2. Emerging Trends in Real Estate 2014 Highly regarded and widely read 35th annual outlook Based on over 1,000 interviews and surveys of industry leaders Sponsored by PwC and the Urban Land Institute Investment and development trends Capital markets Metro areas Property sectors

3. Fundamentals continue to improve…slowly… across all property groups and property markets Development is back, and 2014 will likely be the last year when minimal new supply is delivered Reaching an inflection point where valuations will be driven by fundamentals, not capital markets Interest rates anticipated to increase; it’s the pace and magnitude of the increase that is uncertain Capital goes wide, in more markets and taking on more risk Gaining Momentum

4. Investment Prospects by Asset Class Source: Emerging Trends in Real Estate surveys Abysmal Fair Excellent

5. Investment Prospects: Average Market Score Investment Prospects Excellent Fair Poor Source: Emerging Trends in Real Estate surveys

6. Issues of importance for real estate Economic/Financial Issues none moderate great Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

7. Issues of importance for real estate Real Estate/Development Issues none moderate great Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

8. “2014 should be a year when we see real estate fundamentals improve in sectors beyond the very healthy multifamily sector—and in a number of markets—to a point where we could see above-inflation-rate rental growth”

9. A “stubbornly high” unemployment rate Uncertainty over government regulation and fiscal policy Likely increase in the cost of both equity and debt capital Economic uncertainty in the Euro-zone China’s moderating economic growth Headwinds Facing the Real Estate Industry

10. “Good if not great” job growth in industries with high real estate utilization including: energy, technology, health care, medical research, education, and financial services Increasing corporate profits Continuing recovery in the single-family housing industry Historically low interest rates currently Tailwinds Benefiting the Real Estate Industry

11. Industry profitability expected to continue to improve Interest rates anticipated to increase Dependence on cap rate compression to drive value to be replaced by rent growth and vacancy declines Markets are expected to be “well supplied” with both equity and debt capital Emerging Trends: Key Trends/Drivers for 2014

12. Opportunities to develop property finally appear in sectors other than multifamily Industry begins to understand changing needs of both Gen Y and the baby boomers Needs of end users of commercial space continue to evolve The single family housing market continues to make a positive contribution to the overall economy Emerging Trends: Key Trends/Drivers for 2014

13. Prospects for profitability by percentage of respondents Source: Emerging Trends in Real Estate surveys Note: Based on US respondents only

14. Capital markets

15. Prospects by Investment Category/Strategy Abysmal Fair Excellent Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

16. Index Returns: Real Estate vs. Stocks/Bonds Source: NCREIF, NAREIT, S&P, Barclays Group Note: 2013 data annualized from second-quarter 2013

17. NCREIF Cap Rates vs. U.S. Ten-Year Treasury Yields Source: NCREIF, Moody’s Analytics, Federal Reserve Board *Ten-year Treasury yields based on average of the quarter, 2013Q2 average is as of July 2013 Note: Cap rate based on four-quarter moving average of current-value cap rate Spread

18. Equity and Debt Capital Balance Outlook Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

19. Debt capital for development and refinancing Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

20. Debt Underwriting Standards Forecast Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

21. Emerging trends barometer 2014 Source: Emerging Trends in Real Estate surveys Note: Based on US respondents only Excellent Poor Fair Abysmal Good

22. Change in Availability of Equity Capital for Real Estate Very large decline Stay the Same Very large increase Equity source Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

23. Change in Availability of Debt Capital for Real Estate Very large decline Stay the Same Very large increase Lending source Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

24. CMBS Revival Continues CMBS 2013 issuance expected to exceed $80 billion CMBS 2014 issuance anticipated to exceed $100 billion CMBS lenders continue to fill the gaps left by conventional lenders in terms of: --deal size (under $25 million) and --property location (secondary versus solely primary locations)

25. Commercial Banks Regional and local banks are expected to become increasingly active as their balance sheets improve National banks, searching for opportunities, will increasingly compete on a regional and local basis Development and construction loans will become increasingly available for borrowers with strong credentials and track records, and with substantial pre-leasing

26. Bank Real Estate Loan Delinquency Rates Source: Federal Deposit Insurance Corp. Note: Delinquent loans defined her as those that are noncurrent, either 90 days or more past due or in noncurrent status *as of second quarter 2013

27. Life insurers mortgage delinquency rates Source: Moody’s Analytics, American Council of Life Insurers In-foreclosure %

28. Mezzanine Financing Interviewees and survey participants seem of two minds regarding the roll of mezzanine financing in 2014 Some interviewees predict an “increase in B-piece, mezzanine, and debt funds to fill gaps in transaction structure” and “an increase in the use of mezzanine financing combined with higher-cost senior debt.” “The biggest question on mezzanine is where the returns are going to be. If mezzanine rates don’t increase enough and we don’t feel we’re getting paid enough, we’ll stop. At a 200 [basis point] difference, we don’t think we’re getting paid for the risk.”

