Weekly REIT Insights. NAREIT Conference Recap Recent Reports

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1 NORTH AMERICA Morgan Stanley & Co. Incorporated Paul Morgan Chris Caton Swaroop Yalla, PhD Industry View Attractive NAREIT Conference Recap Recent Reports Samir Khanal Jorel Guilloty What s New: The mood at this week s NAREIT Investor Forum in New York was consistently positive in the face of investor concerns about weaker macroeconomic trends. Leasing momentum has not reflected any Q2 softness, with momentum continuing to build gradually in most sectors, and more robustly in others (apartments). This week s Insights follow up on the themes that we focused on at NAREIT: Widespread demand momentum. Demand metrics continue to improve, particularly in coastal and tech-centric markets. Coastal apartment REITs reported 6% to 7% increases in new and renewal leases for May and up again for June/July renewals. An emerging lack of large blocks of class A commercial space is putting upward pressure on rents in core markets. Retail REITs were also constructive following ICSC, citing demand to backfill store closings and downsizing programs. Title Date Mall Sales Monitor: Soft May Results Jun 2, 2011 REIT Valuation Analyst: Backtesting Validates Alpha Lodging: Slowing Supply Growth Favors Some Portfolios over Others Jun 1, 2011 May 25, 2011 A Walking Tour of ICSC May 20, 2011 Global Property Compass: May 2011 May 20, 2011 Don t Fear the Fed: REITs Can Shine While Rates Rise : May 18, 2011 Asset values resilient, but CMBS risks warrant attention. The combination of no new supply, accelerating fundamentals and affordable debt has driven asset values, particularly in coastal and/or tech-oriented markets. We believe asset pricing drivers are shifting from cap rate compression to NOI growth in core markets. Asset value momentum has seeped into secondary markets as well, particularly for quality assets, but we believe the recent weakness in the CMBS market warrants attention, since investors viewed CMBS as a driver of cap rate compression for weaker assets. Development starting to pick up steam. Permits have picked up in tier-1 cities in the apartment space, while in office, CBD development has bounced modestly off the bottom. Retail is concentrated in outlets and the redevelopment of strong centers. Commentary from the healthcare REIT sector focused on the need for medical office building development. Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision. For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.

2 Highlights from this week s NAREIT Conference The mood at this week s NAREIT Investor Forum in New York was consistently positive in the face of investor concerns about weaker macroeconomic trends. Management teams did not indicate that leasing momentum has reflected any Q2 softness, but rather argued that demand fundamentals have continued to build gradually in most sectors, and more robustly in others (apartments). This week s Insights follow up on the themes that we focused on at NAREIT: Widespread demand momentum. Demand metrics continue to improve, particularly in coastal and tech-centric markets. Coastal apartment REITs reported 6% to 7% increases in new and renewal leases for May and up again for June/July renewals. An emerging lack of large blocks of class A commercial space is putting upward pressure on rents in core markets. Retail REITs were also constructive following ICSC, citing demand to backfill store closings and downsizing programs. Asset values resilient, but CMBS risks warrant attention. The combination of no new supply, accelerating fundamentals and affordable debt has driven asset values, particularly in coastal and/or tech-oriented markets. We believe asset pricing drivers are shifting from cap rate compression to NOI growth in core markets, where the momentum supports rising values. Asset value momentum has seeped into secondary markets as well, particularly for quality assets, but we believe the recent weakness in the CMBS market warrants attention for this segment, which investors have viewed as a key potential beneficiary of increasingly low cost, high LTV debt from CMBS loan originators. Spreads on CMBS indices (Exhibit 1) have gapped out in recent weeks, returning to levels from late summer 2010 and erasing all the strong gains from 2H10 and into 1Q11. Our fixed income research team believes that market technicals have been the primary driver of the weakness, rather than direct concerns about future losses or the direction of the commercial real estate recovery. Among the drivers have been 1) a supply overhang from the Fed s ongoing sale of the Maiden Lane RMBS securities; 2) dealers limits risks on their trading desks; and 3) CMBX being used as a hedge against other structured products due to its high liquidity. Despite the technical aspects, the market turmoil has boosted spreads on recent securitizations by 20-30bps and should the pricing trend persist, would be almost certain to impact new loan origination pricing. Exhibit 1 Recent CMBS spread-widening in focus /1/2010 8/1/ /1/2010 Note: CMBX AAA spreads in bps, average of the five series. Source: Morgan Stanley. 12/1/2010 We would expect the impact of higher securitized loan pricing to be felt most acutely on the B-asset segment, particularly in a sector such as retail, where a disproportionate share of the originations have occurred. In particular, a pricing shift would be likely to impact pricing on non-core dispositions of B-quality malls (sold by Westfield, Simon & General Growth) and non-prime shopping centers (e.g., DDR, KIM, EQY, and WRI). We believe the most direct NAV impact would be on the B-mall REITs, including CBL & Associates (CBL-UW) in our coverage universe. Development starting to pick up steam. Permits have picked up in tier-1 cities in the apartment space, while in office, CBD development has bounced modestly off the bottom. Retail is concentrated in outlets and the redevelopment of strong centers. Commentary from the healthcare REIT sector focused on the need for medical office building development. 2/1/2011 4/1/2011 6/1/2011 2

3 Apartments The mood continues to be very upbeat for the apartment REITs, with one CEO putting it well: There has never been a better time to be in the apartment business. General highlights from our meetings at NAREIT include: Summer leasing continues the positive momentum. Conference participants voiced concerns that weaker economic datapoints and higher gas prices could impact the ability of apartment landlords to continue to push rent increases. While rental demand certainly depends on economic conditions ultimately, we can report from our meetings with coastal REITs that they are reporting strong 6%-7% increases for new and renewal leases in May and trending to 7%-8% range for June/July. Markets with heavy concentrations of technology jobs like San Francisco and Seattle are leading the pack in terms of renewal rents. We continue to expect this momentum to translate into higher FY11 guidance during the upcoming Q2 earnings reports. Focusing on rent to income ratios to gauge upside. Many REITs discussed current rent to income levels relative to long-run averages in order to help calibrate the durability of above-trend rent growth over the medium-term. Most REITs are currently in the ~18% range versus a long-run average of 20-22%, leaving room to maneuver before historical averages are reached; however, we would expect given the current tailwinds in the rent/buy equation e.g., stiffer mortgage underwriting and a shift in views regarding homes as a savings vehicle there is a real prospect of overshooting in this cycle, leaving even greater room for rents to grow. To put rent/income ratios in perspective, an average rent of $1200 and a household income of $80K yields a rent/income ratio of 18%. Assuming an 8% increase in rents and 3% increase in incomes for the next three years results in the ratio moving to 21%, still consistent with long-run averages. Development (pre-)party has begun. Construction permits and starts are up in most tier-1 cities, along with improvements in construction financing e.g., recent news on a developer landing a $530M construction loan from Wells Fargo-led syndicate for development of over 2,000 units on the West Side of Manhattan. Supply will be low through next year and into 2013, but the focus is on the potential for completions in 2H13 and 2014 taking the edge off strong rent growth in certain core markets where starts have been strong (e.g., Washington, DC). The entitlement and construction permits for core mid-high rise buildings takes longer than suburban garden deals, and therefore supply should become a concern in suburban markets first. Selected company specific takeaways: AIMCO (AIV-OW): Management continues to target dispositions of 5%-10% of the portfolio almost 80 properties are listed on their website; many of which are assets with small JV interests. We were encouraged that conventional same-store operating trends look promising for Q2 (after a temporary pause in 1Q) new leases are trending at 4.8% in May, and renewals are +3.5% (both up strongly from ~2% in March). Essex (ESS-OW): The technology sector continues to be a shining light, with Essex reporting 10% increases on new leases in Northern California and Seattle, while renewals are trending at 6%-6.5%. The acquisitions pipeline is strong ESS has another four assets under contract for $190M, including a new failed condominium deal this would already bring total acquisitions within the low end of full-year guidance of $ M. Home Properties (HME-EW): Preliminary numbers for May leasing is showing 4.3% renewal increases (up from 3.3% in Jan) and new leases are up a strong 6.1% (vs. flat in Jan), driven by double-digit gains in Philadelphia. The acquisition pipeline is strong with over a dozen properties under consideration and 4 under contract. The average cap rate is 5.9% and management stated C-assets comprise most of the pipeline, which is concentrated in core markets such as Maryland and Boston. MAA (MAA-EW): Management provided commentary on cap rates in the Sunbelt market based on the six deals they recently completed, the average cap rate is 6% (MAA continues to underwrite to a hurdle rate of 11-12% leveraged IRR). Management argues that the spread between the large and secondary Sunbelt markets is not as large as investors believe (in the range of bps). The company is seeing renewals in the 5-6% range and new leases are trending towards the 7% range. 3

