Comprehensive Real Estate Counseling and Valuation Services

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2 Comprehensive Real Estate Counseling and Valuation Services Integra Realty Resources, Inc. specializes in commercial real estate consulting and valuation assignments. IRR s valuers and counselors are among the most outstanding experts in their local markets and are located in 55 offices throughout the United States. IRR benefits from more than 131 professionals who hold the Appraisal Institute s MAI designation. These specialists provide the following services across the world, across the country, or across town: Appraisals Consulting Portfolio Valuation Review Appraisal Tax Abatement Court Testimony Litigation Support Market Studies Feasibility Analysis Investment Analysis Lease Negotiations Sales Negotiations Loan Portfolio Valuation Advisory Services Due Diligence Analysis Public Finance Consulting Seattle Portland Sacramento Salt Lake City San Francisco Los Las Vegas Angeles Orange County IRR de México San Diego Phoenix Denver Fort Worth Minneapolis Syracuse Boston Hartford Providence Milwaukee Detroit Philadelphia New York City Chicago Northern New Jersey Pittsburgh Dayton Coastal New Jersey Columbus Wilmington Indianapolis Baltimore Morgantown Cincinnati Washington D.C. Kansas City Richmond Louisville Tulsa Dallas Memphis Nashville Atlanta Charlotte Columbia Greenville Savannah Austin San Antonio Houston Orlando Tampa Sarasota Naples Miami

3 C CHAIRMAN S LETTER Dear Colleagues and Friends, Iam pleased to publish IRR-Viewpoint 006, which is the 16th consecutive year of print. Each year, we evaluate the four main property sectors in commercial real estate: office, retail, multifamily, and industrial. We are also pleased to print special reports on the gaming and lodging sectors. Shelli Lowe and Anthony S. Graziano authored the update on gaming, and Eric Belfrage prepared the lodging section. In the National Real Estate Market section, IRR addresses trends in the national economy that affect the real estate industry and offers our projections for next year. We are also pleased to print a special report regarding the Mexican economy and real estate market. Oscar Franck of Integra Realty Resources de Mexico authored the Mexican Market Update. Integra Realty Resources has had another great year in 005. We are pleased to welcome new offices in Salt Lake City, Syracuse, San Diego and Wilmington! Now with 55 total offices, we continue to bring our clients local expertise nationally. In 005, we have leveraged our national coverage to complete several, multi-state, portfolio valuation assignments, including over 1,00 grocery and drug stores across 9 states, 351 nursing home facilities across 3 states and 1 luxury department stores across six states. In 006, we are implementing new internal, proprietary software via the Integra intranet that will aggregate our database to include lease, income/expense and comparable sale data. We believe this to be the most sophisticated software in the industry providing the platform to bring our clients the highest quality financial analysis in the industry. In 005, the nation experienced two events that will affect the real estate industry. First, Hurricane Katrina caused catastrophic damage that will affect real estate values in New Orleans and other coastal regions for years to come. Second, with the retirement of Alan Greenspan, the country is losing one of the greatest economic policy makers of our time. We are optimistic that the appointment of Ben Bernanke will continue the growth and stability of the American economy. TABLE OF CONTENTS National Real Estate Market... Property Sector Cycles New Investment Criteria...5 Office, CBD & Suburban...9 Retail...14 Apartment...17 Industrial...0 Gaming...3 Lodging...4 Mexican Market Update...6 Demographic and Economic Trends...7 Appendix...3 Local IRR Offices...back cover Finally, on behalf of Integra Realty Resources, I would like to wish each of you a healthy and prosperous 006. Very truly yours; Kevin K. Nunnink, MAI Editor-in-Chief Chairman of the Board Integra Realty Resources, Inc.

4 NATIONAL REAL ESTATE MARKET The economy, as predicted in last year s Viewpoint, continues to grow despite the oil price increases experienced in 005. The prospects for 006 are robust and the impact on real estate will likely be significant. Most economists continue to predict growth in our Gross Domestic Product in the 3.5-4% range. While employment growth in 004 was 183,000 jobs per month, 005 has averaged 167,000 jobs per month in spite of the effects of two major hurricanes experienced in the south. TABLE 1 NONFARM PAYROLL EMPLOYMENT Thousands of jobs When examining this job growth on a different scale, the whole picture of the recovery is evident and easier to understand where we are in the cycle. Thousand of jobs Jan -03 TABLE month moving average EMPLOYMENT Nonfarm payroll employment Nonfarm payroll employment change 004 avg = avg = 167 Jul -03 Jan -04 Jul -04 Jan -05 Jul Thousands of jobs Unemployment rate (Percent) If we were to conclude our analysis at this point all trends would suggest that everything is going to be rosy in the near and distant future. We wish it were so easy! A brief reflection of the Capital Markets notes the Federal Reserve has had to slow down and speed up the capital flows like a technician throttling a roller coaster. In fact, the FED reduced the Federal Funds Rate 13 times since May of 000 from 6.5% to 1% in June of 003. During that period, borrowers generally had a zero cost of funds when considering inflation. Ironically, since June of 004 the Federal Reserve has increased their Federal Funds Rate 13 consecutive times to 4.5%. These increases have been expected and the impact to long term rates has been minimal. Other investments have reacted to these increases, inflation and the price of oil differently. The following chart is helpful in understanding the recent relationships: TABLE 3 CHANGES IN FINANCIAL MARKETS Change in percentage points Change in financial markets since the June 004, FOMC Meeting Fed 3M 6M 1Y Y 3Y 5Y Funds* * The change in federal funds rate is from 1 percent to today s rate Normally, the delta between the Federal Funds Rate and the ten-year (10 yr) treasury is basis points. In Viewpoint 005, Integra predicted that the ten-year treasury should be between 4.75% and 5.5% when the Federal Funds Rate hits 4%. Yet, at year end 005, the Federal Funds Rate is 4.5%, and the ten-year treasury hovers around 4.5%. This has been great for the real estate sector, but somewhat of an anomaly in economists forecasts, including ours. In fact, when short- and long-term interest rates are the same, sometimes called a flat yield curve, many economists get nervous. General expectations are that the yield curve is likely to invert in the near term, which has historically suggested a looming recession. However, the Federal Reserve seems to suggest that a flat yield curve indicates unchanged future short-term rates. Likewise, an inverted yield curve might suggest future short-term rates 10Y S&P Nasdaq Wilshire 5000 Percent change INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

5 NATIONAL REAL ESTATE MARKET are expected to fall. Many economists disagree with this theory. Empirical data notes, All recessions since 1960 have been preceded by an inverted yield curve. However, careful examination of the data shows that not all inverted yield curves are followed by a recession. Since most of the debt markets in the real estate sector peg their rates off of the ten-year treasury, the current narrow range in the short- and long-term rates bodes well for the real estate sector. With expectations of a favorable debt market in 006, an analysis of the primary demand engine is appropriate. Most economists are predicting a 3.5-4% growth in the Gross Domestic Product (GDP). IRR agrees that 006 should see the productivity of the U.S. economy in this range, while qualifying the forecast with two unknowns: 1) Oil prices must remain below $60 per barrel. The U.S. has approximately a $1 trillion dollar economy that imports roughly 4.5 billion barrels of oil per year. Each ten dollar ($10) increase in oil prices, costs the economy nearly $45 billion and represents a 0.4% drag on the economy. ) Foreign investors must continue to have an appetite for U.S treasuries. Approximately 55% of all long term treasuries are foreign owned at this time. Should the foreign thirst for U.S. risk adjusted returns wane, IRR believes the yield between short term rates and long terms rates will return to the historical 50 to 300 basis points spreads. Absent the aforementioned risk components, IRR agrees with the forecast of the Blue Chip prognosticators that the GDP will grow in the 3.5-4% range in 006. CMBS MARKET Bank of America, at $10.5 billion, and Wachovia, at $9.8 billion, were head-to-head in the league tables as the CMBS markets headed into the fourth quarter. The top ten originators are noted below: 1) Bank of America ) Wachovia 3) Morgan Stanley 4) Credit Suisse 5) J.P. Morgan Chase 6) Lehman Brothers 7) Deutsche 8) Bear Stearns 9) RBS Greenwich 10) UBS The debt markets obviously benefited from a 10-year treasury that twice dipped below 4%. CMBS transactions set the new bar for originations and IRR believes it will be difficult, but not impossible, to maintain these volumes in 006. Each year the CMBS market continues to mature and capture more of the US mortgage market. TABLE 5 CMBS ISSUANCE ($ IN BILLIONS) TABLE 4 PRIVATE FORECASTERS EXPECTED TREND GROWTH Percent Real GDP Growth (Blue Chip assumes the fed funds rate rises to 4.85 percent by end of 006) Percent change from year ago Percent December -- Percent change from previous quarter, AR Blue Chip SOURCE: CMSA & MBAA IRR-VIEWPOINT VIEWPOINT INTEGRA INTEGRA REALTY RESOURCES, INC. INC. 3

6 NATIONAL REAL ESTATE MARKET REITS The Real Estate Investment Trusts (REITs) have done it again! As of December 31, 005 the equity REITS total return was 11.9%, and the return for all REITS was 8.0%, which outpaced the S&P 500 as well as the other exchanges. In fact, REIT s have outperformed the S&P 500 for six straight years. For comparison, the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite Index returned 3.0%, -0.6%, and 1.4%, respectively. Many short sellers bet that REITs could not continue their good fortune, but as Mark Twain said the rumors of my demise have been greatly exaggerated! Perhaps, the short sellers were fundamentally recognizing that REITs have been trading at 19 times their projected earnings while stocks on the S&P 500 exchange average a multiple of 14 times earnings. Last year IRR predicted multi-family and lodging as the best upside sectors and they have performed admirably with returns of 14.5% and 8.5%, respectively. This year these sectors should continue their good fortune. In 005, IRR suggested the challenged sectors would be manufactured homes, health care and mortgage REIT s. The forecast on mortgage REITs was prophetic with the sector losing 5.8%. Manufactured homes as a sector lost 1.6% and health care, while positive, only returned 1.8%. The leader in the REIT sector in 005 was Self Storage, followed by Regional Malls and the Industrial sector. ALTERNATE INVESTMENTS The following table reflects the investment alternatives available to investors and the ten-year history. While many investors are negative toward the real estate sector, IRR believes investors will continue to look upon this area of investment with favor. Even though the multiples are aggressive relative to the other opportunities, the underlying fundamentals and cash flow are attractive to the investment community. EXPECTATIONS FOR 006 IRR is bullish for the real estate sector in 006. The leaders should again be the Apartment and Hospitality sectors. IRR believes these segments will continue to ride the tide of a strong economy. While retail is expected to soften in 006, the dominant players will continue to expand their market share, especially in the discount retailer space. For example, Wal*Mart plans to build 550 stores in 006. Furthermore, Wal*Mart is now the second largest employer in the U.S. with 1.3 million employees. They could conceivably pass the U.S. Government as the largest employer this decade. Likewise, Costco, Target and other discounters and wholesale clubs continue to perform well. According to ICSC as of December 1st, the same-store sale growth rates for discounters and wholesale clubs were 3.5% and 6.4%, respectively. IRR feels they will continue their dominance in 006. For comparison, department stores experienced positive growth of.1% over the last year. IRR is still concerned with the demand and absorption for office and industrial space. The office market has nearly a 14% average vacancy and a predicted 3.89 years to reach equilibrium. With a 9.08% average vacancy, it is believed that the industrial sector will take.69 years to return to equilibrium. There will likely be some value oriented opportunities in these sectors. TABLE 6 INVESTMENT ALTERNATIVES Year S&P 500 Bonds* NCREIF** NAREIT*** % 19.4% 7.70% 18.30% %.90% 10.30% 35.80% % 9.76% 10.90% 18.90% % 9.46% 16.14% -18.8% % -.15% 11.11% - 4.6% % 11.84% 11.66% 6.37% % 8.50% 10.10% 13.93% % 9.15% 5.50% 3.8% % 4.67% 7.84% 37.13% % 4.0% 1.4% 31.58% %.71% 19.0% 1.39% *SOURCE: Lehman's Government/Corporate Bond Index **NCREIF: Twelve-month return based on 3rd quarter 005 reporting *** NAREIT Equity REIT Index 4 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

7 PROPERTY SECTOR CYCLES New Investment Criteria Integra Realty Resources (IRR) takes a three-channel approach in providing investors with appropriate information to make investment decisions. Our triad of services the Viewpoint publication, our website at and market insights from our local IRR representatives help investors interpret the real estate environment, both nationally and locally. Viewpoint provides a broad introduction to the current national real estate environment while selectively directing a spotlight at several hot spots on the horizon. The local IRR representatives can assist investors and lenders in defining local and submarket risks and opportunities in all MSAs. Examples of specialized information available from our representatives for some MSAs and their submarkets are presented in Quick Market Glance in the individual property sector segments in this section of Viewpoint. The data on the following table provides a snap-shot of overall real estate markets in major MSAs. This information allows investors and lenders to evaluate the various market areas. However, it is important to realize that even within topperforming markets, the individual submarkets can be vastly different. To get more targeted information about specific submarkets, consult a local IRR representative. To make the most informed real estate investment decision, investors are encouraged to use all resources made available by IRR. TABLE CAP RATE RANKS Low 005 High 005 Avg. Rank Property Type (%) (%) (%) 1 Suburban Multi Family Urban Multi Family Regional Mall Community Mall Neighborhood Strip CBD Office Office/Warehouse Suburban Office Bulk R&D Manufacturing CBD Lodging Airport Lodging Suburban Lodging In the following pages, we discuss these designated property sectors: CBD and suburban office, senior housing and long-term care, gaming, lodging, retail, apartment and industrial. We feature market cycle and cap rate trends charts in only four of those property sectors: office, retail, apartment and industrial. MARKET CYCLE PHASES The four market cycle phases include: Recovery decreasing vacancy rates low new construction moderate absorption low-to-moderate employment growth Expansion decreasing vacancy rates moderate-to-high new construction high absorption moderate-to-high employment growth Hypersupply increasing vacancy rates moderate-to-high new construction low-to-negative absorption moderate-to-low employment growth Recession increasing vacancy rates moderate-to-low new construction low absorption low-to-negative employment growth We determine the position of each market by analyzing vacancy rate trends, new construction starts, forecasted absorption figures and employment growth forecasts and by applying standard criteria to each surveyed city. The majority TABLE 8 PROJECTED CAP RATE CHANGE Property Type Decline (%) Increase (%) Stable (%) CBD Office Suburban Office Regional Mall Community Mall Neighborhood Strip Manufacturing Bulk Office/Warehouse R&D Urban Multi Family Suburban Multi Family CBD Lodging Suburban Lodging Airport Lodging AVERAGE IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 5

