Real Estate Research

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1 Americas/United States Equity Research REITs Research Analysts Ian Weissman George Auerbach Kris Trafton, CFA Real Estate Research INITIATION REIT Initiation: Looking to 2015, Bullish on Fundamentals, Less So on Valuation Launching coverage on 34 US REITs across the Mall, Shopping Center, Office, Hotels, Industrial and Apartment sectors. Forecasting 10% total returns over the next 12 months (including a 3.0% dividend yield), led by Malls (+14%), Industrial (12%), and Hotels (+10%). We see plenty of Alpha for investors with forecasted returns as high as +19% (FCE/A) to a low of +1% (OFC). Bullish on REIT fundamentals in '15: Strong US macro (notably jobs) should help to drive above average internal growth of 3.7%, while robust development pipelines across most property types should help to drive annualized FFO growth of 9% through Other reasons for our bullish view in 2015: 1) no new supply; 2) REITs have unlimited access to capital to help feed external growth engines (acquisitions and development); 3) debt markets continue to improve; 4) interest rates are likely to remain low over the next 12 months (sub 3%); 5) strong demand by private equity buyers (sovereign wealth funds, private capital) has compressed cap rates for the best quality assets a trend we believe will continue; and 6) 8-10% annualized dividend growth through How we compare to the Street: Earnings: relatively in-line next two years at 9% annualized growth; Target Prices: 5% above consensus. Bottom line: While we are bullish on operating fundamentals in 2015, the recent run-up in the group has valuations a bit stretched (REITs are up 9% over the last 30 days, and 24% YTD, outperforming the S&P 500 by 1,200bp since the start of the year) with the group now trading at just a 3% discount to NAV and 25x cash flow (AFFO). Greatest Risk: In our opinion, rising interest rates is a potential roadblock to a continuation of the real estate bull market over the next 12 months. Historically, when rates increase by more than 150bp over a given period of time, most REITs underperform broader equities by 1,400bp on an annualized basis. We believe the best hedge against rising rates are the Hotels, Malls and Industrial sectors which outperform when rates 'spike'. Top picks: FCE/A, SPG, BXP, TCO, PEB, SHO, LHO, RLJ, PLD, HPP, KIM DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION Client-Driven Solutions, Insights, and Access

2 Table of Contents Executive Summary: REITs Launch 4 Initiation of Coverage: REIT Sector 5 Initiation Tear Sheet: Top Investment Ideas with Brief Thesis 6 Industry Themes for REITs in Sector-Specific Themes for Sector-Specific Themes (Cont.) 9 REITs: The 2015 Bull Case 10 REITs: The 2015 Bear Case 11 Nationwide Tour (Ahead of Launch) Illustrates Healthy Economic Growth Across Major REIT Markets 15 Macro Backdrop Getting Better Credit Backdrop Very Healthy 16 Interest Rates and REITs 22 Dividends 9% Long-Term Growth Expected 28 Malls 30 General Growth (GGP): Neutral Rating; $28 Price Target; 12% Total Return Exp. 39 Macerich (MAC): Neutral Rating; $71 Price Target; 8% Total Return Exp. 45 Simon Properties (SPG): Outperform Rating; $205 Price Target; 17% Total Return Exp. 51 Taubman (TCO): Outperform Rating; $87 Price Target; 17% Total Return Exp. 57 Shopping Centers 63 DDR, Corp (DDR): Neutral Rating; $19 Price Target; 7% Total Return Exp. 68 Equity One (EQY): Neutral Rating; $25 Price Target; 9% Total Return Exp. 74 Federal Realty (FRT): Neutral Rating; $144 Price Target; 11% Total Return Exp. 80 Kimco (KIM): Outperform Rating; $27 Price Target; 13% Total Return Exp. 86 Regency Centers (REG): Neutral Rating; $65 Price Target; 9% Total Return Exp. 91 Office 97 Boston Properties (BXP): Outperform Rating; $147 Price Target; 17% Total Return Exp. 105 Brandywine Realty (BDN): Neutral Rating; $16 Price Target; 8% Total Return Exp. 112 Corporate Office (OFC): Underperform Rating; $27 Price Target; 1% Total Return Exp. 118 Douglas Emmett (DEI): Neutral Rating; $29 Price Target; 5% Total Return 124 Forest City (FCE/A): Outperform Rating; $25 Price Target; 10% Total Return Exp. 130 Hudson Pacific (HPP): Outperform Rating; $31 Price Target; 13% Total Return 138 Kilroy Realty (KRC): Underperform Rating; $68 Price Target; 3% Total Return 145 SL Green (SLG): Underperform Rating; $115 Price Target; 3% Total Return 152 Vornado Realty (VNO): Neutral Rating; $114 Price Target; 7% Total Return 159 Hotels 166 Key Sector Themes for DiamondRock (DRH): Neutral Rating; $14.50 Price Target; 6% Total Return Exp. 174 Host Hotels (HST): Neutral Rating; $24 Price Target; 9% Total Return Exp. 180 LaSalle (LHO): Outperform Rating; $43 Price Target; 15% Total Return Exp. 186 Pebblebrook (PEB): Outperform Rating; $47 Price Target; 15% Total Return 193 RLJ Lodging (RLJ): Outperform Rating; $35 Price Target; 15% Total Return 201 Strategic Hotels (BEE): Neutral Rating; $14 Price Target; 12% Total Return Exp. 207 Sunstone Hotels (SHO): Outperform Rating; $17 Price Target; 14% Total Return Exp. 213 Ashford Hospitality Trust (AHT): Neutral Rating; $12 Price Target; 10% Total Return Exp. 222 Apartments 229 AvalonBay (AVB): Neutral Rating; $167 Price Target; 9% Total Exp Return 238 Camden (CPT): Neutral Rating; $82 Price Target; 12% Total Exp Return 247 Equity Residential (EQR): Neutral Rating; $73 Price Target; 8% Total Exp Return 256 Essex Property Trust (ESS): Neutral Rating; $212 Price Target; 9% Total Exp Return 265 UDR, Inc. (UDR): Neutral Rating; $32 Price Target; 10% Total Exp Return 274 Industrial 283 DCT Industrial (DCT): Underperform Rating; $8.50 Price Target; 4% Total Return Exp. 288 EastGroup (EGP): Underperform Rating; $69 Price Target; 4% Total Return Exp. 295 Real Estate Research 2

3 Prologis (PLD): Outperform Rating; $46 Price Target; 14% Total Return Exp. 302 Appendix Valuation 310 Current Valuations vs. Historical 311 Real Estate Research 3

4 Executive Summary: REITs Launch Launching coverage on 34 US REITs forecasting a 10% total return over the next 12 months Macro: Improving US macro will be a tailwind for operating fundamentals o 2.4mn jobs + 3% GDP growth strong enough to drive above trends internal growth in '15 (3% to 4% SSNOI growth across the sector) Interest rates: Just like Goldilocks, REITs like it not too hot, not too cold the likely playbook for REITs in '15 o o Sub 3% 10YR REITs outperform in 15 (tailwind for financing rates, cap rates, more attractive vs. other yield alternatives) Highly susceptible to interest rate swings: when rates spike, REITs underperform Capital: Lots of it looking at core real estate with increasing lower return hurdles, coupled with a global thirst for yield likely to keep cap rates at/near historical lows. Additionally, we would not be surprised to witness greater cap rate compression in secondary markets as investors continue to get priced out of gateway cities, and with the economic recovery broadening, investors are more willing to move further out on the risk curve for higher returns. Real Estate Fundamentals: SSNOI growth to average 3.7%; Hotel RevPAR growth to average 7%+ o o o Limited new supply growth across most property types Occupancy: Most markets/assets beyond peak Rental rates: Landlords are well positioned to drive rates higher Valuation: With REITs up 24% YTD, stocks are fairly valued o o o Trading at implied 5.6% cap rates, or just 3% discount to NAV --- vs. historic range of 1% premium Stocks will screen expensive to generalists trading at 25x cash flow Near-term risk is equity overhang Earnings growth: forecasting 9% growth in '15 and 9% in '16 led by hotels in both years Dividend growth: forecasting 10% growth in '15 and 9% growth in '16 Outperform Rated Stocks: o Malls: SPG (16% return), TCO (15%) o Shopping Centers: KIM (12%) o Office: BXP (17%), FCEA (19%), HPP (13%) o Hotels: PEB (13%), LHO (13%), SHO (13%), RLJ (13%) o Industrial: PLD (15%) Underperform Rated Stocks: o OFC (1%) o KRC (1%) o SLG (2%) o DCT (3%) o EGP (3%) Real Estate Research 4

5 12-Month Total Returns 11 November 2014 Initiation of Coverage: REIT Sector We are initiating coverage on 34 U.S. REITs across the Apartment (5 companies), Mall (4), Shopping Center (5), Office (9), Industrial (3), and Hotel (8) subsectors, with 30% of our coverage Outperform rated, 55% Neutral, and 15% rated as Underperform (Credit Suisse rating system is on a relative basis within the sector). For the next 12 months we are forecast 12% total returns for our coverage universe (including an average dividend yield of 3.0%) this is on top of the 24% total return REITs have generated year to date. Since 2000, REITs have outperformed the S&P 500 by 340bp, beating the index in 12 out of the past 15 years, although much of that outperformance occurred in , with REITs up 405% vs. the S&P 500, which delivered an 108% return. Since the start of the 2010 recovery, REITs have performed in line with broader equities. With job growth accelerating and supply largely in check, we remain bullish on REITs for 2015 despite expectations for modest increases in the U.S. 10-yr. (See Exhibit 1.) Across our coverage universe, we expect Malls to deliver the highest total returns (14%), with Residential expected to underperform over the next 12 months, delivering just a 9% total return. We are forecast 10% total returns across our coverage universe in '15, led by Malls (+14%) Exhibit 1: We Expect Malls and Industrial REITs to Outperform in % 14% 13.6% 12% 10% 11.7% 10.3% 9.2% 9.0% 10.5% 8% 7.7% 6% 4% 2% 0% Regional Mall Avg Industrial Avg Hotel Strip Avg Office Avg Residential Avg CS REIT Avg Source: Company data, Credit Suisse estimates, Thompson Reuters. Real Estate Research 5

6 Initiation Tear Sheet: Top Investment Ideas with Brief Thesis Exhibit 2: Credit Suisse Coverage list (Outperform Rated Colored Blue, Underperform Colored Red) Apartments Rating Price Tgt. Ttl Ret. Investment Thesis CPT Neutral $ % Large dvlpt pipeline (18.5% of EV) with sector-leading 7% yields; best play on energy sector growth; screens inexpensive (5% disc to NAV) UDR Neutral $ % Highly diversified operator expected to encounter dilution as it exits second-tier markets; west coast dvlpt pipeline will boost to portfolio quality AVB Neutral $ % Luxury coastal operator; suburban focus helps avoid comp with new supply; $6.1bn dvlpt pipeline (25% of EV) with significant cap-rate spreads ESS Neutral $ % Portfolio concentrated along west coast where rent growth is strongest; meager development pipeline/land bank; stock screens expensive EQR Neutral $ % Luxury coastal operator; urban portfolio to compete with new supply; small relative CIP budget (5.8% of EV); DC overweight will depress rents Residential Avg 8% Credit Suisse REIT Top Picks with Summary Thesis Shopping Centers KIM Outperform $ % Turn around in progress; non-core asset sales will dilute FCFPS but refocus Street on in-fill portfolio. Redevelopments should ramp in '15 FRT Neutral $ % Best in class portfolio with solid demographics and on balance sheet growth opportunities. Valuation not compelling at current levels. REG Neutral $ % Very good portfolio / developers, but we're struggling to find a story specific catalyst at this time. EQY Neutral $ % Company needs to elaborate on value add opportunities in portfolio that new mgmt can mine over next 3-5 years. LT we like the footprint DDR Neutral $ % We prefer neighborhood centers to power centers -- expect better NOI growth and less risk from e-commerce. Trades cheap on FCF Strip Avg 9% Malls TCO Outperform $ % Highest mall productivity at highest implied cap rate; Development overhang understandable but more than priced in. SPG Outperform $ % Best in class company / balance sheet / development pipeline at an attractive valuation, but we see more upside in GGP / TCO. GGP Neutral $ % Best in group SS NOI next 3 years from occupancy / temp to perm leasing. We think leverage is a positive given our view of mall valuations. MAC Neutral $ % Portfolio demographics + redev. pipeline / opportunities better than people think. Like SPG we like the story, just see better value elsewhere. Regional Mall Avg 14% Office FCEA Outperform $ % Very good real estate trading at a 7.2% implied cap rate. Yes its complicated but identifiable catalysts to unlock value (asset sales, Ridge Hill, etc) BXP Outperform $ % Best in class office owner trading at a sharp discount to NAV. We think Street missing value already created in development pipeline. HPP Outperform $ % Small cap developer on West Coast provides a highly leveraged play (operations & development, not financial) on continued growth in LA / SF. BDN Neutral $ % Sharp sell off since equity raise makes BDN interesting, but lack of NT lease up story may leave a cheap story with few catalysts. VNO Neutral $ % 220 CPS sales and spin of retail at YE will largely complete simplification. Improving NYC market and Penn redev next story. DEI Neutral $ % Great FCF story, with above average SS NOI growth next three years. We think lease up in Warner Center now here, but priced in. SLG Underperform $ % Stock seems expensive to us at a 4.7% implied cap rate. Fewer growth opportunities on the horizon given low return hurdles & capital in market. KRC Underperform $ % Great developer with a full, profitable pipeline. We see the portfolio fairly valued and trading at highest FCF multiple in REIT space through OFC Underperform $ % Company projections for 2-3% SS NOI and 4-6% FFOPS growth through 2019 not exciting to us in challenged DC / NoVA market. Office Avg 9% Industrials PLD Outperform $ % Global logistics leader trading at same cap rate as peers; European valuations a positive catalyst in low rate environment DCT Underperform $8.50 3% Solid developer will likely see earnings growth restrained in 2015 from capital recycling out of weaker markets. EGP Underperform $ % Best in class developer trading above NAV with outlook for below average NOI growth next 5 years vs. peers Industrial Avg 12% Hotels PEB Outperform $ % Top ranked hotel portfolio FFO estimates too low; Best in class management team SHO Outperform $ % Discounted valuation; Renovation Overhang Unwarranted; 16% FFO growth in '16 LHO Outperform $ % High quality portfolio = sector leading margins; Park Central ramp up additive to earnings; NYC and DC will remain drag on story RLJ Outperform $ % Best in class management team; Select service hotels set to outperform in '15; Capital recycling efforts will add to story over time BEE Neutral $ % Best play on luxury/group fundamentals; Continued deleveraging efforts; Discounted valuation AHT Neutral $ % Middle market player = slower growth; highest leverage in sector; Solid track record--delivering sector leading total returns; HST Neutral $ % Best REIT balance; most levered to improving Group business trends; 3. lack of external growth story a drag on valuation DRH Neutral $ % Renovation tailwind = above peer operating trends in '15; NYC exposure a continued drag; 15% dividend growth in '15 Hotel Avg 10% Source: Company data, Credit Suisse estimates Real Estate Research 6

7 Industry Themes for REITs in 2015 Bottom Line: (1) Strong job growth, coupled with 3%-plus (real) GDP growth; (2) liquid and cheap debt markets; (3) limited new supply; and (4) a significant amount of public and private capital that sits on the sidelines translates into a favorable backdrop for REITs. REIT Overview FFO Growth: We forecast 9% growth in 2015 and 9% in 2016 led by Hotels (15%). NOI Growth: We forecast 3.9% growth in 2015 and 3.8% growth in 2016 (ex-hotels). Dividends: We forecast 9% growth in 2015 and 9% growth in SS NOI/RevPAR: We forecast SS NOI growth of +3.8% in 2015 (up from 3.3% YTD), 3.8% in 2016, and 3.7% in 2017 for REITs. This compares to the group's LT average of 3.3%. For hotels, we are forecasting 7% RevPAR growth in 2015 and 6.5% in 2016, with 80%+ of that growth, rate (ADR) driven, translating into bp of margin growth. Supply: Outside of apartments, industrial, and NYC/SF office, supply growth across all other property types runs at historical lows, with little risk of supply short-circuiting the recovery through at least Consolidation: With the visibility to an elongated recovery way to clear, and FFO multiples way too tight within sectors, we do not expect much in the way of REIT M&A in '15. Macro Employment: Credit Suisse economists believe we are in the tail-end of a back-loaded recovery, forecasting another 2.4mn jobs to be created in 2015, while the U.S. unemployment rate falls to 5.5% by YE15. Further, they expect wage growth to accelerate into 2015 which would be good for apartments, hotels and consumption driven sectors. The U.S. economy should provide a healthy backdrop for REIT fundamentals the next 2 years. Interest Rates: Our view is that interest rates will remain low in 2015 (sub 3%, which is consistent with the five-year forward curve) good news for REITs given the positive impact on financing costs, with little concern for cap rates increasing. That said, the risk is to the downside with Credit Suisse economists forecasting a 110bp increase in the 10-yr in 2015 to 3.4%. Historically, when rates spike by 150bp+, REITs underperform the broader market by as much as 1,400 in the short term. REIT External Growth Acquisitions: With cap rates running at/near historical lows, we expect REITs to remain largely on the sidelines, except, of course, where they are redeploying 1031 tax gains from lower quality asset sales. Re/Development: A primary driver of external growth in will come from (re)development. With acquisition cap rates at/near historical lows, we expect most capital allocation to go toward investing in/strengthening existing assets and ground up projects with (re)/development returns bp higher than acquisition yields. Malls, Industrial, and several Office companies (BXP, KRC, HPP) appear best positioned, while much of the renovation drag in hotels is largely over and done with. Abundant Capital Should Keep Cap Rates Low: Given the low returns available to private/sovereign capital in other income generating asset classes, we are not surprised by the amount of capital that has flowed into high-quality real estate. Pricing on recent deals has surprised to the upside, including BXP's JV deal with Norges at an 3.8% cap rate; or Hilton's deal to the Waldorf (NYC) to a Chinese investor at a sub-3% cap rate. With the U.S. 10-yr down 100bp YTD to just 2.3%, we expect return hurdles rates to remain low and have subsequently lowered our IRR return hurdles by 25bp across the board, with a new range of 6.0% to 9.5% across our coverage universe. Real Estate Research 7

8 Sector-Specific Themes for 2015 Malls (14% Forecast Total Returns) Forecasting 4.1% NOI growth in 2015 and 3.6% NOI growth in Retail sales on the decline not as much of an issue for class-a mall owners with retailers expansion still healthy in malls generating sales north of $500/sf especially among European retailers (Uniqlo, H&M, Zara, etc.). Rental spreads to remain healthy the next two years forecasting 12% growth per annum through Redevelopment pipelines remain robust for all ($1bn+ across our coverage), representing 3% of enterprise value, with returns north of 9%. No new supply growth bottom line is that new malls are just not getting built these days given the continued consolidation of the department store space. Shopping Centers (9% Forecast Total Returns) Forecasting 3.4% NOI growth in 2015 and 3.6% NOI growth in month trend is 100bp+ above historical trends. With most Shopping Center REITs running near peak occupancy, internal growth will likely be driven largely from rent spreads, with expiring below market leases generating 10%+ rent spreads through Re/development will likely be a key driver of growth the next two years with shopping center construction pipelines representing 4% of enterprise value. Returns on these projects will exceed 8.7%, adding 2-3% to NAV. Supply remains in check. Internet less of a threat for grocery anchored centers located in densely populated, in-fill markets with above-average household incomes. Hotels (10% Forecast Total Returns) Investors should expect another 4+ years of positive RevPAR growth, with 2015 RevPAR forecast at ~7%. Moderate pick up in supply, but not enough to short-circuit the recovery. Expect demand to outpace supply for the next couple years. With the U.S. unemployment rate to fall to 5.5%, we expect ADR growth to accelerate to 5%+ next two years (above the 4% pace the past two years). Moderate chain scales (Upscale and Upper Midscale) could be the play in 2015 as the economy continues to pick up steam. Lodging stocks best positioned to outperform should interest rates materially increase from here. Real Estate Research 8

9 Sector-Specific Themes (Cont.) Office (9% Forecast Total Returns) Forecasting 2.4% NOI growth in 2015 and 3.1% NOI growth in Cash rent spreads to average just 4% in 2015 and 7% in More than any other sector, office is about picking the right markets from a fundamental standpoint, West coast remains the best coast with best fundamentals in San Francisco and West LA less so in DC. New York City steady improvements, but no rental spikes expected. Transaction pricing very healthy for core office given high demand by sovereign wealth/private equity capital pricing on BXP's recent sale of class A New York City, Boston and DC surprised to the upside at a cap rate of just 3.8%. That trend is unlikely to change in Industrial (12% Forecast Total Returns) Forecasting 2.9% NOI growth in 2015 and 2016 below balance of our coverage universe, but with industrial, that s just the nature of the beast (i.e., slower, but steadier growth than other asset classes). Leasing spreads should peak in , but at a level lower than expected. Development volumes should continue to drive earnings and NAV growth with industrial CIP averaging 5% for our coverage universe, adding 3% to our NAV estimates. Fundamentals to remain healthy in 2015, but stocks have underperformed on supply concerns we think this is short sighted given acceleration in demand well above supply levels. Apartments (9% Forecast Total Returns) Forecasting 4.6% NOI growth in 2015 and 3.8% NOI growth in Macro backdrop for apartments to remain favorable: (1) U.S. macro;(2) demographics, including the uptick in household formation; (3) household affordability index is on the rise meaning its more expensive to own then to rent homes in the US; Apartment demand (job growth) continues to exceed deliveries (supply). Best markets include: LA, San Francisco, Seattle, Orange County, Boston and San Diego all top markets for apartment REITs. Supply well outpaces demand in DC--one of the more heavily concentrated apartment REIT markets. Primary driver of external growth remains development with yield 200bp above acquisition cap rates. Real Estate Research 9

10 REITs: The 2015 Bull Case 3mn+ Jobs created in 2015: Credit Suisse economists expect solid, but steady job growth in 2015, with a monthly jobs forecast of 200,000, or 2.4mn in-line with the past two years. Given the strong correlation between job growth, with both REIT NOI growth and stock performance, upside to the Credit Suisse forecast would be a net positive for the sector. In addition, stronger job growth (implying a broader U.S. economic recovery) will likely lead to more aggressive cap rate compression in secondary markets as investors look further out on the risk curve for higher (and seemingly safer) returns. Interest Rates Remain Stuck in Neutral: Our general view is that interest rates remain below 3% in 2015 consistent with consensus estimates (CS economists, however, forecast a 3.8% 10YR by YE15). While we would not be surprised to witness moderate increases in the 10YR as the US economy continues to slowly improve, we do not believe it will be material enough to impact cap rates or financing costs for real estate. Public to Public/Private M&A: Generally speaking, we do not expect widespread consolidation in the REIT sector in 2015 although when you factor in the amount of capital (foreign and domestic) that continues to sit on the sidelines, improving debt markets, and that at some point, certain public real estate executives will look for an exit strategy ahead of the next downturn we cannot entirely rule it out, either. US REITs Better Positioned Than Ever Before: While the downturn was one most real estate investors would love to forget, it has helped to better position the REIT sector than ever before. Never in the 15 years since we have covered the industry has overall asset quality, the depth of senior management and overall balance sheet strength been better than what we find today. Companies have done a very good job these past four-plus years repositioning portfolios with select acquisitions/developments, while aggressively disposing of non-core assets. In addition, balance sheets are in excellent shape ample liquidity, limited variable rate debt, staggered debt maturities, with the benefit of extremely low debt costs. We believe the sector is better positioned today than ever before, warranting an aboveaverage historical valuation. Real Estate Research 10

11 REITs: The 2015 Bear Case Interest Rate Spike Could Put a Near-Term Damper on the REIT Bull Market: The direction of the 10-yr will remain the hot topic in 2015, with consensus estimates calling for a 2.6% 10Yr in 12 months (vs. 3.4% for Credit Suisse economists), or a 100bp+ increase from the latest print. Historically, REIT stocks underperform when rates spike 150bp+ over a given period of time, underperforming the S&P by 1,400bp, on an annualized basis over that time frame. For our models, we assume a risk free rate of 3.0% (down from 3.5% when we first starting writing this report). Credit Spreads: Credit spreads have begun to plateau at the 240bp over Treasury level and could increase in the face of global political uncertainty and weaker than expected growth in the Eurozone and China. This would affect all in borrowing costs as well as cap further gains in asset pricing. Unknown Macro Shocks: REITs have enjoyed a solid run YTD, up 24%, on average, although the group traded down 7% from September 5, 2014 through October 2, 2014 as global macro concerns started to bubble. Strong 3Q earnings seem to be drowning out the global noise, however, although an expanded ground war with ISIS, or escalating troubles in Europe and China could once again put the brakes on a REIT (and for that matter, equities overall) rally, in the near term. Real Estate Research 11

12 Real Estate Research 12 Credit Suisse REIT Coverage Universe Exhibit 3: REIT Valuation Summary and Key Metrics CS REIT Valuation Summary Sheet Stock Information Dividends Multiples NAV Metrics DCF Leverage Stock Price 12mo Exp. Mkt Cap FTM AFFO AFFO EV/EBITDA NAV P-NAV Impl DCF Price to Debt/ Debt/Adj Company Name Ticker Rating Price Target Return ($bn) Div Yld Payout '15E '16E '15E '16E Curr Fwd Curr Fwd Cap Est. DCF TMC EBITDA AvalonBay Comm. AVB Neutral $ $ % $ % 78% 25.1x 23.5x 23.7x 21.9x $ $ % 99% 5.0% $ % 23% 5.4x Camden Prop Trust CPT Neutral $76.75 $ % $ % 75% 20.1x 18.5x 19.0x 17.7x $78.00 $ % 96% 6.4% $ % 27% 0.2x Equity Residential EQR Neutral $70.46 $ % $ % 75% 24.8x 23.3x 21.2x 20.1x $67.50 $ % 101% 5.0% $ % 29% 6.2x Essex Property ESS Neutral $ $ % $ % 68% 24.5x 22.3x 25.6x 23.7x $ $ % 98% 4.7% $ % 30% 7.3x UDR, Inc. UDR Neutral $30.61 $ % $ % 77% 21.8x 20.4x 23.7x 22.3x $32.00 $ % 94% 5.5% $ % 34% 7.3x Residential Avg 8% $ % 75% 24.0x 22.4x 22.7x 21.2x 101% 99% 5.1% 98% 28% 5.7x Equity One EQY Neutral $24.15 $ % $ % 93% 24.3x 22.6x 19.3x 18.9x $23.50 $ % 103% 6.0% $ % 29% 6.1x DDR Corp. DDR Neutral $18.52 $ % $ % 60% 16.3x 15.8x 17.8x 17.4x $18.00 $ % 100% 6.4% $ % 45% 8.5x Federal Realty FRT Neutral $ $ % $ % 76% 29.9x 27.1x 23.5x 21.4x $ $ % 105% 4.7% $ % 20% 5.5x Kimco Realty KIM Outperform $24.94 $ % $ % 82% 21.0x 19.2x 21.5x 20.8x $28.50 $ % 89% 6.6% $ % 39% 9.5x Regency Center REG Neutral $62.10 $ % $ % 74% 24.4x 21.9x 18.6x 17.3x $62.00 $ % 99% 5.8% $ % 28% 6.0x Strip Avg 9% $ % 76% 23.3x 21.4x 20.7x 19.6x 99% 98% 5.9% 97% 33% 7.4x General Growth GGP Neutral $25.76 $ % $ % 55% 21.1x 18.0x 25.2x 23.7x $25.50 $ % 97% 5.2% $ % 46% 11.7x Macerich MAC Neutral $69.55 $ % $ % 85% 22.5x 20.1x 20.4x 18.7x $67.00 $ % 102% 5.1% $ % 36% 7.5x Simon Property SPG Outperform $ $ % $ % 66% 21.6x 19.4x 20.1x 18.5x $ $ % 100% 5.4% $ % 28% 5.8x Taubman Centers TCO Outperform $77.59 $ % $ % 76% 24.8x 21.0x 26.0x 24.8x $89.00 $ % 86% 5.5% $ % 24% 7.2x Regional Mall Avg 14% $ % 66% 21.8x 19.2x 21.7x 20.1x 101% 98% 5.3% 87% 33% 7.4x Boston Properties BXP Outperform $ $ % $ % 71% 35.0x 32.2x 18.6x 18.2x $ $ % 90% 5.1% $ % 24% 4.6x Brandywine Realty BDN Neutral $15.46 $ % $ % 88% 21.4x 16.7x 13.9x 13.6x $15.50 $ % 97% 7.3% $ % 43% 6.2x Corporate Office OFC Underperform $27.95 $ % $ % 80% 19.6x 19.5x 17.4x 16.4x $27.50 $ % 104% 6.9% $ % 40% 7.3x Douglas Emmett DEI Neutral $28.53 $ % $ % 71% 23.4x 21.8x 21.7x 20.8x $31.00 $ % 95% 5.0% $ % 41% 8.8x Forest City FCEA Outperform $21.05 $ % $ % 0% 21.5x 19.4x 19.0x 18.5x $28.00 $ % 71% 7.0% $ % 52% 9.7x Hudson Pacific HPP Outperform $28.00 $ % $ % 359% 201.1x 58.3x 21.1x 18.9x $31.50 $ % 89% 5.1% $ % 29% 7.4x Kilroy Realty KRC Underperform $68.85 $ % $ % 84% 37.6x 31.9x 22.3x 19.7x $63.50 $ % 107% 4.8% $ % 25% 6.6x SL Green SLG Underperform $ $ % $ % 62% 32.0x 27.6x 19.3x 19.0x $ $ % 98% 4.7% $ % 37% 9.1x Vornado VNO Neutral $ $ % $ % 85% 29.9x 29.0x 22.3x 22.2x $ $ % 93% 5.3% $ % 32% 7.4x Office Avg 9% $ % 78% 34.8x 28.8x 20.1x 19.5x 93% 93% 5.3% 116% 32% 7.0x DCT Industrial DCT Underperform $8.56 $8.50 3% $ % 90% 24.1x 21.0x 19.4x 19.2x $8.25 $ % 104% 5.6% $ % 32% 6.7x Eastgroup EGP Underperform $68.96 $ % $ % 79% 23.5x 21.8x 20.1x 18.1x $65.00 $ % 105% 5.8% $ % 30% 6.3x Prologis PLD Outperform $41.68 $ % $ % 82% 24.4x 22.7x 22.5x 21.5x $42.50 $ % 97% 5.7% $ % 33% 7.5x Industrial Avg 12% $ % 83% 24.3x 22.5x 22.0x 20.9x 99% 98% 5.7% 96% 33% 7.3x Ashford Hotels AHT Neutral $11.41 $ % $ % 81% 19.2x 14.8x 12.0x 11.2x $13.50 $ % 85% 9.1% $ % 59% 8.3x DiamondRock DRH Neutral $14.25 $ % $ % 62% 18.8x 16.0x 14.8x 13.4x $14.75 $ % 92% 7.3% $ % 29% 4.4x Host Hotels HST Neutral $22.76 $ % $ % 65% 17.9x 16.2x 14.3x 13.1x $24.50 $ % 89% 7.3% $ % 20% 2.8x LaSalle Hotels LHO Outperform $39.48 $ % $ % 76% 18.6x 16.5x 14.7x 13.4x $43.00 $ % 89% 7.2% $ % 22% 3.7x Pebblebrook PEB Outperform $42.41 $ % $ % 59% 24.5x 20.1x 16.0x 14.2x $44.00 $ % 91% 6.4% $ % 21% 4.8x RLJ Lodging Trust RLJ Outperform $32.31 $ % $ % 62% 14.8x 13.2x 13.4x 12.2x $33.50 $ % 91% 7.5% $ % 24% 3.3x Strategic Hotels BEE Neutral $12.67 $ % $ % 0% 21.2x 18.3x 15.5x 13.9x $14.50 $ % 82% 6.8% $ % 30% 4.9x Sunstone Hotels SHO Outperform $15.67 $ % $ % 72% 17.6x 15.0x 13.4x 11.8x $17.50 $ % 88% 6.2% $ % 26% 3.8x Hotel Avg 10% $ % 61% 18.5x 16.2x 14.4x 13.0x 93% 89% 7.2% 106% 24% 3.6x CS REIT Avg 10% $ % 72% 25.0x 22.1x 20.7x 19.5x 98% 96% 5.6% 99% 31% 4.7x

13 How We Derive Our Target Prices: NAV + DCF On the next page, we illustrate our Price Target Methodology, which for our non-hotel coverage is based on a two-pronged approach: (1) NAV which is driven by our proprietary unlevered IRR models; and (2) DCF. We should note that we have eliminated AFFO multiples from our valuation framework given the arbitrary means by which most arrive at a targeted multiple, not to mention the fact that most companies are better positioned today from a balance sheet, and overall portfolio quality making historical look-backs irrelevant. First we apply a 75% weighting on our forward NAV estimates. Our NAVs are driven by cap rates derived using an unleveraged IRR analysis where we underwrite the cash flow growth of the various portfolios to a targeted unlevered return hurdles (currently 6% to 10%), which we believe is reflective of where these assets are being priced in the private market today. The methodology is very similar to the way direct real estate buyers think about valuation while not entirely proprietary; the methodology is only used by a handful of sell-side shops. We believe the underlying, market value of the real estate should be the primary valuation metric for the REIT stocks. We then apply an applied premium or discount to principally account for management's ability to create value over the long-term through capital allocation. Second, we apply a 25% weighting to our DCF value. We believe the DCF is a useful tool for valuing real estate equities as: (1) real estate is a cash flow generating asset so the discounted value of the company cash flows should resemble the value of the stock, and (2) it allows U.S. to better reflect a long-term impact of managements value creation through financing decisions and capital deployment on company value. Added Metric for Hotels: EV/EBITDA For our Hotel coverage, we add a third component, targeted EV/EBITDA multiples (which are derived using an unlevered IRR model driven off the same assumptions used to arrive at our cash NOI cap rates), to our PT methodology and assign that "leg" a 30% weighting and tweaking the weightings for NAV (to 50%) and DCF (to 20 most have limited development pipelines). For Hotel REITs, we added multiples to our valuation framework given their widespread use among both private and public investors when analyzing transactions. Real Estate Research 13

14 Real Estate Research 14 Exhibit 4: Target Price Methodology Credit Suisse REIT Price Target Calculation Forward NAV - 75% of PT DCF Values - 25% of PT Equity Price Target Targeted P- Targeted P- Company Name Ticker Mkt Cap Price Current Calc'd Dividend Total Return Fwd NAV NAV Contribution Current DCF Contribution AvalonBay Comm. AVB $21,000 $ $ $ % 8% $ % $127 $ % $41 Camden Prop Trust CPT $7,000 $76.75 $82.00 $82 3.7% 11% $ % $60 $ % $22 Equity Residential EQR $26,500 $70.46 $73.00 $73 3.0% 7% $ % $55 $ % $18 Essex Property ESS $13,400 $ $ $ % 7% $ % $162 $ % $50 UDR, Inc. UDR $8,200 $30.61 $32.00 $32 3.5% 8% $ % $24 $ % $8 Residential Avg $76, % 8% 104% 100% Equity One EQY $3,200 $24.15 $25.00 $24 3.8% 7% $ % $19 $ % $6 DDR Corp. DDR $6,700 $18.52 $19.00 $19 3.7% 6% $ % $14 $ % $5 Federal Realty FRT $9,200 $ $ $ % 9% $ % $106 $ % $38 Kimco Realty KIM $10,300 $24.94 $27.00 $27 3.9% 12% $ % $21 $ % $6 Regency Center REG $5,700 $62.10 $65.00 $65 3.0% 8% $ % $50 $ % $16 Strip Avg $35,100 $0 3.4% 9% 104% 100% General Growth GGP $24,400 $25.76 $28.00 $28 2.6% 11% $ % $21 $ % $7 Macerich MAC $10,500 $69.55 $71.00 $71 3.8% 6% $ % $54 $ % $17 Simon Property SPG $66,300 $ $ $ % 16% $ % $151 $ % $54 Taubman Centers TCO $7,000 $77.59 $87.00 $87 3.1% 15% $ % $64 $ % $22 Regional Mall Avg $108, % 14% 107% 100% Boston Properties BXP $21,900 $ $ $ % 17% $ % $118 $ % $28 Brandywine Realty BDN $2,800 $15.46 $16.00 $16 4.1% 8% $ % $12 $ % $4 Corporate Office OFC $2,600 $27.95 $27.00 $27 4.1% 1% $ % $20 $ % $7 Douglas Emmett DEI $5,000 $28.53 $29.00 $29 3.0% 5% $ % $23 $ % $7 Forest City FCEA $5,000 $21.05 $25.00 $25 0.0% 19% $ % $20 $ % $5 Hudson Pacific HPP $1,900 $28.00 $31.00 $31 1.8% 13% $ % $25 $ % $6 Kilroy Realty KRC $6,000 $68.85 $68.00 $68 2.2% 1% $ % $53 $ % $15 SL Green SLG $11,500 $ $ $ % 2% $ % $93 $ % $22 Vornado VNO $21,900 $ $ $ % 7% $ % $93 $ % $22 Office Avg $78, % 9% 105% 100% DCT Industrial DCT $3,000 $8.56 $8.50 $ % 3% $ % $6 $ % $2 Eastgroup EGP $2,200 $68.96 $69.00 $70 3.4% 3% $ % $52 $ % $19 Prologis PLD $21,500 $41.68 $46.00 $47 3.4% 14% $ % $35 $ % $11 Industrial Avg $26, % 12% 109% 100% Forward NAV - 50% of PT DCF Values - 20% of PT EV/EBITDA - 30% Equity Price Target Targeted P- Targeted P- '15E Targeted Company Name Ticker Mkt Cap Price Calc'd Dividend Total Return Fwd NAV NAV Contribution Current DCF Contribution EBITDA/sh Multiple Contribution Ashford Hotel AHT $1,300 $11.41 $12.00 $15 4.2% 9% $ % $6 $ % $2 $ x $6 DiamondRock Hospitality DRH $2,800 $14.25 $14.50 $14 3.3% 5% $ % $8 $ % $3 $ x $4 Host Hotels HST $17,900 $22.76 $24.00 $24 3.6% 9% $ % $13 $ % $4 $ x $7 LaSalle Hotels LHO $4,100 $39.48 $43.00 $43 4.1% 13% $ % $23 $ % $7 $ x $12 Pebblebrook Hotel Trust PEB $2,700 $42.41 $47.00 $47 2.4% 13% $ % $24 $ % $9 $ x $13 RLJ Lodging Trust RLJ $4,300 $32.31 $35.00 $35 4.2% 13% $ % $18 $ % $7 $ x $10 Strategic Hotels BEE $3,200 $12.67 $14.00 $14 0.0% 10% $ % $8 $ % $2 $ x $4 Sunstone Hotels SHO $3,200 $15.67 $17.00 $17 4.1% 13% $ % $9 $ % $3 $ x $5 Hotel $39, % 10% 100% 100% CS REIT Avg 3.0% 10% 105% 100% 14.7x CS Total REITs- Min 0.0% 90% 100% 12.0x CS Total REITs- Max 4.2% 110% 100% 16.8x

15 Nationwide Tour (Ahead of Launch) Illustrates Healthy Economic Growth Across Major REIT Markets Road Tripping: 16 States, 100+ Properties, 90 Days Launching coverage on 34 REITs across six property types is no small task. To best prepare, the Credit Suisse REIT team packed its bags and took on an aggressive travel schedule over the past three months, visiting 16 states; meeting with dozens of REIT executives; while touring over 100 properties. As bottom up real estate analysts, the tours provide real time information on market and asset fundamentals, leasing and development trends while serving as a basis for how we think about valuation, and relative positioning for the REITs in our coverage universe. In Exhibit 5, we highlight the cities visited in recent months including (but not limited to) San Francisco, Los Angeles, New York, Boston, DC, Philadelphia, Miami, Houston, Atlanta, Connecticut, Scottsdale, Cleveland, Las Vegas, and Denver. Exhibit 5: Illustration of the States the Credit Suisse REIT Team Visited in the Past Three Months Source: Credit Suisse estimates, Thompson Reuters. Real Estate Research 15

16 Cumulative Job Growth 11 November 2014 Macro Backdrop Getting Better Credit Backdrop Very Healthy As it relates to REIT operating fundamentals (internal growth), employment growth is by far the most important economic data point we focus on. Job growth has a direct impact on Apartment, Hotel, and Office demand, and a second derivative impact on income growth/consumer spending both key drivers for Retail and Industrial while during periods of accelerated job growth, REIT stocks tend to outperform. In addition to jobs, we would say the second most important macro discussion we have with investors relates to the direction of the 10-year with interest rates having a direct impact on financing cost, cap rates, and ultimately stock performance. Understanding both are key when investing in the REIT sector which is why we point out some of the more important macro themes investors need to focus on in 2015 as it relates specifically to employment and interest rates. Employment Will Remain a Tailwind for REITs in 2015; Credit Suisse Economists Expect 2015 Job Growth to Remain Steady at 2.4mn The good news for REIT investors is that Credit Suisse economists expect another year of solid job gains (2.4mn) as the recovery gains traction and broadens out from the technology/energy drivers of the past few years. They also expect an increase in wage growth which in turn supports tenant sales for consumption-based real estate sectors, while putting greater pricing power (in the form of higher rental rates) in the hands of landlords. Jobs are the best leading indicator for same-store NOI growth for the REIT sector, although there's certainly a risk that the fed could start to move rates higher a potential near-term headwind for the group. While the pace of job growth next year is below the 2.6mn jobs created this year (assuming we end the year at 200k/month), economists feel good about the overall health of the economy as the U.S. unemployment rate is expected to fall to 5.5% the lowest level since 2007 when U.S. unemployment was just 4.6%. Generally speaking, this should translate into solid NOI growth across the REIT sector especially with most asset classes at/near peak occupancy, providing landlords with greater operating leverage to drive rental rates higher. Exhibit 6: Non-Farm Payroll Growth over the Past Several Years 3,000,000 2,640,000 2,500,000 2,331,000 2,236,000 2,083,000 2,000,000 1,500,000 2,400,000 Steady job growth is expected to continue in 2015 with another 2.4mn jobs created as the U.S. unemployment rate falls to 5.5% 1,000, , E 2015E Source: Credit Suisse estimates, Thompson Reuters. Real Estate Research 16

17 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec November 2014 Job Growth Surveys Continue to Point Higher Further supporting the positive jobs forecast has been the recent trend in employment surveys which continue to push higher. Blending the three most important job surveys (ISM, Conference Board, and NFIB), the trend is clearly more positive than it has been since Exhibit 7: Employment Surveys (ISM Non-Manufacturing Index, Conference Board Employment Trends, and NFIB Small Business Hiring Index) Hooking Up Source: Credit Suisse estimates, Thompson Reuters. Job Growth Has Been Surprisingly Consistent Indicating a Broader Economic Recovery While the market has been disappointed by tepid employment growth, Credit Suisse economists might disagree. In fact, they note that U.S. job growth has been surprisingly consistent over the last four years, averaging +1.5% per month (TTM) vs. just +1.3% from signaling a broader, more stable economic recovery moving forward. We highlight this point to simply point out that the real estate recovery is no longer just a gateway city/coastal market phenomenon. To this point, we have started to witness greater cap rate compression across secondary markets as investors (more comfortable with overall macro improvements), move further out on the risk curve for higher returns. When comparing the latest job cycle to , job gains have been surprisingly "consistent," which according to Credit Suisse economists lends support to a broader and healthier economic recovery. Exhibit 8: Trailing-Twelve-Month Non-Farm Payroll Growth TTM Job Growth (Y/Y %) 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% Source: Credit Suisse estimates, Thompson Reuters. TTM Job Growth (Y/Y %) Real Estate Research 17

18 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 YoY NonFarm Payroll Growth Relative Performance YoY NonFarm Payroll Growth 4Q97 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 11 November 2014 Why Job Growth Is So Important 1. Leading Indicator for SS NOI Growth US employment has proven to be a very strong leading indicator for REIT internal growth, posting a 0.87 correlation dating back to the late 1990s (lagged one year to account for the lag between economic growth and real estate pricing power). This is good news for the REIT sector in light of Credit Suisse's employment growth forecasts (2.4mn jobs and a U.S. unemployment rate of 5.5%), which we believe will translate into 3.6% SS NOI growth in 2015 and 3.5% in Exhibit 9: NOI Growth Highly Correlated with Job Growth 8.0% 6.0% 4.0% 2.0% 0.0% Job growth is highly correlated to REIT samestore NOI growth, as well as to REIT stock performance Exhibits % -4.0% -6.0% Correlation = % Employment Growth Q/Q Annualized (lagged one year) SS Cash NOI Growth, Y/Y Source: Credit Suisse estimates, Thompson Reuters. 2. High Correlation Between Jobs and REIT Stock Performance In addition to operating fundamentals, jobs have correlated very well with overall REIT returns on an absolute and relative basis. On an absolute basis REIT stocks have shown a 0.73 correlation with job growth, and a 0.57 correlation relative to the S&P 500 Index. Exhibit 10: REIT stocks closely follow the pace of employment while historical trends suggest that REIT stocks outperform broader equities (S&P 500) when job growth is accelerating ( ) 3.5x 3% 1.2x 3% 3.0x 2.5x 2% 1% 0% 1.0x 0.8x 2% 1% 0% 2.0x 1.5x -1% -2% 0.6x -1% -2% 1.0x 0.5x Correlation 73% R-Squared: 53% -3% -4% -5% 0.4x 0.2x Correlation 57% R-Squared: 32% -3% -4% -5% 0.0x -6% 0.0x -6% REIT Absolute Returns (1=Jan '95) Non-Farm Payrolls, YoY REIT Returns relative to S&P Returns (1=Jan '95) Non-Farm Payrolls, YoY Source: Credit Suisse estimates, Thompson Reuters. GDP Matters as Well for SS NOI, but Less Than Jobs While GDP growth is a meaningful snapshot of the U.S. economy's overall health, historically, the correlation between GDP and SS NOI growth has been less meaningful than absolute job gains. In fact, since 1998 REIT internal growth has shown just a 0.65 correlation with nominal GDP growth (Y/Y, lagged by one year). Real Estate Research 18

19 That said, the data point is still a headline grabber, and an important data point in the minds of investors. Credit Suisse economists are targeting 5% GDP growth in 2015, this off a 2H acceleration with 3Q ending at 3.5%. Exhibit 11: REIT SS NOI Growth vs. Nominal GDP Growth, Lagging GDP By One year GDP while not the best leading indicator for REIT NOI growth, investors will rally behind the 5% growth rate forecasted by Credit Suisse economists Source: Company data, Credit Suisse estimates, Thompson Reuters. How Do Our Forecasts Compare with GDP Expectations? One thing we like to do as a "gut check" on our SS NOI forecasts is to see what level of nominal GDP growth our forward NOI projections imply. Our 10-yr CAGR of 3.0% SS NOI growth implies a nominal GDP growth rate of 4.5% over the next 10 years (compared to 4.2% since 1998). While this seems high, we would argue that given the improvements to the REIT portfolios (higher quality, more coastal markets) the companies should perform better relative to national GDP figures than in the past. Exhibit 12: Forecasting SS NOI Growth vis a vis GDP Growth Our 10 year NOI forecast of 3.1% implies at 4.5% Nominal GDP growth rate over the next 10 years for every 50bp of GDP growth, NOI growth improves by 20bp Source: Company data, Credit Suisse estimates, Thompson Reuters. Supply Below Trend for Most Asset Classes One of the hallmarks of this cycle has been little new supply which has supported pricing power and vacancy recoveries across asset classes in the face of okay but not great economic growth. Looking across each of the property sectors, supply growth in the multifamily and industrial sectors are the only subsectors where we have witnessed a meaningful pick-up in supply, although the fact of the matter is that demand remains in-line to ahead of supply growth for both property types. Real Estate Research 19

20 1997 3Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 4Q97 4Q98 4Q99 4Q00 4Q01 4Q02 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 Industrial SF under construction (000's) Industrial UC as a % of existing inventory 11 November 2014 Exhibit 13: : Apartment Supply 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% United States Apartment Supply Growth ( E) For apartments, supply growth is trending +1.9% YTD, or approximately 80bp above the historical trend, although we expect that pace of growth to moderate in % E 2015E 2016E Source: Company data, Credit Suisse estimates, REIS Exhibit 14: Industrial Supply 250, , , ,000 50, % 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% For the industrial sector, supply growth has gradually increased through the cycle; supply still below absorption, but increased building has been a headwind for the stocks 0 0.0% Space Under Construction (mn sf) UC as a % of Inv. Source: CoStar, Company data, Credit Suisse research Exhibit 15: Office Supply 250, , , ,000 50, % 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% In office, supply is primarily in the NYC Downtown market and San Francisco/San Jose markets two areas seeing aboveaverage job growth National National as % of Inventory Source: CoStar, Company data, Credit Suisse research. Real Estate Research 20

21 2002 1q q q q q q q q q q q q q Y/Y Supply and Demand Growth Y/Y RevPAR Growth 11 November 2014 Exhibit 16: Hotel Supply Growth vs. Demand Growth 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% -16% -18% -20% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% -16% -18% -20% The supply and demand dynamics is probably best in hotels with supply growth a non-issue for most U.S. cities (with the exception of NYC, Miami and Seattle) running at ~1%, while demand growth remains very strong well outpacing supply Supply Demand US RevPAR Source: STR Global, Company data, Credit Suisse research. Illustrated below, the retail sector is seeing limited new supply at this point in the cycle, especially in the shopping center/power center category, which is encouraging for NT occupancy + rent spreads. Exhibit 17: Retail Supply (Shopping Center Formats on Left, Malls on Right) 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Supply as % of Inv. LT Average Source: CoStar, Credit Suisse reseach Real Estate Research 21

22 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan November 2014 Interest Rates and REITs REITs have underperformed the S&P and other Financials in periods of rate spikes but do not be totally discouraged as the group can post positive total returns in a rising rate environment. One of the big questions for investors is how to think about the risk of rising rates to the overall REIT sector performance, and specifically, how the individual subsectors perform on a relative basis. Conventional wisdom is such that rising rates are a broad negative for REITs given several factors: (1) higher financing costs; (2) the appeal of higher yielding fixed income investments; and (3) an increase in cap rates (implying lower real estate valuations). Looking back over the last 20 years, we found six "periods" in time when the U.S. 10-year Treasury increased by 150bp or more a measure which we would define as potentially having a material impact on REITs. Generally speaking, we were not surprised to find REITs underperform the broader equity markets by an average of 1,400 basis points (on an annualized basis) in four of the six periods, although that's not to say that returns were necessarily negative, as they still managed to post positive absolute total returns over that same time period (+10%). Said another way, higher rates are a negative for relative returns but do not condemn the sector to negative absolute returns. Furthermore, and we'll go into this more later, it is important to watch the interplay of corporate bond spreads and the 10-yr. We tend to focus more on the BAA corporate bond yield when thinking about how rates will affect REIT stocks as they are more comparable to REIT financing costs and cap rate trends. During periods when 10-yr rates increased by 140bp (annualized) see shaded areas in Exhibits 18 and 19, BAA corporate bond yield increased by 60bp (annualized) as credit spreads narrowed by 80bp. Exhibit 18: U.S. 10-Year Since 1995 (100bp+ Increases Shaded) 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Over the past 20 years, there have been six separate periods when the U.S. 10-yr Treasury has increased by 100bp+. When this occurs, REITs have underperformed broader equities (S&P 500) by 1,400bp Rising Rate Period. US 10Yr Treasury Source: Company data, Credit Suisse estimates, Thompson Reuters. Exhibit 19: REIT Performance vs. the S&P 500 in Periods of Sharp Rises in the U.S. 10-Year Annualized Length of REIT Return REIT Return Beg. Date End Date 10Yr Rate Rise Δ 10Yr Yields REIT Stocks Less S&P Δ 10Yr Yields REIT Stocks Less S&P Period #1 Dec-95 Jun yrs 136bp 8% 0% 263bp 15% 0% Period #2 Oct-98 Jan yrs 228bp -17% -62% 183bp -14% -50% Period #3 May-03 May yrs 174bp 73% 29% 59bp 24% 10% Period #4 Dec-08 May yrs 151bp -17% -15% 342bp -38% -35% Period #5 Aug-10 Feb yrs 108bp 19% -8% 225bp 39% -17% Period #6 Jul-12 Sep yrs 150bp 3% -23% 133bp 3% -20% Historical Avg. 1.1yrs 158bp 11% -13% 139bp 10% -12% Source: Company data, Credit Suisse estimates, Thompson Reuters. REIT Performance vs. the S&P 500 during periods of rising 10Yr Yields Actual Real Estate Research 22

23 Over the Long Run, REIT Stock Performance Has Shown Little Correlation to the Movement in the 10- Year While investors tend to look closely at the 10-yr Treasury yield, REIT performance (on either an absolute or relative basis) has shown little correlation relative to the spot 10-yr. The correlation has been over the past ~20 years, but interestingly from 2002 to 2010 there was a very positive correlation between equity performance and the base rate (as rates rose but REITs did as well due to higher and cheap leverage and positive economic growth). Since 2010, the correlation has been decidedly negative. (REITs performed well as rates sunk.) Exhibit 20: REIT Absolute Performance Compared to Changes in the U.S. 10-Year Over the long run, REIT performance (on either an absolute or relative basis) has shown little correlation relative to the spot 10-yr positive correlation from '02- '10, but then turning negative the last 4 yrs. Source: Bloomberg, Credit Suisse estimates. Exhibit 21: REIT Relative Performance (vs. S&P 500) Compared the U.S. 10-Year Source: Bloomberg, Credit Suisse estimates. Real Estate Research 23

24 In the Short-Term, Sector Selection Matters when the 10-Year Spikes Hotels, Malls, and Industrial Outperform While we have illustrated a relatively weak correlation between REIT stock performance and changes in long term interest rates (US 10 Year Treasury), what we have found, however is that REITs are susceptible to near-term rate spikes, making individual sector calls that much more important. Specifically, during periods of material increases in the US10YR (i.e., when rates increase by 158bp) Hotels, Industrial and Mall REITs materially outperformed, generating total returns of 26%, 21% and 17%, respectively vs. the broader REIT market total return of just 11%. On the flip side, Healthcare (1%) and Net Lease (5%) REITs materially underperformed. In addition, what's even more important to note is the consistency of outperformance (or lack thereof) among the sectors in a rising interest rate environment. Accordingly, Hotels and Industrial outperformed the broader REIT index in 5 out of 6 of those periods Malls beat the index 4 times. Worst performers included Apartments and Net Lease, underperforming 4 out of 6 times, while Healthcare underperformed during all but one period December 08 May 2009 when the group was down 13% vs. -17% for REITs, overall. While this analysis is interesting, however, there is little consistency in the period to period results given valuations concerns, balance sheet concerns or other issues at the time of the rate increase. While it's no surprise that shorter lease duration stocks should outperform, we view the data as helpful, but not a foolproof playbook going forward. Exhibit 22: REIT Subsector Performance During the Periods of Rising Rates (from the Page Before) REIT Subsector Performance during periods of rising 10Yr Rates (Figures are FTSE NAREIT sector index levels) Apartments Hotels Strips Malls Health Care Net Lease Office Industrial REIT index S&P 500 Index 10Yr Treasury Yld BAA Corp. Yld Period #1 Dec % 0.0% Jun % 0.0% Return / Δ 8% 14% 4% 12% 5% 8% 15% 7% 8% 8% 136bp 0bp Period #2 Oct % 0.8% Jan , % 2.3% Return / Δ -3% -41% -20% -25% -39% -20% -5% -13% -17% 44% 228bp 148bp Period #3 May % 1.7% May , % 2.7% Return / Δ 77% 113% 72% 104% 48% 41% 59% 80% 73% 43% 174bp 103bp Period #4 Dec % 0.3% May % 1.9% Return / Δ -23% 6% -27% -11% -13% -7% -19% -13% -17% -1% 151bp 154bp Period #5 Aug , % 1.5% Feb , % 2.3% Return / Δ 17% 40% 21% 22% 7% 7% 15% 44% 19% 27% 108bp 72bp Period #6 Jul , % 2.1% Sep , % 2.1% Return / Δ -10% 26% 6% -1% -3% -1% 4% 18% 3% 26% 150bp 3bp Six Period Average 11% 26% 9% 17% 1% 5% 11% 21% 11% 25% 158bp 80bp Median 2% 20% 5% 5% 1% 3% 9% 13% 6% 26% 151bp 88bp Source: Bloomberg, Credit Suisse estimates. Real Estate Research 24

25 REIT Relative Performance (vs. S&P) Closely Tied to Forward Curve with Relationship to Corporate Bond Yields Fading While changes in the 10-yr grabs the headlines, in our opinion, the more important metrics to monitor are the forward curve and the investment grade bond yield, which over time show a higher correlation with REIT equity returns (both absolute and relative). This is in spite of the fact (which we are hard pressed to explain) that REIT returns since 2010 have become less tied to the BAA yield. Overall, we believe investors should watch the forward curve and BAA yield for two primary reasons for two primary reasons: The implications of the slope of the rate curve for an interest rate sensitive, dividend paying stock are clear. REITs tend to fund at the BBB+ (plus or minus) credit rating, not the 10-yr Yield, and a changing bond yield reflect both the base rate and conditions in the macro and credit markets which are as important for how REIT stocks will perform as understanding the outlook for underlying tenant demand. While changes in the 10-yr grabs the headlines, in our opinion, the more important metrics to monitor are the forward curve and the investment grade bond yield, which over time show a higher correlation with REIT equity returns Exhibit 23: REIT Relative Performance (vs. S&P 500 Index) vs. BBA Bond Yield Since 2012 the correlation between the BAA Bond Yield and REIT performance has weakened dramatically, perhaps in line with declinig and increasing term profile of REIT leverage Source: Bloomberg, Credit Suisse estimates. Exhibit 24: REIT Relative Performance (vs. S&P 500 Index) vs. the U.S. 10-Year The slope of the forward treasury curve has been among the most highly correlated indicators to REIT relative performance, with a correlation for a long period of time Source: Bloomberg, Credit Suisse estimates. Real Estate Research 25

26 The Outlook for Rates/Credit Markets Credit Suisse Economists expect rates to rise through 2015, ending the year at 2.9% for the 5-year and 3.4% for the 10-year Treasury, or an increase of 100bp and 180bp, respectively above current rates. In addition, we should note that Credit Suisse economists are significantly more bearish on the credit markets (more optimistic on the U.S. economy), with their current 10-year forecast 80bp above the forward yield curve. Generally speaking, Credit Suisse economists expect the U.S. economy to continue on its steady climb higher, with rate increases largely driven by an anticipated acceleration of wage inflation (so far, it has been moderate). What happens in Europe, however, cannot be ignored as Draghi tries to reinvigorate inflation in Europe although so far, more investors are talking about European deflation which will further suppress rates. While we fully expect the yield on the U.S. 10-year to increase over the next 12 months, our valuation models are more in line with consensus assuming a 25bp increase in our forward cap rates (which assumes further spread compression as base rates rise), while modeling a 3.0% long-term risk free rate in our DCF models. If Credit Suisse economists are indeed correct, U.S. REITs (especially Office, Net Lease, and Health Care) are likely to dramatically underperform next year, while alpha can be generated by owning Hotels, Industrial and Malls which tend to outperform when rates spike. That said, if rates do in fact stay below 3% through 2015 (as the forward curve expects), in our view, that would be a tailwind for REIT equities on an absolute and relative basis. Exhibit 25: Credit Suisse Economist Expectations for the 5-Year and 10-Year Treasury Rates Source: Bloomberg, Company data, Credit Suisse estimates. Exhibit 26: Market Expectations for Fwd. Treasury Rates 3.50% 3.00% 2.50% 2.00% 1.50% 1.6% 1.7% 1.9% 2.2% 2.4% 2.6% 2.9% 3.2% 3.50% 3.00% 2.50% 2.00% 1.50% 2.3% 2.4% 2.5% 2.6% 2.7% 2.8% 3.0% 3.1% 1.00% 1.00% 0.50% 0.50% 0.00% Today 3mo 6mo 1yr 18mo 2yr 3yr 5yr 0.00% Today 3mo 6mo 1yr 18mo 2yr 3yr 5yr 5Yr Forward Treasury Curve 10Yr Forward Treasury Curve Source: Bloomberg, Company data, Credit Suisse estimates. Real Estate Research 26

27 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan November 2014 Credit Spreads have flattened out here On average the REITS have a BBB/BBB+ credit rating, so it is important to track the investment grade borrowing spreads as we think about "all-in" borrowing costs as well as REIT implied cap rates. As we illustrate below, the current Moody's BAA Corporate Bond Index less 10-yr Treasury spread is 240bp, which compares to a 15-year average of 275bp and an average of 180bp from 2005 to Clearly an open and increasingly attractively priced unsecured bond market is a benefit to the earnings power of the REITs as they continue to refinance debt a lower costs and enjoy a lower WACC on new developments/external growth. Exhibit 27: BAA Corporate Bond Spreads Less the 10-Year Treasury 700bp 600bp 500bp 400bp 300bp 200bp 100bp BAA Corporate Bond Index, spread to 10yr Treasury yield Average spread since Jan. '99 Source: Bloomberg, Company data, Credit Suisse estimates. Leading to little change in all in REIT borrowing costs over the past 6 months We track all of the unsecured bonds issued by the REITs that we cover (and some that we do not) to track "real-time" all in borrowing costs. Across the $85bn of bonds we track, the average coupon is 2.7% for a 6.5-year duration bond. Over the past six months the all in yield is down 9bp and the spreads have widened by 14bp. Exhibit 28: REIT Unsecured Bond Spreads Amount of Bonds Avg. Yield to Worst Option Adj Spread Sector Tracked ($mn) Duration Current -1 mo -3 mo -6 mo Current -1 mo -3 mo -6 mo Apartment $13, yrs 2.6% (14bp) (3bp) (18bp) 108bp 2bp 11bp 6bp Health Care $18, yrs 2.7% (8bp) (4bp) (4bp) 121bp 2bp 15bp 20bp Hotels $3, yrs 2.6% (14bp) (5bp) (6bp) 150bp 7bp 15bp 26bp Industrial $4, yrs 3.2% (8bp) (21bp) (37bp) 160bp 1bp 11bp 12bp Office $16, yrs 2.8% (15bp) (10bp) (22bp) 131bp (3bp) 4bp 2bp Retail $27, yrs 2.5% (13bp) (13bp) (21bp) 105bp (1bp) 7bp 5bp Overall Index $85, yrs 2.7% (12bp) (9bp) (17bp) 119bp 0bp 9bp 9bp A/A- Rated $20, yrs 2.4% (12bp) (13bp) (16bp) 92bp (1bp) 8bp 11bp BBB+ $32, yrs 2.6% (12bp) (6bp) (13bp) 118bp 1bp 13bp 14bp BBB $21, yrs 2.8% (13bp) (10bp) (22bp) 134bp 1bp 9bp 6bp BBB- $7, yrs 2.8% (15bp) (9bp) (22bp) 149bp (5bp) 0bp (2bp) Source: Bloomberg, Company data, Credit Suisse estimates. Real Estate Research 27

28 Dividends 9% Long-Term Growth Expected While REITs continue to be priced as growth stocks (25x AFFO), at a 75bp premium to the U.S. 10-yr, or 3.0% dividend yield (a slight premium to historic ranges) the sector still provides a healthy return for income oriented investors. With earnings growth of 9% forecasted through 2016, we are modeling 8-10% dividend growth over the next two years, with AFFO payout ratios slightly increasing to approximately 75%, on average, across our coverage universe. Malls and hotels are best positioned to deliver outsized gains, although few investors invest in Hotel stocks for the dividend given the volatility (and unpredictability) of their earnings stream. Below we highlight sector and company specific expectations. By and large, however, REITs will remain an attractive yield story with potential upside in our forecasts as external growth opportunities dry up. Exhibit 30: Credit Suisse Coverage Universe: Dividends Exhibit 29: Sector Dividend Expectations '15 '16 5y CAGR AFFO Payout ('15/'16) Apartments 6.8% 7.0% 6.4% 74.1% Strips 6.6% 8.4% 8.1% 74.2% Malls 13.1% 12.0% 11.8% 66.2% Office 5.0% 9.3% 8.4% 73.9% Industrial 5.2% 5.3% 5.8% 98.8% Hotels 21.7% 9.7% 9.9% 56.0% Avg. 9.8% 9.3% 8.9% 72.3% Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Real Estate Research 28

29 Subsector and Company Sections Including: Big Picture Thoughts By Subsector Malls, Shopping Centers, Office, Hotels, Apartments, and Industrial Top Picks Within the Groups Three to Five Issues Per Company Which Will Likely Effect Performance In Valuation Models by Company (NAV, IRR, DCF) Real Estate Research 29

30 Total Returns 11 November 2014 Malls We are launching coverage on four mall REITs including Simon Property Group (Outperform rating, $205 TP), General Growth (Neutral rating, $28 TP), Macerich (Neutral rating, $71 TP), and Taubman (Outperform rating, $87 TP). Our forecast total return for malls over the next 12 months is 15%, or 300bp better than the balance of our coverage universe. Overall, we are bullish on Mall fundamentals in 2015, forecasting 4% same-store NOI growth with rent spreads up by an average of 13% across the group. Earnings growth will average 6% in 2015 and 13% in 2016, as companies benefit from improving fundamentals, while ramping up their re/development pipelines. From a valuation standpoint, the group trades at a 3% discount to forward NAV or an implied cap rate of just 5.4%--a discounted valuation given the strength of mall fundamentals. Coverage Group Exhibit 31: Regional Mall Investment Summary Price Total P/AFFO Implied Ticker Rating Mkt Cap Price Target Return 2015E Cap Rate Investment Summary GGP Neutral $22,589 $25.55 $ % 20.9x 5.2% MAC Neutral $9,636 $68.48 $ % 22.1x 5.2% SPG Outperform $56,401 $ $ % 21.3x 5.4% TCO Outperform $4,841 $76.45 $ % 24.4x 5.5% With balance sheet issues in the rear view mirror, company focus on execution of leasing strategy (turning temp to perm and capturing spreads) and leasing the development pipeline. In our view MAC has the second most impactful redevelopment program in the mall space (as % of company) which will drive earnings and NAV growth through Largest A mall owner with outlet business kicker. One of the best companies in the REIT space combines attractive valuation at current levels, and a fortress balance sheet, with development upside. Post-Starwood sale, TCO's portfolio is best positioned in US mall group with productivity of $780psf and off the chart demographics. Developments are highly accretive even factoring in China dilution FFO Estimate 2016 FFO Estimate Dividend Consensus Rating and Distribution CS Consensus H/(L) CS Consensus H/(L) Yield Outperform Neutral Underperform CS Rating GGP $1.42 $ % $1.68 $ % 2.5% 3 / 100% 0 / 0% 0 / 0% Neutral MAC $3.72 $ % $4.13 $ % 3.8% 10 / 50% 9 / 45% 1 / 5% Neutral SPG $9.85 $ % $10.93 $ % 2.9% 19 / 79% 4 / 17% 1 / 4% Outperform TCO $3.52 $ % $4.17 $ % 2.8% 1 / 8% 12 / 92% 0 / 0% Outperform Source: Thomson Reuters, Credit Suisse estimates. Subsector Returns Exhibit 32: Regional Mall YTD vs. 2015E Total Returns 30% 25% 20% 15% 10% 5% 17% 17% 12% 8% 12% 0% TCO SPG GGP MAC REITs Overall Trailing 12-Month Return 12-Month Expected Return Source: Thomson Reuters, Credit Suisse estimates. Real Estate Research 30

31 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec November 2014 Key Sector Themes for 2015 More Than Ever Before, Merchandise Sold in Malls (i.e., Soft goods) Are Witnessing Lower Growth Than Overall Retail Sales One of the questions we wanted to research with this launch was why US mall sales have lagged overall retail sales over the last 24 months by such a wide margin (total retail sales are up 7.8% vs. just 1.7% growth for US malls in general the last 24 months. Relying on government data, one would have to dig deep into the retail sales figures and ultimately exclude Autos and Gasoline results which have little relevance to mall or strip center productivity. Furthermore, we've gone one step further and constructed a "Mall Sales" Index which takes the overall Retail sales figures and strips out Autos, and Gas but also Building Products, Grocery Sales, and three quarters of the Restaurant sales. We leave part of the latter sales growth in our Mall Sales to account for the increasing productivity of restaurants in malls as they become less apparel focused and more entertainment focused. Bottom line is that unfortunately for malls, sales growth for 'mall-based' products has been relatively anemic, just +2.2% per annum over the last two years, well off the pace for the broader sales categories, and more than bp below prior cycle upticks ('97-'00 and '02-'07). While some might point to the internet for loss of sales, the fact of the matter is that the internet accounts for just 6% of total retail sales in the US. The bigger issue has to do with anemic wage growth in the US, or a lack of disposable income among the middle class. Exhibit 33: Breaking Down Retail Sales Avg Y/Y Growth in the cycle for Past Cycles Total Sales Sales ex-autos and Gas "Mall Sales" % 5.9% 6.4% % 5.2% 4.9% 2010-Present 5.3% 4.0% 3.0% Current Cycle % 5.3% 4.2% % 4.2% 3.1% % 3.6% 2.1% YTD 3.8% 3.5% 2.5% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Retail Sales (SA) ex-autos, Building, Grocery, Gas, and Non-Store and 1/4 of Food Service, Y/Y % Real Estate Research 31

32 Sales Growth, Year Before Last 11 November 2014 Exhibit 34: Retail Sales Growth by Category Snapshot of Retail Sales by Category SA Sales, % of Total Retail % of Sales ex- 6 months 12 months 24 months $bn Sales Autos and Gas % Chg % Chg % Chg Category Building Materials and Garden Supplies $27 6% 9% 2% 4% 9% Clothing and Acces. $21 5% 7% 1% 3% 4% Electronics and Appliances $9 2% 3% 3% 5% 8% Food and Beverage Stores $56 13% 18% 2% 2% 6% Food Service $48 11% 16% 3% 7% 9% Furniture $8 2% 3% -1% 1% 6% Gasoline $45 10% -1% -2% -5% General Merch $56 13% 18% 2% 3% 3% Health and Personal Care Stores $25 6% 8% 4% 6% 11% Misc. $10 2% 3% 2% 2% 9% Motor Vehicles and Parts $90 20% 3% 10% 17% Nonstore Retail $40 9% 13% 0% 6% 14% Sporting Goods $7 2% 2% 3% 1% 4% Total Sales, SA $ % 4.5% 7.8% Total ex-autos and Gas $ % 4.0% 7.6% Total ex-autos, Building, Food, Gas, and Non-Store $ % 3.1% 5.8% Including Grocery Stores $ % 2.9% 5.7% Source: BLS, Company data, Credit Suisse estimates. Exhibit 35: Visualizing Growth in Sales over the Past Two Years (Size of the Bubble Correlates to the percentage of Sales ex-autos and Gas Each Category Comprises) 18% 16% Health Care and and Internet Sales 14% 12% 10% 8% Clothing, Furniture, General Merch., Grocery Stores 6% 4% 2% Electronics Food Service 0% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Sales Growth, last 12 months Source: BLS, Company data, Credit Suisse estimates. Do These Trends Matter as Much for A-Quality Mall Owners (Sales Productivity of $600/sf+) We Think Not While overall retail sales growth is modest, it is important to remember that the mall REITs we follow, primarily own high quality malls with well above average sales productivity ($640/sf, on average vs. $470/sf for the average U.S. mall) and will remain in high demand from a diverse group of tenants. Generally speaking, we believe A-quality mall owners are less sensitive to the recent anemic sales trends when compared to B-quality operators given the desirability/need of retailers to operate in the highest productive malls in order to capture, what appears to be a shrinking demand by consumers. What is an occupancy story for B-quality operators (more defensive, although well positioned late cycle as retailers seek to expand their footprints), A-quality mall owners are Real Estate Research 32

33 March-03 March-04 March-05 March-06 March-07 March-08 March-09 March-10 March-11 March-12 March-13 March November 2014 certainly better positioned to drive rents, especially in today's environment with A-mall occupancy already near all-time highs (95%, on average) and international retailers looking to gain a foothold in the US. Higher sales malls give the owner several advantages: Ability to Drive Rents: Higher sales productivity will translate into higher in-line rental rates. Higher Occupancy: Better malls are better occupied and when tenants leave there are generally 'waiting lists' of other tenants who want to come into the mall. Existing, successful tenants grow their footprint in existing malls with early rental uplift opportunity. Targeted by International Retailers: Today, the growth in international tenants (H&M, Zara, Uniqlo, Lorna Jane, etc.) is a major driver of absorption. These tenants are targeting only the top malls in major markets for their U.S. expansion. Limited Impact from Department Store Consolidation: All owners have Sears/JCP exposure, but in a mall with high productivity the releasing/repositioning options are more attractive (i.e., new and better anchor, more entertainment features, splitting the box and adding in-line GLA). Exhibit 36: Mall Productivity Across Our Coverage Group Source: Company data, Credit Suisse estimates, ICSC. What is really interesting to U.S. is the degree to which the A-quality Mall owners have shed "average" or below average assets over the past four years and what that has done to their relative productivity. For example in 2009 the average mall for TCO, SPG, GGP, and MAC did just $60/sf (or 15%) more in sales than the national average today that spread is $170/sf, or +35% higher. We believe this aggressive pruning/upgrading of the portfolios is a major advantage in the mall business today limiting their exposure to retailer bankruptcies, while insulating them from the growing threat of the internet. Exhibit 37: Mall Productivity for the A-Malls We Cover Continues to Widen vs. the National Average $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 A-Mall REITs Sales psf less National Average Mall Sales psf Source: Company data, Credit Suisse estimates, ICSC. Real Estate Research 33

