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Wells Fargo CRE Conference 2/27/2013 Financing panel: Loans are being carried by: Bank balance sheet

t 50%, CMBS 18%, LIFECO 11%, GSE 9%, and 12% other Commercial banks have $10 trillion of deposits but only lending $8 trillion o $2 trillion sitting on the sidelines Banks are well capitalized o This caused spreads to tighten 100 bps and structure loosen David Durning, Senior Managing Director, Head of Originations, Prudential Mortgage Capital Company In 2012 $7b of lending expect $8b in 2013 Feeling nostalgic for 2009 because now they are having difficulty putting out money o Doing more construction lending $400m last year Not that worried about the maturity issues with loans as there so much capital chasing deals someone will bail them out o Thinks fundamentals will improve value Brian Harris, CEO, Ladder Capital Finance LLC Will lend $3.5b this year which is up 20% to last year, o Starting to now buy real estate Thinks valuations are crazy, too much money has come into the space o Tough asset classes are office bc people need less space and malls as less people are shopping o Likes Florida and Michigan bc there are no banks that are there, lack of financial institutions Doug Mazer, Managing Director, Head of Real Estate Capital Markets, Wells Fargo $24b of new business in 2013 o 1/3 construction lending, 1/3 existing assets, 1/3 subscription lines Size is a friend of CMBS, o Borrowers only deal with one lender at a time, club deals are harder for borrowers CMBS lends to secondary and tertiary markets that lifecos are scared of o Improving these market valuations UW standards are at 2005 levels, less IO, and harder to put on additional debt o A lot less leverage in the system and not the same risk positions B piece buyers lot of interest in the space from all different areas o Last few years there were less than 10 b buyers, buyers market Last year fewer buyers and more supply o Tough to tell who will actually stay in the space Loan maturities $318b in 2013, $353b in 2014, and $428b in 2015 50 year 10 year treasury average is 6.5% while today it is 2%

Rating Agencies Panel: Eric Thompson, Senior Managing Director, Kroll Bond Rating Agency Since November there is a lot of pushing on leverage Tad Philipp, Director of Commercial Real Estate Research, Moodys Investors Service Large loans are taking up a lot of the securitizations making it tough for conduit deals Moodys looks at through the cycle cap rates, think rates will move to 5% in 3 years o Similarly think it is 2005 o Prepared if there is an asset operating performance issues as already priced in their models o Have on their website the expected loss for every Moodys rated deal, for 2007 deals it is 10% Have been very focused on malls recently o Look at the competitive profile is it a survivor mall For UW they focus on quality malls o On the 19 single offerings 1/3 have sales of $700 or higher o If low sales is the mall the only game in town 2006-08 losses are low think they will tick up this year but only modestly Peter Eastham, Managing Director, Standard and Poors If there are loan shortfalls for more than 6 months they downgrade CMBS Servicing Panel: Where is this going in the future? Not a lot of new entrants in the market, lot of barriers to entry, cost, personal, policies Revenues from new issue is very low and will be for the future A lot of servicers redeploy the people into lending activities Some people are doing due diligence for B buyers, do surveillance now Brian Hanson, Managing Director, CWCapital Asset Management Defaults almost stopped in the middle of 2012 but have been very lumpy since then o It will continue this way Borrowers only cooperate if they absolutely have to Always require appraisals at the time of modification Out of the 2,300 resolutions only 40 were A/B note deals o Only purpose of B note is in case the borrower has a tenant in their pocket but dont notify the lender They then pay off the loan Protection for the lender as they should get a piece of the upside Isaac Pesin, Co-President, LNR Partners, LLC

End of 2010 they serviced $28b, End of 2011 $24b, and end of 2012 $20b Right now mostly 2003 vintage maturity defaults o If it hasnt found out a way to refinance yet it probably wont Only do modifications if they get access to title o They dont just do one to do one, actually have to be better off than before Lot of value add left in the shop, sold most of the bad stuff already, absorption is up 40/50% of borrowers are not home as there is some complicated ownership structure in place, 30% will work with you, 20% just want to fight 150 people in Europe but it is still tough to figure out there and no liquidity

