Real Estate

Investors Face Ups And Downs Korpacz Real Estate Investor Survey® Second Quarter 2008

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011679 Dear Reader:

During my conversations with investors this quarter, the slow recovery in the capital sector and the pric­ ing gap between buyers and sellers took center stage. Opinions on the movement of overall cap rates, the fragile state of the U.S. economy, and the comforting notion that industry fundamentals are still quite healthy also made their way into each discussion.

In our lead story, "Investors Face Ups and Downs," read about the shifts occurring in the industry as it continues to work through the economic slowdown, the credit disruption, and the price correction. More insight into the movement of overall cap rates can be found in our Overall Cap Rate Analysis sec­ tion, which returns after debuting last quarter.

Also returning in this issue is the National Medical Office Buildings Market, which debuted as a special report in the fourth quarter of 2007. Going forward, we will report on this market on a quarterly basis. Read it to find out why an increasing number of investors are targeting this asset class.

Other informative articles include our semiannual Domestic Self-Storage Market, Bob White's Real Estate Capital Markets column, and our quarterly Technology News & Trends and Economic News columns. In addition, we have included charts illustrating the current U.S. Real Estate Cycle Positions for the four major property types. Take a look and see where the top U.S. markets are positioned.

I hope that you enjoy reading this issue. As always, I invite your comments, feedback, and suggestions for future topics and markets to cover.

Sincerely,

Susan M. Smith Editor-in-Chief

CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011680 In This Issue

National Highlights: Investors Face Ups and Suburban Maryland 35

Downs 2 Washington, DC 36

Overall Cap Rate Analysis 3 National Flex/R&D Market 37

Technology News & Trends: Integrating GIS and National Warehouse Market 38 Real Estate 5 National Apartment Market 39 Economic News: Learning From Politics 6 National Net Lease Market 40 Real Estate Capital Markets: Plenty of Equity National Development Land Market 41 Waits on the Sidelines 7

Investor Survey Responses Per Market 42 Domestic Self-Storage Market: Pricing and

Performance Trends- 1st Half 2008 9 Investment and Property Characteristics Office Markets 70 NEW •. National Medical Office Building Market 12 National Markets 71 National Retail Markets Regional Mall 14 Yield Comparisons 72

Power Center 15 Dividend Comparisons 72 Strip Shopping Center 16 Institutional-Grade vs. Noninstitutional- Office Markets Grade Property Rates 73

National CBD 17 Income Capitalized in Direct Capitalization 74 National Suburban 18 Lodging Income Capitalized in Direct Atlanta 19 Capitalization 74 Boston 20 Forecast Periods and Growth Rates 75 Charlotte 21

Chicago 22 Definitions 76 Dallas 23 Industry News 78 Denver 24 U.S. Real Estate Cycle Positions 79 Houston 25

Los Angeles 26 Manhattan 27

Northern Virginia 28 Pacific Northwest 29

Philadelphia 30 Phoenix 31

San Diego 32 San Francisco 33 Southeast Florida 34

CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011681 National Highlights INVESTORS FACE UPS AND DOWNS Korpacz AFTER MONTHS OF OPERATING IN AN ENVIRONMENT WHERE DEBT WAS PRACTICAllY FREE FlOWING AND FEW INVESTORS PAID ClOSE ATTENTION TO UNDERlYING FUNDAMENTAlS,

THE FIRST HAlF OF 2008 HAS BEEN A CHAllENGING TRANSITIONAl PERIOD FOR MANY Real Estate BUYERS AND SEllERS IN THE U.S. COMMERCIAl REAl ESTATE INDUSTRY. "The dynamics of the market have dramatically changed since the onset of the credit crisis," notes an investor. Debt availability is down. Economic uncertainty is up. And, tenant demand Investor has slipped for most types of space. "We are definitely in a downturn, and it has buy­ ers and sellers at odds over pricing," remarks a participant. Due to the bid-ask pricing gap, sales activity has dropped considerably on a year­ Survey® over-year basis in the four major property sectors- office, industrial, apartments, and retail. In April 2008, year-over-year sales of significant properties were down 80.0% in the office sector, 67.0% in the industrial sector, 81.0% in the apartment sector, and 79.0% in the retail sector, according to Real Capital Analytics, Inc. "Buyers and sell­ ers are having a hard time reconciling today's economic uncertainty and capital con­ straints with yesterday's prosperous expansion and high use of leverage," comments a participant. Another reason for the decline in sales activity is that tighter lending restrictions have reduced the number of potential buyers. "Leveraged buyers, who dominated the invest­ ment arena for many months, have vanished," remarks a participant, who noted that the number of bidders on a recent offering was well below the level witnessed in 2006 and the start of 2007. With fewer bidders vying for available assets, investors are find­ ing it tricky to pinpoint exactly where price levels and overall cap rates now stand. "We need more data points in order to figure out the new pricing levels," shares a participant. To date, the consensus among investors is that price declines and overall cap rate expansions have not been uniform across all property types and locations. For the most part, strong investment interest is keeping price levels elevated for high-quality, stable assets in top-performing markets despite a drop in transaction activity. "A flight to quality is very apparent," affirms a participant. On the other hand, secondary and tertiary markets have seen the greatest increases in overall cap rates due to a sharp decline in investor interest. "Assets in secondary markets are finally being priced cor­ rectly," insists another. Even though continued investor interest is lessening price declines in larger, more dominant office markets, it is only a matter of time before downward shifts in investors' key cash flow assumptions negatively impact the pricing in such areas. "Fundamentals have held up relatively well, but we are starting to see rental growth decline and vacancy rates inch up, which ultimately reduces value," states a partici­ pant. This quarter, the initial-year market rent change rate declined in 14 of the 18 individual office markets in our Survey. This downward trend materialized in the fourth quarter of 2007, at which time just seven office markets reported decreases, and picked up steam in the first quarter of 2008. As the industry continues to work through the economic slowdown, the credit disruption, and the ensuing price correction, investors will continue to raise funds and look for opportunities. After all, many of them find solace in knowing that what goes up must come down and that another upturn lies ahead. 4

CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011682 Overall Cap Rate Analysis

ON A YEAR-OVER-YEAR COMPARATIVE increase in their average OAR during LOOKING AHEAD BASIS, THE AVERAGE OVERAll CAPITAli­ that time. The Phoenix office market Even though an overwhelming majority ZATION RATE (OAR) FOR AN INCREASING reported the highest year-over-year in­ of Survey participants expect overall NUMBER OF SURVEYED MARKETS SHOWED crease, moving up 35 basis points. This cap rates to increase over the next six AN UPTICK BETWEEN THE SECOND QUAR­ market's economy continues to strug­ months, the amount of the expected TER OF 2007 AND THE SECOND QUARTER gle due to its exposure to the national increase declined in 11 markets, in­ OF 2008 (SEE EXHIBIT 1). Specifically, nine housing crisis and the credit crunch. creased in eight markets, and remained of our surveyed markets reported an Exhibi! 2

Exhibit 1 OVERAll CAPITALIZATION RATE FORECAST Second Quarter 2008 OVERALL CAPITALIZATION RATES CHANGE OVER NEXT 6 MONTHS* Second Quarter 2008 CIJRRENT OAR illASIS POINT51 Annual MARKFr AVERAGE RANG!' AVERAGE National Markets Average Change* National Regional Mall 6.71°/,, 50- 100 72.0 Apartment 5.75% .. s National Power Center 7.17% 0 ·- 75 40.0 Warehouse 6.56% -2 National Strip Shopping Center 7.32°,\, 25 - 75 38.0 CBD Office 6.68% - 15 National CBD Office 6.68% 0 ·- 75 33.3 Regional Mall 6.71% -17 Power Center 7.17% + 11 National Suburban Office 7.28% 0 ·- 100 42.8 Surburban Office 7.28% -1 Atlanta Office 7.25% 0-50 28.1

Strip Shopping Center 7.32% -· 3 Boston Office 7.43% (25)- 25 9.4

Net Lease 7.63% 0 Charlotte Office 7.56% 0-30 10.0 Flex/R&D 7.68% + 8 Chicago Office 6.96% 0-50 33.3

Office Markets Dallas Office 7.75% 25-50 43.8 Manhattan 5.67% -t-] Denver Office 6.52% 0- 50 25.0 San Diego 6.06% -19 Houston Office 7.27% 0 -· 200 79.2 San Francisco 6.14% -25 Los Angeles Office 6.20% 0 -·50 20.8 Los Angeles 6.20% - 12 Manhattan Office 5.67% 0--100 33.3 Washington, DC 6.23% +2 Denver 6.52% -21 Northern Virginia Office 6.94% 50--50 50.0

Phoenix 6.90% + 35 Pacific Northwest Office 7.31% 0 -·50 18.8 Northern Virginia 6.94% +13 Philadelphia Office 8.25% - a - a Chicago 6.96% J Phoenix Office 6.90% 0-25 12.5 Suburban Maryland 7.02% + 24 San Diego Office 6.06% - a - a Atlanta 7.25% + 8 San Francisco Office 6.14% 0-100 25.0 Houston 7.27% -61 Southeast Florida Office 8.00% 25-50 37.5 Pacific Northwest 7.31% - 121 Boston 7.43% +4 Suburban Maryland Office 7.02% 25-50 41.7

Charlotte 7.56% Washington, DC Office 6.23% 0 ·-50 25.0

Dallas 7.75% - 3B National Flex/R&D Market 7.68% 0 ·- 75 40.7

Southeast Florida 8.00% --1 National Warehouse Market 6.56% 0 ·- 75 23.7 Philadelphia 8.25% + ·:o National Apartment Market 5.75% (50)·-· 100 31.4 KDI** 6.95% -· 9 Simple Average 6.95% 7-72 34.6

*Basis points *All changes are positive unless enclosed in parentheses Korpacz Dividend Indicator (see Definitions) (a) An insufficient number of responses were reported for this market. Source: Korpacz Real Estate Investor Survel' Source: Korpacz Real Estate Investor Survel'

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011683 unchanged in five of them (see Exhibit the forecasted increases each ticked up average for the suburbs. A main reason 2). With the exception of the Boston nearly eight basis points. for this difference is that higher barriers office market, the declines in the ex­ to entry and a lack of available land for pected increases were minimal. In the CBD vs. SuBURBAN OARs new development tend to keep the Boston office market, the expected in­ A breakout of overall cap rates, discount supply-demand equation a bit more crease dropped from 25 basis points to rates, and residual cap rates for the CBD balanced in a market's CBD. As a just under ten basis points. Given the and suburban submarkets of each indi­ result, they typically achieve higher lull in this market's leasing activity and vidual office market in our Survey is rental rates. In addition, downtown the decline in its initial-year market rent shown in Exhibit 3. In reviewing the cores tend to provide better forms of change rate, the expected increase in OAR breakout, it appears that overall mass transportation and embody a 24- its average OAR may soon rise. cap rates remain lower for most CBD hour, live-work lifestyle that appeals to The two markets that reported the submarkets than for their suburban many individuals. As a result, CBD largest increases in expected OAR counterparts. In the second quarter of assets are generally perceived as pro­ growth for the next six months were 2008, the average OAR for the CBD viding less investment risk to the Washington, DC and Manhattan, where submarkets sat 48 basis points below the owner - less risk, lower cap rate. +

Exhibit 3 BREAKOUT OF KEY INDICATORS Second Quarter 2008

DISCOuNT RATE OHR~ll CAPITAliZATION RI\Tt RESIDUAl CAP RATE CBD Of: RANG[ AVtRAGt RANGE AVtRAG[ RANGE AVEIIAGE Atlanta !).00%- 1CU10% 8.38% 7.19% 7.63%

Boston ? JJ{Jf'l: -- 1 ! . OCl~tO 8.67% ').00% -- C!.7')(~~ 6.82% 7.73% Charlotte 7.00%- 10.00% 8.40% 7.30%

Chicago j'J}~Y'/G -- 10.00%) 7.98% ~LiO% -- 9.ClG% 6.57% b.S(}!~ - 9.00% 7.27% Dallas 8.41% b.OlYYr, - 9.00% 7.15% 6.:io"!:1 -- 9.25%) 7.59%

Denver 7.00% -- 9.00''!() 8.18% 5. ~(n-:, -- 7.00% 6.23% 6.50% - 7.90% 7.08% Houston 7.50%- 10.00% 8.46% S.OllYo -- 1O.OO''l, 7.11% 7.00% -· 1O.OllYo 8.04% Los Angeles 6.75% -- 11.00% 8.24% 3.ocn-:, -- 9.00% 5.86% 6.00% - 9J)0% 7.32%

Manhattan 7.72% .1.SC)l;,{,- 8.00% 5.67% S.7~%- 9.2S 1% 6.91% Pacific Northwest S.OO%- 11.00% 8.60% S.OW'l,- 1 I.OOt;,{, 7.15% 6.2 S%- '!.00% 7.44%

Philadelphia f\J.l.Jr~;,- 1.J.50% 9.00% ~.00%- 0.00% 7.38% 7.00%- 9 . .50 1% 8.38% Phoenix 7.88% S.OW'l,- 8.50% 6.SO%- '!.00% 7.52%

San Diego ~; .6{Jf'l: -- 1O.OCl~tO 8.17% b.O!TYO -- 7.00% 6.64% San Francisco 7.60% 5.83% 6.73%

Southeast Florida ? JJ{Jf'l: -- 1 ! . OCl~tO 8.75% G.OO% -- H.10% 7.34% 7.88%

Washington, DC 6.00% - 4.SlYY~, 7.51% ~j.OO% - 3.00% 6.23% 5.00% -- 9.00%) 6.85% DISCOUN'f RArE OV!'RAI.l CA?ITAlllATION IMH RESIDUAl. CAP RATE SUBUIHIS Of: I!ANGI' AVER~GE RANGE AVEIMG!' RANGE AVEIIAGE Atlanta HJJO% - 10.00% 8.64% 5.8llYo - 0.00% 7.11% 7.00% -· H.7S% 7.64%

Boston 6.00% -- 1·i.OO% 9.16% 8.00% 7.00% -- 10. ~O"t(, 8.34% Charlotte 7JJO%- 10.00% 8.50% 6.SllYo - 0.00% 7.65% 7.00% -· 9.00% 7.90%

Chicago 7.00%--11.00% 8.68% 5./0''l, -- 9.50% 7.51% 7.00% -- 10. ~0% 8.02%

Dallas f\ J.l.Jr~;, - 9. Q()l){, 8.44% 6.25%- 8.2~% 7.43% 6.7~%- 9.2S 1% 7.72%

Denver 7.75%- 1{100% 8.69% S.~on;;,- 7.50% 6.69% 6.SO%- B.90% 7.53%

Houston 8.40% ~.SO% - 1OJ.lW'l, 7.45% 7.2 ~%- 10.00% 8.23% Los Angeles !).71)%-,- 1 !.00% 8.68% :tOO%-- 'lOG% 6.15% b.00'};1 -- 9.00% 7.34%

Northern Virginia b JJ{Jf'l: -- 1 ! . OCl~tO 8.13% ').00% -- C!.ClO% 6.94% 7.61%

Pacific Northwest S.OO%- 11.SO% 8.63% ~t.OO% -- 1 1.00% 7.06% G.2 ~t·};l -- 9.00% 7.52% Philadelphia 9.46% 6.00% -- 11.GO% 8.50% fLOG% - 1G.OO% 8.90%

Phoenix 6.00% - 11.00% 8.75% ~j.SO% - 3.~)0% 7.02% 7.00% -- B.OO%) 7.63%

San Diego 6J}~Y'/G -- 10.00%) 8.19% ~LiO% --fLOG% 6.25% 6.98%

San Francisco 7JJO% - 9.SllYo 8.08% 4.SllYo - 8.25% 6.57% 5. ~0% -· H.SO% 7.01%

Southeast Florida 7.00%--11.00% 9.06% 5.20"l, -- 10.5llYo 8.04% 6.25%- 10.~0% 8.06% Suburban Maryland 6JJO% - 11.00% 8.23% S.OllYo - 0.00% 7.02% 6.00% -· 9.50% 7.70%

Source: Korpacz Real Estate Investor Survel'

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011684 Technology News & Trends

INTEGRATING GIS AND REAL ESTATE By Scott Metro, Partner Real Estate Systems and Process Assurance- PricewaterhouseCoopers LLP

GEOGRAPHIC INFORMATION SYSTEMS receive geocoding for free. While these fee-based systems allow in-house data­

(GIS) AND REAl ESTATE HAVE AlWAYS stand-alone websites are not integrated bases to be integrated into the GIS

HAD A SPECIAl BOND. The most obvi­ with property management databases, process and, therefore, eliminate the ous reason is that, unlike many other they allow users to ready data for plot­ need to manually process files. investment categories, such as stocks ting and other analyses. Plus, services Second, fee-based systems allow a or bonds, real estate investments have like batchgeocode.com return a file much wider set of data to be overlaid a tangible location on this earth. This formatted using KML, a format under­ onto proprietary data. While the three makes plotting their locations relative stood by several mapping services. major free mapping providers offer a to one another feasible and interesting. way for programmers to integrate maps However, there is more to the marriage MAPPING into applications, in-house systems of GIS and real estate than just plotting Armed with a geocoded property file, provide more power and flexibility in property locations. Understanding real estate professionals can use any of programming the maps into legacy what is going on around a property­ the free mapping services available on applications. Various mapping tools earthquake fault lines, crime rates, and the Internet. The most popular of these and solutions, both free and fee based, household income data- is also im­ is Coogle Maps. Using Coogle Maps are shown in Exhibit TNT-1. portant when analyzing real estate. and its "MyMaps" feature, the KML file Still, for real estate professionals While several sophisticated mapping produced by the free geocoding serv­ who simply want to view their proper­ programs are available for a fee, there ice can be directly uploaded and plot­ ties and related information on a map are also free services that, with a little ted on a map. Within seconds of and share the map with others, the work, allow property data to be uploading the file, the properties are many free services available on the "mashed up" with other data in order plotted on a map along with the other Internet will meet their needs quite to create helpful analyses. information contained in the file. Users well.+ are also able to import boundaries and

GEOCODING attach photos. They can also create The first step, and likely one of the free "mashup" most important requirements in map­ maps, which com­ MAPPING TOOLS AND SOLUTIONS ping properties and performing further bine and display FREE GIS analyses, is geocoding the loca­ data from different tions of the properties. Geocoding sources, such as Borch Ceocoding Tooi batchgenrode.com consists of converting typical addresses census data, earth­ Coogle Maps maps.google.com to geographic coordinates, such as lati­ quake fault lines, and city crime sta­ tude and longitude. All of the "heavy­ Microsoft Virtual Earth tT!ap.live.corn duty," fee-based GIS systems, such as tistics. Maplnfo and ESRI, market geocoding Yahoo Maps tT!aps.yahoo.cot:J

engines within their products and TRADE-OFFS FH BASED allow companies to integrate existing Using free geocod­ Map Info mapinfo.com databases in order to perform fast con­ ing and mapping versions of addresses to latitude and services instead of ESR.I esri.com longitude. industrial-strength, Maptitude caliper.com Other online services, such as fee-based systems map.live.com and batchgeocode.com, comes with a few Pushpin pushpin.C()!l1 allow users to upload addresses and trade-ofis. First,

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011685 Economic News

lEARNING FROM POLITICS By Steven P. Laposa, Ph.D., Director Global Strategic Real Estate Research Croup - PricewaterhouseCoopers LLP

ElECTION-YEAR POliTICS PROVIDE AN last year, increasing from $62.00 per Houston; 65,000 jobs in New York­

OPPORTUNITY TO COMPARE AND CON­ barrel in May 2007 to the mid-$130.00- Northern New Jersey; 58,000 jobs in

TRAST GOVERNMENT POliCIES AND per-barrel range in May 2008. At the Dallas-Forth Worth; 36,000 jobs in

CANDIDATE PROMISES TO ECONOMIC same time, gasoline prices have in­ Seattle; and 26,000 jobs in Atlanta. On

ACTIVITIES AND THE REAliTIES OF liVING creased over $1.00 per gallon. In addi­ the other hand, Detroit lost 45,000 jobs;

AND WORKING EACH DAY. Over time, tion, food and beverage prices have Los Angeles lost 35,000 jobs; Miami changes in elected and appointed gov­ increased at a 6.1% annual rate as of lost 21,000 jobs; and Tampa lost ernment officials, whether on a local, April 2008, with corn prices rising 17,000 during that time period. Do state, or national basis, eventually result 30.0% in 2008 alone, according to the job losses result in lower real estate in positive and negative consequences Bureau of Labor Statistics (BLS). returns? to the real estate industry. So, the pri­ mary question is simple: What do real LOCAL VS. LOCATION LESSONS LEARNED estate economics, real estate investing, The second similarity between real es­ There's plenty of sobering economic and politics have in common? tate and politics can be summed up by news in the media these days from the infamous phrase of former Speaker housing woes, inflation fears, and the

WINNERS AND LOSERS of the House Tip 0' Neill, who said, weak value of the dollar to poor employ­ First, both politics and real estate have " ... all politics is local." So, too, is real ment growth and rising energy costs. winners and losers. After all the Presi­ estate. The mantra location, location, Exhibit EN-1 highlights the forecasts dential campaigning and debating on location is well known in the industry. for select macroeconomic variables how to "fix" the economy this year, some­ National statistics and trends are that impact real estate. Based on fore­ one will win the Presidency, and some­ important, but they may not apply to casts by Moody's Economy.com, most one will lose. According to a Gallup all markets and all property types. Spe­ economic trends are expected to National Poll released on May 15, 2008, cific performances of regions, cities, rebound in 2009 and 2010. With so 83.0% of respondents indicated that submarkets, and trade areas are what many factors constantly changing and U.S. economic conditions are getting matter. shifting, it is important to test and worse, an increase from the mid-60.0% Although the decline of national improve investment strategies, models, range at the beginning of the year. payroll jobs is lessening, from about and management tools on a regular Resilience, recession, or recovery­ 80,000 jobs lost in February and March basis in order to maximize returns­ will the U.S. economy be a winner or a of 2008 to 20,000 jobs lost in April of whether it's an election year or not. 4- loser in 2009? The Bureau of Economic 2008, some cities Analysis reported consecutive 0.6% are experiencing SELECT MACROECONOMIC FORECASTS annualized growth rates for real gross year-over-year 200B to 2010 domestic product (GOP) in the fourth employment ECONOMlC INDICATOR 2008 2009 2010 quarter of 2007 and the advanced esti­ gains. On a non­ CDP 0l) 1.5 3.0 ':L6 mate for the first quarter of 2008. As of seasonally adjust­ Inflation% 3.6 2.1 I.G May 2008, Moody's Economy.com still ed basis from showed a modest 1.5% GOP forecast March 2007 to Employmf~nt %, 0.1 0.7 1.7

for 2008, down from its December March 2008, the 10-year treasury %, 4.08 5.]7 5 63 2007 forecast of 2.2% for 2008. BLS reported that Ret;1d s;1iE:s t~x. autos ~In 3.0 2A 2.7 Rising energy and food prices are employment in­ u.s 5 to turo € 145 l .39 1.3: center stage with businesses and house­ creased by about SuutTe: Moudy's Ecunumy.cum as of May 2008 holds. Oil prices have doubled in the 80,000 jobs in

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011686 Real Estate Capital Markets

PLENTY OF EQUITY WAITS ON THE SIDELINES By Robert M. White, }r., CRE, FRICS Founder & President, Real Capital Analytics, Inc.

PROPERTY SAlES HAVE SlOWED TO JUST It is hard to see all of this capital PRIVATE EQUITY FUNDS A FRACTION OF A YEAR AGO WHEN REIT because it is not moving. While some Private equity funds continue to attract PRIVATIZATIONS AND MUlTIBilliON-DOl­ of it is paralyzed by a lack of financ­ capital and are targeted to raise a total lAR DEAlS PROliFERATED THROUGHOUT ing, another large portion is paralyzed of $318.0 billion this year, 35.0% THE INDUSTRY. The difference in total by an abundance of uncertainty. Either more capital than in 2007 (see Exhibit sales between the first quarter of 2007 way, all of it is waiting for signs that CM-1 ). Experienced managers are rais­ and the first quarter of 2008 is astound­ the worst is over. One thing is for cer­ ing record sized funds. The Blackstone ing. In the United States, property sales tain: very little capital is leaving the Group just closed on $10.9 billion of of significant office, industrial, retail, commercial property sector. So far, no capital commitments for its Fund VI; apartment, and hotel assets totaled just better opportunities in stocks or other Morgan Stanley just completed raising $46.5 billion in the first quarter of asset classes have emerged to lure the $5.9 billion for its Special Situations 2008, down from over $135.0 billion capital away. In fact, equity capital Fund Ill; and CB Richard Ellis Investors a year ago. More startling is the fact flows into commercial property invest­ recently completed raising $2.1 billion that over 150 different buyers spent ments remain strong. Private equity for its Strategic Partners U.S. 5. New more than $100.0 million in just the funds are raising capital at a near­ funds are also successful in achieving first quarter of last year; this year less record pace, pension fund allocations their targets, especially those aimed at than 50 did so. What happened to the are up, and interest from foreign buy­ "pursuing opportunities that result other 1 00 investors? ers is high. And, the good news for from the capital-market dislocation," a The answer is that relatively few of REITs is that U.S. mutual fund flows common strategy of many new funds. them have disappeared. Instead, most have turned positive this year after suf­ commercial property investors remain fering a $5.6-billion outflow in 2007, PENSION FUNDS on the sidelines with plenty of capital according to AMG Data. This is also Pension funds are making new alloca­ and are silently plotting their return. good news for the private sector, as tions to real estate and increasing Despite the media attention that certain real estate mutual fund flows are a good existing allocations. In total, a survey high-profile investors, such as Macklowe gauge of the sentiment among individ­ of the leading pension plans in Fall Properties and Centro Properties Group, ual, high-net-worth property buyers. 2007 revealed a sharp rise in their are receiving due to financial troubles, [xhibit CM-l few other investors of income-produc­ EQUITY FUNDS* ing properties are having problems 2002 to 2008 (Forecast) nearly as severe. And, even though $350 delinquencies in the CMBS market are rising, they are still very low- less than $300

0.4% for the major property types. It is $250 also important to note that income­ $200 producing properties are faring quite "' .2"' well and that foreclosures of develop­ $150 05 ments and land deals are more com­ $100 mon. Notwithstanding a number of developers and lenders that have van­ $50

ished, the universe of potential proper­ $0 '02 '03 '04 '05 '06 '07 '08 ty buyers remains large with many of *TMgeted equity t·aised by high-yield t·eal estate funds them continuing to raise equity capital. SuutTe: Real Estate Alett; compiled by Real Capital Analytics, Inc.

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011687 expected capital flows to commercial property (see Exhibit CM-2). By all re­ U.S. ACQUISITIONS BY FOREIGN INVESTORS ports, capital continues to flow in, but 2003 to 2007

estimates of pension fund capital should $50 Offshore­ be revised downward. A phenomenon Other

called the "denominator effect" is cur­ $40 ::::! Pacific Rim

tailing some of the capital pension funds ::::Canada have planned for commercial real estate "''" ~ $30 Ill! MidEast (CRE). The denominator is the value of o:; Australia all the assets owned by pension funds, $20 United while the numerator is the allocation Kingdom

to CRE. If the value of the denominator $10 :::: Europe

declines, the allocation to CRE must :::=:Germany also decline. The denominator effect $0 03 '04 05 '06 07 was last an issue after the dot-com bust. SuutTe: Real Capital Analytics, Inc. Another reason that pension fund capital may fall short of original expec­ amount from 2006 (see Exhibit CM-3). acquired an office building in Wash­ tations is that an increasing share of CRE Moreover, foreign interest in U.S. prop­ ington, DC, while a major Korean allocations is going overseas. Though erties continues to grow, partially facil­ investor recently announced its inten­ still small, the amount of U.S. pension itated by the weak dollar. tion to buy a significant amount of U.S. fund capital allocated to international Foreign buyers of U.S. property are real estate. These examples reflect the property is material and growing quickly. far more diverse than even a few years trend, but the floodgates have yet to In fact, capital allocated to interna­ ago. Middle Eastern and Australian in­ open for foreign capital since many of tional property has been exploding vestment now outstrips that of Germany. these investors are also cautiously globally among all types of investors. And, a steady flow of new buyers from waiting on the sidelines. Last year, Real Capital Analytics, Inc. all over Europe continues. A new Irish recorded $340.0 billion of cross-bor­ investor just claimed a building in CoNClUSION der acquisitions in 70 countries, which Washington, DC, while a Spanish retail While the availability of debt is scarce, accounted for 32.0% of all property magnate recently purchased major equity capital for commercial property sales globally. The United States cap­ properties in Chicago and Boston. Plus, has not disappeared and may actually tured about $50.0 billion of this cross­ a growing number of Asian firms are be growing. While capital raising border capital in 2007, double the seeking U.S. real estate. Sumitomo trends are largely positive from most equity sources, many buyers will re­ Exhibit CM-2 main on the sidelines waiting for the PENSION FUNDS* economy and financial markets to im­ 2002 to 2008 (Forecast) prove before making further acquisi­ $80 tions.+ $70 $60 Real Capital Analytics, Inc. is an in­ ternational research and consulting $50 firm. It publishes monthly reports "'c $40 ,_; concerning capital flows, prices as $30 and yields, and the supply and $20 demand of offerings. For informa­ $10 tion on these, as well as other serv­ $0 ices and publications, visit their '02 '03 '04 '05 '06 '07 '08 website at www.rcanalytics.com *Expected capital flows to t·eal estate SuutTe: I REI/Kingsley; compiled by Real Capital Analytics, Inc. or contact them at 866-732-5328.

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011688 Domestic Self-Storage Market

PRICING AND PERFORMANCE TRENDS - 1ST HALF 2008 By Charles Ray Wilson, CRE, MAl Self Storage Data Services, Inc.

ALTHOUGH THE MAJORITY OF SELF-STOR­ a recession? A more telling question is: hi bit DSS-1, self-storage facilities in

AGE FACiliTIES CONTINUE TO PERFORM How much slower can the economy these five markets are doing quite well

WELL, THERE ARE A FEW SELF-STORAGE grow before self-storage owners start to with only one market, Sacramento,

MARKETS THAT ARE DEMONSTRATING see a significant, adverse impact on posting a 5.0% decline in collected rent

SIGNS OF WEAKNESS. Their weakness, operating performances? over the past year. however, has more to do with the errors In April 2008, Forbes magazine Within the past 12 months, the made by a few overly enthusiastic and identified five markets as "America's amount of rent collected per occupied misinformed developers and investors riskiest real estate markets" based on square foot in these "risky" markets in­ than with market fundamentals. high rates of home foreclosures, job creased an average of 4.0% after the The major question on the minds growth, and large inventories of homes cost of concessions were taken into of most self-storage participants is: for sale. Self Storage Data Services, Inc., consideration. Our analysis suggests What happens to the self-storage (SSDS) studied these markets from an that self-storage operations are stable, industry if the U.S. economy slips into operating standpoint. As shown in Ex- and may even be thriving, in markets like these despite the housing crisis and the U.S. economic slowdown. Table DSS-1 DOMESTIC SELF-STORAGE MARKET Nevertheless, the current level of First Half 2008 performance could be partially a func­ tion of the lag effect of the housing cri­ FIRST HAI.F 2003 SECOND HALF 2007 sis, which suggests that a further slow­ DISCOUNT RATE (IRR)a Rangf' down in the economy will, at some

Avt~rage point, negatively impact the perform­ Change (Basis Points) + 25 ance of these, as well as many other

OVERAll CAP RATE (OAR)a self-storage markets. But for now, the Range underlying fundamentals remain strong Average in the majority of self-storage markets Change (Basis Points) -t- 25 across America. RESIDUAL CAP RATE R;mge 7.75'1(, -- 10.2S%, INVESTMENT MARKET CONDITIONS Average Change (Basis Points! 0 Transaction volume is down significant­

MARKET RENT CHANGE RATE" ly. In addition, the distinction between Class-A facilities and "all others" is be­ A.veragt~ ].2~.i%, 3.2~j~ln coming more apparent. Investors are Change (Bosis Points) 0 recognizing the importance of properly EXPENSE CHANGE RATE" assessing risk based upon quality of Range J.OO%, --· s.oo(;{, 2.75~/n --· S.OO%, construction, local market conditions, Average 3.2St~{, 3.7.Sl>(, and location attributes. As a result, Change (Basis Points) -· SO investment demand is strong for stabi­ AVERAGE MARKETING TIME' Range 1 .'iO ... ].00 1.'j0 .. 2.'j0 lized Class-A facilities, but only a lim­ Average 2 00 1.50 ited number of facilities are available Change C-};,) + 33.33 for purchase. However, brokers report a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c In months a record number of listings of Class-B Source: Self Storage Data Services, Inc. facilities, most of which they feel are

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011689 fxhibit OSS-l forecasting their facility's future perform­ AMERICA'S RISKIEST REAl ESTATE MARKETS"' ance. While many of these owners Trends in Rent Collected per Occupied Square Foot blame oversupply issues for the poor MSA 1Q07 1Q03 ·;~Change performance of their investments, over­

Detroit $0.58 $0.66 + 14.0%, supply is not the problem in most cases. Rather, the problems stem from poor Denver $0.74 $0.82 + 11.0t>c, investment decisions. The question now Cleveiand $0.')8 $0.63 + 9.0%, is when will these sellers be motivated Son Diego $1.09 $1.08 - l.O~b enough to reduce their asking prices to

SacratT!t:nto $0.85 $0.81 -l).Qty, actual market value?

Average $0.77 $0.30 + 4"0~h OPERATING PERFORMANCE *As t·anked by Forhr=s, Apt·i I 2008 SuutTe: Self Stmage Data Set·vices, Inc. The self-storage industry has displayed tremendous resilience over the past not priced correctly in order to sell. rates for Class-B facilities are shown in several quarters, posting positive rev­ Fortunately, the narrow spread be­ Table DSS-2. enue growth in most individual mar­ tween anticipated development yields There are two types of sellers of kets through a period of weakening and current overall cap rates, together Class-B facilities. First are the owners economic conditions and a prolonged with limited capital for construction, who are hoping to achieve an idealistic housing market downturn. Although will help to hold the lid on new supply. price based upon unrealistic overall performances vary by market, supply cap rates and revenue projections. and demand remain generally bal­ Class-A Facilities They are not highly motivated. Second anced throughout the industry. There is strong demand for Class-A are the owners who are highly moti­ Owners pushed up asking rental facilities by the larger, sophisticated in­ vated to sell because they are facing rates an average of 5.0% over the past vestors, such as REITs and large private maturing loans and are not meeting 12 months and the median physical oc­ operators. However, such properties investors' expectations. cupancy remains at 90.0%. After con­ have not been freely available in the The first group is the larger group. sidering the cost of concessions, the marketplace. Still, several investors with These sellers will probably not discount amount of rent collected per occupied an abundance of capital are well aware their asking prices because their facili­ square foot- while down approximately of the strength of this sector's funda­ ties continue to perform well despite 1.0% in the first quarter of 2008 com­ mentals and are ready, able, and set to the slowing economy. These sellers do pared to the same period last year - was move when opportunities arise. The fact not have to sell. generally flat over the past four quarters. that overall cap rates have not been The second, smaller group of sell­ increasing as they have for most other ers includes owners who were over­ SELF-STORAGE PERFORMANCE INDEX"' property types demonstrates continued zealous in their investment process and The Self-Storage Performance Index confidence in this sector on behalf of used overly optimistic projections in (SSPI)''1 for the quarter ending March investors. Overall cap rates for Class-A

facilities are shown in Table DSS-2. rable DSS-2 OVERALL CAPITALIZATION RATES BY ClASSIFICATION Class-B Facilities First Half 2008 There is demand for Class-B facili­ ClASS-A SELF-STORAGE FACILITIES ties from investors who have cash. But, MINIMUM MAXIMUM AVERAGE while more Class-B properties are 6.50% 7.50% 7.20% available, fewer transactions are clos­ ClASS-BAND CLASS-C SELF-STORAGE FACILITIES ing. Many, and perhaps most, of the MINIMUM MAXIMUM AVERAGE investors looking to acquire Class-B 7.75% >10.00% 8.75% to 9.00% facilities are waiting for sellers to dis­ SuutTe: Self Stmage Data Set·vices, Inc. count their asking prices. Overall cap

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011690 The current investment market is in­ <:hart DSS-1 SELF-STORAGE PERFORMANCE INDEX (SSPI)'" creasingly bifurcated between Class-A 2Q05 to 1 Q08 facilities and "all others." The limited number of Class-A facilities that come 115.------~ to market get good exposure and tend to sell quickly. For non-Class-A facili­ 109.5 ties, marketing times may be prolonged, 11 0 ·------;0''<_------/A." /"',,// \ and price discounting may not be as "< / '-....,_ I \ widespread as anticipated since the "-' ~- ,_ I \ "1;:) 1 05 .. ······················f··················································-V----···································-'"'-· majority of Class-B facilities continue c 1 105.0 to be profitable. I At the same time, the gap is widen­ 100·····::::.-.-.-.-.-.-.-f'·-················································································································ ing between the well-capitalized, sophis­ ticated investors and the less-informed, under-capitalized investors. This gap begins with access to information and talent and is ultimately reflected in the Base: 4th Quarter 2003 = 100 Source: Self Storage Data Services, Inc. difference in the long-term investment yields achieved by each group. 31, 2008 now stands at 1 05.0, down flat, physical occupancy only dropped 5.0% from the prior quarter's restated 0.3% in the first half of 2008; at which Note: The Self Storage Performance index, but up nearly one-half of one time median physical occupancy Index' (SSP!) and other products refer­ percent (0.38%) from the same quarter nationwide was 89.7%. enced herein are either copyrighted by a year earlier (see Chart DSS-1 ). or trademarks of Self Storage Data Rent Per Occupied Square Foot Services, Inc. (SSDS) and are reprinted KEY INDICATORS Rent per occupied square foot is down herein with SSDS's permission. --'!' As shown in Table DSS-1, both the 1.2% in the first quarter of 2008 com­ average discount rate and the average pared to the same quarter last year. Charles R. Wilson & Associates, Inc., founded by Charles Ray overall cap rate increased 25 basis Wilson, MAl, CRE, is now part of points in the self-storage industry dur­ Concessions Integra Realty Resources, the ing the first half of 2008. Today, approximately 60.0% of all largest national commercial real So long as the economy does not facilities in the nation's largest 50 mar­ estate valuation and consulting continue to deteriorate, a major kets offer some type of concession, an firm in the United States. Integra upward movement in overall cap rates increase of approximately 1.0% com­ Realty Resources' metro Los is not anticipated. pared to the same period a year ago. Angeles office continues to spe­ The number of facilities offering con­ cialize in self-storage valuation PERFORMANCE AT A GlANCE cessions has been trending upward nationwide. Asking Rental Rates since the third quarter of 2006. As a result of having pushed asking In 1992, Charles Ray Wilson found­ rental rates 8.0% in the fourth quarter CoNClUSION ed Self Storage Data Services, Inc., of 2007, owners were unable to in­ The self-storage industry's fundamen­ an independent research firm that maintains the nation's largest data­ crease rates again in the first quarter of tals remain strong from an operating base of self-storage operating sta­ 2008. As a result, asking rental rates standpoint in most areas of the coun­ tistics. Mr. Wilson is a recognized remained flat in the first quarter of try. Generally, additions to new supply leader in providing independent 2008 on a quarterly and annual basis. are in check, and the effects of the research on the self-storage indus­ slowing economy and the soft housing try. For more information about Physical Unit Occupancy market have not adversely affected the SSDS please visit their website at Since owners held asking rental rates industry- at least for now. www.ssdata.net.

