Comprehensive Real Estate Counseling and Valuation Services

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2 Comprehensive Real Estate Counseling and Valuation Services Integra Realty Resources, Inc. specializes in commercial real estate consulting and valuation assignments. IRR s valuers and counselors are among the most outstanding experts in their local markets and are located in more than 5 offices throughout the United States. IRR benefits from more than 8 professionals who hold the Appraisal Institute s MAI designation. These specialists provide the following services across the world, across the country, or across town: Appraisals Consulting Portfolio Valuation Review Appraisal Tax Abatement Court Testimony Litigation Support Market Studies Feasibility Analysis Investment Analysis Lease Negotiations Sales Negotiations Loan Portfolio Valuation Advisory Services Due Diligence Analysis Public Finance Consulting Seattle Portland Minneapolis Boston Providence Hartford Milwaukee New York City Detroit Philadelphia Northern New Jersey Chicago Pittsburgh Coastal New Jersey Dayton Columbus Baltimore Indianapolis Washington D.C. Cincinnati Kansas City Richmond Louisville Morgantown Sacramento San Francisco Denver Las Vegas Los Angeles IRR de México Phoenix San Diego Nashville Tulsa Memphis Atlanta Fort Worth Dallas Austin San Antonio Charlotte Columbia Greenville Savannah Orlando Houston Tampa Sarasota Miami Naples

3 CHAIRMAN S LETTER Dear Colleagues and Friends, I am pleased to publish Viewpoint 005, which is in its 5th consecutive year of print. Again this year we focus on the four food groups: office, retail, multifamily and industrial. Additional special reports were prepared by Shelli Lowe and Anthony S. Graziano on gaming and Joe Pasquarella on lodging. This year we present our real estate trends forecast in a similar format reflecting our views on the national real estate market and identifying where each major metropolitan area currently is in the cycle. We are pleased to announce that Jeffrey Rogers has been promoted from Chief Operating Officer to President of Integra Realty Resources. Jeffrey is responsible for the leadership of our 5 U.S. offices and two in Mexico. We are proud of the fact that we continue our mantra local expertise nationally providing services to financial institutions, corporations and the legal profession. Integra continues to focus on quality control. In 005 we will be launching integrated new software throughout Integra that will allow the exchange of income and expense data as well as lease and comparable sale information throughout our entire company. Integra Realty Resources was further honored by the fact that I was invited to present to the Federal Reserve Board of Governors, including Alan Greenspan, Integra s views on the residential real estate market for 005. The presentation included forecasting potential bubble markets and the impact of those markets on the residential real estate industry. TABLE OF CONTENTS National Real Estate Market... Property Sector Cycles New Investment Criteria..5 Property Sector Cycles Office, CBD & Suburban...9 Gaming...4 Lodging...5 Retail...8 Apartment... Industrial...4 Demographic and Economic Trends...7 Appendix... Local IRR Offices..back cover Finally, on behalf of Integra, I would like to wish each of you a healthy and prosperous 005. Very truly yours; Kevin K. Nunnink, MAI Editor-in-Chief Chairman of the Board Integra Realty Resources, Inc. VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

4 Mar-90 Mar-9 Mar-9 Mar-9 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-0 Mar-0 Mar-0 Mar-04 Mar-05 Mar-06 NATIONAL REAL ESTATE MARKET the equilibrium for the Federal Funds rate is approximately 4%. In the early 990 s the delta between these two indices approximated 50 basis points. In the middle to late 990 s this spread narrowed to 50 to 00 basis points. In the first portion of the st Century, the spread again widened to 50 to 00 basis points. Thus, Integra has forecasted that if the Federal Funds rate returns to 4%, the 0-year treasury will range from 4.75% to 5.5%, similar to the spreads observed during the mid to late 990 s. The economic recovery is in full swing, but what it means for the real estate sector is the question. Last year IRR forecasted a Yellow Flag Recovery. IRR believes the economy is now hitting on all cylinders and IRR believes the GDP growth rate will range from.5% 4% in 005. Reflecting on the last three months, approximately 00,000 jobs per month have been created in the U.S. decreasing the unemployment rate to 5.4%. TABLE INTEREST RATE % Historical Projected % TABLE NEW JOBS CREATED BY THE ECONOMY Rate 6.5 Thousands of jobs Unemployment Rate Nonfarm payroll employment When the economy is experiencing a rising tide, normally one would expect the real estate sector to rise with all other boats. However, when dissecting the capital markets IRR cautions both investors and lenders of the historical relationship of the 0-year treasury and the Federal Funds rate. Reflecting on the recent Federal Reserve actions, it is worthwhile to note the Fed reduced the Federal Funds rate consecutive times from 6.5% in May of 000 to % in June of 00. Considering inflation, this accommodative fiscal policy created at times a zero cost of funds to borrowers during that period. Since June 004, the Federal Reserve has increased rates from % to.5%. Presumably, these increases are in part to keep inflation in check as the recovery heats up. While there are numerous externalities affecting the 0-year treasury, a comparison of the direct relationship would suggest that the 0-year treasury will likely rise commensurate with the Federal Funds rate. Furthermore, it is widely speculated that SOURCE: Federal Reserve Bank 0 Effective Federal Funds Rate 0 Year Treasury Yield HISTORICAL SOURCE: Federal Reserve Bank PROJECTED SOURCE: Integra Realty Resources, Inc. With most borrowing being pegged off the 0-year treasury and a median loan to value ratio of 75%, the impact of the interest rates trends could be considerable. Thus, Integra cautions investors and lenders to chart their debt course accordingly; either by hedging their position or by locking in on a fixed rate mortgage. IRR counsels those investors that have ridden the adjustable rate tide, now is the time to lock your rate or pay the price in the years to come. Other risks to consider when examining today s economy include: Energy: The U.S, which is an approximate $.8 Trillion dollar economy, imports approximately 4.5 billion barrels of oil per year, thus every $0 per barrel (i.e. aggregate cost of $45 billion) increase in oil would suggest a drop in the annual GDP growth rate of.4%. Threats of terrorism in the Middle East expose the U.S. economy to this risk. Deficit: The current U.S. deficit is projected to be $4 billion in 004, up from $75 billion in 00. Financing the war in Iraq in the future will likely cause 0 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

5 NATIONAL REAL ESTATE MARKET the deficit to increase in the short term which could begin to substantially affect the price of debt instruments. TABLE CURRENT ACCOUNT DEFICIT Percent Billions of $ J.P. Morgan Chase for first place in the league tables. J.P. Morgan lost first place by a meager $550 million. Morgan Stanley and Credit Suisse First Boston are virtually in a dead heat for third and fourth place, both originating approximately $0.5 billion. TABLE 5 CMBS ISSUANCE ($ in Billions) Current Account CA/GDP SOURCE: Federal Reserve Bank Medical costs and funding retirement: Rising medical costs and the current underfunding of Social Security are concerns and need to be dealt with before these issues affect the economy on a go forward basis Terrorism: Another catastrophic event in the U.S. could again cause another economic flu that is not predictable in depth or impact. ALTERNATIVE INVESTMENTS TABLE 4 INVESTMENT ALTERNATIVES YEAR S&P 500 BONDS* NCREIF** NAREIT 994.%.5% 6.4% 0.8% % 9.4% 7.7% 8.% 996.0%.90% 0.% 5.8% 997.% 9.76% 0.9% 8.9% % 9.46% 6.4% -8.8% % -.5%.% -6.48% %.84%.66% 7.74% % 8.5% 0.0%.8% % 9.5% 5.5%.6% % 4.67% 7.84% 5.4% % 4.%.4% 9.88% CMBS MARKET SOURCE: *Lehman s Government/Corporate Bond Index **NCREIF: Twelve-month return based on rd quarter 004 reporting. U.S. volume was up 9.7% closing at $9. billion. Last year s volume of $77.8 billion was also a record. Bank of America originated $.6 billion and dethroned REITS SOURCE: CMSA & MBAA Real Estate Investment Trusts continue to dominate the investing sectors. The ALL REIT index returned 8.67% with the EQUITY REITS returning 9.88%. MORTGAGE REITs returned a respectable 6.0% while dealing with the interest rate swing in 004. IRR believes this REIT sector will have difficulty continuing its recent returns and investors should cautiously trade mortgage REIT stocks. Furthermore, IRR believes it will be difficult for the Equity REITs to continue the returns they have harvested in the past five years; three-year average of.%, five-year.55%. IRR suggests the upside will be selecting individual REIT stocks rather than the indexes. Attributes to look for in your favorite REIT stock should be low debt levels, diversification of geographic ownership that will insulate the REIT from catastrophic events (hurricanes, terrorism, etc). IRR likes the lodging and apartment sectors. The lodging sector should continue to benefit from the rebounding economy and many of its gains are merely recovery from the post-september th hangover. On the other hand, the apartment sector will benefit from the rebounding economy as well as the swing upward in interest rates. IRR believes the most challenged REIT sectors will be Manufactured Homes, Health Care and Mortgage Financing. VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

6 NATIONAL REAL ESTATE MARKET EXPECTATIONS FOR 005 Integra expects the office, industrial and apartment sectors to continue their rebounding parallel with the recovery of the economy. Thus, expectations of significant gross revenue increases are expected. However, net yield to the investor will be a function of the amount of leverage in the transaction or pool of transactions. Gains in the top line revenue may be lost to the bottom line for properties with lots of leverage. Owners of apartments seem to feel the worst is over. Generally, concessions are disappearing and increasing interest rates in the single-family residential sector are creating additional demand for rental units. Apartment conversions to condos have also contributed to less supply. IRR acknowledges the office market is still soft but 005 should provide the turning point for the recovery with corporations first absorbing underutilized space followed by expansion in late 005 and 006. However, due to the number of new buildings under construction in the major metropolitan areas IRR expects a continued hangover for owners attempting to re-lease space that has been vacated. Tenants will still perceive it as a tenant s market and landlords will have difficulty in pushing rents until late 005 or early 006. This paradigm coupled with interest rate hikes will be challenging in the office and industrial sectors. In conclusion, IRR believes acceptable risk adjusted returns will be commanded by the four main food groups in the real estate sector. However, apartments and retail will lead the recovery followed by industrial and then office. Those owners that are highly leveraged will face some challenges of maintaining their bottom line, but generally the demand components will increase as the economy gains momentum. IRR believes the cities with a 4-hour culture will continue to thrive as the empty nesters continue to leave the burbs for the vibrancy of the City. The hospitality and gaming sectors are both in for a banner 005; however, the hospitality sector will primarily just recover some of the ground that it has lost during the past few years. The gaming sector on the other hand continues to cater to the boomers and the high risk adjusted returns continue to attract capital. All in all the real estate boat should rise with the rising tide of the economy, but Integra does not expect a good times roll mentality. 4 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

7 PROPERTY SECTOR CYCLES New Investment Criteria Integra Realty Resources (IRR) takes a three-channel approach in providing investors with appropriate information to make investment decisions. Our triad of services the Viewpoint publication, our website at and market insights from our local IRR representatives help investors interpret the real estate environment, both nationally and locally. Viewpoint provides a broad introduction to the current national real estate environment while selectively directing a spotlight at several hot spots on the horizon. Investors drill down more at where they can access a collection of comprehensive, more detailed and regularly updated data. In addition, updates for property type and submarket are available at Investors dig even deeper when they turn to local IRR representatives for help in defining local and submarket risks and opportunities in all MSA s. Examples of specialized information available from our representatives for some MSA s and their submarkets are presented in Quick Market Glance in the individual property sector segments in this section of Viewpoint. Our broad look focuses on promising MSA s that are in expansion phases. However, even in those top markets, an isolated submarket could be in a recessionary phase. We think this is important so we ll say it again. To get more targeted information about specific submarkets, consult a local IRR representative. To make the most informed real estate investment decision, investors ideally would use all resources made available by IRR. In the following pages, we discuss these designated property sectors: CBD and suburban office, gaming, lodging, retail, apartment and industrial. We feature market cycle and cap rate trends charts in only four of those property sectors: office, retail, apartment and industrial. MARKET CYCLE PHASES The four market cycle phases include: Recovery: decreasing vacancy rates; low new construction; moderate absorption; and low to moderate employment growth Expansion: decreasing vacancy rates; moderate to high new construction; high absorption; and moderate to high employment growth Hypersupply: increasing vacancy rates; moderate to high new construction; low to negative absorption; and moderate to low employment growth Recession: increasing vacancy rates; moderate to low new construction; low absorption; and low to negative employment growth We determine the position of each market by analyzing vacancy rate trends, new construction starts, fore- TABLE CAP RATE RANKS Low 004 High 004 Avg. Rank Property Type (%) (%) (%) Suburban Multi Family Urban Multi Family Regional Mall Community Mall Neighborhood Strip CBD Office Office/Warehouse Suburban Office Bulk R&D Manufacturing CBD Lodging Airport Lodging Suburban Lodging TABLE 7 PROJECTED CAP RATE CHANGE Property Type Decline (%) Increase (%) Stable (%) CBD Office Suburban Office Regional Mall Community Mall Neighborhood Strip Manufacturing Bulk Office/Warehouse R&D Urban Multi Family Suburban Multi Family CBD Lodging Suburban Lodging Airport Lodging AVERAGE VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 5

