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The Real Estate Cycle

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					                                   Real GDP Growth

7%
6%
5%
4%
3%
2%
1%
0%
-1%
-2%
-3%
      73      75         77   79    81   83   85   87   89   91   93   95   97   99f
Rosen Consulting Group
                          U.S. Employment Growth

6%

5%

4%

3%

2%

1%

0%

-1%

-2%
      72      74         76   78   80   82   84   86   88   90   92   94   96   98
Rosen Consulting Group
                          U.S. Unemployment Rate

10%


9%


8%


7%


6%


5%


4%
       72     74         76   78   80   82   84   86   88   90   92   94   96   98
Rosen Consulting Group
                           Consumer Confidence
                               Conference Board Survey

      Index
140


120


100


80


60


40
      89        90        91     92   93   94   95   96   97   98
 Rosen Consulting Group
                      U.S. Merchandise Exports to
                         East Asia plus Japan
$Million per Month

15,500

15,000

14,500
14,000

13,500

13,000

12,500
                                 3-Month Moving Average
12,000

11,500

11,000
         1995             1996              1997          1998
 Rosen Consulting Group
                          U.S. Net Exports

$1992 (Billion)
 -50


-100


-150


-200


-250


-300
        1995              1996       1997    1998
 Rosen Consulting Group
                 Consumer and Producer Prices

Annual Change
16%
14%
                                                                 CPI
12%
                                                                 PPI
10%
8%
6%
4%
2%
0%
-2%
       72     74         76   78   80   82   84   86   88   90    92   94   96   98e
Rosen Consulting Group
               3-Month T-Bill vs. 10-Year T-Bond

18%

16%
                                                3-Month
14%
                                                10-Year
12%

10%

8%

6%

4%

2%

0%
      80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
Rosen Consulting Group
                     Equity REIT Offering Volume

 $Billion
30

25

20

15

10

5

0
      82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98e
 Rosen Consulting Group
         Growth in Public Real Estate Securities

 $Billion
250

                                                                             200.0
200


150                                                          129.1
                                                                     120.3

100
                                                      67.5
                                               48.7
50                                      37.2
                                 26.2
          6.1       7.6   10.3
  0
        1990       1991   1992   1993   1994   1995   1996   1997    1998    2000f
 Rosen Consulting Group
                         Investment Performance
                                 REITs vs. S&P 500 Index

Total Return
40%                                               37.6%   37.0%
                                                                        33.4%
                    Wilshire REIT Index
                                                                                   28.6%
30%
                    S&P 500 Index                            23.1%
                                                                     19.6%
20%
          15.2%          15.1%
                                               12.2%
                            10.1%
10%            7.6%
                                    2.7%
                                        1.3%
 0%

-10%

-20%                                                                            -17.1%

            1992          1993       1994       1995       1996       1997        1998
Rosen Consulting Group
                          REIT Market Valuation
                      Stock Market vs. Real Estate Value

Number of Companies
35
                            30
30

25                   23
         21
20                                        17
                                  15
15

10                                                         7
                                                      6
 5
                                                                    1    0
 0
       -30%        -20%    -10%   -5%     0%      5%      10%   20%     30%

                     Discount     Real Estate Value       Premium
 Rosen Consulting Group
                         De
                           c-




                                                                             10%
                                                                                            11%




                                   5%
                                        6%
                                             7%
                                                  8%
                                                       9%
                         M 93
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                         De 94
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                         Ju -97
                                                                                                  AFFO vs. Dividend




                           n-
                         Se 97
                           p-
                                                                                                                      REIT Yield Comparison




                         De 97
                           c
                                                                               AFFO Yield




                         M -97
                          ar
                                                            Dividend Yield




                         Ju -98
                           n-
                         Se 98
                           p-
                         De 98
                           c-
                              98
                         De
                           c