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011691 National Medical Office Buildings Market

THE WINNING COMBINATION OF HIGH class as a core investment by both relocating can sometimes cause a loss

RENTS, LONG-TERM LEASES, AND SOliD individual and institutional investors. in patients, many physicians will move

TENANT RETENTION PERCENTAGES MAKE On the supply side, several factors to an updated facility in close proximi­

OWNING MEDICAL OFFICE SPACE VERY are contributing to the rise in investment ty to current sites.

ATTRACTIVE TO INVESTORS. The allure of demand in the MOB sector. First, hos­ Although the dollar volume of MOB ownership is particularly strong during pital expansions are exorbitant, costing sales rose steadily from midyear 2005 times of economic distress when alter­ an average of $600.00 per square foot to midyear 2007, the pace has backed native investments may not be as appeal­ compared to the construction cost of off slightly since midyear 2007. Never­ ing. "We expect pricing for medical about $250.00 per square foot for theless, the market is still considered office buildings (MOBs) to hold up bet­ MOBs. Second, many medical proce­ active. In the first quarter of 2008, sales ter than most other commercial real dures are being pushed from hospitals involving MOBs totaled $970.0 mil­ estate sectors," notes a participant. The to physicians' offices, outpatient clin­ lion, down from the most recent peak need for health care is constant. As the ics, and surgery centers in an effort to of $1.6 billion in the first quarter of population ages, both longevity and the control expenses. Third, the growth in 2007, according to Real Capital Analyt­ amount of preventative procedures medical technology is forcing physi­ ics, Inc. The Southwest and West regions increase. These trends have led to an cians to remain competitive by upgrad­ of the country posted the highest MOB increase in investment demand for ing and enhancing spaces when exist­ sales volumes over the past 12 months, MOBs and an acceptance of this asset ing facilities become obsolete. Since capturing almost 54.0% of the total. During that time, Dallas ($370.0 mil­ Table M0-1 lion), San Diego ($350.0 million), and NATIONAl MEDICAL OFFICE BUilDINGS MARKET Seattle ($272.0 million) reported the Second Quarter 2008 highest MOB sales volumes.

CURRENT QUARTER lAST QUARTfR YE.

Changf~ (Basis Points) erties (NHP) is purchasing 15 properties

RESIDUAL CAP RATE from Pacific Medical Buildings between Range 6.S0'-};,- 8.75'-'J~~ 2008 and 2010. By the end of the deal­ Aver;1ge 7.71 ~~(! ings, NHP will spend $915.0 million Change (Basis Points) and will also own exclusive rights to MARKET RENT CHANGE RATE" acquire up to an additional $1.0 billion Range 0.00°;() -- iJ.OO~;() of Pacific's MOBs over the next seven Avf~rage 2.46%. Ch;mge (Bas's Points) years under specific terms. In another

EXPENSE CHANGE RATE" portfolio sale, HRPT Properties Trust Range 2. 00~/(J ·- 4 . 00~1(1 plans to sell 48 MOBs to Senior Housing Average 2.96% Properties Trust, a former HRPT subsid­ Change ::Bas~s Points) iary that spun off in 1999, for $565.0 AVERAGE MARKETING TIME' million. Finally, Jones Lang LaSalle will Range 1.50- 6.00 be marketing Tenet Health care Corpo­ Average 4. 7 5 ration's 34-asset, 2.4-million-square­ Change ( 0;~;)

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months foot MOB portfolio for sale. ~

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011692 ~ 0 2 "'!"j """"~ t'!'j 2 ...., NATIONAL MEDICAl OFFICE BUILDINGS MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSlJMPTIONS RrsmvE TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQlJARt ~ Rf:NT f:XPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j REAL ESTATE ADVISOR + Forocast Pof'iod: 1 u >e>rs 2 2.0% 7.00°t;) 1.0% B.O(Y'!o 6 ..~)0°/o 6 BO.(Y'!o 3.0% $0.10 ...., Uses mJirdy DCF. analysis; in direct cap, car:•itctlize~ :\JOI before tenant 1.0% tn :{ 1)6;~, tn tn to to tn to t(J to to irnprovt::nK:nts, !eas!ng UJI11r0.issions, J.nd Cd.pi1a! f2J::.olacenK:nt reserv2; does 4.0~';, fUll)% 2.0% 9.on(;;,l 8.on;~;,~ 12 90,(1(Y,l S.O% $0.20 9 ~ i1C•1 USC! r2n1 spik2S. 10e t'!'j PRIVATE INVESTOR + forecast Perind: 5 lo 7 yearr-: 7 2S% BJJU~·;) (;J.'/}·;, $().2() IJ1 rv1J.in!v u~es DCF in direct c;~p, capitd!izes r">JOI before Tis, leJ.sing 1JY~;,, to 1.5°t;, TO TO 3 B(1.U~·;) 5.0';.\~ to ...., comm;ssiur.:;., and ;eplacernen1 re:;.erve . 8.0l)~/,, 1D.S0'1;) 7.90% $0.2S t'!'j ~ C;:l DEVHOPER/INVESTOR + Forocas! Poriod: 5 vears !Jp ·:0.00% 5.0% ivbin!y uses DCF J.nJ.Iysis; in direc1 cJp, CJpitJI!~es !~01 after capitJ! -< 3.0% 3.l)~/,, 8.UO% 3.0°t;, to TO 6 75.0% tn Sil.2il 6 repi:Kement reserve but before Tis 2nd leJ.sing commissiur.:;.; expects c;~p ·:s.OO% 11.0(l% 7.0% ~ r;~1es to hold steady ave; the next six rnnr.ths. ~ r !Uil + forecast Perim!: 5 to 1 0 years 7.2 s~Y() 1.~.% 9.2S 0/o 6 ..~0% 80.0% :;.nu/;: ~n.2c, Use~ b(•th [)(]' :lna.lysis J.nd drrect ca.p;tJ.irzatinn; in dirl::'ct cap, CJ.)Jitalizf'!'J :{ 1)6;~, to tn to tn to TO TO :\:01 before Tis, ieasrng cnmmissrnns_ a.nd cap;t:li repi:lcement reseve; h• Ul% 6 6 ~ .t) 1.0% 8.00% 2.0% 10.SO% 8.00°/o B!:.(Y'!o .1)6;~, ~0.!:0 IJ1 expl::'cts cap rates tQ ••lQve up 2S to .~)n basrs pnrnts (1Vd the next ~ix m(•nths

r C;:l PI!IVAH IlEAl ESTATE Fll!lvl + fnrecasl Period: 1 to 2 years t'!'j Dot::s Does 8.00% Uses ail apprn2ches tn vJ.iue,: does r.nt have a prefe;er.ce with respect 1n 0.0% 2.0% no1 not tn .\ 80.0% L\ 1he incnme c;~nitJ.i;zed in direct C2DitJ.iizatinn: expecb c2p r21e:;, 1n incre;~se ~ use use 10.00% buver:;.. ~ ~ S(lurcfo P~t.Sl•I1JI SLU'VC';' C(ll1cluc.i2d by P::u::wJ.iC'th(luSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 0...... w ...... 0"1 w\C National Regional Mall Market

A DIFFICUlT U.S. ECONOMIC AND CON­ lowest increase in over 20 years. now looking to lease additional space,

SUMER ENVIRONMENT IS EXPECTED TO Retailers that posted some of the owners of recently completed regional

CONTINUE TO NEGATIVELY IMPACT THE largest year-over-year declines in retail malls could struggle to achieve stabi­

PERFORMANCE OF THE NATIONAL RE­ sales in January 2008 were Dillard's lized occupancy rates. According to Co­

GIONAL MALL MARKET IN THE COMING (-12.0%), Kohl's (-8.3%), Limited Brands Star Realty Information, shopping cen­

MONTHS. "As consumers spend less (-8.0%), American Eagle Outfitters ters delivered in 2005 had an average money on retail goods, landlords will (-7.0%), and Macy's (-7.1%). Unfortu­ vacancy rate of 9.0% in the first quar­ have a harder time pushing up rental nately, a decline in consumer spending ter of 2008. Vacancy, however, escalates rates and collecting percentage rent has prompted many typical regional mall as the delivery date progresses, increas­ from tenants," comments a participant. stores, such as Sharper Image, Foot ing to 13.0% for those centers deliver­ According to the Bank ofTokyo-Mitsu­ Locker, Pacific Sunwear of California, ed in 2006, 22.0% for those delivered bishi UFJ, comparable same-store retail and Zales, to either file for bankruptcy in 2007, and 28.0% for those shopping sales posted a 0.5% year-over-year in­ protection or close some stores. centers delivered thus far in 2008. crease in January 2008. By comparison, Even though most stressed retailers Weaker property performances, the year-over-year growth was 3.9% a year will avoid bankruptcy during the cur­ expectation that income growth for earlier. Although comparable same-store rent economic slowdown, many of malls will decelerate, and the difficul­ retail sales grew 2.4% on an annual them will likely shelve expansion plans ties in the capital markets have com­ basis in 2007, this figure represents the for the near term. With fewer retailers bined to push many regional mall buy­ ers to the sidelines. "We still like the Table I fundamentals for Class-A malls, but NATIONAl REGIONAl MAll MARKET there are very few on the market," notes Second Quarter 2008 a participant. Even though lower quali­

CI.JRI!ENT QUARTER lAST QUARTfR YE.

Average malls going forward, the average over­

Changf~ (Basis Points) + 3 -17 all cap rate (OAR) for Class-A+ malls

RESIDUAL CAP RATE remains much lower than for other Range 6.00%- 10.00% 6.00%- 10.00% 6.25°lJ - 'I 'I .DD{;fc, mall classifications. According to our 8.'19%) Aver;1ge 7.3fJ~/(J participants, OARs range from 4.75% Change (Basis Points) 0 -81 to 7.00% and average 5.79% for Class­ MARKET RENT CHANGE RATE" A+ regional malls this quarter, while Range 0.00°;() -- ].90~1() 0.00%) ·- 3.90~1() they range from 5.00% to 8.30% and Avf~rage 2.63%. 2.63%. Ch;mge (Bas's Points) 0 --32 average 6.31% for Class-A properties.

EXPENSE CHANGE RATE" For Class-B+ regional malls, OARs range Range 3. 00~/(J ·- ] . 00~1(1 from 5.75% to 9.00% and average Average 7.22%, while they range from 6.50% Change ::Bas~s Points) ll 0 to 9.50% and average 8.07% for Class­ AVERAGE MARKETING TIME' B assets. By comparison, OARs range Range 3.00- 12.00 3.00- 12.00 3.00- 12 00 from 7.00% to 15.00% and average Average 6.75 7.14 7.19 10.10% for Class-C+ assets (431 basis Change ( 0;~;) - s .46 -6.12

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months points higher than Class-A+ assets). +·

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011694 National Power Center Market

WITH RETAIL SALES GROWTH ON THE DE­ scattered in ten states, represent less property values to decline an average

CliNE FOR SEVERAL BIG-BOX AND DIS­ than 1.0% of the company's existing of nearly 4.0% in the national power

COUNT RETAILERS, MANY POWER CENTER store portfolio. In addition, The Home center market over the next 12 months.

OWNERS ARE FACING DIPS IN RENTAL Depot will cut its U.S. development Survey participants indicate that

RATES, UPTICKS IN VACANCIES, AND DE­ pipeline by approximately 50 stores. OARs vary based on a power center's

CliNES IN PROPERTY VALUES. "The end Due to lackluster retail sales growth percentage of big-box space. Specifical­ result is never good when you combine and weakened consumer spending ly, the average OAR is 7.13% for prop­ higher vacancies and lower rental rates," habits, investors looking to acquire erties with 1 00.0% big-box space. By states a participant. While many big-box power centers are doing so with much comparison, it is 7.35% for properties retailers continue to outperform tradi­ more scrutiny and more conservative where 85.0% of the gross leasable tional merchants, several big-box chains underwriting. This quarter, the average area (GLA) is occupied by big-box ten­ are starting to feel the impact of a slow­ initial-year market rent change rate ants and 7.38% for properties where down in consumer spending. Retail declined 44 basis points to 2.44%. 75.0% of the GLA is occupied by such sales growth trends for select big-box This current rate represents a 69-basis­ tenants. Discount rates (IRRs) also vary, retailers are shown in Table NPC-1. point decline from a year earlier. When averaging 8.25% for 100.0% big-box Weakened consumer spending and combined with other shifts in key as­ space, 8.46% for properties with 85.0% the inability to borrow money to finance sumptions and the anticipation of high­ big-box space, and 8.90% for proper­ the purchasing of merchandise are hit­ er cap rates, our participants expect ties with 75.0% big-box space. + ting some stores much harder than others. The most recent big-box retailer Table 2 NATIONAL POWER. CENTER MARKET to feel the pain of an economic slow­ Second Quarter 2008 down is Linens 'n Things, which filed for Chapter 11 bankruptcy protection CURRENT Ql!ARTER lAST Ql!ARTER YEAR AGO and is set to close 120 of its 589 stores. DISCOUNT RATE (IRR)a Range The majority of these store closings (27 A.veragt~ stores) is located in California, followed Change (Basis Po:nts) + 20 by Texas with ten stores and Michigan OVERAll CAP RATE (OAR)a with nine stores. Range Another big-box retailer that recent­ Average 7.06% ly announced plans to close underper­ Chang<' (Basic, Points) -+4 +11 forming stores and to curtail its new RESIDUAL CAP RATE Range store openings is The Home Depot. Average The store closings, totaling 15 stores Change (Basis Points} + 12 -t- ?.?.

MARKET RENT CHANGE RATE"

Table NPC-1 Ronge YEAR-OVER-YEAR, SAME-STORE Avt~rage 3.13% Change (Basis Points) -44 -69 SALES GROWTH Select National Retailers EXPENSE CHANGE RATE" Range jan. Dec. jan. Retailer 2008 2007 2007 Average

Costco + 5.0% + S.0%1 +- 3.0%, Change (Baois f'c@ts) •Ll +13

Bj's + 7.8% + 3.0~/(J -t- 3.5 1 ~~) AVERAGE MARKETING TIME' Range 3.00-9.00 1.00-9.00 3.00-9.00 Target --1.1% -- 5.0'}~, -t- 5. "]1~~) Average 5.56 5.56 Wai-Mart + 0.5% - 2.'3'}:, -t- 5.4'};, Change (l>C,) 0 0 Source: Bank ofTokyo-Mitsubishi UFJ, Ltd. a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011695 National Strip Shopping Center Market

EVEN THOUGH CONSUMERS ARE CUTTING Capital Analytics, Inc. (RCA), a stagger­ for approximately $487.00 per square

BACK ON THEIR DISCRETIONARY SPEND­ ing 77.0% decline from a year earlier. foot. Located in Chino Hills, this prop­

ING, THE DESIRE TO OWN GROCERY­ Many investors looking for strip erty was 1 00.0% occupied by national

ANCHORED STRIP SHOPPING CENTERS shopping center investments continue and regional tenants, including Baja

REMAINS STRONG AMONG INVESTORS. to be drawn to strong population growth Fresh, Henry's Farmers Market, Chick­ "People still need to eat," remarks a areas in the southeast and along the fil-A, and Bank of America. participant. Plus, there is still demand West Coast, like Atlanta and Los In another West Coast sale, a for service-oriented stores, such as dry Angeles. In the first quarter of 2008, 10,207 -square-foot strip center located cleaners and banks, which typically 104 strip shopping centers were sold in Granada Hills and anchored by sev­ occupy neighborhood strip shopping in Atlanta, approximately 2.3% of the eral tenants with long-term leases centers. Nevertheless, a bid-ask pricing U.S. total, according to RCA. In Los reportedly sold for $372.00 per square gap and turmoil in the capital markets Angeles, this number was much lower foot and an approximate overall cap kept the number of transactions in this at 56 properties. "The West Coast rate (OAR) of 6.44%. This OAR is market well below historical levels would be our top pick for retail invest­ within the range indicated by our par­ during the first quarter of 2008. ments, but it is a very pricey area," ticipants this quarter. Specifically, OARs Sales of significant strip shopping notes a participant. In one recent West range from 5.80% to 9.00% this quar­ centers totaled $3.3 billion in the first Coast sale, a 97,000-square-foot strip ter and average 7.32%. "Good proper­ quarter of 2008, according to Real center known as Gateway Village sold ties still sell at cap rates between 5.5% and 6.5%," affirms a participant. Table 3 Overall cap rate trends for this mar­ NATIONAL STRIP SHOPPING CENTER MARKET ket are shown in Table SSC-1. After Second Quarter 2008 several quarterly declines, the average CURRENT QUARTER lAST QUARTER YEAR AGO OAR has trended upward for the past

DISCOUNT RATE (IRR)a three quarters. ~ Range 6.00%.- 10.00%,

Average 8.34'}~,

Change (Bas:s Poinrs) +5 +S Table SSC-1 OVERALL CAP RATE (OAR)a OVERALL CAP RATE TRENDS Range National Strip Shopping Center Market i\veragf' Change Change (Basis Points) + 4 - 3 Quarter Average (Basis Points)

RESIDUAL CAP RATE 2Q08 7.32% + 4 Range 6.00')(, ·- 10.00% 1Q08 7.28% + 4 Average 4Q07 7.24% + 4 Changf~ (Basis Points) + 7 + 5 3Q07 7.20% - 15 MARKET RENT CHANGE RATE" 2Q07 7.35% -] Range 1Q07 7.38% + 11 Aver;1ge Change (Basis Points) -· 5 -- 10 4Q06 7.27% -9 3Q06 7.36% 0 EXPENSE CHANGE RATE" Range 3.00% -· 4.00%. 2Q06 7.36% 0 Average 1Q06 7.36% -6 Ch;mge (Bas•s Pointc,) 0 0 4Q05 7.42% -3 AVERAGE MARKETING TIME' 3Q05 7.45% -27 Range 2.00- 12.00 2.00- 12.00 2.00- ! 2.00 2QOS 7.72% -78 Average 6.10 6.10 6.10 2Q04 8.50% ll 0 Source: Korpacz Real Estate Investor Survey~' a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011696 National CBD Office Market

ON THE SURFACE, THE KEY FUNDAMENTALS they're coming," remarks a participant. like Manhattan and Washington, DC,

OF THE NATIONAL CBD OFFICE MARKET­ Since the start of 2008, the U.S. tend to be more resilient before, during,

VACANCY RATES, LEASING ACTIVITY, ASK­ economy has lost a total of 260,000 and after a recession," notes another.

ING RENTAL RATES, ETC. - CONTINUE TO jobs, according to the Bureau of Labor In the most dominant CBD office

REFLECT STRENGTH AND STABiliTY. The Statistics. Although many of these loss­ markets, property values are expected overall vacancy rate stood at 9.9% in es are in housing-related industries that to stay flat in 2008. Overall, our partic­ the first quarter of 2008, comparable do not demand large amounts of office ipants expect property values in the nat­ to where it was a year earlier, accord­ space, many office-using companies are ional CBD office market to increase as ing to Cushman & Wakefield. At the downsizing, pulling back on expansion much as 5.00% and decline as much same time, leasing activity totaled al­ plans, and/or planning to return space as 5.00% over the next 12 months. The most 17.5 million square feet, also to the market upon lease renewal. "Many average expected value change is 0.80%. comparable to the level reported a year office markets won't feel the pain of the Helping to restrain value appreciation ago. And, the average asking rental current downturn until 2009 or 201 0," is a downward shift in this market's rate stood at over $37.00 per square comments a participant. Of course, the initial-year market rent change rate, foot in the first quarter of 2008, nearly extent to which individual CBD office which slid 41 basis points this quarter $10.00 per square foot above its posi­ markets react to the downturn will de­ (see Table CBD-1 ). "We buyers are tion in the first quarter of 2007. pend greatly on their current supply/de­ starting to control this market again," Amid all this good news, however, mand imbalance. "Major office markets, delights an investor. 4- many investors, particularly those who own properties in secondary and terti­ Table 4 NATIONAl CBD OFFICE MARKET ary downtown markets, seem a bit con­ Second Quarter 2008 cerned about the near-term performance of the national CBD office market. For CURRENT QUARTER LAST QUARTER YEAR AGO many of them, the problems lie in the DISCOUNT RATE (IRR)a Range uncertainty that surrounds the future Average 8.05% direction of the economy and the lag Change (Basis Points) -·I effect its apparent weakness will have OVERAll CAP RATE (OAR)a on the office sector. "The office sector Range 4.50')(, ·- 10.00%. tends to lag the performance of the Average economy. So while we don't see imme­ Change (Basis Po,nts) - 15

diate losses in occupancy, I do think RESIDUAL CAP RATE Range 6.00% - 1 0.00''.{,

A.veragt~ Table CBD·1 Change (Basis Po:nts) - 16

MARKET RENT CHANGE RATES MARKET RENT CHANGE RATE" National CBD Office Market Range o.oo%~ ·-· ·1 o.oo(;<, 0.00% ·-· ·1 0.00%,

Change Average 3.64(~{) Quarter Average (Basis Points) Chang<' (Basic, Points) -· 41 --28 2Q08 3.64% -41 EXPENSE CHANGE RATE" 1Q08 4.05% +2 Range 4Q07 4.03% -7 Average

3Q07 4.10% + 18 Change (Basis Poin~s} -7 + 6 2Q07 3.92% + 104 AVERAGE MARKETING TIME' Ronge 2 00- 12.00 2.00- 12.00 !.00- 1!.00 2Q06 2.88% + 170 Avt~rage 6.13 G.as ?.OS 2QO'i 1.18% - 1].05 Source: Korpacz Real Estate Investor Survey~' a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011697 National Suburban Office Market

WHILE MUCH OF THE NATIONAL SUBUR­ imately 7.63 million square feet of the first quarter of 2008 ranks as one

BAN OFFICE MARKET CONTINUES TO speculative office space were delivered of the highest reported by the 42 sub­

PERFORM WELL AND POST VACANCY in the national suburban office market. urban office markets tracked by C&W.

RATES BELOW THE NATIONAL LEVEL, A Suburban markets that posted the Other markets that posted high

DECliNE IN DEMAND AND AN INCREASE largest number of speculative comple­ increases in vacancy during that time

IN ADDITIONS OVER THE PAST FEW YEARS tions during that time were Phoenix are shown in Table NS0-1. By com­ ARE EXPECTED TO WEAKEN FUNDAMEN­ (1.11 million square feet), Houston parison, suburban office markets that

TALS IN THE NEAR TERM. "It's just poor (1.06 million square feet), and reported notable declines in vacancy timing on the part of some develop­ Northern Virginia (939,000 square over the past year include San ers," notes a participant. At the end of feet). Of these three individual cities, Francisco, Fairfield County, Hartford, 2007, construction activity totaled only Houston realized a decline in and Denver. 51.7 million square feet in the national vacancy over the past year. By com­ Many investors are hopeful that suburban office market, according to parison, both Northern Virginia and tighter lending restrictions will impede Cushman & Wakefield (C&W). Approx­ Phoenix posted increases in overall the risk of overbuilding in many subur­ imately 43.9 million square feet (85.0%) vacancy. ban office markets, allowing this sector were considered speculative with only At 350 basis points, suburban to better combat the U.S. economic about 53.0% of the space preleased. Phoenix's increase in overall vacancy slowdown. As in the national CBD In the first quarter of 2008, approx- between the first quarter of 2007 and office market, stricter underwriting requirements and the inability to easily Table 5 acquire debt have drastically reduced NATIONAL SUBURBAN OFFICE MARKET the number of sales. "The bid-ask Second Quarter 2008 spread is still too wide to generate

CURRENT QUARTER LAST QUARTER YEAR AGO transactions and allow investors to fig­ DISCOUNT RATE (IRR)a ure out where pricing now stands," Range 7.00~/(J ·- ! 2.50~/(1 comments a participant. While pricing Average 8.74%. may still be tricky to figure out, it Ch;mge (Bas's Points) + 19 -f- ~j appears that this market is shifting in OVERAll CAP RATE (OAR)a favor of buyers. This quarter, 26.67% Range 5.00%- ! 0.50% 5.00%- 1 0.5()0;<, Average of our participants believe that market Change (Bas:s Poinrs) + ::; conditions favor buyers. Last year, this

RESIDUAL CAP RATE figure was a mere 7.14%. + Range 6.00%.- 11.00%, 6.00%.- 11.00%,

Averagf~ 7 .94'};) Table NS0-1 Change (Basis Points) ·-· ·: ~ OVERALL VACANCY RATE INCREASES MARKET RENT CHANGE RATE" Top Six Suburban Office Markets 11.ange 0.00'}~) -- 8.00%, 0.00')(, -- fJ.OO% 1QOB Change* Average ?..S8'-};, Vacancy (Basis Changf~ (Basis Points) -56 -56 Market Rate Points)

EXPENSE CHANGE RATE" Los Angeles-North, CA 12.9% + 650 2.50''1;,- 4.00% Range Orange County, CA 14.1% +600 Aver;1ge 3.09% Orlando, FL 13.6% + 440 Change (Basis Points) -7 - 5 Tampa, FL 13.6% + 390 AVERAGE MARKETING TIME' Palm Beach, FL Range 2.00-- 9.00 2.00-- 9.00 2.00- 9.00 Los Angeles-Tri Cities, CA 10.3% + 360 Avf~rage 6.13 6.08 6.29 --2.54 *From First Quarter 2007 Source: Cushman & Wakefield a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011698 Atlanta Office Market

DUE PRIMARILY TO A MORE DIVERSIFIED first quarter of 2008, representing an in­ cause pricing has become a point of

EMPLOYMENT BASE, THE ATLANTA OFFICE crease of 5.8% from the fourth quarter contention in closing deals. "There is a

MARKET IS BETTER EQUIPPED TO WITH­ of 2007. This boost in leasing activity disagreement between buyers and sell­

STAND THE CURRENT NATIONAL ECO­ may be a result of the aggressive con­ ers as to where prices and capitalization

NOMIC SLOWDOWN THAN IT WAS SEVEN cession packages being offered by many rates are," comments a participant.

YEARS AGO DURING THE HIGH-TECH landlords. It may also be due to an in­ Despite a bid-ask pricing gap, some

FALLOUT. Even though the housing and creased urgency among tenants to owners are placing properties up for financial sectors remain stressed, growth secure deals while they hold the upper sale. Tishman Speyer Properties, for ex­ in professional-and-business services, hand during lease negotiations. ample, has placed Colony Square, a education and health services, and The snail's pace of the investment Midtown office tower, on the market. leisure and hospitality are buffering the market in early 2008 is expected to This asset includes 700,000 square feet downturn. On the plus side, Atlanta quicken during the second half of this of office space in two buildings and an remains a top city for job growth and year. "Institutional equity is available attached 140,000-square-foot, open-air relocations and maintains a healthy and needs to be placed before year-end. retail component on Peachtree Street. business climate. However, risk factors However, most investors are pausing to The highest priced office transaction in do exist for the local economy and in­ see what happens with the economy Atlanta in the first quarter 2008 was clude the Delta-Northwest airline mer­ and the debt markets," remarks a partici­ the sale of Lakeside Commons for ger, the closing of General Motors' plant pant. Sales activity is also down be- $201.00 per square foot. ~ in the northeast suburbs, and the in­ creasing cost of energy. Table 6 Tentative economic trends have re­ ATlANTA OFFICE MARKET Second Quarter 2008 sulted in some softness in the Atlanta office market, and some local players CURRENT QU.

down 90.0% from its total in the fourth RESIDUAL CAP RATE quarter of 2007, according to Cushman & Wakefield. Even though suburban Change (Basis Points) + 7 -16 Class-A absorption improved in the first MARKET RENT CHANGE RATE" quarter of 2008, it still reported a loss of approximately 69,000 square feet.

Proof of Atlanta's resiliency is noted in Change rF3asis Fhnts) ' I J +50

its Class-A overall vacancy rates. In the EXPENSE CHANGE RATE"

1 first quarter of 2008, the Class-A over­ Range LSO'J() -- 3.00%, 2.00 ~~~ -- 3.00'1() all vacancy rate remained at 14.6% in Average 2.9iJ%) 2.81 ~In 2.81%- the suburbs, while it increased just 40 Change (Basi~, Po~nts) t 13 +13 basis points to 25.2% in the CBD. AVERAGE MARKETING TIME' Range 1.00- 9.00 1.00- 9.00 1.00-9.00 In the face of a challenging eco­ Averag<' 'i.OO 'j.'jO 5.58 nomic setting, Class-A leasing activity Change l%~) -- 9.09 --1CU9

totaled 2.5 million square feet in the a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011699 Boston Office Market

AFTER SEVERAL QUARTERS OF BUSTliNG ket rent change rate assumption in ported $140.0 million in office build­ LEASING ACTIVITY, A MUCH QUIETER 2006 and into 2007, this trend started ing sales, according to Real Capital ATMOSPHERE IS ENCOMPASSING MUCH to reverse itself three quarters ago (see Analytics, Inc. A year earlier, this figure OF THE BOSTON OFFICE MARKET. "We're Table BOS-1 ). At the end of 2007, the was $5.72 billion, an astounding not seeing the same interest from ten­ average initial-year market rent change 97.6% year-over-year drop in volume. ants as we saw in 2007," notes an rate for the Boston office market The top buyers in this market over the investor. While the extent to which dipped 16 basis points, followed by a past 12 months include Broadway Real supply is outpacing demand varies 22-basis-point decline in the first quar­ Estate Partners, Beacon Capital Partners, among the industry's leading space ter of 2008. This quarter, the assump­ and The Davis Companies. reports, the underlying message is the tion declined again, tumbling 62 basis Like many other office markets same: fundamentals, while still healthy, points to reach 2.94%. A year earlier, across the country, the main reason for could be in for some unfavorable shifts this assumption's average was 3.81 %. the decline in activity is that buyers and in the very near term. "Tenants defi­ Even though rental rate growth is sellers cannot come to terms on pricing. nitely sense that they have more con­ declining and market conditions are Nevertheless, certain assets, particular­ trol over terms now than they did last expected to be choppy for the remain­ ly single-tenant buildings, have sold in year," adds the investor. der of 2008, sale transactions are oc­ Boston recently. 285 Summer Street, After experiencing strong quarterly curring- albeit at a much slower pace. for example, sold for $263.00 per growth in its average initial-year mar- In the first quarter of 2008, Boston re- square foot to Aegean Capital. This 54,000-square-foot office building was Table 7 fully occupied by Payette Associates, BOSTON OFFICE MARKET an architectural firm, which purchased Second Quarter 2008 the asset under foreclosure in 1991 CURREN I QUARJTR LAST QUARHR YEAR AGO (during one of the worst real estate DISCOUNT RATE (IRR)a times for the city) for $2.5 million, or Range 6.00'}~, -- 13.00%, 6.00'}~, -- 13.00 1 ~~) 7.00'1(, -- l.HJO% roughly $47.00 per square foot.+ Average 9.01°;(, 8.86%, 8.92%,

Changf~ (Basis Points) + 11 +9

OVERAll CAP RATE (OAR)a Table BOS-1 Range S.OO'-};,- : 0.25'-'J~, S.OO'-};,- 1 0.25°/~, 5.50°l,- 10.25% INITIAL-YEAR MARKET RENT 7.43~/(J 7.3•1%, 7.]9%, Aver;1ge CHANGE RATES Change (Basis Points) + 9 +4 Boston Office Market

RESIDUAL CAP RATE Change Range 6.50°;(, ·- ":0.50~1() 6.SO%, -- 10.50~/(J 6.SO%, -· 10.50%, Quarter Average (Basis Points)

Avf~rage 8.06% 8.01% 7.98(~{, 2QOS 2.94% -62 Ch;mge (Bas's Points) + 5 + e lQOS 3.56% -22

MARKET RENT CHANGE RATE" 4Q07 3.78% - 16 Range 0.00% ·- 'i.OO% 3Q07 3.94% +13 Average 2.94% 2Q07 3.81% + 31 Change ::Bcy,~s Poin~s) -62 -87 1Q07 3.50% + 12 EXPENSE CHANGE RATE" Range 3.00%.- 3.00%, 4Q06 3.38% +50

Average 3.00'}~, .HJO')(, 3Q06 2.88% +52

Change (Bas:s Points) 0 0 2Q06 2.36% + 173

AVERAGE MARKETING TIME' 2Q05 0.63% +50 Range 2.00 -· 24.00 2.00 ·-· 24.00 2.00--24.00 2Q04 0.13% +lOS i\veragf' 6.8l 6.71 6.43 2Q03 -0.95% Change (0;~,) + 1.79 + 6.22 a. Rate on unlevet·aged, all-cash tt·ansactions b. lnitialt·ate of change c. In months Source: Korpacz Real Estate Investor Survel'

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011700 Charlotte Office Market

LADIES AND GENTLEMEN, START YOUR toward the mid to upper $30.00-per­ both Charlotte's average in the fourth ENGINES! The NASCAR Plaza is first in square-foot range for new CBD proper­ quarter of 2007 and the national aver­ the race between four new high-rise ties. These rising rental rates are likely age in the first quarter of 2008, which office towers coming out of the ground to bring about increases in asking rents both exceeded $200.00 per square foot. in downtown Charlotte. Lauth Property for existing properties as well. Further hindering investment activi­ Group is building the 19-story, 400,000- Despite evidence of a steady office ty is the uncertain direction of property square-foot property, which will be market, the national credit crisis caused values over the next several months. 25.0% occupied by NASCAR's corpo­ a 50.0% drop in sales in this market in "Institutional real estate will hold pric­ rate offices. Lease rates for remaining the first quarter of 2008, according to ing in 2008, but noninstitutional real space at this asset range from $31.00 to Real Capital Analytics, Inc. One rea­ estate will see a decrease in pricing," $33.00 per square foot. NASCAR Plaza son for this plunge is the gap between believes a participant. "Values will hold will be located adjacent to the existing buyers' and sellers' expectations relative steady over the next 12 months," predicts NASCAR Hall of Fame and is sched­ to pricing. Moreover, the average sale another. The slowdown in transaction uled for delivery in March 2009. price per square foot has plummeted. activity and the ambiguity in pricing The three other towers underway in During the first quarter of 2008, sales resulted in a 29-basis-point increase in downtown Charlotte include Novare in this market totaled $180.0 million this market's average overall cap rate Group and Trinity Capital Advisors' 15- with an average price of $11 0.00 per this quarter, one of the highest shifts re­ story tower at South Church Street, square foot. This figure was well below ported by an individual office market. + planned for a midyear 2009 delivery; Wachovia Corporation's 48-story build­ Table B CHARLOTTE OFFICE MARKET ing slated for a late 2009 opening; and Second Quarter 2008 Bank of America's 32-floor project scheduled to open in 2010. When com­ CURRENT QUARTER LAST QUARTER YEAR AGO pleted, these four developments will DISCOUNT RATE (IRR)' Range increase the office space inventory in Average the Charlotte CBD by close to 2.5 mil­ Change rF3asis Fhnts) 0 lion square feet, or approximately 24.0%. OVERAll CAP RATE (OAR)a According to CB Richard Ellis (CBRE), Range 6'00'1() -- 9. 00%, about 76.0% of this new space (rough­ Average ly 1.9 million square feet) is preleased. Change (Basis Po,nts) '29 The CBD office market, particularly RESIDUAL CAP RATE the Class-A sector, is ready and eagerly Range 6.50°lJ - 9.00%, A.veragt~ 7.67%) waiting for this additional space. "The Change (Basis Po:nts) market remains strong and has avoided MARKET RENT CHANGE RATE" weakness due to solid fundamentals and Range 0.00%) ·-· 6.00(;{, continued job growth," notes a partici­

pant. The CBD is still displaying unusu­ Chang<' (Basic, Points) -· 60 ally low vacancy rates, dropping to 1.2% EXPENSE CHANGE RATE" in the first quarter of 2008, down from Range 2.7% at the end of 2007, as indicated Average Change (Basis Poin~s} + 10 by CBRE. By comparison, the first quar­ ter vacancy rate for the entire Charlotte AVERAGE MARKETING TIME' Ronge 2 00- 6.00 2.00- 6.00 office market was 1 0.9%, down from Avt~rage 5.00 4.6?

