The Real Estate Roundtable Sentiment Index

Third Quarter 2009

The Real Estate Roundtable Sentiment Index
The Real Estate Roundtable is pleased to announce the results from the Q309 Real Estate Roundtable Sentiment
Survey. The survey is the industry’s most comprehensive measure of senior executives’ confidence in the real
estate environment. This quarter, the survey captured the thoughts of over 120 senior real estate executives,
including CEOs, presidents, board members, and other executives from a broad set of industry sectors including
owners & asset managers, financial services providers, and operators & related service providers. The quarterly
survey, conducted by FPL Advisory Group on behalf of the The Real Estate Roundtable, measures executives’
current and future outlook on three topics including (1) overall real estate conditions, (2) access to capital
markets, and (3) real estate asset pricing.

Topline Findings
■ The overall sentiment index has increased by eight points over last quarter, but still reflects extremely weak
market conditions.

— The Real Estate Roundtable Sentiment Index rose to 491 from a reading of 41 in April 2009.

■ A significant majority of respondents believe current conditions are worse than one year ago.

■ Respondents report a significant decline in asset values and have little hope for near-term improvement.

■ Respondents indicate that capital markets have retreated from the brink of historic collapse, however, they
are still extraordinarily fragile.

1
The Real Estate Roundtable Sentiment Index is measured on a scale of 1–100. It is the average of The Real Estate Roundtable
Future Index and The Real Estate Roundtable Current Index. To register an Index of 100, all respondents would have to answer
that they believe conditions are “much better” today than one year ago and will be “much better” one year from now.

© 2009, FPL Advisory Group LLC

2
The overall sentiment index has increased by eight points over
last quarter, but still reflects extremely weak market conditions.

“There’s the story... and then the real story. The mood has improved, but fundamentals have not.”

“Things will get worse before they get better. The real estate business lags the economy by two or three quarters.
I think it’s at least 9-12 months before we see something of a recovery.”

“The operating market will be difficult for some time, but we’re closer to the end than we were six months ago.”

“I felt until recently like we’re running in quicksand, but we’re not doing that anymore. The worst is over... but
that doesn’t mean it’s good.”

“Conditions are still bad, but at least the pace of decline has slowed.”

Exhibit 1
The Real Estate Roundtable Sentiment Index

Future 63 62
Conditions 60
58 58

49 49
46
Overall 43
41
38
36
33
28 28
Current
Conditions 21
17 18

Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09

© 2009, FPL Advisory Group LLC

3
A significant majority of respondents believe
current conditions are worse than one year ago.

“The property market stinks and it continues to get worse. We were in the same place in 1990.”

“Next year, people will be bold. They’re not ready yet.”

“Nothing will free up this year because the capital markets will not free up.”

“Only when jobs start to recover will we see REIT fundamentals follow suit.”

Exhibit 2
Perspectives on Real Estate Market Conditions

% of respondents

Much worse Somewhat worse About the same Somewhat better Much better

Today vs. One Year Ago One Year From Now vs. Today
3

100 100 6 3
12 14
24
44 75
75 20
23

34
50 50

39 58
19 53
25 25

7 20
10 3 6 5
0 0
April ’09 July ’09 April ’09 July ’09
3

4 © 2009, FPL Advisory Group LLC

Respondents report a significant decline in asset values
and have little hope for near-term improvement.

“Asset prices have declined, perhaps 20-30%, but there’s not enough transactions to really tell how much they’ve
declined. It’s impossible to underwrite today.”

“Owners don’t want to be distressed sellers, so it will fall to the banks to fill that role.”

“I’m more bearish than bullish on asset valuations.”

“The bid/ask spread will close in the next year. Sellers will have to begin to drop their prices and accept buyer offers.”