4 Commercial Commentary from our meetings with commercial REITs seemed more broadly constructive than in recent events, though pricing power is still concentrated in a handful of markets and submarkets. Manhattan continues to see upward rent lifts ahead of other markets, notably Washington, DC, while tech-oriented demand has meaningfully accelerated San Francisco/Silicon Valley and has also boosted suburban Boston and Seattle. Large blocks of available class A space are becoming harder to come by across a host of markets, which appears to be putting upward pressure on rents for those remaining availabilities. Boston Properties (BXP-EW): Development has ramped quickly in the past few months, most notably 255 W 55th St in Midtown Manhattan, with Morrison & Foerster taking mid-rise space as an anchor tenant. We expect Boston Properties to hold back a portion of the top floors to maximize rate (Central Park views on the top ten floors). We agree with management that coastal-cbd pricing is likely not as frothy as some worry given the emerging growth profile - recent effective rate gains in Midtown and in SoMa (SF ) show how quickly rates can rise. Piedmont (PDM-EW): Chicago leasing remains a dichotomy with CBD more active at the expense of the suburbs, partly due to relocations back into the city of corporate headquarters. Piedmont has exposures in both submarkets, though the net impact is positive for the combined portfolio. GE's announcement late May to add 1,000 jobs in Chicago increases the chances that Piedmont can keep GE upon their upcoming lease expiration at 500 W Monroe, a potential positive catalyst. Kilroy (KRC-EW): Deal activity dominated our conversations with Kilroy, who announced two more transactions this week and specified six additional assets in their $414M pipeline. The company pre-funded much of their acquisition pipeline in April with a 6M share offering (~$220M), although more capital will be needed if they close on their entire pipeline. The company is accelerating dispositions and will bring several sizable assets to market in 2H11 (could exceed $200M); pricing on a San Diego disposition or two may provide a strong comp for the remainder of the portfolio. Hudson Pacific (HPP-EW): Updated FY11 FFO guidance earlier in the week ($ $1.04) was in line with our estimate and included a new pending acquisition (625 Second St. in San Francisco). The highest SoMa rents are reaching into the $40/ft range, up 25% in the past year on an effective basis (net of changes in TIs and free rent). Spring/summer leasing for the Hollywood studios was active and successful, which could provide a positive earnings catalyst given the weaker visibility of this earnings stream. First Potomac (FPO-EW): A topic of discussion across most of our meetings with office owners was the vibrancy of the DC market. In general, First Potomac is seeing better fundamental trends than the other owners, which we attribute to their type of vacancy exposure, oriented toward mid- and smaller-users. The company is beginning to receive inbound interest in the earlier of their redevelopment projects, 440 First, although we expect tenant interest to pick up early in '12 once prospects get more visibility on the ultimate completion of the project and pre-leasing efforts begin in earnest. Highwoods (HIW-EW): Capital deployment remains challenging as market vacancies are high enough to limit new development starts, and deal activity in HIW's core markets remains quite constrained. We expect healthy occupancy momentum through the end of the year, as several Southeastern markets (Raleigh, Nashville) are adding jobs. Government Properties (GOV-EW): Leasing decisions have slowed as the federal government inches toward potential cost cutting, although we have not yet cut expected tenant retention in coming years. GOV's recent NYC acquisitions represent a one-off opportunity rather than a shift toward lower cap rate assets in our view, as the pipeline is still comprised of 8-10% cap rate acquisitions. Should the company be successful in all of their recently announced and pending acquisitions, we believe GOV may resolve the debate on which is next, debt or equity by needing both -- likely issuing shares and an unsecured bond by year-end. BioMed Realty (BMR-OW): We remain constructive on BioMed s leasing momentum, with Silicon Valley demand migrating across the Bay to Pacific Research Center, and continued recent success elsewhere (incl. a new lease with Pfizer at the top of their CLSB project). We believe the uptick and continuation of venture capital fundraising aids leasing in the near-term with a medium term potential benefit of monetizing BMR s land holdings ($131M book value, or ~$1/shr). Acquisitions have been relatively quiet YTD as pricing has pushed yields below attractive levels; we expect development to become an increasingly active area of capital deployment in Prologis: The 2H11 FFO guidance released earlier in the week was up due principally to faster G&A synergies from the 4

