1. Wells Fargo CRE Conference – 2/27/2013
Financing panel: Loans are being carried by: Bank balance sheet 50%, CMBS 18%, LIFECO
11%, GSE 9%, and 12% other
• Commercial banks have $10 trillion of deposits but only lending $8 trillion
o $2 trillion sitting on the sidelines
• Banks are well capitalized
o This caused spreads to tighten 100 bps and structure loosen
David Durning, Senior Managing Director, Head of Originations, Prudential Mortgage
Capital Company
• In 2012 $7b of lending expect $8b in 2013
• Feeling nostalgic for 2009 because now they are having difficulty putting out money
o Doing more construction lending
 $400m last year
• Not that worried about the maturity issues with loans as there so much capital chasing deals
someone will bail them out
o Thinks fundamentals will improve value
Brian Harris, CEO, Ladder Capital Finance LLC
• Will lend $3.5b this year which is up 20% to last year,
o Starting to now buy real estate
• Thinks valuations are crazy, too much money has come into the space
o Tough asset classes are office bc people need less space and malls as less people are
shopping
o Likes Florida and Michigan bc there are no banks that are there, lack of financial
institutions
Doug Mazer, Managing Director, Head of Real Estate Capital Markets, Wells Fargo
• $24b of new business in 2013
o 1/3 construction lending, 1/3 existing assets, 1/3 subscription lines
• Size is a friend of CMBS,
o Borrowers only deal with one lender at a time, club deals are harder for borrowers
• CMBS lends to secondary and tertiary markets that lifecos are scared of
o Improving these market valuations
• UW standards are at 2005 levels, less IO, and harder to put on additional debt
o A lot less leverage in the system and not the same risk positions
• B piece buyers – lot of interest in the space from all different areas
o Last few years there were less than 10 b buyers, buyers market
 Last year fewer buyers and more supply
o Tough to tell who will actually stay in the space
• Loan maturities $318b in 2013, $353b in 2014, and $428b in 2015
• 50 year 10 year treasury average is 6.5% while today it is 2%

2. Rating Agencies Panel:
Eric Thompson, Senior Managing Director, Kroll Bond Rating Agency
• Since November there is a lot of pushing on leverage
Tad Philipp, Director of Commercial Real Estate Research, Moody’s Investors Service
• Large loans are taking up a lot of the securitizations making it tough for conduit deals
• Moody’s looks at through the cycle cap rates, think rates will move to 5% in 3 years
o Similarly think it is 2005
o Prepared if there is an asset operating performance issues as already priced in their
models
o Have on their website the expected loss for every Moody’s rated deal, for 2007 deals
it is 10%
• Have been very focused on malls recently
o Look at the competitive profile is it a survivor mall
• For UW they focus on quality malls
o On the 19 single offerings 1/3 have sales of $700 or higher
o If low sales is the mall the only game in town
• 2006-08 losses are low think they will tick up this year but only modestly
Peter Eastham, Managing Director, Standard and Poor’s
• If there are loan shortfalls for more than 6 months they downgrade
CMBS Servicing Panel: Where is this going in the future?
• Not a lot of new entrants in the market, lot of barriers to entry, cost, personal, policies
• Revenues from new issue is very low and will be for the future
• A lot of servicers redeploy the people into lending activities
• Some people are doing due diligence for B buyers, do surveillance now
Brian Hanson, Managing Director, CWCapital Asset Management
• Defaults almost stopped in the middle of 2012 but have been very lumpy since then
o It will continue this way
• Borrowers only cooperate if they absolutely have to
• Always require appraisals at the time of modification
• Out of the 2,300 resolutions only 40 were A/B note deals
o Only purpose of B note is in case the borrower has a tenant in their pocket but don’t
notify the lender
 They then pay off the loan
 Protection for the lender as they should get a piece of the upside
Isaac Pesin, Co-President, LNR Partners, LLC

