Viewpoint Q1 2011

Contributing IRR Regional Offices Metro Area Atlanta Baltimore Boston Dallas Denver Fort Worth Northern New Jersey New York Philadelphia San Francisco Washington, DC Wilmington, DE IRR Principals Sherry Watkins Edward Kerr David Cary Mark Lamb Brad Weiman, Chris Goodwin Donald Sherwood Matthew Krauser Ray Cirz Joseph D. Pasquarella, Michael Silverman Jan Kleczewski, Brady Barbier Patrick Kerr Douglas L. Nickel

Executive Summary  Sale transactions are increasing in volume, and nearly reaching pre-crash levels of August This increase resembles levels last seen in 2008 before the collapse of the market.  Current offering volume has increased, particularly for office and industrial. Reportedly there is an estimated $28 billion of commercial property for sale.  With the assistance of an increasing volume of available debt capital, 2011 will be the year of a continued trend toward lower cap rates, a trend that began in earnest about 9 months ago.  Most investment momentum was led by the demand for CBD properties within all major markets.  Industrial properties over the last quarter had their second largest quarterly drop over the past 9 months.  Warehouse distribution properties comprise over two-thirds of the industrial sales volume, increasing almost 40% year over year change.  In the retail segment, the favored sub property type continues to be the grocery anchored strip center. However, there are several power center transactions pointing toward lower yields.  The lowest cap rates amongst the four major asset types were within the apartment segment, but well leased core assets in gateway cities continue to lead the downward cap rate trend. Notice: No warranty expressed or implied, is made to the accuracy or completeness of the information contained herein and same is submitted subject to errors, omissions, change of any information contained herein and subject to withdrawal without notice.

Office - CBD Lowest vacancy rate for CBD office is Fort Worth at 9.2% followed by Philadelphia at 10.0% and NYC at 10.2% Highest vacancy was posted in Dallas at 23.1% followed by Northern NJ at 18.0% and Wilmington at 17.0% Rental Rates remain strong in NYC and Washington, DC at $56 and $49 respectively. As investment capital continues to mount for the gateway cities, the lowest cap rates are recorded at or near 6.0% in San Francisco, NYC and Washington, DC. Not surprisingly given the high vacancy rate, the highest cap rates for CBD office are 8.50% in Dallas, TX and Wilmington, DE. The lowest discount rate is placed at 7.25% in Washington, DC followed by San Francisco, CA at 7.75%. The greatest market rent potential is San Francisco, CA and New York, NY as both report a 5.0% growth rate.

Office - Suburban Lowest vacancy rate for Suburban office is Fort Worth at 9.78% followed by Baltimore at 13.7%. Highest vacancy was posted in Northern NJ and New York, NY at 21% followed by Dallas, TX at 18.56%. Rental Rates remain strong in San Francisco and Washington, DC suburbs at $31 and $28 respectively, but both markets are expected to be flat in the near term. Cap rates remain relatively constant from the prior quarter with rates ranging from 7.0% to 8.5%. The lowest suburban office IRR’s were posted by NYC and DC. Several regional suburban markets show no rental growth in the near term, while expenses are expected to continue an upward trend of 2.5% to 3.0%.

Regional -Mall Lowest vacancy rates for regional Malls are in Washington, DC and Wilmington, DE at 2.7% and 2.9% respectively. Highest vacancy was posted in Boston, MA at 11.0% followed by Denver, CO at 9.0%. Rental growth rate change are anemic almost across the board with the exception of NYC, San Francisco and Washington, DC. Cap rates remain strong in the gateway cities and Northern New Jersey, owing to its juxtaposition as a bedroom community to NYC. The lowest discount rates are posted by Northern NJ and NYC with the highest discount rates being in Atlanta and Philadelphia. The expense growth rates with all market areas for the regional malls are either 2.5% or 3.0%.

