January 29, 2013 I. National Economy II. Atlanta Economy III. - - PowerPoint PPT Presentation

January 29, 2013

I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions

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NATIONAL ECONOMY

Recovery (GDP – Percentage Change)

Source: Bureau of Labor Statistics

R

1Q 2008

E

3Q 2009

Total loss in GDP is 18.7%

NATIONAL ECONOMY

Jobs (U.S. non-farm)

66% of jobs regained

11.7 MM

Jobs Lost 2007-2010

7.7 MM

Jobs Regained 2010-2012

Source: Bureau of Labor Statistics

120,000,000 122,000,000 124,000,000 126,000,000 128,000,000 130,000,000 132,000,000 134,000,000 136,000,000 138,000,000 140,000,000 2005 2006 2007 2008 2009 2010 2011 2012

Date: 2007 Pop: 233 MM Jobs: 139 MM Date: 2010 Pop: 239 MM Jobs: 127 MM Date: 2012 Pop: 244 MM Jobs: 135 MM

93 94 95 96 97 98 99 100 101 102 103 104 105

2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 Index of Total Payroll Jobs, where peak = 100

Length of Recovery (months)

2008-09 1990-91 2001 1980, 1981-82 1974-75

Temporary Census Workers not included Source: Jeff Rosensweig, Emory University Data: U.S. Dept. of Labor

Oct 1974 – July 1975 16 Months Mar 1980 – Oct 1982 10 Months Jun 1990 – Oct 1991 32 Months Feb 2001 – Feb 2006 48 Months Dec 2007 – Dec 2012 90 Months

NATIONAL ECONOMY

Duration (Job recovery after a recession)

NATIONAL ECONOMY

Reasons Slow Steady Expansion Will Continue

• United States doing comparatively well – global

business gravitates to stable economies

• Cost of debt is low
• Commodity prices are moderating because of low

global demand

• Neither capacity utilization or the labor market

is tight

NATIONAL ECONOMY

Reasons Economy May Falter

• Major event
• Payroll tax increase

› 2% (from 4.2 to 6.2%; $100B annually)

• Other tax rate increases

› Income tax: 35% to 39.6% for incomes exceeding $450K (a 10% increase; $17.5B annually) › Medicare: 3.8% additional tax on net income investment ($17.5B annually) › Capital gains: 15% to 23.8% (20% + 3.8%) (a 59% increase)

• Spending Cuts

NATIONAL ECONOMY

Conclusion

The national economy will continue a slow, shallow recovery.

I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions

2,200,000 2,250,000 2,300,000 2,350,000 2,400,000 2,450,000 2,500,000 2,550,000 2,600,000 2,650,000 2,700,000 2007 2008 2009 2010 2011 2012

ATLANTA ECONOMY

Atlanta Jobs

61% of jobs regained

265,935

Jobs Lost 2007-2010

162,835

Jobs Regained 2010- 2012

Source: Bureau of Labor Statistics

ATLANTA ECONOMY

Growth ► Jobs

AN IMBALANCED RECOVERY (000s) Jobs Lost

(since Nov 2007)

Jobs Regained

(since January 2010)

Percentage Regained

(as of Nov 2012)

U.S. 11,781 7,756 66

Source: Bureau of Labor Statistics

Washington, D. C. MSA 36.2 200.6 553.6 Dallas MSA (Texas) 53.6 229 427 San Francisco MSA 119.2 137.5 115 Boston MSA 114 91.1 80 Atlanta MSA 266 163 61 Chicago MSA 449 207 46 Los Angeles MSA 582 231 40 New York MSA 449 176 39

ATLANTA ECONOMY

Absorption

2007 2008 2009 2010 2011 2012 Office 3,243,255 343,226 (2,143,431) 120,280 163,986 2,045,214 Industrial 9,438,778 (2,960,710) (4,142,585) (2,796,091) 8,504,815 4,877,455

ATLANTA ECONOMY

Growth ► Jobs ► Absorption

Absorption Low-cost debt Eager equity Big increase in investment activity

= + +

Concourse Corporate Center

Atlanta – Central Perimeter

• 2,168,254 SF
• $311 MM | $142.43 PSF
• 5.8% Cap Rate
• 82% Occupancy
• Buyer: GEM Realty Capital / Equity

