To the Friends and Clients of Navigant Capital Advisors: Realizing Value Delivering Results. Atlanta Chicago New York

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1 Real Estate QUARTERLY fa DIALOGUE FOURTH QUARTER 2012 February 2013 To the Friends and Clients of Navigant Capital Advisors: We are pleased to once again share with you Navigant Capital Advisors Real Estate Quarterly Dialogue continuing our coverage of key trends, news, and metrics most relevant to fund managers, investors and creditors. Contents Slow and Steady Road Ahead 3 The Value Change Index 11 Office 12 Industrial 13 Retail 14 Multifamily Residential 15 Single Family Residential 16 Navigant s Real Estate 17 Investment Trust (REIT) Universe In this edition, we provide our perspective of the Slow and Steady Road Ahead. While the fourth quarter of 2012 was characterized by many unique external events such as the presidential election, the looming fiscal cliff negotiations and natural disasters, all real estate assets classes still managed to improve during the quarter. While the improvements were marginal for many product types, the disparity between specific markets still remains high. Although the fragility of the rebound is unquestionable, the overall real estate market is slowly recovering. Additionally, Navigant s proprietary Value Change Index is presented, a measurement of the quarterly relative change in value of various asset classes office, industrial, retail, multi-family and single-family for various geographic markets. We also present metrics from a universe of REITs to gauge the health of the public markets in four sectors: office, industrial, retail and residential. We welcome your comments and hope that you find our Quarterly Dialogue informative. Navigant Capital Advisors is the dedicated corporate finance business unit of Navigant (NYSE: NCI). Navigant is a specialized, global expert services firm dedicated to assisting clients in creating and protecting value in the face of critical business risks and opportunities. Through senior level engagement with clients, Navigant professionals combine technical expertise in Disputes, Investigations, Economics, Financial Advisory and Management Consulting, with business pragmatism in highly regulated industries. Darin Buchalter Edward R. Casas Managing Director Senior Managing Director Head of Real Estate Practice Head of Navigant Capital Advisors dbuchalter@ncacf.com ecasas@ncacf.com INVESTMENT BANKING RESTRUCTURING VALUATION & FINANCIAL RISK MANAGEMENT Realizing Value Delivering Results Atlanta Chicago New York Investment banking, private placement, merger, acquisition and divestiture services offered through Navigant Capital Advisors, LLC. Member FINRA/SIPC.

2 NCA Real Estate Solutions Key Contacts: For additional information, feel free to contact the NCA Real Estate Solutions team: Edward R. Casas Senior Managing Director Head of Navigant Capital Advisors Chicago, IL Darin L. Buchalter Managing Director Head of Real Estate Practice San Francisco, CA Mitchell C. Hochberg Senior Advisor, Development & Operations New York, NY Neil F. Luria Managing Director, Restructuring Cleveland, OH Gregory F. Hagood Managing Director, Investment Banking Atlanta, GA Jack D. Huber Managing Director, Restructuring Chicago, IL Matthew Rubin Managing Director, Restructuring Chicago, IL Comprehensive Scope and Proven Results Continued market turbulence has left fund managers, investors and creditors looking for solutions. Navigant Capital Advisors (NCA) professionals have the experience and resources to assist real estate investors and creditors in meeting the challenges of today s markets, having restructured over $50 billion of real estate assets. Whether addressing the needs associated with a single asset, or an entire portfolio, Navigant provides a comprehensive service offering with core strengths in: Strategic Assessment, Valuation, Restructuring, Operations & Development, and Transaction Solutions. Our deep network of relationships includes key players from throughout the real estate, construction and financial services sectors. Navigant professionals possess the expertise required to actively advise and implement solutions for complex projects, portfolios, and capital structures in all real estate asset classes including office, hospitality, retail, industrial and residential. Strategic Assessment» Project feasibility analysis» Asset / Portfolio positioning and pricing» Alternative / Best use analysis Valuation» Relevant market research» Asset / Portfolio appraisals» Mark-to-market studies Restructuring» Alternatives analysis» Plan development & execution in-court or out-of-court» Inter-constituent negotiations and communications Operations & Development» Interim asset / fund portfolio management» Development & construction completion» Sales and marketing execution Transaction Solutions» Recapitalizations» Sell side / Buy side structuring and execution» Fairness opinions» Liquidity solutions Page 2 of 20