Community Center Lowest vacancy rates for community centers are in San Francisco, CA and New York, NY at 3.5% and 5.9% respectively. Highest vacancy rates were posted in Fort Worth, TX at 13.27% followed by Denver, CO at 12.0%. Cap rates remain relatively constant for most regions, ranging from 7.25% to 8.0%, however the NYC and DC rates are below the 7.0% watermark. The discount rates for community centers fall predominantly in the 8.0% to 9.0% range. Market rent growth is expected to be outstripped by operating expenses.

Neighborhood Center Lowest vacancy rates for neighborhood centers are in San Francisco, CA and New York, NY at 3.60% and 5.90% respectively. Highest vacancy rates were posted in Atlanta, GA at 14.7% followed by Wilmington,DE at 14.0%. Cap rates are disparate with DC posting 6.5% and at least 3 regions reporting over 8.0%. Likewise, discount rates for neighborhood centers fall between 8.25% to 10.0%. The market rent growth rate for the neighborhood center is anemic thus far in the real estate cycle. Like other retail property sectors, the expense growth rate ranges from 2.50% to 3.0%.

Industrial Market – CBD and Suburban Markets While several regions have double digit vacancy rates, the lowest vacancy rates for the industrial markets are in Philadelphia, PA and San Francisco, CA at 8.0% and 8.3%, respectively. Not surprisingly, it follows that the cap rates are in the low to mid 7.0% range for San Francisco and Philadelphia. Highest vacancy rates were posted in Boston, MA at 18.5% followed by Washington, DC at 17.9%. The lowest discount rates are posted by Northern NJ, Philly and San Francisco. Like many other property sectors, the market rent growth rates for industrial properties are weak but improving.

R & D Market – CBD and Suburban Markets Lowest vacancy rates for the R & D markets are in Northern, NJ and New York, NY at 9.0%. Highest vacancy rates were posted in Atlanta, GA and Wilmington, DE both being at 15.0%. Rental Rates remain strong in San Francisco, CA and Washington, DC at $18.47 and $11.76 respectively. Cap rates remain relatively constant ranging mostly 8.5% to 9.0% in all market areas. The discount rates for the R & D market fall between 9.0% to 10.5% with the exception of San Francisco which reports a 7.5% rate.

Apartment - CBD Lowest vacancy rates for CBD apartments are in New York, NY and Washington, DC at 3.1% and 3.8% respectively. Highest vacancy rates were posted in Fort Worth, TX at 8.8% followed by Atlanta, GA and Dallas, TX at 8.2%. Rental Rates remain strong in New York, NY and Boston, MA at $2, and $2, respectively. Cap rates are the lowest in Boston, DC and San Francisco. The market rent growth rate is strong throughout the nation except in Wilmington, DE reflecting the decline in the financial services sector and persistent unemployment. The apartment sector is projected to remain strong as rents are outpacing expected increases in operating expenses.

Apartment -Suburban Lowest vacancy rate for suburban apartments was in San Francisco, CA at 3.8%. Highest vacancy rates were posted in Atlanta, GA at 9.7% followed by Fort Worth, TX at 8.8%. Rental rates remain strong in New York, NY, Northern, NJ, San Francisco, CA, and Washington, DC all ranging from $1,400 to $16,450. Cap rates are lowest in Boston, San Francisco and DC. The discount rates for the suburban apartments are between 7.0% to 8.5%. The expense growth rates within all market areas for the neighborhood centers are 2.50% or 3.00%.

About Integra Realty Resources Integra Realty Resources, Inc. (IRR) with corporate offices in New York, NY offers the broadest and most comprehensive valuation and counseling services in North America through 60 independently owned and operated offices located across the United States and Mexico. Each local office is operated by its principal who, on average, has over 30 years of local service and is led by a Managing Director holding the MAI designation with extensive experience in the valuation of commercial and investment property. Benefited by IRR’s intellectual property, standardized reports, delivery systems and certain intellectual property, each office operates under the philosophy “Local Expertise…Nationally.”