8 INVESTMENT CRITERIA TABLE 9 CAPITALIZATION RATES, DISCOUNT RATES, REVERSION RATES, MARKET RENT CHANGE RATES, EXPENSE GROWTH RATES AND TENANT FINISH ALLOWANCES Property Types Atlanta, GA Austin, TX Baltimore, MD Boston, MA Charlotte, NC Chicago, IL Cincinnati, OH Columbia, SC Columbus, OH Dallas, TX Dayton, OH Denver, CO Detroit, MI Fort Worth, TX Greenville, SC Hartford, CT Houston, TX Indianapolis, IN Kansas City, KS/MO Las Vegas, NV Long Island, NY Los Angeles, CA Louisville, KY Memphis, TN Miami, FL TENANT FINISH ALLOWANCE ($) EXPENSE GROWTH RATE (%) MARKET RENT INFLATOR (%) REVERSION CAP RATE (%) GOING-IN DISCOUNT RATE (%) GOING-IN CAP RATE (%) CBD Office 9.00% 8.50% 7.75% 7.50% 7.75% 7.00% 9.00% 8.50% 8.00% 8.65% 10.5% 7.50% 9.5% 8.70% 8.50% 9.50% 7.5% 8.5% 9.50% 7.50% 7.75% 7.50% 8.00% 9.50% 7.5% Suburban Office 8.5% 9.00% 7.75% 8.00% 8.00% 9.00% 9.5% 9.5% 8.50% 9.00% 9.5% 7.50% 8.5% 9.00% 9.00% 9.80% 7.5% 8.00% 8.5% 7.50% 7.5% 7.00% 8.50% 9.00% 7.5% Regional Mall 8.00% 8.00% 7.5% 7.50% 7.30% 6.00% 8.00% 8.00% 7.00% 7.50% 9.00% 6.50% 8.5% 7.75% 10.00% 8.50% 8.00% 7.5% 6.5% 8.00% 6.5% 7.50% 8.00% 7.00% 6.50% Community Mall 8.00% 8.00% 7.50% 7.50% 7.30% 7.50% 7.5% 8.75% 8.00% 8.50% 9.00% 7.75% 8.00% 8.50% 9.50% 8.75% 7.5% 7.50% 7.50% 7.50% 6.75% 7.50% 8.00% 7.00% 6.75% Neighborhood Strip 8.5% 9.00% 7.50% 7.50% 7.50% 8.00% 8.00% 8.5% 8.50% 7.50% 9.00% 7.50% 8.5% 7.50% 8.50% 8.80% 7.5% 8.00% 7.50% 7.50% 6.80% 7.50% 7.80% 8.00% 7.5% Manufacturing 9.50% 10.00% 8.00% 8.75% 8.30% 8.50% 9.00% 10.5% 9.50% 8.75% 10.00% 8.00% 9.00% 8.80% 9.00% 10.00% 9.00% 9.50% 8.00% 8.00% 8.00% 8.50% 8.00% 8.50% 7.50% Bulk 8.50% 10.00% 7.75% 8.00% 8.00% 7.50% 8.50% 9.75% 9.50% 8.5% 10.00% 8.00% 9.00% 8.30% 9.50% 9.50% 8.50% 7.5% 8.00% 8.00% 7.5% 8.00% 7.50% 8.50% 7.50% Office/Warehouse 9.00% 10.00% 7.75% 8.00% 8.00% 7.50% 8.50% 9.00% 9.00% 7.50% 10.50% 8.50% 8.75% 7.50% 9.00% 9.00% 7.50% 8.5% 8.00% 8.00% 7.5% 7.50% 8.50% 8.50% 7.5% R&D 9.00% 10.00% 8.5% 8.75% 8.50% 8.00% 8.75% 10.00% 9.50% 8.75% 10.50% 8.50% 8.50% 8.80% 9.50% 9.50% 7.50% 8.50% 7.50% 8.00% 7.75% 8.00% 8.50% 8.50% 7.00% Urban Multi Family 8.00% 8.00% 6.00% 7.00% 6.00% 7.00% 8.50% 8.50% 7.50% 6.75% 9.50% 5.00% 8.00% 7.00% 8.50% 8.50% 7.00% 7.50% 7.00% 7.00% 7.50% 6.50% % 6.5% Suburban Multi Family 8.50% 8.00% 5.50% 7.00% 6.00% 7.00% 8.00% 8.00% 8.00% 7.00% 9.00% 5.50% 7.50% 7.5% 8.50% 8.50% 7.00% 7.00% 6.50% 6.50% 6.0% 6.00% 6.50% 7.00% 7.00% CBD Lodging 9.50% 10.50% 9.50% 9.00% 9.30% 9.50% 11.00% 9.50% 9.00% 9.50% 1.00% 9.00% 10.50% 9.50% 9.00% 10.50% 8.00% 10.5% 7.50% 8.00% 9.00% 9.50% 8.50% 9.00% 8.50% Suburban Lodging 9.00% 11.00% 9.00% 9.5% 10.30% 10.50% 10.50% 11.00% 10.50% 9.50% 11.50% 9.00% 10.50% 9.50% 9.50% 10.00% 8.50% 10.75% 10.00% 8.00% 8.75% 9.50% 9.50% 9.00% 8.50% Airport Lodging 10.00% 11.00% 9.00% 9.5% 10.30% 9.50% 10.50% 11.00% 10.00% 9.75% 1.00% 10.00% 10.50% 9.80% 9.00% 10.50% 8.50% 10.50% 10.00% 8.00% 8.50% 9.50% 9.00% 10.00% 8.50% CBD Office 11.00% 10.00% 9.50% 9.00% 9.50% 9.50% 11.00% 9.75% 9.00% 9.53% 1.00% 8.00% 9.50% 9.53% 9.00% 1.00% 8.75% 9.50% 10.50% 10.50% 8.50% 9.50% 9.00% 10.50% 8.75% Suburban Office 10.5% 10.50% 9.50% 9.50% 9.80% 10.50% 11.5% 10.00% 9.75% 9.53% 11.00% 8.50% 9.5% 9.53% 10.00% 13.00% 8.75% 9.50% 9.50% 10.50% 8.50% 9.00% 9.50% 10.50% 8.75% Regional Mall 9.00% 10.00% 9.00% 9.00% 9.00% 8.00% 10.00% 9.50% 9.00% 9.75% 11.00% 8.00% 9.00% 9.75% 11.00% 10.00% 9.50% 9.00% 9.00% 10.50% 7.75% 9.50% 9.00% 8.50% 7.50% Community Mall 9.00% 11.00% 9.5% 9.00% 9.00% 8.50% 9.5% 10.75% 10.00% 9.50% 11.00% 8.50% 9.00% 9.50% 10.50% 10.50% 8.75% 9.00% 9.00% 10.50% 7.75% 9.50% 9.00% 8.50% 7.75% Neighborhood Strip 9.5% 11.00% 9.5% 9.00% 9.50% 8.50% 10.00% 10.50% 10.50% 9.50% 11.00% 8.50% 9.00% 9.50% 9.75% 11.00% 8.75% 9.50% 9.00% 10.50% 8.00% 9.50% 8.50% 9.50% 7.75% Manufacturing 10.50% 11.00% 9.75% 10.5% 10.30% 9.00% 11.00% 11.00% 11.00% 10.75% 1.50% 9.00% 10.50% 10.75% 10.50% 13.00% 10.50% 11.50% 9.00% 10.50% 8.50% 10.50% 9.00% 10.00% 9.00% Bulk 9.50% 11.00% 9.50% 9.50% 10.00% 9.00% 10.50% 10.50% 11.00% 10.00% 1.50% 9.00% 10.00% 10.5% 11.00% 1.00% 10.00% 9.00% 9.00% 10.50% 8.00% 10.00% 8.50% 10.00% 8.50% Office/Warehouse 10.00% 11.00% 9.50% 9.50% 10.00% 9.00% 10.50% 10.50% 10.50% 9.5% 1.50% 9.50% 10.00% 9.50% 10.50% 1.00% 9.00% 9.50% 9.00% 10.50% 8.00% 9.50% 8.50% 10.00% 8.50% R&D 10.00% 11.00% 10.00% 10.5% 10.50% 10.00% 10.75% 11.00% 11.00% 10.50% 1.50% 9.50% 9.50% 10.50% 11.00% 1.00% 9.00% 9.50% 8.50% 10.50% 8.5% 10.00% 9.50% 10.00% 8.50% Urban Multi Family 9.50% 9.50% 7.75% 8.50% 7.50% 9.00% 10.50% 10.50% 9.50% 8.50% 1.00% 8.00% 8.75% 8.75% 9.50% 10.50% 8.50% 9.00% 9.00% 10.50% 8.50% 8.50% % 8.00% Suburban Multi Family 10.00% 9.50% 7.5% 8.50% 7.50% 9.00% 10.00% 10.50% 10.00% 8.75% 11.00% 8.00% 8.75% 9.00% 9.50% 10.00% 8.50% 9.00% 8.50% 10.50% 8.00% 8.00% 9.00% 8.00% 8.00% CBD Lodging 10.50% 11.00% 11.5% 10.50% 11.50% 11.00% 13.00% 11.75% 11.00% 11.00% 14.00% 1.00% 11.50% 11.00% 11.00% 13.00% 9.50% 1.5% 9.00% 10.50% 8.50% 11.50% 11.50% 11.00% 10.50% Suburban Lodging 10.00% 11.00% 10.75% 10.75% 11.30% 1.00% 1.50% 1.50% 1.50% 11.00% 13.50% 1.00% 11.00% 11.00% 1.00% 13.50% 10.00% 1.5% 1.00% 10.50% 8.50% 11.50% 1.00% 11.00% 10.50% Airport Lodging 11.50% 11.00% 10.75% 10.75% 11.30% 9.50% 1.50% 1.50% 1.00% 11.00% 14.00% 1.00% 10.75% 11.00% 11.00% 13.00% 10.00% 1.5% 1.00% 10.50% 8.50% 11.50% 11.70% 1.00% 10.50% CBD Office 9.50% 9.00% 8.50% 8.00% 8.30% 7.50% 9.5% 9.5% 8.50% 9.00% 10.75% 8.00% 9.50% 9.00% 10.50% 10.00% 7.75% 9.00% 10.00% 8.00% 8.00% 8.00% 8.50% 9.75% 7.75% Suburban Office 9.5% 9.50% 8.50% 8.50% 8.50% 9.50% 9.50% 10.00% 9.00% 9.5% 10.5% 8.00% 9.00% 9.5% 11.00% 10.30% 7.75% 8.75% 8.50% 8.00% 7.50% 7.50% 8.80% 9.5% 7.75% Regional Mall 8.75% 8.50% 8.00% 8.00% 7.80% 7.00% 8.5% 8.50% 7.70% 8.00% 11.50% 7.00% 8.75% 8.5% 1.00% 9.00% 8.50% 8.00% 6.75% 8.50% 6.75% 8.00% 8.50% 7.5% 6.75% Community Mall 8.50% 9.50% 8.5% 8.00% 7.80% 8.50% 7.50% 9.5% 8.70% 8.75% 11.50% 8.5% 8.50% 8.75% 11.00% 9.00% 7.75% 8.5% 8.00% 8.00% 7.00% 8.00% 8.50% 7.5% 7.5% Neighborhood Strip 8.75% 9.50% 8.5% 8.00% 8.00% 9.00% 8.5% 8.50% 9.00% 7.75% 10.50% 8.00% 8.75% 7.75% 10.50% 9.30% 7.75% 8.50% 8.00% 8.00% 7.00% 8.00% 8.50% 8.5% 7.75% Manufacturing 10.00% 11.00% 8.75% 9.5% 8.80% 9.50% 9.5% 11.00% 10.00% 9.00% 11.5% 8.50% 9.00% 9.00% 11.00% 11.00% 9.50% 10.50% 8.50% 8.50% 8.50% 9.00% 8.50% 8.75% 8.50% Bulk 9.00% 11.00% 8.50% 8.50% 8.50% 8.50% 8.75% 10.5% 10.00% 8.50% 11.5% 8.50% 9.00% 8.50% 11.00% 10.00% 9.00% 7.75% 8.50% 8.50% 7.75% 8.50% 8.00% 8.75% 8.50% Office/Warehouse 9.50% 11.00% 8.50% 8.50% 8.50% 8.50% 8.75% 9.50% 9.50% 7.75% 11.5% 9.00% 9.00% 7.75% 11.00% 9.50% 8.00% 9.00% 8.50% 8.50% 7.75% 8.00% 8.80% 8.75% 8.5% R&D 9.50% 11.00% 9.00% 9.5% 9.00% 9.00% 9.00% 10.50% 10.00% 9.00% 11.5% 9.00% 8.75% 9.00% 11.00% 10.00% 8.00% 9.5% 8.00% 8.50% 8.00% 8.50% 8.80% 8.75% 8.00% Urban Multi Family 9.00% 8.50% 6.75% 7.50% 6.50% 8.00% 8.75% 9.00% 8.00% 7.00% 11.00% 6.00% 8.75% 7.5% 11.00% 8.80% 7.50% 8.00% 7.50% 7.50% 8.00% 7.00% 7.80% 7.5% 7.50% Suburban Multi Family 9.50% 8.50% 6.5% 7.50% 6.50% 8.00% 8.5% 8.50% 8.50% 7.5% 10.00% 6.50% 8.75% 7.50% 11.00% 8.80% 7.50% 7.50% 7.00% 7.00% 6.75% 6.50% 7.50% 7.5% 7.50% CBD Lodging 10.00% 11.00% 10.5% 9.50% 9.80% 9.75% 11.5% 10.00% 9.50% 10.50% 13.00% 9.50% 10.75% 10.50% 11.50% 11.00% 8.50% 10.75% 8.00% 8.50% 9.5% 10.00% 9.50% 9.5% 9.50% Suburban Lodging 9.50% 11.50% 9.75% 9.75% 10.80% 10.75% 10.75% 11.50% 11.00% 10.50% 1.50% 9.50% 10.75% 10.50% 11.50% 10.50% 9.00% 11.5% 10.50% 8.50% 9.00% 10.00% 9.50% 9.5% 9.50% Airport Lodging 10.50% 11.50% 9.75% 9.75% 10.80% 9.75% 10.75% 11.50% 10.50% 10.75% 13.00% 10.50% 10.50% 10.75% 11.50% 11.00% 9.00% 11.00% 10.50% 8.50% 9.00% 10.00% 9.50% 10.5% 9.50% CBD Office.00% 5.00%.00% 3.00% 1.00% 1.50% 1.00%.00%.00% 1.50% 1.00% 3.00% -.00% 1.50%.00%.00% 0.00% 1.00% 0.00% 3.00% 3.00%.00% 1.00% 1.00%.00% Suburban Office 3.00% 3.00%.00% 3.00% 1.00% 0.00%.00% 0.00% 1.50% 1.50%.00% 3.00% 0.00% 3.50% 0.00%.00%.00% 1.50%.00% 3.00% 3.5%.00% 1.00%.00%.00% Regional Mall 3.00% 3.00% 3.00% 3.00%.50%.00%.00%.00%.50%.50%.00% 3.00%.00% 0.00% 0.00% 3.00%.00%.50%.00% 3.00% 3.50% 3.00%.00%.00%.00% Community Mall 3.00% 3.00% 3.00% 3.00%.50%.00%.50%.00%.50%.00%.00% 3.00%.00% 3.00% 3.00% 0.00% 3.00%.50%.00% 3.00% 3.00%.50%.00%.00%.00% Neighborhood Strip 3.00% 3.00% 3.00% 3.00%.50%.00%.50% 3.00%.50%.00% 3.00% 3.00%.00%.00% 3.00% 0.00% 3.00%.50%.00% 3.00% 3.00%.50%.50%.00%.00% Manufacturing 1.50% 0.00% 3.00% 0.00% 0.00%.00% 1.00% 1.00%.00%.00% 1.00% 3.00% -.50%.00%.00%.00%.00% 0.00%.50% 3.00%.75% 0.00%.00%.00% 1.50% Bulk 3.00% 0.00% 3.00% 1.00% 0.00%.00% 1.00% 1.00%.00% 3.00% 1.00% 3.00% -.00% 3.00% 1.00%.00%.00% 1.50%.50% 3.00% 3.5%.00%.00%.00% 1.50% Office/Warehouse.50% 0.00% 3.00% 1.00% 0.00%.00%.00%.00%.00% 3.00% 1.00% 3.00% 0.00% 3.00%.00%.00%.00% 1.5%.50% 3.00% 3.5%.00%.00%.00%.00% R&D.50% 0.00% 3.00% 1.00% 0.00%.00%.00% 1.00%.00%.00% 1.00% 3.00% 0.00%.00%.00%.00%.00% 1.5%.50% 3.00% 3.00%.00%.00%.00%.00% Urban Multi Family 3.00% 5.00%.50%.00%.00% 1.00%.00%.00%.00% 0.00%.00% 3.00% 0.00% 0.00% 0.00% 3.00% 3.00% 1.50% 1.00% 10.00% 3.00% 3.00%.00%.50% 3.00% Suburban Multi Family.00% 5.00%.50%.00%.00% 1.00%.00% 1.00%.00% 0.00%.00% 3.00% 1.50% 0.00% 0.00% 3.00% 3.00% 1.50% 3.00% 10.00% 3.5% 3.00%.00%.00% 3.00% CBD Lodging 4.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 1.00% 5.00% 0.00%.00% 3.00% -1.50% 0.00% 0.00% 5.00%.00%.50% 5.00%.00% 3.00%.00% 5.00%.50% 3.00% Suburban Lodging 4.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50%.00% 5.00% 0.00%.00% 3.00% 0.00% 0.00% 0.00% 5.00%.00%.50% 4.00%.00% 3.00% 3.00% 4.00%.50% 3.00% Airport Lodging 3.50% 3.00% 3.00% 3.00% 3.00% 3.00%.50%.00% 5.00% 0.00%.00% 3.00% 0.00% 0.00% 0.00% 5.00%.00%.50% 4.00%.00% 3.5%.00% 4.50% 1.00% 3.00% CBD Office 3.50% 3.00% 3.00% 3.00%.75% 3.00%.00% 3.00% 3.00%.60%.00% 3.00%.50%.60% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Suburban Office 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00%.60%.00% 3.00%.50%.60% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Regional Mall 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Community Mall 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Neighborhood Strip 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Manufacturing 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% -.50% 3.00% Bulk 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Office/Warehouse 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% R&D 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Urban Multi Family 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00%.00% 3.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% Suburban Multi Family 3.50% 3.00% 3.00% 3.00%.75%.00%.00% 3.00% 3.00% 3.00%.00% 3.00%.50% 3.00%.00% 3.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% CBD Lodging 3.50% 3.00% 3.00% 3.00%.75% 3.00%.00% 3.00% 3.00% 3.50%.00% 3.00%.50% 3.50%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.5% 3.00% 3.00%.50% 3.00% Suburban Lodging 3.50% 3.00% 3.00% 3.00%.75% 3.00%.00% 3.00% 3.00% 3.50%.00% 3.00%.50% 3.50%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.5% 3.00% 3.00%.50% 3.00% Airport Lodging 3.50% 3.00% 3.00% 3.00%.75% 3.00%.00% 3.00% 3.00% 3.50%.00% 3.00%.50% 3.50%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.5% 3.00% 3.00%.50% 3.00% CBD Office $3.00 $0.00 $35.00 $30.00 $5.00 $35.00 $15.00 $30.00 $40.00 $0.00 $15.00 $5.00 $0.00 $0.00 $35.00 $5.00 $0.00 $0.00 $0.00 $40.00 $5.00 $35.00 $15.00 $15.00 $40.00 Suburban Office $17.50 $17.00 $30.00 $0.00 $0.00 $5.00 $15.00 $0.00 $0.00 $0.00 $0.00 $5.00 $1.50 $0.00 $30.00 $0.00 $15.00 $15.00 $0.00 $40.00 $0.00 $5.00 $15.00 $15.00 $5.00 Regional Mall - $ $.00 - $10.00 $15.00 $ $5.00 $5.00 $.00 $7.00 $35.00 $5.00 $10.00 $5.00 $10.00 $30.00 $30.00 $5.00 $5.00 $30.00 $10.00 $0.00 Community Mall $10.00 $ $.00 - $10.00 $10.00 $ $15.00 $0.00 $4.00 $5.00 $17.00 $5.00 $5.00 $1.00 $10.00 $30.00 $30.00 $6.00 $5.00 $1.00 $10.00 $15.00 Neighborhood Strip $10.00 $ $.00 - $10.00 $5.00 $ $15.00 $15.00 $4.00 $7.00 $15.00 $5.00 $5.00 $8.00 $5.00 $30.00 $30.00 $1.00 $5.00 $10.00 $4.00 $15.00 Manufacturing - $ $ $1.00 $7.50 $ $ $5.00 $ $ $0.50 $10.00 Bulk $1.00 $.00 $ $ $3.00 $7.50 $ $ $0.50 $5.00 $ $1.50 $.00 $0.50 $10.00 Office/Warehouse $.00 $.00 $ $ $.50 $7.50 $1.00 $3.00 $ $5.00 $1.00 $10.00 $ $.50 $4.00 $0.50 $15.00 R&D - $5.00 $ $ $5.00 $7.50 $5.00 $7.00 $ $4.00 $1.00 $15.00 $ $3.00 $4.00 $.00 $ INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

