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October 1, 2012 new york, ny Perspectives on Book Value
Mick McGuire, Marcato Capital Management

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PerspectivesonBookValue: FindingHiddenValueontheBalanceSheet October2012

Disclosures

This document is confidential and intended solely for the addressee and may not be published or distributed without the express written consent of Marcato Capital Management, LLC (Marcato). This document is not intended for public use or distribution. This document does not constitute either an offer to sell or a solicitation of an offer to buy any interest in any fund associated with Marcato. Any such offer would only be made at the time a qualified offeree receives the funds confidential offering memorandum and related subscription documentation (together, the Offering Documents). To the extent, therefore, there is any inconsistency between this document and the Offering Documents, the Offering Documents govern in all respects. Figures provided herein are rounded as applicable. Information contained herein is believed to be accurate and/or derived from sources which Marcato believes to be reliable; however Marcato disclaims any and all liability as to the completeness or accuracy of the information contained herein and for any omissions of material facts. Securities or investment ideas are presented to illustrate Marcatos typical research process and not to suggest or show profitability of any or all transactions. There should be no assumption that any specific portfolio securities identified and described herein were or will be profitable. Marcato may, at any time, reevaluate its holdings in any such positions.

<1>

Conservative Accounting Rules For Property Create Opportunity

Under GAAP Codification Section 360, land is recorded at cost and is then subject to an ongoing recoverability/impairment test. In most all cases, the carrying value of the land at any point in time is the lower of cost or fair value.

This can lead to major understatements when the market value of a property is well above its original cost, and often occurs when the property in question is very old.

Source: FASB.

<2>

Undervalued Land On The Balance Sheet

I. Alexander & Baldwin (ALEX) II. Gencorp (GY) III. Brookfield Residential Properties (BRP)

<3>

I. Alexander & Baldwin (ALEX)

<4>

Alexander & Baldwin, Inc.


Alexander & Baldwin is one of the most important companies in Hawaiis history and present-day economy Founded as a sugar plantation in 1870 in Hawaii, Alexander & Baldwin owns real estate businesses Ticker: ALEX Recent Stock Price: $30 (1)
7.9 million square feet of developed GLA on Hawaii and the U.S. mainland Real estate development pipeline on Hawaii comprising ~88,000 acres

Capitalization:
Equity Market Value: $1.3 billion Total Enterprise Value: $1.5 billion

Operating Statistics (2):


2011 Revenue: $272 million 2011 EBITDA: $86 million

Source: Company documents (1) All financials in this presentation assume a stock price of $30 (2) Excludes discontinued operations
<5>

A&B Properties, Inc.


7.9m of commercial GLA on Hawaii and the U.S. mainland
Acquired by reinvesting proceeds of property sales over time through taxdeferred 1031 exchanges Diversified across office, retail, industrial Currently 92% leased and generating income

Development pipeline in Hawaii


Resort and residential properties in different stages of development Fully owned projects comprising ~620 entitled acres JV projects requiring minimal cash contributions, comprising over 1,000 acres

Ownership of additional hidden land assets


>75,000 additional acres on Maui and Kauai for potential future development Extremely low basis given acquisition circa ~1870 Currently being farmed as a holding strategy

Source: Company documents

<6>

ALEX: Balance Sheet Snapshot

Completed development properties for sale

JV development projects

Fully owned development projects

Retained investment properties (ie, leased CRE)

Source: Company documents

<7>

An NAV Calculation Will Include All of ALEXs Real Estate Assets

A bottoms-up analysis requires an assessment of three different categories of assets

Leased, income-generating commercial real estate portfolio


Hawaii Mainland

Easy to Value

Development pipeline in Hawaii


Fully owned projects JVs

Additional land assets


Low basis land for potential future development, currently being farmed as a holding strategy, comprising roughly 20% of Maui and 15% of Kauai

Harder to Value

Source: Company documents

<8>

Leased Commercial Properties: Hawaii


We believe ALEXs leased commercial real estate on Hawaii is worth over $400m

Industrial Office Retail Unimproved Land (1) Total Value 2011 NOI Blended cap rate Value

Occupancy 2009 2010 96% 86% 90% 96% 91% 95%

2011 89% 92% 92%

Recent Ow ned Market Sq. Ft. Price / Sq Ft. 564,800 $100 185,800 694,980 11,770 150 400 5,000

Value $56 28 278 59 $421

$26.5 6.5% $408

$26.5 6.0% $442

Source: Company documents, Marcato estimates (1) Represents land leased to third parties and included in reported NOI. Numbers represent acres and $ / acre
<9>

Leased Commercial Properties: Mainland


We believe ALEXs leased commercial real estate on the mainland is worth close to $500m today, and could be worth more as rents and occupancy improve from cyclically depressed levels
Recent Ow ned Market Sq. Ft. Price / Sq Ft. 4,466,800 $50 1,267,800 726,000 28 150 175 0

Industrial Office Retail Unimproved Land Total Value 2011 NOI Blended cap rate Value
(1)

Occupancy 2009 2010 82% 83% 86% 90% 84% 91%

2011 95% 84% 88%

Value $223 190 127 0 $541

$34.3 7.5% $457

$34.3 6.5% $528

Source: Company documents, Marcato estimates (1) Numbers represent acres and $ / acre