3. • End of 2010 they serviced $28b, End of 2011 $24b, and end of 2012 $20b
• Right now mostly 2003 vintage maturity defaults
o If it hasn’t found out a way to refinance yet it probably won’t
• Only do modifications if they get access to title
o They don’t just do one to do one, actually have to be better off than before
• Lot of value add left in the shop, sold most of the bad stuff already, absorption is up
• 40/50% of borrowers are not home as there is some complicated ownership structure in
place, 30% will work with you, 20% just want to fight
• 150 people in Europe but it is still tough to figure out there and no liquidity
Stacey Berger, Executive Vice President, PNC Real Estate / Midland Loan Services
• Liquidation vs. extension really just about if they think the borrower is a good one or bad
Kevin Donahue, Senior Managing Director, C-III Capital Partners LLC
• Every asset is unique, time is your enemy
• Lot more activity in the secondary markets
• Going to look closely at the European market
o Lot of issues of distress in the market but how to actually do it is tough
MaryLou Lemley, Executive Vice President, Commercial Mortgage Servicing, Wells Fargo
& Co.
• Typically like to just give extensions to borrowers
Michael Carp, Executive Vice President, Berkadia Commercial Mortgage LLC
• Regional banks are coming back in financing
CMBS Trading
Nicki Livanos, Director, Real Estate Investments, AXA Equitable
• Want to add duration for their loans, longer end of the curve
o Want structured product and commercial loans
Samir Lakhani, Director, Blackrock Inc
• Spread duration is a concern for them
• Sector is considered a risk asset even for the least risky part of capital structure
Josh Mason, Managing Director, The Blackstone Group
• Market is experiencing positive trends including shrinking RMBS supply
• There should be some volatility the next few months and the macro pictures isn’t as rosy
• Thinks CMBX 6 is a good think to play in if you want to be in the legacy indices
• People are bidding triple A’s really well
o A-J and noninvestment grade have not done that well
o People really want the high rated new product
Scott Stelzer, Senior Managing Director, Cerberus Capital
• Credit curve rallied and everything has flattened

4. o Macro events that can cause issues
Chuck Mather, Managing Director, CMBS Trading, Wells Fargo Securities
• CMBX 6 is trading wide of the cash market
• Liquidity is still healthy in the sector and better than in the corporate space
Retail: State of the Transaction Market with Eastdil Secured
• Cap rates are at an all time low for open air centers
• Debt market punishes retailers less in secondary and tertiary locations than other asset
classes
• Risk adjusted real estate is still the best sector
o Residual cap rates are still tough to forecast
• Never want a tenant vacating a box that is not part of the collateral
• Some smaller retail REITS might go through a consolidation
Investors view for 2013
Michael Hudgins, Executive Director, Global REIT Strategist, J.P. Morgan Asset
Management
• In the 1970’s real estate underperformed CPI while in the 1980’s it outperformed CPI
• REITS are very expensive compared to the rest of equities
o Think about normalized cash flow who is expensive vs. their peers
• Did an analysis that showed NOI is correlated to nominal GDP
• Apartments, regional malls, and self storage all have good growth
o Don’t see acceleration with strip centers and CBD
o Suburban office has some room to grow
• Most REIT investors are generalists who only look at a multiple and that is really it
o Are not real estate experts
Gerwin Holland, Senior Portfolio Manager, PGGM
• Need growth for inflation but there has not been much
o No growth in Europe over the next 5 years, US 1.5 – 3% annual
• What happens with healthcare is a big concern
• Activity of the US government does not stop them (foreign capital) from investing in the US
• A lot of growth is driven by cheap capital and this will eventually stop but not just yet
• Want 8% returns and will invest in REITS for the next 20 years
Sherry Rexroad, Chief Investment Officer, Global Real Estate Securities, BlackRock
• US is 48%of the world’s real estate market
o Thinks multifamily REITS are undervalued and there is really strong growth
potential

5. o Shopping centers require too much rent growth to support acquisition prices and
not where they want to be
• Less US and more global investing
New York City office outlook
Kevin Donner, Director, Eastdil Secured
• Fundamentals are basically the same for the last 12 – 18 months
o Leasing market is relatively the same and has not moved
o Don’t like having a lot of vacancy now
o Rent will be flat for a couple years and then push in years 4 and 5
• Unlevered returns for core are high 6% and low 7%
o 11% levered IRR for core deals
• Most investors prefer current cash flow rather than levered IRR
o Will see some huge deals which are coming to market in the near term
o More capital to chase large deals in the market now
• More than $300 psf in anything downtown be careful
John Saclarides, Lease Negotiations Manager, Wells Fargo & Co.
• Signed 300k sf and taking 75k more
• Need more jobs to drive absorption
o Tenants need to consolidate in the market
Scott Gottlieb, Vice Chairman, CB Richard Ellis
• Rents in 2013 will be flat
• Midtown South still have some growth left even though at an all time high of $60 psf
o Midtown flat as financial services are getting rid of jobs
• Tenants are going to higher density
o Getting rid of private offices and more people sitting in open space
• The 10 largest transactions of the year had a renewal component involved
o 6m sf of positive absorption in 2011 and -6m sf in 2012
• 6 avenue is dead in Midtown but they are asking $70+ in rent
th
o No one likes it here as it’s not hip and cool
o Midtown South won’t draw financial companies
o Love garment district
Reinventing the City: accomplishing large multi-use projects in a complex urban
environment
Jeff T. Blau, CEO of Related Companies, on Hudson Yards
• Hudson Yards is 15m sf of new development consisting of 2 phases of the eastern yards
followed by the western yards
• 60% of office stock is over 50 years old and this provides tenants opportunity to move into
brand new efficient space
o 5m sf of office in 2 towers
 First tower is 1.7m sf which will be the Coach corporate HQ