                                   1.0
                                         1.2
                                               1.4
                                                     1.6
                                                           1.8
                                                                 2.0
                                                                       2.2
                                                                             2.4
                         M -93
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                         Ju -94
                                                                                   Ratio
                           n-
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                           p-
                         De 94




Rosen Consulting Group
                           c
                         M -94
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                         Ju -95
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                           p-
                         De 95
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                         Ju -96
                           n-
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                         De -96
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                         Ju -97
                           n-
                                                                                                                                Relative Valuation




                         Se 97
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                          ar
                                                                                           S&P 500 P/E vs. REIT AFFO Multiple




                         Ju -98
                           n-
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                           p
                         De -98
                           c-
                              98
                            Net Lending
                         Commercial Properties

$Billion                                               % of GDP
120                                                           3.0%
100                                                           2.5%
80                                                            2.0%
60
                                                              1.5%
40
                                                              1.0%
20
                                                              0.5%
 0
-20                                                           0.0%

-40                                                           -0.5%

-60                                                           -1.0%
      70 72 74 76 78       80 82 84 86 88   90 92 94 96 98e
Rosen Consulting Group
                                Commercial MBS
                                Gross Amount Issued

 $Billion
90
                                                                            78.3
80
70
60
50                                                                   44.0
40
                                                              29.7
30
                                                20.3   19.0
                                         17.5
20     12.8                       14.0
                          8.2
10                 4.8
0
        80s        90     91      92     93     94     95     96     97     98
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                         De
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                                   50
                                        100
                                              150
                                                    200
                                                          250
                                                                      300
                                                                              350
                         M 93
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                         Ju -94
                           n
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                           p-




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                         De 94
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                         Ju -95
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                           c
                                                                A



                         M -95
                                                                        AAA




                          ar
                         Ju -96
                           n-
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                           p-
                         De 96
                           c
                                                                        AA
                                                                BBB




                         M -96
                          ar
                         Ju -97
                           n-
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                           p-
                         De 97
                           c
                         M -97
                          ar
                                                                                                   CMBS Spreads to Treasuries




                         Ju -98
                           n-
                         Se 98
                           p
                         De -98
                           c-
                              98
                          Pricing Spreads
           Commercial Mortgage Rate vs. 10-Year T-Bond

Basis Points
300

250

200

150

100

50

  0
      83    84 85 86 87 88   89 90 91 92 93   94 95 96 97 98
 Rosen Consulting Group
                         U.S. Employment Growth




                                                  Growth Rate
                                                      less than 0%
                                                      0% to 1.1%

                                                      1.2% to 2.4%
                                                      2.5% and
                                                      above




Rosen Consulting Group
                         Fastest Growing U.S. MSAs
     Ranked by Annual Absolute Change in Employment


     Rank          Metropolitan Area   Nov-97    Nov-98    Change

     1             New York, NY        3,990.2   4,094.1   103.9
     2             Los Angeles, CA     3,941.2   4,031.4    90.2
     3             Phoenix, AZ         1,432.3   1,508.1    75.8
     4             Washington, DC      2,517.0   2,585.3    68.3
     5             Houston, TX         1,936.8   1,993.2    56.4
     6             Atlanta, GA         2,014.0   2,069.8    55.8
     7             Dallas, TX          1,811.3   1,866.7    55.4
     8             Detroit, MI         2,120.6   2,170.2    49.6
     9             Tampa, FL           1,091.8   1,138.3    46.5
     10            Chicago, IL         4,108.6   4,155.0    46.4

Rosen Consulting Group
                         Fastest Growing U.S. MSAs
            Ranked by Annual % Change in Employment

              Rank           Metropolitan Area     Nov-98

              1              Sarasota, FL          6.6%
              2              Las Vegas, NV         6.1%
              3              Phoenix, AZ           5.3%
              4              Riverside, CA         4.9%
              5              Orlando, FL           4.7%
              6              Tampa, FL             4.3%
              7              West Palm Beach, FL   4.2%
              8              Jacksonville, FL      4.2%
              9              Austin, TX            4.0%
              10             Ventura, CA           3.9%


