Wealth Management Research

Jonathan Woloshin, CFA – Equity Sector Analyst

Southern California Commercial & Residential Real Estate Overview –
February 2010

This report has been prepared by UBS Financial Services Inc. (“UBSFS”).
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Residential Real Estate

The Ugly, The Bad & The Good

1
Summary
THE UGLY THE BAD

Negative Equity ARM/Option ARM Resets/Recasts

Shadow Inventory Overhang Homeownership Rates
Foreclosures/Mortgage Delinquency Impact of Distressed Sales
Mortgage Modifications High End Risk
“Sand” Markets Single Family Rentals

THE WILD CARDS THE GOOD

Politics Affordability
Unemployment Lagging Housing Starts and Household
Formations

Length of Downturn
Public Builder Market Share Gains

2
Residential Real Estate

THE UGLY

3
Negative Equity Time Series Source: First American Core Logic

N e g a ti v e E q u i ty b y M o r tg a g e V i n ta g e
45%
41%
40%
37%

35%
33%

30%

25%
22%

20% 19%

15%
13% 12%
11% 12%
10%
10%

5%

0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

N e g a ti v e E q u i ty b y B u i l d Y e a r
45%
42%
41%
40% 38%

35% 34%
33%

30%
30% 28%
27%
25%
25%

20%

15%

10%

5%

0%
2000 2001 2002 2003 2004 2005 2006 2007 2008

4
Distribution of Negative Equity 3Q 2009 Source: First American Core Logic

12%
11%

10%

8%

6%

4%
4%
3%
3% 3%
2%
2%

0%
0% - (5%) Equity (5%) - (10%) Equity (10%) - (15%) Equity (15%) - (20%) Equity (20%) - (25%) Equity > (25%) Equity

5
Negative Equity Composition Source: Loan Performance

100.0% 2.0%
80.0%
69.0%
60.0%
98.0%
40.0%
20.0% 31.0%
0.0%
Negative Equity @ 2Q 2007 Negative Equity @ 3Q 2009

LTV 105%-120% LTV 120%+

6
Mortgage Amount by Equity Level Source: First American Core Logic

$350,000
$320,000

$300,000
$280,000
$270,000
$260,000
$250,000
$250,000 $240,000
$225,000
$215,000
$200,000
$200,000
$175,000

$150,000

$100,000
$100,000

$50,000

$0
> 50% 25% - 50% 5%-25% 0% - 5% 0% - (5%) (5%) - (10%) - (15%) - (20%) - (25%) - > (50%)
(10%) (15%) (20%) (25%) (50%)
Homeowner Equity

7
Mortgage Issuance 2000-2008 Source: MBA

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008

Option ARM Subprime Alt-A Jumbo Conforming - Fixed Conforming - Floating FHA

8
Loan-to-Value by Loan Type Source: Loan Performance, MBA

100.0% 6.0%
15.0%
90.0% 11.0%
29.0% 30.0%
80.0%
20.0%
70.0% 26.0% 58.0%

60.0% 21.0%
24.0%
20.0%
50.0% 21.0%
40.0% 18.0%
15.0% 20.0%
19.0%
30.0%
15.0%
20.0% 36.0% 13.0%
12.0%
30.0%
10.0% 17.0%
13.0%
5.0%
6.0%
0.0%
Conforming Jumbo Alt-A Subprime Option Arm

<= 80% 80%-90% 90%-105% 105%-125% 125%+

9
Delinquency by LTV Source: Loan Performance

60% 58%

50%
50% 48%
60+ Days Delinquent

41% 42%

40%
33% 34%

30% 25% 26% 27%

21% 20%
20% 16% 15%
17%

9% 9%
10% 5% 6%
3%

0%
<=80% 80%-100% 100%-120% 120%-140% 140%+

Loan-to-Value

Jumbo Alt-A Subprime Option Arm

10
Underwriting Quality Matters Source: First American Corelogic

Alt-A
50%
45%
40%
60+ Days Delinquent

35%
30%
25%
20%
15%
10%
5%
0%
1 6 12 18 24 30 36 42 48 54 60 66
M onths of Se as oning

2002 2003 2004 2005 2006 2007

S ub P r im e
60%

50%
60+ Days Delinquent

40%

30%

20%

10%

0%
3 12 21 30 39 48 57 66
M o n th s o f Se as o n in g

2002 2003 2004 2005 2006 2007

11
Serious Delinquencies 3Q 2009 Source: First American Core Logic

28% 400%

26%

24% 350%

22%
300%
20%

18%
250%
16%

14% 200%
12%

10% 150%
o

pa

x
re
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ta
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L
CA

h
rs
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% Serious Delinquent % of National Index

12
 N

0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
ev
ad
a
A
riz
on
a
Fl
or
id
M a
ic
hi
ga
Ca n
lif
or
ni
a
G
eo
rg
ia
V
Negative Equity by State

irg
in
ia
N
at
io
M n
ar
yl
an
d
O
hi
o
Id
ah
o
Co
N lo
ew ra
H d
am o
ps
hi
Source: First American Core Logic

re
Ill
in
oi
s
U
ta
h
13
 L

0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
In as V
lan eg
d E as
mp
i
Ft Pho re
.L
au enix
de
rd
Or ale
lan
d
Ta o
mp
M a
Sa iam
cra i
me
W nt
o
es
tP D etr
alm oit
Negative Equity by MSA

W Be
ar ach
re
Ja n, M
ck
so I
nv
Oa ille
k
Sa land
nD
ieg
o
Lo
sA C D
ng
e
At les
l
Cl anta
ev
e
VA land
Source: First American Core Logic

Be
Sa ach
nJ
o
De se
nv
Ch er
ica
g
Irv o
ine
14
At Risk Mortgages by State Source: Lender Processing Services

25.0%

20.0%
6.8%
10.9%
2.3%
15.0% 2.4%
3.9%
3.7% 3.2% 2.6% 2.5%
4.0% 3.5% 2.8% 2.5% 1.8%
4.3% 3.2%
10.0%
15.7% 15.5%
12.7% 12.3% 13.4% 11.3% 11.3% 11.8%
5.0% 10.3% 10.7% 11.5% 11.0% 9.1% 10.0% 10.8%
11.4%

