1. 1 Prepared for Edge Fund Advisors THE ECONOMY AND THE OFFICE MARKETS OF WASHINGTON, BOSTON, NEW YORK, AND SAN FRANCISCO By Gregory H. Leisch, CRE Alexander (Sandy) Paul December 2, 2009

2. THE NATIONAL ECONOMY

3. Source: Bureau of Labor Statistics, Delta Associates; December 2009. U.S. PAYROLL JOB LOSSES HAVE MODERATED 200820092007

4. LEADING ECONOMIC INDICATORS HAVE TURNED UP Leading Economic Indicator Index Source: The Conference Board, Delta Associates; December 2009. Note: 2004 = 100. 2008 2009 2007

5. U.S. INITIAL UNEMPLOYMENT CLAIMS: PREDICTOR OF RECESSIONS END Seasonally Adjusted Unemployment Claims (Four Week Moving Average) Source: Bureau of Labor Statistics, Delta Associates; December 2009. Peak in Initial Unemployment Claims Note: Through November 14, 2009.

6. Unemployment Rate and Annualized GDP Change Source: Bureau of Labor Statistics, Bureau of Economic Analysis, Delta Associates; December 2009. Percent Change in GDPUnemployment Rate Recession U.S. ECONOMIC TRENDS AND FORECAST

7. Percent Change in GDPUnemployment Rate Recession Unemployment Rate and Annualized GDP Change Source: Bureau of Labor Statistics, Bureau of Economic Analysis, Delta Associates; December 2009. U.S. ECONOMIC TRENDS AND FORECAST

8. Unemployment Rate and Annualized GDP Change U.S. ECONOMIC TRENDS AND FORECAST Percent Change in GDPUnemployment Rate RecessionRecovery 32 months: Recession + Recovery 50 months: Recession + Recovery 51 months: Recession + Recovery Source: Bureau of Labor Statistics, Bureau of Economic Analysis, Delta Associates; December 2009.

9. Source: Bureau of Economic Analysis, Delta Associates; December 2009. U.S. PRODUCTIVITY IS HIGH 2003200420052006 2007 20082009

10. U.S. CONSUMER SENTIMENT IS LOW Source: University of Michigan, Delta Associates; December 2009. * Through October 2009. Note: 1966 = 100

11. Source: Bureau of Economic Analysis, Delta Associates; December 2009. U.S. PERSONAL SAVINGS RATE IS HIGH 20052006 2007 2008 2009

12. THE WASHINGTON AREA REGIONAL ECONOMY

13. PAYROLL JOB LOSSES - 23.9 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS 12 MONTHS ENDING OCTOBER 2009 District of Columbia only = + 0.6

14. Job Change Source: Bureau of Labor Statistics, Delta Associates; December 2009. +22,600 -46,500 PAYROLL JOB CHANGE WASHINGTON METRO AREA 12 MONTHS ENDING OCTOBER 2009

15. 2007 Coincident Index Source: Dr. Stephen Fuller, Delta Associates; December 2009. 2008 2009 COINCIDENT INDEX OF ECONOMIC INDICATORS WASHINGTON METRO AREA

16. PAYROLL JOB CHANGE + 40.4 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS JANUARY 31 THROUGH OCTOBER 31, 2009

17. Source: Dr. Stephen Fuller, Delta Associates; December 2009. GRP = Gross Regional Product Core Industries % GRP Federal Government32% (Federal Procurement = 15% of total GRP) Technology16% Building Industry6% International Business5% Tourism / Hospitality2% Total Core Industries61% Other39% Total GRP100% CORE INDUSTRIES WASHINGTON METRO AREA 2008

18. Source: Deutsche Bank, CNN, MSNBC, Bloomberg, NY Times, Delta Associates; December 2009. Total = $15.6 Federal Reserve FDIC Treasury Department HUD Stimulus Initiatives Bailout/Guarantee Initiatives FEDERAL BAILOUT/GUARANTEE INITIATIVES TRILLIONS OF DOLLARS 2008 - 2010

19. Number of Jobs Source: Recovery.gov, Delta Associates; December 2009. *Delta Associates estimate based on state-wide job creation and regional population share. PROJECTED JOBS CREATED/SAVED THROUGH THE AMERICAN RECOVERY AND REINVESTMENT ACT WASHINGTON METRO AREA THROUGH 2011

20. CREDIT CRISIS: IMPACTED SUBMARKETS? Financial Firms Mainly Located in: Tysons Corner Reston Bethesda / Chevy Chase Financial Recovery Agency Locations: CBD / East End NoMa Rosslyn-Ballston Corridor WASHINGTON METRO AREA Source: Delta Associates; December 2009.

