2009 Kootenai County Market Forum Rick Davidson Slides

R Davidson Rick D President & COO Coldwell Banker Commercial

Agenda • Overview of International Commercial Real Estate markets • Di Discussion i off Major M j Product P d Types: T Office, Industrial, Retail, Multi-family • Market Direction

Widening of the Financial Crisis Seized by:

British Government

Acquired by:

Acquired by:

Collapsed

Filed for Bankruptcy

Placed into Federal Conservatorship

Widening of the Financial Crisis Acquired by:

Taken Over by:

Infused dollars from:

Federal Government

Sold Assets to:

Became Bank Holding Companies

Unemployment and Job Loss Unemployment M 09’ 8 Mar 8.5% 5%

Job Loss

Education Level

Global Markets

Real GDP Growth Rates: 20082008-2011

Source: Economist Intelligence Unit, ING Economics, ING Real Estate Research & Strategy as of 14 November 2008. Note: Countries and regions are ranked, left to right, by the difference between their forecast GDP growth rate of 2009 and their average longterm GDP growth rate (Geometric average 1998-2011). Historical data is from EIU. Forecasts are from ING Economics

AsiaPac Leasing Markets will see a turn Vacancy Rates Rents

In Markets including: g Hong Kong Singapore Shanghai Tokyo New Delhi Mumbai

EURO ZONE UK will be the worse performing Projected negative growth of 1.7% 1 7%

leasing Markets Vacancy Rates Rents

In Markets including: London Madrid Milan Paris Warsaw

Canada Economic Growth is projected below LT Market Fundamentals Vacancy Rates Rents (softening)

Office Vacancy: 6 7% 6.7%

Latin America Expected p Positive Economic Growth: Brazil Mexico Argentina Chile Venezuela

US 4thh Year of decline in Housing Sector Declining Consumer Spending Declining Access to Capital Illiquidity of Credit Markets

The Great Deleveraging Capital Values are falling as investors reappraise their appetite for risk As commercial real estate fundamentals decline – there will be a direct impact on real estate values

CMBS Issuances I 1990 1990--2008

Decline 75% in 2008 over same period in 2007

Office Jan 09 – fewer than $1B Closed Listings Li i O Outpaced d Closed Transactions 41 4:1 Cap Rate 7.5% (45 bps increase since Sep 08)

Distressed Office Assets 297 Properties $11.5B in Value Notable Markets: Austin Los Angeles Detroit Cleveland Kansas City

Offi Buyer Office B C Composition iti

Office Vacancy (14%) Rents (5-6%) Absorption

Industrial Jan 09 – fewer than $400m Closed Close to $2B iin newly Cl l listed properties Cap p Rate 8.4% (80 bps increase since Sep 08)

Distressed Industrial Assets 170 Properties p $1.3B in Value Notable Markets: Austin Columbus

I d t i l Buyer Industrial B C Composition iti

Industrial Vacancy (8.8%) Rents (1.7% Warehouse) (3.6% R&D) (1.1 Manufacturing)

Absorption

Retail Jan 09 –$876m Closed Close to $2B in newly li d properties listed i Cap Rate 7.3% (20 bps increase since Sep 08)

Distressed Retail Assets $6 7B iin V $6.7B Value l Notable Markets: Las Vegas Indianapolis San Jose

Retail Buyer Composition

Retail Vacancy (8.9%) (8 9%) Rents (1.1%) Absorption

Multi--Family Multi Jan 09 – fewer than $600m Closed Listings Li i O Outpaced d Closed Transactions 51 5:1 Cap Rate 6.4% (50 bps increase since Sep 08)

Distressed MultiMulti-Familyy Assets 906 Properties $9 2B in Value $9.2B Notable Markets: Miami Las Vegas P l Beach Palm B h

Multi--Family Buyer Composition Multi

MultiM lti-Family Multi F il Vacancy (6.6%) (6 6%) Rents Absorption

Market Outlook • Rents will fall; Concessions will grow • Retail product is and will suffer the most; • Office product will continue to be weak with f th growth further th iin unemployment l t • Industrial will be impacted less but still impacted p • MF will perform better than the rest from an operational standpoint

Opportunities pp • For Tenants – take advantage g of the market and lock in for longer terms • For landlords – keeping tenants is key • Smaller sales transactions with private investors • REO transactions

Opportunities pp • NPL portfolios and other distressed debt purchases h • Student S d h housing i will ill continue i to perform f • Health care will continue to have demand • Other Federal Government related business • “Keep some powder dry”

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