REITS REMAIN VERY ACTIVE, WITH INVESTMENT VOLUME UP 20.5% OVER

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1 CBRE Limited Global Research and Consulting Canadian Investment ca/research Year-End 211 REITS REMAIN VERY ACTIVE, WITH INVESTMENT VOLUME UP 2.5% OVER 21 By Roelof van Dijk Research Manager, Canada SUMMARY Most markets recorded increased activity in 211 as total During the fourth quarter, REITs were again significant national investment volume rises 2.5% compared to 21. REITs and buyers of commercial real estate, accounting for 31.4% of REOCs continue to lead the charge, with foreign investors attempting to total acquisitions in 211, which is up substantially from re-enter the market. 15.7% in 21. Life insurance companies and pension funds accounted for 7.5% of all sales in 211, which was Canada s commercial real estate market slowed in the largely in line with 21, but was down from 28 and fourth quarter with investment volume down 12.7% from 29 when institutional buyers accounted for the third quarter of 211, but up 5.6 per cent from the approximated 2.% % of all transactions. Private buyers same period one year ago. Fourth quarter investment remained the largest buyer group in 211, at 47.8%, sales volume totaled $5.7 billion and brought full year dropping just 1. percentage point from 21. Canadian volume to $23.6 billion; a 2.5% jump over Private Canadian Investor REIT/REOC 21 levels and the highest annual total since 27. A Purchaser Profile Foreign Investor Institution Pension Fund Advisor Opportunity Fund combination of rising investor confidence and the motivation by select owners to sell, continued to propel the 1% Canadian commercial real estate t market. 8% In spite of the European economic woes and flat Canadian job growth, investors continue to see value as 6% the hunt for income intensifies. In a low interest rate environment, low capitalization rates appeal to many 4% buyer groups, particularly institutional investors and private buyers anxious to both preserve capital and secure 2% a long-term income stream. % Investment Trends First Half Second Half Source: CBRE Limited and RealNet Canada Inc. $35, $28, $21, $14, $7, Nat. Avg. Cap Rate (R) 1 Yr. GOC Bond Yield (R) Source: CBRE Limited, RealNet Canada Inc. and Realtrack Inc. 1.% 8.% 6.% 4.% 2.%.% Looking forward to 212, a broad spectrum of investors continue to be very aggressive in their pursuit of income producing real estate that meets their investment criteria. REITs are expected to remain very significant buyers and sellers, as recently announced portfolio deals will surely lead to the disposition of some non-core assets. REITs also raised $5.9 billion in new equity and debt during 211, up 22.9% over 21, which leaves many REIT s with significant capacity to grow. Pricing is expected to remain aggressive with a surplus of capital seeking limited available properties. Depending on the portfolio deal activity, investment volume for 212 will likely be in the $2. - $25. billion range. 211, CBRE

2 Significant (Above $1. MM) $4, $3,2 $2,4 $1,6 $ Number of Investment Comparison $35, $3, $25, $2, $15, $1, $5, Office Industrial Retail Multi-Residential ICI Land Hotel 2Q7 4Q7 2Q8 4Q8 2Q9 4Q9 2Q1 4Q1 2Q11 4Q11 Source: CBRE Limited, RealNet Canada and Realtrack Inc. YEAR-END INVESTMENT VOLUME BY MARKET (MILLIONS) Market Office ($) Industrial ($) Retail ($) Multi-Family y($) ICI Land ($) Hotel *($) Total($) Vancouver ,361 Calgary 1, ,452 Edmonton ,4 London Waterloo Region Toronto 2,652 1,87 2,954 1, ,614 Ottawa Montreal ,389 Halifax National 6,88 4,284 5,65 3,57 3, ,553 Source: CBRE Limited, RealNet Canada and Realtrack Inc. * See Hotels discussion on page 4. Economic Trends 1.%.8%.6%.4%.2%.% Source: Conference Board of Canada * Forecasted Employment % Change GDP % Change 1Q11 2Q11 3Q11 4Q11* 1Q12* 2Q12* 3Q12* ECONOMIC TRENDS In the fourth quarter of 211, businesses and consumers were bombarded with news of significant downside risks to global economic growth. Europe is expected to be in a mild recession and recent growth in the U.S. might be difficult to sustain in the second half of 212. This suggests that subdued demand for commodities and goods will restrain Canadian economic growth in the near-term. Real gross domestic product (GDP) rose.4% in the fourth quarter, and unemployment rose for three consecutive months to end 211 at 7.5%. Of particular importance to the office market, the Finance, Insurance and Real Estate (FIRE) sector continued to lose jobs throughout 211, ending with 3.2% fewer employees, whereas jobs in the Professional, Scientific and Technical Services sector were up 5.5% year-over-year (YOY). Page 2 211, CBRE Year End 211

