OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN

OFFICE MARKET REPORT: 4Q OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN Prepared by: Galen M. Raza-Self Real Estate Market Research PNC Real Estate 249 Fifth Avenue Pittsburgh, PA 15222 (412) 762-1847 Galen.Raza-Self@pnc.com ECONOMY: Strong job growth in October and November buoyed 4Q13 s total to 586,000 (195,300/month) and lowered the unemployment rate 50 bps to 6.7%. However, office-using employment slowed during the quarter. PNC Economics Group 2014 forecast includes average monthly job growth of close to 200,000 and a 6.2% unemployment rate by year-end. ABSORPTION: Overall 4Q13 net absorption of 20.6 msf was slightly lower than last quarter s five-year high of 21.0 msf. By class, demand was balanced between Class A & B space, while suburban accounted for 90% of the quarter s demand. With the exception of New York City and Chicago, the nation s largest office markets experienced higher demand than a year ago. SUPPLY: Construction activity remains near historical lows, rising incrementally from 83.8 msf last quarter to 86.0 msf with sustainable (LEED) projects accounting for an increasing share. Development activity remains concentrated in major markets, though medium-sized ones, such as San Diego and Raleigh/Durham are witnessing higher levels. Speculative office construction continues to be clustered in New York City, San Francisco, and Austin. VACANCY: As of year-end, the national office vacancy rate had decreased 17 bps sequentially and 54 bps annually to 12.1%, while Class A improved 7 bps and 65 bps, respectively. Atlanta and Northern New Jersey improved by 90 bps; however, their rates remain elevated at 15.0% and 14.5%, respectively. RENTS: Nationally, rents accelerated from 3Q13 by 1.4% ($0.32/sf) and 2.4% ($0.57/sf) annually to $23.69/sf, while Class A rents rose 0.9% to $28.81/sf over these periods. New York City rents registered the largest gain, with the average rent increasing 5.8% from a year ago to $52.35/sf. Washington, DC was the only major market that experienced a decline, as the average rent softened 0.5% from a year ago to $34.21/sf. CAPITALIZATION RATES: Office volume $35.6 billion in 4Q13, a level unseen since 3Q07 s $43.4 billion. Sequentially, average cap rates tightened slightly, with CBD easing 8 bps to 6.1% and suburban rising 24 bps to 7.1%. DISTRESS: Outstanding distressed office balances dropped by $2.8 billion to $32.5 billion. However, office remained the most distressed segment, accounting for 22.6% of the $143.6 billion in total outstanding distress. PNC is a registered service mark of The PNC Financial Services Group, Inc. This document is for general informational purposes only and is not intended as specific advice or recommendations. The information contained herein is gathered from public sources believed by PNC to be accurate and reliable at time of publication, but neither PNC nor any of its affiliates is providing any guaranty or warranty as to the accuracy, completeness or reliability of that information or of the conclusions presented in this document. In addition, markets do change. Opinions expressed herein are subject to change without notice. The information set forth herein does not constitute legal, tax or accounting advice. You should obtain such advice from your own counsel or accountant. Any reliance upon the information provided herein is solely and exclusively at your own risk. 2014. The PNC Financial Services Group, Inc. All rights reserved.

