University of Washington November 4, 2010 Retail Development

F. KEMPER FREEMAN, JR. CHAIRMAN & CEO KEMPER DEVELOPMENT COMPANY Kemper Development Company and Retail Development

Future Importance of China

4 Eastside Economy

5 The Bellevue Collection Downtown Bellevue

6 The Bellevue Collection Downtown Bellevue

7 The Bellevue Collection 1980 – 41% leakage in Retail Sales

8 The Bellevue Collection 2005 – 257% Positive Capture of Retail Sales

9 The Bellevue Collection Adjacency

10 The Bellevue Collection Portfolio Overview Locally focused Market Leader is several forms of commercial real estate Diversified by asset class in search of synergy Privately held Ranked 23 rd of top 100 real estate companies in US by McGraw Hill RetailOfficeHotelResidentialTotal Bellevue Square1,331, ,331,300 Bellevue Place62,700433,800672, rooms -0-1,168,900 Lincoln Square309,600540,400312, rooms 230, units 1,393,500 Total1,703,600974,200985,000 1,070 rooms 230, units 3,893,700 Assorted land and underdeveloped parcels are not included in totals above.

JIM MELBY PRESIDENT KEMPER DEVELOPMENT COMPANY Financial Consequences of Retail

Retail Economics

Retail Economics with Percentage Rent

Kemper Development Lincoln Square Started in 1998 by Canadian developer Purchased by KDC in 2003 Includes: Retail – 300,000 sf Hotel – 337 room Westin Residential – 148 condos Garage – 1,700 stalls Office – 540,000 sf

18 Lincoln Square Office Building economic value created by retail

Source: CB Richard Ellis Acquire Lincoln Square Approached by Eddie Bauer Commence Office Construction Open Office Building Lincoln Square Office Building History Approached by Eddie Bauer