0.0%

ois
a

hio

l
an
a
ia

d
ia
da

na
a
pi

nd
na

ia
ey
id

an

an
an
rg

rn
ip

ig

ina
va

tio
O

yla
izo
or

rs
eo

Illi
iss

lifo

di

Isl
si
ich
Fl

Ne

Na
Je

irg
In

ui

ar
Ar

G
iss

Ca

e
M

Lo

M
od

tV
w
M

Ne
Rh

es
W
Delinquency % Foreclosure %

15
Default Rates – State Laws Matter Source: Loan Performance

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
Feb-08

Feb-09
Oct-07

Dec-07

Jun-08

Oct-08

Dec-08

Jun-09

Oct-09
Aug-07

Apr-08

Aug-08

Apr-09

Aug-09
CA & AZ FL & NV

16
Default Rates (LTV >= 125%) – State Laws Matter Source: Loan Performance

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%
Oct-07

Dec-07

Oct-08

Dec-08

Oct-09
Feb-08

Jun-08

Feb-09

Jun-09
Apr-08

Apr-09
Aug-07

Aug-08

Aug-09
CA & AZ FL & NV

17
Mortgage Modification Actions Source: OCC, OTS

Rate Reduction
Rate Freeze
Term Extension
Principal Reduction
10.0% Other

18
Re-Default Rates as of 2Q 2009 Source: OCC/OTS

70.0%
58.0%59.5% 58.0%
60.0% 55.0% 53.0%
51.0% 49.5%
50.0% 41.5%
46.0%

40.0% 34.0%
30.0% 28.0%
30.0%
20.0%
10.0%
0.0%
Agency FHA Private

3 Mo. 6 Mo. 9 Mo. 12 Mo.

19
Re-Default Rates With Principal Reduction (2Q 2009) Source: OCC/OTS

70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
3 Mo. 6 Mo. 9 Mo. 12 Mo.

Unchanged Decreased less than 10%

Decreased 10%-20% Decreased > 20%

20
 Monthly Foreclosures

Ja

50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
M n-05
a
M r-0
ay 5
Ju -05
Se l-05
Nop-05
Jav-05
M n-06
a
M r-0
ay 6
Ju -06
Se l-06
Nop-06
Jav-06
M n-07
a
M r-0
ay 7
Ju -07
National Foreclosure Data

Se l-07

Total US Forclosures
Nop-07
Jav-07
M n-08
a
M r-0
ay 8
Ju-08
Se l-08
Nop-08
Jav-08
M n-09
a
Trailing 12 Months

M r-0
ay 9
Ju -09
Se l-09
Nop-09
Jav-09
n-
10
0
Source: Realtytrac

500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000

TTM Foreclosures
21
 Bubble Market Foreclosure Inventory Source: Realtytrac, Trulia.com, Zip Realty

Foreclosure
MLS Listings Inventory %of MLS Listings

Las Vegas 12,945 60,178 464.9%

Inland Empire 26,604 85,407 321.0%
San Diego 10,300 33,060 321.0%
Los Angeles 32,700 96,515 295.2%
Ventura County 2,448 7,142 291.7%
Phoenix 34,735 83,812 241.3%
Miami 54,525 42,368 77.7%

22
A Clog in the Foreclosure Pipeline? Source: Lender Processing Services

35.0%
30.9%
30.0%

25.0% 23.0%
21.8%

20.0%
16.0%
14.4% 13.9% 13.8%
15.0%
10.8% 10.0% 10.1%
8.5% 9.1%
10.0%

5.0%

0.0%
No Pmts 6 Months No Pmts 12 Months No Pmts 18 Months No Pmts 24 Months

Dec-09 Dec-08 Dec-07

23
Estimated Existing Excess Housing Units Source: UBS Estimates

2,300,000 2,240,000

2,100,000

1,900,000
1,750,000
1,700,000 1,600,000

1,500,000

1,300,000

1,100,000

900,000

700,000

500,000
Vacancy Rate Basis Homeownership Basis Structural Demand Basis

24
 1Q

0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
20
05
2Q
20
05
3Q
Cure Rates

20
4Q 05
20
0
1Q 5
20
0
2Q 6
20
0
3Q 6
20
0
4Q 6
20
0

30 Day
1Q 6
20
2Q 07
20
0
3Q 7

60 Day
20
0
4Q 7
20
0
1Q 7
20
0
2Q 8
20
90+ Days

0
3Q 8
20
4Q 08
20
0
Source: Loan Performance

1Q 8
20
0
2Q 9
20
09
25
 Potential Additional National Shadow Supply Source: MBA, UBS Estimates, LoanPerformance

Current MBA Default Rates Estimated Total

Mortgage Type 30 Days 60 Days 90 Days Foreclosure # of Mortgages

Prime/Agency 2.49% 1.08% 2.44% 3.00% 38,975,000

Subprime 8.48% 4.51% 11.50% 15.10% 12,500,000

FHA 6.30% 2.61% 4.80% 2.98% 5,700,000

Total 4.18% 1.98% 4.66% 5.64% 57,175,000

2005-Current Average Cure Rates Current Cure Rates

30 Days 60 Days 90 Days Foreclosure 30 Days 60 Days 90 Days Foreclosure
67.00% 38.00% 19.00% 0.00% 28.00% 4.00% 1.00% 0.00%

Probability-Weighted Liquidation Potential

Current MBA Default Rates Current MBA Default Rates

30 Days 60 Days 90 Days Foreclosure 30 Days 60 Days 90 Days Foreclosure

Avg Cure Rates 1.38% 1.23% 3.77% 5.64% Curr Cure Rates 3.01% 1.90% 4.61% 5.64%

New Inventory 788,561 702,739 2,156,293 3,226,610 New Inventory 1,720,496 1,088,112 2,635,469 3,226,610