Stacey Berger, Executive Vice President, PNC Real Estate / Midland Loan Services Liquidation vs. extension really just about if they think the borrower is a good one or bad Kevin Donahue, Senior Managing Director, C-III Capital Partners LLC Every asset is unique, time is your enemy Lot more activity in the secondary markets Going to look closely at the European market o Lot of issues of distress in the market but how to actually do it is tough MaryLou Lemley, Executive Vice President, Commercial Mortgage Servicing, Wells Fargo & Co. Typically like to just give extensions to borrowers Michael Carp, Executive Vice President, Berkadia Commercial Mortgage LLC Regional banks are coming back in financing CMBS Trading Nicki Livanos, Director, Real Estate Investments, AXA Equitable Want to add duration for their loans, longer end of the curve o Want structured product and commercial loans Samir Lakhani, Director, Blackrock Inc Spread duration is a concern for them Sector is considered a risk asset even for the least risky part of capital structure Josh Mason, Managing Director, The Blackstone Group Market is experiencing positive trends including shrinking RMBS supply There should be some volatility the next few months and the macro pictures isnt as rosy Thinks CMBX 6 is a good think to play in if you want to be in the legacy indices People are bidding triple As really well o A-J and noninvestment grade have not done that well o People really want the high rated new product Scott Stelzer, Senior Managing Director, Cerberus Capital Credit curve rallied and everything has flattened

o Macro events that can cause issues Chuck Mather, Managing Director, CMBS Trading, Wells Fargo Securities CMBX 6 is trading wide of the cash market Liquidity is still healthy in the sector and better than in the corporate space

Retail: State of the Transaction Market with Eastdil Secured Cap rates are at an all time low for open air centers Debt market punishes retailers less in secondary and tertiary locations than other asset classes Risk adjusted real estate is still the best sector o Residual cap rates are still tough to forecast Never want a tenant vacating a box that is not part of the collateral Some smaller retail REITS might go through a consolidation Investors view for 2013 Michael Hudgins, Executive Director, Global REIT Strategist, J.P. Morgan Asset Management In the 1970s real estate underperformed CPI while in the 1980s it outperformed CPI REITS are very expensive compared to the rest of equities o Think about normalized cash flow who is expensive vs. their peers Did an analysis that showed NOI is correlated to nominal GDP Apartments, regional malls, and self storage all have good growth o Dont see acceleration with strip centers and CBD o Suburban office has some room to grow Most REIT investors are generalists who only look at a multiple and that is really it o Are not real estate experts Gerwin Holland, Senior Portfolio Manager, PGGM Need growth for inflation but there has not been much o No growth in Europe over the next 5 years, US 1.5 3% annual What happens with healthcare is a big concern Activity of the US government does not stop them (foreign capital) from investing in the US A lot of growth is driven by cheap capital and this will eventually stop but not just yet Want 8% returns and will invest in REITS for the next 20 years Sherry Rexroad, Chief Investment Officer, Global Real Estate Securities, BlackRock US is 48%of the worlds real estate market o Thinks multifamily REITS are undervalued and there is really strong growth potential

o Shopping centers require too much rent growth to support acquisition prices and not where they want to be Less US and more global investing

New York City office outlook Kevin Donner, Director, Eastdil Secured Fundamentals are basically the same for the last 12 18 months o Leasing market is relatively the same and has not moved o Dont like having a lot of vacancy now o Rent will be flat for a couple years and then push in years 4 and 5 Unlevered returns for core are high 6% and low 7% o 11% levered IRR for core deals Most investors prefer current cash flow rather than levered IRR o Will see some huge deals which are coming to market in the near term o More capital to chase large deals in the market now More than $300 psf in anything downtown be careful John Saclarides, Lease Negotiations Manager, Wells Fargo & Co. Signed 300k sf and taking 75k more Need more jobs to drive absorption o Tenants need to consolidate in the market Scott Gottlieb, Vice Chairman, CB Richard Ellis Rents in 2013 will be flat Midtown South still have some growth left even though at an all time high of $60 psf o Midtown flat as financial services are getting rid of jobs Tenants are going to higher density o Getting rid of private offices and more people sitting in open space The 10 largest transactions of the year had a renewal component involved o 6m sf of positive absorption in 2011 and -6m sf in 2012 th 6 avenue is dead in Midtown but they are asking $70+ in rent o No one likes it here as its not hip and cool o Midtown South wont draw financial companies o Love garment district Reinventing the City: accomplishing large multi-use projects in a complex urban environment Jeff T. Blau, CEO of Related Companies, on Hudson Yards Hudson Yards is 15m sf of new development consisting of 2 phases of the eastern yards followed by the western yards 60% of office stock is over 50 years old and this provides tenants opportunity to move into brand new efficient space o 5m sf of office in 2 towers First tower is 1.7m sf which will be the Coach corporate HQ