3 OFFICE TRADE ACTIVITY There was $6.1 billion in office investment activity in 211, which is up 65.% over 21. Activity increased in all markets, except for Ottawa and Halifax, which h were down 48.5% and 12.8%, respectively. Calgary experienced the largest percentage increase, up 325.8%, or $847.3 million, to $1.1 billion. Although the increase in Toronto was only 58.6% to $2.7 billion, that translated into an increase of almost $1. billion. Dundee REITs acquisition of the Blackstone and Slate office portfolio for $ million, was the largest transaction in the second half of 211 and contributed to the increase in activity in Toronto. At the end of the fourth quarter, the national average downtown Class A cap rate was 5.86%, which is well below the previous low of 6.19% recorded in the second quarter of 27. The average suburban cap rate, at 7.17%, remains above the 6.89% recorded in mid-27. INDUSTRIAL TRADE ACTIVITY Despite the ongoing headwinds being experienced by the manufacturing sector, industrial market fundamentals continue to pick up, particularly for distribution centres. This is not just a western Canada phenomenon, as even the Greater Toronto Area (GTA) is experiencing speculative construction and an increase in net asking rental rates. There was $4.3 billion worth of transactions in 211, down 25.3% from 21, however, the 21 volume was inflated as a result of the $2. billion ING industrial portfolio deal, in the second half of 21. At the end of the fourth quarter, the national average industrial cap rate was 6.97%, which is just above the historical low of 6.8% recorded in the second quarter of 27. RETAIL TRADE ACTIVITY Investment in the retail sector remained strong in 211, with volume up 46.9% over 21 to $5.7 billion, however, the number of transactions was up only 1.4% to 1, The GTA accounted for 52.3% of the national retail investment activity in 211, with $2.9 billion in investment activity, up 97.9% over 21. This large increase was the result of several large transactions, particularly in the first half of 211. At the end of the fourth quarter, the national average retail (neighbourhood) cap rate was 6.91%, which is just above the historical low of 6.88% recorded in the second quarter of 27. Office Trade Activity $12, $1, $8, $6, $4, $2, Industrial Trade Activity $6, $5, $4, $3, $2, $1, Retail Trade Activity $6, $5, $4, $3, $2, $1, Page ,8 1,5 1, ,8 1,5 1, , CBRE Number of Number of Transactio ons Number of Year End 211