34 Demographics Drive Demand: A-Quality Malls Best Positioned in Good Times and Bad Following up on the point above, we wanted to illustrate the importance demographics plays in supporting above average tenant sales and ultimately the attractiveness of the mall to new/existing retailers. For example, the average household income for the malls (weighted by ABR where available and GLA otherwise, depending on the company's disclosure) the malls for TCO, SPG, GGP, and MAC averages $74k, compared to $52k for the U.S. (2013 YE figure from the Census). Exhibit 38: Mall Demographics: Selected Measures for REITs vs. Average Across All Properties Surveyed 2014 E Population 2019 E Population Growth E Population Mall Demographic Snapshot: Weighted by GLA 2014 E Households 2014 Est. Average Household Income 2014 Est. Median Household Income % of HHs Earning >$100k 2014 Est. Buying Power (Avg HH Income x Total HH in $bns) CBL 302, ,958 11, ,629 $68,135 $50,159 19% $8.2 DDR 502, ,179 22, ,801 $71,879 $52,925 23% $14.0 FCEA 683, ,544 38, ,617 $78,316 $58,824 26% $20.9 GGP 637, ,983 28, ,005 $75,764 $55,315 24% $18.3 MAC 955, ,226 38, ,872 $79,266 $58,468 25% $27.9 PEI 582, ,080 12, ,996 $70,877 $53,047 21% $16.1 SPG 733, ,051 32, ,730 $82,592 $60,268 28% $22.8 TCO 895, ,392 35, ,225 $81,923 $56,587 28% $27.9 WDC 1,018,992 1,054,904 35, ,814 $92,814 $67,295 33% $34.6 REIT Mall Avg 600, ,765 25, ,932 $74,920 $54,731 24% $ E Population 2019 E Population Mall Demographic Snapshot: Weighted by ABR/NOI, estimated by CS where not available Growth E Population 2014 E Households 2014 Est. Average Household Income 2014 Est. Median Household Income % of HHs Earning >100k 2014 Est. Buying Power (Avg HH Income x Total HH in $bns) CBL 305, ,530 12, ,624 $68,170 $50,101 20% $8.2 DDR 551, ,035 25, ,543 $73,080 $53,674 25% $15.7 FCEA 714, ,452 39, ,223 $79,052 $59,236 26% $21.8 GGP 648, ,951 28, ,136 $76,257 $55,644 24% $18.7 MAC 1,159,367 1,205,308 45, ,552 $81,761 $59,940 26% $35.0 PEI 657, ,055 15, ,066 $70,714 $52,647 21% $18.1 SPG 721, ,143 32, ,435 $82,638 $60,338 28% $22.4 TCO 881, ,246 35, ,094 $82,512 $57,194 28% $27.6 WDC 1,088,487 1,128,762 40, ,424 $91,745 $66,417 32% $36.6 REIT Mall Avg 600, ,765 25, ,932 $74,920 $54,731 24% $17.2 Source: Company data, Credit Suisse estimates, ESRI, 4Ctechnologies. Exhibit 39: Mall Demographics: Population Density & Average Household Income 1,400,000 $95,000 1,200,000 1,162,000 $90,000 1,088,000 $86,500 $91,700 1,000, ,000 $85,000 $81,900 $82, , , , , , , , , ,000 $80,000 $75,000 $70,000 $68,200 $72,200 $79,100 $75,800 $70, ,000 $65,000 0 CBL DDR FCEA GGP MAC PEI SPG TCO WDC $60,000 CBL DDR FCEA GGP MAC PEI SPG TCO WDC 2014 Population REIT Property Avg 2014 Est. Average Household Income REIT Property Average Source: Company data, Credit Suisse estimates, ESRI, 4Ctechnologies. Real Estate Research 34

35 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan November 2014 Growth in E-Commerce More of a Perception Issue for A-Quality Malls and In-Fill Neighborhood Centers Than a True Threat to Their Business One of the hardest variables to quantify is how the growth in e-commerce/internet retail will affect brick and mortar retail sales and more specifically, the relative impact on A- vs. B-quality malls, as well as traditional shopping center sales trends. The growth in e-commerce has been impressive accounting for 6% of total sales in 2013, up from just 2% a decade ago. The biggest question investors seem to be asking these days as it relates e-commerce vs. brick and mortar real estate are (1) can the two co-exist (profitably); and (2) is all real estate created equal or in other words are certain asset types and/or locations better insulated than others. In our view, while e-commerce has been effective at competing on price (and convenience), it has yet to figure out a cost effective (and profitable) way to get goods to consumers on a same-day basis (i.e., the Amazon, 0% margin model is simply not sustainable over time). In fact, the most successful retailers pursue an Omni-channel strategy targeting customers through e-commerce, mobile devices and traditional mall/shopping center real estate which helps to build customer loyalty. While we remain bullish on the outlook for brick and mortar retail real estate, not all retail is created equal and in fact, we expect retailers to be much more selective in their 'real estate' plans targeting primarily densely populated, high income markets for footprint growth. Generally speaking A-quality malls and well located grocery anchored neighborhood shopping centers are relatively insulated from the threat of the internet, and are generally the better quality investment, over the long run. A-quality malls have both the retail appeal (high demand form best in class retailers) and expanding entertainment/restaurant component are highly desirable and trafficked assets which offer an experience which is still valuable to most consumers, while grocery anchored neighborhood centers serve a convenience need that is hard to replace by the internet even with next day delivery by Amazon (which is a questionable long-term viable business model given the 0% margins that business runs on). The bigger issue malls face, in our view, is that from a sentiment / headline perspective as a large percentage of the investment community looks at the malls as being in the crosshairs of e-retail given the convenience and pricing factors. Therefore, while we and other REIT investors expect the mall to be a highly productive SS NOI grower over the foreseeable future, the stocks may continue to trade at levels not reflective (on a NAV basis or on relative multiples vs. other sectors) reflective of their FCF profile. Exhibit 40: E-Retail Sales in Total and as a Contributor to Overall Retail Sales Growth $80,000 $70,000 $60,000 $50, % 9.0% 8.0% 7.0% 6.0% 2.0% 1.5% 1.0% 0.5% $40,000 $30,000 $20,000 $10,000 $0 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 0.0% -0.5% -1.0% -1.5% Retail Sales E-commerce ($bn) E-commerce as a % of Total Incremental Growth (Y/Y) to Sales ex-auto and Gas from Internet Sales 6mo Avg Source: Company data, Credit Suisse estimates, Census. Real Estate Research 35

36 Focus on Retailers for Relative Mall Performance One issue that may get lost in the discussion about Malls and Shopping Centers is that while we are not consumer analysts, we think you can get a decent feel for tenant sales growth and profitability trends by how well retailer stocks perform (we've run similar tests in the past to show Industrial REIT exposure to FedEx, UPS, Panalpina, etc.). In fact, over the past years, Mall relative performance (vs. the REITs) has been highly correlated to the performance of the Retail sector vs. the S&P 500, and to a lesser degree the performance of consumer discretionary stocks compared to consumer staples stocks. We believe investors should watch these indices going forward as they tell you something about the overall profitability and potential store growth of retailers, hopefully netting out the growing and contracting tenants. Exhibit 41: Mall Relative Performance Is Correlated with the Relative Performance of Their Retailers Source: Bloomberg, Company data, Credit Suisse estimates. Exhibit 42: Stock Performance of Retailers Retail Subsectors vs. Retail REIT Performance Market 30 Day 90 Day YTD Last 12 Mo. Last 3 Yrs Index: Cap ($bn) Total Return Total Return Total Return Total Return Total Return Food and Staples S5FDSR Index $ % 12.2% 13.3% 16% 23% Food Retail S5FDRE Index $ % 17.7% 15.5% 12% 26% Apparel and Specialty Retail $ % 18.0% 10.7% 14% 28% Internet Retail S5INRE Index $ % -8.9% -15.7% -6% 21% Home Imporvemet S5HOMI Index $ % 21.7% 19.9% 28% 40% Multiline S5MRET Index $ % 8.8% 8.7% 11% 11% Drug Stores S5DRUG Index $ % 14.3% 22.5% 30% 33% S&P 500 Retail Index S5RETL Index $ % 7.7% 2.2% 8% 23% S&P 1500 Staples SPTRSC30 Index $2, % 10.5% 13.9% 16% 19% S&P 1500 Discretionary SPTRSC25 Index $2, % 4.8% 2.9% 9% 23% S&P 1500 Index SPR Index $20, % 6.8% 11.2% 16% 20% REIT Index FNER Index $ % 6.6% 23.7% 22% 17% Malls FNMAL Index $ % 9.1% 25.5% 26% 18% Shopping Centers FNSHO Index $ % 9.6% 26.2% 22% 20% Source: Company data, Credit Suisse research, Bloomberg Mall SS NOI Next Five Years Should Be Very Good We expect that the internal growth profile of A-quality Mall REITs to be in-line, to slightly above the LT average for the mall sector. We forecast Mall SS NOI growth of 4.1% in 2015 and 3.6% in 2016, with a 5-yr CAGR of 3.2% compared to a trailing 15+ year average SS NOI growth for the sector of 3.7%. With Mall shop occupancy running north of 94%, on average, leasing spreads should remain powerful drivers of EBITDA growth. (We underwrite spreads of 13% in 2015 and 12% in 2016.) Real Estate Research 36

37 1997 FY 1998 FY 1999 FY 2000 FY 2001 FY 2002 FY 2003 FY 2004 FY 2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY 11 November 2014 Exhibit 43: How We Model SS NOI Growth for the Malls vs. Historical Trends 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Annual Mall REITs CS Forecast Leasing Spreads 12%+ the Next Two Years In our Mall models, we expect cash leasing spreads to average 13% in 2015 and 12% in 2016, which compares to 15% YTD and 15% in 2013 and a trailing 8-year average of 13%. While we remain constructive on the cash SSNOI impact from above average leasing spreads, slowing retail sales against a backdrop of modest economic growth, coupled with continued pressure from e-commerce, leasing spreads are likely to moderate to ~10%, although A-quality malls will continue to outperform. Exhibit 44: How We Think About Cash Releasing Spreads Going Forward Historical Cash Rent Spreads vs. CS Forecasts - Malls YTD 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY CS Next 5Yr Forecast Trail. 5Yr Avg Trail. 8Yr Avg General Growth 9.4% 11.4% 14.3% 12.0% 11.0% 10.0% 10.0% 9.0% 10.4% 5.5% 6.6% Macerich 16.4% 15.1% 17.8% 12.0% 10.5% 9.0% 9.0% 9.0% 9.9% 13.7% 16.7% Simon Property 10.2% 14.9% 18.9% 14.0% 13.0% 12.0% 12.0% 12.0% 12.6% 11.3% 14.9% Taubman Centers 17.6% 19.0% 16.2% 16.0% 15.0% 14.0% 14.0% 14.0% 14.6% 14.0% 12.0% Regional Mall Avg 13.4% 15.1% 14.7% 13% 12% 11% 11% 11% 11.9% 10.7% 13.1% Development A Key Focus for All; Adds 2% to EV the Next Two Years One of the attractive features of the Mall sector investment case is the ability of the company's to drive earnings and NAV growth through ground up development, which at this point in the cycle is very attractive relative to the sales cap rate environment (5-6% across most markets). In our models, we assume that the in-process developments for the malls will add 1.8% of value creation to their enterprise values. In addition we underwrite future development activity for each company, averaging 1.1% of EV per year at an 8.0% yield. We fund this growth in the model with leverage neutral debt/equity. The big standouts from a value creation standpoint (relative to the size of their companies) are Macerich and Taubman with our models estimating their current development projects will add 2.6% and 5.6% respectively to EV. The development pipelines for GGP and Simon are less impactful today given the size of their companies, but investors should note that the companies are largely self-funding their current development pipelines with FCF after dividends (and should continue to do so into the future, a huge value driver relative to other sectors). Real Estate Research 37

38 Exhibit 45: How We Think About Development Volumes Going Forward and the NAV Accretion from CIP Supply Nonexistent in the Mall Sector In light of continued consolidation of department stores (JC Penny, Sears, etc.), the supply picture for malls remains a major tailwind for the group, with supply growth averaging just ~1% the past five years. Not much has changed over the past twelve months, with supply growth averaging just 1% in 2014 (8sf) compared to a total inventory of 700msf. With supply in check, mall owners benefit from increased pricing power (as evidenced by 15% rent spreads YTD) a trend we anticipate will remain in place for the near future. Furthermore we think the growth profile for A-mall space is better than the average, with tenants looking to increase their exposure to higher productivity malls which will benefit the four companies we cover given their above average tenant sales. Exhibit 46: Mall Supply Growth Should Remain Light Going Forward Source: Company data, Credit Suisse research, CoStar Real Estate Research 38

39 General Growth (GGP): Neutral Rating; $28 Price Target; 12% Total Return Exp. Company Overview General Growth (GGP) is a large cap retail REIT (listed on the S&P 500), and the second largest mall owner in the country with 20 regional malls totaling 125msf. The company benefits from six demographics surrounding its centers, while the average population density and household income surrounding its malls is 638,000 and $75,700, respectively ranking the company 6th within our proprietary demographic study. Its top five tenants include Limited Brands (3.5% of NOI), The Gap (3.0%) and Footlocker (2.4%), while its top 20 account for just 20% of NOI. Overall, the company owns a very high quality portfolio with 88% of its assets A to B+ quality. Over the last three years, GGP has generated 4.5% NOI growth, while we forecast GGP to generate 4.4% NOI growth, per annum through Exhibit 47: General Growth Properties Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage on General Growth Properties (GGP) with an Neutral rating and a $28 target price, implying a 12% total return over the next 12 months. Our target price is based upon a 75% weighting of our $27/sh forward NAV (5% premium to NAV); and a 25% weighting of our $29/sh DCF estimate. Our Neutral rating is based on (1) the stock's discounted valuation with GGP trading at a 4% discount to NAV; (2) its sector leading same-store NOI growth over the next three years (4.4%, on average); and (3) its robust development pipeline, with yields in excess of 9.5%. Overall, we forecast 10% earnings growth over the next two years among the highest in the sector. Investment Positives While GGP's average tenants sales fall at the lower end of our coverage universe ($571psf vs. SPG at $613 its closest competitor), we expect a higher sales growth for GGP as temporary tenancy moderates into Real Estate Research 39

40 Company leverage is a net positive, given our view that Wall Street cap rates are too high for A-quality mall owners. We see the sector trading at a 5.2% implied cap rate vs. 5.4% in our NAVs which is too far wide of where we believe GGP's assets should trade given market concentration and overall asset quality. Leasing spreads in 2015 should remain in the 12%+ range pushing same store NOI growth to 4.5% in 2015 and 4.1% in 2016 approximately 40bp higher than what we have modeled for its peers over the next two years. GGP should deliver $650mn of development projects over the next months. Furthermore we expect the company will spend $1.2bn over the next 24 months on incremental developments, with the cost funded with FCF after dividends. The potential for medium-term spend of $600mn+/yr of very accretive redevelopments funded with FCF is one of the more attractive development stories in REITs (similar to SPG). Redevelopment program of $500-$800mn per annum at 8%+ yields and 5% or below cap rates is a great value generator in a difficult acquisition environment. Company should add Street retail over time as well to diversify revenue streams. Investment Risks While we believe GGP's shares are undervalued (4% discount to NAV) it is hard to ignore the company's leverage ratio which investors are clearly sensitive to (46% on a debt to asset value basis, and 11.9 times net debt/ebitda). In our view, however, the company's secured asset financings mitigate the financial risk (especially if rates back up), while higher leverage should help drive outsized equity returns. Productivity of $~570/sf is third best of the four malls we cover placing the company more at the risk from the e-commerce/slower retail sales sentiment than higher productivity peers. Company demographics are not as strong as their A-Mall peers, but we expect these metrics will strengthen over time as the company continues to shed lower productivity malls and use proceeds to fund redevelopment of stronger malls. Mall sales per foot have been stagnant for the past two quarters on a same center basis, raising concerns that pricing power going forward will not be as strong as in Our models, including GGP's, assume that leasing spreads moderate over the next three years towards 10% spreads from the mid-teens in line with a longerterm average. Street retail acquisitions are in vogue today, but a backup in the market/regression in street rents could negatively impact GGP (along with VNO and SLG) given the high residual value as a percentage of total return in those assets. Real Estate Research 40

41 Development Pipeline At Q3, GGP had six active development projects with a total estimated build cost of $1.1bn ($630mn left to fund.). GGP also has 7 identified active redevelopment projects (plus an 'other' bucket) with total costs of $394mn. As these projects are open but not yet stabilized we assume that half of the NOI from the projects is already in the run rate and ½ is not. We expect the company to deliver these projects to a 9.5% blended return, with an estimated stabilized cap rate of 5.0%. As we illustrate below we estimate that these projects represent $996mn of development accretion for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Going forward we expect GGP will invest $600mn per annum in development / redevelopment projects at an average return of 8%. Exhibit 48: GGP Development Pipeline and Credit Suisse Estimate for Value Creation General Growth Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Development Mayfair $72,300 $25,200 $47, % 5.0% 1.8 $28,920 $24,613 Ridgedale $106,200 $42,200 $64, % 5.0% 1.8 $74,340 $63,268 Soutwest $72,600 $11,300 $61, % 5.0% 2.0 $65,340 $54,450 Ala Moana Center $573,200 $342,600 $230, % 5.0% 2.0 $515,880 $429,900 Baybrook $76,300 $20,100 $56, % 5.0% 2.0 $68,670 $57,225 Other $241,400 $67,600 $173, % 5.0% 2.0 $168,980 $140,817 Open Projects - we assume 1/2 of NOI is in run rate already so we use 1/2 of building costs Northridge $6,100 $5,650 $ % 5.0% 2.0 $10,980 $9,150 Fashion Show $17,400 $16,500 $ % 5.0% 2.0 $62,640 $52,200 Oakwood $9,500 $8,300 $1, % 5.0% 2.0 $7,600 $6,333 Glendale $25,850 $25,500 $ % 5.0% 2.0 $36,190 $30,158 Columbia $11,800 $10,150 $1, % 5.0% 2.0 $16,520 $13,767 Oakbrook $7,500 $6,500 $1, % 5.0% 2.0 $7,500 $6,250 Woodlands $22,350 $19,850 $2, % 5.0% 2.0 $17,880 $14,900 Other (1/2 to space out) $48,250 $42,400 $5, % 5.0% 2.0 $57,900 $48,250 Other (1/2 to space out) $48,250 $42,400 $5, % 5.0% 3.0 $57,900 $44,538 Totals / Avg $1,339,000 $686,250 $652, % 5.0% $1,197,240 $995,819 Real Estate Research 41

42 General Growth Valuation Overview Exhibit 49: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $26.46 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $27.78 Approach 2: DCF DCF per share $29.13 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $29.13 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $28.00 Forecasted Total Return 12.2% Exhibit 50: NAV Snapshot Key inputs/items in our GGP NAV Model: Year 1 Cash NOI of $2.2bn Blended cash cap rate of 5.25% Underwrite portfolio to a 6.5% unleveraged IRR, inline with SPG and MAC Development pipeline" $1.6bn of value Implied Cap Rate: 5.2% Real Estate Research 42

43 General Growth IRR Analysis and DCF Model Exhibit 51: IRR Underwriting Key Assumptions Targeted IRR (output) 6.51% Required Initial Cap Rate (input) 5.25% Assumed Rise in Terminal Cap 0.75% GGP IRR Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Terminal Value NOI Growth (output) 4.5% 4.1% 3.9% 3.6% 3.4% 3.2% 3.4% 3.3% 3.0% 3.0% 3.0% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $2,191,365 $2,282,056 $2,370,193 $2,456,259 $2,540,823 $2,623,226 $2,711,134 $2,799,277 $2,883,256 $2,969,753 EOP Cash NOI (000's) $2,282,056 $2,370,193 $2,456,259 $2,540,823 $2,623,226 $2,711,134 $2,799,277 $2,883,256 $2,969,753 $3,058,846 Leasing CapEx (as % of Rev) 12% 11% 11% 11% 11% 11% 11% 11% 11% 11% Leasing CapEx (as % of NOI) 17% 16% 16% 16% 16% 16% 16% 16% 16% 16% Leasing and Maintenance CapEx ($394,672) ($381,854) ($395,034) ($408,199) ($420,951) ($434,626) ($448,331) ($468,108) ($482,151) ($492,566) IRR Analysis Implied Cap Rate/Cash Flows ($43,467,730) $1,887,384 $1,988,339 $2,061,225 $2,132,625 $2,202,275 $2,276,508 $2,350,947 $2,415,148 $2,487,602 $2,566,280 Terminal Value $52,000,380 Total CF ($43,467,730) $1,887,384 $1,988,339 $2,061,225 $2,132,625 $2,202,275 $2,276,508 $2,350,947 $2,415,148 $2,487,602 $54,566,661 Asset Value Growth over Hold Period - Annual 1.8% Asset Value Growth over Hold Period - Total 20% IRR 6.51% Cap Rate to achieve IRR 5.25% Exhibit 52: DCF Model with Primary Assumptions General Growth DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $1,839,221 $2,106,767 $2,259,029 $2,380,837 $2,501,176 $2,588,717 Normalized FFO $1,342,997 $1,587,961 $1,734,972 $1,879,116 $2,003,584 $2,073,709 Maintenance Capex ($238,068) ($270,323) ($268,667) ($282,570) ($296,173) ($306,539) SL Rent ($49,676) ($51,879) ($54,004) ($56,071) ($58,094) ($58,094) FAS 141 $70,328 $64,804 $58,461 $51,356 $43,529 $43,529 Non-Cash Interest $32,000 $28,000 $24,000 $20,000 $16,000 $0 AFFO $1,157,581 $1,358,563 $1,494,762 $1,611,832 $1,708,846 $1,752,605 Ratios / Analysis CAGR EBITDA/sh growth 15% 7% 5% 5% 3% 8% FFO/sh growth 18% 9% 8% 7% 3% 11% AFFO/sh growth 17% 10% 8% 6% 3% 10% CapEx as % of FFO 18% 17% 15% 15% 15% 15% 15% Inputs GGP Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.20 Cost of Equity (CAPM) 8.40% Perpetual Growth Rate 3.50% Items to Add to / Deduct from Firm Value Outputs NPV of Cash Flows $5,706,617 NPV of Terminal Value $21,684,229 Total $0 Firm Value $27,390,845 Plus non-cash flow producing assets $0 Shareholders Value $27,390,845 Share outstanding 947,088 DCF value per share $28.92 Real Estate Research 43

44 General Growth Properties GGP Price (07 Nov 14): US$25.55, Rating: NEUTRAL, Target Price: US$28.00, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 2, , , ,055.7 Property operating expenses Real estate taxes Net operating income (US$ m) 1, , , ,984.7 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items ,168.4 Cash flow from operations ,168.4 Other investment/(outflows) (159.9) (863.9) (595.6) Cash flow from investment (109.9) (663.9) (395.6) Dividends paid (132.6) (636.4) (763.7) Equity raised Net borrowings Other financing cash flows (200.0) (400.0) Financial cashflow (128.2) (323.8) (772.8) Net cashflow 20.4 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 16, , , ,822.4 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets 1, , , ,255.6 Total fixed assets Investment properties 21, , , ,747.7 Other investments 2,408 3,116 3,116 3,116 Other non-current assets 23, , , ,553.2 Total non-current assets 23, , , ,157.0 Total assets 25, , , ,412.6 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 15, , , ,552.7 Other non-current liabilities Total non-current liabilities 17, , , ,280.7 Total liabilities 17, , , ,388.7 Unit funds Reserves 7, , , ,522.3 Shareholders' equity 8, , , ,023.9 Total capital employed 25, , , ,304.6 Real Estate Research 44

45 Macerich (MAC): Neutral Rating; $71 Price Target; 8% Total Return Exp. Company Overview Macerich (MAC) is a large cap mall REIT (included in the S&P 500) with ownership interest in 52 regional malls and community centers. MAC's top five markets include California (28% of NOI), Arizona (19%), New York City (16%), NJ/CT (9%), and Virginia (6%) collectively making up 72% of total NOI. Incomes average $80k within a 10 mile radius of its centers, while densities are 1.2mn people. MAC has been an active capital recycler the several years since the start of 2013 they've sold 13 malls with sale averaging just $333psf.. Exhibit 53: Macerich Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Macerich with a Neutral rating and $71 target price, implying an 8% total return over the next 12 months. Our target price is based upon a 75% weighting of our $68/sh forward NAV (5% premium to NAV to reflect management and balance sheet quality); and a 25% weighting of our $70/sh DCF estimate. Our Neutral rating is primarily valuation based with the stock trading at a 1% premium to NAV vs. a 3% discount for its peers. We remain bullish on MAC's fundamentals with the company expected to deliver 3.8% average same-store NOI growth the next two years with its robust development pipeline, adding $3/share of NAV accretion. Overall, we forecast 9% earnings growth over the next two years. Investment Positives High quality mall portfolio with large development/redevelopment kicker (current pipeline is ~6% of EV). $900mn of asset sales in past two years has left the portfolio focused where external growth can move the needle. Mall portfolio in much better shape post sales with demographics ranking much better than we would expected: Population densities of 1.2mn people in a 10-mile radius Real Estate Research 45

46 ranks 1 st in our survey driven by their NYC-metro portfolio. Household incomes of $80k rank 4th. Development pipeline is highly accretive to earnings and NAV, and is especially meaningful on a smaller company post asset sales. In our NAV, we give MAC $435mn of NAV accretion on the current pipeline. Look for company to spend $250mn-300mn per annum on redevelopments going forward. SS NOI has trailed peers of late due in part to low CPI (MAC leases are a multiple of CPI, not fixed like peers). That said, we expect MAC's SS NOI to accelerate in 2015 and 2016, modeling 4% (in-line with peers) and 3.6% respectively, over the next two years. California and Phoenix markets were hit hard in the downturn, but mall occupancies are recovering and we think the company's land position in Phoenix is an underestimated long-term positive. Stock is the most likely takeout candidate in the A-Mall group given their geographic exposure, size, and relative valuation. Stock trades at an implied 5.2% cap rate, which is just inside of the peer average which doesn't seem to us to be an attractive entry point for the stock. Investment Risks MAC faces the headwind of modest headline retail sales growth. Note that this is not an issue that rests solely on the shoulders of MAC. We believe Malls, in general, need to find a way to communicate their sales growth for all in-line stores not just those under 10ksf given what we have found to be solid sales performance from large foot print retailers (Forever 21, Uniqlo, etc.). Otherwise the perception that leasing spreads will contract over time will be difficult to overcome. Mall sales per foot have been stagnant for the past two quarters on a same center basis, raising concerns that pricing power going forward will not be as strong as in Our models, including MAC's, assume that leasing spreads moderate over the next three years towards 10% spreads from the mid-teens in line with a longerterm average. Dispositions of sub $400psf malls will be somewhat dilutive to near-term earnings growth that said; the redeployment of proceeds into the development pipeline at 8-10% returns is a long-term positive. Real Estate Research 46

47 Development Pipeline At Q3, MAC had 13 active development projects with a total estimated build cost of ~$780mn ($416mn left to fund.). Overall, we expect the company to deliver these projects to a 8.9% return. As we illustrate below we estimate that these projects represent $435mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 54: MAC Development Pipeline and Credit Suisse Estimated Value Creation Macerich Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Broadway Plaza I $120,000 $32,000 $88, % 5.0% 2.3 $96,000 $78,367 Broadway Plaza II $15,000 $0 $15, % 5.0% 3.3 $12,000 $9,057 Niagara Outlet Expansion $84,000 $68,000 $16, % 6.0% 1.0 $56,000 $50,909 Los Cerritos $23,000 $1,000 $22, % 5.0% 2.0 $13,800 $11,500 Santa Monica $30,000 $5,000 $25, % 5.0% 2.0 $18,000 $15,000 Scottsdale Fashion $15,000 $2,000 $13, % 5.0% 1.8 $15,000 $12,766 Tysons Office $114,000 $104,000 $10, % 6.0% 1.0 $38,000 $34,545 Tysons Hotel $68,000 $53,000 $15, % 6.0% 1.5 $22,667 $19,710 Tysons Mult $80,000 $65,000 $15, % 5.0% 1.8 $48,000 $40, N. Micigan $17,500 $2,000 $15, % 5.0% 2.0 $21,000 $17,500 Green Acres $117,500 $24,000 $93, % 5.0% 2.8 $117,500 $92,157 Kings Plaza $95,000 $7,000 $88, % 5.0% 2.8 $66,500 $52,157 Paradise Valley $0 $0 $ % 5.0% 2.5 $0 $0 Totals / Avg $779,000 $363,000 $416, % 5.3% $524,467 $434,519 Real Estate Research 47

48 Macerich Valuation Overview Exhibit 55: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $68.09 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $71.49 Approach 2: DCF DCF per share $69.83 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $69.83 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $71.00 Forecasted Total Return 7.5% Exhibit 56: NAV Snapshot Macerich NAV Calculation Assumptions IRR Target 6.50% Assumed avg NOI growth next three years 3.44% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $823,701 Straight-line rent adjustment/ FAS 141 ($15,442) Cash NOI from owned properties $808,258 Assumed cash NOI cap rate 5.25% Market value of owned properties $15,395,395 Key inputs/items in our MAC NAV Model: Year 1 Cash NOI of $808mn Blended cash cap rate of 5.25% Underwrite portfolio to a 6.5% unleveraged IRR in-line with SPG and GGP Development pipeline of $1.0bn of value including $435mn of assumed value creation Add Cash, CIP, + Other Assets Cash and cash equivalents $151,301 Other assets $320,594 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $0 Development Projects (CIP plus Est. Value Creation) $1,021,976 Equals -Gross market value of assets $16,889,266 Less Liabilities Total liabilities (incl. JVs) $6,748,739 Net market value of assets $10,140,527 Total Shares / Units 151,215 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $68.09 Real Estate Research 48

49 Macerich IRR Analysis and DCF Model Exhibit 57: IRR Underwriting Key Assumptions Targeted IRR (output) 6.50% Required Initial Cap Rate (input) 5.25% Assumed Rise in Terminal Cap 0.75% MAC IRR Analysis N4Q Terminal Value NOI Growth (output) 4.0% 3.6% 3.4% 3.3% 3.2% 3.1% 2.7% 3.1% 3.3% 3.3% 3.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $100,000 $103,611 $107,161 $110,667 $114,259 $117,856 $120,988 $124,763 $128,817 $133,004 EOP Cash NOI (000's) $103,611 $107,161 $110,667 $114,259 $117,856 $120,988 $124,763 $128,817 $133,004 $137,327 Leasing CapEx (as % of Rev) 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Leasing CapEx (as % of NOI) 14% 14% 14% 14% 14% 14% 14% 14% 14% 14% Leasing and Maintenance CapEx ($14,506) ($15,003) ($15,493) ($15,996) ($16,500) ($16,938) ($17,467) ($18,034) ($18,621) ($19,226) IRR Analysis Implied Cap Rate/Cash Flows ($1,973,538) $89,105 $92,159 $95,174 $98,263 $101,357 $104,050 $107,296 $110,783 $114,384 $118,101 Terminal Value $2,334,553 Total CF ($1,973,538) $89,105 $92,159 $95,174 $98,263 $101,357 $104,050 $107,296 $110,783 $114,384 $2,452,654 Asset Value Growth over Hold Period - Annual 1.7% Asset Value Growth over Hold Period - Total 18% IRR 6.50% Cap Rate to achieve IRR 5.25% Exhibit 58: DCF Model with Primary Assumptions Macerich DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $806,057 $881,937 $953,927 $1,007,485 $1,058,502 $1,090,257 Normalized FFO $562,185 $625,077 $683,910 $730,717 $776,766 $800,069 Maintenance Capex ($78,930) ($86,338) ($93,415) ($98,669) ($103,667) ($106,777) SL Rent ($15,442) ($16,046) ($16,622) ($17,189) ($17,756) ($17,756) Non-Cash Interest $0 $0 $0 $0 $0 $0 AFFO $467,813 $522,693 $573,873 $614,860 $655,342 $675,535 Ratios / Analysis CAGR EBITDA/sh growth 9% 8% 6% 5% 3% 7% FFO/sh growth 11% 9% 7% 6% 3% 8% AFFO/sh growth 12% 10% 7% 7% 3% 9% CapEx as % of FFO 14% 14% 14% 14% 13% 13% 14% Inputs MAC Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.12 Cost of Equity (CAPM) 8.02% Perpetual Growth Rate 3.00% Items to Add to / Deduct from Firm Value Land in Phoenix $0 Outputs NPV of Cash Flows $2,233,709 Terminal Value $12,243,502 Number of periods 5 NPV of Terminal Value $8,325,974 Total $0 Firm Value $10,559,682 Plus non-cash flow producing assets $0 Shareholders Value $10,559,682 Share outstanding 151,215 DCF value per share $69.83 Real Estate Research 49

50 Macerich Company MAC Price (07 Nov 14): US$68.48, Rating: NEUTRAL, Target Price: US$71.00, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 1, , , ,493.0 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity 31 Net income before tax Surplus/deficit on inv property Income tax (expense) 0.4 (3.8) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (72.1) (370.8) (358.9) Cash flow from investment (270.8) (258.9) Dividends paid (187.5) (397.5) (421.4) Equity raised Net borrowings (255.0) Other financing cash flows Financial cashflow (442.5) (197.7) (263.0) Net cashflow (64.6) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU (46.3) (0.2) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 7, , , ,432.9 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets 1, Total fixed assets Investment properties 7, , , ,976.6 Other investments Other non-current assets 7, , , ,361.1 Total non-current assets 7, , , ,361.1 Total assets 9, , , ,067.3 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 4, , , ,320.0 Other non-current liabilities Total non-current liabilities 5, , , ,810.5 Total liabilities 5, , , ,923.8 Unit funds Reserves 3, , , ,914.8 Shareholders' equity 3, , , ,143.6 Total capital employed 9, , , ,954.1 Real Estate Research 50

51 Simon Properties (SPG): Outperform Rating; $205 Price Target; 17% Total Return Exp. Company Overview With a market cap of $55bn, Simon Property Group is the largest REIT in the sector, and the only real estate company in the S&P 100. The company owns the largest regional mall and outlet center portfolio in the sector totaling ~230 properties and over 189mnsf of GLA. Its centers generate a very impressive $608/sf in sales, on average (2 nd behind TCO), while its diverse portfolio of high quality assets generated 20% leasing spreads through the first half of this year, on top of the 15% generated in '13. Top tenants include The Gap (3.5% of NOI), followed by Limited Brands (2.2%) and Signet Jewelers (1.7%) with its top 10 tenants accounting for 16% of NOI (US portfolio). The company is managed by David Simon, one of the most respected REIT CEOs in the business. Exhibit 59: Simon Property Group US Portfolio Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Simon Properties with an Outperform rating and $205 target price, implying 17% total return over the next 12 months. Our target price is based upon a 75% weighting of our $183/sh forward NAV (plus a 10% premium to reflect management, asset, and balance sheet quality), and a 25% weighting of our $217/sh DCF estimate. Our Outperform rating is based on (1) the stock's discounted valuation with SPG trading at a 2% discount to NAV but a large discount to its FCF generating ability; (2) solid internal growth with same-store NOI averaging ~3.5% through 2016; (3) its robust development pipeline, with $800mn of deliveries per annum at 9% returns; and (4) its high quality portfolio and deep/talented management team. Overall, we forecast 9% earnings growth over the next two years. Real Estate Research 51

52 Investment Positives Combining a top quality real estate portfolio, with a deep/talented management team and fortress balance sheet, SPG is widely considered one of the best quality companies of the modern REIT era warranting a premium valuation. SPG's impressive redevelopment pipeline should allow the company to deliver $800mn-1bn of projects per annum at an 8-10% cash return over the next few years, much of it funded by free cash flow, a considerable value generator given low stabilized cap rates for malls (<5% for the best quality assets). The continued expansion of their malls and improving the merchandising mix further improve on an A-class portfolio. Development acumen, large opportunity set, and healthy retailer growth plans should allow company to deliver $800mn+ in annual development deliveries. We expect that SPG's Klepierre investment will continue to appreciate in value as European cap rates contract in a low interest rate environment. (See PLD section for more charts/data.) While the investment is relatively small for SPG ($2bn), we expect that positive asset pricing trends will prove a net positive for the company over time. Underlying mall business is very good, which should drive SS NOI growth for SPG of 4% in 2015 and 3.4% in 2016 boosted by 14% rent spreads in 2015 and 13% in As it relates to potentially higher interest rates, we have found that Mall stocks tend to outperform as rates rise. Investment Risks Credit Suisse Retail analysts expect soft lines sales growth of 1-3% over the next 12 months which could prove a major headwind to mall sales per foot. Given investor concern around this metric, slow sales growth could be a headwind for bellwether SPG (and its peers), in general, and its relative (to overall REIT sector) performance. Mall sales per foot have been stagnant for the past two quarters on a same center basis, raising concerns that pricing power going forward will not be as strong as in Our models, including SPG's, assume that leasing spreads moderate over the next three years towards 10% spreads from the mid-teens in line with a longerterm average. Can a large cap REIT outperform if retail sales growth remains modest and rates rise into 2015? May be difficult for SPG to attract non-reit investment in that scenario despite a healthy underlying business. While we believe A-quality malls have demonstrated a general resilience to the internet the issue remains an overhang on the sector, and will likely weigh on valuations until proven otherwise. In the longer term, we expect retailers to find ways to leverage both their brick and mortar and internet strategies especially for, irreplaceable A-quality malls. Real Estate Research 52

53 Development Pipeline At Q3, SPG had a number of active redevelopment and development projects comprising with a total estimated build cost of $2.2mn ($1.6bn left to fund.). SPG breaks out their developments into a few categories, notably Malls, Outlets, and Mills. Overall, we expect the company to deliver these projects to a 9% return. As we illustrate below we estimate that these projects represent $1.1bn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 60: Snapshot of Simon Properties Real Estate Research 53

54 Simon Properties Valuation Overview Exhibit 61: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $ Targeted Premium (Discount) to NAV 10% Fair Value on NAV Valuation $ Approach 2: DCF DCF per share $ Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $ Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $ Forecasted Total Return 17.4% Exhibit 62: NAV Snapshot Simon Property Group NAV Calculation Assumptions IRR Target 6.48% Assumed avg NOI growth next three years 3.20% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $4,770,926 Straight-line rent adjustment/ FAS 141 ($75,201) Cash NOI from owned properties $4,695,725 Key inputs/items in our SPG NAV Model: Year 1 Cash NOI of $4.7bn Blended cash cap rate of 5.45% Underwrote portfolio to 6.5% unleveraged IRR, un-line with GGP and MAC Assumed cash NOI cap rate 5.45% Market value of owned properties $86,160,093 Add Cash, CIP, + Other Assets Cash and cash equivalents $1,174,927 Other assets $3,350,036 Klepierre $2,677,901 Land held for future development(market value) $0 Development Projects (CIP plus Est. Value Creation) $1,666,345 Equals -Gross market value of assets $95,029,302 We value Klepierre at $2.7bn based on the closing price of their equity price. Development pipeline of $1.7bn Less Liabilities Total liabilities (incl. JVs) $29,751,377 Mark-to-Market Debt Adj. $0 Preferred Stock $75,384 Net market value of assets $65,202,541 Total Shares / Units 363,635 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $ Real Estate Research 54

55 Simon Properties IRR Analysis and DCF Model Exhibit 63: IRR Underwriting Key Assumptions Targeted IRR (output) 6.48% Required Initial Cap Rate (input) 5.45% Assumed Rise in Terminal Cap 0.75% SPG IRR Analysis N4Q Terminal Value NOI Growth (output) 4.0% 3.4% 3.2% 3.0% 2.5% 2.7% 3.0% 3.0% 3.3% 3.3% 3.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $1,000,000 $1,033,704 $1,066,933 $1,099,055 $1,126,274 $1,156,237 $1,191,250 $1,226,430 $1,266,289 $1,307,444 EOP Cash NOI (000's) $1,033,704 $1,066,933 $1,099,055 $1,126,274 $1,156,237 $1,191,250 $1,226,430 $1,266,289 $1,307,444 $1,349,936 Leasing CapEx (as % of Rev) 11% 11% 11% 11% 11% 11% 11% 11% 11% 11% Leasing CapEx (as % of NOI) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Leasing and Maintenance CapEx ($156,252) ($161,274) ($166,130) ($170,244) ($174,773) ($180,066) ($185,384) ($191,409) ($197,629) ($204,052) IRR Analysis Implied Cap Rate/Cash Flows ($18,967,054) $877,453 $905,658 $932,925 $956,030 $981,463 $1,011,185 $1,041,047 $1,074,881 $1,109,815 $1,145,884 Terminal Value $22,208,622 Total CF ($18,967,054) $877,453 $905,658 $932,925 $956,030 $981,463 $1,011,185 $1,041,047 $1,074,881 $1,109,815 $23,354,505 Asset Value Growth over Hold Period - Annual 1.6% Asset Value Growth over Hold Period - Total 17% IRR 6.48% Cap Rate to achieve IRR 5.45% Exhibit 64: DCF Model with Primary Assumptions Simon Property Group DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $4,612,706 $4,999,601 $5,295,314 $5,530,027 $5,740,361 $5,926,923 Normalized FFO $3,581,174 $3,976,344 $4,268,613 $4,479,863 $4,692,930 $4,845,450 Maintenance Capex ($441,502) ($478,117) ($506,343) ($528,665) ($548,647) ($566,478) FAS 141 ($14,996) ($14,996) ($14,996) ($14,996) ($14,996) ($14,996) SL Rent ($60,205) ($65,198) ($69,047) ($72,091) ($74,815) ($74,815) Non-Cash Interest $0 $0 $0 $0 $0 $0 AFFO $3,064,471 $3,418,033 $3,678,227 $3,864,111 $4,054,472 $4,189,161 Ratios / Analysis CAGR EBITDA/sh growth 8% 6% 4% 4% 3% 6% FFO/sh growth 11% 7% 5% 5% 3% 7% AFFO/sh growth 11% 8% 5% 5% 3% 7% CapEx as % of FFO 12% 12% 12% 12% 12% 12% 12% Inputs SPG Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 0.96 Cost of Equity (CAPM) 7.32% Perpetual Growth Rate 3.25% Outputs NPV of Cash Flows $14,559,718 NPV of Terminal Value $64,388,385 Firm Value $78,948,103 Plus non-cash flow producing assets $0 Shareholders Value $78,948,103 Share outstanding 363,645 DCF value per share $ Real Estate Research 55

56 Simon Property Group SPG Price (07 Nov 14): US$179.44, Rating: OUTPERFORM, Target Price: US$205.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 6, , , ,109.4 Property operating expenses 1, , , ,109.8 Real estate taxes Net operating income (US$ m) 4, , , ,847.5 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses 1, , , ,022.4 Interest expense/finance costs 1, , , ,162.4 Total non-property expenses 1, , , ,022.4 Share of associates/jvs' equity Net income before tax 1, , , ,822.8 Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to 1, , , ,814.8 unitholders Net income (US$ m) 1, , , ,491.7 Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items (200.7) , ,731.7 Cash flow from operations (200.7) , ,731.7 Other investment/(outflows) (491.8) (1,672.4) (1,055.5) Cash flow from investment (441.8) (1,522.4) (905.5) Dividends paid (472.7) (2,035.1) (2,243.7) Equity raised Net borrowings (162.0) Other financing cash flows Financial cashflow (634.7) (1,143.6) (2,065.3) Net cashflow (200.7) (643.4) (224.8) (239.1) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 10, , , ,548.0 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents 2, Accounts receivable Total current assets 6, , , ,804.5 Total fixed assets Investment properties 32, , , ,668.6 Other investments Other non-current assets 32, , , ,168.6 Total non-current assets 32, , , ,168.6 Total assets 38, , , ,973.1 Accounts payable Short-term debt , Other current liabilities Total current liabilities , Long-term debt 29, , , ,255.0 Other non-current liabilities Total non-current liabilities 31, , , ,473.3 Total liabilities 31, , , ,391.6 Unit funds Reserves 5, , , ,691.0 Shareholders' equity 6, , , ,581.6 Total capital employed 38, , , ,054.9 Real Estate Research 56

57 Taubman (TCO): Outperform Rating; $87 Price Target; 17% Total Return Exp. Company Overview Taubman (TCO) is a mid-cap Mall REIT focused on owning very high quality malls in the U.S. with the highest productivity in the U.S. Malls space ($807/sf). Widely known as a developer, the company owns just 24 properties (20msf of pro-rata GLA this follows the recent sale of seven properties, or 7msf to Starwood Capital for $1.4bn. Unlike most of its peers, TCO has an active pipeline outside of the US, including developments in South Korea and two in China, as well as one asset in San Juan. TCO's top tenants (on a GLA basis include) Forever 21 (5.3% of mall GLA), The Gap (3.9%), H&M (3%), Limited Brands 2.6%) and Abercrombie & Fitch (2.1%). Exhibit 65: Taubman Centers Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Taubman with an Outperform rating and $87 target price, implying an 17% total return over the next 12 months. Our target price is based upon a 75% weighting of our $91/sh forward NAV (5% discount to NAV to reflect LT questions about their International development strategy) and a 25% weighting of our $91/sh DCF estimate. Our Outperform rating is based on (1) the stock's discounted valuation with TCO trading at a 16% discount to NAV among the deepest discounts across our entire coverage universe a discount we believe is largely driven by negative sentiment to the China developments. We've effectively written those investments to zero in our model and therefore focus on TCO's portfolio quality (sales psf of $800+) and solid internal growth with same-store NOI averaging 4% through 2017; Overall, we forecast 11% earnings growth over the next two years. Real Estate Research 57

58 Investment Positives TCO is the most attractively valued mall company in our coverage universe trading at a 16% discount to NAV, or an implied cap rate of 5.5%. This discount is unwarranted given the relative quality of its portfolio, while recent trades of A-quality Malls have neared 4%. High-quality core assets have and should continue to deliver above average same store NOI growth relative to its peers. We are forecasting 4.0% SSNOI growth for Taubman an average from We believe the Street is too focused on the China developments and not focused enough on the value creation opportunities in Sarasota, Hawaii, and South Korea. We ascribe $640mn of value creation in our model for TCO's non-china developments vs. an $80mn forecast value loss for China, or a net of $580mn. Development accretion as a % of EV (with or without China) should drive earnings growth for the next several years. Best demographic profile of the U.S. mall companies makes their portfolio less resistant, in our opinion, to the potential threat of e-retail long term. Investment Risks Company needs sales per square foot to reaccelerate which will not happen over the next two quarters due to the impact of Tesla no longer reporting sales at Short Hills. This caused a 100bp drag on same center sales across TCO's portfolio in 3Q'14 and will impact the next two quarters, which is not a great headline for the company. Mall sales per foot have been stagnant for the past two quarters on a same center basis, raising concerns that pricing power going forward will not be as strong as in Our models, including GGP's, assume that leasing spreads moderate over the next three years towards 10% spreads from the mid-teens in line with a longerterm average. China overhang is not going away regardless of potential value implications (plus or minus). With initial return expectations of just 4% (TCO expects both projects to stabilize at north of 6%), TCO's two China developments will not go down in the history books as among their best while investors continue to focus on the drag on management's time. Good news is that the company owns just 31% of the economics, and will have an immaterial impact on earnings, going forward. Retail sales growth for apparel and luxury may be among weakest over the next 12 months, which would prove a headwind for the company given its high productivity malls. Real Estate Research 58

59 Development Pipeline At Q3, TCO had 11 active development projects with a total estimated build cost of $1.8bn ($990mn left to fund.). Overall, we expect the company to deliver these projects to a 7.1% return. As we illustrate below we estimate that these projects represent $583mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. This figure includes an $80mn haircut on the China projects to account for the uncertainty over the projects' yields, effectively wiping out the company's investment in the assets to date. Exhibit 66: TCO Development Pipeline and Credit Suisse Estimate for Value Creation Taubman Centers Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Development Hawaii $370,000 $79,600 $290, % 5.0% 2.5 $222,000 $177,600 Puerto Rico $375,000 $258,900 $116, % 5.0% 1.5 $150,000 $130,435 Sarasota $160,000 $138,200 $21, % 5.0% 1.0 $96,000 $87,273 X'ian Saigao City Plaza $115,000 $58,200 $56, % 7.0% 2.0 -$49,286 -$41,071 Zhengzhou $115,000 $41,700 $73, % 7.0% 2.5 -$49,286 -$39,429 Hanam Union Square $380,000 $127,800 $252, % 5.0% 3.0 $171,000 $131,538 Beverly $55,000 $19,217 $35, % 5.0% 1.5 $33,000 $28,696 Cherry Creek $55,000 $19,217 $35, % 5.0% 1.5 $33,000 $28,696 Dolphin $55,000 $19,217 $35, % 5.0% 1.5 $33,000 $28,696 Green Hills $55,000 $19,217 $35, % 5.0% 4.5 $33,000 $22,759 Sunvalley $55,000 $19,217 $35, % 5.0% 1.5 $33,000 $28,696 Totals / Avg $1,790,000 $800,486 $989, % 5.3% $705,429 $583,887 Real Estate Research 59

60 Taubman Valuation Overview Exhibit 67: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $90.63 Targeted Premium (Discount) to NAV -5% Fair Value on NAV Valuation $86.10 Approach 2: DCF DCF per share $88.50 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $88.50 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $87.00 Exhibit 68: NAV Snapshot Taubman Centers NAV Calculation Assumptions IRR Target 6.26% Assumed avg NOI growth next three years 3.80% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $444,144 Straight-line rent adjustment/ FAS 141 ($2,829) Cash NOI from owned properties $441,315 Assumed cash NOI cap rate 4.85% Key inputs/items in our TCO NAV Model: Year 1 Cash NOI of $441mn(ex-Starwood sale assets) Blended cash cap rate of 4.85% Underwrote portfolio to 6.25% unlevered IRR, 25bp below the other Mall owners given the strong profile of TCO's assets. Market value of owned properties $9,099,283 Add Cash, CIP, + Other Assets Cash and cash equivalents $88,983 Other assets $250,892 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $1,400,000 Development Projects (CIP plus Est. Value Creation) $1,384,373 Equals -Gross market value of assets $12,223,531 Less Liabilities Total liabilities (incl. JVs) $3,832,378 Mark-to-Market Debt Adj. $0 Preferred Stock $362,500 $1.4bn placeholder for proceeds from Starwood sale Development pipeline value of $1.4bn Almost no value for money spent in China as we've assumed an 80% haircut to the value of dollars spent in China Net market value of assets $8,028,653 Total Shares / Units 90,095 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $90.63 Real Estate Research 60

61 Taubman IRR Analysis and DCF Model Exhibit 69: IRR Underwriting Key Assumptions Targeted IRR (output) 6.26% Required Initial Cap Rate (input) 4.85% Assumed Rise in Terminal Cap 0.75% TCO IRR Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year N4Q Terminal Value NOI Growth (output) 4.0% 4.1% 3.9% 3.5% 3.4% 3.4% 3.4% 3.3% 3.3% 3.3% 3.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $561,381 $584,145 $606,744 $627,841 $649,350 $671,279 $694,082 $716,885 $740,184 $764,240 EOP Cash NOI (000's) $584,145 $606,744 $627,841 $649,350 $671,279 $694,082 $716,885 $740,184 $764,240 $789,077 Leasing CapEx (as % of Rev) 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Leasing CapEx (as % of NOI) 14% 14% 14% 14% 14% 14% 14% 14% 14% 14% Leasing and Maintenance CapEx ($81,780) ($84,944) ($87,898) ($90,909) ($93,979) ($97,172) ($100,364) ($103,626) ($106,994) ($110,471) IRR Analysis Implied Cap Rate/Cash Flows ($12,044,221) $502,365 $521,800 $539,943 $558,441 $577,300 $596,911 $616,521 $636,558 $657,246 $678,607 Terminal Value $14,372,479 Total CF ($12,044,221) $502,365 $521,800 $539,943 $558,441 $577,300 $596,911 $616,521 $636,558 $657,246 $15,051,086 Asset Value Growth over Hold Period - Annual 1.8% Asset Value Growth over Hold Period - Total 19% IRR 6.26% Cap Rate to achieve IRR 4.85% Exhibit 70: DCF Model with Primary Assumptions Taubman DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $313,562 $393,587 $490,662 $550,143 $589,448 $607,131 Normalized FFO $316,728 $375,611 $448,455 $496,833 $524,832 $540,577 Capital Expenditures ($31,607) ($39,280) ($48,526) ($54,461) ($58,367) ($60,118) Straight-Line Rent ($2,829) ($2,944) ($3,063) ($3,179) ($3,290) ($3,290) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $282,292 $333,387 $396,866 $439,193 $463,175 $477,169 Ratios / Analysis CAGR EBITDA/sh growth 26% 25% 12% 7% 3% 17% FFO/sh growth 19% 19% 11% 6% 3% 13% AFFO/sh growth 18% 19% 11% 5% 3% 13% CapEx as % of FFO 10% 10% 11% 11% 11% 11% Inputs TCO Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.03 Cost of Equity (CAPM) 7.62% Perpetual Growth Rate 3.00% Items to Add to / Deduct from Firm Value Outputs NPV of Cash Flows $1,516,817 NPV of Terminal Value $6,456,785 Total $0 Firm Value $7,973,602 Plus non-cash flow producing assets $0 Shareholders Value $7,973,602 Share outstanding 90,095 DCF value per share $88.50 Real Estate Research 61

62 Taubman Centers TCO Price (07 Nov 14): US$76.45, Rating: OUTPERFORM, Target Price: US$87.00, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) (7.45) (6.87) (9.76) (14.19) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (132.1) (719.8) (589.4) Cash flow from investment 1,267.9 (719.8) (489.4) Dividends paid (48.7) (214.1) (235.5) Equity raised Net borrowings (892.1) Other financing cash flows Financial cashflow (940.8) Net cashflow (29.1) (226.9) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU 13.6 (3.5) (0.2) 18.6 Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) (10.3) (11.1) (7.8) (5.4) Credit ratios Net debt/equity (%) (1,399.0) (3,308.8) (766.8) (424.1) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 11, , , ,392.1 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 2, , , ,232.2 Other investments Other non-current assets 3, , , ,776.9 Total non-current assets 3, , , ,776.9 Total assets 3, , , ,179.9 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 3, , , ,356.0 Other non-current liabilities Total non-current liabilities 3, , , ,685.1 Total liabilities 3, , , ,685.1 Unit funds Reserves (482.6) (444.7) (633.6) (921.6) Shareholders' equity (215.7) (28.3) (217.2) (505.2) Total capital employed 3, , , ,179.9 Real Estate Research 62

63 Total Returns 11 November 2014 Shopping Centers We are launching coverage on five shopping center REITs including Kimco (Outperform rating, $27 TP), Regency Centers (Neutral rating, $65 TP), Federal Realty (Neutral rating, $144 TP), Equity One (Neutral rating, $25 TP), and DDR (Neutral rating, $19 TP). Shopping center fundamentals will remain healthy in 2015 with the sector benefiting from limited new supply growth over the next couple of years. In addition, with inflation running at less than 2% over the last five years, retailers are growing top-line with new store openings good news for retail landlords. Overall, we are forecasting ~3.5% same-store NOI growth with rent spreads up by an average of 11% across the group. From a valuation standpoint, the group trades at a 3% discount to NAV or an implied cap rate of 5.9%, this compares to the implied cap rate of 5.4% of malls too narrow of a valuation gap, in our opinion. Coverage Group Shopping center fundamentals will remain healthy in '15 with the sector benefiting from limited new supply growth over the next couple of years. In addition, with inflation running at just 2% over the last five years, retailers are growing top-line with new store openings good news for retail landlords. Exhibit 71: Shopping Center Investment Summary Price Total P/AFFO Implied Ticker Rating Mkt Cap Price Target Return 2015E Cap Rate Investment Summary DDR Neutral $6,618 $18.36 $ % 16.1x 6.5% EQY Neutral $2,957 $23.88 $ % 24.0x 6.0% FRT Neutral $9,055 $ $ % 29.5x 4.7% Leading power center owner continues to improve quality of portfolio / strengthen demographics which is critical for a less internet resistant business. CEO change likely to overhang shares over NT Street NAVs likely underestimate the LT value of Serramonte, Barneys, and Bethesda redevelopment plays. Company has significantly improved the quality of their real estate over the past 3 years. Best in class owner and developer with significant development spend potential over next decade at existing, successful sites. Also very strong demos protect portfolio from new supply and e-commerce. KIM Outperform $10,199 $24.79 $ % 20.8x 6.6% Non-core asset sales over past 3 years have refocused portfolio and management on core, neighborhood shopping center business. Expect next leg of the story is an acceleration of redevelopment spend to take advantage of property densities (have lagged peers here). REG Neutral $5,738 $61.54 $ % 24.2x 5.9% Similar to FRT, REG's investment story combines very strong demographics and a best in class development platform to drive LT value creation. Stock appears cheap to us trading wider of KIM / EQY on an implied cap rate and in-line multiples FFO Estimate 2016 FFO Estimate Dividend Consensus Rating and Distribution CS Consensus H/(L) CS Consensus H/(L) Yield Outperform Neutral Underperform CS Rating DDR $1.30 $ % $1.37 $ % 3.4% 13 / 68% 6 / 32% 0 / 0% Neutral EQY $1.34 $ % $1.45 $ % 3.7% 3 / 21% 9 / 64% 2 / 14% Neutral FRT $5.40 $ % $5.93 $ % 2.6% 6 / 33% 11 / 61% 1 / 6% Neutral KIM $1.44 $ % $1.57 $ % 3.9% 7 / 35% 13 / 65% 0 / 0% Outperform REG $3.13 $ % $3.46 $ % 3.1% 6 / 32% 12 / 63% 1 / 5% Neutral Source: Thomson Reuters, Credit Suisse estimates. Subsector Returns Exhibit 72: Shopping Center YTD vs. 2015E Total Returns 35% 30% 25% 20% 15% 10% 5% 0% 13% 11% 9% 9% 7% 12% KIM FRT REG DDR EQY REITs Overall Trailing 12-Month Return 12-Month Expected Return Source: Thomson Reuters, Credit Suisse estimates. Real Estate Research 63

64 Key Sector Themes for 2015 SS NOI 100bp Higher Than Historical Trends We expect the Shopping Center sector to continue delivering solid NOI growth over the next three years, modeling internal growth of 3.5%, on average, through 2016 nearly 70bp higher since we started tracking the data back to 1997 (and 100bp higher than the prior 10 years). Worth noting---the group's SSNOI performance in '13 and '14 (+3.8%, on average) was boosted by strong occupancy gains coming out of the recession coupled with redevelopment accretion some REITs include into their SS figures. Our internal growth forecasts of +3.4%, however, exclude the redevelopment 'kicker', further highlighting the group's attractive fundamental story. Exhibit 73: How We Model SS NOI for the Strip REITs vs. Historical Actuals Historical SS NOI Growth vs. CS Forecasts - Strips YTD 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY CS Next 5Yr Forecast Trail. 5Yr Avg Trail. 10Yr Avg Equity One 2.7% 3.0% 2.6% 3.7% 3.1% 2.7% 2.3% 1.9% 2.7% 2.2% 1.4% DDR Corp. 3.6% 3.2% 3.2% 3.2% 3.2% 2.8% 2.4% 2.0% 2.7% 3.0% 1.9% Federal Realty 4.3% 4.3% 2.0% 3.9% 3.7% 3.6% 3.4% 3.3% 3.6% 3.2% 3.4% Kimco Realty 2.8% 2.9% 3.7% 4.5% 3.6% 3.2% 2.9% 2.5% 3.3% 2.8% 2.6% Regency Center 4.1% 3.4% 1.9% 3.2% 3.1% 2.6% 2.5% 2.4% 2.8% 2.4% 1.5% Strip Avg 4.2% 4.0% 4.0% 3.8% 3.4% 3.1% 2.8% 2.5% 3.0% 2.8% 1.9% Spreads Below Market Expiring Leases Should Lead to 10%+ Spreads Through 2017 Leasing spreads this cycle have trended above average, driven in part by the anniversary of lower lease rates from 2009/2010 vintage deals, while limited new supply has put pricing power back in the hands of landlords especially in light of solid demand from junior anchors and grocers. While supply is likely to increase going forward (see next page), we expect leasing spreads to accelerate into 2015 against the backdrop of high occupancy levels, before settling down at an above average pace over the next five years of ~10% (vs. <9% in the past 8 years). Exhibit 74: How We Model Rent Spreads (ex-redevelopment) for the Strip REITs vs. Historical Actuals Historical Cash Rent Spreads vs. CS Forecasts - Strips YTD 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY CS Next 5Yr Forecast Trail. 5Yr Avg Trail. 8Yr Avg Equity One 6.9% 20.2% 5.0% 9.0% 9.0% 8.0% 7.0% 7.0% 8.0% 4.9% 6.7% DDR Corp. 6.9% 8.9% 9.7% 11.0% 11.0% 10.0% 9.0% 8.0% 9.8% 6.9% 6.4% Federal Realty 12.8% 19.8% 15.7% 15.0% 15.0% 14.0% 13.0% 12.8% 14.0% 13.0% 14.6% Kimco Realty 9.8% 8.4% 8.5% 9.0% 9.0% 8.0% 7.0% 7.0% 8.0% 6.0% 5.0% Regency Center 5.5% 6.4% 12.9% 12.0% 12.0% 11.0% 10.0% 10.0% 11.0% 4.5% 3.1% Strip Avg 7.1% 10.5% 11.1% 11% 11% 10% 9% 9% 10.2% 6.3% 8.7% Development Key Focus of External Growth One of the attractive features of the Retail sector investment case is the ability of the companies to drive earnings and NAV growth through ground up development, which at this point in the cycle is very attractive relative to the sales cap rate environment (5-6% across most markets). In our models, we assume that the in-process developments for the shopping center sector will add 1.8% of value creation to NAVs. In addition we underwrite future development activity for each company, averaging 6% of EV per year at an 8.4% yield. We Real Estate Research 64

65 fund this growth in the model with leverage neutral debt/equity. This average is a little deceiving though as our forecasts expect development accretion on the current pipeline will add 4% to Federal's EV and 3% to EQY's. Exhibit 75: How We Think About Development Volumes Going Forward and the NAV Accretion from CIP Development Value Creation, Current Pipeline and CS Forecasts Construction in Progress & Value Creation in our NAVs from Developments CS Est. Stabilized CS Est. Stabilized Est. Value Creation (PV) How we underwrite future development volumes Incremental Deliveries Per Ticker CIP $ Value CIP as % of EV Yield Cap Rate $ Value $/sh as % of EV Year, 2016 and Beyond as % of EV Yield DDR Corp. DDR $529,600 4% 9.0% 6.5% $79,761 $ % $120,000 1% 8.0% Equity One EQY $304,900 7% 8.6% 4.9% $121,759 $ % $100,000 2% 8.0% Federal Realty FRT $962,200 8% 8.1% 5.2% $477,784 $ % $250,000 2% 8.0% Kimco Realty KIM $386,800 2% 11.0% 6.5% $200,651 $ % $250,000 1% 9.0% Regency Center REG $365,400 4% 8.0% 5.5% $139,654 $ % $200,000 2% 8.5% Strip Avg 5% 9.3% 6.0% 1.8% 1.6% 8.4% Supply Rising but Still Low Relative to Historical Trends As we mentioned earlier in the discussion of Strip leasing spreads, one of the positives this cycle has been a lack of competing supply to pull tenants and growing anchors from existing centers. According to CoStar the amount of new shopping center square footage under construction added in 2014 is 11msf, compared to a total inventory of just under 3bn sf. Over the past 5 years square footage added has totaled 60msf or 2%. Clearly little new supply growth leads to increased pricing power as long as tenant demand growth remains positive which has been the cast for the past 5 years and we expect will continue going forward. Exhibit 76: Shopping Center Supply Growth Should Increase but Remain Relatively Low Real Estate Research 65

66 REIT Demographics a Key Factor for Strip REITs In our view, a key consideration for shopping center investors is the portfolio demographic profile as neighborhood shopping centers depend on the local population density/income profiles to drive consumer demand, and ultimately dictating the quality of their anchor (grocer) and the in-line tenancy. For neighborhood/grocery anchored centers we believe a 3-mile radius is most appropriate when evaluating quality of the REIT portfolios. Exhibit 77: How We Rank the REIT Shopping Center Portfolios 2014 E Population 2019 E Population Growth E Population Shopping Center Demographic Snapshot: Weighted by GLA (3mi radius) 2014 E Households 2019 E Households Growth Households 2014 Est. Average Household Income 2014 Est. Median Household Income % of HHs Earning >$100k 2014 Est. Buying Power (Avg HH Income x Total HH in $bns) BRX 73,477 75,982 2,505 28,002 28, $73,429 $55,498 22% $2.1 CDR 102, ,657 2,652 41,567 42,768 1,201 $74,947 $57,515 25% $3.1 EQY 129, ,716 5,889 50,829 53,194 2,365 $86,689 $62,752 28% $4.4 FCEA 719, ,277 28, , ,499 13,106 $80,269 $51,323 24% $25.3 FRT 135, ,776 5,845 54,129 56,570 2,442 $103,560 $78,799 38% $5.6 KIM 99, ,510 4,017 37,574 39,150 1,576 $81,250 $62,060 27% $3.1 REG 97, ,534 4,965 38,294 40,354 2,060 $97,181 $73,182 35% $3.7 VNO 182, ,002 5,172 67,495 69,479 1,984 $85,537 $65,660 34% $5.8 REIT Strip Avg 110, ,310 4,540 42,009 43,810 1,802 $86,674 $66,349 30% $ E Population 2019 E Population Growth E Population Shopping Center Demographic Snapshot: Weighted by ABR/NOI, estimated by CS where not available 2014 E Households 2019 E Households Growth Households 2014 Est. Average Household Income 2014 Est. Median Household Income % of HHs Earning >100k 2014 Est. Buying Power (Avg HH Income x Total HH in $bns) BRX 78,424 81,176 2,752 29,490 30,567 1,077 $78,003 $58,946 25% $2.3 CDR 102, ,657 2,652 41,567 42,768 1,201 $74,947 $57,515 25% $3.1 EQY 198, ,065 8,455 82,435 86,061 3,625 $92,702 $66,654 31% $7.6 FCEA 797, ,201 32, , ,256 14,644 $85,048 $54,424 26% $29.7 FRT 145, ,951 6,612 58,298 61,098 2,800 $109,596 $83,453 41% $6.4 KIM 109, ,786 4,433 40,788 42,510 1,722 $85,838 $65,773 30% $3.5 REG 102, ,569 5,233 40,142 42,311 2,169 $99,995 $75,216 36% $4.0 VNO 192, ,769 6,264 71,042 73,444 2,402 $81,420 $63,344 36% $5.8 REIT Strip Avg 110, ,310 4,540 42,009 43,810 1,802 $86,674 $66,349 30% $3.6 Exhibit 78: Shopping Center Population Density and Avg. Household Income Real Estate Research 66

67 Sales Growth, Year Before Last 11 November 2014 Recent Retail Sales Are Supportive of "Staples" Retailers While retail sales have been modest over the past few years, it is interesting to note that sales have been better in the categories where tenants are more apt to lease in a shopping center format than a mall format, i.e., building materials, health care stores, food service and even grocery stores. Exhibit 79: Visualizing Growth in Sales over the Past Two Years (Size of the Bubble Correlates to the Percentage of Sales ex-autos and Gas Each Category Comprises) 18% 16% Health Care and and Internet Sales 14% 12% 10% Clothing, Furniture, General Merch., Grocery Stores 8% 6% 4% 2% Electronics Food Service 0% -1% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% Sales Growth, last 12 months Exhibit 80: Strips Relative Performance Is Less Correlated with the Relative Performance of Their Retailers Source: Bloomberg, Company data, Credit Suisse estimates. Real Estate Research 67

68 DDR, Corp (DDR): Neutral Rating; $19 Price Target; 7% Total Return Exp. Company Overview DDR, Corp. is a mid-cap shopping center company focused on "power center" assets characterized by larger boxes and fewer local tenants than traditional/grocery anchored shopping centers (DDR's average asset size is over 300ksf, up from 200ksf in 2010), although 70% of DDR's assets have a grocery component. Exhibit 81: DDR, Corp. Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of DDR, Corp. with a Neutral rating and $19 target price, implying a 7% total return over the next 12 months. Our target price is based upon a 75% weighting of our $18.50/sh forward NAV (no premium/discount to NAV); and a 25% weighting of our $19.50/sh DCF estimate. Our Neutral rating on DDR is primarily valuation based with the stock trading at a 2% premium to NAV, or an implied cap rate of 6.5%. Fundamentals will remain healthy with same store NOI growth up 3.0%, while we estimate that DDR can deliver nearly $500mn of redevelopments through 2016 at 8% returns adding $0.06-$0.08 per annum to earnings. The stock has underperformed YTD with most of that underperformance occurring since CEO Dan Hurwitz announced that he would not be renewing his contract in 2015 (September 2014). Investment Positives Box demand is very strong with limited new supply bodes well for DDR's occupancy and releasing spreads over the next three years. 'Project Initiative' means of recapturing space from 'dying' retail categories (books, toys, office, department stores), further diversifying its tenant base, while taking advantage of below market leases. DDR estimates nearly 90 tenants (3.3msf) of Real Estate Research 68

69 potential upside with in-place rents 50% below market. $200+mn cost to execute, with returns in the low teens to mid-teens. Not currently factored into our model so potential upside to estimates. Strong management team seen as a thought leader in the space. Relationship with Blackstone as their shopping center advisor has been and we expect will be advantageous for sourcing new deals at attractive ROIC's including fees. We estimate that DDR can deliver nearly $500mn of redevelopments through 2016 at 8% returns adding $0.06-$0.08 per annum to earnings (5% of FFO). Overall, we underwrite $120mn/yr. of new (re)development projects at 8.5% returns, compared to $130mn of redevelopments and $200mn of ground up developments in the pipeline today. Overall, we expect DDR's development pipeline to add $0.04/share to earnings in 2015 and $0.08/share to earnings in 2016 helping to drive 6% earnings growth per annum over the next two years. Investment Risks Departing CEO Dan Hurwitz has been an important piece of the DDR turnaround story over the last five years leaving a noticeable void in the C-suite. That said, Mr. Hurwitz's partner, David Oakes, who joined the company in 2007 as CFO, and expanded his role as President in 2013 is highly regarded among investors and for good reason. That said, stocks typically underperform in the near term when management teams turn over as the market digests the news, and the new executives have time to articulate any and all strategic changes. When compared to the Mall REITs we follow (appropriate given DDR's big box focus), its clear DDR is more exposed to secondary, lower growth markets which are potentially more susceptible to e-commerce encroachment. Can spreads improve from the ~9% clip of the past 6 quarters? Overall, we expect rent spreads will improve to 11% in 2015 with spreads moderating through the forecast period. Puerto Rico is 13.5% of NOI, and the noise around that government's finances has died down (primary municipal bond was trading in the mid $70's in late 2013 and is now trading just below par). Real Estate Research 69

70 Development Pipeline At Q3, DDR had five active development projects and various redevelopment projects with a total estimated cost of $282mn ($158mn left to fund). We expect these projects will be delivered to a 9% return on cost. As we illustrate below we estimate that these projects represent $80mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 82: Snapshot of DDR's Development Pipeline Real Estate Research 70

71 DDR, Corp. Valuation Overview Exhibit 83: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $18.62 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $18.62 Approach 2: DCF DCF per share $19.50 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $19.50 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $19.00 Forecasted Total Return 7.2% Exhibit 84: NAV Snapshot DDR Corp NAV Calculation Assumptions IRR Target 7.02% Assumed avg NOI growth next three years 2.90% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $775,331 Straight-line rent adjustment/ FAS 141 ($7,701) Cash NOI from owned properties $767,630 Assumed cash NOI cap rate 6.50% Key inputs/items in our DDR NAV Model: Year 1 Cash NOI of $768mn Underwrote to a 7% unlevered IRR, 25bp above KIM and 50bp wide of EQY Blended cash cap rate of 6.5% Market value of owned properties $11,809,698 Add Cash, CIP, + Other Assets Cash and cash equivalents $142,570 Other assets $490,321 Development Projects (CIP plus Est. Value Creation) $529,583 Development pipeline: $530mn valuation, or $1.50/share Equals -Gross market value of assets $12,972,172 Less Liabilities Total liabilities (incl. JVs) $6,046,854 Preferred Stock $350,000 Net market value of assets $6,575,318 Total Shares / Units 361,500 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $18.62 Real Estate Research 71