Group and Regent Partners

• Seller: TIAA-CREF

BIG DEALS

Investment Sales

Platinum Tower

Atlanta – Northwest

• 312,713 SF
• $48.1 MM | $153.81 PSF
• 7.6% Cap Rate
• 94% Occupancy
• Buyer: Beacon Investment
• Seller: CBRE Global Investors Strategic

Partners

BIG DEALS

Investment Sales

Federal Government Lease Portfolio

Atlanta, GA & Jackson, MS

• 552,571 SF
• $88 MM
• 7.1% Cap Rate
• 100% Occupancy
• Buyer: Government Properties Income

Trust

• Seller: Highwoods Properties

BIG DEALS

Investment Sales

Prominence

Office | Built in 2006

• 424,252 SF
• $100 MM | $236 PSF
• 6.0% Cap Rate
• 96% Occupancy
• Buyer: Crocker Partners
• Seller: EOP / TIAA-CREF

(Separately sold adjacent site for additional $5MM to Crocker)

BIG DEALS

Investment Sales

64 & 66 Perimeter Center East

Office | Built in ‘85 & ‘71; Renovated in ‘12

• 583,192 SF
• $118.5 MM | $203 PSF
• 6.8% Cap Rate
• 98% Occupancy
• Buyer: Wells Real Estate Funds
• Seller: Rubenstein Partners

BIG DEALS

Investment Sales

FedEx / BrandsMart

Industrial | Built in 2006

• 801,600 SF
• $48.5 MM | $57 PSF
• 7.6% Cap Rate
• 100% Occupancy
• Buyer: LaSalle Investment Management
• Seller: McDonald Development

BIG DEALS

Investment Sales

Prologis Atlanta Portfolio

• Size: 3,714,095 SF
• Price: $130,680,000 ($35.18/sf) sold in 3

tranches

• Cap: Varies by tranche
• Occupancy: 95%
• Seller: Prologis
• Buyers: USAA, TA Associates, Huntington

Industrial

BIG DEALS

Investment Sales

Satellite North

• Size: 153,624 SF
• Price: $8,750,000 ($56.96/sf)
• Cap: 6.5%
• Occupancy: 100%
• Seller: Seefried Properties
• Buyer: Goldman Sachs

BIG DEALS

Investment Sales

Norcross Center & Brook Hollow Business Park

• Size: 322,158 SF
• Price: $10,300,000 ($31.97/sf)
• Cap: 6.5% on in-place
• Occupancy: 64%
• Seller: James Campbell Company
• Buyer: Ackerman & Company

BIG DEALS

Investment Sales

Woodlands & Hamilton Mill

• Size: 659,898 SF
• Price: $26,875,000 ($40.73/sf)
• Cap: 7.5%
• Occupancy: 91%
• Seller: Colony Realty Partners
• Buyer: Cobalt Capital Partners

BIG DEALS

Investment Sales

BIG DEALS

Significant Transactions

Bank of America Plaza

Midtown

• $235 MM foreclosure
• $182/PSF
• 1.29 MM SF
• Special servicer: LNR
• Prior owner: Bentley Forbes

BIG DEALS

Significant Transactions

The Terraces

Central Perimeter

• $140 MM foreclosure
• $133/PSF
• 2 bldgs. / 1.05 MM SF
• Lender: Royal Bank of

Scotland

• Prior owner: Rubenstein

Partners

I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co Update V. Conclusions

Total SF 208,924,820 Vacant SF 39,416,256 Percent Vacant 18.9% SF Under Construction 1,511,443

• Avg. Annual Absorption (11-12) 1,104,600

2011 Net Absorption 163,986 2012 Net Absorption 2,045,214 %Vacant 36 Months @ Avg. 17.3%

METRO ATLANTA MARKET

Office

DOWNTOWN SUBMARKET

D

Office

Total SF 26,117,710 Vacant SF 5,039,572 Percent Vacant 19.3% SF Under Construction 0

• Avg. Annual Absorption (11-12) (369,078)

2011 Net Absorption (479,097) 2012 Net Absorption (259,058) %Vacant 36 Months @ Avg. 23.5%

MIDTOWN SUBMARKET

D

Office

Total SF 20,593,797 Vacant SF 3,684,473 Percent Vacant 17.9% SF Under Construction 450,000