21. 30-Year Annual Average = 47,600/Year Source: Dr. Stephen Fuller, Delta Associates; December 2009. Note: 2009 is estimated at -21,000 jobs. PAYROLL JOB CHANGE WASHINGTON METRO AREA Thousands of New Payroll Jobs

22. 5-Year Projected Average = 40,400/Year30-Year Annual Average = 47,600/Year Source: Dr. Stephen Fuller, Delta Associates; December 2009. Note: 2009 is estimated at -21,000 jobs. PAYROLL JOB CHANGE WASHINGTON METRO AREA Thousands of New Payroll Jobs

23. THE WASHINGTON AREA OFFICE MARKET

24. National Vacancy Rate: 14.0% OFFICE VACANCY RATES SELECT METRO AREAS THIRD QUARTER 2009 Overall Vacancy Rate Source: CoStar, Delta Associates; December 2009.

25. OFFICE NET ABSORPTION SELECT METRO AREAS JANUARY – SEPTEMBER 2009 -0.5 Source: CoStar, Delta Associates; December 2009. Net Absorption (Millions of SF) Nation: negative 48 million SF

26. OFFICE NET ABSORPTION WASHINGTON METRO AREA 1981 – THIRD QUARTER 2009 Net Absorption (Millions of SF) Long-Term Average = 7.9 MSF * Through 3 rd quarter 2009. Source: Delta Associates; December 2009.

27. OFFICE SPACE UNDER DEVELOPMENT Millions of SF SELECT METRO AREAS SEPTEMBER 2009 Source: CoStar, Delta Associates; December 2009. Nation: 74 million SF at 44% pre-leased

28. OFFICE SPACE DEMAND & DELIVERIES WASHINGTON METRO AREA SEPTEMBER 2009 – DECEMBER 2014 26.0 million SF Deliveries = Demand Total = 13.3 million SF U/C or U/R: 8.2 million SF Planned and may deliver by 12/14: 5.1 million SF Inside the Beltway Outside the Beltway = = Millions of Square Feet Source: CoStar, Delta Associates; December 2009.

29. OFFICE VACANCY RATES INSIDE THE BELTWAY 2001 – 2014 Overall Vacancy Rate Metro Source: CoStar, Delta Associates; December 2009. Vacancy 9.6% 11.6% 11.2% 9.2% 7.9% 8.5% 9.1% 10.5% 13.2% 13.8% 13.1% 11.8% 10.3% 9.1% 10.4% 7.0% 12.5% Rent Equilibrium Zone = 7.9% to 8.1%

30. 10.2% 6.9% 13.0% OFFICE VACANCY RATES DISTRICT OF COLUMBIA 2001 – 2014 Source: CoStar, Delta Associates; December 2009. Metro Vacancy 9.6% 11.6% 11.2% 9.2% 7.9% 8.5% 9.1% 10.5% 13.2% 13.8% 13.1% 11.8% 10.3% 9.1% Rent Equilibrium Zone = 7.4% to 7.6% Overall Vacancy Rate

31. OFFICE RENT GROWTH PER YEAR WASHINGTON METRO AREA 2000 – 2014 Average of Past 15 Years: 3.8% Effective Rental Rate Change/SF/Yr. Source: CoStar, Delta Associates; December 2009.

32. Source: Delta Associates; December 2009. Office 20132012201120102009 WHEN IS THE MARKETS SWEET SPOT? WASHINGTON METRO AREA = Market Transition = Landlord/Seller Market = Tenant/Buyer Market

33. THE BOSTON AREA REGIONAL ECONOMY

34. PAYROLL JOB LOSSES - 63.5 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS 12 MONTHS ENDING OCTOBER 2009 City of Boston plus inner suburbs only = - 45.8

35. Job Change Source: Bureau of Labor Statistics, Delta Associates; December 2009. +11,400 -74,900 PAYROLL JOB CHANGE BOSTON METRO AREA 12 MONTHS ENDING OCTOBER 2009

36. 2007 Coincident Index Source: Federal Reserve Bank of Philadelphia, Delta Associates; December 2009. 2008 2009 COINCIDENT INDEX OF ECONOMIC INDICATORS COMMONWEALTH OF MASSACHUSETTS

