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THE NET LEASE MARKET REPORT Q1 2012

NATIONAL ASKING CAP RATES
Sector Retail Office Industrial Q4 2011 (Previous) 7.72% 8.15% 8.00% Q1 2012 (Current) 7.75% 8.00% 7.94% Basis Point Change +3 -15 -6

MARKET OVERVIEW
Cap rates in the entire single tenant net leased retail property sector rose slightly from the fourth quarter of 2011 to the first quarter of 2012, while the cap rates for net leased office and industrial properties continued to compress. The primary factor contributing to the increase in cap rates for retail properties remains the influx of lower quality assets added to the market. Lower quality assets are those with non-credit tenants, short-term leases and secondary market locations. Owners of lower quality assets have added supply to the market as they try to capitalize on the increased demand and lowered cap rates across the net lease sector. In the first quarter 2,976 retail properties were added to the market, representing a 19.6% increase in supply when compared to last quarter. Despite the expanded property supply in the retail market, new development remains limited and many of the properties added to the market are second generation real estate. Second generation space refers to previously occupied space that has become available from a tenant’s vacancy. While the supply of single tenant net lease properties added to the market has grown, the market remains limited by the lack of properties with long-term leases to investment grade tenants. Accordingly, investor demand will begin to shift to lower quality assets with higher yield. Although, first quarter retail cap rates rose in comparison to the fourth quarter, cap rates for core assets continued to compress. Banks, CVS/Walgreens and GSA occupied properties experienced cap rate compression of 15, 30 and 23 basis points respectively in the first quarter. GSA and pharmacy properties will remain attractive to investors because of the wide availability of credit tenant lease (CTL) financing for these assets. The national single tenant net lease market transaction volume remains high, but many net lease participants expect the market to slow down. There is a shrinking supply of investment grade properties being developed and interest rates have recently risen. In March 2012, The Ten Year Treasury Rate experienced atypical volatility and increased all the way to 2.39%. With the rise in interest rates, investors will need to see higher returns in order to meet their financial goals. If interest rates continue to increase and investors are unable to achieve targeted returns, expect cap rate compression to cease for the first time since the second quarter of 2011.

NUMBER OF PROPERTIES ADDED TO MARKET IN Q1
Sector Retail Office Industrial Q4 2011 (Previous) 2,488 672 352 Q1 2012 (Current) 2,976 500 320 Percent Change +19.61% -25.60% -9.09%

MEDIAN ASKING CAP RATES BY PROPERTY TYPE
Property Type Walgreens Ground Leases Restaurants Leaseholds Advance Auto Parts Banks CVS Government-GSA Dollar General Fedex McDonalds Q4 2011 (Previous) 6.50% 6.00% 7.50% 8.06% 7.90% 6.00% 7.00% 8.00% 8.50% 7.32% 4.77% Q1 2012 (Current) 6.45% 5.75% 7.50% 7.75% 7.33% 5.85% 6.70% 7.77% 8.25% 7.70% 5.00% Basis Point Change -5 -25 0 -31 -57 -15 -30 -23 -25 +38 +23

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75% 8.066.000.83% 6.94% 8.00% 6.THE NET LEASE MARKET REPORT Q1 2012 SELECTED SINGLE TENANT SALES COMPARABLES Sale Date Feb-12 Jan-12 Jan-12 Mar-12 Mar-12 Mar-12 Feb-12 Jan-12 Feb-12 Jan-12 Jan-12 Sector Office Retail Industrial Retail Retail Industrial Retail Retail Retail Office Office Tenant Ultimate Software Walgreens Novelis Corporation West Marine Walgreens Lowe's Sports Authority Walgreens CVS Siemens GSA .85% 9.95% 7.504.54% 6.000 $5.42% 8.800.995.50% 7.750.000 $12.000 $7.000 $5.000 $4.250.35% 7.55% 7.900.com .100.000 $7.54% 6.00% 8.000 $12.bouldergroup.000 Price Per SF $262 $810 $79 $255 $694 $32 $196 $508 $426 $91 $408 Cap Rate 8.000 $13.000 $7.375.000 $10.50% 6.850.75% Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2005 2006 2006 2006 2006 2007 Q2 2007 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Office Industrial Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2010 2010 2010 2010 2011 2011 2011 2011 2012 www.10% Lease Term Remaining 6 25 15 15 24 5 9 25 19 5 7 Fort Lauderdale FL Mount Pleasant SC NET LEASED CAP RATE TRENDS 8.SSA City Weston Chicago Kennesaw Orlando White House Moreno Valley Charlotte Lowell Freeport State FL IL GA FL TN CA NC MA NY Price $16.15% Retail 6.

25% 8. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. This information is designed exclusively for use by The Boulder Group clients and cannot be reproduced.50% 8.com . retransmitted or distributed without the express written consent of The Boulder Group. The Boulder Group.00% 6.THE NET LEASE MARKET REPORT Q1 2012 NATIONAL BID .00% Industrial Rate 6.00% 41% Properties on Median Cap Median Cap Median Cap 41% $1-$3 million FOR MORE INFORMATION AUTHOR John Feeney | Research Director john@bouldergroup.00% 8. www.75% 7.35% 8.ASK CAP RATE SPREAD Sector Retail Office Industrial Q4 2011 (Previous) 45 77 47 Q1 2012 (Current) 32 60 66 Basis Point Change -13 -17 +19 2012 Q1 Properties by Deal Size Over $6 million Under $1 million $3-$6 million 13% 28% LARGEST FIVE MSA STATISTICS MSA # of the Market New York Los Angeles Chicago Dallas Philadelphia 142 332 399 170 147 Retail Rate 6.50% 7.com CONTRIBUTORS Randy Blankstein | President rblank@bouldergroup.00% 8. Reliance on this information is at the risk of the reader and The Boulder Group expressly disclaims any liability arising from the use of such information.50% 7.00% 7. warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose nor under any circumstances shall any of the above information be deemed legal advice or counsel.bouldergroup. We have not verified the information and we make no guarantee.50% 6.com © 2012.86% Office Rate 6.25% 8.com Jimmy Goodman | Partner jimmy@bouldergroup.