3 Slow and Steady Road Ahead National Real Estate Overview For the third quarter in a row, and only the fourth time since the beginning of 2007, the office, industrial, retail, multi-family and single-family asset classes all experienced quarter-on-quarter index gains during 4Q While the multi-family sector realized the greatest quarterly recovery during 2012, growth has begun to slow. The national industrial market featured the largest quarterly index gain at 7%, while the national retail asset class remained flat compared to 3Q Similar to the third quarter 2012, the singlefamily asset class experienced another 3% year-on-year increase and barring any unforeseen events, is anticipated to further increase at a slow and steady pace in the first part of Continued office and retail recovery is directly reliant upon improvement in general economic and employment figures, which were anemic during the fourth quarter of Short-term office and retail recovery are not anticipated to record material improvement as employers and consumers remain wary and uncertain about the intermediate future. Sources: CoStar, Korpacz Real Estate Investor Surveys, BOMA Experience Exchange Report, U.S. BLS, S&P/Case Shiller Home Price Indices, REIS and IREM Income/Expense Analysis: Conventional Apartments Economy and Employment While the GDP growth rate for 3Q 2012 was revised upwards to from 2% to 3.1%, the economy recorded a slight decline of 0.1% during 4Q 2012, which is attributed to government spending cuts, effects of Hurricane Sandy and uncertainty leading up to the fiscal cliff deadline at the end of Government spending decreased approximately 2.6% during 4Q 2012, but was offset by consumer spending increases of 2.2% over 3Q 2012, which mitigated the potential for a much larger economic contraction during the fourth quarter of While the unique events of 4Q 2012 are behind us, the impending debt ceiling and impact of social security tax increases are anticipated to further hamper significant growth during first quarter of In addition, the effects of increased payroll tax and implementation of Obama Care are not certain and could further slow economic growth during the beginning of The national unemployment rate reported by the Bureau of Labor Statistics remained unchanged at 7.8%, compared to the third quarter of Page 3 of 20

4 Source: Federal Reserve Bank of St. Louis While U.S. stocks reported a modest decline during 4Q 2012, the quarter experienced significant volatility, which was primarily triggered by political events such as the presidential election and fiscal cliff negotiations. The largest declines of the quarter occurred immediately after the presidential election in November; however, much of the decline was recovered during early December. As the fiscal cliff deadline approached without a clear compromise, whereby automatic tax increases and spending cuts would immediately take place, stocks fell and finished the quarter slightly below 3Q In comparison, European and emerging market stocks posted strong quarterly gains, which was a result of the new bond buy-back program in Europe and signs of Chinese economic stabilization. Regardless of the marginal quarterly losses, the Dow Jones Industrial Average, S&P 500 Index, NASDAQ Composite Index and Russell 2000 Index all ended the year with substantial year-on-year gains. The All REIT S and Real Estate 50 index experienced similar year-on-year gains; however, annualized 5-year real estate index gains remained positive, but weaker than stock performance over the same period. The fourth quarter of 2012 was plagued with uncertainty, which led to significant volatility in the markets. Unfortunately, 1Q 2013 is anticipated to look similar as the U.S. approaches the debt ceiling limit with no clear long-term consensus among political parties. While market analysts opinions vary widely, there is a common consensus that uncertainty exists. Source: Morningstar Direct and FTSE NAREIT Page 4 of 20

5 Housing Rebound and Driver of Economic Growth As per the Case-Shiller index, the national housing market finished 2012 by recording the first multiple quarter increases since the recession began in Nationally, new housings starts have continued to increase given the relative lack of new supply over the past couple years. New housing starts have the potential to drive employment in the construction industry and indirectly boost manufacturing and small businesses. Further, the reduction in supply may increase prices, which barring any extraordinary external impacts, should fuel the wealth effect as home prices increase and equity returns to houses that were previously under water. Source: S&P/Case-Shiller Home Price Indices While the outlook for the housing industry through the first part of 2013 is positive, the overall economic impact is anticipated to remain modest due to uncertainty with a deadlock in Congress and uncertainty due to the demand linked to historically low interest rates, which if increased could reverse any immediate gains. Commercial Real Estate Values and Pricing According to NAREIT, the end of 2012 marked the fourth consecutive year that REIT stocks have outperformed the broader equity market. Growth in U.S. publically traded REITs ended 4Q 2012 up approximately 1% compared to the end of 3Q However, the 1% increase was driven by a strong 2.5% increase during the month of December, which helped to offset losses during October and November. Among the composites, the Equity REIT index posted the highest quarterly gains during 4Q 2012 with a 2.14% increase over 3Q The overall REIT market performance during the 4Q 2012 was marginal; however, the index at yearend was 15% higher than December 2011 and brought the index to levels comparable to the end of Source: FTSE NAREIT U.S. Real Estate Index Page 5 of 20

