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CAPITAL MARKETS OVERVIEW January 15, 2014

Capital Markets Overview

Ample liquidity for all asset classes. Real estate offers the best risk adjusted return profile of the top four major asset classes.

Capital will continue to re-allocate from financial assets to hard assets, with the CRE being the largest beneficiary.

“Flight Capital” from Foreign Investors to U.S. will continue and will likely eclipse previous records.

The above factors will result in plentiful capital for CRE in 2013/2014 across both the debt and equity markets. We are expecting allocations to increase approximately 20% over 2012 levels.

BIG THEMES FOR 2013/2014

2


There will be no scarcity of product coming to the market. We expect transactional volume to approximate the 2005 level of $350 Billion for 2013. While seemingly a stretch, our expectation is 2013/2014 will witness many more larger portfolio or merger transactions than did 2012. The one exception being core product in Gateway markets.

The domestic banks have worked through 90% of the “troubled assets” and therefore sales of loans/REO from these institutions will greatly diminish. However, sales of assets/loans from foreign banks will continue to increase. Unlike the domestic banks, expect the foreign banks to sell in portfolios versus a one-off strategy.

HFF continues to emphasize the risk of rising interest rates relative to a “hold/sell” strategy decision. We believe cap rates and interest rates are correlated, and our regression analysis concludes NOIs must increase 10-15% to offset a 100 basis point move in interest rate/cap rates.


3


Once again, 2013/2014, like 2012, will be a nearly “perfect” capital markets environment given the abundance and low cost of available capital.

HFF Recommendation: Consume capital and integrate a smart Asset Liability Management (ALM) strategy.


4

Capital Markets Overview CRE CAPITAL STACK – $4.69 TRILLION

2008 U.S. Institutional Commercial Real Estate Universe – $4.76 Trillion

5

Private Debt 35%

Public Debt 26%

Private Equity 26%

Public Equity 13%

Debt $3.14 67% Private $2.19 Public $0.95

Equity $1.55 33% Private $1.02 Public $0.53

$4.69 100%

Source: NAREIT, Federal Reserve, HFF Research, as of 3Q 2013


6

CRE Debt Outstanding $3.14 Trillion Total

Lender Composition

Source: Federal Reserve, HFF Research *includes groups such as real estate investment trusts. pension funds, non-financial corporate business, non-farm non-corporate businesses and finance companies.

49%

18%

12%

11%

6% 4%

Banks & Thrifts

CMBS, CDO & ABS

Agency/GSE Portfolios &MBSLife Insurance Companies

State, Local, Federal Gov't

Others*

Capital Markets Overview CRE Equity Outstanding ($B)

$1.55 Trillion Total Investor Composition

7

34%

34%

14%

11%

3% 3% 1%

REITs

Pension Funds

Wealth Managers

Life Insurance Cos

Foreign Investors

Private Financial Institutions (REO)

Endowments & Foundations

Source: HFF Research, NAREIT, Towers Watson

TRANSACTION VOLUME HFF CAPITAL MARKETS OVERVIEW


$-

$100

$200

$300

$400

$500

$600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Billi

ons

Office Industrial Retail Apartment Hotel Land

$89 $105 $130

$211

$360

$415

$570

$172

$66

$300 $305

$145

$231

9

U.S. Transaction Volume by Property Type Property Sales ($B)

Down 88% From Peak

2010 Up 120% vs.

2009

2012 Up 30% vs. 2011

YTD Nov 2013 > 2012

2011 Up 57% vs. 2010

Source: Real Capital Analytics *November 2013


$-

$20

$40

$60

$80

$100

$120

$140

$160

$180

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

03Q1 04Q1 05Q1 06Q1 07Q1 08Q1 09Q1 10Q1 11Q1 12Q1 13Q1

Transaction Volume

Billions M

ortg

age

Rate

Transaction Volume Commercial Mortgage Rate Multi-Housing Mortgage Rate

10

Rise In Mortgage Rates Not Impacting Volumes 3Q13 Volume Up 20% YoY, In Spite of 60-70 bps Increase In Mortgage Rates