Total 6,874,202 Total 8,670,687

26
Residential Real Estate

THE BAD

27
ARM Resets Source: LoanPerformance, FNMA, FHLMC, GNMA

$600

$500
$232
$131
$400
$21
$12
$69
$BN

$300
$111 $65
$5
$131
$200 $90
$95

$63 $23
$100
$151 $12 $19
$134 $59 $22
$86 $45 $50 $34 $11
$43 $27 $25
$24 $24 $13
$0
2010 2011 2012 2013 2014 2015 2016 2017

Agency Prime Alt A Subprime Option ARMs

28
Historical Homeownership Rates Source: US Census & Harvard JCHS

70.0%
69.0%
68.0%
67.0%
66.0%
65.0%
64.0%
63.0%
65

68

71

74

86

92
77

80

83

89

95

07
98

01

04
19

19

19

19

19

19

19

19

19

19

20

20
19

19

20
Homeownership Rate Average

29
Impact of Distressed Sales Source: Inside Mortgage Finance/Campbell Communications

Average Property Prices Average Time on Market (4Q2009)

$300,000 20.0
$265,300
17.5
18.0
$250,000
$221,400 16.0 14.9
$198,150 14.0
$200,000
12.0
9.8
$150,000 $129,600 10.0
7.5
8.0
$100,000
6.0

4.0
$50,000
2.0

$0 0.0
Non-Distressed Short Sale Move-In Ready REO Damaged REO Short Sale Non-Distressed Move-InReadyREO Damaged REO

Average # of Offers (4Q 2009) Purchase Distribution by Property Type

4.5 100%
4.1 7%
13% 18%
4.0 90%
3.6
80%
3.5 52%
3.1 70% 46%
3.0
60% 56%
2.5 57%
50%
1.9 40%
2.0
30%
30%
1.5
47%
20%
1.0 31%
25%
10% 18%
0.5 0%
Damaged REO Move-In ReadyREO Short Sale Non-Distressed
0.0
Damaged REO Move-In Ready REO Short Sale Non-Distressed
Current Homeowner First Time Buyer Investor Buyer

30
Sources of Financing (4Q 2009) Source: Inside Mortgage Finance/Campbell Communications

100%

90% 21% 20%

32%
80%
6%
70%
12%
60%
24%
50%
72%
40%
22%
30% 61%

20%

10% 22%
6%
0% 2%
Current Homeow ner Firs t Time Buy er Inv es tor Buy er

FHA FA N/FRE Cas h Other

100%
15% 19%
90% 20%
30%
80%

70% 19% 23%

16%
60%
57% 13%
50% 13%
18%
40%

30%
7% 48% 45%
20% 36%
10% 21%

0%
Damaged REO Move-In Ready REO Short Sale Non-Distressed

FHA FA N/FRE Cash Other

31
SF Homes Converted to Rentals Source: Foresight Analytics

1,500,000 1,420,000

1,300,000
1,100,000
SF Housing Units

900,000 720,000
700,000
500,000 400,000
290,000 320,000
300,000
100,000
(100,000)
(110,000)
(300,000)
(500,000) (390,000)
2003 2004 2005 2006 2007 2008 YTD
6/30/09

32
Residential Real Estate

THE GOOD

33
Affordability Index Source: NAR, FHFA

180

160

140

120

100

80

60

40

20

0
2005 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2006 2006 2006 2006 2007 2007 2007 2007 2008 2008 2008 2008 2009 2009 2009

Phonix Las Vegas LA Inland Empire NY DC NATIONAL AVG

34
 Units in 000

0
200
400
600
800
1,000
1,200
1,400
1,600
1,800

1971
1974
1977
1980
1983
1986
1989
1992
1995
Single Family Housing Starts

1998
2001
2004
2007
Mar-08
Jun-08
Sep-08
Source: US Census

Dec-08
Mar-09
Average

Jun-09
Sep-09
Dec-09
35
Household Formations Source: US Census

3,000

2,500

2,000
Units in 000

1,500 Average
1,000

500

E
00

04
96
92
88
84
60

64

68

72

76

80
56

08
20
20
19

19
19
19
19

19

19

19

19

19
19

20
36
Prior Housing Cycle Durations Source: US Census, UBS Estimates

Duration in Months Change In Unit Sales

Trough Peak Trough Peak Trough Peak Trough

Mar-70 Dec-72 Jan-75 34 25 46.1% -24.1%

Jan-75 Apr-78 Apr-82 40 49 50.0% -55.0%

Apr-82 Dec-86 Jan-91 57 50 52.4% -35.3%

Jan-91 Jan-93 Apr-95 24 27 35.3% -19.9%

39 38 46.0% # -33.6%

Apr-95 Sep-05 Dec-09 127 52 50.5% -39.5%

37
Housing Supply/Demand Model Source: UBS Estimates

N o r m a liz e d D e m a n d

H o u s e h o ld F o r m a tio n s 1 ,1 0 0 ,0 0 0
N e t D e m o litio n s 2 0 0 ,0 0 0
S econd H om e D em and 1 5 0 ,0 0 0
T o ta l 1 ,4 5 0 ,0 0 0

C u r r e n t S u p p ly

S in g le F a m ily H o u s in g S ta r ts 5 5 0 ,0 0 0
M a n u f a c tu r e d H o u s in g 5 0 ,0 0 0
T o ta l 6 0 0 ,0 0 0

A b s o r p tio n 8 5 0 ,0 0 0

C u r r e n t E x c e s s S u p p ly 2 ,0 0 0 ,0 0 0
In c r e m e n ta l C h a n g e in H o m e O w n e r s h ip 0
C u r r e n t E x c e s s S u p p ly 2 ,0 0 0 ,0 0 0
C u r r e n t H o m e o w n e r s h ip R a te 6 7 .2 %

Y e a r s to A b s o r b C u r r e n t E x c e s s 2 .4
38
 Housing Supply/Demand Sensitivity Analysis Source: UBS Estimates