< 10 >

ALEX: Valuation

Balance Sheet Value Com m ercial RE Portfolio Haw aii Mainland Total Property Under Developm ent Wholly Ow ned JV Total Land Less: Corporate (1) Less: Debt Equity Value Current Stock Price % Premium / (Discount) to Current 0 (224)

Market Value Per Share $425 493 $917 $10.02 11.62 $21.63

$819

(120) (224) $573

(2.83) (5.28) $13.52 $30.00 (54.9%)

Source: Company documents, Marcato estimates (1) Estimated at $15m of pre-tax expenses per year, capitalized at 8x
< 11 >

Map of Important Development Projects

Maui
Maui Business Park II Haliimaile

Kauai

Wailea

Kukuiula

Source: Company documents


< 12 >

Fully Owned Development Projects: Wailea

Wailea resort originally developed by ALEX and sold to Shinwa Golf Group in 1989 270 fully zoned, undeveloped acres at Wailea reacquired in 2003 for $67m
Subsequently sold 70 acres in 2004 for $70m Contributed 25 acres to Kai Malu JV with Armstrong Builders

Remaining acreage in various stages of development


Planned for ~800 homes

Source: Company documents

< 13 >

Fully Owned Development Projects: Maui Business Park II

Phase II of ALEXs Maui Business Park comprises 179 acres of industrial zoned lands in central Kahului, close to the airport and harbor Final zoning approval received in 2008 and infrastructure work completed in 2011 Planned for 160, -acre lots Sales and leasing have begun
4-acre anchor parcel sold to Costco in January 2012 at ~$1.5m / acre

Source: Company documents

< 14 >

Fully Owned Development Projects: Waihonua at Kewalo

2-acre urban Honolulu parcel acquired by ALEX in 2Q10 for highrise condominium development Extremely well located in the Ala Moana corridor near shopping, restaurants, and beaches
Successfully navigated complex permitting process Limited new product in supply-constrained market

341 units planned on 43 floors


One-, two-, and three-bedroom residences averaging 1,000 square feet 257 units sold as of August 2012 (236 binding sales averaging >$700 / sq. ft.)

Source: Company documents

< 15 >

Fully Owned Development Properties: DCFs

Fully ow ned Developm ent Properties Wailea - under development (ex Kai Malu JV) Bluffs at Wailea Ridge at Wailea Wailea MF-7 Wailea - future developments Wailea SF-8 Wailea MF-10 (Residential) Wailea MF-10 (Commercial) Wailea MF-6 Wailea MF-16 Wailea - Other Wailea - Subtotal Haliimaile Kane Street (Residential) Kane Street (Commercial) Kahului Tow n Center (Residential) Kahului Tow n Center (Commercial) Maui Business Park II Port Allen Residential - Kai Olino Keola Lai (mostly sold) Waihonua - Honolulu Brydesw ood Total Fully Ow ned Developm ent

Entitled Acres 27 7 7 13 140 13 14 23 7 83 63 4 19 179 4 3 2 441

Value per Acre

Units / Sq. Ft 12 9 75 90 45 65,000 60 20

Avg. Sale Price $1.5 1.5 1.3 0.3 1.3 350.0 1.3 1.3

Sales Proceeds $18.0 13.5 97.5 27.0 58.5 22.8 78.0 26.0

Costs to Com plete $0.0 0.0 84.0 25.0 40.0 16.0 14.0 7.0

Net Proceeds $18.0 13.5 13.5 2.0 18.5 6.8 64.0 19.0

Tax Basis $9.0 8.0 90.0 25.0 40.0 20.0 20.0 10.0

Tax Years to Rate Com plete 35% 35% 35% 35% 35% 35% 35% 35% 0 0 3 5 5 5 2 3

Discount Rate 15% 15% 15% 15% 15% 15% 15% 15%

NPV $14.9 11.6 8.3 0.9 8.1 2.9 35.5 10.2 49.8 $142.0 15.1 9.9 1.7 9.8 7.1 44.9 11.3 5.7 32.2 14.5 $294

0.6 170 103 20,000 440 240,000 160 75 10 341 24 0.4 0.5 300.0 0.5 300.0 1.0 0.5 0.6 0.7 1.8 68.0 51.5 6.0 220.0 72.0 160.0 37.5 6.0 238.7 43.2 34.0 32.0 2.0 200.0 53.0 82.0 19.0 0.0 185.0 15.0 34.0 19.5 4.0 20.0 19.0 78.0 18.5 6.0 53.7 28.2 35.0 33.0 2.0 202.0 53.0 95.0 30.0 5.1 206.0 17.0 35% 35% 35% 35% 35% 35% 35% 35% 35% 35% 5 3 3 4 4 2 4 0 3 3 15% 15% 15% 15% 15% 15% 15% 15% 15% 15%

We note that in 2006, Goldman Sachs performed DCFs of Wailea and Haliimaile, valuing the projects at $144m and $186m, respectively. (1)

Source: ALEX Real Estate Supplements, Marcato estimates (1) Goldman Sachs Initiation Report, January 11, 2006
< 16 >

Fully Owned Development Projects


Entitled Acres 167 179 2 19 63 4 4 3 441

We believe ALEXs fully owned development projects are worth roughly ~$294 million

Wailea Maui Business Park II Waihonua - Honolulu Kahului Tow n Center Haliimaile Brydesw ood Kane Street Port Allen Residential Keola Lai Total Fully Ow ned Developm ent

