The State of the Commercial Real Estate Industry: Year-End 2010 Office Review & Outlook

The State of the Commercial Real Estate Industry: Year-End 2010 Office Review & Outlook Copyright 2011 CoStar Realty Information, Inc. No reproduction or distribution without permission. The following information includes projections and analyses that are based on various assumptions by CoStar concerning future events and circumstances, as well as historical and current data maintained in CoStar s database, obtained from public sources or provided by proprietary sources. Actual results may vary materially from the projections presented. The information in this presentation speaks only as of the date(s) referenced and is provided as is. CoStar expressly disclaims any guarantees, representations or warranties of any kind, including those of merchantability and fitness for a particular purpose. You should not construe any of the information herein as investment, tax, accounting or legal advice. 1331 L Street, NW, Washington, DC 20005, USA (800) 204-5960 www.costar.com NASDAQ: CSGP

Today The Economy Leasing Market Review & Outlook The Capital Markets and Sales Trends Q&A

Our Fed Chair: QE2 Continues While Dr. Bernanke makes a somber report January 6 th to congress that the Federal deficit as a proportion of GDP is heading to heaven

U.S. Federal Budget Balance, % of GDP 4% U.S. Fiscal Balance, % of GDP Bloomberg Consensus Forecast as of February 2010 As of January 2011 2% 0% (2%) (4%) (6%) (8%) (10%) (12%) 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: Global Insight; Bloomberg

Choices to Solve the Deficit Problem 1. Do nothing and become Portugal or Greece with crippling interest rates within a decade.

Choices to Solve the Deficit Problem 1. Do nothing and become Portugal or Greece with crippling interest rates within a decade. 2. Raise taxes, hurting future productivity as incentives are reduced, and not get re-elected. 3. Cut spending including entitlements and defense spending and not get re-elected. 4. Monetize the debt via inflation which makes our real debt burden lower but dissuades future foreign buyers and this will raise interest rates overall.

Elements of the 2010 Tax Bill $858 billion over 10 years in renewed tax cuts and extended unemployment benefits Maintains the current income and capital gains tax rates established by the Bush tax cuts of 2001 and 2003 Reduces 2011 payroll taxes by 2% Establishes estate tax of 35% after $5 million individual exemption Extends long-term unemployment benefits

Recent Stimulus Means a Rosier 2011 For GDP 6% Moody's New Forecast Moody's Old Forecast U.S. GDP Growth 4% 2% 0% (2%) (4%) (6%) (8%) 2007 q1 2007 q3 2008 q1 2008 q3 2009 q1 2009 q3 2010 q1 2010 q3 2011 q1 2011 q3 2012 q1 2012 q3 2013 q1 2013 q3 2014 q1 2014 q3 2015 q1 2015 q3 Source: Moody's Analytics

3.2 Million New Jobs in 2011! 1,500 Moody's New Forecast Moody's Old Forecast Historical Job Growth 1,000 500 0 (500) (1,000) (1,500) (2,000) (2,500) 2007 q1 2007 q3 2008 q1 2008 q3 2009 q1 2009 q3 2010 q1 2010 q3 2011 q1 2011 q3 2012 q1 2012 q3 2013 q1 2013 q3 2014 q1 2014 q3 2015 q1 2015 q3 Source: Moody's Analytics

More Jobs Mean More Spending in 2011 10% Moody's New Forecast Moody's Old Forecast Year-Over-Year Change in Retail Sales 8% 6% 4% 2% 0% (2%) (4%) (6%) (8%) (10%) (12%) 2007 q1 2007 q3 2008 q1 2008 q3 2009 q1 2009 q3 2010 q1 2010 q3 2011 q1 2011 q3 2012 q1 2012 q3 2013 q1 2013 q3 2014 q1 2014 q3 2015 q1 2015 q3 Source: Moody's Analytics

Key Economic Indicators Indexed to Pre- Recession Levels 102 100 GDP Retail Sales Employment 98 96 94 92 90 88 2007 2008 2009 2010 Source: Moody s Analytics

10-Year Treasury Rates 16% 14% 12% Average Since 1900 = 4.9% Average Since 1953 = 6.3% 10% 8% 6% 4% 2% 0% 1953 1957 1961 1965 1969 1973 1977 1981 1985 1989 1993 1997 2001 2005 2009 Source: Moody s Analytics

Inflation Rates Versus Commodity Prices 250 Commdty Prices Inflation, CPI 6 5 200 4 3 150 2 100 1 0 50-1 -2 0 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10-3