• Avg. Annual Absorption (11-12) 245,839

2011 Net Absorption (69,755) 2012 Net Absorption 561,433 %Vacant 36 Months @ Avg. 14.3%

BIG DEALS

Office

PricewaterhouseCoopers, LLP

Midtown

• 139,490 SF
• 12th & Midtown
• Relocation (within Atlanta)
• 1100 employees
• Owner: Daniel Corp / Metlife
• Landlord Brokers: Doug Guedry of Daniel

Corp

• Tenant Brokers: Timothy Dempsey & John

Shlesinger of CBRE

BIG DEALS

Office

Alston + Bird, LLP

Midtown

• 366,569 SF
• One Atlantic Center
• Consolidation (139,482 SF)
• 847 employees
• Owner: Hines
• Landlord Brokers: Mark Ferris, John

Heagy, & Tori Kerr of Hines

• Tenant Brokers: Andrew Ghertner & John

Izard of Cushman & Wakefield

BUCKHEAD SUBMARKET

D

Office

Total SF 19,624,711 Vacant SF 3,315,543 Percent Vacant 17.9% SF Under Construction 147,500

• Avg. Annual Absorption (11-12) 597,527

½ 298,763 2011 Net Absorption 749,263 2012 Net Absorption 445,790 %Vacant 36 Months @ Avg. 8.75% 12.98%

BIG DEALS

Office

Suntrust Robinson Humprey

Buckhead

• 229,894 SF
• Atlanta Financial Center
• Expansion (137,596 SF)
• 950 employees
• Owner: Hines
• Landlord Brokers: John Heagy, Tori Kerr,

Brian Eichenseer & Scott Martin of Hines

• Tenant Brokers: Dom Wyant, Brad

Armstrong & Chris Wagner of JLL

BIG DEALS

Office

Kids II

Enter Submarket

• 105,818 SF
• Terminus 200
• Relocation (from Alpharetta)
• 230 employees
• Owner: Cousins
• Landlord Brokers: Walter Fish, Anton Kotze

& Cameron Gordon

• Tenant Brokers: Mitchell Kahler & James

Sanders of ICON Commercial

NORTHWEST SUBMARKET

D

Office

Total SF 33,347,877 Vacant SF 6,288,456 Percent Vacant 18.9% SF Under Construction 117,467

• Avg. Annual Absorption (11-12) 99,780

2011 Net Absorption 200,921 2012 Net Absorption (1,361) %Vacant 36 Months @ Avg. 18.0%

CENTRAL PERIMETER SUBMARKET

D

Office

Total SF 28,638,264 Vacant SF 5,740,266 Percent Vacant 20.0% SF Under Construction 0

• Avg. Annual Absorption (11-12) 461,146

2011 Net Absorption (215,446) 2012 Net Absorption 1,137,738 %Vacant 36 Months @ Avg. 15.2%

BIG DEALS

Office

State Farm Insurance

Central Perimeter

• 434,513 SF
• Perimeter Center East
• Consolidation (to Atlanta – new jobs)
• 750 employees
• Owner: Rubenstein Partners / Wells Real

Estate Funds

• Leasing Brokers: Andy Sumlin & Caroline

Nolen of Cushman & Wakefield

• Tenant Representatives: Sam Holmes and

John Shlesinger of CBRE

NORTH FULTON SUBMARKET

D

Office

Total SF 24,215,566 Vacant SF 4,839,654 Percent Vacant 20.0% SF Under Construction 102,000

• Avg. Annual Absorption (11-12) 2,464

2011 Net Absorption 108,559 2012 Net Absorption (103,632) %Vacant 36 Months @ Avg. 19.9%

METRO ATLANTA MARKET

D

Industrial

Total SF 579,204,962 Vacant SF 71,229,875 Percent Vacant 12.3% SF Under Construction 1,598,581

• Avg. Annual Absorption (11-12) 6,691,135

2011 Net Absorption 8,504,815 2012 Net Absorption 4,877,452 %Vacant 36 Months @ Avg. 9.0%

Total SF 153,032,648 Vacant SF 16,684,712 Percent Vacant 10.9% SF Under Construction 659,497

• Avg. Annual Absorption (11-12) 1,924,996

2011 Net Absorption 1,760,564 2012 Net Absorption 2,086,427 %Vacant 36 Months @ Avg. 7.1 %

NORTHEAST SUBMARKET

D

Industrial

BIG DEALS

Industrial

Carter’s

Northeast / Braselton / W. Jackson Ind

• 1,061,663 SF
• 625 Braselton Parkway
• Renewal / Expansion (by 505,269 SF)
• Owner: Duke
• Leasing Company: Brian Sutton of Duke
• Tenant Representative: Blaine Kelley of

CBRE

BIG DEALS

Industrial

FedEx BTS

Northeast Atlanta

• 215,000 SF
• 6721 Atlantic Boulevard
• New
• Owner & Landlord: Paranet Corporation

Services, Inc.