6 Investment Performance By Property Sector and Subsector All REIT property classes achieved positive growth during the month of December and year-on-year. The industrial REIT property class led both quarterly growth in 4Q 2012 and annual growth at 7.1% and 31.3%, respectively. The strong positive growth is a reversal from a 5% decline in value during The multifamily market, which had been the asset class leader since the recession began, recorded the smallest year-on-year increase as the market stabilized and growth decreased. Total Return (%) 2011 December 2012: YTD Industrial/Office Industrial Office Mixed Retail Shopping Centers Regional Malls Free Standing Residential Apartments Manufactured Homes Source: FTSE NAREIT CMBS Market Continues to Rebound Since the collapse of the CMBS markets, the most active issuers of CMBS have been the government agencies, such as Fannie Mae, Freddie Mac and Ginnie Mae, with multifamily transactions. However, as investors continually seek return and spreads stabilize, many of the traditional conduit lenders have returned to the market. As such, new CMBS issuances increased 40% during 4Q 2012 when compared to the previous quarter. CMBS issuances have continued to increase over the past five consecutive quarters, with 4Q 2012 recording issuances of $17.5 billion. This quarterly volume represented the highest amount of quarterly new issuances since 4Q 2007, prior to the collapse of the CMBS markets. A large driver of the increased conduit issuance is associated with the industry s change in underwriting standards. Allowable loan-to-value ratios have increased to approximately 65%, but in some cases have been significantly higher. While the loan-tovalue ( LTV ) levels are still well below ratios experienced prior to the CMBS market collapse, the trend appears to be increasing. Further, 4Q 2012 witnessed the reintroduction of securitized mezzanine debt whereby three large transactions, which totaled $7 billion in loans, included $2 billion of mezzanine debt that was secured by the borrowers equity position in the project. Source: Pension Real Estate Association Page 6 of 20

7 While it appears that the risk associated with the increased LTV ratios is mitigated by higher debt service coverage ratios ( DSCR ), which currently average 1.65x compared to 1.25x in 2007, there is concern that the additional coverage is directly associated with historically low interest rates. According to a recent CRE Financial Council publication, if interest rates in effect in 2006 and 2007 were applied to project cash flows today, the DSCR would be in line or below 2007 levels came and went without catastrophic results from the maturity of 5-year debt issued during While delinquency rates during the first half of 2012 were quite volatile and reached a peak of 8.53% in May 2012, 4Q 2012 experienced a significant decline and ended the year at 7.77%, down from 8.28% during 3Q Source: Morningstar (Realpoint) The next wave of increased delinquencies is expected to begin in 2015 and peak during 2016 and The outlook is for the CMBS delinquency rate to remain modest, but with a downward trend. Two major factors anticipated to contribute to the decreasing delinquency rate are the increasing number of new CMBS issuances, which will further dilute the number of non-performing loans, and the current favorable refinancing market. Source: Trepp LLC Page 7 of 20

