Bruce K. Erhardt, ALC Cushman & Wakefield of Florida, Inc. Tampa Bay Land Market Overview 4Q 2010

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1 Bruce K. Erhardt, ALC Cushman & Wakefield of Florida, Inc. Tampa Bay Land Market Overview 4Q 2010 The following represents excerpts from economic and real estate journals, notes from conventions, seminars and other meetings I attended, along with personal opinions of my own and others that I believe pertain to the land business in the Tampa Bay Region. Previous Market Overviews can be found at Erhardt s Quick Look at the Land Market Multifamily land For the tenth quarter, land for multifamily for sale product is not active, and for the second quarter, rental developers are looking at sites for 2012 delivery.. Single Family Over the last five quarters, builders and developers are closing on A and B locations. There is some interest in C locations for long term hold. I ve had more than one land acquisition person for a home builder tell me the A lots are all sold or committed. I am predicting a lot shortage in A and B locations beginning in 2012, and heating up in CDDs Every CDD is different from a standpoint of quality and exit strategy, but the bond holders are willing to listen. Several bondholders have closed on several parcels through a special purpose entity with the goal of getting the lots into the hands of builders, at prices that work, and maintain as much of the value of the bonds as possible. Retail - Same as last fifteen quarters with land prices flat or declining because of lack of tenant demand. The only buyers are single tenant driven, or buy and hold investors. I believe large anchors will soon be in the market for 2012 / 2013 delivery. Industrial No change, users only. No new developer purchases. Developers would rather wait for a build to suit opportunity, or see stronger demand and an uptick in rents. Land values are now at 30% of peak; under $3.00/per building foot for distribution product. Office There is some land demand from end users, but same as industrial, developers are waiting. The exception is Highwoods $12,500,000 purchase of the Independence Park parcel, west of Tampa International Airport. This property contained acres, an existing 115,000sf net rentable office building, and entitlements for an additional 650,000sf of office, which could be converted to a mixed use project containing retail, multifamily and hotel. Bank deals Appraisals I had one REO Asset Manager tell me they only have 25% of the assets that they will be getting over the next year. Banks have taken portfolios to market. Rialto has been the major purchaser. Appraisals continue to be an issue. Page 1 of 18

2 The Big Picture. Kiplinger Letter, September 24, 2010 Don t expect existing home sales of about 5,000,000/year of annual housing starts of roughly 8,000,000 more normal pace for a growing economy to return until Starts in 2011 will be about 700,000, an improvement over 2010 s 600,000, less than half of the average annual tally between 1985 and Homeownership has dropped from 69.22% of households in 2004 to 66.9%. This put 2,500,000 households into the rental market. Kiplinger Letter, October 29, 2010 Global Forecast Global Forecasts GDP Growth (Descending rank by GDP size) World 3.5% 3.0% United States 2.8% 3.0% Euro Zone 1.6% 1.3% China 10.0% 9.0% Japan 2.9% 1.0% United Kingdom 1.6% 1.9% Brazil 7.5% 4.6% Russia 4.3% 4.0% Canada 3.1% 2.5% India 8.5% 8.3% South Korea 6.1% 3.9% Mexico 4.9% 3.6% Burns Consulting, Public builder sales have shrunk so much that the year supply of owned lots has actually risen from two years to five years, despite a 34% decline in lots owned during Q to Q Burns is predicting a relatively quiet year for land acquisition. Page 2 of 18

3 Shadow Lot Supply, What Happened to 1.3 million Lots? In the last four years, the public builders have reduced their land holdings from 2.2 to 700,000 lots, and only built on 200,000 of them during that time period. What happened to the remaining 1.3 million remaining lots? Clearly, farmers, land bankers, and lenders own the bulk of these lots, most of which are in outlying areas that are now worthless, except for farming. For those who have patient capital, such as family money, we advise purchasing the lots in outlying areas and holding them for a better day (unless, of course, they have improvement district bonds on them). Kiplinger Letter, December 3, 2010 Economic Forecasts Economic Forecasts GDP Averaging 2.8% growth in 2010; about the same in 2011 Interest Rates 10-year T-notes modestly higher in 2011, prime, no change Inflation Rising to 1.5% in 2011 from 1% in 2010 Unemployment NEW Ending 2010 over 9.5%; a bit lower in 2011 Crude Oil Trading in the neighborhood of the low $80s/bbl, into 2011 Business Spending NEW Equipment buying leveling off; new buildings still lagging Complete economic outlook at kiplingerbiz.com/outlooks ULI Real Estate Business Barometer, December 2010 National Office vacancy rates stood at 19.5% in the third quarter of 2010, about the same as in the second quarter, and just 50 basis points above the rate in the third quarter a year ago, according to Property & Portfolio Research (the source of all data presented in this section). Completions in the third quarter were down as a percentage of inventory, decreasing from 0.2% in the first quarter to 0.1%; figures for both quarters are substantially below the historical average of 0.7%. The absorption of 11.1 million square feet of space continues the positive absorption first seen in the second quarter after nine quarters of negative absorption. Rents remained stable and are off 3.6% from the same quarter a year ago. Retail vacancy rates stood at 18.8% in the third quarter of 2010, down slightly from 19.2% in the second quarter and just 20 basis points above the figure for the same quarter a year ago. Completions in the third quarter of 2010, as a percentage of inventory, were 0.1%, the same as Page 3 of 18