8 INVESTMENT CRITERIA TABLE 8 CAPITALIZATION RATES, DISCOUNT RATES, REVERSION RATES, MARKET RENT CHANGE RATES, EXPENSE GROWTH RATES AND TENANT FINISH ALLOWANCES Property Types Atlanta, GA Austin, TX Baltimore, MD Boston, MA Charlotte, NC Chicago, IL Cincinnati, OH Columbia, SC Columbus, OH Dallas, TX Dayton, OH Denver, CO Detroit, MI Fort Worth, TX Hartford, CT Houston, TX Indianapolis, IN Kansas City, KS/MO Las Vegas, NV Long Island, NY Los Angeles, CA Louisville, KY Memphis, TN GOING-IN CAPE RATE (%) GOING-IN DISCOUNT RATE (%) REVERSION CAP RATE (%) CBD Office 9.00% 9.00% 8.50% 8.00% 8.75% 7.50% 9.5% 9.00% 9.50% 9.00% 0.50% 8.00% 0.00% 9.00% 9.50% 9.5% 9.00% 0.00% 8.50% 8.50% 8.50% 9.00% 0.00% Suburban Office 8.50% 9.50% 8.50% 9.00% 9.00% 9.50% 9.50% 9.50% 9.50% 9.5% 9.50% 8.50% 9.00% 9.5% 9.80% 9.5% 8.50% 9.00% 8.00% 8.5% 8.00% 9.00% 9.00% Regional Mall 8.00% 8.00% 8.00% 8.00% 7.50% 7.50% 8.00% 8.50% 8.50% 7.75% 0.00% 7.50% 8.75% 8.00% 8.50% 8.00% 8.00% 9.00% 9.00% 7.75% 8.00% 8.00% - Community Mall 8.50% 8.50% 8.50% 8.50% 8.00% 8.00% 7.75% 8.75% 8.75% 8.75% 9.50% 8.00% 9.00% 8.75% 8.75% 9.00% 8.50% 9.50% 8.50% 8.00% 8.00% 9.00% 8.50% Neighborhood Strip 8.75% 9.50% 8.00% 8.50% 8.50% 8.50% 8.5% 8.5% 8.75% 9.00% 9.50% 8.50% 9.00% 9.00% 8.80% 9.5% 8.50% 9.50% 8.50% 8.00% 8.00% 8.00% 9.50% Manufacturing 9.50% 0.00% 9.00% 9.00% 9.5% 9.00% 9.00% 0.5%.00% 9.00%.00% 9.00% 9.75% 9.00% 0.50%.00% 0.00% 0.50% 8.50% 9.5% 9.00% 9.80% 9.00% Bulk 9.00% 0.50% 8.00% 9.00% 9.00% 8.00% 8.75% 9.75% 9.50% 8.50% 0.50% 9.00% 9.75% 8.50% 9.50%.00% 8.00% 9.00% 8.50% 8.5% 8.00% 9.50% 8.50% Office/Warehouse 9.00% 0.50% 8.00% 9.00% 9.00% 8.00% 8.50% 9.50% 9.50% 8.50% 0.50% 8.80% 9.5% 8.50% 9.00% 0.50% 9.00% 9.50% 8.50% 8.50% 8.50% 9.00% 8.50% R&D 9.00% 0.00% 8.50% 9.00% % 9.00% 0.5%0.00% 9.00% 0.50% 9.00% 8.75% 9.00% 9.50% 0.00% 9.00% 9.50% 8.50% 8.75% 8.50% 9.80% 9.00% Urban Multi Family 8.50% 8.50% 7.00% 8.00% 6.50% 7.00% 8.50% 8.50% 8.50% 7.00% 0.50% 6.00% 9.00% 7.5% 8.5% 8.50% 8.00% 9.50% 8.00% 8.5% 7.00% 8.50% 6.75% Suburban Multi Family 8.50% 8.50% 7.00% 7.00% 6.50% 7.00% 8.00% 8.00% 8.00% 7.5% 9.50% 6.50% 8.5% 7.50% 8.0% 9.5% 7.50% 8.50% 7.50% 6.75% 6.50% 8.00% 6.75% CBD Lodging 0.50%.00% 0.00% 0.00% 9.50% 0.50%.50% 0.50% 9.50% 0.00%.00% 9.50%.50% 0.00%.00% 9.50% 0.50%.00% 9.00% 9.5%0.00% 0.00% - Suburban Lodging 0.50%.00% 0.50% 0.00% 9.50%.50%.00% 0.50%0.50% 0.00%.50% 0.00%.50% 0.00%.00%.00%.00%.00% 9.00% 9.00%0.00%.00% - Airport Lodging.00%.00% 0.50% 0.00% 9.50% 0.50%.00% 0.50%0.50% 0.50%.00% 0.00% 0.50% 0.50% 0.50%.00% 0.75%.00% 9.00% 9.00%.00% 0.00% - CBD Office.00%.00% 0.50% 0.50%0.5% 0.00%.5%.5%0.50% 0.75%.50% 0.00% 0.50% 0.75%.00% 0.75% 0.50% 0.50%.00% 9.50%0.50% 0.50%.00% Suburban Office 0.50%.00% 0.50%.00%0.50%.00%.50%.00%0.50% 0.75%.50% 0.50% 0.5% 0.75%.00% 0.75% 0.00% 0.50%.00% 9.5%0.00% 0.50% 0.00% Regional Mall 9.00% 0.00% 0.00% 0.00% 9.00% 0.00% 0.00% 0.75% 9.00% 0.5%.00% 9.50% 0.50% 0.5% 0.00% 9.50% 9.50% 0.00%.00% 8.75%0.00% 0.00% - Community Mall 9.50%.00% 0.50% 0.00% 9.50% 0.50% 9.75%.00%0.00% 0.5%.50% 0.00% 0.50% 0.5% 0.50% 0.50% 9.50% 0.50%.00% 9.00%0.00% 9.80% 0.00% Neighborhood Strip 9.75%.00% 0.00% 0.00%0.00% 0.50% 0.5% 0.50%0.00% 0.50%.00% 0.5% 0.50% 0.50%.00% 0.75% 0.00%.50%.00% 9.00%0.00% 0.50%.00% Manufacturing 0.50%.50%.00% 0.50%0.75%.00%.00%.50%.50%.00%.00%.00%.50%.00% 4.00%.50%.00%.50%.00% 0.00%.00% 0.0%.00% Bulk 0.00%.50% 0.00% 0.50%0.50%.00% 0.75% 0.50%.00% 0.5%.50% 0.50%.00% 0.50%.00%.00% 9.50%.00%.00% 9.00%0.00% 0.80% 0.50% Office/Warehouse 0.00%.00% 0.00% 0.50%0.50%.00% 0.50% 0.50%.00% 0.5%.50% 0.00%.00% 0.50%.00%.00% 0.50%.00%.00% 9.5%0.50% 0.50% 0.50% R&D 0.00%.00% 0.50% 0.50% -.00%.00%.50%.00%.00%.50% 0.50% 0.50%.00%.00%.50% 0.50%.50%.00% 9.50%0.50% 0.80%.00% Urban Multi Family 0.00% 0.00% 9.00% 0.00% 8.50% 9.00% 0.50% 0.50%0.00% 9.5%.50% 9.50% 9.50% 9.50% 0.50% 9.50% 9.50% 0.00%.00% 9.5% 9.50% 9.50% 0.00% Suburban Multi Family 0.00% 0.00% 9.00% 0.00% 8.50% 9.00% 0.00% 0.50%0.00% 9.50%.50% 9.50% 9.5% 9.75% 0.00% 0.75% 9.00% 9.00%.00% 9.00% 9.00% 8.80% 0.00% CBD Lodging.00%.00%.00%.50%.75%.00%.50%.5%.00%.00% 4.00%.75%.50%.00% 4.00%.00%.50%.50%.00% 9.50%.00%.00% - Suburban Lodging.00%.00%.50%.50%.75%.00%.00%.5%.50%.00%.50%.75%.00%.00% 4.00%.00%.50%.50%.00% 9.5%.00%.50% - Airport Lodging.50%.00%.50%.50%.75% 0.50%.00%.5%.50%.00% 4.00%.75%.50%.00%.50%.50%.50%.50%.00% 9.5%.00%.00% - CBD Office 9.50% 9.50% 9.50% 8.50% 9.5% 8.00% 9.50% 9.50%0.00% 9.50%.00% 8.50% 0.5% 9.50% 0.00% 9.75% 9.50% 0.50% 9.00% 9.00% 9.00% 9.50% 0.5% Suburban Office 9.50% 0.00% 9.50% 9.50% 9.50% 0.00% 9.75% 0.00%0.00% 9.75% 0.00% 9.00% 9.50% 9.75% 0.0% 9.75% 9.00% 9.50% 8.50% 8.75% 8.50% 9.50% 9.5% Regional Mall 8.75% 8.50% 9.00% 8.50% 8.00% 7.50% 8.5% 9.00% 9.00% 8.5%.00% 8.00% 9.5% 8.50% 9.00% 8.50% 8.50% 9.50% 9.50% 8.00% 8.50% 8.60% - Community Mall 9.00% 9.50% 9.50% 9.00% 8.50% 8.00% 8.00% 9.5% 9.5% 9.50% 0.00% 8.75% 9.50% 9.50% 9.00% 9.50% 9.00% 0.00% 9.00% 8.50% 8.50% 0.50% 8.75% Neighborhood Strip 9.5% 0.50% 9.00% 9.00% 9.00% 8.50% 8.50% 8.50% 9.5% 9.50% 0.00% 8.75% 9.50% 9.50% 9.0% 9.75% 9.00% 0.00% 9.00% 8.50% 8.50% 9.0% 9.75% Manufacturing 0.00% 0.50% 0.00% 9.50% 9.75% 9.50% 9.5% 0.75%.50% 9.50%.50% 9.50% 0.00% 9.50%.00%.50%.00%.00% 9.00% 0.00% 9.50% 0.00% 9.50% Bulk 9.50%.00% 9.00% 9.50% 9.50% 8.50% 9.00% 0.00%0.00% 9.00%.00% 9.50% 0.00% 9.00% 0.00%.00% 8.50% 9.50% 9.00% 8.75% 8.50% 0.00% 9.00% Office/Warehouse 9.50%.00% 9.00% 9.50% 9.50% 8.50% 8.75% 9.75%0.00% 9.00%.00% 9.5% 9.75% 9.00% 9.50%.00% 9.50% 0.00% 9.00% 8.75% 9.00% 0.00% 9.00% R&D 9.50% 0.50% 9.50% 9.50% % 9.5% 0.75%0.50% 9.50%.00% 9.50% 9.5% 9.50% 0.00%.00% 9.50% 0.00% 9.00% 9.00% 9.00% 0.0% 9.50% Urban Multi Family 9.50% 9.00% 8.00% 8.50% 7.5% 7.50% 8.75% 8.75% 9.00% 7.50%.00% 6.50% 9.5% 7.75% 8.80% 8.50% 8.50% 0.00% 8.50% 8.75% 7.50% 8.70% 7.00% Suburban Multi Family 9.50% 9.00% 8.00% 7.50% 7.5% 7.50% 8.5% 8.5% 9.00% 7.75% 0.00% 7.00% 9.00% 8.00% 8.80% 9.75% 8.00% 9.00% 8.00% 7.75% 7.00% 8.0% 7.00% CBD Lodging.00%.50%.00% 0.50% 9.75% 0.75%.75%.00%0.00%.00%.00% 0.00%.00%.00%.0% 0.00%.00%.50% 9.50% 9.50%0.50%.00% - Suburban Lodging.00%.50%.50% 0.50% 9.75%.75%.5%.00%.00%.00%.50% 0.50%.00%.00%.50%.00%.50%.50% 9.50% 9.5%0.50%.50% - Airport Lodging.00%.50%.50% 0.50% 9.75% 0.75%.5%.00%.00%.50%.00% 0.50%.00%.50%.00%.50%.5%.50% 9.50% 9.5%.50% 0.50% - MARKET RENT INFLATOR (%) EXPENSE GROWTH RATE (%) TENANT FINISH ALLOWANCE ($) CBD Office.00% 0.00%.00% 0.00% 0.00%.50% 0.00% 0.00%.00% 0.00%.00% 0.00% -.00% 0.00% 0.00% 0.00%.00%.00%.00%.75%.00% 0.50%.00% Suburban Office.00% 0.00%.00% 0.00% 0.00% 0.00%.00% 0.00%.00% 0.00%.00% 0.00% 0.00%.00% 0.00% 0.00% 5.00%.00%.00%.75%.00% 0.50%.00% Regional Mall.00% 5.00%.00%.50%.50%.00%.00%.00%.00%.00%.00%.00% 0.00% 0.00%.00%.00%.50%.00%.00%.5%.00%.00% - Community Mall.00% 5.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00% 0.00%.00% 0.00%.00%.50%.00%.00%.5%.50%.00%.00% Neighborhood Strip.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00% 0.00%.00% 0.00%.00%.50%.00%.00%.00%.50%.50%.00% Manufacturing.50% 0.00%.00% 0.00% 0.00%.00%.00% 0.00%.00%.50%.00%.00% -.50%.50% 0.00% 0.00% 0.00% 0.00%.50%.75% 0.00%.00%.50% Bulk.50% 0.00%.00% 0.00% 0.00%.00% 0.00%.00%.00%.00%.00%.00% -.00%.00% 0.00%.00%.50%.00%.50%.00%.00%.00%.50% Office/Warehouse.50% 0.00%.00%.50% 0.00%.00%.00%.00%.00%.00%.00%.00% 0.00%.00%.00%.00%.5%.00%.50%.00%.00%.00%.50% R&D.50% 0.00%.00% 0.00% -.00%.00%.00%.00% 0.00%.00%.00% 0.00% 0.00%.00%.00%.5%.00%.50%.75%.00%.00%.50% Urban Multi Family.00%.00%.50%.50% 0.00%.00%.00%.00%.00% 0.00%.00%.00% 0.00% 0.00%.00%.00% 5.00%.00% 5.00%.75%.00%.50%.00% Suburban Multi Family.00%.00%.50%.50% 0.00%.00%.00%.00%.00% 0.00%.00%.00%.50% 0.00% 4.00%.00% 5.00%.00% 5.00%.00%.00%.00% 0.00% CBD Lodging.50% 0.00%.00%.00% 0.00%.00%.00%.00%.00% 0.00%.00%.00% -.50% 0.00% 5.00%.00%.50% 0.00%.00%.00%.00%.50% - Suburban Lodging.50% 0.00%.00%.00% 0.00%.00%.00%.00%.00% 0.00%.00%.00% 0.00% 0.00% 5.00% 0.00%.50% 0.00%.00%.5%.00%.00% - Airport Lodging.00% 0.00%.00%.00% 0.00%.00%.00%.00%.00% 0.00%.00%.00% 0.00% 0.00% 5.00% 0.00%.50% 0.00%.00%.00%.00%.50% - CBD Office.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.75%.00%.00%.00%.00%.50%.00% Suburban Office.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.75%.00%.00%.75%.00%.00%.00% Regional Mall.50%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00% - Community Mall.50%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00% Neighborhood Strip.50%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00% Manufacturing.50%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.75%.00%.00%.50% Bulk.50%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.50% Office/Warehouse.50%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.50% R&D.50%.00%.00%.00% -.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.50% Urban Multi Family.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.75%.50%.00%.5%.00%.00%.50% Suburban Multi Family.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.50% CBD Lodging.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00% 0.00%.00%.00%.00%.00% - Suburban Lodging.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00% 0.00%.00%.00%.00%.00% - Airport Lodging.50%.00%.00%.00%.75%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00% 0.00%.00%.00%.00%.00% - CBD Office $.00 $0.00 $5.00 $0.00 $5.00 $5.00 $5.00 $0.00 $0.00 $0.00 $5.00 $5.00 $0.00 $0.00 $5.00 $0.00 $0.00 $0.00 $40.00 $5.00 $5.00 $0.00 $5.00 Suburban Office $7.50 $7.00 $0.00 $0.00 $5.00 $5.00 $5.00 $5.00 $0.00 $0.00 $.00 $5.00 $.50 $0.00 $0.00 $5.00 $5.00 $5.00 $40.00 $0.00 $5.00 $5.00 $5.00 Regional Mall - $ $.00 - $0.00 $5.00 $ $5.00 $.00 $.00 $7.00 $5.00 $0.00 $5.00 $ $0.00 $5.00 $5.00 $ Community Mall $0.00 $ $.00 - $0.00 $0.00 $ $5.00 $7.00 $4.00 $5.00 $7.00 $5.00 $.00 $ $0.00 $5.00 $5.00 $0.00 $0.00 Neighborhood Strip $0.00 $ $.00 - $0.00 $5.00 $ $6.00 $5.00 $4.00 $7.00 $6.00 $5.00 $8.00 $ $0.00 $.00 $5.00 $5.00 $0.00 Manufacturing - $ $ $.00 $8.00 $.00 - $ $ $.50 - $.00 Bulk $.00 $.00 $ $ $.00 $8.00 $.00 - $ $ $ $.50 $0.00 $.00 Office/Warehouse $.00 $.00 $ $ $.50 $8.00 $.00 $.00 $.00 - $5.00 $.00 - $ $.50 - $.00 R&D - $5.00 $9.00 $ $ $5.00 $.00 $5.00 $7.00 $ $4.00 $.00 $5.00 $ $.00 $5.00 $.00 6 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

