IAMC Conference Global Corporate Real Estate Market

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					                  IAMC Conference
Global Corporate Real Estate Market
                              April 21-23, 2008
                            Scottsdale, Arizona




              Presented by:
              Garry S. Weiss, SIOR, CCIM
              Sr. Vice President, National Director
              Integrated Industrial Solutions
         Industrial Real Estate
         Environment                                                     IAMC Conference-Scottsdale, AZ
                                                                                       April 21-23, 2008




 Solid Fundamentals
   U.S. Major Markets: Occupancy > 90%
   Business Spending Forecast Good
     • 5% Increase Forecast for 2008*
     • 7.3% on Structures*
     • 78% Capacity Utilization*

 Supply and Demand in Balance
   81 million S.F. of net absorption projected for „08**




                                              Sources: *Moody’s Economy.com; **Torto Wheaton
         Industrial Real Estate
         Environment                                            IAMC Conference-Scottsdale, AZ
                                                                              April 21-23, 2008




 Corporate Ownership of Industrial Real Estate
    65% of Total in U.S.
    Higher Levels in Canada and Europe


 Operating and Surplus Facilities and Land =
  Untapped Sources of Capital
    Sale Leaseback Market:
    $56 billion globally* in 2007 across all commercial property types
    Similar volume projected for 2008*



                                                      Source: *Real Capital Analytics
         Industrial Real Estate -
         Investment Environment                                     IAMC Conference-Scottsdale, AZ
                                                                                  April 21-23, 2008




 Record Volume in 2007
    $56.8 billion in ‟07 vs $50.7 billion in ‟06*
    Volume slowed considerably in first two months of 2008 vs same period
     a year ago
           • Jan/Feb 2007: $7.7 Billion
           • Jan/Feb 2008: $3.2 Billion
    Slower Pace of Transactions from Start to Close
    Transactions are Occurring: First Industrial Completed Sale-
     Leaseback/Surplus Acquisition in Toronto in 1Q08


 Many on sidelines waiting for end to fallout
 Highly leveraged investors squeezed by Credit Crunch
 Recent Fed Decreases Should Help
    Increased spread to treasuries for Real Estate

                                                          Source: *Real Capital Analytics
        Cap Rate Trends – Bulk
        Distribution                IAMC Conference-Scottsdale, AZ
                                                  April 21-23, 2008




 Primary Markets: + 25-50 bps

 Secondary Markets: + 50-75 bps

 Tertiary Markets: + 100-150 bps
        Cap Rate Trends – Core
        Markets                   IAMC Conference-Scottsdale, AZ
                                                April 21-23, 2008




 Bulk: + 25-50 bps

 Light Industrial: + 25-65 bps

 Flex: + 25-75 bps
        Cap Rate Trends – Non-
        Core Markets               IAMC Conference-Scottsdale, AZ
                                                 April 21-23, 2008




 Bulk: + 50-100 bps

 Light Industrial: + 50-100 bps

 Flex: Low liquidity
         Industrial Real Estate
         Long-Term Demand Drivers                                  IAMC Conference-Scottsdale, AZ
                                                                                 April 21-23, 2008




 Pent-Up Demand from Pension Funds and Insurance
  Companies
    Continue to increase allocations to real estate
    Difficult to fill allocations to industrial due to facility sizes
    Attracted to industrial as they seek to meet actuarial return requirements

       • Stable asset class
       • Critical facilities
       • Net leased

 REITs and partners: dedicated joint venture capital with
  long-term horizon to put to work
           Navigating the Current
           Market Environment:                             IAMC Conference-Scottsdale, AZ
                                                                         April 21-23, 2008




Corporate Solutions from Full-Service Providers

 Maximize value

 Focus on capital needs
    Growth capital
    Debt reduction
    Share repurchase
      • Impact to financial statements
       •   Operating lease treatment
       •   Certainty of closure
       •   Operational flexibility

 Short to long-term leases
    Partial or fully occupied buildings
    Cancellation, expansion, purchase options available
    Forward commitments
            Corporate Solutions:
            Rockwell Automation                                            IAMC Conference-Scottsdale, AZ
                                                                                         April 21-23, 2008




 Client Objective
      Sale-leaseback of $152 million portfolio of operational assets
      24 properties in 17 markets
      Primarily Manufacturing/Distribution
      Minimal contingencies
      “All or nothing”

 Challenges
    5 to 15-year lease terms
    Termination options for every lease
    Multiple markets

 FR SOLUTION
      Speed of service – purchase agreement/earnest money provided within 5 days
      Site visits to 66% of the properties in four days
      Awarded the transaction in July 2005
      Willingness to provide short and long-term leases
      Accommodated tenant‟s termination requirements
      Accepted all or nothing
         Corporate Solutions:
         Volkswagen of North America &                                       IAMC Conference-Scottsdale, AZ
                                                                                           April 21-23, 2008

         Canada

 Client Objective
    One transaction involving three properties in two countries (U.S. & Canada)
    Required a 45-day time frame for closing
    Company wanted operational flexibility: expansion rights, long-term
     lease with renewal options

 Challenges
      Accelerated closing deadline
      Sale included excess land
      Multi-national transaction with complex title, zoning and currency issues
      Expansion options

 FR SOLUTION
    Closed entire portfolio (both US & Canada) in client‟s time frame
    “One-stop-shop” flexibility allowed for FR to tackle multi-market issues and
     provide optimal timely response
    Structured 15-year lease with expansion and renewal options for all three
     facilities