Value $142 45 32 17 15 14 12 11 6 $294

Source: Company documents, Marcato estimates

< 17 >

JV Development Projects: Kukuiula

77% interest in JV with DMB Associates 1,000 acre master planned community on Kauai
Up to 1,500 units planned High end resort / residential with price points $1 - $4 million / lot Amenities include golf course, spa, country club, water access, trails, parks 79,000 sq. ft. commercial retail center opened for business in August 2009 and construction is complete on 178 lots Construction of all amenities completed 88 lots sold to date

Source: Company documents

< 18 >

JV Development Properties: DCFs

JV Developm ent Properties Kukui'ula Kukui'ula Village Kai Malu at Wailea (mostly sold) Ka Milo Palmdale Trade & Commerce Center Crossroads Plaza Bakersfield - Panama Grove Santa Barbara Ranch Total JVs

Koloa, Kauai Koloa, Kauai Wailea, Maui Kona, Big Island Palmdale, CA Valencia, CA Bakersfield, CA Santa Barbara, CA

Acres 1,000 10 25 31 18 7 57 22 1,170

Units / Sq. Ft 1,100 83,200 12 113 315,000 56,000 575,000

Avg. Sale Price $1.5 800.0 1.3 1.2 150.0 150.0 150.0

Sales Proceeds $1,650.0 15.6 135.6 47.3 86.3

Costs to Com plete $412.0 0.0 113.0 41.0 79.0

Net Proceeds $1,238.0 15.6 22.6 6.3 7.3

Tax Basis $810.0 10.0 120.0 45.0 90.0

Tax Years to Rate Com plete 35% 10 35% 35% 35% 35% 0 4 5 5

Discount Rate 15% 15% 15% 15% 15%

% Ow ned 77% 60% 50% 50% 50% 50% 50%

NPV $343.7 39.9 6.8 6.1 1.4 4.2 2.1 0.0 $404

We note that in 2006, Goldman Sachs performed a DCF of Kukuiula, valuing the project at $288m, before ALEX increased its project ownership from 60% to 77%. (1)

Source: ALEX Real Estate Supplements, Marcato estimates (1) Goldman Sachs Initiation Report, January 11, 2006
< 19 >

JV Development Projects

We believe ALEXs JV development projects are conservatively worth roughly ~$404 million

Kukui'ula Kukui'ula Village Kai Malu at Wailea (mostly sold) Other Total JV Developm ent

Acres 1,000 10 25 135 1,170

Value $344 40 7 14 $404

Source: Company documents, Marcato estimates

< 20 >

ALEX: Valuation

Balance Sheet Value Com m ercial RE Portfolio Haw aii Mainland Total Property Under Developm ent Wholly Ow ned JV Total Land Less: Corporate (1) Less: Debt Equity Value Current Stock Price % Premium to Current 0 (224)

Market Value Per Share $425 493 $917 $294 404 $698 $10.02 11.62 $21.63 $6.93 9.53 $16.46

$819 $159 291 $449

(120) (224) $1,271

(2.83) (5.28) $29.99 $30.00 (0.0%)

Source: Company documents, Marcato estimates (1) Estimated at $15m of pre-tax expenses per year, capitalized at 8x
< 21 >

Additional Legacy Land Assets Provide Hidden Value


ALEX owns 20% of the island of Maui and 15% of the island of Kauai, and a higher proportion of usable land This land was acquired circa 1870 and is carried on ALEXs books at $150 / acre (~$13m)

Source: Company documents

< 22 >

Recent ALEX Land Sales Average $27,000 / Acre

ALEX Ag Land Sales Transactions - Last 5 Years Avg Price High Total Acres Sold Per Acre 0 - 5 Acres 10 $107,300 $175,000 5 - 20 Acres 67 61,300 167,800 20 - 100 Acres 260 25,900 40,700 100+ Acres 649 22,800 29,000 Total 986 $27,100 $175,000

Low $11,500 24,300 14,000 11,300 $11,300

Source: Company documents < 23 >

Recent Comparable Land Sales Average >$30,000 / Acre


Maui Ag Land Sale Com ps - Last 5 Years # of Total Transactions Acres Sold 40 350 17 630 8 2,900 65 3,880 Avg Acres Per Transaction 9 37 361 60 Avg Price Per Acre $95,600 51,700 18,300 $30,700

5 - 20 Acres 20 - 100 Acres 100+ Acres Total

High $295,000 197,800 50,100 $295,000

Low $24,300 8,300 11,300 $8,300

Kauai Ag Land Sale Com ps - Last 5 Years # of Total Transactions Acres Sold 32 300 3 70 5 1,730 40 2,100 Avg Acres Per Transaction 9 23 346 52 Avg Price Per Acre $111,000 68,700 17,200 $32,100

5 - 20 Acres 20 - 100 Acres 100+ Acres Total

High $297,700 86,400 35,100 $297,700

Low $25,000 27,700 3,700 $3,700

Source: Company documents < 24 >

Comparable Land Sales: Maui Land & Pineapple Company


In recent years, Maui Land & Pineapple Company (NYSE: MLP), formed in the 1960s from ALEX landholdings in west Maui, has sold agricultural land at an average of over $20,000 / acre MLPs precedent land sales provide additional data points for valuing ALEXs excess land:

Maui Land & Pineapple Precedent Land Sales Date Acres $ / Acre Description Jan-12 89 $16,854 Upcountry Maui (1) Mar-10 128 13,281 Upcountry Maui (1) 2008 111 39,460 Upcountry Maui 2007 683 29,136 Upcountry Maui 2006 2,200 15,227 Upcountry Maui 2005 640 44,063 Upcountry Maui (2) Q1-2002 9 70,112 Upcountry Maui Total 3,860 $23,267

Source: Maui Land & Pineapple Company documents (1) We believe these were forced sales, as MLP is in financial distress (2) Consideration included 1 acre in west Maui valued at $350k < 25 >

Lease Income: Cap Rate Valuation


We note that, in recent years, ALEX has leased some of its agricultural land to third parties, and earned $333 - $584 of NOI per acre Valuing this acreage on a cap rate basis supports a valuation of ~$6,700 per acre for ALEXs agricultural landholdings
2007 $8.5 10,183 2008 $6.2 11,054 $584 2009 $4.6 10,220 $432 2010 $3.8 9,260 $390 2011 $3.5 11,770 $333 Average

NOI from leasing unimproved land in Haw aii Unimproved land leased to third parties in Haw aii Market rent / avg leased acres of ag land Assumed "Normalized" Market Rent / Acre Cap Rate Im plied Value / Acre of Ag Land

$435

$435 6.5% $6,690

Source: ALEX Real Estate Supplements, Marcato estimates


< 26 >

Additional Land Value


Value of Ag Land Adjusted Value Value Per Acre Per Acre (1) $6,690 $6,690 23,267 7,586 27,100 8,836 30,700 10,010 Total Value $308 349 407 461

Methodology Lease Value Maui Land & Pineapple Value Historical ALEX Sales Land Comps Plus: Other Land

Acres 46,005 46,005 46,005 46,005

(2)

Additional Entitled Land Conservation Land

(3)

Value Per Acre $675,000 0

Acres 177 29,170

Total Value $119 0

Total Land Value Low Per Share High Per Share

$582 $13.72 $734 $17.32

Plus: Value of Agricultural Operations LTM Agribusiness EBITDA EBITDA $34 Multiple 4.5x Value $154

Source: Company documents, Marcato estimates (1) Adjusted for taxes and time value of money (2) Represents all of ALEXs agricultural land, excluding the 11,770 agricultural acres leased to third parties in 2011, the income from which was included in the NOI of the Hawaiian leased commercial properties (3) Includes entitled acreage not included in the 441 acres of fully owned development projects for which we performed DCFs < 27 >

ALEX: Valuation

Balance Sheet Value Com m ercial RE Portfolio Haw aii Mainland Total Property Under Developm ent Wholly Ow ned JV Total Land (1) Less: Corporate (2) Less: Debt Equity Value Current Stock Price % Premium to Current

Market Value Low High $425 493 $917 $294 404 $698 $582 $425 493 $917 $294 404 $698 $734

Per Share Low High $10.02 11.62 $21.63 $6.93 9.53 $16.46 $13.72 $10.02 11.62 $21.63 $6.93 9.53 $16.46 $17.32

$819 $159 291 $449 $13 0 (224)

(120) (120) (224) (224) $1,853 $2,006

(2.83) (2.83) (5.28) (5.28) $43.70 $47.30 $30.00 $30.00 45.7% 57.7%

Source: Company documents, Marcato estimates (1) Balance sheet value of land estimated based on Company comments of $150 / acre carrying value (2) Estimated at $15m of pre-tax expenses per year, capitalized at 8x < 28 >

II. Gencorp (GY)

< 29 >

GenCorp, Inc.
GenCorp is a supplier of propulsion technologies to the aerospace and defense industries
Longstanding reputation as a highly regarded supplier Founded in the 1950s by Cal Tech scientists

Ticker: GY Stock Price: $9.75 (1)

Technologies used on NASA missions since inception of U.S. space program

Capitalization:
Equity market value: $600 million Enterprise Value: $700 million

Operating Statistics:
LTM Revenue: $930 million LTM EBITDAP(2): $113 million LTM CapEx: $27 million LTM Free Cash Flow: $69 million
Source: Company and other public documents (1) All financials in this presentation assume a stock price of $9.75

Valuation Multiples:
EV / EBITDAP(2): 6.2x EV / EBITDAP(2) CapEx: 8.2x FCF Yield: 11.5%

(2) Earnings before interest, taxes, depreciation & amortization, and non-cash pension expenses

< 30 >

Balance Sheet Snapshot of GY Real Estate Value

Source: Company documents

< 31 >

GY Owns Several Excess Real Estate Assets


12,000 acres of contiguous, developable raw land adjacent to a major highway in Sacramento GY originally acquired this land in the 1950s to test its propulsion systems, but stopped all tests there over a decade ago 1950s acquisition led to low book value (~$64m) GY plans to turn 6,000 clean acres into a Master-Planned Community (MPC) called Easton, currently in different stages of zoning and development These acres were never used for testing, but were a buffer between the test sites and civilization 310k square feet of excess Sacramento office space leased to third parties 580 acres in Chino Hills, CA

Source: Company documents

< 32 >

Civilization Has Encroached on the Sacramento Raw Land


In the 55 years since Aerojet acquired the land, civilization has encroached such that it is now in a very desirable location, adjacent to a main highway, adjacent to public transportation, and close to schools and retail and commercial districts