Homeownership Single Family Housing Starts

Rate 450,000 500,000 550,000 600,000 650,000 700,000 750,000 800,000 850,000 900,000 950,000 1,000,000
68.00% 1.2 1.2 1.3 1.4 1.5 1.6 1.7 1.8 2.0 2.2 2.5 2.8
67.75% 1.5 1.5 1.6 1.7 1.8 2.0 2.1 2.3 2.5 2.8 3.1 3.5
67.50% 1.8 1.8 2.0 2.1 2.2 2.4 2.6 2.8 3.0 3.3 3.7 4.2
67.25% 2.0 2.2 2.3 2.4 2.6 2.8 3.0 3.2 3.5 3.9 4.3 4.9
67.00% 2.3 2.5 2.6 2.8 3.0 3.2 3.4 3.7 4.0 4.4 4.9 5.6
66.75% 2.6 2.8 2.9 3.1 3.3 3.6 3.9 4.2 4.6 5.0 5.6 6.3
66.50% 2.9 3.1 3.3 3.5 3.7 4.0 4.3 4.6 5.1 5.6 6.2 7.0
66.25% 3.2 3.4 3.6 3.8 4.1 4.4 4.7 5.1 5.6 6.1 6.8 7.7
66.00% 3.5 3.7 3.9 4.2 4.5 4.8 5.1 5.6 6.1 6.7 7.4 8.4
65.75% 3.8 4.0 4.3 4.5 4.8 5.2 5.6 6.0 6.6 7.2 8.1 9.1
65.50% 4.1 4.3 4.6 4.9 5.2 5.6 6.0 6.5 7.1 7.8 8.7 9.8
65.25% 4.4 4.6 4.9 5.2 5.6 6.0 6.4 7.0 7.6 8.4 9.3 10.5
65.00% 4.7 5.0 5.3 5.6 6.0 6.4 6.9 7.4 8.1 8.9 9.9 11.2

39
Incremental Public Builder Potential Source: US Census, Company Reports, UBS Estimates

Total New Public Builder Public Builder

Home Sales Deliveries Market Share

2004 1,203,000 290,000 24.1%

2005 1,283,000 335,000 26.1%
2006 1,051,000 330,000 31.4%
2007 776,000 260,000 33.5%
2008 485,000 170,000 35.1%
2009 340,000 115,000 33.8%

Incremental Market Share & Revenue Potential ($MM)

Public Market Share Average New Home Price

Housing Starts 35.0% 37.5% 40.0% $200,000 $225,000 $250,000

500,000 5,882 18,382 30,882 $1,176 $4,136 $7,721

550,000 6,471 20,221 33,971 $1,294 $4,550 $8,493
600,000 7,059 22,059 37,059 $1,412 $4,963 $9,265
650,000 7,647 23,897 40,147 $1,529 $5,377 $10,037
700,000 8,235 25,735 43,235 $1,647 $5,790 $10,809
750,000 8,824 27,574 46,324 $1,765 $6,204 $11,581
800,000 9,412 29,412 49,412 $1,882 $6,618 $12,353
850,000 10,000 31,250 52,500 $2,000 $7,031 $13,125
900,000 10,588 33,088 55,588 $2,118 $7,445 $13,897
950,000 11,176 34,926 58,676 $2,235 $7,858 $14,669
1,000,000 11,765 36,765 61,765 $2,353 $8,272 $15,441
1,050,000 12,353 38,603 64,853 $2,471 $8,686 $16,213
1,100,000 12,941 40,441 67,941 $2,588 $9,099 $16,985

40
Supplemental Market Specific Detail

Southern California Market Overview

41
 0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
90,000
10/26/2007
11/26/2007
12/26/2007
1/26/2008
2/26/2008
3/26/2008
4/26/2008
5/26/2008
6/26/2008
7/26/2008
8/26/2008
9/26/2008
10/26/2008
LA

11/26/2008
12/26/2008
1/26/2009

0
5,000
10,000
15,000
20,000
25,000
10/26/2007 2/26/2009
11/26/2007 3/26/2009
12/26/2007 4/26/2009
1/26/2008 5/26/2009
2/26/2008 6/26/2009
3/26/2008 7/26/2009
4/26/2008 8/26/2009
5/26/2008 9/26/2009
6/26/2008 10/26/2009
7/26/2008 11/26/2009
8/26/2008 12/26/2009
9/26/2008 1/26/2010
10/26/2008
11/26/2008
San Diego

12/26/2008
California For Sale Inventory

1/26/2009
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000

2/26/2009 10/26/2007
3/26/2009 11/26/2007
4/26/2009 12/26/2007
5/26/2009 1/26/2008
6/26/2009 2/26/2008
7/26/2009 3/26/2008
8/26/2009 4/26/2008
9/26/2009 5/26/2008
10/26/2009 6/26/2008
11/26/2009 7/26/2008
12/26/2009 8/26/2008
1/26/2010 9/26/2008
10/26/2008
11/26/2008
12/26/2008
Inland Empire

1/26/2009
2/26/2009
3/26/2009
4/26/2009
5/26/2009
Source: California Association of Realtors

6/26/2009
7/26/2009
8/26/2009
9/26/2009
10/26/2009
11/26/2009
12/26/2009
1/26/2010
42
 -5 0 . 0 %
-4 0 . 0 %
-3 0 . 0 %
-2 0 . 0 %
-1 0 . 0 %
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%

-8 0 . 0 %
-6 0 . 0 %
-4 0 . 0 %
-2 0 . 0 %
0.0%
20.0%
40.0%
60.0%
80.0%
1/6/2001 1/6/2001