Source: Real Capital Analytics


$65 $81 $102 $154 $271 $297 $293 $135 $55 $111 $171 $224 $134 $163 0%

1%

2%

3%

4%

5%

6%

$0

$100

$200

$300

$400

$500

$600

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 YTD 3Q12 YTD 3Q13

$Bill

ions

Individual Portfolio Entity 10yr UST Series5 Series6

U.S. Real Estate Investment Activity Property Sales ($B)

11

Down 88% From Peak

2010 Up 120% vs.

2009

2012 Up 30% vs. 2011

YTD 3Q13 up 29% vs. YTD 3Q12

10Y T by Decade Avg. Median

1961-1969 4.73% 4.28%1970-1979 7.50% 7.49%1980-1989 10.59% 10.86%1990-1999 6.67% 6.51%2000-2009 4.46% 4.45%2010-2013 ytd 2.59% 2.67%

2003 – 2007 10Y T averaged 4.40%

1998 – 2012 10Y T averaged 4.22%

2011 Up 57% vs. 2010

4.27% 4.29% 4.80% 4.63% Annual Average 10yr UST

2.78% 1.80% Source: Real Capital Analytics


12

Major & Non-Major Markets Now Converging YoY Change (%)

-40%

-30%

-20%

-10%

0%

10%

20%

30%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

National Major Markets Non-Major Markets

Source: Moody’s Analytics/Real Capital Analytics Major Markets include Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C. This index measures prices changes in US commercial real estate, based on the completed sales of the same commercial properties over time, known as the “repeat-sales methodology.”


13

Major Markets Have Nearly Recovered Peak Pricing Major Markets 1.7% Off Peak – Non-Major Markets 18.7% Off Peak – National 11.0% Off Peak

Source: Moody’s Analytics/Real Capital Analytics Major Markets include Boston, Chicago, Los Angeles, New York, San Francisco and Washington, D.C. This index measures prices changes in US commercial real estate, based on the completed sales of the same commercial properties over time, known as the “repeat-sales methodology.”

-45%

-40%

-35%

-30%

-25%

-20%

-15%

-10%

-5%

0%

2008 2009 2010 2011 2012 2013

National Major Markets Non-Major Markets


$0 $10 $20 $30 $40

Lehman Bros Holdings

Blackstone

HK Lands Dept

GE Capital

Cole RE Investments

Goldman Sachs

Morgan Stanley

Fortress

Deutsche Asset/Wealth Mgmt

Primaris REIT

Hines

Prologis

Equity Residential

Invesco RE

LaSalle

Caisse de Depot

URA

Inland Real Estate Group

Hutchison Whampoa

Prudential RE Investors

RBS Group

CBRE Global Investors

JP Morgan

UBS

Klepierre

$0 $5 $10 $15 $20

Blackstone

China Vanke

Greenland Group

Equity Residential

Poly Real Estate Group

Spirit Realty Capital

China Overseas L&I

Norges Bank Invt Mgmt

Patrizia Immobilien AG

GIC (Govt of Singapore)

Starwood Capital Group

AvalonBay Communities

Evergrande RE Group

Lone Star

Shimao Group

Caisse de Depot

China Resources

American Realty Capital

Hines

Sunac China

Sun Hung Kai

Abu Dhabi Invt Authority

Brookfield Asset Mgmt

Invesco RE

JP Morgan

Buye

rs

Selle

rs

14 Source: Real Capital Analytics

Top 25 Market Participants LTM Transaction Volume ($B)

EQUITY OVERVIEW HFF CAPITAL MARKETS OVERVIEW


16

Retail 29.5%

Apartments 13.9%

Health Care 12.6%

Office 11.3%

Diversified 9.9%

Lodging/Resorts 7.4%

Self Storage 6.6%

Industrial 5.1%

Flex 2.7%

Manufactured Homes 0.9%

Source: NAREIT *as of November 30, 2013

Listed REIT Market Capitalization By Property Type

Capital Markets Overview 2013 Listed REIT Capital Offerings Eclipse Previous Peak

Debt Issuance & Equity Offerings ($B)