5 PLD/AMB merger. We now expect roughly half of the stated $80M in savings immediately, with much of the balance to be realized as executive management is consolidated at the end of Initial commentary on synergies from cheaper debt costs is another positive result of the merger. Market fundamentals continue their steady improvement and guidance included no upgrade (or downgrade) to core growth. Management's long-term goal is to own a high-quality, unencumbered U.S. portfolio in tandem with a fund-focused non-u.s. portfolio targets reducing FX exposure and sourcing attractively priced U.S. unsecured debt. Eastgroup (EGP-OW): We expect development to be the primary mode of capital deployment given heightened acquisition market competition. Steady expansion of the development pipeline is being led by Houston, but with potential projects in Orlando and San Antonio. We will look for the spread between the development yield and market cap rate of ~175bp, or low 8% range. EastGroup is also acquiring land, but in small bits given their investment strategy (land parcels can cost under $5M; 500ksf buildable with pricing under $10/ft). Management noted that investment opportunities and talent are expected to become more available as a result of the AMB/PLD merger. American Assets (AAT-OW): After agreeing to terms on the Lloyd Center portfolio ($92M for six buildings plus developable land), the company is hard at work to further expand their Northwest portfolio and closing this transaction in Q3. We see a sizable opportunity for American Assets to create value with multifamily development at the new Portland site. We will incorporate the potential future upside from this asset once the transaction closes and American Assets determines project specifications and timing. Healthcare The views expressed at NAREIT by the Healthcare REITs reinforced our neutral view, which balances the potential for positive acquisition catalysts against the sector s more limited revenue cyclicality and the headline risks from Medicare reimbursement shifts. Mixed on the reimbursement question. Though overall healthcare asset transactions are widely expected to continue at a healthy clip, the effect of the latest range-bound CMS reimbursement proposal on the SNF transaction market was a subject of debate. HCP likened the proposal to throwing cold water on dealflow, and expects the pace to resume only after the final rules come through in Q3. Sabra Healthcare didn t believe that the proposal had reduced transaction flow, citing their $400M transaction pipeline, with 70% in the SNF segment. Interestingly, recent industry data from the Senior Care Investor newsletter showed that for the 12 months leading to March, the average price per bed for SNFs dropped to $60.5k from $62.5k, data whose timeframe does not take into account the proposal. We believe that even if the CMS proposal does not end up being a draconian 11% reimbursement cut, continuing fiscal pressure at both the national and local level will likely affect SNF transaction market pricing. The supply/demand balance. The lack of construction activity with the healthcare real estate sector has been beneficial for the REITs, tipping the balance in favor of occupancy gains and landlord pricing power. Given the imbalance, construction interest has naturally perked up; Cogdell Spencer mentioned in particular the growing need for medical office development. Even if construction activity accelerates, fundamentals will remain broadly unexposed to new supply, given the timing to complete projects. Retail Retail REITs overall were constructive following their retailer meetings at the recent ICSC Convention in Las Vegas. Other themes included the capital market recovery (though the CMBS sell-off was largely off the radar screen); retailer demand for the better locations freed up by consolidating retailers (e.g., Borders, Best Buy, and Blockbuster); and outlet center development mania. Company-specific tidbits include: CBL & Associates (CBL-UW): Management plans to open the first outlet center in Oklahoma City at 95% leased, including Saks, Tommy Hilfiger, and Under Armour. The company s near-term focus is to convert short-term leases to long-term while managing downside risks to rents. The company continues to pursue a 2 nd JV to source B-mall acquisition opportunities. Developers Diversified (DDR-EW): New lease and renewal spreads are being executed in the high single digits and mid-single digits, respectively. Management continues to believe demand is now running ahead of supply (with a lack of space in the best assets). Business is picking up with franchisees and SBA loans are up 21% this year. Management expects one-off deals over portfolio ones in strips. Regency Centers (REG-EW): Positive leasing activity continues (35% more ICSC retailer meetings versus the prior two years). Move outs are moving back to historical norms. 5

6 Recent retailer conversations indicate better demand for quality space versus previous conversations (at prior ICSC and NAREIT) which revolved around portfolio reviews and rent concession/reduction. Management remains focused on national small shop tenants, where demand continues to be stronger than still-struggling mom and pop shops. REG has been successful at replacing Blockbuster with higher rent paying tenants. Macerich (MAC-EW): Retailers have become more bullish as foot traffic improves at better centers. Retailers continue to expand and are pushing for new development (management notes that fast fashion is doing especially well). MAC is not interested in the currently marketed B- assets as they continue to identify the next Santa Monica place redevelopment opportunity. Self-Storage While renewal growth remains impressive for the self-storage sector, our NAREIT meetings did not prompt us to shift our current cautious view on the sector. We heard disparate views on the two catalysts we were looking for in the sector: portfolio acquisition activity and momentum in street rents. Storage companies reported modest increases in street rents, in contrast to stronger growth of 7-9% from renewals of existing tenants. Public Storage (PSA UW) is pushing renewal increases of 8%-9% (including 10% renewal notices this year), up from 5-6% last year. Extra Space (EXR EW) also reported renewal increases of 7-9%, preferring to send them out on a more frequent basis than PSA. Morgan Stanley is currently acting as financial advisor to Pfizer Inc. ("Pfizer") with respect to the sale of its Capsugel business to Kohlberg Kravis and Roberts & Co L.P., as announced on April 4, Upon completion of the transaction, Pfizer will pay fees to Morgan Stanley for its financial advisory services. Please refer to the notes at the end of the report. Morgan Stanley is acting as financial advisor to CP Equity LLC ("CP Equity"), the sole owner of Castle Pines Capital LLC and its affiliates, Castle Pines Capital International LLC and CPC Global LLC (collectively "Castle Pines Capital") in relation to their definitive agreement to sell the remaining equity interest in Castle Pines Capital to Wells Fargo Bank, N.A., as announced on May 26, The transaction is subject to customary closing conditions. CP Equity has agreed to pay fees to Morgan Stanley for its financial services that are contingent upon the consummation of the proposed transaction. Please refer to the notes at the end of the report. Some companies have also started to innovate on the traditional storage model. For example, U-Store-It (YSI) presented their superstore concept where they partner with companies like Penske, UPS, and Iron Mountain to offer additional services like shipping, packaging, auctioning and document shredding. The idea is to double the small business component from the current level of 20% - management feels that the small business customers have longer retention rates, and therefore a higher potential to pass on renewal increases. Third party business also continues to be a focus for the smaller firms like Extra Space and U-Store-It. They view tenant insurance income at the additional sites as an attraction, in addition to the potential source of quasi-proprietary acquisition dealflow and expansion of the brand footprint. 6