11 .1% in the prior quarter. As vacancy Change ( 01~~) + 7.07

remains low, rental rates are inching a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011701 Chicago Office Market

DESPITE THE STRONG PERFORMANCE OF unchanged from a year earlier and ten In the Class-A sector, three of the

THE CHICAGO OFFICE MARKET OVER THE basis points lower than the prior quarter. five largest leases signed during the

PAST SEVERAL QUARTERS, CAUTION FlAGS Despite posting just over two mil­ quarter were for buildings either under

ARE BEING WAVED THROUGHOUT THE lion square feet of leasing activity in its construction or scheduled to begin

WINDY CITY DUE TO A SLOWDOWN IN CBD in the first quarter of 2008, the construction. William Blair & Co., for

THE ECONOMY, HESITANCY AMONG TEN­ CBD recorded negative absorption of example, signed a lease for 340,000

ANTS TO LEASE SPACE, AND UNTIMELY nearly 475,000 square feet. Much of square feet to become the anchor tenant

ADDITIONS TO SUPPLY. "Landlords will the negative absorption, however, has at 444 W. Lake Street, a 1.1-million­ have it tough for the next several occurred in buildings outside of the square-foot tower under development months," comments a participant. But, Class-A sector. In the first quarter of by Hines Interest and slated for com­ it remains to be seen exactly how deep 2008, negative absorption totaled only pletion in mid-2011. With nearly 3.9 their pain will run. In the first quarter 60,376 square feet in the Class-A sec­ million square feet of new Class-A of 2008, the overall vacancy rate for tor. Tenants in Class-B buildings that space under construction and 3.5 mil­ Chicago's CBD sat at 12.0%, down 250 recently returned space include Amer­ lion square feet of it scheduled for basis points from a year earlier, but up ican National Bank, which returned delivery in 2009, there are concerns slightly from year-end 2007, according 296,638 square feet, and Bankers Life & that the fundamentals of Chicago's to Cushman & Wakefield. For the sub­ Casualty, which returned 114,308 Class-A sector will weaken. urbs, the overall vacancy rate was 19.0%, square feet. The amount of space entering the downtown market represents the largest Table 9 total since 1990, one of the hardest real CHICAGO OFFICE MARKET estate times for the Chicago office mar­ Second Quarter 2008 ket. At that time, the untimely additions CURRENT QUARTER LAST QUARTER YEAR AGO to supply drove down rents and creat­ DISCOUNT RATE (IRR)a ed an oversupply problem that took a 6VJ')(, ·- 10.00% Range long time to remedy. Hopefully, history Average will not repeat itself. Changf~ (Basis Points) -t- s + 35 Despite concerns about the near­ OVERAll CAP RATE (OAR)a Range term performance of this market, par­ Aver;1ge ticularly the CBD, two significant office Change (Basis Points) -4 properties recently traded in downtown

RESIDUAL CAP RATE Chicago. In the first deal, Kushner Com­ Range 6.50°;() -- ": 0.50~1() panies purchased 225 West Randolph Avf~rage 7.66%. 7.65%. Street for about $275.00 per square Ch;mge (Bas's Points) + 1 --4 foot. In the second deal, a subsidiary MARKET RENT CHANGE RATE" of Hines U.S. Core Office Fund ac­ Range 0.00% ·- 1 0.00% 0.00% ·- 10.00% quired the 1.4-million-square-foot One Average 3.08%, 2.95%.

Change ::Bcy,~s Poin~s) +11 + 3 North Wacker Drive from a German

EXPENSE CHANGE RATE" investment fund operating under the Range 2.00%.- 3 00%, 2.00%.- 3.00%, guidance of RREEF for approximately Average 2.92'}~, 2.90'}~, $386.00 per square foot. This 51-story, Change (Bas:s Points) +2 +9 Class-A trophy asset was built in 2001 AVERAGE MARKETING TIME' by john Buck Co. and sits in the CBD's Range 2.00 -· 36.00 'i.OO -· 18.00 3.00 -- 18.00 West Loop district. "One North Wacker i\veragf' 9.00 8.20 7.45 was a great buy for Hines," affirms a Change (0;~.) -t- 9.76 + 20.ll0

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months participant. ~

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011702 Dallas Office Market

VIGOROUS LEASING ACTIVITY, POSITIVE square feet), Las Colinas/DFW Free­ finishes. As a result, our participants

NET ABSORPTION, AND VIRTUALLY STATIC port (429,473 square feet), and LBJ are not estimating significant rent

VACANCY EQUATED TO A SOliD FIRST­ Freeway (418,591 square feet). When growth in the near term. Only 20.0%

QUARTER PERFORMANCE FOR THE DAL­ factoring in new additions to supply of them are using rent spikes in their

LAS OFFICE MARKET. Economically, and returned space, however, overall analyses, and the average market rent Dallas is not only a distribution center absorption totaled only 365,230 change rate dropped 25 basis points for the Southwest, but it is also the square feet in this market for the quar­ this quarter. financial and corporate hub for the ter. Amazingly, given the amount of region. Financial-activities employment Given the plethora of office space new office space added to the market, for the Dallas-Fort Worth-Arlington options available to tenants, rental vacancy rates have not suffered dra­ metropolitan area showed an increase concessions are widespread. In fact, matically to date, especially in the of 1,300 jobs from year-end 2007 100.0% of our participants report Class-A sector (see Table DAL-1 ). through the first quarter of 2008, prevalent rental concessions, a trend However, as more than 3.5 million according to the Bureau of Labor that has held true for the past twelve square feet of space are added this Statistics. On the contrary, profession­ months. Increases in rental rates over year, followed by 1.9 million square al-and-business services posted a loss the past quarter are generally due to feet in 2009 and more than 620,000 of 2,400 jobs. However, preliminary increasing operating expenses, such as square feet in 2010, vacancy rates are figures for April indicate job growth in utilities, taxes, and the cost of tenant anticipated to rise. + both of these sectors, which drive demand for office space. Moreover, Table 10 DAllAS OFFICE MARKET the unemployment rate for the Dallas Second Quarter 2008 area was 4.2% as of March 2008, well below the national rate of 5.1 %. CIJRI!ENT QUARTER lAST QUARHR YE.

leasing activity occurred in the sub­ Changf~ (Basis Points) -20

urbs, led by Far North Dallas (521, 158 RESIDUAL CAP RATE Range _P.,verage Table DAL-1 Chonge (Basis Points) -24 - !.!.

CLASS-A SUBURBAN VACANCY RATES MARKET RENT CHANGE RATE" AND CONSTRUCTION TRENDS Range

Dallas Office Market Avf~rage 3.25%. 3.50%, Class-A Office Deliveries Change (Basis Points) -· 25 -· 35 Time Vacancy (Square Feet) EXPENSE CHANGE RATE" 2QOS 17.2% 497,110 Rang<• 2. 00~/(J ·- 3. 00~1(1 2007 16.0% 2.666.286 Average 2.83%. 2.67%. 2006 16.1% ].246.112 Change (Basis Points) + 16

2005 16.9% 545.279 AVERAGE MARKETING TIME' Range 3.00- 12.00 3.00- 12.00 300- !2.00 2004 20.4% 705,282 r\verage 6.30 6.l0 6.30 2003 24.1% 1,733,130 0 0 Source: Cushman & Wakefield a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011703 Denver Office Market

SINCE LENDING PARAMETERS ARE MORE tion, favorable vacancy rates, and ration for the Democratic National Con­

STRINGENT AND BUYERS AND SELLERS increasing rental rates. Although the vention in August has boosted activity

STRUGGLE TO AGREE ON PRICING, THE Denver office market held its own dur­ in the CBD and is anticipated to have

DENVER OFFICE MARKET HAS NOT ELUD­ ing the first quarter of 2008, the rate of a sizeable economic impact on the

ED THE NATIONAL SLOWDOWN IN SALE economic expansion in Denver is de­ downtown area. In the suburbs, Class­

TRANSACTIONS CURRENTLY OCCURRING. celerating. In fact, Cushman & Wake­ A overall vacancy inched up to 10.9% The total volume of office building field reported a hefty increase in Class­ in the first quarter of 2008. Similar to transactions was $420.0 million in the A office vacancy for the CBD in the the CBD, additions to supply will like­ Denver office market in the first quarter first quarter of 2008, shifting from 5.9% ly result in elevated vacancy in the of 2008, a sharp contrast to the nearly at year-end 2007 to 8.9% in the first suburbs over the short term. $2.0 billion in sales one year earlier, quarter of this year. Nevertheless, the Increases in vacancy rates have according to Real Capital Analytics, Inc. current rate still remains below the done little to deter certain buyers inter­ Despite this drop in sales activity, the national Class-A vacancy rate of 9.1 %. ested in acquiring assets in this market. fundamentals of the Denver office mar­ Persistent upward pressure on va­ In one recent suburban transaction, the ket continue to appeal to many investors. cancy rates is anticipated over the next 355,269-square-foot Tamarac Plaza Lasting investor interest, albeit at a 18 months as more than 1.1 million sold to Parmenter Realty Partners for more cautious pace, is attributable to square feet of new office inventory $115.00 per square foot. This three­ this market's steady positive net absorp- enter the CBD. Fortunately, the prepa- building property was reportedly 70.0% occupied at the time of sale and previ­ Table 11 ously sold for $1 04.00 per square foot DENVER OFFICE MARKET four years ago. The reported overall Second Quarter 2008 cap rate (OAR) for this transaction was CURRENT QUARTER I.AST QUARTER YEAR AGO 5.50%. In a recent CBD sale, Massachu­ DISCOUNT RATE (IRR)a setts Mutual sold its 436,000-square­ Range foot office complex for $193.00 per Avt~rage 8.30%, iJ.11% square foot to U.S. Premier Office Change (Basis Points) ' 24 + 43 Equities of San Antonio. In another OVERAll CAP RATE (OAR)a Range downtown trade, the 101, 149-square­

Average foot Sherman Center sold for $11 7.00 Change rF3asis Points) ·-11 -· 21 per square foot and a reported OAR of

RESIDUAL CAP RATE 6.00%. This downtown property was 82.0% occupied at the time of the sale Average ?.JiJ~;() 7.47%, and sold for $98.00 per square foot in Change (Bosis Points) -6 -1?. 2006. MARKET RENT CHANGE RATE" The overall cap rates indicated by these transactions are within the range Average 4.6~:F~{~

Change (Basis Points) -· 100 -- 2SD indicated by our participants for the

EXPENSE CHANGE RATE" Denver office market. This quarter, the Range ].00%) -· J.OO(!~? average OAR dipped 11 basis points to Average 3 OtJ<-% reach 6.52%. For Denver's CBD office Chang<' (Basis Points) -· 40 ·- 40 submarket, OARs range from 5.50% to AVERAGE MARKETING TIME' 7.00% and average 6.23% this quarter. Range ! .00 - i3.00 1.oo- e.oo 1.00-9.00 In its suburban component, OARs range Average 3.! l 3.29 3.SD from 5.50% to 7.50% and average Change(%) -:1.65 -9.43

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months 6.69%. <$>

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011704 Houston Office Market

AT A TIME WHEN MOST INDIVIDUAL OF­ Oil & Gas is consolidating 500 of its than many other markets across the

FICE MARKETS IN THE SURVEY EXPERIENCED 2,000 local employees into a ten-story nation and, therefore, may begin to re­

QUARTERLY DECliNES IN THEIR INITIAL­ building under construction in West bound earlier. These economic factors,

YEAR MARKET RENT CHANGE RATE AS­ Houston. GE Oil & Gas's logo will in combination with Houston's popu­

SUMPTIONS, THE HOUSTON OFFICE MAR­ appear atop this 250,000-square-foot lation growth and trade/export activity,

KET BUCKED THE TREND BY POSTING A building when it opens in March should allow its office market to endure

QUARTERLY INCREASE OF 47 BASIS POINTS 2009. Its 125,000-square-foot new the national economic downturn better

IN THE SECOND QUARTER OF 2008. While lease will establish an American head­ than most major U.S. cities. Over the this increase may seem minimal, it quarters for GE Oil & Gas, based in next 12 months, Survey participants represents the highest quarterly gain Florence, Italy. expect property values in the Houston reported by an individual office market Another boost to the local economy office market to increase an average of in the Survey and indicates investor could come if Continental and United 2.67%, one of the highest forecasts in confidence in this market. Still, this key Airlines merge. This union would in­ the Survey. "Many new investors are assumption stands below its average crease the prospect of Houston main­ looking at Houston due to its employ­ from a year ago (see Table HOU-1) taining, and possibly adding to, Conti­ ment and population growth, which is and suggests that even though investors nental's 18,000 local jobs. In addition, allowing pricing to remain relatively are optimistic about this market's Houston's housing market, while weak­ unchanged amid choppy credit market future performance, caution also exists. ened, is expected to hit bottom sooner conditions," remarks a participant. + Investors' optimism in this office market stems from the persistent expan­ Table 12 HOUSTON OFFICE MARKET sion of the local economy. While rising Second Quarter 2008 oil prices are a hindrance to consumers, they are generating jobs in the indus­ CURRENT QUARTER l.AST QUARHR YEAR AGO try, which is a primary driver of office DISCOUNT RATE (IRR)a Range 7.50%.- 10.00%, space demand in Houston. For instance, Average 8.SS%. Parker Drilling Company is moving its Change (Basis Points) international headquarters 14 miles OVERAll CAP RATE (OAR)a east to the urban location of Five Green­ Range 6.00%. ·- 10.00% way Plaza, where Parker will lease Average 75,000 square feet beginning in the Change (Baois Points) + 2 - 61

summer of 2009. In another deal, GE RESIDUAL CAP RATE Range 7.25%,- 11 .00% Average Table HOU-1 Change (Basis Points) + ],g - 24

INITIAL-YEAR MARKET RENT MARKET RENT CHANGE RATE" CHANGE RATE Range 0.00''.{,- 15.00% Houston Office Market 3.26%. Market Annual Change Change (Basis Points) + 4'7 -- 122 Quarter Rent Change (Basis Points) EXPENSE CHANGE RATE" 2QOS 3.73% + 47 Range 2. 00~/(J ·- ~j. 00~1(1 1QOS 3.26% .. 169 Average 2Q07 4.95% + 24S Ch;mge (Bas;s Pointc,) -· 26 0

2Q06 2.50% + 183 AVERAGE MARKETING TIME' Range 3.00-9.00 2.00-9.00 2.00-9.00 2Q05 0.67% + 25 Average 6.33 6.13 6.14 2Q04 0.42% + 3.26 + 3.09 Source: Korpacz Real Estate Investor Survey~' a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011705 Los Angeles Office Market

EVEN THOUGH EMPLOYMENT IS FAlliNG, 18.0% of the buyers in the Los Angeles square feet of space. The seller was

AND THE HOUSING CRISIS IS HAMPER­ office market have been foreign in­ Arden Realty, which has been actively

ING LOS ANGELES' ECONOMIC GROWTH, vestors. Given the falling value of the buying and selling assets since it was

INVESTORS CONTINUE TO SHOW THEIR dollar globally, the number of foreign purchased by GE Real Estate in 2006.

CONVICTION IN THE AREA'S OFFICE investors is expected to rise. "Look for The purchase price equated to $425.00

MARKET VIA ACQUISITIONS. Despite a Japanese money to come back into per square foot and included assets in slight slowdown in transactions during this market," predicts a participant. the West and North Los Angeles sub­ the first quarter of 2008 to $1.32 bil­ With regard to the transaction envi­ markets. Kennedy Wilson also capital­ lion from $1.44 billion in the prior ronment, Survey participants are divid­ ized on Arden's portfolio culling by quarter, Los Angeles maintained its ed on their perceptions. About 62.50% purchasing a three-property portfolio third-place ranking behind Manhattan of them believe that buyers control this for $94.1 million. The assets, which and San Francisco in total sales vol­ market, while 12.50% believe that sell­ ranged from 60.5% to 98.9% occupied ume, according to Real Capital Ana­ ers do. The remaining 25.00% declare at the time of the sale, are located on a lytics, Inc. "We don't expect to see a lot it to be neutral -equally favoring buy­ single block in downtown Burbank. of trades this year, but Los Angeles is ers and sellers. In a large portfolio sale Investor loyalty to the Los Angeles still a desired market," remarks a par­ this quarter, Douglas Emmett Realty office market is largely due to its long­ ticipant. increased its share of the Los Angeles standing history as a diverse market with Over the past twelve months, office market by acquiring 1.4 million a proven ability to weather downturns and rebound with vigor. Even in the Table 13 face of an economic slowdown and a lOS ANGELES OFFICE MARKET challenging lending environment, sub­ Second Quarter 2008 urban Los Angeles ranked first in over­ CURRENT QUARTER I.AST QUARTER YfAR AGO all occupancy ahead of the 42 subur­ DISCOUNT RATE (IRR)' ban office markets tracked by Cushman Range & Wakefield. Specifically, overall va­ Average cancy for suburban Los Angeles was Change (Basis Points) + 14 8.5% in the first quarter of 2008, com­ OVERAll CAP RATE (OAR)a RangE: .HJO%. ·- 'J.OO% .l.OO%,-- 9.00%. pared to the national average of 14.7%. Average Furthermore, West Los Angeles and the

Change (Basis Points) ' 4 - 12 Tri-Cities were the second and third RESIDUAL CAP RATE tightest suburban office markets during Range 6.00''.{,- 9.00% that time with overall vacancy rates of Average 7. -~ 7(!~? 8.6% and 1 0.3%, respectively. Change (8osis Points) - 1 New construction is still underway MARKET RENT CHANGE RATE" with deliveries of 1.5 million square Range 1.00% -- 8.00%. 2.00%, -- 8.00% feet expected in 2008 and 1.1 million

Change (Basis Points) -- 23 --3 square feet in 2009. While these addi­

EXPENSE CHANGE RATE" tions are making some landlords offer Range 2.r-;o(:~? -- 3.DD'}~) more attractive concession packages to Average 2.94°;;; 3.21 ~/() prospective tenants, this market remains Change !Basis Point~,) -23 - 27 resilient in the minds of our participants. AVERAGE MARKETING TIME' Over the next 12 months, they estimate Range 1 .00- 1 ! 00 100-1200 :1.00- 12.00 that office property values in this mar­ Average S.86 5.6.l uo ket will increase 2.57%, a bit above the Change(%,) + 4.09 -- (L85

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c In months average from the prior quarter. ~

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011706 Manhattan Office Market

AMID CORPORATE LAYOFFS AND JOB in the overall vacancy rate to 7.2%. creased on a year-over-year basis in CUTS, BOTH RECENT AND PENDING WITH One of the main problems impact­ Midtown in the first quarter of 2008, it THE MERGER OF BEAR STEARNS AND ing the underlying fundamentals of dipped in Midtown South during the ]PMORGAN CHASE & CO., THE MANHAT­ Downtown Manhattan is the increase same time period. Given this market's TAN OFFICE MARKET CONTINUES TO PER­ in sublease space. Companies that exposure to the financial industry, addi­ FORM REASONABLY WEll. "The over­ recently placed large blocks of space tional returns to each submarket are heated leasing market has definitely on the sublet market include Goldman anticipated until the turmoil in the fi­ cooled down, but there is still demand Sachs, which listed 140,000 square feet nancial sector subsides and the econo­ for space out there," reveals a partici­ at 77 Water Street; the Royal Bank of my regains its footing. Also anticipated pant. In the first quarter of 2008, Mid­ Scotland, which is marketing 140,000 in the near term is a decline in market town posted the highest level of leas­ square feet at 7 World Trade Center; rent growth. "Landlords can't keep ing activity (3.8 million square feet) of and Nomura Holdings, which returned aggressively pushing up rental rates the 32 CBD markets tracked by Cush­ 11 0,000 square feet from 2 World when space options greatly increase," man & Wakefield. Downtown had the Trade Center. In total, sublease space notes a participant. After several quar­ seventh highest total (775,681 square Downtown amounted to 1.53 million ters of strong rent growth, this market's feet) while Midtown South recorded square feet in the first quarter of 2008, initial-year market rent change rate the twelfth highest total (490, 190 up quite a bit from a year earlier. declined for the past three quarters square feet). While the sublease total also in- (see Table MAN-1). + The leasing totals for both Midtown and Midtown South are comparable to Table 14 MANHATTAN OFFICE MARKET the levels each submarket realized a year Second Quarter 2008 earlier. For Downtown, however, this quarter's total was well below its per­ CURREN I QUMUER LAST QUARHR YEAR AGO formance a year ago- nearly 477,000 DISCOUNT RATE (IRR)' Range 6.00%, - 9.00% square feet lower. When combined with Average the amount of space returned to this sub­ Chonge (Basis Points) + 6 ---;-- 1 3 market during the first quarter of 2008, OVERAll CAP RATE (OAR)a the end result was negative absorption Range

of 802,000 square feet and an increase Avf~rage 5.67~fr, 5.55%. Change (Basis Points) + 12 RESIDUAL CAP RATE Table MAN·1 Range INITIAL-YEAR MARKET RENT Average 6.81'',{, CHANGE RATES Change (Bas;s Pointc,) + 10 -- 10 Manhattan Office Market MARKET RENT CHANGE RATE" Change Range 3.00%- 1O.OfJO;h 3.00%.- 10.00%, Quarter Average (Basis Points) Average 2QOS 5.78% ·· 2S Change (Bas:s Points) -56 1QOS 6.03% -88 EXPENSE CHANGE RATE" 4Q07 6.91% -31 Range

3Q07 7.22% +e.g /\veragf~ Change (Basis Points) 0 0 2Q07 6.34% + N~4 2Q06 3.50% + 121 AVERAGE MARKETING TIME' Range 2.00 .. 8.00 2.00 -· 8.00 2.00-- 8.00 2Q05 2.29% + 150 Averoge 4.06 3.94 2Q04 0.79% Changf~ (%,) + 3.0S Source: Korpacz Real Estate Investor Survel' a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011707 Northern Virginia Office Market

DESPITE HEALTHY LEASING ACTIVITY IN As supply outpaced demand, the andria posted a total vacancy rate of

NEWLY DEliVERED BUILDINGS, AN ECO­ overall vacancy rate for this market 6.22% in the first quarter of 2008. By

NOMIC SLOWDOWN AND THE DEliVERY increased 57 basis points in the first comparison, the total vacancy rate was

OF ADDITIONAL NEW SPACE HAVE JOINED quarter of 2008 to reach 11.4%. More­ 9.59% for Arlington County, 16.35%

TO NEGATIVELY IMPACT THE PERFORM­ over, the sublet vacancy rate rose to for Prince William County, 16.50% for

ANCE OF THE NORTHERN VIRGINIA OFFICE 1.29%, the highest since September Loudoun County, and 11.58% for

MARKET. "Many companies have pulled 2005. The construction glut, however, Fairfax County during that time period. back their expansion plans and are is impacting certain sections of this Due to the tremendous amount of making do with the space they cur­ market more than others. "Problems office space under construction in rently occupy," notes a participant. In are not universal," remarks a partici­ Fairfax County (nearly 3.0 million additional, several firms have consoli­ pant. As has historically been the case, square feet) and the limited amount of dated their regional locations, leaving the closer-in submarkets, such as space preleased, its vacancy rate is available space behind. Verizon, for Arlington, Alexandria, and the 1-395 likely to increase over the near term. example, recently vacated 33,000 Corridor, continue to post vacancy Rising vacancy rates and additions square feet in Herndon, 81,000 square rates much lower than both the entire to supply are providing tenants with a feet in Merrifield, and 106,000 square market and outlying submarkets. greater number of leasing options. As feet in Tysons Corner, according to CB Based on CBRE's first quarter report a result, landlords have become a bit Richard Ellis (CBRE). for Northern Virginia, the City of Alex- less optimistic that a tenant will remain in its existing space upon lease Table 15 expiration. This quarter, the tenant NORTHERN VIRGINIA OFFICE MARKET retention rate for Northern Virginia Second Quarter 2008 ranges from 60.00% to 70.00% and

CURRENT QUARTER lAST QUARHR YE.

Changf~ (Basis Points) + !1 ages for select individual Survey office

RESIDUAL CAP RATE markets are shown in Table NV0-1. ~ Range .P..verage Table NV0-1 Chonge (Basis Points) 0 0 TENANT RETENTION PERCENTAGES MARKET RENT CHANGE RATE" Select Survey Office Markets Range 0.00°;() -- !LOO~;() Market Average Avf~rage 2.86% 2.94%, Pacific Northwest 71.67% Change (Bas;s Points) -· 8 --a Houston 70.36% EXPENSE CHANGE RATE" Rang<' Manhattan 70.00% Average San Francisco 69.17%

Change (Basis Points) ll 0 Atlanta

AVERAGE MARKETING TIME' Dailas Range 1.00-9.00 1.00-9.00 100-900 Philadelphia r\verage 5.75 5.07 Suburban Maryland Change ( 0;~;) -'- 13.41 Source: Korpacz Real Estate Investor Survel' a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011708 Pacific Northwest Office Market

EVEN THOUGH THE PACIFIC NORTHWEST points, pushing up its average to 3.92% the first quarter of 2008, transactions

OFFICE MARKET IS FEEliNG THE EFFECTS -the fifth highest average of the 18 in­ totaled $15.0 million in Seattle (down

OF A NATIONAL ECONOMIC SLOWDOWN dividual office markets included in our 79.0% from the prior quarter) and $16.0

TO SOME DEGREE, A SOliD REGIONAL Survey. Additional proof of this market's million in Portland (down 60.0% from

ECONOMY AND A HEALTHY BALANCE BE­ appeal to investors is noted in its aver­ the prior quarter), as per Real Capital

TWEEN SUPPLY AND DEMAND ARE HELP­ age overall cap rate, which declined 50 Analytics, Inc. "Don't expect to see a lot

ING TO CUSHION ITS DOWNTURN. After basis points this quarter to reach 7.31 %. of institutional trades due to a divide strong employment growth in both 2006 In the first quarter of 2008, only four of between buyers and sellers over pric­ and 2007, several employment sectors the 18 individual office markets included ing," notes a participant. Due to the reported declining growth in the first in our Survey reported declines in their inability of buyers and sellers to agree quarter of 2008. In the Seattle-Bellevue­ average OAR. At 50 basis points, the on pricing, many buyers are content to Everett metropolitan division, for exam­ Pacific Northwest office market incurred sit on the sideline until a new pricing ple, the financial-activities sector has the largest drop during the quarter. level is established. "Just because an as­ lost approximately 800 jobs since the Even though investors remain im­ set receives 20-plus bids, doesn't mean end of 2007, moving from 89,500 work­ pressed by the performance of this mar­ it will sell," comments a participant, ers in December 2007 to 88,600 work­ ket and continue to look for investment who recently was one of numerous ers in April 2008, based on data from opportunities, sales activity is way down underbidders on an asset that was sub­ the Bureau of Labor Statistics. On top compared to the same time last year. In sequently pulled from the market. 4- of these losses, the professional-and­ business-services sector incurred a Table ·16 PACIFIC NORTHWEST OFFICE MARKET decline of 1,700 jobs during that time Second Quarter 2008 period. Despite these current bumps, this CURRENT QUARTER lAST QUARTER YEAR AGO office market has shown resiliency at a DISCOUNT RATE (IRR)a Rang<: 5.00%- 13.00% time when many other major office Average 9 J 7'}~) 9.98')(, markets are dealing with growing levels Change (Bas:s Poinrs) - 3S -81 of sublease space and rising vacancy OVERAll CAP RATE (OAR)a rates. In the first quarter of 2008, both Range 5.00%, -- 11.00%) Seattle and Portland posted quarterly declines in their overall vacancy rates Change (Basis Points) --50 -- 121 on both a quarterly and year-over-year RESIDUAL CAP RATE basis in both their CBD and suburban Range 6.25'}~) -- 9.00%~ 7.00'1() -- 10.00%. submarkets. Moreover, at 8.4% and Change (Basis Points) -42 -90 8.9%, respectively, Seattle and Portland MARKET RENT CHANGE RATE" have two of the lowest CBD vacancy Range 0.00'}:)- 7.50°l)

rates in the country. .P..verage 3.92~/(J While these vacancy rates are ex­ Chonge (Basis Points) + 32 _,_ 14!

pected to increase over the next several EXPENSE CHANGE RATE" months due to the delivery of several speculative developments, this market's Avf~rage 3.33%. 3.33%, Change (Basis Pointc,) 0 0 durability continues to appeal to inves­ tors. While many office markets in our AVERAGE MARKETING TIME' Rang<' 1.00 -- 12.00 1.00 -- 12.00 ].00 - 12.00 Survey reported declines in their aver­ Average 4.75 5.08 5.92

age initial-year market rent change rates, Change ::(j~:} - 6. SO - 19.76

this market posted a gain of 32 basis a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011709 Philadelphia Office Market

THE PHILADELPHIA OFFICE MARKET RARELY employment growth has decelerated the two years. This trend is beneficial for the FALLS SUBJECT TO STEEP PEAKS AND VAL­ demand for office space in this market. area's vacancy rates and rental rates, LEYS. Instead, it typically maintains an The sluggish job growth is evidenced by which continue to tick upward. In the unhurried, yet steady tempo, occasion­ negative Class-A absorption in both the first quarter of 2008, the weighted aver­ ally bucking national trends. The same central business district (CBD) and sub­ age rental rate for Class-A CBD office rings true for its underlying economy. urbs during the first quarter of 2008. space inched up to $26.66 per square So while the national housing picture However, the CBD Class-A overall va­ foot while it reached $26.31 per square is exceedingly bleak at the moment, the cancy rate remains in the single digits foot for Class-A suburban office space. Philadelphia region reported a 30.0% at 6.9%, down from 7.1% in the prior Property owners are expected to con­ year-over-year decline in home fore­ quarter. In addition, the vacancy rate tinue pressing for rental rate increases closures during the first quarter of 2008. in the suburbs dropped 30 basis points as long as vacancy rates remain favor­ This favorable trend is due in part to the to 14.2% in the first quarter of 2008. able to landlords. area's limited exposure to the subprime Moreover, both of these rates are below While a lack of competitive space crisis and the strength of its core em­ the national averages: 9.1% (U.S. CBD) and steady demand have helped propel ployment sectors (education and health­ and 14.4% (U.S. suburbs), according the CBD's rental rate growth, this trend care) that drive the local economy. to Cushman & Wakefield. would likely reverse itself if a significant Like most office markets across the Limited new office space deliveries amount of space entered the CBD. The country, a slowdown in office-using are in this market's pipeline for the next proposed American Commerce Center could be that catalyst. This 63-story, 1.3- Table 17 million-square-foot office tower would PHILADElPHIA OFFICE MARKET become the city's tallest skyscraper and Second Quarter 2008 is part of a mixed-use development that CURRtNl" QUARJIR lAST QUARHR YEAR AGO also includes a 300-room luxury hotel DISCOUNT RATE (IRR)' and 315,000 square feet of retail space. Range 8.00%- 11.00% B.OO(j~: - 11 .00'};, 8.00%, - 11 .00% The developer's strategy is to attract Average ~~-2~Y}~~ 930°;;; 9.]0%, headquarter-type users to the property Chonge (Basis Points) - ' - 1 by virtue of its position as the only new, OVERAll CAP RATE (OAR)a trophy asset in the CBD. This new proj­ Range S.DD'-}:,- 11 .00°/~ 1 s .00°;~; - 11 .00'-};, 5.00%- 11.00'',{,

Avf~rage 8.25% 8.15%, f_LlStY, ect is estimated to break ground in Change (Basis Points) + 10 -)- 10 2009, subject to approvals. RESIDUAL CAP RATE On the investment side, a limited Rang<' 6.00% ·- 1 0.00% 6.00<);~, -- 10.00% 6.00%,-- 10.00% number of sales occurred in this mar­ Average 8.42% 8.40'',{, .'3 40~b ket in the first quarter of 2008. "The Change (Bas;s Pointc,) + 2 -:- 2 investors that own assets don't want to MARKET RENT CHANGE RATE" get hurt, so they aren't going to sell Range O.OO~fr, ~ 3.0()<}(, 0.00%,- 5.00% Average 2.08%, right now," notes a participant. While Change (Bas:s Points) -50 -50 most of the recent sale transactions EXPENSE CHANGE RATE" occurred in the suburbs during the first Range J.DD{;~r,- 3.00%, 2.00'',{,- 3.00% quarter of 2008, an interesting transac­ /\veragf~ ·3 .00'-l;:, tion did occur in the CBD. SSH Real Change (Basis Points) + 17 Estate, in a joint venture with Young AVERAGE MARKETING TIME' Capital, purchased a 626,594-square­ Range 4.00 -· 9.00 l.OO -· 9.00 .l.OO --9.00 foot portion of the office-condo Averoge S.9!. s. 30 5.30 Wachovia Building at 123 S. Broad Change(%,) + 11.70 • 11.70

a. Rate on unlevet·aged, all-cash tt·ansactions b. lnitialt·ate of change c In months Street for $91.00 per square foot. '*"

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011710 Phoenix Office Market

As PHOENIX STRUGGLES WITH TREMEN­ even parking abatements. Although the this year, it is better positioned to with­ DOUS EXPOSURE TO THE NATIONAL Class-A weighted average suburban stand economic adversity over the

HOUSING CRISIS AND THE CREDIT rental rate did increase modestly from short term. Overall, first quarter leasing CRUNCH, THE STRAIN ON THE LOCAL $27.53 to $28.34 per square foot dur­ activity in the CBD closely matched

ECONOMY IS SPilliNG OVER INTO ITS ing the first quarter of 2008, the the third and fourth quarters of 2007. OFFICE MARKET. From 2004 to 2006, increase is mainly attributable to the One new lease recently signed down­ financial activities and professional­ delivery of more than one million town was law firm Squire, Sanders & and-business services, the primary square feet of new Class-A space. Dempsey's deal for 80,000 square feet drivers of office space demand, According to Cushman & Wakefield, across the top four floors of One East expanded by 18,900 jobs and 60,600 these deliveries increased the Class-A Washington, the Class-A office tower jobs, respectively (see Table PH0-1). suburban vacancy rate to just over of the new mixed-use CityScape devel­ While new jobs were added in both 20.0%. The office inventory is expect­ opment underway in the CBD. Set for sectors in 2007, the gains paled in ed to increase by another 2.0 million delivery in 2010, the goal of CityScape comparison to prior years, signaling a square feet by the end of 2008, creat­ is to create a thriving urban environ­ halt in economic growth. During the ing a greater imbalance between sup­ ment in the heart of downtown first quarter of 2008, these employ­ ply and demand in suburban Phoenix. Phoenix that blends residential space ment sectors lost jobs, resulting in neg­ Since no speculative additions to with urban living, work, shopping, and ative absorption during the quarter. On supply will be delivered to the CBD entertainment opportunities. + a positive note, Phoenix is experienc­ ing strong population growth and in­ Table 18 PHOENIX OFFICE MARKET migration trends, which in turn could Second Quarter 2008 generate home sales and help counter­ act the housing slump. CURRENT QUARTER I.AST QUARTER HARACO Lackluster tenant demand has DISCOUNT RATE (IRR)a Range passed the leasing advantage back to Average 8.31%, tenants, reintroducing free rent, liberal Change (Basis Points) +- 39 + 39 tenant improvement allowances, and OVERAll CAP RATE (OAR)a Range Average 6.90'';(, Table PH0-1 Change (Basis Points) + 35 ANNUAL EMPLOYMENT GROWTH Phoenix-Mesa-Scottsdale RESIDUAL CAP RATE Rangt! Metropolitan Division Professional- Average Financial and-Business Change (Basis Points) + 18 +6 Year Activities Services MARKET RENT CHANGE RATE" 2008* -2,800 -700 Range 1.00'';(,- 5.00% 2007 + 200 + 5,000 Jwerage 2006 + 6,400 + 22,400 Change (Basis Points) -- 125 2005 + 8,300 + 23,000 EXPENSE CHANGE RATE" Range 2004 + 4,200 + 15,200 Average 2003 + 3,300 + 5,100 Change (Basic, Points) --10 ·- 10 2002 + 1,600 - 5,900 AVERAGE MARKETING TIME' 2001 + 3,300 -4,700 Range 2.00-9.00 2.00-9.00 1.00- 6.00 2000 + 2,000 + 16,000 Average 433 3.50 * Month of March Change(%) + ?.3 .71 Source: Bureau of Labor Statistics a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011711 San Diego Office Market

DESPITE A GROWING NUMBER OF RESI­ hand, tourism, typically a growth em­ ly 83.0% of the space underway is ex­

DENTIAL FORECLOSURES, DETERIORATING ployment sector for San Diego, is begin­ pected to deliver within the year. While

HOME PRICES, AND AN UNEMPLOYMENT ning to buckle under the pressure of new construction suggests that investors

RATE NORTH OF 5.0%, TOTAL NONFARM rising gas prices, higher airline travel are confident in the long-term perform­

EMPLOYMENT FIGURES FOR THE SAN costs, and reduced consumer spending. ance of this market, increased vacancy DIEGO-CARLSBAD-SAN MARCOS METRO­ The aforementioned economic and halted rental rate growth are short­

POliTAN STATISTICAL AREA SHOWED A stress, coupled with sizeable additions term risks that many of them will face