Exhibit 3
Real Estate Asset Values

% of respondents

Much lower Somewhat lower About the same Somewhat higher Much higher

Today vs. One Year Ago One Year From Now vs. Today

100 100
9 9

75 75 31
59 37
69

50 50
36
36
25 34 25
30
24
4 18
1 3
0 0
April ’09 July ’09 April ’09 July ’09
4 3
1

5 © 2009, FPL Advisory Group LLC

Respondents indicate that capital markets have
retreated from the brink of historic collapse,
however, they are still extraordinarily fragile.

“The banks aren’t making any new loans. They’re pretending that the extensions that they’re issuing (instead of
foreclosing) are new lending to make the government think they’re loaning money.”

“There’s a fair amount of equity, though it’s mostly on the sidelines. The debt side is a more serious issue. The
banks are full up on commercial real estate debt and there’s no one else who can step into the void.”

“We’ve been able to access the common equity market and that has some life. The preferred equity market is
dead. Unsecured debt is dead. Secured is open, you may not like the pricing, but it’s open.”

“Four to five months ago, there wasn’t a penny available for anything. Now, the wheels are starting to move.”

Exhibit 4
Availability of Capital

% of respondents

Much worse Somewhat worse About the same Somewhat better Much better

Today vs. One Year Ago One Year From

2 Now vs. Today
3 2
3
100 100 100 100
8 8 5 6
24
41 21 24 28
75 75 75 28 75
57
71
31

50 50 50 50
30
62 63
25 58
29 60
25 25 25 25
17 17
16
9
10 12
4 4 7 5 6
0 0 0 0
Apr ’09 Jul ’09 Apr ’09 Jul ’09 Apr ’09 Jul ’09 Apr ’09 Jul ’09
1
2
Apr ’09
Apr ’09

Apr ’09
Apr ’09
Jul ’09
Jul ’09

Jul ’09
Jul ’09

Debt Equity Debt Equity

6 © 2009, FPL Advisory Group LLC

Participants
(Please note that this is only a partial list. Not all survey participants elected to be listed.)

Acadia Realty Trust Colliers Macaulay Nicolls, Inc. Heitman Financial

Kenneth F. Bernstein Douglas P. Frye Jerome J. Claeys, III

Alcion Ventures Crow Holdings Highwoods Properties, Inc.

David L. Ferrero Anne L. Raymond Edward J. Fritsch

AllBridge Investments CSCA Capital Advisors, LLC Hines REIT

John B. Bartling, Jr. Bradley Razook Charles Hazen

American Hotel & Lodging Association Cushman & Wakefield, Inc. Home Properties Inc.
Joseph A. McInerney John C. Cushman, III Edward J. Pettinella

AmREIT, INC. DCT Industrial Trust Horizon Bay Senior Communities

Phillip Taggart Thomas G. Wattles Thilo Best

Beekman Advisors, LLC DePaul University HSA Commercial Real Estate

John Cibinic Charles H. Wurtzebach Robert E. Smietana

BlackRock, Inc. DePaul University – Real Estate Center Inland Western Retail Real Estate Trust
Ronald E. Zuzack Susanne E. Cannon Michael J. O’Hanlon

Boston Properties, Inc. Disney Vacation Club Interstate Hotels & Resorts, Inc.
Edward H. Linde Lawrence Smith Thomas F. Hewitt

Bovis Lend Lease DLA Piper Jack Resnick & Sons

Mike Bellaman Jay Epstein Burton P. Resnick

Boykin Management Co. EastGroup Properties, Inc. Johnson Capital Group, Inc.
Robert W. Boykin David H. Hoster, II Guy K. Johnson

BRE Properties, Inc. Education Realty Trust, Inc. JP Morgan

Constance B. Moore Paul O. Bower Joseph Greff

Building Owners & Managers FelCor Lodging Trust Incorporated Julian LeCraw & Co.
Association Intl. Thomas J. Corcoran Michael Tompkins
Henry H. Chamberlain
First Centrum, LLC Kimpton Hotel & Restaurant Group, LLC
Capital Trust, Inc. Mark L. Weshinskey Michael Depatie
Stephen D. Plavin
Forum Partners Investment Lane Construction
CB Richard Ellis Management LLC Robert Alger
Jim Peck Caroline S. McBride
LaSalle Investment Management
Centro Properties Group Green Courte Partners, LLC Jeff Jacobson
Glenn J. Rufrano Randall K. Rowe
Lazard
Champion Partners, Ltd. Greenberg Traurig, LLP Robert C. Larson
Jeffrey L. Swope Robert J. Ivanhoe Matthew J. Lustig