9 INVESTMENT CRITERIA TABLE 9 continued Milwaukee, WI Minneapolis, MN Naples/Ft. Myers, FL Nashville, TN New Jersey, Coastal New Jersey, Northern New York, NY Oakland, CA Orange County, CA Orlando, FL Philadelphia, PA Phoenix, AZ Pittsburgh, PA Portland, OR Providence, RI Richmond, VA Sacramento, CA San Antonio, TX San Diego, CA San Francisco, CA San Jose, CA Sarasota, FL Seattle, WA Syracuse, NY Tampa, FL Tulsa, OK Washington, DC Averages 8.50% 7.50% % 9.00% 7.5% 5.50% 6.50% % 8.00% 7.00% 10.5% 6.75% 9.50% 8.75% 7.00% 8.50% 6.00% 6.00% 7.00% 7.00% 6.50% 10.00% 8.00% 11.00% 6.50% 8.00% 8.75% 8.00% 7.50% 7.00% 9.50% 7.50% 6.80% 6.5% 7.00% 6.75% 7.00% 7.00% 9.50% 7.5% 9.50% 8.75% 7.5% 8.00% 6.80% 6.50% 7.00% 7.50% 7.50% 9.00% 8.00% 9.50% 7.00% 8.0% 8.00% 6.50% % 6.70% 6.40% 6.30% 6.00% 6.00% % 7.00% 7.0% 7.00% 9.5% 7.00% 8.00% 8.75% 7.0% 6.00% 6.00% % % 8.50% 7.00% 7.8% 8.00% 7.00% 7.00% 7.50% 7.0% 7.80% 7.80% 6.5% 6.50% 7.00% 7.50% 6.50% 7.50% 7.00% 9.50% 8.00% 7.00% 8.75% 6.50% 6.5% 6.5% 7.50% 7.00% 9.50% 7.00% 9.00% 6.5% 7.59% 8.50% 7.00% 7.00% 8.00% 7.50% 8.00% 7.50% 6.5% 7.50% 6.50% 6.75% 7.50% 7.75% 7.50% 10.50% 8.00% 6.50% 8.50% 7.00% 6.5% 6.5% 7.50% 6.5% 10.00% 7.50% 9.00% 6.5% 7.69% 9.50% 8.50% % 8.50% 8.75% 8.0% 7.5% 7.00% % 8.00% 9.00% 9.50% 11.00% 9.50% 8.5% 9.50% 7.00% 7.5% 7.5% % % 9.50% 7.75% 8.66% 9.00% 8.00% % 7.0% 7.5% 7.80% 6.5% 7.00% 7.5% 6.75% 8.00% 9.00% 8.00% 11.00% 9.50% 7.00% 9.00% 7.00% 6.5% 6.5% % % 9.50% 7.50% 8.13% 8.50% 8.00% 6.00% 8.00% 7.0% 7.5% 7.70% 6.50% 7.00% 6.5% 7.50% 7.50% 8.50% 8.00% 10.00% 9.00% 7.5% 9.00% 7.00% 6.50% 6.50% 8.00% 7.00% 9.0% 8.00% 9.50% 7.50% 8.01% 9.00% 8.00% 6.00% 8.00% 8.5% 8.00% 7.70% 8.00% 8.50% 6.5% 8.50% 7.50% 9.00% 9.50% 10.50% 8.75% 7.75% 9.00% 7.50% 8.00% 8.00% 8.00% 8.5% 9.00% 8.00% % 8.41% 7.00% 6.50% % 7.70% 8.00% 5.70% 5.5% % 6.50% 6.50% 6.00% 9.40% 7.50% 6.00% 7.50% 5.00% 5.5% 5.5% - 5.5% 9.00% 6.00% 7.50% 5.75% 7.03% 7.00% 7.00% 6.00% 7.50% 6.00% 6.00% 6.00% 5.5% 5.00% 5.75% 5.75% 6.50% 7.00% 6.50% 9.00% 7.50% 6.00% 7.00% 5.50% 5.5% 5.5% 6.50% 6.00% 8.50% 5.50% 7.00% 5.50% 6.74% 9.00% 9.50% % 9.40% 9.00% 8.0% 8.00% % 8.50% 8.50% 9.00% 10.00% 10.50% 9.5% 8.50% 10.00% 10.00% 8.00% 8.00% % % 1.00% 9.00% 9.33% 9.50% 10.00% 10.00% 9.00% 9.0% 8.75% 8.30% 8.00% % 8.50% 9.00% 9.00% 11.00% 10.75% 9.75% 9.00% 10.50% 10.00% 8.00% 8.00% 10.00% 9.5% % 10.00% 8.75% 9.53% 9.50% 9.50% % 9.0% 8.75% 8.70% 8.50% % 9.00% 9.00% 9.00% 10.00% 10.5% 9.75% 9.00% 10.50% 10.00% 8.50% 8.50% % % 10.00% 8.75% 9.56% 10.50% 9.00% % 10.50% 9.00% 8.00% 8.00% % 8.75% 10.00% 10.5% 9.00% 1.10% 11.00% 8.50% 10.50% 7.50% 7.75% 8.00% 9.50% 8.00% 1.00% 10.00% 1.00% 8.00% 9.55% 11.00% 9.50% 11.00% 8.50% 11.00% 8.50% 8.00% 8.00% 9.00% 8.00% 8.50% 10.00% 9.50% 9.00% 1.75% 11.00% 8.50% 10.00% 8.0% 8.00% 8.50% 10.00% 8.75% 11.00% 10.00% 11.00% 8.50% 9.66% 10.00% 9.00% % 8.50% 8.00% 7.75% 7.50% 10.00% - 8.5% 9.50% 9.75% 8.5% 11.5% 9.00% 9.00% 10.50% 9.5% 7.50% 7.50% % % 11.00% 8.50% 9.05% 10.00% 9.00% 10.00% 9.00% 9.0% 8.50% 8.0% 7.75% 10.50% 8.00% 8.50% 9.50% 9.00% 8.75% 11.75% 10.00% 9.00% 10.00% 9.50% 7.75% 7.75% 10.00% 8.00% 10.00% 9.00% 11.00% 7.75% 9.6% 10.50% 9.50% 10.00% 8.50% 9.70% 8.50% 8.50% 7.75% 10.50% 7.00% 8.50% 9.00% 9.00% 8.75% 1.5% 10.00% 8.00% 10.00% 8.50% 7.75% 7.75% 10.00% 8.50% 10.00% 10.00% 11.50% 7.75% 9.3% 1.00% 9.50% % 9.75% 9.50% 8.70% 9.00% 10.00% - 9.5% 10.00% 10.50% 10.00% 13.00% 1.00% 9.50% 10.00% 8.50% 9.00% 9.00% % % 11.00% 9.5% 10.18% 11.50% 9.00% % 9.00% 8.00% 8.0% 7.50% 10.00% 8.50% 8.00% 10.00% 10.50% 9.00% 13.50% 1.00% 8.75% 10.00% 8.50% 7.50% 7.50% % % 11.50% 9.00% 9.67% 11.00% 9.00% 9.00% 9.00% 9.00% 8.00% 8.0% 7.75% 10.00% 8.00% 9.00% 10.00% 10.00% 9.00% 1.5% 11.50% 9.00% 10.00% 8.0% 7.75% 7.75% 10.00% 8.00% % 11.50% 9.00% 9.57% 11.00% 9.50% 9.00% 9.00% 9.75% 8.50% 8.50% 8.50% 10.00% 8.00% 9.50% 10.00% 10.00% 10.00% 1.75% 11.00% 9.50% 10.00% 9.00% 8.50% 8.50% 10.00% 9.50% % % 9.87% 9.50% 9.00% % 9.5% 8.50% 7.00% 7.5% % 9.00% 9.00% 9.00% 11.50% 9.50% 7.50% 9.50% 8.50% 7.5% 7.5% % % 9.50% 7.5% 8.89% 9.50% 9.50% 9.00% 8.50% 9.5% 8.00% 7.70% 7.5% 8.00% 7.00% 8.00% 9.00% 9.5% 9.50% 10.75% 9.50% 7.50% 9.50% 9.00% 7.5% 7.5% 9.50% 8.50% % 9.00% 7.00% 8.76% 11.50% 11.00% % 10.00% 9.00% 8.70% 10.5% % 10.00% 11.50% 11.00% 11.00% 1.75% 1.00% 10.50% 10.50% 1.00% 10.5% 10.5% % % 1.00% 10.50% 11.01% 1.00% 11.50% 11.00% 10.00% 9.50% 8.75% 8.70% 10.5% 11.00% 1.00% 10.00% 11.50% 11.00% 1.00% 1.75% 1.75% 11.00% 11.00% 1.00% 10.5% 10.5% 1.00% 11.00% % 1.00% 10.5% 11.1% 1.00% 11.50% % 9.50% 8.75% 8.80% 10.50% 11.00% 1.00% 10.50% 1.00% 11.00% 11.00% 13.00% 1.75% 11.00% 11.00% 1.00% 10.50% 10.50% % % 1.00% 10.5% 11.16% 9.00% 8.00% % 9.50% 7.50% 6.50% 7.75% % 8.50% 8.00% 10.5% 7.10% 10.5% 9.5% 7.50% 9.50% 6.70% 7.50% 7.50% 7.50% 7.00% 10.50% 8.50% 11.00% 7.5% 8.41% 9.5% 8.50% 8.00% 8.00% 10.00% 8.00% 7.70% 7.50% 7.50% 7.5% 8.00% 8.00% 9.75% 7.60% 11.00% 9.5% 7.75% 9.00% 7.40% 7.50% 7.50% 8.00% 8.00% 10.00% 8.50% 9.50% 7.75% 8.64% 8.50% 7.50% % 7.0% 7.5% 7.0% 6.75% 6.00% % 7.50% 7.75% 8.50% 10.5% 7.50% 8.50% 10.00% 7.90% 6.75% 6.75% - 6.5% % 9.50% 7.75% 7.96% 8.50% 8.00% 7.50% 8.50% 7.70% 8.50% 8.00% 7.5% 8.00% 7.50% 8.00% 7.50% 8.00% 8.80% 10.35% 8.50% 7.75% 9.50% 7.00% 7.5% 7.5% 8.00% 7.50% 10.00% 7.50% 9.50% 7.00% 8.8% 9.00% 8.00% 7.50% 8.00% 8.00% 8.5% 8.00% 7.5% 8.00% 7.00% 7.5% 7.50% 8.5% 8.80% 11.00% 8.50% 7.00% 9.50% 7.5% 7.5% 7.5% 8.00% 7.00% 10.00% 8.00% 9.50% 7.00% 8.6% 10.00% 9.00% % 9.00% 9.5% 8.80% 8.00% 8.00% % 9.00% 9.50% 10.00% 10.50% 10.00% 8.75% 9.50% 7.5% 8.00% 8.00% % % 10.00% 8.75% 9.5% 9.50% 9.00% % 7.70% 8.00% 8.0% 7.00% 8.00% 7.75% 7.5% 9.00% 9.50% 9.5% 10.50% 10.00% 7.75% 9.50% 7.5% 7.00% 7.00% % % 10.00% 8.50% 8.73% 9.00% 9.00% 6.50% 8.50% 7.70% 8.5% 8.0% 7.5% 8.00% 7.00% 8.00% 8.50% 9.00% 9.5% 10.5% 9.50% 7.75% 9.50% 7.5% 7.5% 7.5% 8.50% 7.50% % 10.00% 8.50% 8.61% 9.50% 9.00% 6.50% 8.50% 8.75% 8.50% 8.50% 8.50% 9.00% 7.00% 9.00% 8.50% 9.00% 11.00% 10.5% 9.5% 8.5% 10.00% 8.00% 8.50% 8.50% 8.50% 9.50% % % 8.81% 7.50% 7.50% % 8.0% 7.00% 6.50% 6.5% % 7.50% 7.00% 7.30% 10.5% 8.00% 6.50% 8.50% 5.50% 6.5% 6.5% - 6.5% % 8.5% 6.50% 7.68% 7.50% 7.50% 6.50% 8.00% 6.50% 9.5% 7.50% 6.5% 7.00% 7.00% 6.50% 7.50% 7.50% 8.30% 9.50% 8.00% 6.50% 8.50% 6.00% 6.5% 6.5% 6.50% 6.50% 9.00% 6.00% 8.00% 6.5% 7.54% 9.50% 10.00% % 9.90% 9.00% 9.00% 9.00% % 9.00% 9.00% 9.50% 11.00% 10.75% 9.50% 9.5% 10.00% 10.50% 9.00% 9.00% % % 1.00% 9.75% 9.9% 10.00% 10.50% 10.50% 9.50% 9.70% 9.00% 9.00% 9.00% % 9.00% 9.00% 9.50% 11.50% 10.75% 10.00% 9.75% 10.50% 10.50% 9.00% 9.00% 10.50% 9.75% % 11.00% 9.75% 10.09% 10.00% 10.00% % 9.70% 9.00% 9.0% 9.00% % 9.50% 9.00% 9.50% 11.00% 10.75% 10.00% 9.75% 10.50% 10.50% 9.00% 9.00% - 9.5% % 11.00% 9.75% 10.1% 1.50% 3.00% %.50% 3.00% 3.0% 5.00% % 3.00% 0.00% 0.00%.50%.00% 3.00% 0.00%.00% 3.00% 6.50% 6.50% 4.00% 3.00%.00%.50% 0.00% 3.00%.11% 1.50% 3.00% 4.00%.50%.50% 3.00% 3.00% 5.00% 3.00% 3.00% 3.00% 0.00% 0.00%.50%.50% 3.00% 0.00%.00% 3.00% 5.00% 5.00% 4.00% 3.00%.00%.50% 5.00% 3.00%.35%.50% 3.00% -.50% 3.00% 3.5% 3.0% 3.00% 3.00% 3.00% 3.00% 3.00%.50%.50% 3.00%.00%.00%.00%.00% 3.00% 3.00% % % 3.00% 3.00%.53%.50% 3.00% 4.00%.00% 3.00% 3.5% 3.00% 3.00%.00% 3.00% 3.00% 3.00%.50%.50% 3.00%.00% 3.00%.00%.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 5.00% 3.00%.68%.50% 3.00% 4.00%.00% 3.00% 3.5% 3.00% 3.00%.00% 3.00% 3.00% 3.00%.50%.50% 3.00%.00% 3.00%.00% 3.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 5.00% 3.00%.73% 0.00%.00% -.00%.50%.75%.80% 3.00%.00% 3.00% 3.00% 3.00% 1.00% 1.00%.00% 0.00%.00% 3.00%.00% 3.00% 3.00% % 0.00%.50% 3.00% 3.00% 1.81%.50%.00% -.00%.50% 3.00% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 1.00%.50%.00% 0.00% 3.00% 3.00%.00% 3.00% 3.00% % 0.00%.50% 3.00% 3.00%.08%.00%.00% 4.00%.00%.50% 3.00% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00%.50%.00%.00% 3.00% 3.00%.00% 3.00% 3.00% 4.00% 3.00% 0.00%.50% 3.00% 3.00%.31%.00%.00% 4.00%.00%.50% 3.00% 3.00% 5.00%.00% 3.00% 3.00% 3.00% 1.00% 1.00%.00%.00%.00% 3.00%.00% 5.00% 5.00% 4.00% 1.00% 0.00%.50% %.% 1.00%.00% -.00% 3.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00%.50% 3.00% 3.00%.00% 3.50%.50% 5.00% 4.00% 4.00% % 0.00% 4.00% 0.00% 3.00%.56% 1.00% 1.00% 6.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00%.50% 1.50% 4.00%.00% 3.50%.50% 5.00% 4.00% 4.00% 5.50% 3.00% 0.00% 4.00% 0.00% 3.00%.70%.00% 3.00% -.00% 3.50% 3.50% 3.0% 3.00% % 3.00% 5.00% 3.50%.00% 4.00% 5.00%.00% 0.00% 4.00% 3.00% 3.00% % 0.00% 3.00% 0.00% 3.00%.69%.00% 3.00% 4.00%.00% 3.00% 3.00% 3.50% 3.00% % 3.00%.00% 3.50% 1.00% 4.00% 4.00%.00% 0.00% 4.00% 3.00% 3.00% 4.00% 3.00% 0.00%.50%.50% 3.00%.66%.00% 3.00% -.00% 3.5% 3.5% 3.0% 3.00% % 3.00%.00% 3.50% 1.50% 4.00% 4.00%.00% 0.00% 4.00% 3.00% 3.00% % 0.00%.50%.50% 3.00%.57%.50% 3.00% -.00% 3.5% 3.5% 3.0% 3.00% % 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.75%.00% 3.00%.91%.50% 3.00% 3.00%.00% 3.5% 3.5% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00%.75%.00% 3.00%.89%.50% 3.00% -.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00%.00% 3.00% 3.00% % - 3.5%.00% 3.00%.87%.50% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% - 3.5%.00% 3.00%.87%.50% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00% 3.00% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% - 3.5%.00% 3.00%.87%.50% 3.00% %.50%.75%.80% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00%.00% 3.00% 3.00%.00% 3.00% 3.00% % -.75%.00% 3.00%.76%.50% 3.00% %.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00%.00% 3.00% 3.00%.00% 3.00% 3.00% % -.75%.00% 3.00%.79%.50% 3.00% 3.00%.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00%.00% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% -.75%.00% 3.00%.81%.50% 3.00% 3.00%.00%.50% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00%.50% 3.00%.00% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% -.75% %.83%.50% 3.00% -.00% 3.00% 3.5% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% % 4.00% 3.00%.50% 3.00%.9%.50% 3.00% 3.00%.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.50% 3.00% 4.00% 3.00%.50% 3.00%.93%.50% 3.00% -.00% 3.5% 3.5% 3.00% 3.00% % 3.00% 4.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% % % %.97%.50% 3.00% 4.00%.00% 3.5% 3.5% 3.0% 3.00% % 3.00% 4.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% 4.00% 3.00% -.75%.50% 3.00% 3.00%.50% 3.00% -.00% 3.5% 3.5% 3.0% 3.00% % 3.00% 4.00% 3.00% 3.00% 4.00% 3.00% 3.00% 3.00% 3.00% 3.00% 3.00% % -.75%.50% 3.00%.96% $0.00 $ $3.00 $30.00 $37.00 $45.00 $ $0.00 $30.00 $0.00 $5.00 $15.00 $3.00 $0.00 $40.00 $15.00 $45.00 $5.00 $5.00 $30.00 $5.00 $.00 $10.00 $10.00 $45.00 $5.6 $15.00 $5.00 $5.00 $10.00 $0.00 $18.00 $.00 $0.00 $35.00 $15.00 $15.00 $0.00 $0.00 $15.00 $14.00 $15.00 $35.00 $14.00 $35.00 $0.00 $0.00 $5.00 $0.00 $5.00 $10.00 $10.00 $0.00 $0.00 $10.00 $ $0.00 $5.00 $5.00 $14.00 $15.00 $ $5.00 $ $10.00 $ $5.00 $ $15.00 $ $.50 $17.8 $5.00 $ $1.00 $5.00 $5.00 $6.00 $5.00 $.00 $.00 $3.00 $ $10.00 $ $1.00 $10.00 $3.00 $5.00 $ $6.00 $ $15.00 $.50 $9.65 $5.00 $ $10.00 $.00 $.00 $.00 $5.00 $.00 $.00 $3.00 $ $10.00 $ $1.00 $10.00 $3.00 $5.00 $ $6.00 $1.00 $5.00 $15.00 $.50 $8.39 $1.00 $ $5.00 $.00 - $0.50 $.50 - $ $8.00 $.00 - $5.00 $ $4.70 $1.00 $ $1.00 $0.50 $1.00 $.00 $0.50 $.50 - $ $ $0.50 $ $0.50 $1.00 $3.03 $.50 $ $1.00 $1.00 $1.00 $10.00 $0.50 $.50 $5.00 $0.50 $.00 - $5.00 $ $1.00 $ $ $0.50 $.50 $4.51 $.50 $ $5.50 $7.50 $.00 $10.00 $10.00 $.50 - $1.50 $.00 - $10.00 $10.00 $5.00 $7.50 $ $ $.00 - $10.00 $7.47 IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 7