9 INVESTMENT CRITERIA TABLE 8 continued Miami, FL Milwaukee, WI Minneapolis, MN Naples, FL Nashville, TN New Jersey, Coastal New Jersey, Northern New York, NY Oakland, CA Orange County, CA Orlando, FL Philadelphia, PA Phoenix, AZ Pittsburgh, PA Portland, OR Providence, RI Richmond, VA Sacramento, CA San Antonio, TX San Diego, CA San Francisco, CA San Jose, CA Seattle, WA Tampa, FL Tulsa, OK Washington, DC Averages 7.50% 9.00% 8.5% % 0.00% 7.80% 7.00% 8.75% % 8.00% 9.00%0.50% 8.50% 9.90% 9.5% 7.75% 9.00% 7.50% 8.50% 8.50% 7.00% 8.50% % 8.7% 7.50% 9.00% 8.50% 9.00% 8.00%.00% 6.60% 8.00% 8.5% 8.00% 7.75% 8.75% 9.00%.00% 9.5% 0.00% 9.00% 7.75% 8.50% 7.75% 8.50% 8.50% 8.75% 8.75% 9.00% 7.75% 8.79% 6.75% 8.50% 8.50% % 8.75% 8.00% 6.75% 7.00% 6.00% % % 8.00% 9.40% 7.60% 8.5% 9.50% 7.50% 7.00% 7.00% 6.00% 8.50% 0.00% 7.5% 7.98% 7.00% 8.50% 7.50% 7.50% 8.50% 7.50% 8.0% 7.75% 7.5% 7.50% 7.50% 8.00% 8.50% 8.50% 8.5% 0.00% 9.40% 7.75% 9.50% 7.75% 7.5% 7.5% 7.50% 8.50% 9.00% 7.5% 8.9% 7.50% 8.50% 8.00% 7.50% 8.50% 8.00% 9.00% 8.00% 7.50% 8.00% 7.00% 7.50% 8.50% 8.00% 8.5% 0.75% 9.0% 7.00% 9.5% 8.00% 7.50% 7.50% 6.50% 8.75% 9.00% 7.00% 8.7% 8.00% 0.00% 9.00% % 9.50% 7.50% 8.50% 8.50% 8.00% % 9.00% 9.75% 9.50%.00% 0.50% 9.00% 9.75% 8.00% 8.50% 8.50% 8.50% 9.00% 9.50% 9.50% 9.4% 8.00% 9.00% 9.50% % 9.50% 7.70% 8.00% 7.50% 8.00% 8.50% 7.5% 9.00% 9.75% 8.75%.00% 9.50% 7.75% 9.5% 8.00% 7.50% 7.50% 8.50% 9.00% 0.00% 9.00% 8.8% 7.50% 9.00% 9.50% 7.50% 8.00% 8.50% 8.40% 8.5% 8.00% 8.00% 9.00% 8.00% 9.00% 9.5% 8.75% 0.00% 9.50% 7.75% 9.5% 8.00% 8.00% 8.00% 7.50% 7.75% 0.00% 8.50% 8.74% 7.00% 9.00% 9.50% 8.00% 9.00% 0.50% 8.0% 8.75% 9.00% 9.00% 9.00% 9.00% 9.00% 9.5% 0.50% 0.50% 0.00% 8.50% 9.5% 8.5% 9.00% 9.00% 9.50% 9.00% % 9.5% 7.00% 7.50% 7.50% % 8.50% 6.60% 6.5% 6.5% 6.00% % 8.50% 7.50% 6.75% 9.50% 7.50% 6.50% 8.00% 6.50% 6.5% 6.5% 5.90% 8.00% 8.50% 6.50% 7.6% 7.50% 8.00% 7.00% 7.00% 8.50% 8.50% 9.0% 6.50% 6.5% 5.00% 6.75% 7.5% 8.50% 7.75% 7.75% 9.00% 7.50% 6.75% 7.50% 7.00% 6.5% 6.5% 6.80% 7.50% 7.70% 6.75% 7.49% 0.00%.00% 0.00% %.00% 9.00% 9.00%.00% % 9.50% 0.00%0.5% 0.50%.00% 0.00% 9.50% 0.50%.00% 0.50%.00% 9.5% %0.% 0.00%.00%.00%.50% 8.50% 0.50% 9.00% 9.5% 0.50% % 9.00% 9.00%0.50%.00%.50%.50% 0.00%.00%.00% 0.50%.00% 9.50%.00%.00%.00%0.48% 0.00%.00% 0.50% % 0.50% %.00% % 9.50% 0.00%0.50% 0.50% 0.50%.50% 0.00%.00%.00%.00%.50% 9.00%0.50%.00% 0.50%0.48% 9.00%.50% 0.00% %.50% 9.5% 8.50% 0.50% % 9.5%.00%0.50% 0.00%.5%.50% 9.50%.00%.00% 0.00% 0.00% 9.00%0.00% %0.45% 9.00%.50% 0.00%.00% 9.00%.00% 9.00% 9.00% 9.50% 9.00% 9.50% 9.50%.00%.00%.00%.5%.00% 9.50% 0.50%.5% 0.00% 0.00% 0.00%0.50%.00% 0.5%0.5% 8.00%.00% 0.00% %.50% 9.5% 8.75% 8.50% 0.00% % -0.00% 0.00%.70% 0.00% 0.00%.00%.00% 8.50% 8.50% 9.00% -.00% 0.50% 9.89% 8.50%.00% 0.00%.00% 9.50% 9.75% 9.50% 9.00% 8.50% 0.50% 9.50% 9.00% 0.00% 9.50% 0.50%.50%.0% 0.00% 0.50%.5% 8.50% 8.50% 0.50%0.00%.00% 9.5%0.08% 8.50%.00% 0.5%.5% 9.50% 0.00% 0.50% 9.00% 9.00% 0.50% 9.00% 9.00%.00% 9.00% 0.50%.50%.0% 9.00% 0.50%.50% 9.00% 9.00% 0.00%0.50%.50% 9.00%0.% 9.50%.50% 0.50% -.00%.00% 8.75% 9.50% 0.50% 0.00% %.00%0.75%.00%.50%.50% 0.50% 0.50%.50% 0.50% 0.50% 0.00%0.75%.00%.5%.05% 9.00%.50% 0.00% %.5% 9.00% 9.00% 9.00% 0.00% 9.50% 8.50%.00%0.75% 0.50% 4.00%.50% 0.00% 0.50%.50% 9.00% 9.00% 0.00%.00%.50% 0.50%0.50% 8.50%.50% 0.00%.00% 9.00% 0.50% 9.50% 9.5% 9.00% 0.00% 9.50% 9.50%.00%0.5% 0.50%.50%.50% 0.00% 0.50%.50% 9.00% 9.00% 0.00% 9.50%.50% 0.75%0.4% 9.00%.50% 0.00%.75% 0.00%.50% 9.5% 9.50%.00% 0.00% 9.50% 0.00%.00%0.5%.50%.00%.00% 0.50% 0.50%.75%.00%.00% 0.50%.00% %0.85% 8.50% 0.00% 0.00% -.00%.00% 9.00% 8.75% 8.50% 8.5% % 0.00% 9.50% 0.00%.75% 9.50% 8.50% 0.00% 0.00% 8.50% 8.50% 9.00%0.00% 0.00% 9.00% 9.68% 8.50% 0.00% 0.00%.00% 0.00% 0.50% 9.75% 8.50% 8.50% 8.5% 9.00% 9.00% 0.00% 9.75%.00%.00% 9.50% 8.75% 0.00% 0.50% 8.50% 8.50% 0.00% 9.50% 0.00% 9.00% 9.65%.00%.50%.00% %.00% 9.75% 9.75%.00% -.00% 0.50%.00%.5%.00%.50%.50%.50%.00%.00%.50%.50%.00% %.0%.00%.50%.50%.00% 9.50%.00% 9.75% 9.75%.50%.00%.00%.00%.00%.50%.50%.50% 4.00%.00%.50%.00%.50%.50%.00%.00%.50%.00%.6%.00%.50%.50% -.00%.00% %.00%.00%.00%.5%.00%.50%.00%.5% 4.00%.00%.50%.00%.50%.50%.00%.50%.50%.00%.% 8.00% 9.50% 8.75% % 0.50% 8.00% 7.50% 9.00% - 8.5% 8.75% 9.50%0.50% 8.75% 0.50% 9.75% 8.50% 0.00% 7.75% 8.50% 8.50% 6.60% 9.00% % 9.7% 8.00% 9.50% 9.00% 9.50% 9.00% 0.00% 7.50% 8.50% 8.50% 8.50% 8.5% 8.75% 9.50%0.50% 0.00%.5% 9.50% 8.5% 9.50% 8.00% 8.50% 8.50% 8.0% 9.5% 9.50% 8.75% 9.4% 7.00% 9.00% 9.00% % 9.50% 8.50% 7.75% 7.50% 6.50% % % 8.50% 0.50% 8.0% 8.75% 0.50% 7.75% 7.50% 7.50% 6.80% 9.00% 0.50% 8.5% 8.59% 7.50% 9.00% 8.00% 8.00% 9.50% 8.50% 8.75% 8.50% 7.75% 8.00% 8.00% 8.75% 9.00% 9.00% 8.75% 0.65% 0.00% 8.5% 0.00% 8.5% 7.75% 7.5% 8.50% 9.00% 9.50% 7.75% 8.86% 8.00% 9.00% 8.50% 8.00% 9.50% 9.5% 0.00% 8.50% 8.00% 8.50% 7.50% 8.75% 9.00% 8.50% 8.75%.5% 9.75% 7.75% 0.00% 8.5% 8.00% 8.00% 8.00% 9.5% 9.50% 7.50% 8.95% 9.00% 0.50% 9.50% % 9.75% 8.5% 9.50% 9.00% 8.5% - 9.5% 9.50%0.00% 0.00% 0.60%.00% 9.75% 0.00% 8.5% 9.00% 9.00% 8.80% 9.50% 0.00% 0.5% 9.84% 9.00% 9.50% 0.00% % 0.00% 8.5% 8.50% 8.00% 8.5% 9.00% 8.50% 9.50%0.00% 9.5% 0.75% 0.50% 8.50% 0.00% 8.5% 8.00% 8.00% 8.80% 9.50% 0.50% 0.00% 9.4% 8.50% 9.50% 0.00% 8.00% 8.50% 9.50% 9.00% 8.75% 8.50% 8.5% 9.50% 9.00% 9.50% 9.75% 9.5% 0.50% 0.50% 8.50% 0.00% 8.5% 8.50% 8.50% 8.0% 8.5% 0.50% 9.5% 9.0% 8.00% 9.50% 0.00% 8.50% 9.50% 0.00% 8.75% 9.00% 9.00% 9.50% 9.50% 9.50% 9.50% 9.75%.00% 0.50% 0.75% 9.5% 0.50% 8.50% 9.00% 9.00% 9.60% 9.50% % 9.6% 8.00% 8.00% 8.50% % 8.50% 7.00% 7.00% 6.75% % 9.00% 8.00% 7.5% 0.50% 8.00% 7.5% 9.00% 6.00% 6.75% 6.75% 7.0% 8.50% 9.00% 7.50% 8.% 8.50% 8.50% 8.00% 7.50% 9.00% 8.50% 9.75% 7.5% 6.75% 7.00% 7.5% 8.50% 9.00% 8.5% 8.5% 9.75% 8.00% 7.50% 9.00% 7.50% 6.75% 6.75% 8.0% 8.00% 8.5% 7.50% 8.4%.00%.50% 0.50% %.50% 9.50% 9.50%.00% -.00% 0.50% 0.00%0.75%.00%.00% 0.50% 0.5% 0.50%.50% 0.50% 0.50% 9.50% %0.75%.00%.50%.50%.00% 9.00%.00% 9.50% 9.75% 0.50%.50% 0.50% 0.50% 9.50%0.5%.50%.00%.75% 0.75%.00%.50% 0.50% 0.50% 9.80%.50%.50%.00%.00%.00%.50%.00% %.00% %.00%.50%.00% 0.75% 0.00%0.5%.00%.00%.75% 0.75%.00%.50%.00%.00% 9.0%.00%.50%.75%.00%.00% 0.00% 0.00% %.50%.00%.75% 0.00% -.00%.75% 0.00% 0.00%.50%.00%.00%.50%.00%.00% 0.00% 0.00%.50%.00% -5.00%.00%.07%.00% 0.00% 0.00%.00%.50%.00%.5% 7.50% 0.00% 4.00%.00%.75% 0.00% 0.00%.00%.50%.00%.50%.00%.00% 0.00% 0.00%.00%.00% 0.00%.00%.66%.00%.50%.50% -.50%.00%.5% 8.5%.00% 4.00%.00%.75%.50%.50%.00%.00%.50%.50%.00%.00%.00%.00% 0.00% -.00%.50%.65%.00%.50%.50% 5.00%.00%.5%.5%.00%.00% 4.00%.00%.75%.50%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00%.57%.00%.00%.50% 5.00%.00%.00%.50%.00%.00% 4.00%.00%.75%.50%.50%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00%.00%.57%.00%.50%.00% -.00%.00%.00%.50% 0.00%.00%.00%.75% 0.00% 0.00%.00%.00% 0.00%.50%.00%.00% 0.00% 0.00%.00%.00% -.00%.50%.6%.00%.50%.00% -.00%.00%.00%.00%.00%.00%.00%.75% 0.00% 0.00%.00%.00% 0.00%.00%.00%.00%.00%.00%.00%.00% 0.00%.50%.74%.00%.50%.00% 5.00%.00%.00%.75%.00%.00%.00%.00%.75% 0.00% 0.00%.00%.00%.00%.00%.00%.00%.00% 0.00%.00%.00% 0.00%.50%.97%.00%.50%.00%.00%.00%.00%.5%.75% 0.00%.00%.00%.75% 0.00% 0.00% 0.00%.00%.00%.50%.00%.00% 0.00% 0.00%.00%.50% -.50%.69%.00%.00%.00% -.00%.00%.5%.00% 4.00% 8.00%.00%.75% -.00%.00%.00%.00%.00%.50% 0.00% 5.00% 4.00%.00% 0.00% 4.00% 0.00%.50%.4%.00%.50%.00%.00%.00%.00%.50%.00% 4.00% 8.00%.00%.75% -.00%.00%.50% 4.00%.00%.50% 0.00% 5.00% 4.00%.00% 0.00% 4.00% 0.00%.50%.4%.00%.50%.00% -.00% 4.00%.5%.5%.00% -.00%.75%.00%.00%.00% 4.00% 4.00%.50% 0.00% 4.00%.00% 0.00%.00% %.00%.0%.00%.50%.00%.00%.00% 4.00%.00%.00%.00%.00%.00%.75%.00%.00%.00% 4.00% 4.00%.50% 0.00% 4.00%.00% 0.00%.00%.00%.50%.00%.%.00%.50%.00% -.00% 4.00% -.5%.00%.00%.00%.75%.00%.00%.00% 4.00%.00%.50% 0.00% 4.00%.00% 0.00%.00%.00%.50%.00%.05%.50%.50%.00% -.00% 5.00%.5%.5%.00% -.00%.75%.00%.50%.00%.00%.00%.00%.00%.00%.00%.00%.50%.00%.00%.00%.84%.50%.50%.00%.00%.00% 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4.00%.50%.00%.00%.00%.00%.00%.50%.00%.50%.00%.80%.00%.00%.00%.00%.00%.00%.5%.00%.00%.00%.00%.75%.00%.50%.00% 4.00%.50%.00%.00%.00%.00%.00%.50%.00%.50%.00%.8%.00%.00%.00% -.00%.50%.00%.5%.00% -.00%.75%.00%.50%.00% 4.00%.00%.00%.00%.00%.00%.00%.50%.00% 0.00%.00%.70%.00%.00%.00%.00%.00%.50%.00%.00%.00%.00%.00%.75%.00%.50%.00% 4.00%.00%.00%.00%.00%.00%.00%.50%.00%.50%.00%.7%.00%.00%.00% -.00%.50% -.5%.00%.00%.00%.75%.00%.50%.00% 4.00%.00%.00%.00%.00%.00%.00%.50%.00%.50%.00%.78% $5.00 $5.00 $ $6.00 $5.00 $0.00 $40.00 $ $0.00 $0.00 $0.00 $5.00 $5.00 $.00 $8.00 $5.00 $5.00 $40.00 $5.00 $5.00 $0.00 $ $40.00 $.85 $0.00 $5.00 $5.00 $50.00 $8.00 $0.00 $5.00 $5.00 $5.00 $5.00 $5.00 $0.00 $0.00 $0.00 $5.00 $5.00 $5.00 $7.00 $4.00 $0.00 $5.00 $5.00 $0.00 $8.00 $0.00 $5.00 $9.7 $0.00 $5.00 $.00 - $4.00 $5.00 $5.00 $5.00 $5.00 $ $0.00 $ $0.00 $ $0.00 $ $5.00 $ $5.00 $.4 $5.00 $5.00 $ $.00 $5.00 $.00 $7.00 $5.00 $.00 $.00 - $ $0.00 $ $0.00 $0.00 $.00 $5.00 $5.00 $6.00 $5.00 $5.00 $5.00 $7.88 $5.00 $5.00 $ $.00 $ $.50 $5.00 $.00 $.00 - $ $0.00 $ $0.00 $0.00 $.00 $5.00 $5.00 $6.00 $5.00 $5.00 $5.00 $7. $5.00 $5.00 $ $5.00 $ $.50 - $ $7.00 $.00 - $5.00 $ $.4 $5.00 $5.00 $ $.00 $0.50 $.00 $.00 - $.50 - $ $ $0.50 $ $0.50 $.00 $.4 $0.00 $5.00 $.00 $0.00 $ $.00 $.00 $.00 $ $5.00 $5.00 $0.50 $.00 - $5.00 $.00 - $.00 $.00 $.00 $.00 $0.50 $.50 $.57 - $5.00 $ $ $5.00 $0.00 $.00 $0.00 $0.00 $ $.50 $.00 - $0.00 $0.00 $0.00 $0.00 $0.00 $8.00 $ $0.00 $6.7 VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 7