7 Weekly News Flow Industry REITs Ramp Up Acquisitions As Portfolio Fundamentals Improve (National Real Estate Investor, June 8) Real Estate Investment Funds Favor North America of 439 RE funds raising equity are focused on NA and seek to raise $88.9b. (Commercial RealEstate Direct, June 8) Apartments Huge West Side Project Gets $530M Loan Residential complex on the West Side. (Crain's new york business.com, June 7) Freddie Mac Launches $1.2bln Apartment-Loan Securitization Second involving mortgages with seven-year terms. (Commercial RealEstateDirect, June 7) Macfarlane Buys Marin Development Site Bought 4.5 acres in Corte Madera slated for $68M 180 apartment(180ksf)/retail(5ksf) project. (BizJournal, June 3) RAIT Contributing Six Multifamily Assets To New REIT Independence Realty Trust Multifamily-focused Independence has filed a preliminary prospectus to raise up to $1.1B. (citybiz Real Estate, June 3) Commercial MetLife to Sell Houston Office Stake to ING - 50% stake in Wells Fargo Plaza for $255M (RE Alert, June 8) New building slated for Hudson Square Beacon Capital Partners signed a 99-yr lease to build 350ksf of office/retail space. (Crain s New York, June 9) ExxonMobil To Build Huge Office Complex In North Houston 385 acre campus. (CoStar Group, June 8) Palo Alto Networks Relocates To Santa Clara And More Than Doubles Its Space 110ksf. (BizJournal, June 3) Brookfield To Shop Jersey City Tower 1.1msf office building. Could sell for $400m, or ~$360 per foot (Real estate finance & investment, June 3) Panama Canal Expansion To Forever Change U.S. Ports (World Property Channel, June 3) California Firm Wants 100 Railyard Acres In Tacoma Birther Devpt. is in talks with Burlington Northern Santa Fe Railway. (BizJournal, June 3) Miller Global Puts 1333 H St. NW East End Up For Sale The DC Class A office building is expected to sell for $160m, or about $595/SF. (GlobeSt, June 2) Downtown's Verizon Tower Fetches $120M Sabey Data Center Properties purchased 32-story NY office building for $120M. (Crain's new york business.com, June 7) Blackstone Expects More Distressed Deals In US; also says European banks distressed property sales present an opportunity. (Crain's new york business.com, June 7) Retail Canton Crossing Retail Site Sold To Baltimore Development Team Planning to develop a 31-acre Baltimore area retail center on waterfront. (BizJournal, June 7) Developers Eying Brooklyn Waterfront For Big-Box Locations (Crain's new york business.com, June 6) Edens & Avant Sells Promenades Shopping Center 230ksf presently 87% leased. (GlobeSt, June 3) Genting Land Buy Creates Retail Buzz Restaurants and retailers could benefit from planned +$3b multi-use project. (BizJournal, June 3) Healthcare Fully-Leased Medical Building In Beverly Hills Seen Fetching $1,000/Sf (Commercial Real Estate Direct, June 3) Fitch: Healthcare REIT Outlook Positive - Bullish due to relatively stable property fundamentals and greater liquidity. (real estate finance & investment, June 7) Grubb & Ellis Healthcare REIT II Adds Five Medical Office Buildings To Its Portfolio 179ksf, four in Arkansas and one in New Jersey, for $44M. Properties are fully leased. (NREI Online, June 2) 7

8 The Week Ahead: Economic Indicator Preview Date/Time: Tuesday, June 14th /8:30 AM EST Indicator: May Retail Sales ex Auto Forecast(MS/Cons/Last): +0.4%/+0.3%/+0.6% Retail Sales ex-auto (%) 3 2 Recession Period Subsector Implication: All Subsectors 1 Comments: Company reports point to a decline in the auto dealer category. And, gas station sales should be little changed as prices finally began to flatten out. Meanwhile, chain store figures suggest that the key retail control gauge should show a modest gain on the heels of some volatility in March/April that appeared related to inadequate seasonal adjustment for the Easter calendar shift Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Date/Time: Wednesday, June 15th /8:30 AM EST Indicator: May Consumer Price Index (Core) Forecast(MS/Cons/Last): +0.2%/+0.1%/+0.2% Core CPI (%) Recession Period Subsector Implication: All subsectors Comments: Core is expected to get a significant boost from higher vehicle prices. Supply shortages have caused automakers to pull back on incentive offerings, and industry figures and anecdotal reports suggest a highly active used car market. Our estimate would represent the sharpest rise since October On a year/year basis, the core should tick up another tenth of a percentage point to +1.4%. As recently as October 2010, the core CPI was running at a +0.6% pace Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Date/Time: Thursday, June 16th /8:30 AM EST Indicator: May Housing Starts Forecast(MS/Cons/Last): 535k/535k/523k Housing Starts (M) Recession Period Subsector Implication: Multifamily 1.5 Comments: Tight credit is hampering sales of newly constructed residences while activity in the multi-family category appears to be on the upswing (likely reflecting some tightening of rental market conditions). Thus, we look for a modest rise in starts this month (+2.3%). Although the current pace of activity remains extremely depressed from a long run standpoint, there is light at the end of the tunnel. With household formations now running close to 1 million annually, the current pace of starts will lead to a significant absorption of vacant inventory over the next few years Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Source: FactSet, Morgan Stanley Research 8

9 Valuation Metrics Exhibit 2: REIT Market-Cap Weighted Implied Cap Rate 12% 10% 8% 6% 4% 1 Std Dev 2 Std Dev Average 2% 0% Exhibit 3: REIT Market-Cap Weighted NTM FFO Multiple 20x 18x 16x 14x 12x 10x 8x 6x 4x 1 Std Dev 2 Std Dev Average 2x 0x Exhibit 4: Implied Cap Rates vs. 10-year Treasuries 12% 10% 8% 6% 4% 2% 0% -2% -4% Spread (rhs) REIT Wtd Ave (lhs) 10Yr Treasury (lhs) Spread Ave. (rhs) (bps) Exhibit 5: Implied Cap Spread vs. 10Yr Tips 12% % % % % % 800 0% -2% 600-4% 400-6% 200-8% Spread (rhs) REIT Wtd Ave (lhs) 10Yr Tips (lhs) Spread Ave. (rhs) (bps) Exhibit 6: Implied Cap Rates vs. Corporate Bond Yields 12% 10% 8% 6% 4% 2% 0% -2% Spreads (rhs) REIT WTD Ave (lhs) Baa Corp (lhs) Spread Ave(rhs) (bps) Exhibit 7: REIT vs. S&P500 Multiples 26x 24x 22x 20x 18x 16x 14x 12x 10x 8x 6x P/FFO NTM Multiple S&P500 NTM P/E Multiple 4x Note: Priced as of June 9 th, Source: Factset, SNL Financial, Company data, Morgan Stanley Research 9

10 REIT Weekly Price Performance Heat Maps Exhibit 8: Trailing 5D Relative to RMZ Heat Map (Sorted by Implied Cap Rate; Color Intensity Represents Return Quartile) Quar. Subsectors Malls Strips Office Mixed OI Industrial Apartments Healthcare Hotels Storage Apts TCO FRT BXP MSW EGP AVB UHT PEB PSA Storage SPG SKT SLG DLR PLD EQR VTR FCH EXR Office MAC AKR DEI WRE DCT ESS HR CLDT SSS Malls GGP AAT MPG DFT FR ACC NHI CHSP YSI Industrial GRT WRI BPO PSB TRNO BRE NHP HST Hcare CBL EQY ARE LRY UDR HCN DRH Mixed O/I PEI ROIC VNO DRE PPS HCP LHO Strips IRC KRC FPO MAA MPW HT KIM OFC COR CPT LTC SHO Rel. Performance in bps REG BMR HME CSA HPT BFS PDM EDR SNH AHT 1 +76< DDR HIW AIV OHI BEE 2-66 < x <+76 KRG BDN SBRA < x <-66 CDR CLI 4-217> RPT CUZ EXL GOV HPP CWH PKY Exhibit 9: Trailing 5D Absolute Price Performance Heat Map Sorted by Subsector Lease Duration (Color Intensity Represents Quartile) HOT. STO. HST -3.3 PSA -0.1 HPT -4.3 LHO -6.2 DRH -4.5 SHO -5.8 HT -2.4 AHT -6.7 EXR -1.2 BEE -0.8 FCH PEB SSS -2.1 YSI -2.9 APARTMENTS EQR +2.1 AVB +3.0 UDR +0.4 CPT +3.3 ESS +2.0 AIV +1.8 BRE +1.2 HME +1.2 MAA +0.7 ACC +0.7 PPS CLP STRIPS IND MIX KIM -4.1 DLR +4.0 FRT -1.7 PLD -4.1 LRY -3.6 REG -2.9 DDR -3.1 DRE -4.0 WRI -3.6 WRE -1.4 SKT -1.9 DFT +2.5 EQY -1.7 DCT -4.5 BFS AAT AKR IRC PSB -2.4 EGP -3.6 FPO FR -7.6 MSW OFFICE VNO -0.7 BXP -1.3 BPO -2.9 SLG -4.6 ARE -2.0 PDM -0.2 CLI -4.5 DEI BMR HIW OFC KRC CWH BDN MALLS SPG -0.7 MAC -2.3 GGP -3.2 TCO -0.1 CBL -5.5 H.CARE HCP -2.1 HCN -0.9 VTR -3.2 NHP -2.1 SNH -1.6 OHI -2.9 HR MPW NHI Note: REIT box size indicates relative equity market capitalization. Row height represents relative subsector market cap and column width with rows represents stock market cap relative to subsector. Both exhibits as of June 9th, Source: FactSet, Morgan Stanley Research 10

