Update on Real Estate Capital Markets-- Where is the Equity Investment Market Today? CREW Network: Investing in Your Professional Development Presenter : Lisa Campoli Executive Vice President & Managing Partner Colliers International

Real Estate Capital Markets Update Lisa M. Campoli, Executive Vice President & Managing Partner July 19, 2012

Webinar Agenda Big picture - global economic considerations Snapshot of today’s real estate capital markets Focus on U.S. equity trends Preferred regions and property types Current underwriting considerations

Private Debt Public Debt Private Equity Public Equity Source: Emerging Trends U.S. Real Estate Capital Markets - $3.93 Trillion

Private Investors Domestic Pension Funds REITS & C Corps Foreign Interests Life Ins. Cos. Inst’l OREO K E Y Private Investment Cos. Pension Funds REITs Source: Emerging Trends U.S. Equity Market - $1.15 Trillion

Public REIT Offerings (capital raised in billions) Source: NAREIT

Commercial Banks CMBS Market Life Insurers REIT Unsecured Gov’t Credit Pension Funds K E Y Commercial Banks CMBS Life Insurers Source: Emerging Trends U.S. Debt Market - $2.78 Trillion

CMBS Loan Performance by MSA

Real Estate As An Investment Asset Class Why Invest in Real Estate? Institutional Investor  Portfolio diversification  Annual cash flow  Risk-adjusted return (between stocks and bonds)  Appreciation potential  Inflation hedge Private Investor  Value creation/capital appreciation  Ability to leverage  Annual cash flow  Risk-adjusted return  Inflation hedge  Tax benefits

Hold Vs. Sell Decision-Making Optimal time to sell is the convergence of three factors: Portfolio objectives are achieved Markets are peaking (capital and leasing markets) Property is peaking within its “life cycle”

Demand by Property Type: Cap Rate Comparison

Core Cap Rates Vs. Debt 200 bps 450 bps 487 bps

Major Underwriting Issues Lease-up (rents and timing) Rent growth (3-5 year outlook) Renewal assumptions Capital expenses (base & leasing) Residual value (exit cap rate) Debt strategy Replacement cost comparison Value Per SF Appreciation potential

Outlook for 2012 Capital demand will remain steady, but bi-furcated Sellers will be enticed by improved pricing Lenders will exit problems that were not re-worked Interest rates and cap rates are likely to remain low Stabilizing fundamentals will enhance outlook for NOI

Thank you for attending UPDATE ON REAL ESTATE CAPITAL MARKETS – WHERE IS THE EQUITY INVESTMENT MARKET TODAY? Please check the CREW Network web site for future webinar schedules at under Eventswww.crewnetwork.org