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 2 ECONOMY This section summarizes changes in the national economy and discusses employment trends that influence office space demand. EMPLOYMENT The Bureau of Economic Analysis second estimate of 4Q13 GDP indicated that the economy grew at an annualized rate of 2.4%. This was notably lower than its advance estimate of 3.2%, with the difference attributable to smaller increases in personal consumption expenditures, exports, and government spending. 600 400 200 0-200 12% 10% 8% 6% Although December payroll gains were weak at 75,000, total employment during the quarter increased by 586,000 (195,300/month) and the unemployment rate fell 50 bps to 6.7%. -400-600 -800-1,000 Monthly Office Jobs (L) Total Monthly Nonfarm Jobs (L) Unemployment Rate (R) 2000 2001 2002 2003 2004 2005 2006 2007 Office-using job growth continued to slow, declining from 3Q13 s 138,000 (46,000/month) Source: Moody's Analytics; PNC Real Estate Market Research to 133,000 (44,300/month) in 4Q13. As one of the primary demand drivers for office space, Professional/Business Services remained the largest and quickest growing office-using segment during 4Q13, adding 130,000 jobs (43,300/month), which equates to a 3.7% annualized growth rate. The Information sector lost 3,000 (1,000/month), due mainly to the motion picture and sound recording industries large December decline. Hiring in the Financial Activities sector added 6,000 jobs (2,000/month), but was tempered by commercial bank headcount reductions. PNC Economics Group s 2014 forecast calls for 2.9% real GDP growth, average monthly job growth of close to 200,000, and a 6.2% unemployment rate by year-end 2014. 4% 2% 0%

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 3 OFFICE MARKET TRENDS As noted in the Economy Section, office-using employment growth has translated into improving office market fundamentals. Please refer to the Appendix for additional data on PNC s 22 Footprint Markets, which represent approximately 34% of the nation s office space and include five of the nation s largest office markets. ABSORPTION Positive leasing momentum from energy and technology firms in Boston, Houston, New York City, San Diego, San Francisco, and Seattle carried into 4Q13. During 4Q13, net absorption was 20.6 msf, down slightly from the prior quarter s five-year high of 21.0 msf. By class, demand was more balanced, with Class A space accounting for about 45.0% space demand, compared to nearly 75.0% in the prior quarter. All 10 of the nation s largest office markets experienced higher demand, relative to a year ago. Texas markets led the way, with net absorption in Houston and Dallas/Ft Worth increasing solidly, up 5.0 msf and 4.5 msf, respectively. New York City and Washington, DC were the exceptions with small gains of 0.2 msf and 0.7 msf, respectively. Collectively, the top 10 markets had 28.4 msf of net absorption and accounted for 35.4% of leasing in. As a percent of existing inventory, absorption averaged 0.8% nationally and 0.7% among PNC s 22 footprint markets. Several of the Bank s small/medium-sized markets achieved sizable improvements of 1.3%, including Charlotte, Columbus, and Raleigh/Durham, while Dayton and Milwaukee trailed at -0.3% and -0.1%, respectively. msf 30 25 20 15 10 5 0-5 -10-15 -20-25 New York City Washington, DC Chicago Los Angeles Philadelphia Boston N. New Jersey Dallas/Ft Worth Atlanta Houston (1.0) (0.1) 0.2 0.6 0.7 0.3 OFFICE SPACE ABSORPTION 2.6 2.9 2.0 1.8 2.3 3.0 3.8 3.6 3.2 Overall Net Absorption Class A Net Absorption Overall Delivery Class A Delivery 4Q13 vs. 4Q12 YTD NET ABSORPTION 10 LARGEST MARKETS 4.5 4.0 4.5 4Q13 4Q12 5.0 5.2 (2.0) 0.0 2.0 4.0 6.0