8 The composition of delinquent CMBS loans was relatively stable between the third and fourth quarters. The office property sector continues to be the largest contributor to delinquencies, representing 31.4% of all delinquent CMBS loans at the end of 2012, a slight increase from 30.9% during 3Q The retail asset class also recorded a slight increase to 24.8%, while the hotel, industrial, multi-family and healthcare sectors all reported slight quarterly declines. Slowing Cap Rate Compression and Shift in Strategy Source: Morningstar The fourth quarter 2012 Korpacz market report stated that average overall cap rates decreased in 24 regional U.S. markets, increased in one and remained steady in seven. While the number of markets to experience a further decrease in cap rates was in line with 3Q 2012, the number of markets that featured no quarterly movement increased from one to seven. As further anticipated, 4Q 2012 experienced a significant shift from trophy assets in core markets to nontrophy assets in core markets and high quality assets in secondary markets. It is anticipated that the demand for secondary markets and assets with repositioning opportunity in core markets, will continue to increase. The national industrial asset class reported the largest quarterly decrease in cap rates during 4Q 2012 and is now nearly on par with the national office market at 6.73%. While cap rates for the national office market also decreased, cap rates for the national apartment and retail markets featured little to no change and ended 4Q 2012 at 5.72% and 7.06%, respectively. Source: Korpacz Real Estate Investor Survey Overall office cap rates and quarterly movement in rates vary widely based on geographical location. The Seattle and Boston markets experienced cap rate increases of 9% and 10%, respectively, while cap rates in the Atlanta and Phoenix office markets decreased 4% and 7%, respectively. While cap rates for all asset classes have significantly recovered from the historical highs during late 2009 and 2010, it is anticipated that the regional disparity will remain through the first part of 2013 and that investors will continue to diversify apartment and office assets and seek quality assets in secondary markets. Page 8 of 20

9 Insourcing - Promising Trend for Real Estate Demand Outsourcing trends beginning in the 1990 s significantly reduced demand for traditional manufacturing, industrial and back-office related real estate. The associated loss of jobs had a further economic carry-on effect through all other real estate asset classes. A quiet trend now appears to be catching on with many of the same companies that previously moved jobs and manufacturing offshore. While the scale and impact is still uncertain, a fundamental shift in the business strategy of a few of the world s largest companies occurred during the fourth quarter of Apple Computer made headlines in December 2012 with their announcement to bring a portion of Mac computer manufacturing back to the US from China. The plan includes a $100 million investment and intends to begin production in The irony of the announcement is that when Steve Jobs hired Cook in 1998 to streamline production it was Tim Cook s recommendation to offshore nearly all manufacturing, which up to that time had been produced domestically. General Electric quietly announced their intention to build new manufacturing lines at their Appliance Park location in Louisville, Kentucky, which during the 60 s and 70 s was the hub of manufacturing for their entire appliance division. Drawn by a need to reduce costs and globalization, beginning in the 80 s most of the manufacturing was moved offshore to China and India. The aging facility became a ghost town with approximately 1,200 employees remaining by early 2000 s, which was down from a peak of 23,000 in the 1970 s. During 2012, GE opened two new manufacturing lines, which were the first new lines in 55 years, to produce high-end refrigerators and energy efficient water heaters. The decision to reverse offshoring by many of these prominent companies is not altruistic. The following five factors are beginning to cause an adjustment in the manufacturing business model: Oil prices today are approximately three times higher than in the year The recent explosion of natural gas extraction in the US and Canada has significantly increased domestic supply of clean, cheaper energy required for energy intensive manufacturing. Wages in China have increased substantially since 2000 and most believe the trend will continue into the foreseeable future. In addition, wages in India have also increased to a point where for some companies it is now more cost effective to hire entry-level workers in Midwestern states of the US. Unions, which were extremely fragmented throughout the 80 s and 90 s have taken steps to harmonize on many fronts as hindsight has allowed them to measure the impacts of historical decisions. The early adopters of insourcing are moving higher-end and more technical products back onshore. As such, the incremental cost of labor in the production of the product does not have the same impact as it does on low margin, low cost production. While insourcing does not make sense for every company, many large companies who during the 1990 s and 2000 s moved millions of jobs offshore are beginning to reassess their strategy. In some cases, the move to bring jobs and manufacturing back to the US makes financial sense. It is not anticipated that this trend will have a material impact on the economy or unemployment in the near future, but the trend is encouraging. If it continues, it will further strengthen the domestic economy and add much needed strength to many of the Midwestern real estate markets, which suffered greatly during the recession. Page 9 of 20

10 Outlook While the actual impact of unique events such as the presidential election, Hurricane Sandy and fiscal cliff negotiations are not quantifiable, the overall real estate market still managed to post positive results during the fourth quarter Uncertainty remains with regard to the speed and level of economic and employment improvement. It is anticipated that the real estate market for all asset classes will remain geographically varied, and that any overall improvements during the first part of 2013 will be slow and steady at best. Page 10 of 20