4 in the second quarter and below the 0.6% historical average. Rents remained stable in the third quarter and are off 4.0% from the same quarter a year ago. Warehouse vacancy rates stood at 13.1% in the third quarter of 2010, down slightly from 13.2% in the second quarter and 50 basis points above the figure for the same quarter a year ago. Completions in the third quarter of 2010, stood at 0.1% of inventory, up from virtually no activity in the previous quarter and below the 0.6% historical average. Rents stayed about the same and are off 5.9% from the same quarter a year ago. Apartment vacancy rates stood at 7.7% in the third quarter of 2010, down slightly from the second quarter and 60 basis points below the figure for the same quarter a year ago. Completions in the third quarter of 2010 stood at 0.1% of inventory, the same as in the previous quarter and below the 0.4% historical average. Rents remained stable in the first quarter and are off just 0.3% from the same quarter a year ago. Hotel occupancy rates (a moving 12 month average) stood at 60.9% in the third quarter of 2010, up from 58.4% in the same quarter a year ago. Completions were down slightly as a percentage of rooms, from 3.2% in third quarter 2009 to 2.1% - now below the historical average of 2.2%. The RevPAR Index was up to 9.2% from the same quarter of ULI Washington, D.C., October 13, 2010, Seminar by Robert Verchick, Deputy Associate Administrator, EPA EPA Priorities 2011 through 2015: Climate change in air quality. Protecting water. Cleaning up communities and advance sustainable development. Chemical safety and pollution prevention. Enforcing environmental laws. Largest U.S. Private Land Owners, Fall 2010, The Land Report I m only listing the top 10: 1. Ted Turner, 2,000,000 acres. Turner owns 15 ranches in seven states. He owns more than 50,000 head of buffalo. 2. Red Emberson, million acres, timber, mainly on the West Coast. 3. Brad Kelly, 1.7 million acres, conservation holdings in Texas, New Mexico and Florida. The property is used mainly to propagate rare species of animals. 4. Irving Family, 1.2 million acres, timber, in Maine. 5. John Malone, 1.2 million acres, Malone is CEO of Liberty Media. Malone recently purchased a 290,000 acre ranch in New Mexico. Terms were not disclosed on this purchase, but the asking price was $83,000,000 (which is $ per acre). 6. Singleton Family, 1.11 million acres, ranching, in the state of New Mexico. 7. King Ranch, 911,215 acres, ranching, in Texas and Florida. 8. Pingree Heirs, 830,000 acres, timber, in Maine. 9. Reed Family, 770,000 acres, located in the Pacific Northwest, mainly timber. 10. Sand Cronke, 740,000 acres, ranching, Montana, Wyoming and Colorado. Page 4 of 18

5 Florida land owners, in the top, were Lykes Brothers (615,000 acres), Collier Family (280,000 acres), Fanjul Family (155,000 acres). King Engineering, King Facts, December 14, 2010 Florida sues EPA over nutrient standards for Florida waters lawsuit alleges that EPA rules not consistent with the intent of congress when it passed the clean water act based on cooperative Federalization with the state s responsible for water quality regulation with oversight by EPA. Studies by Florida Department of Environmental Protection and the Florida Department of Agricultural and Consumer Services, as well as two, independent studies that have projected that the impact to Florida s economy would be billions of dollars. EPA has projected a compliance cost of approximately $200 million. Please see attached King Engineering White Paper on the Effect of Nutrient Standards Regulations on Land Development. Tampa Economic Development Tampa Economic Development recently published a report done by Biggins Lacy Shapiro & Company on a study of the Locational Assessment & Strategic Plan for Economic Growth for our area. To review this study, go to: pdf. The five clusters that were recommended as strategic targets are bio, technology and medical devices, cross business functions, defense and security, financial services, and medicine and medical management. Dividend Capital Research Cycle Monitor Real Estate Market Cycles, Q3-2010, Physical Market Cycle Analysis of All Five Major Property Types in More Than 50 MSAs. Lending by life insurance companies increased 59% in Q and was up 120% year over year, according to the American Council of Life Insurers (ACLI). The average interest rate for fixed rate loans was 5.2%, which is a narrower 284 basis point spread to Treasuries showing higher interest in commercial mortgage financing. But, new supply is expected to be low for another few years. Office occupancies improved 0.1% in Q3-2010, but rents declined 0.3% for the quarter and fell 2.7% annually. Industrial occupancies improved 0.1% in Q3-2010, but rental growth fell 0.7% for the quarter and 5.9% annually. Apartment occupancy improved 0.2% in Q and rental growth improved 0.6% for the quarter, but fell 0.3% annually. Retail occupancy improved 0.4% in Q3-2010, but rental growth fell 0.7% for the quarter and 4.0% annually. Page 5 of 18