MONTHLY INCREASE IN MARCH 2008. Ac­ to supply, resulted in more than 404,000 in an already strained office market. cording to the Bureau of Labor Statis­ square feet of negative absorption in Investment sales volume in the first tics, preliminary figures indicated a gain the first quarter of 2008. Consequently, quarter of 2008 dropped to just $170.0 of 6,000 jobs. The primary sectors that the overall vacancy rate increased to million, a level not seen since midyear drive demand for office space were split 12.5% from 11.8% in the prior quar­ 2005, according to Real Capital Ana­ in their results- professional-and-busi­ ter, as reported by Cushman & Wake­ lytics, Inc. At the same time, the aver­ ness services gained 1,000 jobs, while field. The bulk of new construction is age sale price plunged from nearly financial activities lost 200 jobs. San occurring in the 1-15 Corridor submar­ $400.00 per square foot in midyear Diego's economy is also seeing mod­ ket, which encompasses such areas as 2007 to about $225.00 per square foot erate growth in the technology-produc­ Rancho Bernardo, Sabre Springs, and this quarter. ing and defense industries. On the other Scripps Ranch (see Table SD0-1). Near- Several of the recent sales involved medical office buildings, indicating a Table ·19 rising interest in this asset class among SAN DIEGO OFFICE MARKET investors. In one such sale, Pacific Second Quarter 2008 Realty Advisors purchased the 35,000- CURR£NT QUARTtR LAST QUARHR Y£AR AGO square-foot Pacific Doctors Park for DISCOUNT RATE (IRR)a $251.00 per square foot. This property Rang<' was 100.0% occupied at the time of Average 8.08% sale. In another medical office sale, Change (Ba~,s Points) + 16 0 Montecito Medical Investment, in a OVERAll CAP RATE (OAR)a Range 4.50%.- 8.00%, 4.50'',{,- 8.00% joint venture with Harrison Street Real r\verage Estate, acquired Escondido Medical Change (Bas:s Points) -2 - 19 Arts Center for approximately $319.00

RESIDUAL CAP RATE per square foot. This two-building, Range 52,756-square-foot property was /\veragf~ 6.84% 95.0% occupied at the time of sale. ~ Change (B;1sis Points) 2

MARKET RENT CHANGE RATE" Range Table SD0-1 Average OFFICE SPACE UNDER CONSTRUCTION Changf' (Basis Points) - 76 -67 San Diego Office Market EXPENSE CHANGE RATE" Under Construction Range Sub market (Square Feet)

!'.verage Central Suburban 816,254 Change (Basis Points) -- 2{_:1 Mid-City 300,664

AVERAGE MARKETING TIME' North County 310,191 Range 1.00-- 8.00 1.00-- 8.00 2.00 - 6.00 1-1 5 Corridor 1 '162,456 Average 4.21 ].94 4 07 San Diego County 2,589,S6~j Change(%) + G.as -:-3.44 Source: Cushman & Wakefield a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011712 San Francisco Office Market

WITH LEASING VELOCITY WAY OFF FROM increased to 13.5% in the first quarter rate tumbled 228 basis points to reach

PRIOR YEARS, MANY LANDlORDS IN THE of 2008. While sublease totals remain below 5.00% for the first time in almost

SAN FRANCISCO OFFICE MARKET ARE well below those witnessed during the eight quarters. This drop represents the BRACING THEMSELVES FOR A SHAKY PER­ dot.com bust, a lingering downturn largest decline for this assumption of

FORMANCE IN 2008. "There is not a lot could easily increase the current totals. all the individual office markets in the of leasing activity going on right now," According to a new report by Studley, Survey. At 125 basis points, the Phoenix bemoans a participant. After several the nation's 200 largest law firms are office market had the second highest quarters of reporting strong net absorp­ heading into a likely recession saddled decline, while the Denver office mar­ tion totals, this market posted 400,000 with excess space. The report estimates ket posted the third highest dec! i ne square feet of negative absorption in that law firms with offices in San Fran­ with 1 00 basis points. the first quarter of 2008, according to cisco have at least 10.0% (or 265,000 Given the economic uncertainty CB Richard Ellis. Downtown properties square feet) more space than they need. underlying both the national and local that witnessed increases in vacant As this market swings in favor of economies, further declines in market space during that time period included tenants, especially those looking for rent growth rates would not be surpris­ 153 Kearny Street, Three Embarcadero large blocks of space, property owners ing. As one participant notes, "Even Center, One Embarcadero Center, and are becoming more conservative in with a large drop in our market rent One Front Street. In addition, 560 their underwriting. This quarter, the growth rate assumption, we might still Mission Street experienced the loss of average initial-year market rent change be a bit too aggressive." ~ tenant Pay By Touch, which vacated 87,000 square feet. Table 20 SAN FRANCISCO OFFICE MARKET With supply outpacing demand, the Second Quarter 2008 total vacancy rate in this market in­ creased 30 basis points in the first CURRENT QUARTER LAST QUARTER YEAR AGO quarter of 2008 to reach 8.7%. When DISCOUNT RATE (IRR)' Range factoring in sublease space availabili­ Average SJB~fr, ties, which have increased in nearly Change rF3asis Fhnts) -· 22 every submarket, the availability rate OVERAll CAP RATE (OAR)a R;mge 4.50'1() -- 9.00%, 4.00% ... 9.00% Average 6.39%, Table SF0-1 Change (Basis Po,nts) INITIAL-YEAR MARKET RENT RESIDUAL CAP RATE CHANGE RATES Range San Francisco Office Market A.veragt~ Change Change (Basis Po:nts) _,_ 6 - 24 Quarter Average (Basis Points) MARKET RENT CHANGE RATE" 2Q08 4.95% -228 Range 1Q08 7.23% -82 Average 4Q07 8.05% -68 Chang<' (Basic, Points) -· 228 ·- 161 3Q07 8.73% _,_ ?17 EXPENSE CHANGE RATE" 2Q07 6.56% --t- so Range 1Q07 6.06% -72 Average 4Q06 6.78% + 211 Change (Basis Points} - 22 -29

3Q06 4.67% + 31 AVERAGE MARKETING TIME' Range 1 00- 12.00 100- 12.00 1.00- 1!.00 2Q06 4.39% + 289 Avt~rage 5.36 2Q05 1.50% Change(%) '2.61 -· 6.62 Source: Korpacz Real Estate Investor Survel' a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011713 Southeast Florida Office Market

THE THREE COUNTIES THAT COMPRISE end of 2007, moving from a total of in the first quarter of 2008, according THE SOUTHEAST FLORIDA OFFICE MAR­ 76,500 workers in December 2007 to to CB Richard Ellis. In Palm Beach

KET - BROWARD, PALM BEACH, AND 74,500 workers in April 2008, accord­ County, sublease space reportedly MIAMI-DADE - CONTINUE TO CONTEND ing to the Bureau of Labor Statistics. increased from about 240,000 square

WITH RISING VACANCY RATES, TEPID On top of these losses, the profession­ feet at year-end 2007 to close to

LEASING ACTIVITY, AND AN OVERALL al-and-business-services sector 500,000 square feet in the first quarter

SLOWDOWN IN ECONOMIC GROWTH. incurred a decline of 3,900 jobs dur­ of 2008. While mounting sublease "The problems that started in the hous­ ing that time period. As companies space is less of a concern in Broward ing sector have spilled over into the have shed workers, many of them have County, this submarket continues to commercial real estate sector," remarks either directly or indirectly returned contend with speculative additions to a participant. As a result, business office space to the market. As a result, supply and rising vacancy rates. consolidations, local unemployment tenants looking for office space are Due to weaker fundamentals, rate increases, and job losses have finding more options and more con­ tighter lending requirements, and the occurred. cessions. concern that market conditions could In the Miami-Miami Beach-Kendall Since the first quarter of 2007, deteriorate further, sales activity has metropolitan division, for example, the vacant sublease space has more than dropped considerably. In the first quar­ financial-activities sector has lost doubled in the Miami office market, ter of 2008, office sales totaled $130.0 approximately 2,000 jobs since the growing to nearly 252,000 square feet million in Miami, $5.0 million in Palm Beach County, and $4.0 million in Table 21 Broward County, according to Real SOUTHEAST HORIDA OFFICE MARKET Capital Analytics, Inc. On average, Second Quarter 2008 these totals represent a 78.0% decline CURRENT QUARHR lAST QUARHR YEAR AGO from the amounts reported in the first DISCOUNT RATE (IRR)a quarter of 2007. Range 7.00%.- 11 .00%, 6.00'',{, - II .00% As uncertainties have risen and r\verage 9.02<:() 8.63')(, performances have weakened, the Change (Bas:s Points) + 47 .;. J9 average overall cap rate (OAR) for this OVERAll CAP RATE (OAR)a market has increased. This quarter, the Range s.2o<:<. -· 10.50%, 5.20<;{, -· 10.00%. S~2Cf}~, -- 1(1.00%

/\veragf~ B.OO(j{: 7.80(j{: 8.01°l, average OAR for the Southeast Florida

Change (fJ;,sis Points) + 20 ·- 1 office market ticked up 20 basis points

RESIDUAL CAP RATE to reach 8.00%, one of the highest Range 6.2~)

EXPENSE CHANGE RATE" Second Quarter 2008 Range Office Market Average

Average J.J6'',{, Philadelphia 8.25% Change (Basis Points) - 29 -· 29 Southeast Florida 8.00% AVERAGE MARKETING TIME' 7.75% Range .'1.00- 12.00 3.00- 12.00 lOO- !2.00 Charlotte 7.56% Average 6.75 5.42 6.42 Change ::(j<:) + 5.14 Source: Korpacz Real Estate Investor Survel' a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011714 Suburban Maryland Office Market

LINGERING UNCERTAINTY ABOUT THE The percentage of landlords offer­ Bethesda, Chevy Chase, and Silver

FUTURE DIRECTION OF THE U.S. AND ing concessions typically moves in Spring. At 7.22%, Silver Spring posted

LOCAL ECONOMIES WILL liKELY DAMPEN sync with shifts in a market's vacancy the fourth lowest vacancy rate of the

TENANT DEMAND IN THE SUBURBAN rate. Due to a strong number of spec­ nine office areas that comprise

MARYLAND OFFICE MARKET FOR THE ulative completions (with minimal lev­ Montgomery County, according to CB

REMAINDER OF 2008. "Tenants will want els of preleasing), the overall vacancy Richard Ellis. more inducements in order to sign rate in Suburban Maryland surged on Due to their tendency to outper­ leases going forward," states a partici­ both an annual and quarterly basis. In form the market as a whole, Silver pant. Currently, 75.0% of our partici­ the first quarter of 2008, the overall Spring and Bethesda tend to attract pants believe that concessions are vacancy rate for this market stood at strong investor interest. In one recent prevalent in this market. While con­ 13.0%, 110 basis points above the sale, TecHill I & II located in Silver cessions vary, our participants indicate average in the prior quarter and 160 Spring sold for $265.00 per square that free rent can be as much as three basis points above the average a year foot. Although an overall cap rate months on a seven-year lease in this ago, based on data from Cushman & (OAR) was not disclosed for this sale, market. Tenant improvement allow­ Wakefield. investors expect OARs to increase an ances (Tis) can also be awarded and The top-performing submarkets are average of 42 basis points over the typically vary based on the condition mainly located in Montgomery County next six months. OAR trends for this of the space. For shell space in this and include Gaithersburg, North market are shown in Table SM0-1. ~ market, Tis range from $35.00 to $50.00 per square foot and average Table 22 SUBURBAN MARYL.ANO OFFICE MARKET $41.25 per square foot this quarter. For Second Quarter 2008 second-generation space, they are a bit lower, ranging from $18.00 to $35.00 CURRENT QUARTER LAST QUARTER YEAR AGO per square foot and averaging $26.00 DISCOUNT RATE (IRR)a Ronge 6.00'-}:)- 11.00°/~~ per square foot. Avt~rage fJ.OfJ~Io Change (Basis Points) +! s

Table SM0-1 OVERAll CAP RATE (OAR)a Range OVERALL CAP RATE TRENDS Average Suburban Maryland Office Market Change rF3asis Fhnts) + 24 Change ' 10 Quarter Average (Basis Points) RESIDUAL CAP RATE 2Q08 7.02% + 10 Range Average 1Q08 6.92% 0 Change (Basis Po:nts) + 12 4Q07 6.92% +9 MARKET RENT CHANGE RATE" 3Q07 6.83% + s Range o.ooul)- 4.00%, 2Q07 6.78% -II Average 2.66(~{) 2.86% 1Q07 6.89% -8 Change (Basis Points) -- "15 --20 4Q06 6.97% -4 EXPENSE CHANGE RATE" 3Q06 7.01% -7 Range

2Q06 7.08% -5 Average

1Q06 7.13% -37 Chang<' (Basis Points) 0 0

4Q05 7.50% -3 AVERAGE MARKETING TIME' Rangf' !00- !2.00 1.00- 12.00 1.00-12.00 3Q05 7.53% -14 Average 6.58 5.79 ?QO'i 7.67% Change ( 01~~) + 1].64 + !3 64 Source: Korpacz Real Estate Investor Survel' a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011715 Washington, DC Office Market

A DROP-OFF IN NEW DEMAND AND AN buildings were delivered in the East End term oversupply problem will likely be

UPSWING IN NEW CONSTRUCTION HAVE submarket- 455 Massachusetts Avenue, avoided, the fact that only 22.0% of

COMBINED TO INCREASE THE OVERALL NW and 251 H Street, NW. Located in this space is preleased will make it dif­

VACANCY RATE FOR THE ENTIRE WASH­ the Mount Vernon Triangle district of ficult for landlords to retain control of

INGTON, DC OFFICE MARKET, AS WELL AS the East End, 455 Massachusetts Avenue, this market. "Market conditions are

ITS CLASS-A OFFICE SECTOR. In the first NW is a 250,000-square-foot building starting to favor tenants and buyers," quarter of 2008, the overall vacancy that is 100.0% vacant except for a let­ attests a participant. Nevertheless, the rate was 7.3% for this entire market ter of intent to one tenant for 15,000 Washington, DC office market remains and 9.6% for the Class-A sector, ac­ square feet, according to CB Richard one of the top-performing office mar­ cording to Cushman & Wakefield. A Ellis. The other new building (the kets in the country and continues to year earlier, these figures were 7.1% 90,000-square-foot 251 H Street, NW) attract strong investor interest. and 8.3%, respectively. "A lot of Class­ is fully leased to the American Israeli The Washington, DC office market B space has been completely renovat­ Public Affairs Commission. is of particular interest to foreign buy­ ed and upgraded to Class-A space so With an additional 2.3 million ers, who like the District's long-stand­ there are a number of options for ten­ square feet set to deliver throughout ing stability, employment and job growth ants looking for Class-A space right this market in 2008, supply is expect­ history, and diverse pool of tenants. In now," confirms a participant. ed to stay ahead of demand for the 2007, foreign investors bought nearly During the first quarter of 2008, two next several months. Although a long- ten times as much commercial office space in the District as they did in 2006. Table 23 The most recent Washington, DC asset WASHINGTON, DC OFFICE MARKET acquired by a foreign buyer was the Second Quarter 2008 Class-A trophy building located at CURRENT QUARTER LAST QUARTER YEAR AGO 2099 Pennsylvania Avenue, which sold DISCOUNT RATE (IRR)a for a record $867.00 per square foot. Range 6.00°l1- 9.50%. Reportedly, Jones Lang LaSalle, which Averagt~ 7.51%1 brokered the deal, presented the prop­ Change (Basis Points) -- s erty to buyers in Europe, Australia, OVERAll CAP RATE (OAR)a Range 'i.OO%, -· 8.00% Asia Pacific, and Latin America. The

Average 6 2 3 ~b buyer was a wealthy Irish investor, Chang<' (Basic, Points) _,_ 7 '2 Vico Capital, who was up against very

RESIDUAL CAP RATE few domestic buyers. Range S.OO(Y1- 9.00(j<: Other office properties that sold in Average 6J~,s r;,() Washington, DC recently include 901 Change (Basis Points) -4 -II E Street, NW, which was vacant at the MARKET RENT CHANGE RATE" time of sale and will be occupied part­ Range 3 OO~b - 7 .00°;~: Average J.6:S 0l1 ly by the new owner who acquired it Change (Basis Points) ·- 12 --3 for $620.00 per square foot; 1602 L

EXPENSE CHANGE RATE" Street, NW, which traded for $587.00 per square foot; and 1111 19th Street, which was 98.0% occupied at the time Change IF3aois Fhnts) 0 0 of sale and sold for $456.00 per square AVERAGE MARKETING TIME' foot. Overall, sales activity is down Rang<: 1.00- 9.00 1.00- 9.00 1.00-9.00 considerably in Washington, DC due Average iJ .] 1 ] . g;~ 3.94 to economic uncertainty, tighter lending Change(%,) ---;-- 9.?.9 + 9.]9

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months guidelines, and a bid-ask pricing gap. ~

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011716 National Flex/R&D Market

EVEN THOUGH COST-SENSITIVE SUBURBAN pricing and too much economic uncer­ utor of engine parts, and was part of a OFFICE TENANTS ARE CURBING THEIR DE­ tainty keeping investors on the sidelines, 1 031 exchange. MAND FOR FLEX/R&D SPACE, CONTINUED many participants do not expect sales In a similar trade, GE Commercial GROWTH IN THE HIGH-TECH SECTOR IS activity to pick up noticeably in the Finance purchased the Quadrant Wil­ KEEPING DEMAND FOR FLEX/R&D SPACE latter part of 2008. "I think 2008, and lows Corporate Center, a 65,080-square­ STRONG IN ESTABliSHED HIGH-TECH HUBS. even into 2009, will be slow in terms foot flex/R&D building, for $284.00 per In Austin, for example, the flex/R&D of deal flow," shares a participant. square foot. This single-tenant asset sector absorbed close to 185,000 square Although some flex/R&D trades have was fully leased to Universal Avionics feet in the first quarter of 2008, accord­ occurred recently, many of them have and sold in July 2007 for $230.00 per ing to Grubb & Ellis. As a result, Austin's involved smaller, single-tenant proper­ square foot. The reported overall cap flex/R&D vacancy rate held steady at ties. In one such deal, two private inves­ rate (OAR) for this sale was 6.30%. This 16.6% during that time despite additions tors from California acquired a 67,204- OAR is within the range indicated by to supply. Such steady demand allowed square-foot, flex property located in our participants this quarter for both the the average asking rental rate for Austin's Avondale, Arizona for about $200.00 national flex/R&D market (see Table 24) flex/R&D space to increase to $9.68 per per square foot. This three-year-old, and the national net lease market, square foot in the first quarter of 2008. build-to-suit asset was fully leased on a which reports an OAR range of 6.00% Portland's flex/R&D market also con­ long-term basis to Cummins Rocky to 1 0.00% and an average OAR of tinues to perform well despite deliver­ Mountain, a manufacturer and distrib- 7.63% (see Table 27). + ies and economic uneasiness. In the first quarter of 2008, its flex/R&D mar­ Table 24 NATIONAl FlEX/R&D MARKET ket posted a vacancy rate of 6.8%, Second Quarter 2008 down 40 basis points from the end of 2007. With only 203,000 square feet CURRENT QUARTER lAST QUARTER YEAR AGO under construction, this market will DISCOUNT RATE (IRR)a Range likely perform well over the near term. Average 8.56'';(, In nearby Seattle, the vacancy rate for Change (Baois f'c@ts) + 5 flex/R&D space ended the first quarter OVERAll CAP RATE (OAR)a much higher at 1 0.3%. Despite a high­ Range 5.50%, - 1 0.00%

er vacancy rate, the average asking Average 7.1~7~1() rental rate for flex/R&D space in Seattle Change (Basi~, Po~nts) '21 + 8 is much higher than in Austin. In the RESIDUAL CAP RATE 6.75'';(,- I O.SO% first quarter of 2008, Seattle's average Aver;1gE: B.20~1n asking rental rate stood at $11.86 per Change (Basis Points) + 10 +9 square foot, $2.18 per square foot above MARKET RENT CHANGE RATE" Austin's rate.

Mirroring the investment trends Average 2. 70%, throughout the industry, sales are down ChrmgE: (Basis Points) --5 + 9 considerably in both number and dol­ EXPENSE CHANGE RATE" lar volume for this sector. According to Range 2.00%- 3.00% Real Capital Analytics, Inc., transac­ + 1 0 tions involving significant flex/R&D AVERAGE MARKETING TIME' properties totaled $1.7 billion in the Ronge 3.00- 18.00 3.00- 18.00 3.00- lB.OO first quarter of 2008, 43.0% below the 6.06 6.33

total realized a year earlier. With buy­ Change(%) -t- 4.45 0

ers and sellers unable to easily agree on a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011717 National Warehouse Market

EVEN THOUGH AN ECONOMIC SLOW­ try, underlying fundamentals have (+50 basis points), and Phoenix(+ 10

DOWN IS EXPECTED TO REDUCE DEMAND started to weaken in several markets basis points).

FOR INDUSTRIAL SPACE, RESTRAINT ON that attracted significant capital from Increases in vacant space and tight­

THE PART OF DEVELOPERS SHOULD Al­ investors during the recent expansion. er lending restrictions have reduced

LOW THE NATIONAL WAREHOUSE MARKET In Los Angeles, where warehouse sales the number of warehouse property

TO PERSEVERE AND MAINTAIN A RELATIV­ totaled $1.3 billion in 2007, the avail­ trades throughout the country. Sales of

ELY HEALTHY BALANCE BETWEEN SUPPLY ability rate increased 100 basis points significant warehouse assets totaled

AND DEMAND. In the first quarter of to reach 8.50% in the first quarter of $5.4 billion in the first quarter of 2008, 2008, the U.S. industrial market's avail­ 2008. Similarly, in San Diego, where down about 34.0% from the same pe­ ability rate increased 30 basis points warehouse sales totaled $292.3 million riod in 2007, according to Real Capital from 10.20% at year-end 2007 to in 2007, the availability rate increased Analytics, Inc. However, big-box ware­ 10.50%, based on data from CB Richard 130 basis points to reach 12.4% in the house assets located in leading hubs, Ellis. The Midwest and West regions of first quarter of 2008. Other western mar­ like Northern New Jersey, the Inland the country incurred the largest shifts kets that posted upticks in vacancy in Empire, and Charlotte, continue to in availability during this time, report­ the first three months of 2008 were receive strong interest from buyers and ing increases of 50 basis points and 40 Orange County (+80 basis points), post gains in sales volumes. basis points, respectively. Portland (+ 100 basis points), Salt Lake Within the warehouse sector, most In the western region of the coun- City (+ 120 basis points), San Francisco investors remain drawn to newer assets that offer both "credit and term." As a Table 25 result, investors have noticed very little NATIONAL WAREHOUSE MARKET movement in overall cap rates for Class­ Second Quarter 2008 A, dominant product so far this year. CURRENT QUARHR lAST QUARHR YEAR AGO "Pricing is still strong for better, institu­ DISCOUNT RATE (IRR)a tional-quality product, but buyers are Range 5.50%.- 10.00%, 5.50'',{,- I 0.00% being more selective in their choices r\verage 7.6(3

/\veragf~ market rent change rate dipped 29 basis Change (fJ;,sis Points) +9 ·- 2 points to reach 2.94%. After nine quar­

RESIDUAL CAP RATE ters of steady increases, this marks the Range s.so<:() -- a.so%, 6DO'X, ·- 10.00%, first decline for this key assumption Average 7.1 8°;;; since the fourth quarter of 2005. At that Changf' (Basis Points) + 5 10 time, the average initial-year market MARKET RENT CHANGE RATE" rent change rate stood at 1.96%, near­ Range 0.00%- 10.00% CI.OO% - 1 0. 00% 0.00% - 5.00'',{, ly 100 basis points below the current

Chonge (Basis Points) -29 c-10 average. With investors lowering their

EXPENSE CHANGE RATE" rental growth expectations and overall Range cap rates ticking upward, some partici­ Average 3.00%, 3.00%, pants expect warehouse property values Change (Basis Points) 0 0 to decline as much as 10.0% over the AVERAGE MARKETING TIME' next 12 months. The average expected Rang<' 1.00 -- 12.00 1.00 ·- 12.00 1.00 ·- 12.00 appreciation is 0.50%. A year ago, this Average 5.75 5.59 SJ7 figure was a much healthier 2.71 %; + 2.86 - 0.35

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months what a difference a year makes. +·

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011718 National Apartment Market

BUYERS ARE FINDING IT MUCH EASIER TO Along with the deceleration in the are escaping foreclosure by forming ATTAIN FINANCING IN THE APARTMENT investment market, the underlying fun­ agreements to sell their homes for less SECTOR THAN IN OTHER COMMERCIAL damentals may be challenged in the than their debt on the property. Then, PROPERTY SECTORS. "Fannie and Freddie near term. National job losses have the the banks can return the homes to the continue to offer financing options for potential to impact overall demand for market for sale at a much lower price, multifamily properties that aren't avail­ rental units. Vacancy for the national making it an achievable price for some­ able to the other asset classes, helping apartment market was 5.9% as of the one on the cusp between renting and prices remain elevated. However, the first quarter of 2008, up just 20 basis buying. Second, new apartments con­ agencies' spreads have widened and points from year-end 2007, according tinue to be added at a steady pace, with their underwriting has become much to Reis. Reis estimating an average of 100,600 stricter," explains a participant. In mar­ While demand trends may slow, units annually over the next five years. kets hard hit by both the condo and most apartment investors view supply­ While these additions to supply are not housing crises, like Phoenix and Or­ side issues as the greatest short-term risk as large as the average of 166,000 units lando, the concern in the investment to this sector. First, the competition for added annually from 1999 to 2003, market is an oversupply of apartment renters from both unsold single-family when combined with the "shadow assets for sale coupled with an above­ homes and condos, poses a threat to market" inventory, they will likely push average rental inventory comprised of apartment owners. For instance, in up vacancy rates and limit rental rate empty homes and condos. Bargain Southern California, some homeowners growth.+ hunters are tracking foreclosures, at­ tempting to capitalize on the sales of Table 26 NATIONAL APARTMENT MARKET distressed assets. Such actions have the Second Quarter 2008 potential to cause asset pricing to de­ cline in the multifamily market. CURRENT QUARTER LAST QUARTER YEAR AGO The investment market for apart­ DISCOUNT RATE (IRR)a Ronge ments has not escaped the national AvE:rage slowdown in sales activity. The dollar Change (Basis Points) + 1 -20 volume of apartment sales slid 40.0% OVERAll CAP RATE (OAR)a in the first quarter of 2008 compared to Range the fourth quarter 2007, and the num­ 5.80%. ber of active buyers dwindled from 49 Change (Baois f'c@ts) .. 4 __ !) to 16, as reported by Real Capital Ana­ RESIDUAL CAP RATE 11.ange 4.50%, -- KSO'J(, lytics, Inc. The dynamics of the current Average 6.69~;(, investment market offer some unique Change (Basi~, Po~nts) +8 opportunities to able investors. Hirsch­ MARKET RENT CHANGE RATE" field Properties and Dubai Investment Group acquired the Landmark Apart­

ments in Cherry Hill, New Jersey in a Change (Basis Points) -- 34 ·-37 $1 00.0-million deal. This 544-unit EXPENSE CHANGE RATE" community is not only a failed condo­ Range 2.00~1(, --· 3.7~.:%, minium conversion, but it remained Average 2. 92%, Change (Basis Points) + 1 40.0% vacant for more than one year. + 6 AVERAGE MARKETING TIME' The buyers plan to spend approximate­ Rangf' 1.00- 12.00 1.00- 12.00 1.00- 12.00 ly $26.0 million repositioning the prop­ Av·erage 6.00 5.79 S.71 erty, which boasts a solid location in a Changt: ('}:,) + 3.63

market with high barriers to entry. a. Rate un unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011719 National Net Lease Market

THE STEEP DOWNWARD TREND IN SALES increase from the prior quarter. "Some arduous process of obtaining debt. "The

ACTIVITY THAT BEGAN IN THE NATIONAL of the new offerings are from owners bid-ask price gap is higher than it's

NET LEASE MARKET IN MIDYEAR 2007 HAS testing the waters, rather than truly mo­ been in five years," exclaims a partici­

SUBSIDED, AS THE NUMBER OF ASSETS tivated sellers as we saw in 2007," re­ pant. The top buyers of single-tenant

SOLD AND THOSE AVAILABLE FOR SALE marks a participant. The retail sector net lease assets over the past twelve

BOTH INCREASED DURING THE FIRST dominated the offerings arena (1 0,916 months were SL Green Realty Corpo­

QUARTER OF 2008. On the sale side, net assets), followed by office (6,462 assets), ration and Paramount Group (office); lease asset trades surged from 3,290 in and industrial (3,586 assets). Inland Real Estate and Lexington Corp­ the fourth quarter of 2007 to 9,929 in Despite the increase in net lease orate Properties (industrial); and Cole the first quarter of 2008, according to offerings, sellers sense a strong "flight to Capital Partners and National Retail Boulder Net Lease Funds. Net lease quality" among buyers, especially rela­ Properties (retail), according to Real office properties led this surge, account­ tive to the underlying real estate. While Capital Analytics, Inc. ing for 3,088 of the net lease assets sold deals with credit tenants have a defi­ Despite current credit issues and the in the first quarter of 2008, a dramatic nite advantage, buyers are paying clos­ pricing disparity between buyers and 272.0% increase from the prior quarter. er attention to fundamentals, building sellers, sale-leaseback transactions are On the offering side, a total of 20,964 quality, and location. In addition, deals occurring at a steady pace as compa­ net lease assets were available for sale are taking a longer time to come to the nies strive to increase liquidity, mini­ as of the first quarter of 2008, a 15.4% table than in prior quarters given the mize debt, and fund acquisitions. In one of the largest sale-leaseback port­ Tabl" 27 folio sales in recent history, Sun Trust NATIONAl NET LEASE MARKET Bank sold 433 retail banking facilities Second Quarter 2008 to Inland Real Estate Group for more CURREN I QUARHR LASJ" QUARHR YEAR AGO than $736.0 million. Sun Trust will lease DISCOUNT RATE (IRR)a back all of the assets for an initial ten­ Range 8.00%- 12.00% year term. Average In another sale-leaseback deal, re­ Change (Basis Points) -20 - 100 tailer and service chain Pep Boys sold OVERAll CAP RATE (OAR)a Range 6.00%- 10.00% 6.00'',{, - I 0.00% 23 properties for $7 4.3 million in an 7.63%. effort to reduce debt. Pep Boys will Change (Basis Points) 0 + 5 lease back the stores for an initial 15-

RESIDUAL CAP RATE year term. Another retailer, Pier 1 Im­ Range 7.00%, ·-· 10.00%, 6.So~;(J -- 1 O.OO~In ports, also anticipates capitalizing on 8.L3%. its real estate values by selling its Chang<: (Basis Points) +: 5 + 28 460,000-square-foot headquarters cam­ MARKET RENT CHANGE RATE" pus in Fort Worth. Concurrent with this Range O.OOt>t, ~ ~:LOQty, sale, Pier 1 Imports plans to lease back 2.:rn~, Change (Basis Points) 0 - 42 250,000 square feet under a seven-year

EXPENSE CHANGE RATE" agreement with the buyer, Chesapeake Range 2.00%, -- 3J)Cf}(, 2.00%, -- 3.00%, Energy Corporation. Lastly, Bank of Average :?..75°;;, 2.75'};, 2.42%, America, experienced in using its real Change (Basis Points) 0 + 33 estate to raise capital, has reportedly AVERAGE MARKETING TIME' put its office building located at 135 Range 2.00 -· 6.00 1.00 -· 6.00 1.00 ·- 6.00 LaSalle Street in downtown Chicago Average 4.42 ?..SO 1.60 on the market, and expects to secure a Change (%) + 26.29 + ?.?..78

a. Rate on unlevet·aged, all-cash tt·ansactiuns b. lnitialt·ate of change c. In months sale-leaseback deal. '*'"

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011720 National Development Land Market

As SUPPLY MOVES AHEAD OF DEMAND IN on a decline for the past couple of ABSORPTION PERIOD MOST PROPERTY SECTORS AND THE U.S. years. Given short lead times and The absorption period required to sell

ECONOMY STRUGGLES TO REGAIN ITS quick completions, supply rarely gets an entire project varies significantly FOOTING, DEVELOPMENT LAND OPPOR­ too far ahead of demand in this sector. depending on such factors as location, TUNITIES WILL BE DIFFICUlT TO FIND IN On the other hand, fewer development size, and property type. This quarter, THE COMING MONTHS. "It is very hard opportunities will exist in the retail preferred absorption periods for partic­ to judge the market's movement right sector, where many retailers have ipants range from 12 to 240 months. now," comments a participant. Plus, reduced store openings and scaled The mean absorption period is 60 developers of commercial real estate are back on expansion plans due to weak months, or five years. also facing higher costs for construc­ consumer spending.

tion materials, labor, and the fuel used In the apartment sector, additions FORECAST ASSUMPTIONS to run equipment. In addition, tighter to supply are expected to rise over the Growth rates for lot pricing vary due debt markets and more stringent under­ next two years. Even though falling to local market conditions. writing standards are not easy hurdles home values and stricter lending prac­ Participants report an overall range for many development land investors tices have increased the demand for from 0.0% to 12.5% with a mean of to overcome at the present time. rental units, most apartment investors 4.0%. Over the near term, 50.0% of While all of these obstacles will limit view supply-side issues as the greatest participants forecast lot prices to the number of projects that developers short-term risk to this sector. Develop­ increase at the rate of inflation, while start in the months ahead, they will also ment land opportunities are also diffi­ 33.0% of them project increases benefit the supply-demand balances cult in the office sector, where job greater than inflation. The remainder throughout the industry by limiting ad­ losses and a skittish economy are (17.0%) expects increases less than ditions to supply. "We've pushed back keeping companies from expanding and inflation. Inflation growth rate assump­ the start date on a few apartment proj­ leasing new or additional space. tions range from 0.0% to 4.0% and

ects given the amount of uncertainty we average approximately 2.2%. ~ have with respect to how both the econ­ DISCOUNT RATES

omy and the industry will fare over the Free-and-clear discount rates including Exhibi! Dl-2 next several months," shares an investor. developer's profit range from 10.00% GROWTH ll ATES FOR DEVELOPMENT EXPENSES So, while some developers have de­ to 25.00% and average 17.50% this EXPENSE SECOND QUARTER 2008 layed projects, few have cancelled quarter (see Exhibit DL-1 ). This average them. "Fundamentals are still quite assumes that entitlements are in place. INFRASTRUCTURE Range 3.00%-3.00% sound, and many major markets can Discount rates for projects that lack Average 3.00% still absorb new space," notes another. entitlements are typically increased AMENITIES The key, however, is to proceed with between 300 and 600 basis points; the Range 3.00%-3.00% Average 3.00% caution. average increase is 450 basis points. An ADVERTISING Some of the best development op­ insufficient number of responses pre­ Range 3.00% ·- 3.00% portunities will likely be in the indus­ vent us from reporting discount rates Average 3.00% REAL ESTATE TAXES trial sector, where deliveries have been subject to financing. Range 1.00% ·- 3.00% Average 2.50% Exhibit D l-1 ADMINISTRATIVE DISCOUNT RATES (IRRS)" Range 3.00%-3.00% Second Quarter 2008 Average 3.00% CURRENT QUARTER FOURTH QUARTER 2007 CONTINGENCY Range 3.00%- 5.00% FREE & CLEAR Average 3.67% Range 10.00%- 25.00% 10.00%- 25.00% Average 17.50% 17.21% OTHER Change _,_ ?9 Range 3.00% -· 3.00% Average 3.00% -1. Rcti:? or• cmleve··J.gc~d, J.II-(.-J.S0 trcJr•s<~.ctillns: ir)( I,Jd:r•g develllper's pmii~

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011721 ~ 0 2 "'!"j """"~ t'!'j 2...., NATIONAL REGIONAL l\-1ALL MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfRI.YINC PfR MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j PUBliC REAl ESTATE COMPANY + Forecast l'£ric•d: ·1 0 yoars 4.0% 2 6.2S 0t;) 7.2)0/o ).()(10/o Dues ...., u~es DCF and d;rect cap;tJ.i;zat!nn; in di;ec1 0/\R:;, frum (Class A); 1.0% Ul% :{ 1)6;~, tn 1.0% to to 6 7!:.(Y'!o not 1G S.2S% for Cl;~ss-A.+ pruperties and {rom to 8.00°/;) 6.tY'I;! B.:: so::./;) 1lLSO% 7.0(1(~/,) ~~~e ~ (Class B) 10e t'!'j INVESTMENT BANKER + furecasl l'£rin!l: 10 years Cdli!ld!I!ZaliO!l: does extensive J.naiysi~ IJ1 6.so~~;,, 7,0(1(;;,) S.l)O% 6 65.0% 2.0% $0.1\ ...., Gr. residual CJ.)J rate:;., s;~les 3.0% 3.l)% 3.0% to 1.S'1;. to to ((, to t(J t(J ((, t'!'j bJ.sed on his1nr!c;~l marke1 analysis; typica! ~aie~ grn'.tvth pe; market 1l).00% 11.00% 9.SO% 9 75.0% 3.0% $0.2\ 6 is at the iilflatinil rate (CPi; a.na!ys1s of Tb i-, an ir.lpnrtJ.nt ra<,h ~ ;tern. C;:l -<

~ REIT + Foreca

INVESTMENT BANKER + forocasl Period: 10 years 7 __',()~\"() B.. t,(Y'!o S ..')0°/o 7().(Y'!o 1.06k u~es both DCF and direct capita!iz2tinn.: in direct c2p, capit2lizes r">JOI 3.0% 3.0~·;, 3 0°t;, to 1.0% to to 6 to TO $l1.2\ to befwe Tl~, ieas;ng corn missions, 2nd c;~pit2l repi2cement reserve; uses 13.2Y~;,, 9 ..r-,n% 8.Sn% 80.(1% 2.0°t;, 6 f2.ce ;er.ts ar.d refiects cnnce~sions when they ;~rescheduled to uccu;.

