Investment, Leasing & Development Trends in the U.S., Asia and - - PowerPoint PPT Presentation

Investment, Leasing & Development Trends in the U.S., Asia and Western Europe: How do they compare with Calgary and the Canadian Market?

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Moderator:

Patrick McFetridge, Executive Vice President CB Richard Ellis

Panel:

Paul Boneham, Senior Vice President, Acquisitions Kennedy Associates Real Estate Counsel LLC Chris Broccolo, Principal, Marketing & Leasing Verus Partners LP Yves-Andre Godon, Managing Director SITQ

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Page 3 Source: CBRE Torto Wheaton Research 2008

Question: Paul Boneham A wide Bid/Ask gap has emerged between Buyers and Sellers. Will this Spread widen or narrow in 2009?

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Question: Paul Boneham Will the US Troubled Asset Relief Program (TARP) include offerings in direct commercial real estate assets?

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Forced and Distressed Sellers Industrial Closings

Source: Global Capital Trends, Real Capital Analytics, Inc.

Question: Chris Broccolo Merchants Developers are typically highly levered; do you think industrial developers will be a major source of distressed sales in 2009? a) What does a current financing package to develop industrial project in the US look like versus the financing package to develop a similar project Calgary?

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Question: Chris Broccolo We were starting to see Green Design incorporated in industrial developments throughout North America. Is Green Design and its higher upfront costs taking a back seat to other financial considerations?

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Sources of Acquisition Financing

Question: Paul Boneham Who will fill the debt void in 2009? a) What does US debt pricing currently look like?

Net Borrowing as % of GDP

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Cap Rates Question: Yves-Andre Godon Global Commercial Real Estate markets have performed in a highly correlated manner. Yields in both Europe and N. America have backed up 75 bp to 100 bp. Is SITQ concerned that diversification of risk is not being met by investing through different geographic regions?

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Source: Global Capital Trends, Real Capital Analytics, Inc.

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Question: Yves-Andre Godon If you can buy good quality Canadian REITs at yields between 9 - 11% why would you buy direct investments yielding 7%?

Name Price Distr. ($/Unit) Yield

Artis $10.00 1.0800 10.8% CREIT $22.00 1.3600 6.2% Dundee $19.97 2.2000 11.0% H&R $9.89 1.4400 14.6% Morguard $9.00 0.9000 11.7% Whiterock $7.36 1.1220 15.2% Primaris $12.08 1.2240 10.1% RioCan $16.59 1.3800 8.1% Calloway $14.70 1.5500 10.5% Crombie $8.59 0.8900 10.4% AVERAGE 10.86%

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Industrial Construction Completions

Source: CBRE United States National Office Vacancy Index

Question: Chris Broccolo How does the risk/reward ratio of developing industrial product in Calgary compare to developing industrial product in US markets?

United States Calgary

Source: CBRE

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a) Are construction costs in US declining? Do you see Calgary construction cost declining in 2009?

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Question: Chris Broccolo If serviced industrial land in Calgary is trading at between $600,000 and $750,000 per acre, how does this pricing compare to industrial land prices in Us markets? How liquid is industrial land in the markets that you operate?

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Page 12 Source: Global Capital Trends, Real Capital Analytics, Inc.

Volume Question: Paul Boneham There is lots of equity on the sidelines, and commercial real estate values have not dramatically declined (-10%). Will equity shift to other asset classes that have been more beat up and may therefore offer more upside?

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Page 13 Source: Global Capital Trends, Real Capital Analytics, Inc.

* 90-day rolling average

Question: Yves-Andre Godon Asian Markets have maintained there value significantly better than EMU and the American markets. Are you inclined to invest in the Asian markets because they have shown resilience or go to the European and US markets where prices have already decreased 8-10%? Acquisition Yields*

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Page 14 Source: Capital Trends Monthly, Real Capital Analytics, Inc.

Mega Deals and Portfolios*

* 3 month rolling average

Question: Paul Boneham Large property deals (+$100M) have fallen by 50% this year. Do your funds see this space as an

• pportunity to buy at better pricing?

a) What will take to get them to back into the market? b) Will they go for core or

• pportunistic acquisitions?

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Cap Rate Grade A

Question: Yves-Andre Godon If Canadian Class A Office Cap Rates are currently in the low 6’s and emerging market Class A Office Cap Rates are only 100-150 b.p. higher, is this yield premium high enough to justify the associated lack of transparency and political risk?

Source: CBRE

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