11 Navigant s Value Change Index The following pages present Navigant s proprietary Value Change Index (VCI) for the office, industrial, retail, and multi family markets. The VCI for residential (single family) uses the Case-Shiller Home Price Indices from S&P and reindexes the data to First Quarter, Navigant s VCI measures the quarterly relative change in value of selected asset classes office, industrial, retail, multi family - for various geographic markets, benchmarked to First Quarter, Specifically, the VCI uses the direct capitalization methodology to measure the relative change in value (dollar psf) of an asset class for selected markets on a quarterly basis. The following variables are used in calculating the VCI: (i) rent (FS or NNN); (ii) vacancy rate; (iii) operating expense (for non-nnn assets); and (iv) capitalization rates. Formulas are as follows: Office: ([Full Service Rent * (1 Total Vacancy)] Operating Expense) / Cap Rate Industrial and Retail: [NNN Rent * (1 Total Vacancy)] / Cap Rate Multifamily: ([Effective Rent * (1 Vacancy)] * (1 Operating Expense Ratio)) / Cap Rate Korpacz reports the following range of cap rates for all asset types: (i) minimum, (ii) average and (iii) maximum for each market. Navigant then calculates the Low Cap Rate by determining the midpoint between the minimum and average cap rate and High Cap Rate by determining the midpoint between the average and maximum cap rate. Finally, the Low Cap Rate for all cities (except for the National market) is applied, as properties are located predominately in the CBD of major cities. For the National market, Navigant uses the average to reflect the fact that not all cities are core markets. Below is a key describing the cities/regions presented on the following pages: Code Market Region Code Market Region NAT National National MIA Miami Southeast ATL Atlanta Southeast NYC New York City Northeast BOS Boston Northeast PHX Phoenix West CHI Chicago Midwest SFO San Francisco West DAL Dallas Southwest SJO San Jose West HOU Houston Southwest SEA Seattle West LAS Las Vegas West WDC Washington, D.C. Mid-Atlantic LAX Los Angeles West Page 11 of 20

12 Office performance varied widely, with 6 of the 14 cities experiencing slight declines, while the overall national office market grew 3% in 4Q The San Francisco and Washington, D.C. markets have rebounded to 2007 levels. Sources: CoStar, Korpacz Real Estate Investor Surveys, BOMA Experience Exchange Report and U.S. BLS QTR NAT ATL BOS CHI DAL HOU LAS LAX MIA NYC PHX SFO SJO SEA WDC 2008q q q q q q q q q q q q q q q q q q q q Variance 07q1-12q4 8% -10% -8% 8% -3% 89% -16% -4% 0% -31% -60% 23% 12% 10% 40% Max - 12q4-10% -24% -36% -41% -16% -1% -31% -42% -28% -45% -64% 0% -25% -26% 0% 12q3-12q4 3% 7% -10% -7% 1% -1% 1% -2% 4% 3% 11% 3% -1% -5% 2% 11q4-12q4 5% 15% -6% -1% 12% 17% 0% 0% 4% 2% 7% 53% 24% 19% 10% Page 12 of 20

13 The San Francisco industrial market experienced the greatest quarterly decline of 10% during 4Q 2012, but is up 31% year-on-year. All 14 markets and the national average have increased year-on-year, with Boston experiencing 12% quarterly growth. Sources: CoStar, Korpacz Real Estate Investor Surveys, BOMA Experience Exchange Report and U.S. BLS QTR NAT ATL BOS CHI DAL HOU LAS LAX MIA NYC PHX SFO SJO SEA WDC 2008q q q q q q q q q q q q q q q q q q q q Variance 07q1-12q4-9% -13% 18% 1% -5% 16% -38% -17% 13% -12% -28% -31% 21% 0% -41% Max - 12q4-16% -13% -1% -21% -12% -4% -41% -24% 0% -50% -28% -38% -3% -17% -44% 12q3-12q4 7% 3% 12% 10% 7% 8% 4% 3% 6% 2% 7% -10% 5% 8% 7% 11q4-12q4 14% 8% 21% 21% 22% 25% 11% 14% 18% 2% 24% 31% 13% 15% 5% Page 13 of 20

