Real Estate Software Market Overview

FrontLine Partners Viewpoint Series Real Estate Software Market Overview Market Sizing and Segmentation Value Chain / Heat Maps Trends by Sector Competitor Positioning Core vs. Non-Core Emerging Opportunity in Workflow and Collaboration www.frontlinepartners.net 1

Real Estate Market Sizing The global real estate market total asset value of $14.0 trillion dollars generates roughly $2.6 trillion per annum in real estate revenue Global Real Estate Asset Value (Total Asset Value), $TR $34.3 $37.9 The market asset value generates roughly 18% in per annum global real estate spend (revenues), which in 2006 is $2.6 TR $31.1 11.29% CAGR $28.2 $25.1 $3.6 $4.3 $5.1 $6.0 1998 1999 2000 2001 $7.1 $8.4 $14.0 $11.8 $10.0 $15.4 2002 2003 2004 2005 2006 2007E $23.0 $20.8 $18.8 $17.0 2008E 2009E 2010E 2015E 2016E 2017E 2018E 2019E 2020E 2

Real Estate Market Sizing North America and Europe represent 75 percent of the market expenditure with strong spend in homebuilding, owner/operator, capital markets, and development Market Expenditure (as a percent) by Geographic Region Global Distribution of Real Estate Expenditure North America 38% Europe 37% Latin America 3% Asia/Pacific 22% Market Expenditure (as a percent) by Geographic Region and Market Segment North America Europe Asia/Pacific Latin America Homebuilding 35% 11% 10% 23% Owner/Operator 23% 15% 15% 15% Capital Markets 27% 40% 30% 5% Corporate 2% 10% 5% 7% Development/ 8% 20% 38% 48% Services 5% 4% 2% 2% 3

Real Estate Market Sizing An estimated $16.7 billion was spent on software and services in the real estate market with half of that spend occurring in the U.S. Global Real Estate Technology Expenditure (2006 Estimate) Real Estate Technology Spend as a Percentage of Revenue North America 0.8% Europe 0.6% Asia/Pacific 0.5% Latin America 0.2% Market Segment Capital Markets Real Estate US Technology Spend as a Percentage of Revenue 2006 Technology Expenditure ($,BN) $2.24 Expenditure Propensity Leading Buyer Real Estate Technology Spend By Geographic Region Owner Operator $1.47 Leading Buyer North America 50% Corporate $2.59 On-time Buyer Services $0.12 On-time Buyer Latin America 1% Europe 35% Home Builder $0.51 Lagging Buyer Asia/Pacific 14% Development/ $0.42 Lagging Buyer 4

Real Estate Market Segmentation Six key market segments define the real estate industry Real Estate Market Segmentation Markets Home Building Development/ Owner/ Operators Services Capital Markets Corporate Real Estate Homebuilders Multi-Family Housing Senior Housing Student Housing Military Housing Master Plan Communities Land Development Commercial Multi-Family Specialty Office Retail Industrial Hospitality Healthcare Mixed Use Management Facility Management Energy Telco Brokerage Opportunity Funds Lenders / Banks I-Banks Insurance Pension Funds Retail Users Large Block Industrial Health Higher Education Government Land Owners 5

Real Estate Market Value Chain Real estate market players have an aggregate set of valued functions that define their capabilities Aggregate Real Estate Market Value Chain Re- Development/ Development Leasing Legal Tenant Coordination and Improvement Lease Admin / Facility Accounting/ Reporting Risk / Insurance Investor Relations Asset Identify potential projects Pro-Forma model potential project Secure funds for project Monitor project progress Monitor project IRR Detail project budgeting Gov t permitting Subcontracto r Progress Reporting ROI and leasing projections Prop. Availability Report Marketing/ Prospecting Tenant Opportunities Identified Lease Negotiations Reporting Plan Design (CAD) Legal Review Lease Negotiations Lease Approvals Lease Abstracts Tenant Space Design & Coordination Tenant Space Review, Revisions and Approval Tenant Coordination Reporting Site Design TI Budget Bid Request Contract Award Const. Schedule Acceptance of Premise Contractor Eval Tenant Space Delivery Reporting Lease Setup/ Tenant Rec. Billings Recoveries (CAM, Tax, Insurance) Lease Renewals Collections CAM Audits Reporting Monthly physical inspect Vendor contracts scheduled services Tenant Move In/Move Outs Site repair, Maintenance/ facilities mgmt Prop & Portfolio Reporting Budgeting Procurement Accts receivable process Accts payable process Asset mgmt Periodic journal entries Corp budgeting Bank reconciliation Fixed assets mgmt JV accounting Consolidations accounting Reporting -Integrity -Month End -Financial Section 404 compl. Claims mgmt Insurance Coverage plan Create External communications Manage external investors Create company marketing materials Manage Wall St. Analysts Create/post press releases Manage the asset Position the asset for growth 6