10 INVESTMENT CRITERIA casted absorption figures and employment growth forecasts and by applying standard criteria to each surveyed city. The majority of reviewed markets for all property types were in various stages of the recessionary or recovery phases of the market cycle. The viability of a MSA depends upon where it is in the cycle. If a MSA has entered the last stage of the recessionary phase, it is expected that it will begin its recovery by the end of the year. OFFICE MARKET CYCLE 004 In the office sector cycle, many markets in the recessionary phase in last year s report have moved into the first phase of recovery, including Boston, Chicago, Dallas, Minneapolis and Pittsburgh. Hartford, Milwaukee and St. Louis are those still stuck in the third phase of the recessionary stage. Houston, Tampa, TABLE DISCOUNT RATE RANKS Low 004 High 004 Avg. Rank Property Type (%) (%) (%) Urban Multi Family Suburban Multi Family Regional Mall Community Mall Neighborhood Strip CBD Office Office/Warehouse Bulk Suburban Office R&D Manufacturing CBD Lodging Airport Lodging Suburban Lodging TABLE 0 PROJECTED DISCOUNT RATE CHANGE Property Type Decline (%) Increase (%) Stable (%) CBD Office Suburban Office Regional Mall Community Mall Neighborhood Strip Manufacturing Bulk Office/Warehouse R&D Urban Multi Family Suburban Multi Family CBD Lodging Suburban Lodging Airport Lodging AVERAGE St. Petersburg and San Diego are all in some stage of expansion in the office property sector. RETAIL MARKET CYCLE 004 Kansas City and Orange County have moved into the first phase of expansion for the retail property sector. Last year, Kansas City was in the third phase of recession in this sector. The majority of the markets are in various stages of the expansion or recovery phases with many more in the hypersupply phase. Last year, Austin was the lone MSA in the hypersupply phase. APARTMENT MARKET CYCLE 004 In the apartment sector cycle, Washington, D.C., Hartford, Miami, Austin, Boston, St. Louis and Tulsa are in the hypersupply phase. Last year no markets were in this phase. INDUSTRIAL MARKET CYCLE 004 The majority of markets in the industrial property sector are in various stages of recovery/expansion. Only two markets are in hypersupply including Ft. Worth and Atlantic City, which was in this phase last year. Indianapolis, St. Louis and Tampa moved out of the recessionary phase. CAPITALIZATION AND DISCOUNT RATES Although no crystal ball, capitalization and discount rates are important signposts on the real estate investment landscape. When capitalization rates increase, caution is warranted. However, a drop in initial capitalization rates usually indicates strength in future durability, net income growth, capital costs and overall risks. Other factors in the macro-economic environment can skew this standard barometer, so it is wise to take a hard look at the declining rates to determine if they are based on strong fundamentals or other market conditions. Caution is warranted here and IRR representatives can help you analyze any current market anomalies. Discount rates are the annualized rates or expected rates of return for property investments and they also provide clues about the weakness or strength of a market. Basically, overall risk decreases when discount rates fall and risk increases as rates move up. OVERALL YIELD RATES Last year s projected capitalization rates were on average 74.% stable with 7.8% declining and 7.9% increasing. This year it hasn t changed much with 7.7% stable, 8.9% declining and 9.4% increasing. The discount rates year-to-year change was greater. Last year IRR projected discount rates at 75.4% stable, 8.6% declining and 6% increasing. This year, the projections are 7.% stable with 7.8% declining and 9% increasing. 8 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

11 PROPERTY SECTOR CYCLES Office, CBD & Surburban CBD OFFICE BY THE NUMBERS The capitalization rates average dropped considerably, down to 8.7% from last year s 9.% and the previous year s 9.4%. The rate span is 6.8% to 0.5% as compared with last year s 7.5% to 0.5%. Market strength appears on the horizon, as the numbers continue to fall in projected increases of capitalization rates only 8.5% surveyed forecast an increase as opposed to last year s 7.4%. Discount rates also moved in a promising direction as they again decreased this year to 0.5%, down 40 basis points from last year. 74.5% of those surveyed expect discount rate stability, compared with last year s 67.4%. The projected discount rate change decline dropped from last year s 9.6% to 9.%. The CBD vacancy rate continues to climb, although at a slower rate. At its present 4.9%, it moves further and further away from the 00 Viewpoint vacancy rate of 7.%. Last year the rate was 4.06%. However, the projection for balance of supply and demand dropped back to.57 years from last year s projected.95 years. TABLE CBD OFFICE MARKET CYCLE Atlanta, GA Baltimore, MD Boston, MA Charlotte, NC Chicago, IL Cincinnati, OH Dallas, TX Dayton, OH Denver, CO Fort Worth, TX Kansas City, KS/MO Louisville, KY Minneapolis, MN Nashville, TN Oakland-East Bay, CA Philadelphia, PA Pittsburgh, PA Portland, OR Providence, RI Sacramento, CA Seattle, WA Columbia, SC Greenville, SC Los Angeles, CA Naples, FL New York, NY Orlando, FL Richmond, VA San Jose, CA Coastal NJ Columbus, OH Detroit, MI Indianapolis, IN Las Vegas, NV Memphis, TN Miami, FL Orange County, CA Phoenix, AZ San Antonio, TX San Francisco, CA San Diego, CA Tampa/St. Petersburg, FL Houston, TX Tulsa, OK Indicates st stage within the phase Indicates nd stage within the phase Indicates last stage within the phase Hartford, CT Milwaukee, WI Morristown/Newark, NJ St. Louis, MO Washington, DC RECOVERY EXPANSION HYPERSUPPLY RECESSION Decreasing Vacancy Rates Low New Construction Moderate Absorption Low/Moderate Employment Growth Neg/Low Rental Rate Growth Decreasing Vacancy Rates Moderate/High New Construction High Absorption Moderate/High Employment Growth Med/High Rental Rate Growth Increasing Vacancy Rates Moderate/High New Construction Low/Negative Absorption Moderate/Low Employment Growth Med/Low Rental Rate Growth Increasing Vacancy Rates Moderate/Low New Construction Low Absorption Low/Negative Employment Growth Low/Neg Rental Rate Growth *City data compiled using the following sources: IRR Surveys, REIS, and Legg Mason Copyright 005 Integra Realty Resources VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 9

12 PROPERTY SECTORS OFFICE, CBD & SURBURBAN Inventory grew. This year it was.7 billion square feet, as compared with last year s.5 billion square feet. Development in the pipeline for is 46 million square feet. Last year about 54.6 million square feet in office space was under development for the period of QUICK MARKET GLANCE CBD office continues to hold 6th place in the cap rate ranks, but has moved up one slot in the discount rate ranks, from 7th to 6th. The continuing upward trend of vacancy rates, even though it appears to be slowing a bit, discourages any thoughts of a quick turnaround in this sector, but a market recovery is on the horizon. Perhaps investors think it has bottomed out and are buying on higher than normal vacancy rates. Although moving away from the projection to reach equilibrium in almost four years, it at last seems to be moving in the right direction. TABLE CAP RATE TRENDS CBD OFFICE The corporate hiring moratorium seems to be a stubborn mainstay of today s economy and it will have to shake loose before this sector begins to fire on all cylinders. This sluggishness holds on in many MSA s throughout the nation, with a few tentative bright spots, offering a glimpse at a more promising future trend. In the Los Angeles market, recent construction and development have accelerated, but the anticipated amount of available space expected within the next two years is still considered minimal so the market will tighten up somewhat. However, the reduction of government employment will put a drag on absorption of space in the market. In Miami, vacancy continues to decline and the trend of slightly increased lease rates is expected to continue for the next two years. The downtown Seattle market is steadily improving, although gradually. In the third quarter, the downtown Bellevue market improved significantly when three large tenants relocated to the area. Growth in low-wage and service sector jobs just won t pull this sector out of the doldrums. Until Corporate America sees enough growth on the horizon to ignore escalating health care costs and begins to generate jobs, recovery in this sector isn t going to surprise anyone with any speed records. In this sector, the follow-up to the age-old maxim of nothing ever happens until someone sells something is nothing will really happen until someone hires someone. 7 Percentage Year Office CBD 0 Year Treasury (January Avg.) 0 Year Treasury (Annual Avg.) 005 Integra Realty Resources 0 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

13 TABLE OFFICE MARKET CONDITIONS AND FORECASTS: Central Business District TOTAL FORECAST TOTAL FORECAST AVG. ANNUAL UNDER AVG. ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY RATE VACANCY TO MARKET AREA (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE Atlanta, GA 5,500, ,0,500-70,50 44, , Austin, TX 8,456,0.40,978,74 6,9,9,970 7, Baltimore, MD 9,069,000.00,478,970 44,500 75,000 5, Boston, MA 60,000, ,000,000-47,500,500,000 5, Charlotte, NC 4,95, ,86,550 7,50,97,000 40, Chicago, IL 5,400, ,78,000-59,500 4,50,000,5, Cincinnati, OH,000,000.00,690,000-70, ,000 66, Cleveland, OH 0,54, ,478,74-40,50 0 9, Columbia, SC 5,56, ,0,0,500 70,000 00, Columbus, OH 9,50, ,09,000-4,750 60,000 5, Dallas, TX,99, ,,96 -, Dayton, OH 7,4,95 4.0,08,774 44,755 0,000, Denver, CO,00, ,96,000-58, , Detroit, MI,000,000.00,990,000-8,500 00,000 8, Fort Worth, TX 0,8, ,58 55,906,00,000 0, Hartford, CT 7,547, ,8,49-40,858 9,000-50, Houston, TX 4,00, ,56, ,65 690, , Indianapolis, IN 0,8, ,65,480 5, Kansas City, KS/MO,550,000.00,98,000-40, ,000 66, Las Vegas, NV,960, ,98 8,000 9,000 50, Los Angeles, CA 5,69, ,858,068-40,5 697, , Louisville, KY 0,00, ,544,00-0,486 80,000 66, Memphis, TN,79, ,567-44,45 50,000 0, Miami, FL 6,700, ,000-8, , Milwaukee, WI,9, ,75,857-45,750 0,000, Minneapolis, MN 4,786, ,907,68-505,750 94, , Nashville, TN 5,800, ,000 56,50 80,000 6, New Jersey, Coastal 4,500, , ,000 00, New Jersey, Northern 4,000, ,594, ,000 0,800, New Orleans, LA 4,04, ,454,00-44, , New York, NY 65,000, ,5,000 -,88,000 7,400,000,9, Oakland, CA,9,000.0,58,000 79,000 77,000 45, Orlando, FL 6,70, ,700 0,79,40,000 85, Philadelphia, PA 54,464, ,6,4-449,075,800,000-6, Phoenix, AZ 5,500, ,000 47, , Pittsburgh, PA 6,700, ,806,000-95, ,000, Portland, OR 7,096,59.80,88,54-58,987 40,980 00, Providence, RI 6,00, ,400-00,000 6, Richmond, VA 8,50, ,55,000 5,750,050,000 50, Sacramento, CA,000, ,540,000-6,500 60,000 50, Salt Lake City, UT 7,6, ,5,5-0,000 56,000 9, San Antonio, TX 5,4,000.0,76,604-46, , San Diego, CA 9,50,000.00,045,0-79,000,99,000 88, San Francisco, CA 49,67, ,05,000 -,409,000 70,000 5, San Jose, CA 8,640,000 7.,479,000-94,500 49,000 4, Seattle, WA 4,84, ,09,9 5,76,74, , St. Louis, MO,98, ,7,46-0, , Tampa, FL 7,0, ,8,600-94,68,750,000 58, Tulsa, OK 7,900, ,95,500-48,649 0, Washington, DC 05,000, ,875,000,497,500 8,856,000,7, Total: Simple Avg Total: Total: Total: Total: Average: Average: Average:,7,9, ,467,7-6,5,79 46,00,450 7,98, Weighted Avg: 4.9 Italicized Inventory (i.e. blue), Vacancy, Absorption and Under Construction figures were provided by REIS, Inc VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