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 4 SUPPLY Nationally, office pipeline activity remained near historic lows. Sequentially, construction activity increased incrementally from 83.8 msf to 86.9 msf, maintaining the 0.8% supply expansion ratio. Collectively, the 24 markets highlighted in the adjacent table account for nearly 85% of the office construction underway in the nation. Markets eclipsing the 1.0 msf mark for the first time this cycle included Northern New Jersey, San Diego, and Raleigh/Durham, while Philadelphia and Los Angeles rejoined the group. During 4Q13, the largest office project getting underway was a 1.1 msf, 37-story, LEED Gold designed office tower that will be part of Amazon s 3.3 msf corporate campus planned in Seattle s Denny Triangle neighborhood. Other noteworthy office projects moving ahead include: BHP Billiton Petroleum s 600,000 sf, 30-story, LEED Gold office tower in Houston s Uptown District, Gulch Crossing, a 205,000 sf mid-rise in Nashville, Sempra Energy s new 300,000 sf, 16-story headquarters in San Diego s East Village, and MetLife s new 427,000 sf global technology & operations center in Cary. CONSTRUCTION ACTIVITY (> 1.0 MSF) Market # Bldgs U/C (msf) % of Inv. % Leased Houston 71 12.0 4.4% 73.7% New York City 8 8.7 1.6% 48.3% Boston 38 7.0 1.8% 77.8% Washington, DC 30 5.1 1.1% 59.4% Dallas/Ft Worth 67 4.8 1.4% 59.9% San Francisco 12 4.1 2.5% 38.9% Seattle/Puget Sound 8 2.7 1.4% 75.4% Minneapolis 11 2.6 1.4% 90.8% South Bay/San Jose 19 2.6 2.4% 86.3% N. New Jersey 18 2.4 0.7% 76.8% Pittsburgh 17 2.2 1.8% 66.1% Atlanta 12 2.0 0.7% 82.9% Austin 36 1.9 2.2% 29.4% Denver 23 1.8 1.0% 46.6% San Diego - 1.7 2.4% - Westchester/S. CT 12 1.6 1.0% 84.8% Chicago 7 1.5 0.3% 46.3% Baltimore - 1.4 1.9% - Orange County (CA) 8 1.4 0.9% 93.9% Salt Lake City 12 1.3 1.5% 72.4% Raleigh/Durham 15 1.2 1.4% 74.0% Philadelphia - 1.1 1.1% - Los Angeles - 1.1 0.6% - Nashville 8 1.0 1.3% 69.2% US TOTAL 870 86.9 80.8% 67.2% Note: Bold/italicized markets are the 10 largest U.S. office markets Source: Cassidy Turley; Colliers; CoStar; Cushman & Wakefield; Jones Lang LaSalle; Newmark Grubb Knight Frank; PNC Real Estate Market Research The nation s 10 largest office markets had 45.6 msf (52.5%) of the 86.9 msf underway nationally, with 15.8 msf (18.1%) of the space located in PNC s footprint markets. Pre-leasing improved from 3Q13 s 64.9% to 67.2% this quarter. By metro, New York City, San Francisco, and Austin continued to account for most of the speculative space (<50% preleasing) underway and realized nominal gains over 3Q13 levels, while completions in Denver and Chicago revealed higher levels of unleased office space in the pipeline. During 4Q13, completions tallied 10.1 msf, down slightly from the prior quarter s 11.5 msf, according to CoStar data. Sustainably designed buildings continued to represent the majority of deliveries this quarter, totaling approximately 6.8 msf. The largest was 4 World Trade Center in New York, a 72-story, 2.8 msf building designed to LEED Gold standards that opened in November with just over 60.0% of the space leased. Notably, the three Washington, DC projects were the only properties delivered with no leasing in place. LEED OFFICE DELIVERIES (4Q13) Property Metro SF Leased LEED 8th & Main Boise 277,642 90.1% Silver Alexandria Center at Kendall Square Boston 307,000 100.0% Gold Vertex Pharmaceutical Boston 1,200,000 100.0% Gold 1812 North Moore Street DC 538,092 0.0% Platinum Sentinel Square II DC 289,524 0.0% Gold 3 Constitution Square DC 362,844 0.0% Silver Anadarko Tower 2 Houston 550,000 100.0% Silver Granite Briarpark Green Houston 302,551 50.4% Gold Westgate I Houston 248,500 67.7% Silver Spectrum Brands HQ Madison (WI) 220,000 100.0% Silver 4 World Trade Center New York 2,300,000 63.6% Gold Inmar Corporate HQ Winston-Salem 242,000 100.0% Platinum TOTALS/WTD AVGS - 6,838,153 66.6% - Source: CBRE-EA; CoStar; PNC Real Estate Market Research

