Weathering the Commercial Real Estate Market January 28, 2010

Weathering the Commercial Real Estate Market REGIONAL ECONOMIC HIGHLIGHTS January 28, 2010

Weathering the Commercial Real Estate Market UNEMPLOYMENT JOB GROWTH FINANCIAL MARKETS January 28, 2010

Weathering the Commercial Real Estate Market January 28, 2010 Port of Virginia  Over 1.7 million TEU’s flow through the port annually  20 shipping lines with weekly service to Asia and Europe  Less than a seven hour drive to eight major markets  Ice-free, deepwater, unobstructed natural harbor  Expansion capacity to grow to 8 million TEU capacity Hampton Roads Economic Indicators

Labor Force  830,000 person private labor force  13,000 military personnel transitioning into workforce annually  12 traditional colleges and universities and 10 for-profit institutions  Over 14,000 degrees conferred annually  Wage rate 8% below national average January 28, 2010 Hampton Roads Economic Indicators Weathering the Commercial Real Estate Market

Hampton Roads Economic Indicators Business Climate Virginia voted ‘Best State for Business’ – again! 180 international firms representing 27 countries in region Workers’ compensation rate 47% below the national average Corporate income tax rate of 6%; not raised since 1972 Ranked 4th in “Cities where Americans are getting richer” Ranked in top 20 regions for economic performance by Brookings Institute in December, 2009 Hampton Roads ranked third least expensive metro area for corporate headquarters by the Boyd Co. January 28, 2010 Weathering the Commercial Real Estate Market

Hampton Roads Economic Indicators Military & Government $19 billion – Direct DOD spending 45% of regional economy Key issues in 2010: –Loss of another carrier group –Need to develop new OLF –Transportation system. January 28, 2010 Weathering the Commercial Real Estate Market

Hampton Roads Economic Indicators Opportunities and Announcements Jordan Bridge approved as PPTA project New Gilmerton Bridge under construction Midtown Tunnel PPTA project close to approval I-564 connector, enhancing Port and Norfolk Naval Base traffic Higher Speed Rail Service to Hampton Roads Stimulus funds for bridge repairs APM terminals lease with VIT January 28, 2010 Weathering the Commercial Real Estate Market

OFFICE OVERVIEW January 28, 2010

Weathering the Commercial Real Estate Market FORECAST THE STATE OF THE OFFICE MARKET TENANT LEVERAGE FINANCING ABSORPTION January 28, 2010

INDUSTRIAL OVERVIEW Weathering the Commercial Real Estate Market January 28, 2010

Weathering the Commercial Real Estate Market “HIGH CUBE” SPACE CHALLENGED INDUSTRIAL CORE STILL HEALTHY FINANCING USER LEVERAGE FORECAST January 28, 2010

Weathering the Commercial Real Estate Market RETAIL OVERVIEW January 28, 2010

Weathering the Commercial Real Estate Market ANCHORS IN TROUBLE SMALL SHOPS FINANCING TENANT LEVERAGE FORECAST January 28, 2010

Weathering the Commercial Real Estate Market FINANCING OWNER OCCUPIED/ BUSINESS BASED SPECULATIVE CONSTRUCTION REFINANCING MARKET CMBS MARKETS January 28, 2010

Vacancy and Rents January 28, 2010 National Trends 4Q 20084Q 2009Rates Apartments6.50%8.40%-6.00% Industrial9.80%13.00%-9.00% Office16.00%19.4%-9.00% Retail12.9%18.6%-8.00% Mortgage Banker’s Association

Vacancy and Rents Regional Trends 4Q 20084Q 2009 Quoted Rates Effective Rates Apartments6.90% Flat-7% Industrial9.90%10.90%Flat-20% Office9.80%11.10%-10%-15% Retail6.20%6.70%-5%-25% Source: Real Data/CoStar

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