11 REIT YTD Price Performance Heat Maps Exhibit 10: YTD Relative to RMZ Heat Map (Sorted by Implied Cap Rate; Color Intensity Represents Return Quartile) Quar. Subsectors Malls Strips Office Mixed OI Industrial Apartments Healthcare Hotels Storage Apts TCO FRT BXP MSW EGP AVB UHT PEB PSA Storage SPG SKT SLG DLR PLD EQR VTR FCH EXR Office MAC AKR DEI WRE DCT ESS HR CLDT SSS Malls GGP AAT MPG DFT FR ACC NHI CHSP YSI Industrial GRT WRI BPO PSB TRNO BRE NHP HST Hcare CBL EQY ARE LRY UDR HCN DRH Mixed O/I PEI ROIC VNO DRE PPS HCP LHO Strips IRC KRC FPO MAA MPW HT KIM OFC COR CPT LTC SHO Rel. Performance in bps REG BMR HME CSA HPT BFS PDM EDR SNH AHT < DDR HIW AIV OHI BEE < x <+399 KRG BDN SBRA < x <-362 CDR CLI 4-898> RPT CUZ EXL GOV HPP CWH PKY Exhibit 11: YTD Absolute Price Performance Heat Map Sorted by Subsector Lease Duration (Color Intensity Represents Quartile) HOT. STO. HST -8.4 PSA HPT -3.1 LHO -6.0 DRH SHO HT AHT EXR BEE FCH PEB SSS +8.4 YSI APARTMENTS EQR AVB UDR +6.2 CPT ESS AIV -0.2 BRE HME +9.6 MAA +5.4 ACC +9.3 PPS CLP STRIPS IND MIX KIM -2.1 DLR FRT +7.1 PLD +3.0 LRY +3.7 REG +1.3 DDR -5.3 DRE WRI +2.0 WRE +5.3 SKT +3.3 DFT EQY +2.0 DCT -4.9 BFS AAT AKR IRC PSB -0.7 EGP +2.4 FPO FR MSW OFFICE VNO BXP BPO +6.0 SLG ARE +5.9 PDM +0.7 CLI -1.2 DEI BMR HIW OFC KRC CWH BDN MALLS SPG MAC +7.8 GGP +3.2 TCO CBL -1.2 H.CARE HCP -2.1 HCN +7.3 VTR +0.7 NHP SNH +6.4 OHI HR MPW NHI Note: REIT box size indicates relative equity market capitalization. Row height represents relative subsector market cap and column width with rows represents stock market cap relative to subsector. Both exhibits as of June 9th, Source: FactSet, Morgan Stanley Research 11

12 REIT Price Performance Charts Exhibit 12: REIT Subsector Relative Performance Exhibit 13: REIT Subsector Price Performance - YTD -8% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% Self Storage Apartments Regional Malls Office RMZ Industrial -10 Apartments Regional Malls Shopping Centers Office Industrial Health Care -15 Self Storage Lodging/Resorts Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Health Care Shopping Centers Lodging Exhibit 14: REIT Subsector Price Performance-Trailing 5D -6% -5% -4% -3% -2% -1% 0% 1% 2% 3% Apartments Self Storage Regional Malls RMZ Office Health Care Shopping Centers Lodging Industrial Exhibit 15: REIT Subsector Dividend Yields 0% 1% 2% 3% 4% 5% 6% Health Care Shopping Centers REITs Self Storage Industrial Regional Malls Office Apartments Lodging Exhibit 16: REIT Subsector Price Performance - MTD -10% -9% -8% -7% -6% -5% -4% -3% -2% -1% 0% Apartments Self Storage Regional Malls RMZ Health Care Office Shopping Centers Lodging Industrial ` Exhibit 17: Top 10 REIT Dividend Yields 0% 2% 4% 6% 8% 10% HPT SBRA CWH OHI MPW CDR GOV SUI CSA IRC Note: As of June 8 th, Source: FactSet, Morgan Stanley Research 12

13 Global REIT Price Performance FTSE/EPRA NAREIT Indices Exhibit 18: Price Return Trailing 5D (USD) -5% -3% -2% 0% 2% Middle East and Africa Latin America USA UK Developed Europe ex UK Singapore Global Australia Japan Hong Kong Exhibit 19: Total Return Year to Date (USD) -15% -10% -5% 0% 5% 10% 15% 20% 25% UK Developed Europe ex UK USA Australia Global Middle East and Africa Singapore Hong Kong Latin America Japan Exhibit 20: Price Return Month to Date (USD) -5% -3% -2% 0% 2% 3% Middle East and Africa Latin America Australia Developed Europe ex UK Singapore UK Japan Global Hong Kong USA Exhibit 21: Top 10 Price Performance Week to Date 0% 5% 10% Tecnisa (BRA) Parsvnath Developers Ltd. (IND) Mission West Properties (USA) EZ TEC (BRA) Helbor Empreendimentos (BRA) Sao Carlos (BRA) Even Construtora e Incorporadora (BRA) CapLease (USA) Brookfield Incorporacoes (BRA) Digital Realty Trust (USA) Exhibit 22: Price Return 90 Days (USD) -15% -10% -5% 0% 5% 10% 15% Middle East and Africa Latin America Developed Europe ex UK UK USA Australia Global Singapore Hong Kong Japan Exhibit 23: Bottom 10 Price Performance Week to Date -14% -12% -10% -8% -6% -4% -2% 0% KWG Property Holding (CYM) Extendicare REIT (CAN) Gagfah S.A. (LUX) Agile Property Holdings (CYM) Tokyo Tatemono (JPN) Sino-Ocean Land Holdings (HKG) Hang Lung Properties (HKG) Tokyu Land (JPN) Chartwell Seniors Housing REIT (CAN) IVG Immobilien AG (DEU) Note: As of June 8 th, Source: FactSet, Morgan Stanley Research 13