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 5 VACANCY Since peaking at 13.6% in 3Q10, the national office vacancy rate has improved at a slow, but steady pace. As of year-end, the national office vacancy rate stood at 12.1%, down 17 bps sequentially and 54 bps annually. The national Class A vacancy rate remained higher at 13.2%, down 7 bps sequentially and 65 bps annually. The nation s 10 largest office markets had an average 4Q13 vacancy rate of 12.4%, up 2 bps from 3Q13. This is due in part to delivery of buildings with unleased space in the two largest office markets; New York City (4 World Trade Center) and Washington, DC (1812 North Moore, Sentinel Square II, and 3 Constitution Square), which rose 89 bps and 62 bps, respectively. With the exception of these two markets, improvements ranged from 6 bps in Houston to 91 bps in Atlanta. The average 4Q13 weighted vacancy within PNC s 22 footprint markets was 12.8%, 5 bps lower sequentially and 24 bps annually. Our southern markets achieved the most visible quarterly improvement, with Louisville and Mobile tightening 57 bps each and Charlotte declining 53 bps, all three now have vacancy rates below the national average. At the other end of the spectrum, footprint markets that experienced escalating vacancy rates included Dayton up 40 bps and Northern New Jersey, which increased 25 bps, as did Washington, DC. 16% 15% 14% 13% 12% 11% 10% 9% 8% New York City Washington, DC Los Angeles Philadelphia N. New Jersey Dallas/Ft Worth Houston 4Q13 Class A: 13.2% 4Q13 Overall: 12.1% Chicago Boston Atlanta 4Q13 4Q12 7.4% 8.3% 4Q13 vs 4Q12 VACANCY RATES 10 LARGEST MARKETS 9.6% 9.9% 11.2% 11.6% 11.4% 11.5% 12.3% 12.4% 13.5% 14.1% 14.2% 14.2% 14.5% 14.8% 15.4% 15.5% 15.0% 15.9% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% OFFICE VACANCY RATES

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 6 RENTS During 4Q13, the national average office rent grew at a quicker pace than the average Class A rent. Sequentially, it increased 1.4% ($0.32/sf) to $23.69/sf, while Class A rents rose 0.9% ($0.25/sf) to $28.81/sf. This trend also held on an annual basis, with average rents climbing 2.4% ($0.57/sf) and Class A rents increasing 0.9% ($0.25/sf). As in the prior quarter, New York City registered the largest rent gain, with the average rent growing 5.8% annually to $52.35/sf. Other top markets with rent growth in excess of the national average included Los Angeles, Boston, Dallas/Ft Worth, and Houston. Washington DC was the only top 10 market that experienced rent losses, with the average rent easing 0.5% to $34.21/sf and Class A softening 1.0% to $38.35/sf. Within PNC s footprint, the average office rent grew 0.7% from 3Q13 and 1.5% annually to $21.63/sf. On a quarterly basis, Chicago and Indianapolis rose 2.5% and 3.2%, respectively. On an annual basis, Milwaukee and Nashville rents strengthened 3.9% and 3.0%, respectively. Birmingham was the worst with rents declining 1.2% sequentially and 3.8% annually to $16.34/sf. $35 $30 $25 $20 $15 $10 $5 $0 4Q13 Overall: $23.69/sf 4Q13 Class A: $28.81/sf New York City Washington, DC Chicago Los Angeles Philadelphia Boston N. New Jersey Dallas/Ft Worth Atlanta Houston Overall Cl. A -0.5% -1.0% -0.7% 0.9% 0.9% 1.3% 0.6% 0.2% 0.4% 0.5% 1.1% 1.8% 3.3% 3.1% 3.5% OFFICE RENTAL RATES 4.2% 4.3% 4.1% 4.9% 4Q13 Rent Y/Y % Change 10 Largest Office Markets National Average: 2.0% 5.8% (2.0%) 0.0% 2.0% 4.0% 6.0% 8.0%

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 7 TRANSACTION VOLUME & PRICING Improving office market fundamentals combined with capital access and accommodative interest rates resulted in institutional quality office trading volume hitting $35.6 billion in 4Q13 (a level unseen since 3Q07 s $43.4 billion). With the exception of major markets, office prices remain below prior peaks. During 4Q13, office prices (blue line) increased 4.5% from 3Q13, due to strength in non-major CBD office, which rose 11.2%. Major CBD office prices (green line) rose a moderate 3.4% in 4Q13, after rising 10.1% in 3Q13. Pricing for