 9.50% % 7.50% % 7.00% % 7.50% % Stabilized Value Add Stabilized Value Add Stabilized Value Add 7.50% % 7.25% % 7.50% % NVESTOR NTERESTS** Denver Las Vegas Los Angeles Orange County Phoenix Portland Sacramento Salt Lake City San Diego San Francisco Seattle ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. 7.50% % 8.00% % ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps 22

23 N THS SSUE: s Total investment activity for hotels increased 358% in 2010 from 2009 according to RCA. Most of the sales activity occurred in the major centers such as New York, Los Angeles, Boston and San Francisco. The majority of buyers consisted of both public and private RETS and lenders. The increase in activity was due to the fast recovering market fundamentals and the number of good quality assets at distressed level prices. The majority of transaction activity focused on full service hotels representing 57% of the transactions with averaging pricing increasing by 93% compared to limited service hotels with pricing only increasing by 28% according to Real Capital Analytics. As the economy recovers the hotel sector is anticipated to continue to recover based on increased business travel and the resumption of conventions. According the CBRE Econometric Advisors occupancy rates increased in 2010 by 400% compared to 2009 and the growth in RevPar almost increased by double digits. Both are encouraging signs for the hotel industry and well as the economy. Growth in 2011 is expected to continue in 2011 but at a more moderate rate. Select from the list below to access the current hotels cap rates, forecast and investor interests. ndustrial Download a Complete s Current Cap Rates Chart (PDF) Download a Complete s Cap Rate Forecast and nvestor nterests Chart (PDF) 23

24 N THS SSUE: s National ndustrial Atlanta 6.00% % Baltimore 6.50% % Boston 3.00% % Chicago 6.50% % Dallas 8.00% % Luxury Full Service Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* 6.50% % 7.00% % 3.00% % 7.00% % 8.50% % 6.50% % 7.00% % 5.00% % 7.50% % 8.75% % 7.50% % 7.75% % 5.00% % 9.50% % Denver 6.50% % N/A 7.00% % N/A 7.00% % N/A 7.00% % N/A Las Vegas 15.50% % N/A N/A 18.00% % N/A N/A Los Angeles 6.50% % 6.00% % 6.50% % Miami 6.00% % N/A 6.00% % N/A 6.50% % New York City 6.50% % 7.00% % Orange County 6.50% % 6.00% % 7.00% % 6.50% % Orlando 7.00% % 6.50% % N/A San Diego 7.00% % 7.00% % N/A 7.00% % San Francisco 6.00% % 7.00% % 6.00% % 6.00% % N/A 6.00% % 7.00% % 7.00% % N/A N/A N/A 7.00% % Seattle 6.25% % N/A 6.00% % N/A 6.00% % N/A 6.00% % N/A Washington, DC 5.50% % 6.50% % 6.00% % 6.75% % N/A Atlanta Baltimore 7.60% % Select Service Economy Stabilized Trend* Value Add Trend* Stabilized Trend* Value Add Trend* Boston N/A N/A N/A N/A N/A N/A N/A N/A Chicago Dallas 9.75% % 9.25% % 10.00% % 10.50% % Denver 7.00% % N/A 7.00% % N/A 8.00% % N/A 9.00% % N/A Las Vegas N/A N/A N/A N/A N/A N/A N/A N/A Los Angeles 6.50% % Miami 6.50% % 6.00% % N/A 8.00% % 6.00% % New York City Orange County 6.50% % 7.00% % N/A 8.00% % 9.00% % N/A 10.00% % N/A Orlando 9.00% % N/A 9.75% % 10.50% % N/A San Diego 7.00% % San Francisco 6.50% % 7.00% % N/A 8.00% % 6.50% % 9.00% % N/A 8.00% % N/A 9.00% % N/A Seattle 6.50% % N/A 7.00% % N/A N/A 11.50% % N/A Washington, DC 6.60% % 7.50% % 24

25 N THS SSUE: s National ndustrial Atlanta Luxury Full Service Select Service Economy Stabilized Value Add Stabilized Value Add Stabilized Value Add Stabilized Value Add Baltimore Boston Chicago Dallas Denver Las Vegas N/A N/A N/A N/A N/A N/A Los Angeles Miami New York City Orange County Orlando San Diego San Francisco Seattle Washington, DC ncrease more than 50 bps ncrease less than 50 bps Remain flat Decrease less than 50 bps Decrease more than 50 bps NVESTOR NTERESTS** Luxury Full Service Select Service Economy Stabilized Value Add Stabilized Value Add Stabilized Value Add Stabilized Value Add Atlanta Baltimore Boston Chicago Dallas Denver Las Vegas N/A N/A N/A N/A N/A N/A Los Angeles Miami New York City Orange County Orlando San Diego San Francisco Seattle Washington, DC ** nvestor interests represents the local CBRE professional s opinion on the current level of investor interest as compared to second half of 2010 in their local market. 25

26 N THS SSUE: Definitions Cap Rates (, ndustrial,, and ) Cap rate ranges were best estimates provided by CBRE professionals based on recent trades in their local market as well as recent interaction with investors. The ranges represent those cap rates that a given property will trade at in this current market. Stabilized cap rates were based on in-place NO for the latest year before adjusted for reserves. value-add cap rates were based on projected stabilized NO. actual cap rates within each asset class will vary, occasionally outside of the stated ranges, based on asset/location quality and property-specific opportunities for NO enhancement. Cap Rates ( only) Cap rate ranges are based on an estimated NO derived by annualizing the last 90-days of revenue and subtracting what buyers would estimate as stabilized, year one expenses after adjustments for real estate taxes and reserves. Actual cap rates within each asset class will vary, occasionally ndustrial outside of the stated ranges, based on asset/location quality and property-specific opportunities for NO enhancement. CBD The Central Business District of a major city Class A Best-of-class product, attract larger, top quality tenants with 5- and 10-year leases, often newer construction Class B Older product, mostly 5-year leases, typically previously owned Economy chains that are priced within the % percentile in terms of average annual room rates according to Smith Travel Research 26

27 N THS SSUE: Definitions (continued) Full Service A hotel property with more than 150 rooms, room service, an on-site restaurant and a concierge service. Luxury chains that are priced in the top 15.0% percentile in terms of average annual room rates according to Smith Travel Research Neighborhood/Commercial Center (Grocery Anchored) Enclosed retail center that is anchored by a supermarket or other type of grocery store. Can range from 150K SF-350K SF Power Center Open-air retail center comprised of larger, brand name tenants. Limited CRU space and typically 400K+ SF or in a node of that size ndustrial Select Service A hotel property with less than 150 rooms, no room service and no on-site restaurant or concierge service. Stabilized Property A property that has an occupancy level at or above the local average under typical market conditions Suburban Mainly residential area located within close proximity to a major city Value-Add Property An underperforming property that has an occupancy level below the local average under typical market conditions 27

28 CB Richard Ellis, nc. The information above has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. t is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only a and do not represent the current or future performance of the property. The value of this transaction to you depends on tax and other factors which should be evaluated by your tax, financial and legal advisors. You and your advisors should conduct a careful, independent investigation of the property to determine to your satisfaction the suitability of the property for your needs.