Rosen Consulting Group
                         Fastest Growing U.S. MSAs
            Ranked by Annual % Change in Employment


              Rank           Metropolitan Area   Nov-98

              11             Columbia, SC        3.8%
              12             Orange County, CA   3.8%
              13             Grand Rapids, MI    3.6%
              14             San Antonio, TX     3.6%
              15             Tulsa, OK           3.5%
              16             Denver, CO          3.5%
              17             Baton Rouge, LA     3.4%
              18             Wilmington, DE      3.3%
              19             Louisville, KY      3.2%
              20             Fort Worth, TX      3.2%

Rosen Consulting Group
                         Fastest Growing U.S. MSAs
            Ranked by Annual % Change in Employment


              Rank           Metropolitan Area     Nov-98

              21             Seattle, WA           3.2%
              22             Greenville, SC        3.1%
              23             Dallas, TX            3.1%
              24             El Paso, TX           3.0%
              25             Houston, TX           3.0%
              26             Tucson, AZ            2.9%
              27             Cincinnati, OH        2.9%
              28             Fort Lauderdale, FL   2.8%
              29             Atlanta, GA           2.8%
              30             Raleigh, NC           2.8%

Rosen Consulting Group
                     Slowest Growing U.S. MSAs
            Ranked by Annual % Change in Employment

              Rank       Metropolitan Area   Nov-98

              1          Honolulu, HI        -1.9%
              2          Allentown, PA       -0.3%
              3          Knoxville, TN       -0.3%
              4          Pittsburgh, PA      -0.1%
              5          Dayton, OH           0.0%
              6          Toledo, OH           0.0%
              7          Greensboro, NC       0.1%
              8          Buffalo, NY          0.2%
              9          Rochester, NY        0.3%
              10         Fort Wayne, IN       0.4%
              11         New Orleans, LA      0.4%
              12         New Haven, CT        0.4%
Rosen Consulting Group
                              Employment Growth
                               New York MSA vs. U.S.

6%


4%


2%


0%


-2%

                                    New York MSA
-4%
                                    U.S.

-6%
      72      74         76   78   80   82   84   86   88   90   92   94   96   98e
Rosen Consulting Group
                              Employment Growth
                                   California vs. U.S.

7%
                                                                 California
6%
                                                                 U.S.
5%

4%

3%

2%

1%

0%

-1%

-2%
      72      74         76   78   80   82   84   86   88   90    92    94    96   98e
Rosen Consulting Group
                              Real Estate Cycle

          Extended Stay Hotel - 12:00

                                         12
Power Center - 10:30
                              Overshooting    Decline
                              Phase           Phase
Sun Belt Apt - 9:30


                          9                                3   Factory Outlet -
                                                                    3:00
    Industrial - 8:30
    Single Family/
                              Growth          Absorption
   Multifamily - 8:00
                              Phase           Phase
 Neighborhood/Strip/
 Suburban Office - 7:30                  6
 Apts Northeast/Calif - 7:00
 CBD Office/Full Service Hotel/
 Regional Mall - 6:30
 Rosen Consulting Group
                                Office Construction
                          Contracts Awarded - F.W. Dodge

 Million SF
350

300

250

200

150

100

50

  0
      70      72     74    76    78   80   82   84   86   88   90   92   94   96   98
 Rosen Consulting Group
                          Office Employment Growth
                             Annual Change in Jobs

Thousand
700
600
500
400
300
200
100
   0
-100
-200
       78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
 Rosen Consulting Group
                         Office Vacancy Rates
                         Downtown and Suburban

25%


20%


15%


10%
                                          Downtown
                                          Suburban
5%


0%
      82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
Rosen Consulting Group
                  Downtown Office Rent Growth

15%



10%



5%



0%



-5%
         86      87      88   89   90   91   92   93   94   95   96   97   98
Rosen Consulting Group
          Private Market Total Return (NCREIF)
                                            Office

