Capital Markets Update Rob Stiles EVP & Principal Head of Western Region Cushman & Wakefield Sonnenblick Goldman

1 ■ Post Triage – Two Worlds Emerge ■ Changing Equity Markets ■ Changing Debt is Back – Really? ■ Resultant Imbalance of Equity Capital Raised to Investment Opportunities ■ So What Will it Take Looking Forward? Property & Finance Update Capital Drought or Capital Bubble – Depends on Where You Stand?

2 Post Triage – Two Worlds Emerge ■Enter REITVILLE –Better Asset Pricing –Cheaper & Higher Leverage Debt –Ability to Price on 3 – 4 Year Forward 7 – 10% returns on Cost –Hard to Get Visas ■Enter Realityville –Buyers Want Distress –Lenders Want Coverage!? –People Know How to Spell Recourse –Fewer Optimists

3 ■ Plenty of Capital – But Why the Increasing Appetite for Hotels?  No Good Alternatives Outside Real Estate  Within Real Estate – Only Hotel NOI Has Bottomed  Public REITS, Private REITS, PE Funds, Domestic and International HNWs ■ Two Minds of Buyers:  Cycle Buyers Who Believe We Have Bottomed Out  Buyers Focused on Deep Discounts Changing Equity Markets

4 Confidence in Future Fundamentals 2012 NOI Expectations Source: Green Street Advisors Hotel (31%, 23%)

5 (1)YTD 2010 Annualized Totals Source: Real Capital Analytics Domestic Sales Transaction Volume (Deals >$25mm) (in $ Billions)

6 Maximize Value (1)Current premium on asset pricing is 13.8% on an unlevered basis. Source: Green Street Advisors, As of REITs vs. Private Market Real Estate Public Markets are Anticipating an Improvement

7 ■ Lack of Debt or Lack of Cash Flow ■ Starting to Look Forward Again! ■ Data is Supportive ■ Yield is Delicious Relative to Options  (3.75 – 4.25%/Year Fixed for Core Office) ■ CMBS 2.0 or 1.2? $6.3 Billion 4 th Qtr Pipeline ■ General Debt Parameters – Leverage – Coverage / Debt Yield – Pricing – Term Debt is Back – Really? In One of the Two Worlds Anyway

8 ■ Voluntary Opportunistic Sellers Come Out of the Woods – The Surge is Visible (Off a Terribly Low Base) – Suddenly, underwater Owners Have Equity! (But they still can’t refinance their debt) ■ Surging Confidence Among Lenders Leads to Action – Recovery Values move above Marked Loan Values – Lenders are in a Better Position to Get Aggressive Will Resultant Imbalance of Equity Capital Raised Make Sales Happen?

9 ■ Debt Costs to Remain Low and Begin to Tighten on the Borders ■ Prospects of Sustained Lower Debt Costs to Push Valuations ■ Lack of Alternatives Will Continue to Attract Capital - $60 Billion of Capital Raised by REITS in 2009 and YTD 2010 ■ Hotels to Become Increasingly Favorable Class (In Reitville) ■ Ability to Compete – Buy on Forward Stabilized Return on Cost ■ Nerves to Play in the Other World (Realityville):  DPOs  Structured Transactions  Note Sales ■ In the End – Its All About the Loathing of Writing Checks ■ Think Long Term –- or Duck So What Will it Take Looking Forward?