72 DDR IRR Analysis and DCF Model Exhibit 85: IRR Underwriting Key Assumptions Targeted IRR (output) 7.02% Required Initial Cap Rate (input) 6.50% Assumed Rise in Terminal Cap 0.75% DDR IRR Analysis Terminal Value NOI Growth (output) 3.0% 3.2% 3.0% 2.5% 2.3% 1.6% 1.8% 1.9% 2.0% 2.0% 2.0% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $100,000 $103,222 $106,337 $108,951 $111,427 $113,254 $115,239 $117,389 $119,737 $122,132 EOP Cash NOI (000's) $103,222 $106,337 $108,951 $111,427 $113,254 $115,239 $117,389 $119,737 $122,132 $124,575 Leasing CapEx (as % of Rev) 8% 8% 8% 8% 8% 8% 8% 8% 8% 8% Leasing CapEx (as % of NOI) 12% 12% 12% 12% 12% 12% 12% 12% 12% 12% Leasing and Maintenance CapEx ($12,284) ($12,641) ($12,938) ($13,219) ($13,428) ($13,656) ($13,903) ($14,211) ($14,495) ($14,780) IRR Analysis Implied Cap Rate/Cash Flows ($1,588,031) $90,939 $93,696 $96,013 $98,208 $99,827 $101,583 $103,486 $105,527 $107,637 $109,795 Terminal Value $1,752,635 Total CF ($1,588,031) $90,939 $93,696 $96,013 $98,208 $99,827 $101,583 $103,486 $105,527 $107,637 $1,862,430 Asset Value Growth over Hold Period - Annual 1.0% Asset Value Growth over Hold Period - Total 10% IRR 7.02% Cap Rate to achieve IRR 6.50% Exhibit 86: DCF Model with Primary Assumptions DDR Corp DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA (pro-rata) $747,550 $787,862 $826,655 $868,892 $904,260 $922,345 Normalized FFO $473,126 $508,940 $544,638 $584,431 $617,925 $630,283 Maintenance Capex ($61,608) ($65,163) ($68,438) ($72,182) ($75,369) ($76,876) SL Rent ($7,701) ($8,145) ($8,555) ($9,023) ($9,421) ($9,421) Non-Cash Interest $11,200 $0 $0 $0 $0 $0 AFFO $415,017 $435,632 $467,645 $503,226 $533,135 $543,986 Ratios / Analysis CAGR EBITDA/sh growth 5% 5% 5% 4% 2% 4% FFO/sh growth 7% 7% 7% 5% 2% 7% AFFO/sh growth 5% 7% 7% 6% 2% 6% CapEx as % of FFO 13% 13% 13% 12% 12% 12% Inputs DDR Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.20 Cost of Equity (CAPM) 8.40% Perpetual Growth Rate 2.00% Items to Add to / Deduct from Firm Value Land and HQ $75,000 Outputs NPV of Cash Flows $1,841,382 NPV of Terminal Value $5,267,347 Total $75,000 Firm Value $7,108,729 Plus non-cash flow producing assets $75,000 Shareholders Value $7,183,729 Share outstanding 368,354 DCF value per share $19.50 Real Estate Research 72

73 DDR DDR Price (07 Nov 14): US$18.36, Rating: NEUTRAL, Target Price: US$19.00, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , , ,145.3 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax (11.9) Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to (50.4) (38.5) unitholders Net income (US$ m) (43.1) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (735.6) (677.7) (620.0) Cash flow from investment (360.6) (227.7) (170.0) Dividends paid (56.0) (248.9) (279.0) Equity raised Net borrowings Other financing cash flows (50.0) (50.0) Financial cashflow (176.7) (175.6) Net cashflow (122.6) 79.4 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU 2.6 (4.1) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio (38,571. 4) 24, , ,800.0 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets 1, Total fixed assets Investment properties 7, , , ,894.0 Other investments Other non-current assets 8, , , ,127.3 Total non-current assets 8, , , ,511.2 Total assets 9, , , ,431.3 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 5, , , ,462.6 Other non-current liabilities Total non-current liabilities 5, , , ,983.7 Total liabilities 5, , , ,983.7 Unit funds Reserves 3, , , ,064.4 Shareholders' equity 3, , , ,447.6 Total capital employed 9, , , ,431.3 Real Estate Research 73

74 Equity One (EQY): Neutral Rating; $25 Price Target; 9% Total Return Exp. Company Overview Equity One is a mid-cap owner of 116 neighborhood shopping centers across nine states, with a primary concentration in the Northeast (34% of value), Florida (35%), and Northern/Southern California (23). The portfolio underwent a significant transformation under their prior CEO (Jeff Olson) who along with President Tom Caputo sold ~$1bn of non-core real estate located in secondary markets, and subsequently acquired ~$2bn of primarily in-fill, grocery anchored centers across several key markets, dramatically improving the overall quality of its portfolio. Today, its centers have an average 3-mile population density of 199,000 (ranked 2nd in our demographic study) with incomes of $110k. Its grocers are highly productive, averaging $600+/sf. Exhibit 87: Equity One Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Equity One with a Neutral rating and $25 target price, implying a 9% total return over the next 12 months. Our target price is based upon a 75% weighting of our $23.50/sh forward NAV (plus a 5% premium to reflect management, asset, and balance sheet quality), and a 25% weighting of our $24/sh DCF estimate. Our Neutral rating on Equity One is primarily valuation based with the stock trading at a 2% discount to NAV, or an implied cap rate of 6.1%. Internal growth will remain healthy for EQY the next two year, with same-store NOI up 3.5%, per annum a clear benefit of the portfolio repositioning undertaken over the last several years. With the stock materially underperforming YTD, expect newly appointed CEO, David Lukes to look to narrow that valuation gap with his peers with a particular focus to remain on ramping up the company's redevelopment pipeline. Overall, we forecast 7% earnings growth per annum over the next two years. Real Estate Research 74

75 Investment Positives Geographic concentration across several high barrier-to-entry markets (California, NY/CT, and Southern FL) argues for above average SS NOI growth going forward. SS NOI growth (ex-developments) should average 3.5% over the next three years, compared to 3.4% for the strip centers. We think spreads will average 10% over the next two years. Heavy lifting on portfolio transformation is done, which should allow EQY to grow earnings at 6% per annum over the next two years (including 3% to 3.5% internal growth) expect EQY to be active underwriting broken / value add deals (i.e., looking at 4 centers in the Northeast) rather than wholesale portfolio changes. Redevelopment opportunities are likely to accelerate under newly appointed CEO David Lukes (an architect by trade), who will look to reposition the already high quality portfolio acquired under departed CEO, Jeff Olson. We believe EQY can deliver $300mn of redevelopments in redevelopments over the next two years (through 2016) at 9% returns adding $0.08-$0.10/share/annum to earnings (6% of FFO). Well executed repositioning strategy has dramatically improved the overall earnings quality of its portfolio which should lead to higher internal growth in the long run. Having turned nearly $3bn of real estate the last five years ($1bn of sales and $2bn of acquisitions), EQY has dramatically improved the overall quality of its earnings. Here are some facts worth noting: (1) demographic profile ranks the company 3rd relative to the 5 Shopping centers we follow; (2) asset repositioning has increased the average population density and incomes by 152% and 31%, respectively since '09; (3) Publix NOI exposure down to just 4% from a high of 11% in '09; and (4) 46% of NOI is located in Northeast and West Coast up from 15% in '10. We think the Street is undervaluing the Barney's lease on 7 th Avenue as the company puts only the incremental cost ($15mn) in their development schedule not the $75mn total cost. We believe at a 7% return and 4% cap rate the value creation at the project is north of $50mn, or +1% to NAV. Similarly we expect that at some point over the next months, EQY will move forward with redevelopment plans at Serramonte and Bethesda. We value Serramonte on current NOI but assume Bethesda will generate $5.9mn more NOI when the leases are rolled in the next 5-10 years. Several long-term development stories on balance sheet (Serramonte, Bethesda) will allow company to drive earnings growth on existing sites over the next 5 years. Outside of these projects, EQY has 9 on-going redevelopments at a cost of $200mn. Returns are expected to be 9%+, which will add $0.09/share to earnings once fully stabilized. Investment Risks While we applaud the dramatic improvements in EQY's overall portfolio quality, better positioning the company for outsized internal growth longer term, we believe much of the good news is already priced in with the stock trading at an 2% premium to NAV. While company has made strides to improve the portfolio/markets over time, EQY still has 13% exposure to lower barrier to entry, slower growth markets in Louisiana, North Carolina and Georgia. Sale of these assets over time could impact earnings growth. New management team needs to explain to the Street if and how the strategy of the company and/or capital allocation may change going forward. Overall, we believe the Street embraced the direction of the company under Mr. Olson and Mr. Caputo so we would be surprised if there is too much of a change going forward. Real Estate Research 75

76 Development Pipeline At Q3, EQY has nine on-going developments with a total expected investment of $200mn with just $70mn left to fund. Excluding the redevelopment of the Barney's site on 7 th Avenue ($67mn investment at 7% return), return expectations will exceed 9%+ for most projects. While the accretion to earnings will top $0.08/share/annum, we also estimate the incremental value creation will near $125mn, or $1.00/share in NAV. Exhibit 88: Snapshot of Equity One's Development Pipeline Equity One Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Broadway Plaza $66,522 $43,913 $43, % 5.0% 2.0 $66,522 $55,435 7th Ave $67,453 $56,477 $10, % 4.0% 2.0 $50,590 $42,158 Alafaya $7,502 $247 $7, % 6.0% 2.0 $3,751 $3,126 Boca Village $10,911 $9,066 $1, % 6.0% 2.0 $5,456 $4,546 Boynton Plaza $7,608 $1,065 $6, % 6.0% 2.0 $3,804 $3,170 Kirkman Shoppes $13,094 $4,988 $8, % 6.0% 2.0 $6,547 $5,456 Lake Mary $4,893 $3,976 $ % 6.0% 2.0 $2,447 $2,039 Summerlin $2,127 $1,250 $ % 6.0% 2.0 $1,064 $886 Willows $13,460 $4,016 $9, % 6.0% 2.0 $6,730 $5,608 Totals / Avg $193,570 $124, % 5.0% $18 $146,909 $122,424 Real Estate Research 76

77 Equity One Valuation Overview Exhibit 89: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $23.71 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $24.90 Approach 2: DCF DCF per share $23.76 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $23.76 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $25.00 Forecasted Total Return 8.9% Exhibit 90: NAV Snapshot Key inputs/items in our EQY NAV Model: Year 1 Cash NOI of $258mn Underwrote portfolio to a 6.6% unlevered IRR, between REG and KIM.\ Blended cash cap rate of 6.1% Add $87mn of value for Serramonte land and the rollup of the grocer at Bethesda Development pipeline: $305mn valuation Real Estate Research 77

78 Equity One IRR Analysis and DCF Model Exhibit 91: IRR Underwriting Key Assumptions Targeted IRR (output) 6.62% Required Initial Cap Rate (input) 6.10% Assumed Rise in Terminal Cap 0.75% EQY IRR Analysis Terminal Value NOI Growth (output) 3.5% 3.3% 2.8% 2.6% 1.9% 2.0% 2.6% 2.5% 2.5% 2.5% 2.5% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $100,000 $103,266 $106,175 $108,890 $111,003 $113,218 $116,154 $119,027 $122,003 $125,053 EOP Cash NOI (000's) $103,266 $106,175 $108,890 $111,003 $113,218 $116,154 $119,027 $122,003 $125,053 $128,179 Leasing CapEx (as % of Rev) 11% 11% 11% 11% 11% 11% 11% 11% 11% 11% Leasing CapEx (as % of NOI) 16% 16% 16% 16% 16% 16% 16% 16% 16% 16% Leasing and Maintenance CapEx ($16,038) ($16,490) ($16,911) ($17,239) ($17,583) ($18,039) ($18,485) ($18,948) ($19,421) ($19,907) IRR Analysis Implied Cap Rate/Cash Flows ($1,692,882) $87,228 $89,686 $91,979 $93,764 $95,635 $98,115 $100,542 $103,056 $105,632 $108,273 Terminal Value $1,908,656 Total CF ($1,692,882) $87,228 $89,686 $91,979 $93,764 $95,635 $98,115 $100,542 $103,056 $105,632 $2,016,928 Asset Value Growth over Hold Period - Annual 1.2% Asset Value Growth over Hold Period - Total 13% IRR 6.62% Cap Rate to achieve IRR 6.10% Exhibit 92: DCF Model with Primary Assumptions Equity One DCF $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $241,284 $262,474 $277,309 $291,386 $304,475 $315,132 Normalized FFO $179,919 $194,196 $205,249 $215,299 $224,544 $232,403 Maintenance Capex ($29,889) ($32,569) ($34,404) ($36,131) ($37,720) ($39,040) SL Rent ($16,303) ($17,765) ($18,766) ($19,708) ($20,574) ($20,574) Non-Cash Interest $0 $0 $0 $0 $0 $0 AFFO $133,727 $143,862 $152,079 $159,460 $166,250 $172,789 Ratios / Analysis CAGR EBITDA/sh growth 9% 6% 5% 4% 3% 6% FFO/sh growth 8% 6% 5% 4% 3% 6% AFFO/sh growth 8% 6% 5% 4% 4% 6% CapEx as % of FFO 17% 17% 17% 17% 17% 17% Inputs EQY Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.06 Cost of Equity (CAPM) 7.75% Perpetual Growth Rate 3.50% Items to Add to / Deduct from Firm Value Bethesda Rental Uptick Value $87,241 Serramonte Land Value $0 Outputs NPV of Cash Flows $602,320 NPV of Terminal Value $2,503,301 Total $87,241 Firm Value $3,105,621 Plus non-cash flow producing assets $87,241 Shareholders Value $3,192,862 Share outstanding 134,361 DCF value per share $23.76 Real Estate Research 78

79 Equity One EQY Price (07 Nov 14): US$23.88, Rating: NEUTRAL, Target Price: US$25.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity 2 10 Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (31.7) (137.9) (101.8) Cash flow from investment (6.7) (37.9) (1.8) Dividends paid (29.6) (124.1) (130.4) Equity raised Net borrowings Other financing cash flows Financial cashflow (29.6) (99.1) (105.4) Net cashflow (8.4) (22.8) 17.3 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,026.6 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 2, , , ,514.8 Other investments Other non-current assets 2, , , ,655.7 Total non-current assets 2, , , ,668.1 Total assets 3, , , ,058.7 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,437.7 Other non-current liabilities Total non-current liabilities 1, , , ,690.8 Total liabilities 1, , , ,690.8 Unit funds Reserves 1, , , ,160.7 Shareholders' equity 1, , , ,368.0 Total capital employed 3, , , ,058.7 Real Estate Research 79

80 Federal Realty (FRT): Neutral Rating; $144 Price Target; 11% Total Return Exp. Company Overview Federal Realty is a large cap owner and developer of high quality retail assets primarily in the DC metro area and California. Management is considered among the best in the Retail and overall REIT space. The company has long track record of value add redevelopments and ground up developments and is well positioned going forward with several "next phase" developments on the drawing board at very attractive sites. Exhibit 93: Federal Realty Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Federal Realty with a Neutral rating and $144 target price, implying an 11% total return over the next 12 months. Our target price is based upon a 75% weighting of our $128/sh forward NAV (plus a 10% premium to reflect management, asset, and balance sheet quality), and a 25% weighting of our $154/sh DCF estimate. Our Neutral rating on Federal Realty is largely valuation based with the stock trading at 5% premium to valuation, or an implied 4.7% cap rate among the lowest in the REIT sector. While we believe a premium valuation is warranted given the company's superior asset quality, and outside earnings growth we believe the stock is fairly valued. Investment Positives Wall Street estimates are likely to move higher as FRT moves closer to delivery on its $1bn development pipeline. FRT has one of the more robust redevelopment pipelines in the sector through 2016, FRT will deliver $1bn of new projects at 8%+ returns. Once stabilized, we estimate these projects will add $0.72/share to earnings, or annualized growth of 10-12%. Real Estate Research 80

81 Additionally, we estimate that at a 5% cap rate, these projects add incremental value of nearly $420mn to FRT's NAV, or $6/share. By far the highest quality shopping center portfolio in the sector (population density and average household incomes surrounding its centers are meaningfully higher than its peers), should translate into solid SSNOI growth over the long run debt refinancing ($207mn at 7.3%) should add $0.09/share to earnings on a go forward basis (assuming a 4% refi rate). Investment Risks Valuation debate: Trading at an implied 4.7% cap rate, or 4% premium to NAV, FRT has (and will likely) continue to screen expensive relative to its peers although given the relative quality of its assets (and earnings capacity), a premium valuation is certainly warranted. Despite the fact that our estimates are currently 2% above consensus (most likely reflects the full value creation from its development pipeline which is reflected in our $154 DCF estimate), we have a hard time getting to an Outperform rating on FRT with our $ month price target implying an 11% total return. As a significant developer FRT's yields are at risk if construction costs or land costs rise faster than their pricing power. Yields could compress on future projects if FRT faces significant cost pressures on the materials or labor cost front. Real Estate Research 81

82 Development Pipeline At Q3, FRT had ten active development projects comprising with a total estimated build cost of $1.0bn ($437mn left to fund). Returns are expected to be in the low 8% range in part due to a lower yield at Assembly Row (first phase) which should improve on subsequent phases. As we illustrate below we estimate that these projects represent $478mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. How we value the future redevelopment pipeline Exhibit 94: FRT's Development Schedule and Expected Returns Federal Realty Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Active Projects Santana Office $115,000 $7,000 $108, % 5.0% 3.5 $69,000 $51,111 The Point $80,000 $42,000 $38, % 5.0% 1.8 $48,000 $40,851 Santana Apts $75,000 $75,000 $ % 5.0% 1.0 $45,000 $40,909 Westgate $20,000 $17,000 $3, % 5.0% 1.0 $16,000 $14,545 Mixed Use Pike & Rose (Initial Delivery) $175,000 $150,000 $25, % 5.0% 1.0 $122,500 $111,364 Pike & Rose (Bldg 10 & Office) $75,000 $51,000 $24, % 5.0% 2.0 $52,500 $43,750 Pike & Rose (Phase 2 Retail) $125,000 $16,000 $109, % 6.0% 4.3 $41,667 $29,240 Pike & Rose (Phase 2 Resi and Hotel) $75,000 $0 $75, % 6.0% 5.0 $25,000 $16,667 Assembly Row (main retail) $140,000 $140,000 $ % 5.0% 1.0 $14,000 $12,727 Assembly Row (office) $45,000 $40,000 $5, % 5.5% 2.0 $0 $0 Other Active (devliver next two years) $23,250 $10,750 $12, % 5.0% 1.0 $34,700 $31,545 $23,250 $10,750 $12, % 5.0% 1.8 $34,700 $29,532 $23,250 $10,750 $12, % 5.0% 2.3 $34,700 $28,327 $23,250 $10,750 $12, % 5.0% 2.8 $34,700 $27,216 Totals / Avg $1,018,000 $581,000 $437, % 5.2% $30 $572,467 $477,784 Real Estate Research 82

83 Federal Realty Valuation Overview Exhibit 95: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $ Targeted Premium (Discount) to NAV 10% Fair Value on NAV Valuation $ Approach 2: DCF DCF per share $ Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $ Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $ Forecasted Total Return 10.9% Exhibit 96: NAV Snapshot A Federal Realty NAV Calculation Assumptions IRR Target 6.24% Assumed avg NOI growth next three years 3.66% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $486,962 Straight-line rent adjustment/ FAS 141 ($8,083) Cash NOI from owned properties $478,879 Assumed cash NOI cap rate 4.95% Market value of owned properties $9,674,325 Add Cash, CIP, + Other Assets Cash and cash equivalents $23,917 Other assets $236,688 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $472,500 Development Projects (CIP plus Est. Value Creation) $1,058,784 Equals -Gross market value of assets $11,369,627 Less Liabilities Total liabilities (incl. JVs) $2,604,586 Mark-to-Market Debt Adj. $0 Preferred Stock $100,000 Net market value of assets $8,665,041 Total Shares / Units 68,649 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $ B Key inputs/items in our FRT NAV Model: Year 1 Cash NOI of $479mn We underwrote FRT's portfolio to a 6.25% unlevered IRR, 50bp inside of REG Blended cash cap rate of 4.95% Development pipeline: $1.1bn valuation Land Bank (i.e., future phases) adds an additional ~$473mn of NAV Real Estate Research 83

84 Federal Realty IRR Analysis and DCF Model Exhibit 97: IRR Underwriting Key Assumptions Targeted IRR (output) 6.24% Required Initial Cap Rate (input) 4.95% Assumed Rise in Terminal Cap 0.75% FRT IRR Analysis Terminal Value NOI Growth (output) 3.5% 3.9% 3.7% 3.5% 3.3% 3.3% 3.2% 3.2% 3.0% 3.0% 3.0% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $400,000 $415,405 $430,585 $445,602 $460,496 $475,570 $490,842 $506,419 $521,611 $537,259 EOP Cash NOI (000's) $415,405 $430,585 $445,602 $460,496 $475,570 $490,842 $506,419 $521,611 $537,259 $553,377 Leasing CapEx (as % of Rev) 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Leasing CapEx (as % of NOI) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Leasing and Maintenance CapEx ($60,355) ($62,614) ($64,897) ($67,146) ($69,393) ($71,657) ($73,955) ($76,013) ($78,294) ($80,673) IRR Analysis Implied Cap Rate/Cash Flows ($8,392,022) $355,051 $367,972 $380,705 $393,350 $406,177 $419,186 $432,464 $445,598 $458,966 $472,705 Terminal Value $9,951,082 Total CF ($8,392,022) $355,051 $367,972 $380,705 $393,350 $406,177 $419,186 $432,464 $445,598 $458,966 $10,423,786 Asset Value Growth over Hold Period - Annual 1.7% Asset Value Growth over Hold Period - Total 19% IRR 6.24% Cap Rate to achieve IRR 4.95% Exhibit 98: DCF Model with Primary Assumptions Federal Realty DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA (Total) $499,785 $550,179 $593,655 $648,650 $699,760 $724,251 Normalized FFO $377,719 $421,268 $462,080 $507,155 $544,524 $563,582 Capital Expenditures ($53,888) ($59,766) ($64,740) ($71,314) ($77,408) ($80,117) Straight-Line Rent ($8,083) ($8,965) ($9,711) ($10,697) ($11,611) ($11,611) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $315,748 $352,536 $387,629 $425,144 $455,505 $471,854 Ratios / Analysis CAGR EBITDA/sh growth 8% 7% 9% 7% 3% 8% FFO/sh growth 10% 9% 9% 7% 3% 9% AFFO/sh growth 10% 9% 9% 7% 4% 9% CapEx as % of FFO 14% 14% 14% 14% 14% 14% Inputs FRT Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 0.84 Cost of Equity (CAPM) 6.76% Perpetual Growth Rate 3.50% Items to Add to / Deduct from Firm Value Land Held for future development $472,500 Outputs NPV of Cash Flows $1,579,434 NPV of Terminal Value $9,055,584 Total $472,500 Firm Value $10,635,018 Plus non-cash flow producing assets $472,500 Shareholders Value $11,107,518 Share outstanding 72,460 DCF value per share $ Real Estate Research 84

85 Federal Realty Investment Trust FRT Price (07 Nov 14): US$132.90, Rating: NEUTRAL, Target Price: US$144.00, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (44.1) (267.6) (348.5) Cash flow from investment (44.1) (207.6) (298.5) Dividends paid (53.8) (240.2) (268.1) Equity raised Net borrowings Other financing cash flows Financial cashflow (3.3) 9.2 (68.1) Net cashflow (8.2) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 12, , , ,607.6 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 3, , , ,740.6 Other investments Other non-current assets 3, , , ,821.1 Total non-current assets 3, , , ,872.3 Total assets 4, , , ,334.3 Accounts payable Short-term debt 0.57 Other current liabilities Total current liabilities Long-term debt 2, , , ,514.9 Other non-current liabilities Total non-current liabilities 2, , , ,514.9 Total liabilities 2, , , ,856.9 Unit funds Reserves 1, , , ,356.5 Shareholders' equity 1, , , ,477.3 Total capital employed 3, , , ,992.3 Real Estate Research 85

86 Kimco (KIM): Outperform Rating; $27 Price Target; 13% Total Return Exp. Company Overview Kimco is a large cap shopping center owner (included in the S&P 500) focused on neighborhood, primarily grocery anchored centers. Founded in 1991 by industry icon, Milton Cooper, the portfolio includes ownership interest in 840 shopping centers comprising 121msf of space across 41 states, Puerto Rico, Canada, Mexico and South America. The company is nearing the end of a multi-year portfolio clean up (selling noncore/international, rationalizing joint ventures, etc.) which has been dilutive to earnings but we believe beneficial to the investment case. Exhibit 99: Kimco Realty Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Kimco with an Outperform rating and $27 target price, implying a 13% total return over the next 12 months. Our target price is based upon a 75% weighting of our $25/sh forward NAV (no premium/discount to NAV), and a 25% weighting of our $23.50/sh DCF estimate. Our Outperform rating on Kimco is primarily valuation based with the stock trading at an 11% discount to NAV, or a 6.6% implied cap rate. We are net positive on the company's back to basic strategy of selling its non-core assets and expect to see growth in the development pipeline. Investment Positives Portfolio clean-up largely done although there will be some near-term earnings drag. Also, we believe investors will appreciate management's commitment to simplifying the story and going back to its roots of simply owning high quality neighborhood centers without the noise of international markets and other non-core investments. We think SS NOI growth could be 3.5% in 2015 and 3.8% in 2016, given upside to occupancy growth. NOI growth should outpace the sector by ~20bp in Real Estate Research 86

87 We think the biggest opportunity for KIM is to ramp it's (re)development pipeline over the next 12 months, given the favorable demographics of its centers and the incoming proceeds from the asset sales. We underwrite $300mn of incremental redevelopment spend per annum for the company (ramping into 2017) but think this number could accelerate meaningfully which would offset some of the asset sale dilution. Redevelopment volumes could surprise to the upside.right now our assumption for $300mn of incremental deliveries would equal just 1.5% of EV, in-line with the shopping center average. That said the fact that KIM has not been as aggressive as their peers in growing the redevelopment pipeline (note that their current pipeline is just 2% of EV vs. their peer average of 6%). Investment Risks Finishing the portfolio clean up + resetting earnings run rate KIM expects to sell $1.2bn of assets over the next three years including the rest of its LatAm assets and other non-core properties at an estimated % cap rate. Part of the proceeds will go toward acquiring higher value centers (likely at a bp lower yield, potentially including the Blackstone JV assets) and used to fund the company's redevelopment pipeline. We think that as you look toward the KIM earnings story should be in the 8-10% annual range more akin to its peers. Occupancy is now 95% in the portfolio, which limits near-term SS NOI growth as most growth will be driven by lease expirations and KIM's ability to get to lower rent stores, made more difficult by the prevalence of long-term options in many anchor leases. Company leverage remains elevated at 8.4x net debt to EBITDA vs. peer group at 7.0x. In our KIM model we assume the company issues $100mn/yr of common equity over the next two years. Coupled with FCF from operations we expect leverage will end 2016 at 7.9x. Portfolio demographics are just okay with average population density of 109k which is in-line with the average and household income of $85k, also in-line with their peers. These stats speak to the clean-up work left to do by management to sell non-core lower growth assets going forward. Real Estate Research 87

88 Kimco Valuation Overview Exhibit 100: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $28.21 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $28.21 Approach 2: DCF DCF per share $23.44 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $23.44 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $27.00 Forecasted Total Return 13.5% Exhibit 101: NAV Snapshot Kimco Realty NAV Calculation Assumptions IRR Target 6.74% Assumed avg NOI growth next three years 3.37% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $1,093,385 Straight-line rent adjustment/ FAS 141 $0 Cash NOI from owned properties $1,093,385 Key inputs/items in our KIM NAV Model: Year 1 Cash NOI of $1.09nn We underwrote KIM to a 6.75% unlevered IRR, second highest in group with DDR Blended cash cap rate of 6.05% Assumed cash NOI cap rate 6.05% Market value of owned properties $18,072,478 Add Cash, CIP, + Other Assets Cash and cash equivalents $154,190 Other assets $1,243,525 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $0 Development Projects (at cost) $386,814 Other assets on KIM's balance sheet held at book value Equals -Gross market value of assets $19,857,007 Less Liabilities Total liabilities (incl. JVs) $7,150,181 Mark-to-Market Debt Adj. $0 Preferred Stock $975,000 Net market value of assets $11,731,826 Total Shares / Units 413,823 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $28.21 Real Estate Research 88

89 Kimco IRR Analysis and DCF Model Exhibit 102: IRR Underwriting Key Assumptions Targeted IRR (output) 6.74% Required Initial Cap Rate (input) 6.05% Assumed Rise in Terminal Cap 0.75% KIM IRR Analysis Terminal Value NOI Growth (output) 3.5% 3.8% 3.3% 3.0% 2.7% 2.2% 2.4% 2.7% 2.3% 2.3% 2.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $100,000 $103,816 $107,236 $110,440 $113,428 $115,875 $118,616 $121,806 $124,547 $127,349 EOP Cash NOI (000's) $103,816 $107,236 $110,440 $113,428 $115,875 $118,616 $121,806 $124,547 $127,349 $130,214 Leasing CapEx (as % of Rev) 11% 11% 11% 11% 11% 11% 11% 11% 11% 11% Leasing CapEx (as % of NOI) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Leasing and Maintenance CapEx ($15,813) ($16,316) ($16,787) ($17,229) ($17,590) ($17,997) ($18,472) ($18,923) ($19,349) ($19,778) IRR Analysis Implied Cap Rate/Cash Flows ($1,715,974) $88,004 $90,921 $93,653 $96,199 $98,285 $100,619 $103,334 $105,624 $108,001 $110,437 Terminal Value $1,953,217 Total CF ($1,715,974) $88,004 $90,921 $93,653 $96,199 $98,285 $100,619 $103,334 $105,624 $108,001 $2,063,654 Asset Value Growth over Hold Period - Annual 1.3% Asset Value Growth over Hold Period - Total 14% IRR 6.74% Cap Rate to achieve IRR 6.05% Exhibit 103: DCF Model with Primary Assumptions Kimco Realty DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $851,824 $915,552 $975,396 $1,032,722 $1,084,661 $1,111,778 FFO $596,848 $658,184 $720,985 $778,601 $829,069 $849,796 Capital Expenditures ($85,262) ($92,466) ($99,034) ($105,160) ($110,735) ($113,504) Straight-Line Rent ($19,378) ($21,015) ($22,508) ($23,900) ($25,167) ($25,167) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $492,209 $544,703 $599,444 $649,541 $693,167 $711,125 Ratios / Analysis CAGR EBITDA/sh growth 7% 7% 6% 5% 2% 6% FFO/sh growth 10% 10% 8% 6% 2% 8% AFFO/sh growth 11% 10% 8% 6% 3% 9% CapEx as % of FFO 14% 14% 14% 14% 13% 13% Inputs KIM Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.20 Cost of Equity (CAPM) 8.40% Perpetual Growth Rate 2.50% Items to Add to / Deduct from Firm Value Land Held for future development $0 Outputs NPV of Cash Flows $2,321,773 NPV of Terminal Value $7,423,687 Total $0 Firm Value $9,745,461 Plus non-cash flow producing assets $0 Shareholders Value $9,745,461 Share outstanding 415,675 DCF value per share $23.44 Real Estate Research 89

90 Kimco Realty KIM Price (07 Nov 14): US$24.79, Rating: OUTPERFORM, Target Price: US$27.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , , ,154.8 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to (29.9) unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (61.1) (779.7) (799.0) Cash flow from investment 88.9 (154.7) (149.0) Dividends paid (99.3) (404.2) (437.4) Equity raised Net borrowings (218.1) Other financing cash flows (100.0) Financial cashflow (317.4) (249.1) (305.4) Net cashflow (134.2) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU 16.5 (7.7) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 20, , , ,279.5 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 7, , , ,452.7 Other investments 2,270 2,176 2,176 2,176 Other non-current assets 9, , , ,686.5 Total non-current assets 9, , , ,709.3 Total assets 9, , , ,729.3 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 4, , , ,647.3 Other non-current liabilities Total non-current liabilities 4, , , ,316.1 Total liabilities 4, , , ,335.2 Unit funds Reserves 3, , , ,295.8 Shareholders' equity 4, , , ,394.1 Total capital employed 9, , , ,710.2 Real Estate Research 90

91 Regency Centers (REG): Neutral Rating; $65 Price Target; 9% Total Return Exp. Company Overview Regency Centers is a mid-cap shopping center REIT which focuses on owning and developing high quality centers in very strong demographic areas. REG's demographics are among the best in the industry, and going forward the company aims to create value by building ground up centers (~75% of their development spend should be on ground up vs. redevelopment) since 2000, the company has developed 216 properties, representing an investment at completion of ~$3bn. Today its portfolio includes nearly 330 properties, or 44mnsf of GLA. Exhibit 104: Regency Centers Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Regency with a Neutral rating and $65 target price, implying a 9% total return over the next 12 months. Our target price is based upon a 75% weighting of our $63sh forward NAV (plus a 5% premium to reflect management, asset, and balance sheet quality), and a 25% weighting of our $63/sh DCF estimate. Our Neutral rating on Regency is largely valuation based with the stock trading in line to NAV, or an implied 6% cap rate. While a premium valuation is warranted given its relative portfolio quality and above average earnings growth (10% the next two years) we believe the shares are currently fairly valued. Investment Positives High-quality core assets have and should continue to deliver above average same store NOI growth relative to its peers REG estimates 3% (excluding redevelopments), longer term. With the portfolio repositioning effectively done, REG is well positioned to drive above average earnings growth over the next three years. Real Estate Research 91

92 Company has been one of the most successful, developers of high quality shopping centers in the sector. We expect that the company will spend $ mn per annum going forward on developments/redevelopments on top of their existing $300mn pipeline an important driver of earnings going forward. Moreover, they learned many lessons in the last downturn about chasing rooftops and building product to sell which bodes well for their risk adjusted return profile. Strong demographic profile of their largely grocer anchored shopping centers (86% of their portfolio is grocery anchored) make REG a very defensive portfolio going forward with the upside of a rebounding development pipeline. Focus on grocery anchored stores a positive in our view during a time when grocer sales and other staples sales growth is more robust than discretionary spending. Also more defensive against e-commerce taking share. Investment Risks REG is among the highest quality shopping center companies we cover (1) great portfolio with solid demographics; (2) compelling development story; and (3) well respected management team. At this point, however, we think much of the good news is priced into the stock with REG trading an implied 5.9% cap rate, inside of KIM, EQY and DDR. As a significant developer REG's yields are at risk if construction costs or land costs rise faster than their pricing power. Yields could compress on future projects if FRT faces significant cost pressures on the materials or labor cost front. REG's grocery anchored centers are reliant on the health of the anchor and the traffic they drive, so future NOI growth is impacted by the health of grocery stores. The grocer business is healthy today but there is increased competition in the specialty grocer business which could impact tenant margins going forward. Real Estate Research 92

93 Development Pipeline As of Q3, REG has seven active development projects totaling $264mn (roughly one-half of which has been funded) and an additional $83mn of on-going redevelopments ($28mn of which has been funded). On a blended basis, we estimate returns to be approximately 8.0% vs. our estimated 5.5% market cap rate for the assets, generating NAV value of $140mn (PV) Exhibit 105: Snapshot of Regency Centers Regency Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Development DC $28,139 $5,628 $22, % 5.5% 1.8 $15,349 $13,063 Jville $15,113 $9,219 $5, % 5.5% 1.3 $5,496 $4,885 Dallas $26,606 $5,853 $20, % 5.5% 2.3 $8,707 $7,108 Miami $55,135 $34,735 $20, % 5.5% 1.3 $20,049 $17,821 Chicago $29,390 $21,455 $7, % 5.5% 1.3 $16,031 $14,250 SF $59,976 $24,590 $35, % 5.5% 1.5 $25,081 $21,809 Chicago $37,867 $31,430 $6, % 5.5% 1.3 $10,327 $9,180 Charlotte $12,563 $3,643 $8, % 5.5% 1.8 $6,853 $5,832 Redevelopment 1/4 next 4 q $20,862 $7,093 $13, % 5.5% 1.3 $13,276 $11,800 1/4 next 4 q $20,862 $7,093 $13, % 5.5% 1.5 $13,276 $11,544 1/4 next 4 q $20,862 $7,093 $13, % 5.5% 1.8 $13,276 $11,298 1/4 next 4 q $20,862 $7,093 $13, % 5.5% 2.0 $13,276 $11,063 Totals / Avg $348,235 $164, % 5.5% $160,994 $139,654 Real Estate Research 93

94 Regency Centers Valuation Overview Exhibit 106: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $62.78 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $65.92 Approach 2: DCF DCF per share $62.78 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $62.78 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $65.00 Forecasted Total Return 8.7% Exhibit 107: NAV Snapshot Key inputs/items in our REG NAV Model: Year 1 Cash NOI of $465mn Underwrote portfolio to a 6.5% unlevered IRR, 25bp above FRT but 10-25bp inside of EQY and KIM respectively Blended cash cap rate of 5.85% Development pipeline: $365mn valuation Real Estate Research 94

95 Regency Centers IRR Analysis and DCF Model Exhibit 108: IRR Underwriting Key Assumptions Targeted IRR (output) 6.52% Required Initial Cap Rate (input) 5.85% Assumed Rise in Terminal Cap 0.75% REG IRR Analysis Terminal Value NOI Growth (output) 3.3% 3.2% 2.7% 2.5% 2.4% 2.4% 2.3% 2.3% 2.8% 2.8% 2.8% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $100,000 $103,202 $106,027 $108,707 $111,311 $113,949 $116,620 $119,326 $122,607 $125,979 EOP Cash NOI (000's) $103,202 $106,027 $108,707 $111,311 $113,949 $116,620 $119,326 $122,607 $125,979 $129,443 Leasing CapEx (as % of Rev) 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% Leasing CapEx (as % of NOI) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Leasing and Maintenance CapEx ($15,203) ($15,605) ($15,983) ($16,352) ($16,727) ($17,107) ($17,493) ($18,015) ($18,510) ($19,013) IRR Analysis Implied Cap Rate/Cash Flows ($1,764,130) $87,998 $90,423 $92,724 $94,960 $97,222 $99,513 $101,832 $104,592 $107,469 $110,430 Terminal Value $2,000,486 Total CF ($1,764,130) $87,998 $90,423 $92,724 $94,960 $97,222 $99,513 $101,832 $104,592 $107,469 $2,110,917 Asset Value Growth over Hold Period - Annual 1.3% Asset Value Growth over Hold Period - Total 13% IRR 6.52% Cap Rate to achieve IRR 5.85% Exhibit 109: DCF Model with Primary Assumptions Regency Centers DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $448,516 $480,764 $512,788 $548,004 $583,122 $602,074 FFO $289,904 $319,831 $350,284 $383,536 $414,429 $427,898 Capital Expenditures ($49,418) ($53,069) ($56,670) ($60,624) ($64,544) ($66,642) Straight-Line Rent ($9,884) ($10,614) ($11,334) ($12,125) ($12,909) ($12,909) Other Adj. $5,160 $6,447 $6,448 $6,640 $6,606 $6,606 AFFO $235,762 $262,595 $288,729 $317,427 $343,582 $354,953 Ratios / Analysis CAGR EBITDA/sh growth 7% 7% 7% 6% 3% 7% FFO/sh growth 10% 10% 9% 8% 3% 9% AFFO/sh growth 11% 10% 10% 8% 3% 10% CapEx as % of FFO 17% 17% 16% 16% 16% 16% Inputs REG Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.11 Cost of Equity (CAPM) 8.00% Perpetual Growth Rate 3.25% Items to Add to / Deduct from Firm Value Land Held for future development $63,704 Outputs NPV of Cash Flows $1,139,948 NPV of Terminal Value $4,606,889 Total $63,704 Firm Value $5,746,836 Plus non-cash flow producing assets $63,704 Shareholders Value $5,810,540 Share outstanding 92,556 DCF value per share $62.78 Real Estate Research 95

96 Regency Centers REG Price (07 Nov 14): US$61.54, Rating: NEUTRAL, Target Price: US$65.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity 1 Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (76.5) (240.8) (191.0) Cash flow from investment (16.5) (100.8) (51.0) Dividends paid (43.5) (174.0) (188.2) Equity raised Net borrowings (75.0) Other financing cash flows Financial cashflow (118.5) (99.0) (113.2) Net cashflow (80.8) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU 87.1 (21.0) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,944.8 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 2, , , ,573.7 Other investments Other non-current assets 3, , , ,813.1 Total non-current assets 3, , , ,825.2 Total assets 3, , , ,337.7 Accounts payable Short-term debt 75.0 Other current liabilities Total current liabilities 75.0 Long-term debt 2, , , ,576.2 Other non-current liabilities Total non-current liabilities 2, , , ,838.2 Total liabilities 2, , , ,838.2 Unit funds Reserves , , ,142.1 Shareholders' equity 1, , , ,499.6 Total capital employed 3, , , ,337.7 Real Estate Research 96

97 Office We are launching coverage on nine office REITs with Outperform ratings on Boston Properties ($147 TP), Forest City ($25 TP), and Hudson Pacific ($31 TP); Neutral ratings on Douglas Emmett ($29 TP), Brandywine Realty ($16 TP), and Vornado ($114 TP); and an Underperform rating on Corporate Office ($27 TP), Kilroy Realty ($68 TP), and SL Green ($115 TP). Our forecast total return for Office sector over the next 12 months is 10% or 200bp lower than the balance of our coverage universe. By and large, operating fundamentals across our office coverage universe should be mixed in 2015 with West coast, NYC and Boston focused owners likely to outperform. The good news is that job growth continues to improve a key driver of demand, although space efficiencies continue to put a cap on overall leasing demand. For our coverage universe, we are forecasting 3% same-store NOI growth in Earnings growth should average 6% in 2015 and 7% in YTD Office stocks are up 21% vs. 22% for the balance of our coverage. From a valuation standpoint, the group trades at an 8% discount to NAV, or an implied cap rate of 5.4%. Exhibit 110: Office Investment Summary Price Total P/AFFO Implied Ticker Rating Mkt Cap Price Target Return 2015E Cap Rate Investment Summary BXP Outperform $19,569 $ $ % 34.9x 5.1% BDN Neutral $2,763 $15.44 $ % 21.3x 7.3% Best in class owner and developer, with significant pipeline today of ~ $3bn of projects throughout Boston, NY, DC, and San Francisco. Our top pick in traditional office as we believe pricing for their assets is well in excess of their NAV. Mid-Atlantic owner continues to upgrade portfolio and markets with almost 75% of NOI coming from Philly CBD, better PA suburbs, Austin, and Northern VA. Question is how well company can continue leasing progress into '15 given remaining holes in weaker Northern VA/Richmond markets. OFC Underperform $2,446 $27.89 $ % 19.5x 6.9% OFC's business model is highly reliant on the growth of the defense IT industry with almost 2/3 of revenues from government and defense tenants (remainder reliant on Baltimore/DC job growth). Questions remain about growth revolve around leasing up in difficult markets. DEI Neutral $4,100 $28.40 $ % 23.3x 5.0% FCEA Outperform $3,813 $20.98 $ % 21.5x 7.2% HPP Outperform $1,863 $27.78 $ % 199.5x 5.1% KRC Underperform $5,691 $67.79 $ % 37.0x 4.8% SLG Underperform $10,904 $ $ % 31.6x 4.8% VNO Neutral $20,469 $ $ % 29.8x 5.3% West LA focused owner is a cash flow story, generating over $0.50/sh of FCF after dividend which they use to deleverage and acquire selectively. We think the lease up story continues through 2016 given improving LA fundamentals. Owner and developer of office, residential, and apartment assets is in the middle of a non-core asset disposition which we expect will end with a REIT conversion and significant price appreciation. Our top opportunistic pick in Office. Small cap developer / opportunistic buyer and redeveloper very active this cycle in SF, LA, and Seattle. Impactful construction pipeline ($4/share). Future development rights on BS make this an interesting story should the tech markets continue to run. Probably the most successful external growth story of the past five years, KRC was early in expanding into SF and Seattle and has a very attractive & preleased construction pipeline will add to NAV once delivered. Very solid management team up and down the coast. Largest NYC office owner has been an active capital recycler over the past decade selling fully stabilized assets and redeploying into growth areas, including Street retail and Structured Finance. We like NYC fundamentals here but less enamored with valuation. Diversified asset base of NYC office, NYC Street retail, and DC office (other retail will be spun off at YE). Story going forward is one of execution of on BS growth with Penn Station redevelopment, marking street retail leases higher, and leasing up the DC portfolio FFO Estimate 2016 FFO Estimate Dividend Consensus Rating and Distribution CS Consensus H/(L) CS Consensus H/(L) Yield Outperform Neutral Underperform CS Rating BXP $5.35 $ % $5.60 $ % 2.0% 19 / 90% 2 / 10% 0 / 0% Outperform BDN $1.36 $ % $1.50 $ % 3.9% 8 / 50% 8 / 50% 0 / 0% Neutral OFC $2.10 $ % $2.13 $ % 3.9% 5 / 36% 9 / 64% 0 / 0% Underperform DEI $1.62 $ % $1.71 $ % 2.8% 4 / 27% 8 / 53% 3 / 20% Neutral FCE/A $1.33 $ % $1.42 $ % N/A 2 / 100% 0 / 0% 0 / 0% Outperform HPP $1.25 $ % $1.43 $ % 1.8% 4 / 67% 2 / 33% 0 / 0% Outperform KRC $3.11 $ % $3.48 $ % 2.1% 8 / 53% 7 / 47% 0 / 0% Underperform SLG $6.25 $ % $6.53 $ % 1.8% 6 / 32% 13 / 68% 0 / 0% Underperform VNO $5.31 $ % $5.52 $ % 2.7% 6 / 46% 7 / 54% 0 / 0% Neutral Source: Thomson Reuters, Credit Suisse estimates. Real Estate Research 97

98 YTD YTD Total Returns 11 November 2014 Subsector Returns Exhibit 111: Office YTD vs. 2015E Total Returns 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 19% 17% 13% 12% 8% 7% 5% 3% 3% 1% FCEA BXP HPP BDN VNO DEI SLG KRC OFC REITs Overall Trailing 12-Month Return 12-Month Expected Return Key Sector Themes for 2015 More Than Any Other Sector, Office Is About Picking the Right Market/Story Office REIT portfolios tend to be regional or encompass two to four major markets, in contrast to the more national portfolios of the Apartments, Industrials, and Retail owners. Therefore we tend to focus more on market and submarket trends, as well as individual leases than for other property types, as the SS NOI growth can vary widely and have dramatic effects on stock performance. As we illustrate below, office companies have shown much more variability in SS NOI growth over the past 10+ years when compared to the retail sector which tend to have more diversified, national footprints (Figure 112). Exhibit 112: LT SS NOI for the Office stocks (Top) vs. the Malls and Strips We Are Covering (Bottom) 15.0% 8.0% 6.0% 10.0% 4.0% 2.0% 5.0% 0.0% -2.0% 0.0% -4.0% -6.0% -5.0% -10.0% -8.0% -10.0% BXP BDN OFC DEI FCE/A HPP KRC SLG VNO Equity One DDR Corp. Federal Realty Kimco Realty Regency Center General Growth Macerich Simon Property Taubman Centers From a Market Perspective, We Remain Quite Bullish on San Francisco and West LA, and Less So on DC. For New York City, We Expect Steady Improvement but No Rental Spikes. The office companies we follow own assets in several major cities with the greatest concentration in NYC, San Francisco, DC, Boston, Los Angeles, and the greater Mid-Atlantic region. Overall, we have a definite bias towards the west coast markets and away from DC as the latter strikes U.S. as hamstrung by more structural headwinds to office using job growth and therefore net absorption. For New York, we are neutral to positive as we like the activity in the market and modest pricing power, but also see asset Real Estate Research 98

99 values pricing in either lower required returns or more aggressive rental rate growth than we're willing to underwrite for the REITs. Highlights from Our Most Recent Market Visits Over the past three months, we have visited all of the major office markets. Below are our takeaways on the fundamental outlooks as well as the read-throughs for the REITs with assets in those markets. San Francisco Bay Area and Seattle San Francisco, has been, and will likely remain, the strongest office market in the country over the next 24 months (note: Boston, Seattle, areas of West LA, and Midtown South have also been strong, but the growth has not been as robust). Here are some of the key takeaways from our recent (two months ago) San Francisco/Valley tours: Demand continues to run at very high levels, with overall less space available (existing or under construction given the pre-leasing of projects not yet complete over the past six months). Rent growth is likely to exceed 10% in 2015, with a few more years of potential expansion given the robust tenant demand and limited supply growth. The Peninsula and Valley markets are also tightening up although the growth rates in demand and rents are not as robust as the CBD. Demand in Silicon Valley continues to spread South and East out of Palo Alto and Mountain View. The transaction market in San Francisco remains tight with more capital looking to acquire assets than sellers are willing to bring to market. As of earlier this year, cap rates were >4% to 5% for CBD while core plus cap rates are 4.5% to 5.0%. Unleveraged return hurdles are similar to 2007 levels but with lower financing rate assumptions and the fundamentals much stronger than at the end of the last cycle. The perception is that buyers are underwriting much lower cash return hurdles than the ranges noted by Eastdil, with several public and private contacts suggesting winning bids are in the 6% "real" targeted IRR range. Los Angeles On balance, except for the tech industry, the LA job market has been a laggard versus other major U.S. cities, which in turn has a created, a bifurcated office market: Silicon Beach (West LA) and the rest. Part of LA's problem has been an exodus of businesses escaping to more tax and business friendly cities/states, hindering a full-blown economic recovery. Most of the growth that has occurred has been from the tech industry. YouTube (Google), Amazon, Facebook, Hulu, Netflix, Microsoft, Beats Audio (Apple), and over 900 startups all have a presence within LA's Westside to collaborate with media and entertainment, an environment that cannot be duplicated or replicated anywhere else. As a result, the West LA submarkets have dramatically outperformed the rest of LA over 83% of total net absorption year-to-date in Los Angeles has occurred in West LA. The rising demand for office space in West LA has led to a 9% uptick in asking rents there over the past year. As the remaining supply in West LA gets soaked up, we expect to see users start to move South (El Segundo) and East to lower cost options. Real Estate Research 99

100 New York City The New York City office market has seen a steady recovery directly due to a stable increase in the office using job market since the Great Recession. The bulk of the job growth has been driven by the TAMI sector. To illustrate the impact the TAMI sector is having on the NYC office market, it currently occupies 17% of the total NYC office market yet accounts for almost 38% of all NYC office leasing year-to-date. Related to the office market, NYC street retail has been on fire, with asking rent growth rates sky-rocketing for the major retail submarkets over the past five years. This will present an opportunity for a number of office REITs with exposure to NYC to reposition their current street retail holdings to take advantage of the major uptick in market rents and drive NOI. However, we believe that market rent growth rates will normalize and level-off after five years of above average growth rates. Boston The Boston office market has continued to improve, with the CBD seeing its highest net absorption since 2005 (750,000 SF by mid-year). The strength of the office market has been driven by the city's steady employment growth led by the health care/biotech and TAMI industries. Suburban Boston has seen an uptick in activity as users are migrating towards well located mixed use, amenity rich centers. BXP's Colony Bay project has been a huge success and the company is looking to follow that up with its development of 10 CityPoint and 99 Third Avenue that will continue to drive demand in the Central 128 Corridor. Washington DC and Northern VA Washington DC and Northern VA are very much a tale of two markets. The core, Class A+ office space that: (1) is well located (i.e., close to mass transportation, good access, etc.); (2) has a strong amenity base (both from a retail and housing perspective); and (3) offers high quality finishes and efficient, fungible floor plates is generally very well leased with growing asking rents, both in DC and Northern VA. On the other hand, the more commodity office space older, less efficient buildings and floor plates that are poorly located and lacking amenities continues to struggle with the downsizing of the Federal Government and law firms, which make up two-thirds of the office using population in the DC and Northern VA markets. According to real estate executives we met during our tours of the DC and Northern VA markets, the downsizing of the Federal Government and law firms is approaching the final innings, and, barring any major economic shocks, both markets should see an uptick demand. We believe that BXP is best positioned to benefit from the market dynamics going forward given that their DC/Northern VA portfolio consists of core, Class A+, and amenity rich office product. Greater Philadelphia The Philadelphia CBD office market has been very stable with overall Class A vacancy rates holding fairly steady over the past nine-plus years. The CBD market has built upon its stable base and is benefiting from improving economic fundamentals driven by the "eds and meds" (UPenn, Drexel, Temple, Independence Blue Cross, and Children's Hospital of Philadelphia), as well as media giant Comcast, who, together with Liberty Property Trust, has begun construction on the Comcast Innovation and Technology Center totaling 1.5 million SF. Real Estate Research 100

101 Expectations from market participants are that the growth of Comcast will have a trickle-down effect for the rest of Philadelphia by attracting users who want to be in close proximity to Comcast. Brandywine has done a very good job of positioning itself within the CBD market, boasting a 51% market share of the total Class A/Class A+ office space. Moreover, BDN's development of the FMC Tower and redevelopment of 1900 Market will allow the company to be able take advantage of the supply-demand imbalance and continue to push rents higher. The suburban Philly office market, like most other suburban markets across the country, is very much a story between the haves and have-nots. Radnor, Conshohocken (Class A), and pockets of Plymouth Meeting (by the interchange of I-276 and I-476) have relatively low vacancy rates and seen a modest up-tick in rents due to their accessibility to public transportation and proximity to a large amenity base. On the other hand, older vintage buildings outside of these three sub/micro-markets suffer from a 21% vacancy rate and perpetually stagnant rent growth. Suburban MD and BWI Corridor The suburban MD and BWI Corridor markets are still suffering from the major pull-back in Federal Government leasing and, as with all other markets in the US, users becoming more efficient with their space needs. However, there are pockets of relative success such as Bethesda/Chevy Chase and Silver Spring, due to their amenity base, and OFC's National Business Park at Fort Meade, which is driven by the growth the U.S. Government's cyber security program. Transaction Pricing Very Healthy for Core Office Given Foreign Appetite and Size of Assets One positive for the office REITs is that the number of large office trades has picked up over the past three to six months at pricing which continues to move the bar higher for asset valuations. These prices have in large part moved faster than our perception of market fundamentals/office using job growth, but that is of little matter when compared to the impact they can have on REIT equity valuations (as the market re-prices REIT portfolio based on the last handful of trades). With most of the company write-ups that follow we provide a submarket or at least market based look at how we value the office REIT portfolios, but suffice it to say that we feel comfortable that our NAVs appropriately reflect what we believe is fair market pricing today for the relative quality of the REIT portfolios. Real Estate Research 101

102 How We Underwrite the Office REIT Stocks Leasing Spreads Expect Variability We expect the best leasing spreads from HPP and KRC, two West coast focused operators who will benefit from the continued strength in SF and Seattle, while well-below market leases signed four years ago will remain a tailwind. New York City should produce strong rental spreads going forward, with SLG benefitting more than BXP and VNO given the mixed geographic portfolios and drag from the DC portfolios. BDN and OFC should see the lowest leasing spreads given the okay but not landlord markets in the Mid-Atlantic. Exhibit 113: How We See Office Market Rent Growth and Cash Spreads Evolving Through the Cycle Market Rent Growth and Cash Re-leasing Spread Forecasts 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 7Yr Average Boston Properties Market Rent Growth 3.9% 4.8% 5.2% 4.3% 1.6% 1.6% 3.0% 3.5% Cash Releasing Spreads in our model 5.0% 7.2% 9.9% 12.2% 12.1% 11.1% 10.4% 9.7% Brandywine Realty Market Rent Growth 0.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 1.7% Cash Releasing Spreads in our model 0.0% -1.0% -1.1% -0.9% -0.8% -0.9% -0.9% -0.8% Corporate Office Market Rent Growth 0.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 1.7% Cash Releasing Spreads in our model -2.0% -3.2% -3.2% -3.2% -3.2% -3.3% -3.3% -3.1% Douglas Emmett Market Rent Growth 6.4% 6.4% 4.8% 3.8% 0.0% 0.0% 3.5% 3.6% Cash Releasing Spreads in our model 1.2% 4.7% 7.2% 8.2% 6.5% 3.1% 1.9% 4.7% Hudson Pacific Market Rent Growth 5.9% 5.9% 4.7% 4.7% 0.0% 0.0% 2.8% 3.4% Cash Releasing Spreads in our model 11.2% 14.4% 16.8% 18.1% 15.9% 12.0% 9.6% 14.0% Kilroy Realty Market Rent Growth 5.4% 5.4% 4.3% 4.3% 0.0% 0.0% 3.0% 3.2% Cash Releasing Spreads in our model 8.9% 11.7% 13.3% 14.3% 11.9% 7.5% 6.2% 10.6% SL Green Market Rent Growth 5.0% 7.5% 7.5% 5.0% 0.0% 0.0% 3.5% 4.1% Cash Releasing Spreads in our model 7.6% 11.5% 16.6% 20.0% 18.9% 15.0% 13.4% 14.7% Vornado Market Rent Growth 3.0% 4.5% 5.7% 4.2% 1.2% 1.2% 3.4% 3.3% Cash Releasing Spreads in our model 2.6% 4.5% 7.5% 10.3% 10.5% 9.0% 8.4% 7.5% Average Rent Growth 4% 5% 5% 4% 1% 1% 3% 3% Average Cash Spreads 4% 7% 10% 12% 11% 9% 8% 9% SS NOI Growth Almost All Spreads and Bumps with Most Portfolios Full We forecast SS NOI growth of 3.3% in 2015 and 3.8% in 2016, produced by rolling the above rent growth and leasing spread projections through our models, coupled with some occupancy growth (BXP, BDN, DEI, OFC, and VNO's DC). Over the next five years we underwrite 3.7% NOI growth in the Office sector which compares to mid 2% LT growth. Exhibit 114: Credit Suisse Cash NOI Growth Forecasts vs. Historical Historical SS NOI Growth vs. CS Forecasts - Office YTD 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY CS Next 5Yr Forecast Trail. 5Yr Avg Trail. 10Yr Avg Boston Properties 5.1% 0.7% 5.5% 4.1% 3.1% 4.5% 3.9% 3.8% 3.8% 3.8% 3.2% 2.8% Brandywine Realty -2.1% 3.5% 4.9% 3.4% 4.6% 3.9% 3.0% 2.9% 2.4% 3.4% 1.2% 0.4% Corporate Office 1.2% 1.3% 0.9% -0.2% 2.9% 2.6% 2.5% 2.5% 2.5% 2.6% 0.3% 1.8% Douglas Emmett -1.3% 2.5% 1.3% -0.6% 4.2% 4.3% 4.5% 4.7% 4.2% 4.4% 0.1% NA Forest City Enterprises 1.4% 3.7% -0.7% 3.3% 3.0% 3.3% 2.8% 2.6% 2.6% 2.9% NA NA Hudson Pacific NA NA -5.9% -1.8% 4.5% 4.5% 4.9% 5.7% 4.7% 4.9% NA NA Kilroy Realty 9.2% 0.0% 2.4% 0.9% 3.3% 3.5% 3.7% 3.7% 3.6% 3.6% 2.0% 1.2% SL Green 1.0% 4.9% 1.9% 0.7% 4.4% 4.2% 4.0% 4.0% 4.1% 4.1% 1.2% 3.7% Vornado 1.7% -0.2% 5.2% 1.7% 2.5% 2.9% 3.7% 3.9% 3.5% 3.3% 2.9% 3.7% Office SS NOI growth 2.5% 1.6% 2.9% 4.0% 3.3% 3.8% 3.8% 3.9% 3.7% 3.7% 2.5% 2.6% REITs 4.1% 4.4% 3.5% 4.0% 2.6% 2.5% 2.3% 2.3% 2.1% 3.6% 3.5% 3.2% Real Estate Research 102

103 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Monthly Chg Payroll E,mployment (000s) 11 November 2014 Macro Factors to Think About Jobs, Efficiency Trends, and Supply Credit Suisse's Economists expect job growth to remain steady in 2015 at 2.4mn jobs which is good news for the office sector. Furthermore, the primary office markets have seen solid office using job growth over the past two years with the country posting 5.5% office using job growth, topped by SF and Los Angeles (DC a laggard with -0.3% growth). Exhibit 115: Job Growth Has Been Solid on an Overall and Office-Using Basis Chg: +2,193k; 2013 Chg: +2186k Total NonFarm Payroll Employment 3-Mth Avg Historically there has been a very strong correlation between office job growth and net absorption (0.80 since 1997). That said the correlation has weakened over the past five years as the pace of job growth outpaced net absorption for the first time. This is due to space efficiency trends where employers are placing more employees in a given space (just 150sf/person down from a high of 225sf/person in 2010), embracing the 'new workplace' drive towards more collaboration and less closed office space. Real Estate Research 103

104 Exhibit 116: Job Growth and Net Absorption Closely Tied, but Demand Affected by Space Efficiencies Source: CBRE, CoreNet, Company data, Credit Suisse estimates. Exhibit 117: We Expect Net Absorption Will Continue to Trend at a Low but Steadily Positive Level Exhibit 118: Office Supply Growth Should Increase but Remain Relatively Low Real Estate Research 104

105 Boston Properties (BXP): Outperform Rating; $147 Price Target; 17% Total Return Exp. Company Overview Boston Properties is a large-cap Office owner/developer with 37.3msf of operating assets (pro-rata) across four primary markets, including New York (39.5% of NOI), Washington, DC (19.6%), Boston (29.8%), and San Francisco (11.1%). BXP has a $2bn active development pipeline and the ability to build an additional 14msf on its land bank. Exhibit 119: Boston Properties Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Boston Properties an Outperform rating and $147 target price, implying a 17% total return over the next 12 months. Our target price is based upon a 75% weighting of our $143/sh forward NAV (plus a 10% premium to reflect management, asset, and balance sheet quality), and a 25% weighting of our $113.50/sh DCF estimate. Our Outperform rating on Boston Properties is driven primarily by valuation with the stock trading at an 11% discount to NAV, or an implied cap rate of 5.4%, which does not reflect: (1) the strong demand for trophy assets in gateway markets; (2) the company's large and accretive development pipeline ($3.3 billion at bps spreads vs. market cap rates); (3) healthy internal growth for the next two years, with projected same-store NOI up 3.75% per annum; and (4) one of the best-in-class management teams in the REIT sector that have been proven capital allocators over time. Investment Positives BXP has the highest quality asset base and among the highest quality management team/regional teams in the office space. In a world where core/trophy office assets trade at ever increasing prices per pound/lower and lower IRRs, the BXP portfolio in our view has the best chance for Real Estate Research 105

106 NAV-resetting market transactions to push Street NAVs higher (i.e., the EOP trade in Boston). We expect the company will continue to pre-lease the Salesforce Tower to stabilization given the increasing large block demand in San Francisco. Therefore, we include the Salesforce Tower in our NAV at a $360mn of present value creation today (7.5% yield on 5% cap rate, discounted back three years) to give credit similar to what we have done for KRC. We expect BXP's Boston and San Francisco portfolios to put up solid rent growth over the next 36 months (12% forecast market rent growth and 20%, respectively), but we see more muted growth or risk to our forecasts in NYC (20%) and DC (3%). Elsewhere we believe BXP is hitting the sweet spot of the development pipeline and we underwrite an incremental $500mn of development starts (above what is in CIP) for delivery in at a 7.5% return. Large development pipeline creates accretive opportunities for company at yields well north of comparable acquisition cap rates. Balance sheet is an unquestioned strength, with little to no floating rate debt and plenty of cash and liquidity in case of capital markets trouble/opportunity. One of the more active recyclers of assets with funds used for special dividends or funding future development projects. Investment Risks BXP's DC portfolio continues to perform well above the market, but if sluggish economic conditions persist in that market their ability to push rents will come under pressure. Demand in New York City has over the past few years been in Midtown South and lower price point submarkets (6 th Ave, Grand Central, etc.) and not in the higher rent Plaza District where most of BXP's assets are located. Will demand and above average rent growth return to these submarkets and/or will BXP be successful diversifying its NYC portfolio into other markets where demand has been more robust? BXP has enough cash on the balance sheet to fund development for the next two years which is very prudent but also causes the company to trade at an above average earnings multiple because of the cash drag. As a large cap stock and S&P 500 constituent this may be a negative as it may keep non-reit dedicated investors from investing in the story given the high multiple. Real Estate Research 106

107 Development Pipeline At Q3, BXP had 10 active development projects comprising 3.2msf of office and retail with a total estimated build cost of $2.0bn ($1.4bn left to fund). In addition, BXP owns land capable of supporting 14msf of buildable square footage (excluding the land in production). Overall, our model ascribes $707mn of value of BXP s developments in progress. Exhibit 120: BXP's Development pipeline Operating Portfolio Valuation Exhibit 121: How Our 4.65% Applied Cap Rate Translates into Prices per Pound for BXP's Portfolio Real Estate Research 107

108 Boston Properties Valuation Overview Exhibit 122: Credit Suisse Valuation Methodology Exhibit 123: NAV Snapshot Boston Properties NAV Calculation Assumptions IRR Target 6.27% Assumed avg NOI growth next three years 2.76% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $1,476,544 Straight-line rent adjustment/ FAS 141 ($106,800) Cash NOI from owned properties $1,369,743 Assumed cash NOI cap rate 4.65% Key inputs/items in our BXP NAV Model: Year 1 Cash NOI of $1.37bn We underwrite BXP'S portfolio to a 6.25% unlevered IRR, in line with VNO and SLG's NYC portfolios Blended cash cap rate of 4.65% Market value of owned properties $29,456,845 Add Cash, CIP, + Other Assets Cash and cash equivalents $2,674,100 Other assets $872,175 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $684,178 Development Projects (CIP plus Est. Value Creation) $1,423,103 Equals -Gross market value of assets $35,110,401 Development pipeline o CIP $1.4bn valuation, or $700mn above cost o Land Bank $685mn of NAV Less Liabilities Total liabilities (incl. JVs) $10,414,207 Mark-to-Market Debt Adj. $0 Preferred Stock $200,000 Net market value of assets $24,496,194 Total Shares / Units 171,062 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $ Real Estate Research 108

109 Boston Properties IRR Analysis Exhibit 124: IRR Underwriting Real Estate Research 109

110 Boston Properties DCF Model Exhibit 125: DCF Model with Primary Assumptions Real Estate Research 110

111 Boston Properties BXP Price (07 Nov 14): US$127.82, Rating: OUTPERFORM, Target Price: US$147.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 2, , , ,419.0 Property operating expenses Real estate taxes Net operating income (US$ m) 1, , , ,535.4 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (29.7) (458.3) (958.5) Cash flow from investment 1, (208.5) Dividends paid (1,111.1) (444.4) (511.1) Equity raised Net borrowings (320.0) (550.0) Other financing cash flows Financial cashflow (1,431.1) (994.4) (511.1) Net cashflow (43.3) 0.8 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 8, , , ,203.3 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents 2, , , ,468.2 Accounts receivable Total current assets 4, , , ,277.1 Total fixed assets Investment properties 13, , , ,592.9 Other investments Other non-current assets 15, , , ,160.5 Total non-current assets 15, , , ,160.5 Total assets 20, , , ,437.7 Accounts payable Short-term debt Other current liabilities 1, , , ,302.2 Total current liabilities 1, , , ,555.8 Long-term debt 11, , , ,295.6 Other non-current liabilities 1, , , ,555.8 Total non-current liabilities 11, , , ,295.6 Total liabilities 12, , , ,851.4 Unit funds Reserves 5, , , ,957.5 Shareholders' equity 7, , , ,586.2 Total capital employed 18, , , ,881.8 Real Estate Research 111

112 Brandywine Realty (BDN): Neutral Rating; $16 Price Target; 8% Total Return Exp. Company Overview Brandywine Realty is a mid-cap Office REIT focused on the mid-atlantic markets of Greater Philadelphia and Northern VA (18% of NOI). BDN has done a nice job of pruning its exposure to commodity suburban markets and increasing its exposure to DT Philly, which we view as a solid, if low growth markets. Exhibit 126: Brandywine Realty Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Brandywine Realty with a Neutral rating and $16 target price, implying an 8% total return over the next 12 months. Our target price is based upon a 75% weighting of our $16/sh forward NAV (no premium/discount to NAV), and a 25% weighting of our $16/sh DCF estimate. Our Neutral rating on Brandywine is driven primarily by valuation with the stock trading at just a 3% discount to NAV, or an implied cap rate of 7.4%. Although the company has done a good job rotating out of low barrier, low growth suburban markets and into better performing CBD and 'Crescent' Philadelphia and Austin, TX markets, earnings growth going forward will be tempered by: (1) high current occupancy rates that have little room to grow; (2) negative re-leasing spreads; and (3) lack of additional development opportunities to drive accretive external growth. Investment Positives NOI exposure to better markets than most people give them credit for/think of: 75% of NOI comes from the Philly CBD, better 'Crescent' suburbs surrounding Philadelphia, Northern VA, and Austin, TX. Balance sheet in much better shape following two-plus years of asset sales, leasing progress, and the recent equity raise. While we will see how the funds are utilized the fact that BDN's net debt to EBITDA is below 6.5x a LT positive. Real Estate Research 112

113 Development pipeline as robust as we can remember with better markets and preleasing. Going forward we do not underwrite much development for BDN ($100mn/yr) given their reduced land bank (was never a huge part of the B/S to be fair). The stock currently trades at an implied 7.4% cap rate, which seems screens inexpensive, in our opinion. If DT Philly economic growth picks up more steam into 2015 we think BDN's DT portfolio will become a more dear asset. Investment Risks Is there any room left to grow occupancy after 2014 with the company confident it will hit its year-end target for 91-92% occupancy and 93-94% leased percentage? Yes BDN's portfolio is better now than in past cycles, but we only underwrite their portfolio to 92% occupancy in 2017 capping off the above-average SS NOI growth they have registered over the past few years because of occupancy gains. What are they going to do with $670mn of cash (3Q balance sheet figure)? BDN has never been a company that you'd describe as having too much cash, but after their recent asset sales and common equity raise, the company has prefunded NT development costs and has repurchased $250mn of debt in 4Q. Occupancy holes in Metro DC (85% occupied), Richmond (86%), and NJ/DE, some of the softer activity markets in the Mid-Atlantic. Lack of development opportunities means the company relies more on acquisitions and Outperforming land at market for development, compressing potential yield spread from external growth. Cash earnings (i.e., AFFO) growth is muted due to high capex to fill vacancies. We think it is money well spent/the right thing to do long term for the assets and the company, but it does limit dividend growth and organic FCF for investments. Development Pipeline At Q3, BDN had seven active development projects with a pro-rata cost of $700mn ($540mn left to fund). The projects have an expected yield in the high 7% range. As we illustrate below we estimate that these projects represent $140mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 127: BDN's Development pipeline Real Estate Research 113

114 Brandywine Valuation Overview Exhibit 128: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $16.29 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $16.29 Approach 2: DCF DCF per share $16.13 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $16.13 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $16.00 Forecasted Total Return 7.7% Exhibit 129: NAV Snapshot Brandywine Realty NAV Calculation Assumptions IRR Target 7.52% Assumed avg NOI growth next three years 4.22% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $393,066 Straight-line rent adjustment/ FAS 141 ($25,275) Cash NOI from owned properties $367,791 Key inputs/items in our BDN NAV Model: Year 1 Cash NOI of $368mn 7.5% unlevered IRR Blended cash cap rate of 7.25% Assumed cash NOI cap rate 7.25% Market value of owned properties $5,072,978 Add Cash, CIP, + Other Assets Cash and cash equivalents $671,943 Other assets $71,727 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $90,842 Development Projects (CIP plus Est. Value Creation) $297,874 Development pipeline: ~$300mn valuation Equals -Gross market value of assets $6,205,363 Less Liabilities Total liabilities (incl. JVs) $3,226,913 Mark-to-Market Debt Adj. $0 Preferred Stock $100,000 Net market value of assets $2,878,450 Total Shares / Units 180,869 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $16.29 Real Estate Research 114

115 BDN IRR Analysis and DCF Model Exhibit 130: IRR Underwriting Key Assumptions Targeted IRR (output) 7.52% Required Initial Cap Rate (input) 7.25% Assumed Rise in Terminal Cap 0.75% BDN IRR Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Terminal Value Total SF in portfolio (000's) 22,450 22,450 22,450 22,450 22,450 22,450 22,450 22,450 22,450 22,450 SF Rolling in period (000's) 1,850 1,779 2,753 2,467 1,784 2,276 1,148 1, Avg Expiring Gross Rent $20 $24 $26 $28 $31 $26 $28 $30 $30 $30 Operating Expense Margin 46% 46% 46% 46% 46% 46% 46% 46% 46% 46% Recovery % 37% 37% 37% 37% 37% 37% 37% 37% 37% 37% Avg net rent per SF $14 $17 $18 $19 $22 $19 $20 $21 $21 $21 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth 0.0% 2.0% 2.0% 2.0% 2.0% 0.0% 0.0% 2.0% 2.0% 2.0% Mark to Market, Beg. Of Period 0% -2% -2% -2% -2% -2% -4% -6% -6% -6% Mark to Market, End of Period 0% 0% 0% 0% 0% -2% -4% -4% -4% -4% Avg. Mark to Market (vs. Exp. Net + Recov.) 0% -1% -1% -1% -1% -2% -4% -5% -5% -5% Incremental NOI in Period $0 -$165 -$442 -$514 -$415 -$589 -$837 -$1,276 -$1,149 -$729 Total Rent Growth 0% 2% 4% 6% 8% 8% 8% 10% 13% 15% CAGR Rent Growth (through period) 0% 1% 1% 1% 2% 1% 1% 1% 1% 1% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 20,600 20,671 19,697 19,983 20,666 20,174 21,302 20,738 21,833 21,598 Contractual Rent Bumps 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% Incremental NOI (000's) $3,346 $6,840 $7,031 $7,277 $7,691 $7,876 $8,101 $8,256 $8,428 $8,720 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 88.4% 89.9% 91.4% 92.0% 92.0% 92.0% 91.5% 91.0% 91.0% 91.0% Occupancy Pick-up 1.5% 1.5% 0.6% 0.0% 0.0% -0.5% -0.5% 0.0% 0.0% 0.0% E.O.P. Occupancy 89.9% 91.4% 92.0% 92.0% 92.0% 91.5% 91.0% 91.0% 91.0% 91.0% Avg. Occupancy 89.2% 90.7% 91.7% 92.0% 92.0% 91.8% 91.3% 91.0% 91.0% 91.0% Total Incremental NOI from Occ. (000's) $5,140 $10,280 $7,196 $2,056 $0 -$1,713 -$3,427 -$1,713 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $35 $36 $37 $38 $39 $40 $41 $42 $43 $44 Leasing TI/LC per sf (renewal) $15 $15 $16 $16 $17 $17 $17 $18 $18 $19 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% TI's/LC's (000's) ($54,336) ($54,021) ($71,478) ($61,104) ($45,292) ($54,782) ($26,064) ($46,806) ($17,290) ($24,473) Recurring CapEx ($0.75/sf/yr. In $000's) ($16,837) ($17,258) ($17,690) ($18,132) ($18,585) ($19,050) ($19,526) ($20,014) ($20,515) ($21,028) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Cash NOI Growth (output) 4.6% 4.5% 3.5% 2.2% 1.8% 1.3% 0.9% 1.2% 1.7% 1.8% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $366,689 $375,175 $392,130 $405,916 $414,735 $422,011 $427,586 $431,423 $436,690 $443,968 Add: Mark to market (000's) $0 ($165) ($442) ($514) ($415) ($589) ($837) ($1,276) ($1,149) ($729) Add: Rent Bumps (000's) $3,346 $6,840 $7,031 $7,277 $7,691 $7,876 $8,101 $8,256 $8,428 $8,720 Add: Occupancy Pick up (000's) $5,140 $10,280 $7,196 $2,056 $0 ($1,713) ($3,427) ($1,713) $0 $0 EOP Cash NOI (000's) $375,175 $392,130 $405,916 $414,735 $422,011 $427,586 $431,423 $436,690 $443,968 $451,960 Leasing CapEx (from above) ($54,336) ($54,021) ($71,478) ($61,104) ($45,292) ($54,782) ($26,064) ($46,806) ($17,290) ($24,473) Maintenance CapEx (from above) ($16,837) ($17,258) ($17,690) ($18,132) ($18,585) ($19,050) ($19,526) ($20,014) ($20,515) ($21,028) IRR Analysis Implied Cap Rate/Cash Flows ($5,174,824) $304,001 $320,851 $316,748 $335,499 $358,134 $353,754 $385,832 $369,870 $406,163 $392,878 Terminal Value $5,762,489 Total CF ($5,174,824) $304,001 $320,851 $316,748 $335,499 $358,134 $353,754 $385,832 $369,870 $406,163 $6,155,367 Terminal Value Per SF / Unit $257 Growth over Hold Period 1.1% IRR 7.52% Cap Rate to achieve IRR 7.25% Real Estate Research 115