5/6/2001 5/6/2001

9/6/2001 9/6/2001

1/6/2002 1/6/2002

5/6/2002 5/6/2002

9/6/2002 9/6/2002

1/6/2003 1/6/2003

5/6/2003 5/6/2003

P a lm S p rin g s
L o s A n g e le s
9/6/2003 9/6/2003

1/6/2004 1/6/2004

5/6/2004 5/6/2004

9/6/2004 9/6/2004

H ig h D e s e rt
O ra n g e C o u n t y

1/6/2005 1/6/2005

5/6/2005 5/6/2005

9/6/2005 9/6/2005

S B C ounty
1/6/2006 1/6/2006

5/6/2006
In la n d E m p ire

5/6/2006

9/6/2006 9/6/2006

1/6/2007 1/6/2007

S B S . Coas t
V e n t u ra

5/6/2007 5/6/2007

9/6/2007 9/6/2007

1/6/2008 1/6/2008

5/6/2008 5/6/2008
S a n D ie g o

N o. S B C ounty

9/6/2008 9/6/2008

1/6/2009 1/6/2009

5/6/2009 5/6/2009

9/6/2009 9/6/2009
California Home Price Changes 2001-2009 Source: California Association of Realtors

43
Subprime Mortgages and Price Appreciation Source: Loan Performance, OFHEO

150.0% Inland Empire

LA/OC
140.0% Ft. Myers Miami
HPA 2000-2005

Sac/Stockton
130.0%
DC
120.0% Vegas

o
110.0%

nd

pa
rla

m
Phoenix

Ta
100.0% O
90.0%
80.0%
0.50x 1.00x 1.50x 2.00x 2.50x 3.00x
Relative Use of SP/Alt-A

44
 LA
/L
on
g

0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
NY Inla Be 9.0%
/N n ac
J/ d E h
W m
es p
tch ire
es
O DC ter
ra
n g Me
e tr
Co o
Sa unt
n y
Di
e
Ph go
oe
O nix
ak
la
Ch nd
La icag
s

Share of SP/Alt-A
V o
Sa eg
Exposure to Alt-A & Subprime

cr a s
am
en
At to
la
nt
a
M
Sa iam
n i
Lo Jo
n s
Ft g I e
Cumulative Share

. L sla
a n
Sa ude d
n r
Fr da l
an e
Source: First American Core Logic

cis
co
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%

45
Option ARM Use by State Source: Loan Performance

Ot her
25%

Ar izona
3%
Calif or nia
Nevada 58%
3%

Flor ida
11%

46
California REO Sales Source: LPS Applied Analytics

800,000 60.0%
700,000
50.0%
600,000
40.0%
500,000
400,000 30.0%
300,000
20.0%
200,000
10.0%
100,000
0 0.0%
2004 2005 2006 2007 2008 Jan-June
2009

Residential Unit Sales REO Share of Sales

47
California Mortgage Loss Severities Source: LoanPerformance

80.0%
75.0%
70.0%
65.0%
60.0%
55.0%
50.0%
45.0%
40.0%
35.0%
30.0%
Se 8

9
A 8

Ju 9

A 9
09
D 8

M 09
Fe 9
Ja 8

A 9
M 9
O 8
N 8
-0

-0
l -0

-0

l -0
-0

0
-0

-0
0

0
0

n-
p-

b-
n-
ct-
ug

ug
pr
ov

ay
ec

ar
Ju

Ju
Prime Jumbo Option ARM Alt-A Subprime

48
California Housing Supply by Price Point Source: California Association of Realtors

20

18

16

14
Months Supply

12

10

0
$0-$300K $300k-$500K $500K-$750K $750K-$1MM $1MM+

2008 2009

49
California High End Risk? Source: MDA Dataquick, NAR

60,000 600,000

50,000 550,000

Total Existing Sales

$1MM+ Unit Sales

40,000 500,000

30,000 450,000

20,000 400,000

10,000 350,000

0 300,000
2005 2006 2007 2008 2009

$1+MMSales Total Existing Sales

50
Housing Starts CAGR 11/94 – Peak Source: US Census

25.0% 23.4%
21.4%
20.3%
20.0% 18.4%

15.2%
15.0%
11.0%
10.0%

5.0%

0.0%
California Arizona Florida Nevada Colorado New Mexico

51
Housing Starts & Population Growth CAGR Source: US Census

25.0% 23.4% 4.50%

21.4% 4.00%
20.3% 3.90%
20.0% 18.4% 3.50%
3.23%
2.99% 15.2% 3.00%
15.0%
2.50%
11.0%
1.98% 2.00%
10.0% 1.80%
1.50%
1.15%
5.0% 1.00%

0.50%

0.0% 0.00%
California Arizona Florida Nevada Colorado New Mexico

Housing Starts CAGR Population Growth CAGR

52
California Average Down Payment % Source: California Association of Realtors

20.0%
19.0%
18.0%
17.0%
16.0%
15.0%
14.0%
13.0%
12.0%
11.0%
10.0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

53
California Transactions w/$0 DP Source: California Association of Realtors

45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

First Time Buyers All Buyers

54
California Transactions w/2nd Mortgage Source: Cal. Assoc. of Realtors

70%

60%

50%

40%

30%

20%

10%

0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

First Time Buyers All Buyers

55
California Transactions FRM vs. ARM Source: Cal. Assoc. of Realtors

100% 5% 6%
8% 9% 10% 12%
90% 17% 22%
80% 37% 40%
51%
70%
60%
50% 95% 94%
92% 91% 90% 88%
40% 83% 78%
30% 63% 60%
49%
20%
10%
0%
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Fixed Rate ARM

56
Commercial Real Estate

Exorcising The Shoe

(aka Where is the Distress?)

57
Summary
We are more constructive on CRE than RRE owing to:
 Manageable capacity additions
 Capital access/capital on the sidelines
 Government intervention & Bank/Servicer “Flexibility”

However, we are mindful of a number of headwinds including:

 Substantial debt maturities
 An anemic CMBS and transaction market
 The impact of sublease space
 Public vs. private – “flight to quality”

Relationships (lender and tenant) have never been more important.

We believe investment opportunities exist in CRE. However, property
selection, underwriting and risk adjusted return analysis have never been
more important.

For income-oriented investors, we see attractive risk/reward

opportunities investing in the capital structure of selected REITs.