30%
       26.0%
25%
              20.9%
20%                                                                                         17.4%
                                                                                                17.0%

15%                                                                                13.4%
                           12.4%
                       12.3%
                   9.9%         9.0%
10%                                                                             7.2%
                                   5.7%    6.0%
                                       4.0%    4.5%                    3.9%
 5%

 0%
                                                     -1.0%
-5%                                                                -4.0%

-10%                                                         -8.0%
                                                        -11.5%
-15%
         80           82    84         86    88       90      92           94          96       98e
Rosen Consulting Group
                              Real Estate Cycle
                                       Office


                                         12


                              Overshooting      Decline
                              Phase             Phase
    Atlanta/
    Houston - 9:30

                          9                                  3



Boston/Minneapolis            Growth            Absorption
San Jose - 8:00               Phase             Phase

                                         6
 Seattle/Wash, DC - 7:00
         Chicago/Miami/New York/
         San Francisco - 6:30                Los Angeles - 6:00
 Rosen Consulting Group
                          Multifamily Housing Starts

Units, Thousand
700                             665 670
                          636             626
600

500 440                                         474
                  400                                 407
            379                                             373
400                                                                                                   340 346
                                                                  298                           313
300                                                                                   259 278

200                                                                     174 170 162

100

  0
       80          82           84        86          88          90        92        94        96       98e
 Rosen Consulting Group
                                  Multifamily Permits
                                                 California

Units, Thousand
180                                                     168
                                                     158
160
140
                                                112          117
120
                 102
            96                                                     93
100
       81              83
                                                                        75
 80                                        70
                            58                                               60
 60
                                 44
 40                                   34                                          32
                                                                                       21                 25 30
                                                                                            15 19 16 19
 20
  0
       76        78         80        82        84      86         88        90        92      94   96      98e
 Rosen Consulting Group
                         Rental Vacancy Rates

12%

11%

10%

9%

8%

7%
                                                   5+ Units
6%
                                                   Total Rentals
5%

4%
        80        82     84   86   88   90   92   94    96     98
Rosen Consulting Group
                                    Rental Inflation

Annual Change
14%

12%
                                                             Total CPI
10%
                                                             Rental Component
 8%

 6%

 4%

 2%

 0%
        72      74        76   78   80   82   84   86   88   90   92     94   96   98e
 Rosen Consulting Group
                          U.S. Household Formation

 Million
2.0



1.5



1.0



0.5



0.0
      72      74      76    78   80   82   84   86   88   90   92   94   96   98e
 Rosen Consulting Group
                           Divorce Rate in the U.S.

Rate per 1,000
 5.5
 5.0
 4.5
 4.0
 3.5
 3.0
 2.5
 2.0
 1.5
 1.0
    1920          1930      1940   1950   1960   1970   1980   1990
  Rosen Consulting Group
                         U.S. Population Growth
                               1995 - 2000f




                                                  Absolute Growth
                                                    less than 25,000
                                                    25,000 to 99,999

                                                    100,000 to 249,999
                                                    250,000 and
                                                    above




Rosen Consulting Group
          Private Market Total Return (NCREIF)
                                             Multifamily

14%                                                                                      12.8%
      11.6%                                                               11.9%11.7%11.7%
12%                                                                                           11.4%
                              10.3%
10%                                   8.8%                         8.7%

8%             7.1% 6.9%
                                             5.8%
6%

4%
                                                            1.8%
2%

0%

-2%                                                 -1.4%
         85     86       87    88     89     90      91     92     93      94   95   96   97   98e
Rosen Consulting Group
                              Real Estate Cycle
                                   Multifamily



                                         12


                              Overshooting    Decline
Atlanta/Las Vegas/            Phase           Phase
Phoenix - 9:30

                          9                                3

   Dallas/
   San Jose - 8:30
                              Growth          Absorption
San Francisco - 8:00          Phase           Phase

