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David Loeb
Managing Director, Senior Real Estate Research Analyst
Robert W. Baird & Co.
dloeb@rwbaird.com
414.765.7063
Please refer to Appendix - Important Disclosures and Analyst Certification on page 25.
How Did We Get Here?
Lots of Money, Mostly Going Overseas
US Money Supply (M2), 1999-2009
8,500
8,000
7,500
Money Supply:
Money Supply (Billions)
7,000
5,500
annually 1999-
5,000 2009
4,500
4,000
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
-
(100)
Trade Deficit:
Trade Deficit (Billions)
(200)
(300) 1999-2008
(400) cumulative US
(500)
trade deficit: $5.4
(600)
(700)
trillion
(800)
Yields, 2001-2009
12.0%
11.0%
10.0%
9.0%
8.0% Full-service hotel cap rate
4,500
4,000
3,500
3,000
2,500
2,000 4,000
1,500 3,000
1,000
1,200
500 600
0 100 100 100
100
6 to 1 12 to 1 30 to 1 40 to 1
Equity Debt
1.6% 1.3%
2.0% 0.0%
0.0%
May
May
Mar
Mar
Mar
Nov
Nov
Jan
Feb
Apr
Jun
Aug
Sep
Apr
Jan
Feb
Jun
Aug
Sep
Jan
Feb
Jul
Jul
Oct
Oct
Dec
Dec
-0.6%-1.2% -3.6%
-5.0%
-7.7%
-10.0% -9.9%
-12.6%
-15.0% -14.0%
-17.5%
-20.0%
Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
4.0%
3.4% 3.4% 3.3%
3.5% 3.2% 3.2%
3.0%
3.0% 2.8% 2.9%
2.7%
2.5%
2.4% 2.4%
2.5% 2.3%
2.0%
1.5%
1.0%
0.5%
0.0%
US YoY Hotel Supply Growth for Luxury & Midscale with F&B Chain Scales
Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0%
Midscale w/o F&B Luxury
Or is it an oncoming train?
Baird Real Estate Research | 15
RevPAR, Profits Still Shrinking
Early 1990s Hotel REIT Returns v. RevPAR - 3 mo. Moving Avg
45 6.0%
• RevPAR falling 40
4.0%
more slowly 35
falling
30
RevPAR growth 15
Stocks lagged the recovery of
RevPAR coming out of the
increases 10
Stocks bottom July 1992
slow, but RevPAR needed to
have positive growth for a number
of months before the stocks -6.0%
• Lessons from
5
performed.
1991-1993,
1991 1992 1993
Hotel REIT Index 3mo MA RevPAR Chg
2001-2003
Source: Baird Research, Smith Travel Research, and SNL Financial
50 15.0%
45
10.0%
40
35 5.0%
SNL Hotel REIT Index
0 -20.0%
2002 2003 2004
Hotel REIT Index 3mo MA RevPAR Chg
80 10.0%
70
5.0%
60
SNL Hotel REIT Index
40 -5.0%
30
-10.0%
20
-15.0%
10
0 -20.0%
Jan-2007 Jul-2007 Jan-2008 Jul-2008 Jan-2009
SNL Hotel REIT Index 3mo MA RevPAR Trend
120
107
100
Aggregate Raised (Billions)
88
80
80 71
60
40
28 29
23
20 16 14
-
2000 2001 2002 2003 2004 2005 2006 2007 2008*
2,000
1,815
1,728 1,755
1,800
1,600
1,400
1,200
1,000
800 711 692
543
600
400
200
-
Industrial Shopping Center Office Hotel Health Care Mall
Gross Offering
Company Ticker Offering Date Offer Price Shares (000)
Medical Properties Trust, Inc. MPW 01/08/2009 5.40 13,340,700 72,040
Health Care REIT, Inc. HCN 01/29/2009 36.85 5,816,870 214,352
Senior Housing Properties Trust SNH 02/04/2009 17.30 5,853,800 101,271
Digital Realty Trust, Inc. DLR 02/10/2009 34.00 2,500,000 85,000
Alexandria Real Estate Equities, Inc. ARE 03/19/2009 38.25 7,000,000 267,750
Simon Property Group, Inc. SPG 03/20/2009 31.50 17,250,000 543,375
AMB Property Corporation AMB 03/25/2009 12.15 47,437,500 576,366
Corporate Office Properties Trust OFC 04/01/2009 24.35 2,990,000 72,807
Kimco Realty Corporation KIM 04/03/2009 7.10 105,225,000 747,098
Ventas, Inc. VTR 04/07/2009 23.90 12,750,000 304,725
ProLogis PLD 04/08/2009 6.60 174,800,000 1,153,680
Equity One, Inc. EQY 04/09/2009 14.30 6,500,000 92,950
Equity One, Inc. EQY 04/09/2009 14.30 2,450,000 35,035
Acadia Realty Trust AKR 04/14/2009 11.95 5,750,000 68,713
DiamondRock Hospitality Company DRH 04/14/2009 4.85 17,825,000 86,451
Duke Realty Corporation DRE 04/16/2009 7.65 75,210,000 575,357
Weingarten Realty Investors WRI 04/17/2009 14.25 32,200,000 458,850
Regency Centers Corp. REG 04/21/2009 32.50 10,000,000 325,000
Vornado Realty Trust VNO 04/22/2009 43.00 17,225,000 740,675
Parkway Properties PKY 04/23/2009 13.71 7,187,500 98,541
LaSalle Hotel Properties LHO 04/23/2009 10.10 12,362,500 124,861
Host Hotels & Resorts HST 04/24/2009 6.60 75,750,000 499,950
Total 7,244,844
David Loeb
dloeb@rwbaird.com
414-765-7063
• Hospitality Monthly
• Industry and company research
• This presentation
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