Where Are Interest Rates Headed? Long Term Risk Free Government Rates Long Term Real Growth Rate (GR) = + Approx Expected Inflation Rate (I) LT Growth Rate in GDP Inflation Nominal Rate for 10 Yr Treasury Bonds 2.5% 2.0% 4.5% 3.0% 2.5% 5.5% 3.5% 3.0% 6.5% But QE2 could keep us well below these figures for 2011 until at least June when bond buying eases off

Federal Reserve's Industrial Production Index 105 100 95 90 85 80 75 70 65 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Moody s Analytics

ISM Purchase Managers Index 65 60 55 50 45 40 35 Over 50 = Expansion Under 50 = Contraction 30 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Moody s Analytics

Consumer Confidence 160 140 120 100 80 60 40 20 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: Moody s Analytics

Millions of Dollars Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Retail Sales (Through Dec 2010) 390 370 350 330 310 290 270 250 230 210 190 Source: Commerce Department

Worst Post-War Job Loss Periods by % of Pre-Recession Workforce 1% October 1948 - July 1950 August 1953 - June 1955 May 1957 - April 1959 May 1960 - December 1961 August 1974 - February 1976 August 1981 - November 1983 July 1990 - February 1993 March 2001 - February 2005 January 2008 -??? 0% (1%) (2%) (3%) (4%) (5%) (6%) (7%) t-30 t-24 t-18 t-12 t-6 Mid-Point t+6 t+12 t+18 t+24 t+30 Source: Moody s Analytics, CoStar Group

Total Nonfarm Employment 150 Total Non-Farm Employment (millions) Forecast (per Moody's Analytics) 145 140 135 130 125 120 115 110 105 100 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 Source: Moody s Analytics

Millions of Jobs Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Nonfarm Job Growth 0.5 0.4 0.3 0.2 Historical Job Growth Forecast Job Growth 0.1 0.0 (0.1) (0.2) (0.3) (0.4) (0.5) (0.6) (0.7) (0.8) Source: Moody s Analytics 2006 2007 2008 2009 2010 2011 2012

Millions of Jobs Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Office Using Job Growth 0.4 Historical Job Growth Forecast Job Growth 0.3 0.2 0.1 0.0 (0.1) (0.2) (0.3) (0.4) (0.5) (0.6) (0.7) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Moody s Analytics

Corporate Profits in Billions Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Corporate Profits 1,800 1,600 1,400 1,200 1,000 800 600 Source: Moody s Analytics 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10

Housing Distress Remains: Case Shiller Takes A Double Dip (Starts in Jan 2000) 200.00 180.00 160.00 140.00 120.00 100.00 Jan-00 Feb-01 Mar-02 Apr-03 May-04 Jun-05 Jul-06 Aug-07 Sep-08 Oct-09 Nov-10

Economic Danger Zones for 2011 and beyond 1. Oil price increases based on emerging market demand (China, India) 2. Rising health care costs even before the health care plan coverage of 32 million Americans is implemented 3. A terrorist act or continued stupidity on the part of North Korea 4. Rising interest rates after June of 2011

Summary Weaning the US off of the Bernanke QE2 pump and government stimulus will be hard. Debt Deficit could be catastrophic if not reined in with a solid and legislated plan. Short term slack in the labor markets will keep prices and interest rates down for the first half of 2011 but commodity prices will lead inflation. Positive employment will drive positive absorption.

Millions of Square Feet Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO U.S. Leasing Activity by Quarter 110 100 90 80 70 60 50 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Millions of Square Feet Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Net Absorption 50 40 30 20 10 0 0 (0) 19 5 19 15 1516 42 36 37 3435 33 29 29 24 35 27 26 21 22 19 7 11 5 4 0 6 7 21 (10) (9) (8) (5) (20) (16) (19) (13) (18) (18) (30) (40) (38) (50) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Office Using Jobs Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Net Absorption and Office Using Job Growth 0.4 0.3 0.2 0.1 0-0.1-0.2-0.3-0.4-0.5-0.6 Office Net Absorption Office Using Job Growth 50 40 30 20 10 0 (10) (20) (30) (40) Millions of Square Feet -0.7 Source: CoStar Group 2001 2002 2003 2004 2005 2006 2007 2008 2009 (50) 2010