Real Estate Market Segment Value Chains While each market segment delivers its capabilities a little differently, there is a high degree of commonality in the underlying business processes Aggregate Real Estate Market Value Chain Re-Devel/ Development Leasing Legal Tenant Coordination and Improvement Lease Admin / Facility Accounting/ Reporting Risk / Insurance Investor Relations Asset Home Builder Owner/ Operator Corporate Real Estate Capital Markets Development/ Services 7

Real Estate Market Segment Value Chains 28 percent of the valued functions represent high or medium value within the market segments Real Estate Function Pools of Value Re-Devel/ Development Leasing Legal Tenant Coordination and Improvement Lease Admin / Facility Accounting/ Reporting Risk / Insurance Investor Relations Asset Home Builder Owner/ Operator Corporate Real Estate Capital Markets Development/ Services High Degree of Value Medium Degree of Value Low Degree of Value Note: There is insignificant variation between geographic regions

Real Estate Market Segment Value Chains There is a close correlation between function value and technology expenditure in the real estate market, except in accounting/reporting Real Estate Technology Expenditure by Function Re-Devel/ Development Leasing Legal Tenant Coordination and Improvement Lease Admin / Facility Accounting/ Reporting Risk / Insurance Investor Relations Asset Home Builder Owner/ Operator Corporate Real Estate Capital Markets Development/ Services High Degree of Spend Medium Degree of Spend Low Degree of Spend Note: There is insignificant variation between geographic regions Higher Functional Value than Technology Expenditure

Real Estate Business Market Trends by Segment Capital markets, owner/operator, and corporate real estate show strong growth potential in the U.S. market Homebuilding» The growth in homebuilding has slowed. Builders are now looking to consolidate and cut-costs.» Many domestic homebuilders are looking for international opportunities.» It is estimated that the top five homebuilders in the US represent 7-9% of the total homebuilding market.» The top-tier technology solutions market place is highly competitive, while the mid-tier market does not offer end-to-end solutions. Capital Markets» There has been significant expansion in growth of funds under management and institutional investment in real estate.» Few systems can handle the complex layers of visibility from property level all the way through to fund and investor reporting level.» There is a shortage of software solutions in the market, so there is a high degree of customization to platforms.» Real estate performance has fueled investor demand as a separate asset class and significant queue of capital raised; seeking deployment.» There is an increasing consolidation & globalization in the market. Corporate Real Estate» The top 10 corporations on last year s Buildings magazine census controlled more than 2BB square feet of real estate.» Flextime and telecommuting are anticipated to reduce the typical square footage requirements.» In the last five years corporations began focusing more on real estate technology.» Creating appealing workspaces with ergonomic design is a top priority for leading companies. Tools to assist in this endeavor are on the radar of corporations. Development/» Global infrastructure development will drive the construction sector in the coming years.» Private sector funding may provide some of the capital needed to build much needed infrastructure. Key Real Estate Trends Services» Green principles are not only seen as part of real estate development, but throughout the industry as cost-efficient operating.» Volatility in energy markets leads companies to meter monitoring and other technology solutions. Owner/Operator» Globalization of the owner/operator sector is a key trend in this sector, as exemplified by the latest estimates of 244 REITs in 24 countries.» 28 countries are likely to have REITs in the next 24 months.» Recent trends toward mergers, acquisitions and privatizations of previously public REITs.» Owners are interested in utilizing business intelligence tools to be able to analyze the business according to internal measures of KPI. 10