SOUTH ATLANTA SUBMARKET

D

Industrial

Total SF 149,281,560 Vacant SF 19,768,722 Percent Vacant 13.2% SF Under Construction 285,600

• Avg. Annual Absorption (11-12) 3,169,799

2011 Net Absorption 5,846,600 2012 Net Absorption 492,997 %Vacant 36 Months @ Avg. 6.9%

BIG DEALS

Industrial

Owens Corning

(Insulation and Roofing maker) Airport/North Clayton Ind.

• 1,044,288 SF
• 8095 McLarin Road
• Relocation / Expansion (from 2 nearby

buildings at 1200 Oakley Industrial Blvd.)

• Owner: USAA Real Estate Company
• Leasing Company: Brian Cardoza of

Prologis

• Tenant Representatives: Paul Roeser, Bob

Robers & Ryan Wood of JLL

BIG DEALS

Industrial

Nestle Purina Petcare

South Atlanta

• 448,172 SF
• 5005 Terminus Drive
• New
• Owner: Hodges MD Enterprises
• Leasing Company: Chet Koenig
• f Avison Young
• Tenant Representative: Blaine Kelley
• f CBRE

BIG DEALS

Industrial

Carter’s

S Clayton/Henry Cnty Ind.

• 311,000 SF
• Space Center Building
• Expansion (216,000 SF)
• Owner: Space Center Atlanta
• Leasing Company: Greg Haynes & Todd

Barton of CBRE

• Tenant Representative: Blaine Kelley
• f CBRE

Total SF 89,265,098 Vacant SF 12,235,679 Percent Vacant 13.7% SF Under Construction 653,484

• Avg. Annual Absorption (11-12) 498,835

2011 Net Absorption (206,811) 2012 Net Absorption 1,204,480 %Vacant 36 Months @ Avg. 12.0%

I-20 W/FULTON INDUSTRIAL SUBMARKET

D

Industrial

BIG DEALS

Industrial

New Breed Logistics

I-20W/Fulton Industrial

• 439,487 SF
• 5400 Fulton Industrial Blvd.
• New
• Owner: FIB Grocer CDP LLC
• Landlord Representative: Scott Plomgren
• f Colliers International
• Tenant Representative: Dan Rose of

Cassidy Turley

METRO ATLANTA MARKET

D

Retail

Total SF 350,320,885 Vacant SF 35,322,718 Percent Vacant 10.1% SF Under Construction 367,061

• Avg. Annual Absorption (11-12) 1,161,356

2011 Net Absorption 473,213 2012 Net Absorption 1,849,498 %Vacant 36 Months @ Avg. 8.8%

BUCKHEAD SUBMARKET

D

Retail

Total SF 13,189,767 Vacant SF 1,021,267 Percent Vacant 7.7% SF Under Construction 0

• Avg. Annual Absorption (11-12) 49,724

2011 Net Absorption (275,716) 2012 Net Absorption 375,163 %Vacant 36 Months @ Avg. 6.6%

CENTRAL PERIMETER SUBMARKET

D

Retail

Total SF 10,640,265 Vacant SF 896,650 Percent Vacant 8.4% SF Under Construction 0

• Avg. Annual Absorption (11-12) 159,048

2011 Net Absorption 97,589 2012 Net Absorption 220,506 %Vacant 36 Months @ Avg. 3.9%

GA 400 SUBMARKET

D

Retail

Total SF 34,007,309 Vacant SF 3,525,777 Percent Vacant 10.4% SF Under Construction 9,977

• Avg. Annual Absorption (11-12) 237,801

2011 Net Absorption 286,328 2012 Net Absorption 189,366 %Vacant 36 Months @ Avg. 8.3%

NORTH COBB SUBMARKET

D

Retail

Total SF 41,896,805 Vacant SF 4,042,147 Percent Vacant 9.6% SF Under Construction 449,388