37. PAYROLL JOB CHANGE + 35.2 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS JANUARY 31 THROUGH OCTOBER 31, 2009

38. Source: Dr. Stephen Fuller, Delta Associates; December 2009. GRP = Gross Regional Product Core Industries % GRP Technology14% Prof./Bus./Fin. Services10% Federal & State Government8% Medical & Education Services7% Construction6% Transportation & Warehousing4% Total Core Industries49% Other51% Total GRP100% CORE INDUSTRIES BOSTON METRO AREA 2008

39. Number of Jobs Source: Recovery.gov, Delta Associates; December 2009. *Delta Associates estimate based on state-wide job creation and regional population share. PROJECTED JOBS CREATED/SAVED THROUGH THE AMERICAN RECOVERY AND REINVESTMENT ACT BOSTON METRO AREA THROUGH 2011

40. 30-Year Annual Average = 19,800/Year Source: Dr. Stephen Fuller, Delta Associates; October 2009. Note: 2009 is estimated at -55,200 jobs. PAYROLL JOB CHANGE BOSTON METRO AREA Thousands of New Payroll Jobs

41. 5-Year Projected Average = 14,800/Year30-Year Annual Average = 19,800/Year Source: Dr. Stephen Fuller, Delta Associates; October 2009. Note: 2009 is estimated at -55,200 jobs. PAYROLL JOB CHANGE BOSTON METRO AREA Thousands of New Payroll Jobs

42. THE BOSTON AREA OFFICE MARKET

43. National Vacancy Rate: 14.0% OFFICE VACANCY RATES SELECT METRO AREAS THIRD QUARTER 2009 Overall Vacancy Rate Source: CoStar, Delta Associates; December 2009.

44. OFFICE NET ABSORPTION SELECT METRO AREAS JANUARY – SEPTEMBER 2009 -3.7 Source: CoStar, Delta Associates; December 2009. Net Absorption (Millions of SF) Nation: negative 48 million SF

45. OFFICE NET ABSORPTION BOSTON METRO AREA 1981 – THIRD QUARTER 2009 Net Absorption (Millions of SF) Long-Term Average = 4.5 MSF * Through 3 rd quarter 2009. Source: Delta Associates; December 2009.

46. OFFICE SPACE UNDER DEVELOPMENT Millions of SF SELECT METRO AREAS SEPTEMBER 2009 Source: CoStar, Delta Associates; December 2009. Nation: 74 million SF at 44% pre-leased

47. OFFICE SPACE DEMAND & DELIVERIES BOSTON METRO AREA SEPTEMBER 2009 – DECEMBER 2014 9.0 million SF Deliveries = Demand Total = 6.7 million SF U/C or U/R: 3.2 million SF Planned and may deliver by 12/14: 3.5 million SF = = Millions of Square Feet Source: CoStar, Delta Associates; December 2009.

48. OFFICE VACANCY RATES BOSTON METRO AREA 2001 – 2014 Overall Vacancy Rate Metro Source: CoStar, Delta Associates; December 2009. Vacancy 10.6% 14.0% 14.5% 13.4% 12.4% 9.6% 11.2% 10.0% 11.4% 12.0% 11.6% 11.1% 10.5% 9.7% 10.7% 9.7% 12.0% Rent Equilibrium Zone = 8.9% to 10.1% City of Boston = 7.6%

49. OFFICE RENT GROWTH PER YEAR BOSTON METRO AREA 2000 – 2014 Average of Past 30 Years: 2.5% Effective Rental Rate Change/SF/Yr. Source: CoStar, Delta Associates; December 2009.

50. Source: Delta Associates; December 2009. Office 20132012201120102009 WHEN IS THE MARKETS SWEET SPOT? BOSTON METRO AREA = Market Transition = Landlord/Seller Market = Tenant/Buyer Market

51. THE NEW YORK AREA REGIONAL ECONOMY

52. PAYROLL JOB LOSSES - 218.2 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS 12 MONTHS ENDING OCTOBER 2009 New York City only = - 109.9

53. Job Change Source: Bureau of Labor Statistics, Delta Associates; December 2009. +31,900 -250,100 PAYROLL JOB CHANGE NEW YORK METRO AREA 12 MONTHS ENDING OCTOBER 2009

54. 2007 Coincident Index Source: Federal Reserve Bank of New York, Delta Associates; December 2009. 1992 = 100 2008 2009 COINCIDENT INDEX OF ECONOMIC INDICATORS NEW YORK CITY

55. PAYROLL JOB CHANGE + 96.1 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS JANUARY 31 THROUGH OCTOBER 31, 2009

56. Source: Delta Associates; December 2009. GRP = Gross Regional Product Core Industries % GRP Prof./Fin./Tech. Services14% Government10% Education & Health Services8% Manufacturing & Distribution6% Construction3% Tourism / Hospitality2% Total Core Industries45% Other55% Total GRP100% CORE INDUSTRIES NEW YORK METRO AREA 2008 Note: Core industry percentages do not total to 45% due to rounding.

