Retail Investment Strategy

• Retail has suffered the most from the economic recession as unemployment increases and the housing decline has shaken confidence. Although retail will remain a part of our investment strategy, any new retail investments will likely be made towards the end of 2009.

• Market Fundamentals

• Consumer spending is declining as a result of increasing unemployment.

• Weakening economy is resulting in suspended retailer expansion plans and increasing retailer bankruptcies.

• Vacancy has increased to 11% from 9.4% one year ago.

• Variable lease structure provides upside when economy improves.

• Investment Strategy

• Focused on necessity goods retailers and the strongest national retailers.

• Neighborhood shopping centers with high income demographics.

• Specialty centers tenanted by traditional mall tenants, located in dense, high traffic, affluent locations; offer good sales productivity potential and much lower occupancy costs than traditional malls.

Office Investment Strategy

• Market Fundamentals

• Vacancies have increased to 13.5% during the third quarter 2008, up from 12.6% one year ago; primarily due to increasing suburban office vacancies as CBD office vacancies held steady.

• Overbuilding has not been a significant issue but demand for office space is slowing as businesses contract and as employees are being encouraged more and more to work from home.

• Expected rental growth is decreasing.

• Investment Strategy

• Core properties with leases in place that extend through 2010 and beyond with average rental rates at or below market.

• Supply constrained markets with barriers to development – preference for urban/downtown locations vs. suburban

• Buildings with minimum 75% occupancy

• Markets with strongest employment growth and long term demand

Industrial Investment Strategy

• Market Fundamentals

• Relatively low vacancy of 11%.

• Rising construction costs and credit constraints are curtailing development limiting the likelihood of oversupply.

• Steady cash flows

• Near term import and export volume will slow in concert with the slowing economy but long term volumes will increase with the ever expanding global economy.

• Investment Strategy

• Our strategy is centered on pathways between world production centers and consumption (population) centers in the United States and targeting logistic property investments along critical intersections.

  • Gateway cities benefiting from the movement of goods and material to and from Asia (particularly West Coast markets)

  • Other overseas markets (selected markets in the Northeast influenced by European imports such as Northern New Jersey)

  • Cities that represent major distribution hubs with good rail inter-modal access (such as Chicago)

  • Priced based on current income with potential of enhanced rents due to existing vacant space or upon expiration of current leases

Multifamily Investment Strategy

• Market Fundamentals

• Low vacancy of 6.5%

• Continued demand expected with the significant number of new household formations in the 20-29 age group; household formations throughout the age distribution of the population are increasing

• The housing market collapse supports an increasing number of renters as defaulting homeowners are pushed into rentals.

• Investment Strategy

• Captive renter markets

• Markets with housing affordability issues

• Stabilized properties with high occupancy

• Core

• Class B affordable rental housing for moderate income earners

• Class A properties acquired at a discount to replacement cost and leased at rates competitive with home ownership costs

• Supply constrained markets with geographic barriers to growth limiting new development

• Non-Core

• Reposition existing assets; renovation—repairs, upgrades, focused management; targets renters who cannot afford homes because of affordability of single-family housing in certain markets