6 Hotel occupancies improved 1.1% in Q3-2010, and RevPAR declined 0.5% for the quarter and improved 9.2% annually. Office Market Cycle Analysis The national office market occupancy level increased 0.1% in Q3-2010, but registered a 0.5% year over year decline. Our model proved true with Q as the bottom of the occupancy cycle and Q as the start of the recovery. Absorption was a positive 3.9 million square feet in Q3-2010, the second consecutive quarter of low but positive net absorption. Developers delivered less than 1 million square feet of new space, making this the first quarter in three years that more space was absorbed than completed. Sublease space declined 24% from the peak a year ago and that peak was well below previous cycles. Thus sublease space may not put as much of a drag on the office recovery like previous cycles. Rents declined 0.3% in Q and were down 2.7% year over year. We do not expect to see rents rise until Tampa is the in the same position as last quarter, at level 1, the beginning of the recovery phase. With Tampa are Orlando, Palm Beach and Raleigh Durham. Ahead of Tampa are Atlanta, Charlotte, Nashville, Ft. Lauderdale, Jacksonville and Miami. Industrial Market Cycle Analysis Industrial occupancies improved 0.5% in Q3-2010, which resulted in a 0.3% decline year over year. This is the second quarter of occupancy increase, confirming that the recovery is underway. The major indices of truck, train and waterborne freight continue to show improvement, which creates more demand for warehouse space. Net absorption was a small 2.4 million square feet for Q and only half of the 2 million square feet of new supply was speculative construction. We expect much of the new construction to be build to suit for the next few quarters. Industrial average rents were down 0.7% for Q and 5.9% year over year. Tampa is the in the same position as the last three quarters, at level 1, the beginning of the recovery phase. With Tampa are Orlando, Palm Beach and Raleigh Durham. Ahead of Tampa are Atlanta, Charlotte, Ft. Lauderdale, Miami and Nashville.. Apartment Market Cycle Analysis The national apartment occupancy average improved 0.2% in Q and was also up 0.6% year over year. Two quarters of improvement confirms that apartment occupancy levels are now in recovery. Net absorption was up over 80,000 units in Q3-2010, a little more than half of the 155,000 units for the year Job growth and home foreclosures are creating new demand and supply is staying at low levels. Average national apartment rents improved 0.6% in Q3-2010, but were down 0.3% year over year. Tampa has moved up to level 2, the beginning of the recovery phase. With Tampa are Atlanta, Charlotte, Jacksonville, Orlando, Raleigh Durham, Memphis and Palm Beach. Ahead of Tampa is Nashville. Behind Tampa are Ft. Lauderdale and Miami. All cities are in the recovery phase. Page 6 of 18