2010 Net Absorption in 20 Largest Markets Washington Dallas/Ft Worth Denver Seattle/Puget Sound Houston Chicago South Florida Minneapolis San Francisco Phoenix Philadelphia Boston Detroit Northern New Jersey Atlanta Orange (California) Westchester/So Connecticut New York City Long Island (New York) Los Angeles Millions of Square Feet Source: CoStar Group (2.4) (0.0) (0.1) (0.6) (0.7) (1.0) 0.9 0.8 0.8 0.5 0.4 0.2 1.9 1.9 1.9 1.6 1.5 2.5 2.4 (3) (2) (1) 0 1 2 3 4 5 6 5.4

2010 Net Absorption by Class Class A 23.6 Class B 13.7 Class C 0.5 0 5 10 15 20 25 Millions of Square Feet Source: CoStar Group

Deliveries as % of Inventory 6.0% Historical Deliveries Future Deliveries Hist Average 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 2004 2008 2013 Source: CoStar Group

Millions of Square Feet Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Construction Starts 50 45 44 40 39 35 30 25 20 15 10 5 0 32 Source: CoStar Group 1817 23 21 2001 12 17 16 2002 23 16 14 20 2003 29 16 27 20 2004 26 25 2005 31 32 32 29 34 2006 31 29 28 26 2007 21 13 11 7 2008 6 7 3 5 2009 5 6 1 2010

Under Construction as % of Inventory in 20 Largest Markets New York City Seattle/Puget Sound Houston Long Island (New York) Washington South Florida Westchester/So Connecticut Phoenix Boston Los Angeles Denver Philadelphia Northern New Jersey Dallas/Ft Worth Orange (California) San Francisco Chicago Atlanta Detroit Minneapolis Millions of Square Feet Source: CoStar Group 0.8% 0.8% 0.8% 0.7% 0.5% 0.5% 0.5% 0.3% 0.3% 0.3% 0.3% 0.3% 0.2% 0.2% 0.2% 0.1% 0.0% 0.0% 1.1% 1.6% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0%

Vacancy and Availability Rates 18% Vacancy Rate Availability Rate 17% 16% 15% 14% 13% 12% 11% 10% 2005 2006 2q 2006 2007 2q 2007 2008 2q 2008 2009 2q 2009 2010 2q 2010 Source: CoStar Group

Quarterly Change in Vacancy Rate 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% -0.2% -0.4% -0.6% 2001 Source: CoStar Group 2002 2003 2004 2005 2006 2007 2008 2009 2010

Percentage of Submarkets With Declining Vacancy Rates 70% 65% 60% 55% 50% 45% 40% 35% 30% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Current Vacancy Rates in 20 Largest Markets New York City Minneapolis Long Island (New York) Boston Westchester/So Philadelphia Los Angeles Washington Seattle/Puget Sound San Francisco Houston Northern New Jersey Denver South Florida Chicago Orange (California) Atlanta Dallas/Ft Worth Detroit Phoenix Source: CoStar Group 7.7% 8.9% 9.4% 10.9% 11.3% 12.2% 12.4% 12.9% 12.9% 13.1% 13.5% 13.9% 13.9% 14.7% 15.5% 15.7% 17.3% 17.5% 18.3% 21.3% 0% 5% 10% 15% 20% 25%

Quarter-Over-Quarter Change in Occupancy Rates in 20 Largest Markets San Francisco Detroit Philadelphia Dallas/Ft Worth Denver Phoenix Houston New York City Washington Chicago Orange (California) South Florida Atlanta Seattle/Puget Sound Boston Northern New Jersey Los Angeles Minneapolis Westchester/So Connecticut Long Island (New York) Source: CoStar Group (0.7%) (0.0%) (0.0%) (0.1%) 0.6% 0.6% 0.6% 0.5% 0.5% 0.5% 0.4% 0.4% 0.4% 0.3% 0.3% 0.3% 0.2% 0.1% 0.1% 0.1% (0.8%) (0.6%) (0.4%) (0.2%) 0.0% 0.2% 0.4% 0.6% 0.8%

Class A Office Quoted Rental Rates $31 $30 $29 $28 $27 $26 $25 Source: CoStar Group 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Annual Change in Quoted Office Rents 8% 6% 4% 2% 0% (2%) (4%) (6%) (8%) Source: CoStar Group 2002 2003 2004 2005 2006 2007 2008 2009 2010