58
Capacity Additions Source: PPR

3.5%

3.0%
Capacity Additions

2.5%

2.0%

1.5%

1.0%

0.5%

0.0%

06

08
90

98

00

02

04
92

94

96

E
10

12
20

20

20

20

20
19

19

19

19

19

20

20
Retail Industrial Office Multifamily

59
REIT Capital Market Activity Source: SNL Financial

$30,000

$4,600 $5,500
$25,000

$7,730 $18,300
$20,000

$14,889
$MM

$15,000

$656
$10,000
$17,135 $5,600

$5,000 $1,607 $10,885

$9,150

$4,600

$0
2006 2007 2008 2009

Unsecured Debt Cvt. Debt Equity

60
CRE Debt Maturities Source: Company Reports, Bloomberg, SNL Financial, Trepp, UBS Estimates

$500
$50
$400 $36
$150 $135
$135
$300 $32
$BN

$70
$53
$200 $331
$240 $202
$186
$100
$26 $33 $30 $30
$0
2010 2011 2012 2013

Reits Private CRE CMBS Costruction Loans

61
CMBS Maturities 2010-2018 Source: Trepp

$160,000

$140,000
$11,614 $17,885

$120,000

$100,000 $10,310

$80,000

$129,280
$124,639
$60,000
$34,980
$94,943

$40,000 $33,032 $39,884

$14,831
$27,928
$20,000 $35,267

$17,074 $20,099 $18,204 $14,154

$7,823
$0 $1,187

2010 2011 2012 2013 2014 2015 2016 2017 2018

2005-2007 V intage Other V intages

62
CMBS Maturities 2010-2018 Source: Trepp

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2010 2011 2012 2013 2014 2015 2016 2017

Amortizing I/O

63
CMBS Maturities > $25MM/Loan Source: Trepp

180 $16

160 $14
140
$12
120
$10
# of Loans

100

$ BN
$8
80
$6
60
$4
40

20 $2

0 $0
10

13

13
10

10

10

11

11

11

11

12

12

12

12

13

13
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q

1Q

2Q

3Q

4Q
# of Loans Maturing Loans >= $25MM

64
 CMBS Loan Characteristics 2010-2012 Source: Trepp

2010 Unpaid Maturities 2011 Unpaid Maturities 2012 Unpaid Maturities

5 Year 10 Year 5 Year 10 Year 5 Year 10 Year

Avg. Loan Size ($MM) $26.43 $10.55 $17.66 $9.78 $29.85 $13.08

DSCR 1.84x 1.69x 1.71x 1.53x 1.41x 1.57x

LTV 61.6% 64.6% 70.9% 65.2% 66.6% 62.1%

Debt Yield 13.1% 14.3% 11.0% 12.7% 9.4% 15.3%

65
CMBS Underwriting – Back to the Future? Source: Rating Agency Pre-Sale Reports

LTV

120%

100%

80%

60%

40%

20%

0%
Pr e - 2 0 0 5 2005-2008 DDR 2 0 0 9 Bof A 2009 JPM 2 0 0 9

L TV ( UW ) L TV ( A g e n c y )

DS CR

1 .6 0 x

1 .5 5 x

1 .5 0 x

1 .4 5 x

1 .4 0 x

1 .3 5 x

1 .3 0 x

1 .2 5 x
Pr e - 2 0 0 5 2005-2008 DDR 2009 BofA 2009 JPM 2 0 0 9

66
CRE Vacancy and Rent Trends Source: Property Portfolio Report

V a c a nc y
20%
15%

10%
5%
0%
M ultifa mily O ffic e R e ta il Ind ustria l

2Q 08 2Q 09

C ha ng e in R e nt
5%
0%

-5%
-10%
-15%
M ultifa mily O ffic e R eta il Ind ustria l

2Q 08 2Q 09

67
CRE Recession Vacancy Source: Property Portfolio Report

Late 80s/Early 90s Recession 2001 Recession Current Recession

Low Hi Low Hi Low Hi

Office 14.0% 19.0% 10.0% 18.0% 15.0% 19.0%

Multifamily 6.0% 7.0% 5.0% 7.0% 6.0% 8.0%

Retail 12.0% 19.0% 10.0% 13.0% 10.0% 18.0%

Industrial 7.0% 11.0% 7.0% 11.0% 9.0% 12.0%

Unemployment Rate 5.0% 8.0% 4.0% 6.0% 5.0% 9.7%

68
CRE and Inflation – Who is Best Positioned? Source: SNL Financial, UBS estimates

5
Years

0
Multifamily Industrial Office - Suburban Office - CBD Shopping Center Regional Mall

Avg. Lease Duration Avg. Debt Duration

69
CMBS Delinquency by Property Type Source: Trepp

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%
4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 Jan-10

Retail Multifamily Office Hotel Industrial Self Storage

70
Outstanding CMBS by Property Type Source: Trepp

Ot her
Self St or age 8%
2%

Indust r ial
5% Ret ail
30%

Hot el
8%

Of f ic e Mult if amily
31% 16%

71
CRE Transaction Market (>$5MM/TX) Source: Real Capital Analytics

$600
$502
$500

$400 $353
$302
$BN

$300
$206
$200 $142
$122
$101
$79
$100 $46

$0
2001 2002 2003 2004 2005 2006 2007 2008 2009

72
Manhattan Office Transaction Funding Source: Real Capital Analytics

100% 2.0%
90% 19.0%

80% 44.0% 43.0%

50.0% 47.0%
70% 66.0%
67.0%
60% 41.0%
88.0%
50%
40%
30% 56.0% 55.0%
50.0% 50.0%
20% 39.0%
34.0%
32.0%
10%
12.0%
0%
2002 2003 2004 2005 2006 2007 2008 YTD 2009

Private CMBS Bank/Ins. Co. Assumed Debt

73
Southern California

Selected Office Market Statistics

74
 0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
40.0%

W W
es es
tL tL
A A
14.0% 13.0%
15.0% 13.7%
D D
T T
LA LA
D 14.8% D 13.6%
T T
LA 15.1% LA 14.0%
C C
la la
s s s
A s
12.1%
A
10.6%
12.4% 11.2%
In In
.E .
m Em
In p. In
.E 23.1% .
p.
22.4%
m 23.7%
Em
22.9%
p. p.
C C
la la
ss ss
A A
36.8% 36.1%
37.2% 36.7%

