HARTFORD COUNTY COMMERCIAL REAL ESTATE MARKET NOVEMBER 2008 Presented by: Andrews & Galvin Appraisal Services, LLC 16 Spring Lane, Farmington, CT john@agvalues.com 860-677-5522

REAL ESTATE MARKET PRESENTATION OVEVIEW What is Current Perception in Hartford County Property Type Snap Shot & General Trends Where are We Going From Here

Connecticut Counties

Hartford County Map

HARTFORD MARKET AREA City of Hartford Downtown North Market – North Suburbs South Market – South Suburbs East Market – East Suburbs West Market – West Suburbs

What Does the Hartford Commercial Real Estate Market Look Like?

Where Are We Now?

What Segment of the Coaster Do You Operate In?

Total Number of Sales Tracked by Conn-comps November 1989 to 2008

Feeling the Trend?

Growth – Core Growth How Much Are We Talking? Housing Units 348,252 units in 1997 to 367,078 Units 2006 18,827 Net Gain in Housing Units Population 825,141 in 1997 to 878,298 in 2006 53,000 + more people Industrial Growth – Added 5 +/- Million SF (past 5 yrs) Office Growth – Added 2.2 +/- Million SF (past 5 yrs) Retail Growth – Expansions in All Four Quadrants

Value Trends Industrial Apartment Office Retail Starting From the Back Of the Coaster Industrial Apartment Office Retail

Typical Sales Activity 2008 46 Kennedy Road, South Windsor 5,628 SF, Built 1966, 1.24 acres -- 7 Months to Market / 4 tenants -- 20% Owner Occupied ($550,000) Sold January 2008 for $68.51/SF (Previous sale April 2004 for $28.25/SF) 375 Lake Avenue, Bristol 11,520 SF, Built 1959, 2 acres -- Several Months / Owner Occupied -- Seller Relocated ($662,000) Sold Nov 2007 for $57.42/SF (Previous sale June 2002 for $28.65.SF)

780 James P. Casey Rd Bristol, CT Former General Motors Plant from 1968 to 1996 -- 1,200,000 SF on 182 Acres -- 5 Credit Tenants / 28’ Height -- 30,000 SF Vacant @ $2.75/SF NNN -- 111 Acres Excess Land @ $50,000/acre -- @ 7+% Cap Rate – 97.5% occupied Sold January 2008 for: $60,500,000 - $50.42/SF Sold November 2006 for: $28,300,000 - $23.58/SF Sold June 2003 for: $23,500,000 - $19.58/SF Sold Sept 1997 for: $ 4,280,000 - $ 3.57/SF

Industrial Survey Results CBRE – Market Overview 2nd Qtr 2008 Overall Vacancy Rate 10.8% 2nd Qtr – Jumped 11.34% 3rd Qtr -- (7% in the West / 14.6% in the East 2nd Qtr) Industrial Rental Rates $4.50 to $5.70 with Avg @ $5.00/SF NNN -- (Landlord negotiating to keep tenants) Absorption – Negative 650,000 SF YTD -- (However - 300,000 SF New Constriction & 300,000 SF Raymore & Flanagan Leased at 61 Chapel Road, Manchester) Reason – lower demand for space

Industrial Survey Results Cushman & Wakefield – Market Beat 2nd Qtr 2008 Overall Vacancy Rate 9.5%, down from 10.2% in 2007 Absorption – positive 180,000 +/- SF Rental Rates - $4.25/SF NNN +/- Slight increase over 1st Qtr - below 2007 Conclusion: Sales have slowed but pricing stable – low inventory Industrial Users Have Prepared for Slow Down Market is Still Active With Leasing but Less Demand Causing Owners to Negotiate Cost of Business in CT is Still High – Manchester Industrial User Consolidated down South / Expansions put on hold / 15-30% drop in Revenues / Defense Budgets 770,000 SF Walgreen's Facility in Windsor & 260,000 SF BJ Facility in Rocky Hill

Apartment Trends Year No of Sale Avg. $/Unit 1999 177 $ 17,349.01 2000   No of Sale Avg. $/Unit 1999 177 $ 17,349.01 2000 151 $ 19,802.58 2001 173 $ 22,291.40 2002 225 $ 26,131.49 2003 236 $ 32,324.90 2004 281 $ 38,811.40 2005 331 $ 48,018.02 2006 269 $ 54,823.46 2007 185 $ 55,384.58 2008 86 $ 56,063.65

Apartment Trends No of Sales Has Tapered Off …… Average Sale Price Stabilized Off …. Vacancy Rates Remain Stable …. Rents Slight Increases with Expenses …. Municipalities Concerned with Absentee Landlords .. Out of State Investors – No more Bi-model Data … Job Losses – Foreclosures – Housing Age … Sellers Still Want Higher Prices – Buyers waiting for fall . Leveraged Properties – Economic Life vs. Physical Life Mortgage Financing Nearly Gone …. Or Is It?