• Avg. Annual Absorption (11-12) 115,470

2011 Net Absorption (159,426) 2012 Net Absorption 390,366 %Vacant 36 Months @ Avg. 8.8%

Current Market Conditions Future Market Conditions % Vacancy 36 Months Average

MARKET UPDATE | 2012

Office

Metro Atlanta Downtown Midtown Buckhead Northwest Central Perimeter North Fulton 17.3% 23.5% 14.3% 12.0% 18.0% 15.2% 19.9%

Current Market Conditions Future Market Conditions % Vacancy 36 Months Average

MARKET UPDATE | 2012

Industrial

Metro Atlanta Northeast South Atlanta I-20 W/Fulton Ind. 9.0% 7.1% 6.9% 12.0%

Current Market Conditions Future Market Conditions % Vacancy 36 Months Average

MARKET UPDATE | 2012

Retail

Metro Atlanta Buckhead Central Perimeter Georgia 400 North Cobb 8.8% 6.6% 3.9% 8.3% 8.8%

I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions

2012 YEAR IN REVIEW

D

Ackerman & Co. Goals

• Lease 800,000 SF in existing portfolio

› 68% Achieved

− Mozley Finlayson 35,000 SF − McGriff Siebel 62,000 SF − Shorter College 27,000 SF − Northside Hospital 12,000 SF − Other deals 404,000 SF TOTAL 540,000 SF

2012 YEAR IN REVIEW

D

Ackerman & Co. Goals

• Lease 800,000 SF in existing portfolio

› 68% Achieved

• Acquire 4 new assets

› 100% Achieved

2012 YEAR IN REVIEW

D

Acquisition Highlights Academy Warner Robbins

• January 2012
• $3.4 MM
• 62,000 SF

2012 YEAR IN REVIEW

D

Acquisition Highlights Winn Medical Center

• March 2012
• $3.6 MM
• 65,200 SF

2012 YEAR IN REVIEW

D

Acquisition Highlights Westside Center

• December 2012
• $5.8 MM
• 60,458 SF

2012 YEAR IN REVIEW

D

Acquisition Highlights Norcross Center & Brook Hollow Business Park

• January 2013
• $10.3 MM
• 322,158 SF

2012 YEAR IN REVIEW

D

Ackerman & Co. Goals

• Lease 800,000 SF in existing portfolio

› 68% Achieved

• Acquire 4 new assets

› 100% Achieved

• Sell 4 new assets

› 50% Achieved

2012 YEAR IN REVIEW

D

Dispositions Highlights Academy Warner Robbins

• November 2012
• $12 MM

2012 YEAR IN REVIEW

D

Dispositions Highlights Camp Creek III

• January 2012
• $8.8 MM

2012 YEAR IN REVIEW

D

Ackerman & Co. Goals

• Lease 800,000 SF in existing portfolio

› 68% Achieved

• Acquire 4 new assets

› 100% Achieved

• Sell 4 new assets

› 50% Achieved

• Develop 2 new medical centers

› 50% Achieved

2012 YEAR IN REVIEW

D

Under Construction Henry Physician Center

• December 2012
• 60,000 SF MOB

2012 YEAR IN REVIEW

D

Ackerman & Co. Goals

• Lease 800,000 SF in existing portfolio

› 68% Achieved

• Acquire 4 new assets

› 100% Achieved

• Sell 4 new assets

› 50% Achieved

• Develop 2 new medical centers

› 50 % Achieved

• Grow brokerage volume by $2MM

› 100% Achieved

2012 YEAR IN REVIEW

D

Ackerman & Co. Goals

• Lease 800,000 SF in existing portfolio

› 68% Achieved

• Acquire 4 new assets

› 100% Achieved

• Sell 4 new assets

› 50% Achieved

• Develop 2 new medical centers

› 50 % Achieved

• Grow brokerage volume by $2MM

› 100% Achieved

• Add 500,000 SF of management and leasing

› 160% Achieved; added more than 800K SF

• Lease 800,000 SF in existing portfolio.
• Make four new acquisitions.
• Sell four assets.
• Develop two new medical buildings.
• Grow brokerage volume by $2MM.
• Add 500,000 SF of management and leasing.

2013 Goals:

D

Ackerman & Co.

I. National Economy II. Atlanta Economy III. Market Update IV. Ackerman & Co. Update V. Conclusions

• Atlanta office absorption is coming back.
• Jobs are returning (even construction) and those

people need work space.