r PENSION fUND AOVISOil + l'orecastl'orind: 1 n years C;:l 6.UO% 7.l)0% 5.10% lLS% U<,es both DCJ and direct ca)Jita!iz:lt;on; 1n d1rect capita.l;zes NOI t'!'j 3.0% 3.l)~/,, 3.0% to 0.8'1;, to to 6 75.0% t(J 9 afte rap;t:ll repia.cement reseve hut hefnre Tb a11d cor.lm•ss;ons; $0.2\ h.l.~% 8.50% 6.80% ).0% ~ does not use concess•ons. ~ ~ SC>Ut'Cfo P~t·spnJI SLJt"VC:';' CPI1cluc.12d by P::C2WJ.ie:he>useC}•>pe:~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 ... 0...... N ...... -....l N N ~ 0 2 "'!"j """"~ t'!'j 2...., NATIONAL POWER CENTER MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS Rrsmvr: TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j 2 REALTY ADVISOR + Foreca;! Poriod: 5 lo 10 years O.O';t;, 6.Sl)~/,, 7.2S% S.7S% $0.10 ...., u~es both DCF and d!rec1 capita!!za1inn.: in direct cap, capitalizes r">JOI lo 3.0% 3.tY'I;! )(, to t(J 6 65.0% 3.0% to lo befwe Tl:;,, iea.s;ng corn missions, and c;~pital repiacement reserve. l ..;no::./;) 8.2S% 6.?S% $0.20 [, ~ 10 e ~E~SI~N FUND ADVISOR ~- Fc•reca;! Period: 10 years . ,. t'!'j :r21t:!rs LJCF J.IS(J uses u:rect CdJ::.Oital:zJtl()ll; !ll d!r·ed td :ra 7.(HYY() 1.0% 7,(l(Y'!o 6.2)0/q ~n. :o IJ1 c;~pital;zes ,'\!0! leJ.sing commissiur.:;., ar.d h• Ul% :{ 1)6;~, to to to to tn' 60.(Y'!o 7 .1)6;~, TO 6 ...., reserve; uses {ace rents J.nd ref!ec1s concessi Gr.:;. ~,vher. 't.O% 7.7Y~;,, 2.0% 7.7YY,l 7.75% sn.4n t'!'j 10 OCCUL " ~ C;:l -< INSTITUTIONAL INVESTOR + forecast Period: I 0 yoar; Pr!m<:JJily inter2stecl in high-cn::dit dmis: uses b(Jth DCF Jnd eli red O.h% 7.0l)~/,, 1.0% 7.00% 6.SO% 3 65.0% $0.10 cJpitdl!zaticn but ioCLJS8S on !RR; d2v2!o_1ps IRR tenJnts' bond rat2 (~nchc;rs}; 3.0'1;) 3.0% 3.tY'I;! )(, t(J to t(J lo to to lo ~ 200 t(J 4l)0 tnsis fcq· 12:1! 8Strtte rt:!IJ.tecl lc•l.,ver IRRs Jr8 5.0% to 6.0% 8.0l)~/,, 2.0% 8.00% 7.00% 6 75.0% $0.20 6 ~ high-uedit clea!s ·'bond" !8dS8S, uses pr2S8nt va!u8 J.r.Jiysis of (norrJ.nr:hor~) r eHec1ive rent:;.. ~ IJ1 REAl ESTATE ADVISOR + Foreca.t Period: I 0 year< Uses both DCF and direct capita!izat;on; in direct Glp, cJpitJI;zes NOI 7.(H)% B.O(Y'!o 7.25% sn.1n 7s.u~-;) before Tis, commissions, Jnd cJp;tal repiJcernent reserve; uses 3.0% 3.0~·;, 3 0°1;, to 2.0% to to 2 },()0;;, TO to (nonanchors) concessions when they Jre scheduled TO occur; a.oo~~;,, 9,0(1% 8.25% $(1.1' pr2fers the Soutlwvest. "

UH INSURANCE COMPANY + furecasll'erin!l: 10 years u~es i113rnly DCJ analysis; Ill drrect ca.p, capita.l;zes NOI he'fore tl::'nant 1.2% 7 00% 1 ,()0;;, 7JJU% (;JJU% 3 4.0';.\~ $().2() 3 cnmi11i-,~iorrs, arrd cJ.pital re)J!acement rl::'serve; to :U1% 3.t)C';;: to TO TO TO to TO to to to conr:ess;ons >Nhen they are scheduied to 9.Sl)~/,, 3.0% 9.00% 8.00% 18 75.0% (HY'I;! $().30 6 OCC!!r

r INVESTMENT ADVISOR + forocasl Period: 3 !o 5 year; C;:l U:;.es both DCF and d!rect cap!ta!!z2tinn.: in direct ca.p, capita.lizes r">JOI 1 ,5°1;, 8.SO% t;,SO% 6 t'!'j 5.0% befure Tl:;,, ieas;ng commissions, a.ncl c;~pit2l repia.cement reserve; does 2.0% 4.0% 3.tY'I;! 7.2S~i,, t(J to t(J lo 70.0% $0.20 C) (nonanchorsl ~ not use ;er.t uses face rents 2nd reflec1:;. cnncessinn:;. ~,;:hen they 2.0% 9.00% 7.SO% 12 ;~re ~ ~ SOUI"CE': p~,-Sl)na! Cl)r!d~!CTed by P1"iCE\h!.tel·houseC1opei"S Ll r di!l"ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ... 0...... w ...... -....l N w ~ 0 2 "'!"j """"~ t'!'j 2 ...., NATIONAL STRIP SHOPPING CENTER. MARKET-INVESTOR. SURVEY RESPONSES Second Quarter 2008 >r ...., OISCO!JNT OVERAlL CAP VACANCY REPLACEMENT MARKFTING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RrsmvE TIME

~ UNDERlYING PER MARKtT CAP SHliNG fl1tE & fRH & MON!HS lENA NT VACANCY & SQUAI1t ~ RENT EXPENSES CPI RAH EXPENSE ClEAR ClEAR VACANT REHNTION CREDIT lOSS fOOT MONTHS ~ t'!'j 3 to 9 UH INSURANCE COMPANY + forecasll'eriod: I 0 yoar> 1.2% ; .oo~~;,, 1.0% 7,0(1(Y,l ::,.on;~;,~ :::,:;.n;;;,l !J.0°r;, sn.2n 2 t,i~!:n~ sroreSJi to ...., Uses both DCF J.nd dirt:!ct capitJ.!iLJ.tion; in direc1 cJp, CJpitJiizes !~01 to 3.0~·;, 3 0°r;, to to to to TO TO to b!Ol3 ?t;no; b2f•.112 Tis, !easing UJmrnissions, Jnd cJpitdlr·ep!Jcernent rese;ve. 3.Y% 9.SG% 3.ll'i:. 9.00% 3.l)0% 10.l)~/,, $0.30 6 uncho!'s) ' .>.'.-' ''' ~ 10 INVESTMENT BANKER + furecasl Perin& 10 years e Doe~ exten~!ve sen~divi1y anaiy~i~ on res;dua! r;~1es, 8.0l)~/,, B.SO% 7.00% 4 S.tY'I;! t'!'j ;~rtd irtitiJ.i market ren1~; ;etail ~aie~ b;~seJ on 3.0'1;) 3.0% 3.tY'I;! ((, 2.0% to t(J to 65.0% to $().1\ to IJ1...., Jrta!ys;s; irtitrJ.i cash return rs mnre ii11p(HtJ.ilt tha.n IRR; Tl-, are art 10.l)0% 10.00'1;) 9.00% 3 7.Y'I;! C) ;mportant CJ.sh f!o'N hHecJ.st ;ter.,. t'!'j ~ C;:l INSTITUTIONAl INVESTOR + forecast Period: 10 years 0 0.(:/'r;: 6 SO% 1.S k 7.50% f:.SO% l t:S.O% SD.1'i 6 in 200,00(1- TO 400.000-squJre-foot. v.reli-Jnchored (ancho;:; -< Ul% :{ i)Ok to TO TO TO to TO to to .~.\Y'r;: 10 h.tY'r;: re!ies on DCc;r~~~~~ and ~~~~~~it qua:iry Jnchored po\ver centers: 7 so~·;, 2.5°t;, B50% 7.00% 6 75.0% $().2() q ~ (nortar.chnr: ~ INVESTMENT BANKER + forecasll'eriod: I 0 yoar> r 7.SO% 7.l)0% S.BO% 4 Uses both DCF J.nd dirt:!ct capitJ.iiLJ.tion; in direc1 cJp, CJpitJiizes !~01 3.0% 3.l)~/,, 3.0% to 1.S'1;, to to 6 70.0% 2.0% $0.2\ ((, b2f•.112 Tis, !easing UJmrnissions, Jnd cJpitdlr·ep!Jcernent rese;ve: uses ~ 8.SO% 9.00% 8.l)0% 6 IJ1 {ace rents J.nd ref!ec1s concessi Gr.~ ~,vher. 1hey are ~checl!~led 1n occur.

DOMESTIC PfNSION FUND + foreca5ll'eriod: 10 yoars 6 00% 1.0°r;, 6JJO% 6.00% 6 (;(1.0% 1.0% $0.10 6 ~:;~;~~~~- oo· an~~~~~i:~:;:~~~~Ji.~~~~i~:l ~~~~~~c~~~t~~~~~:~;s ~~~~I 3JY~;,, 3.0';.\~ to TO TO TO to TO to to to 7 50% 3.0°r;, BJJO% 7.50% 12 75.0% 3.0% $0.25 y conct:!ssi•Jns when th2y are scheduled to occur.

r l'fNSION fUND ADVISOR + fnrecas! P,riocl: 10 years C;:l Prefers DCF also uses d;red cJpitJI;zation: :n direct cap. 7 00% 1.0°k 7.2!:% 7.00% S0.1il t'!'j leasing cornm;ssions. Jnd 2.0% ~: .n~t: LO% tn TO TO TO 6 t:O.O% 6.0% to 1., reserve; uses fJce rents and refiects \vhen 7 SO% ~;.no;;. 7.SO% SO.lil ~ Jre scheduled TO occur. ~ ~ Seourcfo P~t·spn;::ol SLu·ve;- CPnclue12d by P::u::wJ.te:heouseC}•>pe:~- LLP Ju::nb Ap:·d 2C100 PRtCEVVATERHOUsE@JPERS i """"~ 0 ... 0...... -....l N ""' ~ 0 2 "'!"j """"~ t'!'j 2...., NATIONAL CBD OHlCE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOUN'f OVERALl CAl' VACANCY REPLACEMENl .1\o~ARKfHNG INiliAL-HAR CHANG!' RAHS RESIDUAl RAl E (!!U{) RATE (OAR) ASSUMf'l ION> RESERVE liME

~ UNDfRiYING PfR MARKET CAP SElliNG FRH& fRH& MONTHS TENANT VACANCY & SQUARE ~ Rf:NT eXPENSES CPI RAH eXPENSE Ci~AR CI.EAR VACANT Rf:Tf:NTION CRWIT lOSS fOOT MONT~IS ~ t'!'j PfNSION FUND ADVISOR + forocasl Period: 10 year. 2 Uses horh DCF and direct Glpitalinrion: in direct capitalizes NO: 0.0% 6 2S~·;, 1 ,() 0r;, !J,5(JC}·;, 6 os~~ $0.15 ...., ctfrer capitJ! reserve but before Tis Jnd commissions: to 3JY~;,, 3.0';.\~ to TO TO TO to 7(1,()~·;) to to uses a rent first five years Southern H.O';{) a oo~·;, 2J)0r;, B5lf}·;~ 6.5(JC}·;, g 2.0';.\~ $().2() ~ California, Southmst rioric!J. 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~ PfNSION FUND ADVISOR + forocasl Period: 10 year. l) __',()~jlq 7.0(Y'!o 0 Prefers DCF J!so uses d·rect cJp;tai.zatioll: in direct 1.0% 6.7) /o ~n. :o Ul% :{ 1)6;~, to to to to tc, 60.(Y'!o 7 _1)6;~, TO 12 ~ cJp•taiizes NOi ieas;ng cornm•SS•ons, Jnd 7 __',()% 2.0% 7 ..tt(Y'!o 7.2)0/q ~0.20 r reserve; uses bee rems and reflects concess•ons \vhen 6 ~ to occur; does not use re11t spikes, IJ1 REAl ESTATE ADVISOR + Foreca;! Poriod: 10 years g 00% 2.0°k CJ.CO% 7.2!:% SD.1il 6 Uses b,_11h DCF and di12c1 c.1pi1a!in1icJn: in di!"tXt Dp, capitJ.b_2s r-.10! :i.e,% 1.>% 2.0% tn TO TO TO 6 HO.O% >.0% to to befcJ!"t: Tis. leJ.sing cornmissicJns. J.nd capitJ! replxement 1·ese!"ve; dcJt:S CJOO% ~~.no;;, 10.0(l% d.CO% SD.1'i 8 no1 use ren1 sp! ke~.

r C;:l t'!'j DOMESTIC PENSION FUND Foreca.l Period: l 0 yoar< + 0.0% 6.00°/;) 1.0% 6.00% 4._~0% 6!-:!.0% O.tY't;: $0.:0 Uses horh DCF and direct G1pitalinrion: in direct CJp, capitalizes NOI to :U1% 3.tY't;: tn tn to tn to to 10 10 ~ before rls. cornm;ssions. and capitJ! replacement reserve: uses 10.0% / __;l)% 2.0% ~L~O% 7.00% 12 7!-:!.0% ? .tY't;: $0.2S ~ concessions "vhen they dl2 schedu!ed to CJCCur. ~ SOUI'CE': p~,·s,)na! CJ)r!d~!CTed by Pl'iCE\h!.tel·houseCiopei'S Ll r di!l'ing Ap.·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ... 0...... '-" ...... -....l N Ul ~ 0 2 "'!"j """"~ t'!'j 2 ...., NATIONAL SUBURBAN OFFICE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOUNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAL-YEAR CHANGE RAftS RESIDUAl RATE (IRR! RATE !OAR) ASSUMPIION5 RESERVE TIME

~ UNDERmNG Pt:? MARKET CM SHUNG FRH & fRH& MONTHS TENANT VACANCY & SQUARE ~ RtNI tXI'tNStS CPI RAH !:X PENSE CLfAR ClEAR VACANl R[IINTION CRHJ;J LOSS fOOT MONJ'HS ~ t'!'j l'fNSION fUND ADVISOR + forecast Period: 10 yearo 2...., Use~ h(•th DCT J.nd d;rect ca.p;tJ.Lzatinil; in dirl::'ct CJ.)Jitalize~ NO: 0.0% 6 7S~·;, 2J)0r;, 7JJU~';) (;,00~';, 6 1.0';.\~ $().1() after capita! re~erve but before Tis an<:l com;nis<,iOilS; to 33~~1,, 3.0';.\~ to TO TO TO to TO to to 13.0% a oo~·;, 3J)or;, 7.5(JC}·;, y 75,0~·;) 5.0';.\~ $().2() ~ 10e t'!'j IJ1...., t'!'j ~ C;:l -< UH INSURANCf COMPANY + for•castl'eriod: 1!) vears Use<, h(•th DCT J.nd d;rect ca.p;tJ.Lzatinil; in dirl::'ct cap, C~)Jitalize<, NO: 0.6'1;) 7.0l)~/,, 1.0% 7.SO% 6.00% 6 60.0% S.tY'I;! $0.1\ bl::'fore Tis, cnmmis-,i(•n~. and capita! rep!ar:eml::'nt re~~·ve; tt<,es lo 3.0% 3.tY'I;! ,,, t(J to t(J lo to to to lo ~ cnncess;ons \·Vhl::'n th~y are -,cheduled to occur; 6.0% 9.0l)~/,, 4.0% 9.SO% 9.00% 12 70.0% 12.0% so.so 6 ~ uses a rent sr:·ike of 5.(1';·~~ to B.n•;.~~ in 20GB Jnd 20(1Y ill strong rnarkets r ~ IJ1

RfAI. ESlAH ADVISOR + fnreca.0% tn to before Tis, comrnissrons, Jnd cJp•tai rep:acernent reserve; uses a g SO% ~:.0°k ()_()()% ()_()()% SD.1'i 8 rent spike ill rnarkets

PRIVATE REAL ESTATE fiRM + fotocasl Period: I 0 yoar> 6.Sl)~/,, 2.0% 8.00% 6.2S% $0.10 6 Ust::s both DCF Jnd dirt::ct G:J.pit:liiLJ.t!on; in direc1 Cdp, cJp!trtl!zt::s ~~Oi ., 3.tY't;; to 7:-:!.0% .~J)C';;; 1n before Tis, UJI11r0.issions, .:md r·ep!dcernen1 reserve: L!Ses :U1% to to to to fL~l) 0;;; ).()% $0. J rt::nt spikt:: of in 2l)08 ancl2009 HcJuston. 'lOO% 8.00% :s B r C;:l INVESTOR + fo!'et'a3i PN!nd: 10 yPars /\vt::1ag2s t'!'j / 00% 1.5°;;, 1(1.00';{) 6.00% Relies nn DCF 2nd d;rect ~eil!ng ;~1 3.l)'1·\) Ov2r 3.0% 3.tY'I;! dt to t(J 70.0% o.soo;o $1.00 $1 so,noo; in direct cap, 1he {nrec~st ~ "'8.0l)% 12.00% 7.00% ~ com;ni-,~iOilS, J.ild capital r~place;nent reserve per!ocl ~ Snurcfo P~1-SlpC':~- LLP Ju::nb Ap:·d 2C100 PRtCEVVATERHOUsE@JPERS i """"~ 0 ... 0...... ~ ...... -....l N 0"1 ~ 0 2 "'!"j """"~ t'!'j 2 ...., ATlANTA OFFICE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSlJMPTIONS Rrsmvr TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQlJARt ~ RENT EXPfNSfS CPI R.~H fXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j PENSION fUND ADVISOR + Fot'ecas! Pot'iod; 10 >ears 6.Sl)~/,, 7.SO% S.2S% 2 {(80); {(80); ...., Uses both DCF and direct capita!izat;on; in direct 'CJpitJI;zes NOI Cl.D% (C8D), :{ i)6k 7.0l)'1',) 10 S.30% 1c ?().(Y'!o 2.1)6;~, ~n.: c, Jfter cJpitd.ll·ep!Jcern2n1 reserve bu1 bef(JI·e Tis and commissions; h• Ul% 2.0% 8.00%10 10 7.7S~i,, B.SO% 7.00% uses face r2n1.s and reik:cts conG::ss!ons when 3.0% !suburbs) {Suburbs) {Suburbs) ~ they a1e 10e t'!'j IJ1 UH INSURANCE COMPANY + fmocast l'eriurl: 10 year; ...., 8.2S'1·,, 8.2S% 7.7S% Uses bnth DCF 2nd d;rect uses face rents 2nd reflec1:;. 0.0'1;) 6 (HY'I;! $0.20 t'!'j !C8D); in beth in beth ror.ce-,.,ioils \1'/hf!il they a.re schedu!ed tn occur; doe~ n(•t use rent lo 3.0% 3.tY'I;! 3.0% to 6:-:!.0% 10 10 9 B.?S 0t;) C8D & C8D & ~ in direct 3.no;,, g '10.0% $0.2S !suburb~) subwbs suburbs C;:l r;~p;t:ll reseve. -<

~ 7 SO% ().CO%to 7.SO%to INVESTMENT SANKER + forocasl Period: 10 years tnfl.D% (CBDJ; 1.0°k 10.00% {CP.D); d. SO% (CHD); 6 70.0% >.0% S0.1il Prefers DCF a11aiysis: in direct cap, capitalizes N6: before Tis, lmsing YeJ.rs Ito ~ 2 ..r-,~~;. 2 0°t;, 7 oo~·;. ro TO B5lf}·:~to (;J.S~·:.to to TO to to to r U)mmissiens, and Cdpi1a! r2:::.olacemen1 reserv2; us2s J. r2nt spike of 4.0% to 7 2S~·;, 3.0°t;, 950% 7.50% y B(1.0% 7.0% $().2() ~ 6.0% in 2008 J.nd 20lrl in Jil SL!brnJ.rk2ts e:<.cept D(JI,Vnto,vn Jnd 8uckhe,x!. thermfter (suhurhs) (suhurbs) (suhurhs) IJ1

BJJO% to 7.00 10 UH INSURANCE COMPANY + furecasl Perin& 5 ln 8 ve•r; 0.00% 1(1.()()';-~) 9.00% u~es both DCF J.nd direct capi1J.!!z2tinn: in direct . in both :U1% 3.tY'I;! 2.0% in beth in beth 60.0% ?.!Y'I;: $U.2S to ;~{ter c;~pit2l repi2cement reserve but be{nre Tis J.nd CElD {, CSD & CSD & [, use~ {ace ren1~ J.nd ;e{iects concess;nns when they J.re tn occur. <,uburhs suburbs suburbs

INHSTMrNl ADVISOil + !orecasl !'eriod: 10 years t,,()% 7 .7S~Y() B.O(Y'!o b. SO% Rel;es on DCF; typ•cal fees are 2 5°t;,; ty:=·icJ! Years I h• :1; iCBD); ;n both in both Jre 5.0% on r.ew :eases. on renev.rals; in direa Glp, :: .n~t; LO% 6 t:O.O% 7.0% ~n.:1o 6 1.0% 7.2 s~Y() C:BD & CHJ ,<; NOI before Tis, commissions. and capita! replacement reserve; thereafter (suburbs) suburbs ~ttburbs concess•ons \vhen they are scheduled to occur. r C;:l UH INSURANCE COMPANY + forocasll'eriod: I 0 yoar> 7 SO% 7.2.S% ().()';{) 1.0°t;, 5.0';.\~ t'!'j Uses DCF, direct ca:::.oi1alizJtic•n, Jnd sJies UJil1jJJrison in clir·ect in both \CBD;; in hoth to 3JY~;,, 3.0';.\~ TO y 7(1,0% to $0. 1.'; ~ cdpitd!izes ,"~01 befo;e T:s, !e2~ing cnmrni~~ions, CJ.)Ji1dl CBD & B50% CUD 8.: 2.0'1;) 2.0°t;, 8.0';.\~ ~ ;eserve. suhurhs (suhurbs) suhurbs ~ ~ Sout·ce: p~,·Sl)na! Cl)nd~!CTed by Pt·ice\h!.tet·houseC:r ...., DISCOlJNl OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR CI1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR nrM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j UH INSURANCE COMPANY + foreca5i Period: I 0 yoars 0 7.2S t;) 8.00% 7.00% 2 Uses both DCF and direct capita!izat;on; in direct Glp, cJpitJI;zes NOI 2.0% 2.0% .t, .1)6;~, ~0.20 ...., iC8D); ;n buth {(!3D); ~x::f•Jr2 Tis, !eas!ng UJmrnissions, Jnd cJpitd.ll·ep!Jcernent reserve: uses leo Ul% :{ 1)6;~, to 6 6!:.(Y'!o TO TO 6 l ..;no::./;) C8D & 7.2S% fJce rents Jnd 1ef!eds C..:)llCt:ssicns I.•Vh2n 1hey Jrt:: scheclL!I2d 10 cKcur; 3.0% 3.0% 7.0°r;, $l1.2' isuhurh~) subwbs {Suburbs) ~ does net us2 !"ent spikes. 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~

~ INVESTMENT ADVISOR + forecast Period: 5 tc• 7 voors 8.on(;;,l to 7.0(1% a.oo~~;,, Uses both DCF J.nd din:!Ct capitJ.iiLJ.tion; in direc1 cJp, ~JpitJI!zes cash 4.0%Yd• !; 9.0(1% (C3D); (C8D1: S.O% r (Ci3D): flnw ;~{1er Tis, !ea:;.!ng cnmrnis:;.ions, and rep!acemer.1 rese;ve· 1.0% 3.0~';, 3.0% 1.S% 9.0(1% to 7.Sn%to H 7),(1% t(J $0.20 B.2Y~;,, uses L1ce rents and reflect:;. cur.ces:;.!ons 1hev are schedu!ed to thereafter 10.(10% 8.0(1% 10.l)~/,, ~ (suburbs) IJ1 occur; uses a minur rent :;.pike ir. a!! subm;~rke1:;.. (suburhsl (subur·bsl

INVESTOR + forocasl Period: 10 vears Averages 7.Sl)~t,, 7J)~·;) 7.00% Uses both DCF and direct capita!izat;,on; in direct Glp, cJpitJI;zes NOI 3.4% over !CBD); !CBD); !CBD); ~i.0°t;) :UJ% 2.!Y't;) 6 70.0% 5.0% $!J.1\ 6 before Tis, :ms•ng commissions, Jnd cJp;tal rep:Jcernent reserve; does {nreCJs1 7.7S~t,, 8.00% 7.2S% not use rent Sj:)ikes. period !suburb:;.) !5.uburbs) !suburbs)

PRIVI\H REAl ESTATE FIRM + forecast Period: 10 yoors Averages 6 50% BJJO% S.50% U:;.es mainly direct capitalization; m;~ior focu:;. !:;, on 1he initial ca:;.h-Gn- Doe:;. 3.0% over (CBD); \CBD:: (CBDJ; cash re1urn; typica!ly ex1ends furecas1 tn capture impJct of Jil 1.0% 13% ?().(Y'!o 4.06k IJ()t the forecast 9.0l)~/,, 950% 9.00% iease expirJ1;nns: uses {;Ke rent:;. and concessions ·Nhen they use penod !suburbs) (suhurbs) !suburbs) ;~rescheduled to GCC!H; does not u:;.e rent sp!ke:;.. r C;:l UH INSURANCE COMPANY + forecast Period: I 0 year> 7 SO% to to f:.SO%to t'!'j Uses bnth DCF and d;rect c;~pitai;zation; in direc1 cap, cJpi1alize:;. NOI q 50% {CBDJ; 0.5°t;, 1(1.2S';{) {CBDJ; CJ. 75% {Ci3Dl; 4 $().2() 2 befo;e Tis, cnmrnis:;.ions, and capital rep!acemer.trese;ve; u:;.es to 3JY~;,, 3.0';.\~ 8 00% TO TO to 7.25% to to 7(1,0% 5.0% tn to ~ concessi Gr.:;. ~,vher. 1hey are :;.checl!~led 1n occur; 4.()';-~~ q 2S% 3.0°t;, 11.2.'% 1(1.2'% 6 $!1.35 ~ uses a rer.1 spike of 6.0% in certd;n :;,ubmarkets !n year:;. 1 to 3. (suburhs) (suhurbs) (suhurhs) ~ Snurcfo P~t·spnJI SLu·vey CPnclue12d by P::u::wJ.te:hnuseC}•>pe:~- LLP Ju::nb Ap:·d 2C100 PRtCEVVATERHOUsE@JPERS i """"~ 0 ... 00 0...... -...l N oe ~ 0 2 "'!"j """"~ t'!'j 2 ...., CHARLOTTE OFFICE MARKET-INVESTOR SURVEY RESPONSES > Second Quarter 2008 r...., DISCOUNT OVERAll CAP VACANCY REPLA.Cb\1E:NT MARKFfiNG INrriAl-YEAR CHANGE RAIES RESIDUAL RAH IIRil) RATE (OAR} AS5.UMI'HONS RESERVE "riME

~ UNDERLYING PER MARKET CI\P SElliNG FREE& FREE & MONTHS HNANT VACANCY & SQUARE ~ RENT EXPENSES cr: RATE EXPENSE CHAR CUAR VACANT RfTfNTION CRfiJIT lOSS fOOT MONTHS ~ t'!'j

7,0(1(;;,) to h.on;~;,) to 2 Ufr INSURANU COMPANY + !owcasll'eriod: 10 yoaro ...., 7 .oo~~;,, 8.on(;;,l r:..sn;~;,) (CSDJ: sn.1n MJinly uses DCF analysis; in direct capitJ!izes NOI after cJp;tai 3.0% 3.0~·;, in hmh 1.S% •ll horh h.Sn;~;,) to 7j,(1(Y,l TO repiJcement reserve hut before Tis leasHlg commiss•ons; does not use C8D & C8D & 7.l)0% $0.20 rent spikes. " " ~ subu!"bs SL!burbs (subu1·bs1 10e t'!'j 8.on(;;,l to h.On%to IJ1 RBT + foreca

PENSION FUND ADVISOR + forecast Period: 5 yoar; ELCO% to ELCO% to ~ CLSO% .MJinly uses DCF Jruiys!s, sJies C..:)l11j:JJrisCJil apprc•dch, Jild CCJS! ~-u)'J(;) ·:0.00% 9.CO% $0.1\ (C8D!: ir. Jireci cap, c;~pita.lizes ,'\!0! be{nre T!s, leJ.sing commissiur.~, 0.0% in :UJ% 1.nr::,;, in both in both 8 70.0% 7.CYJ{, tn 4 ~ CJOO% replacement reserve; use~ {ace rents and ;efleus concess;nns when they 4.m;,) c;;[) ,, CHJ ,'!, $0.2\ r (-,ubttrbsl are scheduled to occur; doe~ nnt use rent spikes. ~dwrb-, ~ttburbs ~ IJ1

INSTITUTIONAl INVESTOR + forecast P,riod: 10 years 7.(HYY() 7 ..~)0°/o to and sa!es approach; in di;ec1 cap, 9.CO% Years I & 2; 3.0% to 1.0% 8.2)0/o 7j,(1% 5.0% ~n.: c, ."~01 !ea~! ng and cap!ial rep!acernent (C8D) 4.0%Yd•3 7 .so~~;,, i(llDi " re~erve; p;efers the CBD; dne~ not use reni ~p;kes.

?.SO% to PRIVATE INVESTOR + forecast Period: 3 to 5 yoars 0.00% CJ.CO% $0.2() Uses sa.les r:nmpa.ri-,oil cmt :lnd d;rect ra.p;tJ.Lzatinil; 3.0% ~-u)% to 3.ll'i:- in both 7S.O% tn 6 ir. dired cap, capit~.l;zl::'s bebrl::' Tb, commis-,i(•n.,, Jnd rJp;t:li 9.00% CHJ ,'!, $0.2\ repl:lcer.leilt reserve; <:loes not u~e rent S)Ji~e.,; prefes the' ~ttburbs. ~ttburbs r 6 50% 7 ,0(1% to 6 ..~)0°/o to C;:l V.<\lUf-ADD.ED INVESTOR + fo~cib1. Period: 5 yeaiS Averages /\ve1ages (CBD); 9.0(1% (CBD); 8.00°/o (C31}l; h t'!'j .11/!air.ly uses DCF ;~n;~lysis; in direct cap, c;~pitJ.iiz.es NOI before Tis, !easing over ~:.m;,;(IV\::'f 7 50% TO 2.0% 8.0(1% to 7 .On% to tn 70.0% S.O% $0.1\ 6 r:nmmi~sions, and reserve; mar~et rent i~ ~213.00 per the forecJ5T the fcorecest ~ 8.0l)% 1o.no% 8.Sn% q sqttare foot for the $20.00 pe ~quJre font for the suburb.,. period peiod (subu1·bs1 (suburbs) ~ !suburbs) ~ Soul·ce: p~,·Sl)na! Cl)r!d~!CTed by P1'iCE\h!.tel·houseC1opers Ll r di!l'ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ... 0 "' ..... ----l N \C ~ 0 2 "'!"j """"~ t'!'j 2 ...., CHICAGO OFFICE ,\1ARKET-lNVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOUNT OVERAlL CAP VACANCY REPLACEMENT MARKFTING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RrsmvE TIME

~ UNOfRI.YING PER MARKtT CAP ShliNG fRH & fRH& MON!HS TENANT VACANCY & SQUARt ~ RENT EXPENSES CPI RAH EXPENSE Cl~AR ClEAR VACANT RETENTION CRmiT lOSS fOOT MONTHS ~ t'!'j UH INSURANCE COMPANY + forocasl Period: 10 years 7.SO% to 6.00% 1G 2 7.2 s~Yq ...., Rt::lit::s mainly en DCF analysis; Jisc uses di1ee1 cJp!1a!in1i(J!l: in direLi 8.00% (C8D1: 'lOU% (C8DI; $U.2S 12 cJp, c:1pittiiiz2s NOI aher capitJ.I repiact::ment but b2fore Tis Jnd 0.0% {CBD); resav2 :U1% 3.tY't;: 2.0% 8.00%10 6 ..~0% 1G 9 6?.0% ?.tY't;: 1n to cornmissi(JilS: uses iact:: 1ents J.nd n::fiects concessic•ns when thev YeJ.r : 7.7S% 8.SO% (L~U% $U ..SO 18 \() cccu1: uses d. rent spike of S.O% in ym!"s 2 and 31or ' I suburb~) ~ {Suburbs) (suburb~) 10e certJ.in suburbJ.n propat!es. t'!'j IJ1 REAl ESTATE ADVISOR + Foreca.t Period: lO yoar< ...., 7.. ',C%to 7,_r-,n;y,l to h.7Y~;,l to 60.(Y'!o ~0.2c, Uses both DCF and direct capita!izat;on; in direct cap, cJpitJI;zes NOI 0.0% 2.0% B.oo~~;,, (Cl3D): 1.H% 8.Sn% (C3D); 8.Sn% (C3D): t'!'j ~x::f•Jr2 Tis, !eas!ng UJmrnissions, Jnd cJpitd.lr·ep!Jcernen1 reserve: uses h• to B.oo~~;,, to to 8.0(1% to 7.2S%to tn" to 10Jl% TO 6 2.0% Ul% 23% ?().(Y'!o ~0.!:0 ~ fJce rents Jnd ref!eds CCJncessicns 1.~vhen 1hey Jn:: scheclL!Ied 10 occur; !3.SCY~;,, 8.Sn% s.sn% 12 C;:l does net use rent spikes. (suburbs) (suburhsl (suburhsl -< PRIV~H REAl ESTAH fiRM + Forocasl Period: 10 years Averages Avenge 1 2S~·;, 75(f}·;) 6.2.S% ~ Uses mJirdy direct car:•itctlizJtion; rna:or focus is on the 'initiai cash-on- DCJ8S 2.0'1;1 over" 3JY~;,, over (CBD); 0 {(80); {(80); cJsh rerur11; extends forecJst TO caoture illlCJd of J!l -: .S ;;: y t:S.O% 8.0% !lOt the hcJ!ding rho ho!cl:ng lG.Sn% 'lSO% 'LSD% !ease conc~ssions ;.rhen they use ~ per"tod period {Suburbs) {Suburbs) {Suburbs) r are scheduled t() occur: d.. 1es not L!Se rent spikes.

