1. Condominium Oversupply Miami as a Second Home Resort Market February 9, 2005

2. Supply & Demand Miami is an overbuilt market There are 10,000 to 20,000 luxury priced units in the pipeline Land Prices at Record Levels <$300SF

3. Interest Rates Now Increasing Budget deficit at record levels High trade deficit Weak dollar

5. Housing Market Still Hot, Due For Leveling Median Home Prices Sources: Marcus & Millichap Research Services, Economy.com 64 % 65 % 91 % 23 % 2001 – 3Q 2004 Price Increase Median Home Price

6. South Florida Housing Cost Comparison Sources: Marcus & Millichap Research Services, CoStar Group, Inc.

7. South Florida Apartment Rent Trends *Forecast Sources: Marcus & Millichap Research Services, Reis. 2001-2005* Rent Increase 11% 8%

9. New Condominium Prices

11. Unit Price Price $600,000 Down payment 20% $120,000 Mortgage $480,000 Monthly Payment $2,878 $34,536 Annual Payment Taxes $13,161 Insurance $649 Yearly Payment $48,346 Yearly Income $161,153 30 % of annual income 30 yrs, 6% 1,500 SF $400 SF

12. Construction Costs Increasing above inflation rate New construction loans are participated to reduce exposure

13. Developer buys Miami waterfront hotel for $94 million By Matthew Haggman, The Miami Herald Knight Ridder/Tribune Business News Dec. 14--Developer Jorge Perez has paid $94 million for the waterfront Sheraton Biscayne Bay hotel on Brickell Avenue, which he plans to demolish to make way for a mixed-use project that will include high-rise condominium towers. The 598-room hotel will stay open for at least six months while plans for the project are developed, said Perez, chairman of Miami-based Related Group of Florida. The Sheraton will continue to manage the property, he added. The 5.1-acre property at 495 Brickell Ave. stretches to Biscayne Bay. The sale price is the highest total price Perez has ever paid for land. Flanking the hotel are the Miami Circle, a protected Tequesta Indian site, and the 2.2- acre Brickell Park. Springfield, Mass.-based MassMutual Financial Group sold the property to Perez. Manuel de Zarraga, executive managing director of Holliday Fenoglio Fowler in Coral Gables, led the team that brokered the sale, which closed Friday. (c) 2004, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. HOT,

14. Physical Market Cycle Characteristics Below Inflation & Negative Sales Price Growth Negative Sales Price Growth Below Inflation Sales Price Growth Increasing Sales Prices Tight Market Sales Price Increases in Decline Sales price growth above inflation

16. The Role of Research In Identifying Cycles in Real Estate Demand for Space Increases Rents Rise Faster than Expenses NOI spike Attracts Capital Over Building Reduces Occupancy High Vacancy Reduces Rents Lower Income Leads to Reduced Prices

17. Valuation Considerations Business cycle Inflation or deflation Interest rates and credit Population demographics Tastes and preferences Regional economic base Construction costs Legal and regulatory environment Taxes Physical characteristics of property Location Legal Nature of leases Financing

18. Valuation Considerations Return Purchase price or cost Price appreciation Leverage Inflation hedge Risk Liquidity and marketability Interest rate risk Inflation risk Systemic/non-systemic

19. Principle of Balance H&BU of residential sites will revert to commercial use as demand for condominium units weakens Result will be lower land prices in the CBD

21. Profit Construction lenders see lower profits on gross sales to 5% from 10% - 15%

22. The Life Cycle of a Real Estate Investment ProductCharacteristicsRisk Land No income, but high appreciation potential High Risk Development No income, but high income/appreciation potential High Risk Renovation Limited income, but higher appreciation Higher Risk Lease-Up Limited income, appreciation Lower Risk Operating Stage Income and appreciation, depending upon market cycle Lowest Risk

23. At What Point in the Market Cycle Do You Invest? RecoveryRisingStableDeclining Discount PricingIncreasing pricingHighest pricingDecreasing pricing Low occupancyIncreasing occupancy Full occupancyDeclining occupancy Flat rental ratesIncreasing rental rates Maximum rental rates Softer rental rates Supply exceeds demand Demand exceeds supply Supply & demand in equilibrium Over supply