14 The national Retail Index was flat during 4Q 2012 and year-on-year. San Francisco posted the greatest gain of 3%, while Seattle experienced the greatest quarterly decline at 7%. Sources: CoStar, Korpacz Real Estate Investor Surveys, BOMA Experience Exchange Report and U.S. BLS QTR NAT ATL BOS CHI DAL HOU LAS LAX MIA NYC PHX SFO SJO SEA WDC 2008q q q q q q q q q q q q q q q q q q q q Variance 07q1-12q4-8% 1% 8% 1% 0% -13% -42% 4% 5% -19% -20% -9% -26% 7% 0% Max - 12q4-12% -18% -2% -7% -5% -13% -46% -15% 0% -28% -27% -19% -26% -9% -9% 12q3-12q4 0% 2% 1% 1% -1% 1% -1% 2% 2% -1% -1% 3% -1% -7% -2% 11q4-12q4 1% -5% 47% 3% 2% 2% -9% 0% 16% 1% -1% -6% 5% 0% -3% Page 14 of 20

15 With a quarterly growth of 1%, the national multifamily index reached its highest level since While all markets experienced positive quarterly increases, the magnitude of growth appears to be decreasing. Houston experienced a 2% quarterly increase, while New York s increase was negligible. Sources: REIS, Korpacz Real Estate Investor Surveys and IREM Income/Expense Analysis: Conventional Apartments QTR NAT ATL BOS CHI DAL HOU LAS LAX MIA NYC PHX SFO SJO SEA WDC 2008q q q q q q q q q q q q q q q q q q q q Variance 07q1-12q4 9% 10% -2% -9% 49% 19% -8% 1% -4% -6% -9% 37% 21% 18% 9% Max - 12q4-1% 0% -9% -15% 0% 0% -10% -5% -6% -16% -11% 0% 0% 0% -4% 12q3-12q4 1% 1% 1% 1% 1% 2% 1% 1% 1% 0% 1% 1% 1% 2% 1% 11q4-12q4-1% 7% -9% -15% 33% 10% 0% 1% -1% -14% -7% 19% 8% 8% -4% Page 15 of 20

16 The national single-family housing market recorded another quarterly and year-on-year gain at 1% and 3%, respectively. The Phoenix market continues to experience the greatest year-on-year gain, while the Chicago market slipped 1% during 4Q Source: S&P/Case-Shiller Home Price Indices QTR NAT ATL BOS CHI DAL HOU LAS LAX MIA NYC PHX SFO SJO SEA WDC 2008q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a q n/a n/a Variance 07q1-12q3-30% -31% -10% -34% -5% n/a -58% -36% -47% -24% -46% -35% n/a -26% -22% Max - 12q3-30% -31% -10% -34% -5% n/a -58% -36% -47% -24% -46% -35% n/a -27% -22% 12q2-12q3 1% 3% 0% -1% 1% n/a 2% 2% 1% 0% 3% 1% n/a 0% -1% 11q3-12q3 3% 0% 2% -2% 4% n/a 4% 4% 7% -3% 21% 7% n/a 5% 3% Page 16 of 20

17 Navigant s Real Estate Investment Trust (REIT) Universe During 4Q 2012, the relative performance of the office and residential REIT segments lagged the S&P 500. Office segment returns declined by 2% during the most recent three months. Source: Capital IQ Note: REITs selected from the FTSE NAREIT All REITs Index and S&P Equity Indexes (ranked within a category by equity market capitalization as of April 30, 2009). Page 17 of 20

