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CB CBRE CB CB CBRE CBRE CBRE B B B B B B B B B B B B B B B B B R R R R R R m R R R R R R R R R R R R e R R R E E o E f E E E E E E E Sale/Leaseback Market S S l /L a l e / / L L b b b k

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SLIDE 1

S l /L b k M k Sale/Leaseback Market

Minnesota Commercial Association of Realtors March 15, 2012

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SLIDE 2 Contact Information CBRE Capital Steve Buss Executive Vice President CBRE – Capital Markets 952 924 4618 Markets Fort Parker 952.924.4618 steven.buss@cbre.com Fort Parker Vice President Angelo, Gordon & Co. 212.883.2495 Tim m Crowley fparker@angelogordon.com Tim Crowley Co-Founder Net Lease Holdings 314.991.1119 tcrowley@netleaseholdings.com

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SLIDE 3 Outline CBRE Capital 1. Introduction 2. Participants 3. Sale Lease/Back Activity Markets 4. Corporate Motivation for Sale/Leasebacks 5. Typical Lease Structures 6. Role of Credit and Financial Strength g 7. Impact of Real Estate Fundamentals 8. Audience Q&A

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SLIDE 4

AG Net Lease Financing AG Net Lease Financing

March2012

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SLIDE 5 AGOverview
  • $22BillioninAssetsUnderManagement*
(asofSeptember30,2011) Residential/ Private Hedged Strategies 2% Cash PE & Special Situations PPIP 12% Residential/ Consumer Debt 8% Private Equity 5% Cash 2% Distressed Securities 23% Corporate e Credit t Real l Estate Real Estate Debt 10% Credit * Estimate Corporate Credit (Leveraged Loans) 15% Real Estate 23% Credit Real Estate

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$22BillioninAss derManagement* (as of S 30, 2011)

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SLIDE 6 Angelo,GordonPlatform
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SLIDE 7 AGNetLeaseRealtyFunds
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SLIDE 8 IllustrativeTransactions

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SLIDE 9 PropertyandTenantBreakdown
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SLIDE 10

NET LEASE HOLDINGS (“NLH”)

Single-Tenant, NNN Sale-Leaseback Fund Founded 1994:
  • St. Louis, MO Headquarters
10 Today’s MNCAR Panelist = Tim Crowley (Co-Founder)

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Single-Tenant, NNN Sale-Leaseback Fund

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SLIDE 11

NLH Executive Team

Tim Crowley (Co Founder) St Louis University (BA) Tim Crowley - (Co-Founder) St. Louis University (BA) Luke Fouke - (Co-Founder) Yale Univ. (BA); Washington Univ. (MBA) Rob Hill - Princeton University (BA); Pepperdine University (MA) Lenders Accounting Tyler Willibrand - St. Louis University (BSBA) Single Tenant, NNN Real Estate Fund Legal Equity Investors g Enviro. Survey ($) Engineers Appraisals Survey

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y ( y ( Luke Fouke - (Co-Founder) Yale Univ. (BA); Washington Univ. (MBA) b Hill - Princeton University (BA); Pepperdine University (M

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SLIDE 12

NLH Investment Criteria

Transaction Size (Purchase Price)
  • $1 million to $10 million
Geography Geography
  • Anywhere in USA (past examples plotted)
Occupancy / Structure / Term
  • Single-tenant under an absolute triple-net (NNN) lease
  • [10] – 20 year lease terms (with shorter terms considered)
  • Annual rental increases (“Bumps”) = Yes; generally 2.0% or CPI
Property Types
  • Industrial, Warehouse/distribution, Flex/office, Healthcare, Medical, Retail
Tenant Credit Profile Tenant Credit Profile
  • Generally Sub-Investment Grade or Unrated Companies with Revenue between $10mm - $150mm

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Transaction Size (Purchase Price) million to $10 millio

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SLIDE 13

Some Past Examples

Memphis, TN Purchase: $6,000,000 Springfield, MO Purchase: $3,400,000 106,000 SF Office/Warehouse 120,000 SF Office/Warehouse Cincinnati, OH Purchase: $3,360,000 Saint Louis, MO Purchase: $2,948,069 84,941 SF Office/Warehouse 9,728 SF Medical Office NLH Average CapRate @ Purchase = 9.74%

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Memphis, TN Purchase: $6,000,000 R ringfield, MO se: $3,400,000 SF Offi 120,000 SF Office/Warehouse

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Cincinnati, OH Purchase: $3,360,000 t Lo se: $2,948,069 84,941 SF Office/Warehouse

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SLIDE 14

Sale/Leaseback Activity

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SLIDE 15 UHG – Optum Campus CBRE Capital Buyer: Angelo Gordon Seller: Markets UnitedHealth Group Square Feet: 473,325 , Broker: Jones Lang LaSalle Sale Price: $50,000,000 Sale Date: December 2011 Location: Eden Prairie, MN Source: Real Capital Analytics

