1. HARTFORD COUNTY COMMERCIAL REAL ESTATE MARKET NOVEMBER 2009 Veterans Day Presented by: Andrews & Galvin Appraisal Services, LLC 16 Spring Lane, Farmington, CT john@agvalues.com 860-677-5522

2. REAL ESTATE MARKET PRESENTATION OVEVIEW Hartford County – Fall 2009  What Just Happened – Where are we Now?  Market Real Estate Segments  Review of Trends

3. Hartford County Map

4. Last Years Theme - What Segment of the Coaster Do You Operate In?

5. IM STICKING WITH THE COASTERS Reality Is All Hartford Market Segments Are Heading in the Same Direction Fall 2009

6. For Some It Seem More Like This !

7. So Where Are We Now?

8. Last Year Question - Feeling the Trend? This Year – There is No Question We are Feeling It!

9. Total Number of Sales Tracked by Conn-comps November 1989 to 2009

10. Results of Phone Surveys  Last Year – Uncertainty over Financial Markets and Some Over President Elect  Changes in Financial Markets We Understand - Liquidity  Since Presidential Elect – External Changes Causing Uncertainty Most Do Not Understand – Automotive, Unemployment, Housing, Health Care, War …  Too Many Changes Too Fast  Consequently – Hartford Commercial Real Estate Market is Nearly On Hold – lack of liquidity - Resulting in Large Disconnect Between Market Participants

11. So What Are the Uncertainties? Stimulus Package-Residual Impact of Clunkers  Automobile Market Here in Hartford – More Vacant Space  Obsolete Space – Vacant Auto dealerships -  Less Used Car Inventory–low end?  Les Cars to Repair – Less Demand for Automotive Garages  Less Demand For Auto Parts – Increase in Vacant Retail Space  Starting to See Foreclosures in This market segment - 1099  Defense – Middle East  UTC – Renewed Headquarters Lease in Gold Building – but closing some operations  Several Manufactures Pulling Back Work from Smaller Job Shops

12. Housing Stimulus  The $8,000 Credit –  Did it Just Shift Remaining Demand Up?  Did it Increase home furnishing, appliance, etc. spending ?  Did it Consume Remaining Supply  Will the $6,500 cause many to sell and then rent – retired focusing on future expenses?  New $8,000 credit to have same impact on housing prices as it did on automotive pricing – at least locally – Just Shift Prices Up?  Did Help New Residential Projects Total Single-Family Sales Simsbury, Glastonbury, Farmington, Avon 20052006200720082009 1,6931,3951,4271,152751

13. Health Care Reform  Creates Uncertainty in the Hartford Real Estate Market  Will it Change Future Demand for Office Space by Insurance Users?  Employment Base – Location Quotient – Will it Change?  What About B and C Office Near Hospitals and Suburbs?  Retail Base – Will it Decline?  Municipalities–Tax Base Change?  Medical Space Demands Change?  Hospitals Repositioning

14.  So – Market is Nearly Stagnant – definitely Slowed Down  Lets Look at some Sales Activity Starting with Industrial, Office, Apartments & Retail  Review of Lender Survey & Positive Trends

15. Typical Industrial Sales Activity 2009 51 Old Windsor Rd, Bloomfield, CT 2,520 SF, Built 1991, 0.34 acres -- Private Sale / Owner Occupied -- 70% L/V @ 6.98% Fixed 10 yrs Sold June 2009 for $250,000 or $99.21/SF Rent Payment - $1,500 Monthly Debt Service – Less than Rent (Previous sale 2005 for $243,000) Total Industrial Sales 2009: 34 (-60%) Average Price / SF: $37.03 (-5.6% avg) Average Size / Sale: 26,468 SF Trends: Users Consolidating Back Total Industrial Sales 2008: 87 Average Price / SF: $39.23 Average Size / Sale: 15,873 SF

16. Industrial Survey Results  CBRE – Market Overview 3rd Qtr 2009  Overall Vacancy Rate 12.55% 1st Qtr – Jumped 13.9% 3 rd Qtr  -- (8% in the West / 17% in the North)  Industrial Rental Rates $4.22 to $5.16 with Avg @ $4.81/SF NNN  -- (Down 4% or $0.20/SF on Average – Tenants have Control)  Absorption – Negative 946,951 SF YTD  -- (However - 300,000 SF New Constriction-Tire Rack in Windsor)  Cushman & Wakefield – Market Beat 2 nd Qtr 2009  Overall Vacancy Rate 12.1%, up from 10.2% (1,395 Buildings Surveyed)  Absorption – negative 1,230,681 +/- SF  Rental Rates - $4.37/SF to $4.70/SF, NNN – declining  Jump in Vacancy due to a Couple of Large Users Closing – 3,000 jobs in Enfield lost