14 Exhibit 24: REIT Comparative Valuation Table, Retail and Commercial; Performance, NAV and Implied Cap Rate REIT COMPARATIVE VALUATION Total Return Net Asset Value Implied Cap Rate Mixed Office/Industrial Industrial Office Shopping Centers Regional Malls Price Price Price 90 90D v. 90D v. Ent. Equity MS or Price MS v. Relative vs. Peers EV/ Div FFO Tckr Rtg 9-Jun Tgt Tgt YTD Day Peers Peers Value Cap Cons. /NAV Cons. Now LRAv. Now LRAv. Diff Relative Valuation Sigma EBITDA Yld P.out Company Name ($) ($) (%) (%) (%) Hist. (%) ($B) ($B) ($/sh) (%) (%) (%) (%) (bps) (bps) (bps) Current 5Yr Hist. QTD Chg. (x) (%) (%) Taubman Centers TCO EW % 17% 14% +3% % +4% 5.5% 6.6% SD -0.2 SD 19.5x 3.0% 61% Simon Property SPG EW % 16% 11% +0% % +2% 6.0% 6.8% SD -0.5 SD 16.4x 2.8% 63% Macerich Company MAC EW % 10% 10% -1% % +0% 6.1% 6.9% SD +0.1 SD 16.8x 3.8% 73% General Growth GGP % 9% -2% % 6.6% 7.5% SD +0.3 SD 17.0x 2.5% 66% Glimcher Realty GRT % 9% -1% % 7.8% 9.5% SD +0.2 SD 14.7x 4.2% 53% CBL & Associates CBL UW % 0% 1% -10% % +1% 8.3% 8.7% SD +0.4 SD 12.6x 4.8% 44% Penn REIT PEI % 18% +7% % 8.6% 9.4% SD -0.1 SD 13.6x 3.7% 31% Regional Malls 12% 11% +4% % +2% 6.2% 7.1% SD -0.2 SD 16.6x 3.0% 63% Federal Realty FRT EW % 8% 4% +1% % +2% 5.7% 6.2% SD -0.4 SD 18.8x 3.2% 68% Tanger Factory Outl. SKT % 5% +2% % 6.1% 7.1% SD -0.1 SD 16.6x 3.0% 65% Acadia Realty Trust AKR % 8% +6% % 6.7% 7.2% SD -0.6 SD 25.2x 3.6% 58% American Assets AAT OW % NA 3% +1% % +3% 6.8% NA -17 NA NA NA NA 16.7x 3.9% NM Weingarten Realty WRI % 1% -2% % 6.9% 7.4% SD +0.1 SD 14.9x 4.5% 76% Equity One EQY EW % 3% 3% +0% % +9% 7.1% 7.1% SD -0.1 SD 16.0x 4.7% 87% Retail Opportunity ROIC % -2% -5% % 7.2% NA +25 NA NA NA NA 9.9x 3.4% NM Inland Retail IRC % -3% -6% % 7.2% +27 NA NA NA 14.6x 6.5% 95% Kimco Realty KIM EW % -1% 2% -0% % +5% 7.3% 7.1% SD +0.1 SD 14.9x 4.0% 62% Regency Centers REG EW % 3% 2% -1% % +11% 7.3% 6.8% SD +0.0 SD 15.7x 4.3% 101% Saul Centers BFS % -10% -13% % 7.6% 7.2% SD +2.0 SD 15.0x 3.8% 67% Developers Dvsfd DDR EW % -5% 0% -3% % +11% 7.6% 7.5% SD +0.3 SD 15.7x 1.2% NM Kite Realty Group KRG % 0% -3% % 8.0% 7.4% SD -0.3 SD 17.3x 4.9% 56% Cedar Shopping Ctrs CDR % 2% -1% % 8.2% 7.8% SD +0.3 SD 15.1x 6.7% NM Ramco-Gershenson RPT % 0% -3% % 8.6% 8.9% SD -0.1 SD 15.2x 5.2% 151% Excel Trust EXL % 4% +1% % 8.9% +194 NA NA NA 12.2x 5.1% NM Shopping Centers 2% 3% -4% % +7% 6.9% 6.8% SD +0.6 SD 16.2x 3.7% 75% Boston Prop. BXP EW % 20% 13% +3% % -1% 4.9% 5.6% SD -0.3 SD 20.7x 1.9% 51% SL Green Realty SLG % 17% +7% % 5.4% 6.0% SD -0.6 SD 17.4x 0.5% 8% Douglas Emmett DEI % 13% +3% % 5.6% -56 NA NA NA 16.8x 2.6% 41% Brookfield Prop. BPO % 12% +2% % 6.1% 6.5% SD +0.2 SD 18.4x 3.0% 40% Alexandria RE ARE % 4% -5% % 6.3% 7.1% SD +0.3 SD 17.5x 2.3% 51% Vornado Realty VNO EW % 14% 10% -0% % +1% 6.3% 6.0% SD -0.3 SD 17.9x 2.9% 45% Corp Office Props OFC % -3% -13% % 6.6% 6.3% SD +0.8 SD 16.6x 5.1% 72% Kilroy Realty KRC EW % 9% 8% -2% % +5% 6.6% 7.0% SD +0.6 SD 15.6x 3.5% 68% BioMed Realty Trust BMR OW % 6% 13% +4% % +3% 6.7% 7.4% SD +0.1 SD 16.5x 4.0% 68% Piedmont Office PDM EW % 4% 8% -1% % +7% 6.9% +71 NA NA NA 15.7x 6.2% 79% Highwoods HIW EW % 9% 3% -7% % +7% 7.7% 8.2% SD +0.5 SD 14.8x 5.0% 69% Brandywine Rlty. BDN % 0% -10% % 7.7% 7.9% SD +0.7 SD 12.4x 5.1% 44% Mack-Cali Realty CLI % 2% -7% % 7.8% 8.3% SD +0.7 SD 13.8x 5.5% 66% Govt Props GOV EW % -4% 0% -10% % -1% 8.0% +181 NA NA NA 13.2x 6.6% 93% Cousins Properties CUZ % 11% +1% % 7.9% 6.6% SD +0.1 SD 19.8x 2.1% 56% Hudson Pacific HPP EW % 2% 7% -3% % +8% 8.4% +224 NA NA NA 13.9x 3.2% 87% Parkway Props PKY % 1% -8% % 9.2% 8.7% SD +0.6 SD 11.3x 1.8% 11% CommonWealth CWH % 5% -4% % 9.1% 9.4% SD +0.7 SD 10.8x 8.0% 54% Maguire Props MPG % -25% -35% NA NA NA NA NA NA 16.7x 0.0% 0% Office 12% 10% +3% % +1% 6.2% 5.8% SD -0.4 SD 17.6x 3.1% 49% Terreno Realty TRNO % 1% +2% % 6.3% NA -46 NA NA NA NA 22.7x 2.4% NM EastGroup Prop EGP OW % 4% 5% +5% % +8% 6.4% 7.2% SD -0.6 SD 16.8x 4.7% 72% ProLogis Trust PLD % -2% -1% % 6.6% 7.4% SD -0.3 SD 39.3x 3.3% 85% DCT Industrial DCT % 1% +1% % 7.1% +32 NA NA NA 16.2x 5.5% 84% First Industrial FR % 6% +7% % 8.5% 8.3% SD +0.0 SD 12.0x 0.0% 0% STAG Industrial STIR NA NA NA % NA NA NA NA NA NA NA 11.7x 0.0% NA Industrial 5% 0% -7% % +8% 6.7% 6.9% SD +0.6 SD 34.1x 3.4% 79% Mission West Prop. MSW % 28% +19% % 5.8% 5.9% SD -0.7 SD 12.3x 6.5% 99% Digital Realty Trust DLR % 15% +6% % 6.1% 6.5% SD -1.9 SD 12.5x 4.3% 81% Washington REIT WRE % 11% +2% % 6.3% 6.8% SD +0.8 SD 15.4x 5.2% 96% Dupont Fabros Tech. DFT % 12% +3% % 6.4% -48 NA NA NA 12.4x 1.8% 36% PS Business Parks PSB % -3% -12% % 7.6% 8.2% SD +1.2 SD 12.3x 3.1% 45% Liberty Property LRY % 5% -4% % 7.7% 8.5% SD +1.1 SD 14.2x 5.7% 71% Duke Realty DRE % 5% -4% % 7.7% 7.8% SD +0.6 SD 13.8x 4.8% 54% First Potomac FPO EW % -7% 6% -3% % +0% 7.8% 8.4% SD -0.2 SD 17.2x 5.2% 94% Coresite COR % 14% +4% % 8.3% NA +145 NA NA NA NA 11.8x 3.1% 67% Mixed Office/Industrial 15% 9% +2% % +0% 6.9% 6.6% SD -1.0 SD 13.4x 4.5% 70% Sector Total/Weighted Avg. 9% 7% % +5% 6.4% 17.2x 3.4% 66% Straight Average 5% 5% % +8% 7.1% 7.6% 15.4x 3.9% 65% S&P 500 INDEX SPX % -2% 1.8% RMZ RMZ % 2% Source: FactSet (including consensus FFO and EBITDA estimates), SNL (including consensus NAV estimates), Morgan Stanley Research. For valuation methodology and risks associated with any price targets above, please with a request for valuation methodology and risks on a particular stock 14