suburban office properties in non-major markets (grey line) increased at a slightly quicker pace of 3.8% during 4Q13; however they remain approximately 32.5% below 3Q07 s peak pricing. During 4Q13, office cap rates exhibited additional compression. The average CBD office cap rate declined 8 bps sequentially and 12 bps annually to 6.1%, while the average suburban office cap rate tightened 24 bps sequentially and 32 bps annually to 7.1%. Please see the adjacent charts for additional details and trends. Liberty Property Trust (LRY) and Washington Real Estate Investment Trust (WRE) made progress on repositioning their portfolios. LRY s shift from office to industrial moved ahead, as the first portion of a $697.3 million sale to Greenfield Partners involving 97 office (4.0 msf) and flex-space (2.3 msf) properties in five states (FL, MD, MN, NJ, & PA) closed at year-end. WRE sold a portion of its medical office portfolio for $307.2 million to Harrison Street and intends to redeploy the proceeds into high-end office, residential, and retail properties in urban areas. Other portfolio trades included Hines/Oaktree Capital $89 million acquisition of 40 office and industrial properties (1.7 msf) in Kansas City from Commonwealth REIT. While Heitman/NexCore teamed up to acquire a 13- property medical office portfolio concentrated in S. California and the Phoenix metro from LaSalle Investment Management for $114M. $ Billions $40 $35 $30 $25 $20 $15 $10 11% 10% 9% 8% 7% 6% 5% 4% 9% 8% 7% 6% 5% 4% $5 11% 10% $- 2002 2003 2004 2005 2006 2007 Note: NCREIF data represents current value office cap rates. Sources: PwC Real Estate Investor Survey, Real Capital Analytics, RERC, NCREIF, PNC Real Estate Market Research 2002 2007 2003 2004 2005 Transaction Volume > $5 mil Office Major Off-CBD Non-Major Off-Sub 2006 2007 Note: Major Office Markets are Boston, Chicago, Washington DC, New York, San Francisco, and Los Angeles Sources: Real Capital Analytics, PNC Real Estate Market Research CBD OFFICE CAPITALIZATION RATES Note: NCREIF data represents current value office cap rates. Sources: PwC Real Estate Investor Survey, Real Capital Analytics, RERC, NCREIF, PNC Real Estate Market Research OFFICE CPPI & TRANSACTION VOLUME 250 230 210 190 170 150 130 110 90 70 50 6.45% - PwC CBD Office 14 bps, +2.2% 5.97% - RCA CBD Office 11 bps, +1.8% 6.00% - RERC CBD Office 0 bps, +0.0% 4.91% - NCREIF Office 6 bps, +1.2% SUBURBAN OFFICE CAPITALIZATION RATES 6.98% - PwC Suburban Office 53 bps, +7.6% 7.18% - RCA Suburban Office 9 bps, +1.3% 7.10% - RERC Suburban Office 10 bps, +1.4% 4.91% - NCREIF Office 6 bps, +1.2%

OFFICE FUNDAMENTALS CONTINUE TO SLOWLY STRENGTHEN 8 DISTRESS & DELINQUENCIES The amount of distressed (Troubled and REO) office real estate continued to drop during 4Q13, declining by $2.8 billion to $32.5 billion, as flows of newly distressed assets continued to subside and workout activity (restructured and resolved) progressed at a moderate pace. As of year-end, office represented 22.6% (highest among property types) of the $143.6 billion in outstanding distress across all property types As of year-end, RCA noted that distressed opportunities and pricing have become uncommon. Remaining office distress is in concentrated in Philadelphia, Detroit, Northern New Jersey, Atlanta, Phoenix, and Las Vegas, as well as tertiary Southeast markets. Billions ($) $120 $100 $80 $60 $40 $20 $- Resolved: $ 51.9 Billion Restructured: $ 22.1 Billion REO: $ 9.8 Billion Troubled: $ 22.7 Billion Sources: Real Capital Analytics, PNC Real Estate Market Research 4Q13 OFFICE CUMULATIVE DISTRESS VOLUME Trepp data indicated that the overall CMBS delinquency rate has declined for seven consecutive months. It ended the year at 7.4%, down 71 bps sequentially and 228 bps annually. The CMBS office delinquency improved by 118 bps sequentially and 253 bps annually to 8.1%, trailing Lodging at 7.9% and Retail at 6.1%.