• Short-term, no T.I. renewals are still common; but

increasingly some tenants are choosing to go long because terms are not getting better.

• Debt and equity are plentiful
• Keys to successful acquisitions:

› Fundamentally good real estate › Good basis › Current income

CONCLUSIONS

.

Office

• Absorption is positive two years in a row – but a few

big deals still carry too much impact.

• Demand is being driven by GDP growth and exports.
• Functional product at distressed pricing is hard to

find; must have motivated seller and under leased product.

• Housing recovery will provide small tenant

absorption.

• Development is occurring.

CONCLUSIONS

.

Industrial

• It is very difficult to make broad, accurate conclusions

about retail.

• The credit tenant market and grocery-anchored retail

are at all time high.

• Smaller, simpler projects are doing better.
• Key to retail investment are:

› Good location › Great parking › Food, entertainment, and low-price point merchants › Barriers to entry; intown preferred

CONCLUSIONS

D

Retail

ON THE ECONOMIC, BUSINESS & POLITICAL ENVIRONMENT Roger Tutterow, Ph.D. Mercer University

Tutterow_RC@Mercer.edu

Question #1:

42 months into a recovery and we are still talking about "double dips" - why is the economy so sluggish and when will it turn around?

GDP vs. Final Sales

GDP = Consumption Gross Investment Net Exports Government

2011:Q4 4.1 1.45 3.72

• 0.64
• 0.43

2012:Q1 2.0 1.72 0.78 0.06

• 0.60

2012:Q2 1.3 1.06 0.09 0.23

• 0.14

2012:Q3 3.1 1.12 0.85 0.38 0.75 Contributions To GDP Growth

Gross Investment = Nonresidential Residential

Inventory

2011:Q4 3.72 0.93 0.26 2.53 2012:Q1 0.78 0.74 0.43

• 0.39

2012:Q2 0.09 0.36 0.19

• 0.46

2012:Q3 0.85

• 0.19

0.31 0.73

Source: Bureau of Economic Resource

Institute of Supply Management’s “PMI”

Consumer Sentiment

60 70 80 90 100

Index of Consumer Sentiment Index of Current Economic Conditions Index of Consumer Expectations

3Q-07 4Q-07 1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09 1Q-10 2Q-10 3Q-10

Consumer Sentiment

Retail Sales

• 14%
• 12%
• 10%
• 8%
• 6%
• 4%
• 2%

0% 2% 4% 6% 8% 10% 12%

Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jul-08 Nov-08 Mar-09 Jul-09 Nov-09 Mar-10 Jul-10 Nov-10 Mar-11 Jul-11 Nov-11 Mar-12 Jul-12 Nov-12

Leading Economic Indicators

(source: Conference Board, % change in last 6 months)

Question #2:

If the economy is truly growing, why is job growth so low?

• 800
• 700
• 600
• 500
• 400
• 300
• 200
• 100

100 200 300 400 500 600

Jan-01 May-01 Sep-01 Jan-02 May-02 Sep-02 Jan-03 May-03 Sep-03 Jan-04 May-04 Sep-04 Jan-05 May-05 Sep-05 Jan-06 May-06 Sep-06 Jan-07 May-07 Sep-07 Jan-08 May-08 Sep-08 Jan-09 May-09 Sep-09 Jan-10 May-10 Sep-10 Jan-11 May-11 Sep-11 Jan-12 May-12 Sep-12

Change in Employment

(non-farm payrolls)

U.S. Average Labor Participation Rate

Employment By State (2009 to 2010)

• 3%
• 2%
• 1%

0% 1% 2% 3%

North Dakota DC Alaska Texas Indiana Massachusetts Vermont West Virginia Kentucky Pennsylvania New York Arkansas South Dakota Michigan Tennessee Rhode Island Maryland Virginia Montana South Carolina Nebraska New Hampshire Mississippi Wisconsin Maine Utah Iowa Minnesota Oregon Hawaii Illinois Ohio Louisiana Alabama Delaware Oklahoma New Jersey Florida Colorado Connecticut Idaho North Carolina Wyoming New Mexico California Missouri Georgia Kansas Washington Arizona Nevada

State Employment (2010 to 2011)