Recent Apartment Sales (Both Openly Marketed) 12 Maple Street, Plainville Sold June 2008 for $66,000/Unit ($660,000) 5,595 SF – 0.41 acres – 1980 9 Efficiency – 1 one-bed – retail 7.6% Overall Rate / No vacancy (Previously Sold July 2004 for $380,000 or $34,545/Unit) - Just Four Years 851 Wethersfield Ave, Hartford Sold July 2008 for $56,250/Unit ($1,350,000) 19,640 SF – 0.46 acres – 1935 / Updated 12 one-bedroom & 12 two-bedroom 6.6% Overall Rate / No vacancy (Previously Sold June 1988 for $1,032,000 or $43,000/Unit) - Bought by Local Investors

What Has Changed? Hartford County Apartment Stabilized 1999 2007 Rents: $475 – $500 $565 (2%/year) Vacancy: EGIM: 10% vacant 1.63x 4% 7.3x OER: Taxes: NOI: 60.7% $720/unit $50,500 +/- 59% $605/unit $68,100 (4%/year) Overall Rate: 12.5% ?? Below 6% Mortgage: Equity Expectation: 75% L/V 7.7% Fixed 20 yr Term 20% +/- 76% L/V 6% 5 yrs Fixed 30 yr Term ?? 1.02x DSCR ?? Increase Rents Hartford County Apartment Sold March 2007 for $58,833/Unit ($1,220,000 – 5.8x original purchase) 18,369 SF - 0.41 acres – Built 1966 24 Units – all One-bedroom – 96% Occp. Updated – new roof – Walk to Downtown (Previously Sold January 1998 for $210,000 or $8,750/unit) – Stabilized Occupancy 1999 Some of Value Increase is due to Rent Increases, Lower Vacancy, Lower Expense – But what about Investor Expectations? Most Likely not going to decrease to 1999 Point

Hartford County Office Market Met-Life Relocated to Cigna Complex in Bloomfield (375,000 SF) --1,300 employees Moving From City Place & 450 From Glastonbury Rents: $16 - $20/SF with low end in the north market higher in the west market Vacancy: Class A 7% in South / 35% North – Class B Below 7% in south to 44% in City – Overall 15% - 20% Leasing Activity: Slower but still active for smaller spaces – 1,000 to 5,000 SF – Build-outs a concern - Sales: No indication Values are Declining – No unusual Speculation Overall Cap Rates 7.5% to 9.5%

Recent Office Sales Hartford County 86 Hopmeadow Street, Simsbury Sold May 2008 for $3,800,000 - $89.50/SF 42,456 SF of GBA – 4.9 acres - 1989 Buyer secured tenant prior to closing for a vacating tenant / Factoring in Build-out for new tenant and deferred maintenance, overall cap rate of 8.7% 43 Western Blvd, Glastonbury Sold Jan. 2008 for $5,250,000 - $92.43/SF 56,798 SF – 8.33 acres – 1979 Buyer purchased vacant as part of 1031 but seller elected to stay and lease back space after the sale was negotiated, overall capitalization rate 9.89% perceived at time of sale

Retail Market Hartford Count --The most uncertainty in terms of potential income growth --National Retailers pulling back on expansions --Everyone waiting for holiday / year end sales --No new concepts coming on line to replace vacating retailer --Tenants having more control during new construction – lease renewals --Tenants paying for build-outs for lower rents -Concepts of Retailers have changed to more of a free standing building – ground leases --Vacancy starting to increase --Less activity on leases --Low inventory of Available For Sale

What Are Lenders Doing? Hartford County Market Increasing Credit Terms – Lowering loan to value ratios and increasing debt service coverage ratios Points – ½ to a 1.5 points Rates – Spreads nearly all increased and now tied to FHLBB 5 yr mostly Recourse is Back Why – less competition

Thank you … Andrews & Galvin Appraisal Services, LLC 16 Spring Lane, Farmington, CT john@agvalues.com 860-677-5522