14 TABLE 4 OFFICE MARKET CONDITIONS AND FORECASTS: Surburban Market Area TOTAL FORECAST TOTAL FORECAST AVG. ANNUAL UNDER AVG. ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY RATE VACANCY TO MARKET AREA (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE Atlanta, GA 0,000, ,50, ,000,9,000,8, Austin, TX 8,75, ,864,84-479,54 5,67 7, Baltimore, MD 55,44, ,684,54,07,80,00, , Boston, MA 9,500, ,400,000 -,87,500,00, , Charlotte, NC 5,4, ,87,6 79,50 5,6,46, Chicago, IL 0,000, ,5,000 -,70,500,707,000,869, Cincinnati, OH 8,605, ,56,50-6,50,050,000 48, Cleveland, OH 6,557, ,09,9 8,500 67,500 49, Columbia, SC 4,875, ,70,000,50 75,000 9, Columbus, OH,00, ,400,000-56, , , Dallas, TX 69,, ,0,669 -,68,540,6,667 77, Dayton, OH 4,060,696.85,806,485 6,6 45,000 0, Denver, CO 6,000, ,60,500-48,750 4,00,000,000, Detroit, MI 55,50, ,890,50-96,40,750,000-00, Fort Worth, TX 9,60, ,57,98 0,,0,9 644, Hartford, CT 6,80, ,678,4-9, , Houston, TX 70,77, ,9,70 669,4 940,000,500, Indianapolis, IN 8,98, ,658,480 40,50 6, , Kansas City, KS/MO 7,50, ,7,000-5,908,000,000 66, Las Vegas, NV 9,6, ,77,70,885,50 8,00,000,68, Long Island, NY 46,00, ,989, ,000 95, , Los Angeles, CA 8,08, ,557,584 -,047,888,78,947,078, Louisville, KY,000, ,477,00 84,58,50,000, Memphis, TN 4,584,4 6.94,470,545 7,458 48, , Miami, FL,00, ,05,000,477,657,000 6, Milwaukee, WI 5,84, ,855,654-08,750 00,000, Minneapolis, MN 4,66, ,988,40-8,750, , Naples, FL 5,605, ,064 4,78 579,000 50, Nashville, TN 9,400, ,96,50 4,547 90,000 6, New Jersey, Coastal 7,7,765.4,68,75-4, ,000 8, New Jersey, Northern 0,000, ,54,000,95,000,00,000,5, New Orleans, LA 7,505, ,95-4,750 60,000 68, Oakland, CA 48,066, ,,000-48,000 67,000 89, Orange County, CA 6,6,98 0.4,77,45 8,99,795,000,898, Orlando, FL 4,5, ,994,7 7,96,859,000 8, Philadelphia, PA 90,679, ,978,64-8,4,9,445 68, Phoenix, AZ 50,80, ,064,000,7,500 6,000,000,00, Pittsburgh, PA 47,900, ,487,880,00 500,000, Portland, OR 4,8,7 6.0,89,948 4,880,987,97 750, Providence, RI 5,750, ,50-550,000 95, Richmond, VA 7,550,000.4,97,50 8,750,40,000 70, Sacramento, CA 7,075, ,,50 56,50 4,050,000,50, Salt Lake City, UT 7,788, ,4,084-79,500 99,000 55, San Antonio, TX 0,47, ,67,49-0,706 84,000 64, San Diego, CA 8,48, ,77,990 8,50,8,000,74, San Francisco, CA 74,676, ,040,000-54, ,000,40, San Jose, CA 56,64, ,044, ,50 46,000,87, Seattle, WA 50,00, ,49,00-09,69 677,08 7, St. Louis, MO,06, ,04,758 9,750,09, , Tampa, FL,555, ,75,9 999,6,50,000 50, Tulsa, OK,000,000 7.,067,500-55,5 0 00, Washington, DC 0,850, ,58,650,60,500,7,000 4,040, Total: Simple Avg Total: Total: Total: Total: Average: Average: Average:,656,8, ,66,68,74,46 00,4,79 4,088, Weighted Avg: 6.5 Italicized Inventory (i.e. blue), Vacancy, Absorption and Under Construction figures were provided by REIS, Inc INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

15 PROPERTY SECTORS OFFICE, CBD & SURBURBAN CRITERIA SUBURBAN OFFICE BY THE NUMBERS Capitalization rates continue to fall, decreasing from last year s 9.% to this year s 8.79%. Projected declines rose to.4% from last year s 8.8%. The discount rate average continues to decrease with a drop to 0.5% from last year s 0.9%. TABLE 5 CAP RATE TRENDS SURBURBAN OFFICE 0 9 The vacancy rates took a decidedly welcome downward turn, but it was still far from the 8.6% of four years ago. This year s 6.5% is a decrease from both last year s 6.76% and the previous year s 6.66%. Inventory levels were just a bit higher from last year s.6 billion at almost.66 billion square feet. Suburban office space in the development pipeline moved upwards to 00 million square feet from last year s 9.8 million square feet under construction. However, it s well under the radar of the 46 million square feet reported in Viewpoint 00. Percentage This constriction of future supply alleviates some of the pressure in this sector, supporting the drop in the time span to reach equilibrium. Last year s estimated years to balance were.48 years and this year, the projected years to balance are.0 years. QUICK MARKET GLANCE Suburban again held down 8th place in the cap rate ranks chart. Equilibrium moves closer, but tenants are still favored with a beneficial negotiating environment. Healthy discipline in controlling supply will aid this sector. Once demand returns, supply will be in balance. The Tulsa suburban office submarket is showing a sign of recovery as absorption was positive in 004. The average vacancy rate also decreased in the suburban market. Tampa Bay is also experiencing a strengthening suburban office market with increasing rental rates and lower vacancies. The previous glut of sublease space has dissipated except for negative absorption of call center space. The Westshore office district, the largest in Florida, is particularly strong and demand for owner-occupied buildings has soared, with some prices over $00 per square feet Year Office Sub 0 Year Treasury (January Avg.) 0 Year Treasury (Annual Avg.) 005 Integra Realty Resources VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

16 PROPERTY SECTOR CYCLES Gaming Last November, voters made the gaming equipment makers the real winners in several significant elections. Voters passed the expansion of gaming in three states. Florida, Oklahoma and Wisconsin all passed gaming initiatives. Voters in Florida approved the legalization of slot machines at both Jai Alai games and racetracks. However, the voters in both Miami-Dade and Broward Counties still need to pass a referendum early in 005 to secure the vote. If all goes as planned, the slot machines should be showing up in Florida sometime in early 006. Oklahoma voters passed a proposal to allow racetracks to have slot machines. Wisconsin voted to allow tribal casinos to develop gaming properties on acquired land. California voters shot down two separate initiatives that would have expanded Indian gaming. The individual tribes are trying to negotiate with the new governor on their individual pacts. They want to increase slot machine numbers currently allowed. California is one of the strongest, if not the most explosive gaming market. Therefore, 46 states have some form of legalized gaming and 5 states allow electronic gaming devices. The American Gaming Association (AGA) reports legal gaming reported $7 billion spent by estimates of gross gaming revenue. The largest component is commercial casinos. As of October 0, 004, Nevada statewide reported a $0,89,484,000 win for all nonrestricted gaming locations for 004 thru August, 004. This is up 6.59%. Total gaming win for the strip was up 8.08%. Nevada casinos reported their best ever August winnings at $905. million. This is up.% over the same month last year. September was $94.8 million, a 0% gain from last year. Las Vegas has the 0 largest hotels in the United States. The average occupancy level overall is 88%. By 006, the total room count will be approximately 40,000 rooms. The new Wynn Resort is planned to open in April of 005. Sheldon Adelson is also building a new resort between the Venetian and the new Wynn property. MGM Mirage announced a multi-billion dollar Urban Metropolis on the strip between Bellagio and the Monte Carlo. This will be a 66-acre project featuring an 8 million square foot phase one. The resort will include a 4,000- room hotel and casino, three 400-room boutique hotels and a,550-condominium development. There is also a 550,000 square foot retail and entertainment space planned. The first phase will cost approximately $4 billion and create 7,000 construction jobs, and then,000 permanent jobs. MGM Mirage states it should be completed by 00. Interest has again peaked to see the latest and greatest hotels. The new financial sheets show that gaming income as a percentage of total income is continuously having less of the total pie, as the other portions of business (dining, rooms, entertainment and retail) continue to increase their contribution to the bottom line. Atlantic City, New Jersey still maintains the Avis position in the United States gaming industry and continues to try harder. After a 0-year effort on the part of the redevelopment agencies, state legislature and gaming industry, in 00 Atlantic City enjoyed opening the first new casino hotel in years. The Borgata Hotel raised the bar and brought new life to the gaming industry. As we reported last year, gaming revenues for the city in 00 increased by a modest.4%. A significant component of the win shifted from the existing casinos to the Borgata. The year 004 saw the first full year of operation for the Borgata Hotel and the grand opening of the Walk Outlet Center at the foot of the Expressway. Resorts opened the 479-room Rendezvous Tower and Showboat opened a new 544-room tower. More recently, in November of this year, the $80-million Havana Hotel Tower and The Quarter at the Tropicana Casino opened. The Quarter is a Cuban-themed non-gaming venue which features street entertainment, retail shops, restaurants and the IMAX Theatre. The Havana Tower added an additional 500 rooms to the Tropicana Complex which now is the second hotel in Atlantic City to boast over,000 hotel rooms. As we forecasted last year, Atlantic City will wrap up 004 with well over 5,000 hotel rooms and over,00,000 square feet of casino gaming space. Boosted by the success of the Borgata, anticipation throughout the city was encouraged dramatically by the same store sales January to October of 00 vs. January to October of 004 which showed a 7.4% growth in gaming revenue from approximately $.8 billion to $4. billion based on Casino Control Com- 4 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

17 PROPERTY SECTORS GAMING mission reports. The Borgata continues to drive success and reports a win as of October 004 at $58 million, second only to Bally s win of $549 million for the same period. Bally s win, which is slightly over % higher than Borgata, however, must be weighted against the reality that Bally/Claridge Complex provides over 55% more gaming space. We are further impressed by the Borgata performance in table win which totals over 5% of revenue when compared to the industry average in Atlantic City at about 5% of gaming revenue. Enthusiasm in Atlantic City is running high. The Borgata has announced plans for a $47 million expansion which includes 500 rooms, restaurants and non-gaming facilities. The best evidence of the Atlantic City confidence is the increasing investment from operators within the market. One of the commitments is the $9.4 billion Harrah's acquisition of Caesars Entertainment. Once completed, Harrah's will be operating four world-class casino hotel properties including Bally's, Caesars, Showboat and, of course, the Harrah's Marina property. Even the new guy on the block, Colony Capital, who operates Resorts will be closing shortly on their acquisition of the Atlantic City Hilton, a purchase which will include several large tracts of land at the west end of the city. Atlantic City is even excited about a recently filed bankruptcy by the Trump Organization. As stated by Donald Trump, the three Trump Casinos are in dire need of major renovations and expansion to maintain a competitive position in this growing marketplace. The bankruptcy offers Trump an opportunity to recapitalize and upgrade the three properties. Although Atlantic City will never challenge Las Vegas in size, merely for geographic reasons, it is clear that the industry in Atlantic City will be in a strong second place with a 004 gross win close to $4.7 billion. All current indications are that 005 could be the year that the city breaks the $5-billion threshold. Redevelopment efforts throughout the city are continuing and all eyes now are focusing on the re-opening of the Million Dollar Pier (formerly Shops at Ocean I). This new non-gaming venue will position the city as a true national convention hub with gaming and non-gaming opportunities, including over one-million square feet of new upscale shopping. The more we study the industry, the more we recognize that the gaming industry provides a draw necessary to support the upscale hotel, resort, entertainment and shopping venues necessary to attract the Baby Boomers and Generation Xers. Clearly the ability to support and fund world-class boxing and top-line entertainment while providing luxury hotel rooms at moderate pricing are the features that attract American and international travelers to Las Vegas and Atlantic City. Continued growth in the economy and the building of underlying family wealth should bode well for the gaming industry. As stated several years ago in the early planning stages of the Borgata site, the various state initiatives and expansion of the Indian gaming markets have helped the industry by legitimizing recreational gaming and exposing a larger segment of the population to this form of recreation. PROPERTY SECTOR CYCLES Lodging As we review national, regional and local lodging trends, we will primarily focus on conditions affecting the lodging s specific market area and competitive set. First, a review of national trends over the past 0 years for a general perspective of the cyclical nature of the lodging industry, and a brief review of the anemic conditions surrounding the more recent past and the current resurgence underway with the recovering economy. NATIONAL TRENDS A review and comparison of the past 0 to years of the industry is a useful tool for understanding the direction the lodging industry is likely to take in the near and intermediate term. A 0 year historical perspective of pertinent lodging statistics compiled by Smith Travel Research for the U.S. lodging industry is presented below. TABLE 6 U.S. LODGING INDUSTRY KEY STATISTICS Supply Demand Fixed % % % % ADR % RevPAR % GOP Expenses Chg Chg Occupancy Chg $ Chg $ Chg (RTS)* (RTS) N/A N/A N/A N/A * Gross operating profit ratio to sales SOURCE: 004 Smith Travel Research VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 5

18 PROPERTY SECTORS LODGING Before 000, the lodging industry fared well with generally stable occupancy rates and increasing ADR and RevPAR. In particular, IRR Hospitality identifies several key forces that affected the expansion cycle of lodging assets immediately before 000 including: Improved hotel performance since 99 Financing availability at low interest rates Demand from real estate investment trusts (REITs) Growing economic trends Expansion of major franchise affiliations However, the market sharply declined during the national recession, especially after September th. These forces culminated in a deep and protracted economic downturn following the wars in Afghanistan and Iraq; reduced consumer confidence/spending; and capital market instability. A reversal of the past trends surfaced in late-00 into early-00. The following chart shows this observed turnaround. More pronounced improvement has been observed through most of 004. The following demonstrates the rate(s) of growth or decline having taken place before and after the downturn. Note the slope of ADR and OCC lines are markedly improved beginning in the latter part of 00, with a slight flattening during 00, and another surge reflecting consistent improving conditions observed through May 004. (As will be noted below, these trends have continued to take place through September 004.) TABLE 7 TOTAL UNITED STATES OCCUPANCY/ ADR PERCENT CHANGE MONTH MOVING AVERAGE TO MAY Occ % Change ADR % Change SOURCE: 004 Smith Travel The growth recorded above is a result of an expanding economy and improving capital markets, causing a much-anticipated recovery in the U.S. lodging industry. Actual RevPAR improvement in the first six months of 004 was 9.5%, as reported by all companies that track these statistics, including Smith Travel. ADR increased in the range of.% during the same period, a growth rate similar to that reported during the post recession. In relative terms, this increase is more positive since the rate of inflation is noticeably less post- 00 when compared to the early-990s. If this trend continues through the remainder of 004 (data available through September 004 available through Smith Travel projections appears to support these estimates), the rate of recovery in RevPAR will be the highest in almost 5 years. As a result of this recent and projected growth, hotel operators are expecting a 7.9% increase in operating profits, also the highest rate in about 5 years. In addition to the above, other major observations in the broader market are as follows: Room occupancy in the Top 5 Markets sector was 7.7%, for an increase of almost 6%± over a year ago. Room demand rose nearly 7%. The increase in demand during June was common to all regions, all price groups and all location segments. The largest increases were in urban, higher-priced properties in the South Atlantic, West South Central, and Pacific regions. In a Special Analysis conducted by STR Lodging Review in August 004, it was reported the performance of the industry in the first six months of the year showed improvement in all measures that was greater than the pace set in 99 over 99 when the industry was recovering from the last recession. The comparison provides support in forecasting market performance for the subject as historical perspective provides a fundamental basis for near-term future expectations. The following tables infer that the current turnaround of the lodging industry is more prominent today than post-99. The improved performance in the first six months of 004 was significantly better than ten years ago, after the recession of However, the industry still has room for recovery as there were 8 million more vacant room-nights in hotels during the first six months of 004 when compared to 99 due to greater existing inventory. Assuming the rooms supply does not suddenly increase and demand continues to grow at similar levels as experienced in the recent past, prospects are excellent during 005 and 006. Barring a catastrophic event, the majority of U.S. hotels are expected to benefit from improving economy and market conditions. These industry improvements have resulted in stronger investor appetite for hotel property particularly among full-service hotels, which also bears striking similarities 6 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