116 Exhibit 131: DCF Model with Primary Assumptions Brandywine Realty DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $366,828 $396,179 $430,052 $462,506 $483,981 $496,080 FFO $246,415 $273,777 $294,591 $314,329 $330,756 $339,024 Capital Expenditures ($70,770) ($76,794) ($83,758) ($90,581) ($95,156) ($97,535) Straight-Line Rent ($25,275) ($27,426) ($29,914) ($32,350) ($33,984) ($33,984) Other Adj. ($18,912) $88 $88 $88 $88 $0 AFFO $131,458 $169,646 $181,008 $191,485 $201,703 $207,505 Ratios / Analysis CAGR EBITDA/sh growth 7% 8% 7% 4% 2% 6% FFO/sh growth 10% 7% 6% 5% 2% 7% AFFO/sh growth 28% 6% 5% 5% 3% 11% CapEx as % of FFO 29% 28% 28% 29% 29% 29% 29% Inputs BDN Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.17 Cost of Equity (CAPM) 8.24% Perpetual Growth Rate 2.50% Items to Add to / Deduct from Firm Value Land Held for future development $90,842 Outputs NPV of Cash Flows $684,201 NPV of Terminal Value $2,237,075 Total $90,842 Firm Value $2,921,276 Plus non-cash flow producing assets $90,842 Shareholders Value $3,012,118 Share outstanding 186,740 DCF value per share $16.13 Real Estate Research 116

117 Brandywine Realty Trust BDN Price (07 Nov 14): US$15.44, Rating: NEUTRAL, Target Price: US$16.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity 15 (1) (2) (2) Net income before tax 31.3 (4.3) Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to 11.9 (4.0) unitholders Net income (US$ m) 23.7 (11.7) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (28.5) (629.3) (342.4) Cash flow from investment 21.5 (279.3) (242.4) Dividends paid (27.1) (115.5) (123.3) Equity raised Net borrowings Other financing cash flows Financial cashflow (27.1) (95.5) 96.7 Net cashflow 19.8 (267.0) 0.2 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 40, , ,222.2 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets , Total fixed assets Investment properties 3, , , ,544.6 Other investments Other non-current assets 3, , , ,928.4 Total non-current assets 3, , , ,928.5 Total assets 4, , , ,783.2 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 2, , , ,667.4 Other non-current liabilities Total non-current liabilities 2, , , ,667.4 Total liabilities 2, , , ,667.4 Unit funds Reserves 1, , , ,094.8 Shareholders' equity 1, , , ,115.8 Total capital employed 4, , , ,783.2 Real Estate Research 117

118 Corporate Office (OFC): Underperform Rating; $27 Price Target; 1% Total Return Exp. Company Overview Corporate Office Properties is a mid-cap Office REIT focused on the Baltimore/DC metro with a particular focus on developing and owning secured assets for US Government and defense contractors adjacent to military bases as intelligence installations. The company expanded into too many commodity assets during the last cycle, but has since refocused and pared the portfolio to one with primarily government / defense demand drivers. Exhibit 132: Corporate Office Source: SNL Financial. Investment Thesis: Underperform We are initiating coverage of Corporate Office with an Underperform rating and a $27 target price, implying a 1% total return over the next 12 months. Our target price is based upon a 75% weighting of our $27/sh forward NAV (no premium/discount to NAV), and a 25% weighting of our $27.50/sh DCF estimate. Our Underperform rating on OFC is driven primarily by valuation with the stock trading flat to NAV, or an implied cap rate of 6.8%. Even though the company has pared down a large portion of its underperforming assets and face less macro headwinds than they have in the past couple of years, earnings growth going forward should be muted by: a) short, term, variable rate debt that will eventually have to be fixed and termed out at higher rates; b) relatively high current occupancy rates with little room to grow given their asset base; c) negative re-leasing spreads due to lack of rent growth in most of their markets; and d) lack of additional development opportunities to drive accretive external growth. Investment Positives Macro headwinds in the DC metro and Defense industry have hit OFC particularly hard over the past several years. Signs are that the worst is behind the market and Real Estate Research 118

119 with the magnitude of cuts known defense tenants (especially those in the Cyber security / Defense IT sector are again growing. We expect occupancy to increase to 93% by YE 2016 from 91% today given the improved demand picture. In addition we expect development spend per annum of $200mn per year going forward at an 8.5% yield. OFC's development pipeline is now $260mn with a large land bank capable of supporting additional development in OFC's core markets with solid & rebounding demand drivers. The company builds to an average return of 9%, which is healthy in the current cap rate environment. Management has refocused the portfolio on core markets and demand drivers, which took a bite out of earnings (as they sold out of higher cap rate markets) but the portfolio is generally high quality and focused on their core customer. Investment Risks The big question mark in our minds is when OFC will fix out the balance sheet. Subsequent to 3Q earnings the company raised $150mn of equity to help pay down two tranches of fixed rate debt coming due in 2015/2016, but leverage is still at 7.5x which for a developer we believe is risky. Lowering leverage/pushing out the maturity profile would have a dilutive impact on our cash flow growth forecasts. The company expects to generate just 4-6% FFOPS growth over the next several years which will be among the lowest in the office REIT sector. We suspect deleveraging and terming out the balance sheet will add to the headwinds to growth. While 65% of the company's revenues come from defense and government tenants, the fact that several of these tenants have vacated OFC's buildings on short notice over the past two years suggests that the stickiness of the tenants may not be as high as we thought or the visibility into tenant plans can be clouded by macro events. Because of sequestration some of OFC's development markets (Springfield, Huntsville) have been slower to materialize. Development Pipeline At Q3, OFC had 12 active development projects comprising 1.1msf of office with a total estimated build cost of $257mn ($120mn left to fund.). We estimate that these projects will contribute $50mn of NAV accretion (present value) once stabilized. Exhibit 133: BDN's Development pipeline Current CS Estimates Costs Total Cost Future Est. Stab. Yrs to NAV PV of Stab. Value Current Pipeline SF PSF Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Per SF Under Construction Corporate Office Develpopment Pipeline 310 Sentinel 191,464 $299 $57,300 $31,456 $25, % 6.5% 2.3 $13,223 $10,794 $368 NOVA Office A 159,300 $280 $44,560 $38,201 $6, % 6.5% 1.5 $10,283 $8,942 $ Potranco Road 160,466 $216 $34,715 $19,969 $14, % 6.5% 2.0 $8,011 $6,676 $266 NOVA Office B 161,030 $258 $41,500 $19,475 $22, % 6.5% 2.3 $9,577 $7,818 $ Redstone Gateway 69,191 $144 $9,997 $1,369 $8, % 6.5% 2.0 $2,307 $1,923 $ Milestone 119,980 $263 $31,535 $12,836 $18, % 6.5% 3.0 $7,277 $5,598 $323 Redevelopment Pecan 27,122 $146 $3,953 $2,667 $1, % 6.5% 2.0 $912 $760 $ Alexander Bell Drive 52,000 $168 $8,713 $5,321 $3, % 6.5% 2.0 $2,011 $1,676 $ Arbor 140,765 $179 $25,182 $6,769 $18, % 6.5% 2.3 $5,811 $4,744 $ Elkridge 56,452 $0 $0 $ % Totals / Avg 1,137,770 $226 $257,455 $138,063 $119, % 6.5% $59,413 $48,930 Real Estate Research 119

120 Corporate Office Properties Valuation Overview Exhibit 134: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $27.18 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $27.18 Approach 2: DCF DCF per share $27.67 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $27.67 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $27.00 Forecasted Total Return 0.9% Exhibit 135: NAV Snapshot Key inputs/items in our OFC NAV Model: Year 1 Cash NOI of $288mn Underwrite OFC's portfolio to a 7.0% unlevered IRR, 50bp below BDN but 75bp north of CBD portfolios Blended cash cap rate of 7.0% Development pipeline: ---CIP: $218mn or $48mn above spend to date ---Land bank = $346mn at BV Real Estate Research 120

121 OFC IRR Analysis Exhibit 136: IRR Underwriting Key Assumptions Targeted IRR (output) 7.02% Required Initial Cap Rate (input) 7.00% Assumed Rise in Terminal Cap 0.75% OFC IRR Analysis Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Terminal Value Total SF in portfolio (000's) 16,620 16,620 16,620 16,620 16,620 16,620 16,620 16,620 16,620 16,620 SF Rolling in period (000's) 1,720 1,496 1,867 1,983 1,767 1,767 1,767 1,767 1,767 1,767 Avg Expiring Gross Rent $30 $29 $30 $30 $30 $30 $30 $30 $30 $30 Operating Expense Margin 47% 47% 47% 47% 47% 47% 47% 47% 47% 47% Recovery % 49% 49% 49% 49% 49% 49% 49% 49% 49% 49% Avg net rent per SF $23 $22 $22 $22 $22 $22 $22 $22 $22 $22 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth 0.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Mark to Market, Beg. Of Period 0% -2% -2% -3% -3% -3% -3% -3% -3% -3% Mark to Market, End of Period 0% 0% 0% -1% -1% -1% -1% -1% -1% -1% Avg. Mark to Market (vs. Exp. Net + Recov.) 0% -1% -1% -2% -2% -2% -2% -2% -2% -2% Incremental NOI in Period $0 -$208 -$516 -$659 -$676 -$674 -$717 -$756 -$792 -$824 Total Rent Growth 0% 2% 4% 6% 8% 10% 13% 15% 17% 20% CAGR Rent Growth (through period) 0% 1% 1% 1% 2% 2% 2% 2% 2% 2% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 14,900 15,124 14,753 14,637 14,853 14,853 14,853 14,853 14,853 14,853 Contractual Rent Bumps 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Incremental NOI (000's) $2,851 $5,774 $5,860 $5,962 $6,217 $6,461 $6,599 $6,689 $6,734 $6,797 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 91.0% 91.0% 91.5% 92.3% 93.0% 93.0% 93.0% 92.5% 92.0% 92.0% Occupancy Pick-up 0.0% 0.5% 0.8% 0.8% 0.0% 0.0% -0.5% -0.5% 0.0% 0.0% E.O.P. Occupancy 91.0% 91.5% 92.3% 93.0% 93.0% 93.0% 92.5% 92.0% 92.0% 92.0% Avg. Occupancy 91.0% 91.3% 91.9% 92.6% 93.0% 93.0% 92.8% 92.3% 92.0% 92.0% Total Incremental NOI from Occ. (000's) $0 $1,322 $3,305 $3,966 $1,983 $0 -$1,322 -$2,644 -$1,322 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $35 $36 $37 $38 $39 $40 $41 $42 $43 $44 Leasing TI/LC per sf (renewal) $15 $15 $16 $16 $17 $17 $17 $18 $18 $19 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% TI's/LC's (000's) ($37,835) ($36,709) ($47,748) ($51,689) ($42,900) ($43,972) ($41,699) ($42,741) ($47,353) ($48,537) Recurring CapEx ($0.75/sf/yr. In $000's) ($12,465) ($12,777) ($13,096) ($13,423) ($13,759) ($14,103) ($14,456) ($14,817) ($15,187) ($15,567) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 2.0% 2.4% 3.0% 3.1% 2.4% 1.8% 1.4% 1.0% 1.4% 1.8% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $279,531 $282,382 $289,269 $297,918 $307,188 $314,711 $320,499 $325,060 $328,348 $332,968 Add: Mark to market (000's) $0 ($208) ($516) ($659) ($676) ($674) ($717) ($756) ($792) ($824) Add: Rent Bumps (000's) $2,851 $5,774 $5,860 $5,962 $6,217 $6,461 $6,599 $6,689 $6,734 $6,797 Add: Occupancy Pick up (000's) $0 $1,322 $3,305 $3,966 $1,983 $0 ($1,322) ($2,644) ($1,322) $0 EOP Cash NOI (000's) $282,382 $289,269 $297,918 $307,188 $314,711 $320,499 $325,060 $328,348 $332,968 $338,940 Leasing CapEx (from above) ($37,835) ($36,709) ($47,748) ($51,689) ($42,900) ($43,972) ($41,699) ($42,741) ($47,353) ($48,537) Maintenance CapEx (from above) ($12,465) ($12,777) ($13,096) ($13,423) ($13,759) ($14,103) ($14,456) ($14,817) ($15,187) ($15,567) IRR Analysis Implied Cap Rate/Cash Flows ($4,034,022) $232,082 $239,784 $237,073 $242,075 $258,053 $262,424 $268,905 $270,790 $270,427 $271,780 Terminal Value $4,460,894 Total CF ($4,034,022) $232,082 $239,784 $237,073 $242,075 $258,053 $262,424 $268,905 $270,790 $270,427 $4,732,674 Terminal Value Per SF / Unit 1.0% Growth over Hold Period $268 IRR 7.02% Cap Rate to achieve IRR 7.00% Real Estate Research 121

122 OFC DCF Model Exhibit 137: DCF Model with Primary Assumptions Corporate Office Properties DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $265,476 $281,110 $300,836 $324,701 $349,735 $358,479 FFO $203,609 $211,394 $227,863 $250,100 $271,948 $278,747 Capital Expenditures ($57,437) ($60,821) ($65,088) ($70,256) ($75,676) ($77,568) Straight-Line Rent ($7,658) ($8,109) ($8,678) ($9,367) ($10,090) ($10,090) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $138,514 $142,464 $154,096 $170,477 $186,182 $191,088 Ratios / Analysis CAGR EBITDA/sh growth 4% 2% 4% 5% 2% 4% FFO/sh growth 2% 3% 6% 6% 3% 4% AFFO/sh growth 1% 4% 7% 6% 3% 4% CapEx as % of FFO 28% 29% 29% 28% 28% 28% Inputs OFC Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.15 Cost of Equity (CAPM) 8.18% Perpetual Growth Rate 2.50% Items to Add to / Deduct from Firm Value Land Held for future development $346,331 Outputs NPV of Cash Flows $621,712 NPV of Terminal Value $2,089,116 Total $346,331 Firm Value $2,710,829 Plus non-cash flow producing assets $346,331 Shareholders Value $3,057,160 Share outstanding 110,474 DCF value per share $27.67 Real Estate Research 122

123 Corporate Office Properties Trust OFC Price (07 Nov 14): US$27.89, Rating: UNDERPERFORM, Target Price: US$27.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (18.8) (127.1) (198.5) Cash flow from investment 31.2 (27.1) (98.5) Dividends paid (25.2) (111.1) (119.3) Equity raised Net borrowings (65.0) Other financing cash flows Financial cashflow (25.2) (27.0) 80.7 Net cashflow Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU (6.3) (24.3) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,457.4 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 2, , , ,576.1 Other investments Other non-current assets 3, , , ,105.4 Total non-current assets 3, , , ,105.4 Total assets 3, , , ,611.6 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,085.0 Other non-current liabilities Total non-current liabilities 2, , , ,299.2 Total liabilities 2, , , ,299.2 Unit funds Reserves 1, , , ,072.5 Shareholders' equity 1, , , ,312.4 Total capital employed 3, , , ,611.6 Real Estate Research 123

124 Douglas Emmett (DEI): Neutral Rating; $29 Price Target; 5% Total Return Company Overview Douglas Emmett is a mid-cap Office REIT focused on the West LA (primarily Santa Monica, Beverly Hills, Sherman Oaks/Encino, and Woodland Hills/Warner Center) and the Honolulu office market. In addition the company owns several multifamily assets in West LA and HI, with two developments which will increase their exposure to multifamily at attractive returns. Exhibit 138: Douglas Emmett Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Douglas Emmett with a Neutral rating and a $29 target price, implying a 5% total return over the next 12 months. Our target price is based upon a 75% weighting of our $30/sh forward NAV (no premium/discount to NAV) and a 25% weighting of our $27.50/sh DCF estimate. Our Neutral rating on Douglas Emmett is driven primarily by valuation with the stock trading at a 10% discount to NAV, or an implied cap rate of 5%. The company owns a high quality portfolio with assets in several of the best performing submarkets in Los Angeles (read: West LA) and will experience above average SS NOI growth through occupancy growth (driven by leasing at the Warner Center, which accounts for roughly 13% of the company's current NOI), high in-place rent bumps, and positive-turning re-leasing spreads. The company is also led by a very experienced management team that has a large stake in the business and should continue to generate a ton of FCF after dividends, which will be used for either new developments or debt pay downs. Investment Positives High-quality portfolio with (we do not use this term often) irreplaceable assets in several of the best West LA submarkets. The Santa Monica, Beverly Hills, Westwood, Century City, and Brentwood markets in particular are controlled by a small number of players with rent growth in up cycles among the best in the country. Real Estate Research 124

125 West LA was later to recover the San Francisco bay and Seattle markets, but has seen strong demand and rent growth over the past 18 months. We expect this to continue underwriting 6% rent growth across DEI's portfolio, or 6.5% excluding Warner Center and Honolulu. We expect cash rent spreads to turn positive in 2015 posting 0% spreads in 2015 and +3% in We expect DEI will have among the best SS NOI growth in the REIT sector over the next five years (+4.2% average). Company is a cash flow machine, throwing off $65mn of free cash flow (FCF) after dividends each year. Over the next two years we expect this will be the primary funding source for the new development. We do not expect the company to acquire anything in the next two years given its conservative underwriting criteria. Clearly a transformational (read: Blackstone's EOP West LA Portfolio) acquisition is always a potential, and one that we think the equity markets would support at current pricing given the potential rent growth and expense savings from such a combination. Long tenured management who acquired much of the portfolio as a private company. Very conservative underwriting keeps a strict, disciplined capital allocation strategy. Investment Risks We are less enamored with the Honolulu and Warner Center markets (11% and 13% of NOI, respectively). While the Warner Center market has shown better signs of late, it's important to remember that most of DEI's lease up potential is in these two markets so while the Santa Monica's/Beverly Hills' will drive rent growth we need to see better signs of absorption in Warner Center to get more excited about DEI. Because of its conservative nature DEI tends not to grow much externally, so the investment story by and large is focused on internal growth, which has disappointed in recent years as negative cash releasing spreads offset 3-4% rent bumps in their markets. Real Estate Research 125

126 Douglas Emmett Valuation Overview Exhibit 139: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $29.98 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $29.98 Approach 2: DCF DCF per share $27.36 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $27.36 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $29.00 Forecasted Total Return 5.2% Exhibit 140: NAV Snapshot Douglas Emmett NAV Calculation Assumptions IRR Target 6.48% Assumed avg NOI growth next three years 4.17% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $383,752 Straight-line rent adjustment/ FAS 141 ($19,261) Cash NOI from owned properties $364,492 Assumed cash NOI cap rate 5.05% Market value of owned properties $7,217,656 Key inputs/items in our DEI NAV Model: Year 1 office Cash NOI of $365mn Underwrote portfolio to a 6.5% unlevered IRR Blended cash cap rate of 5.05% Valued multifamily at $1.7bn, which includes $135mn of value for the below market units in Santa Monica. Residential Assets Cash NOI from JV properties $62,138 Assumed cash NOI cap rate 4.00% Market value of owned properties (incl. value for pre-'99 units) $1,687,643 Add Cash, CIP, + Other Assets Cash and cash equivalents $12,785 Other assets $101,214 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $0 Development Projects (CIP plus Est. Value Creation) $96,127 Development pipeline o We ascribe $96mn of value for the residential development rights in Hawaii and Brentwood Implied Cap Rate: 5.0% Equals -Gross market value of assets $9,115,425 Less Liabilities Total liabilities (incl. JVs) $3,572,338 Mark-to-Market Debt Adj. $0 Preferred Stock $100,000 Net market value of assets $5,443,087 Total Shares / Units 176,310 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $29.98 Real Estate Research 126

127 Douglas Emmett IRR Model Exhibit 141: IRR Underwriting Key Assumptions Targeted IRR (output) 6.48% Required Initial Cap Rate (input) 5.05% Assumed Rise in Terminal Cap 0.75% DEI IRR Analysis Terminal Value Total SF in portfolio (000's) 15,095 15,095 15,095 15,095 15,095 15,095 15,095 15,095 15,095 15,095 SF Rolling in period (000's) 576 1,899 2,075 1,992 1,604 1,534 1, ,362 Avg Expiring Gross Rent $34 $35 $35 $34 $37 $35 $35 $35 $34 $40 Avg net rent per SF $23 $24 $24 $23 $26 $24 $24 $24 $23 $27 Step 1: Mark Expiring Leases up or down CS Market Growth Expectations Sherman Oaks, Pro-Rata 21% 6.0% 6.0% 4.0% 4.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Warner Center / W. Hills, Pro-Rata 13% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% Beverly Hills, Pro-Rata 12% 7.5% 7.5% 5.0% 5.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Brentwood, Pro-Rata 12% 6.0% 6.0% 4.0% 4.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Santa Monica, Pro-Rata 11% 7.5% 7.5% 5.0% 5.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Honolulu 11% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% 2.0% 2.0% 2.0% 2.0% Century City 7% 6.0% 6.0% 4.0% 4.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Olympic Corridor 7% 6.0% 6.0% 4.0% 4.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Burbank 3% 6.0% 6.0% 4.0% 4.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Westwood 3% 6.0% 6.0% 4.0% 4.0% 0.0% 0.0% 4.0% 4.0% 4.0% 4.0% Assumed Market Rent growth 5.9% 5.9% 3.8% 3.8% 0.0% 0.0% 3.5% 3.5% 3.5% 3.5% Mark to Market, Beg. Of Period -3% 0% 3% 3% 4% 1% -2% -1% -1% 0% Mark to Market, End of Period 3% 6% 7% 7% 4% 1% 1% 2% 3% 3% Avg. Mark to Market (vs. Exp. Net + Recov.) 0% 3% 5% 5% 4% 1% 0% 0% 1% 2% Incremental NOI in Period -$10 $615 $1,776 $2,377 $2,028 $951 $119 $9 $80 $343 Total Rent Growth 6% 12% 16% 21% 21% 21% 25% 29% 34% 39% CAGR Rent Growth (through period) 6% 6% 5% 5% 4% 3% 3% 3% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 14,519 13,196 13,020 13,103 13,491 13,561 14,028 14,386 14,761 13,733 Contractual Rent Bumps 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Incremental NOI (000's) $4,536 $8,790 $8,674 $9,107 $9,778 $10,436 $11,042 $11,635 $12,115 $12,057 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 89.5% 90.5% 91.5% 92.5% 93.5% 94.0% 94.0% 93.5% 93.0% 93.0% Occupancy Pick-up 1.0% 1.0% 1.0% 1.0% 0.5% 0.0% -0.5% -0.5% 0.0% 0.0% E.O.P. Occupancy 90.5% 91.5% 92.5% 93.5% 94.0% 94.0% 93.5% 93.0% 93.0% 93.0% Avg. Occupancy 90.0% 91.0% 92.0% 93.0% 93.8% 94.0% 93.8% 93.3% 93.0% 93.0% Total Incremental NOI from Occ. (000's) $2,714 $5,428 $5,428 $5,428 $4,071 $1,357 -$1,597 -$3,193 -$1,597 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $30 $31 $32 $32 $33 $34 $35 $36 $37 $37 Leasing TI/LC per sf (renewal) $20 $21 $21 $22 $22 $23 $23 $24 $24 $25 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% TI's/LC's (000's) ($18,353) ($51,357) ($57,079) ($56,361) ($44,992) ($41,654) ($27,072) ($17,535) ($9,767) ($40,823) Recurring CapEx ($0.75/sf/yr. In $000's) ($11,321) ($11,604) ($11,894) ($12,192) ($12,497) ($12,809) ($13,129) ($13,458) ($13,794) ($14,139) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 4.1% 4.1% 4.3% 4.3% 3.9% 3.0% 2.2% 1.9% 2.3% 2.7% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $351,250 $358,489 $373,322 $389,201 $406,113 $421,990 $434,734 $444,298 $452,749 $463,347 Add: Mark to market (000's) ($10) $615 $1,776 $2,377 $2,028 $951 $119 $9 $80 $343 Add: Rent Bumps (000's) $4,536 $8,790 $8,674 $9,107 $9,778 $10,436 $11,042 $11,635 $12,115 $12,057 Add: Occupancy Pick up (000's) $2,714 $5,428 $5,428 $5,428 $4,071 $1,357 ($1,597) ($3,193) ($1,597) $0 EOP Cash NOI (000's) $358,489 $373,322 $389,201 $406,113 $421,990 $434,734 $444,298 $452,749 $463,347 $475,746 Leasing CapEx (from above) ($18,353) ($51,357) ($57,079) ($56,361) ($44,992) ($41,654) ($27,072) ($17,535) ($9,767) ($40,823) Maintenance CapEx (from above) ($11,321) ($11,604) ($11,894) ($12,192) ($12,497) ($12,809) ($13,129) ($13,458) ($13,794) ($14,139) IRR Analysis Implied Cap Rate/Cash Flows ($7,098,798) $328,815 $310,361 $320,227 $337,560 $364,501 $380,271 $404,097 $421,756 $439,786 $433,291 Terminal Value $8,366,572 Total CF ($7,098,798) $328,815 $310,361 $320,227 $337,560 $364,501 $380,271 $404,097 $421,756 $439,786 $8,799,863 Terminal Value Per SF / Unit $554 Growth over Hold Period 1.7% IRR 6.48% Cap Rate to achieve IRR 5.05% Real Estate Research 127

128 Douglas Emmett DCF Model Exhibit 142: DCF Model with Primary Assumptions Douglas Emmett DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $414,419 $431,900 $456,632 $483,813 $504,060 $520,442 Normalized FFO $285,370 $301,740 $321,735 $342,691 $362,175 $373,946 Maintenance Capex ($50,986) ($53,475) ($57,436) ($56,727) ($59,543) ($61,479) SL Rent ($6,373) ($6,684) ($7,179) ($7,736) ($8,120) ($8,120) FAS 141 ($12,887) ($11,288) ($9,730) ($7,906) ($5,593) ($5,593) AFFO $215,123 $230,292 $247,390 $270,323 $288,920 $298,755 Ratios / Analysis CAGR EBITDA/sh growth 4% 6% 6% 4% 3% 5% FFO/sh growth 6% 7% 7% 6% 3% 6% AFFO/sh growth 7% 7% 9% 7% 3% 8% CapEx as % of FFO 18% 18% 18% 17% 16% 16% Inputs DEI Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.12 Cost of Equity (CAPM) 8.04% Perpetual Growth Rate 3.25% Items to Add to / Deduct from Firm Value Outputs NPV of Cash Flows $987,246 NPV of Terminal Value $3,836,517 Total $0 Firm Value $4,823,762 Plus non-cash flow producing assets $0 Shareholders Value $4,823,762 Share outstanding 176,310 DCF value per share $27.36 Source: Company data, Credit Suisse estimates Real Estate Research 128

129 Douglas Emmett Inc. DEI Price (07 Nov 14): US$28.40, Rating: NEUTRAL, Target Price: US$29.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (100.0) (118.3) (191.7) Cash flow from investment (50.0) (68.3) (141.7) Dividends paid (70.5) (152.3) (164.5) Equity raised Net borrowings Other financing cash flows Financial cashflow (36.5) (122.6) (63.5) Net cashflow 7.2 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU (0.4) 5.7 Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 23, , , ,714.9 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 5, , , ,171.1 Other investments Other non-current assets 5, , , ,421.3 Total non-current assets 5, , , ,421.3 Total assets 5, , , ,570.2 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 3, , , ,320.2 Other non-current liabilities Total non-current liabilities 3, , , ,462.4 Total liabilities 3, , , ,627.4 Unit funds Reserves 1, , , ,569.5 Shareholders' equity 2, , , ,942.7 Total capital employed 5, , , ,405.1 Real Estate Research 129

130 Forest City (FCE/A): Outperform Rating; $25 Price Target; 10% Total Return Exp. Company Overview Forest City is a mid-cap diversified real estate operating company that focuses on the development of mixed use urban office, retail, and multifamily across the US. The company also owns a 55% interest in the Barclays arena and development rights in Brooklyn, Washington, D.C., Denver, and San Francisco (more on these later). Exhibit 143: Forest City portfolio Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Forest City with an Outperform rating and a $25 target price, implying a 10% total return over the next 12 months. Our target price is based upon a 75% weighting of our $30/sh forward NAV (with a 10% discount to reflect a below average balance sheet and above-average execution risk in asset sales and development) and a 25% weighting of our $21/sh DCF estimate. Our Outperform rating on Forest City is driven primarily by valuation with the stock trading at a 23% discount to NAV, or at an implied cap rate of 7.4%--the widest discount among our coverage universe. The company has a complicated yet high quality diversified portfolio that consists of office (38% of NOI), apartments (28%), retail (30% excluding Ridge Hill), senior/military housing, and the Barclays Center/Brooklyn Nets, and is saddled with above average leverage (11.6x debt-to-ebitda). However, we believe that the company can unlock significant value by taking the following steps: 1) sell Barclays Center/Nets stake which would generate $600mn+ of pro-rata cash and likely soak up all/most of the company's NOLs making a REIT conversion more likely; 2) deliver existing development pipeline; 3) lease up Ridge Hill which could add $20mn of NOI in next 18 months; and 4) execution on the previous three could lead to a higher share price which could trigger convertible bonds becoming equity at $21.67 ($350mn) and $24.21 ($300mn), lowering leverage by 0.6x and 0.5x respectively. Although there's Real Estate Research 130

131 significant execution risk, if management is able to perform on steps outlined above, we believe there's ~20% upside potential in the stock. Investment Positives High-quality core assets should continue to deliver above-average same-store NOI growth relative to its peers. The stock currently trades at an implied 7.1% cap rate, which is too far wide of where we believe their assets should trade given market concentration and asset quality. There are several identifiable NT catalysts that we expect will move the stock higher, including the following: o o Stabilizing and selling the Barclays arena. We believe removing both the EBITDA upside (to lower leverage ratios) and an eventual sale of the asset (to further simplify the investment story and bring cash back for debt reduction) are two primary catalysts for the stock. Furthermore, the company will likely burn through its remaining net operating losses with a gain on sale furthering the case for REIT conversion. Leasing up Ridge Hill, a $890mn mall developed starting in 2006 which is 77% committed yielding less than 2% yield on cost. While we and the Street assume that the asset has lost money that's in the stock price with a lease up of the asset only good news from here as investors can put this story behind them. Pace of new developments and redevelopments should prove a significant driver of earnings and NAV growth in As the company continues to reduce its asset base (see JV of Atlantic yards project, non-core asset sales, potential NT sale of Barclays) it is also ginning up several multifamily developments (seven slated for near term starts in the Arizona and Greenland ventures) and retail redevelopments (Ballston, several of the QIC malls) which will put more no income producing land into production and enhance the retail portfolio. Development acumen with long-term complex sites allows the company to effectively acquire land and control large parcels in major markets at below market pricing. Investment Risks One of the more complicated investment stories given the risk on sale of the Barclays arena, lease up of ridge hill, and eventually the split share structure and the timing of a REIT conversion. Company leverage is well above the REIT average at 11.6x compared to the sector average of 6.5. This will come down with asset stabilization (and continued sales activity but even so the leverage is an issue for many investors. As noted above the company is not a REIT so the buying appetite from dedicated investors may be limited until the commonly declares its intention to convert. The company is considered a controlled company as defined by NYSE because the founding families including the Ratner s, Miller s and Shafran s control the majority of voting rights (~55%). FCE does not currently pay a dividend, which was suspended in 2009 as the company focused on retaining capital for deleveraging and development funding. Real Estate Research 131

132 Development Pipeline Exhibit 144: FCE's construction pipeline at 3Q Forest City Development Pipeline Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of NOI Current Pipeline Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Contr. Retail Antelope $11,200 $5,801 $5, % 6.5% 1.0 $4,308 $3,916 $1,008 Galleria $12,400 $6,423 $5, % 6.5% 1.5 $4,769 $4,147 $1,116 Office 300 Mass Ave $87,700 $45,425 $42, % 6.5% 2.3 $13,492 $11,014 $6,578 Residential San Francisco $10,600 $5,490 $5, % 5.0% 1.0 $3,180 $2,891 $689 Winchester Lofts $62,000 $32,113 $29, % 5.0% 1.0 $18,600 $16,909 $4,030 Arris $35,700 $18,491 $17, % 5.0% 1.0 $10,710 $9,736 $2,321 Blossom Plaza $26,700 $13,829 $12, % 5.0% 1.0 $8,010 $7,282 $1,736 B2 $193,700 $100,328 $93, % 6.0% 4.0 $0 $0 $11,622 Totals / Avg $440,000 $227,900 $212, % 5.8% $13 $63,069 $55,896 $29,099 Balance Sheet Review One of the big issues with Forest City for some investors is the leverage profile is well above average (11.4x net debt to EBITDA, compared to mid-6x for the REITs), which is especially high for a developer with non-income-producing assets on the balance sheet. The good news is that we believe there are several near-term deleveraging events for the company over the next months. Exhibit 145: Levers to Lowering FCE's Leverage over the Next 12 Months Operations Sales Converts / Common Equity 12.0x 0.2x 0.4x 11.0x 0.4x 10.0x 0.2x 0.3x 0.3x 0.6x 9.0x 11.4x 0.5x 0.18x 8.0x 10.4x 9.6x 9.0x 7.0x 6.0x Leverage Today Deliver Const. Pipeline Lease Ridge Hill to 4% Yield FCF to deleverage Sell Nets for $100mn Leverage Post-Event Sell Barclays at Cost / F12 NOI Sell Fulton St Resi Land Impact First Convert to Equity ($21.67) Second Convert to Equity ($24.21) Every $100mn of Common Equity Real Estate Research 132

133 Portfolio Snapshot by Asset Type and Region Portfolio Snapshot by Asset Type The first way we look at FCE's portfolio is by asset type, including Arena, Land Sales, and Military Housing (they lump in Senior Housing with Apartment). Roughly one-third of FCE's operating NOI comes from Office asserts, with ~26-27% each coming from Apartments and Retail. Denver contributes almost all of the land sales. Exhibit 146: Core Portfolio by Asset Type and NOI contribution Portfolio Snapshot by Market Another way to look at the portfolio is to separate out the land NOI, and to see of the core asset types (office, residential, and apartments) where the NOI comes from. On this basis New York City generates 38% of non-land NOI, with DC contributing 9%, LA 7%, and San Francisco and Boston each contributing 7% of NOI. Within the non-core markets, Cleveland makes up 8% of NOI (5% is Apartment). Exhibit 147: Core Portfolio NOI by Market Real Estate Research 133

134 Overview: How We Value Forest City's Operating Portfolio In our FCE's NAV model we apply a 5.9% blended cap rate to our $610mn forward 12 month cash NOI estimate (pro-rata for share of JVs, we value the Military and Senior Housing units separately). Please note that we value Ridge Hill, the Barclays Center, and other assets separately from a traditional "NOI divided by cap rate" analysis and look at them as stabilized asset value. Exhibit 148: Estimated NOI by Core Segment for Forest City While we do not specifically target market by market cap rates and per square foot values, below is a reasonable guess-timate to the appropriate cap rates and per square foot values for FCE's core portfolio including joint venture interests on a pro-rata basis. Exhibit 149: How We Value FCE's Core Operating Portfolio Real Estate Research 134

135 Forest City Valuation Overview Exhibit 150: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $29.70 Targeted Premium (Discount) to NAV -10% Fair Value on NAV Valuation $26.73 Approach 2: DCF DCF per share $20.73 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $20.73 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $25.00 Exhibit 151: NAV Snapshot Forest City NAV Calculation Assumptions IRR Target 6.76% Assumed avg NOI growth next three years 4.20% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $621,233 Straight-line rent adjustment/ FAS 141 ($10,235) Cash NOI from owned properties $610,998 Exhibit 152: Key Assumptions in our NAV Key inputs/items in our FCE/A NAV Model: Year 1 Cash NOI of $608mn Blended cash cap rate of 5.9% Assumed cash NOI cap rate 5.92% Market value of owned properties $10,322,997 Add Cash, CIP, + Other Assets Cash and cash equivalents $573,200 Other assets $1,833,499 Senior Housing and Military Housing $368,667 Land held for future development(market value) $69,942 Development Projects (CIP plus Est. Value Creation) $346,777 Barclays Arena: $515mn value for their 55% share, or inline with build costs Nets: $100mn, compared to book value of $0 Equals -Gross market value of assets $13,515,081 Less Liabilities Total liabilities (incl. JVs) $6,927,662 Net market value of assets $6,587,419 Total Shares / Units 235,764 Implied Cap Rate: 7.1% (office, retail, and apartment NOI only) Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $29.70 Real Estate Research 135

136 FCE IRR Analysis and DCF Model Exhibit 153: IRR Underwriting Key Assumptions Targeted IRR (output) 6.76% Required Initial Cap Rate (input) 5.65% Assumed Rise in Terminal Cap 0.75% FCE IRR Analysis - Office Terminal Value NOI Growth (output) 3.0% 6.9% 2.7% 2.5% 2.5% 2.4% 2.2% 2.1% 2.5% 2.5% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $200,000 $206,000 $220,279 $226,147 $231,697 $237,522 $243,153 $248,489 $253,759 $260,103 EOP Cash NOI (000's) $206,000 $220,279 $226,147 $231,697 $237,522 $243,153 $248,489 $253,759 $260,103 $266,606 Leasing CapEx (as % of NOI) 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Leasing and Maintenance CapEx ($30,900) ($33,042) ($33,922) ($34,755) ($35,628) ($36,473) ($37,273) ($38,064) ($39,016) ($39,991) IRR Analysis Implied Cap Rate/Cash Flows ($3,646,018) $175,100 $187,237 $192,225 $196,943 $201,894 $206,680 $211,216 $215,696 $221,088 $248,352 Terminal Value $4,249,034 Total CF ($3,646,018) $175,100 $187,237 $192,225 $196,943 $201,894 $206,680 $211,216 $215,696 $221,088 $4,497,386 Growth over Hold Period 1.5% IRR 6.76% Cap Rate to achieve IRR 5.65% Exhibit 154: DCF Model with Primary Assumptions Forest City DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $550,577 $565,459 $588,271 $630,285 $670,945 $687,719 FFO $312,048 $343,019 $386,757 $439,697 $489,828 $502,074 Capital Expenditures ($71,780) ($73,921) ($76,908) ($82,134) ($87,193) ($89,372) Straight-Line Rent ($10,235) ($10,872) ($11,316) ($11,647) ($11,969) ($11,969) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $230,034 $258,225 $298,533 $345,915 $390,667 $400,733 Ratios / Analysis CAGR EBITDA/sh growth 2% 0% 3% 4% 2% 2% FFO/sh growth 9% 8% 9% 8% 2% 9% AFFO/sh growth 11% 11% 11% 10% 3% 11% CapEx as % of FFO 23% 22% 20% 19% 18% 18% Inputs FCEa Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.30 Cost of Equity (CAPM) 8.85% Perpetual Growth Rate 2.50% Items to Add to / Deduct from Firm Value Land Held for future development $232,893 Nets $100,000 Outputs Atlantic Center Air Rights $50,000 NPV of Cash Flows $1,162,820 Fort Green Land $150,000 NPV of Terminal Value $3,828,444 Total $532,893 Firm Value $4,991,264 Plus non-cash flow producing assets $532,893 Shareholders Value $5,524,157 Share outstanding 266,428 DCF value per share $20.73 Real Estate Research 136

137 Forest City Enterprises Inc. FCEa.N Price (07 Nov 14): US$20.98, Rating: OUTPERFORM, Target Price: US$25.00, Analyst: George Auerbach Per share data 01/14A 01/15E 01/16E 01/17E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 01/14A 01/15E 01/16E 01/17E Income statement (US$ m) 01/14A 01/15E 01/16E 01/17E Revenue (US$ m) 1, , , ,345.8 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity (1) (2) (2) (2) Net income before tax (115.1) (13.8) Surplus/deficit on inv property Income tax (expense) (30.6) Non-tax deductible expenses Distributable income to (113.9) (11.8) unitholders Net income (US$ m) (84.6) (13.8) Cash flow 01/14A 01/15E 01/16E 01/17E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items (33.5) Cash flow from operations (33.5) Other investment/(outflows) (52.6) (188.2) (296.5) (362.2) Cash flow from investment (96.5) (162.2) Dividends paid (97.2) (105.6) Equity raised Net borrowings (200.0) (400.0) (400.0) Other financing cash flows Financial cashflow (200.0) (247.2) (255.6) Net cashflow (11.1) (118.2) (152.8) Key ratios and 01/14A 01/15E 01/16E 01/17E valuation Growth (%) Sales EBITDA EPU (38.3) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (01/14A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 20,500.0 Balance sheet 01/14A 01/15E 01/16E 01/17E Assets Cash and cash equivalents Accounts receivable Total current assets 1, , , ,561.6 Total fixed assets Investment properties 7, , , ,433.7 Other investments Other non-current assets 7, , , ,935.8 Total non-current assets 8, , , ,392.7 Total assets 9, , , ,954.3 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 6, , , ,045.6 Other non-current liabilities Total non-current liabilities 8, , , ,100.4 Total liabilities 8, , , ,100.4 Unit funds Reserves 1, , , ,702.2 Shareholders' equity 1, , , ,853.9 Total capital employed 9, , , ,954.3 Real Estate Research 137

138 Hudson Pacific (HPP): Outperform Rating; $31 Price Target; 13% Total Return Company Overview HPP is a small-cap office owner and developer focused on the technology driven markets/submarkets of San Francisco, Los Angeles, and Seattle. The company has a large (for its size) development pipeline that is largely preleased, with other value add opportunities in San Francisco, Los Angeles, and Seattle over the next few years. Exhibit 155: Hudson Pacific portfolio footprint Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Hudson Pacific with an Outperform rating and a $31 target price, implying a 13% total return over the next 12 months. Our target price is based upon a 75% weighting of our $31.50/sh forward NAV (plus a 5% premium to reflect management, asset, and balance sheet quality) and a 25% weighting of our $23.50/sh DCF estimate. Our Outperform rating on Hudson Pacific is driven primarily by valuation with the stock trading at an 12% discount to NAV, or at an implied cap rate of 5.1%. The company owns high quality office assets in the best performing West Coast markets and should boost NAV through its strong development and redevelopment pipeline. The company should also drive earnings through above average SS NOI growth, which is driven by a steady increase in occupancy and positive re-leasing spreads. Investment Positives On a market/submarket basis, HPP's portfolio and development opportunities are in the sweet spot of the West Coast technology job growth which bodes well for future development opportunities. Real Estate Research 138

139 Strength in Hollywood market makes development at Icon site more likely in the near term, which could be a ~$300mn development that we believe HPP will start in the next months. Delivery and stabilization of Element LA development will add ~$15mn or 10%+ of NOI to the run rate. The company has done a great job with this round of developments, will the technology driven west coast markets remain strong through the next round? Overall pace of new developments and redevelopments for a smaller company like HPP should prove a significant driver of earnings and NAV growth in That said the timing of new projects is uncertain so we underwrite just $100mn of new projects at a 7.5% yield per annum for delivery in 2016 through 2018 with a bias to the upside. On an organic growth basis we think HPP can post SS NOI growth of ~5.0% per annum the next five years as they lease up their portfolio and roll leases in markets where rents have risen dramatically over the past few years. We think their cash mark to market is ~15% today. Leasing up the office portfolio from 92.5% to 94% adds $3.5mn or ~3% to the NOI run rate. Balance sheet is in strong shape (low 6x net debt to EBITDA at YE 2015 unadjusted for CIP), which is important for a developer in historically volatile markets. We expect HPP to issue equity to keep its net debt to EBITDA in the low 6s. Investment Risks Portfolio and markets leveraged to continued growth of new media/technology tenants which have driven the recovery + growth in net absorption and rents in West LA and San Francisco. HPP's submarkets, in our view, cater to this tenant type much more than traditional white collar tenants, placing greater relative risk on the tenant profile than other West Coast owners. External growth likely to involve "needle-moving" acquisitions and developments of meaningful size relative to the company's balance sheet. While HPP has done a nice job this cycle managing their developments and acquisitions the cycle is almost five years old so the risks have increased to capital deployment. Three of HPP's five development sites are in Hollywood, which while improved over the past three years is still not a main destination for large tenants. Real Estate Research 139

140 Development Pipeline Exhibit 156: HPP Current Development Pipeline and Credit Suisse Estimate of Value Creation HPP Develpopment Pipeline Current CS Estimates Costs Total Cost Future Est. Stab. Yrs to NAV PV of Stab. Value Current Pipeline SF PSF Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Per SF Preleased Developments Icon 413,000 $460 $190,000 $6,700 $183, % 5.5% 3.3 $65,636 $49,537 $619 Element LA 284,037 $679 $193,000 $152,400 $40, % 5.5% 1.5 $78,955 $68,656 $957 Totals / Avg 697,037 $549 $383,000 $159, % $144,591 $118,193 Exhibit 157: HPP Land Bank Is Primarily in Hollywood Real Estate Research 140

141 Hudson Pacific Valuation Overview Exhibit 158: Credit Suisse Valuation Methodology Exhibit 159: NAV Snapshot HPP NAV Calculation Assumptions IRR Target 6.47% Assumed avg NOI growth next three years 5.03% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $139,909 Straight-line rent adjustment/ FAS 141 ($25,120) Cash NOI from owned properties $114,790 Key inputs/items in our HPP NAV Model: Year 1 Cash NOI of $115mn 6.7% unlevered IRR Blended cash cap rate of 4.8% Assumed cash NOI cap rate 4.45% Market value of owned properties $2,579,540 Exit cap rate of 5.5% (+75bp) Media Assets Cash NOI from JV properties $15,473 Assumed cash NOI cap rate 7.00% Market value of owned properties $221,044 Add Cash, CIP, + Other Assets Cash and cash equivalents $89,047 Other assets $22,860 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $119,817 Development Projects (CIP plus Est. Value Creation) $293,993 Media property valuation of $220mn, arrived at by applying a 7% cap rate to F12mo NOI Equals -Gross market value of assets $3,326,301 Less Liabilities Total liabilities (incl. JVs) $1,007,634 Mark-to-Market Debt Adj. $0 Preferred Stock $145,000 Development pipeline o $300mn valuation Net market value of assets $2,173,667 Total Shares / Units 69,430 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $31.55 Real Estate Research 141

142 Hudson Pacific IRR Analysis Exhibit 160: IRR Underwriting Key Assumptions Targeted IRR (output) 6.47% Required Initial Cap Rate (input) 4.45% Assumed Rise in Terminal Cap 0.75% HPP IRR Analysis - Office Terminal Value Total SF in portfolio (000's) 5,423 5,423 5,423 5,423 5,423 5,423 5,423 5,423 5,423 5,423 SF Rolling in period (000's) Avg Expiring Gross Rent $27 $34 $34 $31 $39 $45 $34 $41 $39 $56 Avg net rent per SF $19 $24 $24 $22 $28 $32 $24 $29 $27 $39 Step 1: Mark Expiring Leases up or down San Francisco 49% 8% 8% 5% 5% 0% 0% 3% 3% 3% 3% Los Angeles 45% 5% 5% 5% 5% 0% 0% 3% 3% 3% 3% Seattle 6% 8% 8% 5% 5% 0% 0% 3% 3% 3% 3% Assumed Market Rent growth 5.9% 5.9% 4.7% 4.7% 0.0% 0.0% 2.8% 2.8% 2.8% 2.8% Mark to Market, Beg. Of Period 15% 18% 21% 21% 22% 17% 13% 12% 12% 11% Mark to Market, End of Period 22% 25% 26% 26% 22% 17% 16% 15% 15% 14% Avg. Mark to Market (vs. Exp. Net + Recov.) 18% 21% 23% 24% 22% 17% 15% 13% 14% 13% Incremental NOI in Period $521 $1,491 $2,942 $2,731 $2,614 $2,903 $2,162 $1,152 $1,214 $2,250 Total Rent Growth 6% 12% 17% 23% 23% 23% 26% 30% 34% 37% CAGR Rent Growth (through period) 6% 6% 6% 5% 4% 4% 3% 3% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 5,118 5,047 4,723 5,128 4,819 5,035 4,787 5,404 4,788 4,983 Contractual Rent Bumps 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% Incremental NOI (000's) $1,534 $3,089 $3,089 $3,304 $3,517 $3,652 $3,781 $4,047 $4,153 $4,112 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 92.5% 93.0% 93.5% 94.0% 94.0% 94.0% 93.5% 93.0% 93.0% 93.0% Occupancy Pick-up 0.5% 0.5% 0.5% 0.0% 0.0% -0.5% -0.5% 0.0% 0.0% 0.0% E.O.P. Occupancy 93.0% 93.5% 94.0% 94.0% 94.0% 93.5% 93.0% 93.0% 93.0% 93.0% Avg. Occupancy 92.8% 93.3% 93.8% 94.0% 94.0% 93.8% 93.3% 93.0% 93.0% 93.0% Total Incremental NOI from Occ. (000's) $595 $1,189 $1,189 $595 $0 -$595 -$1,189 -$595 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $60 $62 $63 $65 $66 $68 $70 $71 $73 $75 Leasing TI/LC per sf (renewal) $25 $26 $26 $27 $28 $28 $29 $30 $30 $31 Renewal % 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% TI's/LC's (000's) ($12,973) ($16,007) ($29,079) ($11,830) ($24,830) ($14,490) ($25,584) ($837) ($28,788) ($20,443) Recurring CapEx ($0.75/sf/yr. In $000's) ($4,067) ($4,169) ($4,273) ($4,380) ($4,489) ($4,601) ($4,716) ($4,834) ($4,955) ($5,079) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 4.5% 4.8% 5.8% 5.0% 4.4% 4.1% 3.1% 2.9% 3.3% 3.8% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $117,129 $119,779 $125,548 $132,768 $139,398 $145,528 $151,488 $156,242 $160,846 $166,214 Add: Mark to market (000's) $521 $1,491 $2,942 $2,731 $2,614 $2,903 $2,162 $1,152 $1,214 $2,250 Add: Rent Bumps (000's) $1,534 $3,089 $3,089 $3,304 $3,517 $3,652 $3,781 $4,047 $4,153 $4,112 Add: Occupancy Pick up (000's) $595 $1,189 $1,189 $595 $0 ($595) ($1,189) ($595) $0 $0 EOP Cash NOI (000's) $119,779 $125,548 $132,768 $139,398 $145,528 $151,488 $156,242 $160,846 $166,214 $172,576 Leasing CapEx (from above) ($12,973) ($16,007) ($29,079) ($11,830) ($24,830) ($14,490) ($25,584) ($837) ($28,788) ($20,443) Maintenance CapEx (from above) ($4,067) ($4,169) ($4,273) ($4,380) ($4,489) ($4,601) ($4,716) ($4,834) ($4,955) ($5,079) IRR Analysis Implied Cap Rate/Cash Flows ($2,691,657) $102,739 $105,372 $99,416 $123,188 $116,208 $132,397 $125,942 $155,175 $132,471 $165,773 Terminal Value $3,385,141 Total CF ($2,691,657) $102,739 $105,372 $99,416 $123,188 $116,208 $132,397 $125,942 $155,175 $132,471 $3,550,915 Terminal Value Per SF / Unit $624 Growth over Hold Period 2.3% IRR 6.47% Cap Rate to achieve IRR 4.45% Real Estate Research 142

143 Hudson Pacific DCF Model Exhibit 161: DCF Model with Primary Assumptions Hudson Pacific DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $135,952 $151,870 $185,828 $206,805 $227,158 $235,108 FFO $86,952 $101,063 $123,689 $137,215 $151,514 $156,817 Capital Expenditures ($40,661) ($41,637) ($49,949) ($47,128) ($51,349) ($31,319) Straight-Line Rent ($25,120) ($25,553) ($27,798) ($27,460) ($27,917) ($27,917) Other Adj. ($11,506) $0 $0 $0 $0 $0 AFFO $9,666 $33,874 $45,942 $62,627 $72,248 $97,582 Ratios / Analysis CAGR EBITDA/sh growth 10% 19% 9% 8% 3% 11% FFO/sh growth 14% 19% 8% 8% 3% 13% AFFO/sh growth 245% 32% 33% 13% 35% 62% CapEx as % of FFO 47% 41% 40% 34% 34% 20% Inputs HPP Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.00 Cost of Equity (CAPM) 7.50% Perpetual Growth Rate 3.50% Items to Add to / Deduct from Firm Value Land Held for future development $119,817 Outputs NPV of Cash Flows $172,505 NPV of Terminal Value $1,510,479 Total $119,817 Firm Value $1,682,985 Plus non-cash flow producing assets $119,817 Shareholders Value $1,802,802 Share outstanding 75,503 DCF value per share $23.88 Real Estate Research 143

144 Hudson Pacific Properties HPP Price (07 Nov 14): US$27.78, Rating: OUTPERFORM, Target Price: US$31.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax (2.6) Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) (14.8) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (17.7) (117.6) (245.5) Cash flow from investment (17.7) 71.3 (245.5) Dividends paid (8.7) (34.7) (35.3) Equity raised 50.0 Net borrowings (21.8) Other financing cash flows Financial cashflow (30.4) (8.0) Net cashflow (39.0) 71.2 (71.2) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio (35,714. 3) 10, , ,238.1 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 1, , , ,831.5 Other investments Other non-current assets 1, , , ,039.6 Total non-current assets 1, , , ,039.6 Total assets 2, , , ,143.1 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt ,025.9 Other non-current liabilities Total non-current liabilities 1, , ,123.4 Total liabilities 1, , ,144.8 Unit funds Reserves , Shareholders' equity 1, , , Total capital employed 2, , , ,121.7 Real Estate Research 144

145 Kilroy Realty (KRC): Underperform Rating; $68 Price Target; 3% Total Return Company Overview Kilroy Realty is a mid-cap owner and developer of class A office buildings on the West Coast primarily in San Diego, Los Angeles, San Francisco, and Seattle. The company was an early investor in San Francisco and Seattle this cycle, diversifying its portfolio into those markets at very low cost basis relative to current construction/acquisition pricing. Today, the company owns nearly 13msf of high-quality office space on the West coast, with another 2.5msf ($1.4bn investment) currently under development. KRC's expansion into Northern California and Seattle has paid off for investors, with the company ranked as the top performing office REIT the last five years. Exhibit 162: Kilroy Realty Trust Source: SNL Financial. Investment Thesis: Underperform We are initiating coverage of Kilroy Realty with an Underperform rating and a $68 target price, implying a 3% total return over the next 12 months. Our target price is based upon a 75% weighting of our $65/sh forward NAV (plus a 10% premium to reflect management, asset, and balance sheet quality) and a 25% weighting of our $61/sh DCF estimate. Our Underperform rating on Kilroy is driven primarily by valuation with the stock trading at a 5% premium to NAV, or at an implied cap rate of 4.8%. The company, led by one of the most respected management teams in the office sector, has been the best West Coast office developer and owns a high quality office portfolio that should produce well above average SS NOI growth. However, given where the company's shares trade today, we believe much of the NAV and earnings upside has already been baked into the share price (over 30x 2015 and 2016 estimated AFFO. Real Estate Research 145

146 Investment Positives Expanding its senior ranks over the last four years, KRC's management team is among the most respected in the industry. Its expansion into Northern California, while ramping up its development pipeline has been a key strategic initiative, supporting its premium valuation. KRC has long been the best west coast office developer, a reputation enhanced over the past five years. CEO John Kilroy has set out a high hurdle for development over the next three years for his team. KRC wants to have $1bn+ of office development underway at any given time through the next few years. Given its track record over the past four-plus years, we are inclined to give the company the benefit of the doubt that it will break ground when appropriate and finance these projects appropriately. Can rent growth in San Francisco surprise again? We underwrite 7.5% rent growth in SF (26% for KRC's portfolio) in 2015 and 7.5% in 2016 but the big wildcard in the Prop M FAR restrictions, which could limit future construction in SF pushing rents up at a faster pace than we currently expect. KRC should post SS NOI growth averaging 3.5% over the next five years, above the REITs of ~3%. The balance sheet is in very good shape, as usual. CFO Tyler Rose does not play games with the balance sheet or with leverage. KRC has been a bigger seller of assets than the Street generally realizes, but in our view, with the non-core assets gone, and the stock trading at an 4.8% implied cap and 31x 2016 AFFO, we believe KRC should issue common stock to fund the next round of developments. Investment Risks The stock is not cheap on a NAV or cash flow basis (over 30x 2015 AFFO and 25x 2017 AFFO. Yes, AFFFO growth should lead the sector at 22% in 2015 and 16% in 2016, but we believe much of the company's valuation is reflected in the current share price. At current valuations, we do worry that continued bullishness requires either continued IRR/yield compression or rents to surpass prior peak, both assumptions that do not make us feel great this late in a cycle. The company wants to keep a development pipeline of $1bn+ for the next several years. While the cycle/tenant demand in the West Coast appears strong, that is a considerable amount of development. Though to be fair, KRC's pipeline over the past four years has been well pre-leased mitigating development risk. Real Estate Research 146

147 Development Pipeline Exhibit 163: Valuing KRC's Development Pipeline Adds $~430mn to our NAV Kilroy Realty Development Pipeline Current CS Estimates Costs Total Cost Future Est. Stab. Yrs to NAV PV of Stab. Value Current Pipeline SF PSF Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Per SF Preleased Developments 690 Middlefield Road 341,000 $567 $193,400 $171,600 $21, % 5.5% 1.3 $35,164 $31,257 $ Mission 450,000 $615 $276,600 $161,800 $114, % 5.0% 2.3 $138,300 $112,898 $ Brannan 185,000 $542 $100,200 $46,000 $54, % 5.0% 1.8 $100,200 $85,277 $1,085 Crossing ,000 $543 $184,200 $98,000 $86, % 6.0% 3.3 $61,400 $46,340 $725 Subtotal 1,315,000 $754,400 $477,400 $277,000 Spec Developments Columbia Square, Ph 1 93,000 $591 $55,000 $22,146 $32, % 5.5% 1.3 $20,000 $17,778 $805 Columbia Square, Ph 2 592,000 $595 $352,300 $141,854 $210, % 6.0% 3.5 $88,075 $65,241 $745 Subtotal 685,000 $407,300 $164,000 $243,300 Totals / Avg 2,000,000 $1,161,700 $641, % 5.4% $443,139 $358,789 How We Value KRC's Operating Portfolio Exhibit 164: KRC's Operating Assets and How We Think About Appropriate Cap Rates and Values per sf Thinking through a market by market valuation of KRC's Portfolio Estimated Current Est. Office CS Estimated % of KRC's Owned Implied % of Pro-Rata NOI Market Cap Rate Occupied % Value Pro-Rata Value Sf Value/sf Estimated FY 1YR Cash NOI $341,516 Los Angeles and Ventura 20.9% 5.1% 92.7% $1,405, % 3,502,779 $ Corridor 1.8% 6.0% 98.1% $102, % 306,324 $330 El Segundo 7.9% 5.5% 99.6% $490, % 1,090,525 $450 Hollywood 1.7% 6.0% 90.2% $96, % 321,883 $300 Long Beach 4.4% 6.0% 91.1% $250, % 946,857 $260 West LA 5.1% 3.0% 84.5% $580, % 837,190 $690 Orange County 2.0% 6.0% 97.8% $113,839 2% 271,556 $420 San Diego County 31.7% 5.4% 90.7% $2,014, % 4,244,066 $470 Del Mar 15.0% 5.0% 95.7% $1,024, % 1,743,213 $590 I-15 Corridor 4.7% 5.8% 95.0% $279, % 540,852 $520 Mission Valley 1.6% 5.8% 87.4% $95, % 290,585 $330 Point Loma 2.5% 5.5% 45.5% $155, % 103,900 $1,490 Sorrento Mesa 6.9% 5.8% 90.5% $409, % 1,303,583 $310 UTC 1.0% 5.8% 71.9% $59, % 261,933 $230 San Francisco Bay Area 25.6% 4.2% 98.5% $2,059, % 2,692,255 $760 Menlo Park 3.7% 5.0% 100.0% $252, % 378,358 $670 Mountain View 1.2% 4.5% 100.0% $91, % 87,565 $1,040 San Francisco 19.7% 4.0% 98.1% $1,681, % 2,150,522 $780 Sunnyvale 1.0% 6.0% 100.0% $56, % 75,810 $750 Greater Seattle 19.8% 5.6% 95.2% $1,212, % 2,188,242 $550 Bellevue 8.3% 5.5% 90.9% $515, % 905,225 $570 Kirkland 2.0% 6.0% 92.2% $113, % 279,924 $410 Lake Union 8.5% 5.5% 100.0% $527, % 880,990 $600 Redmond 1.0% 6.0% 100.0% $56, % 122,103 $470 Portfolio Totals / Wtd. Average 100.0% 5.10% 93.8% $6,804, % 12,898,898 $530 CS Applied Cap Rate 5.10% KRC Implied Cap Rate 4.83% Real Estate Research 147

148 Kilroy Realty Valuation Overview Exhibit 165: Credit Suisse Valuation Methodology Exhibit 166: NAV Snapshot Kilroy Realty NAV Calculation Assumptions IRR Target 6.26% Assumed avg NOI growth next three years 3.68% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $396,924 Straight-line rent adjustment/ FAS 141 ($55,410) Cash NOI from owned properties $341,514 Key inputs/items in our KRC NAV Model: Year 1 Cash NOI of $342mn 6.25% unlevered IRR Blended cash cap rate of 5.1% Assumed cash NOI cap rate 5.10% Market value of owned properties $6,696,347 Add Cash, CIP, + Other Assets Cash and cash equivalents $250,246 Other assets $40,000 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $448,800 Development Projects (CIP plus Est. Value Creation) $1,000,189 Equals -Gross market value of assets $8,435,582 Development pipeline o CIP = $1.bn valuation, or $360mn above cost spent to date Less Liabilities Total liabilities (incl. JVs) $2,674,183 Mark-to-Market Debt Adj. $0 Preferred Stock $200,000 o Land Bank = $448mn at book Net market value of assets $5,561,399 Total Shares / Units 87,538 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $64.48 Real Estate Research 148

149 Kilroy IRR Analysis Exhibit 167: IRR Underwriting Key Assumptions Targeted IRR (output) 6.26% Required Initial Cap Rate (input) 5.10% Assumed Rise in Terminal Cap 0.75% KRC IRR Analysis Terminal Value Total SF in portfolio (000's) 13,486 13,486 13,486 13,486 13,486 13,486 13,486 13,486 13,486 13,486 SF Rolling in period (000's) 1, ,813 1,305 1,368 1, ,114 Avg Expiring Gross Rent $31 $28 $33 $39 $37 $35 $47 $31 $41 $37 Avg net rent per SF $24 $22 $26 $30 $29 $27 $37 $24 $31 $29 Step 1: Mark Expiring Leases up or down Los Angeles and Ventura 21% 5.0% 5.0% 5.0% 5.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Orange County 2% 2.5% 3.0% 3.0% 3.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% San Diego County 32% 3.0% 3.0% 3.0% 3.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% San Francisco Bay Area 26% 7.5% 7.5% 5.0% 5.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Greater Seattle 20% 7.5% 7.5% 5.0% 5.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Assumed Market Rent growth 5.5% 5.5% 4.3% 4.3% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Mark to Market, Beg. Of Period 6% 9% 11% 12% 13% 10% 6% 7% 7% 8% Mark to Market, End of Period 12% 15% 16% 17% 13% 10% 10% 10% 11% 11% Avg. Mark to Market (vs. Exp. Net + Recov.) 9% 12% 14% 15% 13% 10% 8% 8% 9% 9% Incremental NOI in Period $1,451 $2,644 $4,423 $6,137 $5,558 $4,718 $3,033 $1,440 $1,222 $2,252 Total Rent Growth 5% 11% 16% 21% 21% 21% 25% 28% 32% 36% CAGR Rent Growth (through period) 5% 5% 5% 5% 4% 3% 3% 3% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 12,110 12,539 11,673 12,181 12,118 11,924 12,828 13,019 12,955 12,372 Contractual Rent Bumps 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Incremental NOI (000's) $3,399 $7,004 $7,096 $7,268 $7,677 $7,844 $8,277 $8,846 $9,119 $9,118 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 94.1% 94.6% 95.0% 95.0% 95.0% 94.5% 94.0% 94.0% 94.0% 94.0% Occupancy Pick-up 0.5% 0.4% 0.0% 0.0% -0.5% -0.5% 0.0% 0.0% 0.0% 0.0% E.O.P. Occupancy 94.6% 95.0% 95.0% 95.0% 94.5% 94.0% 94.0% 94.0% 94.0% 94.0% Avg. Occupancy 94.4% 94.8% 95.0% 95.0% 94.8% 94.3% 94.0% 94.0% 94.0% 94.0% Total Incremental NOI from Occ. (000's) $1,196 $2,153 $957 $0 -$1,196 -$2,393 -$1,196 $0 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $50 $51 $53 $54 $55 $57 $58 $59 $61 $62 Leasing TI/LC per sf (renewal) $25 $26 $26 $27 $28 $28 $29 $30 $30 $31 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% TI's/LC's (000's) ($51,540) ($36,724) ($66,679) ($49,187) ($49,134) ($58,051) ($26,718) ($19,442) ($22,655) ($48,705) Recurring CapEx ($0.75/sf/yr. In $000's) ($10,115) ($10,367) ($10,627) ($10,892) ($11,165) ($11,444) ($11,730) ($12,023) ($12,324) ($12,632) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 3.8% 3.6% 3.7% 3.8% 3.3% 2.7% 2.6% 2.6% 2.5% 2.7% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $321,801 $327,848 $339,649 $352,125 $365,530 $377,569 $387,738 $397,852 $408,138 $418,480 Add: Mark to market (000's) $1,451 $2,644 $4,423 $6,137 $5,558 $4,718 $3,033 $1,440 $1,222 $2,252 Add: Rent Bumps (000's) $3,399 $7,004 $7,096 $7,268 $7,677 $7,844 $8,277 $8,846 $9,119 $9,118 Add: Occupancy Pick up (000's) $1,196 $2,153 $957 $0 ($1,196) ($2,393) ($1,196) $0 $0 $0 EOP Cash NOI (000's) $327,848 $339,649 $352,125 $365,530 $377,569 $387,738 $397,852 $408,138 $418,480 $429,850 Leasing CapEx (from above) ($51,540) ($36,724) ($66,679) ($49,187) ($49,134) ($58,051) ($26,718) ($19,442) ($22,655) ($48,705) Maintenance CapEx (from above) ($10,115) ($10,367) ($10,627) ($10,892) ($11,165) ($11,444) ($11,730) ($12,023) ($12,324) ($12,632) IRR Analysis Implied Cap Rate/Cash Flows ($6,428,390) $266,194 $292,558 $274,820 $305,450 $317,270 $318,244 $359,404 $376,674 $383,502 $405,570 Terminal Value $7,494,822 Total CF ($6,428,390) $266,194 $292,558 $274,820 $305,450 $317,270 $318,244 $359,404 $376,674 $383,502 $7,900,392 Terminal Value Per SF / Unit $556 Growth over Hold Period 1.5% IRR 6.26% Cap Rate to achieve IRR 5.10% Real Estate Research 149

150 Kilroy DCF Model Exhibit 168: DCF Model with Primary Assumptions Real Estate Research 150

151 Kilroy Realty Corp. KRC Price (07 Nov 14): US$67.79, Rating: UNDERPERFORM, Target Price: US$68.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (68.3) (575.5) (766.9) Cash flow from investment (68.3) (225.5) (666.9) Dividends paid (30.8) (138.3) (157.0) Equity raised Net borrowings (135.0) Other financing cash flows Financial cashflow (140.8) Net cashflow (176.6) (123.2) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 38, , , ,239.3 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets 1, , , ,278.8 Total fixed assets Investment properties 2, , , ,374.7 Other investments Other non-current assets 3, , , ,601.0 Total non-current assets 3, , , ,601.1 Total assets 5, , , ,879.8 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 2, , , ,743.9 Other non-current liabilities Total non-current liabilities 2, , , ,182.0 Total liabilities 2, , , ,182.0 Unit funds Reserves 2, , , ,441.1 Shareholders' equity 2, , , ,697.7 Total capital employed 5, , , ,879.8 Real Estate Research 151

152 SL Green (SLG): Underperform Rating; $115 Price Target; 3% Total Return Company Overview SL Green is a mid-cap office company with a primary focus on NYC office and retail assets with a suburban office portfolio (Westchester and Connecticut) and small residential portfolio. In addition to its dominant position in NYC (it is the city's largest office landlord), SLG creates additional value for investors through capital allocation/asset recycling and its structured finance book. While SLG has limited ground up development experience, the company is working on plans to build One Vanderbilt. Exhibit 169: SL Green Realty Source: SNL Financial. Investment Thesis: Underperform We are initiating coverage of SL Green with an Underperform rating and a $115 target price, implying a 3% total return over the next 12 months. Our target price is based upon a 75% weighting of $115 forward NAV estimate (plus a 5% premium, see NAV discussion and model below) and a 25% weighting of our $89.50 DCF estimate. Our Underperform rating on SL Green is driven primarily by valuation with the stock trading at a 3% discount to NAV, or at an implied cap rate of 4.8%. The company has the highest percentage exposure to NYC office market in the REIT sector, a market that will continue to see low cap rates/high valuations due to continued capital inflows from abroad. Although NYC office fundamentals are fairly strong and improving, which will drive above average SS NOI growth of 2.9% and 3.2% in 2015 and 2016, respectively, much of the NAV and earnings upside has been priced into the shares already. Moreover, given that SLG's structured finance book is a significant driver of earnings (15-20% of total earnings), any decrease in the current historically wide spread between lending yields and borrowing costs could dent overall earnings growth going forward. Real Estate Research 152

153 Investment Positives Highest percentage exposure to the NYC Office market, which continues to see improving capital flows and higher proving for core assets. Strong senior management teams active across property types and capital types have historically wrung more value-add opportunistic investments than their NYC peers. One Vanderbilt is the best development site in New York City. Look for more news on SLG's development plans and how those may evolve with the broader East Side up zoning efforts. Asset sales: SLG has historically been an active seller of stabilized assets, and their comments on the 2Q call suggested that they had a fairly active pipeline that could be sold in 2H'14. Given where asset pricing is currently, we believe the Street would applaud more rather than fewer sales. Rent Growth in NY: We underwrite 5% growth in 2015 and 7.5% in 2016, with an average over the next six years of 4.2%. Past cycles have produced more robust rent growth during upturns but we doubt whether the city can see such a rent spike with construction downtown and on the west side coupled with little growth from banks. NYC leasing market is very active, but not much positive absorption market wide. Growing development/redevelopment pipeline should allow SLG to achieve better risk adjusted returns over time in a competitive acquisition environment. Investment Risks Valuation is not compelling at these levels, and we believe SLG's current stock price fully reflects the improving market trends in New York City (we underwrite 25% rent growth over the next four years). While NYC has experienced its share of growth from technology firms, net absorption has been relative weak as corporations right-sized their space through increased space efficiencies (average square foot per employee is down to 150 from 250). Earnings reliance on structured finance is considerable, and while we like the business, a closing of the spread between borrowing costs and lending yields (or overall liquidity) would introduce company-specific earnings risk. NAV is not straightforward, nor is the underwriting of returns on the development pipeline. Company should improve development disclosure to help bridge the gap on transitional assets. Real Estate Research 153