17

$18.7 $19.7

$25.5

$38.4 $37.4

$49.0

$36.0

$17.9

$34.6

$47.4 $51.2

$73.3 $73.9

$0

$10

$20

$30

$40

$50

$60

$70

$80

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Common Unsecured IPO Preferred Secured

Source: NAREIT *as of November 30, 2013

Capital Markets Overview Top Managing Broker Dealers

Total Sales ($M) Up Significantly From 2012

18

2013 2012 Change Managing Broker Dealer YTD Sales Market Share YTD Sales Market Share Sales Market Share American Realty Capital $6,547.3 35.2% $2,195.7 21.1% 198.2% 14.1% Cole Real Estate Investments $2,462.8 13.2% $1,089.3 9.7% 126.1% 3.5% Franklin Square Capital Partners $2,234.9 12.0% $1,483.0 15.2% 50.7% -3.2% Griffin Capital Corporation $1,900.3 10.2% $431.0 5.2% 340.9% 5.0% CNL Financial Group $1,017.9 5.5% $579.7 6.2% 75.6% -0.7% Dividend Capital $765.3 4.1% $563.0 5.3% 35.9% -1.2% NorthStar Realty Finance Corp. $534.1 2.9% $288.5 3.2% 85.1% -0.3% Hines Interest Limited Partnership $487.0 2.6% $339.5 4.3% 43.4% -1.7% WP Carey Inc. $438.9 2.4% $600.1 7.8% -26.9% -5.4% Carter/Validus Advisors $333.9 1.8% $106.7 1.3% 212.9% 0.5%

Source: Robert A. Stanger & Co., Inc.


Source: IREI, Kingsley Associates Tax-Exempt Real Estate Investment 2013 19

35.0

%

27.7

%

18.1

%

9.7%

6.2%

5.5%

2.43

%

0.47

%

31.3

%

22.3

%

17.1

%

10.2

%

7.1%

7.4%

3.24

%

1.50

%

29.8

%

25.0

%

17.5

%

10.2

%

6.8%

6.1%

3.51

%

1.10

%

27.8

%

24.8

%

17.5

%

10.3

%

8.1%

7.0%

3.25

%

1.22

%

25.6

%

27.0

%

17.8

%

9.5%

7.7%

6.8%

4.2%

1.4%

26.7

%

26.6

%

19.3

%

8.7%

7.9%

4.5%

5.3%

1.0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

U.S. Stocks Fixed Income Foreign Equities Real Estate VC / Private Equity Hedge Funds Other Cash

Perc

ent o

f Tot

al A

sset

s

2008 2009 2010 2011 2012 2013

Real Estate Allocations Giving Ground To Equities/Private Equity Historical Target Allocations


20 Source: Preqin

Total Dry Powder Re-Approaching $90 Billion Capital Available ($B) For Deployment

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

2006 2007 2008 2009 2010 2011 2012 2013

Dry

Pow

der (

$B)

Opportunistic Value Added Debt Distressed Core/Core-Plus


$818

$170

$386

$627

$676

$173

$285

$327

$568

$575

0 100 200 300 400 500 600 700 800 900

Qatar Investment Authority

Temasek Holdings (Singapore)

Government of Singapore Investment Corporation

Hong Kong Monetary Authority Investment Portfolio

Kuwait Investment Authority

SAFE investment Company (China)

China Investment Corporation

Abu Dhabi Investment Authority

SAMA Foreign Holdings (Saudi Arabia)

Government Pension Fund - Global (Norway)

Asia/Pacific Middle East Europe

21 Source: SWF Institute, HFF Research

Sovereign Wealth Funds Assets Under Management ($B)