19 PROPERTY SECTORS LODGING to post-99: the economy is gradually expanding; the stock market continues to improve; the capital markets are flush with capital; interest rates remain low; and real estate markets are extremely well-funded with limited opportunities for above-average ROI. More capital is now being allocated to hotel property investment than in the past two years or so, as investors forecast improved market lodging conditions, improved operations, stronger profit levels and ROIs that are higher than more traditional real estate returns. The industry appears poised for the projected recovery. Several indicators suggest the deal pipeline is filling. The Blackstone acquisition of the 485-property Extended Stay America chain for $. billion earlier this year reflects an optimism that is shared by some publicly raised funds. Hotel brokers almost unanimously are experiencing increased listing and sale activity. Hotels are expected to yield investors the highest returns of the five major property types according to a new report to be released by Principal Real Estate Investors, RERC and TWR. The average annual return on full-service hotels over a five-year holding period is expected to exceed 5%. Hotel occupancies and rates are up. It is reported that the hotel sector is at an inflection point where we ll see earnings and pricing pick up more than the other property types, which have held up strong. It is expected that 005 will be the peak year for RevPAR performance growth. For fullservice hotels, RevPAR is expected to rise 7% in 005, 4% in 006 and % to.5% thereafter. All industry indicators appear to be rebounding from the historic lows of 00 and 00. Year-end 00 reports reflected an improving market, while the first half of 004 is surpassing industry predictions of a year ago. With a low growth rate in room supply and an increase in demand for the remainder of 004 and in to 005, the national outlook for the lodging industry is positive. TABLE 9 TOTAL U.S. HOTELS BY CHAIN SCALE COMPARISON OF CHANGES IN ROOM RATES FIRST SIX MONTHS 99 vs. 99 and 004 vs. 00 5% 4.5% 4%.5% %.5% %.5% % 0.5% 0% Total US Hotels Luxury Upper Upscale Upscale 99 vs vs. 00 Midscale Midscale Economy with F&B w/o F&B SOURCE: 004 Smith Travel TABLE 8 TOTAL U.S. HOTELS BY CHAIN SCALE COMPARISON OF CHANGES IN OCCUPANCY FIRST SIX MONTHS 99 vs. 99 and 004 vs. 00 8% 99 vs. 99 7% 004 vs. 00 6% 5% 4% TABLE 0 TOTAL U.S. HOTELS BY CHAIN SCALE COMPARISON OF CHANGES IN RevPAR FIRST SIX MONTHS 99 vs. 99 and 004 vs. 00 4% % 0% 8% 6% 99 vs vs. 00 % 4% % % % 0% Total US Hotels Luxury Upper Upscale Upscale Midscale with F&B Midscale w/o F&B Economy 0% Total US Hotels Luxury Upper Upscale Upscale Midscale with F&B Midscale w/o F&B Economy SOURCE: 004 Smith Travel SOURCE: 004 Smith Travel VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 7

20 PROPERTY SECTOR CYCLES RETAIL BY THE NUMBERS Retail Regional mall capitalization rates decreased to 7.98% from last year s 8.46% and the previous year s 8.7%. Regional mall discount rates also fell to 9.9% from last year s 0.% and the previous year s 0.8% average. Also decreasing was the community mall capitalization rate averages to 8.9% from last year s 8.77% and the previous year s 9.% average. The community mall discount rate average fell from last year s 0.6% to this year s 0.% average. The downward trend continues with the neighborhood strip capitalization rate average dropping to 8.7% from last year s 8.9%. The discount rate average for neighborhood strip mall category moved down also, decreasing to 0.% from last year s average of 0.8%. Retail inventory is.4 billion square feet and the vacancy rate was 7.7%, a drop from last year s 7.65%. Mall vacancy rates continue to increase this year s rate is 6.7%, last year s was 6.% and the previous year s was 6.%. It is expected to take less than a year to reach a balance in this property sector, steady advancement from the previous two years estimates of.5 and. years to equilibrium. The amount in the development pipeline is TABLE RETAIL MARKET CYCLE Atlanta, GA Chicago, IL Denver, CO Miami, FL Providence, RI Richmond, VA Tulsa, OK Cincinnati, OH Dallas, TX Dayton, OH Detroit, MI Fort Worth, TX Memphis, TN Naples, FL Baltimore, MD Columbus, OH Hartford, CT Indianapolis, IN Las Vegas, NV Los Angeles, CA New York, NY Seattle, WA Kansas City, KS/MO Orange County, CA San Jose, CA San Francisco, CA Boston, MA Coastal NJ Louisville, KY Minneapolis, MN Milwaukee, WI Morristown/Newark, NJ Philadelphia, PA Phoenix, AZ Pittsburgh, PA Sacramento, CA San Diego, CA Washington, DC Houston, TX St. Louis, MO Austin, TX Nashville, TN Oakland/East Bay, CA Orlando, FL Portland, OR San Antonio, TX Tampa, FL Indicates st stage within the phase Indicates nd stage within the phase Indicates last stage within the phase RECOVERY EXPANSION HYPERSUPPLY RECESSION Decreasing Vacancy Rates Low New Construction Moderate Absorption Low/Moderate Employment Growth Neg/Low Rental Rate Growth Decreasing Vacancy Rates Moderate/High New Construction High Absorption Moderate/High Employment Growth Med/High Rental Rate Growth Increasing Vacancy Rates Moderate/High New Construction Low/Negative Absorption Moderate/Low Employment Growth Med/Low Rental Rate Growth Increasing Vacancy Rates Moderate/Low New Construction Low Absorption Low/Negative Employment Growth Low/Neg Rental Rate Growth *City data compiled using the following sources: IRR Surveys, REIS, and Legg Mason Copyright 005 Integra Realty Resources 8 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

21 TABLE RETAIL MARKET CONDITIONS AND FORECASTS: Central Business Districts and Suburban Market Areas TOTAL FORECAST TOTAL FORECAST GAFO AVG. ANNUAL UNDER AVG. ANNUAL VALUE TOTAL VALUE EST. SALES GLA VACANCY MALL NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS PER PER INVENTORY RATE VACANCY VACANCY TO HOUSEHOLD CAPITA MARKET AREA (SQ. FT.) (%) (SQ. FT.) RATE (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE ($) 004 Atlanta, GA 69,00, ,87, ,750,45,000,000, Austin, TX 8,8, , ,74 6,7,78 500, Baltimore, MD 55,90, ,9, ,50,78,000 6, Boston, MA 5,500, ,46, ,000 8,000,000,000, Charlotte, NC 6,85, ,577, ,50 8,00,000,66, Chicago, IL 09,800, ,09, ,900,000 7,000,000,8, Cincinnati, OH 4,00, ,74, ,750 5,50,000,8, Cleveland, OH,668, ,6,096-84,50,05,000 6, Columbia, SC 9,80, , ,500,000,000 75, Columbus, OH 45,740, ,447, ,000 4,40,000,066, Dallas, TX 9,8,80 0.4,5, ,05 5,57, , Dayton, OH 5,95,000.65,770, ,50 5,000 50, Denver, CO 8,4, ,70, ,000 8,000,000,666, Detroit, MI 5,40, ,4, ,750 6,000 95, Fort Worth, TX 75,57, ,60, ,57,648,900 75, Hartford, CT 6,08, ,84, ,550,00, , Houston, TX 9,50, ,085, ,7,000,055,000 97, Indianapolis, IN 6,6,08.5,857,59 7.0,50,0,508 48, Kansas City, KS/MO 45,800, ,554, ,750,400, , Las Vegas, NV 8,755,768.76,455, ,750 8,700,000,750, Long Island, NY 5,600, , ,400,000 6,700,000,066, Los Angeles, CA 58,845,000.,954, ,000 4,876,959 64, Louisville, KY 6,40,000.,844, ,50,500, , Memphis, TN 7,859,77 0.4,86,7-74,66 5,00,000,8, Miami, FL 6,650, ,59, ,000,49,000 48, Milwaukee, WI,704, ,00,89-70,000,08,000 8, Minneapolis, MN 50,850, ,7, ,50,00, , Naples, FL 9,04, ,97-7,48 5,95 75, Nashville, TN,000, ,6, ,500,50,000 8, New Jersey, Coastal 40,0, ,768, ,750,000 4,50,000 8, New Jersey, Northern 46,900, ,69, ,80,000 6,600,000,000, New Orleans, LA,80, ,7,900-77, ,000 4, Oakland, CA 0,49, ,5, , ,000 09, Orange County, CA 9,8,000.8,04, ,50,64,000, Orlando, FL 54,500, ,944, ,500,40,000 6, Philadelphia, PA 57,68, ,4, ,500,549, , Phoenix, AZ 4,40, ,446, ,000,000 8,00,000,78, Pittsburgh, PA 57,50, ,76, ,500,950,000,475, Portland, OR 8,60, ,69,4 5.40,98,45,95 6, Providence, RI 0,000, ,90, , ,000 4, Richmond, VA,40, ,470,005-05,750,50,000 6, Sacramento, CA,40, ,5, ,750 6,00,000,00, Salt Lake City, UT,9, ,005-5, ,000 47, San Antonio, TX 7,75, ,058, ,78,60, , San Diego, CA 8,690,000.49,055, ,50,76,000 60, San Francisco, CA 0,48, ,594, , ,000 09, San Jose, CA,5, , ,500 6,000 46, Seattle, WA 4,600,8.56,479, ,86 5,90,00,050, St. Louis, MO 4,56, ,89,968-4,500,8,000 47, Tampa, FL 48,00, ,00,00-7,00 4,7,5 86, Tulsa, OK 5,600, ,65, ,000,400,000 8, Washington, DC,6,00.9 4,84, ,5,850 6,755, , Total: Simple Avg Total: Average: Total: Total: Total: Average: Average: Average: National Avg,45,654, ,07, ,66,84 7,0,58 9,90, Weighted Avg: Italicized inventory, vacancy, absorption and under construction figures were provided by REIS, Inc GAFO Sales per Household provided by Claritas Data Services GLA per Capita provided by the National Research Bureau VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 9

22 PROPERTY SECTORS RETAIL 7 million square feet as compared with last year s 66 million square feet. This year s annual net absorption is 5.6 million square feet, a drop from last year s 7. million square feet. QUICK MARKET GLANCE Regional mall is again in the rd spot in the cap rate ranking chart. Community mall hasn t made a change either and is again in 4th place. Neighborhood is also holding its own with 5th place. As was the case last year, the discount rate rankings put regional mall in rd place, community mall in 4th and neighborhood strip in 5th. The Los Angeles retail market shows a decline in vacancy rate with supply levels being met by strong demand. With a considerable amount of new supply in the development pipeline, it is expected that the vacancy rates will move upward well into 006. Although both asking and effective rents are expected to continue to rise, it is projected that the pace will slow as vacancies rise. TABLE CAP RATE TRENDS RETAIL Naples s strong tourist destination status strengthens the retail market, particularly from January through April, resulting in fast absorption of new space as it is completed. In Seattle, as in many other MSA s, the retail market is the healthiest of any commercial property type. New development is concentrated in expansion of regional malls and construction of lifestyle centers. The expansion programs of several grocery chains are fueling development and redevelopment of neighborhood centers in both suburban and centralcity locations. Several suburbs are trying to create mixed-use downtown areas with retail space topped by residential. Tampa Bay continues to maintain retail market strength. Another large regional mall is proposed for northeast Tampa and several lifestyle centers are under construction. Vacancy rates have declined in Hillsborough County, causing rental rate increases, and three years of strong residential growth have spawned a new round of retail development in New Tampa and South Pasco County. According to the International Council of Shopping Centers (ICSC), the regional mall sector is very healthy with tenants celebrating significant samestore sale reports. Regional malls are reporting very good levels of occupancy and mall rents are trending upwards. Even with a less than exciting start for the holiday shopping season, as of December s end, the ICSC was still expecting December sales to grow by % to.5% on a a year-over-year basis this year s season did have two extra shopping days compared with last year so that may have helped the increasingly popular procrastinator-shoppers. In mid-december the Commerce Department brightened retailers days with the report that retail sales had increased by 0.8% in October, revised from the first estimated 0.%, and that November sales, with an exclusion of automobile sales, rose 0.5%, much better than some analysts previous forecasts of a moderate 0.% increase. Higher energy prices and other economic concerns have depressed sales for discounters who rely on lower-income families. 4 Regional Mall Community Mall Neighborhood Strip 0 Year Treasury (January Avg.) 0 Year Treasury (Annual Avg.) Retailers who cater to higher-income families are basking in significant increases in sales. Income garnered from non-job related sources has bolstered this group Integra Realty Resources 0 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

23 PROPERTY SECTOR CYCLES APARTMENTS BY THE NUMBERS Apartment The urban multifamily capitalization rate average decreased yet again with this year s 7.6%, significantly lower than last year s average of 8.%. The capitalization rate average for suburban multifamily also continues to drop and is now 7.49% as compared with last year s 8.04%. Again the significantly decreasing cap rates are good news for these two property sectors and they continue to hold the top two spots in the cap rate ranks with suburban multifamily again in the first position. However, the percentage of those surveyed who expect capitalization rates to continue to decrease or stabilize for urban multifamily is less than last year s 97.7% the figure now is at 8%. Suburban multifamily discount rate average is 9.7%, another significant decrease from years past last year it was 0.% and the previous year it was 0.8%. 8.7% of those surveyed forecast suburban multifamily discount rates to decrease or maintain stability and while that is a significant percentage, it is well below last year s 9.8%. TABLE 4 APARTMENT MARKET CYCLE Atlanta, GA Cincinnati, OH Dallas, TX Denver, CO Fort Worth, TX Indianapolis, IN Kansas City, KS/MO Louisville, KY Nashville, TN Pittsburgh, PA Providence, RI Richmond, VA Coastal NJ Columbia, SC Columbus, OH Dayton, OH Memphis, TN New York, NY Northern, NJ Orlando, FL Sacramento, CA Los Angeles, CA Minneapolis, MN Baltimore, MD Charlotte, NC Detroit, MI Las Vegas, NV Phoenix, AZ Portland, OR San Francisco, CA San Diego, CA Tampa, FL Philadelphia, PA San Antonio, TX Oakland/Eastbay, CA Orange County, CA San Jose, CA Hartford, CT Miami, FL Washington, DC Austin, TX Boston, MA St. Louis, MO Tulsa, OK Chicago, IL Seattle, WA Indicates st stage within the phase Indicates nd stage within the phase Indicates last stage within the phase Houston, TX Milwaukee, WI Naples, FL RECOVERY EXPANSION HYPERSUPPLY RECESSION Decreasing Vacancy Rates Low New Construction Moderate Absorption Low/Moderate Employment Growth Neg/Low Rental Rate Growth Decreasing Vacancy Rates Moderate/High New Construction High Absorption Moderate/High Employment Growth Med/High Rental Rate Growth Increasing Vacancy Rates Moderate/High New Construction Low/Negative Absorption Moderate/Low Employment Growth Med/Low Rental Rate Growth Increasing Vacancy Rates Moderate/Low New Construction Low Absorption Low/Negative Employment Growth Low/Neg Rental Rate Growth *City data compiled using the following sources: IRR Surveys, REIS, and Legg Mason Copyright 005 Integra Realty Resources VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