154 Arriving at Our Cash NOI for the NAV Exhibit 170: How We Arrive at Our Cash NOI to Cap in our NAV Valuing the Structured Finance Book Exhibit 171: How We Arrive at Our Cash NOI to Cap in our NAV Assumptions Cost of Equity 8.5% Cost of Debt 4.0% Leverage 40% WACC 6.7% How we value SLG's Structured Finance Business Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Book Value $1,432,951 $1,400,000 $1,300,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000 $1,200,000 Investment Yield 10.5% 10.0% 9.0% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% WACC 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% 6.7% Yield over WACC 3.8% 3.3% 2.3% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Net Profit on Book $54,968 $46,284 $29,978 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 $24,000 T erminal Value (8x profits) $192,000 PV $54,968 $43,380 $26,334 $19,760 $18,520 $17,358 $16,269 $15,249 $14,292 $120,557 PV of Excess Cash Flows $346,689 "Market Value" of Structured Finance Business $1,779,640 Premium (discount) 24% Real Estate Research 154

155 SL Green Valuation Overview Exhibit 172: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $ Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $ Approach 2: DCF DCF per share $89.49 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $89.49 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $ Forecasted Total Return 2.8% Exhibit 173: NAV Snapshot SL Green NAV Calculation SLG 3Q14 Assumptions IRR Target 6.22% Assumed avg NOI growth next three years 3.21% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $748,095 Straight-line rent adjustment/ FAS 141 ($94,267) Cash NOI from owned properties $653,827 Key inputs/items in our SLG NAV Model: Year 1 Cash NOI of $605mn 6.25% unlevered IRR Blended cash cap rate of 4.7% Assumed cash NOI cap rate 4.70% Market value of owned properties $13,911,221 Joint Venture Assets (unconsolidated) Cash NOI from JV properties $0 Assumed cash NOI cap rate 4.70% Market value of owned properties $0 Add Cash, CIP, + Other Assets Cash and cash equivalents $412,823 Other assets $1,690,594 Assets valued outside of NOI calc $3,308,856 Structured Finance (MV) $1,779,640 Development Projects (at cost) $959,569 Development pipeline $1.0bn valuation Structured Finance $1.8bn valuation Equals -Gross market value of assets $22,062,703 Less Liabilities Total liabilities (incl. JVs) $10,306,640 Mark-to-Market Debt Adj. $0 Preferred Stock $230,000 Net market value of assets $11,526,063 Total Shares / Units 99,322 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $ Real Estate Research 155

156 SL Green IRR Analysis Exhibit 174: NYC IRR Underwriting Key Assumptions Targeted IRR (output) 6.22% Required Initial Cap Rate (input) 4.70% Assumed Rise in Terminal Cap 0.75% SLG IRR Analysis - NYC Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Terminal Value Total SF in portfolio (000's) 19,595 19,595 19,595 19,595 19,595 19,595 19,595 19,595 19,595 19,595 SF Rolling in period (000's) 836 1,142 1,743 1,133 1,187 2,630 1, ,412 1,000 Avg Expiring Gross Rent $57 $63 $57 $74 $63 $59 $57 $60 $53 $56 Avg net rent per SF $41 $45 $41 $53 $45 $42 $41 $43 $33 $34 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth - Wtd Average 5.0% 7.5% 7.5% 5.0% 0.0% 0.0% 3.5% 3.5% 3.5% 3.5% Mark to Market, Beg. Of Period 5% 8% 14% 19% 21% 18% 14% 15% 16% 17% Mark to Market, End of Period 10% 16% 22% 25% 21% 18% 18% 19% 20% 21% Avg. Mark to Market (vs. Exp. Net + Recov.) 8% 12% 18% 22% 21% 18% 16% 17% 18% 19% FY Incremental NOI (000's) $2,616 $6,247 $12,720 $13,040 $11,540 $20,396 $12,630 $7,005 $8,288 $6,519 Incremental NOI in Period 1 $1,308 $3,124 $6,360 $6,520 $5,770 $10,198 $6,315 $3,502 $4,144 $3,260 Incremental NOI in Period 2 $1,308 $3,124 $6,360 $6,520 $5,770 $10,198 $6,315 $3,502 $4,144 Incremental NOI in Period $1,308 $4,432 $9,484 $12,880 $12,290 $15,968 $16,513 $9,817 $7,646 $7,403 Total Rent Growth 5% 13% 21% 27% 27% 27% 32% 36% 41% 46% CAGR Rent Growth (through period) 5% 6% 7% 6% 5% 4% 4% 4% 4% 4% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 18,759 18,453 17,852 18,462 18,408 16,965 17,680 18,624 18,183 18,595 Contractual Rent Bumps 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Incremental NOI (000's) $5,411 $10,834 $10,858 $11,256 $11,840 $11,765 $11,918 $12,848 $13,370 $13,727 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 94.2% 94.6% 95.0% 95.0% 95.0% 95.0% 94.5% 94.0% 94.0% 94.0% Occupancy Pick-up 0.4% 0.4% 0.0% 0.0% 0.0% -0.5% -0.5% 0.0% 0.0% 0.0% E.O.P. Occupancy 94.6% 95.0% 95.0% 95.0% 95.0% 94.5% 94.0% 94.0% 94.0% 94.0% Avg. Occupancy 94.4% 94.8% 95.0% 95.0% 95.0% 94.8% 94.3% 94.0% 94.0% 94.0% Total Incremental NOI from Occ. (000's) $2,000 $4,000 $2,000 $0 $0 -$2,500 -$5,000 -$2,500 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $60 $62 $63 $65 $66 $68 $70 $71 $73 $75 Leasing TI/LC per sf (renewal) $25 $26 $26 $27 $28 $28 $29 $30 $30 $31 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% TI's/LC's (000's) ($35,844) ($48,423) ($68,214) ($45,449) ($48,806) ($104,190) ($75,908) ($42,994) ($64,084) ($46,520) Recurring CapEx ($0.75/sf/yr. In $000's) ($14,696) ($15,064) ($15,440) ($15,826) ($16,222) ($16,627) ($17,043) ($17,469) ($17,906) ($18,354) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 2.9% 3.2% 3.6% 3.7% 3.6% 3.6% 3.2% 2.7% 2.7% 2.7% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $600,000 $608,719 $627,984 $650,326 $674,462 $698,592 $723,825 $747,256 $767,421 $788,437 Add: Mark to market (000's) $1,308 $4,432 $9,484 $12,880 $12,290 $15,968 $16,513 $9,817 $7,646 $7,403 Add: Rent Bumps (000's) $5,411 $10,834 $10,858 $11,256 $11,840 $11,765 $11,918 $12,848 $13,370 $13,727 Add: Occupancy Pick up (000's) $2,000 $4,000 $2,000 $0 $0 ($2,500) ($5,000) ($2,500) $0 $0 EOP Cash NOI (000's) $608,719 $627,984 $650,326 $674,462 $698,592 $723,825 $747,256 $767,421 $788,437 $809,568 Leasing CapEx (from above) ($35,844) ($48,423) ($68,214) ($45,449) ($48,806) ($104,190) ($75,908) ($42,994) ($64,084) ($46,520) Maintenance CapEx (from above) ($14,696) ($15,064) ($15,440) ($15,826) ($16,222) ($16,627) ($17,043) ($17,469) ($17,906) ($18,354) IRR Analysis Implied Cap Rate/Cash Flows ($12,951,466) $558,179 $564,497 $566,672 $613,186 $633,564 $603,007 $654,305 $706,957 $706,447 $876,989 Terminal Value $15,225,815 Total CF ($12,951,466) $558,179 $564,497 $566,672 $613,186 $633,564 $603,007 $654,305 $706,957 $706,447 $16,102,805 Terminal Value Per SF / Unit $777 Growth over Hold Period 1.6% IRR 6.22% Cap Rate to achieve IRR 4.70% Real Estate Research 156

157 SL Green DCF Model Exhibit 175: DCF Model with Primary Assumptions SL Green DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $945,308 $978,864 $1,021,217 $1,063,343 $1,101,656 $1,140,214 FFO $623,415 $650,750 $677,429 $712,039 $744,944 $771,017 Capital Expenditures ($181,259) ($152,169) ($160,966) ($168,292) ($175,528) ($181,672) Straight-Line Rent ($94,267) ($94,084) ($95,129) ($95,134) ($94,794) ($94,794) Other Adj. $12,000 $12,000 $12,000 $12,000 $12,000 $12,000 AFFO $359,889 $416,496 $433,334 $460,614 $486,622 $506,551 Ratios / Analysis CAGR EBITDA/sh growth 3% 4% 4% 4% 3% 4% FFO/sh growth 4% 4% 5% 5% 3% 4% AFFO/sh growth 15% 4% 6% 6% 4% 8% CapEx as % of FFO 29% 23% 24% 24% 24% 24% Inputs SLG Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.22 Cost of Equity (CAPM) 8.49% Perpetual Growth Rate 3.50% Items to Add to / Deduct from Firm Value Land/Buildings Held for future development $959,569 Mark up of street retail $142,577 Outputs NPV of Cash Flows $1,681,204 NPV of Terminal Value $6,139,068 Total $1,102,146 Firm Value $7,820,273 Plus non-cash flow producing assets $1,102,146 Shareholders Value $8,922,419 Share outstanding 99,706 DCF value per share $89.49 Real Estate Research 157

158 SL Green Realty Corp. SLG Price (07 Nov 14): US$114.06, Rating: UNDERPERFORM, Target Price: US$115.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 1, , , ,658.2 Property operating expenses Real estate taxes Net operating income (US$ m) , , ,069.3 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (127.9) (735.8) (750.0) Cash flow from investment (27.9) (335.8) (350.0) Dividends paid (49.9) (223.3) (250.1) Equity raised Net borrowings (394.4) Other financing cash flows Financial cashflow (444.3) (223.3) (250.1) Net cashflow (389.6) (231.6) (216.2) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU (1.7) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,164.6 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets 2, , , ,847.1 Total fixed assets Investment properties 10, , , ,927.4 Other investments 1,305 1,433 1,433 1,433 Other non-current assets 10, , , ,128.7 Total non-current assets 11, , , ,561.7 Total assets 14, , , ,408.8 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 6, , , ,795.0 Other non-current liabilities Total non-current liabilities 7, , , ,024.9 Total liabilities 7, , , ,024.9 Unit funds Reserves 6, , , ,643.1 Shareholders' equity 7, , , ,383.9 Total capital employed 14, , , ,408.8 Real Estate Research 158

159 Vornado Realty (VNO): Neutral Rating; $114 Price Target; 7% Total Return Company Overview Vornado Realty is a large-cap diversified REIT which focuses primarily on New York Office and Street Retail and DC Office. The company will spin off its retail assets by YE14 ending two years+ of simplification into core office/street retail portfolio. VNO also owns several large development sites including the luxury condo project at 220 Central Park South. Exhibit 176: Vornado Realty (Map Includes VNO's Shopping Center Portfolio) Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Vornado with a Neutral rating and a $114 target price, implying a 7% total return over the next 12 months. Our target price is based upon a 75% weighting of $ forward NAV estimate (plus a 5% premium, see NAV discussion and model below) and a 25% weighting of our $88 DCF estimate. Our Neutral rating on Vornado is driven primarily by valuation with the stock trading at a 7% discount to NAV, or at an implied cap rate of 5.3% for the office portfolio. The company has a high quality office and street retail portfolio that has been cleaned up with the spinoff of the strip retail and deconsolidation of Toys R Us. Although the company boasts a strong development/redevelopment portfolio, such as 220 Central Park South, we expect earnings growth going forward to be fairly average given the high NYC office occupancy rates and negative re-leasing spreads and depressed market fundamentals in metro DC (Crystal City). However, a significant catalyst for the company is its ability to mark up rents in its NYC street retail portfolio, which could push its NAV and earnings significantly higher. Investment Positives High-quality asset base and refocused management bode well for core operations going forward. We expect the DC portfolio to lease up over time and New York City to remain a bright spot. Real Estate Research 159

160 Retail spin and Toys R U.S. deconsolidation will finish the portfolio clean up begun a few years ago leaving a more focused company. For the NYC office portfolio we underwrite 5% growth in 2015 and 7% in 2016, with an average over the next seven years of 25%. One big issue for VNO is the west side transformation and how its Penn Plaza assets fit into the office dynamic. Expect to hear more about large redevelopment plans for VNOs assets and the submarket to take advantage of the population and infrastructure improvements just west of VNO's portfolio. 220 Central Park South sales should begin in 1Q'15, we underwrite average sales prices of $8,000psf, which generates a value for the project after costs of $1.1bn ($5/share) on a present value basis. Development portfolio stronger today than in recent memory should help company monetize land parcels and upgrade rent/tenancy in the Penn Plaza. Premier NYC street retail portfolio in the REIT space. Investment Risks Cash flow multiples/dcf challenged by continued acquisitions of street retail and uncertain lease up timeline for DC. Stock has not looked attractive on cash flow in our opinion, but asset value appreciation (especially street retail) has en supportive of the equity value. Will 2015 be the year when the DC portfolio gains traction? Sitting at 80.5% occupancy after a slate of BRAC related move outs and broader DC leasing malaise in , we underwrite occupancy improvement in VNO's portfolio of 600bp from before stabilizing the portfolio at 92% in Street has already baked in strong numbers for 220 Central Park South the question remains whether international demand (Russia, China, South America, etc.) will continue in the face of growing geopolitical risk. Real Estate Research 160

161 Vornado Realty Valuation Overview Exhibit 177: Credit Suisse Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $ Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $ Approach 2: DCF DCF per share $87.94 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $87.94 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $ Forecasted Total Return 7.4% Exhibit 178: NAV Snapshot Key inputs/items in our VNO NAV Model: Year 1 Cash NOI of $1.2bn NYC % unlevered IRR DC 7.25% unlevered IRR Blended cash cap rate of 4.9% Retail portfolio pending spin: $3.2bn valuation Development pipeline, $1.9bn valuation Real Estate Research 161

162 Vornado IRR Analysis NYC Office Portfolio Exhibit 179: IRR Underwriting Key Assumptions Targeted IRR (output) 6.26% Required Initial Cap Rate (input) 5.10% Assumed Rise in Terminal Cap 0.75% VNO IRR Analysis - NYC Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Terminal Value Total SF in portfolio (000's) 16,660 16,660 16,660 16,660 16,660 16,660 16,660 16,660 16,660 16,660 SF Rolling in period (000's) 1,038 1, ,386 1,130 1,288 1,583 1,187 Avg Expiring Gross Rent $62 $61 $63 $73 $62 $59 $65 $65 $69 $64 Avg net rent per SF $49 $48 $50 $58 $49 $47 $51 $51 $55 $51 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth 5.0% 7.5% 7.5% 5.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Mark to Market, Beg. Of Period 5% 8% 13% 19% 22% 18% 15% 16% 16% 16% Mark to Market, End of Period 10% 16% 22% 25% 22% 18% 19% 19% 19% 19% Avg. Mark to Market (vs. Exp. Net + Recov.) 8% 12% 17% 22% 22% 18% 17% 17% 18% 18% Incremental NOI in Period $1,942 $5,919 $7,899 $10,222 $11,476 $11,148 $10,810 $10,532 $13,278 $12,879 Total Rent Growth 5% 13% 21% 27% 27% 27% 31% 35% 39% 43% CAGR Rent Growth (through period) 5% 6% 7% 6% 5% 4% 4% 4% 4% 4% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 15,622 15,276 15,760 15,663 15,684 15,274 15,530 15,372 15,077 15,473 Contractual Rent Bumps 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% Incremental NOI (000's) $5,926 $11,791 $12,077 $12,568 $12,870 $12,995 $13,147 $13,361 $13,439 $13,898 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 96.6% 96.6% 96.6% 96.6% 96.1% 95.6% 94.6% 94.0% 94.0% 94.0% Occupancy Pick-up 0.0% 0.0% 0.0% -0.5% -0.5% -1.0% -0.6% 0.0% 0.0% 0.0% E.O.P. Occupancy 96.6% 96.6% 96.6% 96.1% 95.6% 94.6% 94.0% 94.0% 94.0% 94.0% Avg. Occupancy 96.6% 96.6% 96.6% 96.4% 95.9% 95.1% 94.3% 94.0% 94.0% 94.0% Total Incremental NOI from Occ. (000's) $0 $0 $0 -$2,516 -$5,033 -$7,549 -$8,052 -$3,020 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $75 $77 $79 $81 $83 $85 $87 $89 $91 $94 Leasing TI/LC per sf (renewal) $25 $26 $26 $27 $28 $28 $29 $30 $30 $31 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% 65.0% Leases signed (new, rolling) (000's) Leases signed (new, renewal) (000's) , Leases signed (new, lease up) (000's) TI's/LC's (000's) ($44,115) ($60,291) ($40,186) ($45,631) ($45,786) ($66,646) ($55,694) ($65,069) ($81,971) ($62,996) Recurring CapEx ($0.75/sf/yr. In $000's) ($12,495) ($12,807) ($13,128) ($13,456) ($13,792) ($14,137) ($14,490) ($14,853) ($15,224) ($15,605) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 2.4% 2.7% 2.9% 2.9% 2.7% 2.2% 2.1% 2.7% 3.4% 3.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $654,239 $662,107 $679,817 $699,793 $720,066 $739,379 $755,973 $771,878 $792,752 $819,468 Add: Mark to market (000's) $1,942 $5,919 $7,899 $10,222 $11,476 $11,148 $10,810 $10,532 $13,278 $12,879 Add: Rent Bumps (000's) $5,926 $11,791 $12,077 $12,568 $12,870 $12,995 $13,147 $13,361 $13,439 $13,898 Add: Occupancy Pick up (000's) $0 $0 $0 ($2,516) ($5,033) ($7,549) ($8,052) ($3,020) $0 $0 EOP Cash NOI (000's) $662,107 $679,817 $699,793 $720,066 $739,379 $755,973 $771,878 $792,752 $819,468 $846,245 Leasing CapEx (from above) ($44,115) ($60,291) ($40,186) ($45,631) ($45,786) ($66,646) ($55,694) ($65,069) ($81,971) ($62,996) Maintenance CapEx (from above) ($12,495) ($12,807) ($13,128) ($13,456) ($13,792) ($14,137) ($14,490) ($14,853) ($15,224) ($15,605) IRR Analysis Implied Cap Rate/Cash Flows ($12,982,486) $605,497 $606,719 $646,479 $660,980 $679,801 $675,190 $701,694 $712,831 $722,273 $893,979 Terminal Value $14,755,048 Total CF ($12,982,486) $605,497 $606,719 $646,479 $660,980 $679,801 $675,190 $701,694 $712,831 $722,273 $15,649,027 Terminal Value Per SF / Unit $886 Growth over Hold Period 1.3% IRR 6.26% Cap Rate to achieve IRR 5.10% Real Estate Research 162

163 Vornado IRR Analysis Washington DC Portfolio Exhibit 180: IRR Underwriting Key Assumptions Targeted IRR (output) 7.26% Required Initial Cap Rate (input) 6.10% Assumed Rise in Terminal Cap 0.75% VNO IRR Analysis - DC Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year Terminal Value Total SF in portfolio (000's) 13,669 13,669 13,669 13,669 13,669 13,669 13,669 13,669 13,669 13,669 SF Rolling in period (000's) 1,948 1, ,003 1, Avg Expiring Gross Rent $41 $43 $41 $44 $42 $50 $46 $44 $46 $44 Avg net rent per SF $32 $34 $32 $35 $33 $40 $36 $34 $36 $35 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% 4.0% 4.0% 4.0% 4.0% Mark to Market, Beg. Of Period -5% -6% -8% -7% -6% -4% -4% -2% 0% 2% Mark to Market, End of Period -5% -6% -5% -4% -3% -2% 0% 2% 4% 6% Avg. Mark to Market (vs. Exp. Net + Recov.) -5% -6% -6% -5% -4% -3% -2% 0% 2% 4% Incremental NOI in Period -$1,578 -$2,809 -$1,883 -$1,591 -$1,975 -$1,443 -$574 -$140 $92 $696 Total Rent Growth 0% 0% 3% 6% 9% 13% 17% 22% 27% 32% CAGR Rent Growth (through period) 0% 0% 1% 1% 2% 2% 2% 2% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 11,721 12,499 13,032 12,666 12,230 12,992 13,105 12,708 13,491 12,716 Contractual Rent Bumps 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% 2.25% Incremental NOI (000's) $2,406 $5,031 $5,513 $5,936 $6,261 $6,893 $7,505 $7,601 $7,861 $8,011 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 80.5% 81.5% 83.5% 86.5% 89.5% 92.0% 92.0% 92.0% 92.0% 92.0% Occupancy Pick-up 1.0% 2.0% 3.0% 3.0% 2.5% 0.0% 0.0% 0.0% 0.0% 0.0% E.O.P. Occupancy 81.5% 83.5% 86.5% 89.5% 92.0% 92.0% 92.0% 92.0% 92.0% 92.0% Avg. Occupancy 81.0% 82.5% 85.0% 88.0% 90.8% 92.0% 92.0% 92.0% 92.0% 92.0% Total Incremental NOI from Occ. (000's) $2,384 $7,151 $11,919 $14,303 $13,111 $5,959 $0 $0 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy Leasing TI/LC per sf (new) $60 $62 $63 $65 $66 $68 $70 $71 $73 $75 Leasing TI/LC per sf (renewal) $30 $31 $32 $32 $33 $34 $35 $36 $37 $37 Growth in TI/LC per annum 3% 3% 3% 3% 3% 3% 3% 3% 3% 3% Renewal % 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% 60.0% TI's/LC's (000's) ($90,017) ($67,181) ($53,958) ($71,861) ($89,344) ($32,170) ($27,471) ($47,978) ($9,109) ($49,987) Recurring CapEx ($0.75/sf/yr. In $000's) ($10,252) ($10,508) ($10,771) ($11,040) ($11,316) ($11,599) ($11,889) ($12,186) ($12,491) ($12,803) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 2.1% 3.0% 4.8% 5.5% 4.9% 3.1% 1.8% 1.9% 2.0% 2.1% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $309,888 $313,100 $322,474 $338,023 $356,670 $374,067 $385,477 $392,408 $399,869 $407,821 Add: Mark to market (000's) ($1,578) ($2,809) ($1,883) ($1,591) ($1,975) ($1,443) ($574) ($140) $92 $696 Add: Rent Bumps (000's) $2,406 $5,031 $5,513 $5,936 $6,261 $6,893 $7,505 $7,601 $7,861 $8,011 Add: Occupancy Pick up (000's) $2,384 $7,151 $11,919 $14,303 $13,111 $5,959 $0 $0 $0 $0 EOP Cash NOI (000's) $313,100 $322,474 $338,023 $356,670 $374,067 $385,477 $392,408 $399,869 $407,821 $416,529 Leasing CapEx (from above) ($90,017) ($67,181) ($53,958) ($71,861) ($89,344) ($32,170) ($27,471) ($47,978) ($9,109) ($49,987) Maintenance CapEx (from above) ($10,252) ($10,508) ($10,771) ($11,040) ($11,316) ($11,599) ($11,889) ($12,186) ($12,491) ($12,803) IRR Analysis Implied Cap Rate/Cash Flows ($5,132,788) $212,831 $244,785 $273,294 $273,769 $273,407 $341,708 $353,048 $339,705 $386,222 $372,819 Terminal Value $6,202,329 Total CF ($5,132,788) $212,831 $244,785 $273,294 $273,769 $273,407 $341,708 $353,048 $339,705 $386,222 $6,575,148 Terminal Value Per SF / Unit $454 Growth over Hold Period 1.9% IRR 7.26% Cap Rate to achieve IRR 6.10% Real Estate Research 163

164 Vornado DCF Model Exhibit 181: DCF Model with Primary Assumptions Vornado DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $1,631,201 $1,705,658 $1,769,964 $1,883,931 $1,949,695 $2,008,186 FFO $1,065,423 $1,107,198 $1,164,171 $1,216,356 $1,273,229 $1,311,426 Capital Expenditures ($245,560) ($258,170) ($268,718) ($288,557) ($299,126) ($262,285) Straight-Line Rent ($111,618) ($117,350) ($122,144) ($131,162) ($135,966) ($135,966) Other Adj. $24,000 $24,000 $16,000 $16,000 $16,000 $16,000 AFFO $732,244 $755,679 $789,309 $812,636 $854,137 $929,175 Ratios / Analysis CAGR EBITDA/sh growth 5% 4% 6% 3% 3% 5% FFO/sh growth 4% 5% 4% 5% 3% 5% AFFO/sh growth 3% 4% 3% 5% 9% 4% CapEx as % of FFO 23% 23% 23% 24% 23% 20% 23% Inputs VNO Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.11 Cost of Equity (CAPM) 7.98% Items to Add to / Deduct from Firm Value Perpetual Growth Rate 3.00% 280 Park - incremental lease up $273,748 Air Rights $321,088 Value for mark up of street retail $828,691 Outputs 220 CP South Profit (FV above CIP) $1,527,500 NPV of Cash Flows $3,132,646 Total $2,951,027 NPV of Terminal Value $11,546,520 Firm Value $14,679,167 Plus non-cash flow producing assets $2,951,027 Shareholders Value $17,630,194 Share outstanding 200,470 DCF value per share $87.94 Real Estate Research 164

165 Vornado Realty Trust VNO Price (07 Nov 14): US$109.03, Rating: NEUTRAL, Target Price: US$114.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 2, , , ,890.2 Property operating expenses 1, , , ,144.2 Real estate taxes Net operating income (US$ m) 1, , , ,721.3 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity (236) Net income before tax Surplus/deficit on inv property Income tax (expense) (6.4) 8.4 Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (1,042.7) (320.0) (641.1) Cash flow from investment (402.7) (441.1) Dividends paid (146.3) (620.5) (657.7) Equity raised Net borrowings (533.1) Other financing cash flows (200.0) Financial cashflow (679.5) (620.5) (857.7) Net cashflow (929.5) (642.8) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU (21.9) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,437.6 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents , Accounts receivable Total current assets 4, , , ,109.5 Total fixed assets Investment properties 14, , , ,665.7 Other investments Other non-current assets 16, , , ,700.6 Total non-current assets 16, , , ,700.6 Total assets 20, , , ,810.1 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 9, , , ,620.2 Other non-current liabilities Total non-current liabilities 11, , , ,094.5 Total liabilities 11, , , ,094.5 Unit funds Reserves 5, , , ,258.3 Shareholders' equity 8, , , ,715.6 Total capital employed 20, , , ,810.1 Real Estate Research 165

166 Hotels We are launching coverage of eight hotel REITs, including Pebblebrook Hotels (Outperform rating, $47 TP), LaSalle Hotels (Outperform rating, $43 TP), Sunstone Hotels (Outperform rating, $17 TP), ), RLJ Lodging (Outperform rating, $35 TP), Host Hotels (Neutral rating, $24 TP), Strategic Hotels (Neutral rating, $14 TP), DiamondRock Hospitality (Neutral rating, $14.50 TP), and Ashford Hospitality (Neutral rating, $12 TP). Our forecast total return for hotels is 17%, in-line with our broader REIT coverage universe. Lodging fundamentals continue to build momentum, with RevPAR growth expected to remain healthy in 2015 and 2016 supported by solid job growth. We are forecasting 7% RevPAR growth in 2015 and 6.5% in Growth will be largely rate driven, with most of the top 15 MSAs in the US well beyond peak occupancy. Accordingly, margin growth should top 100bp-150bp next year. Overall, we are forecasting [REIT] sector leading earnings growth the next two years--+17% in 2015 and +13% in Stock performance has been strong, with Hotels up 25% YTD vs. 24% for the balance of our coverage. Despite the strong performance, the stocks are attractively valued trading at an 8% discount to NAV, or an implied cap rate of 7.2% (nominal). Exhibit 182: Credit Suisse Hotel Coverage Price Total P/AFFO Implied Ticker Rating Mkt Cap Price Target Return 2015E Cap Rate Investment Summary HST Neutral $17,161 $22.66 $ % 17.9x 7.3% S&P 500 bellwether Lodging REIT with heavy concentration in big-box, group hotels. Company is well positioned to outperform in '15 should group continue to accelerate. LHO Outperform $4,047 $38.89 $ % 18.3x 7.2% DRH Neutral $2,759 $14.10 $ % 18.6x 7.4% SHO Outperform $3,155 $15.36 $ % 17.3x 6.3% Heavy on the transient side, and with job growth accelerating, expect LHO to aggressively drive rates next year. NYC and DC (25% of EBITDA) will remain drags in '15 Renovation/development tailwind will help DRH deliver sector leading RevPAR growth in '15. That s the good news--challenge remains its NYC exposure, with 20% of EBITDA derived in the big Apple. Renovation overhang has been the major drag on SHO, which has underperformed its peers by 1,000bp YTD. Discount is unwarranted and expect SHO to materially outperform in '15 BEE Neutral $3,097 $12.52 $ % 20.9x 6.9% Focus on luxury will help BEE continue to deliver solid RevPAR growth in '15 and '16--7% on average. Expect BEE to accelerate its external growth initiatives. RLJ Outperform $4,190 $31.74 $ % 14.5x 7.6% With job growth accelerating, witnessing strong RevPAR performance for mid-scale chains-- key focus for RLJ. Additional catalyst will come from aggressive capital recycling plans PEB Outperform $2,957 $41.68 $ % 24.1x 6.4% AHT Neutral $1,012 $11.33 $ % 19.1x 9.1% Among best portfolios in the REIT sector. Heavy concentration on the West coast should help to drive above average FFO growth. We believe Street estimates need to move higher Levered play in the hotel sector at 9x net debt/ebitda. At 20% insider ownership, AHT is one of the top-performing hotel REITs this cycle--although we would rank its portfolio quality at the lower end relative to its peers 2015 FFO Estimate 2016 FFO Estimate Dividend Consensus Rating and Distribution CS Consensus H/(L) CS Consensus H/(L) Yield Outperform Neutral Underperform CS Rating HST $1.67 $ % $1.87 $ % 3.5% 14 / 61% 9 / 39% 0 / 0% Neutral LHO $2.79 $ % $3.10 $ % 3.9% 9 / 53% 6 / 35% 2 / 12% Outperform PEB $2.35 $ % $2.77 $ % 2.2% 8 / 89% 1 / 11% 0 / 0% Outperform DRH $1.04 $ % $1.18 $ % 2.9% 7 / 41% 8 / 47% 2 / 12% Neutral SHO $1.22 $ % $1.43 $ % 9.4% 3 / 21% 11 / 79% 0 / 0% Outperform BEE $0.86 $ % $0.99 $ % N/A 5 / 63% 3 / 38% 0 / 0% Neutral RLJ $2.67 $ % $2.96 $ % 3.8% 8 / 80% 2 / 20% 0 / 0% Outperform AHT $1.17 $ % $1.38 $ % 4.2% 7 / 50% 7 / 50% 0 / 0% Neutral Source: Thomson Reuters, Company data, Credit Suisse estimates Real Estate Research 166

167 Total Returns 11 November 2014 Subsector Returns Exhibit 183: Hotels YTD vs. 2015E Total Returns 60% 50% 40% 30% 20% 10% 15% 15% 15% 15% 12% 10% 10% 6% 12% 0% PEB SHO LHO RLJ BEE AHT HST DRH REITs Overall Trailing 12-Month Return 12-Month Expected Return Real Estate Research 167

168 Y/Y Change 11 November 2014 Key Sector Themes for 2015 Investors Should Expect Another Four-Plus Years of Positive RevPAR Growth, with 2015 RevPAR Forecast at 7% With little to no major supply threat for most U.S. cities over the next two-plus years, we are modeling positive RevPAR growth through 2018, including 7% in 2015 and 6.5% in While RevPAR growth will likely moderate during 2H15 as the sector faces more difficult comps (3Q14 RevPAR growth topped 9% for the U.S.), 80%+ of RevPAR gains will be rate-driven, with 23 out of the top 25 MSAs running well beyond peak occupancy. Over the past two quarters, ADR growth has averaged a very healthy 4.8% with the growth even stronger across the top 10 most important REIT markets (by room count), with ADRs up 7% during 3Q14. Exhibit 184: Fundamentals Remain Strong, While Rate Growth (ADR) Is Accelerating 12% 10% 8% 6% 4% 2% 0% 4.9% 5.1% 10.2% US Occup US ADR US RevPAR Top REIT Mkts Occup 3.4% 5.7% Top REIT Mkts ADR 9.4% Top REIT Mkts RevPAR 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 4Q13 1Q14 2Q14 3Q14 4Q14 2Q14 3Q14 4Q14 Source: STR Global and Credit Suisse research. US ADR Top REIT Mkts ADR Exhibit 185: RevPAR REIT Concentrated Markets RevPAR RevPAR RevPAR RevPAR Rank City 2Q14 3Q14 4Q14 Prior 3 Qtrs 1 Atlanta 11.2% 17.9% 16.1% 13.7% 2 San Fran 11.7% 10.5% 15.8% 13.5% 3 Chicago 4.2% 10.4% 13.5% 5.4% 4 LA 9.5% 11.4% 11.1% 11.0% 5 Seattle 11.1% 16.4% 9.8% 12.3% 6 San Diego 13.5% 7.4% 7.7% 10.5% 7 Miami 11.9% 9.5% 7.3% 8.3% 8 Philadelphia -0.1% 8.1% 7.2% 6.3% 9 Boston 12.9% 15.4% 3.8% 11.2% 10 DC CBD -0.2% 11.6% 3.6% 1.1% 11 New York 4.7% 3.8% 3.0% 2.7% Total US 8.2% 9.0% 10.2% 7.9% Source: STR Global and Credit Suisse Moderate Pickup in Supply, but Not Enough to Short- Circuit the Recovery; Expect Demand to Outpace Supply for the Next Several Years Unlike the lodging recovery (cycle most investors assimilate to the latest recovery), supply growth remains largely in check, forecast to increase by 1.2% per annum through 2017 (see Exhibit 187) versus the 2.4% per annum growth rate experienced during the late innings of the 1991 recovery, while demand continues to Real Estate Research 168

169 Y/Y Supply and Demand Growth Y/Y RevPAR Growth 11 November 2014 materially outpace supply. In fact, within the REIT concentrated markets, only NYC, Seattle, Miami, and Houston face outsized supply over the next few years. For the REITs in our coverage universe, supply is largely muted, growing at 1.7% to 1.9% supply per annum over the next few years. Exhibit 186: Most U.S. Cities Face Little Supply Risk While Demand Continues to Outpace Supply Estimated Supply Growth Est. Annualized Key Markets Luxury Upper Upscale Select Serv.(1) Unbranded Total Through '17 New York 8% 3% 47% 15% 16% 5.5% Seattle 0% 8% 11% 23% 11% 3.6% Miami 1% 4% 16% 13% 11% 3.6% Houston 23% 11% 16% 4% 10% 3.3% DC Metro 4% 1% 7% 11% 5% 1.7% Boston 0% 1% 7% 8% 5% 1.5% LA County 1% 2% 5% 8% 5% 1.5% New Orleans 0% 0% 15% 2% 5% 1.5% Chicago 5% 5% 4% 5% 4% 1.4% Philly Metro 13% 1% 5% 5% 4% 1.3% San Diego 0% 0% 11% 0% 4% 1.2% Atlanta 0% 1% 5% 1% 3% 0.9% San Fran Metro 0% 0% 7% 3% 2% 0.7% Orlando 6% 0% 2% 0% 1% 0.5% Key City Avg: 4% 3% 11% 7% 6% 2.0% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% -16% -18% -20% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -12% -14% -16% -18% -20% Total US 5% 3% 7% 3% 5% 1.2% Supply Demand US RevPAR Source: STR Global and Credit Suisse estimates, Exhibit 187: REIT Exposure to Future Hotel Supply Total New Per Annum Exposure to Select Cities (Pro-Rata Room Count as % of Ttl Port.) Avg. '14 RevPAR Top REIT Mkts Supply Grth Supply Grth DRH PEB LHO HST SHO BEE RLJ Exposure Growth New York 16% 5.5% 15% 13% 11% 10% 9% 7% 7% 11% 2.6% Seattle 11% 3.6% 5% 3% 3% 2% 11.8% Miami 11% 3.6% 2% 1% 9% 2% 4% 7.1% Houston 10% 3.3% 3% 6% 5% 3% 9.7% DC Metro 5% 1.7% 6% 7% 16% 9% 6% 3% 5% 7% -1.5% Boston 5% 1.5% 10% 3% 13% 6% 10% 1% 10% 11.3% LA County 5% 1.5% 9% 13% 7% 3% 5% 5% 2% 4% 11.2% New Orleans 5% 1.5% 2% 5% 2% 4% 4.0% Chicago 4% 1.4% 14% 10% 5% 8% 20% 9% 10% 4.1% Philly Metro 4% 1.3% 4% 5% 1% 2% 3% 4.8% San Diego 4% 1.2% 4% 12% 13% 8% 11% 16% 1% 9% 9.8% Atlanta 3% 0.9% 3% 6% 4% 1% 1% 13.3% San Fran Metro 2% 0.7% 1% 22% 11% 6% 6% 23% 5% 9% 13.3% Orlando 1% 0.5% 4% 3% 6% 2% 10.8% Subtotal 66% 87% 89% 63% 74% 83% 40% 6% 8.0% Total/Rest of US 5% 1.2% 34% 13% 11% 37% 26% 17% 60% Est. Annual Supply (Ranked Left to Right) 1.9% 1.9% 1.9% 1.8% 1.8% 1.7% 1.8% Source: STR Global and Credit Suisse estimates With Credit Suisse Economists Forecasting U.S. Unemployment to Fall to 5.5% by YE'15, We Expect ADR Growth to Accelerate to 5%-Plus While annual RevPAR growth has averaged a healthy 7.4% since the start of the recovery (2010), rate growth has been disappointing, up just 3.5% over the same period. Our research suggests, however, that when the U.S. unemployment rate falls below 5.5%, ADR growth consistently (several quarters in a row) averages above 5%. With Credit Suisse economists forecasting a 5.5% unemployment rate by YE15 and most major U.S. cities well beyond peak occupancy (300bp+, Exhibit 189), we expect ADR growth to accelerate to 5-6% in 2015 and Real Estate Research 169

170 T3M RevPAR Growth T3M RevPAR Growth 2Q88 2Q89 2Q90 2Q91 2Q92 2Q93 2Q94 2Q95 2Q96 2Q97 2Q98 2Q99 2Q00 2Q01 2Q02 2Q03 2Q04 2Q05 2Q06 2Q07 2Q08 2Q09 2Q10 2Q11 2Q12 2Q13 2Q14 11 November 2014 In its latest industry report, PKF Hospitality noted that the U.S. lodging industry will achieve 65% occupancy in 2015, the highest national occupancy rate since STR began reporting data in Moreover, by the end of 2015, demand for lodging accommodations is projected to have increased 25.8% since the lowest point of the recession in 2009, while supply is up just 5.6%. Accordingly, PKF expects ADR growth to accelerate to a pace of 5.7% from 2015 through Exhibit 188: With Most U.S. Well Beyond Peak Occup, and Unemployment ~6%, ADR to Accelerate to 5%-Plus TTM Vs. '07 Peak MSA/City Occup. Rate RevPAR Occup. ADR RevPAR San Francisco/San Mateo, CA 84.3% $202 $ bps 36% 55% New Orleans, LA 69.0% $142 $ bps 22% 44% Oahu Island, HI 84.6% $219 $ bps 29% 44% Miami/Hialeah, FL 78.9% $185 $ bps 18% 28% Boston, MA 75.2% $170 $ bps 13% 26% Los Angeles/Long Beach, CA 79.0% $145 $ bps 17% 25% Seattle, WA 75.2% $133 $ bps 9% 17% Anaheim/Santa Ana, CA 76.5% $133 $ bps 9% 17% Orlando, FL 74.1% $106 $ bps 0% 10% Atlanta, GA 67.6% $92 $ bps 1% 10% Chicago, IL 69.3% $130 $ bps 1% 6% Washington, DC CBD 77.2% $205 $ bps 0% 5% San Diego, CA 74.7% $139 $ bps 0% 4% New York, NY 85.2% $261 $ bps -3% 0% Philadelphia, PA-NJ 67.7% $121 $ bps 1% 0% Washington, DC-MD-VA 68.5% $142 $99 24 bps -5% -3% Total US: 64.5% $114 $74 56 bps 9% 12% Source: STR Global, BLS, and Credit Suisse research. 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0% -10.0% Unemployment Rate ADR Growth 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0% -10.0% Moderate Chain Scales (Upscale and Upper Midscale) Could Be the Play in 2015 as the Economy Picks Up Steam In light of the surprisingly strong job market, the U.S. lodging sector has benefited from a much broader recovery, with both Upscale and Upper Midscale chains posting aboveaverage RevPAR growth YTD, outperforming both Luxury and Upper Upscale over the past six months. Specifically, RevPAR growth at the Upscale and Upper Midscale chains (or limited service brands such as Courtyard, Homewood Suites, Hyatt Place, Residence Inn, Hampton Inn, Holiday Inn, etc.) has averaged 8-9% over the past five months ( bps above YTD trends), while both Luxury and Upper Upscale chains are running at/or below YTD RevPAR trends. (See Exhibits 190.) While some of the delta is explained by relative comps (Luxury has consistently outperformed since 2010), job growth has played a key role in the outperformance of higher beta markets/chain scales with an 85% correlation between jobs and RevPAR growth. While fundamentals will remain healthy across most gateway cities (14 out of the top 16 cities we track are beyond peak occupancy), we would not be surprised if secondary markets have a sharper rebound in REITs best positioned to generate outsized RevPAR gains given their exposure to limited service brands/suburban markets include RLJ (Outperform rated), AHT (Neutral rated), INN (not rated), and CLDT (not rated). Exhibit 189: RevPAR: Upscale/Upper Midscale vs. Luxury/Upper Upscale 11.0% 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% Upscale Upper Midscale Average Luxury Upper Upscale Average Source: STR Global and Credit Suisse research. Real Estate Research 170

171 RevPAR Growth RevPAR Delta (bp) Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 T3M RevPAR Growth T3M Change in Demand (%) 11 November 2014 Consistent Improvements in Group Business Have Been Encouraging Should Help to Support Fundamentals in Group business has been the lodging industry's Achilles heel throughout much of the recovery although the last 6-9 months have been encouraging. With job growth accelerating, and the U.S. posting 3.5% GDP growth in the third quarter, group RevPAR growth is up 6.4% YTD, this compares to the 2-4% over the prior two years. While transient remains the stronger of the two (7.4% RevPAR growth YTD), the recent surge in group demand (room nights), in our opinion, has been one of the primary drivers of outsized ADR growth these past six months. Exhibit 190: Group vs. Transient RevPAR (% Change) 11% 9% Exhibit 191: Group vs. Transient Demand (% Change) % 5% 3% 1% % -6.0 Transient Group Group Transient Source: STR Global and Credit Suisse research. Source: STR Global and Credit Suisse research. West Coast to Remain the Best Coast Gateway cities on the West coast continue to outperform most east coast markets with top performers over the last three quarters including San Francisco (14% RevPAR growth), Seattle (12%), LA (12%), and San Diego (10%). Limited new supply, coupled by strong tech demand are the primary drivers, while supply concerns in market such as New York City, Miami, and DC have been a drag on results. In fact, over the past 11 quarters, West coast markets have outperformed gateway cities on the East coast by an average of 525bp (9.5% RevPAR growth vs. 4.3% growth). REITs with above-average exposure to the west coast include PEB (65% of hotel rooms); BEE (47%), LHO (34%), and SHO (33%). Exhibit 192: West Coast Remains the Best Coast 14% 12% 10% 8% 6% 4% 2% 1200 bps 1000 bps 800 bps 600 bps 400 bps 200 bps 0 bps (200 bps) 0% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 (400 bps) West Coast Delta West Coast RevPAR East Coast RevPAR 1) West coast markets include: San Francisco, LA, San Diego and Seattle. East coast markets include NYC, Boston, Philadelphia and DC. Source: STR Global and Credit Suisse Real Estate Research 171

172 Stock Returns # of Months it took 10Yr to Increase 100bp 11 November 2014 Lodging Stocks Are Best Positioned to Outperform Should Interest Rates Dramatically Increase. The interest rate debate is likely to remain a hot button item in 2015, with Wall Street economists' range of forecasts ~3% (Credit Suisse sits at 3.4% by YE15). As we illustrated in our REITs and Rates section, REITs typically underperform the S&P 500 when rates spike by more than 100bp. Lodging, with its daily leases and greater operating leverage, however, have generated outsized returns during periods when the 10Yr is up by more than 100bp, delivering returns of 26%, on average, versus just 12% for REITs, on average. Exhibit 193: Lodging Stocks Have Consistently Outperformed REITs (5 out of 6 periods) When Rates Increase 100bp+ 140% % 100% 80% 60% % 20 20% 0% -20% -40% % Dec 95-Jun 96 Oct 98 - Jan 00 May 03 - May 06 Dec 08 - May 09 Aug 10 - Feb 11 Jul 12 - Sept 13 0 Lodging REITs Months Source: Bloomberg and Credit Suisse Real Estate Research 172

173 Portfolio Quality: TripAdvisor Analysis The growing influence social media has had on the decision-making process for both the business and leisure traveler is undeniable. Several studies suggest that nearly 80% of travelers use some form of on-line review Web site before making hotel reservations. TripAdvisor is the dominant provider, with over 53mn registered users and over 260mn unique visits to its site each week. Not only are sites having an impact on demand, but according to a Cornell University study, there is a direct link between changes in RevPAR and improvements or declines in the online reputation of a hotel, driven by ratings on sites such as TripAdvisor and Travelocity. The study goes on to suggest that these changes can affect ADRs by as much as 10%. Given the relative importance of TripAdvisor to hotel operations, we conducted an in-depth analysis of each of the hotel REIT portfolios in our coverage universe (8 companies, 540 hotels) overlaying TripAdvisor customer satisfaction ratings (Credit Suisse's proprietary "score") a good measure to also evaluate the overall portfolio quality of the REITs we follow. While we plan on publishing a more detailed report on our findings, some key takeaways to consider: (1) we found a strong correlation between our TripAdvisor ranking and hotel occupancy; and (2) our TripAdvisor score and relative stock performance. Bottom Line: Social media Web sites (such as TripAdvisor) will play an ever increasing role in the travel decision making process. While we have demonstrated that lower TripAdvisor scores often translate into better internal growth, there are other variables to consider when evaluating hotel performance. At the very least, however, customer feedback from TripAdvisor is a powerful tool for the better hotel owners/operators (i.e., well capitalized REITs) to continually improve the overall lodging experience for customers, which should ultimately lead to better returns. We aim to provide an update to this analysis, quarterly. Exhibit 194: Credit Suisse Proprietary TripAdvisor Analysis Who Owns the Most 'Desirable' Portfolio? Rank REIT Rooms Hotels Size (rooms) TRIP Rank Market Size Quality Score 1 PEB 6, % 2 SHO (1) 14, % 3 RLJ 23, % 4 LHO 11, % 5 HST- US (3) 57, % 6 BEE (2) 7, % 7 AHT 25, % 8 DRH 10, % Total/Wtd. Avg: 155, % (1) SHO's TRIP score dramatically improves to 28% if you exclude Boston Park Plaza and Marriott Wailea (two projects on-going/slated for renovation) (2) BEE's TRIP score improves to 29% if you exclude Lincolnshire (asset they'd like to sell) and Del Coronado (3) HST's TRIP score for its international portfolio is 20%, and for US only, its 36% Source: STR Global and Credit Suisse Real Estate Research 173

174 DiamondRock (DRH): Neutral Rating; $14.50 Price Target; 6% Total Return Exp. Company Overview DiamondRock Hospitality (DRH) is a $2.6 billion hotel REIT, with ownership interest in 26 hotels totaling 11,017 hotel rooms. Since the start of the recovery (2010), DiamondRock has done an excellent job at repositioning its portfolio to higher growth markets through select acquisitions in New York City, Denver, Boston, DC and San Diego, while exiting out of non-core markets such as Lexington (KY), Austin, Atlanta and suburban LA and Chicago. Since 2010, DRH has acquired ~$1.4bn of assets (including its pending Hilton Garden Inn, Times Square) at an average price of $333k/key, while selling over $400mn of non-core assets ($153k/key). Exhibit 195: DiamondRock Hospitality Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of DiamondRock Hospitality (DRH) with a Neutral rating and a $14.50 price target, which is based on the weighted average of our $15.50 forward NAV estimate (50%), 14.5x "forward EBITDA" (30%) and our $12.50 DCF value (20%), which implies a 6% total return (including 3.2% dividend yield) over the next 12 months. Our 2015 and 2016 FFO estimates of $1.06 and $1.21, respectively, are based on assumed RevPAR growth of 6.5% in 2015 and 5% in Our Neutral rating on DiamondRock is largely valuation based with the stock trading at a 5% premium to NAV, or 14.4x 2015 EBITDA. Despite the relative rating, DRH is poised to deliver solid earnings growth over the next two years (14%), as the company continues to benefit from renovation tailwinds across NYC, Boston and DC. Real Estate Research 174

175 Investment Positives Renovation tailwinds (Hotel Lexington, along with the Hilton Garden Inn), DRH is well positioned to deliver among the highest earnings growth rates in the sector, with 2015 FFO up 17%, driven by RevPAR growth of 7% and margin growth of 125bp. This is on top of the 265bp of margin expansion realized in Drivers in 2015 will include: (1) the stabilization of its NYC Hilton Garden Inn at a 9% return ($6-7mn of incremental EBITDA); (2) stabilization of the Hotel Lex, and Westin DC and San Diego all three of which were renovated in 2014 ($5-7mn in additional EBITDA); and (3) expansion at Boston Hilton, with another 41 keys added. Disciplined approach to managing its balance sheet, with a focus on returning capital to shareholders. As DRH discussed on its 2Q earnings call, the company expects to take a disciplined approach to external growth strategies, while maintaining the integrity of its balance sheet. With cap rates continuing to compress and deals becoming increasingly more difficult to source, we would not be surprised if DRH looks to increase its dividend more aggressively, while potentially buying back its own stock (implied cap rate of 7.4% vs. gateway city cap rates 100bp+ inside of that). We forecast 20% dividend growth for DRH over the next two years, implying a 65% payout ratio. Balance sheet. DRH maintains the second lowest leverage ratio in the hotel sector (behind HST), with net debt/ebitda of 4.5x, with a stated goal of getting leverage down to 3x by The company has ample financial flexibility, ending 2014 with $180mn of cash and an additional $400mn available on its LOC. Additional funding capacity could be tapped from its 11 unencumbered hotels with ~$83mn of EBITDA ($1.2bn of asset value), translating into an additional $650mn of borrowing capacity (50% LTV). Additionally, DRH expects to sell another $75mn-$100mn of non-core assets over the next 24 months. Deal pace could pick up in The addition of both a seasoned operations executive, coupled with a new CIO, adds value to the DRH investment thesis. DRH has ample liquidity should they be successful at sourcing off-market deals, with $120mn of cash + $400mn of available on its LOC. Investment Risks Manhattan exposure will be a headwind in Along with DC, NYC is among the weaker gateway city markets in the US. While Manhattan is 200bp beyond peak occupancy, supply pressures (5%+ supply growth per annum through 2017) has pressured ADR growth (just 2% the last 12 months), with rates still 3% below '07 levels. This will clearly create a headwind for DRH which counts NYC as its largest market with 5 hotels (or ~20% of EBITDA) a figure which is likely to go higher when accounting for the ramp up at both the Hilton Garden Inn Times Square and Lexington Hotel. DRH's portfolio scored surprisingly low in our TripAdvisor analysis. DRH has been one of the more aggressive capital recyclers this cycle selling six non-core hotels ($408mn), while expanding its footprint in New York City, Boston, San Diego, Denver, DC, San Francisco, Key West, and Minneapolis ($1.4bn investment). Despite its efforts to improve the overall quality of its portfolio (footprint), we were surprised by DRH's last place ranking in our TripAdvisor analysis (Figure 195). TripAdvisor is one of the more important marketing tools in the hotel industry, and is essential to driving better operating results (i.e., occupancy and rate) given the reliance by transient travelers when making travel decisions. Part of DRH's poor showing relates to the number of assets the company had under renovation the past months, with Real Estate Research 175

176 management noting that it typically takes 18 months for newly renovated hotels to move up in the TripAdvisor rank. Earnings Model and Key Assumptions Exhibit 196: DiamondRock Hospitality Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $0.60 $0.71 $0.71 $0.76 $1.06 $1.21 $1.31 Consensus FFOPS $0.88 $1.03 $1.15 $1.32 FFO Growth 19% 0% 7% 40% 14% 8% FFO Multiple 23.5x 19.8x 19.8x 18.6x 13.3x 11.7x 10.8x EBITDA $159,627 $179,126 $196,862 $234,367 $268,869 $297,083 $316,639 EV/EBITDA Multiple 19.7x 16.5x 14.4x 13.0x 12.2x RevPAR Growth 6.3% 5.3% 1.5% 12.2% 6.5% 5.0% 4.0% Source: Credit Suisse estimates Key Drivers of DRH's Earnings Model: We forecast 2015 and 2016 FFO of $1.06 and $1.21, respectively, 4% above consensus. Annualized FFO growth is 17% over the next two years. Our EBITDA forecast for 2015 and 2016 is $268mn and $297mn. Our earnings estimates are driven by 6.5% RevPAR growth in 2015 and 5% RevPAR growth in We expect margin growth of 100bp in 2015 and 115bp in 2016 We have modeled $75mn of non-core dispositions in 2015 (at 7% cap rate), with no additional acquisitions modeled for 2015 or Our model assumes 15% dividend growth in 2015 (to $0.47/share) and 20% growth in 2016 (to $0.59/share), with an AFFO payout ratio of 65% by Real Estate Research 176

177 DiamondRock Hospitality Valuation Overview Exhibit 197: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $15.50 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $15.50 Approach 2: DCF DCF Per Share $12.57 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $12.57 Approach 3: EV/EBITDA Fwd EBITDA $268,869 Targeted Multiple 14.5x Fair Value on NAV Valuation $13.47 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $14.50 Estimated Total Return 6.1% Source: Company data, Credit Suisse estimates Exhibit 198: NAV Snapshot Assumptions IRR Target 9.2% Assumed avg NOI growth next three years 20.87% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $282,131 Maintenance Capex ($59,525) Cash NOI $222,606 Assumed cash NOI cap rate 7.15% Market value of owned properties $3,945,890 Add Cash, CIP, + Other Assets Cash and cash equivalents $119,069 Other assets $235,851 Equals -Gross market value of assets $4,300,810 Less Liabilities DRH NAV Calculation Total liabilities (incl. JVs) $1,403,478 Mark-to-Market Debt Adj. $0 Preferred Stock $0 NAV Net market value of assets $2,897,332 Total Shares / Units 196,130 Key inputs / items in our DRH NAV Model: Year 1 Cash NOI of $282mn (pre capex) 9.2% unlevered IRR o Modeling an economic downturn in years 5-6, with NOI declining by 25% as revenues fall 17% and margins drop 250bp. Model assumes a recovery in years 7-10 Blended cash cap rate of 7.15% Exit cap rate of 7.9% NOI growth rate in 'perpetuity' is 2.2% Implied Cap Rate: 7.4% Implied $/key of $343k vs. warranted $/key of $355k Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $15.50 Warranted Price/Key $354,910 Current Stock Price $14.10 Implied Cap Rate 7.4% Price/Net Asset Value 95% Real Estate Research 177

178 DRH IRR Analysis and DCF Model Exhibit 199: IRR Underwriting IRR ANALYSIS-CAP RATE ANALYSIS Period Offset 23 Initial NOI 253,918 Going-in Cap Rate 7.15% Initial Value of Assets 3,551,301 Terminal Year NOI 361,451 Hold Period Cap Rate Expansion 0.75% Terminal Year Cap Rate 7.90% Terminal Value of Assets 4,575,325 Maint. Capex % of Hotel Rev's 6.00% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Hotel Revenues 992,082 1,037,499 1,081,876 1,123,655 1,157,365 1,041, ,298 1,015,796 1,066,586 1,119,915 Change YoY 4.6% 4.3% 3.9% 3.0% -10.0% -8.0% 6.0% 5.0% 5.0% Net Operating Income 282, , , , , , , , , ,451 Change YoY 45.6% 10.4% 6.6% 5.8% 4.6% -13.5% -11.8% 9.6% 8.5% 8.4% Margin 28.4% 30.0% 30.7% 31.3% 31.8% 30.5% 29.3% 30.3% 31.3% 32.3% Margin Change YoY 158 bps 68 bps 57 bps 50 bps -125 bps -125 bps 100 bps 100 bps 100 bps (-) Maintenance Capex (59,525) (62,250) (64,913) (67,419) (69,442) (62,498) (57,498) (60,948) (63,995) (67,195) = Cash NOI 222, , , , , , , , , ,256 Initial Value of Assets (3,551,301) Terminal Value of Assets 4,575,325 Total Cash Flow (3,551,301) 222, , , , , , , , ,578 4,869,581 IRR 9.2% Cap Rate to Achieve IRR 7.2% Source: Company data, Credit Suisse estimates Exhibit 200: DCF Model with primary assumptions DCF ANALYSIS Risk Free Rate Equity Risk Premium 5-Year Adjusted Beta Cost of Equity Perpetual Growth Rate Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Normalized FFO 208, , , , , ,242 (-) Maintenance Capex (59,525) (62,250) (64,913) (73,038) (71,261) (73,399) = Adjusted FFO 148, , , , , ,843 (+) Terminal Value 3,127,263 = Cash Flow to Equity Holders 148, , , , ,716 3,328,106 Ratios / Analysis FFO/sh growth NA 18% 10% 5% -7% CapEx as % of FFO 29% 26% 25% 27% 28% Inputs DRH Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.47 Cost of Equity (CAPM) 9.62% Perpetual Growth Rate 3.00% Outputs NPV of Cash Flows $683,989 Terminal Value (+50bp) $2,822,813 Number of periods 5 NPV of Terminal Value $1,783,743 Firm Value $2,467,732 Plus non-cash flow producing assets Shareholders Value $2,467,732 Share outstanding 196,355 DCF value per share $12.57 Source: Company data, Credit Suisse estimates Real Estate Research 178

179 DiamondRock Hospitality Co. DRH Price (07 Nov 14): US$14.10, Rating: NEUTRAL, Target Price: US$14.50, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) ,037.5 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) (1.1) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (124.6) (606.8) (100.0) (100.0) Cash flow from investment (42.0) (286.3) (25.0) (100.0) Dividends paid (66.5) (80.5) (92.6) (115.1) Equity raised (2.0) (1.9) Net borrowings Other financing cash flows (49.2) 55.3 (52.0) Financial cashflow (144.6) (115.1) Net cashflow (66.6) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,261.5 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 2, , , ,769.4 Other investments Other non-current assets 2, , , ,865.0 Total non-current assets 2, , , ,865.0 Total assets 3, , , ,124.3 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,125.3 Other non-current liabilities Total non-current liabilities 1, , , ,222.4 Total liabilities 1, , , ,403.5 Unit funds Reserves 1, , , ,720.8 Shareholders' equity 1, , , ,720.8 Total capital employed 2, , , ,943.3 Real Estate Research 179

180 Host Hotels (HST): Neutral Rating; $24 Price Target; 9% Total Return Exp. Company Overview Host Hotels (HST) is the largest hotel REIT in the sector, with a market cap of $18bn, and the only hotel REIT in the S&P 500. The company owns 99 properties in the United States, with an additional 15 properties internationally, totaling approximately 60,000 rooms. Its portfolio includes a diverse pool of upper upscale and luxury branded hotels, with its top brands including Marriott (49% of room count), Starwood (25%), Hyatt (12%) and Ritz Carlton (7%). The company maintains one of the strongest balance sheets in the entire REIT sector with a net debt to EBITDA ratio of 2.8x, while HST is investment grade rated by S&P (BBB). Exhibit 201: Host Hotels Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Host Hotels (HST) with a Neutral rating and a $24 price target, implying a 9% total return over the next 12 months (including the stock's 3.6% dividend yield). Our price target is based on the weighted average of our $25 forward NAV estimate (50%), 14.8x forward EBITDA (30%) and our $21 DCF value (20%). Despite posting solid YTD results, the company has underperformed its peers YTD (19% vs. 30% for peers), although with group momentum improving, the stock has the potential to generate solid double digit gains over the next 12 months.. That said, we believe the stock is fairly valued trading at 14.3x '15 EBITDA, and an implied 7.3% cap rate. Finally, our 2015 and 2016 FFO estimates of $1.67 and $1.87, respectively, are based on RevPAR growth assumptions of 6.7% in 2015 and 6.4% in Investment Positives Strong group momentum could be a catalyst for HST in With job growth accelerating, and business sentiment improving, it's no surprise that group business is finally starting to rebound. Over the past 12 months, Group RevPAR growth has averaged 6.4% versus the prior two years of just 2-4%. A dramatic improvement in group trends is good news for HST, with 40%+ of its demand driven by group Real Estate Research 180

181 business. With limited new supply, especially in the Upper Upscale segment of lodging (just 1.5% over the next two years), coupled with accelerated job and wage growth we anticipate group to continue to post solid results which could lead to additional multiple expansion for HST. Fortress balance sheet an advantage in good times and bad. HST has among the strongest balance sheets in the sector with a net/debt to EBITDA multiple of just 2.8x by YE14 (the lowest in the sector); a BBB- rating by S&P; $1.2bn of available cash/liquidity (including $440mn of cash); and a fixed charge coverage ratio of 2.8x. Despite its financial flexibility, HST has been relatively quiet on the external growth front acquiring just $65mn of net new acquisitions YTD the slowest pace in the entire lodging REIT sector. With cap rates continuing to compress we expect HST to remain a net seller with $1.5bn of non-core assets earmarked for sale over the next couple of years. Outsized dividend growth potential. With HST likely to remain on the acquisition sidelines, we expect HST to use its excess liquidity to drive outsized dividend growth over the next two years modeling 15% dividend growth per annum, through 2016 assuming a 60-65% payout ratio. This would translate into a dividend yield north of 3.5%. Investment Risks Margins lag peers. With its focus on big-box, branded hotels (Marriott, Hilton, etc.), HST's operating margins fall well short of its peers averaging 180bp lower than its closest competitors (DRH, SHO, BEE, LHO and PEB). Higher costs associated with brand association (i.e., revenue management systems and the need to maintain 'brand standards') are the primary drags on operating margins. HST, however, has done a very solid job at keeping a cap on costs which has translated into solid margin gains the last several quarters (250bp+, on average) well outpacing most of its peers. Overall, HST's margins are running ~200bp below prior peak, although with group supply in check for the next 2-3 years, management fully expects margins to exceed prior peak levels, with a bp expansion per year. External growth story stuck in Neutral. Lacking an external growth story could place a drag on valuation. Despite having the best balance sheet in the sector, HST's external growth story remains stuck in neutral, with investors unlikely to give management a multiple premium for creating value. To HST's credit, however, it has been relatively aggressive at disposing of non-core assets; however, their external growth story has been non-existent, acquiring less than $200mn of new hotels over the past two years versus non-core sales of 400mn. HST is the only hotel company in our coverage universe that has been a net seller over the past five years. Real Estate Research 181

182 HST Earnings Summary Exhibit 202: Host Hotels & Resorts Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $0.89 $1.09 $1.26 $1.48 $1.67 $1.87 $2.02 Consensus FFOPS $1.47 $1.65 $1.82 $2.08 FFO Growth 22% 16% 17% 13% 12% 8% FFO Multiple 25.4x 20.9x 18.0x 15.4x 13.6x 12.2x 11.3x Adjusted EBITDA $1,018 $1,185 $1,305 $1,402 $1,553 $1,706 $1,826 EV/EBITDA Multiple 21.8x 18.7x 17.0x 15.8x 14.3x 13.0x 12.2x RevPAR Growth 6.1% 6.4% 5.6% 6.7% 6.4% 5.0% 4.0% Source: Credit Suisse estimates Key Drivers of HST's Earnings Model: We are forecasting 2015 and 2016 FFO of $1.67 and $1.87, respectively, or 2% above consensus. Annualized FFO growth is 13% over the next two years. Our EBITDA forecasts for 2015 and 2016 are $1.54bn and $1.7bn. Our earnings estimates are driven by 6.7% RevPAR growth in 2015 and 6.4% RevPAR growth in 2016 We expect margin growth of 100bp in 2015 and 115bp in 2016 We are modeling no new acquisitions over the next two years. Our model assumes 23% dividend growth in 2015 (to $0.82/share) and 6% growth in 2016 (to $0.87/share), with an AFFO payout ratio of 62% by Real Estate Research 182

183 Host Hotels Valuation Summary Exhibit 203: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $25.32 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $25.32 Approach 2: DCF DCF per Share $20.87 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $20.87 Approach 3: EV/EBITDA Fwd EBITDA $1,553 Targeted Multiple 14.8x Fair Value on NAV Valuation $23.84 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $24.00 Forecasted Total Return 8.9% Source: Company data, Credit Suisse estimates Exhibit 204: NAV Snapshot HST NAV Calculation Assumptions IRR Target 8.8% Assumed avg NOI growth next three years 9.3% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $1,636 Maintenance Capex ($348) Cash NOI $1,288 Assumed cash NOI cap rate 6.90% Market value of owned properties $23,709 Joint Venture Assets (unconsolidated) Cash NOI from JV properties $0 Assumed cash NOI cap rate 6.90% Market value of owned properties $0 Add Cash, CIP, + Other Assets Cash and cash equivalents $387 Other assets $248 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $0 Development Projects (at cost) $0 Equals -Gross market value of assets $24,344 Less Liabilities Total liabilities (incl. JVs) $5,301 Key inputs / items in our HST NAV Model: Year 1 Cash NOI of $1,636mn 8.8% unlevered IRR o In the IRR, we are modeling an economic downturn in years 5-6, with NOI declining by 25% as revenues fall 16% and margins drop 250bp. Model assumes a recovery in years 7-10 IRR model works toward a blended cash cap rate of 6.9% Exit cap rate of 7.65% NOI growth rate in 'perpetuity' is 3% Implied Cap Rate: 7.3% (pre-capex) Warranted $/key of $396k NAV Net market value of assets $19,043 Total Shares / Units 785 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $25.32 Warranted Price/Key $396,279 Current Stock Price $22.66 Implied Cap Rate 7.3% Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Real Estate Research 183

184 HST IRR Analysis and DCF Model Exhibit 205: IRR Underwriting IRR ANALYSIS-CAP RATE ANALYSIS Period Offset 18 Initial FTM NOI 1,472 Going-in Cap Rate 6.90% Initial Value of Assets 21,338 Terminal Year NOI 2,112 Hold Period Cap Rate Expansion 0.75% Terminal Year Cap Rate 7.65% Terminal Value of Assets 27,601 Maint. Capex % of Hotel Rev's 6.50% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Hotel Revenues 5,801 6,115 6,338 6,594 6,726 6,121 5,692 5,977 6,276 6,589 Change YoY 5.4% 3.7% 4.0% 2.0% -9.0% -7.0% 5.0% 5.0% 5.0% Net Operating Income 1,636 1,796 1,920 2,031 2,105 1,824 1,611 1,766 1,933 2,112 Change YoY 11.1% 9.8% 6.9% 5.8% 3.7% -13.4% -11.7% 9.6% 9.4% 9.3% Margin 28.2% 29.4% 30.3% 30.8% 31.3% 29.8% 28.3% 29.5% 30.8% 32.0% Margin Change YoY 117 bps 92 bps 50 bps 50 bps -150 bps -150 bps 125 bps 125 bps 125 bps (-) Maintenance Capex (377) (397) (412) (429) (437) (398) (370) (388) (408) (428) = Cash NOI 1,259 1,399 1,508 1,602 1,668 1,426 1,241 1,377 1,525 1,683 Initial Value of Assets (21,338) Terminal Value of Assets 27,601 Total Cash Flow (21,338) 1,259 1,399 1,508 1,602 1,668 1,426 1,241 1,377 1,525 29,285 IRR 8.8% Cap Rate to Achieve IRR 6.9% Source: Company data, Credit Suisse estimates Exhibit 206: DCF Model with primary assumptions DCF ANALYSIS Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Adjusted FFO 1,317 1,470 1,587 1,691 1,613 1,706 (-) Maintenance Capex (319) (367) (380) (429) (418) (432) = AFFO net of Maint Capex 998 1,103 1,207 1,262 1,195 1,275 (+) Terminal Value 21,150 = Cash Flow to Equity Holders 998 1,103 1,207 1,262 1,195 22,424 Ratios / Analysis FFO/sh growth NA 11% 9% 5% -5% CapEx as % of FFO 24% 25% 24% 25% 26% CapEx as % of NOI 20% 20% 20% 21% 21% Inputs HST Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.45 Cost of Equity (CAPM) 9.53% Perpetual Growth Rate 3.3% Outputs NPV of Cash Flows $4,385 Terminal Value (+50bp) $18,952 Number of periods 5 NPV of Terminal Value $12,025 Firm Value $16,410 Plus non-cash flow producing assets Shareholders Value $16,410 Share outstanding 786 DCF value per share $20.87 Source: Company data, Credit Suisse estimates Real Estate Research 184

185 Host Hotel & Resorts Inc. HST Price (07 Nov 14): US$22.66, Rating: NEUTRAL, Target Price: US$24.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity (0) (0) Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (0.88) (0.79) (0.40) (0.40) Cash flow from investment (0.15) (0.13) (0.40) (0.40) Dividends paid (0.35) (0.53) (0.65) (0.68) Equity raised 0.30 Net borrowings (0.65) (0.75) Other financing cash flows 0.21 (0.00) (0.16) Financial cashflow (0.5) (1.3) (0.8) (0.7) Net cashflow 0.44 (0.36) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA 14, , , ,374.9 EV/EBIT 33, , , ,324.6 P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 10, , , ,354.2 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties Other investments Other non-current assets Total non-current assets Total assets Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt Other non-current liabilities Total non-current liabilities Total liabilities Unit funds Reserves Shareholders' equity Total capital employed Real Estate Research 185

186 LaSalle (LHO): Outperform Rating; $43 Price Target; 15% Total Return Exp. Company Overview LaSalle Hotel Properties is a $3.8 billion hotel REIT, with ownership interest in 45, high quality hotels totaling over 11,338 hotel rooms. Its assets are concentrated in gateway cities including DC (15% of rooms), Boston (13%), San Diego (13%), New York City (11%) and San Francisco (11%). Unlike its lodging REIT peers, nearly 70% of its rooms/ebitda are independently flagged, while 80% of its management contracts are terminable-at-will better aligning operators with owners, while translating into sector leading margins. LHO has been one of the more active acquirers since the start of the recovery, spending $1.9bn on new deals the last five years (average price per key of $437k and a 6% cap rate), while expanding its portfolio by 4,300 rooms (60% growth in room count). Exhibit 207: LaSalle Hotel Properties Source: SNL Financial Investment Thesis: Outperform We are initiating coverage of LaSalle Hotels (LHO) with an Outperform rating and a $43 price target, implying a 15% total return (including 4.1% dividend yield) over the next 12 months. Our price target is based on the weighted average of our $44 forward NAV estimate + 5% premium (50%), 15x forward EBITDA (30%) and our $36 DCF value (20%). Our 2015 and 2016 FFO estimates of $2.81 and $3.12, respectively, assume RevPAR growth of 6.9% in 2015 and 6% in Our Outperform rating on LHO is based upon (1) its high quality portfolio which should help LHO continue to deliver above average RevPAR growth and sector leading margins; (2) strong balance sheet, with access to capital; and (3) renovation tailwind at Park Central should be a net positive contributor to LHO's 7% forecasted RevPAR growth in Real Estate Research 186

187 Investment Positives Top ranked portfolio translates into sector leading margins. Overall, we believe LHO owns one of the highest quality portfolios in the lodging sector--concentrated across many of the top performing markets in the US: San Francisco (11% of EBITDA); LA (9%), Seattle (2%), Boston (17%) and San Diego (13%). Collectively, these markets have generated RevPAR growth of 12.5% over the trailing four quarters. In addition, 70% of its hotels (as measured by EBITDA) are independently managed which helps to drive sector leading margins (33% in 2014), while its management contracts are terminable at will commanding a premium valuation in the private market. Finally, LHO scored extremely well in our proprietary TripAdvisor quality survey, ranking 4 th, overall, with particularly strong results in DC (an important market for LHO). Despite near peak margins room for growth. Benefiting from limited new supply and strong transient demand trends LHO expects another 360bp+ of margin expansion from here driven largely from ADR gains with 8 out of its top 10 markets running well above peak occupancy (+300bp). We have modeled ~200bp of margin expansion the next two years to ~35%, the highest level in the sector achievable, in our opinion, with ADR growth accelerating to 5% to 6% next two years. Balance sheet strength; ability to refinance $500mn of mortgage debt over the next two years potentially saving the company $0.08-$0.10/share. LHO maintains one of the strongest balance sheets in the sector with Net Debt to EBITDA of 3.9x, while its average cost of debt is just 3.6%. LHO has nearly a third of its debt ($505mn) maturing over the next 2+ years (60% of that in 2016) with a weighted average interest rate of 5.7% bp higher than where the secured market is currently priced. In 2015, LHO will refinance $200mn of secured debt which we assume will save LHO 200bp in interest cost, or $0.04/share in earnings with an additional $0.03-$0.05/share savings realized when the company refinances its 2016 maturities. Renovation tailwind Park Central/West House. LHO expects EBITDA at the combined Park Central/WestHouse hotels to grow 22% per annum over the next two years or a run rate of ~$43mn this compares to the 2014 annualized EBITDA run rate of ~$29mn. With the property well occupied prior to renovation most of the uplift will come from ADR increases narrowing the gap with its Times Square comps, while trying to reposition WestHouse as a premium luxury boutique hotel (with rates ~$75+ higher than Park Central. While the repositioning of an unbranded hotel takes time, with WestHouse's TripAdvisor score of 70 out of the 452 hotels in NYC (top 15%), driving rates should not be a problem, over time. Despite widespread investor concerns over the LHO's initial investment (renovation drag; large unbranded hotel to name a few), Park Central has turned into a very solid real estate deal for LHO. Including LHO's $79mn capital investment in the property, we estimate the company's IRR to be north of 10%, with an all in cost of just $510k/key well below NYC replacement cost. Investment Risks New York City will likely remain a drag in In light of the continued uptick in NYC supply (14k rooms under construction, or +13% increase in supply), STR is forecasting -5% to 0% RevPAR growth in NYC for 2015 the weakest performance among the top 25 largest U.S. cities. LHO has 12% concentration in NYC. While the company will likely benefit from the continued stabilization of the Park Central and WestHouse redevelopment widespread underperformance in NYC, overall, will remain an overhang on the LHO story. Real Estate Research 187

