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

2. 1 ■ Two Worlds Emerge ■ Changing Equity Markets ■ Transaction Activity – Where, Why and Who ■ Changing Debt is Back – Really? ■ The Crystal Ball Property & Finance Update Capital Drought or Capital Bubble – Depends on Where You Stand?

3. 2 Still Stuck in Two Very Different Worlds ■Enter REITVILLE (the have’s) –People are Happy, Optimistic – Generally More Fun –Better Asset Pricing –Cheaper Equity –Cheaper & Higher Leverage Debt –Ability to Price on 3 – 4 Year Forward 7 – 10% returns on Cost –Hard to Gain Access to This Neighborhood – its Gated ■Enter REALITYVILLE (the have not’s) –People are Overly Focused on Reality –Buyers Want Distress –Lenders Want Coverage!? –People Know How to Spell Recourse

4. 3 ■ Plenty of Capital – But Why the Increasing Appetite for Hotels?  First of all - Limited Good Alternatives Outside Real Estate  Within Real Estate – Only Hotel NOI Has Bottomed  NOI Growth Expectations for Hotels Crush Everybody Else (Hope it Happens)  Where is the Capital Formation - Public REITS, Private REITS, PE Funds, Domestic and International HNWs ■ The Divergent Investor Psychology:  Buy NOW (at almost any price) in Key Locations as We Have Bottomed Out!  Buy Distress – Much more to Come to Market Over the Next 2 – 5 years! All about expectations… Changing Equity Markets

5. 4 Confidence in Future Fundamentals Change in 2012 NOI Growth Expectations by Product Type Source: Green Street Advisors Hotel (31%, 23%)

6. 5 Source: Real Capital Analytics Domestic Sales Transaction Volume (Deals >$2.5mm) Change in Volume in 2010 Over 2009 (in $ Billions) YearHotelOfficeMulti-familyIndustrialRetailTotal 2009$3.0$17.3$16.7$10.7$15.0$62.8 2010$13.8$43.0$33.8$20.0$22.6$133.2 2010 vs. 2009 (% Change) 357.2%148.7%101.7%87.4%50.3%112.2%

7. 6 ■ 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 maturing debt) ■ Surging Confidence Among Lenders Leads to Action – Recovery Values move above Marked Loan Values – Lenders are in a Better Position to Get Aggressive So, who are the Buyers? Will Transaction Activity Continue to Accelerate?

8. 7 Hotel Acquisitions by Investor Type (Deals > $25 million) (1)Based on dollar ($) volume Source: Real Capital Analytics, Cushman & Wakefield Sonnenblick Goldman

9. 8 (1)Deals originated in United States Source: Real Capital Analytics, Cushman & Wakefield Sonnenblick Goldman # of Acq. PropertiesInstitutional Equity FundPublicPrivateTotal 2010/2009 TTM 3841126 2011/2010 TTM 1514352589 Hotel Buyers by Investor Type (Deals >$25mm) (in $ Millions)

10. 9 REIT Performance 2010 Hotel’s Continued to Outperform – Look at Expectations Forward! DividendNumberEquity MarketImplied Market 20092010 2010 Yield 2 of REITsCapitalization 3 3,4 Industrial/Office29.1717.043.673170,588,87475,350,401 Retail27.1733.413.472796,217,580105,970,657 Residential30.8246.013.331855,145,53657,868,638 Diversified17.0223.753.791128,651,91530,690,261 Lodging/Resorts67.1942.771.411123,341,02623,732,791 Health Care24.6219.205.281342,348,17242,693,590 S&P 50026.4615.06 Dow Jones Industrials18.8211.02 Source: NAREIT ®. Notes: 1 Data derived from the constituents of the FTSE NAREIT Composite REIT Index. 2 Dividend yield quoted in percent. 3 Data presented in thousands of dollars. 4 Implied market capitalization represents the sum of common shares outstanding and operating partnership units, multiplied by share price. Property Sector/Subsector Investment Performance by Property Sector and Subsector 1 (Percent change, except where noted. All data as of December 31, 2010) Total Return (%)

11. 10 ■ Lack of Debt or Lack of Cash Flow ■ Data is Supportive ■ Starting to Look Forward Again! ■ Yield is Sooo Compelling Relative to Options  (3.75 – 4.25%/Year Fixed for Core Office) ■ CMBS 2.0 or 1.2? $ 50 Billion in 2011 ■ Credit markets continue to strengthen as lenders compete for origination assignments – Debt yields have compressed – Larger Loans Can Now Execute – Expect Additional Spread Compression as Rates Rise - Competition ■ General Debt Parameters Debt is Back – In One of Two Worlds Anyway

12. 11 ■ Short-Term - Debt Costs to Drop Further for Key Assets and Begin to Tighten on the Borders – Capital – CMBS, Insurance Co’s, Healthier Banks – Supportive Fundamentals ■ Lack of Alternatives and NOI Growth Expectations Will Continue to Attract Equity Capital Through 2011 & 2012 (Major Risk is Failure to Deliver on Performance Dream) ■ Medium-Term – Debt Costs to Stabilize as Rates Rise and Spreads Compress (Again, Major Risk is Failure to Deliver on Performance Dream) ■ Higher Leverage Finance Will Emerge and Bring Private Equity Competition to REITs for a more Stabilized Trading Market ■ To be Updated Next Week… The Crystal Ball As Best I Dare