Did You Believe Us Over The Last Five YearsWhat we think for 2015 & 2016

January 20, 2015

Dennis P. YeskeyManaging Partner/Founderdennis@yeskeyrealestate.com

“Keeping Clients & Investors Ahead of the Market”

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Outline

• Summary 2015

• Predictions - 2014, 2015 & 2016

• Product Life Cycle

• Top Five Issues – 2015 & 2016

• Some Interesting Misc. Exhibits

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Predictions 2014

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Source: Yeskey Real Estate

Topic 2014 Prediction 2014 Actual 2014 Grades

GDP +2.5-2.7% 2.5% + A+

Interest Rates Flat, slightly up Flat, slightly down B

Stock MarketsModest rise; 8-10%; USA

Remains the place to invest 8-13%, USA #1 A

REITs Up Year – Double digits Up > 30% A+

Cap-X – Business Investment USA, Needs to be up! USA; Mixed B-

Dollar Dribbling Down Flat, slightly up at YE B

CRE Great year so far in 2014 Great year A+

Residential

Watch out – Res boom is a head fake driven by

investment not fundamentals.

No Boom- Correct!!! A

Predictions 2015

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Source: Yeskey Real Estate

Topic 2014 Actual 2015 Prediction

GDP 2.5% + 2.7% - 3.0%

Interest Rates Flat, slightly down Flat

Stock Markets 8-13%, USA #1 5% - 8%

REITs Up < 30% 10%

Cap-X – Business Investment USA; Mixed Flat

Dollar Flat, slightly up at YE Flat

CRE Great year Another good year

Residential No Boom- Correct!!! Slightly up

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We are in the sixth year of recovery… Will we make it to seven?

Recovery Expansion Boom Decline

ProductExtension

TIME

2009

2010

2011

2012

2013

2014

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A Seven Year of Expansion is Very Rare!

Recovery Expansion Boom Decline

Extended Expansion

TIME

2007-2008

2009

2010

2015-20162017

“Tipping Point”

Summary - Top Ten Issues 2012-2014

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2014

1.Real

Business

Investment

2.Residential

3.Government

Intervention

2012

1.Government

Intervention

2.Rules &

Regulations

3.Economy

Top Ten CRE Issues 2014

1. Business Investment

2. Residential

3. Government Intervention

4. Capital Markets & Alternative Investments

5. Costs – replacement & operations

6. Global – foreign in to US.

7. Traditional CRE Fundamentals

8. Development

9. CRE Equity including REITs

10.CRE Debt Including CMBS

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Summary - Top Five Issues 2015-2016

1.Domestic Economy; “Can we make history?”2.Global Economy; “Gloom grows”3.Capital Markets; “Reactions”4.Flows into CRE; “The yield chase”5.CRE Fundamentals; “Continue to improve”

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Some Interesting Misc. Exhibits

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Equity REITs– Outpacing Stocks in 2014

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Source: Yahoo! Finance, gold.org

Comparative Returns, Year End 2012, 2013 & 2014

  12/31/12 12/31/13 12/31/14

Nikkei 225 (JP) 22.94% 56.72% 7.1%

NASDAQ Composite 15.91% 38.32% 13.4%

Russell 2000 14.63% 37.00% 3.5%

S&P 500 13.41% 29.60% 11.4%

DJIA (US) 7.26% 26.50% 7.5%

DAX (DE) 29.06% 25.48% 2.7%

NYSE Composite (US) 12.93% 23.18% 13.2%

CAC40 (FR) 15.23% 17.99% -.5%

FTSE100 (UK) 5.84% 14.43% -2.7%

Hang Seng (HK) 22.91% 2.87% 1.3%

DJ All Equity REITs (US) 14.29% -0.47% 30.14%

DJ All REITs (US) 13.00% -1.82% 27.20%

Barclays Aggregate Bond 2.70% -4.19% 6.0%

Gold 1oz Spot 8.26% -27.33% -1.5%

Predictions – Economy

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Source: Yeskey Real Estate

Topic Early 2011 What People

Were Saying

GDP3% to 4% Growth,

or Double-Dip Recession

Top Issue Jobs

Unemployment Expected to Remain Above 9%

Housing Turning the Corner

Our Prediction, Early 2011

1% to 2% Growth

Jobs

Stays High, But Dips Below 9%

Continued Decline

Actual 2011

1.7% Growth

European Debt

Yr End 8.9%

Declined

Predictions – Economy

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Source: Yeskey Real Estate

Topic Our Early 2012 Prediction

GDP 2%+ Growth

Top Issue Government Intervention

Unemployment Heading down, toward 8%

Housing Flat, But Bottoming

Actual

2.0, 1.3, 3.1

Govt. Intervention

7.8%

Bottomed

2013 Prediction

2.3 – 2.5%

Economy & Business

Investment

7.5%

Continued Slow Up

Predictions – Commercial Real Estate

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Source: Yeskey Real Estate

Topic Early 2012 Prediction

CRE Up Modestly

CRE Fundamentals Up More, Including NYC

EquityGreater Availability for

Money and Deals

REITsUp Year – Will Top Stock

Market Again

Debt Continuing to Open Up

CMBSTroubles Continue,

But Inevitable

Actual

Up Significantly

Up

Greater Availability for Money and Deals

Topped Stock Market Again (14-20%)

It has

Did until 4th Q 2012

2013 Prediction

Continues Up

Continues Up

Greater Availability for Money and Deals

Top of Market, beating gets tough

Slight improvement in non-core markets

Significant up year

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Y Yeskey Real Estate Consulting and Investmentswww.YeskeyRealEstate.com

Dennis P. Yeskey Yeskey Consulting (Yc) and Investments (Yi)

Mr. Yeskey is the Founder and Managing Partner for two firms: Yeskey Consulting (Yc) and Yeskey Investments (Yi). Yc is a unique company formed 5 years ago after Dennis’s retirement from Deloitte as the Senior National Partner in charge of Real Estate Capital Markets, and after over 40 years in the business world. Yc accepts a limited number of consulting and research assignments which are mostly focused on developing new business strategies, debt restructurings, and operational improvements across the Real Estate arena. Mr. Yeskey is also the Managing Partner of Yi which involves managing a family office and a series of private investments, along with developing new research boutique operation.

While at Deloitte, Mr. Yeskey was recognized as the senior leader of Deloitte’s Real Estate, Financial Services and Capital Markets Practices both domestically and globally. Initially, recruited by Deloitte’s Chairman to head the NYC office’s real estate services practice, he successfully restructured the practice and achieved and annual growth exceeding 25% with a staff of over 250 professionals. Promoted to the Group Managing Partner at Deloitte, he led a practice of over 1000 professionals focused on the real estate, investment management, private equity, hedge fund and insurance industries. He served on the New York Executive Committee, the firm’s National and Global Financial Services Practices and directed the financial services marketing and eminence building activities.

Before joining Deloitte, he was a partner and practice leader at Kenneth Leventhal and Co. from 1987-1995 where he initiated a new practice focused on institutional real estate, specifically, insurance based real estate. He is a long time member and Governor of ULI, as well as being very active on the Real Estate Round Table. He is a frequent speaker at numerous real estate industry events and author of industry publications. He received his MBA from Columbia University Business School along with an MS and BS from the Swanson School of Engineering at the University of Pittsburgh.

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