APPENDIX PNC FOOTPRINT MARKETS - OFFICE 4Q13 Market Existing Inventory Vacancy YTD Net Absorption YTD Deliveries U/C Rent Total RBA (msf) Direct (msf) Total (msf) 4Q13 % Q/Q bps Δ Y/Y bps Δ (msf) (msf) (msf) 4Q13 Q/Q % Δ Y/Y % Δ Atlanta 301.4 43.8 45.2 15.0% -26-91 3.6 0.7 1.8 $18.85 0.2% 0.4% Baltimore 135.6 15.1 15.8 11.6% -4-28 1.0 1.1 1.2 $21.33-0.1% -0.6% Birmingham 55.0 5.0 5.2 9.4% 0-55 0.1 0.0 0.0 $16.34-1.2% -3.8% Central New Jersey 148.0 21.7 22.6 15.2% -7 0 2.1 0.1 0.3 $22.39-0.1% 0.0% Charlotte 99.5 10.6 10.9 10.9% -53-117 1.3 0.1 0.4 $19.65 0.8% 1.4% Chicago 461.8 61.9 65.4 14.2% 8-4 2.6 0.8 2.5 $23.45 2.5% 1.8% Cincinnati 95.0 12.0 12.4 13.1% -24-14 1.0 0.1 0.5 $15.18 0.3% -0.1% Cleveland 142.8 17.1 17.5 12.2% -2 12 0.4 1.7 0.1 $16.89 1.7% 0.5% Columbus 96.1 8.7 8.8 9.2% -38-112 1.2 0.2 0.6 $16.45 1.4% 0.9% Dayton 42.0 6.7 6.8 16.1% 40 21-0.1 0.0 0.0 $14.82 0.8% -2.5% Detroit 194.3 33.4 33.8 17.4% -21-71 1.4 0.0 0.1 $17.49-0.5% -1.8% Indianapolis 97.0 8.5 8.7 9.0% 0-32 0.4 0.2 0.5 $16.52 3.2% 1.6% Louisville 52.7 5.3 5.4 10.3% -57-85 0.4 0.2 0.4 $16.06 1.7% 3.9% Milwaukee 78.1 8.6 8.8 11.3% 15 66-0.1 0.2 0.0 $15.64 0.8% -1.0% Mobile 16.9 1.6 1.6 9.5% -57-58 0.1 0.0 0.0 $12.16 0.0% 1.7% Nashville 75.7 5.7 6.0 7.9% 14-59 0.6 0.1 1.1 $19.03 0.0% 3.0% Northern New Jersey 209.9 28.2 29.3 14.0% 25 0 1.0 1.3 0.2 $23.85 0.2% 0.0% Philadelphia 400.0 43.5 44.7 11.2% -29-41 2.3 1.4 0.8 $21.10 0.2% 0.9% Pittsburgh 122.0 9.4 9.9 8.1% -1 19 0.7 0.7 1.6 $18.83-0.1% 0.4% Raleigh/Durham 90.4 9.6 9.7 10.8% -30-141 1.2 0.3 0.9 $18.67 2.0% 0.2% St. Louis 130.0 14.9 15.1 11.6% -19-69 1.6 0.0 0.7 $17.95 1.4% 1.7% Washington, DC 468.2 62.4 66.1 14.1% 25 62 0.7 3.9 6.4 $34.21 0.0% -0.5% PNC FOOTPRINT TOTALS / WTD AVGS 3,512.3 433.6 449.6 12.8% -5-24 23.4 13.1 20.1 $21.63 0.7% 1.5% US TOTALS / WTD AVGS 10,369.3 1,152.4 1,195.6 11.5% -9-37 80.4 47.2 86.9 $22.06 1.4% 2.0% Note: Due to differences in CoStar's methodology, national figures differ from the long-term historical ones presented in this report. Top 10 National Office Markets Are Italicized Bold Sources: CoStar; PNC Real Estate Market Research