Australia 30%

Canada 16%

Other 12%

United Arab Emirates

11%

Israel 8%

United Kingdom 5%

Bahrain 5%

Germany 4%

Mexico 4%

Switzerland 3%

Ireland 3%

Canada 35%

Other 21%

Germany 9%

Switzerland 7%

Israel 6%

United Kingdom 6%

South Korea 4%

France 4%

Singapore 4% Japan

4%

Kuwait 3%

Canada 23%

Singapore 14%

Other 14%

South Korea 10%

Israel 6%

Switzerland 6%

Kuwait 3%

Norway 5%

United Arab Emirates

5%

Malaysia 3%

China 12%

22

2007 - $44.6 Billion 2012 - $25.3 Billion 1H 2013 - $12.95 Billion

Source: Real Capital Analytics

Composition of Foreign Investment Investment In US CRE by Country of Origin

Capital Markets Overview US Destinations for Foreign Investments

2013 Cross-Border Flows

HFF Office


$10.1

$3.5

$3.1

$2.6

$2.5

$2.2

$2.1

$2.1

$1.4

$10.3

$3.3

$1.8

$1.5

$1.4

$1.3

$1.2

$1.1

$0.9

$0 $4 $8 $12

Canada

Singapore

China

Australia

Germany

Israel

Switzerland

Norway

South Korea

Manhattan

Los Angeles

Chicago

Houston

Boston

Dallas

Seattle

DC

Inland Empire

Origin of Capital ($B)

Top Market Destinations ($B)

DEBT OVERVIEW HFF CAPITAL MARKETS OVERVIEW

Capital Markets Overview Debt Originations Highly Correlated To Transaction Volumes

Quarterly Volumes ($B)

25

Source: Mortgage Bankers Association, Real Capital Analytics


$157

$219

$256

$351

$410

$510

$184

$83

$119

$186

$244

0%

1%

2%

3%

4%

5%

6%

$0

$100

$200

$300

$400

$500

$600

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Billi

ons Debt Origination Volume 10-Yr Treasury

4.29% 4.80% 4.63% 4.27% 2.78% 1.80%


1961-1969 4.73% 4.28%1970-1979 7.50% 7.49%1980-1989 10.59% 10.86%1990-1999 6.67% 6.51%2000-2009 4.46% 4.45%2010-2013 ytd 2.59% 2.67%

2003 – 2007 10Y T averaged 4.40%

26

Precedent Of Higher Volume In Higher Interest Rate Environment Total Debt Origination Volume ($B) vs. 10yr UST (%)

Source: Mortgage Bankers Association, Bloomberg

Capital Markets Overview Lender Composition

All Property Types

24%

23%

17%

17%

11%

7%

5%

5%

5%

3%

18%

26%

27%

30%

44%

12%

14%

20%

15%

10%

9%

6%

7%

7%

7%

16%

14%

12%

12%

12%

11%

11%

9%

11%

13%

3%

2%

1%

1%

1%

1H13

2012

2011

2010

2009

CMBS Financial Gov't Agency Insurance Int'l Bank Nat'l Bank Reg'l/Local Bank Pvt/Other


2008

2007

BANKS HFF CAPITAL MARKETS OVERVIEW

Capital Markets Overview Pre-Tax Operating Income

In Spit of Growing Assets, ROAA Has Suffered On Increased Regulation Costs

29

Quarter Avg Earn Assets Pre-Tax NOI ROAA

2009 Q1 $11,658,137,874,500 ($1,047,356,000) -0.04

2009 Q2 $11,455,873,767,000 ($8,461,163,000) -0.3

2009 Q3 $11,387,789,634,000 $2,523,440,000 0.09

2009 Q4 $11,300,677,258,500 ($595,090,000) -0.02

2010 Q1 $11,401,142,637,500 $24,977,736,000 0.88

2010 Q2 $11,448,216,983,000 $31,324,369,000 1.09

2010 Q3 $13,284,448,949,500 $21,749,173,670 0.65

2010 Q4 $13,339,663,447,000 $19,610,071,370 0.59

2011 Q1 $13,360,136,796,500 $28,973,912,610 0.87

2011 Q2 $13,492,055,384,500 $28,421,143,690 0.84

2011 Q3 $13,671,233,299,000 $32,653,246,620 0.96

2011 Q4 $13,843,087,598,500 $24,075,807,640 0.7

2012 Q1 $13,881,929,804,000 $32,650,091,370 0.94

2012 Q2 $13,970,782,607,000 $32,908,839,500 0.94

2012 Q3 $14,118,613,264,500 $35,568,255,960 1.01

2012 Q4 $14,268,695,788,500 $33,631,025,920 0.94

2013 Q1 $14,430,592,698,500 $39,015,432,030 1.08

2013 Q2 $14,382,552,194,000 $37,568,030,600 1.04

2013 Q3 $14,489,789,711,000 $35,534,066,140 0.98

Source: BankRegData

Capital Markets Overview FDIC Balance Sheet ($T)