< 33 >

Easton Development in Progress


GY has extensive plans to turn the 6,000 clean acres into a master planned community called Easton, in five separate phases

Entitlement and zoning are in place for the first 1,400 acres (Glenborough and Easton Place), with detailed plans for residential, commercial, and office property development

Source: http://easton-ca.com

< 34 >

Recent Land Sale Comp Available


In late 2010, prominent Sacramento developer AKT paid $49,000 / acre for 17,000 acres of comparable raw land, in a less desirable location

GY Land

Source: Sacramento Business Journal

< 35 >

Other Recent Land Sale Comps Available


Current listings of unfinished, un-entitled land parcels in the Sacramento area confirm the range of $50,000 - $60,000 / acre
Land Parcel Gerber Rd Rogers Rd and Bradshaw Rd Rio Linda Blvd and Marysville Blvd Raley Blvd, Santa Ana Admiral Lane and Gerber Rd El Centro Rd 24th St at Florin Rd Straw berry Ln and Hw y 99 Average Acres 20 20 19 14 10 4 3 Price 650,000 1,000,000 1,620,432 925,000 600,000 195,000 135,000 $ / Acre $50,000 32,500 50,000 87,120 67,766 60,484 53,867 54,000 $56,967

60 $3,000,000

Source: Public documents, www.loopnet.com

< 36 >

Sacramento Office Space Generating >$5m of NOI


In addition to the Sacramento raw land, GY also owns 310,000 square feet of excess Sacramento office space that it leases to third parties This leasing activity generated $5m of operating income in the LTM (and has generated as much as $10m before the financial crisis)
2008 $10.3 2009 $4.4 2010 $5.3 2011 $5.6 LTM $5.3

Sacramento Office Space NOI

Source: Company documents

< 37 >

Excess Real Estate Valuation

We believe GYs excess real estate is worth ~ $370m today, and potentially much more as real estate markets recover and the Company makes progress on its development plans

Excess Real Estate Valuation Asset Sacramento Land Sacramento Office Space Chino Hills Land Total Value / Share % of Current M arket Cap Value $302 66 0 $368 $5.99 61% Methodology 6,044 acres @ $50k / acre LTM NOI @ 8% cap rate Conservatism
(1)

Source: Marcato estimates

(1) This site is in the process of environmental remediation

< 38 >

Large, Diversified, Well-Positioned Program Portfolio

Source: Company documents

< 39 >

Growing Revenue and Stable Margins

With half of revenue from cost-plus contracts, pre-corporate EBIT margins in GYs aerospace segment have consistently been between 9.8% and 11.7% for the past 8 years
'04 - '11 CAGR 9.3%

Aerospace Sales % Growth Aerospace EBIT % M argin

2004 489.1

2005 615.8 25.9% 60.2 9.8%

2006 $614.6 (0.2%) 61.2 10.0%

2007 $739.1 20.3% 84.8 11.5%

2008 $725.5 (1.8%) 78.0 10.8%

2009 $787.2 8.5% 84.4 10.7%

2010 $850.7 8.1% 99.6 11.7%

2011 $909.7 6.9% 99.7 11.0%

56.6 11.6%

8.4%

Source: Company documents

< 40 >

GenCorps Core Business is Growing


Company Backlog Provides Revenue Visibility
$1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2009 2010 2011 $811 $804 $902

$1,377 $1,191
$380 $573

$1,422

$520

Unfunded Funded

% Growth

15.7%

3.2%

Source: Company documents

< 41 >

Free Cash Flow Significantly Exceeds GAAP Net Income

GYs Free Cash Flow significantly exceeds its reported GAAP Net Income, for four separate reasons

1) Minimal cash taxes 2) Substantial non-cash GAAP pension charges 3) D&A > Ongoing cash Capital Expenditures 4) Non-cash interest expense

< 42 >

Free Cash Flow Significantly Exceeds GAAP Net Income

Adjusting for the combined effects of all of these dynamics, it becomes clear that GY is trading at 8.2x the recurring cash earnings power of its aerospace and defense business

Revenue OpEx (incl Pension) D&A EBIT Unusual Items Interest Taxes Net Income P / E Multiple

GAAP $930 (862) (24) $45 (6) (26) (9) $4 142.8x

Adj. PF Cash $930 44 (818) 4 (20) $48 $92 6 0 16 (11) (9) $69 $73 8.2x

Com m ent Addback Non-Cash Pension Replace D&A w / Cash CapEx

Addback Non-Cash, PF for Refi

Source: Company documents, Marcato estimates

< 43 >

Transformative Acquisition

In July, GY announced the acquisition of Pratt & Whitney Rocketdyne from United Technologies Corporation for $550m Deal expected to close 1Q 2013 Significant Revenue and Cost Synergies Financing with cash on hand and new borrowings Highly Accretive Transaction

< 44 >

What is it Worth?
GY-Rocketdyne Pro Form a Revenue EBITDAP % Margin Interest
(2) (3) (1)

GenCorp Rocketdyne $920 $792 $115 12.5% (2) (10) (10) (25) $68 $149 18.8% (36) (10) (21)