7 Retail Market Cycle Analysis Retail occupancies improved 0.4% in Q3-2010, but were down a mere 0.2% year over year. Two quarters of improvement confirms that the retail occupancy cycle is now in the recovery phase. Retail sales have been improving and the first anecdotal evidence from Black Friday seems to confirm the trend. Profitable retailers are beginning to expand, but are negotiating low rents and strong concessions. Rents were down 0.7% in Q and were down 4.0% year over year. Tampa is in the same position as the last two quarters, at level 1, the beginning of the recovery phase. With Tampa are Orlando, Palm Beach and Raleigh Durham. Ahead of Tampa are Atlanta, Charlotte, Ft. Lauderdale, Jacksonville, Memphis, Miami and Nashville. Hotel Market Cycle Analysis Hotel occupancies improved 1.1% in Q (the same rate as Q2-2010) and were up 2.5% year over year. Three quarters of improvement confirms that the hotel occupancy cycle is now in the recovery phase. Supply is very low and there is virtually no new supply in the forecast after 2010 due to the lack of financing and high Investment hurdle rates being applied to hotels. Note that many major markets saw improved occupancy rates that moved them forward one point on the occupancy graph. Hotel RevPAR was down 0.5% in Q but was up 9.2% year over year. Tampa for the second quarter is at level 1, the beginning of the recovery phase. With Tampa are Norfolk and Richmond. Ahead of Tampa are Atlanta, Charlotte, Ft. Lauderdale, Jacksonville, Memphis, Miami, Nashville, Orlando and Palm Beach. Real Estate Lives, January 11, 2011 To date, 1,369 trained so far, 120 small group meetings. 52 bi-monthly, large group meetings, averaging 120 each. 169 attended free Pancake Annual Meeting with Steve Otto as speaker, over a hundred at free summer picnic, and dozens attended free Christmas Party for REL Kids. 1,350 jobs posted on web site, 20,000 phone bank calls; 500 were helped in placing back in new jobs. Follow up calls from all over the country 0tto nationwide salute to our realestatelives.org in Inman National Housing News, Tampa Tribune Thanksgiving Editorial what they were thankful for, 50 Peer Lead Counseling meetings, co-sponsor spouse help event, working up REWork for those back to work looking for help keeping and adjusting back to work. Tampa Bay Retail Market Overview CoStar Retail Report, Q3-2010, Tampa / St. Petersburg (Including Hillsborough, Hernando, Pasco, Pinellas, Sarasota and Bradenton Markets) Net absorption 563,489 square feet absorbed in Q3-2010, compared to Q net absorption of -74,296 square feet. Vacancy At the end of Q3-2010, vacancy was 7.6%. Page 7 of 18

8 Rental Rates Rents at the end of Q were at $14.17 per square foot, compared to $14.51 per square foot at Q Inventory and Construction During Q3-2010, four buildings totaling 217,241 square feet were completed. Over the past four quarters, a total of 927,997 square feet of retail space has been built. There were 412,450 square feet of retail space under construction at the end of Q Upgrades - Averaging 9.57% compared to the same period in 2009 when they averaged 8.97%. Historical deliveries 1982 to 2010 The average has been 4.1 million square feet with peak being 1985 at 8.5 million square feet, followed by 2003 at 6.9 million square feet. The Linneman Letter, Retail Vacancy Rates, Tampa Bay Market YE 2009 Act. YE 2010 Est. YE 2011 Est. YE 2012 Est. YE 2013 Est. Tampa Bay 10.1% 9.9% 8.3% 5.5% 3.3% Tampa Bay Single Family Market Overview MetroStudy Tampa Executive Summary, Q3-2010, Housing Market Trends In Tampa, 1,003 single family units were started in Q This represents a decrease of 0.1%, compared to last year s rate of 1,004 units. The annual starts rate, compared to last year, increased by 10.4%, to 3,902 annual starts. The table below shows the price distribution of annual starts by price range: Price Range Starts Closings $0 - $149, ,079 $150,000 to $199,999 1,367 1,531 $200,000 to $249, $250,000 to $299, $300,000 to $349, $350,000 to $399, $400,000 to $449, $450, This quarter, 772 lots were delivered to the Tampa market. This same quarter a year ago, we delivered 808 lots. Vacant developed lot inventory stands at 34,172 lots, an increase of 10.4% compared to 30,950 lots last year. Based upon the annual start rate, this level of lot inventory represents a months supply, a decrease of 0.0 months compared to last year. Page 8 of 18

9 Market areas based on annual starts are shown below: Market Area Ann Starts (% Change) Hillsborough 2,529 (+18.5%) Pasco 1,072 (-0.5%) Pinellas 171 (+29.5%) Hernando 87 (+29.5%) The table below ranks the top ten communities in the market by annual starts: Annual Starts by Submarket Community (Area) Ann. Starts Cypress Creek 165 South Fork 135 Verandahs 145 FishHawk Ranch 143 WatersEdge 128 Panther Trace 127 Valencia Lakes 111 Oak Cree 97 K-Bar Ranch 95 Moss Landing 89 From an August MetroStudy Report, only 6% of Tampa Bay s subdivisions where there is any building activity at all are creating 55% of new construction activity. Page 9 of 18