CRE Loan Balances Growing Once Again

3Q 2013 3Q 2012 YoY D YoY % Construction $206,145 $210,435 -$4,289 -2.04% Multi-Housing $252,342 $227,769 $24,573 10.79% Commercial $1,092,487 $1,058,001 $34,486 3.26% Total $1,550,975 $1,496,205 $54,770 3.66%

$-

$0.2

$0.4

$0.6

$0.8

$1.0

$1.2

$1.4

$1.6

$1.8

$2.0

13Q312Q311Q310Q309Q308Q307Q306Q305Q304Q303Q302Q301Q300Q399Q398Q397Q396Q395Q394Q393Q392Q391Q390Q389Q388Q387Q386Q385Q384Q3

Multi-Housing Commercial Total Total (+Construction)

30 Source: FDIC

INSURANCE COMPANIES HFF CAPITAL MARKETS OVERVIEW


$14.1

$6.3

$9.4 $10.7

$13.6

$21.4

$19.0

$20.7

$24.8 $22.3

$21.5

$26.9 $28.1

$32.7

$39.2

$43.2 $44.1

$42.7

$26.7

$16.4

$30.7

$45.5 $45.6

$23.3

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

$50

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*

Billi

ons

Life Co Commitments 10-Yr Treasury

2003 – 2007 10Y T averaged 4.40%

2.78% 1.80% Source: ACLI * YTD September 2013 32


1961-1969 4.73% 4.28%1970-1979 7.50% 7.49%1980-1989 10.59% 10.86%1990-1999 6.67% 6.51%2000-2009 4.46% 4.45%2010-2013 ytd 2.59% 2.67%

4.29% 4.63% 4.27% 4.80%

Annual Averages

Life Insurers Are Lending More Than Ever Life Company Commitments ($B)

1998 – 2012 10Y T averaged 4.22%

Capital Markets Overview Life Insurers Focusing On Large Loans

ACLI New Commitments By Loan Size (%)

33

67.6%

0

10

20

30

40

50

60

70

80

90

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Less Than $2M $2-5M $5-15M $15-25M $25M and over

Source: ACLI * YTD September 2013

CMBS MARKET HFF CAPITAL MARKETS OVERVIEW

Capital Markets Overview Historical CMBS Issuance

Slow But Steady Recovery, Annual Volume ($B)

Source: Commercial Real Estate Direct, forecast based on commentary from various investment banks

$3.4 $7.6

$14.0 $17.2 $17.5 $15.8

$26.4

$36.8

$74.3

$56.6 $46.9

$67.2

$52.1

$77.9

$93.1

$169.2

$203.0

$230.2

$12.1 $2.7

$11.6

$32.7

$48.4

$28.0

$57.0

$0

$50

$100

$150

$200

$250

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 YTDSep12

YTDSep13

Long Term Credit Capital

9/11 and Corporate Credit

Squeeze

Mortgage Meltdown

S&L Collapse

2008 Capital Market Collapse

35

2009-2012 1500%

Increase

2013 Forecast $65 Billion

103% Increase

AGENCIES HFF CAPITAL MARKETS OVERVIEW

Capital Markets Overview Freddie/Fannie Origination Volume

Annual Origination Volume ($B)

37 Source: Fannie Mae, Freddie Mac * HFF Research estimates for YE2013 production volume

$7.9

$7.8

$15.

5

$12.

4

$13.

5 $22.

8

$22.

0 $36.

0

$21.

2

$25.

6 $34.

3

$60.

0

$35.

5

$19.

8

$16.

9

$24.

0 $33.

8

$29.

0

$2.3

$2.7

$6.6

$7.8

$7.1

$12.

3

$14.

3

$22.

6

$23.

8 $26.

2

$28.

8

$44.

7

$24.

3

$16.

6

$15.

0

$20.

3

$28.

8

$25.