Synergies PF Com bined $1,712 $50 $314 18.3% (38) (46) (20) (46) $164 4.7x 5.5x 27.3% $164 10.0% $1,638
(1) EBITDAP = Earnings before interest, taxes, depreciation & amortization, and non-cash pension expense (2) Assuming full dilution from the $200m outstanding 4.0625% convertible subordinated notes (strike price = $9 / share) (3) GY pays minimal cash taxes due to a combination of NOLs and various tax planning strategies. We conservatively apply a 20% tax rate to the combined entity (4) Mid-point of Marcato estimated value

Taxes Working Capital CapEx Free Cash Flow

Adj. TEV / EBITDAP Adj. TEV / EBITDAP - CapEx % FCF Yield to Current M arket Cap Free Cash Flow Target FCF Yield Implied Equity Value Plus: Excess Real Estate Total Equity Value FD Shares Out Im plied Share Price % Premium to Current
(2) (4)

368 $2,006 83.7 $23.96 145.8%

Source: Marcato estimates

< 45 >

III. Brookfield Residential Properties (BRP)

< 46 >

Company Overview
Brookfield Residential Properties (BRP or the Company) is a hybrid land developer and homebuilder Primarily acquires and develops land for residential use Ticker: BRP Price: $14.39 (1) Capitalization Mkt. Cap TEV $1.5B $2.8B Financials: 2011 Revenue (2) 2011 Free Cash Flow (3) $819M $163M Valuation Multiples: P / Q2 2012 TBV P / 2011 FCF 1.5x 9.0x Occasionally designs and constructs homes and commercial properties Operates both in Canada and the United States

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) (2) (3) Represents share price of NYSE: BRP. Brookfield Residential Properties is also traded on the TSX under ticker BRP. Excludes non-recurring lot sales in 2011. Excludes land acquisition capex.

< 47 >

Land Holdings Dominate The Balance Sheet


Q2 2012 Balance Sheet Vast majority of the Companys $2.2B in property inventory consists of long-lived land investments

Q2 2012 Property Inventory by Type

Homes, 12% Land Development Single,23%

RawLand,62%

Land Development Multi&Other, 3%

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 48 >

The Residential Development Process


BRP principally participates here

Land Development
Identify Attractive Land Opportunities Acquire, Convert and Entitle Land Design and Construct Homes

Homebuilding
Market and Sell Finished Homes

Master Plan Community

Sell Land to 3rd-Party Homebuilders or Begin Homebuilding

Average ~10 Year Investment Cycle

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 49 >

Diversified North American Land Portfolio

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 50 >

Diversified North American Land Portfolio (cont.)


Q2 2012 Total Lots by Geography

Washington D.C.,5% NorthernCA, 8%

LA/Southland, 4%

Other,0%

Calgary,26% SD/Riverside, 8% Toronto,9% Edmonton,17%

Denver,10% Austin,13%

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 51 >

Home Start Trends are Encouraging


Canadian home starts are within long-term averages and have recovered since the downturn U.S. home starts are still 50% below long-term averages but have begun to rise

Historical Housing Starts by Country


2,500 2,000 1,500 500 1,000 500 0 (000sstarts) 250 1,000

750

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

U.S.

U.S.Avg.

Canada

CanadaAvg.

Source: U.S. Census and CMHC.

Jul12

0 (000sstarts)

< 52 >

Home Price Trends are Encouraging


Canadian home prices have grown substantially this past decade, up over 100% U.S. home prices are still ~30% below peak but have begun to stabilize

Historical Indexed Housing Prices (1)


240 220 200 180 160 140 120 100
May01 May03 May05 May07 May09 May11 Jan00 Jan02 Jan04 Jan06 Jan08 Jan10 Sep00 Sep02 Sep04 Sep06 Sep08 Sep10 Jan12

U.S.

Canada

Source: Teranet Composite 6 and S&P Case-Shiller Composite 10. (1) January 2000 indexed to 100.

< 53 >

Canada Delivering Nearly All Gross Profit

2011 Gross Margin Breakdown (1)


($Ms) Lots: Revenue Expenses GrossMargin$ GrossMargin% Homes: Revenue Expenses GrossMargin$ GrossMargin% Total: Revenue Expenses TotalGrossMargin$ TotalGrossMargin% %ofTotalGrossMargin Canada $255 ($98) $157 61.6% 2011 U.S. $80 ($89) ($9) 11.3% Total $335 ($187) $148 44.2%

$323 ($268) $55 17.0%

$161 ($146) $15 9.3%

$484 ($414) $70 14.5%

$578 ($366) $212 36.7% 97.2%

$241 ($235) $6 2.5% 2.8%

$819 ($601) $218 26.6% 100.0%

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) Excludes non-recurring lot sales in 2011.

< 54 >

Concentrated in the Best Canadian Markets


BRPs Canadian land investments are >80% concentrated in oil sands-rich Alberta Albertas GDP grew 5.2% in 2011, highest in Canada Despite stronger economic trends and better affordability ratios, Albertas housing prices have underperformed Toronto and Vancouver since peaking in 2007

Historical Indexed Housing Prices (1)


140 130

Housing Price to Median Family Income (2)


10.0x 8.0x 8.9x

120 110 100 90 80


Dec07 Mar08 Jun08 Dec08 Mar09 Jun09 Dec09 Mar10 Jun10 Dec10 Mar11 Jun11 Dec11 Mar12 Sep07 Sep08 Sep09 Sep10 Sep11 Jun12

6.5x 6.0x 4.0x 2.0x 0.0x Calgary Edmonton Toronto Vancouver 4.7x 3.8x

Calgary

Edmonton

Toronto

Vancouver

Source: Teranet, Statistics Canda, CMHC and regional real estate boards. (1) September 2007 indexed to 100. Alberta home prices peaked in September 2007. (2) Avg. home price / estimated median family income as of July 2012 .