~ I 00% TO IJ1 INSliHJfiONAL INVfSTOR for•casll'eriod: 1!) year< 0.0% t(J 2.0% 7.. ~0% 7.00% + 2.0% 2.0% 7 50% {CBDJ; 2.0% 60.0% 2.tY'I;! $().1\ 6 Rel;es on DCF; uses effective rents af.er ali concessions are extrJcted; YeJ.rs 1 B.: 2; {(BD); {(!3D); tfJ lo 7 50% TO t(J lo to to to lo does not use rent spikes: ill d;red cJp, cctpitJ!izes 1'-JO: af.er car:•itctl 8.00% 7 ..~0% 3.0% 3.0% tLSl)% 2.S% 6 70.0% 3.0% $0.20 12 repiJcement reserve but before rls and leasi11g corqm;ssions. thereJfter {Suburbs) {Suburbs) {Suburbs)

r C;:l t'!'j 6.?S 0t;) 7.2S% S.. ~U% INVESTMENT ADVISOR fmocast Periurl: 10 year; 1.0% ~o.:1o + Years I & 2; {CBD); :CBDi; i(llDi; Relies ur. DCF; !~:;.es L1ce ren1s ;~nJ reflects cur.ce:;.:;.i~1rJS Js 1hey are 3.0% 3 0°1;, t(J ::)0,(1% 7,()0;;, TO ~ 1.0% 7.2S% 7.7S 0/o 6.00°/o schedu!ed 1G occur; prefers the VVes1 Lnup; does not u:;.e rent spike:;.. 2.0% " sn.4n " ~ thermfter {suburb~) (suburb~) (suburb~) ~ S(IUt'Cfo P~t.Slpe:~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 "'0 0...... -....l w 0 ~ 0 2 "'!"j """"~ t'!'j 2...., DAllAS OHlCE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATf (OAR) ASSlJMPTIONS Rrsmvr TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf Cl.fAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j 2 UH INSURANCE COMPANY + forocasl Period: 10 years ::~~~: ~::~~ ~: 7.2 s~Y() B.O(Y'!o 7.00°/o ...., Relies on oo·: a: so uses direct capitJ!izat•on Jnd sJies c~·mp;uison in hmh •ll horh •11 hmh 3JY~;,, 3.0% 0.5°r;, 2 TO 6.0';.\~ $0.25 appmJch; L!St:s ef1ective 1·ents, in direct ca:::.o. cJp!ta!!Les NOi befcqe Tis. YC!d.fS 3 B.: 4; C8D & C3D & C3D & 7(1.0~r;) k:Jsing cornmissi(JilS. ancl capitJ.I n::piacement !"esave. 3.0'1;) suburbs suburbs suburbs ~ thereJ:fter 10e t'!'j 6 __',()%to REAl ESTATE ADVISOR + Foreca3l Period: 5 years h.on;~;,~ to IJ1 7.00~~;,, (Cl3D): ...., NIJ.;il!y u~es [)(]' :ln:llysi~; in direct cap, cJ.pitali7e~ :\:01 before Tis, 6.SO% (C8D); 2.5% 3.0~';, 3 oor;, 6.7Y~;,, to 3.0% to" 75,(1(Y,) 2.0°r;, sn.2n ieas;ng cnmmiss1ons_ a.nd rJp;tJ.I repia.cement reseve; bel;eve~ tha.t thi-, 6.2S% to t'!'j 7.2Y~;,, q il1J.rket current!y bvors buyer<,. 7.l)0% ~ (suburbs) (subur·bsl C;:l -< UH INSURANCE COMPANY + foreca5i Period: I 0 years fL;0%1G ~L~O% Uses both DCF and direct capita!izat•on; in direct Glp, cJpitJI;zes NOI 0.0% 9.2S% 2.0% 8.00% ·:o.o% $0.20 ~ ;n buth i(llDi; before Tis, :ms•ng commissions, Jnd cJp•tal replJcernent reserve; does h• Ul% :{ i)6k rn both to tn 6!:.(Y'!o T() T() tn C8D & 8.2)0/q not use rent s:::.oikes: uses bee r·ents J.nd rf:!flects concessic_.ns i'vhf:!n they 2.0% CllD ,, 4.0% 1S.ll% ~0.2c, 12 ~ subwbs (suburb~) r Jre scheclL!Ied 1G cKcur. suburbs " ~ IJ1 PENSION FUND ADVISOR + Forecast Period: 10 years 6.00% 1G u~es both DCF J.nd d!rect capdJ.!!z2tinn: in direct capit2lizes r">JOI 7.00°1;) 1G 7.. ~0%10 1.0% 7.00% (C8Di; 6 65.0% ·:.tY'r;: $0. :s ;~{ter c;~pit2l repi2cement reserve but be{nre Tis J:nd comm;ss;nns; B.OIJ% (C:IlDl; 8.?S% (C8D1· to :U1% 3.tY'r;: to 7.. ~0%1G lo to 10 10 a. rent sprke of S.O% to 7.0% !n 20013 and 2010 in Plano a.nd the 7.7S% 8.2)0/o 2.0% 8.00% C) 70.0% jJY'r;: $0.20 u~~s bee rents and refiects r:nnce~sions wh~n they Jre schl::'dul~d {suburb~) (suburb~) {Suburbs) to OCCUL

IUIT + Forocast Period: 10 year< '1.7) 0/o 2.06k 6 Uses bnth DCF 2nd d;rect c;~pit2i;zJ.t!on; in direc1 cap, cJ.pi1al!ze~ NOI 3.0% ~~ .n~t: LO% 10.00°/o 2.nor;, 11 !:0% to 6 t:O.O% T() SD.1il tn 6 befo;e Tis, !e2~!ng cnmrnis~inrrs, and cap!td.l rep!acemer.t rese;ve. 10.00% ::.0 k " r 7.CO%to C;:l UH INSUI!ANct COMPANY + fmocast Period: .5 to 8 years 9.00% 3.0% CJOO% CJ.CO% (CHD); t'!'j Use~ b(•th [)(]' :lnd d;rect also lno~s Jt drsr:nunt to in beth to 2.0% 3.tY'I;! tn 2.0% 7.CO%to 6 70.0% 4.0% $0.2S 6 re}JL:tcement cmt; relie~ on capita!iz~-, NO: :lfter CSD & 4.0% 11.00°/o d.CO% ~ c-Jp;t:ll repia.c~m~nt reseve hut before Tis lms;11g cor.lm;ss;on-,. suburbs (suhurhs) ~ ~ Sou1·ce: p~,·Sl)na! Cl)nd~!CTed by P1·icE\h!.tel·houseC1opers Ll P d111·ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 "' 0...... -....l w...... ~ 0 2 "'!"j """"~ t'!'j 2 ...., DENVER OFFICE l\-1ARKET-lNVESTOR SURVEY RESPONSES > Second Quarter 2008 r...., DISCOUNT OVERAll CAP VACANCY REPLA.Cb\1E:NT MARKFfiNG INrriAl-YEAR CHANGE RAlES RESIDUAL RAH IIRil) RATE (OAR} AS5.UMI'HONS RESERVE 'riME

~ UNDERLYING PER MARKET CI\P SElliNG FREE& FREE & MONTHS HNANT VACANCY & SQUARE ~ RENT EXPENSES cr: RATE EXPENSE CHAR CUAR VACANT RfTfNTION CRfiJIT lOSS fOOT MONTHS ~ t'!'j

2 PRIW.H REAl ESTATE INVESTOR + Forecast P.>riod: 2 to 5 yoars 7.UO% 3.00% 6.00% ...., 1.0% 6 u~es DCF analysis,: ir. Jirec1 cap, capita!izes r">JOI befnre Tl:;,, ieasing to to 1n S.O% 3.o~-;. 3.0% to ((, 75.0% 7.0% ~0.20 ((, cmnm11SsicJns. ;~ncl cap;ta.i rep!a.cemer.1 re:;.erve; use~ a. rent ~p;ke of S.O% 1G 8.UO% ·:0.00% ?.SO% 2.0% 9 6 ~ e.O% in early years; prefers the Snutheas1 submarkeL (subL!1bs: (:;,uburbS.l (-,uburbs) 10e t'!'j .~.SO% IJ1 7.00°t;) ·L~U% ...., f'RIVATr lll'Al fSTAff FIRM + forecasll'eriod: 5 lo 7 years (CBD): Ma.inly use<, DCF Jna!ys;s; in direci cJ.p, ca.p;tJ.Lzes NOi bef(He Tb, {C8D); {CBD); 3.0'1;) 3.0% LO% 1 ,ey~;,, 6.SO% tn 6 70.0% 6.0% $0.15 t'!'j comrnissions. replacement l ..;n% 1D.UD% lms•ng Jnd cJp•ta: reserve; does nor use rent 7.00% {Suburb:;.) ~ sp.kes {Suburbs) (<,uburbo,) C;:l -<

PENSION FUND ADVISOR + Forecast Period: 10 years ~ 7,.r-,n;;;,l to h.7.S%to Uses both DCF and direct Cd.pi1a!intic•n: in direct CJ)J, capit1ii2es NO! 7.90% 3.0% o.sr::,;. 7.7S% (C3D); 7.0(1% (C3D): $0.10 1 (C8D!: ~ to ~U)% :UJ% 1n 8.0n%to 7.0n%to 6 ?S.O% ).0% tn t(J ~:~~~·~~~~·~~~~s!~~f1e~~:~~~~~~~-~~i:;nJ: ~~~~:~i:~~~.e;II:~~~~~J:!~:~~~v~~~~~/ 0.90% r 6.0% 2.S 0t;: 8.2S% 7.2S% $0.2\ 6 uses a rent spike CJf 4.0% t() 8.0% in ymr·s 3 thmugh S. (:;,ub!~rbs: ~ (subur·bsl (subur·bsl IJ1

PENSION/CORE INVESTOR + Forocast Period: 1 u years 7.0U%to 6.SO% 1c i\verJges /\ve1ag2s 6.7S% in direct ca:::.o. cJpita!iLes NOi befcqe Tis. leasing ] ..;% ? ..~U% (C8D1· 7.00% (C8D1; 6.0% Does 3.0% tWt::r 3.l)% ova (CBDl: ancl replacement reserve, believes that mJrket 3.0% tn to 7.0U%1G to ?D.U% 10 nnt lo the forecast the forecJ.st 7.2S% conditic•ns equJ.iiy bvw buyers Jnd sel!ers. 2.0% 8.2S% 7.. ~0% 9 ELO% use B per[cJd paiod (subL!1bs: {Suburbs) {Suburbs)

fl.D% 6 50% TG 8.00% to S,50~·;, tc PRIVATf REAL ESTATE INVESTOR + Forecasl Period: 10 years Years I to 4: 7.0l)% (;,00% SD.1il MJirdy uses DC!' JnJiys•s; in direct car:•. cJp•tai.zes NOi hefore Tis. 9.00% 3.0% 3.tY'I;! in both 0,5°t;, in beth in hoth 6 75.0% 5.0';.\~ tn leasing CCJmmissicJns. Jnd cJpita! repixement reserve; uses J rent spike of Years S to b: CBD & C8D & CUD 8.: S0.2S 6.0% in ymrs 1 through 4: pr·ders the C8D submar"ke1. suburbs suburbs suburbs thermfter r C;:l PRIVATE VAlUt·ADDED INVESTOR + ForK•urcfo P~t·spn;::ol SLJt'VC';' CPI1cluc.12d by P::u::wJ.iC'th(>uSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 0 "'N ..... w-....l N ~ 0 2 "'!"j """"~ t'!'j 2...., HOUSTON OFFICE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNl OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfRI.YINC PfR MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j I.IH INSlJRANU COMPANY + fmecasll\>riorl: 1!l year< 4.1%'rea( 1: 7.25~~1,, 8.mr;;,l 7.UO% 2 [, 65.0~·;) s,u.:u ...., Relies on oo·: a:so uses direct Jnd sJies 3.7% 'rea( 2: in hmh in both 3.0% ~0% o.. % '" bmh teo tfJ h S 61~, tn approJch; uses effective rents; in car:•. cJp•tai.zes NOi 3.5% CBD B.: CBD 8, CBD f, H 70.0% ~lUI ~ !eJsing commissions. and capital replacement reserve thaeaher subur·bs SL!bwbs ~!~burbs 10e t'!'j I.IH INSlJRANU COMPANY + fmecasll\>riorl: 5 to 8 yeors CJDO%to 7 .oo~~;,, to IJ1 9.0()~/;) Use~ b(•th [)(]' :lnd d;rect rJpit:lLzatinil; also lnn~s Jt <:l1sr:nunt to 2.0% ~.no;;, 10.00°/o B.oo~~;,, (C3D): 5.0';.\~ 6 ...., in both replacement cost; relies on DCF; u1 dnect cJp, capitJ!izes 1'-JO: after car:•itctl to tn LO% in both 2 no;;, 8.UG% to 6 6(1.0% to $0.20 tn t'!'j CBD& replacement reserve hut before Tis and lmsing comrnissions; uses face s.n% 4.oo;;, CBD & 9.UG% 7.0% suburbs ~ rerns 3'1d refleds ·:::oncess·ons when they are scheduled to O•:::CUL suhurhs (suburbs I C;:l -< 8 00% TO 9J}O~·;~ to (),()()~·;,TO REAl ESTATE ADVISOR + Forocast Period: 11l year< q 00% {CBDJ; 2 0°/;, 1(1.00';{){CSD); 1n.on% (CBDJ; $0.10 6 ~ Uses bnth DCF 2nd d;rect c;~pit2i;zatinn; in direc1cap, cJ.pi1alize~ NOI 3.0% 3.0'1;) 9.0U%1o tc, 8.0l)%to 8.0l)'1·,) TO 6 75.0% S.tY'I;! to to befo;e Tis, !e2~ing cnmrnis~inns, and capital rep!acemer.t rese;ve; u~es lO.UO% 3.0% 9.0l)% 10.l)0% $0.1\ 3 ~ a rent spike nf in 200?. r {Suburbs) {Suburbs) {Suburbs) ~ IJ1 7.SO%to ' •. OO%to PENSION FUND ADVISOR + Foreca;l Period: 10 yoars 7. .SU% o. .s-::,;, d.Oll% (CHD); fd)0%{CHD); Uses bnth DCF 2nd d;rect c;~pit2i;zatinn; in direc1 cJ.pi1alize~ NOI in both to 3J}% J.()';.~) to 7.50%to ' •. SO%to 6 7(1.0% 2.0% $0.1\ 6 after ca)Jital re~en.:e but before Tis an<:l CBD & 2.0% 7.7.S% 6.SO% uses a. rent suburbs (suhurbs) (suhurhs)

I'RIVAH RfiT + forecao! Period: 10 years Use~ b(•th [)(]' :lnd d;rect cap;t:lLzatinil; in direct 7.7.S% 1.0% 6.Sl)% S.tY'I;! $0.10 after ca)Jital rep!ar:eml::'r.t re~en.:e but before Tis an<:l 2.0% 3.0% tn tc, tc, C) 70.0% to to uses bee reilt~ and refiect~ cor.cessi(lfl<, \·Vhl::'n they are to occur; B.(Hr:'t;) 2.0% 8.0l)% 10.0% S~U.2U uses a rent of 5.0% TO 7.(1';·~~ in ymrs 1 to 3 •n the Cl3D, E.nergy Corndor, \riorl: 10 year; 8.2.S% 7.2S% 8 ..SU% 2.0% 6 6.0% $0.20 6 t'!'j Use~ b(•th [)(]' :lnd d;rect cap;t:lLzatinil; in direct cap, capitali7e<, NOI in both in both 3.0% 3.0% in both tc, to 65.0% to to to bl::'forl::' Tis, commis-,inn~. and ca)Jital rep!acemer.t re~en.:e; u<,es CBD& CBD & CBD & 4.0% 3 3.0% $0.2\ C) ~ concess;or.-, \·Vhl::'r. they are -,chedtdl::'d to occur. suburbs suburbs ~ suburbs ~ Soul·ce: p~,·Sl)na! Cl)r!d~!CTed by P1'iCE\h!.tel·houseC:l10pers Ll r di!l'ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 "'w 0...... -....l w w ~ 0 2 "'!"j """"~ t'!'j 2...., lOS ANGELES OFFICE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOUNT OVERALl CAP VACANCY REPLACEiv\ENT MARKETING IN111AL-YEAR CHANGE RAHS RESIDUAL RA!E (IRRl RATE (OAR) M;SUMPT!ONS RESERVE liME

~ UNDERlYING PER MARKET CAP SElliNG FREE & FREE & MONTHS TtNANT VACANCY & SQUARE ~ RENI tX!tENSES CP·! 11AIE EX!'ENSE CltAR Ci.fAR VACANT RtiENliON CRWIJ' lOSS fOOl lv\ONlHS ~ t'!'j 2 PENSION fUND ADVISOR + lr>re<·ast l'eriod: 5 to 10 years 7 oo~·;, 9.00% (;,5(JC}·;, ...., 2.()';-~) ~-~.no:,/;): 1.0ot;, 6(1.0% 5.0';.\~ $().1() ~~~i1~s nn DCF· bnb at vJ!ue indic:lted by direct use-, fare (CBD); {(80); {(80); to 1axes 3.0% TO to TO to to to rents :lnd ref!ect-, concessi(•n" \lvhen J.re 7 50% 12.00'1;) 7.50% 4.()';-~) 2.0°!;) 2.0°t;, 10 7(1.0% 10JY~;,, $().\() g ~ not tie income (H expen<,es direcily tn focu~es (In <,uburhJn il1J.rkets (suhurhs) {5.uburhs) {Suburbs) 10e t'!'j

IJ1 S,GO~·;, to ...., REAl ESTATE ADVISOR + forocasl Period: 5, 7, and 10 years 6 50% 7JJU~·;~ 1.5°t;, 6.00% (C8D1; 2 8.0% $().3() Buys 1urn,3J(Jund si1UJ1i(JilS as "vt::li as mta1iond! in suburbJ.n rnJ.rk2ts; in both \CBD;; t'!'j 3.0'1;) 2.S% 3.tY'I;! t(J S.GO% 1c to 60.0% to to 6 uses both DCF and dirt::ct capitJ.IiLJtic:on; relies on uses fact:: r2n1s CBD & 8.00% 2.0% 7.00% 12 10.0% $1.00 ~ in DCF i11(Jde!. ne1 t::1tt::ctivt:: 12nts in direct ca:::.oi1alizJtic•n. suburbs {5.uburhs) C;:l {Suburbs) -<

8.UO% to 9.l)0% tc• INVESTMENT BANKER Furecasl P,riod: 10 years ~ + 9.00% 11.00% f:.SO% 4 t:S.O% 1.0% $il.1il Prefers DCF J.nJ.Iysis; ;~!~o use~ direct cap; in direci CJ.)J, cap;tJ.i;zes NO! 3.0% ~: .n~t; LO% in both 2.0°k !n hl")1h TO to TO to to 6 before Tb, cm·,lm;ss;or.-,, ar.d r:apit;~! rl::'nlarement re-,erve; uses ~ CBD f, C6D d.CO% 6 7S.O% 10JYt; $0.2() fare rent<, and COilC\::'SSIOns \vhe~ they scheduied to (ICCIH r ;re ~uburbs S!~burh~ ~ IJ1 PENSION fUND ADVlSOR + forocasl Period: 10 years 6.2S% 1G 6.7S% to 4.20% 1G Uses hmh DCF aild direct ca:=•italizJtion; iil d;;-ect cJp, 'capitJ!izes 1'-JO: 7.00% 1.0% 7.2S% 6.40% 6:-:!.0% ·:.tY't;; $0. :o afrer capitJI repiJcement reserve but before Tls and cornm1ssions; to :U1% 3.tY't;; in bn1h tn ;n buth ;n both to to 10 10 uses a rent spike (Jf 4.0% tc:o S.O% in ye<:JJS 1 thmugh 4 in VdJious CllD ,, 2.0% C8D & C:SD & 9 70.0% 2.tY't;; $0.30 subnnrkets. suburbs subwbs suburbs

?.2.~% to 7.75% tc• 5.7.S% to liFE INSURANCE COMPANY + Furecasl Poriod: 10 years 3.0% 9.00% ·:JY't;; 10.2S% 9.l)0% 6 60.0% 2.0% $!).!\ ;n d;rect cap to ~-~.no:,/;) :UJ% in both 1n !n bo1h 'n bmh rn 10 tn tn rn befwe Tl~, ieJ.s;ng and c;~pita.l repiacemenr 4.0% CElD {, ~l.0°k C6D C6D 8, I'' t:S.O% l.O% $0.2\ reserve. <,uburbs S!~burh~ S!~burbs r 7.2Y~;,, to C;:l liFE INSURANCE COMPANY + Foree a;! Period: 10 yoars 8.00% 6.7S% B.oo~~;,, (Cl3D): 5.0% $().2() 6 t'!'j Uses DCF J.nd direct CJ.)Jddlizatiur.; ;n d;rect cap, cdpi1;~!izes ,"~01 before _ % ;n buth in beth 3 0 :U1% 3.tY't;; ;_so~~;,, to::r 2.0% 6 to to to Tl~, cnrnmiss;nns, and c;~pita.l repiacemenr reserve; does not use C:8D & C:8D & a.oo~~;,, 7.\Y'I;! $0.2S C) ~ e rent subwbs suburbs ~ (subL!1bs: ~ S(>urcfo P~t·spn;::ol SLU.VC';" CPI1cluc.12d by P::u::wJ.iC'th(>uSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 ..."' 0...... w-....l ""' ~ 0 2 "'!"j """"~ t'!'j 2...., MANHATTAN OFFICE l\-1ARKET-lNVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNl OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RrsmvE TIME

~ UNOfRI.YINC PfR MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j 2 INVESTMfNT BANKER + foreca5i Period: I 0 yoars ...., Srro11gesr interest is in Midto\vn; expe11ses exc!ude trJnsfer tJx 6.Sl)~/,, 7.SO% 4.SO% $0.20 ~,-vhich is ignored in ana!ysis: L!St:!S DCF and d!r·ec1 cJp!tJ.!!ntion: S.O% 3.0% 3.tY'I;! tc, 3.0% to t(J lo 75.0% S.tY'I;! to lo UJmrnissions t:!UL!J.te tCJ 32.0% ()j rent 16.0t;,;) fcJr Ym1s 1 tc• 3 B.. ;no::./;) ·L;o% 7.00% [, $U.SO ~ en 1en-ye~!" deJis; L!St:s a r·ent cd !n ymr s 10e 1 10 3 in ~~llidtown Jnd DCN/!110\-Vn. t'!'j IJ1 ...., INVESTOR + furecasl Perin!l: 10 years t'!'j Uses bnth DCF 2nd d;rect c;~pitJ.i;zatinn; in direc1ca.p, cJ.pi1a.lize~ NOI /.c,% 6 SO% 7.50% .~).50% bl::'forl::' Tis, !ea.~ing commis-,inn~. and rep!acemer.t re~~n.,.e; u~es to 4 .n~t; tn 4.0°k TO TO 6 7S.O% >.0% Sil.2il to ~ fact:' r~nt~; expd-:'Je~ inclttde tax; u~~" a r~nt ~pike of 10.0% 10.0% 7 SO% e5U'};) 7})0'};, 3 C;:l -< in 2007 and and a rent -,p;ke of 7 .~)%in 200'-J.

~ PENSION fUND ADVISOR + Forecast Period: 10 yoa" 7.0% 7 00% 2.0°k d.CO% .~).2!:% 'i t:S.O% 4.0% Sil.lil ~:;;~a~~~:~ ~Z~t and price per sqL~J;,~ ~~~tit~~ r~~~~~:.~i~~t to ::.>% L.% tn TO TO TO to TO to to to ~ 13.0% 7 SO% ~l.0°k ()_()()% t:.CO% 6 70.0% 6.0% S: .Oil 8 r reserve: st::liing t::xpenses inciud2 hJ.nsfer ttix. ~ IJ1 INVESTMENT ADVISOR + forocasl Poriori: 5 !o 7 yoar> 7,0(1(;;,) u~es both DCF and direct capi1a!iz2tinn.: in direct c2p, capit2lizes r">JOI 6.oo~~;,, ::,.on% 70,(1% sn.1n Years I & 2; 3.0~·;, .t'

liH INSIJRANU COMPANY + !orecasi !'eriod: 10 years u~es both DCJ and direct CJ.)Jita!iz:~.t;on; 1n d1rect ca.p, capita.l;zes NOI 1.0% 6.75~\"q 03% 7.0(Y'!o 5.()00/q 4 ~0.20 h2for2 Tis, commissions, Jnd teo Ul% :{ i)Ok to to to to tn ?().(Y'!o .t;_\)Ok TO tn exp2nses trJnsfer tax, which is c,,O% Y.?>% l.ll% 9.(l(Y'!o 8.00°/o 6 ~0.!:0 6 rent spikes. r C;:l RfAL fSlAH ADVISOR + l'orecas! !'eriod: 5, 7, anrl10 years l.S 0t;, $().3() t'!'j Uses both DCF and direct capita!izat;on; rel;es on DCF; uses face rerns 6 SO% 6JJO~·;) S.GO% 6 3JY~;,, 3.0';.\~ to TO TO TO to (;(1,0% 8.0% to •ll DC!' illodel, net effective rents •n d·rect cJp•tai.zatioil: prefers tv\idtown 2.0°t;, $1.(1() ~ Jnd Times Square; se!!ing exr:•enses e·,zclude trJnsfer tax. 7 00% 7JJO% 6.00% lil ~ ~ SOUI'CE-: p~,·Sl)r!J! Cl)r!d~!CTE-d by P1'iCE-\h!.tel·houseC:l10pers Ll r di!l'ing Ap.·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 "' 0...... "' ...... -....l w Ul ~ 0 2 "'!"j """"~ t'!'j 2...., NORTHERN VIRGINIA OFFICE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOUNT OVERALL CAP VACANCY REPlACEMENT MARKETING INITIAL-YEAR CHANGE RATES RESIDUAL RATE (IRR} RAIE (OAR) ASSUMPTIONS RESERVE 'liME

~ UNDERlYING PER MARKfT CAP SflliNG FRf[ & fRH & MONTHS HNANT VACANCY & SQUARf ~ RENT EXPENSts Cl'l RAH EXf'ENSE ClEAR ClEAR VACANT REHNIION CRWII LOSS fOOl MON!HS ~ t'!'j 2 INVESTMENT BANKER + furecasl Perin& 10 years 0.0% i-LSO% 9.50% ?.SO% 6 $!J.I\ ...., in direct cap, capitalizes cash ~i.0°t;) 2JY't;: rn flmv after Tis, iea.s;ng and repiacement reserve; uses to :UJ% to 10 TO bS.O% 5.0% tn 6 3.0% 9.SO% ·:1.00% ().CO% 8 $0.2\ ~ face ;er.1s ar.d re{iects cnnce~sions when ;~rescheduled to uccu;. 10e t'!'j IJ1 UH INSURANCE COMPANY+ fnroca;l P.>riod: 10 years l ..;o% 1.0% 7.. ;o% 7.00% 6!-:!.0% ·:.tY't;: $0. ...., Uses both DCF J.nd din:!Ct capitJ.iiLJ.tion; in di1ec1 cJp, cJpitJI!zes !~01 :s to :U1% 3.tY't;: tn tn to tn [, to 1n 1n to t'!'j ~x::f•Ji2 Tis, !easing UJmrnissions, Jnd cJpitd.ll·ep!Jcernent reserve: uses fL;o% ).()% 'lOO% 8.00% 70.0% jJY't;: $0.2S [, ~ {ace rents J.nd ref!ec1s concessi Gr.:;. ~,vher. 1hey are :;.checl!~led 10 occur. C;:l -< INSTITUTIONAL INVESTOR + forecast Period: I 0 yoar> 2.0% 7.00% 2.0% 7.. ;o% 6 ..;o% [, 6!-:!.0% ·:.tY't;: $0. :o Rt::lies ()il DCF; a!s•J ust::s dirt::ct G:J.pit:liiLJ.tion; in dir2c1 Cd.p, CJpitJiizt::s Year :: ~ :U1% 3.tY't;: tn tn to tn to to 10 1n to NOI Jfter cJp!ta! r·ep!J.cern2nt reserve bu1 bef(Jr·e Tis and !easing l ..;o% 2._;% 8 ..;o% 7.00% 9 70.0% 2.tY't;: $0.20 9 ~ U)mmissicns; d(Jt:S n•-11 use rem spikes. thereJ:fter r ~ IJ1 PENSION fUND ADVISOR + Forecast Poriod; 10 >ears 7.00% 7.50% 1.S% Uses both DCF and direct capita!izat;on; in direct Glp, 'CJpitJI;zes NOI 3.0% ~:.m;,) to 2.0°k to 6 70.0% t(J S!l.1!l h2for2 Tis, :ms•ng commissions, Jnd cJp;tal replJcernent reserve; does LO% 6.?S% 7.SO% 3.00% 2.0% 110t use rent sr:·i les.

PENSION fUND ADVISOR + Forecast Peric•d: ·1 0 yoars Uses bc•1h DCF J.nd dir·ec1 cJp!tJ.!in1ion: in dirt::ct cap, ca:::.oitalizes NOI 7.2S~i,, 2.0% 8.00% 6.00% 6 65.0% S.tY'I;! $0.20 6 4.0'1;) befwe Tl:;,, commissions, and c;~pital repiacement reserve; uses a 3.S% 3.5°!;! tc, t(J to t(J lo to to to lo YC!d.fS 1 B.: 2 ren1 spike of in 1 and 2; aisu reiies Gn price per squ;~re font; 8.0l)~/,, 3.0% 8.7.S% 6.SO% h) 70.0% 6.0% $0.7.S 3 ;~ssume:;. a f!at rent higher cred!t inss for 1ech tenants.

r lli'Al fSTA!f ADVISOR + Forecast l'eriod: 5 to 1!) yearo C;:l Use~ h(•th [)(]' :lnd d:rect rJp:t:lLzatinil; in direct ~-3pitali7e~ :\:01 h.SO% ·:.S% 6.00% _;.no% 6 8.0% $!J.l!l t'!'j after C3)Jital rep!ar:eml::'r.t re~en.:e but before Tis an<:l mmilli-,.,ioils; 3.0% ~U)% :UJ% to 1n 10 1n t(J 60.0% t(J tn t(J d(•e-, not us\:' rent u<,es fa.ce rl::'r.ts and refiects u•nce.,~ions when ?.00% 2.!)% 3.00% 6.00% 18 14.0% $1.l)!J 6 ~ they Jre ~ ~ S(>urcfo P~t·spn;::ol SLU"VC';' CPI1clue12d by P::u::wJ.iC'th(>uSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 "'~ 0...... -....l w 0"1 ~ 0 2 "'!"j """"~ t'!'j 2...., PACIFIC NORTHWEST OFFICE .'vtARKET-lNVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNl OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j 6.2S 0t;) w 8.00% to S.00%1G INVESTMENT ADVISOR + forocasl Period: 10 years 2 7.S%Yd• !; 7.00°!;) 'lOO% 6.00% $0.10 ...., fvbiniy uses DCF analysis; in direct Glp, cJpitJI;zes ,NOI before rls, !easing c,.O% Yd• 2; Ul% :{ i)6k 1n both ()._',·~~. ;n hoth ;n both 6 7!:.(Y'!o .t, .1)6;~, to U)mmissicns, and Cd.pi1a! r2J::.olacemen1 reserve; ~x::!iev2s that 111:11 ke1 't.O% 'lear 3 CllD ,, C:BD & C:BD & $0.2S U)ndi1ions bvw seilers: uses d. rent spike of 7.S% in yea!" 1. ~ suburbs suburbs suburbs 10e t'!'j 10.00%tn d.CO%to PRIVAH INVESTOR + foreca5i Poriod: 10 yoars IJ1 0.00% 11.00%{C8DJ; 11.0(l% 7S.O% >.0% Dne~ ...., Uses both DCF J.nd din:!Ct capitJ.iiLJ.tion; in di1ec1 cJp, cJpitJI!zes !~01 1.0% ~-~.n'J/;) LO% to 3J)or;, 10.!:0%tn in both to TO to 'lOt to ~x::f•Jr2 Tis, !eas!ng UJmrnissions, Jnd cJpitd.ll·ep!Jcernent reserve: t'!'j H.SO% 11.!:0% CHJ ,<; 12 B(1.U~·;~ 1UJY~;,, use 12 does net us2 !"ent spikes. ~ (:,.uburhs) suhurbs C;:l -< INVESTMENT BANKER + forocasl Period: 10 years tLSl)~r,, 10.00% 7.00% 65.0% S.tY'I;! $().1\ Uses DCF, direct DpitJ.Iization, and p1·ice per ' d•.12s ~ 3.0% 3.tY'I;! tc, 2.0% to t(J to to to to 6 extensive sensitivity ana!ysis; reiiJ.nce is ()n Jnd IRR.s; L!St:s 9.(10% 1].00% 9.00% 6 70.0% 10.0% $0.20 ~ face r2n1s and re1k:ct5 conct:!ssi•Jns when th2y d!"t: scheduled to cccur. r ~ IJ1 I.IH INSlJRANU COMPANY+ forecasll'l>riorl: 10 yearo 1 oo~·;, 9JJU% 7.00% Use~ h(•th [)(]' :lnd d;rect rJpit:lLzatinil; in direct cap, cJ.pitali7e~ :\:01 0.0% .S.O% $0.1\ 6 in both TO t(J bl::'forl::' Tis, commis-,inn~. and CJ.)Jital rep!acemer.t •e~~n.,.e; uses to ~U)% :UJ% 2.nr::,;. bS.O% t(J to t(J CBD & 1(1. ()()';-~) ~L~O% concess;or.-, \·Vhl::'r. are srhedtdl::'d to occur; 2.0% 10.l)% $0.2\ suburbs {(80) {(!3D) mJy use a. rent sp1ke of S.O% to 8.0% in yeJ.rs.

h.On%to REAl ESTATE ADVISOR + Foreca3l Period: 5 years 6 ..SO% to 7.SO%to 7 ..SO% 2.0°k ().SO% (CHD); 7.l)0% NIJ.;il!y uses[)(]' J.nJ.Iysi~; in direct cap, cJ.pitali7e~ :\:01 b~fore Tis, .S.O% ~:.m;,) LO% in both TO d.CO%to 'n bmh to 70.0% 5.0% $0.2\ t(J cnmmiss1ons_ a.nd repia.c~m~nt reseve; exp~cb cap rates Ye~1s 1 .~ 2 CBD f, 3.5°t;, 1(1. ()()';-~) C8D & 9 to steady over th~ n~xt m(•nths ~uburbs (suhurbs) SL!burbs

PRIVI\H REIT + Fo.0% to 4 CBD & $0.15 fa.ce ;er.1s ar.d re{iects cnnce~s!ons when they ;~rescheduled to uccu;: suhurhs CSOK (suhurhs) ~ use~ a rent spike uf h.O% to e.O% in years : 1G ~-; in Sea.tt!e J.nd Be!levue. suburbs ~ ~ Soul·ce: p~,·Sl)na! Cl)r!d~!CTed by Pl"iCE\h!.tel·houseC:liOpers Ll r di!l·ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 "' 0...... " ...... -....l w -....l ~ 0 2 "'!"j """"~ t'!'j 2...., PHILADELPHIA OFFICE l\-1ARKET-lNVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSlJMPTIONS Rrsmvr TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQlJARt ~ RENT EXPfNSfS CPI R.~H fXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j 9.on(;;,l to INVESTMfNT BANKER + foreca5i Period: 5 >ears fLt;G~~;,, 8.on;~;,l 2 10.(10% (Ci3D); ...., Uses both DCF and direct capita!izat;on; in direc~ Glp, cJpitJI;zes NOI (Ci3D): (C8D1: 3.0% 3.0~·;, 2.S% 9 ..r-,n%to 10 7j,(1% BJ)or;, sn.2n ~x::f•Jr2 Tis, !easing UJmrnissions, Jnd cJpitd.lr·ep!Jcernent reserve: uses 9.UO% 10.00% 10.00% fJce rents Jnd ref!eds C..:)llCt:ssicns 1.~vh2n 1hey Jrt:: scheclL!I2d 10 CKGH. (subL!1bs: (subur·bsl ~ (subur·bsl 10e t'!'j S.l)O% REAl ESTATE ADVISOR + Forecast Period: 11 year< ELOO% IJ1 6.UO% 1.nr::,;. (CBD): 6 $0.30 ...., Uses bnth DCF 2nd d;rect c;~pit2i;zatinn; in direc1 cJ.pi1a.lize~ NOI (CBD): 0.0% 3.l)-::/,, 3.0% 10 to .~.00% to ((, 60.0% 12.l)% t(J 6 t'!'j after capital reserve bu1 before Tis anJ cnmm!:;.~ions; 9.00% 7.UO% 2.nr::,;. 6.00% 12 $1.00 n(• longer (~uburbS.l ~ (suburbs! C;:l -< lll'll + Forecast l'eriod: HI year< ().CO% ().CO% ~ Use~ b(•th [)(]' :lnd d;rect rJp;t:lLzatioil; in direct cap, cJ.pitali7e~ :\:01 10.l)0% TO TO 3.0'1;) 3.0% 3.tY'I;! 2.0% 6 6S.O% >.0% $0.2() 6 bl::'forl::' Tis, commis-,inn~. and CJ.)Jital rep!acemer.t •e~~n.,.e; foctt<,es {Suburbs) 11 . ()()';.~) 11.0(l% ~ on sunurnctn (suhurbs) (suhurhs) r ~ IJ1 7.00% 1G B50~·;~ to 7.00%10 PRIVI\H EQUITY INVESTOR + Fo

OPPORTUNITY fUND INVESTOR + Fo.-eca

r i-LSO% to ().SO%to C;:l INVESTMENT BANKER + Fmocast Period: 10 ye•r; 0.0% CJSO% 10.!:0% ?.SO% 6 $!J.1\ 6 t'!'j in direct cap, cJ.pitali7e~ rJ~h to ~1.0°/;) :UJ% in both 2JY'r;: in both 1n ro bS.O% S.O% tn ro and CJ.)Jital rep!aceml::'r.t •e~~n.··e 3.0% CElD {, c;;[) ,, ().SO% S0.2S ~ (aveJ.ged to (lilt); doe~ nnt use r~nt ~pik~s. ~uburhs ~d)ijrb-, ~ ~ S(>Ut'Cfo P~t·spn;::ol SLJt"VC';' CPI1clue12d by P::u::wJ.iC'th(>uSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 "'00 0...... -....l w oe ~ 0 2 "'!"j """"~ t'!'j 2 ...., PHOENIX OFflCE MARKET-INVESTOR SURVEY RESPONSES Second C~uarter 2008 >r ...., D!SCOlJNl OVERAlL CAP VACANCY REPLACEMENT lv\ARKETI NG INITIAl-YEAR CHANGE RAHS RESIDUAl RAH iiRR) RATE IOARl A5SlJMPTIONS RESERVE TIME

~ UNDERLYING PER MMKET CAP SHUNG fRH.~ fRH& MONTHS HNANT VACANCY & SQUARE ~ R[NJ EXI'ENSES Cf'l RATE tXI'ENSE (lEAR CHAR VACAN! RETENTION CRE!lll lOSS I'OOT MONTHS ~ t'!'j

S,5U~·;, to 2 PRIVAH REAL ESTAH INVESTOR + forecast Period: 5 lo 7 yoar. Years I & 2; 8.00%10 ...., Mainiy uses oo· ardysis; ill d·rea car:•. Glpitalizes NO: before ns, lms;ng 11.00'1;) iLSO% comrnissiolls, and capital reserve: uses bee rents and refieds s.on~Y() Years 3 & 4; :U1% 3.tY't;: in beth in beth to,, 70.0% -~.iY't;: to C..:)ncessi(JilS when they J.r2 tc• OCCL!I: uses a rent spike of s.nc;,;) 1.0% C8D & C8D & 6 ~ in the first f2"v y2:1rs. thermfter subwbs suburbs 10e t'!'j IJ1 PRIVATE RBT fu!'et'asi PN!nd: 12 yPars .~J.CO% tQ b. SO% to ...., + A.verages q oo~-;, d.CO% (CHD); d. SO% (CHD); $().1() !V!air.ly uses direc1 capitd!izJ.1inn; in clireci CJ.)J, caprtJ.irzes NO! be{nre T!~, (CBD); t'!'j 4.0% ovel" 1,0ot;, !e;~~ing cnrnrni~~ions, and cJ.pi1al rep!acernent reserve,: uses f;Ke rents and SJY~;,, 3.0';.\~ t:.CO%to t:.CO%to 6 75.0~·;) 5.0';.\~ to the h(Jiding a oo~-;, 9JJU~·;) 7.SO% $0.15 ~ reflects cunce;,;,!ons when ihey are scheduled in nccuo; uses;~ reni ;,p;ke (suhurhs) pe!"tod (-,uburhs) C;:l d 10.0°/o in year I and 7.0% in yea.r 2 in a!! submar~et-, except [)m,vnt(•wn. (suhurbs) -<