10 INVESTMENT CRITERIA of reviewed markets for all property types were in various stages of the recovery or expansion phases of the market cycle. The investment oulook of an MSA depends upon where it is in the cycle. If a MSA has entered the last stage of the recessionary phase, it is expected that it will begin its recovery by the end of the year. OFFICE MARKET CYCLE 005 In the office sector cycle, many markets remained in the recovery phase, including Atlanta, Boston, Chicago, Denver and Minneapolis. Few markets are expanding, although Florida is looking strong with Naples and Orlando both expanding. Fort Worth, Orange County and San Diego are also in the expansion stage. TABLE DISCOUNT RATE RANKS Low 005 High 005 Avg. Rank Property Type (%) (%) (%) 1 Urban Multi Family Suburban Multi Family Regional Mall Community Mall Neighborhood Strip CBD Office Office/Warehouse Bulk Suburban Office R&D Manufacturing CBD Lodging Airport Lodging Suburban Lodging TABLE 11 PROJECTED DISCOUNT RATE CHANGE Property Type Decline (%) Increase (%) Stable (%) CBD Office Suburban Office Regional Mall Community Mall Neighborhood Strip Manufacturing Bulk Office/Warehouse R&D Urban Multi Family Suburban Multi Family CBD Lodging Suburban Lodging Airport Lodging AVERAGE RETAIL MARKET CYCLE 005 The majority of markets are in the expansion phase, with no markets in the recession stage. Those experiencing expansion include Austin, Detroit, Kansas City, Los Angeles, Nashville and San Francisco. Dallas, Denver, New York and Chicago are among those in recovery. APARTMENT MARKET CYCLE 005 In the apartment sector cycle, there are no markets in the hypersupply phase and only two markets, Phoenix and Milwaukee, in the recession phase. Houston, Chicago and Seattle moved out of recession and into recovery. Most markets are currently in the recovery phase, including Cincinnati, Detroit, Pittsburgh, Memphis and Las Vegas. Those markets expanding include Baltimore, Philadelphia and Orlando. INDUSTRIAL MARKET CYCLE 005 The majority of markets in the industrial property sector are in various stages of recovery expansion. There are no markets in hypersupply. Hartford, Louisville, San Antonio and Austin have all moved out of recession and into recovery. CAPITALIZATION AND DISCOUNT RATES Capitalization and discount rates are important measures of the conditions in the real estate investment landscape. Rising capitalization rates can be a sign of weakness, and caution is warranted. On the other hand, decreasing capitalization rates is an indication of a strong market that is viewed optimistically by investors. Comparison of capitalization rates between various markets and submarkets is a useful exercise that can give a valuable indication of market conditions. However, capitalization rates for individual properties are affected by many factors. IRR representatives have intimate knowledge of the conditions within their markets, and can help you analyze specific submarkets and properties. Discount rates are the annualized rates or expected rates of return for property investments and they also provide clues about the weakness or strength of a market. Basically, decreasing discount rates reflect decreasing risk and vice versa. Last year s projected capitalization rates were on average 71.7% stable with 18.9% declining and 9.4% increasing. This year it hasn t changed much with 69.8% stable,.7% declining and 7.5% increasing. The discount rates year-to-year change was greater. Last year IRR projected discount rates at 73.% stable, 17.8% declining and 9% increasing. This year, the projections are 68.7% stable with 1.3% declining and 9.9% increasing. 8 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

11 PROPERTY SECTOR CYCLES Office, CBD & Suburban CBD OFFICE BY THE NUMBERS The capitalization rates average continues to drop, down to 8.0% from last year s 8.71% and the previous year s 9.17%. The rate span is 5.5% to 11% as compared with last year s 6.8% to 10.5%. The market appears to be stable, as the numbers remain steady in projected increases of capitalization rates 8.% surveyed forecasted an increase, as compared to last year s 8.5%. Discount rates also moved in a promising direction as they again decreased this year to 9.6%, down 90 basis points from last year. 71.4% of those surveyed expect discount rate stability, compared with last year s 74.5%. The projected discount rate change decline dropped from last year s 19.1% to 18.4%. The CBD vacancy rate is currently 13.46%. Although this is still quite a bit more than the 001 Viewpoint vacancy rate of 7.3%, it is a decrease since last year s 14.39%. The projection for balance of supply and demand increased to 3.93 years from last year s projected 3.57 years. Inventory grew by approximately 10 million square feet. Last year s inventory was 1.37 billion square feet, as compared with this year s inventory of 1.38 billion square feet. Development in the pipeline for is 1 million square feet, which is a considerable drop from the 54.6 million square feet of office space under development for the period of TABLE 1 CBD OFFICE MARKET CYCLE Atlanta, GA Austin, TX Boston, MA Charlotte, NC Cincinnati, OH Coastal, NJ Columbus, OH Denver, CO Detroit, MI Greenville, SC Indianapolis, IN Long Island, NY Miami, FL Northern NJ Philadelphia, PA Phoenix, AZ Providence, RI San Antonio, TX Syracuse, NY Chicago, IL Dayton, OH Hartford, CT Houston, TX Kansas City, KS/MO Louisville, KY Memphis, TN Minneapolis, MN Nashville, TN Portland, OR San Jose, CA Seattle, WA Baltimore, MD Columbia, SC Las Vegas, NV Los Angeles, CA New York, NY Oakland/East Bay, CA Richmond, VA San Francisco, CA Tampa, FL Fort Worth, TX Orange County, CA San Diego, CA Naples, FL Orlando, FL Pittsburgh, PA Tulsa, OK 1 3 Indicates 1st stage within the phase Indicates nd stage within the phase Indicates last stage within the phase Dallas, TX Milwaukee, WI Sacramento, CA Washington, DC 3 *City data compiled using the following sources: IRR Surveys, REIS, and Legg Mason Copyright 006 Integra Realty Resources IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 9

12 PROPERTY SECTORS - OFFICE, CBD & SUBURBAN QUICK MARKET GLANCE CBD office continues to hold 6th place in both the cap rate ranks and the discount rate ranks. Vacancy has dropped slightly, but is still larger than the 001 vacancy rate of 7.3%. Although vacancy rates have decreased in the last year, the projection balance of supply and demand saw a six-month increase. Slow employment growth continues to keep the CBD office market in the early stages of recovery. This sluggishness continues in many MSA s throughout the nation, with a few tentative bright spots, offering a glimpse at a more promising future trend. - The Washington, D.C. metro area has added 84,500 jobs in the last year and expects a major redevelopment and revitalization of the southeast submarket. Rent continues to grow as vacancy declines. - Minneapolis Class A properties have had a healthy recovery in the past year with strong investment activity and expected decline in vacancies. - Nashville is expecting a decrease in vacancies for the next several years due to the corporate relocation of 1,00 employees into the area. - The Los Angeles office market continues to tighten. The current trend of transitioning older, obsolete buildings to mixed-use and residential uses has caused a decline in overall inventory. Vacancy is at a low since mid-001 and rental rates continue to climb. - The Fort Worth CBD is at a very high level of occupancy due to corporate expansion and the transition of older buildings to residential use. TABLE 13 CAP RATE TRENDS CBD OFFICE PERCENTAGE YEAR 10 Year Treasury (Annual Avg.) Year Treasury (January Avg.) Office CBD 006 Integra Realty Resources 10 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