24 TABLE 5 APARTMENT MARKET CONDITIONS AND FORECASTS: Central Business Districts and Suburban Market Areas TOTAL FORECAST TOTAL FORECAST AVG. ANNUAL UNDER AVG. ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY RATE VACANCY TO MARKET AREA (UNITS) (%) (UNITS) (UNITS) (UNITS) (UNITS) (%) (%) BALANCE Atlanta, GA 40, ,400,58 9,400 4, Austin, TX 4,7 0.,89,097 5,50, Baltimore, MD 87, ,68 0 5,00, Boston, MA 0, , ,000, Charlotte, NC 74, ,89,40 0,84, Chicago, IL,000, ,050 -,66 5,700, Cincinnati, OH 06, ,650 -, Cleveland, OH 0, , , Columbia, SC 5,85.50,970 56, Columbus, OH 6, ,0 7 4,808, Dallas, TX 69, ,407 -,748 7,0, Dayton, OH, ,97 8, Denver, CO 76,8 8.9,607,5 6,500 5, Detroit, MI 70, ,4-79, Fort Worth, TX 44, , ,60, Hartford, CT 75, ,607-7, Houston, TX 55, ,4 -,80 4,00 5, Indianapolis, IN 05, ,765-6,00, Kansas City, KS/MO 4, ,60 746,700, Las Vegas, NV 56, ,8,40 6,480 4, Long Island, NY, , Los Angeles, CA 745, ,95,04 9,44, Louisville, KY 4,800.55,557,065 8,400, Memphis, TN 6, , ,00, Miami, FL 57, , , Milwaukee, WI 95, , -50, Minneapolis, MN 5, , ,00, Naples, FL, Nashville, TN 58,50 6.8, ,700, New Jersey, Coastal 6,00 4., New Jersey, Northern 957, ,88,94,800, New Orleans, LA 64, ,045, New York, NY,970, ,90,59 4,086, Oakland, CA 45, , ,80, Orange County, CA 97, ,08,74 9,90, Orlando, FL 7, ,65,90 6,60, Philadelphia, PA 94,89.9 7, ,878, Phoenix, AZ 5, ,46,90,09, Pittsburgh, PA 8, ,066-89, Portland, OR 96, ,55-94, Providence, RI 4, , Richmond, VA 7, , ,5, Sacramento, CA 9, , ,800, Salt Lake City, UT 75, ,79 79,548, San Antonio, TX 5, , ,65, San Diego, CA 80, , ,88, San Francisco, CA 5, , ,95, San Jose, CA 06, , ,77, Seattle, WA 87, ,99 7,950, St. Louis, MO 8, ,5-997,555, Tampa, FL 60,4 8.45,59,84 0,600, Tulsa, OK 65, ,85-7, Washington, DC 68, ,64,485 9,400 7, Total: Simple Avg: Total: Total: Total: Total: Average: Average: Average:,705, ,4 6,07 59,95 98, Weighted Avg: 6.6 Note : Italicized Inventory, Vacancy, Absorption and Under Construction figures were provided by REIS, Inc Copyright 005 Integra Realty Resource INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

25 PROPERTY SECTORS APARTMENT Vacancy rates continue to rise. This year the vacancy rate is 6.6%, considerably higher than last year s 5.96% and the previous year s 5.6%. The forecasted equilibrium is now.59 years, an increase from last year s.4 years. The number of apartment units planned for construction is higher than last year s figure. This year it is reported that 59,95 units are in the development pipeline and last year it was 44,975 units. QUICK MARKET GLANCE Both suburban and urban multifamily were again ranked as the top two in the 004 cap rate ranks as well as the 004 discount rate ranks. The number of apartment units in the pipeline has begun to move back up, although only slightly, but it may not be a problem if the fundamentals finally come into alignment the long-term demographics trend still bodes well for this property sector word on the street is that this market has bottomed out, concessions are disappearing and vacancy rates are eroding. However, favorable conditions for the multifamily sector don t exist in every market. Market conditions remain soft throughout the Seattle region with the vacancy rate stuck above 7% for the past three years. Average rents continue a slow decline. New construction remains at low levels and absorption is weak because persistently low mortgage rates continue to draw renters into the ownership market. Net migration to the region is beginning to increase, but has yet to make an impact on the rental market. Despite weak market fundamentals, investors are pouring money into the market, driving up prices. The investors are positioning themselves to take advantage of substantial rental growth when the market does turn around, though even the most optimistic observers believe that won t happen for a year or more. TABLE 6 CAP RATE TRENDS APARTMENT 0 9 Markets with forbidding home values are favorites for investors in this sector and Los Angeles is the poster child for out of reach home costs. With its consistent shortage of affordable housing and constriction on space for development, multifamily has remained strong throughout the recent past. Vacancies are among the lowest of any nationwide. Even with historically low interest rates, buying a home in Los Angeles was tough. Now that interest rates are beginning to move up, it s almost impossible for many hopeful homeowners. In June 004, the median price of a single-family home was nearly $475,000, forcing many potential homebuyers into the apartment rental market. Asking and effective rents have made a slow and steady upward climb in 004 and that trend is expected to continue in 005. Cap rates may increase slightly as interest rates rise Urban Multifamily Suburban Multifamily 0 Year Treasury (January Avg.) 0 Year Treasury (Annual Avg.) Integra Realty Resources VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

26 PROPERTY SECTOR CYCLES INDUSTRIAL BY THE NUMBERS Industrial The manufacturing capitalization rate average declined again and now stands at 9.4% as compared with 9.65%. The office/warehouse cap rate average also is falling with a decrease from last year s 9.7% to this year s average of 8.74%. Even R & D cap rates continue the downward trend with this year s average of 9.5%, well below last year s 9.47%. A significant drop of the cap rate average was experienced in the bulk property class from last year s 9.6% to this year s 8.8%. Discount rates for all industrial property classes also decreased from last year s averages manufacturing to % from.4% office/warehouse to 0.4% from 0.9% R & D to 0.9% from.% bulk to 0.5% from 0.9% TABLE 7 INDUSTRIAL MARKET CYCLE Atlanta, GA Baltimore, MD Boston, MA Chicago, IL Cincinnati, OH Columbus, OH Dallas, TX Dayton, OH Denver, CO Houston, TX Indianapolis, IN Kansas City, KS/MO Memphis, TN Nashville, TN New York, NY Phoenix, AZ Providence, RI Sacramento, CA San Antonio, TX Seattle, WA Tulsa, OK Washington, DC Detroit, MI Louisville, KY Oakland, CA Orange County, CA Orlando, FL Philadelphia, PA Portland, OR San Francisco, CA San Diego, CA San Jose, CA St. Louis, MO Tampa, FL Coastal NJ Morristown/Newark, NJ Naples, FL Fort Worth, TX Indicates st stage within the phase Indicates nd stage within the phase Indicates last stage within the phase Austin, TX Hartford, CT Pittsburgh, PA Richmond, VA Columbia, SC Charlotte, NC Las Vegas, NV Los Angeles, CA Miami, FL Milwaukee, WI Minneapolis, MN RECOVERY EXPANSION HYPERSUPPLY RECESSION Decreasing Vacancy Rates Low New Construction Moderate Absorption Low/Moderate Employment Growth Neg/Low Rental Rate Growth Decreasing Vacancy Rates Moderate/High New Construction High Absorption Moderate/High Employment Growth Med/High Rental Rate Growth Increasing Vacancy Rates Moderate/High New Construction Low/Negative Absorption Moderate/Low Employment Growth Med/Low Rental Rate Growth Increasing Vacancy Rates Moderate/Low New Construction Low Absorption Low/Negative Employment Growth Low/Neg Rental Rate Growth *City data compiled using the following sources: IRR Surveys, REIS, and Legg Mason Copyright 005 Integra Realty Resources 4 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

27 TABLE 8 INDUSTRIAL MARKET CONDITIONS AND FORECASTS: Central Business Districts and Suburban Market Areas TOTAL FORECAST TOTAL FORECAST AVG. ANNUAL UNDER AVG. ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY RATE VACANCY TO MARKET AREA (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE Atlanta, GA 56,00, ,98,500,74,500 5,400,000,5, Austin, TX,596, ,06,505 6,946 84,000 5, Baltimore, MD 0,949,000.50,74,5,046,750 6,400,000,65, Boston, MA 06,00, ,455,000 -,00,500,00,000 56, Charlotte, NC 4,895, ,9,004 90,000,55,000 5, Chicago, IL 979,000, ,90,500 7,049,750 7,000,000,066, Cincinnati, OH 49,000,000. 7,7,500 -,4,750,500,000,666, Cleveland, OH 6,64, ,980,74 -,85,000 8,067,000,954, Columbia, SC,075, ,07,500 00, ,000 5, Columbus, OH 68,0,64. 0,55,0 -,750,68,000,600, Dallas, TX 9,80, ,60,8-779,60 4,695,875 48, Dayton, OH 65,659, ,6,846 6,090 80,000,000, Denver, CO 76,700, ,859, ,50 6,000,000,666, Detroit, MI 87,055,000. 7,687,45 -,866,750 4,970,000,4, Fort Worth, TX 75,9, ,78, 500,9,06,80 45, Hartford, CT 67,55, ,,69 -, , , Houston, TX 405,800, ,58,000,4,750 7,90,000,60, Indianapolis, IN 04,500, ,50, ,500 7,500,000 4,500, Kansas City, KS/MO,500,000. 4,745,000 -,759,50,750,000, Las Vegas, NV 77,946, ,70,4,5,784 9,00,000,66, Long Island, NY 47,000, ,80,000,800,000 5,000,000,66, Los Angeles, CA 94,9, ,957,97 5,60,7 8,0,000 5,69, Louisville, KY 4,5, ,84,7 66,000 5,700,000,666, Memphis, TN,64, ,67,04 7,8 0,95,090,8, Miami, FL 9,99, ,480,688 6,50 6,64,55,58, Milwaukee, WI,40, ,96, Minneapolis, MN 0,90,000.6,897,960 48,000,940,000,66, Naples, FL 0,70, ,76 9,5 94,000 9, Nashville, TN 76,00, ,78,000 50,000 0,400,000,46, New Jersey, Coastal,050, ,5,500 87,500,450,000 8, New Jersey, Northern 685,000, ,95,000 4,50,000 6,500,000 7,000, New Orleans, LA 57,57, ,90,466-0,750 94,000 4, - - Oakland, CA 47,464, ,66,000-69,500,47,000,699, Orange County, CA 9,76, ,477, ,579 4,847,000,078, Orlando, FL 80,500, ,706, ,50,8,000,450, Philadelphia, PA 5,507,7.89,679,66-67,40,057,58-59, Phoenix, AZ,0, ,8,600 96,50 7,450,000 5,, Pittsburgh, PA 8,70, ,4,5 -,,440,00,000-6, Portland, OR 6,06,9 9.59,0, ,648 5,576,76,66, Providence, RI 5,000, ,500,000 -,450,000 4, Richmond, VA 7,95, ,770, , ,000 5, Sacramento, CA 54,950,000. 7,5,00 768,500 5,900,000,600, San Antonio, TX 55,579, ,64, 8,8,8, , San Diego, CA 78,04, ,74,4 855,957 9,67,000,67, San Francisco, CA 8,56, ,574,000 -,74,50,7, , San Jose, CA 8,80, ,794,000 -,069,750 95,000,40, Seattle, WA 06,94, ,984,5-9,549,989,007,750, St. Louis, MO 90,86, ,650,684-4,000 4,90,000,507, Tampa, FL 4,70, ,5,860 09,69 8,600,000,00, Tulsa, OK 57,00, ,48,000-8,47 900, Washington, DC,900, ,,90,85,500 6,650, Total: Simple Avg Total: Total: Total: Total: Average: Average: Average: 9,76,90, ,58,9 7,56,44 7,98,958 84,487, Weighted Avg: 9.98 Italicized Inventory (i.e. blue), Vacancy, Absorption and Under Construction figures were provided by REIS, Inc VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 5

28 PROPERTY SECTORS INDUSTRIAL Vacancy rates in the industrial property sector show a promising downward trend with this year s 9.98% average as compared with last year s slightly higher 0.0% average. A positive trend also appears in the estimated years to balance. It is expected that it will take.59 years to reach equilibrium in this sector. Last year the average was.76 years. While lower, it still is higher than the two years ago estimate of.05 years. The development pipeline is moving upward, also. Last year it was expected that 40 million square feet would move through the pipeline. This year, that figure stands at 74 million square feet. This year the average net absorption was 7.5 million square feet compared with last year s 7.8 million square feet. TABLE 9 CAP RATE TRENDS INDUSTRIAL QUICK MARKET GLANCE Office/warehouse remains in 7th place on the cap rate ranks chart. Manufacturing also retains its th place as do bulk in 9th position and R & D in 0th place. The industrial categories also kept many of the same rankings in the average discount rate chart with manufacturing staying put at th place. R & D was again in 0th and office/warehouse is in 7th place Manufacturing Bulk Office/Warehouse R&D 0 Year Treasury (January Avg.) 0 Year Treasury (Annual Avg.) Integra Realty Resources Bulk continues to move up in the rankings and now is at 8th place. Good news is acknowledged in the Seattle industrial property sector as the South End and Pierce County submarkets come roaring back with rising absorption, falling vacancy rates and the resumption of speculative construction. The close-in Seattle market remains stable, while the technology-dependent Eastside and Boeing-dependent Snohomish County markets remain soft, although vacancy rates are beginning to drift downward in both areas. Development of big box distribution centers is shifting south to Pierce County and Thurston County. In the coastal New Jersey area, sales prices and buyer demand for industrial are at all-time highs. Prices paid versus lease rates and market fundamentals appear high and clearly the market is anticipating continued growth. Economic uncertainty has kept the lid on speculative development and makes near-term projections difficult. Market fundamentals such as employment growth are difficult to project with quarterly employment and industrial capacity shifting back and forth over eight consecutive quarters. Inflation is good for producers and might signal continued positive trends for industrial. Expect a shortterm leveling off in prices and stable user demand. The past year has been somewhat of a roller coaster ride as the corporate world tries to re-establish its footing in the jobless recovery here and in the struggling world economies. Recent increases in the volume of international trade through the Miami Customs District, as well as a reported 7.4% increase of imports, appear to signal a positive change which will reflect as increased demand for warehouse space in the Miami MSA. Boosted by this rising demand, the industrial market is making a comeback, posting positive net absorption and decreased vacancy rates. Rental rates are expected to continue a steady increase over the next year. Leasing is expected to increase over sales as the economy continues to recover and sale prices are expected to slow and flatten in the near term. In Naples, Florida, the lack of vacant industrial land has driven up property values. 6 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