18 Navigant s REIT Universe Market Value Analysis Source: Capital IQ Market % Change Stock Price Capitalization Segments/Companies as of 12/31/12 as of 12/31/12 ($mm) 3-Month 6-Month 12-Month Office: Alexandria Real Estate Equities, Inc. ARE $69.32 $4, % -2.3% 3.3% BioMed Realty Trust Inc. BMR , % 3.6% 7.3% Boston Properties Inc. BXP , % -1.6% 8.5% CommonWealth REIT CWH , % -17.1% -4.7% Corporate Office Properties Trust OFC , % 19.2% 31.9% Douglas Emmett Inc DEI , % 1.7% 40.7% Franklin Street Properties Corp. FSP , % 16.4% 23.7% Highwoods Properties Inc. HIW , % 5.6% 22.0% Mack-Cali Realty Corp. CLI , % -10.6% -1.8% SL Green Realty Corp. SLG , % -4.5% 20.7% Industrial: DCT Industrial Trust Inc. DCT $6.49 $1, % 11.8% 38.5% EastGroup Properties Inc. EGP , % 5.2% 33.7% First Industrial Realty Trust Inc. FR , % 23.8% 56.3% First Potomac Realty Trust FPO % 5.2% -3.8% Monmouth Real Estate Investment Corp. MNR % -9.5% 18.8% Prologis, Inc. PLD , % 10.0% 28.2% Retail: Alexander's Inc. ALX $ $1, % -23.3% -10.6% Equity One Inc. EQY , % 2.6% 28.2% Federal Realty Investment Trust FRT , % 1.0% 16.7% Kimco Realty Corporation KIM , % 1.7% 19.2% The Macerich Company MAC , % 1.8% 19.3% Regency Centers Corporation REG , % -0.4% 25.9% Simon Property Group Inc. SPG , % 3.7% 29.1% Tanger Factory Outlet Centers Inc. SKT , % 8.2% 26.1% Taubman Centers, Inc. TCO , % 7.1% 35.0% Weingarten Realty Investors WRI , % 1.8% 23.2% Residential: American Campus Communities, Inc. ACC $46.13 $4, % 43.7% 62.3% Apartment Investment & Management Co. AIV , % 2.5% 42.2% Avalonbay Communities Inc. AVB , % 12.8% 22.5% BRE Properties Inc. BRE , % 1.8% 2.8% Camden Property Trust CPT , % 5.6% 29.2% Equity Residential EQR , % -2.8% 7.8% Essex Property Trust Inc. ESS , % -1.2% 11.7% Home Properties Inc. HME , % 5.2% 13.1% Mid-America Apartment Communities Inc. MAA , % -2.0% 15.7% UDR, Inc. UDR , % -6.9% 8.2% Page 18 of 20

19 Navigant s REIT Universe Market Value Analysis (cont.) Source: Capital IQ Segments/Companies Enterprise Value Dollars in Millions Total Debt Funds from Operations EBITDA / (Interest Expense + Preferred Dividends Paid) Total Debt / EBITDA Total Debt / Enterprise Value Office: Alexandria Real Estate Equities, Inc. ARE $7,818.2 $3,181.9 $ x 8.9x 40.7% BioMed Realty Trust Inc. BMR 5, , x 7.0x 40.9% Boston Properties Inc. BXP 24, , x 7.8x 37.0% CommonWealth REIT CWH 6, , x 7.9x 66.9% Corporate Office Properties Trust OFC 4, , x 8.5x 47.3% Douglas Emmett Inc DEI 6, , x 10.3x 51.7% Franklin Street Properties Corp. FSP 1, x 5.2x 32.7% Highwoods Properties Inc. HIW 4, , x 6.5x 39.6% Mack-Cali Realty Corp. CLI 4, , x 5.9x 49.1% SL Green Realty Corp. SLG 14, , x 8.0x 45.8% Industrial: DCT Industrial Trust Inc. DCT 3, , x 8.7x 46.1% EastGroup Properties Inc. EGP 2, x 6.8x 33.6% First Industrial Realty Trust Inc. FR 2, , x 6.5x 47.6% First Potomac Realty Trust FPO 1, x 8.8x 53.1% Monmouth Real Estate Investment Corp. MNR x 7.1x 37.1% Prologis, Inc. PLD 30, , x 9.3x 38.6% Retail: Alexander's Inc. ALX $2,255.7 $1,069.8 $ x 6.5x 47.4% Equity One Inc. EQY 4, , x 8.0x 35.0% Federal Realty Investment Trust FRT 8, , x 5.6x 24.7% Kimco Realty Corporation KIM 11, , x 7.6x 35.2% The Macerich Company MAC 12, , x 6.6x 31.5% Regency Centers Corporation REG 6, , x 6.2x 30.3% Simon Property Group Inc. SPG 72, , , x 6.7x 31.9% Tanger Factory Outlet Centers Inc. SKT 4, , x 5.7x 24.8% Taubman Centers, Inc. TCO 7, , x 6.7x 35.5% Weingarten Realty Investors WRI 5, , x 6.3x 39.7% Residential: American Campus Communities, Inc. ACC $6,731.0 $1,836.9 $ x 8.9x 27.3% Apartment Investment & Management Co. AIV 9, , x 8.3x 51.2% Avalonbay Communities Inc. AVB 18, , x 6.1x 21.0% BRE Properties Inc. BRE 5, , x 7.0x 30.8% Camden Property Trust CPT 8, , x 5.8x 30.6% Equity Residential EQR 28, , x 6.3x 30.3% Essex Property Trust Inc. ESS 8, , x 7.8x 34.7% Home Properties Inc. HME 6, , x 7.4x 44.2% Mid-America Apartment Communities Inc. MAA 4, , x 6.6x 37.8% UDR, Inc. UDR 9, , x 7.9x 35.9% Ratios Page 19 of 20