13 TABLE 14 OFFICE MARKET CONDITIONS AND FORECASTS: Central Business District TOTAL FORECAST TOTAL FORECAST AVG ANNUAL UNDER AVG ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY 1 RATE 1 VACANCY TO MARKET AREA (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE Atlanta, GA 15,800, ,033,600-14, , , Austin, TX 8,673, ,107,65-16,0 1,600, , Baltimore, MD 19,193, ,437,511-47,41 84, , Boston, MA 60,000, ,600, ,50,000 1,000, Charlotte, NC 14,100, , ,000 3,600,000 55, Chicago, IL 116,61, ,758, ,840 1,550,000,000, Cincinnati, OH 13,000, ,80,000-86, , , Cleveland, OH 0,165, ,174, ,500 0, Columbia, SC 5,168, ,176 00, , , Columbus, OH 9,45, ,885,000 40, , Dallas, TX 36,874, ,140, , , , Dayton, OH 7,490, ,041,140 10, Denver, CO 3,300, ,78,000-13,000 1,150, , Detroit, MI 13,500, ,835, ,000 30,000 00, Fort Worth, TX 1,053, ,686 90, ,000 17, Greenville, SC,670, ,00 15, ,000 15, Hartford, CT 7,581, ,781,535 53, , Houston, TX 43,950, ,350, ,000 00,000 1,000, Indianapolis, IN 10,390, ,641,60 31, ,000 4, Kansas City, MO/KS 13,550,000.00,981, , , , Las Vegas, NV 3,056, ,66 75, ,00 150, Los Angeles, CA 34,770, ,389, ,816 47,000 48, Louisville, KY 10,300, ,36,900-49, , Memphis, TN 6,719, ,310,369-10, ,000 10, Miami, FL 7,000, ,000-34,000 35, , Milwaukee, WI 11,94, ,645,51 1,50 754, , Minneapolis, MN 4,999, ,04, , ,000 74, Nashville, TN 5,800, ,000-5,000 50,000 17, New Jersey, Coastal 4,750, , , ,000 50, New Jersey, Northern 4,000, ,510, , ,000 00, New York, NY 367,000, ,030,000,00,000 16,000,000 3,830, Oakland, CA 1,073, ,379, ,000 74,000 75, Orlando, FL 6,395, ,450 96,080 1,895, , Philadelphia, PA 54,398, ,331,067-33,791 1,38,000 33, Phoenix, AZ 6,000, ,000 75, , , Pittsburgh, PA 6,95, ,445,517-48, , , Portland, OR 17,14, ,987,71 48,677 80,000 00, Providence, RI 6,175, ,15-600, , Richmond, VA 8,480, ,356,800 50, ,000 50, Sacramento, CA 11,000, ,375, ,000 9, Salt Lake City, UT 7,588, ,168,55 4,750 40, , San Antonio, TX 5,173, ,107,19-149, , San Diego, CA 10,600, ,060,000 6,000 1,95, , San Francisco, CA 49,18, ,577,000 1,81,000,000,000 98, San Jose, CA 8,39, ,709, , ,000 34, Seattle, WA 4,876, ,016,579 44,107 1,085, , St. Louis, MO 11,88, ,471, ,50 1,000 88, Syracuse, NY 7,135, , , Tampa, FL 7,097, ,7,781 43, ,000 33, Tulsa, OK 8,499, ,31,13-75, , Washington, DC 104,575, ,61,486 1,697,535 8,149,139 3,300, Total: Simple Avg: Total: Total: Total: Total: Average: Average: Average: 1,38,739, ,168,911 5,797,300 54,980,439 1,308, Weighted Avg: Italicized Inventory, Vacancy, Absorption and Under Construction figures were provided by REIS, Inc IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 11

14 TABLE 15 OFFICE MARKET CONDITIONS AND FORECASTS: Suburban Market Area TOTAL FORECAST TOTAL FORECAST AVG ANNUAL UNDER AVG ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY 1 RATE 1 VACANCY TO MARKET AREA (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE Atlanta, GA 119,075, ,55,075 18,750 5,45,600 3,300, Austin, TX 8,946, ,616,69-191,837,550,000 1,117, Baltimore, MD 7,46, ,484,63 1,1,060,164, , Boston, MA 96,000, ,395,000 1,150,000 1,900,000 1,000, Charlotte, NC 6,190, ,97, ,000 6,940, , Chicago, IL 110,856, ,878, ,000,444,000 1,467, Cincinnati, OH 19,680, ,965, ,000,150, , Cleveland, OH 16,713, ,94,775 66, , , Columbia, SC 5,41, ,304,9 60, ,000 9, Columbus, OH,500, ,73, ,000 1,310, , Dallas, TX 177,869, ,3, ,064 3,873,000 3,784, Dayton, OH 14,69, ,516, , , , Denver, CO 6,900, ,93, ,000 4,000,000 1,500, Detroit, MI 56,315, ,719,650 45,000 1,170, , Fort Worth, TX 4,056, ,943, ,615 1,18, , Greenville, SC 3,414, ,640 60, ,000 6, Hartford, CT 17,471, ,509,048 15,000 41, , Houston, TX 178,790, ,767,375 1,764,900 3,305,000 3,560, Indianapolis, IN 19,093, ,57, ,500 1,860, , Kansas City, MO/KS 9,850, ,80,000 55, , , Las Vegas, NV 3,855, ,349,709 1,810,000 9,350,000 3,000, Long Island, NY 46,400, ,9, , , , Los Angeles, CA 137,930, ,978,968 1,77,643 3,660,678,988, Louisville, KY 13,048, ,473,8 107, ,000 00, Memphis, TN 4,896, ,75,990 18,90 600, , Miami, FL 33,500, ,35,500-40,000 1,99, , Milwaukee, WI 15,843, ,69,860 31, , , Minneapolis, MN 41,483, ,47,9-49,50 917,000 6, Naples/Ft. Myers, FL 1,8, ,468, ,549 1,91,51 900, Nashville, TN 0,010, ,757,90 4,000 3,150, , New Jersey, Coastal 18,135, ,198,65-635, ,000 67, New Jersey, Northern 0,000, ,80, ,000 3,850,000 1,67, Oakland, CA 45,338, ,596,000 34,000,635,000 1,100, Orange County, CA 18,959, ,840,866 3,495,141 7,97,000,100, Orlando, FL 5,896, ,67,776 55,943 4,76, , Philadelphia, PA 90,66, ,483,745 43,304 1,359,655 54, Phoenix, AZ 5,850, ,887,500 1,647,500 6,500,000 1,833, Pittsburgh, PA 44,394, ,799, ,553 05,66 300, Portland, OR 4,314, ,95, ,71 1,101, , Providence, RI 5,675, , , , Richmond, VA 17,750, ,059,975 43, ,000 63, Sacramento, CA 37,375, ,110, ,000 4,300, , Salt Lake City, UT 18,1, ,941,38 68,500 1,67, , San Antonio, TX 0,397, ,365,588 55, , , San Diego, CA 70,745, ,98,600 1,851,000,875,000 1,140, San Francisco, CA 73,017, ,887, ,000,011,000 1,14, San Jose, CA 57,755, ,395,000,059, ,000 1,045, Sarasota, FL 10,718, ,810, ,610 1,47,15 600, Seattle, WA 51,38, ,470,65 76,139 73,373 1,133, St. Louis, MO 3,475, ,491,53-5,500 1,7, , Syracuse, NY 5,03, ,17-48, , Tampa, FL 34,0, ,64,37 1,347,400 57, , Tulsa, OK 1,075, ,08,400 50,000 00,000 00, Washington, DC 18,5, ,105,971 5,070,647 17,848,937 5,061, Total: Simple Avg: Total: Total: Total: Total: Average: Average: Average:,795,70, ,049,507 34,34,387 19,071,169 54,679, Weighted Avg: Italicized Inventory, Vacancy, Absorption and Under Construction figures were provided by REIS, Inc INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

15 PROPERTY SECTORS - OFFICE, CBD & SUBURBAN SUBURBAN OFFICE BY THE NUMBERS Capitalization rates continue to fall, decreasing from last year s 8.79% to this year s 8.0%, with a range from 6.5% to 9.5%. Projected declines rose to 5.5% from last year s.4%. The discount rate average continues to decrease with a drop to 9.7% from last year s 10.5%. TABLE 16 CAP RATE TRENDS SUBURBAN OFFICE 1 10 Vacancy rates continued to move downward, with an average of 14.53%, as compared to 16.5% a year ago. Although still far from the 8.6% of five years ago, this is a welcome downward shift. Inventory levels increased from last year s.66 billion square feet to nearly.8 billion square feet. PERCENTAGE 8 6 In the development pipeline for is an estimated 19 million square feet, which significantly exceeds the 100 million in the pipeline last year. This indicates that investors are becoming more optimistic about the future of the office market. On the other hand, this is far short of the 46 million square foot development pipeline reported in Viewpoint The increase in development had in part increased the estimated years to balance from 3.01 last year, to this year s projection of 3.85 years. QUICK MARKET GLANCE Suburban office held down 8th place in the capitalization rate ranks chart and 9th place in the discount rate ranks chart YEAR Year Treasury (Annual Avg.) 10 Year Treasury (January Avg.) Office Suburban Integra Realty Resources With time to equilibrium increasing, tenants are still favored with a beneficial negotiating environment. Healthy discipline in controlling supply will aid this sector. Once demand returns, supply will be in balance. Minneapolis has seen positive absorption in all submarkets over the past year and vacancies are expected to continue to decline. The Indianapolis suburban office submarket is experiencing rising values and declining vacancy rates. Several new suburban office construction projects are planned and will commence after several years of minimal growth. IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 13

16 P PROPERTY SECTOR CYCLES RETAIL BY THE NUMBERS Retail Regional mall capitalization rates decreased to 7.8% from last year s 7.98% and the previous year s 8.46%. Regional mall discount rates also fell to 9.0% from last year s 9.9% and the previous year s 10.3% average. The community mall capitalization rate averages also declined to 7.59% from 8.9% last year and 8.77% the previous year. The community mall discount rate average fell from last year s 10.1% to this year s 9.3% average. The downward trend continues with the neighborhood strip capitalization rate average dropping to 7.69% from last year s 8.38%. The discount rate average for neighborhood strip mall category moved down also, decreasing to 9.3% from last year s average of 10.%. Retail inventory totals nearly.47 billion square feet and the vacancy rate was 7.15%, a slight drop from last year s 7.7%. Mall vacancy rates continue to increase this year s rate is 6.87%, last year s was 6.37% and the previous year s was 6.%. It is expected to take 1.4 years to reach a balance in this property sector; an increase from last year s estimate of less than a year, and the previous year s estimate of 1.35 years. It is estimated that 185 million square feet are in the development pipeline for TABLE 17 RETAIL MARKET CYCLE 14 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

17 TABLE 18 RETAIL MARKET CONDITIONS AND FORECASTS: Central Business Districts and Suburban Market Areas TOTAL FORECAST TOTAL FORECAST GAFO MALL AVG ANNUAL UNDER AVG ANNUAL VALUE TOTAL VALUE EST. SALES VACANCY VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS PER GLA INVENTORY 1 RATE 1 VACANCY 1 RATE TO HOUSEHOLD Per Capita 3 MARKET AREA (SQ. FT.) (%) (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE ($) 005 Atlanta, GA 71,564, ,596,495-1,130,000 4,500, , Austin, TX 18,901, ,11, ,475 4,000,000 3,167, Baltimore, MD 54,69, ,164, ,54 1,06, , Boston, MA 9,960, ,58,30-356, , , Charlotte, NC 31,403, ,855, ,790,000 11,750,000 1,083, Chicago, IL 111,600, ,004, ,350,000 6,300,000 1,830, Cincinnati, OH 44,00, ,945, ,000 3,500,000 1,000, Cleveland, OH,59, ,355,50-460,500 1,13,000 9, Columbia, SC 9,875, , ,000 1,40, , Columbus, OH 48,100, ,95, ,000 3,00, , Dallas, TX 138,077, ,196, ,084,88,680, , Dayton, OH 15,63, ,849, , ,000 17, Denver, CO 81,700, ,147,040 -,63,000 9,000,000,500, Detroit, MI 53,800, ,158, ,000 1,370, , Fort Worth, TX 79,119, ,55, ,309 1,768,000 39, Greenville, SC 1,400, ,748, ,500,000,450, , Hartford, CT 38,46, ,181, ,000 1,078, , Houston, TX 144,50, ,493, ,89,000 4,630,000 1,300, Indianapolis, IN 51,30, ,177, ,945 3,653, , Kansas City, MO/KS 35,175, ,54, ,115,000,500, , Las Vegas, NV 41,80, ,37,7 3.00,500,000 4,100,000 3,300, Long Island, NY 7,500, ,100, ,000 7,00,000 1,800, Los Angeles, CA 60,430, ,79, ,000 9,780, , Louisville, KY 16,448, ,13, ,1 1,000, , Memphis, TN 3,364, ,939, ,831 6,400,000 1,500, Miami, FL 6,330, ,510, ,50 1,441,000 37, Milwaukee, WI 13,196, ,194, ,50 815, , Minneapolis, MN 58,000, ,415, ,500 1,950, , Naples/Ft. Myers, FL 18,919, ,06, ,167,843 8,703,93,083, Nashville, TN 19,950, ,556, ,000,400, , New Jersey, Coastal 41,400, ,979, ,075,000,850, , New Jersey, Northern 48,900, ,835, ,800,000 1,000,000 10,500, Oakland, CA 39,444, ,468, ,000 1,039,000 07, Orange County, CA 36,99, , ,333,5,000 69, Orlando, FL 55,794, ,436, ,961,887, , Philadelphia, PA 54,03, ,97, ,34,000,88, , Phoenix, AZ 110,165, ,717, ,95,000 18,50,000 4,580, Pittsburgh, PA 77,100, ,537, , Portland, OR 40,41, ,913,168-17,815 1,189, , Providence, RI 0,500, ,74, , , , Richmond, VA 37,735, ,053, ,035,000 1,700, , Sacramento, CA 33,60, ,613, ,89,000 4,000, , Salt Lake City, UT 11,781, ,889-10,50 658, , San Antonio, TX 38,80, ,697, ,500 3,445, , San Diego, CA 89,700, ,966, ,46,000,550,000 50, San Francisco, CA 3,55, ,587, ,000 1,141,000 60, San Jose, CA 6,661, , ,000 87, , Sarasota, FL 3,587, ,46, ,90 15,835 75, Seattle, WA 41,600, , ,940 1,05,340 95, St. Louis, MO 5,706, ,544, ,750,64,000 65, Syracuse, NY 11,93, ,0, ,10 1,300,65 3, Tampa, FL 48,700, ,361,800-80,066,438, , Tulsa, OK 17,645, ,866, ,000 4,50,000 1,033, Washington, DC 105,937, ,704, ,773,011 4,83, , Total: Simple Avg: Total: Average: Total: Total: Total: Average: Average: Average: National Avg:,468,76, ,411, ,087, ,40,471 5,894, Weighted Avg: Italicized Inventory, Vacancy, Absorption and Under Construction figures were provided by REIS, Inc GAFO Sales per Household provided by Claritas Data Services GLA per Capita provided by the National Research Bureau/CoStar Group, Inc. GLA per capita information is based on Shopping Center Square Footage per person in the CBSA market area. Italicized numbers are from combinded CBSA's. IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 15