188 RevPAR Growth 11 November 2014 While DC will look incrementally better in 2015, real pop is not expected until Facing more difficult comps, DC CBD has had a difficult year with RevPAR growth down 1.5% vs. the Top 25 MSA average of 9.2%--LHO generates 12% of its EBITDA in the nation's capital. While 3Q14 was very strong (at +9%), the start of the year was very tough due to more difficult comps from inauguration and supply pressures (including the 1,400 room Marriott convention hotel which opened in May), while sequestration continues to clip demand. Earlier in the year, we toured several of DC's top assets, and while hotel managers are generally bullish on the long term fundamentals in DC, there appears to be no near term catalyst with the convention/citywide calendar not expected to pick up until Overall, STR expects DC to post 0% to 5% RevPAR growth in Exhibit 208: Closer Look at DC Metro vs. DC CBD RevPAR Growth 12% 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% -1.6% 4.6% 2.0% 9.2% -1.5% DC Metro DC CBD Top 25 MSAs Source: SmithTravel, Credit Suisse research Real Estate Research 188

189 Earnings Model and Key Assumptions Exhibit 209: LaSalle Hotel Properties Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $1.56 $2.08 $2.30 $2.53 $2.81 $3.12 $3.37 Consensus FFOPS $2.58 $2.79 $3.03 $3.41 FFO Growth 34% 11% 10% 11% 11% 8% FFO Multiple 25.0x 18.7x 16.9x 15.3x 13.9x 12.5x 11.5x EBITDA $158,981 $263,223 $300,079 $339,035 $372,649 $407,912 $435,375 EV/EBITDA Multiple 32.5x 19.7x 17.2x 15.3x 13.9x 12.7x 11.9x RevPAR Growth 6.2% 4.7% 2.8% 8.7% 6.9% 6.0% 4.5% Source: Credit Suisse Research Key Drivers of LHO's Earnings Model: We are forecasting 2015 and 2016 FFO of $2.81 and $3.12, respectively, in line with consensus. Annualized FFO growth is 11% over the next two years. Our EBITDA forecast for 2015 and 2016 is $372mn and $407mn. Our earnings estimates are driven by 7% RevPAR growth in 2015 and 6.0% RevPAR growth in 2016 with most of the uplift coming from higher rates with eight out of 10 of LHO's markets beyond peak occupancy We expect margin growth of 75bp in 2015 and 90bp in 2016 We are modeling $150mn of acquisitions in 2015 (6.5% cap rate). Collectively, these deals add $0.05/share per annum. Our model assumes 15% dividend growth in 2015 (to $1.61/share) and 10% growth in 2016 (to $1.77/share), with an AFFO payout ratio of 75% by Real Estate Research 189

190 LaSalle Hotels Valuation Overview Exhibit 210: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $44.40 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $46.62 Approach 2: DCF NAV per share - w/12 month forward growth $35.57 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $35.57 Approach 3: EV/EBITDA Fwd EBITDA $372,649 Targeted M ultiple 15.0x Fair Value on NAV Valuation $40.64 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $43.00 Total Return Expectation 14.7% Source: Company data, Credit Suisse estimates Exhibit 211: NAV Snapshot LaSalle NAV Calculation Assumptions IRR Target 8.8% Assumed avg NOI growth next three years 6.7% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $402,326 Maintenance Capex ($66,458) Cash NOI $335,868 Assumed cash NOI cap rate 6.75% Market value of owned properties $5,960,384 Add Cash, CIP, + Other Assets Cash and cash equivalents $17,084 Other assets $77,301 Key inputs / items in our LHO NAV Model: Year 1 Cash NOI of $402mn 8.8% unlevered IRR o Modeling an economic downturn in years 5-6, with NOI declining by 25% as revenues fall 16% and margins drop 300bp. Model assumes a recovery in years 7-10 Blended cash cap rate of 6.75% Exit cap rate of 7.5% Equals -Gross market value of assets $6,054,769 Less Liabilities Total liabilities (incl. JVs) $1,423,797 Preferred Stock $178,750 Implied Cap Rate: 7.2% Implied $/key of $488k vs. a warranted $/key of $524k NAV Net market value of assets $4,452,222 Total Shares / Units 104,134 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $44.40 Warranted Price/Key $523,576 Current Stock Price $38.89 Implied Cap Rate 7.2% Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Real Estate Research 190

191 LHO IRR Analysis and DCF Model Exhibit 212: IRR Underwriting IRR ANALYSIS-CAP RATE Period Offset 23 Initial NOI 362,093 Going-in Cap Rate 6.75% Initial Value of Assets 5,364,345 Terminal Year NOI 508,417 Hold Period Cap Rate Expansion 0.75% Terminal Year Cap Rate 7.50% Terminal Value of Assets 6,778,899 Maint. Capex % of Hotel Rev's 6.00% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Revenues 1,196,735 1,265,663 1,321,846 1,359,987 1,400,786 1,260,708 1,147,244 1,227,551 1,301,204 1,366,264 Change YoY 5.8% 4.4% 2.9% 3.0% -10.0% -9.0% 7.0% 6.0% 5.0% Net Operating Income 402, , , , , , , , , ,417 Change YoY NA 8.5% 6.6% 5.1% 4.4% -13.1% -12.2% 10.9% 9.0% 7.9% Margin 33.6% 34.5% 35.2% 36.0% 36.5% 35.2% 34.0% 35.2% 36.2% 37.2% Margin Change YoY 88 bps 71 bps 75 bps 50 bps -125 bps -125 bps 125 bps 100 bps 100 bps (-) Maintenance Capex (71,804) (75,940) (79,311) (81,599) (84,047) (75,642) (68,835) (73,653) (78,072) (81,976) = Cash NOI 330, , , , , , , , , ,442 Initial Value of Assets (5,364,345) Terminal Value of Assets 6,778,899 Total Cash Flow (5,364,345) 330, , , , , , , , ,123 7,205,340 IRR 8.8% Cap Rate to Achieve IRR 6.8% Source: Company data, Credit Suisse estimates Exhibit 213: DCF Model with primary assumptions DCF ANALYSIS Risk Free Rate Equity Risk Premium 5-Year Adjusted Beta Cost of Equity Perpetual Growth Rate Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Adjusted FFO 292, , , , , ,157 (-) Maintenance Capex (71,491) (75,626) (78,997) (88,060) (85,813) (88,388) = AFFO net of Maint Capex 221, , , , , ,770 (+) Terminal Value 4,900,340 = Cash Flow to Equity Holders 221, , , , ,009 5,190,110 Ratios / Analysis FFO/sh growth NA 13% 9% 5% -6% CapEx as % of FFO 24% 23% 22% 24% 24% Inputs LHO Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.53 Cost of Equity (CAPM) 9.89% Perpetual Growth Rate 3.75% Outputs NPV of Cash Flows $978,228 Terminal Value (+50bp) $4,367,287 Number of periods 5 NPV of Terminal Value $2,725,961 Firm Value $3,704,190 Plus non-cash flow producing assets Shareholders Value $3,704,190 Share outstanding 104,134 DCF value per share $35.57 Source: Company data, Credit Suisse estimates Real Estate Research 191

192 LaSalle Hotel Properties LHO Price (07 Nov 14): US$38.89, Rating: OUTPERFORM, Target Price: US$43.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , , ,275.3 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (724.2) (267.4) (380.0) (80.0) Cash flow from investment (422.0) 29.3 (230.0) (80.0) Dividends paid (33.3) (42.2) (42.2) (42.2) Equity raised Net borrowings Other financing cash flows (173.4) (242.7) (18.5) (201.7) Financial cashflow (284.9) (60.7) (243.8) Net cashflow (21.7) 46.4 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 13, , , ,329.3 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 3, , , ,354.7 Other investments Other non-current assets 3, , , ,356.3 Total non-current assets 3, , , ,356.3 Total assets 3, , , ,514.7 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,234.9 Other non-current liabilities Total non-current liabilities 1, , , ,234.9 Total liabilities 1, , , ,470.0 Unit funds Reserves 2, , , ,035.2 Shareholders' equity 2, , , ,044.8 Total capital employed 3, , , ,279.7 Real Estate Research 192

193 Pebblebrook (PEB): Outperform Rating; $47 Price Target; 15% Total Return Company Overview Pebblebrook Hospitality is a $2.5 billion hotel REIT, with ownership interest in 31 hotels (six of which are NYC JVs) totaling 7,821 hotel rooms. In our opinion, PEB owns the best real estate portfolio in the hotel sector with 65% of its EBITDA generated in key, west coast markets including San Francisco, Los Angeles, Seattle, Portland, and San Diego. Over the past two quarters, these markets have generated 11%+ RevPAR growth, on average. In addition, PEB owns assets in New York City (13%), DC (6%), Boston (3%), Philadelphia (3%), and Miami (2%), while its assets command a $22 RevPAR premium over its peer group (second highest RevPAR in the sector behind Strategic Hotels). PEB's portfolio quality is further highlighted by our proprietary TripAdvisor analysis which compares the relative rating by the on-line website with PEB ranking in first place (by a wide margin) among the entire hotel REIT sector. Founded by Jon Bortz in 2009 as a blind pool REIT (Jon is widely considered one of the most respected hotel owners in the sector), PEB is the top performing REIT over the last three years generating a total return of 183%, 6,800bp higher than its hotel peers, and 12,000bp higher than the overall REIT index which was up 67%. Exhibit 214: Pebblebrook Hospitality Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Pebblebrook Hotel Trust (PEB) with an Outperform rating and a $47 price target, implying a 15% total return over the next 12 months (including the stock's 2.5% dividend yield). Our price target is based on the weighted average of our $47 forward NAV estimate + 5% premium (50%), 16.5x 'forward EBITDA' (30%) and our $44 DCF value (20%). Our 2015 and 2016 FFO estimates of $2.36 and $2.78, respectively, assume RevPAR growth of 7.1% in 2015 and 6.8% in Our Outperform rating on PEB is based on the following: (1) highest quality portfolio which should command a premium valuation; (2) we believe Wall Street estimates are too low with outsized margin growth and PEB's West coast focus likely to surprise to the upside; and (3) renovation tailwind will help drive 25% earnings growth in 2015 and 18% growth in 2016 highest in the sector. Real Estate Research 193

194 Investment Positives Highest-quality portfolio in the lodging REIT sector. Whether accounting for PEB's (1) west coast concentration (55% of its EBITDA is concentrated in three of the top performing RevPAR markets in the country San Francisco, Seattle, Portland, and LA); (2) urban/transient focused strategy (PEB's urban RevPAR CAGR has outperformed U.S. Hotel Industry RevPAR CAGR the past 26 years by an average of 39%); (3) $22 RevPAR premium above its REIT peers; or (4) its #1 ranking in our proprietary TripAdvisor analysis (PEB ranked #1 in the analysis or 1,000bp better than its lodging REIT peers, see Figure 195) few would argue that PEB owns one of the highest quality hotel portfolios in the sector. Accordingly, PEB should deliver sector leading RevPAR and earnings growth over the next several years. Despite $3.5mn of revenue displacement in 2015 from its ongoing renovation program (see below), we are modeling 15% FFO growth, per annum through Renovation tailwind should help PEB deliver sector leading RevPAR growth in PEB is currently involved in renovating/repositioning four assets spending a total of $64mn. Two of the projects are fairly comprehensive, including the repositioning of the Radisson Fisherman s Wharf (rooms, corridors, lobby, public space and 6 new keys) for a total investment of $29mn, and W Los Angeles (guest rooms and public area, plus 39 new keys), investing $22mn, both of which are expected to be completed by 2Q15. Other projects include the Embassy Suites San Diego ($7mn, adding 4 new keys+ lobby renovation) and Vintage Plaza Portland ($7mn on guest rooms, corridors and lobby) both to be completed by 1H15. We are modeling $3.5mn of NOI displacement in 2H14, and another $3.5mn of displacement through the first six months of Facing easy Y/Y comps, the renovation projects will add a material tailwind to 2016 results (with RevPAR growth +7%), while the addition of 49 new keys across the three projects should, we estimate, add $0.02/share to earnings, on an annualized basis. Solid margin growth story should help to drive above-average earnings growth the next several years. PEB expects to continue to close the margin gap between the company and LHO its closest competitor in the sector. PEB expects another 300bp+ of margin growth over the next couple of years, matching LHO's 32.3% level achieved in Against the backdrop of stronger than expected employment, we are expect ADR gains to top 5-6% across PEB's portfolio over the two years (excluding hotels under renovation) lending support to beyond peak margin gains. We expect PEB's margins to increase to near 34% by 2018, or an increase of ~400bp, while FFO growth will average 15%, per annum through Best in class management team, with a solid track record. PEB is managed by one of the most respected CEOs in the business, Jon Bortz. Having founded the company, along with CFO Ray Martz, in 2009 as a blind pool REIT, PEB has acquired 31, high-quality, urban/gateway city hotels (6,900 rooms, pro-rata) investing over $2.5bn of capital. In fact, over the past three years, EBITDA growth across its 30 hotels (excluding Zetta in San Francisco), has averaged an impressive 16% per annum, on a pro-forma basis, while PEB estimates that the cost basis for its 31 deals remains nearly 40% below replacement cost. Investment Risks NYC exposure a potential drag, on an otherwise solid investment story. In light of the continued uptick in NYC supply (14k rooms under construction, or +13% increase in supply), STR is forecasting -5% to 0% RevPAR growth in NYC for 2015 the weakest performance among the top 25 largest U.S. cities. This will create a headwind to an otherwise solid investment story with PEB generating 13% of its EBITDA in NYC. Real Estate Research 194

195 With the stock trading at an implied 6.4% cap rate there is a risk that the company could issue equity in the near-term to fund its robust acquisition pipeline. Company expects to ramp its redevelopment pipeline in which historically placed an overhang on Hotel equity performance given the renovation displacement and impact on FCF. Real Estate Research 195

196 Earnings Model and Key Assumptions Exhibit 215: Pebblebrook Hospitality Trust Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $0.85 $1.14 $1.42 $1.93 $2.36 $2.78 $3.12 Consensus FFOPS $1.92 $2.36 $2.71 $3.16 FFO Growth 34% 25% 36% 22% 18% 12% FFO Multiple 49.1x 36.7x 29.3x 21.6x 17.7x 15.0x 13.4x Adjusted EBITDA $71,551 $112,005 $146,730 $194,951 $241,267 $271,515 $295,768 EV/EBITDA Multiple 52.6x 33.6x 25.6x 19.3x 15.6x 13.9x 12.7x RevPAR Growth 10.3% 9.5% 6.7% 9.2% 7.1% 6.8% 5.6% Source: Credit Suisse Research Key Drivers of PEB's Earnings Model: We forecast 2015 and 2016 FFO of $2.36 and $2.78, respectively, 2-3% above consensus. Annualized FFO growth is 17% over the next two years among the highest in the industry. Our EBITDA forecast for 2015 and 2016 is $241mn and $271mn. Our earnings estimates are driven by 7% RevPAR growth in 2015 and 6.8% RevPAR growth in We are modeling $4.9mn of renovation displacement over the balance of 2014, and another $2.1mn during 1H15 from the $65mn PEB expects to spend on various renovations projects (mostly W Los Angeles and Radisson Fisherman's Wharf). We expect margin growth of 85bp in 2015 and 150bp in 2016 We have modeled the $261mn Boston acquisition PEB disclosed in a recent filing (although there is no guarantee it will close) for 1Q15, while for every $100mn PEB executes (at a 6% cap rate), earnings accretion is approximately $0.05/share, on an annualized basis. Our model assumes 10% dividend growth in 2015 (to $1.02/share) and 15% growth in 2016 (to $1.18/share), with an AFFO payout ratio of 60% by Real Estate Research 196

197 Pebblebrook Valuation Overview Exhibit 216: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $46.47 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $48.79 Approach 2: DCF DCF per share $44.29 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $44.29 Approach 3: EV/EBITDA Fwd EBITDA $241,267 Targeted M ultiple 16.5x Fair Value on NAV Valuation $44.94 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $47.00 Total Return 15.2% Source: Company data, Credit Suisse estimates Exhibit 217: NAV Snapshot Pebblebrook NAV Calculation Assumptions IRR Target 8.8% Assumed avg NOI growth next three years 11.3% Assumed avg NOI growth years % Key inputs / items in our PEB NAV Model: Calculate Operating Property Value NOI from owned properties $218,021 Maintenance Capex ($37,664) Cash NOI $180,356 Assumed cash NOI cap rate 6.15% Market value of owned properties $3,545,052 Joint Venture Assets (unconsolidated) Cash NOI from JV properties $32,244 Assumed cash NOI cap rate 6.50% Market value of owned properties $496,061 Year 1 Cash NOI of $218mn 8.8% blended unlevered IRR o Modeling an economic downturn in years 5-6, with NOI declining by 25% as revenues fall 16% and margins drop 250bp. In NYC, we model an 18% drop in NOI. Model assumes a recovery in years 7-10 Add Cash, CIP, + Other Assets Cash and cash equivalents $148,478 Other assets $49,137 Equals -Gross market value of assets $4,238,728 Less Liabilities NAV Total liabilities (incl. JVs) $1,030,132 Preferred Stock $350,000 Net market value of assets $2,858,597 Total Shares / Units 64,733 Blended cash cap rate of 6.15% (between core and its Manhattan collection) Exit cap rate of 7% Implied Cap Rate 6.4% Implied $/key of $561k vs. warranted $/key of $585k Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $46.47 Warranted Price/Key $584,314 Current Stock Price $41.68 Price/Net Asset Value 94% Implied Cap Rate 6.4% Real Estate Research 197

198 PEB IRR Analysis and DCF Model Exhibit 218: IRR Underwriting Wholly Owned Portfolio IRR ANALYSIS - Core Portfolio (CAP RATE) Period Offset 23 Initial NOI 196,219 Going-in Cap Rate 6.15% Initial Value of Assets 3,190,547 Terminal Year NOI 289,280 Hold Period Cap Rate ExpARsion 0.75% Terminal Year Cap Rate 6.90% $/Key Terminal Value of Assets 4,192,459 $693 Maint. Capex % of Hotel Rev's 6.00% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Revenues 714, , , , , , , , , ,576 ChARge YoY 6.9% 6.2% 3.8% 3.0% -10.0% -8.0% 6.0% 5.0% 4.0% Net Operating Income 218, , , , , , , , , ,280 ChARge YoY NA 13.1% 9.5% 7.0% 4.5% -13.9% -12.1% 9.3% 8.2% 7.1% Margin 30.5% 32.3% 33.3% 34.3% 34.8% 33.3% 31.8% 32.8% 33.8% 34.8% Margin ChARge YoY 176 bps 103 bps 101 bps 50 bps -150 bps -150 bps 100 bps 100 bps 100 bps (-) MaintenARce Capex (42,844) (45,811) (48,634) (50,482) (51,996) (46,797) (43,053) (45,636) (47,918) (49,835) = Cash NOI 175, , , , , , , , , ,445 Initial Value of Assets (3,190,547) Terminal Value of Assets 4,192,459 Total Cash Flow (3,190,547) 175, , , , , , , , ,249 4,431,904 IRR 8.8% Cap Rate to Achieve IRR 6.2% Source: Company data, Credit Suisse estimates Exhibit 219: IRR Underwriting Manhattan Portfolio IRR ANALYSIS - Manhattan Portfolio Unlevered IRR Assumptions Total Revenues (NTM) 94,300 (-) Property Expenses (excl Corpora (65,421) Initial NOI Assumption (NTM) 28,880 (-) Recurring Capex (5,658) Cash Net Operating Income (NTM) $23,222 Initial Cap Rate Assumption 6.5% Recurring capex as % of revenues 6.0% Implied Initial Multiple 15.4x Initial Value of Assets $444,302 Terminal Cash NOI $33,920 Terminal Cap Rate Assumption 7.0% Change in Cap Rate 0.50% Implied Terminal Multiple 14.3x Change in Terminal Multiple -1.1x $/Key Terminal Value of Assets $576,069 $ FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 FY 2024 FY Hotel Revenues 90,863 94,300 99, , , ,259 97,433 89,638 95, , ,751 Change YoY 3.8% 5.3% 2.8% 3.0% 3.0% -10.0% -8.0% 7.0% 6.0% 5.0% Net Operating Income 30,400 32,244 33,929 36,563 38,127 40,082 34,613 30,499 33,833 37,134 40,325 Change YoY 6.1% 5.2% 7.8% 4.3% 5.1% -13.6% -11.9% 10.9% 9.8% 8.6% Margin 34.2% 34.2% 35.8% 36.3% 37.0% 35.5% 34.0% 35.3% 36.5% 37.8% Margin Change YoY -1 bps 165 bps 44 bps 75 bps -150 bps -150 bps 125 bps 125 bps 125 bps (-) Maintenance Capex (5,658) (5,956) (6,123) (6,306) (6,496) (5,846) (5,378) (5,755) (6,100) (6,405) = Cash NOI $26,586 $27,973 $30,440 $31,820 $33,587 $28,767 $25,121 $28,078 $31,034 $33,920 Initial Value of Assets (444,302) Terminal Value of Assets $576,069 Total Cash Flow (444,302) $26,586 $27,973 $30,440 $31,820 $33,587 $28,767 $25,121 $28,078 $31,034 $609,989 IRR 8.6% Cap Rate to Achieve IRR 6.5% Source: Company data, Credit Suisse estimates Real Estate Research 198

199 Exhibit 220: DCF Model with primary assumptions DCF ANALYSIS Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Normalized FFO 161, , , , , ,719 (-) Maintenance Capex (42,971) (45,811) (48,634) (50,482) (49,156) (50,876) = Adjusted FFO 118, , , , , ,843 (+) Terminal Value 4,160,077 = Cash Flow to Equity Holders 118, , , , ,005 4,342,920 Ratios / Analysis FFO/sh growth NA 22% 11% 12% -6% CapEx as % of FFO 27% 24% 23% 22% 22% Inputs PEB Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.18 Cost of Equity (CAPM) 8.31% Perpetual Growth Rate 3.75% Outputs NPV of Cash Flows $604,745 Terminal Value (+50bp) $3,613,496 Number of periods 5 NPV of Terminal Value $2,424,291 Firm Value $3,029,036 Plus non-cash flow producing assets Shareholders Value $3,029,036 Share outstanding 68,396 DCF value per share $44.29 Source: Company data, Credit Suisse estimates Real Estate Research 199

200 Pebblebrook Hotel Trust PEB Price (07 Nov 14): US$41.68, Rating: OUTPERFORM, Target Price: US$47.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (476.8) (313.0) (602.0) (48.0) Cash flow from investment (246.0) (187.5) (341.0) (48.0) Dividends paid (39.6) (60.5) (70.0) (80.5) Equity raised Net borrowings (8.1) (2.3) Other financing cash flows (23.9) (20.1) Financial cashflow (80.5) Net cashflow (30.8) (108.9) 52.4 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 20, , , ,639.3 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 1, , , ,113.1 Other investments Other non-current assets 1, , , ,392.8 Total non-current assets 1, , , ,392.8 Total assets 2, , , ,678.4 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt Other non-current liabilities Total non-current liabilities Total liabilities Unit funds Reserves 1, , , ,801.9 Shareholders' equity 1, , , ,806.9 Total capital employed 2, , , ,554.1 Real Estate Research 200

201 RLJ Lodging (RLJ): Outperform Rating; $35 Price Target; 15% Total Return Company Overview RLJ Lodging Trust (RLJ) is a $4bn hotel REIT (second largest behind Host), and unlike the other hotel REITs within our coverage universe, its portfolio is comprised mostly of premium-branded, select service hotels. RLJ's portfolio includes 149 properties with over 23,000 hotel rooms, with its assets concentrated in both tier I and tier II cities across 21 states. Select service hotels generate most of their revenue from room rentals, have limited F&B and meeting space, and rely less on group business demand, while maintain some of the highest operating margins in the sector given their lower operating costs (RLJ's '14 hotel margins are running at 35%). RLJ's top markets include NYC (15% of EBITDA), Austin (10%), Chicago (9%), Denver (8%), and DC (6%). Its top brands include Courtyard, Residence Inn, Hilton Garden Inn, Homewood Suites by Hilton, Hyatt Place and Embassy Suites. Since its 2011 IPO, RLJ's management team has delivered superior equity returns, with the stock up 95%, or 40-percentage points higher than its peers. Exhibit 221: RLJ Lodging Trust Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of RLJ Lodging Trust (RLJ) with an Outperform rating and a $35 price target, implying a 15% total return over the next 12 months (including the stock's 4.3% dividend yield. Our price target is based upon the weighted average of our $36 forward NAV estimate (50%), 13. 5x forward EBITDA (30%) and our $35 DCF value (20%). Our 2015 and 2016 FFO estimates of $2.79 and $3.09, respectively, assume RevPAR growth of 6.8% in 2015 and 5.5% in Our Outperform rating on RLJ is supported by: (1) our expectation that select service hotels will post strong operating fundamentals in 2015 and 2016 as the US recovery moves beyond gateway cities; (2) strong balance sheet, and (3) best in class management team supporting a premium valuation trading at just a 5% discount to NAV. Real Estate Research 201

202 Investment Positives Best in class management team focused on creating value for shareholders. As a result of its stellar track record, RLJ's stock has been one of this year's top-performing stocks, up 34%, or 900bp higher than its peers. Key's to RLJ's success had been: (1) repositioning portfolio by selling $130mn of non-core assets, while materially increasing its exposure to higher growth markets (including its Hyatt deal which significantly increased its exposure to the West Coast) top 50 assets account for 65% of EBITDA; (2) returns on acquisitions (mostly off market) have surprised to the upside; and (3) despite its short tenure as a public company (its IPO was in 2011), CEO Tom Baltimore is widely regarded as among the top lodging REIT executives in the space, while the balance of his senior management team has worked for the company for the last 12+ years. Discounted valuation. The stock currently trades at just 13x 2015 EBITDA, or 170 multiple turns lower than its peers. Taking into account RLJ's superior track record, coupled with the fact that we are witnessing a broader lodging recovery (Upscale and Upper Midscale chains have recently outperformed), we believe the valuation gap is too wide. External growth engine has played a key role in the company's solid earnings growth. YTD, RLJ has announced nearly $650m of acquisitions at a going in yield north of 7.5% (offset by $128mn of non-core asset sales) its largest pipeline since going public in We forecast 12% FFO growth (per annum) for RLJ over the next two years, or 300bp higher than the broader REIT index. Upscale/Upper Midscale chains have witnessed a stronger than expected rebound as job growth accelerates. RevPAR growth at the Upscale and Upper Midscale chains (or limited service brands such as Courtyard, Homewood Suites, Hyatt Place, Residence Inn, Hampton Inn and Holiday Inn, to name a few) has averaged 8-9% over the last five months ( bp above YTD trends), while both Luxury and Upper Upscale chains are running at/or below YTD RevPAR trends. We forecast 20%+ annualized dividend growth the next two years. RLJ has aggressively grown its dividend up 175% since its 2011 IPO, while its payout ratio remains a healthy 57%. With RLJ forecasting to generate 12% earnings growth per annum over the next two years, we model 20% dividend growth per annum through 2016 while its payout ratio increases modestly to 65%. A player on either side of the consolidation game. RLJ management is a major proponent of hotel consolidation. Key issues to consider: (1) given RLJ's superior track record as both a public and private operator RLJ could be a seller this cycle recreating themselves in the private market; and (2) In the event that RLJ's valuation gap narrows with its peers expect the company to be a potentially consolidator and potentially diversifying away from strictly select service hotels. Strong balance sheet with $600mn+ of dry powder available for future deals. The company's leverage ratio is just 3.4x, while RLJ faces limited debt maturities the next three years (total of just $380mn, or 24% of outstanding) Investment Risks Middle market, limited service focused portfolio makes RLJ more susceptible to supply pressures, especially in Houston (6% of EBITDA) and Austin (9% of EBITDA) where supply growth is running 3% per annum over the next few years Despite its efforts to dispose of non-core assets, the company continues to own a sizeable portfolio in lower growth, secondary markets, which is one of the primary Real Estate Research 202

203 reasons the stock continues to trade at such a wide discount to the balance of our coverage universe. That said, RLJ is currently marketing non-core assets, which will likely materially reduce its exposure to Indiana, Kentucky, and Michigan. Company has talked openly about its potential as a consolidator in the industry which places both execution risk and equity overhang should they pursue a large scale portfolio deal. Earnings Model and Key Assumptions Exhibit 222: RLJ Lodging Trust Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $1.33 $1.71 $2.02 $2.37 $2.79 $3.09 $3.30 Consensus FFOPS $2.35 $2.70 $2.82 N/A FFO Growth 28% 19% 17% 18% 10% 7% FFO Multiple 23.9x 18.6x 15.7x 13.4x 11.4x 10.3x 9.6x Adjusted EBITDA $229,912 $263,149 $306,732 $362,872 $425,959 $465,901 $493,934 EV/EBITDA Multiple 24.1x 21.0x 18.0x 15.2x 13.0x 11.9x 11.2x RevPAR Growth 7.7% 7.4% 7.2% 7.3% 6.8% 5.5% 5.0% Source: Credit Suisse Research Key Drivers of RLJ's Earnings Model: We forecast 2015 and 2016 FFO of $2.79 and $3.09, respectively, 6% above consensus. Annualized FFO growth is 12% over the next two years. Our EBITDA forecast for 2015 and 2016 is $426mn and $465mn. Our earnings estimates are driven by 6.8% RevPAR growth in 2015 and 5.5% RevPAR growth in We expect margin growth of 55bp in 2015 and 75bp in 2016 We have $150mn of net new acquisitions modeled in 2015, and $100mn modeled in 2016 (both at 7.5% cap rates). For each additional $100mn of deals RLJ closes, FFO increases by $0.04/share We have 30% dividend growth modeled in 2015 to $1.35/share, and growth of 17% in 2015 to $1.58, while RLJ maintains a 65% payout ratio. Real Estate Research 203

204 RLJ Lodging Trust Valuation Overview Exhibit 223: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forw $35.48 Targeted Premium (Discount) to 0% Fair Value on NAV Valuation $35.48 Approach 2: DCF DCF per share $35.26 Targeted Premium (Discount) to 0% Fair Value on NAV Valuation $35.26 Approach 3: EV/EBITDA Fwd EBITDA $425,959 Targeted Multiple 13.5x Fair Value on NAV Valuation $33.64 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $35.00 Total Return 14.5% Source: Company data, Credit Suisse estimates Exhibit 224: NAV Snapshot RLJ Lodging Trust NAV Calc. Assumptions IRR Target 9.3% Assumed avg NOI growth next three years 6.2% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $430,453 Maintenance Capex ($71,621) Cash NOI $358,832 Assumed cash NOI cap rate 7.30% Market value of owned properties $5,896,618 Add Cash, CIP, + Other Assets Cash and cash equivalents 274,440 Other assets $51,472 Equals -Gross market value of assets $6,222,530 Less Liabilities NAV Total liabilities (incl. JVs) $1,776,452 Net market value of assets $4,446,078 Total Shares / Units 133,281 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $35.48 Warranted Price/Key $252,445 Current Stock Price $31.74 Price/Net Asset Value 95% Implied Cap Rate 7.6% Source: Company data, Credit Suisse estimates Key inputs / items in our RLJ NAV Model: Year 1 Cash NOI of $337mn 9.8% unlevered IRR o Modeling an economic downturn in years 5-6, with NOI declining by 20% as revenues fall 15% and margins drop 250bp. Model assumes a recovery in years 7-10 Blended cash cap rate of 7.35% Exit cap rate of 8.2% Implied Cap Rate: 7.5% Implied $/key of $236k vs. warranted $/key of $241k Source: Company data, Credit Suisse estimates Real Estate Research 204

205 RLJ IRR Analysis and DCF Model Exhibit 225: IRR Underwriting IRR ANALYSIS-CAP RATE Period Offset 18 Initial NOI 387,408 Going-in Cap Rate 7.30% Initial Value of Assets 5,306,956 Terminal Year NOI 546,191 Hold Period Cap Rate Expansion 0.75% Terminal Year Cap Rate 8.05% Terminal Value of Assets 6,784,981 Maint. Capex % of Hotel Rev's 6.00% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Revenues 1,220,783 1,290,095 1,351,762 1,405,541 1,454,735 1,323,809 1,231,142 1,305,011 1,383,311 1,452,477 Change YoY 5.7% 4.8% 4.0% 3.5% -9.0% -7.0% 6.0% 6.0% 5.0% Net Operating Income 430, , , , , , , , , ,191 Change YoY NA 7.0% 5.4% 5.0% 4.5% -11.5% -9.6% 9.1% 9.0% 7.9% Margin 35.3% 35.7% 35.9% 36.3% 36.6% 35.6% 34.6% 35.6% 36.6% 37.6% Margin Change YoY 45 bps 21 bps 34 bps 35 bps -100 bps -100 bps 100 bps 100 bps 100 bps (-) Maintenance Capex (73,247) (77,406) (81,106) (84,332) (87,284) (79,429) (73,869) (78,301) (82,999) (87,149) = Cash NOI 357, , , , , , , , , ,042 Initial Value of Assets (5,306,956) Terminal Value of Assets 6,784,981 Total Cash Flow (5,306,956) 357, , , , , , , , ,350 7,244,024 IRR 9.3% Cap Rate to Achieve IRR 7.3% Source: Company data, Credit Suisse estimates Exhibit 226: DCF Model with primary assumptions DCF ANALYSIS Risk Free Rate Equity Risk Premium 5-Year Adjusted Beta Cost of Equity Perpetual Growth Rate Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Adjusted FFO 370, , , , , ,550 (-) Maintenance Capex (79,351) (83,856) (87,865) (91,360) (89,066) (91,737) = AFFO net of Maint Capex 291, , , , , ,813 (+) Terminal Value 5,896,934 = Cash Flow to Equity Holders 291, , , , ,826 6,266,747 Ratios / Analysis FFO/sh growth NA 12% 7% 5% -5% CapEx as % of FFO 21% 20% 20% 20% 20% Inputs RLJ Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.40 Cost of Equity (CAPM) 9.30% Perpetual Growth Rate 2.85% Outputs NPV of Cash Flows $1,288,927 Terminal Value (+50bp) $5,321,045 Number of periods 5 NPV of Terminal Value $3,411,113 Firm Value $4,700,040 Plus non-cash flow producing assets Shareholders Value $4,700,040 Share outstanding 133,281 DCF value per share $35.26 Source: Company data, Credit Suisse estimates Real Estate Research 205

206 RLJ Logding Trust RLJ Price (07 Nov 14): US$31.74, Rating: OUTPERFORM, Target Price: US$35.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , , ,329.5 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (470.3) (1,415.8) (680.0) (680.0) Cash flow from investment (262.1) (589.4) (230.0) (230.0) Dividends paid (98.1) (135.0) (179.1) (208.9) Equity raised Net borrowings Other financing cash flows (7.2) (25.1) 12.2 Financial cashflow (179.1) (196.7) Net cashflow (35.6) (54.3) (33.1) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 9, , ,764.3 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 3, , , ,823.1 Other investments Other non-current assets 3, , , ,826.1 Total non-current assets 3, , , ,826.1 Total assets 3, , , ,177.9 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,570.6 Other non-current liabilities Total non-current liabilities 1, , , ,573.9 Total liabilities 1, , , ,757.3 Unit funds Reserves 2, , , ,410.4 Shareholders' equity 2, , , ,420.6 Total capital employed 3, , , ,994.5 Real Estate Research 206

207 Strategic Hotels (BEE): Neutral Rating; $14 Price Target; 12% Total Return Exp. Company Overview With ownership interest in 16 luxury and upper upscale hotels (totaling 7,600 rooms), across key markets such as San Francisco Metro (22% of rooms); Chicago (20%), San Diego (16%) and NYC (7%), Strategic Hotels owns one of the highest quality hotel portfolios in the sector. Its top brands include: InterContinental (19% of room count), Fairmont (18%), Westin (16), Hotel Del Coronado (10%), and Ritz Carlton (9%). Exhibit 227: Strategic Hotels Source: SNL Financial Investment Thesis: Neutral We are initiating coverage of Strategic Hotels (BEE) with a Neutral rating and a $14 price target, which is based on the weighted average of our $15.75 forward NAV estimate + a 5% premium (50%), 16.8x forward EBITDA (30%) and our $12 DCF value (20%), which implies a 12% total return (BEE does not pay a dividend) over the next 12 months. Our 2015 and 2016 FFO estimates of $0.86 and $0.99, respectively, assume RevPAR growth of 7.1% in 2015 and 7.2% in Our Neutral rating is supported by: (1) BEE's high quality, luxury branded portfolio which is widely regarded as among the best in the sector; (2) limited to no supply risk across its markets; and (4) 20%+ annualized earnings growth over the next two years, although (4) we believe the stock is fairly valued within our valuation framework. Investment Positives High quality portfolio, with a bent toward luxury, has helped BEE deliver sector leading fundamentals. Strategic Hotels is largely considered one of the highest quality hotel owners in the sector. Its hotels have led the industry in a number of key metrics the last several years including average RevPAR (35% higher than peers at Real Estate Research 207

208 $213); RevPAR growth from '10-'13 (7.9%, or 220bp higher than peers); and margin growth (210bp vs. 70bp for peers). In spite of BEE's strong operating performance, most of its hotels are either back, or near peak operating results (RevPAR and margins). Additionally, over half of BEE's EBITDA is generated in California (among the strongest RevPAR state in the country), while ~26% of BEE s EBITDA comes from the San Francisco metro area one of the strongest hotel markets in the country. Over the last three quarters, San Francisco RevPAR growth averaged 13.5%; 11.0% in LA, and 10.5% in San Diego. Virtually no supply risk across BEE's core markets. Excluding New York City and to a lesser extend DC; BEE's core markets face little-to-no supply risk (for upper upscale and luxury branded hotels) over the next three years. In fact, in California, there are virtually no new luxury/upper upscale hotels expected to be delivered in San Francisco, San Diego, or LA County over the next two years. Despite facing more difficult comps, we are forecasting 7.1% RevPAR growth in 2015 and 7.2% in 2016 for BEE's portfolio. Balance sheet in much better shape while simpler story JV consolidation and Europe divestiture helps to simplify the story Investment Risks Luxury operating results expected to remain strong in 2015, but will investor capital move lower down the chain scale for higher growth? As we highlighted in Figure 190, luxury and upper upscale RevPAR growth has flattened out YTD to 6%, while we have witnessed a very strong bounce lower quality scales upscale and midscale brands. On a relative basis, the risk to BEE (and some of its peers) is that investor capital could look further out on the risk spectrum for higher returns. BEE screens expensive on most metrics. With talk of a BEE selling the company largely off the table, the stock screens expensive (remove takeout premium) trading at an implied 6.9% cap rate and 15.2x 2015 EBITDA 1.2 turns wider than its peers. While a take-out of BEE is not entirely off the table, it is no longer an overriding theme for the company. All eyes will be on management's ability to execute drive margins, continue reducing leverage and executing on a redevelopment strategy at several of its key hotels. Potential for renovation penalty box with the Loews Santa Monica slated for a fullscale renovation in Real Estate Research 208

209 Earnings Model and Key Assumptions Exhibit 228: Strategic Hotels Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $0.20 $0.26 $0.43 $0.69 $0.86 $0.99 $1.12 Consensus FFOPS $0.68 $0.82 $0.93 $1.12 FFO Growth 30% 62% 62% 25% 15% 13% FFO Multiple 18.1x 14.5x 12.6x 11.2x Adjusted EBITDA $175,402 $213,188 $262,672 $302,690 $337,882 $373,238 EV/EBITDA Multiple 19.9x 17.2x 15.4x 14.0x RevPAR Growth 10.9% 6.4% 8.2% 6.3% 7.1% 7.2% 5.4% Source: Credit Suisse research Key Drivers of BEE's Earnings Model: We are forecasting 2015 and 2016 FFO of $0.86 and $0.99, respectively, 4% above consensus. Annualized FFO growth is 18% over the next two years among the highest in the sector. Our EBITDA forecast for 2015 and 2016 is $302mn and $337mn. Our earnings estimates are driven by 7.1% RevPAR growth in 2015 and 7.2% RevPAR growth in We expect margin growth of 175bp in 2015 and 100bp in 2016 We have no additional acquisitions modeled for 2015 or 2016 We have no dividends modeled for BEE. Real Estate Research 209

210 Strategic Hotels Valuation Overview Exhibit 229: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $15.39 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $16.16 Approach 2: DCF NAV per share - w/12 month forward growth $10.80 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $10.80 Approach 3: EV/EBITDA Fwd EBITDA $302,690 Targeted M ultiple 16.8x Fair Value on NAV Valuation $13.96 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $14.00 Source: Company data, Credit Suisse estimates Exhibit 230: NAV Snapshot Strategic Hotels NAV Calculation Assumptions IRR Target 8.8% Assumed avg NOI growth next three years 10.5% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $337,478 Maintenance Capex ($72,778) Cash NOI $264,700 Assumed cash NOI cap rate 6.25% Market value of owned properties $5,399,641 Add Cash, CIP, + Other Assets Cash and cash equivalents $234,405 Other assets $80,809 Key inputs / items in our BEE NAV Model: Year 1 Cash NOI of $ % unlevered IRR Blended cash cap rate of 6.2% Exit cap rate of 7% Modeling an economic downturn in years 5-6, with NOI declining by 27% as revenues fall 18% and margins drop 300bp among the steepest declines we modeled in the group. Model assumes a recovery in years 7-10 Equals -Gross market value of assets $5,714,855 Less Liabilities Total liabilities (incl. JVs) $2,028,223 Preferred Stock $87,064 Implied Cap Rate: 6.8% Implied $/key of $625k vs. warranted $/key of $698k NAV Net market value of assets $3,599,568 Total Shares / Units 249,647 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $15.39 Warranted Price/Key $686,541 Current Stock Price $12.52 Price/Net Asset Value 87% Implied Cap Rate 6.9% Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates Real Estate Research 210

211 BEE IRR Analysis and DCF Model Exhibit 231: IRR Underwriting IRR ANALYSIS-CAP RATE ANALYSIS Period Offset 23 Initial NOI 303,730 Going-in Cap Rate 6.25% Initial Value of Assets 4,859,677 Terminal Year NOI 455,757 Hold Period Cap Rate Expansion 0.75% Terminal Year Cap Rate 7.00% Terminal Value of Assets 6,510,813 Maint. Capex % of Hotel Rev's 6.00% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Revenues 1,212,963 1,306,424 1,380,831 1,458,294 1,502,043 1,351,839 1,243,692 1,330,750 1,410,595 1,467,019 Change YoY 7.7% 5.7% 5.6% 3.0% -10.0% -8.0% 7.0% 6.0% 4.0% Net Operating Income 337, , , , , , , , , ,757 Change YoY 11.1% 11.6% 8.8% 7.9% 3.8% -14.4% -12.7% 11.9% 10.6% 7.5% Margin 27.8% 28.8% 29.7% 30.3% 30.6% 29.1% 27.6% 28.8% 30.1% 31.1% Margin Change YoY 99 bps 85 bps 65 bps 25 bps -150 bps -150 bps 125 bps 125 bps 100 bps (-) Maintenance Capex (72,778) (78,385) (82,850) (87,498) (90,123) (81,110) (74,622) (79,845) (84,636) (88,021) = Cash NOI 264, , , , , , , , , ,736 Initial Value of Assets (4,859,677) Terminal Value of Assets 6,510,813 Total Cash Flow (4,859,677) 264, , , , , , , , ,486 6,878,548 IRR 8.8% Cap Rate to Achieve IRR 6.3% Source: Company data, Credit Suisse estimates Exhibit 232: DCF Model with primary assumptions DCF ANALYSIS Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Adjusted FFO 215, , , , , ,509 (-) Maintenance Capex (66,423) (74,816) (82,534) (94,447) (91,949) (94,708) = AFFO net of Maint Capex 149, , , , , ,802 (+) Terminal Value 3,226,787 = Cash Flow to Equity Holders 149, , , , ,187 3,438,589 Ratios / Analysis FFO/sh growth NA 16% 14% 8% -9% CapEx as % of FFO 31% 30% 30% 31% 32% Inputs BEE Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.68 Cost of Equity (CAPM) 10.56% Perpetual Growth Rate 3.75% Outputs NPV of Cash Flows $680,485 Terminal Value (+50bp) $2,897,423 Number of periods 5 NPV of Terminal Value $1,753,969 Firm Value $2,434,453 Plus non-cash flow producing assets $0 Shareholders Value $2,434,453 Share outstanding 225,348 DCF value per share $10.80 Source: Company data, Credit Suisse estimates Real Estate Research 211

212 Strategic Hotels & Resorts Inc. BEE Price (07 Nov 14): US$12.52, Rating: NEUTRAL, Target Price: US$14.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , , ,306.4 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity 3 5 Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) (13.2) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (43.5) (682.8) (80.0) (80.0) Cash flow from investment (43.5) 38.8 (80.0) (80.0) Dividends paid (24.2) (20.6) (7.2) (7.2) Equity raised Net borrowings (36.0) (240.1) Other financing cash flows (18.0) (192.1) Financial cashflow (78.2) (18.2) (7.2) (7.2) Net cashflow Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 1, , , ,593.1 Other investments Other non-current assets 2, , , ,672.8 Total non-current assets 2, , , ,800.8 Total assets 2, , , ,536.6 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,666.6 Other non-current liabilities Total non-current liabilities 1, , , ,712.4 Total liabilities 1, , , ,927.0 Unit funds Reserves , , ,437.5 Shareholders' equity , , ,609.6 Total capital employed 2, , , ,322.0 Real Estate Research 212

213 Sunstone Hotels (SHO): Outperform Rating; $17 Price Target; 14% Total Return Exp. Company Overview Sunstone Hotels is a $3 billion hotel REIT, with ownership interest in 30 upper upscale hotels totaling over 14,300 hotel rooms. SHO owns a well-diversified portfolio of largely big-box branded hotels (Marriott, Renaissance, Hilton, and Hyatt collectively make up 70% of room count), with outsized concentration in San Diego (11% of rooms), Boston (10%), New York City (9%), and Chicago (8%). 54% of its EBITDA is driven by "urban transient" (one of the healthier drivers of hotel demand), followed by "urban group" at nearly 30% of EBITDA. SHO's management team has been a driving force of the company's past success (stock is up 177% the last three years), dramatically reducing leverage, while recycling underperforming/non-core hotels into higher growth gateway cities. Exhibit 233: Sunstone Hotels Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Sunstone Hotels (SHO) with an Outperform rating and a $17 price target, which is based on the weighted average of our $17.80 forward NAV estimate (50%), 14.5x forward EBITDA (30%) and our $15 DCF value (20%) implying a 14% total return (including 4.2% dividend yield) over the next 12 months.. Our 2015 and 2016 FFO estimates of $1.22 (5% below consensus) and $1.44, respectively, assume RevPAR growth of 7% in 2015 and 6.5% in Our Outperform rating is based on the following factors: (1) SHO trades at too wide of a discount (12% discount to NAV) with the discount largely based on unwarranted negative sentiment surrounding its robust redevelopment pipeline; (2) improving group business trends; and (3) 33% forecasted dividend growth. Real Estate Research 213

214 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Index Returns Index Returns 11 November 2014 Investment Positives Renovation overhang creates unwarranted discounted valuation. Year to date, SHO's stock has dramatically underperformed the broader lodging REIT index (+15% vs. 25% for its peers), as concern over the company's robust redevelopment pipeline has placed an overhang on the story. We estimate SHO's redevelopments results in a temporary earnings drag of $ /share/annum over the next two years. At the current share price, SHO trades at a discount by most valuation metrics: (1) 12% discount to our $17.50 NAV estimate; and (2) trades at just 13.7x 2015 EBITDA vs. 14.7x for its peer group average. We believe the discounted valuation is unwarranted, and we expect the valuation gap to narrow over time. As we highlight below, lodging stocks tend to be put into a 12+ month penalty box following news of large-scale redevelopments (both DRH and LHO experienced a similar drag in '12/'13). However, stocks dramatically outperform as projects near completion, with both DRH and LHO outperforming its peers by nearly 1,000bp once both projects opened. "Renovation" penalty box unwarranted creates a unique buying as companies tend to outperform as redevelopment nears completion While redevelopment for most real estate asset classes is often viewed as a good use of capital (solid returns, asset improvement, etc.), lodging stocks tend to be put into a 12+ month penalty box following news of large-scale projects. Case in point, both LHO and DRH materially underperformed the broader lodging REIT index following news of comprehensive renovation programs including the Park Central for LHO and Hotel Lexington, Westin San Diego, Westin DC and Westin Boston, for DRH. Specifically, LHO underperformed its peers from January 2012 (Park Central deal announced) through February 2014 (date of LHO investor day at Park Central) by 1100bp. Same held true for DRH, which underperformed its peers from the day they announced the Hotel Lexington (April 2011) through the day the stock bottomed (Oct. '12) by 1400bp. Since the projects have been completed, both stocks have rebounded with LHO outperforming the broader lodging REIT index by 900bp and DRH by 1,100bp since July Generally speaking, both stocks underperformed for a period of months. Exhibit 234: LHO Underperformed for 12+ months since it Acquired Park Central Only to Materially Outperform Acq. Park Central Meat of the Renovation / displacement LHO Investor Day at Park Central BBHTL LHO Bloomberg Hotels LHO Source: STR Global and Credit Suisse. Real Estate Research 214

215 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Index Returns Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Index Returns Index Returns 11 November 2014 Exhibit 235: DRH Was the Renovation Victim throughout 2012 Only to Rebound Once Renovations Completed DRH Acquired Hotel Lex DRH Acquired Blackstone assets Hotel Lex Opens. DRH hosts Investor Day Westin DC, Boston and San Diego renovations complete BBHTL DRH BBHTL DRH Source: STR Global and Credit Suisse. SHO is the latest hotel REIT to be placed in the renovation penalty box, as the company has three comprehensive renovation projects ongoing, including Boston Park Plaza ($90mn investment); Hyatt Regency San Francisco ($43mn), and Wailea Beach Marriott Resort ($65mn). The capital spend at each of these projects is necessary to reposition the hotels to be more competitive within the comp-set, dramatically improving the RevPAR index at the properties. In addition, all three hotels are located in gateway cities, and generally improve the overall quality of SHO's portfolio. Despite its efforts, SHO's stock has dramatically underperformed since it first announced the Boston Park Plaza deal, with an increase of 29% versus 45% for its peers. In our opinion, the stock performance clearly does not match the relative risk of redevelopment with renovation displacement expected to be just $18mn (including the Marriott Wailea which we estimate will be an additional $7+mn of displacement), or just $0.03/share per annum. Put another way, the capex drag affects SHO's earnings by less than 3% per year. While SHO still has another 2+ years before all three renovations are complete (Marriott Wailea renovation will occur in 2016 and 2017), we expect the valuation gap between SHO and its peers to narrow as we move through 2015 with most of the work at the Hyatt San Francisco near completion, while management expects the rooms renovation at the Boston Park Plaza to be wrapped up by Exhibit 236: SHO in the Renovation Penalty Box Valuation Gap to Narrow Over Time Marriott Wailea Acq Boston Park Plaza Acq. Hyatt SF Acq SHO publishes presentation on renovation impact BBHTL SHO Source: STR Global and Credit Suisse Improving group trends a net benefit for Sunstone. With job growth accelerating, and business sentiment improving, it's no surprise that group business is finally starting to rebound. Over the past 12 months, Group RevPAR growth has averaged 6.4% vs. the prior two years of just 2-4%. A dramatic improvement in group trends is good news for SHO, with 30%+ of its demand driven by group business. With limited new supply, especially in the Upper Upscale segment of lodging (just 1.5% over the next two years), coupled with accelerated job and wage growth we anticipate group Real Estate Research 215

216 to continue to post solid results, which could lead to additional multiple expansion for SHO. Management successful track record at creating value for shareholders. SHO is a classic example of a management-led turnaround story, delivering outsized returns for investors over the past three years. Ever since SHO's "new" management team led by Ken Cruse (CEO), Jon Arabia (President), and Bryan Gigilia CFO) took over operations in late 2011 with a stated goal of reducing leverage, repositioning its portfolio, and regaining the trust of long-only dedicated REIT investors, the stock has materially outperformed its peers through Leverage today is down nearly 4 turns to 4.6x; 60%+ of SHO's EBITDA is generated within the top 10 largest MSAs, while average TTM RevPAR for the $1.6bn of hotels SHO has acquired over the last three years is nearly 75% higher than the hotels they disposed of over the same time period. Investment Risks Large scale renovation projects could remain an overhang for SHO (Hawaii and Boston) through much of 1H15. Investors have put SHO in the "renovation penalty box" since late 2013 when the provided its comprehensive renovation plans for both the Boston Park Plaza and Hyatt Regency San Francisco. Further compounding the problem was the Marriott Wailea acquisition, an asset SHO plans to completely reposition with a $65mn capital plan. Excluding the initial acquisition costs, SHO expects to spend ~$200mn (including $20mn of FF&E reserves) over the next 2.5 years renovating these assets, which will lead to revenue displacement of approximately ~$25mn (~3% of total revenues), or less than $0.10/share over the next couple of years. While SHO management has made a solid attempt at alleviating investor concerns by providing extensive details on investment spend and the expected drag on earnings, the fact of the matter is the company will be addressing analyst/investor questions about these projects for the next months (i.e., budgets, earnings drag, scope/scale, etc.), placing a continued overhang on the stock. Real Estate Research 216

217 Earnings Model and Key Assumptions Exhibit 237: Sunstone Hotels Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $0.85 $0.99 $0.90 $1.17 $1.22 $1.44 $1.61 Consensus FFOPS $1.13 $1.28 $1.44 $1.61 FFO Growth 17% -9% 30% 5% 17% 12% FFO Multiple 18.1x 15.5x 17.1x 13.1x 12.5x 10.7x 9.5x Enterprise Value $4,574,862 Adjusted EBITDA $211,848 $245,834 $240,557 $310,989 $334,981 $378,086 $414,349 EV/EBITDA Multiple 21.6x 18.6x 19.0x 14.7x 13.7x 12.1x 11.0x RevPAR Growth n/m 5.5% 4.5% 6.8% 7.0% 6.5% 6.0% Source: Credit Suisse Research Key Drivers of SHO's Earnings Model: We are forecasting 2015 and 2016 FFO of $1.22 and $1.44, respectively, 5% below consensus in 2015, but in-line in Annualized FFO growth is 12% over the next two years. Our EBITDA forecast for 2015 and 2016 is $335mn and $378mn. Our earnings estimates are driven by 7% RevPAR growth in 2015 and 6.5% RevPAR growth in We expect margin growth of 50bp in 2015 and 165bp in 2016 We have no additional acquisitions modeled for 2015 or 2016 Our model assumes 56% dividend growth in 2015 (to $0.64/share SHO reinstated its dividend in 4Q12) and 10% growth in 2016 (to $0.70/share), with an AFFO payout ratio of 67% by Real Estate Research 217

218 Sunstone Valuation Overview Exhibit 238: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $17.87 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $17.87 Approach 2: DCF DCF $15.32 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $15.32 Approach 3: EV/EBITDA Fwd EBITDA $334,981 Targeted Multiple 14.5x Fair Value on NAV Valuation $16.75 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $17.00 Forecasted Total Return 14.8% Source: Company data, Credit Suisse estimates Exhibit 239: NAV Snapshot Sunstone Hotels NAV Calculation Assumptions IRR Target 9.2% Assumed avg NOI growth next three years 10.37% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $370,280 Maintenance Capex ($68,757) Cash NOI $301,523 Assumed cash NOI cap rate 7.10% Market value of owned properties $5,215,210 Joint Venture Assets (unconsolidated) Cash NOI from JV properties $0 Assumed cash NOI cap rate 7.10% Market value of owned properties $0 Add Cash, CIP, + Other Assets Cash and cash equivalents $228,551 Other assets $58,242 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $0 Development Projects (at cost) $0 Key inputs / items in our SHO NAV Model: Year 1 Cash NOI of $370mn 9.2% unlevered IRR o Modeling an economic downturn in years 5-6, with NOI declining by 25% as revenues fall 16% and margins drop 250bp. Model assumes a recovery in years 7-10 Blended cash cap rate of 7.1% Exit cap rate of 7.85% NOI growth rate in 'perpetuity' is 2% Equals -Gross market value of assets $5,502,002 Less Liabilities NAV Total liabilities (incl. JVs) $1,779,904 Mark-to-Market Debt Adj. $0 Preferred Stock $115,000 Net market value of assets $3,607,098 Total Shares / Units 205,397 Implied Cap Rate: 7.8% Implied $/key of $333k vs. warranted $/key of $364k Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $17.87 Warranted Price/Key $364,623 Current Stock Price $15.36 Price/Net Asset Value 87% Implied Cap Rate 7.8% Real Estate Research 218

219 SHO IRR Analysis and DCF Model Exhibit 240: IRR Underwriting IRR ANALYSIS-CAP RATE Period Offset 23 Initial NOI 344,360 Going-in Cap Rate 7.10% Initial Value of Assets 4,850,145 Terminal Year NOI 486,486 Hold Period Cap Rate Expansion 0.75% Terminal Year Cap Rate 7.85% Terminal Value of Assets 6,197,277 Maint. Capex % of Hotel Rev's 6.00% Offset Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Total Revenues 1,246,791 1,333,312 1,415,345 1,475,124 1,512,002 1,360,802 1,265,546 1,328,823 1,395,264 1,451,075 Change YoY 6.9% 6.2% 4.2% 2.5% -10.0% -7.0% 5.0% 5.0% 4.0% Net Operating Income 370, , , , , , , , , ,486 Change YoY 7.5% 13.4% 10.2% 6.9% 3.3% -14.0% -11.3% 8.4% 8.3% 6.4% Margin 29.7% 31.5% 32.7% 33.5% 33.8% 32.3% 30.8% 31.8% 32.8% 33.5% Margin Change YoY 179 bps 120 bps 84 bps 25 bps -150 bps -150 bps 100 bps 100 bps 75 bps (-) Maintenance Capex (74,807) (79,999) (84,921) (88,507) (90,720) (81,648) (75,933) (79,729) (83,716) (87,064) = Cash NOI 295, , , , , , , , , ,422 Initial Value of Assets (4,850,145) Terminal Value of Assets 6,197,277 Total Cash Flow (4,850,145) 295, , , , , , , , ,595 6,596,699 IRR 9.2% Cap Rate to Achieve IRR 7.1% Real Estate Research 219

220 Exhibit 241: SHO DCF Model DCF ANALYSIS Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Adjusted FFO 251, , , , , ,967 (-) Maintenance Capex (68,961) (80,301) (84,921) (88,507) (87,151) (89,766) = AFFO net of Maint Capex 182, , , , , ,201 (+) Terminal Value 4,030,834 = Cash Flow to Equity Holders 182, , , , ,513 4,302,035 Ratios / Analysis FFO/sh growth NA 18% 15% 10% -7% CapEx as % of FFO 27% 27% 26% 25% 26% Inputs SHO Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.54 Cost of Equity (CAPM) 9.93% Perpetual Growth Rate 3.00% Outputs NPV of Cash Flows $873,823 Terminal Value (+50bp) $3,650,078 Number of periods 5 NPV of Terminal Value $2,273,636 Firm Value $3,147,459 Plus non-cash flow producing assets $0 Shareholders Value $3,147,459 Share outstanding 205,397 DCF value per share $15.32 Real Estate Research 220

221 Sunstone Hotel Investors SHO Price (07 Nov 14): US$15.36, Rating: OUTPERFORM, Target Price: US$17.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , , ,333.3 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (1,017.5) (661.6) (148.0) (148.0) Cash flow from investment (371.4) (396.6) (148.0) (148.0) Dividends paid (8.7) (81.7) (131.5) (144.6) Equity raised Net borrowings Other financing cash flows (8.2) 5.6 (5.6) Financial cashflow (125.8) (150.2) Net cashflow (15.1) 4.2 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU (15.7) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 3, , , ,521.4 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 3, , , ,518.7 Other investments Other non-current assets 3, , , ,533.7 Total non-current assets 3, , , ,543.1 Total assets 3, , , ,810.2 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,386.5 Other non-current liabilities Total non-current liabilities 1, , , ,436.8 Total liabilities 1, , , ,556.7 Unit funds Reserves 2, , , ,645.1 Shareholders' equity 1, , , ,266.2 Total capital employed 3, , , ,703.0 Real Estate Research 221

222 Ashford Hospitality Trust (AHT): Neutral Rating; $12 Price Target; 10% Total Return Exp. Company Overview Ashford is a geographically diversified lodging REIT primarily exposed to upper-upscale (55%) and upscale (36%) hotel assets. The company owns 116 hotels including 23,063 rooms with 72% of its EBITDA generated from top 25 MSA's, although unlike most of our coverage universe, its assets are located in secondary, non-coastal markets. AHT has a strong track record of outperformance, generating a total shareholder return since inception of 232% (vs. peer avg. of 153%) and generating total shareholder return over the last 5 years of 543% (vs. the peer avg. of 257%). Exhibit 242: Ashford Hospitality Trust Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Ashford Hospitality Trust (AHT) with a Neutral rating and a $12 price target, implying a 10% total return over the next 12 months (including the stock's 4.2% dividend yield). Our price target is based on the weighted average of our $13.70 forward NAV estimate, less a 10% discount to account for asset quality and AHT's levered balance sheet (50%), 12x forward EBITDA (30%) and our $12 DCF value (20%). Our 2015 and 2016 FFO estimates of $1.17 and $1.38, respectively, assume RevPAR growth of 6% in 2015 and 5.5% in Our Neutral rating is based on (1) AHT's outsized leverage ratio (8.1x net-debt-to-ebitda vs. 3.7x for peers); 2) high exposure to DC; coupled (3) the relative quality of AHT's portfolio. Investment Positives Levered play on lodging up-cycle: With net debt/ebitda of 8.1x based on our 2015 estimates, AHT s high operating and financial leverage should create attractive equity returns as lodging fundamentals continue their upward momentum and supply growth remains limited. Real Estate Research 222

223 Cash Flow and return of Capital: We estimate that AHT will double its free cash flow in 2015, allowing for outsized dividend growth of 17% Y/Y to $0.56/share, or sector leading dividend yield of 5.5% (70% payout ratio). In addition, strong cash flow will help the company address near-term debt maturities ($241m in 2015 and 835m in $216). Solid track record hard to ignore. AHT has one of the best track records over the past five years for delivering outsized returns generating a total return of 543% vs. 257% for its peers. AHT is managed by one of the more experienced and financially savvy management teams in the business. One of Ashford s key strengths is its highly analytical and cohesive management team that beneficially owns about 17% of the company. Almost all of AHT s executives have the advantage of a long history of working together at Ashford since the IPO in 2003 and at Remington (or affiliates) prior to that. Investment Risks Leverage an overhang on AHT's valuation. At 8.1x times leverage, it's hard to ignore AHT's leverage ratio, which investors are clearly sensitive to, with the company likely to trade at a discounted valuation to its peers as long as the leverage gap remains. Secondary market exposure. While the portfolio is diverse (spread throughout 29 different states), AHT's footprint is considerably more exposed to secondary markets including DC Metro, suburban Dallas, suburban Atlanta, Tampa, and Jacksonville (to name a few) relative to its peers which tend to concentrate in the 15 largest MSAs. While suburban RevPAR has improved, overtime, these markets will simply underperform. In addition, the company ranks in last place in our proprietary TripAdvisor survey, which in our opinion, limits their ability to deliver outsized internal growth High exposure to D.C Market: Ashford has among the sector's highest exposure to the Washington D.C. market, which represented 20% of 2013 EBITDA. DC is expected to remain weak until at least 2017, when the citywide calendar dramatically improves. Externally managed structure creates potential conflicts of interest warranting a discounted valuation: The Bennett s 100% ownership of Remington Lodging & Hospitality, which manages 79 AHT hotels, creates a potential conflict of interest, and typically never well received by REIT investors. In order to mitigate this risk, the board has adopted a policy that requires all approvals, actions or decisions regarding management agreements and Remington be approved by a majority or by all independent directors in some cases, although these measures, in our opinion, still warrant a discounted valuation. Ashford is close to completing the planned spin-out of its management business into a separate, publically traded company Ashford, Inc. (controlled by the existing management team) although the entity will simply act as an external advisor to Ashford Trust (AHT) and Ashford Prime (AHP), while both entities will continue to be responsible for the day-to-day operations at the property level. In our opinion, this does not solve the overhang related to an externally advised management team. Real Estate Research 223

224 Earnings Model and Key Assumptions Exhibit 243: Ashford Hospitality Trust Valuation Snapshot: Estimates 2011 FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 FY FFOPS Estimate $1.53 $1.07 $1.03 $0.91 $1.17 $1.38 $1.56 Consensus FFOPS $1.03 $1.22 $1.39 N/A FFO Growth -30% -4% -12% 29% 18% 13% FFO Multiple 7.4x 10.6x 11.0x 12.5x 9.7x 8.2x 7.3x Adjusted EBITDA $227,167 $301,861 $340,103 $326,590 $347,347 $373,665 $398,040 EV/EBITDA Multiple 18.0x 13.5x 12.0x 12.5x 11.8x 10.9x 10.3x RevPAR Growth 6.5% 7.1% 2.6% 8.8% 6.0% 5.5% 4.0% Source: Credit Suisse research Key Drivers of AHT's Earnings Model: We are forecasting 2015 and 2016 FFO of $1.17 and $1.38, respectively, slightly below in 2015, but in-line in Annualized FFO growth is 14% over the next two years. Our EBITDA forecast for 2015 and 2016 is $347mn and $375mn. Our earnings estimates are driven by 6% RevPAR growth in 2015 and 5.5% RevPAR growth in 2016 about 100bp below its peers. We have no additional external growth modeled. Real Estate Research 224

225 Ashford Valuation Overview Exhibit 244: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $13.68 Targeted Premium (Discount) to NAV -10% Fair Value on NAV Valuation $12.31 Approach 2: DCF DCF Estimate $11.88 Targeted Premium (Discount) to DCF 0% Fair Value on NAV Valuation $11.88 Approach 3: EV/EBITDA Fwd EBITDA $347,347 Targeted Multiple 12.0x Fair Value on NAV Valuation $11.90 Weighting % NAV 50% % DCF 20% % EV/EBITDA 30% Credit Suisse Price Target $12.00 Forecasted Total Return 10.2% Source: Credit Suisse Research Exhibit 245: NAV Snapshot Assumptions IRR Target 9.7% Assumed avg NOI growth next three years 9.5% Assumed avg NOI growth years % Calculate Operating Property Value NOI from owned properties $382,211 Maintenance Capex ($75,876) Cash NOI $306,335 Assumed cash NOI cap rate 8.65% Market value of owned properties $4,418,625 Joint Venture Assets (unconsolidated) Cash NOI from JV properties $0 Assumed cash NOI cap rate 8.65% Market value of owned properties $0 Add Cash, CIP, + Other Assets Cash and cash equivalents $280,574 Other assets $79,272 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $0 Development Projects (at cost) $0 Equals -Gross market value of assets $4,778,471 Less Liabilities AHT NAV Calculation Total liabilities (incl. JVs) $2,895,321 Mark-to-Market Debt Adj. $0 Preferred Stock $393,898 Key inputs / items in our AHT NAV Model: Year 1 Cash NOI of $285mn 9.7% unlevered IRR o Modeling an economic downturn in years 5-6, with NOI declining by 20% as revenues fall 15% and margins drop 150bp. Model assumes a recovery in years 7-10 Blended cash cap rate of 9% Exit cap rate of 9.25% Implied Cap Rate: 8.9% Implied $/key of $189k vs. warranted $/key of $190k NAV Net market value of assets $1,489,252 Total Shares / Units 110,396 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $13.68 Warranted Price/Key $211,119 Current Stock Price $11.33 Implied Cap Rate 9.1% Price/Net Asset Value 84% Real Estate Research 225

226 Ashford IRR Analysis and DCF Model Exhibit 246: IRR Underwriting IRR ANALYSIS-CAP RATE ANALYSIS Period Offset 18 Initial FTM NOI 339,912 Going-in Cap Rate 8.65% Initial Value of Assets 3,929,619 Terminal Year NOI 449,012 Hold Period Cap Rate Expansion 1.00% Terminal Year Cap Rate 9.65% Terminal Value of Assets 4,652,975 Maint. Capex % of Hotel Rev's 6.00% Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Hotel Revenues 1,268,801 1,330,910 1,385,682 1,433,674 1,290,307 1,187,082 1,234,566 1,283,948 1,335,306 1,375,365 Change YoY 4.9% 4.1% 3.5% -10.0% -8.0% 4.0% 4.0% 4.0% 3.0% Net Operating Income 386, , , , , , , , , ,012 Change YoY 13.7% 8.3% 6.5% 5.9% -14.1% -12.4% 6.6% 6.5% 6.5% 4.6% Margin 30.5% 31.4% 32.1% 32.9% 31.4% 29.9% 30.6% 31.4% 32.1% 32.6% Margin Change YoY 98 bps 71 bps 75 bps -150 bps -150 bps 75 bps 75 bps 75 bps 50 bps (-) Maintenance Capex (76,128) (79,855) (83,141) (86,020) (77,418) (71,225) (74,074) (77,037) (80,118) (82,522) = Cash NOI 310, , , , , , , , , ,490 Initial Value of Assets (3,929,619) Terminal Value of Assets 4,652,975 Total Cash Flow (3,929,619) 310, , , , , , , , ,139 5,019,465 IRR 9.7% Cap Rate to Achieve IRR 8.7% Real Estate Research 226

227 Exhibit 247: DCF Model with primary assumptions DCF ANALYSIS Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Adjusted FFO 129, , , , , ,911 (-) Maintenance Capex (63,765) (67,202) (69,835) (72,388) (71,704) (73,676) = AFFO net of Maint Capex 65,822 85, , , , ,235 (+) Terminal Value 1,676,808 = Cash Flow to Equity Holders 65,822 85, , , ,005 1,791,043 Ratios / Analysis FFO/sh growth NA 30% 21% 16% -15% CapEx as % of FFO 49% 44% 40% 38% 41% Inputs AHT Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.50 Cost of Equity (CAPM) 9.75% Perpetual Growth Rate 2.75% Outputs NPV of Cash Flows $355,222 Terminal Value (+50bp) $1,523,134 Number of periods 5 NPV of Terminal Value $956,567 Firm Value $1,311,790 Plus non-cash flow producing assets Shareholders Value $1,311,790 Share outstanding 110,396 DCF value per share $11.88 Real Estate Research 227

228 Ashford Hospitality Trust AHT Price (07 Nov 14): US$11.33, Rating: NEUTRAL, Target Price: US$12.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity (23) Net income before tax (47.0) (36.0) (13.7) 12.3 Surplus/deficit on inv property Income tax (expense) (0.1) 0.1 Non-tax deductible expenses Distributable income to (23.6) (49.2) (31.0) (10.0) unitholders Net income (US$ m) (75.2) (65.4) (46.8) (25.8) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (354.7) (112.5) (88.0) (88.0) Cash flow from investment (354.0) (88.0) (88.0) (88.0) Dividends paid (78.8) (68.2) (53.2) (66.5) Equity raised Net borrowings Other financing cash flows (11.8) 84.0 Financial cashflow (53.2) (66.5) Net cashflow (140.4) 40.7 (27.7) (17.6) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU 5.1 (20.5) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio (4,800.0) (6,443.0) (11,500. 0) (12,261. 9) Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 2, , , ,057.5 Other investments Other non-current assets 2, , , ,288.5 Total non-current assets 2, , , ,288.5 Total assets 2, , , ,714.4 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,959.6 Other non-current liabilities Total non-current liabilities 1, , , ,974.8 Total liabilities 1, , , ,093.4 Unit funds Reserves Shareholders' equity Total capital employed 2, , , ,595.9 Real Estate Research 228