Contract Rent to Asking Rent Percent Differential

Quarter-Over-Quarter Change in Rental Rates in 20 Largest Markets New York City Chicago Tampa/St Petersburg Northern New Jersey Long Island (New York) Atlanta Detroit Westchester/So Connecticut Seattle/Puget Sound Philadelphia Houston Dallas/Ft Worth San Francisco South Florida Phoenix Washington Denver Los Angeles Orange (California) Boston (1.7%) (0.0%) (0.1%) (0.2%) (0.2%) (0.4%) (0.7%) (0.8%) (0.8%) (1.0%) 1.1% 1.0% 1.0% 0.9% 0.7% 0.5% 1.7% 2.3% 2.8% 3.6% Source: CoStar Group (2.0%) (1.0%) 0.0% 1.0% 2.0% 3.0% 4.0%

Absorption & Deliveries in Millions Sqft Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Vacancy Forecast 50 Deliveries Absorption Vacancy Rate Forecast 16 40 14 30 12 20 10 0 10 8 6 Vacancy Rate (10) 4 (20) 2 (30) Source: CoStar Group 2005 2006 2007 2008 2009 2010 2011 2012 2013 0 2014

Percentage Point Change in Occupancy Rate Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Rent Forecast 2.0 Change in Rent Change in Occupancy Forecast 10% 1.5 1.0 0.5 0.0 (0.5) 8% 6% 4% 2% 0% -2% Annual Percent Change in Rent (1.0) -4% (1.5) -6% (2.0) Source: CoStar Group 2006 2007 2008 2009 2010 2011 2012 2013-8% 2014

Change in CRE Debt Outstanding Life Insurers and Pension Funds Depository Institutions CMBS 350 300 250 200 150 100 50 0 (50) (100) 1980 1984 1988 1992 1996 2000 2004 2008 Source: Federal Reserve (150)

Billions of Dollars in CMBS Issuances Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Quarterly CMBS Issuances $80 $70 $60 $50 $40 $30 $20 $10 Source: CMLS $0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

REIT Capital Offerings $60 IPOs Secondary Equity Unsecured Debt Secured Debt $50 $40 $30 $20 $10 $0 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Source: NAREIT

Year-to-Date Sales Volume in 20 Largest Markets New York City Washington San Francisco Bay Area Boston Chicago Los Angeles Seattle/Puget Sound South Florida Northern New Jersey Denver Houston Phoenix Orange (California) Atlanta Long Island (New York) Philadelphia Minneapolis Dallas/Ft Worth Detroit Westchester/So Connecticut Source: CoStar Group $1.9 $1.5 $1.4 $1.3 $1.1 $1.1 $0.9 $0.9 $0.8 $0.5 $0.5 $0.5 $0.5 $0.3 $0.2 $3.2 $2.8 $2.8 $5.7 $8.3 $0 $2 $4 $6 $8 $10

Number of Properties Withdrawn Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO For Sale Properties Withdrawn From the Market 5,000 Properties Withdrawn Dollar Volume Withdrawn 12 4,500 4,000 10 3,500 3,000 2,500 2,000 1,500 8 6 4 Billions of Dollars Withdrawn 1,000 2 500 0 Source: CoStar Group 05 06 07 08 09 10 0

Select Top Sales Fourth Quarter 2010 John Hancock Tower 100-200 Clarendon Street Boston, MA 12/29/2010 $930,000,000 $521/SF Hyatt Center 71 S Wacker Chicago, IL 12/20/2010 $625,000,000 $419/SF Potomac Yard 2733-2777 Crystal Drive Arlington, VA 10/1/2010 $241,912,936 $389/SF Heritage Plaza 1111 Bagby & 430 Lamar Street Houston, TX 12/9/2010 $321,500,000 $280/SF Port of NY Authority Inland Terminal 111 Eighth Avenue New York, NY 12/22/2010 $1,770,000,000 $606/SF

Premium Paid Per Square Foot For a 90% Leased Property $110 $100 $90 $80 $70 $60 $50 2005 2006 2007 2008 2009 2010

Price PSF for Office Buildings At 90% Plus Occupancy Over Those at 70% or Less 2.2 2.0 193% 1.8 179% 1.6 1.4 139% 130% 142% 138% 1.2 1.0 2005 2006 2007 2008 2009 2010

Millions of Dollars Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Price of the Average Sale Over Time $25 $20 $15 $10 $5 $0 1995 Source: CoStar Group 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Cap Rates 11 Average Cap Rate Weighted Average Cap Rate 10 9 8 7 6 5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Weighted Average Cap Rates By Deal Size (Two Quarter Moving Average) 11 Less Than $5 Million $5-$20 Million $20-$50 Million Over $50 Million 10 9 8 7 6 5 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Year-to-Date Cap Rates in 20 Largest Markets New York City Northern New Jersey San Francisco Bay Area Long Island (New York) Washington Seattle/Puget Sound Los Angeles Westchester/So Connecticut South Florida Chicago Denver Phoenix Houston Orange (California) Atlanta Minneapolis Boston Dallas/Ft Worth Philadelphia Detroit Source: CoStar Group 5.7 6.8 6.8 7.0 7.2 7.2 7.6 8.2 8.3 8.3 8.4 8.5 8.8 8.8 8.9 9.0 9.1 9.2 9.3 9.8 0 2 4 6 8 10 12

