Spring 2008 Institutional Investor Survey:

Please take a few moments to complete this survey by March 21, 2008.

UNLEVERAGED FREE AND CLEAR RETURNS

Title/Position:
Institution/Company:
Email:
Firm Type:
Investment Strategy (please check)

core       core-plus       opportunistic       foreign       value add

INVESTMENT CRITERIA (Please not: Expectations are for unleveraged properties.)

1. Tier:  Which property tier will you be basing your assumptions on (1,2, or 3)?
2.  Yield rates (IRR):  What are your current unleveraged yield expectations by property type?
3.  Capitalization rates:  What are your expectations for free and clear going-in and terminal capitalization rates?
4.  Tier Adjustment:  How much adjustment (in basis points) will need to be given for the other property tier levels?
*Tier
(1,2, or 3)

IRR

Going - in Capitalization

Terminal Capitalization

 *Tier Adjustment
(See Question 4)
  Tier
(1,2, or 3)		 Tier
(1,2, or 3)
 
  (+ or -) (+ or -)
  example: +x.xx -x.xx
CBD Office

Suburban Office

Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels

 

First Year or Stabilized NOI?

Cap Rate Before or After Reserves?

First Year

Stabilized

Before

After

(check one)

(check one)
CBD Office
Suburban Office
Industrial  - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail Power Center
Retail - Neigh/Comm.
Apartments
Hotels
IRR is the rate of interest that discounts the pre-income tax cash flows received by the equity investor(s) back to a present value
that is exactly equal to the amount of the original equity investment.  (In effect it is a time-weighted average return on equity, and as 
used here, is synonymous with the term "yield.")
Going-in cap rate is the first year NOI (before capital items of tenant improvements, leasing commissions and debt service,
but after real estate taxes) divided by present value (or purchase price).
Terminal cap rate is the rate used to estimate resale or reversion value at the end of the holding period.  Typically, it is the NOI
in the year following the last year of the holding period that is capped.  
Property Tiers: First Tier-New or newer quality construction in prime or good locations. Second Tier-Aging, formerly first tier properties, in good to average locations. Third Tier- Properties with functional inadequacies and/or in marginal locations.
Note:  IRR responses are assumed to be for unleveraged all-equity transactions
INVESTMENT CRITERIA
3.  Growth rates:  What are your current underwriting assumptions regarding growth rates?  Please respond "0" if you anticipate 
     no growth.
4.  Leasing Assumptions:  When modeling tenants for purposes of DCF analysis, what rollover/tenant turnover probabilities 
    (i.e., the probability a tenant will renew/vacate at the end of their lease) would you typically use for each of the major land uses?
    Please indicate your assumptions for vacancy loss and down times for releasing space.  What marketing time assumptions do
    you use for each property type? *
                    Growth Rates                    

Market

Holding

Rent

Expense

Inflation

Period
% % % (years)
CBD Office

Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels
           Leasing Assumptions         Marketing

Renewal

Vacancy

Time*

Probability

Loss

Down-time

Avg.
% % (months) (months)
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Mall
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels

NA

NA NA
* What is the average for all properties of the indicated type in all markets?  Although each market is different, please provide an overall rate for these property types.
General Investment Questions

 

 

1. Availability of capital: How would you rate the current availability of capital?
(1 = poor; 10 = excellent)

AVAILABILITY

DISCIPLINE

COMMENTS

2.  Property types:  Please rate the appropriate recommendation for each property type.
a. Buy-Sell-Hold:  Please CHECK the appropriate recommendation for each property type.
b. Risk of Overbuilding:  Please rate the levels of oversupply risk and new construction risk
 
BUY SELL HOLD
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Retail - Regional Malls
Retail - Power Center
Retail - Neigh/Comm.
Apartments
Hotels
3.  Property types:  How would you rate the current investment conditions by property type?
    (1 = poor; 10 = excellent)
CBD Office
Suburban Office
Industrial - Warehouse
Industrial - R&D
Industrial - Flex
Regional Mall
Power Center
Retail - Neigh/Comm.
Apartments
Hotels
 
4. Outlook: Please rate the outlook for the following investment alternatives (1 = poor to 10 = excellent)
     
Stocks
 

Bonds
Cash
Commercial Real Estate
 
5. Economy: On a scale of 1 to 10 (1 = very weak, 10 = very strong), how do you expect the economy to perform over the next 4 quarters?
 
6. Has the risk of recession for the coming 2 quarters:(Please Check One)
     
increased?
 

decreased?
remained the same?
 
7. What are the biggest risks to the economy? (Rate each 1-10; with 1 reflecting a low risk and 10 a high risk)
     
Inflation
 

Residential Market
Credit Standards
Value of Dollar
Unemployment
 
Interest Rates
 
GDP Growth
 
Fed Policies
 
Energy Prices
 
Other
 

8. Return vs. Risk: Please rate the relationship between return and risk (1 to 10 based on the graph below)
     
Overall

Office
Industrial
Retail
Apartment
 
Hotel
 
     

9. Value vs. Price: Please rate the relationship between price and value(1 to 10 based on the graph below)
     
Overall

Office
Industrial
Retail
Apartment
 
Hotel
 
     

 

 

 

10.  Investment recommendation:  Generally, in a mixed-asset context, will the coming quarter be a good time to buy, sell, or hold real estate?
(1 = worst time; 10 = best time)
 

BUY

SELL

HOLD

 
 

Credit Crisis
 
11. How much have property capitalization rates been affected by the credit crisis from the preious quarter? (change in basis points)
  Tier 1 Tier 2 Tier 3

Office
Industrial
Retail
Apartment
 
Hotel
 
         
  
12. How much have commercial property prices been affected by the credit crisis from the previous quarter? (% change)
  Tier 1 Tier 2 Tier 3

Office
Industrial
Retail
Apartment
 
Hotel
 
         
Would you be willing to fill out other topical issue surveys from time to time?
Yes No
or be interviewed by telephone?
Yes No