Weathering the Commercial Real Estate Market

1. Weathering the Commercial Real Estate Market January 28, 2010

2. Weathering the Commercial Real Estate Market January 28, 2010 REGIONAL ECONOMIC HIGHLIGHTS

3. Weathering the Commercial Real Estate Market UNEMPLOYMENT JOB GROWTH FINANCIAL MARKETS January 28, 2010

4. Weathering the Commercial Real Estate Market January 28, 2010 Hampton Roads Economic Indicators • Port of Virginia • Over 1.7 million TEU’s flow through the port annually • 20 shipping lines with weekly service to Asia and Europe • Less than a seven hour drive to eight major markets • Ice-free, deepwater, unobstructed natural harbor • Expansion capacity to grow to 8 million TEU capacity

5. Weathering the Commercial Real Estate Market January 28, 2010 Hampton Roads Economic Indicators Labor Force • 830,000 person private labor force • 13,000 military personnel transitioning into workforce annually • 12 traditional colleges and universities and 10 for-profit institutions • Over 14,000 degrees conferred annually • Wage rate 8% below national average

6. Weathering the Commercial Real Estate Market January 28, 2010 Hampton Roads Economic Indicators Business Climate • Virginia voted ‘Best State for Business’ – again! • 180 international firms representing 27 countries in region • Workers’ compensation rate 47% below the national average • Corporate income tax rate of 6%; not raised since 1972 • Ranked 4th in “Cities where Americans are getting richer” • Ranked in top 20 regions for economic performance by Brookings Institute in December, 2009 • Hampton Roads ranked third least expensive metro area for corporate headquarters by the Boyd Co.

7. Weathering the Commercial Real Estate Market January 28, 2010 Hampton Roads Economic Indicators Military & Government • $19 billion – Direct DOD spending • 45% of regional economy • Key issues in 2010: • Loss of another carrier group • Need to develop new OLF • Transportation system.

8. Weathering the Commercial Real Estate Market January 28, 2010 Hampton Roads Economic Indicators Opportunities and Announcements • Jordan Bridge approved as PPTA project • New Gilmerton Bridge under construction • Midtown Tunnel PPTA project close to approval • I-564 connector, enhancing Port and Norfolk Naval Base traffic • Higher Speed Rail Service to Hampton Roads • Stimulus funds for bridge repairs • APM terminals lease with VIT

9. Weathering the Commercial Real Estate Market January 28, 2010 OFFICE OVERVIEW

10. Weathering the Commercial Real Estate Market THE STATE OF THE OFFICE MARKET TENANT LEVERAGE FINANCING ABSORPTION FORECAST January 28, 2010

11. Weathering the Commercial Real Estate Market January 28, 2010 INDUSTRIAL OVERVIEW

12. Weathering the Commercial Real Estate Market “HIGH CUBE” SPACE CHALLENGED INDUSTRIAL CORE STILL HEALTHY FINANCING USER LEVERAGE FORECAST January 28, 2010

13. Weathering the Commercial Real Estate Market January 28, 2010 RETAIL OVERVIEW

14. Weathering the Commercial Real Estate Market ANCHORS IN TROUBLE SMALL SHOPS FINANCING TENANT LEVERAGE FORECAST January 28, 2010

15. Weathering the Commercial Real Estate Market OWNER OCCUPIED/ BUSINESS BASED SPECULATIVE CONSTRUCTION REFINANCING MARKET CMBS MARKETS January 28, 2010 FINANCING

16. January 28, 2010 Vacancy and Rents

17. Vacancy and Rents

18. Questions? Thank You