10 CDD s - Distressed Debt Securities Newsletter, November 2010, by Income Securities Advisor, Since December 2007, some 154 Florida Community Development Districts have defaulted on $4.7 billion in municipal bonds, either through payment defaults or through making interest payments or debt retirements by invading reserve accounts. There are also 62 districts representing $1.3 billion of bonds on the watch list for districts likely to default. Income Securities Advisors did a survey of 218 projects out of 353 that are still in an ongoing development mode. The aggregate number showing annual absorption rate of 1.8% which would indicate a 47 year buildout time period. This may be overstating the problem because they are aggregating active with inactive projects. They found that 84 districts representing 49% of the planned single family houses and 40% of the multifamily units had reported zero sales since inception. Florida CDD Build Out Profile # of Projects 218 Bonds ($000) 5,861,102 Total Acreage 193,939 Planned Single Family Homes 194, % Sold thru June , % Sold Thru Dec , % Planned Multifamily Units 50, % Sold thru June , % Sold thru Dec , % Planned Comm. SF (000) 34, % Sold thru June , % Sold thru Dec , % October 27, 2010 Construction Economic Forecast, by National Association of Home Builders, Rose Reports Segment, Single Family permits peaked for Hillsborough, Pinellas, Pasco and Hernando Counties in 2005 at 27,193. Marvin Rose predicts 2010 will finish at 4,300. The four counties, since 1970, have never been below 6,680 which was in Peak for median new home price was $289,524 in mid We are currently at $193,209. The peak for median existing home price was $224,800 in mid We are currently at $132,895. Newly platted lots peaked in 2005 at 22,095. Newly platted lots for 2010 will be around 700. Carlyle Predictions on Housing Industry Based on Carlyle research, we believe the United States will experience a housing shortage during the next two to three years, when we project housing demand will substantially exceed existing supply. This shortage will include both single family and multifamily homes. Carlyle predicts the shortage will begin in 2011 with home prices reaching a low point. Page 10 of 18

11 New construction of housing is at a historic low; housing starts and permit issuance are at the lowest levels on record, according to the U.S. Census Bureau data, which dates back to In addition, the last time new housing starts were at this current level, was before Carlyle believes pent up demand will likely manifest as the job market improves. Delayed household formation defer demand, but do not eliminate it, which in turn creates pent up demand. Taylor Morrison J.P. Morgan is in the market to sell Taylor Morrison Homes, who has a big presence in the Tampa Bay market. Another large residential transaction are the Lehman SunCal assets, which may trade before Taylor Morrison. Tampa Bay Multifamily Market Overview Marcus & Millichap s Q Retail Market Update Tampa Metro Area 1,626 units delivered in 2010, down from 1,813 in Construction will slow further in 2010 as only 500 units are slated to come on line. Vacancy: Vacancy rate will decline 220 basis points in 2010 to 8.5%. In 2009, vacancy jumped 200 basis points. Class A is at 7.2% and Class B/C is at 9.5%. Rents: Asking rents rose 1.1% in 2010, while effective rents advanced 2%. Sales: Class A quality complexes command CAP rates at the low 6% range. For most Class B product, CAP rates range from 7/5% to 8.5%, while Class C assets trade for 9% to 11%. Bay Area Apartment Association Market Overview, December 8, 2010 Michael Slater, TRIAD Consulting Occupancies 91% Hillsborough, 91% Pinellas, 89% Pasco. Predicting occupancies will move up to 92% to 93% in six to twelve months. A s will be above 94% and enjoy rent growth of 2% to 3% market wide. Deliveries Lowest delivery of new product in 10 years. Slater predicts they will be back to normal deliveries in 2012 and Ray Chiaramonta, Hillsborough County Planning Commission, Spoke on Mass Transit Transit will be necessary because widening of roads just won t do it. One light rail train = 77 cars off the road. In an auto dependent environment, you pay 25% of your income on transit. If you live in a transit rich neighborhood, that goes down to 9% of income. Penny sales tax passed in the City of Tampa and the City of Temple Terrace. Need 8% more voters to pass. Page 11 of 18