6. • Coach purchased their space
• Related purchased the building that Coach is currently in
 Tenants start to look at ownership vs lease
 Another 800k sf leases just about complete
• Right now they only targeting tenants greater than 150k sf
o Finding a lot of interest in tenants that would like to be in one location
 Almost all of the tenants are coming from 10 locations downsizing to 1
 Due to space efficiencies only need 80% of the square footage that they
currently occupy today
• North office tower all of the tenants interested are trying to purchase space here
o Right now negotiating with 4 tenants
o In addition there will be a 6k sf ballroom and observatory on the top
 Will be the highest outdoor space in NYC
• For the 500k sf of retail space the early interest is very high end
o Even higher end than the 300k sf at Time Warner Center
o F&B program with Danny Meyer
• Highline is the most visited tourist attraction in NYC with 4.5m people walking it last year
• Developing two 800k sf 800 foot residential buildings with each being half condos
o Will contain the largest flagship Equinox in the city
• Foundations were laid below the track over 50 years ago with a plan to build here
• Developing a $300mcultural shed
MaryAnne Gilmartin, Executive Vice President at Forest City Ratner Companies
• Developed 8 Spruce, which can never replicate again
o 95% leased at the highest rates in NYC
 Success leasing the building from the bottom up
• Atlantic Yards will now build 8k residential units now that the arena is open
o Building tallest modular building in the world at 32 stories
o 340k sf totaling 363 units
 50% free market and 50% low income
o 55% built outside the city and being shipped in
o Never can be built again
Lynne Brown, Senior VP for University Relations and Public Affairs for New York
University
• Currently own 15m sf in 5 locations
o 1.9m sf will be construction with over half of it being below grade
Janno Lieber, President of World Trade Center Properties LLC, Silverstein Properties
• Started with construction of 7 WTC which opened in May 2006
o Created 7,000 jobs
• Next phase will complete 4 buildings and a final building on the DB site
o 4 WTC, 2.5m sf which will be completed in 2013
o 3 WTC, 2.8m sf complete in 2015
 8 stories up in the air right now, but needs a tenant before they can continue

7. o 2 WTC, 3.1m sf complete in 2015+
• Downtown has the best mass transit in the city
o Fulton Street Hub will be complete in 2014
• 6m visitors have come through the Ground Zero Memorial
• Number of residents has doubled since 9/11
o Richest community in NYC
Key Note Speaker: Sam Zell
• Cost of capital is less than inflation and it reminds him of early 1970’s
o Government is keeping rates very low artificially
 Too much supply of money
• Level of interest rates don't matter if you make money or not
o He made money in years with 21% interest rates and 50bps
• News coverage is silly as people forget about the Eurocrisis even though it was always here
• Very bearish on the US Market
o 2007 only place for demand was emerging markets
o Still thinks foreign markets will outperform
 Thinks we don't study demographics enough.
• Less people in Italy, France, and Japan
o US is better but not dramatically than Europe
 Birth rate now lower in US than 5 years ago
o Brazil was growing at 7% but now 2.5%
• Win on the buy
o Real estate was buy and hold
 With PE now buy and sell in a few years
• $160 psf for Class A office in Minneapolis
o $1,000 psf in NYC
 Tenants will move from NYC eventually
• Every investment they make they ask the question how can the government screw it up
o Be very careful with this government
 When was the last time government cut costs 1776?
• Fannie and Freddie were great ideas when they were 30% of the market
o Kept everyone honest
o Now they are 90% and there is no competition
• REITS are not going anywhere
o Even if they were taxed hey would be paying little in taxes due to depreciation
 REITS have performed very well
• Single family arena he does not know how it gets done
o How do you manage 5,000 houses in 27 markets still no answer to this?
 Don't think there will be any companies that can do this
o Since WWII everytime home ownership is above 62% country has had problems
 Over supply of houses not there anymore
o People don't want commitment anymore
 Can’t get people to work in the burbs

8. o If you take out home price appreciation rents can grow 30% in multi’s before it is a
worse investment than home ownership
• Archstone opportunity to acquire $10b of irreplaceable assets
o Couldn't replicate in 10 years
o Multifamily market never seen better demand
 Rental rates up
• No major supply, 2010 saw negative construction in apartments
• Cost of housing is the cheapest in US compared to any developed country
• Manufactured housing he purchased in the early 1980s and experienced a 17% return on
equity
o Lower end of the housing
 Becoming much more capital intensive
o There is a big relevance of community in the area
o Very hard to get zoning for it
 Have to put all the infrastructure up day 1
 Absorption is very slow you can't sell more than 50 houses per year
• Best to invest over the next 5 years in multifamily as it will outperform all the other asset
classes