4 MULTI_HOUSING TRADE ACTIVITY Multi-housing activity has been slow over the last few years primarily due to the limited amount of product available as many owners do not want to sell, however, 211 investment volume was up 23.6% over 21 at $3.8 billion. The most significant multi-housing transaction in 211 occurred in London, ON, with Minto Group Inc. purchasing the 2,326- unit Cherryhill Village apartment complex from Esam Construction for $215. million. At the end of the fourth quarter, the national average multi-housing i (highh rise B) cap rate was 5.57%, which is just below the previous low of 5.66% recorded in the second quarter of 27. Multi-Residential Trade Activity $5, $4, $3, $2, $1, 1,25 1, Number of ICI-LAND TRADE ACTIVITY ICI land activity, which has been suppressed due to the lack of development occurring, meaning many developers had enough land banked for their development programs, experienced a 13.% uptick in activity in 211. Most markets were either flat or experienced a minor uptick, however, Ottawa and Halifax experienced larger increases, with volume up 23.2% and 99.5%. In Halifax the increase is partially as a result of developers speculating on a strengthening local economy as a result of the federal government ship building contract. ICI Land Trade Activity $5, $4, $3, $2, $1, 2, 1,6 1,2 8 4 Numbe er of HOTEL TRADE ACTIVITY Hotel investment activity, at $876.7* million increased substantially in 211, up 33.8% over 21. The most significant hotel trade in 211 was the Northland Proeprties Corporation purchase of The Sutton Place Hotels in Vancouver and Edmonton for $197. million. At the end of the fourth quarter, the national average hotel (downtown full service) cap rate was 8.%, which is just below the previous low of 8.26% recorded in the third quarter of 27. $ mill ions Hotel Trade Activity * $3, $2,5 $2, $1,5 $1, $ sactions Number of Tran In order to get a more complete picture of the hotel market, the total Canadian hotels investment volume in 211 was $1,46.5 million, up 41.6% from $739.2 million in 21-It * Refers to the markets of Vancouver, Calgary, Edmonton, London, should be notes that the investment volume above Waterloo Region, the GTA, Ottawa, Montreal and Halifax only. Page 4 211, CBRE Year End 211

5 CANADIAN HIGHLIGHTS INVESTMENT TRANSACTIONS FROM THE SECOND HALF OF 211 Sector OFFICE: INDUSTRIAL: RETAIL: Price (millions) Size (SF/ Units/Acres) Address Purchaser $ ,141 Bell Tower/Oxford Tower, Edmonton, AB Aspen Properties Ltd. $ , Yonge Street, North York, ON RioCan REIT $ ,414 Hopewell Business Park, Bldgs A, B, G & H, Calgary, AB Westpen Properties Ltd. $44. 85, 65 Mississauga Road, Mississauga, ON Pannattoni Development Company $ ,443 The Village at Thunderbird Centre, Langley, BC Sun Life Assurance Company of Canada $18. 24,865 Hazelton Lanes, Toronto, ON First Capital Realty Inc. MULTI-RESIDENTIAL: $159. 1, ch. de la Cotes-des-Neiges, Montreal, QC Quebec Inc./Les Appartements t Rickhill Inc. $ ,478 Maple Grove Towers, North York, ON Double Z Investments ICI-LAND: HOTEL: MIXED: $ Steeles Avenue East, Scarborough, ON Mady Development Corp. $ Avenue, Edmonton, AB The City of Edmonton $ Holiday Inn Calgary Airport, Calgary, AB Roloh Investments $ Holiday Inn Yorkdale, Toronto, ON Easton s Group of Companies $ ,95, Metro Toronto Convention Centre, Toronto, ON Oxford Properties Group FOR MORE INFORMATION PLEASE CONTACT: Ross J. Moore Director of Research, Canada CBRE Global Research and Consulting T: ross.moore@cbre.com Roelof van Dijk Research Manager, Canada CBRE Global Research and Consulting T: roelof.vandijk@cbre.com This disclaimer shall apply to CBRE Limited, Brokerage, and to all other divisions of the Corporation ( CBRE ). The information set out herein (the Information ) has not been verified by CBRE, and CBRE does not represent, warrant or guarantee the accuracy, correctness and completeness of the Information. CBRE does not accept or assume any responsibility or liability, direct or consequential, for the Information or the recipient s reliance upon the Information. The recipient of the Information should take such steps as the recipient may deem necessary to verify the Information prior to placing any reliance upon the Information. The Information may change and any property described in the Information may be withdrawn from the market at any time without notice or obligation to the recipient from CBRE. Year End 211