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SLIDE 16 Blue Cross Blue Shield Buyer: : CBRE Capital Buyer: W.P . Carey Seller: Blue Cross Blue Shield Markets Blue Cross Blue Shield
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Square Feet: 1 040 930 1,040,930 Broker: CBRE Sale Price: $150,757,741 Sale e Date: Sale Date: January 2012 Location: Eagan, MN Eagan, MN Source: Real Capital Analytics

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SLIDE 17 Cargill – Excelsior Crossings C CBRE Capital Buyer: Hines Seller: Markets Cargill Square Feet: 254,915 Broker: CBRE Sale Price: $69,489,923 Sale Date: December 2011 Location: Hopkins, MN Source: Real Capital Analytics

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SLIDE 18 Sale/Leaseback Volume - US CBRE Capital $16.13 $16.00 $18.00 Markets $10.05 $13.17 $10 00 $12.00 $14.00
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$6.23 $9.20 $7.97 $6 00 $8.00 $10.00 In Billions of D $2.91 $4.27 $3.40 $3.72 $4.69 $2 00 $4.00 $6.00 $0.34 $- $2.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: Real Capital Analytics

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SLIDE 19 Sale/Leaseback Volume - Minneapolis CBRE Capital $327.76 $275 00 $300.00 $325.00 $350.00 Markets $206.90 $200.00 $225.00 $250.00 $275.00 Dollars $86 86 $161.22 $101.40 $132.78 $125.00 $150.00 $175.00 In Millions of $44.60 $86.86 $101.40 $78.94 $55.76 $32.43 $23.72 $35.05 $25 00 $50.00 $75.00 $100.00 $- $25.00 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Projected 2012 Source: Real Capital Analytics and CBRE

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SLIDE 20

Corporate Motivation

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SLIDE 21 BenefitsofSaleLeasebackTransactions
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SLIDE 22 UseofProceeds
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SLIDE 23

Typical Lease Structure

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SLIDE 24 Sale/Leaseback: Components of Value CBRE Capital Corporate Tenant/Credit Markets Lease Structure Real Estate Fundamentals A il bl Available Mortgage Debt

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SLIDE 25 TripleNetLeaseDefined
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SLIDE 26 Sale/Leaseback: Typical Terms CBRE Capital Investment Grade Sub-Investment Grade Lease Term 12-25 years 15-20 years Markets Rate Market Rate Below Market to Market Annual Increase Flat to 2 0% 2 0% to 3 0% Annual Increase Flat to 2.0% 2.0% to 3.0% Lease Structure Net or Bondable Net Net or Bondable Net C h if C Investor Financing Cash, Low Leverage Life Co, CTL CMBS, Bank Investor’s Type REITs, Pension Funds, Foreign REITs, Single Tenant Funds, Private Private Cap Rate 5.5% to 7.5% 8.0% to 11.0%

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SLIDE 27

Role of Credit & Role of Credit & Financial Strength

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SLIDE 28 T ’ S l d Fi i l Hi

Role of Credit and Financial Strength

  • Tenant’s Sales and Financial History
  • Balance Sheet and Income Statement Needed for Past 3 to 5 years
  • “How Much Leverage/Debt?” and “What are the Profit Margins?”
  • Tenant’s Industry Trends, Competitive Dynamics & Customer Concentration%
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  • Track Record of Private Equity Firm or Business Owners’ Equity Investment
Comparative Analysis to Industry Based Competitors Comparative Analysis to Industry-Based Competitors (Use SIC Code Comparison of Larger Publicly-Traded Competitors) "HOT BUTTON" PREFERENCES: Statistic Fixed Charge Coverage Ratio (FCCR) > 1 25x Fixed Charge Coverage Ratio (FCCR) > 1.25x Gross Profit Margins (GM %) > 30.0% EBITDA Margins > 10.0% Net Debt / EBITDA (Leverage Ratio) < 4.0x Total Revenues or Net Sales > $10,000,000 Return on Net Assets (RONA) > 25%

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SLIDE 29

Real Estate Fundamentals

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SLIDE 30

Impact of Real Estate Fundamentals

  • Strategic Importance of Property to Tenant’s Business
  • Demographic Analysis Helps Determine Ability to Re-Tenant Building
  • Engineering Report & Appraisal Determines Asset Quality and Construction Cost
  • Analysis of Available Square Feet in the Local Market vs. Building Size
  • Analysis of Available Square Feet in the Local Market vs. Building Size
NLH Target Opportunity: Building Cost Should Never Exceed Replacement Cost “I t t G d ” “S b I t t G d ” “Investment Grade” “Sub-Investment Grade” Walgreens = $550/sf on 14,500sf Kele, Inc. = $50/sf on 120,000sf

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  • Strategic Importance of Property to Tenant’s Business
  • Demographic Analysis Helps Dete
Ability to Re-Tenant Bu ngineering Report & Appraisal Determines Asset Quality and Constructio alysis of Available Square Feet in the Local Market vs. Buildin

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SLIDE 31

Q & A

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