15 Exhibit 25: REIT Comparative Valuation Table, Retail and Commercial; FFO and Leverage Parameters REIT COMPARATIVE VALUATION Funds from Operations (FFO) Leverage Parameters Short Int. Industrial Office Shopping Centers Regional Malls Mixed Office/Industrial Price 11E MS/ MS v 12E MS/ MS v Growth Multiple Relative Prem/Disc Debt / Debt/ S.Debt/ Fxd % of 2wk Tckr 9-Jun Cons. Cons. Cons. Cons. 11E 12E 11E 12E LRAvg Now LRAvg Diff Relative Valuation Sigma EBITDA GAV Assets Chg S/O Chg Company Name ($) ($/sh) ($/sh) ($/sh) ($/sh) (%) (%) (x) (x) (x) (%) (%) (%) Current 5Yr Hist. QTD Chg. (x) (%) (%) (x) (%) (bps) Taubman Centers TCO (0.00) 3.02 (0.03) -4% 10% 21.2x 19.3x 15.4x +27% +17% +10% +1.2 SD +0.2 SD 7.8x 42% 70% 2.4x 6% -17 Simon Property SPG (0.06) 11% 5% 16.9x 16.2x 14.0x +1% +6% -5% -1.1 SD -0.3 SD 5.9x 37% 20% 2.9x 5% -2 Macerich Company MAC (0.10) 3.11 (0.03) 6% 10% 18.5x 16.4x 13.1x +11% -6% +17% +0.5 SD -0.3 SD 7.5x 46% 37% 2.1x 5% +17 General Growth GGP % 5% 16.5x 15.7x 10.0x -2% -6% +4% NA NA 10.6x 57% 54% 1.7x 1% -8 Glimcher Realty GRT % 15% 14.2x 12.3x 7.7x -15% -46% +31% +1.3 SD -0.2 SD 10.8x 72% 54% 1.5x 4% -25 CBL & Associates CBL (0.02) 1.95 (0.07) -5% -2% 8.1x 8.9x 7.4x -51% -48% -4% +0.3 SD +0.0 SD 8.3x 64% 51% 2.2x 12% +41 Penn REIT PEI % 4% 9.6x 9.3x -43% NA NA NA 10.5x 70% 55% 1.6x 10% +3 Regional Malls 19% 5% 16.7x 15.8x 12.6x -5% -12% +6% +0.6 SD +0.3 SD 7.4x 44% 35% 2.5x 4% -1 Federal Realty FRT (0.04) 3% 3% 20.8x 20.2x 19.4x +28% +34% -6% -1.0 SD +0.6 SD 4.9x 28% 12% 3.5x 7% -23 Tanger Factory Outl. SKT % 7% 18.9x 17.6x 15.4x +17% +8% +9% +0.1 SD +0.1 SD 4.2x 25% 0% 3.8x 5% +90 Acadia Realty Trust AKR % 4% 19.6x 18.8x 17.7x +21% +22% -2% +0.3 SD +1.4 SD 2.7x 19% 48% 2.7x 8% +3 American Assets AAT NM 14% 18.6x 16.3x NA +15% NA NA NA NA 7.2x 38% 47% 2.1x 3% +9 Weingarten Realty WRI % 14% 14.8x 13.0x 11.7x -9% -21% +12% +1.0 SD -0.1 SD 7.1x 47% 19% 2.0x 9% +17 Equity One EQY % 2% 11.7x 16.0x 15.6x -28% +9% -36% -0.6 SD +0.1 SD 6.6x 38% 19% 2.3x 5% -28 Retail Opportunity ROIC % 100% NM NM NA NA NA NA NA NA 0.7x 5% 9% 6.1x 5% +30 Inland Retail IRC % 6% 11.1x 10.4x 10.4x -32% -29% -3% -1.3 SD -0.9 SD 9.0x 58% 31% 2.1x 3% +8 Kimco Realty KIM (0.01) 6% 4% 14.7x 14.2x 13.8x -9% -7% -3% -0.1 SD -0.2 SD 7.6x 48% 9% 2.3x 5% -13 Regency Centers REG (0.01) % 7% 17.9x 16.4x 15.3x +10% +5% +5% +0.6 SD -0.3 SD 6.4x 38% 9% 1.9x 7% -32 Saul Centers BFS % 11% 16.0x 14.5x -1% NA NA NA 6.5x 41% 55% 1.9x 1% -5 Developers Dvsfd DDR (0.02) 0.99 (0.01) -9% 4% 14.0x 13.5x 10.6x -13% -31% +18% +0.7 SD -0.1 SD 9.8x 57% 20% 1.9x 5% +3 Kite Realty Group KRG % 10% 11.4x 10.4x 10.6x -29% -30% +0% -0.3 SD -0.5 SD 10.3x 62% 40% 1.9x 3% +6 Cedar Shopping Ctrs CDR NM 2% 12.4x 12.1x -23% NA NA NA 11.1x 81% 48% 1.4x 3% +23 Ramco-Gershenson RPT % 6% 13.1x 12.4x 9.4x -19% -38% +19% +1.1 SD +0.1 SD 8.6x 51% 43% 1.8x 8% -0 Excel Trust EXL NM 18% 13.1x 11.0x -19% NA NA NA 6.6x 47% 35% 1.9x 5% +12 Shopping Centers 7% 7% 16.2x 15.4x 13.9x -8% -2% -4% -0.7 SD -0.5 SD 6.7x 41% 17% 2.5x 6% -3 Boston Prop. BXP % 9% 22.3x 20.5x 18.6x +32% +24% +8% +0.5 SD -0.2 SD 7.6x 38% 20% 2.6x 8% -33 SL Green Realty SLG % -6% 17.6x 18.6x 15.7x +4% -1% +6% +0.7 SD +0.1 SD 11.1x 54% 28% 2.9x 7% -63 Douglas Emmett DEI % -4% 14.7x 15.4x -13% NA NA NA 10.9x 56% 51% 3.3x 10% -72 Brookfield Prop. BPO % 6% 17.2x 16.3x 12.6x +2% -18% +20% +1.7 SD +0.2 SD 10.7x 55% 