O O
C C

6/30/09 T o tal Va can cy

20.2%
6/30/09 Direct Vacancy

18.7%
O 20.6% O 19.1%
C C
C C
la la
ss ss
A A
22.5% 20.3%
22.6% 20.3%
D D
T T
SD SD
D 15.0% D 14.5%
T
Southern California Office Vacancy

T
SD 14.5% SD 14.3%
9/30/09 T o tal Vaca n c y
C C
la la
ss ss
A A
15.6%
9/30/09 Direct Vacancy

15.0%
15.1% 14.8%
Su Su
b. b.
S D SD
18.2%
Su Su 16.6%
b. b.
SD 18.0% S D 16.6%
Cl Cl
a ss a ss
A A
22.6% 20.7%
21.7% 19.9%
Source: REIS, Colliers International

75
Downtown LA Source: REIS, Colliers International

2 1 .0 %

1 9 .0 %

1 7 .0 %

1 5 .0 %

1 3 .0 %

1 1 .0 %

9 .0 %

7 .0 %
2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q
96

97

97

98

99

00

00

01

02

03

03

04

05

06

06

07

08

09
19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20
D ir e c t V a c a n t T o ta l V a c a n t T o t a l A v a ila b ilit y

$ 4 0 .0 0 6 0 .0 %
$ 3 5 .0 0
5 0 .0 %
$ 3 0 .0 0
4 0 .0 %
$ 2 5 .0 0
$ 2 0 .0 0 3 0 .0 %
$ 1 5 .0 0
2 0 .0 %
$ 1 0 .0 0
1 0 .0 %
$ 5 .0 0
$ 0 .0 0 0 .0 %
2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q
96

97

97

98

99

00

00

01

02

03

03

04

05

06

06

07

08

09
19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20
% S u b le a s e D e a ls D ir e c t A v e r a g e R e n t S u b le t A v e r a g e R e n t

76
Downtown LA Source: TWR

4,000 16.0%
3,500 14.0%
3,000 12.0%
2,500 10.0%
000 SF

2,000 8.0%
1,500 6.0%
1,000 4.0%
500 2.0%
0 0.0%
19 0
19 1
19 2
19 3
19 4
19 5
19 6
19 7
19 8
20 9
20 0
20 1
20 2
20 3
20 4
20 5
20 6
20 7
20 08
20 9E
E
9
9
9
9
9
9
9
9
9
9
0
0
0
0
0
0
0
0

10
19

0
New Supply New Supply/Stock

77
West LA Source: REIS, Colliers International

2 1 .0 %

1 8 .0 %

1 5 .0 %

1 2 .0 %

9 .0 %

6 .0 %

3 .0 %
2Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q
96

97

98

98

99

00

01

01

02

03

04

04

05

06

07

07

08

09
19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20
D ir e c t V a c a n t T o ta l V a c a n t T o t a l A v a ila b ilit y

$ 5 5 .0 0 3 0 .0 %

$ 5 0 .0 0 2 5 .0 %
$ 4 5 .0 0
2 0 .0 %
$ 4 0 .0 0
1 5 .0 %
$ 3 5 .0 0
1 0 .0 %
$ 3 0 .0 0

$ 2 5 .0 0 5 .0 %

$ 2 0 .0 0 0 .0 %
2Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q
96

97

98

98

99

00

01

01

02

03

04

04

05

06

07

07

08

09
19

19

19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20
% S u b le a s e D e a ls D ir e c t A v e r a g e R e n t S u b le t A v e r a g e R e n t

78
 000 SF

1,000
1,500
2,000
2,500

0
500
19
9
West LA

19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9

New Supply
20 9
0
20 0
0
20 1
0
20 2
0
20 3
0
20 4
0
Source: TWR

20 5
0
20 6
0
New Supply/Stock

20 7
0
20 8
20 09
10
E
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%

79
Orange County Source: REIS, Colliers International

2 1 .0 %
1 9 .0 %
1 7 .0 %
1 5 .0 %
1 3 .0 %
1 1 .0 %
9 .0 %
7 .0 %
5 .0 %
4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q
00

01

01

02

02

03

03

04

04

05

05

06

06

07

07

08

08

09
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
D ir e c t V a c a n t T o ta l V a c a n t T o ta l A v a ila b ility

$ 3 2 .0 0 2 0 .0 %

$ 3 0 .0 0 1 8 .0 %

$ 2 8 .0 0 1 6 .0 %

$ 2 6 .0 0 1 4 .0 %

$ 2 4 .0 0 1 2 .0 %

$ 2 2 .0 0 1 0 .0 %

$ 2 0 .0 0 8 .0 %
4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q

4Q

2Q
00

01

01

02

02

03

03

04

04

05

05

06

06

07

07

08

08

09
20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20

20
% S u b le a s e D e a ls D ir e c t A v e r a g e R e n t S u b le t A v e r a g e R e n t

80
Orange County Source: TWR

3,500 8.0%
3,000 7.0%

2,500 6.0%
5.0%
000 SF

2,000
4.0%
1,500
3.0%
1,000 2.0%
500 1.0%
0 0.0%

20 7
20 2

20 4

20 08
2001

2005
20 6
20 9
20 0

20 3
19 7
19 5

1998
19 2

1994

19 6
1991
19 0

19 3

20 9E
E
0

0
0
0

0
9
0
9

9
9
9
9
9

10
19

0
New Supply New Supply/Stock

81
San Diego Source: REIS, Colliers International

3 0 .0 %

2 5 .0 %

2 0 .0 %

1 5 .0 %

1 0 .0 %

5 .0 %

0 .0 %
2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q
99

00

00

01

02

03

03

04

05

06

06

07

08

09
19

20

20

20

20

20

20

20

20

20

20

20

20

20
D ir e c t V a c a n t T o ta l V a c a n t T o ta l A v a ila b ility

$ 4 0 .0 0 3 5 .0 %
$ 3 8 .0 0
3 0 .0 %
$ 3 6 .0 0
$ 3 4 .0 0 2 5 .0 %
$ 3 2 .0 0 2 0 .0 %
$ 3 0 .0 0
$ 2 8 .0 0 1 5 .0 %
$ 2 6 .0 0 1 0 .0 %
$ 2 4 .0 0
5 .0 %
$ 2 2 .0 0
$ 2 0 .0 0 0 .0 %
2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q