8

$0

$20

$40

$60

$80

$100

$120

96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13*

Fannie Mae Freddie Mac

SUPPLY OF TRANSACTIONS HFF CAPITAL MARKETS OVERVIEW

Capital Markets Overview CRE Maturities Due To Peak In 2013

CRE Debt Maturities By Lender Type ($B)

39

$0

$50

$100

$150

$200

$250

$300

$350

$400

80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22

Billi

ons

CMBS Banks Life Cos Other

$377.4

CMBS Peak Maturities $137 Billion In 2017

Source: Trepp


40

Delinquency (%) By Loan Status

Delinquency (%) by Property Type

$53.6 $53.2 $53.4 $50.4 $50.9 $48.0 $47.1

$550.9 $557.9 $563.0 $566.0 $570.6 $572.5 $574.2

$-

$100

$200

$300

$400

$500

$600

$700

Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13

Delinquent Current

11.7% 11.6%

9.9% 8.7%

7.0%

Industrial Multi-Housing Office Lodging Retail0%

2%

4%

6%

8%

10%

12%

14%

0.3% 0.2%

1.9%

0.7%

1.9%

3.7%

30 Days 60 Days 90+ Days Non-PerfMaturity

Foreclosure REO0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

Source: Trepp

CMBS Loan Performance Cover $116 Billion Maturing In 2014 & 2015


0%

10%

20%

30%

40%

50%

60%

$0

$10

$20

$30

$40

$50

$60

2010 2011 2012 2013

Billi

ons

Loan Balance Realized Losses Loss Severity

41

Liquidations: $56.4 Billion Losses: $24.3 Billion Loss Factor: 43.1%

Source: Trepp

Cumulative CMBS Liquidations & Losses Loss Factor Steady, But May Rise As Largest Loans Are Settled

DEBUNKING MYTHS HFF CAPITAL MARKETS OVERVIEW


43

Money Market Yields

2-Year US Treasuries

2-Year CDs

S&P 500 Index Dividend Yield

Savers Getting Squeezed As Yields Remain Suppressed Yields Available To Investors (& Retirees) In Short Duration Investments

Source: Bloomberg

0%

1%

2%

3%

4%

5%

6%

Jun-07 Sep-07 Dec-07Mar-08 Jun-08 Sep-08 Dec-08Mar-09 Jun-09 Sep-09 Dec-09Mar-10 Jun-10 Sep-10 Dec-10Mar-11 Jun-11 Sep-11 Dec-11Mar-12 Jun-12 Sep-12 Dec-12Mar-13 Jun-13 Sep-13 Dec-13

2 Yr Treasury Money Market S&P 500 Dividend Yield 2 Yr CD

Capital Markets Overview Completions Remain Relatively Low

Completions As % Of Existing Inventory Rebounding But Lower Than Historical Peaks

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Multi-Housing Office Industrial Retail

44 Source: REIS

Capital Markets Overview US Treasury Yields Remain Within Multi-Decade Downtrend

10yr UST Yield (%)

45

Capital Markets Overview US Treasury Yields Are Well Below the 50yr Average

In Spite Of Recent Gains, Yields Still Very Attractive

0%

2%

4%

6%

8%

10%

12%

14%

16%

62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13

10yr UST 50yr Average

46

Long Term Credit

Capital

9/11 and Corporate

Credit Squeeze

S&L Collapse

Mortgage Meltdown

Tax Reform Act – Syndication Blow-up

Does Anyone Remember Prime at 21%?

50 Year Average = 6.55% (1961 – 2013 ytd)

2008 Capital Market Collapse

One Year Ago 12/31/2012 1.76%

$300B Treas. Buyback 3/18/09 2.51% (announced)

Current Rate 12/31/13 3.02%

Average 2013 2.34%

Source: United States Treasury

Capital Markets Overview Cap Rate Sensitivity Analysis NOI Growth vs. Cap Rate Movement

47

25.00%

20.00%

16.67%14.29%

12.50%11.11%

10.00% 9.09%8.33%

0%

4%

8%

12%

16%

20%

24%

28%

4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0%

NO

I G

row

th R

equi

red

Base Cap Rate

NOI Growth to Maintain Value(100 bps Movement in Cap)

Source: HFF

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