3/3/2011 Investment Market Review TOPICS TO COVER Investment - PDF document

3/3/2011 Investment Market Review TOPICS TO COVER Investment Market Review  Positive Signs in the Economy and Property Markets Presented By:  Trends in Property Sales (UP!)  Trends in Distressed Assets (STABLILIZED!) J. Scott Adams, CCIM President, Mid-South Region  The Lending Market Today (IMPROVED!) March 2, 2011  Summary Observations Part of the CB Richard Ellis affiliate network CB Richard Ellis | Page 16 Positive Signs - Economy and Property Markets Positive Signs - Economy and Property Markets SIGNS ARE POSITIVE IN THE NATIONAL ECONOMY SIGNS ARE POSITIVE FOR EACH OF THE MAJOR PROPERTY TYPES  Recession over and protracted expansion phase begun  Especially positive for Office and Multi-Family  Painful reductions in employment begun to turn  Vacancy factors well below previous cyclical around p peaks  Corporate America more profitable and productive,  Buoyed by job growth expectations and housing so the capacity to hire is increasingly evident market  Return of bank credit for small businesses where the majority of jobs are created CB Richard Ellis | Page 17 CB Richard Ellis | Page 18 Trends in Property Sales Nationally Positive Signs - Economy and Property Markets Sales Transactions of $5 Million or greater SIGNS ARE POSITIVE FOR EACH OF THE MAJOR PROPERTY TYPES BILLIONS $140  Clear signs of stabilization for Retail and Industrial $121.4 $120 $100  Vacancy factors remain above previous cyclical $80 peaks peaks $55.6 $60  Buoyed by increased consumer spending and $40 rising trade volumes $20 $0 2009 2010 Source: Real Capital Analytics CB Richard Ellis | Page 19 CB Richard Ellis | Page 20 1

3/3/2011 Trends in Property Sales Hampton Roads 2010 Top Local Sales Transactions: Multi-Family Alta Great Bridge Sales Transactions of $5 Million or greater MILLIONS $151.4 $160 $139.5 $140 $120 $100 $80 $60 $40 $20 $0 2009 2010 Source: CB Richard Ellis Market Research CB Richard Ellis | Page 21 CB Richard Ellis | Page 22 2010 Top Local Sales Transactions: Retail 2010 Top Local Sales Transactions: Multi-Family Prime Outlets Williamsburg Battlefield Woods Apartments CB Richard Ellis | Page 23 CB Richard Ellis | Page 24 2010 Top Local SalesTransactions: Retail 2010 Top Local Sales Transactions: Office Cape Henry Plaza Harbour View Medical Arts Building CB Richard Ellis | Page 25 CB Richard Ellis | Page 26 2

3/3/2011 2010 Top Local Sales Transactions: Office 2010 Top Local Sales Transactions: Office Southport Centre Battlefield Corporate Center CB Richard Ellis | Page 27 CB Richard Ellis | Page 28 Trends in Distressed Assets Trends in Distressed Assets WHAT IS A “DISTRESSED ASSET”? VOLUME OF DISTRESSED ASSETS HAS STABLIZED $250  A loan default has occurred or is imminent $200 $150 and/or $100  The owner/sponsor of the asset is bankrupt $50 or faces financial trouble $0 07Q1 08Q1 09Q1 10Q1  Outstanding  Worked Out CB Richard Ellis | Page 29 CB Richard Ellis | Page 30 Summary Observations The Lending Market Today  Industry has evolved from the phrase GREAT SIGNS IN THE COMMERCIAL REAL ESTATE LENDING MARKET “Survival of the Fittest” to “Most Success for the Fittest”  Lending volume in 4Q 2010 was the highest quarterly increase since mid-2007  Property Types  Physical Assets  Overall lending volume in 2010 was 36% increase over  Markets 2009 2009  Locations  Real Estate Companies  All types of lending sources show positive signs  Service Providers  Banks  Insurance Companies  Conduit Lenders CB Richard Ellis | Page 31 CB Richard Ellis | Page 32 3

3/3/2011 Summary Observations  While much of the first phase of investment volume recovery has been in the “major markets”, Hampton Roads will increasingly participate  More space absorption  More rental rate growth  Higher investment sales volume CB Richard Ellis | Page 33 4