29. Markets to watch More markets begin to look attractive

30. Growing Strength Across Many Metro Areas Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

31. Top 10 total rank 2014 InvestmentDevelopmentHomebuilding Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

32. Next 10 markets 2014 InvestmentDevelopmentHomebuilding Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

33. Outlook improves for more markets Markets with Investment Prospects of Good or Better 2011201220132014 New York CityAustin Washington D.C.Boston New York CityHoustonDallas/Ft. Worth San FranciscoNew York CityHouston San JoseSan FranciscoMiami SeattleSan JoseNew York City Washington D.C.SeattleOrange County Portland San Francisco San Jose Seattle

34. Changing positions Best and worst Position change Source: Emerging Trends in Real Estate surveys Note: Based on US respondents only

35. The impact of uncertainty and new supply for Washington, DC The outlook for Washington, DC succumbs to fed fatigue Market RankInvestment Score Excellent Fair Poor Source: Emerging Trends in Real Estate surveys Note: Based on US respondents only

36. Top 10 investment markets 20142013 Rank Change 1. Houston7.006.84+4 2. San Francisco6.987.21 3. New York6.847.14 4. Seattle6.836.72+2 5. San Jose6.786.89-2 6. Dallas/ Fort Worth6.766.47+4 7. Austin6.696.71- 8. Boston6.646.85-4 9. Orange County, CA6.606.48- 10. Miami6.576.47+1

37. Top 10 development markets 20142013 Rank Change 1. San Francisco 6.886.87- 2. San Jose 6.756.58+1 3. Houston 6.646.36+2 4. New York 6.586.76-2 5. Miami 6.385.89+6 6. Dallas/Fort Worth 6.376.20+1 7. Seattle 6.366.13 8. Boston 6.356.31-2 9. Minneapolis/St. Paul 6.275.06+16 10. Austin 6.256.40-6 Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

38. Top 10 homebuilding markets 20142013 Rank Change 1. San Francisco 7.746.80- 2. Houston 7.486.15+4 3. San Jose 7.406.58 4. Dallas/Fort Worth 7.365.86+6 5. Austin 7.346.26- 6. New York 7.196.42-3 7. Seattle 7.196.14- 8. Miami 7.065.44+8 9. Boston 6.876.05 10. Orange County, CA 6.855.91 Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only

39. Markets: 2014 emerging trendsMarkets: 2

40. East coast Boston 6.6 Washington DC 5.9 New York 6.8 Providence 4.3 Pittsburgh 5.5 Philadelphia 5.6 Northern NJ 5.9 Westchester/ Fairfield, CT 5.5 Baltimore 5.1

41. West coast Seattle 6.8 San Francisco 7.0 Los Angeles 6.5 Portland 6.5 San Jose 6.8 Sacramento 5.0 Inland Empire 5.9 Orange County 6.6 San Diego 6.5 Honolulu 5.7

42. Southwest Las Vegas 5.5 Phoenix 6.1 Tucson 5.1 Albuquerque 4.6 Oklahoma City 4.8 Denver 6.5 Dallas 6.8 Houston 7.0 Austin 6.7 San Antonia 6.3 Salt Lake City 6.4

43. Southeast Atlanta 6.1 New Orleans 4.5 Charlotte 6.4 Raleigh/Durham 6.3 Nashville 6.5 Memphis 4.5 Virginia Beach/Norfolk 5.2

44. Florida Miami 6.6 Jacksonville 5.0 Tampa 6.0 Orlando 5.9

45. Midwest Minneapolis 6.3 Kansas City 5.3 St. Louis 5.2 Chicago 6.1 Cincinnati 5.0 Columbus 4.9 Cleveland 4.2 Milwaukee 4.8 Detroit 3.1

46. Property type outlook Industrial leads the pack

47. Industrial takes the top spot Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only Abysmal Fair Excellent

48. Subsector outlook shows diversity of recovery Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only Abysmal Fair Excellent

49. Commercial development begins to look up Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only Abysmal Fair Excellent

50. Development prospects reflect where market is strongest Source: Emerging Trends in Real Estate 2014 survey Note: Based on US respondents only Abysmal Fair Excellent