< 55 >

BRPs Canadian Markets Are Strong

Home Sales Backlog ($M)


$400

Net New Orders (Units)


500 400 300

$300

$200 $333 $100 $239

200 100

443 342

$0 2Q11 2Q12

0 2Q11 2Q12

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 56 >

U.S. Looks to be Recovering Rapidly

Home Sales Backlog ($Ms)


$125 $100 $75 $50 $25 $29 $0 2Q11 Central&EasternU.S. 2Q12 California $36 $44 $66 180 150 120 90 60 30 0

Net New Orders (Units)

74 41

72

81

2Q11 Central&Eastern

2Q12 California

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 57 >

U.S. Looks to be Recovering Rapidly (contd)

July 2012 YTD U.S. Housing Price Growth

8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Composite 10 Dallas Denver SanDiego San Washington LosAngeles Francisco D.C. 3.2% 3.3% 3.7% 2.1% 3.8% 6.7% 5.2%

Source: S&P Case-Shiller.

< 58 >

Management is Forecasting Strong Growth


Management began to provide FY2012 guidance commentary in Q1 2012 Managements top-line guidance implies strong fundamental growth for FY2012 We conservatively assume flat pricing, margins and no U.S. land sales

FY2012 Management Guidance


Actual 2011 941 354 ProForma 2011 941 354 Guidance 2012
(1)

($Ms) HomeClosings: Canda U.S. LotClosings: Canda U.S. TotalRevenue GrossMargin %Margin

Change 27.5% 55.4%

1,200 550

2,940 534 $1,008 $267 26.5%

1,767 534 $819 $218 26.6%

1,700

3.8% 100.0% 10.8% 12.2% 32bps

Strong growth despite management not providing guidance on U.S. land sales

$907 $244 26.9%

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) Management provided home and lot closings figure only. Pricing and margin assumptions are assumed to be flat from 2011.

< 59 >

Why is BRP Unique vs. Other Homebuilders?

Other Homebuilders
Inventory Runway Short Cash flows needed to refill depleted land inventory Mostly homes Recently acquired Long

BRP

Less need to recycle cash flows into new land acquisition Mostly land Old Book value (original cost) Market prices have since increased substantially

Portfolio Composition

Carrying Value Marked-to-market (impairments) of Property Market prices have fallen/stagnated since purchase

< 60 >

Long Runway Minimizes Cash Needs


BRPs substantial land and housing portfolio provides it with ~30 years of runway at current volumes, allowing BRP to generate significant free cash flow while requiring minimal land capex This is over 3x the inventory of other homebuilders at 2011s run-rate, despite BRPs Canadian operations running at full speed vs. other homebuilders currently depressed sales volumes
Land and Housing Inventory
YearsInventory BeazerHomes DRHorton HovnanianEnterprises KBHome Lennar Meritage PulteGroup StandardPacific TollBrothers Average BrookfieldResidentialProperties
(1)

Homesasa% ofInventory 30% 41% 77% 27% 33% 35% 28% 32% 70% 41% 12%
(3)

2010 2011 6.6x 8.2x 6.2x 7.4x 6.8x 7.4x 5.4x 6.9x 9.5x 10.3x 4.1x 5.1x 8.6x 8.6x 8.7x 10.3x 13.2x 14.4x 7.7x 8.7x 26.4x 30.1x

(2)

BRPs portfolio consists of mostly mature land investments vs. more recent housing inventory for other homebuilders

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) (2) (3) Defined as total lots or home sites / total closings or home deliveries. Excludes non-recurring 2011 lot sales. Defined as housing inventory + model homes / total land and housing inventory.

< 61 >

Long-Lived Assets Understate Value


BRPs land and housing investments are recorded on its balance sheet at lower of carrying value (cost) or fair value We believe the aged nature of the Companys land assets causes them to be understated on the Companys balance sheet Canadian land has an average age of ~8 years in Edmonton and Toronto and up to 15 years in Calgary U.S. land has an average age of ~7-8 years During this timeframe, Canadian real estate has seen a historic appreciation in value BRP has also taken impairments of ~30% of cost for its U.S. land assets, in-line with other homebuilders (1)

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) Management commentary.

< 62 >

Other Homebuilders Inventories are Marked-to-Market


Due to their U.S. focus and inventory write-downs taken during the recent recession, BRPs homebuilding peers assets are likely marked near market value

Impairments as % of Beginning Inventory


40% 35% 30% 25% 20% 15% 10% 5% 0% 2006 DRHorton 2007 Lennar 2008 PulteGroup 2009 TollBrothers 3% 6% 5% 12% 10% 13% 12% 9% 10% 11% 22% 27% 22% 22% 80 70 60 50
May06

U.S. Home Prices Since 2006 (1)


110 100 90

35%

3%

May07

May08

May09

May10

May11

Source: S&P Case-Shiller Composite 10, Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) January 2006 indexed to 100.