18 PROPERTY SECTORS - RETAIL QUICK MARKET GLANCE Regional malls are again in the 3rd spot in both the cap rate ranking chart and the discount rate chart. Community malls retain 4th place in both, and neighborhood strips hold 5th place in both. Capitalization rates range from a low of 6.0% for a regional mall, to a high of 10.5% for a neighborhood strip center. Los Angeles continues to enjoy a strong retail market, with 005 end of year vacancies estimated at 3.%. Low vacancy rates have pushed rents higher and net absorption remains positive. Cincinnati is expecting an increase in downtown retail activity fueled by the influx of downtown residents moving into condominium and apartment conversions. Activity in the suburban areas remains constant, with a number of new projects in the pipeline in the high demand areas. New suburban projects have been primarily lifestyle centers. Two major retail centers in Memphis totaling 1.6 million square feet opened in the 4th quarter of 005. Both are lifestyle centers and are 100% preleased. The retail market in Seattle has seen vacancies cut in half in the past year, with several major projects completed and several more under way. Kansas City is continuing to experience a tremendous retail development boom in areas of upscale shopping and entertainment. The International Council of Shopping Centers (ICSC) reported that same-store sales for the nation s chain stores are up 3.5% for the year. ICSC also reported that sales per square foot rose.3% for non-anchor tenants. TABLE 19 CAP RATE TRENDS RETAIL PERCENTAGE YEAR Year Treasury (January Avg.) 10 Year Treasury (Annual Avg.) Neighborhood Strip Community Mall Regional Mall 006 Integra Realty Resources 16 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

19 PROPERTY SECTOR CYCLES APARTMENTS BY THE NUMBERS Apartment The urban multifamily capitalization rate average decreased yet again with this year s 7.03%, significantly lower than last year s average of 7.6%. The capitalization rate average for suburban multifamily also continues to drop and is now 6.74% as compared with last year s 7.49%. Again the significantly decreasing cap rates are good news for these two property sectors and they continue to hold the top two spots in the cap rate ranks with suburban multifamily again in the first position. However, the percentage of those surveyed who expect capitalization rates to continue to decrease or stabilize for urban multifamily is less than last year s 83% the figure now is at 70.8%. Suburban multifamily discount rate average is 8.8%, another significant decrease from years past last year it was 9.7% and the previous year it was 10.1%. 64.7% of those surveyed forecast suburban multifamily discount rates to decrease or maintain stability and while that is a significant percentage, it is well below last year s 83.7%. 1.6% of those surveyed projected a declining market. TABLE 0 APARTMENT MARKET CYCLE Cincinnati, OH Columbia, SC Denver, CO Detroit, MI Fort Worth, TX Hartford, CT Indianapolis, IN Kansas City KS/MO Minneapolis, MN Pittsburgh, PA Providence, RI Syracuse, NY Atlanta, GA Charlotte, NC Coastal, NJ Dallas, TX Dayton, OH Long Island, NY Louisville, KY Memphis, TN New York, NY Richmond, VA Sacramento, CA 3 Northern NJ Oakland/Eastbay, CA San Antonio, TX San Diego, CA San Jose, CA San Francisco, CA Tampa, FL Los Angeles, CA Miami, FL Nashville, TN Orange County, CA Philadelphia, PA Washington, D.C Indicates 1st stage within the phase Indicates nd stage within the phase Indicates last stage within the phase Chicago, IL Columbus, OH Greenville, SC Houston, TX Las Vegas, NV Portland, OR Seattle, WA Tulsa, OK Austin, TX Baltimore, MD Boston, MA Naples, FL Orlando, FL 1 Phoenix, AZ Milwaukee, WI 3 *City data compiled using the following sources: IRR Surveys, REIS, and Legg Mason Copyright 006 Integra Realty Resources IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 17

20 TABLE 1 APARTMENT MARKET CONDITIONS AND FORECASTS: Central Business Districts and Suburban Market Areas TOTAL FORECAST TOTAL FORECAST AVG ANNUAL UNDER AVG ANNUAL VALUE TOTAL VALUE EST. VACANCY NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY 1 RATE 1 VACANCY TO MARKET AREA (UNITS) (%) (UNITS) (UNITS) (UNITS) (UNITS) (%) (%) BALANCE Atlanta, GA 340, ,395 4,735 13,400, Austin, TX 135, ,384 1,78 0,000 5, Baltimore, MD 19, , ,115 1, Boston, MA 180, , ,448 3, Charlotte, NC 76, ,334,3 9,584, Chicago, IL,000, ,00 6,000 4,600 1, Cincinnati, OH 106, , Cleveland, OH 110, , , Columbia, SC 7, , , Columbus, OH 118, , ,835 1, Dallas, TX 370, ,764,19 9,508 3, Dayton, OH 3, , Denver, CO 78, ,555 3,36 4,500 7, Detroit, MI 180, ,730 1,970 3,900 1, Greenville, SC 9, , Fort Worth, TX 14, , ,17 1, Hartford, CT 75, , , Houston, TX 56, ,069-1,70 10,400 3, Indianapolis, IN 105, , ,690 1, Kansas City, MO/KS 116, ,61 3,590,014 1, Las Vegas, NV 147, , , Long Island, NY 3, , Los Angeles, CA 743,436.98,175 3,453 1,73, Louisville, KY 4, ,180-1, Memphis, TN 63, , , Miami, FL 119, ,837-1,08 5,815, Milwaukee, WI 95, , , Minneapolis, MN 151, , ,850 1, Naples/Ft. Myers, FL 3, ,435 1, Nashville, TN 6, ,355 1,400 13,33 3, New Jersey, Coastal 7, ,09 0 1, New Jersey, Northern 961, ,913,100 16,400 3, New York, NY 1,970, ,010 1,800 14,000 3, Oakland, CA 144, , ,03, Orange County, CA 186, ,086 1,460 7,14, Orlando, FL 14, ,059 -,583 8,818 1, Philadelphia, PA 195, , ,009 1, Phoenix, AZ 50, ,563,500 3,50 3, Pittsburgh, PA 83, ,3-85 3, Portland, OR 96, ,095 0, Providence, RI 4, ,091-1, Richmond, VA 116, , ,879, Sacramento, CA 94, , ,070 1, Salt Lake City, UT 75, , , San Antonio, TX 17, ,698 1, , San Diego, CA 176, , ,88, San Francisco, CA 135, , ,507 1, San Jose, CA 107, ,775 1,45 4,737 1, Seattle, WA 370, ,310 1,783 6,157 3, St. Louis, MO 118, , ,000 1, Syracuse, NY 16, Tampa, FL 189, , ,48 1, Tulsa, OK 65, ,695 1,000 1,000 1, Washington, DC 361, , ,400 6, Total: Simple Avg: Total: Total: Total: Total: Average: Average: Average: 1,595, ,858 43,03 364,04 97, Weighted Avg: Italicized inventory, vacancy, absorption and under construction figures were provided by REIS, Inc INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

21 PROPERTY SECTORS APARTMENT Vacancy rates have decreased over the last year. This year the vacancy rate is 6.04%. Last year s rate was 6.36% and the previous year s was 5.96%. The forecasted equilibrium is now 1.7 years, a decrease from last year s 1.59 years. The number of apartment units planned for construction is higher than last year s figure. This year it is reported that 364,04 units are in the development pipeline and last year it was 359,95 units. QUICK MARKET GLANCE Both suburban and urban multifamily were again ranked as the top two in the 005 cap rate ranks as well as the 005 discount rate ranks. The number of apartment units in the pipeline has increased slightly since last year the long-term demographics trend still bodes well for this property sector concessions are disappearing and vacancy rates are eroding. TABLE CAP RATE TRENDS APARTMENT Rising mortgage interest rates have priced some potential first time buyers out of the residential market and forced people towards apartment living. The Seattle apartment market has been active in the last year with more than $3 billion in apartments changing hands in the last year triple the level of two years ago. Apartment prices/unit are nearly 60% higher than two years ago. The Houston, Atlanta and Fort Worth markets have experienced a recent influx of people displaced by Hurricanes Katrina and Rita. Both markets have seen a reduction in vacancy rates as well as concessions. There have been projections that as many as 100,000 evacuees will become permanent residents of Houston. Markets with forbidding home values continue to be favorites for investors in this sector. With its consistent shortage of affordable housing in these markets, multifamily has remained strong throughout the recent past. Now that interest rates are beginning to move up, home ownership is becoming more difficult for hopeful homeowners PERCENTAGE YEAR 10 Year Treasury (Annual Avg.) Year Treasury (January Avg.) Suburban Multi-Family Urban Multi-Family 006 Integra Realty Resources IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 19

22 P PROPERTY SECTOR CYCLES INDUSTRIAL BY THE NUMBERS Industrial The manufacturing capitalization rate average declined again and now stands at 8.66% as compared with 9.34% last year. The office/warehouse cap rate average also is falling with a decrease from last year s 8.74% to this year s average of 8.01%. R & D cap rates continue the downward trend with this year s average of 8.41%, well below last year s 9.15%. A significant drop of the cap rate average was experienced in the bulk property class from last year s 8.84% to this year s 8.13%. Discount rates for all industrial property classes also decreased from last year s averages - manufacturing to 10.% from 11% - office/warehouse to 9.6% from 10.4% - R & D to 9.9% from 10.9% - bulk to 9.7% from 10.5% Vacancy rates in the industrial property sector show a promising downward trend with this year s 9.08% average as compared with last year s 9.98% average. However, the estimated years to balance has increased slightly from.59 years to.69 years. TABLE 3 INDUSTRIAL MARKET CYCLE 0 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

23 TABLE 4 INDUSTRIAL MARKET CONDITIONS AND FORECASTS: Central Business Districts and Suburban Market Areas TOTAL FORECAST TOTAL FORECAST AVG ANNUAL UNDER AVG ANNUAL VALUE TOTAL VALUE EST. VACANCY 1 NET ABSORP. CONST. NET ABSORP. CHANGE CHANGE YEARS INVENTORY 1 RATE VACANCY TO MARKET AREA (SQ. FT.) (%) (SQ. FT.) (SQ. FT.) (SQ. FT.) (SQ. FT.) (%) (%) BALANCE Atlanta, GA 545,995, ,630,995 5,373,100 7,00,000 4,400, Austin, TX 30,553, ,508, ,014 1,000, , Baltimore, MD 173,641, ,543,514 1,8,978 7,197,000,07, Boston, MA 107,100, ,114,000 80,000,400, , Charlotte, NC 35,451, ,114,7 367,000 1,510, , Chicago, IL 979,000, ,164,000 34,400,000 6,750,000 1,033, Cincinnati, OH 51,000, ,690,000,000,000 5,500,000 1,500, Cleveland, OH 318,086, ,490,514-1,30,000 8,588,000,47, Columbia, SC 31,00, ,76, , ,000 5, Columbus, OH 170,449, ,986,064 1,631,000 5,35,000 1,73, Dallas, TX 45,337, ,314,038,87,406 9,61,000 3,794, Dayton, OH 68,000, ,748, , , Denver, CO 176,500, ,81,500 1,375,000 6,000,000 1,500, Detroit, MI 301,700, ,166,800 -,660,000 6,140,000,700, Fort Worth, TX 09,679, ,831,510 1,958,336 7,70,000,717, Greenville, SC 86,300, ,43,600 1,700,000 1,9,000 1,933, Hartford, CT 68,94, ,701,079 8,000 05, , Houston, TX 415,700, ,95,500 4,985,000 11,930,000 4,133, Indianapolis, IN 11,700, ,846,500,300,000 14,000,000 4,333, Kansas City, MO/KS 1,480, ,174,555 1,971,658 6,000,000 1,800, Las Vegas, NV 81,994, ,31,44,975,000 15,500,000 3,500, Long Island, NY 49,000, ,33, ,000,075, , Los Angeles, CA 951,740, ,060,185 13,515,85 3,338,000 7,439, Louisville, KY 4,645, ,315,309 1,364,109 1,800, , Memphis, TN 136,007, ,50,566 4,139,417 14,000,000 4,000, Miami, FL 19,800, ,109,500 1,977,850 1,450,000,63, Milwaukee, WI 88,836, ,989, Minneapolis, MN 109,760, ,334,010 1,650, ,000 1,650, Naples, FL 10,70, ,163 9, ,750 35, Nashville, TN 169,900, ,885,500 1,95,000 6,600,000 1,666, New Jersey, Coastal 33,750, ,33, , , , New Jersey, Northern 688,000, ,176,000-5,400,000 1,900,000 38,333, Oakland, CA 3,016, ,060,000 78,000 6,35,000 1,997, Orange County, CA 96,89, ,58,661,15,787 6,60,000,617, Orlando, FL 95,910, ,156, ,43 5,47,000 1,881, Philadelphia, PA 57,59, ,819,86-1,48, ,000-3, Phoenix, AZ 30,600, ,151,500 13,0,000 0,000,000 5,600, Pittsburgh, PA 80,337, ,019, ,54 1,00, , Portland, OR 17,40, ,036,979,74,616 4,801,881,666, Providence, RI 5,50, ,7, , ,000 68, Richmond, VA 7,000, ,030,000 55,000 75, , Sacramento, CA 156,450, ,954,500,359,000 6,500,000 1,933, San Antonio, TX 56,053, ,605, ,750,483, , San Diego, CA 165,750, ,549,500,7,650 13,900,000 3,433, San Francisco, CA 80,68, ,384, ,000 1,035, , San Jose, CA 19,633, ,55,000-1,544,000 87,000,01, Sarasota, FL 13,550, , ,60 63, , Seattle, WA 1,50, ,703,794,060,174 3,79,803 4,000, St. Louis, MO 19,550, ,48,700 55,750 6,509,000 1,94, Syracuse, NY 17,10, ,746,39 50, , , Tampa, FL 59,480, ,731,370 1,97,533 3,35, , Tulsa, OK 57,00, ,404,400-00, , , Washington, DC 135,50, ,663, ,943 3,930,671,571, Total: Simple Avg: Total: Total: Total: Total: Average: Average: Average: 10,347,119, ,561,48 108,635,710 96,750,375 13,44, Weighted Avg: Italicized inventory, vacancy, absorption and under construction figures were provided by REIS, Inc IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 1

24 PROPERTY SECTORS INDUSTRIAL The development pipeline is also moving upward. Last year it was expected that 74 million square feet would move through the pipeline. This year, that figure stands at 97 million square feet. QUICK MARKET GLANCE Office/warehouse remains in 7th place on the cap rate ranks chart. Manufacturing also retains its 11th place as do bulk in 9th position and R & D in 10th place. The industrial categories also kept the same rankings in the average discount rate chart with office/warehouse at 7th place, bulk in 8th place, R & D in 10th, and manufacturing at 11th place, TABLE 5 CAP RATE TRENDS INDUSTRIAL 1 10 The Washington, D. C. metropolitan area is demonstrating great potential for a revival in the flex-industrial sector, having experienced decreases in vacancy and increases in leasing activity. The recent surge in tenant activity is an indicator of strong economic growth in the area. Indianapolis has over 3 million square feet currently under construction, with 7 million square feet planned. Detroit has seen a downturn, as jobs continue to flow overseas. The Coastal New Jersey market appears to be vibrant. Strong economic conditions, growth in the residential sector, lack of available vacant land and new competitive properties, favorable financing rates and escalating prices of industrial properties in Northern New Jersey have contributed to the strength of the industrial market. The Puget Sound industrial market ran full throttle during 005, with 5.5 million square feet of new construction and 7.5 million square feet of absorption. Most activity was concentrated in the South End and Tacoma/Pierce County markets, where demand was driven by rapidly growing cargo volumes through the ports of Tacoma and Seattle. Vacancy fell and rents increased in all submarkets. Naples has experienced high appreciations in value due to the diminishing supply of developable land. 8 PERCENTAGE R&D YEAR Office/Warehouse 10 Year Treasury (January Avg.) 10 Year Treasury (Annual Avg.) Bulk Manufacturing 006 Integra Realty Resources INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