34% NA 1% -29 Alexandria RE ARE % 7% 17.1x 16.0x +1% +1% +0% -0.4 SD -0.7 SD 8.3x 42% 12% 3.6x 2% -61 Vornado Realty VNO % 3% 14.9x 16.7x 15.5x -12% +4% -16% -0.7 SD +0.4 SD 8.0x 46% 37% 3.9x 3% +14 Corp Office Props OFC % 79% 24.3x 13.6x 15.9x +44% +9% +34% -0.3 SD +0.5 SD 9.7x 52% 39% 2.2x 5% -69 Kilroy Realty KRC (0.05) 8% 5% 17.2x 16.1x 16.1x +2% +5% -4% -1.0 SD -0.7 SD 6.6x 42% 13% 2.2x 8% -6 BioMed Realty Trust BMR % 9% 16.4x 14.8x 12.7x -3% -15% +13% +0.7 SD -0.4 SD 6.5x 40% 15% 2.5x 8% +45 Piedmont Office PDM (0.03) 1.38 (0.11) -9% -7% 13.6x 14.7x -19% NA NA NA 5.0x 31% 25% 5.0x 4% +8 Highwoods HIW (0.00) % 4% 13.6x 13.0x 13.0x -20% -10% -10% -0.8 SD -0.6 SD 6.1x 40% 20% 2.8x 10% -28 Brandywine Rlty. BDN % 2% 8.8x 8.7x 8.5x -48% -45% -2% -0.1 SD -0.5 SD 8.4x 59% 13% 2.3x 4% +21 Mack-Cali Realty CLI % 1% 12.0x 11.8x 11.1x -29% -25% -5% -0.6 SD -0.8 SD 4.9x 36% 13% 3.1x 3% +40 Govt Props GOV (0.05) 1.95 (0.08) 6% 2% 13.2x 12.9x -22% NA NA NA 2.2x 15% 4% 8.4x 3% +11 Cousins Properties CUZ % 21% 19.9x 16.4x +18% +30% -13% -1.3 SD -0.6 SD 10.6x 48% 25% 1.9x 4% +30 Hudson Pacific HPP (0.05) 1.18 (0.13) 59% 21% 14.7x 13.0x -13% NA NA NA 7.8x 49% 35% NA 3% -20 Parkway Props PKY % 25% 8.5x 6.8x -50% NA NA NA 6.6x 65% 41% 1.8x 8% +14 CommonWealth CWH % 1% 7.1x 7.1x 7.2x -58% -52% -5% -1.6 SD -1.2 SD 7.7x 64% 5% 2.0x 2% +25 Maguire Props MPG NM -47% NM NM NA NA NA NA 23.8x 100% 105% 0.8x 9% +9 Office 0% 6% 16.9x 16.4x 12.6x -4% -0% +0% +0.1 SD -0.6 SD 8.2x 45% 27% 3.2x 5% -16 Terreno Realty TRNO NM 200% NM NM NA NA NA NA NA NA NA NA 9% 0.1x 3% +7 EastGroup Prop EGP % 6% 14.9x 14.1x 13.9x -27% -3% -24% -1.5 SD +0.5 SD 6.6x 39% 38% 3.1x 5% +6 ProLogis Trust PLD % 13% 23.8x 21.1x 14.7x +17% -3% +20% +0.6 SD +0.5 SD 40.0x 52% 11% 2.3x 2% -254 DCT Industrial DCT % 8% NM NM NA NA NA NA 7.8x 46% 12% 2.4x 7% +36 First Industrial FR NM -1% 13.4x 13.5x -35% NA NA NA 10.0x 67% 14% 1.3x 6% -67 STAG Industrial STIR NM 4% NM NM NA NA NA NA NA NA NA NA NA NA 0% Industrial 8% 13% 20.4x 18.2x 12.7x +16% -1% +21% +1.8 SD +2.3 SD 33.7x 52% 13% 2.3x 3% -200 Mission West Prop. MSW % 0% 15.3x 15.3x 16.2x +5% +25% -20% -0.6 SD +0.3 SD 4.7x 34% 29% 3.6x 3% +18 Digital Realty Trust DLR % 10% 15.9x 14.4x 15.9x +9% +22% -13% -1.5 SD +0.1 SD 5.3x 34% 18% 3.5x 18% -75 Washington REIT WRE % 3% 16.2x 15.7x 14.6x +12% +12% -0% +0.4 SD -0.0 SD 7.1x 40% 14% 2.7x 5% +18 Dupont Fabros Tech. DFT % 22% 16.0x 13.1x +10% NA NA NA 4.8x 30% 6% 3.5x 22% +13 PS Business Parks PSB % -1% 12.3x 12.4x 13.1x -15% -0% -15% -1.6 SD -0.4 SD 4.0x 30% 2% 4.0x 3% -26 Liberty Property LRY % 4% 12.9x 12.4x 11.7x -11% -11% +0% +1.3 SD +0.3 SD 6.6x 42% 5% 3.1x 3% +7 Duke Realty DRE % 4% 12.2x 11.8x 10.5x -16% -22% +6% +0.8 SD -0.3 SD 9.0x 59% 13% 1.8x 5% -40 First Potomac FPO (0.13) 1.08 (0.07) -14% 5% 16.6x 14.2x 11.4x +14% -23% +37% -0.5 SD +0.6 SD 8.9x 49% 30% 1.9x 4% +46 Coresite COR % 16% 15.6x 13.4x NA +7% NA NA NA NA NA NA 16% 6.1x 3% -20 Mixed Office/Industrial 9% 7% 14.6x 13.5x 12.3x -18% -11% -7% -1.4 SD -1.6 SD 6.3x 40% 13% 3.1x 10% -27 Sector Total/Weighted Avg. 12% 10% 17.6x 16.3x 13.6x 8.0x 41% 22% 2.9x 5% -16 Straight Average 12% 15% 15.9x 14.6x 13.6x 7.4x 44% 26% 3.0x 5% -3 S&P 500 INDEX SPX Source: FactSet (including consensus FFO and EBITDA estimates), SNL (including consensus NAV estimates), Morgan Stanley Research. 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