Coach purchased their space Related purchased the building that Coach is currently in Tenants start to look at ownership vs lease Another 800k sf leases just about complete Right now they only targeting tenants greater than 150k sf o Finding a lot of interest in tenants that would like to be in one location Almost all of the tenants are coming from 10 locations downsizing to 1 Due to space efficiencies only need 80% of the square footage that they currently occupy today North office tower all of the tenants interested are trying to purchase space here o Right now negotiating with 4 tenants o In addition there will be a 6k sf ballroom and observatory on the top Will be the highest outdoor space in NYC For the 500k sf of retail space the early interest is very high end o Even higher end than the 300k sf at Time Warner Center o F&B program with Danny Meyer Highline is the most visited tourist attraction in NYC with 4.5m people walking it last year Developing two 800k sf 800 foot residential buildings with each being half condos o Will contain the largest flagship Equinox in the city Foundations were laid below the track over 50 years ago with a plan to build here Developing a $300mcultural shed

MaryAnne Gilmartin, Executive Vice President at Forest City Ratner Companies Developed 8 Spruce, which can never replicate again o 95% leased at the highest rates in NYC Success leasing the building from the bottom up Atlantic Yards will now build 8k residential units now that the arena is open o Building tallest modular building in the world at 32 stories o 340k sf totaling 363 units 50% free market and 50% low income o 55% built outside the city and being shipped in o Never can be built again Lynne Brown, Senior VP for University Relations and Public Affairs for New York University Currently own 15m sf in 5 locations o 1.9m sf will be construction with over half of it being below grade Janno Lieber, President of World Trade Center Properties LLC, Silverstein Properties Started with construction of 7 WTC which opened in May 2006 o Created 7,000 jobs Next phase will complete 4 buildings and a final building on the DB site o 4 WTC, 2.5m sf which will be completed in 2013 o 3 WTC, 2.8m sf complete in 2015 8 stories up in the air right now, but needs a tenant before they can continue

o 2 WTC, 3.1m sf complete in 2015+ Downtown has the best mass transit in the city o Fulton Street Hub will be complete in 2014 6m visitors have come through the Ground Zero Memorial Number of residents has doubled since 9/11 o Richest community in NYC

Key Note Speaker: Sam Zell Cost of capital is less than inflation and it reminds him of early 1970s o Government is keeping rates very low artificially Too much supply of money Level of interest rates don't matter if you make money or not o He made money in years with 21% interest rates and 50bps News coverage is silly as people forget about the Eurocrisis even though it was always here Very bearish on the US Market o 2007 only place for demand was emerging markets o Still thinks foreign markets will outperform Thinks we don't study demographics enough. Less people in Italy, France, and Japan o US is better but not dramatically than Europe Birth rate now lower in US than 5 years ago o Brazil was growing at 7% but now 2.5% Win on the buy o Real estate was buy and hold With PE now buy and sell in a few years $160 psf for Class A office in Minneapolis o $1,000 psf in NYC Tenants will move from NYC eventually Every investment they make they ask the question how can the government screw it up o Be very careful with this government When was the last time government cut costs 1776? Fannie and Freddie were great ideas when they were 30% of the market o Kept everyone honest o Now they are 90% and there is no competition REITS are not going anywhere o Even if they were taxed hey would be paying little in taxes due to depreciation REITS have performed very well Single family arena he does not know how it gets done o How do you manage 5,000 houses in 27 markets still no answer to this? Don't think there will be any companies that can do this o Since WWII everytime home ownership is above 62% country has had problems Over supply of houses not there anymore o People don't want commitment anymore Cant get people to work in the burbs

o If you take out home price appreciation rents can grow 30% in multis before it is a worse investment than home ownership Archstone opportunity to acquire $10b of irreplaceable assets o Couldn't replicate in 10 years o Multifamily market never seen better demand Rental rates up No major supply, 2010 saw negative construction in apartments Cost of housing is the cheapest in US compared to any developed country Manufactured housing he purchased in the early 1980s and experienced a 17% return on equity o Lower end of the housing Becoming much more capital intensive o There is a big relevance of community in the area o Very hard to get zoning for it Have to put all the infrastructure up day 1 Absorption is very slow you can't sell more than 50 houses per year Best to invest over the next 5 years in multifamily as it will outperform all the other asset classes