~ PENSION fUND INVESTOR + forocasl Period: 10 voors 7.UO% to 7.7YY,~ to h.on;~;,~ to Us2s both DCF and direct capitalizJti•Jn; in dir·ect cJp, ~J.pitJiiz2.s NOI 1.0% 7.7S% (CBD); 8.25% (C3D); 7.2Y~;,~ (C3D): $0.1() ~ befcqe Tis. commissions, Jnd cJpitJI rep!Jcernent r2ser~:·e: uses to ~-~.no:,/;) :UJ% 7.SO% to o. .su/;: 3.l)0% tc• 7.2Y~;,~ to t(J bS.O% ).0% tn t(J r fJce rents J.nd UJncessions "-'vhen they Jre scheduled to •.xcur; 3.0% 3.UO% 3.50% 7.SO% 8 $0.2\ 6 ~ !~;,es ;~rent spike nf up 1n 3.0°t;) in years 3th rough S. (subL!rbs: (subuih:,J (subu1·bs1 IJ1

PUBLIC REIT + Forecast Period: lO yoa" 7.00% 1G d.CO%tQ t:.CO%to 3.0% l ..;n% 1.0% 9JJU~·;) g,()(J~·;, $0.2S lo :U1% 3.\Y'I;! in bn1h tn in beth in beth 7!-:!.0% -~.iY't;: 1n ~::~:~ilc~;~;~~~~;~:~:~~~~~~~:;~~:~~:Jl~~i!~~:~,:~~~~;;:~;~~~~~,;~~~~;;oi:115 S.O% CBD & 2.0% CSOK CUD 8.: $U.b0 ()l:'e; the next months. subuobs 5uburbs suhurbs

7.. ~0%10 7.00%1G PENSION/CORE INVESTOR + forocast 1\!rio!l: 10 yoar3 ~ 2.S 0t;: l\veuges 7 __',()~\"() 1 ,5°t;, 8.00% (C8D1· 7 ..~0% (C8Di; 6 5.0';.\~ D(Jt!S 6 tvtlinly u~es [)Cf. a.na.lysrs; in direct cap, c:lprtaiih~ NOI before Tl-,, to ].0% over :U1% ave; {CBD); 3.tY't;: t(J 8.00% to 7.2)0/o to 70.0% to !lOt ieas;ng cnnlmrss;ons, an<:l capita.! replacement reserve'; does not use rent the forecd.s1 the forecast 7 .7S~Y() lo lo 2.0% 8 ..~0% 7.7)0/o C) 7.\Y'I;! use C) sprkes pettod pe;;od {suburb~) (suburb~) (suburb~) r 7,_r-,n;y,l to S.OO%tG C;:l REAL ESTATE ADVISOR + Forecast Period: 4 to 8 year. 6.SO% to 9.50% (C8D), 6.00% (C8Di; t'!'j Mainiy uses oo· ardysis; ill d·rea car:•. Glpitalizes NO: before ns. lms;ng ?.SO% (CBD); 6.0% 3.0~';, 3 0°t;, 1.S'1;, tc• 6.00% tG H 70,(1% t(J comrnissio11s. and capital rep:acernem reserve: e·,zpects CJP •Jtes to hoid 3.0% ?.00% to 3.l)0% $0.2\ to 7.00% ~ steJdy (Jver the nex.1 six. m•Jnths. 0.00% 10.00% 7.0% ~ (;,uLH~rbs: (suburh:,J (suburb~) ~ Sout·ce: p~,·s,)na! C•)nd~!CTE-d by Pt·ice\h!.tet·houseCiopers Ll P di!t·ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 "' 0...... "' ...... w--....l \C ~ 0 2 "'!"j """"~ t'!'j 2 ...., SAN DIEGO OHlCE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOUNT OVERAll CAP VACANCY lttl'lACEMEN I MARKETING ~ INHIAL-YEAR CHANGt llAHS ReSIDUAL RA'ft ORR) RA!f (OAR) ASSUMP'fiONS Rf5>ERVt 'fiMt UNDERlYINC i~E li. M~RKtT CAP SElliNG FRH& fRH& MONTHS TtNI\NT VACANCY & SQUARE ~ RfNT EXPENSES CPI RATf: EXPENSE ClEAR Cl~AR VACANT RfHNTION CREDIT LOSS FOOT 1\iONTi-IS ~ t'!'j 7.l)0% 7.00% to S.l)O% to PRIVATE INVESTOR + Foreca.i Period: 2 io Hi vears 2 (CBD): ().CO% 7.l)0% 6 $0.1\ ...., Mainiy uses DCF analysis; •ll d·rect Glp, capitJ!izes .~01 before Tis, 3.0% 3.l)~/,, :UJ% 7.l)0% tc• in both in both t(J 7S.O% 5.0% w t(J comrnissio11s, and capital replacement reserve; uses J rem sp;ke ?.SO% c;;[) ,, [6[) 8, '! $0.2\ 4 to h.O% in initd ymrs in certa•n suhmarkers. ~ (~uburbsi ~dwrb-, S!~burbs 10 S.D% 6.2S% TO o.noo,;, tc) 4J.~% to INVESTiviENT ADVISOR forec•

C;:l l'lliVAlE RrAl rSlATf fiRM + forecariod: 3 to 5 years 9.0(Y'!o h1 s.on;~;,~ to 6 00% Uses DCF 2.5% 2.S~i,, 2.5% 10.00% 7.l)0% (C8D); 65.0% -< (CBDJ; to to ((, 1.S'1;, ;n hoth 6.l)0% to _, to 1.S% ((, 7 00% 4.0% 3.l)~/,, 3.0% C3D & 3.l)0% 70.0% 6 (suhurhs) ~ suburbs (subur·bsl ~ r PUBLIC REAl ESTATE COMPANY + Forecosl Period: 10 yoars 6.mn;, 4. t,()~Y() Does Main!y us2s DCF J.nJiysis: in direct cap. Cd.pi1a!izes cJsh f!Lwv aher Tis. 7.00°r;, to to ~ 2.lY% 3.0'1;. 3.0% 1.0% 70JY~;,, ').0% nor IJ1 !ms!ng commiss!ons, Jnc! CJp!tJI !'ep!Jcernent reserve: d•Jes not L!SE: rent (suburbs) B.oo~~;,, /),t,()% use spikes. (suburbs) (suburbs)

PENSION fUND ADVISOR + Forocast Period: 11l year< .~.60% to .~.00% to 7.UG% tv1:liil!y u~~s DCF. :lna.lysrs; in direct cap, c:lprtaiih~ NOI b~for~ Tl-,, 3.0% (CiHJi; 6.00% (C6D); 6 $0.1() (CBDl: co111mrss:ons, ;m

r C;:l S.l)O% to t'!'j PENSION fUND ADVISOR + Forocast Period: 11l year< 9.00% 6.0% h.SO% 2.n'1;. S.SO% (C8D); tv1:liil!y u~~s DCF. :lna.lysrs; in direct cap, c:lprtaiih~ NOI b~for~ Tl-,, (CBD): YeJ.lS ~i.0°r;) 3 0°r;, tn to 6.l)0% to :::,:;,n;;;,l (;,()or;, ~ ieas:ng COillmrss:ons, an<:l cap:ta.lrepia.cement r~servl::'; -,ubmarkd 9.SO% I 8, 2 7 2.~)% 3.ll'i:- b. SO% " " prefereilC\::'~ inc!ud~ Del 1\t\ar and Route i:\ Corridor. (:;,uburbsl ~ (:;,uburbsi ~ S(>U<'Cfo P~t·spn;::ol SLJt"VC';' CPI1clue12d by P::u::wJ.iC'th(>uSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 ~ 0 0 ...... :J 0""' ~ 0 2 "'!"j """"~ t'!'j 2...., SAN FRANCISCO OFFICE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., D!SCOlJNl OVERALL CAP VACANCY RtPLACEMENi MARKETING INinAl-Y!'AR CHANGE RA'fES RESIDUAl !lAH (!!lR; RATE IOAR\ ASSlJMI'liONS !U:SE:RVt liME

~ U NOfRI.YI NC PfR MARKtT CAf' ShUNG fRH & fRH& MONIHS T!:NANl VACANCY & SQUAR~ ~ RfNT fXPfNSfS CPI RATE fXPfNSf CLEM CHAR VACANT RETENTION CRHJIT lOSS fOOT MONHIS ~ t'!'j 10.0% 6.2 s~Y() 7.0(Y'!o S.. ~)0°/o 2 INVESTMENT ADVISOR + foreca51 Poriod: 10 years Years I & 2; 1.0% ...., {CBD); :CBDi; i(llDi; Uses both DCF and direct capiralizJt;on; •n d·rect Glp, capitJiizes NOI c,.O% Y\::'3, 3; S.O% :{ 1)6;~, to 6 ?(),(Y'!o 7 .1)6;~, ~n.2c, l) __',()~jlq 7 ..t,(Y'!o 6.00°/o 1.0% 1--'· ·~~. " hefore Tl s, co~~::~~~~~i~r~n~,~;~;;~~;:e~r~:~~~~e;~ ~~~~~~v~~~~;~~s (suburbs) (suburbs) (suburbs) ~ thermfter 10 e PENSION fUND ADVISOR + Forecast Period: 5 lo 10 year> t'!'j :U1%; h.OO% 1.0% 6 60.0% 5.0% $0.1() 6 Uses b(Jth DCF and dir·ect cJpitrtlizatien but r2!ies (Jn DCF; us2s fJce to 7.00% 6.00% IJ1 1G taxe:;. 3.t)C';;: tn rn 10 tn tn rn ...., rents ;~nJ refiects cnnce:;.:;.ions when they are schedu!ed1n occur: prefers ?.00% {(BD) {(!3D) fd)% 2.0% 2.0% I"' 7S.O% 10JYt; so.\() I"' t'!'j :he CBD. . (CBDJ ~ C;:l -< ~ ~ .;.no% to r REAl ESTAH ADVISOR + Foreca.t Period: 5 lo 10 years 7.l)0% S.l)O% h.OO% (CBD); 1.S'1;. 6 $0.30 6 Buys turnJround s;tuations JS wei: as rotat.onJ! in suburban (CBD): (CBD): 3.0% 3.l)% 3.0% .;.so% to to ((, 60.0% 10.l)% t(J ((, ~ markets; ust::s both DCF J.nd dirt::ct capit1!i2ation; en DCF; L!Ses ELOO% 6.l)0% IJ1 7 00% 2J)% 18 $ :.U!l 12 fJce rt::nts in DCF model, net effedive rents in direct CJpitJiizatien. (:;,uburbsl (:;,uburbsi (<,llh!nhsl

DOivlfSTIC PENSION fUND + fnrecasl Period: 10 year; 6.SO% to 7,0(1(;;,) to 5.on;~;,l to Prefers C6D; uses both DCF and direct !n .d!rect cap, 3.0% 7.SO% (CBD); 8.0(1% (CBD); 7.0(1% H :::,:;,(1% 1,()0;;, $(1.10 cJ.pdalize:;. NOi before Tis, leasing repiJ.cement to 3.l)% 3.0% ?.00% to :.n'1;. 3.l)0% tc• :n bo:h ((, to t(J t(J 6 reserve: u:;.es face rer.ts ar.d refiects cnnce:;.sions when ;~rescheduled IO.ll<;:. i-LSO% 9.00% C8D& 12 75.0% 3.0% $0.2\ to occur. (:;,ub!~rbs: (subur·bsJ SL!burbs

r C;:l REAl ESTAU ADVISOR + Fmoca.t Period: 5 lo 1 0 years ; .oo~~;,, 7,0(1% 5.0(1% t'!'j 1.0% .t'r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (!RR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfR!.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CP! R.~H EXPfNSf CLEAR nrM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j 2 Rf!T + Forecast Period: 5 to 10 years ...., Core-r:.! us huyer looking for rnid-teen returns w.th rnoderate :everJge: uses B.ooo::./;) 1.0% 8.00% 8.00% $0.': (J 9 per square foot. stJbiiized car:•. a11d 10--ymr DCF as checks; uses to :Ui% tn tn to tn to 6:-:!.0% .S.tY't;: 10 to rents Jnd 1ef!eds C..:)ncessicns 1.-vh2n Jrt:: scheclL!I2d 10 cKcur; c,_()% Y.on~Y() 2.0% 9 ..tt(Y'!o '-) __',()0/q 12 ~oJo 12 ~ uses a 1en1 spik2 c:d 4.0% to 10.n'1;) in yt::J.rs .:md 3. 10e t'!'j IJ1...., t'!'j ~ C;:l -< 7.2Y~;,) to UH INSURANU COMPANY fm•casll\>riorl: 1!l year< 7 7.')%to 8.50% to + 8.00% 1.0% g 7S~·;, 1.0°k 9.50% 6 {:5.0% 7.0% Sil.1il 6 ~ (CBD): ~:;~;~~~~- oo· an~~~~~i:~:;:~~~~Ji.~~~~:~:l ~~~~~~c~~~t~~~~~:~;s ~~~~~ to ~:.no;;, LO% in both TO in both to TO to tn tn 3.7S% to concess;ons when they are scheduled to occur; 3.0% CBD & 2.0°k c;;[) ,, 1., 70.0% I :JYY<: Sil.lil ~ 10.SO% does nor use rem sp;kes suhurhs r ~ttburhs (subur·bsl ~ IJ1 l ..SO% 7.0(Y'!o 6.0l)% PENSION FUND ADVISOR + Forecast l'£ric•d: ·1 0 yoars 1.0% iC6D); 1.0% :CBD1; {(8D); 2.tY'I;: $0. :s Uses bc•1h DCF J.nd d!r·ec1 cJp!1J.!!n1ion: in direct cap, ca:::.oitalizes NOI h• :Ui% 6 ..SO% 1G tn 7,0(1(;;,) to S.20%1G 70.0% to 10 befwe Tl:;,, corn missions, and c;~pital repiacement reserve; uses t,,()% l.?S% 2.0% 7.75% 6 ..SO% ~~ .oo;;, ~0.20 ;~ ren1 :;.p;ke nf to S.O% in year:;. 1 tn 4 ir. Paim Beach. isuhurb:;.) (suburhsl {Suburbs)

7.00% to ?.00% to liH INSIJRANU COMPANY + lorocas! l'eriod: 5 to S year< g 00% 3.0% 3.ll';:. ·:0.00% 8.1)0% U:;.es bnth DCJ and direct C3)Jita!iz:~.t;on; a.l-,o Inob at discnu.ilt tn in both to to 3.(Y'I;! 2.n'1;. in bl")1h in bo1h 70.0% 4.0% $0.2\ to u•st; uses bee rents a.nd reflect<, cnnces-,i(1f1<, \lvhen they are' CBD & 4.0% 4.0% c;;[) ,, CBD f, 6 tn occur; does not use rent spikes. suburbs ~ttburhs S!~burbs

r C;:l IUIT + Furocasl Period: 10 year< g SO% B5lf}·;) a.so~·;, t'!'j Va.h~a.tion p;eference is DCF a.naiy:;.i:;.; ;~!:;.o use:;. d;rect in Jirec1 cJ.p, tn TO TO 3.0% ~i.O% 3.0% 2.1)% 6 6:-:!.0% .S.tY'1;: $0.20 6 c;~pit2l;zes ,'\!0! be{ ore T!s, leJ.sing commissiur.:;., ar.d replacemen1 lG.Sn% 1(1.)0';{) 10.l)Ot;,;) ~ reserves; dues not use rent spikes; p;efers suburbs. (suhurhs) {Suburbs) {Suburbs) ~ ~ Snurcfo P~t·spn;::ol SLu·vC'y CPncluc.12d by P::u::wJ.tC':hnusC'C}•>pC':~- LLP Ju::nb Ap:·d 2C100 PRtCEVVATERHOUsE@JPERS i """"~ 0 ~ N 0...... :J ""'N ~ 0 2 "'!"j """"~ t'!'j 2 ...., SUBURBAN MARYLAND OFFICE ."vtARKET-lNVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (!RR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfR!.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS err R.~H EXPfNSf CLEAR nrM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j INVESTMfNT BANKER + foreca5i Period: I 0 yoars 2 0.0% g SO% CJ.50% 7.SO% 6 $0.1', ...., Uses both DCF and direct capita!izat;on; in direct Glp, cJpitJI;zes cash to ~: .n~t; LO% tn 2.0°k TO TO to 70.0% >.0% to 6 flow af12!" Tis, !eas!ng UJmrnissions, Jnd cJpitd.ll·ep!Jcern2n1 reserve: uses 3.0% CJSO% 11.0(l% CJ.CO% y S0.2S ~ effective re111 J.11t::l· J.l! UJncessions ,m:: ex1racted. 10e t'!'j IJ1 UH INSURANCE COMPANY+ forocasll'eriod: 10 year. ...., 2.S'1;) 6.0l)~/,, 2.S% 6.00% S.SO% 1.tY'I;! $0.2S t'!'j ~:;~;~~~~. oo· an~~~~~i:~:;:~~~~Ji.~~~~i~:l ~~~~~~c~~~t~~~~~:~;s ~~~~I lo 3.0% 3.tY'I;! tc, t(J to t(J 6 6S.O% to to !o ~ concess;ons when they are scheduled to occur; 3.0% 8.0l)~/,, 4.0% 8.00% 8.00% 3.0% $().4.\ 6 C;:l does nor use rem sp;kes -<

~ PRIVATE REAl ESTATE FIRM + furecasll'erio!l: 10 years 6.7S~Y() 7 ..tt(Y'!o 6 ..t)Oo/q ~o.: c, u~es both DCF and d!rec1 capda!!z21inn: in direct c2p, capit2lizes r">JOI 1.0% Ul% :{ i)6k to 2.0% to to 6!:.(Y'!o .t, .1)6;~, TO befwe Tl~, ieas;ng corn missions, 2nd c;~pit2l reserve; uses ~ 7.2S% B.. t,(Y'!o 7.00°/o r eHec1ive rent after 21i concessions 2re " ~o.:1o ~ IJ1

INSTITUTIONAL INVESTOR + forecast Period: 10 vears D.O%tn 2.0% 7 00% 2.0°k d.CO% 7.00% 6 t:S.O% 1.0% SD.1il 6 Rel;es on DCF; J!so uses d·rect cJp•tai.zatioll: in direct , car:•italizes Ye:us 1 ;Y 2; :: .n~t; LO% tn TO TO TO to TO to to to !~01 after G:J.pit:l! n::p!xement reserve but before Tis Jild 3.0% 7 SO% 2.S 0k d.SO% 7.SO% y 70.0% 2.0% SD.2il y ccmm!ssi~_1ns; does net use rent spikes. thereafter

r PENSION fUND ADVISOR + forecasll'eric•d: 5 lo I 0 year> C;:l Uses bcJ1h DCF and dir·ec1 cJpda!in1ion: in direct ca:::..italizes NOI 7 .so~~;,, 1.S% 7,0(1(;;,) 5.0(1% sn.:w 6 t'!'j after capitJ.I replacement reserve but before Tis Jild commissions; 3.0% 3.0~·;, 3 0°1;, to to to to to" 50,(1% 1(1.0% TO to uses face rents J.nd ref!ect-:, concession~ ~,vher. Y.oo~~;,, 2.0% 9,0(1% 7.0(1% 18 $1.00 p ~ they are ~ ~ Soul·ce: p~,·s,)na! Cl)r!d~!CTed by Pl'iCE\h!.tel·houseC:liOpers Ll r di11·ing Ap.·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ~ 0...... w ...... -....l w""' ~ 0 2 "'!"j """"~ t'!'j 2 ...., WASHINGTON, DC OHlCE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., fJISCOUNT OVERAlL CAP VACANCY REPlACEMENT MARKETING INITIAL-YEAR GlANCE RATES RESIDUAL RAT[ (IRRJ RATE IOAR) ASSUMPTIONS RESERVE TiME

~ uNDERlYING PER MARKtl CAf' StlUNG fR[E & I'Rtl& MONIHS HNANI VACANCY & SQUARe ~ RENT EXPENSES CPI RATE EXPENSE ClEAR CLEAR VAC~NT RETENTION CREDIT lOSS FOOT MONTHS ~ t'!'j INVESTivlfNT HANKER + Foreca;l l'l>riud: 10 yoars 7 50~·;, 75(f}';) (;,5(JC}';, 2.0';.\~ $().1() 2 2 in direct CJ.)J, cap;tJ.iizes cash ...., 0 3JY~;,, 3.0';.\~ to 2J) r;, TO TO 6 7(1,()~·;) to to to replacernen1 reserve: uses q oo~·;, 95(f}·;) g,()(J~·;, 5.0';.\~ $().2() ~ are schedu!ed tG occur. 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~ ~ r RM!. ESlArE ADVISOR + forecasl Periorl: 5 to 10 yoars S.Ol)~/,, 1.S% 7.00% S.OO% 6 $().30 Uses both DCF Jn<:l dirl::'rt r:anitJiizatrfm; reire-, nn DCF· rr. drrect ~ 3.0'1;) 3.0% 3.tY'I;! ((, t(J to t(J lo 60.0% (HY'I;! to lo IJ1 7.0l)~/,, ~:~~iit:~i~~~~~.~;s~~; ·~;~:~ ;::~;c~~~~e~; ::':l~;.'~,h~r;1~~~~i~r~:~: 2 or 3. 2.0% 9.00% 6.00% 12 $1.00 6

PENSION FUND ADVISOR + Forocasl Po 6.on~Y() 6.0(Y'!o ).()(10/o 6 1 _1)6;~, ~n.: c, Uses both DCF Jild direct cJ.pitJiization; in dirt::ct cJp!1a!iL(::s NOi 3.0% 3.0~·;, 3 0°r;, to 2.0% to to to 70,(1(Y,l TO TO J.fter cJ.:::.oi1al r2:::.olacenK:nt reserve but bef•.1r2 Tis J.nd O.:)mrr.issions, 6.so~~;,, h.7YY,l 6.00°/o 12 2.0°r;, $l1.2' does il(Jt ust:: 1en1 spik2s.

r C;:l PENSION FUND ADVISOR + Forocasl Period: 10 voars t'!'j P1·ders DCF in direct cJ.p, ?.00% 7.00% $0.2() k:J.sing repiacement 3.0% ~-~.no:,/;) :UJ% to 2JY't;: 10 1n 60.0% 6.0% tn 6 ~ reserve, ust::s fJ.ce rents Jild 12f!ects C..:)ncessions I.•Vh2!l ,m:: scheduled ?.SO% 7.50% $0.4() ~ tO GCCUf. ~ SC>Ut'Cfo P~t·spnJI SLJt"VC';' CPI1clue12d by P::C2WJ.ie:he>useC}•>pe:~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 ...~ 0...... -....l ""' ~ 0 2 "'!"j """"~ t'!'j 2 ...., NATIONAL HEX/R&D MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNI OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSlJMPTIONS RfSrRVE TIME

~ UNOfR!.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CP! R.~H EXPfNSf CLtAR Cl.tM VACANT REHNTION CRWIT lOSS fOOT MONHIS ~ t'!'j PENSION fUND ADVISOR + Forecast Poriod; 10 >ears 4.0% 7 2.~)% 1.oo;;, 7.50% .~).SO% 6 t:S.O% l.O% SD.1il Uses both DCF and direct capita!izat;on; in direct Glp, 'CJpitJI;zes NOI 2 to ~: .n~t; tn TO TO TO to TO to to to ...., before Tis, :ms•ng commissions, Jnd cJp;tal rep:Jcernent reserve; LO% S.O% 7 7.~)% 2.no;;, d.SO% t:.CO% y 70.0% >.0% S0.2S 4 focuses (Jil pr!ct:: pt::r· squ:1r2 foot 1or newe!" product. ~ 10 PENSION FUND ADVISOR + Forecast l'£ric•d: W !o n yoars e u~es both DCF and d!rec1 capi1a!!z2tinn,: in direct c2p, capit2lizes r">JOI 2.()';-~, / 50~';, BJJO% 7,50% y $0.15 t'!'j befwe Tl:;,, ieas;ng commissions, 2nd c;~pit2l reserve; uses to 3JY~;,, J.o·~~ to 1 ,5°r;, :o TO to 7(1,0% 5.0';.\~ to IJ1 eHec1ive rent after 21i concessions 2re g 50% 950% B,50% 12 $0.25 ...., ;n years 2 1G S in Lus Ar.geies, DJ.il2:;., ;~nJ Phuenix. t'!'j ~ C;:l -< ~ UH INSURANCE COMPANY + foreca5i Period: I 0 yoars 0.0% 7 no% 1.nor;, d.CO% t:.CO% 6 .~JS.O% >.0% SD.1il 6 ~ Uses both DCF and direct capita!izat;on; in direct Glp, cJpitJI;zes NOI to ~: .n~t; tn T() TO T() to TO to to to r ~x::f•Jr2 Tis, !eas!ng UJmmissions, Jnd cJpi1J.Ir·ep!Jcernen1 reserve: uses S.O% 1n .. ~J0°/o ~;.nor;, 10.0(l% d.CO% 1., 7S.O% 10.')% SD.2il U\ ~ fJce rents Jnd ref!eds CCJilCt:ssicns 1.~vh2n 1hey Jrt:: scheclL!I2d 10 CKGH. IJ1 PENSION fUND ADVISOR + Foreca;! Period: 10 years 0.0% 7 SO% 2.nor;, 7.SO% 6 t:S.O% 1.0% SD.1il Uses bnth DCF 2nd d;rect c;~pit2i;zat!nn; in direc1 cd.p, cJ.pi1J.I!ze:;. NOI to ~l.C% LO% tn T() TO T() to TO to to before Tis, !e2:;.!ng commis:;.ions, J.nd capital rep!J.cemer.trese;ve; does 3.0% CJSO% ~;.nor;, CJ.CO% CJ.CO% y 70.0% 2.0% SD.1'i nnt use rent spikes.

REAl ESTATE ADVISOR + foreca.i Period: I 0 yoa" 0.0% ?.00% ·:JY'r;; 6.50% 6 ).0% $0.0\ 6 Uses both DCF and direct capita!izat;on; in direct cJp, cJpitJI;zes NOI tn ~i.0°r;; :UJ% to 1o 10 1o t(J bS.O% to to to before Tis, commissions, Jnd cJp;tal rep:Jcernent reserve; uses S.O% 0.00% 4.!Y'r;; 8.7S% 12 5.0% $!J.l\ 8 r concessi ens 1.~vh2n 1hey Jrt:: scheclL!I2d 10 CKGH. C;:l t'!'j PRIVI\H REAl ESTATE FIRM Forocasl Period: 10 yoors + ; .so~~;,, 2.nr::,;, 8.00% 7.l)0% 3.0% $0.10 4 U:;.es both DCF and d!rec1 capi1a!!n1inn,: in direct c2p, capit2lizes r">JOI 3.0% 3.l)% 3.0% to to to to 6 75.0% t(J t(J ((! ~ befwe Tl:;,, ieJ.s;ng commissions. 2nd c;~pit2l repi2cement reserve; does Y.so~~;,, 3.ll'i:. 10.00% 9.00% S.O% $0.1\ 6 ~ nn1 use ;er.1 spikes. ~ SOUI'CE': p~,·Sl)na! Cl)r!d~!CTed by P1'iCE\h!.tel·houseC:l10pers Ll r di!l'ing Ap,·;] 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ~ 0...... "' ...... -....l Ul""' ~ 0 2 "'!"j """"~ t'!'j 2 ...., NATIONAL WAREHOUSE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., DISCOlJNl OVERALL CAP VACANCY REPLACEMENT MARKETING INITIAl·YEAR C!1ANGE RATES RESIDUAl RATf (IRR) RATt (OAR) ASSUMPTIONS RfSrRVE TIME

~ UNOfRI.YINC PER MARKtT CAP ShliNG fRH & fRH & MONIHS TENANT VACANCY & SQUARt ~ RENT EXPfNSfS CPI R.~H EXPfNSf CLEAR Cl.fM VACANT REHNTION CR~O!T LOSS fOOT MONHIS ~ t'!'j PENSION fUND ADVISOR + Forecast P,riod: 10 yoa" 4.0% 7 SO% 2.0°k d.50% .~).SO% 6 70.0% l.O% S0.1il 2 Uses both oo· and d·rect CJp;tai.zatioll; in direct cap, car:•itctlizes :\JOI ...., to ::.>% L',% tn TO TO TO to TO to to to beicre Tis J.nd leasing cornmissic•ns: J.itt::l CJpitJ.I rep!Jcernent r2SC!I~.<'e bL!t S.O% g 00% ~:.no;;, ().CO% t:.CO% y 7S.O% >.0% SD.1'i 4 focuses on price per square f(Jot fcq nel.>~.'er p!"CKiuct. ~ 10 DOMESTIC PENSION FUND + fo:ocasl P,riod: I 0 yoar> ().()';{) 6 oo~·;, 1 ,() 0r;, S,GO~·;, 6 0.3'~~ $().]() e uses bn1h DCF and Jirec1 CJ.)Jitaliz;~1inn; to 3JY~;,, 3.0';.\~ to TO TO TO to TO to to 6 t'!'j ."~01 befo;e Tis, !ea~!ng cnrnrnis~!nns, and capdal 10.0% 7 so~·;, 3J)0r;, 9JJU~·;) 7J)O~·;, 12 75.0~·;) 1.0';.\~ $0.25 IJ1...., repi:Kement reserve . t'!'j ~ C;:l -<

~ PENSION fUND ADVISOR + Forecast Poriod; 10 years Prefers DCT 7 .oo~~;,, 1.0% 7,0(1(;;,) ::,.sn% 1 $l1.0' ~ capitalizes NOI lmsing comrnissions, and 2.0% 3.0~·;, 3 0°r;, to to to to to ::)0,(1% BJ) 0r;, TO 12 r reserve, uses fJce rents Jnd ref!eds CCJncessions when a.oo~~;,, 2.0% 7.75% 7.Sn% sn.2n schedu!ed to occur. " ~ IJ1

PENSION fUND ADVISOR + Fc•recas! l'<>riod: 10 years 0 6.2S r;) 2.0% 6 ..~0% S.OO% [, 6:-:!.0% O.SC'r;: $0.0S Uses bnth DCF and d;rect c;~pitai;zatinn; in direc1cap, cJ.pi1alize~ NOI 1.0% Ul% :{ i)6k to to to to tn to TO TO befo;e Tis, !ea~!ng cnmrnis~inns, and capital rep!acemer.t rese;ve; does 6 7 __',()~jlq l.ll% B.O(Y'!o 7 ..')(10/q H ?().(Y'!o 4.0 k ~n.: c, " nnt use rent spikes.

REAL ESTATE ADVISOR + Forocas! Pof'iod: 1 u >o>rs ().()';{) 6 7S% 1 ,() 0r;, 750~·;) 6.00% 6 $0.(15 6 ;:;~,;~::; ~~:,:;~~~~~i:~:·:~~~~to~~;,;:l ~:~~~~,~~~:~~;:!:::'~~;:I to 3JY~;,, 3.0% to TO :o TO to :o 3.0% to to face r2n1s and re1iects concessi•Jns when th2y are scheduled to occur: 7 7S% 4.0°r;, B50% 7.50% y 75.0% $0.35 g r cloes n•-11 use a r·ent spikes. C;:l t'!'j REAl ESTATE ADVISOR + Forocast Period: 11l year< !HI% h.SO% ·:JY'r;: 6.90% .~.SO% 6 $0.0\ ~ Uses DCF and LKe rents: in clireci cap;tJ.i;zes cash fluw a{1er Tis, to ~-u)% :UJ% to 1n 10 1n t(J bS.O% 2.0% tn 6 ~ !ea~!ng cnmrnis~inns, and capital rese;ve. 4.0% ?.SO% 2JY'r;: 7.80% ?.00% 12 $!J.1\ ~ Snurcfo P~t·spn;::ol SLJt"VC';" CPncluc.12d by P::u::wJ.tC':hnusC'C}•>pC':~- LLP Ju::nb Ap:·d 2C100 PRtCEVVATERHOUsE@JPERS i """"~ 0 ~ 0...... ~ ...... -....l 0"1""' ~ 0 2 "'!"j """"~ t'!'j 2...., NATIONAL APARTMENT MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., OI,COUN'f OVERAll CAP REPLACEMENT MARKFf!NG INITIAL· YEAR CfiANGE RATES VACANCY RfSIOliAl RATE (IRR) RATE (OAR) RtStRVE TiME

~ MARKET TOTAL CAP SHUNC fRH& fREt K PER ~ R[NT tXP[NS[S VACANCY RAH [XPENS[ CltAR ClfAR UN II MONIHS ~ PRIVI\H REAl ESTATE fiRM+ Forecast Poric•d: 2 lo 5 years 2.S~·;, 4.soo,;, 4 ..~0% t'!'j Uses bc•1h DCF J.nd d!1·ec1 cJpitJ.!!ntion. in direct cap, CdJ::.Oitalizes NOI 2.0% l.S% 9.00% afta capitJ.I n::piacement resave, does nc•1 use a sep<:!late structu1·J.I 1G 1G 1G 1G 1G 1G tcJ S.2SO 2 ,;.()Gr;: 3.(/};, ...., repi:Kement reserve. !.0% h.S0°(. 2.0% 10.00% 6 ..~0% ~ 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~ ~ r ~ IJ1

r PENSION FUND ADVISOR + Forecast Poric•d: 7 lo I 0 year> C;:l Sp2cializes in this market; increJS2S Jnnua! r2n1 in lieu cf l2:1se-by-lmse 0.0% 8.0% 7.SD% H.OD% '.. 7.',% $27!: t'!'j cf 3.oc;,;) t(J 3.2S% pius costs Jnd tn :UY'!o to to 2.(Y'!o to tn to reserve reli2s ()ll IRR primdJily, J.lsc_. uses 2.0% :1.0% H. SO% H. SO% h.SO% $4()() ~ ccst Jpp1oaches: L!St:!S a sep:1rate strL!ctu1a! 1·epiJ.cem2n1 ~ reserve n{ S.L~U per un;t. ~ Sou1·ce: p~,·Sl)na! Cl)nd~!CTed by P1·icE\h!.tel·houseC1opers Ll P d111·ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ~ 0...... " ...... -....l -....l""' ~ 0 2 "'!"j """"~ t'!'j 2 ...., NATIONAL NET lEASE MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., PREHRRHJ PREHRRHJ UNDERlYING PROPeRTY CRtDIT DISCOUNT OVeRAll CAP VACANCY & RtPlACtMtNT MARKETING ~ TYPE CHANGE RATES RATING RESIDUAl RATE \IRRl RAH (OARJ CREDIT lOSS RESERVE TIME PER ~ MARKEl CAP SHliNG fREE& fREt & >QUARE ~ RENT EXPENSES RATE EXPENSES ClEAR ClEAR fOOT MONTH t'!'j

2 PRIVI\H INVESTMENT FIRM O{fice. re1atl ...., f, L',·~~. Pr!m<:JJy valuation nx:1h(Jd is DCF JnJiysis; a!s•J ust::s din:!Ct capitJ.iiLJ.tion; in R8,D, industrial, J\li \IJ.Iif'!~ 0.0°/o (1) (ll or. lUYY() N(•ne clireci CJ.)J, cap;tJ.i;zes cash fluw a{1er Tis, leJ.sing commissiun~, ar.d ca.pi1d! henh, ratinP<.',y il1J.XiiTI!!ITI term '"HilO% ~ repi:Kement reserve. 1\::'~t.'l.UfJ.ilt~ 10e t'!'j IJ1...., t'!'j ~ C;:l PRlVA.H INVESTMfNT FIRM Foreca.t Period: 5 years + i)ffice, -< 0 0 Pnrnary valuation method is sales comparison Jpr::.roctch: aiso uses DCF 2.e% 3.0% 8.2S t;: 1.. ~% -:U.2S% !3.2.') k 0.0°(. s.n.=:n indusuJJ! {mirtirnurn) ~ a11aiysis.