• 2%
• 1%

0% 1% 2% 3% 4% 5% 6%

North Dakota DC Utah Texas Michigan Tennessee Colorado New York Louisiana Oklahoma Minnesota Indiana Washington Maryland Virginia Alaska Kentucky Pennsylvania North Carolina South Carolina Florida Georgia Oregon Wyoming Arizona West Virginia Connecticut Ohio Illinois California Hawaii Deleware South Dakota Kansas Nevada Vermont Massachusetts Iowa Idaho Wisconsin Nebraska New Hampshire Rhode Island New Jersey New Mexico Maine Missouri Mississippi Arkansas Alabama Montana

State Employment (2011 to 2012)

• 2%
• 1%

0% 1% 2% 3% 4% 5% 6% 7%

North Dakota Oklahoma Utah Texas Arizona Kentucky Louisiana Indiana Colorado Washington California Idaho Ohio Hawaii New York Tennessee South Carolina Georgia Minnesota Maryland Michigan New Jersey Virginia Massachusetts Vermont Dist of Col North Carolina Iowa Florida Nebraska Kansas Oregon Nevada Montana Wyoming Pennsylvania Arkansas Illinois South Dakota Alabama Missouri Connecticut Delaware Alaska New Hampshire West Virginia Maine Mississippi New Mexico Wisconsin Rhode Island

Change in Employment: GA

Change in Employment: GA & ATL

Albany Athens Atlanta Augusta Brunswick Columbus Dalton Gainesville Hinesville Macon Rome Savannah Valdosta Warner Robins

0% 2% 4% 6% 8% 10% 12%

• 25%
• 20%
• 15%
• 10%
• 5%

0% Recovery Recession

Employment Change: GA

Job Grow th by Sector

(y/y though August 2012)

Question #3:

Oil prices have been falling as of late. Is that the new normal? And, does that take all the inflation worries off the table?

Prices: What Happened to Deflation?

• CPI was flat in December, after being down 0.3% in

November and up 0.1% in October.

• Core up 0.1% in December and November, after

being up 0.2% in October.

• Overall CPI up at an 1.7% annual rate over last 12
• months. Core up 1.9% over same period.
• Energy component up 0.5% over last 12 months.

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0%

Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12

Core CPI

Crude Oil

(Spot Price, WTI)

PPI Commodity Index 100 120 140 160 180 200 220

Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11

Question #4:

"Operation Twist" has been extended until the end of

• 2012. Can the "Fed" save the day and where do

interest rates go from here?

Federal Funds Rate Short Rates on Hold to ‘15?

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0%

Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12

10-Year Treasury Bond Tw ist Again?

Mortgage Spreads

0.0% 0.3% 0.6% 0.9% 1.2% 1.5% 1.8% 2.1% 2.4% 2.7% 3.0%

Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12

Question #5:

What about the financial institution balance sheets - are they finally firming? When will the bank failures end?

Charge Offs Peaked?

0.0 0.3 0.5 0.8 1.0 1.3 1.5 1.8 2.0 2.3 2.5 2.8 3.0 3.3

Jan-90 Jul-90 Jan-91 Jul-91 Jan-92 Jul-92 Jan-93 Jul-93 Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11

Total Balance by Delenquincy Status

Mortgage Delinquency Rates

Mortgage Delinquency Rates

Question #6:

Europe is in shreds, growth is slowing in China - what's slowing down global growth and how does it affect the US?

60 70 80 90 100 110 120 130 140 150

Jan-80 Jan-82 Jan-84 Jan-86 Jan-88 Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02 Jan-04 Jan-06 Jan-08 Jan-10 Jan-12

Foreign Exchange: $ vs. Major Currencies

Emerging Market GDP Grow th

Source: Global Insight

Question #7:

Historically, residential and commercial real estate have been important parts of the local economies, when does housing, and real estate in general, start to recover?