< 63 >

May12

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Sep06

Sep07

Sep08

Sep09

Sep10

Sep11

Jan12

Market Value of BRPs Assets is Significantly Above Carried Value

Estimated Market Value of BRPs Assets

($Ms) LandandHousingInventory: ValueofHomes ValueofLandSingle ValueofLandMulti&Other ValueofRawLand LandandHousingInventory HomesCosttoComplete LandCosttoComplete "Market"LandandHousingInventory "Book"LandandHousingInventory %Increase(Decrease) TangibleBookValue: "Market"LandandHousingInventory Plus:AllOtherAssets Less:AllLiabilities&MinorityInterest "Market"TangibleBookValue "Book"TangibleBookValue %Increase(Decrease)

$467 $783 $233 $2,244 $3,727 ($124) ($289) $3,314 $2,212 49.8%

$3,314 $499 ($1,626) $2,187 $995 119.7%

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 64 >

Public Trading Comps


Despite its portfolio of attractive land development and profitable Canadian operations, BRP trades at a substantial discount to U.S. peers
Public Trading Comps
(MsLocalCurrency,exceptpersharedata) LargeCap: DRHorton Lennar PulteGroup TollBrothers Mean Median SmallerCap: BeazerHomesUSA HovnanianEnterprises KBHome MeritageHomes StandardPacific(3) Mean Median
Total:

SharePrice 9/24/12 $22.04 $36.96 $16.76 $36.13

%Above(Below) 52WL 52WH 174% 204% 409% 175% 241% 189% 3% 3% 4% 3% 3% 3%

Mkt.Cap $7,037 $6,743 $6,432 $6,077

TEV $7,967 $10,913 $8,277 $7,168

P/BV MRQ 2.0x 2.1x 3.3x 2.3x 2.4x 2.2x

P/TBV MRQ 2.0x 2.1x 3.5x 2.3x 2.5x 2.2x

P/Adj.BV MRQ

(2)

P/Adj.TBV MRQ

(2)

P/E 2012 27.7x 20.9x 32.5x 46.8x 32.0x 30.1x 2013 20.0x 24.5x 18.3x 31.7x 23.6x 22.3x

%Growth 20122013 38.2% 14.8% 77.2% 47.8% 37.1% 43.0%

2.0x 2.0x 1.4x 2.0x 1.8x 2.0x

2.0x 2.0x 1.5x 2.0x 1.9x 2.0x

$3.85 $3.83 $14.63 $41.53 $7.43

186% 330% 191% 204% 242% 231% 204%

4% 5% 7% 2% 6% 5% 5%

$381 $485 $1,128 $1,470 $2,660

$1,592 $2,008 $2,436 $1,985 $3,493

2.1x NM 3.0x 3.0x 4.1x 3.0x 3.0x

2.1x NM 3.0x 3.0x 4.1x 3.0x 3.0x

0.6x 1.0x 0.9x 2.5x 2.3x 1.5x 1.0x

0.6x 1.0x 0.9x 2.5x 2.3x 1.5x 1.0x

NM NM NM 51.7x 34.5x 43.1x 43.1x

NM NM NM 22.9x 21.6x 22.2x 22.2x

NM NM NM 125.3% 59.8% 92.6% 92.6%

Mean Median BrookfieldResidentialProperties(Book) BrookfieldResidentialProperties(Market)


Source:Ca pIQ,compa nyfi l i ngs a ndres ea rch Note:As ofSeptember24,2012
(1)

235% 204% $14.39 137%

4% 4% 6% $1,475 $2,753

2.7x 2.6x 1.5x 0.7x

2.8x 2.6x 1.5x 0.7x

1.6x 2.0x 1.3x 0.6x

1.6x 2.0x 1.3x 0.6x

35.7x 33.5x NA

23.2x 22.2x NA

55.6% 53.8% NA

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) (2) (3) Represents share price of NYSE: BRP. Brookfield Residential Properties is also traded on the TSX under ticker BRP. Adjusted for off balance sheet DTAs. Assumes full conversion of preferred.

< 65 >

Whats BRP Worth?

Illustrative Valuation Range

MedianofComps ($Ms) "Market"TangibleBookValue Multiple EquityValue TotalFDSharesOut. ImpliedSharePrice SharePrice(9/24/12) %Increase(Decrease)toCurrent Adj.TBV $2,287 2.0x $4,573 102.48 $44.63 $14.39 210.1%
(1)

TBV $2,187 2.6x $5,685 102.48 $55.48 $14.39 285.5%

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information. (1) Adjusted for off balance sheet DTAs.

< 66 >

Ignored by Analysts

Bulge Bracket Research Coverage

BZH BAML Barclays Citi CreditSuisse DeutscheBank GoldmanSachs JPMorgan UBS Total

DHI Y Y Y Y Y Y Y 7

HOV

Y Y

Y Y 4

Y Y Y Y Y 5

KBH Y Y Y Y Y Y Y Y 8

LEN Y Y Y Y Y Y Y Y 8

MTH Y Y Y Y Y Y Y Y 8

PHM Y Y Y Y Y Y Y Y 8

SPF Y Y

Y Y Y 5

TOL Y Y Y Y Y Y Y Y 8

Avg.

BRP

6.8

Source: Company filings, research, Bloomberg, CapitalIQ, public commentary and information.

< 67 >

PerspectivesonBookValue: FindingHiddenValueontheBalanceSheet October2012

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