Real Estate Software Market Trends by Segment The real estate technology market is growing to support the expanding capital base Homebuilding» The top-tier technology solutions market place is highly competitive, while the mid-tier market does not offer end-to end solutions.» Homebuilders favor technology that demonstrates a clear ROI and is designed specifically for the homebuilding industry.» Virtual design centers are being attempted by some builders; an effective sales and marketing tool is needed in homebuilding» An effective warranty tool is needed for the homebuilding industry. Capital Markets» Integration of fund accounting software with core accounting systems has become a priority. Integration allows for more robust and integrated reporting capabilities.» The capital markets desire a more effective solution for fund accounting and reporting. Corporate Real Estate» Today, corporations use Integrated Workplace Management Systems (IWMS) to effectively manage key metrics such as total square footage and vacancy status.» Corporations are late adopters of technology to manage their real estate assets and typically do not implement technology until it is absolutely necessary; that is beginning to change.» Corporations that require systems find that the solutions are still developing and do not fully meet the industry needs.» The corporate real estate market is highly fragmented and providers have a real challenge in selling their solutions. Development/» Supply chain management.» On-line catalogues are common for today s construction purchasing.» 5D CAD software is anticipated to be the CAD technology of the future. Key Real Estate Trends Services» Business technology is providing increased security.» Meter monitoring with real time data is important for energy management.» managers have many of the same technical trends as the owner/operator segment. Owner/Operator» Companies have a strong desire to purchase software to meet their needs but have limited solutions.» Smaller to mid-tier providers can not scale up and big providers want big deals.» Companies that have implemented these solutions are now moving their focus from back to front office functions.» Standardization of traditionally complex business processes in the areas of leasing and CAM is being implemented by some in the owner/operator segment.» Electronic funds transfers, common in Europe today, are beginning to become more common in the US as well.» Utilities cost containment and utilization management that feed data into the ERP solution are on the radar. 11

Real Estate Software Providers The market leaders differentiate themselves by their ability to maintain and deliver quality technology Real Estate Market Providers Positioning Emerging Players Building Industry Technology Market Leaders Setting the Industry Software Trends Yardi Resolve Intuit MRI Cougar Ascendix Primavera Peracon JD Edwards Famis Corrigo CTI Limited Sitera Kardin Fraser Williams Accruent Tririga Realm/Argus Manhattan Skyline RealPage Bricsnet Real Data Workspeed AMTdirect Virtual Premise Net Facilities Niche Players Serving Specific Industry Needs Visionary Players Emerging Technology Players Note: Major ERP companies have been excluded Corporate Owner/Operator Capital Markets 12

Non-Core Real Estate Software Providers Many non-core estate software providers have little penetration into the real estate market, but provide services to real estate companies SunGard Non-Core Real Estate Market Providers Positioning Emerging Players Building Industry Technology Savvion Tibco Ultimus Niche Players Serving Specific Industry Needs Proforma Mega International igrafx SAP Casewise Information Builders EMC Hyland hyperion Sybase Actuate Interwoven Xerox Tower Software Objective Applix QlikTech Xythos Spotfire Day Software Panorama Cimage Market Leaders Setting the Industry Software Trends IDS Scheer Business Objects Cognos Telelogic Open Text Stellent SAS Oracle MicroStrategy Vignette Visionary Players Emerging Technology Players Note: Major ERP companies have been excluded Business Intelligence Collaboration Workflow 13

Real Estate Software Providers Profile Transaction processing and reporting have a robust offering across multiple market segments, the same is not true for collaboration and work flow an emerging market Capital Markets Homebuilder Owner Operator Corporate RE Realm Yardi MRI Skyline JD Edwards Tririga Accruent Business Analysis Business Intelligence Transaction Processing Reporting Collaboration Workflow No real estate market solution currently exists Core Value Player Participant 14

FrontLine Partners Overview FrontLine Partners (www.frontlinepartners.net) is a real estate consulting firm that works with banks, institutional investors, lenders, owners, intermediaries, and service providers in the commercial real estate and financial services industry to help them accelerate growth of their business or reposition their business models and assets. FrontLine Partners offers a number of services ranging from strategy formation, corporate and business development, mergers and acquisitions, capital sourcing, workouts and corporate restructuring. For additional discussions, please contact our Managing Partner: Jim Vincent (214) 369-2085 jim.vincent@frontlinepartners.net 15