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Ernst & Young IREM/BOMA Real Estate Forecast Breakfast

Ernst & Young IREM/BOMA Real Estate Forecast Breakfast. Commercial Real Estate Conditions and Outlook 29 January 2009. Agenda. Historical trends and effect of contracting economy on different product types

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Ernst & Young IREM/BOMA Real Estate Forecast Breakfast

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  1. Ernst & Young IREM/BOMA Real Estate Forecast Breakfast

    Commercial Real Estate Conditions and Outlook 29 January 2009
  2. Agenda Historical trends and effect of contracting economy on different product types 2008 transactions and status of commercial real estate since the collapse of the capital markets 2009 outlook: capitalization and discount rates and real estate fundamentals
  3. Southern California Office Trends Vacancy Rates Source: REIS
  4. Southern California Office Trends Rental Rates Source: REIS
  5. Southern California Retail Trends Vacancy Rates Source: REIS
  6. Southern California Retail Trends Rental Rates Source: REIS
  7. Southern California Multifamily Trends Vacancy Rates Source: REIS
  8. Southern California Multifamily Trends Rental Rates Source: REIS
  9. Southern California Hospitality TrendsOccupancy Source: Smith Travel Research
  10. Southern California Hospitality TrendsRevenue per Available Room (“RevPAR”) Source: Smith Travel Research
  11. Southern California Industrial Trends Vacancy Rates Source: REIS
  12. Southern California Industrial Trends Rental Rates Source: REIS
  13. 2008 Transactions Leasing, Development and Finance Source: Real Estate Southern California, September 2008
  14. 2008 TransactionsAssets Source: Real Capital Analytics
  15. 2008 TransactionsAssets Source: Real Capital Analytics
  16. 2008 TransactionsAssets Source: Real Capital Analytics
  17. Private MarketsCap Rates Summary
  18. Summary Commercial real estate will re-price by at least 20% of their 2007 peak given lack of debt and changing loan terms to percentages equal to REIT drops in value There is no urgency in the market, as investors are motivated by distressed situations and are waiting on the side lines for non-performing debt to trade; it may be better to be late than early Property owners who are unable to roll over their debts and are forced to sell assets will further put downward pressure on real estate values Required yields for CRE investment are rising with a much higher real estate risk premium Banks will continue to take losses, sell loans to borrowers at discounts and create a new distressed debt market Declining fundamentals (occupancy and rents) due to economic conditions. Begin Again in 2010………………
  19. How you feel today has a lot to do with your vantage point…
  20. Thank you. Troy L. Jones Ernst & Young LLPPrincipal, Transaction Real EstatePhone: + 1 213 977 3338 Email: troy.jones@ey.com
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