Citigroup, Inc. Gunn Capital Ventures LLC Lettuce Entertain You Enterprises, Inc.
Thomas M. Flexner Thomas P. MacManus Kevin J. Brown

Classic Residence by Hyatt Health Care REIT, Inc. Liberty Property Trust
Randal J. Richardson George L. Chapman William P. Hankowsky

7 © 2009, FPL Advisory Group LLC

Lincoln Property Company Prima Capital Advisors LLC Taubman Centers
J. Timothy Byrne Gregory A. White Robert S. Taubman

Los Angeles County Employees Private Investor Tetrad Corporation

Retirement Assoc. Richard D. Kincaid W. David Scott
John D. McClelland
Q10 Capital Thackeray Partners
M3 Capital Partners James M. Murphy Anthony Dona
Donald E. Suter
RD Merrill The Bozzuto Group
Maguire Properties, Inc. Bill Pettit Thomas S. Bozzuto
Nelson C. Rising
Real Esate Partners International, LLC The EMMES Group of Companies
Marcus & Millichap Jerry L. Starkey Andrew Davidoff
Harvey E. Green
George M. Marcus Red Capital Group The JBG Companies
Casey N. Moore James Iker
Marriott International, Inc.
William J. Shaw Regency Centers Corporation The Prime Group, Inc.
Martin E. Stein, Jr. Michael W. Reschke
Mayer Brown LLP
Michael Blair Rockefeller Group Development Transwestern Commercial Services
Corporation Robert D. Duncan
Merrill Lynch & Company Kevin R. Hackett
Douglas W. Sesler Tufts University –
Security Capital Research & Department of Ecomics
Mid-America Apartment Management Inc. Jeffrey E. Zabel
Communities, Inc. Anthony R. Manno
H. Eric Bolton, Jr. UDR, INC.
Shearman & Sterling Thomas W. Toomey
MidCap Financial LLC Lee A. Kuntz
Kevin J. McMeen ULI – the Urban Land Institute
Silver Investments Stephen R. Blank
Molinaro Koger, Inc. Howard A. Silver
Robert Koger University of Connecticut
Skadden, Arps, Slate, Meagher & Flom John P. Harding
National Multi Housing Council (NMHC) Benjamin F. Needell
Douglas M. Bibby USD Burnham Moores Center
Sonic for Real Estate
Nationwide Health Properties, Inc. Carl Taylor Warner Mark J. Riedy
Douglas M. Pasquale
Square Mile Capital Management LLC Utah Retirement Systems
New York State Teachers Craig H. Solomon Devon W. Olson
Retirement System
David C. Gillan Starwood Hotels & Resorts Vornado Realty Trust
Worldwide, Inc. Michael D. Fascitelli
Northwood Investors Simon M. Turner
John Z. Kukral Watson Land Company
Summit Land Partners, LLC Bruce A. Choate
Partners Group Bruce T. Lehman
Nori Gerardo Lietz Willkie Farr & Gallagher
Sunstone Hotel Investors, Inc. Eugene Pinover
Post Properties, Inc. Robert A. Alter
David P. Stockert

8 © 2009, FPL Advisory Group LLC

Contact
Please direct all inquiries regarding this study to:

Mr. Jonas D. Bordo

Senior Director
FPL Associates L.P.
191 North Wacker Drive
Suite 2850
Chicago, Illinois 60606
Phone: (312) 368-5088
Fax: (312) 368-0359
E-mail: jbordo@fplassociates.com

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The views and opinions expressed by each participant are such individual’s own views and are not necessarily the views of FPL Advisory Group LLC
or such participant’s employer.