                                         6
           New York - 7:30
    Boston/Los Angeles - 7:00
 Rosen Consulting Group
                                Retail Construction
                          Contracts Awarded - F.W. Dodge

 Million SF
300



250



200



150



100
      70      72     74    76    78   80   82   84   86   88   90   92   94   96   98
 Rosen Consulting Group
                           Real Retail Sales Growth
                                Excluding Autos

Annual Change
 6%

 4%

 2%

 0%

-2%

-4%

-6%
       80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
  Rosen Consulting Group
          Private Market Total Return (NCREIF)
                                            Retail

20%
                                16.9%
                            15.1%              14.9%
                                    14.4%
15%
              12.8%
          12.3%                         12.5%
                                            12.4%    12.5%
      10.7%       11.0%

10%                                                                                      8.4%8.7%
                         7.0%
                                                         6.0%               6.0%
                                                                        4.9%        4.9%
5%                                                                              4.0%



0%

                                                              -1.8%
                                                                  -2.2%
-5%
       78        80      82      84      86     88       90        92       94      96       98e
Rosen Consulting Group
                              Real Estate Cycle
                                       Retail



                                         12


                              Overshooting      Decline
                              Phase             Phase
    Atlanta - 9:30

                          9                                  3

Boston/Chicago/
S.F./Seattle - 8:30
                              Growth            Absorption
                              Phase             Phase

                                         6

         Los Angeles/New York/
         Washington, DC - 6:30
 Rosen Consulting Group
                              Hotel Construction
                          Contracts Awarded - F.W. Dodge

Million SF
100


80


60


40


20


  0
       80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
 Rosen Consulting Group
                         Hotel Occupancy Rate

66%


65%


64%


63%


62%


61%


60%
         87       88     89   90   91   92   93   94   95   96   97   98
Rosen Consulting Group
                               RevPAR Growth

Annual Change
20%


15%


10%


 5%


 0%


-5%
        71         74     77    80   83   86   89   92   95   98e
 Rosen Consulting Group
                           Hotel Industry Profits
                                Net Profit or Loss

   $Billion
25

20

15

10

  5

  0

 -5

-10
       78        80       82   84   86   88   90     92   94   96   98e
 Rosen Consulting Group
                             Real Estate Cycle
                                       Hotel

         Extended Stay Hotel - 12:00

                                         12


                             Overshooting      Decline
                             Phase             Phase



                         9                                  3




                             Growth            Absorption
                             Phase             Phase

                                         6

      Full Service Hotel - 6:30
Rosen Consulting Group
                           Industrial Construction
                          Contracts Awarded - F.W. Dodge

 Million SF
350

300

250

200

150

100

50

  0
      70      72     74    76   78   80   82   84   86   88   90   92   94   96   98
 Rosen Consulting Group
                         Industrial Vacancy Rate

10%

9%

8%

7%

6%

5%

4%

3%
        80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98
Rosen Consulting Group
          Private Market Total Return (NCREIF)
                                      Warehouse

25%
           20.4%
20%
                16.2%
                    15.2%
      14.2%
15%                                  12.9%
                                                                                          13.8%
                                 12.4%                                                12.7%
                                                                                  12.7%
                                             12.1%                                            12.0%
                             10.8%               11.2%
                                                     9.7%
10%                      9.0%            8.9%                                8.5%


5%
                                                        2.4%


0%
                                                                         -1.5%
                                                                     -2.4%
                                                                 -2.9%
-5%
       78        80      82      84      86      88         90        92         94    96     98e
Rosen Consulting Group
                                Real Estate Cycle
                                      Industrial



                                           12


                                Overshooting    Decline
                                Phase           Phase
Atlanta/Dallas - 9:30


     Chicago - 9:00         9                                3


   San Jose - 8:30
                                Growth          Absorption
                                Phase           Phase
  Detroit/Oakland/
  Portland/Seattle - 7:30                  6
               Los Angeles - 7:00
                   Boston/Newark - 6:30
  Rosen Consulting Group

				
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