4Q

3Q

2Q

1Q
99

00

00

01

02

03

03

04

05

06

06

07

08

09
19

20

20

20

20

20

20

20

20

20

20

20

20

20
% S u b le a s e D e a ls D ir e c t A v e r a g e R e n t S u b le t A v e r a g e R e n t

82
San Fernando Valley Source: Costar

2 0 .0 % $ 3 2 .0 0

1 8 .0 %
$ 3 0 .0 0
1 6 .0 %

1 4 .0 %
$ 2 8 .0 0
1 2 .0 %

1 0 .0 % $ 2 6 .0 0
8 .0 %
$ 2 4 .0 0
6 .0 %

4 .0 %
$ 2 2 .0 0
2 .0 %

0 .0 % $ 2 0 .0 0
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
V a c a n y R a te A ve r a g e R e n t / S F

2 ,0 0 0 8.0%
1 ,8 0 0
7.0%
1 ,6 0 0
6.0%
1 ,4 0 0
1 ,2 0 0 5.0%
000 SF

1 ,0 0 0 4.0%
800
3.0%
600
2.0%
400
200 1.0%

0 0.0%

20 E

20 E
E
99

00

01

02

03

04

05

06

07

08

09
90

91

92

93

94

95

96

97

98

10

11

12
20

20

20

20

20

20
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20
N e w S u p p ly N e w S u p p ly / S t o c k

83
Burbank Source: Costar

3 0 .0 % $ 3 8 .0 0

$ 3 6 .0 0
2 5 .0 %
$ 3 4 .0 0

2 0 .0 % $ 3 2 .0 0

$ 3 0 .0 0
1 5 .0 %
$ 2 8 .0 0

1 0 .0 % $ 2 6 .0 0

$ 2 4 .0 0
5 .0 %
$ 2 2 .0 0

0 .0 % $ 2 0 .0 0
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
V a c a n y R a te A ve r a g e R e n t / S F

900 18.0%

800 16.0%

700 14.0%

600 12.0%

500 10.0%
000 SF

400 8.0%

300 6.0%

200 4.0%

100 2.0%

0 0.0%

20 E

20 E
E
08

09
04

05

06

07
94

95

96

97

98

99

00

01

02

03
90

91

92

93

10

11

12
20

20
20

20

20

20
19

19

19

19

19

19

19

20

20

20

20
19

19

19

N e w S u p p ly N e w S u p p ly / S t o c k 20

84
Glendale Source: Costar

2 5 .0 % $ 3 6 .0 0

$ 3 4 .0 0
2 0 .0 %
$ 3 2 .0 0

$ 3 0 .0 0
1 5 .0 %

$ 2 8 .0 0

1 0 .0 %
$ 2 6 .0 0

$ 2 4 .0 0
5 .0 %
$ 2 2 .0 0

0 .0 % $ 2 0 .0 0
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
V ac a n y R a te A ve r a g e R e n t / S F

1,200 30.0%

1,000 25.0%

800 20.0%
000 SF

600 15.0%

400 10.0%

200 5.0%

0 0.0%

20 E

20 E
E
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

20 9
0
10

11

12
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

N e w S u p p ly N e w S u p p ly / S t o c k 20

85
Pasadena Source: Costar

2 0.0% $ 38 .00
1 8.0% $ 36 .00
1 6.0% $ 34 .00
1 4.0%
$ 32 .00
1 2.0%
$ 30 .00
1 0.0%
$ 28 .00
8.0%
$ 26 .00
6.0%
4.0% $ 24 .00

2.0% $ 22 .00

0.0% $ 20 .00
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
V ac a ny R a te A ve r a g e R e n t / S F

350 4.5%

4.0%
300
3.5%
250
3.0%
200 2.5%
000 SF

150 2.0%

1.5%
100
1.0%
50
0.5%

0 0.0%

20 E

20 E
E
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
10

11

12
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
N e w S u p p ly N e w S u p p ly / S t o c k 20

86
El Segundo Source: Costar

3 0 .0 % $ 3 1 .0 0

$ 2 9 .0 0
2 5 .0 %
$ 2 7 .0 0
2 0 .0 %
$ 2 5 .0 0

1 5 .0 % $ 2 3 .0 0

$ 2 1 .0 0
1 0 .0 %
$ 1 9 .0 0
5 .0 %
$ 1 7 .0 0

0 .0 % $ 1 5 .0 0
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
V a c a n y R a te A ve r a g e R e n t / S F

1,000 7 .0 %

900
6 .0 %
800
700 5 .0 %

600
4 .0 %
000 SF

500
3 .0 %
400
300 2 .0 %
200
1 .0 %
100
0 0 .0 %

E
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
10

11

12
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
20

20

20
N e w S u p p ly N e w S u p p ly / S t o c k

87
Long Beach Source: Costar

3 0 .0 % $ 2 9 .0 0

$ 2 7 .0 0
2 5 .0 %

$ 2 5 .0 0
2 0 .0 %
$ 2 3 .0 0
1 5 .0 %
$ 2 1 .0 0
1 0 .0 %
$ 1 9 .0 0

5 .0 %
$ 1 7 .0 0

0 .0 % $ 1 5 .0 0
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
V a c a n y R a te A ve r a g e R e n t / S F

500 6 .0 %
450
5 .0 %
400
350
4 .0 %
300
000 SF

250 3 .0 %
200
2 .0 %
150
100
1 .0 %
50
0 0 .0 %

E
90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

08

09
10

11

12
19

19

19

19

19

19

19

19

19

19

20

20

20

20

20

20

20

20

20

20
20

20

20
N e w S u p p ly N e w S u p p ly / S t o c k

88