CoStar's Quarterly Repeat Sale Index 200 Case Shiller 10-City Composite CoStar U.S. Composite CoStar Office 100 180 160 140 120 100 80 60 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

CoStar's Monthly Repeat Sale Index Composite Investment Grade General Commercial 100 200 180 160 140 120 100 80 60 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Year-Over-Year Change in CoStar's Monthly Repeat Sale Index 0.25 CoStar Investment Grade CoStar General Commercial Case Shiller 10-City Composite 0.15 0.05-0.05-0.15-0.25-0.35 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Source: CoStar Group

Number of CoStar Repeat Sale Sub- Indices Going Up in Value 30 Number of Sub-Indices Going Up in Value CoStar U.S. Composite Index 210 25 190 170 20 150 15 130 10 110 5 90 0 1998 1999 1999 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009 2009 2010 Source: CoStar Group 70

Year-Over-Year Change in CoStar's Repeat Sale Indices Top 10 Office Metros Midwest Multifamily Northeast Retail Midwest Retail Northeast Multifamily South Office Northeast Office Northeast Composite Northeast Industrial South Retail Top 10 Multifamily Metros U.S. Retail U.S. Investment Grade Top 10 Retail Metros Midwest Composite U.S. Multifamily U.S. Industrial U.S. Office West Multifamily U.S. General Commercial U.S. Composite West Industrial Midwest Industrial South Industrial West Office South Composite West Composite South Multifamily Top 10 Industrial Metros West Retail Midwest Office Source: CoStar Group -20% -23% -1% -2% -2% -4% -5% -6% -6% -6% -6% -7% -7% -7% -7% -8% -8% -8% -8% -9% -11% -12% -15% 6% 5% 4% 3% 3% 2% -30% -20% -10% 0% 10% 20% 30% 40% 11% 34% Office Multi-Family Retail Industrial Composite

Average Year-to-Date Price Per SF in 20 Largest Markets New York City Washington Seattle/Puget Sound Chicago San Francisco Bay Area Los Angeles Orange (California) Boston Long Island (New York) South Florida Denver Minneapolis Houston Northern New Jersey Phoenix Westchester/So Connecticut Dallas/Ft Worth Philadelphia Atlanta Detroit Source: CoStar Group $263 $241 $240 $232 $219 $183 $169 $158 $158 $151 $143 $137 $107 $102 $96 $94 $82 $69 $380 $429 $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $500

Distressed vs. Non-Distressed Sales Volume 3,500 Non Distressed Sales Distressed Sales Distressed % 35% 3,000 30% 2,500 25% 2,000 20% 1,500 15% 1,000 10% 500 5% 0 98 99 00 01 02 03 04 05 06 07 08 09 10 0% Source: CoStar Group

Distressed Sales Volume 600 500 400 300 200 100 0 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: CoStar Group

Distressed Sales Volume by Property Type Office Industrial Retail Multifamily Hospitality 60% 50% 40% 30% 20% 10% 98 99 00 01 02 03 04 05 06 07 08 09 10 Source: CoStar Group 0%

Orange (California) Atlanta Colorado Springs Inland Empire (California) Las Vegas Houston East Bay/Oakland Dallas/Ft Worth South Florida Boston Phoenix Orlando Denver San Francisco Portland Chicago Baltimore New York City Sacramento Jacksonville (Florida) Austin Tampa/St Petersburg Stockton/Modesto Marin/Sonoma Los Angeles Northern New Jersey South Bay/San Jose Seattle/Puget Sound Washington DC San Diego Philadelphia Fresno Tucson Source: CoStar Group Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Distress Sales Volume by Market 2009-10 70% 60% 50% 40% 30% 20% 10% 0%

Millions of Dollars Copyright 2011 CoStar Group, Inc. Presented by Andrew Florance, President and CEO Year-to-Date Net Buying by Investor Type $15,000 Bought Sold Net Purchases $10,000 $5,000 $0 -$5,000 -$10,000 -$15,000 Source: CoStar Group Private Institutional Private Equity User REIT/Public