20 Notes Enterprise Value (EV) = Common equity value + preferred equity + debt cash & short-term investments. EBITDA = Earnings before interest, taxes, depreciation and amortization. Funds from Operations (FFO): Net operating income - gains or losses from sales of property + real estate depreciation. Sources: Capital IQ, CoStar, BOMA Experience and Exchange Report, Korpacz Real Estate Investor Surveys, Real Capital Analytics, Federal Reserve, Goldman Sachs, IREM, S&P/Case- Schiller Index, and others as indicated. Any public companies chosen for the NCA Real Estate Investment Trust (REIT) Universe are companies commonly used for industry information to show performance within a sector. They do not include all public companies that could be categorized within the sector and were not created as benchmarks; they do not imply benchmarking and do not constitute recommendations for a particular security and/or sector. The charts and graphs used in this report have been compiled by Navigant solely for purposes of illustration. For further information on any of our Real Estate services, please contact: Edward R. Casas, Head of Navigant Capital Advisors, , ecasas@ncacf.com Darin L. Buchalter, Head of Navigant s Real Estate Practice, , dbuchalter@@ncacf.com To view all of Quarterly Dialogues or to make changes to your subscription(s), please go to About Navigant Capital Advisors Navigant Capital Advisors is the dedicated corporate finance business unit of Navigant (NYSE: NCI). Navigant Capital Advisors serves the investment banking and private equity, restructuring and valuation needs of companies, private equity groups, lenders and other creditor constituencies. The firm arranges private placements of debt and equity, advises on mergers and acquisitions, as well as initiates divestitures for the owners of businesses across a broad range of industries. The firm also represents borrowers, secured lenders and other creditor constituencies in connection with financial and operating restructurings. Finally, we provide transactional valuations, fairness opinions and other financial reporting and compliance services to companies and their boards. Offices Atlanta, GA* Austin, TX Boston, MA Boulder, CO Burlington, MA Chicago, IL* Dallas, TX Denver, CO Detroit, MI Dubai Evanston, IL* Fairfield, CT Hong Kong Houston, TX Irvine, CA Lawrenceville, NJ London Los Angeles, CA Miami, FL Montreal, Quebec New York, NY* Ottawa, Ontario Palo Alto, CA Philadelphia, PA Phoenix, AZ Princeton, NJ Quebec City, Quebec Rancho Cordova, CA San Francisco, CA Seattle, WA Tampa, FL Toronto, Ontario Vienna, VA Washington, DC Westbury, NY *Broker-dealer offices registered with FINRA. NCA gathers its data from sources it considers reliable. However, it does not guarantee the accuracy or completeness of the information provided within this publication. Any opinions presented reflect the current judgment of the authors and are subject to change. NCA makes no warranties, expressed or implied, regarding the accuracy of this information or any opinions expressed by the authors. (Officers, directors and employees of Navigant Consulting, Inc. and its subsidiaries may have positions in the securities of the companies discussed.) This publication does not constitute a recommendation with respect to the securities of any company discussed herein, and it should not be construed as such. NCA or its affiliates may from time to time provide investment banking or related services to these companies. Like all NCA employees, the authors of this publication receive compensation that is affected by overall firm profitability Navigant Capital Advisors, LLC. All rights reserved. Navigant Capital Advisors, LLC (Member FINRA, SIPC) is a wholly owned broker/dealer of Navigant Consulting, Inc. Navigant Consulting is not a certified public accounting firm and does not provide audit, attest, or public accounting services. See for a complete listing of private investigator licenses. Page 20 of 20