57. Number of Jobs Source: Recovery.gov, Delta Associates; December 2009. Note: Delta Associates estimate based on ratio of state-wide job creation and state-wide population to metro area population share. PROJECTED JOBS CREATED/SAVED THROUGH THE AMERICAN RECOVERY AND REINVESTMENT ACT NEW YORK METRO AREA THROUGH 2011

58. Thousands of New Payroll Jobs PAYROLL JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; December 2009. NEW YORK METRO AREA 30-Year Annual Average = 29,200/Year Note: 2009 is estimated at -210,000 jobs. 15-Year Annual Average = 60,000

59. Thousands of New Payroll Jobs PAYROLL JOB CHANGE Source: Bureau of Labor Statistics, Delta Associates; December 2009. NEW YORK METRO AREA 30-Year Annual Average = 29,200/Year Note: 2009 is estimated at -210,000 jobs. 15-Year Annual Average = 60,000

60. THE NEW YORK AREA OFFICE MARKET

61. National Vacancy Rate: 14.0% OFFICE VACANCY RATES SELECT METRO AREAS THIRD QUARTER 2009 Overall Vacancy Rate Source: CoStar, Delta Associates; December 2009.

62. OFFICE NET ABSORPTION SELECT METRO AREAS JANUARY – SEPTEMBER 2009 -5.8 Source: CoStar, Delta Associates; December 2009. Net Absorption (Millions of SF) Nation: negative 48 million SF

63. OFFICE NET ABSORPTION NEW YORK METRO AREA 1981 – THIRD QUARTER 2009 Net Absorption (Millions of SF) Long-Term Average = 3.3 MSF * Through 3 rd quarter 2009. Source: REIS, CoStar, Delta Associates; December 2009. In normal growth years, average net absorption equals 5-10 million SF per year

64. OFFICE SPACE UNDER DEVELOPMENT Millions of SF SELECT METRO AREAS SEPTEMBER 2009 Source: CoStar, Delta Associates; December 2009. Nation: 74 million SF at 44% pre-leased

65. OFFICE SPACE DEMAND & DELIVERIES NEW YORK METRO AREA SEPTEMBER 2009 – DECEMBER 2014 20.0 million SF Deliveries = Demand Total = 26.6 million SF U/C or U/R: 16.4 million SF Planned and may deliver by 12/14: 10.2 million SF New York Metro = = Millions of Square Feet Source: CoStar, Delta Associates; December 2009.

66. 10.5% 10.1% 11.5% OFFICE VACANCY RATES NEW YORK METRO 2001 – 2014 Source: CoStar, Delta Associates; December 2009. Metro Vacancy 8.2% 10.7% 11.2% 10.6% 8.9% 7.5% 8.5% 9.0% 10.8% 11.5% 11.1% 10.8% 10.4% 10.1% Rent Equilibrium Zone = 9.4% to 9.6% Overall Vacancy Rate City of New York = 8.2%

67. OFFICE RENT GROWTH PER YEAR NEW YORK METRO AREA 2000 – 2014 Average of Past 15 Years: 3.5% Effective Rental Rate Change/SF/Yr. Source: CoStar, Delta Associates; December 2009.

68. Source: Delta Associates; December 2009. = Market Transition = Landlord/Seller Market = Tenant/Buyer Market Office 20132012201120102009 WHEN IS THE MARKETS SWEET SPOT? NEW YORK METRO AREA

69. THE SAN FRANCISCO BAY REGIONAL ECONOMY

70. PAYROLL JOB LOSSES - 133.6 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS 12 MONTHS ENDING OCTOBER 2009 City of San Francisco plus inner suburbs only = - 49.2

71. Job Change Source: Bureau of Labor Statistics, Delta Associates; December 2009. +2,000 -135,600 PAYROLL JOB CHANGE SAN FRANCISCO BAY 12 MONTHS ENDING OCTOBER 2009