12 It appears the first light rail to be built in the area will be from Downtown Tampa to Tampa International Airport, not Downtown to USF, as previous thought. ERHARDT COMMENT: Depending on location of submarket, land values for apartment sites are 30% to 50% of peak. I know of two projects, currently in permitting, that are going to be delivered at under $100,000 per unit. I predict the Herd Instinct in financing will return third or fourth quarter of this year, although I don t believe that debt will get higher than 80%, and you won t be able to use development fees as equity. I was recently on the web site of Lupert Adler, a real estate investment company. On the page with the various office locations, in addition to driving directions, they included train schedules. I firmly believe trains should be and will be a part of Florida s future. Office Market Overview: Cushman & Wakefield Market Overview - Tampa Westshore Office Overview: Overall vacancy at the end of 4th quarter 2010 is 19.0% compared to 21.8% last year and 19.4% last quarter. Class A is at 19.0% compared to 21.7% last year and 19.8% last quarter. I-75 Office Overview: Overall vacancy at the end of the 4th quarter 2010 is at 23.3% compared to 19.0% a year ago and 22.4% last quarter. Class A is at 21.5% compared to 22.9% a year ago and 23.3% last quarter. Tampa Central Business District: Overall vacancy at the end of the 4th quarter 2010 is at 19.0% compared to 20.0% a year ago and 18.9% last quarter. Class A is at 18.1% compared to 18.4% a year ago and 17.1% last quarter. In the entire Bay area, there is no office space currently under construction. The 85,000- sf project located in the Bayside submarket, in the Park Place office park which was being developed by Hallmark, has stopped construction activity until market fundamentals improve in the future. ERHARDT COMMENT: Other than owners/users, I don t believe there will be any multi-tenant spec development until 2012, delivering in Developers like to deliver new product into a less than 10% vacancy. Page 12 of 18

13 Cushman & Wakefield Office Overview The U.S. office market is seeing positive absorption for the first time since 2007, according to Cushman & Wakefield. The firm released statistics indicating an overall absorption rate of positive 2.2 million square feet at the end of 2010 a whopping 106.5% increase from the negative 33.5 million square feet of absorption at year end According to the report, increases in leasing activity and limited new construction were drivers of the positive absorption. Cushman found that overall leasing activity for U.S. central business districts totaled 62.4 million square feet at the end of That s a 26.3% increase from2009, when 49.4 million square feet were leased. Cushman executive managing director and head of Americas research Maria Sicola said that the positive absorption portends good things for the office market s recovery. She added that during this year, restricted new development will play a major role in sustaining that recovery. That s good news, because new construction is indeed limited. In 2010, there was 7.5 million square feet of new office space completed a 40% drop from the 12.4 million square feet completed in It was also the lowest yearly total since 2005, when 5.2 million square feet was built. Industrial Market Overview: Cushman & Wakefield Market Overview - Tampa West Tampa Industrial Overview: The overall vacancy at the end of the 4th quarter, 2010 is 10.4% compared to 10.7% a year ago and 9.9% last quarter. Warehouse distribution is at 10.4% vacancy compared to 10.8% a year ago and 10.0% last quarter. Office Service Center is at 12.7% vacancy compared to 13.4% a year ago and 11.8% last quarter. East Tampa Industrial Overview: The overall vacancy at the end of the 4th quarter 2010 was 10.1% compared to 10.7% a year ago and 10.8% last quarter. Warehouse distribution is at 11.2% vacancy compared to 11.0% a year ago and 11.8% last quarter. Office Service Center is at 18.9% vacancy compared to 16.9% last year and 18.7% last quarter. Plant City Industrial Market Overview: The overall vacancy at the end of the 4 th quarter 2010 was 3.5% vacancy compared to 3.6% a year ago and 3.6% last quarter. Warehouse distribution is at 4.1% vacancy compared to 4.0% a year ago and 4.1% last quarter. Page 13 of 18

14 Lakeland Industrial Market Overview: The overall vacancy at the end of the 4 th quarter 2010 was 5.5% vacancy compared to 7.3% a year ago and 5.4% last quarter. Warehouse distribution is at 7.0% vacancy compared to 9.2% a year ago and 6.6% last quarter. Service center is at 18.5% compared to 16.9% a year ago and 16.6% last quarter. The overall Tampa Bay area market warehouse vacancy is 9.3% and office / service center is 15.0% vacant. The Florida industrial market shows an overall vacancy of 9.9%, with 830,000 square feet under construction. The 85,000sf building that Hallmark was building in the Pinellas County Bayside Market has stopped construction activity until market fundamentals improve. ERHARDT COMMENT: Same as office, there continues to be no demand by developers for industrial development sites. We still believe there will be new multi-tenant spec construction starting late 2011, delivering into mid I know of at least nine developers that have solely permitted buildings sitting on the shelf, ready to start construction. Port Manatee and Port of Tampa Expand Port Manatee The U.S. Department of Transportation has awarded Port Manatee $9 million to help fund a 32 acre, container cargo terminal project that is expected to create 1,000 jobs and relieve highway congestion for cargo shipments between Texas and Florida. Port Tampa The Port has expanded its containers terminal from 25 to 40 acres. Construction will begin next year on the Tampa / Gateway Rail project that will have trains carrying cargo containers and accommodate 100 car trains containing ethanol to the port, where it will be blended with inbound gasoline. In addition, construction began this year on the $500 million I-4 / Crosstown Connector for port, truck and other vehicular traffic. Expansion began on Port Redwing on two births, channel deepening and acquisition of land for rail and road development and warehouse operations. Page 14 of 18