25 PROPERTY SECTOR CYCLES Gaming Historically, gaming companies have not made it into the institutional portfolios on Wall Street. Investors are finally taking a look at an industry that offers strong and stable returns. In many respects, investing in casinos has been a challenge as most lenders were unfamiliar with, if not afraid, of gaming. However the gaming industry has become a global-growth market, leading to a wealth of opportunities on both the debt and equity side. Senator John McCain is the Chairman of the Senate Indian Affairs Committee. He stated, The regulations should be reviewed because the Indian gaming alone has grown to almost 0 billion in annual revenue. Most of the transactions are in cash, which he thinks makes this component of the industry vulnerable to corruption. Where his thoughts go from here remain to be seen as the Indians are not inviting anyone in to advise them in a governmental capacity. Many have hired gaming executives from Nevada and New Jersey to provide the needed expertise to run a casino. There are currently forty-six states that allow legal gaming. During the past ten years there has been an explosion in gaming revenue from all sources Indian, traditional, and online betting. The Nevada Assembly passed Bill 471 which allows the use of wireless handheld gaming devices for casinos with 100 slots or more. The devices will be checked out from the casino cage or at hotel front desks, and can only be used in approved public areas. The choice of games is said to be better than the onfloor slot machines. The average age of the typical visitor to Las Vegas is 49, the average number of nights stayed is 3.6. The Las Vegas hotel occupancy is 9%, and the total airline passengers are 4 million. There are a total of 154,944 hotel rooms in Las Vegas. Total statewide gaming is up 10.% over the first three quarters of 005, or $11,34,31,000. The quality and variety of the non-gaming venues and the overall consumer experience in Las Vegas has become the gold-standard for adult tourist-entertainment. Upping the ante in 005, the Wynn opened to much-deserved fanfare as the most luxurious hotel on the strip. The Mandarin Oriental plans to open nine luxury hotels in the new MGM Mirage Project City Center, and existing facilities continue to expand on the experience that has become Las Vegas s calling card to the world. In other nationwide gaming news, the Illinois Assembly voted to shut down gaming. It now is being voted on by the senate. The chances of HB 190 being passed out of the Rules Committee are remote since the state stands to lose $700 million in annual taxes. Mississippi approved land-based casinos, and Oklahoma is eroding a good portion of Louisiana s gaming market. Maine has approved slot machines. Mississippi s $3 billion gaming industry was the third largest in the United States in 005. The casinos employed 35,000 people and paid nearly $500,000 in state taxes daily. Twelve of the twenty-nine casinos were along the coast of Biloxi and Gulfport. Several suffered extensive damage during Hurricane Katrina. Thirteen casinos were allowed to build on land which may significantly impact the 006 statistics of the tourism industry post-katrina. On the East coast in Atlantic City, the little engine that could is still chugging along. The Tropicana opened The Quarter in November 004 and pulled off the old field of dreams maxim; they built it and they came. By the end of Q3 005, the hotel, retail mixed-use and entertainment expansion to the Tropicana drove an additional $55 million in revenues to this property. These well-planned upgrades are proving that Atlantic City is ripe for fresh new improvements. We have yet to see the numbers, but the Tropicana is poised to join Borgata as the trend setter in this market by creating profit centers other than the gaming floor. The Borgata Hotel continues to be the market leader in Atlantic City. With revenues up by almost $63 million for the first nine months of 005, their decision to expand entertainment venues and provide a Las Vegas-style gaming environment seems prescient. They managed to harness the golden goose of the industry by attracting a new breed of younger gamers. Following the successful launch of the Borgata in 003, many other Atlantic City casinos saw the impact on market share, and shifted into high gear. The Showboat now hosts The House of Blues and showed almost a 0% increase in revenues as a function of property upgrades, hotel expansion and enhancement of the entertainment and non-gaming attractions. In 005, the market leaders in Atlantic City were the operators who made investments in capital upgrades, entertainment and non-gaming attractions. These leaders included the Harrah s organization at Harrah s and the Showboat, the Borgata and Tropicana. IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 3

26 PROPERTY SECTORS - GAMING / LODGING Many industry watchers, including Integra, believe that strategies for success in Atlantic City are taking shape primarily through a property enhancement paradigm shift which is driving a new and younger market share. We expect this will have a long-term positive impact on the East coast s major gaming center for years to come. We see a trend where operators who try to milk a property will continue to lose proportional market share. As of October 005, the Atlantic City gaming industry had increased revenues by about 4% to $4.3 billion while the market leaders saw growth factors in the 1% to 0% range. The losers are the properties that have been sitting idle, which principally includes the three Trump properties, Hilton and the Sands. Caesars opened their new transportation center mid summer 005, and is putting finishing touches on renovations for an early winter 006 opening of the Pier at Caesars, an oceanfront retail venue expected to rival The Caesars in Vegas. They managed to maintain proportional revenue growth at 4% in 005, and IRR predicts that once the Pier opens, Caesars will realize the benefits of their participation in the property enhancement paradigm. There is new competition coming online with gaming soon to open in Philadelphia and New York State. Planners for these new ventures are feeling the pressure from the fresh new look of Atlantic City. Although card parlors and slot machines will attract some share of casual gamblers, they will likely not have the facility scale or revenues to provide non-gaming attractions and entertainment venues needed to attract the new demographic required for the long-term viability of a mature gaming market. In 006, the Borgata will be opening their new 350+ room hotel tower and expanding non-gaming and gaming facilities, which should keep the momentum in Atlantic City at full steam ahead. Many observers are awaiting initiatives from the new management team at Trump now that they have greater access to affordable capital to upgrade these 5 year old properties. The market is rewarding ingenuity with more overnight stays, and more frequent visits. This trend will be difficult to reverse, and Atlantic City will be better for it. Historically the biggest concern over Atlantic City s viability has been the street-side environment. As reported last year, the City s redevelopment efforts have finally begun to demonstrate major improvements both panoramically and from a feet on the street perspective. The redevelopment is successfully driving significant private investment in year round housing, expanding non-casino based retail and restaurant activity and signalling the return of a resort-condominium housing market. While the adjacent smaller communities of Ventnor, Margate, Brigantine, and Longport have been the short-term beneficiaries of housing price appreciation, downtown Atlantic City is at least playing at the table for 006 and beyond. Despite the expansion of gaming competition in the East, Integra predicts that Atlantic City has a firm foothold in establishing itself as a destination resort with a solid future. PROPERTY SECTOR CYCLES UP, UP AND AWAY, THE LODGING INDUSTRY IS SOARING AGAIN Lodging The robust and unprecedented performance in National RevPAR growth experienced in 004 (7.8%) will likely be matched in 005. The fact that supply growth is down has had a positive effect on occupancy. Rate growth was also experienced resulting in strong fundamentals. Buyers have taken notice of the rebound as evidenced by an approximate tripling in transaction volume. Mergers and acquisitions are largely responsible with many portfolios selling in 005, including the LaQuinta, Prime, Wyndham and Amerisuites sales. Lenders have joined in the frenzy, acknowledging by the low loan spreads that hotels are currently a favored class of investment. The hotel business is bifurcated into the haves and the have nots. Newer, major metro market hotels branded by one of the big three (Hilton, Marriott, or Intercontinental) are experiencing low cap rates and loan spreads. Older, non core brand and exterior entry properties are often still operating in a poor competitive environment. According to Smith Travel Research (STR), in the first nine months of 005, national lodging industry performance has continued the strong upward trend which began in 004. Industry occupancy reached 64.5% year to date September 005. That percentage is up.7% from the same period in 004. Nationally the average room rate has increased 5.1% to $ Also revenue per available room improved 8.0% to $ The industry supply change was 0.4% and the demand change was 3.1%. 4 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

27 PROPERTY SECTORS LODGING The Travel Industry Association of America (TIA) forecasted that Americans will take 79.4 million person trips during September, October, and November. A person trip is when one person travels 50 miles or more one way from home. That would be a decrease of 1.1% from the fall of 004. The TIA expects leisure travel volume to decline by 1.6% this fall to slightly over 5 million person trips. Declines are blamed on gasoline prices, Hurricane Katrina, a weak job outlook, and shaky consumer confidence. Dr. Cook delivered the Travel Forecast at the recent marketing outlook forum, and told delegates that travel expenditures are expected to rise by 8% in 005. The TIA projects leisure travel will increase by 4% in 005 and % in 006. Business travel is expected to record a 1% growth rate in 005 and 1-% in 006. Limited supply growth combined with demolition of obsolete product is likely to result in a near term future which is positive from the perspective of market fundamentals. Continued demand growth should result in real occupancy gains, allowing operators in strongly performing markets to drive Average Daily Rates through enhanced yield management, a lengthening booking pace, and continued superior control of distribution channels. To this development most operators will respond, it s about time! Despite an almost giddy demeanor of successful hoteliers, there is plenty of uncertainty on the horizon. Some of these items include: rising energy costs; interest rates; amenity creep; transportation issues (airline profitability, gasoline costs); and bird flu. Unquestionably, the dynamics of the market continue. The International Air Transportation Association (IATA) indicates that year-to-date September international passenger travel was up by 8.3%. By September, the load factor reached 75.6%. The Revenue Passenger Kilometers (RPK) measure showed North American air travel up 9.9% through September 005. Projected passenger RPK growth through 009 shows a 4.6% increase in North America. Pricewaterhouse Coopers have revised their performance projections in the October Forecast Alert. The impact of Katrina and other macroeconomic variables suggest year end occupancy at 63.% (up 1.8% from 004), and ADR up 5.% to $ Projected RevPAR is forecast at $57.31 up by 8.3% from 004. Demand is forecast for 005 at a growth rate of 3.5%. This is above the average compound annual growth rate (ACGR) as measured by STR between 1989 and 005 of 1.9%. The effect of this level of demand growth is exacerbated by the minute amount of supply growth, projected by PwC at 0.5%. The ACGR of historic supply per STR is.1%. The future supply pipeline is limited which could result in rate growth opportunities in some markets. PwC projects demand growth of 3.1% in 006, and.6% in 007. This will likely result in increasing occupancies over the next few years as supply is projected at 1.5% and 1.8% respectively. The impact of Katrina has also been analyzed by STR. Randy Smith reported in his recent presentation to the International Society of Hospitality Consultants (ISHC) that lower room supply and increased demand from aid workers and displaced residents will actually result in demand and RevPAR increases. The effect of Katrina, and other macroeconomic variables on construction costs, transportation, and petroleum based product costs, has resulted in a drop of 4.4% in lodging construction. Projects in the Pre-planning stage have fallen by 16.9%. Overall, the total development pipeline is down by 3.5% as of August 005. This data was compiled by STR in their Pipeline report. IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 5

28 MEXICAN MARKET UPDATE As in the USA; the market conditions in Mexico are tightly linked to the country s overall economic condition, interest rates, the banking industry and the government s programs and policies toward mortgage lending. In addition, Mexico s economy is heavily dependant on the conditions of the American economy and the world oil market. At the end of 005, annual inflation is estimated at approximately 3.8%, which is the lowest since GNP for 005 appears to have grown only 3.1%, which is below the government s forecast and below the 004 growth rate that was over 5%. Despite being an election year, the economic outlook for 006 seems to indicate a growth rate of 3.5% and an inflation rate of 3.6%. Oil exports represent the largest single source of income in Mexico. With oil prices quoted in the mid-to-high $50 s, the economy and dollar reserves have strengthened to a point that Mexico has pre-paid its 006 foreign debt. The moderate growth expectations for the American economy in 006 will affect Mexico s growth rate as 4% of the industrial output is directly attributable to the USA, especially the auto industry. During 005, Mexico produced approximately 1.5 million vehicles of which 7% are exported, mainly to the USA. Considering all of these factors, it is clear that the Mexican economy has continued gaining momentum. Mexico has continued to attract direct foreign investment (DFI). DFI as of the end of 005 is estimated at $14 billion as compared to $16.6 billion in 004. Many US credit unions, pension and investment funds have made significant investments in Mexico where the return on their investment is considerably greater than in the USA. In the past, the lack of a competitive credit market had slowed the Mexican economy, especially the real estate market. Just a couple of years ago, in 003, mortgage interest rates were at 18% and loans were extremely difficult to get. Government-financed, social interest, housing loans were the only funds available in the 8% range. Now, the credit perspective is quite different as non-traditional lenders, such as Savings & Loans (SAPS), Sociedades Financieras de Objeto Limitado (SOFOLES), Credit Unions, Pension Funds, Leasing companies and others are providing higher percentages of the funding for industry, commerce and real estate. In 1994, the credit extended by these non-traditional lenders represented only 36% (about $33.7 billion) of the total credit extended in the country. By 004, the non-traditional lenders accounted for 67% of the total credit market by lending over $1,400 billion dollars. These non-traditional lenders have shifted the competitive landscape so that traditional lenders are now forced to be more competitive in their lending. After years of weak performance, the real-estate market has improved as access to credit improved. For example, the annual mortgage loan approvals increased from 15,571 to 9,318 between 003 and 005. The middle class was ignored in terms of credit, says Jesus Valdes Aguilar, purchasing director at Pulte Homes Mexico. Today, conventional mortgages can be obtained from 8% to 10%, depending on the individual s credit rating. SOFOLES loans for low income housing are available for between 7% and 8%. The Mexican government announced last April that mortgage insurance would be available to encourage financial institutions to approve more loans on even better terms, giving banks the incentive to cut down-payment requirements to 10% from 0%. Banks will also be able to buy and sell mortgage portfolios in the open market. Another major step was the availability of Title Insurance in Mexico, which boosted the confidence of foreign buyers, investors and developers. The Office market, especially in Mexico City, Monterrey and Guadalajara is very strong. The Mexico City market, comprised by nine submarkets, has an inventory of approximately 5 million square meters (about 700 buildings), making it the largest in Latin America. During 004, 13 Class A+ and 6 Class A buildings were completed, which added to the inventory another 08,000 square meters. Furthermore, another 19 buildings have been completed during 005. Mexico City s market is recovering from the oversupply condition which had affected it in the past. Class A buildings vacancy rates finally dropped from 0% to 16% as of the second quarter of 005. Top companies, such as Met-Life and KPGM took space at recently finished buildings. There were also large acquisitions of office space, including the purchase of 30% of the Torre Mayor, the tallest building of Mexico City, by a European investing firm. In general, the demand for office space has remained stable. Leasing is still the predominant form of space take off, which represents close to 80% of the absorption. Total net absorption for the office market in 004 was 114,47 square meters in Mexico City. Average Lease Rates for Class A+ are from $1.00 to $6.00 per square meter monthly depending on the submarket, and Class A buildings are leasing from $19.00 to $3.00 per square meter per month. Asking sale prices range from $1,800 to $,00 per square meter on Class A+ and A buildings and $1,500 to $1,650 for Class B buildings. The vacancy rate at the closing of 005, combining and averaging all the 9 submarkets, dropped to 16%. Mexico s Industrial Market has reacted positively to the 4.3% growth of industrial production during 004. The country s main industrial clusters have performed on an upward trend. During 004, Mexico City s nine submarkets saw important variations in the supply of newly built industrial space, with increases that went from 45% to 119% compared to 00. Mexico City s Commercial-Retail Market experienced one of the most dynamic years of construction of shopping centers. The market is composed of 885 retail stores with a total area of 1.8 million square meters of retail space. At the end of 004 there were nine new shopping centers under construction, adding close to 30,000 square meters of retail space during INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