17. Apartment Trends Year No of Sale Avg Sale Price 1999 177 $ 17,349.01 2000 151 $ 19,802.58 2001 173 $ 22,291.40 2002 225 $ 26,131.49 2003 236 $ 32,324.90 2004 281 $ 38,811.40 2005 331 $ 48,018.02 2006 269 $ 54,823.46 2007 185 $ 56,063.65 2008 86 $ 55,384.58 2009 21 $ 35,537.00

18. Apartment Trends  Marcus & Millichap 3rd Qtr 2009  2007: 3,263 Units Sold For $240,789,000 or $73,794/Unit  2008: 1,500 Units Sold For $128,196,000 or $85,464/Unit (perception unemployment would increase demand for rental units as single-families were foreclosed)  2009: 1,226 Units Sold For $87,630,375 or $71,477/Unit  Total Decline: 3% To date  Reporting 2.9% decline in asking rents and 1.3% increase in vacancy

19. Recent Apartment Sales Hartford Small Apartments  Vacancy 15% to 30%  Rents Declining – Tenants Consolidating  Short Sales Common  Capitalization Rates Increasing from Below 10% up to 12% and higher pending occupancy and condition – Job Loss having an impact Sale & Re-Sales  24 Unit Apartment Property  Sold March 2007 For $50,833/Unit  Resold October 2009 for $45,000/Unit  11.5% Decline Over 30 Month Period  Equates to 0.38% per Month

20. Hartford County Office Market One Large Office Building Sale 2009 The Exchange – 270 Farmington Av Farmington – Sold Sept 2009 $14,250,000 or $56.92/SF 260,000 SF on 15 Acres 80% Occupancy / 10.53% OAR (Previously Sold Dec 1997 for $42.83/SF - 2.7% Increase in Value Per Year) Typical Office Building Sale 1 Old Mill Lane, Simsbury Sold Jan 09 $542,000 - $149.12/SF – Owner Occupied 3,856 SF on 0.67 Acres Vacancy: 19.6% - Avg Rent $19.14/SF Leasing Activity: Several Large Leases Absorption: – Neg. 9,978 per CBRE - Neg. 88,975 SF - Cushman & Wakefield

21. Hartford County Retail Market  Few Large Retail Sales  825-875 Queen St, Southington  Sold August 2009 for $16,500,000  171,989 SF built 1969 on 17.6 Acres  97% Occupied / 10.45% OAR  All Cash Deal – Bob’s Discount, Fashion Bug, Outback, Ruby Tuesday, Radio Shack, TJ Maxx, Bed, Bath & Beyond, Golden Nails, plus others  Couple Smaller Retail Sales  7 Mill Pond Drive, Granby sold June 2009  $2,000,000 or $181.52/SF – Built 2004  11,018 SF Building on 1.89 Acres  Previous sale May 2005 for $170.45/SF  2009 OER: 9.75%  2005 OER: 8.25%

22. What Are Lenders Doing? Hartford County Market – Fall 2009  Tighter Terms Becoming Accepted As Norm  Loan-To-Value Ratios 65% - 75%- Only One Stated 80%  Results in Higher Debt Service Coverage Ratios – 1.25x and up – preferably 1.3x 1.35x – Some over 1.4x  Points – ½ to a 1.5 points or more  Rates – Spreads all increased and tied to FHLBB 5 yr mostly – 5 year fixed – fewer pre-payment clauses  Securing Triangle between Lenders-Appraisers-Ordering Function  Recourse is now the Norm  Overall Cash Analysis on Borrower – Slowing Approval Process  Why – less competition – Lack of Non-regulated Funding  Conduit Market – Restructuring – CMBS?  Small Markets – Short Sales – Work it out  Unlike Early 1990’s – There are Fewer Banks to Take Property Back  Regulations – OK to have Performing Loans With LTV of 100% +

23. What is Different Between 1991-1992 and 2009-2010  Regulators Perspective – Letting Lenders Create Work Out situations Instead of Foreclosing - (May be the one Factor the Downturn is Short- lived on Commercial Side)  Fewer Banks – Less Speculative Lending  Businesses are More Global Oriented due to Internet – Communications – Acceptance  Low Inventory of Property – Less Speculative Building  Back to More Sensible Investor Expectations – (more weight on return over longer holding period as opposed to increasing rents and then a quick resale)

24. Thank you …& Think Positive Andrews & Galvin Appraisal Services, LLC 16 Spring Lane, Farmington, CT john@agvalues.com 860-677-5522