15 Hotel Overview: January 7, 2011 Tampa Bay Business Journal Smith Travel Research Tampa Bay Hospitality Market 2011 Projections, Tampa / St. Petersburg Occupancy up 3% to 5% + Average Daily Rate: +2% Revenue Per Available Room: +3% to 6% 2010 Projections Nationally Occupancy: +1.6% Average Daily Rate: +3.9% Revenue Per Available Room: +5.5% Colliers International / PQF Hospitality Research Mark Woodworth and Robert Mandelbaum, Q Hotel Market Overview Employment In the fourth quarter of 2009, all 50 markets they study had negative job growth. They are predicting that by Q4-2011, all 50 will be positive. The market will come back starting in 2012 with 2013 and 2014 seeing rapid development. Looks to be a good year for 2011, and even better for 2012, as demands are predicted to increase along with substantial double digit RevPAR growth. The Linneman Letter, Hotel Occupancy Rates, Tampa Bay Market YE 2009 Act. YE 2010 Est. YE 2011 Est. YE 2012 Est. YE 2013 Est. Tampa Bay 52.2% 51.4% 51.5% 52.3% 53.0% Financing Overview FDIC Quarterly Banking Profile- Q The Q FDIC Quarterly Banking Profile (QBP) is now available on line. FDIC insured institutions reported an aggregate profit of $14.5 billion in Q3-2010, a $12.5 billion improvement from the $2 billion the industry earned in Q This is the fifth consecutive quarter that earnings have registered a year over year increase. Almost two thirds of all institutions (63.3%) reported improvements in their quarterly net income from a year ago, but nearly one in five institutions (18.9%) had a net loss for the quarter. The average return on assets (ROA) rose to 0.44%, from 0.06% one year ago. Page 15 of 18

16 Cushman & Wakefield Sonnenblick Goldman Capital Markets Update, November 30, 2010 RECENT DEALS / CLOSINGS / QUOTES - DEBT Asset Type Type of Financing Type of Lender Rate / Return Loan to Value Term Amortization / Comments % fee Office Floating Debt Fund L % plus 100% TI/LC Costs Office Fixed Life Company 4.00% 40% 10 years I/O Office Mezzanine Fixed Mezzanine Fund 12.00% 65 85% 5 years I/O Office Fixed CMBS S % 10 years 25 year Multifamily Fixed Agency T % 5 years 30 year Retail Fixed Life Company 4.50% 60% 7 years 30 year Retail Condo Fixed Regional Bank 5.00% 70% 3 years I/O Retail Lifestyle Fixed Life Company 5.30% 57% 10 years 30 year Center Retail Value Add Floating Bank L % 36 months plus one year Partial Recourse, 1% fee Multifamily Construction Fixed Bank 5.50% 70% I/IO, Partial Recourse Land Fixed Fund 10.00% 55% I/O, 1% fee Industrial Portfolio Floating Life Company L % I/O, 0.50% fee RECENT DEALS / CLOSINGS / QUOTES - EQUITY Asset Type Type of Financing Type of Investor Target Return Equity Contribution Comments Levels Multifamily JV Equity Opportunity Fund 20% 99% / 1% 20% above 12% Development Multifamily JV Equity Pension Fund 18% 90% / 10% 20% above 14%, 30% above 18% Industrial JV Equity Opportunity Fund 22% 80% / 20% 20% above 10%, 30% above 16% Development Hotel JV Equity Private Equity 22%+ 80% / 20% 20% above 15% Office JV Equity Life Insurance 18% 98% / 2% 10% above 13%, 25% above 15% Company Land JV Equity Opportunity Fund 25% 95% / 5% 20% above 10%, 30% above 16%, 40% above 22% Government Overview Gulf Coast Business Review, December 23, 2010, Impact Fees Reduced or Suspended Around the State The following counties have suspended or reduced impact fees Charlotte, Citrus, Collier, Columbia, DeSoto, Glade, Hardee, Hendry, Hernando, Highlands, Lake, Lee, Manatee, Marion, Putnam, Santa Rosa, Sarasota, Wakulla and Polk. Most were short term (i.e to 2013). Page 16 of 18