Construction Spending

Construction Spending: Private

NAHB Housing Market Index

Housing Starts: SF and Total

(12 month moving average)

Housing Starts: Multi-family

(12 month moving average)

Total Permits: Atlanta

(SAAR)

Home Prices & CPI

CS/S& P Home Price Index (FROM PEAK TO AUGUST 2012)

• 70%
• 60%
• 50%
• 40%
• 30%
• 20%
• 10%

0%

Dallas Denver Charlotte Boston Cleveland New York Washington Portland Seattle Composite-10 Composite-20 Chicago Atlanta Minneapolis San Diego Los Angeles San Francisco Detroit Tampa Miami Phoenix Las Vegas

Home Prices: Southeast

Case Shiller: Atlanta & US-20

Median Existing Home Prices

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar-00 Mar-01 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11

Office Industrial

Commercial Vacancy Rates

Non-Residential Construction

30 35 40 45 50 55 60 65

Nov-95 Jun-96 Jan-97 Aug-97 Mar-98 Oct-98 May-99 Dec-99 Jul-00 Feb-01 Sep-01 Apr-02 Nov-02 Jun-03 Jan-04 Aug-04 Mar-05 Oct-05 May-06 Dec-06 Jul-07 Feb-08 Sep-08 Apr-09 Nov-09 Jun-10 Jan-11 Aug-11 Mar-12 Oct-12

Architecture Billings Index (AIA)

Question #8:

With the election just ending and “fiscal cliff #1” clear, where do we head politically?

Election 2012: President

Currents Issues in Fiscal Affairs

• Federal:

– “Bush Cuts” < 400K made permanent, government shutdown & default avoided in 2011 – what about 2013? – Mandatory budget cuts forthcoming?

• State:

– Sensitivity of federal & state tax revenues to economic activity depends on tax structure – Bond ratings preserved? – Tax Reform Initiatives in States?

• Local:

– RE valuation and revenues – Fiscal distress moderating

Brokerage Insights

• CBRE (Team Yowell)
• Cushman & Wakefield
• Ackerman & Co.
• CBRE (Team Budnick)

Will Yowell Jay O’Meara

Concourse Corporate Center

Atlanta – Central Perimeter

• 2,168,254 SF
• $311 MM | $142.43 PSF
• 5.8% Cap Rate
• 82% Occupancy
• Buyer: GEM Realty Capital /

Equity Group and Regent Partners

• Seller: TIAA-CREF

Platinum Tower

Atlanta – Northwest

• 312,713 SF
• $48.1 MM | $153.81 PSF
• 7.6% Cap Rate
• 94% Occupancy
• Buyer: Beacon Investment
• Seller: CBRE Global Investors

Strategic Partners

Federal Government Lease Portfolio

Atlanta, GA & Jackson, MS

• 552,571 SF
• $88 MM
• 7.1% Cap Rate
• 100% Occupancy
• Buyer: Government Properties

Income Trust

• Seller: Highwoods Properties

Samir Idris

Prominence

Office | Built in 2006

• 424,252 SF
• $100 MM | $236 PSF
• 6.0% Cap Rate
• 96% Occupancy
• Buyer: Crocker Partners
• Seller: EOP / TIAA-CREF

(Separately sold adjacent site for additional $5MM to Crocker)

64 & 66 Perimeter Center East

Office | Built in ‘85 & ‘71; Renovated in ‘12

• 583,192 SF
• $118.5 MM | $203 PSF
• 6.8% Cap Rate
• 98% Occupancy
• Buyer: Wells Real Estate Funds
• Seller: Rubenstein Partners

FedEx / BrandsMart

Industrial | Built in 2006

• 801,600 SF
• $48.5 MM | $57 PSF
• 7.6% Cap Rate
• 100% Occupancy
• Buyer: LaSalle Investment

Management

• Seller: McDonald Development

John Speros Kyle Gable

Brian Budnick

Prologis Atlanta Portfolio

• Size: 3,714,095 SF
• Price: $130,680,000 ($35.18/sf)

sold in 3 tranches

• Cap: Varies by tranche
• Occupancy: 95%
• Seller: Prologis
• Buyers: USAA, TA Associates,

Huntington Industrial

Satellite North

• Size: 153,624 SF
• Price: $8,750,000 ($56.96/sf)
• Cap: 6.5%
• Occupancy: 100%
• Seller: Seefried Properties
• Buyer: Goldman Sachs

Norcross Center & Brook Hollow Business Park

• Size: 322,158 SF
• Price: $10,300,000 ($31.97/sf)
• Cap: 6.5% on in-place
• Occupancy: 64%
• Seller: James Campbell

Company

• Buyer: Ackerman & Company

Woodlands & Hamilton Mill

• Size: 659,898 SF
• Price: $26,875,000 ($40.73/sf)
• Cap: 7.5%
• Occupancy: 91%
• Seller: Colony Realty Partners
• Buyer: Cobalt Capital Partners

Thank you!