229 Apartments We are launching coverage of five apartment REITs including AvalonBay (Neutral rating, $167 TP), Camden Property Trust (Neutral rating, $82 TP), Equity Residential (Neutral rating, $73 TP), Essex Property Trust (Neutral rating, $212 TP), and UDR (Neutral rating, $32 TP). Our forecast total return for apartments over the next 12 months is 9.6%, or 200bps lower than that of our coverage universe. We expect the Apartment REIT sector to experience another solid year of internal growth. While the pace of growth is expected to moderate, we model an average of 4.7% SSNOI growth in 2015 for our coverage universe, well above the 10-year trend. With the exception of DC and NYC, demand continues to outpace supply growth across most major cities, with the West coast particularly strong. In addition, US demographics coupled with a drop in homeownership continue to feed demand. Earnings growth will likely remain in the high single digits over the next two years as most Apartment REITs are generating 6-7% stabilized yields and bps cap-rate spreads on their extensive development pipelines. Apartment Investment Summary Exhibit 248: Apartment Investment Summary Price Total P/AFFO Implied Ticker Rating Mkt Cap Price Target Return 2015E Cap Rate Investment Summary AVB Neutral $20,765 $ $ % 24.8x 5.0% CPT Neutral $6,527 $75.55 $ % 20.1x 6.7% EQR Neutral $25,108 $69.29 $ % 24.4x 5.1% ESS Neutral $12,823 $ $ % 24.2x 4.7% UDR Neutral $7,702 $30.18 $ % 21.5x 5.5% Industry leading developer w ith significant CIP and land rights holdings expected to drive strong NAV grow th. High income tenants in suburban markets pose move-out risk as the housing market recovers. Strong NOI grow th as CPT benefits from robust job grow th in its sunbelt markets. Large development pipeline w ith attractive yields/cap rate spreads should further enhance NOI grow th. The Archstone transaction and ten years of disposing low er quality assets has reinforced the company's status as a Class-A ow ner focusing on expensive urban submarkets along the coast. Class B operator concentrated in expensive West Coast metros supports industry leading performance given the strong job grow th in tech and unaffordable for-sale housing. Diversified Class A/B operator focused on upgrading its portfolio through heavy capital recycling. Further occupancy gains and turnover reduction unlikely as UDR presumably has peaked in both areas FFO Estimate 2016 FFO Estimate Dividend Consensus Rating and Distribution CS Consensus H/(L) CS Consensus H/(L) Yield Outperform Neutral Underperform CS Rating AVB $7.35 $ % $7.82 $ % 2.9% 10 / 53% 9 / 47% 0 / 0% Neutral CPT $4.45 $ % $4.82 $ % 3.5% 6 / 38% 10 / 63% 0 / 0% Neutral EQR $3.34 $ % $3.53 $ % 2.9% 6 / 27% 15 / 68% 1 / 5% Neutral ESS $9.29 $ % $10.15 $ % 2.6% 8 / 38% 13 / 62% 0 / 0% Neutral UDR $1.60 $ % $1.70 $ % 3.4% 5 / 28% 13 / 72% 0 / 0% Neutral Real Estate Research 229

230 Total Returns 11 November 2014 Subsector Returns Exhibit 249: Apartment Returns: LTM vs. 12-Month Expected Return 45% 40% 38% Trailing 12-Month Return 12-Month Expected Return 35% 30% 30% 31% 33% 33% 25% 20% 21% 15% 10% 12% 10% 9% 9% 8% 12% 5% 0% CPT UDR AVB ESS EQR REIT Coverage Source: Moody's, Credit Suisse estimates. Top Subsector Picks Camden Property Trust (Neutral rating and $82 price target): We did not issue any outperform ratings on apartment REITs as the stocks screen expensive having increased between 30-38% over the last 12 months (Exhibit 249). Within our Neutral-rated apartment coverage universe, however, we are most bullish on Camden. Sunbelt Exposure. CPT generates the bulk of its NOI from sunbelt cities where peers have minimal exposure. Over the long term, we view these markets as relatively undesirable, as low barriers to entry (geographic and political) reduce the sustainability of abnormal returns. However, these markets are expected to perform exceptionally well in the short term, as job growth, fueled by pro-business policies and a boom in the energy sector, continues to outpace that of the rest of the country. Strong Returns on a Large Development Portfolio. Camden's $950M CIP portfolio (10.6% of enterprise value) is expected to generate 7.0% stabilized yields implying 175bps cap rate spreads. Substantial, Well-Located Shadow Pipeline. The company also owns 9 land parcels with $700M in total projected capital costs. The shadow pipeline is highly concentrated in Houston (52.5%), a city that is expected to attain one of the best rental growth rates of any focus city of our coverage universe. Attractive Relative Pricing. Camden shares currently trade at 20.1 times our 2015 AFFO estimate which represents a 15.1% discount to the peer average of 23.7 times AFFO. Our $82 target price represents a total return of 12.3%, inclusive of a 3.8% dividend yield. Rent Growth Expected to Moderate to 3.5% by 2016 Rent growth has remained strong since 2011, when the apartment recovery began recouping rent declines from the previous two years. Rental rates and occupancy figures have been exceptionally strong during this period, as foreclosures soared, multi-family housing supply declined, and lending requirements tightened providing a perfect storm for apartments to gain share of the housing market. We expect rent growth to moderate, though stay above average, as these factors revert towards normal levels. The strongest growth rates will likely remain along the west coast and sunbelt markets where Essex and Camden are most overweight, respectively. West coast markets are Real Estate Research 230

231 Same-Store Rent Growth Rate Rent Growth Rate 11 November 2014 benefiting from the strong job growth driven by the tech boom paired with restrictive building regulations preventing supply from keeping pace. Rent growth in the sunbelt has been driven by strong job growth in the energy sector but is not expected to match growth rates on the west coast, as builders in the sunbelt have fewer regulatory hurdles to overcome reducing the mismatch between supply and demand for housing. Exhibit 250 highlights the range of historical and projected rent growth rates of our coverage universe. The chart shows that rent growth rates have moderately declined from the 2011 peak. On average, these five apartment operators generated 4.7%, 6.2%, 5.0%, and 4.7% top-line growth rates in 2011, 2012, 2013, and 2014E, respectively. We expect the rent growth rate to continue its gradual descent in , achieving 4.3% and 3.5%, respectively, in the next two years. Our growth rate estimates for are presented for each apartment REIT in Exhibit 251. Exhibit 250: 2015 Rent Growth Expected to Moderate but Remain Healthy 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% 2004A 2005A 2006A 2007A 2008A 2009A 2010A 2011A 2012A 2013A 2014E 2015E 2016E Operating cost growth rates are expected to be slightly less favorable in 2015 than those expected in We expect same-store operating costs to grow between % in 2015 compared to an estimated 3.1% in Most of the increase will be driven by higher utility expenses and increased property taxes. Controllable operating costs are expected to stay relatively flat offsetting some of the expense growth. In combination, the deceleration in revenue and acceleration in operating expense growth imply a slightly lower NOI growth rate. We estimate NOI growth of % in 2015, which at the midpoint is 45bps less than our 5.6% growth rate estimate for Exhibit 251: Same Store Rent Growth Rate Estimates ( ) 8.0% 7.0% 6.0% 7.1% 6.0% % 4.0% 3.0% 3.6% 4.1% 3.4% 4.6% 3.7% 3.0% 4.1% 4.0% 3.7% 4.6% 4.4% 3.8% 2.8% 2.0% 1.0% 0.0% AVB CPT EQR ESS UDR Source: Company data, Credit Suisse estimates Real Estate Research 231

232 Demand Expected to Outpace Supply in Most Cities Job growth and resulting apartment demand is expected to outpace the increase in housing supply in 12 of our coverage universe's largest 15 markets over the next two years (Exhibit 252). New York and Washington D.C. are the two notable exceptions with supply in the latter market growing at roughly four times that of demand. The pace of job growth relative to supply growth is most pronounced in California and Texas. We also note that new supply will be heavily concentrated in the downtown urban markets of Washington D.C., Seattle, Boston, and other major metros. As a result, we believe that class B properties in suburban locations will moderately outperform over the next two years. Exhibit 252: Housing Supply and Job Growth Projection NOI Exposure by Market Supply and Job Growth Forecast 12.7% 10.2% 9.8% 7.5% 7.2% 6.2% 5.2% 5.2% 3.7% 3.5% 2.8% 2.5% 2.4% 2.1% 2.1% Washington D.C. Los Angeles New York San Jose Seattle Orange County Oakland Boston San Diego San Francisco Miami Houston Dallas Orlando Tampa Job Growth E Supply Growth E National Job Growth National Supply Growth 1.8% National Avg Supply Growth 2.3% National Avg 15.0% 10.0% 5.0% 0.0% Source: Moody's, REIS, Credit Suisse estimates. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% Deliveries are Expected to Peak in 2015 and Remain Above Trend through 2018 Coverage universe deliveries grew in early 2014, leveled off over the summer, and have started to taper in the back half of the year. However, aggregate deliveries in our coverage universe's markets are expected to continue accelerating through Exhibit 253 depicts a time series of apartment supply in our coverage universe, where deliveries are weighted by NOI. The figure shows that deliveries in 2013 and 2014 were barely sufficient to compensate for the dearth of supply during the downturn, helping to explain why apartment operators achieved such strong rent growth in the past few years. However, given our expectation of flat 2015 job growth, we expect that growing supply will lead to further rent growth rate moderation. Real Estate Research 232

233 CIP Budget ($Millions) CIP Budget as a % of Enterprise Value 11 November 2014 Exhibit 253: Supply is Expected to Peak in 2015 and Stay Above Trend through ,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Source: REIS, Credit Suisse estimates Development Remains a Profitable Growth Driver Our coverage universe is actively participating supply resurgence. As shown in Exhibit 254, the five apartment REITs had approximately $7.8 billion in new communities under development at the end of 3Q14 representing an average of 7.7% of enterprise value. We believe that active development projects peaked in the middle of 2014 and will likely moderate over the next few years as construction costs and land pricing have depressed yields. Notwithstanding, the economics of the development remains compelling relative to acquisitions with cap rate spreads on stabilized yields ranging from bps and stabilized yields ranging from %. Exhibit 254: CIP for Our Coverage Universe Peaked in the Middle of 2014 $10,000 16% $8,000 $6,000 $4,000 $2,000 14% 12% 10% 8% 6% 4% 2% $ E 2015E 0% AVB CPT EQR ESS UDR Average Household Formation Growth Accelerating Great News for Apartment Owners Household formations have lagged population growth since the start of the economic collapse in 2007 for most of the REIT concentrated markets. From 2007 through 2011, only 550,000 households were formed per annum, the lowest level since World War II and 59 percent below the 1.35 million of annual household formations from 2000 to 2006 this has been a material headwind for apartment owners/operators as the Gen Y population typically rents before buying a home. Real Estate Research 233

234 The good news is that the tide has turned with more year-olds moving out and forming new households with household formation forecasted to outpace population growth over the next two years. In fact, we forecast household growth to be higher in than any other year in the past 15 years (Exhibit 255). We expect nearly half of these incremental households to rent apartments (discussed in the following section), representing an incremental source of demand for our apartment coverage universe. Exhibit 255: Household Formations Catching up with Population as Economy Recovers 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% Household Growth Population Growth Source: Moody's, Credit Suisse estimates We Expect the Homeownership Rate to Remain Subdued through 2016 The homeownership rate has declined 480bps to 64.4% since peaking at 69.2% at the end of The sharp decline can be attributed to a weak labor market, declining home values, difficult mortgage underwriting standards, higher student debt, and increasing ownership costs relative to renting. We note that other qualitative factors such as waiting longer to marry, the desire for housing flexibility, and the perception of the investment merits of homeownership also played a factor in the decline. The selloff in housing has been a boon for apartment demand as the majority of these former homeowners moved into apartments. While an improving economy should help to prevent further homeownership declines, fully priced housing coupled with higher interest rates will confine many aspiring homeowners to the rental market. Accordingly, we expect the homeownership rate to remain subdued through In addition, Apartment REITs are generally much better positioned relative to the broader U.S. with the majority of their portfolios concentrated in less-affordable, densely-populated markets. As shown in Exhibit 256, 57.0% of households in our coverage universe's markets are homeowners, 740bp lower than that of the national average. The lack of affordable, for-sale housing in these markets confines a greater percentage of residents to apartment living providing operators with stronger leverage to push rents. Real Estate Research 234

235 Monthly Cost of Housing Homeownership Rate 11 November 2014 Exhibit 256: Homeownership Rate in Decline Since the 2006 Peak 70% 68% 66% 64% 7.0% 4.8% 62% 60% 58% The national homeownership rate dropped in tandem with that of our coverage universe from % 56% National Source: U.S. Census Bureau, Credit Suisse estimates. Coverage The Cost of Ownership Premium has Returned, Constraining Tenant Move Outs While apartment rents have increased at a healthy pace of 3.3% per annum over the last ten years, the cost of owning a home has once again surpassed that of renting for the first time since 2008 (Exhibit 257). The figure compares the cost of owning a home with that of renting, where the dollar values of each are weighted by our coverage universe's market exposures. As of 3Q14, the average U.S. monthly cost to own was $1,800 compared to $1,721 to rent. With interest rates expected to increase 100bps over the next 3 years, we expect the ratio to further widen, though remain well shy of the $1,248 spread realized in 4Q05. Exhibit 257: The Cost of Ownership is Once Again Higher than that of Renting $2,800 $2,400 $2,000 $1,600 $1,200 $800 $400 $ Cost to Own Cost to Rent Source: Company data, Credit Suisse estimates, National Association of Realtors, U.S. Department of Housing and Urban Development. Housing affordability, measured by dividing the housing payment by household income, has effectively returned to its long-term average for the first time in over six years. Until recently, favorable affordability rates have provided an incentive for renters to move out to buy a house. Exhibit 258 illustrates that the incentive is gone: the weighted average affordability level for our coverage universe is 29.7%, matching the 20-year average. Favorable affordability rates pose a threat to apartment operators as homeownership is attainable for a larger share of the potential renter base. If interest rates continue to rise along with house prices (homes continue to be less affordable), the threat of tenant move outs to pursue homeownership will continue to subside. We believe that interest rates and home prices will increase moderately through Real Estate Research 235

236 Affordability Weighted by NOI 11 November 2014 Exhibit 258: Portfolio for-sale Affordability has Matched its 20-Year Average 55% 50% 45% 40% 35% 30% 20-year average: 29.7% 25% 20% 15% Current avg: 29.7% 10% Source: Company data, Credit Suisse estimates, National Association of Realtors, U.S. Department of Housing and Urban Development. Consistent with the national trend, the affordability rate for each of our coverage universe's top 20 markets (accounting for 95% of NOI) remains roughly in line with that of their respective 20-year average as shown in Exhibit 248 (a higher percentage indicates less affordable 'for-sale' housing is in that market). Not surprising, Los Angeles, San Francisco, New York City, and Miami are among the most expensive housing markets in the country (relative to incomes), while Southeast markets are among the most affordable markets. Also worth noting, Boston, Tampa, and Charlotte are the three focus markets that continue to have affordability levels meaningfully below their respective long-term average. Real Estate Research 236

237 Exhibit 259: Portfolio Affordability Approximates its 20-Year Average in Most Markets Los Angeles San Francisco Washington D.C. New York Seattle Boston San Diego Miami Houston Dallas Orlando Tampa Denver Las Vegas Atlanta Charlotte Baltimore Current portfolio average of 29.7% 20-year portfolio average of 29.7% Raleigh Phoenix Nashville 0% 10% 20% 30% 40% 50% MSA Affordability Current Average 20-Year MSA Average 20-Year Average Source: Company data, Credit Suisse estimates, National Association of Realtors, U.S. Department of Housing and Urban Development. Real Estate Research 237

238 AvalonBay (AVB): Neutral Rating; $167 Price Target; 9% Total Exp Return Company Overview AvalonBay is a $20.8 billion market cap apartment REIT concentrated primarily in key gateway cities including New York City (18.8% of NOI), Washington D.C. (15.9%), Los Angeles (11.7%), Boston (1%), San Jose (8.2%), New Jersey (7.7%), San Francisco (6.7%), Oakland (5.2%), and Seattle (4.9%). Founded in 1978, the company is now the second largest apartment operator in the world with interests in 274 communities encompassing 82,333 apartment units. AvalonBay currently has 9,128 apartment units under development with development rights for an additional 10,707 units. The company's apartment portfolio is the most productive in the United States, with an average rent per unit of $2,270. Exhibit 260: AvalonBay Apartment Communities Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of AvalonBay Communities (AVB) with a Neutral rating and $167 price target. Our price target is derived by applying a 75% weighting to our $160 forward NAV estimate (plus a 5% premium to reflect management, asset, and balance sheet quality) and a 25% weighting to our $163 DCF estimate. Our $167 target price implies a multiple of 24.8 times our 2015 AFFO estimate and represents a total return of 9.3%, inclusive of a 3.1% dividend yield. Our Neutral rating is based on our view that view that (1) land-constrained, coastal markets with low for-sale housing affordability will outperform in the long run; (2) yields on its $3.2B CIP portfolio will likely remain strong; (3) its 39 parcel, $2.9 billion shadow pipeline is undervalued in the market; and (4) its strong balance sheet (25% debt-tocapitalization) will allow it to continue to fund its $6.1 billion development pipeline. Investment Positives High Coastal Market Exposure. Portfolio holdings are highly concentrated in topperforming, coastal markets that have historically outperformed. We expect this trend to continue in the long term. Real Estate Research 238

239 Significant Land Rights/Holdings. A large shadow pipeline provides a competitive advantage against peers who must acquire land at today's peek prices to continue development. Strong NOI Growth. We forecast 4.1% same-store rent growth in 2015 and 3.4% in 2016, which translates to 4.6% and 3.8% SSNOI growth per annum over the next two years, respectively. High Suburban Concentration. The company's suburban-concentrated portfolio is expected to be less affected by supply as deliveries will be disproportionately skewed towards the urban core; particularly in Seattle, San Francisco, Los Angeles, Boston, and New York. Best-in-Class Debt Issuance Costs. Debt issuance costs are among the lowest in the subsector with swap spreads at just 54.4bps, 19.5bps lower than the peer average of 73.9bps. Investment Risks Significant Washington D.C. Exposure. Washington D.C. represents the company's second largest NOI-weighted exposure (15.9%). The market is expected to generate negative-to-flat revenue growth in the next two years, significantly worse than any other apartment focus city. Largest Market Overweights Expected Underperform Largest Underweights in AvalonBay's properties are generally located in high-barrier, expensive locals that are expected to outperform in the long run. However, in 2015, we expect that its largest market overweights (New York, Boston, Northern New Jersey) will generate average rent growth while one of its underweights (Houston) significantly outperforms. Development Profit Margins are Eroding. Development yields and cap rate spreads, while still historically strong, are trending toward their historical average, as rent growth fails to keep pace with increasing land values, construction costs, and cap rates. Occupancy Declines are Likely. Occupancy has approached a structural peak, making occupancy gains an unlikely rent growth contributor. We believe that the headwinds associated with occupancy normalization will be partially offset by strong rate growth driven by above-average occupancy. Job Gains Expected to Outpace Supply Growth in most Focus Markets Job growth and resulting apartment demand is expected to outpace new deliveries in 9 of AVB's top 12 markets from 2014 to 2016 (Exhibit 261). However, due to its significant exposure to New York and Washington D.C., we expect supply to marginally outpace demand during this time period. Specifically, we model 2.0% job growth in the company's top 12 markets, 10bps lower than our 2.1% supply growth estimate. Orange County, Los Angeles, San Diego, and Oakland (representing a combined 22.7% of NOI) are expected to have the most favorable job-to-supply growth. The company's two largest markets, Washington, D.C. and New York, are expected to endure the worst job-tosupply growth ratios. Real Estate Research 239

240 Exhibit 261: Job Gains Expected to Outpace Supply Growth in 9 of 12 Markets NOI Exposure by Market Supply and Job Growth Forecast 18.8% 15.9% 11.7% 10.4% 8.2% 7.7% 6.7% 5.2% 4.9% 4.7% 3.4% 2.4% New York Washington D.C. Los Angeles Boston San Jose New Jersey San Francisco Oakland Seattle New Haven Orange County San Diego 2.3% National Avg Job Growth 1.4% National Avg Supply Growth Job Growth E Supply Growth E National Job Growth National Supply Growth 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% While still favorable, the job-to-supply ratios are not as strong as those of the previous three years causing rent growth to moderate. We are underwriting rent growth deceleration in all of AVB's markets (Exhibit 262). Exhibit 262: Rent Growth Rates Expected to Continue Moderating through 2016 NOI Exposure by Market Sam e Store Rent Growth 18.8% 15.9% 11.7% 10.4% 8.2% 7.7% 6.7% 5.2% 4.9% 4.7% 3.4% 2.4% New York Washington D.C. Los Angeles Boston San Jose New Jersey San Francisco Oakland Seattle New Haven Orange County San Diego focus market avg rent growth of 5.3% E focus market avg rent growth of 3.0% Rent Growth E Rent Growth Rent Growth Avg E Rent Growth Avg 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Real Estate Research 240

241 Favorable Long-Term Market Weightings Despite our below-peer same-store rent growth expectation for 2015, we believe that AvalonBay's market exposures are more favorable in the long run than those of our coverage universe. Exhibit 263 shows AvalonBay's three largest overweights and underweights relative to the coverage universe. The company is significantly overweight New York (900bps), Northern New Jersey (620bps), and Boston (520bps), relative to that of our coverage universe. AvalonBay's most heavily overweighted markets tend to have high barriers to entry and significant long-term rent growth rates while the company's most heavily underweighted markets tend to have the opposite characteristics. Exhibit 263: Overweight in the Northeast and Underweight in the South/Southeast New York Metro 900bps Northern New Jersey 620bps Boston 520bps Miami (280bps) Orange County (280bps) Houston (250bps) (1,500bps) (1,000bps) (500bps) 0bps 500bps 1,000bps 1,500bps Source: Company data, Credit Suisse estimates Development Pipeline Construction in Progress (CIP) AvalonBay currently has $3.2 billion in capital spend budgeted for its 27 development projects (9,128 units) under construction. The size of the development portfolio is impressive on a relative and absolute basis: the 13.1% capital cost-to-enterprise-value ratio is the highest of our coverage universe while the $3.2 billion in active construction projects is nearly as large as the $4.6 billion of development capital requirements for the rest of our coverage universe combined. We believe the size of the CIP portfolio will remain near peak levels in 2015, as we expect $1.25 billion in new starts and completions by the end of next year. The economics of the development portfolio remain compelling relative to acquisitions with cap rate spreads of 200bps and stabilized yields of 6.3%. We expect spreads on future development to compress as rent growth is not expected to fully offset the impact of rising land values, construction costs, and cap rates. We estimate that CIP projects will add $21.01 per share (2.0x book or 0.84x projected costs) to our NAV estimate and $21.3 million of incremental NOI in Land Rights (Shadow Pipeline) AVB also owns 39 development rights that would allow the company to build an additional 10,707 apartment units for an estimated $2.9B in capital cost. The company started construction on $1.2B in communities YTD, reduced spend projections on landholdings by $0.4B, and backfilled $0.7B in development rights. As a result, the size of its pipeline declined to $2.9B in 3Q14 from $3.8B at the end of We expect the pipeline to contract further in 2015 as fully entitled sites remain scarce and competition for parcels without entitlements increased significantly in the past year. New starts primarily occurred on the west coast while the pipeline stayed roughly equal in the northeast. Consequently, Real Estate Research 241

242 the shadow pipeline's exposure to the northeast increased from 70.8% in 4Q13 to 78.3% at the end of 3Q14. We estimate AVB's shadow pipeline is worth $4.94 per share (1.1x expected book value), determined by taking the present value of residual land values of future deliveries. AvalonBay Valuation Overview Exhibit 264: AvalonBay: $167 Price Target Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $ Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $ Approach 2: DCF DCF per share $ Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $ Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $ Forecasted Total Return 9.3% Source: Credit Suisse estimates. Real Estate Research 242

243 Exhibit 265: AvalonBay: $160 Forward NAV Estimate Assumptions IRR Target 6.0% Assumed Average NOI Growth in Years % Assumed Average NOI Growth in Years % Calculate Operating Property Value Forward 12-Month GAAP NOI $1,156,759 Straight-Line Rent Adjustment/ FAS 141 $0 Forward 12-Month Cash NOI $1,156,759 Assumed Cash NOI Cap Rate 5.00% Market Value of Properties $23,135,188 Joint Venture Assets (Unconsolidated) Forward 12-Month Unconsolidated Cash NOI $34,788 Cash NOI Cap Rate 5.00% Market Value of Unconsolidated Properties $695,754 Key inputs / items in our AVB NAV Model: NOI Growth Years 0-3: 3.9% NOI Growth Years 4-10: 2.6% Unlevered IRR of 6.0% Blended cash cap rate of 5.0% Development Pipeline valued at: $2.8bn, or $21/share Land Development rights valued at $0.7B, 1.1x expected cost Implied Cap Rate: 5.0% Implied Price per unit: $306k/door Add Assets: Cash & Cash Equivalents $362,986 Other Assets $430,928 Benefit of Tax-Exempt Debt $91,874 Land Held for Future Development $651,599 Development Projects $2,773,686 Equals - Gross Market Value of Assets $28,142,016 Subtract Liabilities and Preferred Stock Total Liabilities $7,196,216 Mark-to-Market Debt Adjustment $0 Preferred Stock $0 Equals Net Assets Net Market Value of Assets $20,945,800 Ending FFO Sharecount 132,014 Net Asset Value per Share $ mo Fwd. Net Asset Value Per Share $ Current Stock Price $ Implied Cap Rate at Current Price 5.0% Source: Credit Suisse estimates. Real Estate Research 243

244 Real Estate Research 244 Exhibit 266: AvalonBay: 5.0% Cap Rate Required to Generate 6.05% Unlevered IRR AvalonBay Communities IRR Analysis Apartment Units 77,918 Price/Unit $305,847 Total Acquisition Price $23,830,943 Ex pense Ratio 35.1% Targeted IRR 6.05% Required Initial Cap Rate 5.00% Assumed Rise in Terminal Cap 0.75% Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Key Assumptions Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Same Store Rev enue Grow th 4.1% 3.4% 3.0% 2.9% (2.1%) (4.5%) 8.1% 4.5% 4.0% 3.3% Same Store Ex pense Grow th 3.2% 2.5% 2.4% 2.9% (2.1%) (4.5%) 8.1% 2.5% 3.0% 2.5% Same Store NOI Grow th 4.6% 3.8% 3.3% 2.9% (2.1%) (4.5%) 8.1% 5.5% 4.5% 3.6% Consolidated Revenue $1,774,058 $1,833,739 $1,888,785 $1,943,285 $1,902,193 $1,816,793 $1,964,597 $2,053,004 $2,135,124 $2,204,516 Consolidated Operating Ex penses ($617,299) ($632,564) ($647,774) ($666,465) ($652,373) ($623,084) ($673,775) ($690,619) ($711,338) ($729,121) JV NOI at share $34,788 $36,123 $37,321 $38,398 $37,586 $35,899 $38,819 $40,972 $42,818 $44,370 GAAP NOI $1,191,547 $1,237,299 $1,278,332 $1,315,218 $1,287,407 $1,229,608 $1,329,642 $1,403,357 $1,466,605 $1,519,765 Apartment Units 77,918 77,918 77,918 77,918 77,918 77,918 77,918 77,918 77,918 77,918 Capex /Unit ($1,298) ($1,357) ($1,481) ($1,501) ($1,524) ($1,550) ($1,578) ($1,606) ($1,655) ($1,704) Total Capex ($101,112) ($105,773) ($115,417) ($116,925) ($118,784) ($120,779) ($122,929) ($125,165) ($128,920) ($132,788) Adjusted Cash NOI $1,090,435 $1,131,526 $1,162,915 $1,198,292 $1,168,622 $1,108,829 $1,206,713 $1,278,192 $1,337,685 $1,386,977 IRR Analysis Implied Cap Rate/Cash Flow s ($23,830,943) $1,090,435 $1,131,526 $1,162,915 $1,198,292 $1,168,622 $1,108,829 $1,206,713 $1,278,192 $1,337,685 $1,386,977 Terminal Value $27,091,464 Total CF ($23,830,943) $1,090,435 $1,131,526 $1,162,915 $1,198,292 $1,168,622 $1,108,829 $1,206,713 $1,278,192 $1,337,685 $28,478,441 Terminal Value Per SF / Unit 1.3% Growth over Hold Period 13.7% IRR 6.05% Cap Rate to achieve IRR 5.00%

245 Real Estate Research 245 Exhibit 267: AvalonBay: $163 Discounted Cash Flow (DCF) Estimate AvalonBay Communities DCF Model $ in thousands Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $1,047,110 $1,148,371 $1,241,798 $1,328,203 $1,440,229 $1,513,277 $1,562,459 Normalized FFO $891,479 $991,185 $1,071,597 $1,132,763 $1,213,523 $1,265,475 $1,306,603 Capital Ex penditures ($80,835) ($102,094) ($108,231) ($120,365) ($125,775) ($130,252) ($134,485) Other Adj. ($33,600) ($33,600) ($33,600) ($33,600) ($33,600) ($33,600) ($34,692) Adjusted FFO $777,044 $855,490 $929,767 $978,799 $1,054,149 $1,101,624 $1,137,427 Diluted Weighted Av g Shares & Units 131, , , , , , ,108 AFFO/Share $5.93 $6.34 $6.78 $7.14 $7.69 $8.03 $8.30 Ratios / Analysis EBITDA/share grow th 6.6% 6.4% 7.0% 8.4% 5.1% 3.3% 6.7% Normalized FFO/share grow th 8.1% 6.3% 5.7% 7.1% 4.3% 3.3% 6.3% Adjusted FFO/share grow th 7.0% 6.9% 5.3% 7.7% 4.5% 3.3% 6.3% CapEx as % of Normalized FFO 9.1% 10.3% 10.1% 10.6% 10.4% 10.3% 10.3% 10.3% Inputs Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5y r adjusted) 0.95 Cost of Equity 7.27% Perpetual Grow th Rate 3.25% Outputs NPV of Cash Flow s $3,970,684 Terminal Value $25,186,597 NPV of Terminal Value $17,736,138 Land Held for Dev elopment $651,599 Equity Value $22,358,421 Shares Outstanding 137,108 Value per Share $ Current Share Price $ (Discount) / Premium to DCF (3.5%) CAGR

246 AvalonBay Communities AVB Price (07 Nov 14): US$157.30, Rating: NEUTRAL, Target Price: US$167.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 1, , , ,965.0 Property operating expenses Real estate taxes Net operating income (US$ m) , , ,277.6 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity (11) Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items ,064.3 Cash flow from operations ,064.3 Other investment/(outflows) (2,940.3) (1,113.6) (1,204.5) (1,366.0) Cash flow from investment (1,181.2) (751.9) (779.5) (966.0) Dividends paid (526.0) (594.0) (660.4) (711.8) Equity raised Net borrowings (1,375.4) Other financing cash flows (98.6) (3.6) Financial cashflow (1,995.4) (39.6) 24.6 (411.8) Net cashflow (2,452.1) (313.5) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 15, , , ,439.4 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets 1, , Total fixed assets Investment properties 12, , , ,019.4 Other investments Other non-current assets 14, , , ,989.9 Total non-current assets 14, , , ,989.9 Total assets 15, , , ,680.4 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 6, , , ,641.8 Other non-current liabilities Total non-current liabilities 6, , , ,173.9 Total liabilities 6, , , ,223.3 Unit funds Reserves 8, , , ,444.5 Shareholders' equity 8, , , ,457.1 Total capital employed 15, , , ,631.0 Real Estate Research 246

247 Camden (CPT): Neutral Rating; $82 Price Target; 12% Total Exp Return Company Overview Camden is a $6.5 billion market cap apartment REIT with above-average exposure to sunbelt markets. The company earns the bulk of its net operating income (NOI) from Washington D.C. (16.7%), Houston (12.6%), Miami (7.0%), Dallas (6.8%), Tampa (6.7%), Los Angeles/Orange County (6.7%), Las Vegas (6.3%), Atlanta (6.1%), Orlando (5.8%), and Charlotte (5.5%). Founded in 1982, the company now has interests in 170 communities encompassing 60,038 apartment units. Camden is in the process of building 4,104 units with another 2,590 units in the pipeline. The company's apartment portfolio is the least productive in our coverage universe with an average rent per unit of just $1,205. Exhibit 268: Camden Apartment Communities Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Camden Property Trust (CPT) with an Neutral rating and an $82 price target. Our price target is derived by applying a 75% weighting to our $80 forward NAV estimate and a 25% weighting to our $88 DCF estimate. Our $82 target price implies a multiple of 20.1 times our 2015 AFFO estimate and represents a total return of 12.3%, inclusive of a 3.5% dividend yield. Our Neutral rating is based on our view that (1) sunbelt markets will continue to outperform most regions (other than the west coast) owing to exceptional job growth; (2) the company will achieve strong yields on its $950 million development portfolio; (3) the $800 million shadow pipeline provides a platform for significant growth without compelling CPT to participate in the inflated land market; and (4) its 16.7% Washington D.C. exposure will depress rent growth by 53bps. Investment Positives High Exposure to Sunbelt Markets. Job growth, fueled by pro-business policies and a boom in the energy sector, is among the fastest in the United States and is expected to stay ahead of new deliveries through Real Estate Research 247

248 Large Construction in Progress (CIP) Portfolio. Camden's projected development costs as a percentage of enterprise value (10.6%) is the second highest in our coverage universe. Yields on newly stabilized deliveries were 7.0% implying a cap rate spread of 175bps. We expect margins to erode in 2015, though remain attractive. Large Shadow Pipeline. Camden owns 9 land parcels with total projected capital costs of $700 million. These land holdings are highly concentrated in Houston (52.5%), a city that is expected to attain one of the best rental growth rates of any focus city of our coverage universe. Strong NOI Growth. We forecast 3.7% rent growth in 2015 and 3.0% in 2016 which translates to 4.0% and 3.0% NOI growth per annum over the next two years, respectively. Shares Trading at a Steeper-than-Average Implied FFO Multiple Discount. Camden shares currently trade at 20.1 times the 2015 consensus FFO estimate. This represents a 15.0% discount to the peer average of 23.7 times FFO. Further, we believe that the market is underestimating rental growth rates in Texas and the South and is resultantly too low on its 2015 FFO estimate, exacerbating the mispricing. Investment Risks High Exposure to Low-Barrier Markets. CPT is significantly overweight the sunbelt, a region that has low barriers to entry (geographic and political). Low barriers to entry make outsized returns less sustainable. Washington D.C. is its Largest Market Exposure. The nation's capital accounts for 16.7% of CPT NOI, 4.1pps higher than its next largest market (Houston). Washington D.C. is expected to generate the worst returns of any focus city in each of the next two years. High Homeownership Rates and Strong Affordability Constrain Rent Growth. The homeownership rate in Camden's markets is 60.3%, the highest among peers and 300bps above the peer average. The higher homeownership rate indicates the ability and desire of residents in its submarkets to own homes. Camden's markets also have the strongest affordability rates among peers: the average house payment represents just 20.7% of household gross income compared to 31.9% for those of peers. Job Gains Expected to Outpace Supply Growth in most Focus Markets Job growth and resulting apartment demand is expected to outpace new deliveries in 10 of CPT's top 14 markets from 2014 to 2016 (Exhibit 269). We expect 2.6% job growth in CPT's top 14 markets, 20bps higher than our 2.4% supply growth estimate. Dallas, Las Vegas, Atlanta, and San Diego are expected to have the most favorable job-to-supply growth whereas Washington, D.C., Charlotte, and Raleigh are expected to endure the least favorable ratios. Real Estate Research 248

249 Exhibit 269: Job Gains Expected to Outpace Supply Growth in 10 of 14 Focus Markets NOI Exposure by Market 16.7% 12.6% 7.0% 6.8% 6.7% Washington D.C. Houston Miami Dallas Tampa Supply and Job Growth Forecast Job Growth E Supply Growth E National Job Growth National Supply Growth 6.7% 6.3% 6.1% 5.8% 5.6% 4.2% 4.0% 3.8% 3.5% Los Angeles Las Vegas Atlanta Orlando Charlotte Denver Raleigh San Diego Phoenix 1.8% National Avg Supply Growth 2.3% National Avg Job Growth 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% While still favorable, the job-to-supply ratios are not as strong as those of the previous three years causing rent growth to moderate. We are underwriting rent growth deceleration in all of CPT's markets except for Las Vegas (Exhibit 270). Exhibit 270: Rent Growth Rates Expected to Continue Moderating through 2016 NOI Exposure by Market 16.7% 12.6% 7.0% 6.8% Washington D.C. Houston Miami Dallas Sam e Store Rent Growth 6.7% 6.7% 6.3% 6.1% 5.8% 5.6% 4.2% 4.0% 3.8% 3.5% Tampa Los Angeles Las Vegas Atlanta Orlando Charlotte Denver Raleigh San Diego Phoenix focus market avg rent growth of 5.7% E focus market avg rent growth of 2.7% Rent Growth E Rent Growth Rent Growth Avg E Rent Growth Avg 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Real Estate Research 249

250 Unfavorable Long-Term Market Weightings In the short run, we believe that Camden's market exposures are more favorable than those for most of our coverage universe given its significant overweight to the sunbelt (Exhibit 271). Rent growth in the region has been driven by a pro-business environment and strong job growth in the energy sector. Our long-run view on CPT's markets, however, is less enthusiastic. The same probusiness policies that have led to strong job growth also suggest there are fewer regulatory hurdles for developers to overcome when bringing new units to market. A shorter time lag between the supply and demand for housing implies apartment operators have less time to receive the abnormal returns associated with a housing shortage. This is one reason why Texas markets are unlikely to generate the magnitude of returns Northern California has experienced in recent years. In general, Camden's most heavily overweighted markets tend to be located in relatively inexpensive suburban, non-coastal markets with low barriers to entry while the company's most heavily underweighted markets tend to have the opposite characteristics. Exhibit 271: Overweight Midwest and Underweight the Coasts Houston Las Vegas Atlanta Tampa-St. Petersburg Charlotte New York Metro San Jose Seattle Orange County Oakland-East Bay (980bps) (750bps) (720bps) (620bps) (520bps) 500bps 490bps 460bps 450bps 1,010bps (1,500bps) (1,000bps) (500bps) 0bps 500bps 1,000bps 1,500bps Source: Company data, Credit Suisse estimates Development Pipeline Construction in Progress (CIP) Camden currently has 13 development projects (12 consolidated and 1 unconsolidated) under construction with a total budgeted cost of $950 million (10.6% of enterprise value). The CIP capital budget as a percentage of enterprise value is the second highest of those of our coverage universe (AVB is first) and represents one of the highest relative construction expenditures of any of our REITs under coverage in the past 10 years. We believe the size of the CIP portfolio will decline modestly through 2015 as expected starts ($400 million) fail to keep up with completion projections ($650 million). The economics of the development portfolio remain compelling relative to acquisitions with cap rate spreads of 175bps and stabilized yields of 7.0%. Camden generates the highest yields among peers as its low-barrier markets tend to generate a greater proportion of their total returns from cash flows rather than capital appreciation. We expect spreads on future development to modestly compress as rent growth is not expected to fully offset the impact of rising land values, construction costs, and cap rates. We estimate that CIP projects will add $9.65 per share (1.5x book value or 0.9x projected cost) to our NAV estimate and generate $6.6 million of incremental NOI in Real Estate Research 250

251 Land Holdings (Shadow Pipeline) Camden has a $684M shadow pipeline comprised of 9 land parcels that it acquired for $135M. Year to date, the company has commenced $75 million in starts (Camden Chandler), transferred two projects from land holdings to pipeline communities with $294M in estimated construction costs, acquired a parcel with $115 million in capital cost, and increased the capital budgets on the current pipeline by $55M. As a result, the size of its pipeline increased to ~$684M in 3Q14 from $295M at the end of We believe the shadow pipeline will start to contract in 4Q14/2015 as fully entitled sites remain scarce, its land holdings remain out of the money, and pricing makes deals uneconomical. Land holdings are highly concentrated in Houston where projected capital costs are expected to account for 52.5% of pipeline development dollars. Washington D.C. is its second largest market, accounting for 17.7% of projected development spend. We estimate CPT's shadow pipeline is worth $2.63 per share (1.8x book value), computed by taking the present value of residual land values on future deliveries. Camden Valuation Overview Exhibit 272: Camden Property Trust: $82 Price Target Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $79.79 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $79.79 Approach 2: DCF DCF per share $88.44 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $88.44 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $82.00 Forecasted Total Return 12.3% Source: Credit Suisse estimates. Real Estate Research 251

252 Exhibit 273: Camden: $77 Forward NAV Estimate Assumptions IRR Target 6.5% Assumed Average NOI Growth in Years % Assumed Average NOI Growth in Years % Calculate Operating Property Value Forward 12-Month Consolidated GAAP NOI $542,488 Straight-Line Rent Adjustment/ FAS 141 $0 Forward 12-Month Consolidated Cash NOI $542,488 Assumed Cash NOI Cap Rate 6.30% Market Value of Consolidated Properties $8,610,922 Joint Venture Assets (Unconsolidated) Forward 12-Month Unconsolidated Cash NOI $13,192 Cash NOI Cap Rate 6.30% Market Value of Unconsolidated Properties $209,389 Key inputs / items in our CPT NAV Model: NOI Growth Years 0-3: 3.2% NOI Growth Years 4-10: 1.3% Unlevered IRR of 6.5% Blended cash cap rate of 6.5% Development Pipeline valued at: $881mn Land Development rights valued at: $240mn Implied Cap Rate: 6.7% Implied Price per unit: $168k/door Add Assets: Cash & Cash Equivalents $238,118 Other Assets $157,129 Benefit of Tax-Exempt Debt $1,707 Land Held for Future Development $239,831 Development Projects $881,476 Equals - Gross Market Value of Assets $10,338,571 Subtract Liabilities and Preferred Stock Total Liabilities $3,205,481 Mark-to-Market Debt Adjustment $0 Preferred Stock $0 Equals Net Market Value of Assets $7,133,090 Ending FFO Sharecount 91,289 Net Asset Value per Share $ mo Fwd. Net Asset Value Per Share $79.79 Current Stock Price $75.55 Implied Cap Rate at Current Price 6.5% Source: Company data, Credit Suisse estimates Source: Credit Suisse estimates Real Estate Research 252

253 Real Estate Research 253 Exhibit 274: Camden: 6.5% Cap Rate Required to Generate 6.75% Unlevered IRR Camden Property Trust IRR Analysis Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Apartment Units 53,053 Price/unit $166,256 Total acq price $8,820,312 Expense ratio 37.5% Targeted IRR (output) 6.50% Required Initial Cap Rate (input) 6.30% Assumed Rise in Terminal Cap 0.75% Key Assumptions Same Store Revenue Growth 3.7% 3.0% 2.6% 2.9% (2.4%) (5.5%) 6.1% 2.9% 3.0% 3.0% Same Store Expense Growth 3.1% 3.0% 2.6% 2.9% (2.4%) (5.5%) 6.1% 2.9% 2.8% 2.8% Same Store NOI Growth 4.0% 3.0% 2.6% 2.9% (2.4%) (5.5%) 6.1% 2.9% 3.2% 3.2% Consolidated Revenue $883,163 $909,516 $933,614 $960,684 $938,103 $886,737 $941,267 $968,559 $997,616 $1,027,545 Consolidated Operating Expenses ($340,675) ($350,840) ($360,136) ($370,578) ($361,868) ($342,054) ($363,088) ($373,616) ($383,890) ($394,447) JV NOI at share $13,192 $13,585 $13,945 $14,349 $14,012 $13,245 $14,059 $14,467 $14,924 $15,395 GAAP NOI $555,680 $572,261 $587,423 $604,456 $590,248 $557,929 $592,239 $609,411 $628,650 $648,492 Apartment Units 53,053 53,053 53,053 53,053 53,053 53,053 53,053 53,053 53,053 53,053 Capex/Unit ($1,052) ($1,083) ($1,116) ($1,149) ($1,184) ($1,219) ($1,256) ($1,293) ($1,332) ($1,372) Total Capex ($55,792) ($57,465) ($59,189) ($60,965) ($62,794) ($64,678) ($66,618) ($68,617) ($70,675) ($72,795) Adjusted Cash NOI $499,888 $514,796 $528,234 $543,491 $527,454 $493,251 $525,621 $540,794 $557,975 $575,697 IRR Analysis Implied Cap Rate/Cash Flows ($8,820,312) $499,888 $514,796 $528,234 $543,491 $527,454 $493,251 $525,621 $540,794 $557,975 $575,697 Terminal Value $9,428,432 Total CF ($8,820,312) $499,888 $514,796 $528,234 $543,491 $527,454 $493,251 $525,621 $540,794 $557,975 $10,004,129 Terminal Value Per SF / Unit 0.7% Growth over Hold Period 6.9% IRR 6.50% Cap Rate to achieve IRR 6.30% Source: Company data, Credit Suisse estimates

254 Real Estate Research 254 Exhibit 275: Camden: $87 Discounted Cash Flow (DCF) Estimate Camden Property Trust DCF Model $ in thousands Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $482,486 $506,197 $543,798 $575,074 $609,415 $628,645 $645,933 Normalized FFO $387,292 $406,405 $439,136 $461,894 $488,185 $498,689 $512,403 Capital Expenditures ($58,116) ($57,503) ($60,172) ($62,914) ($66,284) ($69,481) ($71,391) Other Adj. $0 $0 $0 $0 $0 $0 $0 Adjusted FFO $329,176 $348,902 $378,963 $398,980 $421,900 $429,208 $441,011 Diluted Weighted Avg Shares & Units 90,422 91,281 91,281 91,281 91,281 91,281 91,281 AFFO/Share $3.64 $3.82 $4.15 $4.37 $4.62 $4.70 $4.83 Ratios / Analysis CAGR EBITDA/share growth 3.9% 7.4% 5.8% 6.0% 3.2% 2.8% 5.2% Normalized FFO/share growth 3.9% 8.1% 5.2% 5.7% 2.2% 2.8% 5.0% AFFO/share growth 5.0% 8.6% 5.3% 5.7% 1.7% 2.8% 5.3% CapEx as % of Normalized FFO 15.0% 14.1% 13.7% 13.6% 13.6% 13.9% 13.9% 13.8% Inputs Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 0.94 Cost of Equity 7.24% Perpetual Growth Rate 2.75% Outputs NPV of Cash Flows $1,600,021 Terminal Value $8,839,671 NPV of Terminal Value $6,232,644 Land Held for Development $239,831 Equity Value $8,072,496 Shares Outstanding 91,281 Value per Share $88.44 Current Share Price $75.55 (Discount) / Premium to DCF (14.6%) Source: Company data, Credit Suisse estimates

255 Camden Property Trust CPT Price (07 Nov 14): US$75.55, Rating: NEUTRAL, Target Price: US$82.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (812.5) (663.6) (627.6) (635.1) Cash flow from investment (259.0) (241.0) (287.6) (295.1) Dividends paid (220.1) (236.5) (260.3) (281.1) Equity raised Net borrowings Other financing cash flows Financial cashflow (154.2) 27.2 (260.3) (141.1) Net cashflow (8.9) (142.1) 3.2 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 6, , , ,074.6 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 4, , , ,284.1 Other investments Other non-current assets 5, , , ,722.8 Total non-current assets 5, , , ,722.8 Total assets 5, , , ,848.0 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 2, , , ,883.9 Other non-current liabilities Total non-current liabilities 2, , , ,978.2 Total liabilities 2, , , ,240.1 Unit funds Reserves 2, , , ,540.0 Shareholders' equity 2, , , ,607.9 Total capital employed 5, , , ,586.1 Real Estate Research 255

256 Equity Residential (EQR): Neutral Rating; $73 Price Target; 8% Total Exp Return Company Overview Equity Residential is a $25.1 billion apartment REIT with properties concentrated in key gateway cities including Washington D.C (18.3%), New York (17.3%), Southern California (16.8%), Northern California (14.1%), Boston (10.3%), Miami (7.2%), and Seattle (6.6%). Despite a ~60% reduction in property count since 2003, the company remains the largest apartment operator in the world with interests in 396 communities encompassing 111,087 apartment units. The company currently has 4,193 apartment units under development and land holdings for an additional ~2,500 units. Exhibit 276: Equity Residential Apartment Communities Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Equity Residential (EQR) with a Neutral rating and $73 price target. Our price target is derived by applying a 75% weighting to our $73 forward NAV estimate (plus a 5% premium to reflect management, asset, and balance sheet quality) and a 25% weighting to our $72 DCF estimate. Our $73 target price implies a multiple of 24.4 times our 2015 AFFO estimate and represents a total return of 8.4%, inclusive of a 2.9% dividend yield. Our Neutral rating is based on our belief that (1) land-constrained, coastal markets with difficult affordability will outperform in the long run; (2) new deliveries will be concentrated in urban metros (where EQR operates) causing these regions to underperform suburban in the near term; and (3) high exposure to Washington D.C. (18.3%) will significantly dampen rent growth in Investment Positives Development in the Right Markets. Equity Residential currently has $2.0 billion in projects under construction with another $1.1 billion in the pipeline. Of the projects under construction; 46% are located in Northern California, 17% in Southern Real Estate Research 256

257 California, 18% in New York, and 18% in Seattle. Fully 60% of pipeline projects are located in San Francisco bay area. Meaningful Interest Savings Opportunities from Refinancing in The company has $410M in 6.3% fixed-rate securities yielding 6.3% due in We believe EQR can refinance these loans with 10-year notes at 4.0% leading to $9.5M in annual interest savings, or $0.03 in FFO per share. Strong NOI Growth. We forecasting 4.0% rent growth in 2015 and 3.7% in 2016, which we expect will translate into 4.3% and 3.9% NOI growth per annum over the next two years, respectively. Investment Risks Washington D.C. Is Its Largest Market Exposure. The nation's capital accounts for 18.3% of EQR NOI, 1.0pps higher than its next largest market (New York). The market is also one of EQR's largest overweights. Washington D.C. is expected to generate the worst returns of any focus city in each of the next two years. Small CIP Portfolio. The company has 13 projects with a $2.0B budget in its CIP portfolio. The projects are expected to generate a 6.0% stabilized yield at a 175bps cap rate spread. However, the portfolio represents just 5.8% of enterprise value, among the smallest in our coverage universe. Insignificant Land Holdings. With land costs trending at near record levels and development expected to continue generating significant returns, controlling a meaningful land bank has significant value. EQR owns 9 land parcels expected to require $1.1B in total capital outlays. This accounts for just 3.2% of its enterprise value, among the lowest in our coverage universe. Job Gains Expected to Outplace Supply Growth in Most Focus Markets Job growth and resulting apartment demand is expected to outpace new deliveries in 8 of EQR's top 12 markets from (Exhibit 277). However, due to its significant exposure to New York and Washington D.C., we expect supply to marginally outpace demand during this time period. Specifically, we model 2.0% job growth in the company's top 12 markets, 20bps lower than our 2.2% supply growth estimate. Orange County, Los Angeles, and San Diego are expected to have the most favorable jobto-supply growth while Washington D.C. and New York are expected to have the least favorable ratios. Real Estate Research 257

258 Exhibit 277: Job Gains Expected to Outpace Supply Growth in 8 of 12 Markets NOI Exposure by Market Supply and Job Growth Forecast 18.3% Washington D.C. 17.3% 10.6% New York Los Angeles 1.8% National Avg Supply Growth 10.3% Boston 2.3% National Avg Job Growth 7.2% Miami 6.6% Seattle 4.8% Denver 4.7% San Jose 4.7% 4.7% 3.2% Oakland San Francisco San Diego Job Growth E Supply Growth E National Job Growth National Supply Growth 3.0% Orange County 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% While still favorable, the job-to-supply ratios are not as strong as those of the previous three years causing rent growth to moderate. We are underwriting rent growth deceleration in all of EQR's markets except San Diego (Exhibit 278). Exhibit 278: Rent Growth Rates Expected to Continue Moderating through 2016 NOI Exposure by Market Sam e Store Rent Growth 18.3% Washington D.C Rent Growth 17.3% 10.6% New York Los Angeles E Rent Growth Rent Growth Avg E Rent Growth Avg 10.3% Boston 7.2% Miami 6.6% Seattle 4.8% 4.7% Denver San Jose focus market avg growth of 5.5% 4.7% 4.7% Oakland San Francisco E focus market avg rent growth of 3.1% 3.2% San Diego 3.0% Orange County 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Real Estate Research 258

259 Favorable Long-Term Market Weightings We believe that Equity Residential's market exposures are more favorable than those of our coverage universe given our long-run growth expectations. As shown in Exhibit 279, the company is significantly overweight New York (750bps), Washington D.C. (560bps), and Boston (510bps) relative to that of our coverage universe. Equity Residential's most heavily overweighted markets tend to be urban markets with high barriers to entry and significant long-term rent growth rates while the company's most heavily underweighted markets tend to have the latter two characteristics but be more suburban focused. Exhibit 279: Overweight in the Urban Coasts and Underweight Suburban Coasts New York Metro 750bps District of Columbia 560bps Boston 510bps Orange County (320bps) San Jose (280bps) Houston (250bps) (1,000bps) (500bps) 0bps 500bps 1,000bps Development Pipeline Construction in Progress (CIP) Equity Residential currently has 13 projects with a $2.0 billion capital budget under construction, as well as another 8 projects with a cost basis of $0.6 billion in lease-up. Of the projects under construction; 46% are located in Northern California, 18% in Southern California, 18% in New York, and 18% in Seattle. While the scale of construction in progress is clearly significant, the required capital expenditure only represents ~5.8% of the company's enterprise value, significantly below that of AVB and CPT. We forecast $750M of starts and $760M of completions in 4Q14/2015, implying the CIP budget will likely remain at ~2.0B through The economics of the development portfolio remain compelling relative to acquisitions with cap rate spreads of 150bps and stabilized yields of 5.75%. We expect spreads on future development to compress as rent growth is not expected to fully offset the impact of rising land values, construction costs, and cap rates. We estimate that CIP projects will add $4.41 per share (1.75x book or 0.8x projected cost) to our NAV estimate and $6.6 million of incremental NOI in Land Rights (Shadow Pipeline) Equity Residential also owns 9 land parcels with a $1.1B construction budget. We expect the shadow pipeline to contract in 2015 as fully entitled sites remain scarce and competition for parcels without entitlements increased significantly in the past year. In contrast to the relative diversification of the CIP portfolio, roughly 60% of the shadow pipeline is located in the San Francisco Bay area, a region that we expect to significantly outperform in We ascribe a value of $1.19 per share (1.6x book) to EQR's land holdings, computed by taking the present value of residual land values of future deliveries. Real Estate Research 259

260 Equity Residential Valuation Overview Exhibit 280: Equity Residential: $73 Price Target Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $69.75 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $73.23 Approach 2: DCF DCF per share $72.09 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $72.09 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $73.00 Forecasted Total Return 8.4% Real Estate Research 260

261 Exhibit 281: Equity Residential: $70 Forward NAV Estimate Assumptions IRR Target 6.1% Assumed Average NOI Growth in Years % Assumed Average NOI Growth in Years % Calculate Operating Property Value Forward 12-Month Consolidated GAAP NOI $1,810,880 Straight-Line Rent Adjustment/ FAS 141 $0 Forward 12-Month Consolidated Cash NOI $1,810,880 Assumed Cash NOI Cap Rate 5.20% Market Value of Consolidated Properties $34,824,609 Joint Venture Assets (Unconsolidated) Forward 12-Month Unconsolidated Cash NOI $0 Cash NOI Cap Rate 5.2% Market Value of Unconsolidated Properties $0 Add Assets: Cash & Cash Equivalents $20,000 Other Assets $373,065 Benefit of Tax-Exempt Debt $19,661 Land Held for Future Development $448,338 Development Projects $1,659,987 Key inputs / items in our EQR NAV Model: NOI Growth Years 0-3: 3.6% NOI Growth Years 4-10: 2.5% Unlevered IRR of 6.1% Blended cash cap rate of 5.2% Development Pipeline valued at: $1.7bn, or $4.41/share Land Holdings valued at: $450mn, or $1.19/share Implied Cap Rate: 5.1% Implied Price per unit: $340k/door Equals - Gross Market Value of Assets $37,345,661 Subtract Liabilities and Preferred Stock Total Liabilities $11,799,936 Mark-to-Market Debt Adjustment $0 Preferred Stock $50,000 Net Market Value of Assets $25,495,725 Ending FFO Sharecount 376,533 Net Asset Value per Share $ mo Fwd. Net Asset Value Per Share $69.75 Current Stock Price $69.29 Implied Cap Rate at Current Price 5.11% Source: Credit Suisse estimates. Source: Credit Suisse estimates. Real Estate Research 261

262 Real Estate Research 262 Exhibit 282: Equity Residential: 5.20% Cap Rate Required to Generate 6.12% Unlevered IRR Equity Residential IRR Analysis Apartment Units 102,520 Price/unit $339,686 Total acq price $34,824,609 Ex pense ratio 34.0% Targeted IRR 6.12% Required Initial Cap Rate 5.20% Assumed Rise in Terminal Cap 0.75% Key Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Same Store Rev enue Grow th 4.02% 3.72% 2.64% 3.14% (2.11%) (4.61%) 7.14% 4.5% 4.0% 3.3% Same Store Ex pense Grow th 3.41% 3.41% 2.64% 3.14% (2.11%) (4.61%) 7.14% 2.3% 2.3% 2.3% Same Store NOI Grow th (output) 4.33% 3.87% 2.64% 3.14% (2.11%) (4.61%) 7.14% 5.7% 4.9% 3.7% Consolidated Revenue $2,744,657 $2,846,638 $2,921,861 $3,013,680 $2,950,167 $2,814,238 $3,015,245 $3,150,931 $3,276,968 $3,383,470 Consolidated Operating Ex penses ($933,777) ($965,624) ($991,140) ($1,022,287) ($1,000,742) ($954,633) ($1,022,818) ($1,045,831) ($1,069,362) ($1,093,423) JV NOI at share GAAP NOI $1,810,880 $1,881,015 $1,930,721 $1,991,393 $1,949,425 $1,859,605 $1,992,427 $2,105,100 $2,207,606 $2,290,047 Apartment Units 102, , , , , , , , , ,520 Capex /Unit ($1,708) ($1,758) ($1,808) ($1,861) ($1,916) ($1,972) ($2,029) ($2,089) ($2,152) ($2,216) Total Capex ($175,056) ($180,256) ($185,337) ($190,808) ($196,415) ($202,136) ($208,056) ($214,159) ($220,584) ($227,201) Adjusted Cash NOI $1,635,824 $1,700,758 $1,745,383 $1,800,585 $1,753,010 $1,657,469 $1,784,371 $1,890,941 $1,987,022 $2,062,845 IRR Analysis Implied Cap Rate/Cash Flow s ($34,824,609) $1,635,824 $1,700,758 $1,745,383 $1,800,585 $1,753,010 $1,657,469 $1,784,371 $1,890,941 $1,987,022 $2,062,845 Terminal Value $39,450,387 Total CF ($34,824,609) $1,635,824 $1,700,758 $1,745,383 $1,800,585 $1,753,010 $1,657,469 $1,784,371 $1,890,941 $1,987,022 $41,513,232 Terminal Value Per SF / Unit 1.3% Growth over Hold Period 13.3% IRR 6.12% Cap Rate to achieve IRR 5.20%

263 Real Estate Research 263 Exhibit 283: Equity Residential: $72 Discounted Cash Flow (DCF) Estimate Equity Residential DCF Model $ in thousands Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $1,666,679 $1,762,290 $1,864,967 $1,963,380 $2,050,693 $2,094,246 $2,162,309 FFO $1,187,447 $1,263,959 $1,337,364 $1,409,853 $1,471,662 $1,494,088 $1,542,645 Capital Ex penditures ($174,438) ($174,211) ($179,126) ($182,501) ($187,439) ($192,358) ($198,609) Other Adj. ($12,000) ($12,000) ($12,000) ($12,000) ($12,000) ($12,000) ($12,390) AFFO $1,001,009 $1,077,748 $1,146,238 $1,215,352 $1,272,223 $1,289,730 $1,331,646 Diluted Weighted Av erage Shares & Units 377, , , , , , ,753 AFFO/Share $2.65 $2.85 $3.03 $3.21 $3.36 $3.41 $3.52 Ratios / Analysis EBITDA/sh grow th 5.4% 5.8% 5.3% 4.4% 2.1% 3.3% 4.6% FFO/sh grow th 6.1% 5.8% 5.4% 4.4% 1.5% 3.3% 4.6% AFFO/sh grow th 7.3% 6.4% 6.0% 4.7% 1.4% 3.2% 5.1% CapEx as % of FFO 14.7% 13.8% 13.4% 12.9% 12.7% 12.9% 12.9% 13.1% Inputs Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5y r adjusted) 0.90 Cost of Equity 7.06% Perpetual Grow th Rate 3.25% Outputs NPV of Cash Flow s $4,882,665 Terminal Value $30,903,833 NPV of Terminal Value $21,973,358 Land Held for Dev elopment $448,338 Equity Value $27,304,361 Shares Outstanding 378,753 Value per Share $72.09 Current Share Price $69.29 (Discount) / Premium to DCF -3.9% CAGR

264 Equity Residential EQR Price (07 Nov 14): US$69.29, Rating: NEUTRAL, Target Price: US$73.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) 2, , , ,913.9 Property operating expenses Real estate taxes Net operating income (US$ m) 1, , , ,915.2 Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses 1, Interest expense/finance costs Total non-property expenses 1, Share of associates/jvs' equity (4) (11) (5) (5) Net income before tax 1, Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to (210.0) unitholders Net income (US$ m) 1, Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items , , ,346.4 Cash flow from operations , , ,346.4 Other investment/(outflows) (8,667.6) (1,708.4) (1,895.7) (1,888.8) Cash flow from investment (7.0) (669.6) (795.7) (788.8) Dividends paid (720.1) (819.4) (807.1) (855.3) Equity raised Net borrowings (681.9) Other financing cash flows (38.6) 5.7 Financial cashflow (1,421.0) (695.7) (477.2) (557.6) Net cashflow (559.1) (33.5) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU (30.5) Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 3, , , ,571.4 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 20, , , ,217.5 Other investments Other non-current assets 22, , , ,693.2 Total non-current assets 22, , , ,693.2 Total assets 22, , , ,904.7 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 10, , , ,311.6 Other non-current liabilities Total non-current liabilities 10, , , ,661.0 Total liabilities 11, , , ,363.1 Unit funds Reserves 10, , , ,722.4 Shareholders' equity 11, , , ,541.6 Total capital employed 22, , , ,202.6 Real Estate Research 264

265 Essex Property Trust (ESS): Neutral Rating; $212 Price Target; 9% Total Exp Return Company Overview Essex is a pure play west coast operator that earns the bulk of its net operating income (NOI) from San Jose (20.8%), Seattle (18.1%), Los Angeles (17.8%), Oakland (12.5%), Orange County (12.3%), San Diego (9.3%), Ventura County (5.1%), and San Francisco (2.2%). Essex is currently in the process of building 3,101 units across 13 communities. Of these, 12 are located in Northern California where revenue growth remains the strongest in the country. Exhibit 284: Essex Apartment Communities Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of Essex Property Trust (ESS) with a Neutral rating and $212 price target. Our price target is derived by applying a 75% weighting to our $206 forward NAV estimate (plus a 5% premium to reflect management, asset, and balance sheet quality) and a 25% weighting to our $198 DCF estimate. Our $212 target price implies a multiple of 24.2 times our 2015 AFFO estimate and represents a total return of 8.5%, inclusive of a 2.8% dividend yield. Our Neutral rating is based on our belief that (1) land-constrained, coastal markets with difficult affordability will outperform in the long run; (2) new deliveries will be highly concentrated in Northern California where rent growth is expected to outperform other markets through at least 2015; and (3) a lack of Washington D.C. exposure will contribute 60bps of incremental rent growth relative to peers. However, we believe these factors are fully reflected in the stock price, leading to our Neutral rating. We view Essex Property Trust as a top-tier apartment operator in land-constrained, west-coast markets where onerous zoning regulations and a lack of affordable land constrain new supply leading to stronger, long-term NOI growth rates. The opportunity is particularly strong in the short run as Essex is fully invested in west coast markets where new supply remains tepid despite strong housing demand. Real Estate Research 265

266 Investment Positives Lack of Washington D.C. exposure results in 46bps of outperformance relative to peers. Washington D.C. is expected to be the worst performing market with samestore rents declining an estimated 0-2% in Peer NOI exposure to Washington D.C. ranges from 12.6% for UDR to 18.3% for EQR. Consequently, Essex's portfolio rent growth is expected to be 46bps higher than peers simply due to its lack of Washington D.C. exposure. Strong NOI Growth. We forecast 6.0% rent growth in 2015 and 4.6% in 2016, which translates to 6.3% and 4.6% NOI growth per annum over the next two years, respectively. Strong Job growth, limited new housing supply, and poor affordability support robust long-term rent growth. We think Essex's focus on desirable submarkets within metro areas with solid job growth and supply constraints will allow the company to achieve at least two more years of sector leading NOI growth. Suburban Expected to Outperform Urban. Essex primarily operates in suburban markets where fewer expected deliveries will likely translate to stronger rent growth. We note that despite its huge exposure to Northern California (35.4%), only 2.2% of its NOI comes from urban San Francisco proper. Investment Risks Consensus Estimates Assume Persistently Strong Performance. Consensus estimates assume record rent growth levels persist and near-perfect synergy execution. Upside opportunity is limited as the company and its markets are already hitting on all cylinders. The Normalized FFO Multiple Premium to Peers is Near Historical Highs. Essex is trading at 24.2 times our 2015 AFFO estimate, representing a 6.7% premium to the peer average. We note that the implied multiple is still lower than that for AVB as Essex has a significantly smaller development pipeline which more than offsets the difference in multiple. Portfolio Concentration Increases Idiosyncratic Risk. Essex is 100% invested in three regions along the west coast. San Francisco and Seattle are also highly concentrated and somewhat correlated, further reducing Essex's effective diversification (Los Angeles has a much more diversified economy). Major layoffs at Microsoft, Boeing, or Amazon, or headwinds in the tech sector could have a significant impact on Essex's growth prospects. Plans to Sustain Low Development Exposure Imply Minimal Growth Opportunities. On the 2Q14 earnings call, Essex stated its intentions to shrink its development pipeline to 2.5% of enterprise value, significantly less than AVB and CPT. While Essex is not known for its development prowess, we view the rollback as a signal of where Essex believes apartments are in the business cycle and its view on the attractiveness of pricing in the marketplace. Insignificant Land Holdings. With land costs trending at near record levels and development expected to continue generating significant returns, controlling a meaningful land bank has significant value. Essex, however, does not land bank. Instead, it utilizes a JIT land strategy, preferring to acquire fully entitled land immediately before commencing construction. The company's three parcel portfolio it acquired for $49M represents the smallest holdings in our coverage universe. Real Estate Research 266

267 Job Gains Expected to Nearly Double Supply Growth in Essex's Markets Job growth and resulting apartment demand is expected to outpace new deliveries in all eight of Essex's markets in (Exhibit 285). We expect 2.3% job growth in across Essex's markets, significantly more than our 1.6% supply growth estimate. We expect Essex's markets to achieve same-store rent growth of 5.9% over this time period, 200bps higher than that of its next fastest growing peer. Exhibit 285: Job Growth Expected to Significantly Outpace Supply Growth in Essex's Markets NOI Exposure by Market Supply and Job Growth Forecast 20.8% 18.1% 17.8% San Jose Seattle Los Angeles Job Growth E Supply Growth E National Job Growth National Supply Growth 12.5% Oakland 12.3% 9.3% Orange County San Diego 1.8% National Avg Supply Growth 5.1% 2.2% Ventura County San Francisco 2.3% National Avg Job Growth 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% While still favorable, the job-to-supply ratios are not as strong as those of the previous three years causing rent growth to moderate. We are underwriting rent growth deceleration in Northern California and moderate acceleration in Seattle and most of Southern California (Exhibit 286). Exhibit 286: Rent Growth Rates Expected to Moderate through % NOI Exposure by Market San Jose Sam e Store Rent Growth 18.1% Seattle 17.8% 12.5% 12.3% 9.3% 5.1% 2.2% Los Angeles Oakland Orange County San Diego Ventura County San Francisco focus market avg rent growth of 6.0% E focus market avg rent growth of 3.7% Rent Growth E Rent Growth Rent Growth Avg E Rent Growth Avg 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates, REIS. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Real Estate Research 267

268 Favorable Long-Term Market Weightings We believe that Essex's market exposures are more favorable than those of our coverage universe given our long-run growth expectations. As shown in Exhibit 287, the company is significantly overweight San Jose (1,330bps), Seattle (1,090bps), and Los Angeles (760bps) relative to that of our coverage universe. Notice that Essex's most heavily overweighted and underweighted markets are located in coastal locations characterized by strong job hubs, expensive rents, and high barriers to entry; the underpinnings for strong long-term rent growth. Despite the similarity between our heavy under-and-overweight markets, however, we believe that Essex will generate better-than-peer rent growth in the short run due to its absence from Washington D.C. and outperform in the long run owing to its lack of exposure to the Midwest, South, and Atlantic regions. Exhibit 287: Overweight the West and Underweight the Northeast San Jose 1,330bps Seattle 1,090bps Los Angeles 760bps District of Columbia (1,270bps) New York Metro (980bps) Boston (520bps) (2,000bps) (1,000bps) 0bps 1,000bps 2,000bps Development Pipeline Construction in Progress (CIP) Essex currently has 13 development projects under construction with a total budgeted cost of $1.6 billion or $1.1 billion at share. The CIP portfolio capital budget is the largest in the company's history but represents just 6.2% of enterprise value (at share). Management indicated that the size of the CIP portfolio will decline to 5.0% of enterprise value (2.5% at share) as new starts fail to keep pace with completions in the coming years. We note that 12 of the company's 13 construction projects are taking place Northern California where revenue growth remains most robust. The economics of the legacy Essex development portfolio remains compelling relative to acquisitions with cap rate spreads of 250bps and stabilized yields of 6.5%. We expect spreads on future development to compress as rent growth is not expected to fully offset the impact of rising land values, construction costs, and cap rates. We estimate that CIP projects will add $18.68 per share (1.6x book or 1.05x projected cost) to our NAV estimate and generate $3.2 million of incremental NOI in The implied book value multiple for Essex is smaller than that of competitors since both of its consolidated development projects were marked to market when acquired from BRE. As a result, we estimate the cap rate spread on these two projects to be just 25bps. Land Rights (Shadow Pipeline) Essex has JIT land inventory strategy where it acquires fully-entitled land parcels for immediate construction. The company owns three land parcels, two that were acquired through the BRE merger and one that was procured prior to adopting its no-land-bank policy. We believe the shadow pipeline will decline to zero in 2015 as the company sells or Real Estate Research 268

269 begins construction on existing parcels without backfilling the land bank. We estimate Essex's shadow pipeline is worth $1.6 per share (2.2x book), computed by taking the present value of residual land values on future deliveries. Essex Valuation Overview Exhibit 288: Essex Property Trust: $212 Price Target Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $ Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $ Approach 2: DCF DCF per share $ Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $ Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $ Forecasted Total Return 8.5% Real Estate Research 269

270 Exhibit 289: Essex: $203 Forward NAV Estimate Assumptions IRR Target 6.1% Assumed Average NOI Growth in Years % Assumed Average NOI Growth in Years % Calculate Operating Property Value Forward 12-Month GAAP NOI $766,121 Straight-Line Rent Adjustment/ FAS 141 $0 Forward 12-Month Cash NOI $766,121 Assumed Cash NOI Cap Rate 4.70% Market Value of Properties $16,300,439 Joint Venture Assets (Unconsolidated) Forward 12-Month Unconsolidated Cash NOI $67,668 Cash NOI Cap Rate 4.70% Market Value of Unconsolidated Properties $1,439,748 Key inputs / items in our ESS NAV Model: NOI Growth Years 0-3: 4.9% NOI Growth Years 4-10: 3% Blended cash cap rate of 4.7% Development Pipeline value: $1.2B Land Bank value: $100M Implied Cap Rate: 4.7% Implied Price per unit: $337k/door Add Assets: Cash & Cash Equivalents $20,000 Other Assets $475,437 Benefit of Tax-Exempt Debt $13,737 Land Held for Future Development (at market) $105,492 Development Projects (at market) $1,230,020 Equals - Gross Market Value of Assets $19,584,873 Subtract Liabilities and Preferred Stock Total Liabilities $6,149,389 Mark-to-Market Debt Adjustment $0 Preferred Stock $73,750 Net Market Value of Assets $13,361,734 Ending FFO Sharecount 65,843 Net Asset Value per Share $ mo Fwd. Net Asset Value Per Share $ Current Stock Price $ Implied Cap Rate at Current Price 4.74% Source: Credit Suisse estimates. Source: Credit Suisse estimates. Real Estate Research 270

271 Real Estate Research 271 Exhibit 290: Essex: 4.7% Cap Rate Required to Generate 6.15% Unlevered IRR Essex Property Trust IRR Analysis Apartment Units 52,652 Price per Unit $336,931 Total Acquisition Price $17,740,187 Ex pense Ratio 100.0% Targeted IRR (output) 6.15% Required Initial Cap Rate (input) 4.70% Assumed Rise in Terminal Cap 0.75% Key Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Same Store Rev enue Grow th 6.0% 4.6% 3.7% 2.9% (2.1%) (4.5%) 8.1% 5.8% 4.5% 3.8% Same Store Ex pense Grow th 5.3% 4.6% 3.7% 2.9% (2.1%) (4.5%) 8.1% 3.5% 2.3% 2.3% Same Store NOI Grow th (output) 6.3% 4.6% 3.7% 2.9% (2.1%) (4.5%) 8.1% 6.8% 5.5% 4.5% Consolidated Revenue $1,131,396 $1,183,551 $1,227,582 $1,262,775 $1,235,838 $1,180,124 $1,275,913 $1,349,278 $1,409,996 $1,463,576 Consolidated Operating Ex penses ($365,275) ($382,114) ($396,329) ($407,691) ($398,995) ($381,007) ($411,933) ($426,351) ($435,944) ($445,752) JV NOI at share $67,668 $70,788 $73,421 $75,526 $73,915 $70,583 $76,312 $81,518 $86,034 $89,900 GAAP NOI $833,789 $872,225 $904,674 $930,610 $910,758 $869,700 $940,292 $1,004,446 $1,060,086 $1,107,723 Apartment Units 52,652 52,652 52,652 52,652 52,652 52,652 52,652 52,652 52,652 52,652 Capex /Unit ($1,243) ($1,280) ($1,318) ($1,358) ($1,399) ($1,441) ($1,484) ($1,528) ($1,574) ($1,622) Total Capex ($65,436) ($67,399) ($69,421) ($71,503) ($73,648) ($75,858) ($78,134) ($80,478) ($82,892) ($85,379) Adjusted Cash NOI $768,353 $804,827 $835,253 $859,106 $837,110 $793,842 $862,158 $923,968 $977,194 $1,022,344 IRR Analysis Implied Cap Rate/Cash Flow s ($17,740,187) $768,353 $804,827 $835,253 $859,106 $837,110 $793,842 $862,158 $923,968 $977,194 $1,022,344 Terminal Value $20,833,326 Total CF ($17,740,187) $768,353 $804,827 $835,253 $859,106 $837,110 $793,842 $862,158 $923,968 $977,194 $21,855,671 Terminal Value Per SF / Unit 1.6% Growth over Hold Period 17.4% IRR 6.15% Cap Rate to achieve IRR 4.70%