17 Gulf Coast Impact Fee Reductions Single Family Office Industrial Residential Per 1,000 SF Per 1,000 SF 3 BR or 2,000 SF For 100,000 SF For 100,000 SF County New Fee Old Fee New Fee Old Fee New Fee Old Fee Charlotte $3,649 $4,002 $1,123 $1,232 $1,539 $1,689 Collier $19,367 $28,416 $10,062 $16,077 $6,565 $8,992 Manatee $5,498 $15,577 $4,208 $8,075 $2,184 $4,180 Pasco $16,828 $20,581 $3,943 $17,867 $3,941 $9,401 Sarasota* $6,927 $12,230 $3,877 $7,831 $2,509 $4,496 *The new fee for Sarasota County assumes a proposed 50% decrease in the road fee in addition to the approved 2 year suspension of the school fee. Lee County reduced the road fee for medical offices by approx. $17,000 per 1,000 square feet for two years, and eliminated impact fees for more intensive use of existing buildings for two years. Sources: ImpactFees.com by Duncan Associates, county ordinances and Gulf Coast Business Review. Christopher E. Lee, CEL & Associates, Inc., Q Newsletter at Government Space Fast Facts In 2011, nearly $11.6 billion in government space will be constructed. By 2015 that annual total is expected to be over $15.3 billion. The Federal government (Executive Order 13514) requires that at least 15% of each agency s existing facilities and building leases (above 5,000 square feet) meet Sustainable standards. The Federal government owns approximately 445,000 buildings with total floor space topping three billion square feet. ERHARDT COMMENT: That would be a heck of a sale / lease back. Assuming $100/per building square foot, that s $3 trillion. Land Sales Single Family 1. DR Horton purchased 15 lots in Palmer Oaks for $53,333/per lot for $1,066 per front foot for 50 foot lots. No CDD. Sarasota County. 2. Tide Ridge Holdings Acquisitions purchased acres in the northwest quadrant of SR 52 and US Highway 41 in Pasco County for $2,280,000. The property is zoned for 756 single family lots, or $3,016 per lot. Cushman & Wakefield represented the buyer in this transaction. 3. Beazer purchased foot lots at FishHawk in south Hillsborough County for $987 per front foot. The CDD is $825 annually. 4. Ashton Tampa Residential LLC purchased 50 lots in Port Tampa area of Tampa for $25,000 per lot. 5. DR Horton purchased 56 developed lots between Zephyrhills and Wesley Chapel in southeast Pasco County for $15,160 per lot. Page 17 of 18

18 6. DR Horton purchased 45 lots in Ft. Myers for $36,000 per lot in the Verandah subdivision. Home prices will start in the mid $200,000s. 7. Standard Pacific purchased 33 lots at the north end of Seven Oaks subdivision in the Wesley Chapel area of Pasco County for $1,139 per front foot (assuming 60 foot lots). It is also B bond payoff and A bond assessments. 8. Taylor Morrison purchased foot lots in the Tampa Palms community, north central Hillsborough County for $1,187 per front foot. CDD annual payment is $738 with eight years remaining. Cushman & Wakefield represented the seller in this transaction. Multifamily 1. PACLand purchased a site in Lakewood Ranch, north of SR 70, for $12,750 per unit for 272 unit, three story walk up product. 2. Related Group purchased 5.8 acres in the Channelside District of Tampa s CBD for $25.73 per square foot. The property was zoned for 674 units or $9,645 per unit. 3. Seminole Park LLC purchased acres in the City of Seminole, Pinellas County, for $9,132 per unit for a 219 unit project. The property fronts on Cross Bayou. Office / Industrial Retail 1. Sales Force.com purchased 14 acres in San Francisco for $470 per square foot of land, and $139 per building square foot for a new 2,000,000 square foot headquarters building. 1. Family Dollar bought a site in north central Hillsborough for $1,505, JP Morgan Chase bought a branch bank site in Lakewood Ranch for $2,000, Race Trac purchased a site in Polk County near I-4 and US Highway 27 for $850, Murphy Oil USA purchased an outparcel in the New Port Richey area of western Pasco County for $808,000. Agriculture CDD 1. Loop Farms LLC purchased 160 acres in Wimauma area of Hillsborough County for $7,000 per acre. Cushman & Wakefield represented the seller in this transaction. 1. Bond Sale, undisclosed east coast Florida location, 58 on the dollar for the bonds, which represented 22 on the dollar on the total cost. 2. Bond restructure, Avalon Park Group restructured $27.3 million in CDD bonds on the New River development, Pasco County, to a new structure of $21 million in new bonds and $6 million as subordinated debt to be paid if and when the new 2010 bonds are repaid. This represents 77 of par. Reported in the Tampa Bay Business Journal, December 10, Page 18 of 18