1. NCREIF PRESENTATION MARCH 2011

2. NCREIF Presentation March 10, 2011

3. Keystone & Johnson Capital Introductions Capital Markets General Overview –Debt---CHW; JCS –Equity---JCS; CHW Debt (property preferences, underwriting, pricing, markets, sponsorship) –Life Co’s---CHW –Agencies---JCS –Bridge, Mezz, Other—CHW –CMBS---JCS –Banks---CHW/JCS Property Types –MF---CHW –Retail---JCS –Office---CHW –Industrial---JCS –Other---CHW Summary and Conclusions

4. JOHNSON CAPITAL OFFICES USA Offices USA Offices

8. 8 Theme for the day: Capital Flow has been and continues to INCREASE SOURCES: Life Companies, Agencies, CMBS and Opportunity Funds, with Banks just starting to emerge It is cautious, thorough and very selective. Expect a lot of logical and specific questions: Borrower Quality True Market Rents True Market Vacancy Stressed Cap Rates NOTHING LIKE 2005 – WE HAVE TO ADJUST

9. 9 National Capital Flow Increase Statistics Mortgage Bankers Association of America Life Insurance Companies Capital to grow close to 2007 levels. Need for yield and quality. Agency Administration will keep the flow open even in the midst of agency reform. CMBS Markets are a small fraction of what they were but expect a 4-fold increase over 2010. That said, it will be 10% of the flow of 2007. Banks Like CMBS, Banks have many maturing loans. The general thought is that they will begin to lend more aggressively as they work through these maturities.

10. 10 National Sales Statistics Greater than $5,000,000 $100B/Qtr. Q4 ‘10 $52B (52% of Peak) FY ‘10 $132B (33% of Peak)

11. 11 MBA Commercial/Multifamily Origination Index 20% off high of ‘07.

12. 12 Life Insurance Co. Commitments ‘05-’07 @ $40-$50B/Yr. ‘09 @ $20B/Yr. ‘10 @ $30B/Yr. Est. ‘11 @ $40B/Yr. ‘08 @ $30B/Yr.

13. 13 CMBS Issuance ‘06-’07 @ $300B/Yr. ‘10 @ $12B/Yr. (4% of Peak) Est. ‘11 @ $39B/Yr. (13% of Peak)

14. 14 Commercial & Multifamily Mortgage Debt Outstanding ‘09 @ $3.5T ‘10 @ $3.2T

15. 15 Who Holds The Commercial & Multifamily Mortgage Debt Banks @ $1.4T CMBS @ $640B Agency @ $317B Life Co. @ $300B The Big 4 = 85% of Total

16. 16 Banks & Thrifts > 4% CMBS > 8% Life Insurance < 1% Fannie/Freddie < 1% Commercial/Multifamily Mortgage Delinquency

17. 17 Looming Loan Maturities Most maturities lie with Banks and CMBS. Nearly $300 Billion per year / Almost $1 Trillion ‘11-’13. It is imperative that Banks and CMBS re-establish themselves to meet the demand. If Agency and Life Companies do $50 Billion per year each they will total 1/3, or $100 Million of all maturities annually. ‘11-’13 @ $300B/Yr. - almost $1T

23. Agency Debt Profile Fannie (GSE) Freddie (GSE) ________________ FHA (HUD) 1.Fixed & Floating Rate Debt Fannie, Fixed Execution Freddie, CAPPED ARM Execution 2.5,7,10 year terms 30 year amortization I/O

24. Agency Debt Profile Continued 3.Pricing TIERS by LTV & DSCR range from 4.42% to 5.79%, fixed and 3.32% to 5.36% floating 1% to lender (DUS or Seller/Servicer) 4.60 Day Execution Early rate lock available 5.Underwriting MAI Appraisal 85% occupancy T-3, T-6, T-12 trends Up to 80% LTV & 1.25 x DSC 6.Supplementals

25. FHA (HUD) 1.Refinance No cash out 35/35 9-12 + months processing Open @ par after year 10 Pricing 4.15-4.50%, fixed 1.20x DSCR & 83.3% LTV 2.New Construction 40/40 12-15 + months processing Open @ par after year 10 Pricing 5.45-5.75% 1.20x DSCR & 83.3% LTV

26. Underwriting for Commercial Real Estate 1.All rents at current market Property & submarket checks 2.Sponsorship Track record Bones Schedule of REO Contingent liabilities Liquidity Real equity

27. Underwriting for Commercial Real Estate Continued 3.Underwriting 3 to 25 year terms 20-25 year amortizations No I/O except MF Internal value (cap rates) TILC reserves (true cost to re-tenant) 4.Pricing Mortgage yields are current favorable to other asset categories Junk bonds @ 6.48% Further spread compression likely Spreads are 150-250 over UST for life companies are 200-250 over swap spreads for CMBS

28. Underwriting for Commercial Real Estate Continued 5.Other YM or Defeasance Submarket Critical 6.Multifamily 3 to 25 year terms 30 year amortizations Some I/O Underwrite current trends Most competitive pricing Debt yields under 8% Highest LTV;maybe lower DSCRs Cap rate flexibility