29 DEMOGRAPHIC & ECONOMIC TRENDS Choosing a lucrative real estate investment is easier when an investor includes demand components of the macro real estate environment as integral elements in the decision process. Although investors must factor in other essentials such as interest rate and capital flow trends, identifying geographic areas that are expanding or declining economically is an important part of the game. Demand components of real estate investment fundamentals such as trends in population and employment growth are key indices to judging whether an area is on the edge of an economic boom or bust. Other critical analyzed indices are growth in household and household income. NPA Data Services of Washington, D.C. provided the demographic and economic data for all the charts in this section. With this data gathered over the past years, we have developed a good snapshot of the best Metropolitan Statistical Areas with the most desirable risk-reward real estate investments. However, the outlook of any MSA is more complex than indicated by information gathered merely at the macro level. We know that in each market there are areas of opportunity as well as hazards. That s why it s crucial to have an adviser who is on the ground and specializes in a specific MSA. Our local IRR representatives thoroughly know their local markets and provide useful information and advice about submarket risks and opportunities in each of these MSA s. Since employment sectors don t perform in lock-step as the economy evolves, we also provide information about refined categories by employment type. This section covers information found in the charts on the following pages or on-line at When appearing in both tables, MSA s have a greater potential for strong economic futures based on population growth. Last year, four MSA s made the cut for both tables. This year only three did so again with San Diego dropping off this list. Phoenix This MSA has reliably held on to its rankings in these two charts for awhile. Phoenix retained its year-ago number status in percentage change, and its number 6 position in absolute change. In the year before that, it ranked number in percentage change and number 7 in absolute change. Solid job growth and its continuing appeal to retirees and other sun-lovers make this MSA a favorite for investors. Atlanta Another solid performer, Atlanta is number 7 in percentage change and number in absolute change. Last year it was number 8 in percentage change and number in absolute change. Denver Denver is more than holding its own in the top 0 of both charts. Compared with last year s ranking of number 0 in percentage change and number 9 in absolute change, this year s report has it at number 8 in both charts. The LoDo residential district in downtown Denver remains a beacon of what can be for similar-sized MSA s with excitement-deprived downtowns. TABLE 0 TOP 0 ANNUAL GROWTH AREAS BY PERCENTAGE CHANGE Annual Growth Rate Absolute Annual Growth '04-'09 00 '99-'04 '04-'09 '99-'04 Rank Rank Rank MSA Rank Rank Orlando, FL Austin, TX Phoenix, AZ Las Vegas, NV Ft. Worth, TX Sacramento, CA Atlanta, GA Denver, CO Tampa, FL San Diego, CA 4 6 SOURCE: NPA Data Services, Inc., compiled by IRR TABLE TOP 0 ANNUAL GROWTH AREAS BY ABSOLUTE CHANGE Annual Growth Rate Absolute Annual Growth '04-'09 00 '99-'04 '04-'09 '99-'04 Rank Rank Rank MSA Rank Rank Washington, DC 0 0 Houston, TX 0 4 Atlanta, GA Los Angeles, CA Dallas, TX Phoenix, AZ Orange County, CA Denver, CO Chicago, IL Boston, MA 6 SOURCE: NPA Data Services, Inc., compiled by IRR VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 7

30 DEMOGRAPHIC & ECONOMIC TRENDS In addition to these two charts, these MSA s ranked in the top 0 in the following population/employment growth charts: Phoenix.6% projected growth for population growth;.85% household growth;.74% total household income growth;.76% total employment growth;.66% manufacturing employment growth; 4.0% wholesale/retail employment growth; 4.% wholesale employment growth;.9% retail employment growth; 4.8% FIRE employment growth;.88% services employment growth and.% contract construction employment growth. Atlanta.4% projected growth for population growth;.6% household growth;.6% total employment growth;.8% wholesale/retail employment growth;.57% wholesale employment growth;.97% retail employment growth; 4.06% services employment growth and.6% contract construction employment growth. Denver This year Denver was again only in the top 0 on FIRE employment with.98% projected growth, an increase from last year s.8% projected growth in FIRE employment. Population, Household Growth and Average Household Income Growth The third time is the charm as in the charm of sun and sand, as Naples and Orlando grab the top two spots in population and household growth for the third year in a row. Overall, the top 0 average dropped to.5% from last year s.54% projected population growth percentage. Naples is well above the top 0 average with.%, but has dropped from its last year s reported.9% and Orlando shows.75%, a slight drop from last year s.76%. Although still number one, Naples household growth projections also dropped to.57% from last year s.79% while Orlando dropped to.98% from last year s.5% The average in this section also fell, from last year s top 0 average of.9% to this year s.77% average. Overall this category is trending upward. The top 0 average in household income growth for this year is.6%, well above last year s.6% and the previous year s.77%. The average for the total MSA s analyzed also rose to.5% from last year s.08% and the previous year s.4%. Employment Growth Not much is shaking in this chart, with the top 5 retaining their positions in this chart for the third year. Orlando continues to climb with this year s 4.6% projected average higher than both last year s 4.4% and the previous year s 4.07%. Percentage for forecasted employment growth for all top 0 markets is also higher up to.7% from last year s.56% and the previous year s.5%. In fact, employment is trending up in all analyzed MSA s, a jump to.4% from last year s.%. FIRE Employment Growth A welcomed upward trend for employment in finance, insurance and real estate has appeared on the horizon offering a glimmer of hope for the office property sector in many MSA s. After a multi-year slide, averages in this category have briskly rebounded. Last year the top 0 MSA s average projected growth dropped to.9% from the previous year s.55% this year the average for the top 0 is 4.5%. The trend continues in the overall average with an increase from last year s.96% to this year s.7%. Orlando, Naples and Sacramento are again the top in this category. Orlando surpassed last year s average of.84% to this year s 4.58% projected growth average as did Naples and Atlanta, with 4.4% and 4.7% averages respectively. Last year s average for Naples was.6% and for Sacramento it was.5%. Service Employment Last year, a climbing trend began in this sector with an increase from.84% to.96%. This year s.98% for projected growth in the top 0 MSA s continues that increase. Oakland, California, toppled Providence, Rhode Island, from its three-year top reign for average household income growth. In last year s report, Oakland was number 4 with.9% projected income growth and is this year s leader of the pack with a.67% projected average. Fort Worth has also made significant strides on this chart with its second place showing with a.6% average, up from last year s.5% average in the number 7 spot. Miami moved down to number 0 from last year s number spot. 8 INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

31 DEMOGRAPHIC & ECONOMIC TRENDS TABLE TOTAL EMPLOYMENT GROWTH By Absolute Annual Growth and Annual Growth Rate Percentage 0 0 LEGEND Atlanta, GA Los Angeles, CA Washington, DC Houston, TX Dallas, TX 80 Chicago, IL Phoenix, AZ Absolute Annual Growth (000 s) % -0.5% Washington, DC Seattle, WA Minneapolis/St. Paul, MN Atlanta, GA Denver, CO Tampa, FL Houston, TX Dallas, TX Orange County, CA Philadelphia, PA Sacramento, CA San Diego, CA Portland, OR Las Vegas, NV Detroit, MI San Jose, CA Oakland, CA Austin, TX Fort Worth, TX New York, NY Salt Lake City, UT Tampa, FL Baltimore, MD Charlotte, NC Las Vegas, NV Los Angeles, CA Miami, FL San Francisco, CA San Antonio, TX Columbus, OH Boston, MA Denver, CO Nashville, TN Minneapolis/St. Paul MN Orlando, FL Kansas City, KS/MO Sacramento, CA St. Louis, MO Seattle, WA Indianapolis, IN Austin, TX Cincinnati, OH San Antonio, TX Chicago, IL Portland, OR Fort Worth, TX Baltimore, MD Milwaukee, WI Salt Lake City, UT Cleveland, OH San Francisco, CA San Jose, CA Pittsburgh, PA Memphis, TN Miami, FL Oakland, CA Newark, NJ Richmond, VA Sarasota, FL Philadelphia, PA Nashville, TN Tulsa, OK New Orleans, LA Columbus, OH Charlotte, NC Sarasota, FL Hartford,CT Columbia, SC Newark, NJ Kansas City, KS/MO Honolulu, HI Omaha, NE New Orleans, LA Indianapolis, IN Pittsburgh, PA Richmond, VA Des Moines, IA Naples, FL Dayton, OH Tulsa, Cincinnati, OH Providence, RI Atlantic City, NJ St. Louis, MO OK Atlantic City, NJ New York, NY Omaha, NE Milwaukee, WI Columbia, SC Honolulu, HI Des Moines, IA Dayton, OH Detroit, MI Providence, RI Cleveland, OH Memphis, TN Hartford, CT Louisville,KY Boston, MA Louisville, KY Phoenix, AZ Orange County, CA San Diego, CA Orlando, FL Naples, FL 0.0% 0.5%.0%.5%.0%.5%.0%.5% 4.0% 4.5% 5.0% Annual Growth Rate (%) SOURCE: NPA Data Services, Inc; compiled by IRR VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC. 9

32 TABLE DEMOGRAPHIC AND ECONOMIC TRENDS Mid Year 004 POPULATION 004 Annual Growth Rate Absolute Annual Growth Current '04-'09 '04-'09 '99-'04 '99-'04 '04-'09 '04-'09 '99-'04 '99-'04 MSAs [000 s] Rank [%] Rank [%] Rank [000 s] Rank [000 s] HOUSEHOLDS 004 Annual Growth Rate Absolute Annual Growth Current '04-'09 '04-'09 '99-'04 '99-'04 '04-'09 '04-'09 '99-'04 '99-'04 [000 s] Rank [%] Rank [%] Rank [000 s] Rank [000 s] Atlanta, GA 4, , Atlantic City, NJ Austin, TX, Baltimore, MD, Boston, MA 6, , Charlotte, NC, Chicago, IL 8, , Cincinnati, OH, Cleveland, OH, Columbia, SC Columbus, OH, Dallas, TX, , Dayton, OH Denver, CO, Des Moines, IA Detroit, MI 4, , Ft. Worth, TX, Hartford, CT, Honolulu, HI Houston, TX 4, , Indianapolis, IN, Kansas City, KS/MO, Las Vegas, NV, Los Angeles, CA 9, , Louisville, KY, Memphis, TN, Miami, FL, Milwaukee, WI, Minneapolis, MN, , Naples, FL Nashville, TN, New Orleans, LA, New York, NY 9, , Newark, NJ, Oakland, CA, Omaha, NE Orange County, CA, Orlando, FL, Philadelphia, PA 5, , Phoenix, AZ, , Pittsburgh, PA, Portland, OR, Providence, RI Richmond, VA, Sacramento, CA, Salt Lake City, UT, San Antonio, TX, San Diego, CA, , San Francisco, CA, San Jose, CA, Sarasota, FL Seattle, WA, , St. Louis, MO, , Tampa, FL, , Tulsa, OK Washington, DC 5, , Average INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

33 TABLE continued DEMOGRAPHIC AND ECONOMIC TRENDS Mid Year 004 Average Household Income 004 Annual Growth Rate Absolute Annual Growth Current '04-'09'04-'09 '99-'04 '99-'04 '04-'09 '04-'09 '99-'04 '99-'04 [$] Rank [%] Rank [%] Rank [$] Rank [$] Total Employment 004 Annual Growth Rate Absolute Annual Growth Current '04-'09'04-'09 '99-'04 '99-'04 '09-'04 '04-'09 '99-'04 '99-'04 [000 s] Rank [%] Rank [%] Rank [000 s] Rank [000 s] MSA s 95, , Atlanta, GA 87, Atlantic City, NJ 89, Austin, TX 86, , Baltimore, MD 08, , Boston, MA 87, , Charlotte, NC 05, Chicago, IL 86, Cincinnati, OH 85, , Cleveland, OH 80, , Columbia, SC 8, , Columbus, OH 0, , Dallas, TX 77, , Dayton, OH 00, , Denver, CO 89, , Des Moines, IA 9, , Detroit, MI 74, , Ft. Worth, TX 07, , Hartford, CT 97, , Honolulu, HI 08, Houston, TX 84, , Indianapolis, IN 85, , Kansas City, KS/MO 76, Las Vegas, NV 0, , Los Angeles, CA 8, , Louisville, KY 84, , Memphis, TN 89, , Miami, FL 90, Milwaukee, WI 0, , Minneapolis, MN 95, Naples, FL 87, Nashville, TN 78, New Orleans, LA 9, , New York, NY, , Newark, NJ 96, , Oakland, CA 89, Omaha, NE 4, , Orange County, CA 76, , Orlando, FL 9, Philadelphia, PA 79, , Phoenix, AZ 8, Pittsburgh, PA 84, , Portland, OR 74, , Providence, RI 87, , Richmond, VA 84, Sacramento, CA 85, Salt Lake City, UT 89, San Antonio, TX 8, , San Diego, CA 98, , San Francisco, CA 69, , San Jose, CA 84, Sarasota, FL 78, Seattle, WA 0, , St. Louis, MO 7, , Tampa, FL 79, , Tulsa, OK 8, , Washington, DC Average SOURCE: NPA Data Services, Inc., compiled by IRR VIEWPOINT 005 INTEGRA REALTY RESOURCES, INC.

34 APPENDIX APPENDIX For additional industry trend charts, check on-line at TABLE 4 TABLE 6 POPULATION GROWTH Top 0 Markets AVERAGE HOUSEHOLD INCOME GROWTH Top 0 Markets Annual Growth Rate Absolute Annual Growth Annual Growth Rate Absolute Annual Growth '04-'09 '04-'09 '99-'04 '99-'04 '04-'09 '04-'09 Rank (%) Rank (%) MSA Rank (000 s)..57 Naples, FL Orlando, FL Austin, TX Phoenix, AZ Las Vegas, NV Atlanta, GA Sacramento, CA Sarasota, FL Tampa, FL Salt Lake City, UT IRR Top 0 Average..8 IRR MSA Average SOURCE: NPA Data Services, Inc., compiled by IRR '04-'09 '04-'09 '99-'04 '99-'04 '04-'09 '04-'09 Rank (%) Rank (%) MSA Rank ($ s) Oakland, CA Ft. Worth, TX Providence, RI Orange County, CA Hartford, CT Newark, NJ Baltimore, MD Phoenix, AZ Austin, TX Miami, FL IRR Top 0 Average.5.8 IRR MSA Average SOURCE: NPA Data Services, Inc., compiled by IRR TABLE 5 HOUSEHOLD GROWTH Top 0 Markets TABLE 7 TOTAL EMPLOYMENT GROWTH Top 0 Markets Annual Growth Rate Absolute Annual Growth Annual Growth Rate Absolute Annual Growth '04-'09 '04-'09 '99-'04 '99-'04 '04-'09 '04-'09 Rank (%) Rank (%) MSA Rank (000 s) Naples, FL Orlando, FL Las Vegas, NV Phoenix, AZ Austin, TX Atlanta, GA Sacramento, CA Sarasota, FL Tampa, FL San Diego, CA IRR Top 0 Average.4. IRR MSA Average SOURCE: NPA Data Services, Inc., compiled by IRR '04-'09 '04-'09 '99-'04 '99-'04 '04-'09 '04-'09 Rank (%) Rank (%) MSA Rank (000 s) Orlando, FL Naples, FL Austin, TX Phoenix, AZ Las Vegas, NV Atlanta, GA Sarasota, FL Salt Lake City, UT Sacramento, CA Tampa, FL IRR Top 0 Average.4. IRR MSA Average SOURCE: NPA Data Services, Inc., compiled by IRR INTEGRA REALTY RESOURCES, INC. VIEWPOINT 005

35 Every effort has been made in this publication to provide accurate information regarding the subject matters covered. Provided in this publication are the analyses and opinions derived from the available data of the members of Integra Realty Resources, Inc. and other reputable services. While the available data is presumed to be accurate, this publication is distributed with the understanding that it does not render legal, accounting, appraisal, counseling, investment or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person, having access to the details of the situation, be employed. Copyright February 005, Integra Realty Resources, Inc. Viewpoint 005 Editor: Kevin K. Nunnink, MAI Park Avenue, 9th Floor New York, NY 006 () , ext. 0