72. 2007 Coincident Index Source: Federal Reserve Bank of Philadelphia, Delta Associates; December 2009. 2008 2009 COINCIDENT INDEX OF ECONOMIC INDICATORS STATE OF CALIFORNIA

73. PAYROLL JOB CHANGE - 50.5 Source: Bureau of Labor Statistics, Delta Associates; December 2009. LARGE METRO AREAS JANUARY 31 THROUGH OCTOBER 31, 2009

74. Source: Dr. Stephen Fuller, Delta Associates; December 2009. GRP = Gross Regional Product Core Industries % GRP Prof./Bus./Fin./Tech Services25% Federal and State Government13% Education and Health Services7% Construction6% Manufacturing5% Hospitality3% Total Core Industries59% Other41% Total GRP100% CORE INDUSTRIES SAN FRANCISCO BAY 2008

75. Number of Jobs Source: Recovery.gov, Delta Associates; December 2009. *Delta Associates estimate based on state-wide job creation and regional population share. PROJECTED JOBS CREATED/SAVED THROUGH THE AMERICAN RECOVERY AND REINVESTMENT ACT SAN FRANCISCO BAY THROUGH 2011

76. 30-Year Annual Average = 17,800/Year Source: Delta Associates; December 2009. Note: 2009 is estimated at -143,600 jobs. PAYROLL JOB CHANGE SAN FRANCISCO BAY Thousands of New Payroll Jobs

77. 5-Year Projected Average = 9,000/Year30-Year Annual Average = 17,800/Year Source: Delta Associates; December 2009. Note: 2009 is estimated at -143,600 jobs. PAYROLL JOB CHANGE SAN FRANCISCO BAY Thousands of New Payroll Jobs

78. THE SAN FRANCISCO BAY OFFICE MARKET

79. National Vacancy Rate: 14.0% OFFICE VACANCY RATES SELECT METRO AREAS THIRD QUARTER 2009 Overall Vacancy Rate Source: CoStar, Delta Associates; December 2009.

80. OFFICE NET ABSORPTION SELECT METRO AREAS JANUARY – SEPTEMBER 2009 -6.5 Source: CoStar, Delta Associates; December 2009. Net Absorption (Millions of SF) Nation: negative 48 million SF

81. OFFICE NET ABSORPTION SAN FRANCISCO BAY 1981 – THIRD QUARTER 2009 Net Absorption (Millions of SF) Long-Term Average = 4.5 MSF * Through 3 rd quarter 2009. Source: Delta Associates; December 2009.

82. OFFICE SPACE UNDER DEVELOPMENT Millions of SF SELECT METRO AREAS SEPTEMBER 2009 Source: CoStar, Delta Associates; December 2009. Nation: 74 million SF at 44% pre-leased

83. OFFICE SPACE DEMAND & DELIVERIES SAN FRANCISCO BAY SEPTEMBER 2009 – DECEMBER 2014 6.5 million SF Deliveries = Demand Total = 4.1 million SF U/C or U/R: 1.6 million SF Planned and may deliver by 12/14: 2.5 million SF = = Millions of Square Feet Source: CoStar, Delta Associates; December 2009.

84. OFFICE VACANCY RATES SAN FRANCISCO BAY 2001 – 2014 Overall Vacancy Rate Metro Source: CoStar, Delta Associates; December 2009. Vacancy 10.7% 16.0% 17.2% 15.2% 12.1% 11.9% 10.4% 11.1% 13.5% 14.3% 14.5% 14.0% 13.3% 12.5% 13.3% 12.5% 14.5% Rent Equilibrium Zone = 10.9% to 11.5% City of San Francisco = 11.8%

85. OFFICE RENT GROWTH PER YEAR SAN FRANCISCO BAY 2000 – 2014 Average of Past 30 Years: 3.0% Effective Rental Rate Change/SF/Yr. Source: CoStar, Delta Associates; December 2009.

86. Source: Delta Associates; December 2009. Office 20132012201120102009 WHEN IS THE MARKETS SWEET SPOT? SAN FRANCISCO BAY = Market Transition = Landlord/Seller Market = Tenant/Buyer Market

87. 87 Prepared for Edge Fund Advisors THE ECONOMY AND THE OFFICE MARKETS OF WASHINGTON, BOSTON, NEW YORK, AND SAN FRANCISCO By Gregory H. Leisch, CRE Alexander (Sandy) Paul December 2, 2009