272 Real Estate Research 272 Exhibit 291: Essex: $201 Discounted Cash Flow (DCF) Estimate Essex Property Trust DCF Model $ in thousands Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $624,291 $753,618 $813,967 $859,296 $901,066 $926,513 $956,625 Normalized FFO $499,103 $611,357 $668,395 $707,936 $739,349 $752,471 $776,927 Capital Expenditures ($45,084) ($66,207) ($69,108) ($71,667) ($74,493) ($77,261) ($79,772) Other Adj. $0 $0 $0 $0 $0 $0 $0 Adjusted FFO $454,019 $545,150 $599,287 $636,269 $664,856 $675,210 $697,155 Diluted Weighted Av g Shares & Units 58,852 65,840 65,840 65,840 65,840 65,840 65,840 AFFO/Share $7.71 $8.28 $9.10 $9.66 $10.10 $10.26 $10.59 Ratios / Analysis CAGR EBITDA/sh growth 7.9% 8.0% 5.6% 4.9% 2.8% 3.3% 5.8% FFO/sh growth 9.5% 9.3% 5.9% 4.4% 1.8% 3.3% 6.1% AFFO/sh growth 7.3% 9.9% 6.2% 4.5% 1.6% 3.2% 5.9% CapEx as % of FFO 9.0% 10.8% 10.3% 10.1% 10.1% 10.3% 10.3% 10.3% Inputs Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 0.98 Cost of Equity 7.43% Perpetual Grow th Rate 3.25% Outputs NPV of Cash Flow s $2,511,018 Terminal Value $14,902,832 Number of periods 5 NPV of Terminal Value $10,415,530 Land Held for Development $105,492 Equity Value $13,032,040 Shares Outstanding 65,701 Value per Share $ Current Share Price $ (Discount) / Premium to DCF 1.1%

273 Essex Property Trust ESS Price (07 Nov 14): US$200.54, Rating: NEUTRAL, Target Price: US$212.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) , ,258.8 Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (889.2) (2,455.9) (1,070.3) (1,080.7) Cash flow from investment (453.7) (1,161.2) (470.3) (480.7) Dividends paid (199.2) (277.3) (378.4) (423.1) Equity raised Net borrowings Other financing cash flows (7.4) (4.7) Financial cashflow (112.2) (157.1) Net cashflow (0.1) 1.5 Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 11, , , ,895.3 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 4, , , ,093.7 Other investments 677 1,055 1,099 1,126 Other non-current assets 4, , , ,502.7 Total non-current assets 4, , , ,502.7 Total assets 5, , , ,830.4 Accounts payable Short-term debt Other current liabilities 2.7 Total current liabilities Long-term debt 2, , , ,678.5 Other non-current liabilities 2.7 Total non-current liabilities 2, , , ,004.0 Total liabilities 3, , , ,151.8 Unit funds Reserves 1, , , ,524.6 Shareholders' equity 2, , , ,678.5 Total capital employed 4, , , ,682.6 Real Estate Research 273

274 UDR, Inc. (UDR): Neutral Rating; $32 Price Target; 10% Total Exp Return Company Overview UDR is a $7.7 billion market cap highly diversified apartment REIT with properties located throughout the United States. The company earns the bulk of its net operating income (NOI) from New York (13.1%), Washington D.C. (12.6%), Orange County (12.1%), San Francisco (11.7%), Seattle (6.3%), Boston (5.4%), Dallas (5.2%), Baltimore (4.7%), Los Angeles (4.3%), and Orlando (3.6%). The company has interests in 176 communities and 50,268 apartment units. UDR currently has $675 million in development projects under construction as well as 13 land parcels (9 in California) budgeted for $625M in the shadow pipeline. Exhibit 292: UDR Apartment Communities Source: SNL Financial. Investment Thesis: Neutral We are initiating coverage of UDR with a Neutral rating and $32 price target. Our price target is derived by applying a 75% weighting to our $32 forward NAV estimate and a 25% weighting to our $30 DCF estimate. Our $32 target price implies a multiple of 21.5 times our 2015 AFFO estimate and represents a total return of 9.6%, inclusive of a 3.4% dividend yield. Our Neutral rating is based on the company's (1) moderate-sized CIP pipeline funded by non-core dispositions; (2) sector leading diversification across geographic markets, and (3) record-high occupancy rates that should provide leverage to push rents. However, our positive outlook is muted by its significant exposure to second-tier cities as well as the dilution associated with disposing of these assets in the coming years. These markets tend to lack the job hubs of their larger-city counterparts which drive the apartment operator's ability to push rents. UDR is a highly diversified apartment operator with communities located throughout 23 markets, including a handful of markets void of any peer communities. Since the other REITs under coverage are concentrated in expensive coastal markets (except for Camden), increased portfolio diversity means that more of its portfolio is located in affordable, suburban markets with higher homeownership rates. The more affordable for-sale housing in these markets inhibits rent growth as increasing rent levels make homeownership relatively more attractive. Real Estate Research 274

275 Investment Positives Shadow Pipeline Concentrated to the West Coast. While its $675 million in projects under construction are as diversified as its same-store portfolio, its $625 million shadow pipeline (13 parcels) has a high west coast concentration: 7 parcels in Southern California, 2 parcels in Northern California, and 1 parcel in Seattle. We believe that Seattle and San Francisco will continue to outperform while Southern California continues to deliver average results. Outbound Call Center. The newly installed outbound call center is likely to garner stronger performance in the coming months as the sales force refines their skills and management retools its revenue management system to account for the increase in supply. Strong NOI Growth. We forecast 3.8% rent growth in 2015 and 2.8% in 2016, which we expect will translate into 4.1% and 3.2% NOI growth per annum over the next two years, respectively. Diversification Reduces Downsize Risk. UDR is highly diversifed across geographic markets, asset quality (Class A vs. Class B), and subsector focus (urban vs. suburban). The company's sector-leading diversification reduces idiosyncratic risk. Investment Risks Washington D.C. Exposure. Washington D.C. represents the company's second largest NOI-weighted exposure (12.6%). The market is expected to generate negativeto-flat revenue growth in the next two years, significantly worse than any other apartment focus city. Deteriorating Development Returns. Development Yields and Cap Rate Spreads, while still historically strong, are trending towards their historical average as land/construction costs continue to grow faster than rents. Structural Peek in Occupancy. Occupancy has approached a structural peak (96.9%) making further utilization gains an unlikely rent growth contributor. We believe that the headwinds associated with occupancy normalization will be largely offset by the above average rate growth that peak occupancy affords. Job Gains Expected to Outpace Supply Growth in most Focus Markets Job growth and resulting apartment demand is expected to outpace new deliveries in 11 of UDR's top 14 markets in (Exhibit 293). We expect 1.95% job growth in UDR's top 14 markets, 10bps higher than our 1.85% supply growth estimate. Orange County, Dallas, and Oakland are expected to have the most favorable job-to-supply growth while Washington, D.C. and New York are expected to encounter the least favorable ratios. Real Estate Research 275

276 Exhibit 293: Job Gains Expected to Outpace Supply Growth in 11 of 14 Markets NOI Exposure by Market Supply and Job Growth Forecast 13.1% New York 12.6% 12.1% Washington D.C. Orange County 2.3% National Avg Job Growth 6.3% 5.4% Seattle Boston 1.8% National Avg Supply Growth 5.2% Dallas 4.7% Baltimore 4.3% 3.9% 3.9% 3.9% Los Angeles San Jose Oakland San Francisco Job Growth E Supply Growth E National Job Growth National Supply Growth 3.6% Tampa 3.6% Orlando 2.9% Nashville 25% 20% 15% 10% 5% 0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% While still favorable, the job-to-supply ratios are not as strong as those of the previous three years causing rent growth to moderate. We are underwriting rent growth deceleration in all UDR markets (Exhibit 294). Exhibit 294: Rent Growth Rates Expected to Moderate through 2016 NOI Exposure by Market Sam e Store Rent Growth 13.1% 12.6% 12.1% 6.3% New York Washington D.C. Orange County Seattle Rent Growth E Rent Growth Rent Growth Avg E Rent Growth Avg 5.4% 5.2% Boston Dallas focus market avg rent growth of 5.6% 4.7% 4.3% Baltimore Los Angeles E focus market avg rent growth of 3.0% 3.9% San Jose 3.9% Oakland 3.9% San Francisco 3.6% Tampa 3.6% Orlando 2.9% Nashville 25% 20% 15% 10% 5% 0% Source: Company data, Credit Suisse estimates 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Real Estate Research 276

277 Geographic Diversification Results in a Lack of Large Market Bets UDR's portfolio is more diverse than any other Apartment REIT under coverage: the company is not making any major market bets away from the average of our coverage universe (benchmark). Moreover, the bets UDR is making are within small geographic regions. For example, the company is overweight Orange County but underweight Los Angeles and overweight Dallas while underweight Houston. As shown in Exhibit 295, the company is marginally overweight Orange County (590bps), Baltimore (380bps), New York (330bps), Dallas (280bps), and Nashville (230bps) relative to that of our coverage universe. Unlike those of peers, UDR's most heavily overweighted markets are not easily distinguished from those it underweights. Exhibit 295: Substantial Diversification means no Large Market Bets Orange County Baltimore New York Metro Dallas Nashville Los Angeles San Diego San Jose Miami Houston (590bps) (370bps) (360bps) (280bps) (250bps) 380bps 330bps 280bps 230bps 590bps (1,000bps) (500bps) 0bps 500bps 1,000bps Development Pipeline Construction in Progress (CIP) UDR currently has 6 development projects under construction (including its participating loan investment in Steele Creek) with $675 million in budgeted capital spend. The size of construction portfolio has declined dramatically since the 2012 peak: the current CIP-toenterprise-value ratio of 5.7% is less than half the 11.7% it had under construction at the end of The economics of the development portfolio remain compelling relative to acquisitions with cap rate spreads of 170bps and stabilized yields of 6.0%. We expect spreads on future development to compress as rent growth is not expected to fully offset the impact of rising land values, construction costs, and cap rates. We estimate that CIP projects will add $3.82 per share (2.0x book or 1.3x projected cost) to our NAV estimate and generate $8.4 million of incremental NOI in Land Holdings (Shadow Pipeline) UDR has a $625M shadow pipeline comprised of 13 land parcels that it acquired for $184M. The company started construction on $225M in communities, sold a land parcel budgeted for $100M, and backfilled the pipeline with $400M in capital costs associated with three land acquisitions. As a result, the size of its pipeline grew to $625 million in 3Q14 from $550 million at the end of We believe the pipeline will contract in 4Q14/2015 as the scarcity of fully entitled sites causes the capital cost associated with deliveries to outpace that from land acquisitions. Real Estate Research 277

278 Approximately 70% of UDR's pro-rata basis in its development pipeline is in properties located in California markets, locations that we expect to outperform in the long run. We estimate UDR's shadow pipeline is worth $0.92 per share (1.3x book), computed by taking the present value of residual land values on future deliveries. UDR Valuation Overview Exhibit 296: UDR: $32 Price Target Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $32.46 Targeted Premium (Discount) to NAV 0% Fair Value on NAV Valuation $32.46 Approach 2: DCF DCF per share $30.19 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $30.19 Weighting % NAV 75% % DCF 25% % EV/EBITDA 0% Credit Suisse Price Target $32.00 Forecasted Total Return 9.6% Real Estate Research 278

279 Exhibit 297: UDR: $32 Forward NAV Estimate Assumptions IRR Target 6.3% Assumed Average NOI Growth in Years % Assumed Average NOI Growth in Years % Calculate Operating Property Value Forward 12-Month Consolidated GAAP NOI $552,091 Straight-Line Rent Adjustment/ FAS 141 $0 Forward 12-Month Consolidated Cash NOI $552,091 Assumed Cash NOI Cap Rate 5.30% Market Value of Consolidated Properties $10,416,806 Joint Venture Assets (Unconsolidated) Forward 12-Month Unconsolidated Cash NOI $65,572 Cash NOI Cap Rate 5.30% Market Value of Unconsolidated Properties $1,237,208 Key inputs / items in our UDR NAV Model: NOI Growth Years 0-3: 3.4% NOI Growth Years 4-10: 2.7% Blended cash cap rate of 5.3% Development Pipeline value: $1.0B Land held for development valued at cost: $250M Implied Cap Rate: 5.5% Implied Price per unit: $270k/door Add Assets: Cash & Cash Equivalents $20,000 Other Assets $199,138 Benefit of Tax-Exempt Debt $2,170 Land Held for Future Development $247,372 Development Projects $1,022,752 Equals - Gross Market Value of Assets $13,145,445 Subtract Liabilities and Preferred Stock Total Liabilities $4,501,882 Mark-to-Market Debt Adjustment $0 Preferred Stock $46,571 Net Market Value of Assets $8,596,992 Ending FFO Sharecount 268,172 Net Asset Value per Share $ mo Fwd. Net Asset Value Per Share $32.46 Current Stock Price $30.18 Implied Cap Rate at Current Price 5.5% Real Estate Research 279

280 Real Estate Research 280 Exhibit 298: UDR: 5.3% Cap Rate Required to Generate 6.3% Unlevered IRR UDR, Inc. IRR Analysis Apartment Units 43,201 Price/unit $269,765 Total acq price $11,654,014 Ex pense ratio 35.1% Targeted IRR (output) 6.34% Required Initial Cap Rate (input) 5.30% Assumed Rise in Terminal Cap 0.75% Key Assumptions Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Same Store Rev enue Grow th 3.8% 2.8% 2.7% 2.8% (2.2%) (4.6%) 8.0% 4.6% 4.2% 3.5% Same Store Ex pense Grow th 3.2% 2.2% 2.4% 2.8% (2.2%) (4.6%) 8.0% 2.3% 2.3% 2.3% Same Store NOI Grow th 4.1% 3.2% 2.8% 2.8% (2.2%) (4.6%) 8.0% 5.8% 5.2% 4.1% Consolidated Revenue $842,917 $866,852 $890,172 $914,977 $894,724 $853,669 $922,274 $964,699 $1,005,216 $1,040,399 Consolidated Operating Ex penses ($290,826) ($297,350) ($304,459) ($312,943) ($306,016) ($291,974) ($315,439) ($322,536) ($329,793) ($337,213) JV NOI at share $65,572 $67,640 $69,565 $71,504 $69,921 $66,713 $72,074 $76,270 $80,220 $83,518 GAAP NOI $617,663 $637,142 $655,279 $673,538 $658,629 $628,408 $678,910 $718,433 $755,644 $786,703 Apartment Units 43,201 43,201 43,201 43,201 43,201 43,201 43,201 43,201 43,201 43,201 Capex /Unit ($1,213) ($1,250) ($1,287) ($1,326) ($1,366) ($1,407) ($1,449) ($1,492) ($1,537) ($1,583) Total Capex ($52,420) ($53,993) ($55,613) ($57,281) ($59,000) ($60,770) ($62,593) ($64,470) ($66,405) ($68,397) Adjusted Cash NOI $565,242 $583,149 $599,666 $616,257 $599,630 $567,638 $616,317 $653,963 $689,239 $718,306 IRR Analysis Implied Cap Rate/Cash Flow s ($11,654,014) $565,242 $583,149 $599,666 $616,257 $599,630 $567,638 $616,317 $653,963 $689,239 $718,306 Terminal Value $13,328,442 Total CF ($11,654,014) $565,242 $583,149 $599,666 $616,257 $599,630 $567,638 $616,317 $653,963 $689,239 $14,046,749 Terminal Value Per SF / Unit 1.4% Growth over Hold Period 14.4% IRR 6.34% Cap Rate to achieve IRR 5.30%

281 Real Estate Research 281 Exhibit 299: UDR: $30 Discounted Cash Flow (DCF) Estimate UDR, Inc. DCF Model $ in thousands Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $492,305 $526,767 $559,469 $573,415 $600,475 $621,633 $640,282 Normalized FFO $401,662 $428,928 $456,786 $468,456 $489,872 $497,817 $512,752 Capital Ex penditures ($44,665) ($51,832) ($53,445) ($55,609) ($58,879) ($62,143) ($64,007) Other Adj. $0 $0 $0 $0 $0 $0 $0 AFFO $356,997 $377,096 $403,341 $412,848 $430,994 $435,674 $448,745 Diluted Weighted Av g Shares & Units 265, , , , , , ,282 AFFO/Share $1.34 $1.41 $1.50 $1.54 $1.61 $1.62 $1.67 Ratios / Analysis CAGR EBITDA/sh grow th 6.0% 6.2% 2.5% 4.7% 3.5% 3.0% 4.6% FFO/sh grow th 5.8% 6.5% 2.6% 4.6% 1.6% 3.0% 4.2% AFFO/sh grow th 4.6% 7.0% 2.4% 4.4% 1.1% 3.0% 3.9% CapEx as % of FFO 11.1% 12.1% 11.7% 11.9% 12.0% 12.5% 12.5% 12.0% Inputs Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5y r adjusted) 1.01 Cost of Equity 7.54% Perpetual Grow th Rate 3.00% Outputs NPV of Cash Flow s $1,656,714 Terminal Value $8,910,735 NPV of Terminal Value $6,196,467 Land Held for Dev elopment $247,372 Equity Value $8,100,554 Shares Outstanding 268,282 Value per Share $30.19 Current Share Price $30.18 (Discount) / Premium to DCF (0.0%)

282 UDR UDR Price (07 Nov 14): US$30.18, Rating: NEUTRAL, Target Price: US$32.00, Analyst: Ian Weissman Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity (0) (6) (7) (5) Net income before tax Surplus/deficit on inv property Income tax (expense) (7.3) (9.0) (4.0) (4.0) Non-tax deductible expenses Distributable income to (2.0) unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (373.3) (790.5) (940.9) (1,120.9) Cash flow from investment (123.2) (213.6) (140.9) (320.9) Dividends paid (244.9) (270.6) (293.9) (305.5) Equity raised Net borrowings Other financing cash flows (8.5) (4.3) Financial cashflow (198.6) (172.3) (148.9) (105.5) Net cashflow 18.1 (10.2) (4.8) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth (%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 58, , , ,192.1 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 5, , , ,305.5 Other investments Other non-current assets 6, , , ,382.2 Total non-current assets 6, , , ,382.2 Total assets 6, , , ,551.0 Accounts payable Short-term debt 55.0 Other current liabilities Total current liabilities Long-term debt 3, , , ,868.2 Other non-current liabilities Total non-current liabilities 3, , , ,868.2 Total liabilities 3, , , ,109.2 Unit funds Reserves 2, , , ,145.5 Shareholders' equity 3, , , ,441.9 Total capital employed 6, , , ,310.1 Real Estate Research 282

283 Total Returns 11 November 2014 Industrial We are launching coverage of three industrial REITs including Prologis (Outperform rating, $46 PT), EastGroup (Underperform rating, $69 PT), and DCT (Underperform rating, $8.50 PT). Our forecasted total return for industrial over the next 12 months is 12%. Overall, national fundamentals for the Industrial sector continue to improve with vacancy now below 2008 levels, with rent spreads expected to remain healthy through 2016/17. The overriding issue the next few years is supply growth which has picked up across most major markets. Same-store NOI growth will average 2.7% the next two years vs. the trailing 18-month average of 2.8%. Excluding PLD which is forecasted to growth FFO 22% next year, the average growth rate is 6% in '15, while the group will deliver 7% earnings growth in '16. YTD Industrial stocks are up 14% vs. 22% for the balance of our coverage universe. From a valuation standpoint, the group trades in-line to NAV or an implied cap rate of just 5.8%. Coverage Group Exhibit 300: Industrial Investment Summary Price Total P/AFFO Implied Ticker Rating Mkt Cap Price Target Return 2015E Cap Rate Investment Summary DCT Underperform $2,991 $8.49 $ % 23.9x 5.6% EGP Underperform $2,188 $68.54 $ % 23.4x 5.9% PLD Outperform $20,705 $41.41 $ % 24.2x 5.8% Small cap developer continues to upgrade portfolio and market quality while moving earnings (slowly) higher. Big question is how impactful occupancy growth will be going forward given markets left to lease. Sunbelt / CA developer leveraged to the recovery in local / regional distribution markets given smaller size of assets. Excellent company with strong management and balance sheet trading at a premium valuation. Global logistics provide with large development pipeline ($2bn+) and fund management business (AUM of $25bn+). Operations leveraged to consumption growth in the US and in Europe / Asia the modernizing of logistics supply FFO Estimate 2016 FFO Estimate Dividend Consensus Rating and Distribution CS Consensus H/(L) CS Consensus H/(L) Yield Outperform Neutral Underperform CS Rating DCT $0.50 $ % $0.54 $ % 3.3% 2 / 17% 10 / 83% 0 / 0% Underperform EGP $3.73 $ % $4.02 $ % 3.3% 5 / 33% 8 / 53% 2 / 13% Underperform PLD $2.03 $ % $2.17 $ % 3.2% 14 / 70% 6 / 30% 0 / 0% Outperform Source: Thomson Reuters, Credit Suisse estimates. Subsector Returns Exhibit 301: Industrial YTD vs. '2015E Total Returns 25% 20% 15% 10% 14% 12% 5% 0% 4% 4% PLD DCT EGP REITs Overall Trailing 12-Month Return 12-Month Expected Return Source: Thompson Reuters Real Estate Research 283

284 1997 4q q q q q q q q q q q q q q q q q q q q q q q q q q TTM Net Absorption (mn sf) Net Absorption as a % of Inv. 11 November 2014 Key Sector Themes for 2015 Fundamentals are good, but the stocks have lagged on supply concerns To sum up the Industrial market in late 2013 and early 2014, fundamentals were good and improving, but the stock market cared more about the spectre of rising supply (and what this means for the length of the rent growth cycle) and relatively weak cash rent spreads at this point in the recovery. Exhibit 302: Industrial REITs have lagged over recent period REIT Subsectors Week Ago 30 Day 90 Day YTD Last 12 Mo. Last 3 Yrs Last 5 Yrs Index: Total Return Total Return Total Return Total Return Total Return Total Return Total Return Apartments 0.0% 11.0% 6.3% 34% 31% 36% 167% Free Standing 0.6% -1.8% -6.9% 7% 2% 42% 110% Health Care -0.4% 10.0% 8.9% 27% 15% 51% 114% Hotels -1.3% 11.0% 9.1% 25% 31% 83% 159% Industrial -0.3% 12.0% 6.8% 17% 11% 63% 116% Malls -0.3% 8.6% 9.1% 25% 25% 61% 210% Office -0.1% 9.9% 5.2% 22% 23% 46% 101% Storage 0.7% 13.0% 10.0% 30% 23% 84% 228% Strips 0.3% 11.0% 9.6% 26% 21% 65% 137% All Equity REITs 0.1% 9.0% 6.6% 24% 21% 55% 141% Source: Company data, Credit Suisse estimates, ThompsonReuters Demand remains healthy and accelerating, which bodes well for fundamentals in While much investor/analyst focus has been on the supply front,we are equally focused on the pace of demand growth in the U.S. Industrial market. Demand has outpaced new supply for 12 consecutive quarters on a national basis. In our view the fundamentals of this part of the cycle have been among the healthiest in the past 15 years in large part to the lack of new supply, even if those figures have moved higher in recent quarters. Industrial demand is innately tied to changes in consumption, income, inventory, and trade growth (people can afford and then consume more goods). With CS economists forecasting a similar economic backdrop in 2015 as 2014 (with one exception the potential for better wage growth as the unemployment rate contracts) we'd expect a similar pace of demand going forward to the 180msf TTM or 1.8% of inventory. Exhibit 303: TTM net absorption Absorption outpacing new supply 280, , , , ,000 80,000 40,000 - (40,000) (80,000) (120,000) (160,000) 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% TTM Absorption (mn sf) TTM Absorption / Inventory TTM Absorption Less TTM Supply, all as % of Inventory Real Estate Research 284

285 Exhibit 304: On balance net absorption trending above supply in most markets How we think about 'net' net absorption for the Industrial Markets Supply Deliveries Net Absorption TTM "Net" Net q q q q TTM q q q q TTM Absorption Inventory Atlanta ,144 3,447 2, ,717 6, % Charlotte , ,378 1, ,195 1,696 4,461 3, % Chicago 2,185 1,686 1, ,230 4,282 1, ,182 7,954 2, % Cincinnati ,554 1,554 1, , ,978 1, % Cleveland % Columbus ,810 2,014 1, ,955 5,961 4, % Dallas 2,335 4,510 2,002 1,871 10,719 5,880 6,769 3,113 1,330 17,092 6, % Denver , , ,221 1, ,423 1, % Houston 1,489 2,572 2, , ,487 1,686 1,751 5,636 (1,500) -0.5% Indianapolis 1, ,563 1,538 4, (205) 745 (960) 294 (4,200) -2.5% LA-Inland Empire 2,516 2,615 8,423 5,497 19,050 5,791 3,206 5,995 6,904 21,896 2, % Long Island (358) (74) (649) (882) (1,200) -0.7% Memphis , (1,691) (2,000) -1.1% Nashville ,393 (661) ,400 2, % Northern NJ ,318 1,154 (116) 159 (220) 977 (300) -0.1% Oakland 0 0 1, , (328) 1,019 1, % Orange County (33) , % Pennsylvania , ,207 3,131 1,992 3,353 2,894 11,369 7, % Phoenix 1, , ,823 2, , ,312 1, % San Diego ,073 1, % Northern CA ,159 3,414 2, % Seattle ,007 1, ,822 1, % South Florida , , , % Tampa-Orlando ,000 1, ,478 2,039 4,865 3, % Washington, DC-Balt ,677 2,835 1, ,363 4,583 1, % National 21,516 27,419 34,813 30, ,430 54,982 38,297 45,391 43, ,135 67, % But supply is increasing headwind for stocks The big issue for sentiment surrounding the Industrial stocks is clearly supply. As we illustrate below, the national supply figures have increased over the past 6 quarters, albeit from historically low levels. In addition it is important to note that when you include space taken out of the market due to obsolescence or tear downs for higher and better uses, the total U.S. inventory of space is relatively flat since Exhibit 305: U.S. Industrial Supply under construction as % of Real Estate Research 285

286 In addition the big supply ramp has come in a handful of markets When we look at where the supply is located, we see that on balance supply as a percent of inventory is 1.6% across the REIT markets. On the other hand, absorption on a TTM basis is 50% higher than the supply or delivery totals, suggesting to U.S. that there is still a healthy balance in the markets between demand and supply. Exhibit 306: U.S. Industrial Supply under construction by market Wtd. Average Market Space Under Construction TTM Absorption REIT Exposure Size Vacancy q as % of Inventory q q 6 month Δ 12 month Δ 3Q '14 Abs / Supply UC Atlanta 4% 426,000 10% 5,900 1% 4,000 1,600 48% 269% 7, x Charlotte 1% 158,900 7% 2,200 1% 1,200 1,200 83% 83% 4, x Chicago 8% 624,900 9% 14,400 2% 5,100 5, % 182% 8, x Cincinnati 2% 157,700 7% 0 0% 1,300 1, % -100% 3, x Columbus 2% 177,000 7% 3,000 2% 1,100 1, % 88% 6, x Dallas 6% 426,200 6% 15,400 4% 13,400 7,900 15% 95% 17, x Denver 1% 118,900 4% 1,600 1% 2,000 1,400-20% 14% 3, x Houston 6% 287,400 6% 5,200 2% 3,600 5,700 44% -9% 5, x Indianapolis 3% 167,600 9% 6,100 4% 5,000 2,500 22% 144% x Jacksonville 0% 68,200 10% 370 1% % 0% x LA-Inland Empire 13% 805,500 5% 14,800 2% 17,500 16,500-15% -10% 21, x Memphis 0% 179,900 14% 2,500 1% 2,200 2,500 14% 0% 0 0.0x Nashville 2% 110,700 8% 0 0% % -100% 2, x Northern CA 5% 147,700 9% 700 0% % 40% 3, x NY/NJ Metro 5% 227,100 8% 600 0% 1,500 1,300-60% -54% 1, x Pennsylvania 8% 601,500 9% 11,500 2% 10,200 4,500 13% 156% 11, x Phoenix 1% 146,600 12% 2,900 2% 2,900 3,700 0% -22% 5, x Raleigh 1% 47,500 10% 0 0% % -100% x San Diego 0% 47,800 7% 0 0% % 0% 1, x Seattle 2% 148,700 6% 3,100 2% 1,800 2,400 72% 29% 3, x South Florida 4% 206,200 8% 1,800 1% 2,600 2,200-31% -18% 3, x Tampa-Orlando 4% 196,200 9% 2,600 1% 2,600 2,800 0% -7% 4, x Washington, DC-Balt. 3% 236,800 10% 1,700 1% 3,100 1,800-45% -6% 4, x Totals / Wtd Avg 83% 5,715,000 8% 96, % 82,480 66,820 21% 52% 8, x How we think about Industrial Supply & Demand by Market Same-store NOI likely to lag REITs in , which is the nature of industrial We expect the Industrial REITs to post SS NOI growth of 2.9% in 2015 and 2.9% in 2016, compared to 4% YTD in 2014 and 2.2% in Furthermore this pace of growth is below the rest of the REIT sector by 50bp on average over the next 2 years. By its nature, Industrial real estate is a lower growth asset than the other property types, with the tradeoff being less volatile SS NOI (except in the last recession where overbuilding by REITs and private players coupled with significant demand destruction from housing related tenants wrecked the markets). Exhibit 307: How we model Industrial SS NOI growth YTD 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY CS Next 5Yr Forecast Trail. 5Yr Avg Trail. 10Yr Avg DCT Industrial 2.0% 6.8% 3.0% 2.1% 4.3% 4.4% 3.7% 2.9% 2.5% 3.5% 1.6% NA Eastgroup 3.4% 1.2% 1.9% 3.3% 2.3% 2.5% 2.7% 2.7% 2.2% 2.5% 1.2% 1.6% Prologis 1.1% 2.0% 2.1% 4.7% 2.7% 2.7% 2.8% 2.7% 2.7% 2.7% 1.2% 1.4% Historical SS NOI Growth vs. CS Forecasts - Industrial Leasing spreads should peak in , but at a lower level than expected Leasing spreads in 2015 and 2016 should increase to 6% and 7%, respectively before settling down in as lease rate comps become more difficult and supply as a percent of inventory levels normalize. That said, 6-7% spreads on average over the next Real Estate Research 286

287 two years are above average, even if they are less robust than investors would have hoped for given how strong the demand recovery has been relative to the amount of supply constructed. Exhibit 308: How we think about rent growth / cash spreads for the Industrial REITs Exhibit 309: How we think about rent growth / cash spreads for PLD's Portfolio CS Market Rent Growth - Industrial Markets Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Avg Americas 5.0% 4.0% 3.0% 3.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% 2.7% Europe 2.0% 2.0% 4.0% 4.0% 4.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.6% Asia 2.5% 2.5% 2.5% 2.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% 2.2% Development volumes should continue to drive earnings and NAV growth One of the attractive features of the Industrial sector investment case is the ability of the company's to drive earnings and NAV growth through ground up development, which at this point in the cycle is very attractive relative to the sales cap rate environment (5-6% across most markets). In our models, we assume that the in-process developments for DCT, EGP, and PLD will add 2% of value creation to their EV. In addition we underwrite future development activity for each company, averaging 5% of EV per year at a high 7% yield. We fund this growth in the model with leverage neutral debt/equity. Exhibit 310: How we think about development volumes going forward and the NAV accretion from CIP Real Estate Research 287

288 DCT Industrial (DCT): Underperform Rating; $8.50 Price Target; 4% Total Return Exp. Company Overview DCT Industrial is a small-cap industrial REIT that focuses on the acquisition and development of distribution assets across the country. Over the past 5 years the company has successfully migrated the portfolio into more coastal and Texas markets and away from the Midwest and second-tier cities (which it was more exposed to at IPO) through development and acquisitions in the former and asset sales in the latter. Exhibit 311: DCT Industrial portfolio overview Source: SNL Financial. Investment Thesis: Underperform We are initiating coverage of DCT Industrial with an Underperform rating and a $8.50 price target, implying a 4% total return over the next 12 months. Our price target is based upon a 75% weighting of our $8.25 forward NAV estimate plus a 5% premium, (see NAV discussion and model below; and a 25% weighting of our $8.00 DCF estimate. Our Underperform rating on DCT is largely valuation based with the stock trading at a 3% premium to NAV and a 5.6% implied cap rate. Overall, we like the DCT story as the company has managed to modestly grow earnings despite significant repositioning into lower cap rate markets. Investment Positives The company has managed to modestly grow earnings despite significant repositioning into lower cap rate markets and a deleveraging of the balance sheet. It has done a good job acquiring value add and selling stabilized to capture cap rate spread in the market from Outperformers looking more for stable returns in a low fixed income world. Real Estate Research 288

289 Deleveraging is almost over, which should allow for earnings to grow closer to REIT average starting in On development, the company does not land bank, which limits the risk of owning non-income-producing assets in weaker environments but also produces lower yields in improving markets. We expect cash leasing spreads of 6% in 2015 and 7% in 2016 versus 5% trailing four quarter average. This plus occupancy growth and bumps should produce cash SS NOI growth of 4.3% in 2015 and 4.0% in Development in progress should add about $107mn (future value) or 4% to NAV. We assume the company will build an incremental $125mn/yr at a 7.5% yield, which would produce a similar amount of NAV accretion assuming stabilized cap rates of 6%. This is certainly positive but can DCT ramp its development spend at this point in the cycle to drive higher NAV and earnings growth? Investment Risks Occupancy growth a key to NT SS NOI growth During 3Q portfolio ran at 93.5% average occupancy, and we think that DCT's portfolio should be able to reach 95% occupancy over the next 24 months given positive trends across the Industrial landscape. The big question is, can DCT lease up its vacancy as the underleased markets include Atlanta (90% occupancy), Indy (85%), and Memphis (88%) Outside of a broader reacceleration of Industrial fundamentals (either demand strengthening or supply easing off) it's hard to see DCT getting much of a bid at current levels (5.6% implied cap rate, 3% premium to NAV). Development at current levels is not enough to really move the needle and drive NAV growth above its peers. Portfolio vacancy is in some of the company's weaker markets. Continued deleveraging in the face of development spend suggests more common equity is likely in We model $100mn of common through 2015, which would bring DCT's debt to EBITDA down to 6.2x times by year end Real Estate Research 289

290 Development Pipeline At Q3, DCT had 17 active development projects comprising 4.4msf of industrial with a total estimated build cost of $280mn ($108mn left to fund.). DCT also owns land capable of supporting ~2msf of buildable square footage (assuming 40% coverage) which we value at book value or $51mn. As we illustrate below we estimate that these projects represent $93mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 312: DCT development pipeline and CS estimate for value creation DCT Industrial Development Pipeline Current CS Estimates Costs Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline SF PSF Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Beltway Tanner 133 $118 $15,690 $14,097 $1, % 5.5% 1.0 $5,991 $5,446 Sumner South 188 $70 $13,252 $11,414 $1, % 5.5% 1.0 $5,060 $4,600 River West 733 $40 $29,644 $9,527 $20, % 5.5% 1.8 $11,319 $9,633 Freeport 100 $70 $6,969 $3,516 $3, % 5.5% 1.3 $2,661 $2,365 Frankford Trade Center 82 $75 $6,155 $3,412 $2, % 5.5% 1.8 $2,350 $2,000 Airtex $79 $9,882 $5,859 $4, % 5.5% 1.3 $3,773 $3,354 NW Crossroads I 362 $57 $20,751 $10,865 $9, % 5.5% 1.3 $7,923 $7,043 NW Crossroads II 320 $58 $18,410 $3,896 $14, % 5.5% 1.8 $7,029 $5,982 Airport Dist. Center Orlando 97 $69 $6,693 $4,715 $1, % 5.5% 1.3 $2,556 $2,272 Chrin Commerce Center 426 $61 $25,816 $7,583 $18, % 5.5% 2.0 $9,857 $8,214 White River I 649 $66 $43,036 $38,353 $4, % 5.5% 1.5 $16,432 $14,289 White River II 63 $81 $5,095 $2,581 $2, % 5.5% 1.5 $1,945 $1,692 Fife 45 N 79 $89 $7,049 $2,800 $4, % 5.5% 1.5 $2,691 $2,340 Fife 445 S 64 $88 $5,654 $1,799 $3, % 5.5% 1.5 $2,159 $1,877 8th & Vineyard 64 $93 $5,937 $2,691 $3, % 5.5% 1.5 $2,267 $1,971 Riato 928 $64 $59,755 $48,706 $11, % 5.5% 1.3 $22,816 $20,280 Totals / Avg 4,413 $63,401 $279,788 $171, % 5.5% $106,828 $93,358 Real Estate Research 290

291 DCT Industrial Valuation Overview Exhibit 313: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $8.36 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $8.78 Approach 2: DCF DCF per share $8.06 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $8.06 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $8.50 Forecasted Total Return 3.9% Exhibit 314: NAV Snapshot Key inputs / items in our DCT NAV Model: Year 1 Cash NOI (pro-rata) of $256mn Blended cash cap rate of 5.75% Land at historical Book Value of $51mn Development in CIP valued at $265mn, or $93mn above cost Real Estate Research 291

292 DCT IRR Analysis Exhibit 315: IRR Underwriting Key Assumptions Targeted IRR (output) 6.75% Required Initial Cap Rate (input) 5.75% Assumed Rise in Terminal Cap 0.75% DCT IRR Analysis Terminal Value Total SF in portfolio (000's) 68,372 68,372 68,372 68,372 68,372 68,372 68,372 68,372 68,372 68,372 SF Rolling in period (000's) 8,969 10,692 10,785 6,962 9,352 9,352 9,352 9,352 9,352 9,352 Avg Expiring Gross Rent $3.99 $4.26 $4.03 $4.63 $4.23 $4.23 $4.23 $4.23 $4.23 $4.23 Operating Expense Margin 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% Avg net rent per SF $2.88 $3.08 $2.91 $3.34 $3.06 $3.06 $3.06 $3.06 $3.06 $3.06 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth 5.0% 4.0% 3.0% 3.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Mark to Market, Beg. Of Period 4% 6% 7% 7% 7% 4% 1% 2% 2% 2% Mark to Market, End of Period 9% 10% 10% 10% 7% 4% 4% 5% 5% 6% Avg. Mark to Market (vs. Exp. Net + Recov.) 7% 8% 9% 8% 7% 4% 3% 3% 4% 4% Incremental NOI in Period $854 $2,199 $2,683 $2,299 $1,930 $1,496 $891 $803 $947 $1,075 Total Rent Growth 5% 9% 12% 16% 16% 16% 19% 23% 27% 30% CAGR Rent Growth (through period) 5% 4% 4% 4% 3% 2% 3% 3% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 59,403 57,680 57,587 61,410 59,020 59,020 59,020 59,020 59,020 59,020 Contractual Rent Bumps 2.75% 2.63% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Incremental NOI (000's) $2,511 $4,919 $4,800 $5,031 $5,250 $5,274 $5,364 $5,459 $5,578 $5,707 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 93.5% 94.5% 95.0% 95.0% 95.0% 94.5% 94.0% 94.0% 94.0% 94.0% Occupancy Pick-up 1.0% 0.5% 0.0% 0.0% -0.5% -0.5% 0.0% 0.0% 0.0% 0.0% Total Incremental NOI from Occ. (000's) $1,554 $2,331 $777 $0 -$777 -$1,554 -$777 $0 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy CapEx as a % of NOI 14% 14% 12% 12% 12% 12% 12% 12% 12% 12% TI's/LC's (000's) ($32,157) ($33,480) ($29,688) ($30,568) ($31,336) ($31,962) ($32,619) ($33,371) ($34,154) ($34,968) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 4.4% 4.1% 3.5% 3.0% 2.5% 2.0% 2.1% 2.3% 2.3% 2.4% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $224,774 $229,693 $239,142 $247,402 $254,732 $261,135 $266,351 $271,829 $278,091 $284,616 Add: Mark to market (000's) $854 $2,199 $2,683 $2,299 $1,930 $1,496 $891 $803 $947 $1,075 Add: Rent Bumps (000's) $2,511 $4,919 $4,800 $5,031 $5,250 $5,274 $5,364 $5,459 $5,578 $5,707 Add: Occupancy Pick up (000's) $1,554 $2,331 $777 $0 ($777) ($1,554) ($777) $0 $0 $0 EOP Cash NOI (000's) $229,693 $239,142 $247,402 $254,732 $261,135 $266,351 $271,829 $278,091 $284,616 $291,399 Leasing CapEx (from above) ($32,157) ($33,480) ($29,688) ($30,568) ($31,336) ($31,962) ($32,619) ($33,371) ($34,154) ($34,968) IRR Analysis Implied Cap Rate/Cash Flows ($3,994,661) $197,536 $205,662 $217,714 $224,164 $229,799 $234,389 $239,210 $244,720 $250,462 $265,481 Terminal Value $4,572,720 Total CF ($3,994,661) $197,536 $205,662 $217,714 $224,164 $229,799 $234,389 $239,210 $244,720 $250,462 $4,838,201 Terminal Value Per SF / Unit $67 Growth over Hold Period 1.4% IRR 6.75% Cap Rate to achieve IRR 5.75% Real Estate Research 292

293 DCT DCF Model Exhibit 316: DCF Model with primary assumptions DCT Industrial DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $249,310 $275,351 $296,039 $315,531 $334,111 $344,135 FFO $185,608 $206,243 $222,426 $238,135 $253,050 $260,642 Capital Expenditures ($44,237) ($41,680) ($43,826) ($46,764) ($49,553) ($51,040) Straight-Line Rent ($8,294) ($9,156) ($9,861) ($10,522) ($11,149) ($11,149) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $133,077 $155,407 $168,739 $180,848 $192,348 $198,453 Ratios / Analysis CAGR EBITDA/sh growth 5% 6% 5% 4% 3% 5% FFO/sh growth 5% 6% 5% 5% 3% 5% AFFO/sh growth 11% 7% 5% 5% 3% 7% CapEx as % of FFO 24% 20% 20% 20% 20% 20% Inputs DCT Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.11 Cost of Equity (CAPM) 7.97% Perpetual Growth Rate 3.00% Items to Add to / Deduct from Firm Value Land Held for future development $50,660 Outputs NPV of Cash Flows $654,748 NPV of Terminal Value $2,471,184 Total $50,660 Firm Value $3,125,932 Plus non-cash flow producing assets $50,660 Shareholders Value $3,176,592 Share outstanding 393,921 DCF value per share $8.06 Real Estate Research 293

294 DCT Industrial Trust Inc. DCT Price (07 Nov 14): US$8.49, Rating: UNDERPERFORM, Target Price: US$8.50, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) 0.07 (0.26) Non-tax deductible expenses Distributable income to (9.1) unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (180.7) (402.3) (160.0) Cash flow from investment (6.1) (202.3) (160.0) Dividends paid (58.0) (119.9) (122.1) Equity raised Net borrowings (130.9) Other financing cash flows Financial cashflow (57.0) Net cashflow (1.9) Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 56, , , ,555.6 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable 12.6 Total current assets Total fixed assets Investment properties 2, , , ,860.1 Other investments Other non-current assets 3, , , ,113.6 Total non-current assets 3, , , ,113.6 Total assets 3, , , ,133.6 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt 1, , , ,558.9 Other non-current liabilities Total non-current liabilities 1, , , ,675.5 Total liabilities 1, , , ,751.0 Unit funds Reserves 1, , , ,266.0 Shareholders' equity 1, , , ,382.7 Total capital employed 3, , , ,058.2 Real Estate Research 294

295 EastGroup (EGP): Underperform Rating; $69 Price Target; 4% Total Return Exp. Company Overview EastGroup is a small cap Industrial REIT that focuses on the development of smaller scale (typically under 150ksf) distribution facilities across the Sunbelt markets which the company believes offers the best LT growth profile for local distribution facilities. The company has a core competency in development with a strong portfolio of phased business parks, notably World Houston located just south of IAH. Exhibit 317: EastGroup Source: SNL Financial. Investment Thesis: Underperform We are initiating coverage of EastGroup with an Underperform rating and $69 price target, implying a 4% total return over the next 12 months. Our price target is based upon a 75% weighting of our $65.50 forward NAV estimate (plus a 5% premium, see NAV discussion and model below; and a 25% weighting of our $74 DCF estimate. Our Underperform rating on EastGroup is entirely valuation based with the stock trading at a 5% premium to NAV and a 5.9% implied cap rate. EGP is run by a very high quality management team with an excellent track record. The company maintains a strong balance sheet and funds development through equity issuance issuing equity at very attractive spreads (development yields are north of 8.5%). While a premium valuation may be warranted, we believe the stock is fully valued at the current price. Investment Positives High-quality management team with long track record of executing on a straightforward business plan. Investors love the story which shows in the valuation because of this the company is able to maintain a strong balance sheet (debt to EBITDA is 6.3x on current and mid-5x adjusted for CIP) and fund development Real Estate Research 295

296 through common stock issuance at an accretive spread to their yields (read: issuing stock above NAV and building to above average yields is a good thing). Development acumen allows company to largely build its portfolio ground up and yields well above acquisition cap rates. Development volumes expected to be just over $100mn this year vs. $90mn last year given ~8.5% yields in pipeline (boosted by below market land on the B/S) and EGP's access to cheap capital (stock trades at 6% implied cap rate) we believe that the more the company builds in this part of the cycle the more accretion to NAV and FFO they'll realize (we underwrite $100mn of incremental deliveries per year). Sunbelt markets have positive demographics for local distribution, which is what EGP's smaller portfolio focuses on (as opposed to larger warehouses/markets which are used to serve broader regional markets). Florida markets (28% of ABR) have not recovered to date like the Texas and California markets. An improvement there would provide another leg to the EGP internal growth story. Investment Risks EastGroup is such a loved company that we believe the sentiment, if it ever does change, can only go one way. Along these lines valuation appears stretched to us, but it always does for high-quality companies (see: FRT, BXP, SPG, etc.). At this time though GP trades at the same valuation as Prologis on an implied cap rate and forward multiple basis, which given the market exposures of the companies we believe EGP's shares have less room for outperformance over the next 12 months. CEO David Hoster is set to retire in late Mr. Hoster is well respected, as are his three lieutenants who run the regions (we've met all three, all of whom are excellent). Mr. Hoster's departure and the naming of a new CEO will add some volatility, although the Street recognizes the quality of the organization is quite deep. Development yields are coming down as competition increases, and even though they're still very strong and at an above average spread to acquisition cap rates the stock market tends to penalize negative second derivative trends regardless. SSNOI for company expected to average 2.5% over the next 3 years and 2.6% over the next 5, compared to Industrial average of 2.8% and 2.7%, respectively, and 3.5% and 3.1% respectively for the REIT sector. In part EGP's lower SS NOI growth is a reflection of their successful leasing of the portfolio in with their occupancy gains in the past compared to peers who still have some room to grow occupancy. Real Estate Research 296

297 Development Pipeline At Q3, EGP had 21 active development projects comprising 1.6msf of industrial with a total estimated build cost of $116mn ($81mn left to fund.) and expected yield in the mid-8%'s. EGP also owns land capable of supporting 5.2msf of buildable square footage with a book value of $90mn, which we put in our NAV at $180mn to better reflect the market value of the land in today's low stabilized cap rate environment. As we illustrate below we estimate that these projects represent $39mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 318: EGP development pipeline and CS estimate for value creation EastGroup Development Pipeline Current CS Estimates Costs Total Cost Future Est. Stab. Yrs to NAV PV of Stab. Value Current Pipeline SF PSF Cost To Date Costs Delivery? Yield Cap Rate Stab Accretion Accretion Per SF Under Lease Up Horizon I 109,000 $71 $7,700 $6,946 $ % 6.0% 1.3 $3,080 $2,738 $99 Steele Creek II 71,000 $75 $5,300 $4,774 $ % 6.0% 1.3 $2,208 $1,963 $106 World Houston 39 94,000 $61 $5,700 $4,874 $ % 6.0% 1.5 $2,375 $2,065 $86 Steele Creek III 108,000 $76 $8,200 $6,823 $1, % 6.0% 1.8 $3,417 $2,908 $108 World Houston ,000 $66 $6,900 $5,181 $1, % 6.0% 1.8 $3,105 $2,643 $96 Horizon II 123,000 $70 $8,600 $7,412 $1, % 6.0% 1.8 $3,583 $3,050 $99 Under Construction Kyrene I 75,000 $92 $6,900 $5,403 $1, % 6.0% 1.8 $2,760 $2,349 $129 Kyrene I 45,000 $87 $3,900 $3,024 $ % 6.0% 1.8 $1,560 $1,328 $121 Rampart IV 84,000 $99 $8,300 $6,388 $1, % 6.0% 1.8 $3,597 $3,061 $142 Ten West 6 64,000 $75 $4,800 $3,795 $1, % 6.0% 1.8 $1,840 $1,566 $104 West Road I 63,000 $78 $4,900 $3,795 $1, % 6.0% 1.8 $1,878 $1,599 $108 West Road II 100,000 $68 $6,800 $6,019 $ % 6.0% 1.0 $2,607 $2,370 $94 Alamo Ridge I 96,000 $68 $6,500 $4,621 $1, % 6.0% 2.0 $2,492 $2,076 $94 Alamo Ridge II 62,000 $66 $4,100 $2,600 $1, % 6.0% 2.0 $1,572 $1,310 $91 Steele Creek IV 57,000 $75 $4,300 $3,344 $ % 6.0% 2.0 $1,648 $1,374 $104 West Road III 78,000 $64 $5,000 $2,320 $2, % 6.0% 2.3 $1,833 $1,497 $88 Thousand Oaks 4 66,000 $77 $5,100 $1,405 $3, % 6.0% 2.3 $1,870 $1,527 $106 Ten West 7 68,000 $72 $4,900 $1,401 $3, % 6.0% 2.5 $1,878 $1,503 $100 Madison II & III 127,000 $63 $8,000 $1,306 $6, % 6.0% 2.5 $2,800 $2,240 $85 Totals / Avg 1,594,000 $73 $115,900 $81, % 6.0% $46,103 $39,163 $102 Real Estate Research 297

298 EastGroup Valuation Overview Exhibit 319: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $64.77 Targeted Premium (Discount) to NAV 5% Fair Value on NAV Valuation $68.01 Approach 2: DCF DCF per share $73.26 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $73.26 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $69.00 Forecasted Total Return 4.1% Exhibit 320: NAV Snapshot EastGroup NAV Calculation Assumptions IRR Target 6.77% Assumed avg NOI growth next three years 2.83% Assumed avg NOI growth years % Calculate Operating Property Value GAAP NOI from owned properties $165,651 Straight-line rent adjustment/ FAS 141 ($3,571) Cash NOI from owned properties $162,080 Key inputs / items in our EGP NAV Model: Year 1 Cash NOI of $162mn Blended cash cap rate of 6.1% Assumed cash NOI cap rate 6.10% Market value of owned properties $2,657,047 Add Cash, CIP, + Other Assets Cash and cash equivalents $323 Other assets $76,851 Benefit of Tax-Exempt Debt $0 Land held for future development(market value) $176,384 Development Projects (CIP plus Est. Value Creation) $133,605 Equals -Gross market value of assets $3,044,211 Less Liabilities Total liabilities (incl. JVs) $1,005,119 Mark-to-Market Debt Adj. $0 Preferred Stock $0 Land value of $176mn, or twice book value ~$40mn of incremental value for development accretion on current pipeline Net market value of assets $2,039,092 Total Shares / Units 31,644 Net Asset Value Per Share $ mo Fwd. Net Asset Value Per Share $64.77 Real Estate Research 298

299 EGP IRR Analysis Exhibit 321: IRR Underwriting Key Assumptions Targeted IRR (output) 6.77% Required Initial Cap Rate (input) 6.10% Assumed Rise in Terminal Cap 0.75% EGP IRR Analysis Terminal Value Total SF in portfolio (000's) 33,330 33,330 33,330 33,330 33,330 33,330 33,330 33,330 33,330 33,330 SF Rolling in period (000's) 5,984 6,058 5,436 3,848 2,910 2,203 1,921 1,115 3,684 3,684 Avg Expiring Gross Rent $5.45 $5.11 $5.40 $5.32 $4.24 $5.74 $5.04 $4.98 $5.25 $5.25 Operating Expense Margin 29% 29% 29% 29% 29% 29% 29% 29% 29% 29% Avg net rent per SF $3.89 $3.65 $3.86 $3.80 $3.02 $4.10 $3.60 $3.56 $3.75 $3.75 Step 1: Mark Expiring Leases up or down Assumed Market Rent growth 5.0% 4.0% 3.0% 3.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Mark to Market, Beg. Of Period 4% 6% 7% 6% 6% 4% 1% 2% 2% 3% Mark to Market, End of Period 9% 10% 10% 10% 6% 4% 4% 5% 5% 6% Avg. Mark to Market (vs. Exp. Net + Recov.) 7% 8% 8% 8% 6% 4% 3% 3% 4% 4% Incremental NOI in Period $768 $1,662 $1,762 $1,457 $874 $451 $254 $151 $315 $536 Total Rent Growth 5% 9% 12% 16% 16% 16% 19% 23% 27% 30% CAGR Rent Growth (through period) 5% 4% 4% 4% 3% 2% 3% 3% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 27,346 27,272 27,894 29,482 30,420 31,127 31,409 32,215 29,646 29,646 Contractual Rent Bumps 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Incremental NOI (000's) $1,596 $3,206 $3,303 $3,537 $3,800 $3,994 $4,120 $4,244 $4,174 $4,066 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 96.2% 96.0% 96.0% 96.0% 96.0% 95.5% 95.0% 94.5% 94.0% 94.0% Occupancy Pick-up -0.2% 0.0% 0.0% 0.0% -0.5% -0.5% -0.5% -0.5% 0.0% 0.0% Total Incremental NOI from Occ. (000's) -$227 -$227 $0 $0 -$567 -$1,133 -$1,133 -$1,133 -$567 $0 Step 4: CapEx to maintain portfolio / add occupancy CapEx as a % of NOI 12% 12% 12% 12% 12% 12% 12% 12% 12% 12% TI's/LC's (000's) ($19,674) ($20,231) ($20,839) ($21,438) ($21,931) ($22,329) ($22,718) ($23,109) ($23,580) ($24,132) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 2.6% 2.8% 3.0% 2.9% 2.3% 1.8% 1.7% 1.7% 2.0% 2.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $161,816 $163,954 $168,595 $173,661 $178,654 $182,761 $186,073 $189,314 $192,575 $196,497 Add: Mark to market (000's) $768 $1,662 $1,762 $1,457 $874 $451 $254 $151 $315 $536 Add: Rent Bumps (000's) $1,596 $3,206 $3,303 $3,537 $3,800 $3,994 $4,120 $4,244 $4,174 $4,066 Add: Occupancy Pick up (000's) ($227) ($227) $0 $0 ($567) ($1,133) ($1,133) ($1,133) ($567) $0 EOP Cash NOI (000's) $163,954 $168,595 $173,661 $178,654 $182,761 $186,073 $189,314 $192,575 $196,497 $201,100 Leasing CapEx (from above) ($19,674) ($20,231) ($20,839) ($21,438) ($21,931) ($22,329) ($22,718) ($23,109) ($23,580) ($24,132) IRR Analysis Implied Cap Rate/Cash Flows ($2,687,770) $144,279 $148,364 $152,821 $157,215 $160,830 $163,744 $166,596 $169,466 $172,918 $176,968 Terminal Value $2,994,475 Total CF ($2,687,770) $144,279 $148,364 $152,821 $157,215 $160,830 $163,744 $166,596 $169,466 $172,918 $3,171,443 Terminal Value Per SF / Unit $90 Growth over Hold Period 1.1% IRR 6.77% Cap Rate to achieve IRR 6.10% Real Estate Research 299

300 EGP DCF Analysis Exhibit 322: DCF Model Assumptions EastGroup Properties DCF Model $ in thousands Year 1 Year 2 Year 3 Year 4 Year 5 Terminal Year EBITDA $156,311 $173,974 $191,126 $207,253 $222,871 $229,557 FFO $122,173 $136,488 $150,576 $163,596 $177,253 $182,570 Capital Expenditures ($23,807) ($26,399) ($28,896) ($31,290) ($33,600) ($34,608) Straight-Line Rent ($3,571) ($3,960) ($4,334) ($4,693) ($5,040) ($5,040) Other Adj. $0 $0 $0 $0 $0 $0 AFFO $94,795 $106,129 $117,346 $127,612 $138,613 $142,922 Ratios / Analysis CAGR EBITDA/sh growth 7% 6% 5% 5% 3% 6% FFO/sh growth 7% 7% 5% 6% 3% 6% AFFO/sh growth 8% 7% 6% 6% 3% 7% CapEx as % of FFO 19% 19% 19% 19% 19% 19% 19% Inputs EGP Cost of Equity Capital Risk free rate 3.00% Equity Risk premium 4.50% Beta (5yr adjusted) 1.01 Cost of Equity (CAPM) 7.55% Perpetual Growth Rate 3.00% Items to Add to / Deduct from Firm Value Land Held for future development $176,384 Outputs NPV of Cash Flows $465,991 NPV of Terminal Value $1,969,193 Total $176,384 Firm Value $2,435,185 Plus non-cash flow producing assets $176,384 Shareholders Value $2,611,569 Share outstanding 35,650 DCF value per share $73.26 Real Estate Research 300

301 Eastgroup Properties Inc. EGP Price (07 Nov 14): US$68.54, Rating: UNDERPERFORM, Target Price: US$69.00, Analyst: George Auerbach Per share data 12/13A 12/14E 12/15E 12/16E No. of units EPU (Credit Suisse) (US$) DPU (US$) BV per unit (US$) Key earnings drivers 12/13A 12/14E 12/15E 12/16E Income statement (US$ m) 12/13A 12/14E 12/15E 12/16E Revenue (US$ m) Property operating expenses Real estate taxes Net operating income (US$ m) Interest and investment income Other income Asset management fees (exp. item) Trustee fees (exp. item) Other expenses Interest expense/finance costs Total non-property expenses Share of associates/jvs' equity Net income before tax Surplus/deficit on inv property Income tax (expense) Non-tax deductible expenses Distributable income to unitholders Net income (US$ m) Cash flow 12/13A 12/14E 12/15E 12/16E Net interest paid Cash taxes paid Distribution received Other cash & non-cash items Cash flow from operations Other investment/(outflows) (18.0) (197.0) (204.5) Cash flow from investment (18.0) (157.0) (164.5) Dividends paid (18.2) (76.0) (83.0) Equity raised Net borrowings Other financing cash flows Financial cashflow Net cashflow Key ratios and 12/13A 12/14E 12/15E 12/16E valuation Growth(%) Sales EBITDA EPU Margins (%) EBITDA margin EBIT margin Pre-tax Margin Net margin Valuation metrics (%) EV/sales EV/EBITDA EV/EBIT P/E DPU yield (12/13A) P/B (x) Credit ratios Net debt/equity (%) Net debt / EBITDA (%) Debt/Asset (%) Dividend payout ratio 20, , , ,988.2 Balance sheet 12/13A 12/14E 12/15E 12/16E Assets Cash and cash equivalents Accounts receivable Total current assets Total fixed assets Investment properties 1, , , ,449.0 Other investments Other non-current assets 1, , , ,717.4 Total non-current assets 1, , , ,717.5 Total assets 1, , , ,752.4 Accounts payable Short-term debt Other current liabilities Total current liabilities Long-term debt ,066.5 Other non-current liabilities Total non-current liabilities , ,146.0 Total liabilities , , ,146.0 Unit funds Reserves Shareholders' equity Total capital employed 1, , , ,752.3 Real Estate Research 301

302 Prologis (PLD): Outperform Rating; $46 Price Target; 14% Total Return Exp. Company Overview Prologis is a large cap owner of Industrial real estate across global markets with 70% of NOI from the Americas (primarily US), 20% in Europe (mostly Northern and UK), and 10% Asia (primarily Japan). While the company is often described as one of the more complex in the REIT space, we think of it as simply an owner of $50bn of real estate assets (prorata), which develops ~$2bn of new product each year, and also manages various funds for institutional capital with ~$25bn of assets which provide a reliable earnings stream for the company and a potential takeout for their external growth. Exhibit 323: Prologis geographic footprint Source: SNL Financial. Investment Thesis: Outperform We are initiating coverage of Prologis with an Outperform rating and $46 price target, implying a 14% total return over the next 12 months. Our price target is based upon a 75% weighting of $43 forward NAV estimate (plus a 10% premium, see NAV discussion and model below; and a 25% weighting of our $44 DCF estimate. Our Outperform rating on PLD is based on the following: 1) best in class portfolio; 2) relative valuation with PLD trading at a 3% discount to NAV vs. a 5% premium for its industrial peers; 3) $2bn+ development pipeline with margins well above 15%. Investment Positives Best Industrial portfolio in the U.S. REIT space, in both asset quality and geographic location. Coupled with strong senior & local management and an improving balance sheet we believe PLD is a solid company which deserves to be placed in the blue chip category with BXP, SPG, FRT, etc. We think European cap rates will fall by bp over the next year. We also expect good news out of PLD's Norges JV where they have the option to sell down their 50% ownership beginning in March 2015 (and provide some price discovery on a large Real Estate Research 302

303 portfolio). In addition they should recognize a healthy promote on the $2.4bn Euro fund which was agreed to in December Development volumes now ~$2bn/yr and we think these can creep higher into the low $2bn range on a sustainable basis. Development margins remain well above 15% LT average providing healthy returns on cost and a good use of funds from asset sales/contributions. We think PLD's land is marked 30% below fair market value and expect the Street to take their values up through The Value Add program will ramp up into 2015 and provide $30-50mn of economic value per year to the company's NAV. We think rent spreads will increase in 2015 and 2106 (to 5% and 6%, respectively) which should push SS NOI growth into the high 2's for the next few years (we underwrite 2.7% in 2015 and 2.7% in 2016). Investment Risks As the most global U.S. REIT (~30% of NOI from Europe and Asia) PLD is most exposed to global uncertainties + headlines about foreign economic growth. Clearly this year has not been great for macro risk or the European economic picture, and until the news flow becomes less positive PLD is unlikely to outperform. On a macro basis, PLD is the easiest stock to sell in the face of negative European/world news. Even if it is 70% exposed to the Americas, the stock can trade as a global risk proxy. Stock has been a big underperformer despite solid industrial fundamentals (pushing internal growth and development volumes forward) and a continued clean-up of the balance sheet and fund structure. US supply figures will remain headwind for the entire sector if the amount of supply nationwide continues to increase. As the largest most liquid play in the sector, PLD is likely to be used as a source of funds if it appears the Industrial recovery is expected to be less robust than hoped for. Real Estate Research 303

304 Development Pipeline At Q3, PLD had active development projects with a total estimated build cost of $2.4bn (PLD share, $930mn left to fund) with an estimated yield of 7.2%. PLD also owns $1.6mn land capable of supporting 178msf of buildable square footage. We value this land in our NAV at $2.1bn or a 30% markup to Book to better reflect the market value of the land in today's low stabilized cap rate environment relative to the steep write-downs PLD took on its land subsequent to the recession. As we illustrate below we estimate that these projects represent $647mn of development accretion (present value) for the firm above construction costs given the positive spreads between development yields and stabilized cap rates. Exhibit 324: PLD development pipeline and CS estimate for value creation Current CS Estimates Total Cost Future Est. Stab. Yrs to NAV PV of Current Pipeline Cost To Date Costs Delivery Yield Cap Rate Stab Accretion Accretion Total Pipeline $2,380,905 Left to Fund $933,493 Funded 61% Prologis Development Pipeline Asia $784,665 $477,018 $307,647 --This Q Deliveries $196,166 $119,254 $76, % 5.5% 1.0 $60,633 $55,121 --Next Q Deliveries $196,166 $119,254 $76, % 5.5% 1.3 $60,633 $53,896 --Q3 Deliveries $196,166 $119,254 $76, % 5.5% 1.5 $60,633 $52,725 --Q4 Deliveries $196,166 $119,254 $76, % 5.5% 1.8 $60,633 $51,603 Europe $500,602 $304,329 $196,273 --This Q Deliveries $125,151 $76,082 $49, % 5.5% 1.0 $38,683 $35,166 --Next Q Deliveries $125,151 $76,082 $49, % 5.5% 1.3 $38,683 $34,385 --Q3 Deliveries $125,151 $76,082 $49, % 5.5% 1.5 $38,683 $33,637 --Q4 Deliveries $125,151 $76,082 $49, % 5.5% 1.8 $38,683 $32,922 US $1,095,638 $666,066 $429,572 --This Q Deliveries $273,910 $166,516 $107, % 5.5% 1.0 $84,663 $76,966 --Next Q Deliveries $273,910 $166,516 $107, % 5.5% 1.3 $84,663 $75,256 --Q3 Deliveries $273,910 $166,516 $107, % 5.5% 1.5 $84,663 $73,620 --Q4 Deliveries $273,910 $166,516 $107, % 5.5% 1.8 $84,663 $72,054 Totals / Avg $2,380,905 $1,447,412 $933, % 5.5% $735,916 $647,350 Real Estate Research 304

305 January-99 January-00 January-01 January-02 January-03 January-04 January-05 January-06 January-07 January-08 January-09 January-10 January-11 January-12 January-13 January November 2014 More detail on the European portfolio / why we think cap rates will come down for PLD's portfolio As the chart below illustrates, we use a 6.25% cap rate on PLD's European Portfolio (coupled with a 5.65% cap rate on the Americas portfolio and 4.5% on the Asia portfolio gives U.S. our blended 5.76% cap rate). Speaking with investors earlier this year, most investors we spoke with use a 7 or north of a 7 cap rate on PLD's European assets. We believe that this is too high and will compress over the next 12 months given that: (1) 70% of PLD's European NOI comes from the UK, Germany, Benelux, France, and Poland, and; (2) European government bond yields continue to fall providing a compelling spread for investors in Class A real estate. For sensitivity, every 50bp decline in cap rates equates to a $1.50/sh increase in our NAV. Exhibit 325: How we think about the cap rates and values per foot for PLD's portfolio Estimated Values & Cap Rates Pro-rata SF Est. Qtly NOI % of NOI Est. Cap Rate Est Segm. Value Implied value/sf Americas 272,607 $270,315 73% 5.57% $20,458,425 $75 Europe 66,857 $86,898 23% 6.25% $5,561,472 $83 Asia 8,295 $16,775 5% 4.50% $1,491,111 $180 Totals 347,640 $371, % $27,511,008 $79 Of PLD's European portfolio, 73% of their 3Q NOI came from France, Germany, the UK, and Benelux markets, with another 11% from Poland. Exhibit 326: PLD European portfolio PLD's European Exposure (pro-rata) 3Q NOI % of Europe % of PLD Belgium $1,947 2% 1% Czech Republic $3,827 5% 1% France $16,936 21% 5% Germany $11,611 15% 3% Italy $4,263 5% 1% Netherlands $8,190 10% 2% Poland $9,059 11% 2% Spain $4,380 6% 1% United Kingdom $18,599 24% 5% Europe $78, % 21% PLD Total $373, % Exhibit 327: Lack of yield in Euro risk free debt markets should support lower cap rates on core real estate and continued support for the European REIT market / valuations 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% German Bunds US 10Yr European REITs vs US Market 30 Day 90 Day YTD Last 12 Mo. Last 3 Yrs Index: Cap ($bn) Total Return Total Return Total Return Total Return Total Return UK REITs ELUK Index $50 6.2% 6.1% 15.5% 17% 21% Europe REITs Ex-UK EXUK Index $ % 2.6% 14.5% 13% 14% US REITs FNER Index $ % 6.6% 23.7% 22% 17% Prologis PLD Equity $ % 4.7% 14.9% 10% 19% Real Estate Research 305

306 Prologis Valuation Overview Exhibit 328: CS Valuation Methodology Credit Suisse Price Target Methodology Approach 1: NAV NAV per share - w/12 month forward growth $42.78 Targeted Premium (Discount) to NAV 10% Fair Value on NAV Valuation $47.06 Approach 2: DCF DCF per share $44.17 Targeted Premium (Discount) to DCF 0% Fair Value on DCF Valuation $44.17 Weighting % NAV 75% % DCF 25% Credit Suisse Price Target $46.00 Forecasted Total Return 14.7% Exhibit 329: NAV Snapshot Key inputs / items in our PLD Model: Year 1 Cash NOI of $1.55bn Blended cash cap rate of 5.65% In other assets we apply a 14x multiple to 2015 net management fees of $114mn Land: We carry at 30% premium to book or $2.1bn, underwriting to a 15% margin on development Real Estate Research 306

307 PLD IRR Analysis Exhibit 330: IRR Underwriting Key Assumptions Targeted IRR (output) 6.50% Required Initial Cap Rate (input) 5.65% Assumed Rise in Terminal Cap 0.75% PLD IRR Analysis Terminal Value Total SF in portfolio (000's) 340, , , , , , , , , ,853 SF Rolling in period (000's) 57,993 65,645 58,420 41,022 44,311 44,311 44,311 44,311 44,311 44,311 Avg Expiring Gross Rent $5.27 $5.28 $5.21 $5.46 $5.82 $5 $5 $5 $5 $5 Operating Expense Margin 30% 30% 30% 30% 30% 30% 30% 30% 30% 30% Avg net rent per SF $3.69 $3.70 $3.65 $3.82 $4.07 $3.50 $3.50 $3.50 $3.50 $3.50 Step 1: Mark Expiring Leases up or down Americas 73% 5.0% 4.0% 3.0% 3.0% 0.0% 0.0% 3.0% 3.0% 3.0% 3.0% Europe 23% 2.0% 2.0% 4.0% 4.0% 4.0% 2.0% 2.0% 2.0% 2.0% 2.0% Asia 5% 2.5% 2.5% 2.5% 2.5% 2.0% 2.0% 2.0% 2.0% 2.0% 2.0% Assumed Market Rent growth 4.2% 3.5% 3.2% 3.2% 1.0% 0.6% 2.7% 2.7% 2.7% 2.7% Mark to Market, Beg. Of Period 3% 4% 5% 5% 5% 4% 1% 2% 2% 2% Mark to Market, End of Period 7% 8% 8% 8% 6% 4% 4% 4% 5% 5% Avg. Mark to Market (vs. Exp. Net + Recov.) 5% 6% 7% 7% 6% 4% 3% 3% 3% 3% Incremental NOI in Period $5,531 $13,062 $14,462 $12,188 $10,615 $8,318 $5,150 $4,565 $4,916 $5,231 Total Rent Growth 4% 8% 11% 15% 16% 17% 20% 23% 27% 30% CAGR Rent Growth (through period) 4% 4% 4% 4% 3% 3% 3% 3% 3% 3% Step 2: Add in NOI from Contractual bumps SF not rolling over in period (000's) 282, , , , , , , , , ,542 Contractual Rent Bumps 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% Incremental NOI (000's) $14,846 $29,485 $30,082 $32,302 $33,993 $34,729 $35,634 $36,500 $37,346 $38,207 Step 3: Impact from Occupancy Changes B.O.P. Occupancy 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% 95.0% Occupancy Pick-up 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Total Incremental NOI from Occ. (000's) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 Step 4: CapEx to maintain portfolio / add occupancy CapEx as a % of NOI 12% 12% 12% 12% 12% 12% 12% 12% 12% 12% TI's/LC's (000's) ($183,224) ($188,330) ($193,675) ($199,014) ($204,367) ($209,533) ($214,427) ($219,355) ($224,426) ($229,639) IRR Model Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 NOI Growth (output) 2.7% 2.8% 2.8% 2.8% 2.7% 2.5% 2.3% 2.3% 2.3% 2.3% NOI/Cap Ex Projections Cash NOI, B.O.P. (000's) $1,506,493 $1,526,869 $1,569,417 $1,613,960 $1,658,450 $1,703,059 $1,746,105 $1,786,890 $1,827,955 $1,870,217 Add: Mark to market (000's) $5,531 $13,062 $14,462 $12,188 $10,615 $8,318 $5,150 $4,565 $4,916 $5,231 Add: Rent Bumps (000's) $14,846 $29,485 $30,082 $32,302 $33,993 $34,729 $35,634 $36,500 $37,346 $38,207 Add: Occupancy Pick up (000's) $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 EOP Cash NOI (000's) $1,526,869 $1,569,417 $1,613,960 $1,658,450 $1,703,059 $1,746,105 $1,786,890 $1,827,955 $1,870,217 $1,913,655 Leasing CapEx (from above) ($183,224) ($188,330) ($193,675) ($199,014) ($204,367) ($209,533) ($214,427) ($219,355) ($224,426) ($229,639) IRR Analysis Implied Cap Rate/Cash Flows ($27,024,237) $1,343,645 $1,381,087 $1,420,285 $1,459,436 $1,498,692 $1,536,573 $1,572,463 $1,608,601 $1,645,791 $1,735,914 Terminal Value $30,498,879 Total CF ($27,024,237) $1,343,645 $1,381,087 $1,420,285 $1,459,436 $1,498,692 $1,536,573 $1,572,463 $1,608,601 $1,645,791 $32,234,793 Terminal Value Per SF / Unit $89 Growth over Hold Period 1.2% IRR 6.50% Cap Rate to achieve IRR 5.65% Real Estate Research 307

308 PLD DCF Model Exhibit 331: PLD DCF Model Real Estate Research 308