29 D DEMOGRAPHIC & ECONOMIC TRENDS This section provides a detailed look into the demand components of the United States real estate market as segregated by Metropolitan Statistical Area (MSA). Tracking growth trends in population, employment, households, and household income allows for the identification of markets which are on the verge of expansion or decline. This information is vitally important for prospective real estate investors to possess. Through our analysis, we identify what we consider the best markets with favorable population and employment growth trends. However, potential investors should be cautious: each individual market has unique attributes, opportunity areas, and potential pitfalls. It is therefore crucial to have an advisor who has a handle on the local market. Our local IRR representatives thoroughly know their local markets and can provide meaningful information and advice about area dynamics. Because employment sectors perform differently as the economy fluctuates, we provide specific information on subsets of employment. This section covers information found in the tables on the following pages or on-line at NPA Data Services of Washington, DC provided the demographic and economic data for all the tables in this section. STRONG MSA S Judging whether or not a particular MSA has a greater potential for a strong economic future can sometimes be tricky and difficult to decipher. One measure of economic potential is to look at multiple categories of growth and see which markets are performing well across the board. Our analysis of MSA s investigates trends in population growth, household growth, average household income growth, and total employment growth and averages these factors to determine an absolute change rate as well as a percentage change rate. Those MSA s performing well with both of these ratings deserve specific attention as they are clearly hot markets. Last year, Phoenix, Atlanta, and Denver made both top 10 tables for annual growth. This year, Atlanta and Denver are back along with two newcomers from the Lone Star State: Dallas and Houston. Dallas - Dallas came from farther behind than any MSA to break into the top 10 in both percentage change and absolute change. Last year, Dallas ranked number 1 in both percentage change and absolute change. This year, they catapulted to an elite level, ranked number in percentage change and number 1 in absolute change. Part of Dallas rise from last year may be attributed to the Dallas MSA and Fort Worth MSA combining this year to form one statistical area. Atlanta - This consistent performer has become a regular on these tables. Atlanta improved to number 3 in percentage change while dropping one spot from last year to number 4 in absolute change. Excellent employment growth is helping to keep this MSA near the top. Houston - Like their neighboring Texas metropolis, Houston came roaring to the top of our tables. After finishing ranked number 0 in both percentage change and absolute change last year, Houston now ranks number 5 in percentage change and number in absolute change. TABLE 6 TOP 10 ANNUAL GROWTH AREAS BY PERCENTAGE CHANGE Annual Growth Rate Absolute Annual Growth '05-' '00-'05 '05-'10 '00-'05 Rank Rank Rank MSA Rank Rank 1 13 Austin, TX Dallas-Ft. Worth, TX Atlanta, GA Naples, FL Houston, TX Denver, CO Orlando, FL Sarasota, FL Las Vegas, NV Nashville, TN Source: NPA Data Services, Inc., compiled by IRR TABLE 7 TOP 10 ANNUAL GROWTH AREAS BY ABSOLUTE CHANGE Annual Growth Rate Annual Percentage Growth '05-' '00-'05 '05-'10 '00-'05 Rank Rank Rank MSA Rank Rank Dallas-Ft. Worth, TX Houston, TX Washington, DC Atlanta, GA Los Angeles, CA Denver, CO Miami, FL Seattle, WA San Diego, CA Phoenix, AZ 11 3 Source: NPA Data Services, Inc., compiled by IRR IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 7

30 DEMOGRAPHIC & ECONOMIC TRENDS Denver - Denver is another repeat visitor to this analysis, moving up this year to number 6 in both percentage change and absolute change from number 8 in both of these categories last year. Rapid development in suburban Denver is helping to bolster these figures. In addition to these two tables, these MSA s ranked in the top 10 in the following population/employment growth tables: Dallas -.7% population growth;.49% household growth; 3.84% average household income growth; 3.84% retail employment growth; 4.47% FIRE employment growth. Atlanta -.94% population growth; 3.10% household growth; 4.31% total employment growth; 5.35% wholesale and retail employment growth; 6.30% wholesale employment growth; 4.85% retail employment growth; 4.75% services employment growth;.91% contract construction employment growth. Houston - This year Houston only made the top 10 on average household income growth at 3.90%. Denver -.75% population growth;.85% household growth; 3.91% total employment growth; 4.38% wholesale and retail employment growth; 4.40% wholesale employment growth; 4.37% retail employment growth; 4.80% FIRE employment growth; 4.17% services employment growth;.69% contract construction employment growth. POPULATION, HOUSEHOLD GROWTH AND AVERAGE HOUSEHOLD INCOME GROWTH For the fourth year in a row, Naples grabs the top spot for population and household growth, but for the first time in four years, Orlando did not finish #. This year that ranking in both categories belongs to Las Vegas. Overall, the top 10 average for population growth jumped to 3.6% from.53% a year ago. Naples and Las Vegas are well above the top 10 average with remarkably high population growth rates of 5.5% and 4.65% respectively. Las Vegas nearly doubled its population growth rate, as its growth rate last year was.60%. Naples remains a commanding number 1 in household growth, raising its growth rate to 5.49% from 3.57% last year. Las Vegas is pushing the 5% barrier with its growth rate currently at 4.89%, up dramatically from its rate of.85% last year. Overall, the top 10 average in this category increased to 3.46% from last year s rate of.77%. San Jose came from a ranking of 54 last year to take over the number 1 position for average household income growth with an average of 4.03% (up from 1.89% last year), just edging out other newcomer Charlotte, finishing with an average of 4.0% (up from.8%). Austin improved from number 9 to number 5, increasing its growth rate from.68% to 3.84%. Baltimore dropped positions from number 7 to number 10 despite increasing its growth rate from.97% to 3.67%. Average household income continues to trend upward. The top 10 average for household growth increased to 3.84%, up from 3.16% last year and.36% two years ago. The average total for MSA s climbed, up to 3.35% compared to.51% last year. EMPLOYMENT GROWTH Overall employment growth continues to show positive patterns nationwide. The IRR top 10 average shows a growth rate of 4.6%, up from 3.70% last year. The IRR MSA average exhibits a growth rate of.63% across all markets, up from last year s.41%. Naples takes over the lead in employment growth, moving up from the number spot a year ago with an annual growth rate of 6.4%. Las Vegas finishes a close second with an annual growth rate of 6.17%. Austin, Orlando, and Phoenix round out the top 5, with Orlando falling from the number 1 position. Denver is the only newcomer to the Top 10 list, helping to explain Denver s overall showing as a strong market this year. Salt Lake City drops off the Top 10 list this year, ranking number 1. FIRE EMPLOYMENT GROWTH Employment in finance, insurance, and real estate jumped significantly this year. The IRR Top 10 Average for annual growth increased again this year to 5.47% from last year s 4.15%. The IRR MSA Average also rose, up to 3.36% from last year s growth rate of.7%. Las Vegas leads the way with an impressive charge to the top, displaying an eye-popping 9.01% annual growth rate this year. On the whole, this year s top performing markets easily outpaced last year s markets. To illustrate, the growth rate of last year s top-finisher Orlando (4.58%), would secure only a 9th place finish this year. In fact, all top 5 markets this year grew at rates above 5%, showing an impressive growth pattern for the finance, insurance, and real estate sectors. SERVICES EMPLOYMENT MSA s in warmer climates dominate the services employment sector, with only 10th place Denver bucking the pattern. Naples finishes at the top with an impressive 6.89% growth rate. Las Vegas, Orlando, and Sarasota also show annual growth rates above 5%, finishing with 5.5%, 5.30%, and 5.% growth rates respectively. The IRR top 10 average increased sharply from last year s 3.98% to this year s 5.00% showing. 8 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

31 TABLE 8 DEMOGRAPHIC & ECONOMIC TRENDS TOTAL EMPLOYMENT GROWTH By Absolute Annual Growth and Annual Growth Rate Percentage 160 Los Angeles, CA Dallas-Ft.Worth, TX Atlanta, GA LEGEND Washington, DC 100 New York, NY Houston, TX Miami, FL Phoenix, AZ 90 Chicago, IL Absolute Annual Growth (000 s) Denver, CO Miami, FL Washington, DC Minneapolis/St. Paul, MN San Diego, CA Seattle, WA Tampa, FL Los Angeles, CA San Francisco, CA Houston, TX Boston, MA Philadelphia, PA Phoenix, AZ Atlanta, GA Sacramento, CA San Diego, CA Portland, OR Detroit, MI Baltimore, MD Las Vegas, NV Dallas-Ft, Worth, TX Orlando, FL Austin, TX Las Vegas, NV Minneapolis, MN Omaha, NE Milwaukee, WI Philadelphia, PA Denver, CO Memphis, TN Richmond, VA Baltimore, MD Austin, TX New Orleans, LA Columbia, SC San Antonio, TX Cleveland, Seattle, OH WA Hartford,CT Kansas City, KS/MO Columbus, OH Tulsa, OK Portland, OR Pittsburgh, PA St. Louis, MO Nashville, TN Cincinnati, OH Providence, RI Charlotte, NC Salt Lake City, UT Des Moines, IASarasota, FL Providence, RI New Orleans, LA Dayton, OH Indianapolis, IN Omaha, NE Richmond, VA Chicago, IL Columbia, Syracuse, SCNY Atlantic City, NJ Memphis, TN Des Moines, IA Pittsburgh, PA Hartford, CT Atlantic City, NJ Dayton, OH Tulsa, OK Syracuse, NY Milwaukee, WI Boston, MA Detroit, MI Louisville, KY Cleveland, OH San Francisco, CA St. Louis, MO Kansas City, KS/MO San Jose, CA Sacramento, Charlotte, CA NC Cincinnati, OH Tampa, Columbus, FL San Antonio, TX OH Orlando, FL Indianapolis, IN New York, NY Louisville, KY Nashville, TN Salt Lake City, UT Sarasota, FL Naples, FL Naples, FL -0 San Jose, CA % -1.0% -0.5% 0.0% 0.5% 1.0% 1.5%.0%.5% 3.0% 3.5% 4.0% 4.5% 5.0% 6.0% 7.0% Annual Growth Rate (%) SOURCE: NPA Data Services, Inc; compiled by IRR IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 9

32 DEMOGRAPHIC & ECONOMIC TRENDS TABLE 9 DEMOGRAPHIC AND ECONOMIC TRENDS Mid Year 005 POPULATION 005 Annual Growth Rate Absolute Annual Growth Current '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 '00-'05 '00-'05 MSAs (000's) Rank (%) Rank (%) Rank (000's) Rank (000's) HOUSEHOLDS 005 Annual Growth Rate Absolute Annual Growth Current '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 '00-'05 '00-'05 (000's) Rank (%) Rank (%) Rank (000's) Rank (000's) Atlanta, GA 4, , Atlantic City, NJ Austin, TX 1, Baltimore, MD, , Boston, MA 4, , Charlotte, NC 1, Chicago, IL 9, , Cincinnati, OH, Cleveland, OH, Columbia, SC Columbus, OH 1, Dallas-Ft. Worth, TX 5, , Dayton, OH Denver, CO, Des Moines, IA Detroit, MI 4, , Hartford, CT 1, Houston, TX 5, , Indianapolis, IN 1, Kansas City, KS/MO 1, Las Vegas, NV 1, Los Angeles, CA 13, , Louisville, KY 1, Memphis, TN 1, Miami, FL 5, , Milwaukee, WI 1, Minneapolis, MN 3, , Naples, FL Nashville, TN 1, New Orleans, LA 1, New York, NY 18, , Omaha, NE Orlando, FL 1, Philadelphia, PA 5, , Phoenix, AZ 3, , Pittsburgh, PA, Portland, OR, Providence, RI 1, Richmond, VA 1, Sacramento, CA, St. Louis, MO, , Salt Lake City, UT 1, San Antonio, TX 1, San Diego, CA, , San Francisco, CA 4, , San Jose, CA 1, Sarasota, FL Seattle, WA 3, , Syracuse, NY Tampa, FL, , Tulsa, OK Washington, DC 5, , Average INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

33 TABLE 9 continued DEMOGRAPHIC & ECONOMIC TRENDS DEMOGRAPHIC AND ECONOMIC TRENDS Mid Year 005 AVERAGE HOUSEHOLD INCOME 005 Annual Growth Rate Absolute Annual Growth Current '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 '00-'05 '00-'05 ($) Rank (%) Rank (%) Rank ($) Rank ($) TOTAL EMPLOYMENT 005 Annual Growth Rate Absolute Annual Growth Current '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 '00-'05 '00-'05 (000's) Rank (%) Rank (%) Rank (000's) Rank (000's) MSA s 91, , Atlanta, GA 81, Atlantic City, NJ 83, Austin, TX 96, , Baltimore, MD 113, , Boston, MA 85, Charlotte, NC 96, , Chicago, IL 84, , Cincinnati, OH 8, , Cleveland, OH 74, Columbia, SC 8, , Columbus, OH 9, , Dallas-Ft. Worth, TX 75, Dayton, OH 101, , Denver, CO 83, Des Moines, IA 9, , Detroit, MI 96, Hartford, CT 98, , Houston, TX 85, , Indianapolis, IN 83, , Kansas City, KS/MO 81, , Las Vegas, NV 100, , Los Angeles, CA 80, Louisville, KY 84, Memphis, TN 86, , Miami, FL 88, , Milwaukee, WI 100, , Minneapolis, MN 10, Naples, FL 85, Nashville, TN 79, New Orleans, LA 111, , New York, NY 85, Omaha, NE 7, , Orlando, FL 97, , Philadelphia, PA 79, , Phoenix, AZ 79, , Pittsburgh, PA 8, , Portland, OR 80, Providence, RI 84, Richmond, VA 83, , Sacramento, CA 85, , St. Louis, MO 90, Salt Lake City, UT 76, , San Antonio, TX 101, , San Diego, CA 16, , San Francisco, CA 140, , San Jose, CA 8, Sarasota, FL 99, , Seattle, WA 71, Syracuse, NY 69, , Tampa, FL 78, Tulsa, OK 117, , Washington, DC Average Source: NPA Data Services, Inc., compiled by IRR IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 31

34 APPENDIX For additional industry trend charts, check on-line at TABLE 30 POPULATION GROWTH Top 10 Markets Annual Growth Rate Absolute Annual Growth '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 Rank (%) Rank (%) MSA Rank (000's) Naples, FL Las Vegas, NV Austin, TX Phoenix, AZ Orlando, FL Atlanta, GA Denver, CO Sarasota, FL Tampa, FL Dallas-Ft. Worth, TX IRR Top 10 Average IRR MSA Average Source: NPA Data Services, Inc., compiled by IRR TABLE 31 AVERAGE HOUSEHOLD INCOME GROWTH Top 10 Markets Annual Growth Rate Absolute Annual Growth '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 Rank (%) Rank (%) MSA Rank ($ s) San Jose, CA Charlotte, NC Houston, TX Nashville, TN Austin, TX Dallas-Ft. Worth, TX Boston, MA San Francisco, CA Memphis, TN Baltimore, MD IRR Top 10 Average IRR MSA Average Source: NPA Data Services, Inc., compiled by IRR TABLE 3 HOUSEHOLD GROWTH Top 10 Markets Annual Growth Rate Absolute Annual Growth '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 Rank (%) Rank (%) MSA Rank (000's) Naples, FL Las Vegas, NV Austin, TX Phoenix, AZ Orlando, FL Atlanta, GA Sarasota, FL Denver, CO Tampa, FL Dallas-Ft. Worth, TX IRR Top 10 Average IRR MSA Average Source: NPA Data Services, Inc., compiled by IRR TABLE 33 TOTAL EMPLOYMENT GROWTH Top 10 Markets Annual Growth Rate Absolute Annual Growth '05-'10 '05-'10 '00-'05 '00-'05 '05-'10 '05-'10 Rank (%) Rank (%) MSA Rank (000's) Naples, FL Las Vegas, NV Austin, TX Orlando, FL Phoenix, AZ Sarasota, FL Atlanta, GA Denver, CO Tampa, FL Sacramento, CA IRR Top 10 Average IRR MSA Average Source: NPA Data Services, Inc., compiled by IRR 3 INTEGRA REALTY RESOURCES, INC. IRR-VIEWPOINT 006

35 Every effort has been made in this publication to provide accurate information regarding the subject matters covered. Provided in this publication are the analyses and opinions derived from the available data of the members of Integra Realty Resources, Inc. and other reputable services. While the available data is presumed to be accurate, this publication is distributed with the understanding that it does not render legal, accounting, appraisal, counseling, investment or other professional advice. Should such services or other expert assistance be needed, it is recommended that the services of a competent person, having access to the details of the situation, be employed. Copyright February 006, Integra Realty Resources, Inc. IRR-Viewpoint 006 Editor: Kevin K. Nunnink, MAI 1133 Avenue of the Americas, Suite 730 New York, NY (1) , ext. 01 IRR-VIEWPOINT 006 INTEGRA REALTY RESOURCES, INC. 33