2005 Mid-Year

Investment Report

Expect a Strong & Sustainable Expect a Strong & Sustainable Real Estate Market Through Real Estate Market Through

20062006 Waikiki Gentrification and InvestmentWaikiki Gentrification and Investment Sustainable Military SpendingSustainable Military Spending Safe HarborSafe Harbor Geographic DiversificationGeographic Diversification Institutional Capital: Hawaii is a Sweet Institutional Capital: Hawaii is a Sweet SpotSpot Baby Boomers Investing in Hawaii Baby Boomers Investing in Hawaii Lifestyle InvestmentLifestyle Investment Low Interest RatesLow Interest Rates International Buyers: Cheap U.S. International Buyers: Cheap U.S. DollarDollar

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

Euro U.K. Pound Canadian Dollar German Deutsche

Dollar’s Devaluation Helps International Dollar’s Devaluation Helps International BuyersBuyers

2001-2005 Dollar Slides @ 20%2001-2005 Dollar Slides @ 20%

Source: exchangerate.com

Historical Interest Rate Trend1-Month LIBOR vs. 10 Year Treasury

0123456789

Jan-

92

Jan-

93

Jan-

94

Jan-

95

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Inte

rest

Rat

e 1-Month LIBOR

10 Yr. Treasury

Source: Fannie May & Economagic.com

Recent Trends in Office Capitalization Rates

6

7

8

9

10

Offic

e Cap

italiz

ation

Rate

(%)

CBD Spread Between Treasury & Cap Rate

2

3

4

5

6

7

8

9

10

Perc

enta

ge R

ate Office Cap. Rate

10 Yr. Treasury

2005 2nd Qtr Median Sales Price of Existing Single-Family Homes

$450,000

$500,000

$550,000

$600,000

$650,000

$700,000

$750,000

Orange County Honolulu Los Angeles San Diego San Fransisco

5150

6611

8687

94058893

55195206

5545

37394125

5127

6151

71077667

9312

11326

12590

12242

3902

5326

9572

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000

13000

'85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05

Total Annual Home SalesTotal Annual Home SalesOahu MLS – 1985 to June 2005Oahu MLS – 1985 to June 2005

Information obtained from the Honolulu Board of Realtors MLS Service. Information is deemed reliable but not guaranteed.

Total Monthly Inventory of ListingsTotal Monthly Inventory of ListingsOahu MLS 1987 – June 2005Oahu MLS 1987 – June 2005

Information obtained from the Honolulu Board of Realtors MLS Service. Information is deemed reliable but not guaranteed.

1000

2000

3000

4000

5000

6000

7000

8000

Ja

n-8

7A

ug

-87

Ma

r-8

8O

ct-

88

Ma

y-8

9D

ec

-89

Ju

l-9

0F

eb

-91

Se

p-9

1A

pr-

92

No

v-9

2J

un

-93

Ja

n-9

4A

ug

-94

Ma

r-9

5O

ct-

95

Ma

y-9

6D

ec

-96

Ju

l-9

7F

eb

-98

Se

p-9

8A

pr-

99

No

v-9

9J

un

-00

Ja

n-0

1A

ug

-01

Ma

r-0

2O

ct-

02

Ma

y-0

3D

ec

-03

Ju

l-0

4F

eb

-05

Se

p-0

5

Percent Homes Sold Above List Price Percent Homes Sold Above List Price Oahu MLS 2000 – June 2005Oahu MLS 2000 – June 2005

Information obtained from the Honolulu Board of Realtors MLS Service. Information is deemed reliable but not guaranteed.

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Jan

-00

Ap

r-00

Jul-0

0

Oct

-00

Jan

-01

Ap

r-01

Jul-0

1

Oct

-01

Jan

-02

Ap

r-02

Jul-0

2

Oct

-02

Jan

-03

Ap

r-03

Jul-0

3

Oct

-03

Jan

-04

Ap

r-04

Jul-0

4

Oct

-04

Jan

-05

Ap

r-05

Jul-0

5

SF SAL

CND SAL

0%

20%

40%

60%

80%

100%

Houston LA Miami Oahu San Diego SanFransisco

Tampa

Hotel Occupancy Index – July 2005Hotel Occupancy Index – July 2005

Source: Smith Travel Research

$0

$20

$40

$60

$80

$100

$120

$140

$160

Houston LA Miami Oahu San Diego SanFransisco

Tampa

Average Daily Rate – July 2005Average Daily Rate – July 2005

Source: Smith Travel Research

Hotel Condominium ConversionsHotel Condominium Conversions

Office Vacancy Index

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

Vaca

ncy

Rate

%

Industrial Availability Index

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

Perc

enta

ge R

ate

0

1

2

3

4

5

6

7

Self Storage Market Supply (SF/Capita)

Hawaii is Undersupplied

Source: Mini Storage Association

Ren

tab

le S

F/C

apit

a

0

500

1000

1500

2000

2500

3000

Assisted Living Assisted Living Plus Dementia

DemandSupply

No.

of

beds

Assisted Living MarketAssisted Living Market