RtiT + Foroca>l Po

Dwg stores, BBB fl.\)0% $0.10 INVESTORS AND BROKfRS + forecariod: 5 vears ue:cl!t (2) (21 to (2) (21 C) to 0.l)0/;) to {2) Pnrnary valuation method is direa Glp•taiinrion: also, uses saies re1ai!, A+ HilO% ~0. L~ comr:•anson approach. b2nb

PRIVI\H INVESTOR+ Forecast Period: 3 to I 0 yoar; ElB 4.0% 1(1.00% 7 .Ol}~. Pr!mar·y va!uation nx:1hcJd is di1ee1 cJp!1a!in1iCJil: J.lso uses DCF J.nJ.Iysis; in RetJ.d, (2) (2) (2) to TO {2) to one or eli red c:1p, capit1!i2es cJ.sh fb..v a11t::r· Tis, lmsing CCJmmissicns, J.nd cJpi1a! restJurJnt I' r '"' 5.0~·;, 12.()()';{, 8.0% more C;:l repi:Kement reserve. t'!'j ~ (1: Does not ccns!dt::r· J.ny residuJI va!ut:: ~ (2: Did not disclose ~ S(>Ut'Cfo P~t·spn;::ol SLU"VC';' CPI1clue12d by P::u::wJ.iC'th(>uSC'C}•>pC':~- LLP Ju::n); Ap:·d 2Cl(J0 PRtCEVVATERHOUsE@JPERS i """"~ 0 ~ 0...... 00 ...... -....l oe""' ~ 0 2 "'!"j """"~ t'!'j 2...., NATIONAl DEVElOPMENT lAND MARKET-INVESTOR SURVEY RESPONSES Second Quarter 2008 >r ...., PROPE!<:TY ABSORPTION CHANGE RATES DISCOUNT RAl E FORECAST VAlUE CHANGE MARKETING TYPE'S CRITtRIA (IRR) NEXT 12 MONniS PERIOD

~ Lot Development hee & Subject to ~ '(ears Prjces Costs CPI Clear financing Range Average Months ~ DEVElOPERiBROKER t'!'j sal~s; a.nJ!ys;s IS lOJJ% B:1seJ on a 4.()';-~) 24 :ndustridJ, 2 to to TO n{ specif!c 4.0'7o :0.00% 12.00% to 5.0% tn ...., re1a.i! devl::'!opmer.t ;s COilCer.trJted in lSJJ% l;ne item 6.0'1;) )D ~ 10e t'!'j IJ1...., t'!'j ~ DEVElOPER C;:l industric1i, uffice. -< ;~nJ ciea.r v;~!ue of 1G 2.5°/;) 2.S% 3.0~·;, 1s.onr::,;. 20.00% S.O% 360 medica!. 20 clo''";""""""' is re1a.i! ~ the !V!iclwe~1 and SoutheJ.s1 regions uf the ~ DEVElOPER Depends r 5; ngie-f;~rn;ly/ Equdl l.O% Prim:uy method free and dear of Gr. 'vVer!clnd~ 1G to t() 1.0% 20.U!Y't;: fi none! ng; projl::'rt ranges from SO to s;ze ~ rn;rigatiur. CPi S.O% IJ1 concentrJred in ArizonJ. C::;_lifornict and \

r C;:l PRIVATE INVESTMENT COMPANY t'!'j free and cleJ.; uf {:(1 frnrn 400 to v;~!ue of !and C!mer.tiy h) UJY~;,, OJ)';{) 0,0% 2o.noo1;, 0.()';-~) 0.(1% TO ~ rniliinn; prefe;s Chic;~gu and F!o;;da markets, 10 144 ~ ~ Soul·ce: p~,·Sl)na! Cl)r!d~!CTed by P1·icE\h!.tel·houseC:l10pers Ll r di!l·ing Ap,·;l 2008. {JR!CEWA1fRHOUsE@JPER5 fli """"~ 0 ~ 0...... "' ...... -....l \C""' ~ 0 2 "'!"j """"~ INVESTMENT AND PROPERTY CHARACTERISTICS: OFFICE MARKETS t'!'j 2...., Second Quarter 2008 fORECAS'f VAlUE CHANGE S'fRUCfURAL YEARS TO STRUCTURAl >r NEXl 1l MON'fHS PRICE AS% OF REPlACEMENT COS I VACANCY VACANCY 'fls- NEW (f'SF\ lis- RENEWAL (PSF) ...., MARKH RANGE AVERAGE RANGE AVERAGE RANCt AVERAGE RANGE AVERAGE RANGE AVt:?AGt RANCt AVERAGE ~ Nat!nnal CBD i 5 .00°/,)) -- 5.00% 0.80% 60.00% -- 1 00.00% 84.72°/,) 4.00% ·- 15.00°/,! 7.35% 1 - 5 2,1 $10.00 -- $60.00 $28.50 $5.00-- $45.00 $12.35 ~ National Sul')urban (1 S .OO'X~l - 5.00% (0.2 7%) 70J)0°1;,- 12o.ooo;,, q2.SO% SDO%- 20.00'X~ Q_j 1c;;;) 0-5 1.ft $0.00- $50.00 $23N $0J)O- $20.00 $A.O!l ~ t'!'j Atlanta (5.()()%)- 5.00% 0.8:3% 75J)0°1;,- 11 o.noo;,, q1.07% 750%- 12.00';{~ 10.35% 0-!1 1,8 $15.00- $35.00 $2350 $6.00- $E.00 $9.08 2...., ~ 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~ ~ r ~ IJ1

r C;:l t'!'j VVashingtnn, DC 0.()0%- 6.00°;,, 3.:~1% 75.00%- 120.00'};, g7.90% 5.00% - 10.00°1;, 6.2A% 0-2 0,C, $10.00- $SO.OO $2g.sr, $S.00- $35.00 $20\1 ~ 1I', ,.!,o1 insL•ifJc;ent numl•2' of ··~sp::'~· <~ceiveJ ;m Cfot"iain c~•iagl••·i2s fRietVVATrRHOUsE(ooPERS ~ Sout-ce: Pet·sonC!.I condc!cted by Pi"iCE-\\r NEXT 12 MONTHS REPlACEMENT COST IRRs OARs IRRs OARs OCCUPANCY ...., MMKET RM>JGE AVERAGf RANGf AVfR.~Gf RANGE AVERAGE RANGf AVERAGE RANGE AV~RAGE RANGf AVERAGE RANGf AVERAGf

0 0 0 0 ~ Reginna! 1\'1:~!1 {1 S.00°t;J!- S.OfY'r;) {f).h7°t;J! 90.0U t;)- 12S.OO% 1·: 2.00% h.SO%- 12.00% 8.4S~·;, 4.!S r;)- 830% b.OS% 7.00°!;)- 14.00% {}.92% S.?S t;)- (L~U% 7.fA t;) l!o.noo,;,- 94.00% 9S.SO% {Ci;~ss-6 1G A+! ~ PLwver Center 12.0tY'I;!I·· D.OO';t;) (3.92°1;!1 80.l)0% -- 130.00% 1l)0.00t;,;) YO.Ol)~/d -· 95.00'1;) 94.13'1;)

~ St•·p Shopp·ng Cemer (5,(10°r;,)- 5.(10% 0.06% 80.00~·;,- 140,()0';-~) 103.8'1% ss.mn;,- 97.nO% 93.8:5% t'!'j 2...., ~ 10 FORECAST VALlJ E CHANGE PRICE AS ~-;, Ot e NEXT 12 MONTHS REPLACEMENT COST fiNISHED SPACE ~i,-,. Tis- NEW (PSF/tJNil) Tis- RENEWAl (PSf/UNITI t'!'j IJ1...., MARK~! RANCt AVERA.Gf RANGE AVeRAGE RANGE AVfRACt RANGE AVERAGE: RANGE AVERAGE t'!'j Flex/RS,D { IOJ)O%)- ";.no% (1.42%) en.on%- ·:2i100% 94.SO% S.OD%- I 00.00% 4·: s.n.oo- s, 1s.on t;3b $0.0!J- $'i.O!J $2.27 ~ C;:l VVarehnuse (10.00°/;))- 6.00% rL;o% 80.00%- 120.00°t;) 98.77% 0.00%- 1S.OO% ?.soo,;, $0.00- $:0.00 s.2.::o StO.OO- $2.SO $0.46 -< ,~'>,pJrtrr.ent LS.00%1 ·• 10.00% 1.78% 7S.OO% -- 12S.OO% 97.74% ~ SOL!t·c:e: Fet·sondl :.!.11\'ey conducted by P•·icewdte•·hoL!seL("),;pc•·s LLF' du•·ing Ap•·ii LOOS. ~ PRICE1M4TERHOUsf[mPERS !i r ~ IJ1

r C;:l t'!'j ~ ~ ~ """"~ 0 ...., 0...... -....l Ul...... YIELD COMPARISONS April 1' 2008

lOeB 2004 200.5 21)06 21)07 2007 20011 20011 AVERAGE AVEI~AGE AVERAGE AVERAGE AVERAGE OCTO BEll IANIJAI~Y A?Ril

11.00% 10.28% 9.43% 8.81% 8.41 o;,, 8.32% 8.33% 8.42% 5.87% 6.08% 3.86% 4.21% 2.03°f<, 3.16%

513 420 386 236 157 122 220 197 1 0-Year Treasuries 714 607 514 405 369 376 442 485 Consumer Price Index Change 897 712 513 749 491 710 423 133

a. of the mMkets sut·veyed. b. SuutTe: C:t·ittenden Publishing, Inc.; p,·;cewate>hm"se<::oo'(Je>"S LLP and t·eflects fixed-t·ate debt of S Fm januMy 2008, suutTe is debt, minimum 65.0% LTV; Following

c. d. SuutTe: U.S. Depattment of Labm; hum the ~Him quMtet·; the annual avet·age change is the mean of the fuut· cmt·espunding quattet·s.

COMPARATIVE YIELDS April 1, 2008

~ KYI

10.0 -t- CPI-U

aR 8.0~------~~~------~ -'"0 .~ 6.0+------~,~----~~-2,~--~~,------>-

0.0 ;§' ,c::o ,cv if' ,~ ~ r§ <[} rlf "~ ,§' ,§' ~ ~ ~ ~ ~ ' "' ~ ~ ~ ~ ~:F "$ ~

DIVIDEND COMPARISONS April 1, 2008

2003 2004 2005 2006 2007 2007 2003 2008 AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE OCTOBER jANUARY APRil

Dividend Indicator

256 335 S&P 500 747 699

a. A composite OAR (initialt·ate of t·etum in an all-cash tt·ansactiun) avet·age of the mMkets b. SoutTe: National Association of Real Estate annualized dividend calculated by p,·;cewate>hm"seC:oorms Me as of the last day of the ~ll"im quMtet·. c. SoutTe: StandMd & Poms; avet·age annual dividend yield Pt·icewatet·houseC:oopet·s LLP; dividend yields Me quMtedy of the pt·im quattet·.

PRrCEWATERHOUSECOOPERS llP www.pwcreval.com I 72

CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011752 ~ 0 2 "'!"j """"~ t'!'j INSTITUTIONAL-GRADE VS. NONlNSTlTUTlONAl-GRADE PROPERTY RATES 2...., Second Quarter 2008 INSTITUTIONAl NONINSTITUTIONAl SPREAD TO INSTITUTIONAl >r IRRs OARs IRRs OARs AVERAGE IRR AVERAGE OAR ...., MARKET RANGE AVERAGE RANGE AVERAGE RANGE AVERAGE RANGE ,WERI\GE BASIS POINTS Bl\515 miNTS ~ NJtic_.nal Rt:!gic_.nal MJ.ii 7 .Ol)~/d •· 11.00'1;) 8.73'1;) S.OO% •• q.SO% 6.71% s.soc;,;) ·- 14.SO% 11.00% S.OO% -- 12.0l)~/,, 8.33'1",, 227 162 ~ NationJI Po,vel· Center 7.00% -- 11.SO% 8.30% S.7S'1;) ·-· 9.0l)~/,, 7.17% Nil r~A 1'\J,~'>, I~ A NA Nil ~ NJtic_.nal Ship Shc-'pping Center 6.0l)~/d -· 1D.00'1;1 8.39'1;) S.80% -- q.OO% 7.32% 7.nor;,;) -· 13 .nor;,;) 10.13% 7.00% -- 1 l.Ol)~/,, 8.77~/,, 174 14S t'!'j N;~1inna.l C6D Office n.noo,;,- ·: 1.00% 8.04% 4.SfY'r;:- 1O.l)O% 6.68% e.OO%-l:UlU% 9.96°/;) S.SO%- 11.00% i-LS2% 1(}2 184 2...., ~ 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~ ~ r ~ IJ1 Philodelphia Offoce .a.oo~~;,, - 11 .no% ':l.2':l% S.OO%- 11.0(1(;;,) ':l.no%- 11.so~·;, 1 n.on;~;,l 8.2s•;.~,- 1o.so~~;,, Y.2Y~;,, 71 100

Ph•.12nix Off!ce S.Ol)~i<) •· 11.00'1;, 8.31% S.OO% •• 8.50% 6.90% .. a .• J

San D!2go 01fic2 S.60% -- 10.00% 8.08% 4.S0'1;) ·-· 8.0l)% 6.06% --a

S:1n Franc!scc Off!ce 6.Sl)% •· 12.00% 7.81% 4.SO% •• q.OO% 6.14% 7.SO% ·-· 14.00% 10.1S% S.OO% -- 10.2S'1·,, 7.8l)% 234 166 __ a Southc:Jst Ficr!da Ofke 7.00% -- 11.00% 0.02% S.20% ·-· 1O.SO% 8.00%

SL!burbJ.n fv1a1yiJnd Office 6.0l)% •. 11.00% 8.23% S.OO% •• q.OO% 7.l)2% •• J . .:1 r C;:l t'!'j

~ Ai: tv\arkets Surveyed B.42% 1(1.28% B.SY~;,, 186 160 {S·mple Average)

~ d. Our pdrt;c;pc•nr~ <•'c currcrJTI·,t f'ursu:ns WJnin~t;tutir;nc•l i'1v2~tno2nt~ in thi~ ~ Sl>Ut'C2 P•:>:·suq~,: ~-u.-vey cuqducied by P:icewJi2t"hl•useConpe:~- LLP JL•t·io1g Ap::I20(J8 """"~ PRtCE\tVATERHOUsf[mPERS I 0 "w 0...... -....l Ulw INCOME CAPITALIZED IN DIRECT CAPITAUZATIONa Second Quarter 2008

METHOD 1 M[THOO 2 METHOD 3 MARKET CUP. RENT YEAR AGO CURR[NT HAR AGO CUP. RENT Y[AR AGO

National Retail Regional Mall 28.6% 14.3% 71.4% 71.4% 0.0% 14.3% Power Center 12.5% 12.5% 87.5% 87.5% 0.0% 0.0% Strip Shopping Center 20.0% 11.1% 60.0% 66.7% 20.0% 22.2%

Office National CB D 15.4% 8.3% 76.9% 75.0% 7.7% 16.7% National Suburban 25.0% 20.0% 50.0% 60.0% 25.0% 20.0% Atlanta 37.5% 37.5% 62.5% 62.5% 0.0% 0.0% Boston 0.0% 0.0% 90.0% 100.0% 10.0% 0.0% Charlotte 25.0% ?:i.O'}(, 0.0%) Chicago 23.1% 27.3% 76.9% 72.7% 0.0% 0.0% Dallas 33.3% 42.9% 66.7% 57.1% 0.0% 0.0% Denver 0.0% 100.0% 0.0°l) Houston 28.6% 33.3% 71.4% 66.7% 0.0% 0.0% Los Angeles 37.5% 50.0% 50.0% 50.0% 12.5% 0.0% Manhattan 25.0% 14.3% 62.5% 85.7% 12.5% 0.0% Northern Virginia 37.5% 37.5% 50.0% 62.5% 12.5% 0.0% Pacific Northwest 0.0% 33.3% 100.0% 66.7% 0.0% 0.0% Philadelphia 16.7% 16.7% 66.7% 66.7% 16.7% 16.7%

Phoenix 0.0°/~) 100 0~~) 0.0°/~) San Diego 0.0% 0.0% 66.7% 100.0% 33.]('/0 0.0% San Francisco 18.2% 27.3% 72.7% 72.7% 9.1% 0.0% Southeast Florida 14.3% 14.3% 85.7% 85.7% 0.0% 0.0% Suburban Maryland 37.5% 37.5% 50.0% 62.5% 12.5% 0.0% Washington, DC 50.0% 50.0% 40.0% 50.0% 10.0% 0.0%

National Flex/R&D 10.0% 20.0% 90.0% 80.0% 0.0% 0.0% National Warehouse 20.0% 18.8% 66.7% 75.0% 13.3% 6.3%

National Apartmentb 72.7% 68.2% 18.2% 22.7% 9.1% 9.1%

All Markets Surveyed 27.1% 28.8% 63.8% 65.6% 9.2% 5.6%

Note: Lines may nut add to up to 100% due to munding.

a. Method 1: NOI aft-et· capitalt·eplacement t·eset·ve but befme Tis (tenant ;·~~:·;;r and leasing commissions. Method 2: NOI befme capitalt·eplacement t·eset·ve,Tis, and leasing Method 3: Cash flow aft-et· capital t·eplacement t·eset·ve, Tis, and leasing commissions. b. Method 1: NOI aft-et· capitalt·eplacement t·eset·ve. Method 2: NOI befme capitalt·eplacement t·eset·ve. Method 3: Cash flow aflet· capital t·eplacement t·eset·ve.

lODGING INCOME CAPITAliZED IN DIRECT CAPITAliZATION First Quarter 2008

I'RI0!111 MONJ'HS" fORECASJ' 12 MON'fHSb BOTHe SEGMENT CUP.IIENf YEAR AGO Cl!RREI'

Fu 11-Service 30.0% 22.2% 60.0% 66.7% 10.0% 11.1% Economy/Limited-Service 66.7% 50.0% 33.3% 50.0% 0.0% 0.0% Luxu ry/U pper-U pscale 55.6% 37.5% 44.4% 62.5% 0.0% 0.0% Extended-Stay 50.0% 0.0% 50.0% 100.0% 0.0% 0.0%

All Segments Surveyed 45.8% 29.2% 50.0% 66.7% 4.2% 4.2%

Note: Lines may nut add to up to 100% due to munding.

a. PetTentage of out· lodging who capitalize the ~Him 12 months of income in dit·ect capitalization. b. PetTentage of out· lodging who capitalize the next 12 months of income in dit·ect capitalization. c. PetTentage of out· lodging who analyze both the pt·im 12 months of income and the next 12 months of income in dit·ect capitalization.

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011754 ~ 0 2 "'!"j """"~ t'!'j FORECAST PERIODS AND GROWTH RATES 2...., Second Quarter 2008 MARKEl RENT GROWTH RAlE' EXPENSE GROW'fH RATES FORECAST PERIOD INiliAL YEAR fORECAST PERIOD AVERAGE: INffiAL YEAR FOilECASl PERIOD AVERAGE >r ...., MARKEl RANGE AVERAGE RANGE A\I tRACt RANGE AVtRACt RANCt AVtRACt RANGE AVtRACt

10 .. h) O.l)Ot;,;, ·- 3.Ynr::,;, 2.63t;,;, 1.40'1:) ·-· 3.4l)~/,, 3.0l)~/d ~ Nc,tionJI RegionJI MJH 10 2.93% -· 3.00% 3.00% 3.l)O';t;, ·• 3.0\Y'I;! 3.00% ~ ~ t'!'j 2...., ~ 10e t'!'j IJ1...., t'!'j ~ C;:l -< ~ ~ r ~ IJ1

r C;:l t'!'j

~ National ,"~et Lease 3-l.S 0.00%-3.00% 2.~13% 0.00%- 1 S.OU% 3.88% 2.noo,;,- 3.00% 2.?50!;) 2.00%-3.00% 2.!S0r;)

~ SOLl•·ce: P2•"So)f1c1i SL•tv~y CoX1ducteJ f)y Pt·icewdt•:>:·hoL!S•:>Cl•Of•~:Ct"S LLP clut·lng t\p.-il 2(J00. ~ PRICf.W4TERHOust(mPERS !i """"~ 0 0...... " ...... "' -....l Ul Ul Definitions

2. NOI before capital replacement reserve Tenant Retention GENERAL deduction, Tis, and leasing commissions Percentage of leased rentable area that is expected to be released by the existing 3. Cash flow after capital replacement CHANGE RATE tenants at lease expiration Annual compound rate of change reserve deduction, Tis, and leasing com­ missions Market Rent Underlying Vacancy/Credit Loss Achievable current rent if vacant OVERALL CAPITALIZATION RATE Percentage of total revenue uncollected due to unexpected vacancy or credit loss Expenses (OAR) Initial rate of return in an all-cash transac­ (in addition to any rent loss from vacan­ Total property expenses tion cies at lease expirations) DISCOUNT RATE (IRR) RENT SPIKE Internal rate of return in an all-cash transac­ An increase in market rent that is markedly tion, based on annual year-end compound­ APARTMENT·· higher than the general rate of inflation ing NET OPERATING INCOME REPLACEMENT COST1 (APARTMENT NOI) EXCESSIVE TENANT IMPROVEMENT The cost of construction, at current prices, Income remaining after deduction of all ALLOWANCP of a building having utility equivalent to property expenses (which includes leasing The amount by which an awarded tenant the building being appraised but built with commissions); in direct capitalization, in­ improvement allowance exceeds that modern materials and according to current vestors capitalize one of the following: which is typical for the market standards, design, and layout 1. NOI after capital replacement reserve FORECAST PERIOD1 RESERVE 2. NOI before capital replacement reserve A presumed period of ownership; a period Amount allocated for periodic replacement 3. Cash flow after capital replacement re­ of time over which expected net operating of building components during a property's serve income is projected for purposes of analysis economic life and valuation GARDEN APARTMENT1 RESIDUAL Development consisting of two- to three­ INSTITUTIONAL-GRADE REAL ESTATE Estimated total price at conclusion of fore­ story structures built in a garden-like set­ Real property investments that are sought cast period out by institutional buyers and have the ting with an abundance of lawn, plants, capacity to meet generally prevalent insti­ Cap Rate flowers, etc.; customarily located in the tutional investment criteria Overall capitalization rate used in calcula­ suburbs or rural-urban fringe. tion of residual price; typically applied to HIGH-RISE APARTMENTs KORPACZ DIVIDEND INDICATOR the NOI in the year following the forecast Multifamily housing development consist­ (KDI) Selling Expense ing of at least four stories. A composite OAR average of the surveyed Transaction expenses (legal, brokerage, markets excluding net lease and lodging marketing, etc.) paid by the seller

KORPACZ YIELD INDICATOR (KYI) RESPONDENT TYPE DEVELOPMENT LAND·· A composite IRR average of the surveyed Classification of survey participants into markets excluding net lease, lodging, and descriptive categories (e.g., domestic pen­ DEVELOPMENT LAND development land sion fund, REIT, investment advisor) Land that has been purchased, readied for subdivision development (i.e. entitlements MARKETING TIME SHADOW SPACE and infrastructure), and subsequently sold The period of time between the initial Space within an occupied office suite that to builders offering of a property for sale and the clos­ is not currently utilized by a tenant and is DEVELOPER'S PROFIT, ing date of the sale also not being marketed for subleasing A market-derived figure that reflects the NET OPERATING INCOME (NOI) STRUCTURAL VACANCY amount a developer expects to receive for his or her contribution to a project Income remaining after deduction of all Normal vacancy rate in a balanced market property expenses. In direct capitalization, VACANCY ASSUMPTIONS investors capitalize one of the following: INDUSTRIAL Months Vacant 1. NOI after capital replacement reserve The number of months a space remains 3 deduction but before Tis and leasing FLEX/R&D unleased at the expiration of a vacating commissions An industrial property with 14- to 20-foot tenant lease clear ceiling heights, up to 100.0% fin-

1 Various sources for these definitions include The Dictionary of Real Estate !lppraisal, Third Edition, pub I ished by The Appraisal Institute, 'International Council of Shopping Centers, 'investor interviews, 45mith Travel Research, and 'National Multi Housing Council.

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011756 ished office space including lab and clean­ including incentives, expressed as a per­ they contain in line and anchor stores that room space (up to 60.0% finished office centage of total revenues are both well established and unmatched in space excluding lab and clean-room space), the trade area and dock-high and/or grade-level loading NET OPERATING INCOME used for minimal distribution, research and (LODGING NOI) LIFESTYLE CENTER2 development, and specialized office space Income remaining after deduction of all Most often located near affluent residential property expenses: in direct capitalization, neighborhoods, this center type caters to WAREHOUSP investors capitalize one of the following: the retail needs and "lifestyle" pursuits of An industrial property with 16- to 30-foot consumers in its trading area. It has an 1 . Prior 12 months clear ceiling heights, up to 15.0% finished open-air configuration and typically office space, and dock-high loading facilities 2. Forecast next 12 months includes at least 50,000 square feet of used for the storage and distribution of goods 3. Both of the above space occupied by upscale national chain specialty stores. Other elements, such as OCCUPANCY4 restaurants and entertainment, design ambi­ LODGING Rooms sold divided by rooms available ence and amenities like fountains and street furniture, make the lifestyle center serve as AVERAGE DAILY RATE (ADR)4 OPERATING EXPENSES a multi-purpose leisure-time destination. Room revenue divided by rooms sold The on-going expenditures incurred during One or more conventional or fashion spe­ the ordinary course of business necessary to cialty department stores often act as anchors. CHAIN SCALE LODGING SEGMENTS4 maintain and continue the production of Based on the actual, system-wide average gross revenues, not including reserves, debt OUTLET CENTER2 room rates of the major chains, the five service, and capital costs Consist mostly of manufacturers' outlet chain scale segments include luxury, upper­ stores selling their own brands at a dis­ upscale, upscale, midscale with food and PROFPAR count. Usually located in rural or occasion­ beverage, midscale without food and bever­ Profit per available room ally in tourist locations. A strip configura­ age, and economy. Independent hotels are tion is most common, although some are included as a separate category. PROPERTY EXPENSES enclosed or arranged in a "village" format. Includes all necessary operating expenses and a reserve for replacement of building ECONOMY/LIMITED-SERVICE POWER CENTER2,3 components and FF&E LODGING An open center dominated by at least Lodging with "rooms only" operation and 75.0% large big-box anchors, including dis­ no food and beverage except possibly con­ RESERVE FOR REPLACEMENT count stores, warehouse clubs, and value­ tinental breakfast; lower-tier pricing An allowance that provides for the periodic replacement of building components, and oriented category stores; a minimal amount of in line store space EXTENDED-STAY LODGING furniture, fixtures, and equipment, which Lodging with rooms that generally include deteriorate and must be replaced during the work stations with two-line phones, access building's economic life REGIONAL MALL2,3 to fax machines; mid- and upper-price An enclosed shopping center that contains lodgings include kitchenettes, separate REVPAR at least two department stores and has cl i­ lounging area; weekly rates Revenue per available room mate-controlled walkways that are lined with smaller retail shops FULL-SERVICE LODGING Lodging with restaurant and lounge facili­ NET LEASE····· REGIONAL MALL CLASSIFICATIONS ties, meeting space, and a minimum service Class lnline Retail Sales PSF and amenities level; moderate to lower up­ PROVISION 1031 per-tier pricing; includes all-suite lodgings; A tax code that allows the seller of an in­ A+ $450 and up includes upscale and midscale-with-food­ vestment property to defer capital gains A $350 to $449 and-beverage chain segments taxes by exchanging the sale proceeds for an investment in a similar property or prop­ B+ $300 to $349 GROSS ROOMS REVENUE MULTI­ erties within 180 days of the original closing B PLIER (GRRM) $250 to $299 The relationship, or ratio, between sale SALE-LEASEBACK C+ $200 to $249 price and gross rooms revenue A transaction in which an owner sells a property that it fully occupies to a third c $125to$199 LUXURY LODGING party and then leases the space back from D Less than $125 High-quality lodging offering personalized the new owner guest services, typically with extensive STRIP SHOPPING CENTER2,3 amenities; upper-tier pricing; includes four­ An open row of stores either with or with­ and five-star resorts; includes luxury and RETAIL out anchor stores that offer convenience upper-upscale chain segments (neighborhood centers) and general mer­ FORTRESS MALL chandise (community centers) MANAGEMENT FEE The dominant performing Class-A+ malls in An expense item representing the sum paid the country whose inline stores generate at for or the value of management service, least $450 per square foot in retail sales;

Various sources for these definitions include 1 The Dictionary of Real Estate !lppraisal, Third Edition, published by The Appraisal Institute, 4 'International Council of Shopping Centers, 'investor interviews, 5rnith Travel Research, and 'National Multi Housing Council.

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011757 Industry News

:;: Boston Properties has deposited a $165.0-mil- ::: A group of German investors has decided to

1ion letter of credit to guarantee its purchase of the place Chicago's 515 North State Street, known as trophy GM Building, 540 Madison Avenue, 125 the AMA Building, on the market. The 622,500- West 55th Street, and Two Grand Central Tower square-foot asset is 94.0% occupied with tenants from Macklowe Properties. The $3.96-billion deal including the American Medical Association and is expected to close in stages, starting with the GM the Accredited Council for Graduate Medical Building in june of this year. Education. The property is being offered with assumable first-mortgage financing, making it ) The $1.9-billion, 50-story Palazzo Las Vegas more attractive to potential buyers. hotel was named the world's largest LEED-certified building by the U.S. Green Building Council. The ~== In a $100.0-million, sale-leaseback deal, the Irish project's developer, Las Vegas Sands Corporation, investor group of Markland Holdings purchased 47 is now planning to replace the existing convention Citibank branches in the New York metropolitan center with a $680-million facility. area. The assets total 156,300 square feet and are located in Manhattan, the Bronx, Brooklyn, :;: Linens 'n Things filed Chapter 11 after reporting Queens, Staten Island, and Westchester, Suffolk, a loss of $242.1 million in fiscal-year 2007. The and Nassau Counties. restructuring will close 120 stores, 20.0% of which are located in California. There are currently 589 :: The purchase of the 4400 Post Oak Parkway stores across the United States. office property located in Houston by Shorenstein Realty Investors Nine was the first to break the :;: The former Ford Motor Plant in Hapeville, $200.00-per-square-foot mark in the submarket Georgia is on its way to becoming a 6.5-million­ with a sale price of approximately $215.00 per square-foot, mixed-use development. jacoby square foot. The building was constructed in 1982 Development has the plant under contract and and was 94.0% leased at the time of the sale. received approval for a new zoning designation Amegy Bank is the lead tenant, leasing nearly from the city of Hapeville. jacoby is responsible for 31.0% of the property through 201 6. the successful redevelopment of the abandoned steel mill in Midtown Atlanta, which is now known ) IHOP Corporation is selling 187 Applebee's as Atlantic Station. restaurant sites in a sale-leaseback deal for approxi­ mating $347.0 million. A newly formed partnership ) Wells REIT II purchased the AT&T office campus including Drawbridge Real Assets Fund, Draw­ in the Buckhead submarket of Atlanta and will bridge Opportunities Fund, and other affiliates are lease back the property to AT&T Services and its the buyers. I HOP plans to use the proceeds from subsidiaries for ten to 15 years. This deal included the sale to pay down its funded debt. five buildings totaling one million square feet and built between 1992 and 2002. ::: Mirae Asset MAPS Investment Management, a South Korean firm, purchased One Sansome Street, :;: New York's Metropolitan Transit Authority has the landmark Class-A office tower in the North granted redevelopment rights for the $1 .O-bi II ion Financial District of San Francisco. The purchase Hudson Yards project to the joint venture of price for the 43-story building was $370.0 million. Related Companies and Goldman Sachs. The plans call for a mixed-use development encom­ :: An undisclosed buyer is spending $152.8 million passing 1.67 million square feet of apartments, 3.57 to purchase the three-building Tysons Dulles Plaza million square feet of office space, 565,000 square from Vornado Realty Trust. The transaction price feet of shops, and a 265,000-square-foot hotel. equates to $317.00 per square foot for the 486,000- About 55.0% of the development will be designated square-foot, Class-A asset located in Tysons Corner, public open space. Virginia.~

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011758 U.S. OFFICE MARKET CYCLE POSITIONS Second Quarter 2008

Raleigh Charlotte Stamford Atlanta Austin Honolulu Baltimore Chicago Miami Cincinnati Hartford Orange County Edison Phoenix Kansas City Sacramento Memphis San Diego Oakland Seattle

Detroit Las Vegas Boston Indianapolis San Jose Columbus Nashville Dallas Philadelphia Denver Salt Lake City Long Island San Antonio Minneapolis San Francisco Toledo Nation Fort Worth Pittsburgh Jacksonville Portland Trenton Riverside West Palm Beach

Recession Recovery Expansion Contraction

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

U.S. OFFICE MARKET HISTORY & FORECAST Second Quarter 2008

Majority of stock in Over 20% of markets moving recovery in 2008. to expansion by 2011. 6.0

-tn 5.0 !: 0 m 4.0 ..... Q) 3.0 Q) LL Q) 1.. 2.0 co ::J en0" 1.0 0.0 2008 2009 2010 2011

I mRecession mRecovery D Expansion D Contraction I

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011759 U.S. MULTIFAMILY MARKET CYCLE POSITIONS Second Quarter 2008

Fairfield County Norfolk San Francisco Atlanta Fort Worth N. New Jersey San Jose Austin Hartford Omaha Seattle Baltimore Houston Orange County Syracuse Albuquerque Buffalo Indianapolis Orlando Tacoma Salt Lake City C. New Jersey Knoxville Philadelphia Tulsa Charleston Las Vegas Phoenix Wichita Charlotte Lexington Portland Nation Chattanooga Long Island Raleigh/Durham \ l Chicago Los Angeles Richmond i Cleveland Louisville Rochester / Columbia Milwaukee San Antonio // Columbus Minneapolis San Diego // Tucson

Dallas Nashville / Denver New Haven ,....,:;-:.-~~ District of New Orleans ,...../ Columbia NewYork //. / "'"~// Oakland Colorado Springs Pittsburgh Dayton Sacramento Birmingham Detroit San Bernardino/Riverside Palm Beach County Fort Lauderdale St. Louis Suburban Virginia Boston Greensboro Suburban Maryland Jacksonville Kansas City Tampa Memphis Little Rock Ventura

Recession Recovery Expansion Contraction

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

U.S. MULTIFAMILY MARKET HISTORY & FORECAST Second Quarter 2008

Staying in recovery, near equilibrium, through 2011. 10.0

8.0 -tn !: 0 6.0 ::!!: tn 4.0 :!:: !: ::> 2.0

0.0 2008 2009 2010 2011

I mRecession [l Recovery [l Expansion D Contraction I

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011760 U.S. WAREHOUSE MARKET CYCLE POSITIONS Second Quarter 2008

Houston Long Island Philadelphia Albuquerque Pittsburgh Los Angeles Portland Atlanta Raleigh Orange County Sacramento Akron Cincinnati Salt Lake City San Diego Cleveland Vallejo San Jose Fort Lauderdale Seattle Fort Worth Toledo Kansas City Charlotte Nation ) Newark • Chicago Oakland /------Dallas Gary ~------~"1 --

Indianapolis Jacksonville

Boston Las Vegas Denver Tampa Memphis Trenton Columbus St. Louis Detroit Nashville Stamford Minneapolis

Recession Recovery Expansion Contraction

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

U.S. WAREHOUSE MARKET HISTORY & FORECAST Second Quarter 2008

Recovery phase dominates; some distribution in other phases. 8.0

-tn !: 0 6.0 m ..... Q) Q) 4.0 LL Q) 1..co ::J 2.0 en0" 0.0 2008 2009 2010 2011

I mRecession mRecovery IIl Expansion D Contraction I

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011761 U.S. RETAIL MARKET CYCLE POSITIONS

Second Quarter 2008 San Francisco C. New Jersey Minneapolis San Jose Charlotte Seattle Colorado Springs Nation Columbia New Orleans Tampa Dallas Jacksonville N. New Jersey Tucson Denver Norfolk Fairfield County Philadelphia Ventura i Orange County Birmingham Portland "'/ Fort Worth Cincinnati Richmond _.r"'_.r Greensboro/ _.r Cleveland . Rochester _.r_.r"' K noxv1 11 e /,..... Columbus Dayton Las Vegas --~~\' Little Rock_.r/ Detroit _.r"' ----- .,.,-"-"-" ...... Indianapolis Fort Lauderdale Kansas City Suburban Virginia

Pittsburgh Los Angeles Raleigh Miami Saint Louis New Haven Houston Salt Lake City Palm Beach County Nashville Syracuse Chattanooga San Bernardino/Riverside Oakland Tulsa Chicago San Diego Orlando Greenville Phoenix Long Island Sacramento Louisville Tacoma Memphis Milwaukee Oklahoma City Omaha

Recession Recovery Expansion Contraction

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

U.S. RETAIL MARKET HISTORY & FORECAST Second Quarter 2008

Contraction phase decreases through 2010; recovery phase dominates in 2010 and 2011. 1.4 -tn 1.2 !: 0 1.0 ·-m -..... 0.8 Q) Q) LL 0.6 ~ co 0.4 ::J en0" 0.2 0.0 2008 2009 2010 2011

I mRecession mRecovery mExpansion D Contraction I

SuutTe: Pt·icewatet·huuseC:uupet·s LLP

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CONFIDENTIAL TREATMENT REQUESTED BY BARCLAYS LBEX-BARFID 0011762 r·--~~~~--~~-;~~~------~

i INVESTOR SURVEY i ~--································································································· l VOL. 21, NO.2 Second Quarter 2008 INDEX OF RECURRING SURVEY TOPICS Korpacz Real Estate Investor Survey® ·------is published quarterly by TOPIC QUARTER COVERED PricewaterhouseCoopers LLP Korpacz Real Estate Investor Survey Concessions First P.O. Box 988 Face/Effective Rents Third Florham Park, NJ 07932 '"------Web site: www.pwcreval.com Leasing Commissions First Email: [email protected] Leveraged IRRs Third Editor-in-Chief: Susan M. Smith, MAl Management Fees First Associate Editor: Amy E. Olson Research Associate: Adriana Chaves Property & Geographic Preferences Fourth Production Manager: Christy Hunnefield Circulation Manager: jeanine McCallum Rent Spikes Third Business Manager: Maria L. Isgro r------~~~-~~~~:~~~-~~-~~-;~~~------~~-;~~------

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Survey Process: Survey participants represent a cross I nstitutionai-Grade Real Estate Second 1994 section of major institutional equity real estate Medical Office Space Fourth 2007 investors who invest primarily in institutional-grade property. As such, the information presented is not Net Lease Market First 2000 generally applicable to noninstitutional-grade invest­ October 11, 2001 * 2001 ments. In addition, the information represents ·------investors' investment expectations and does not reflect Power Centers Third 1995 actual property performances. Real Estate Value Cycles First 2000 Initially, participants are interviewed regarding their assumptions used in analyzing their U.S. investments. Subsequently, surveys are completed by mail with l _____~:~!-~~~~--~-~~!--~~~~:~------~:-~-~~-~-~-~~~------telephone follow-ups. Although we do not represent REITs Second 1998

that the survey is statistically accurate, its results pro­ Self Storage Industry First 2003 vide important insight into the thinking of a significant portion of the equity real estate marketplace. Terrorism Insurance Second 2002

Investor Survey Responses: The individual investor *16-page supplement following 9/11 responses contained in the large tables in the back of each issue are a representative sample. Due to space constraints, not all responses are included.

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