gdp growth continues to post moderate...

GDP growth continues to post moderate gains U.S. real gross domestic product

Sources: Bureau of Economic Analysis, IHS Global Insight.

12100806040200989694

10

5

0

-5

-10

Compound annual growth rate

121110090807060504030201

4.0

2.0

0.0

-2.0

-4.0

-6.0

6004002000-200-400-600-800-1000

Percent change, year ago Difference from previous month, thousands

Labor market showing improvement Non-farm employment, United States

Sources: Bureau of Labor Statistics, IHS Global Insight.

% change, (left)

Absolute change, (right)

Oil prices remain at high levels West Texas Intermediate Crude

Sources: Wall Street Journal, IHS Global Insight.

20122011201020092008200720062005200420032002

160

140

120

100

80

60

40

20

0

US$ per barrel

U.S. stock market is doing well S&P 500 composite, price index

Sources: S&P, IHS Global Insight.

20122011201020092008200720062005200420032002

1600

1400

1200

1000

800

600

S&P 500 Index

Consumers continue to spend despite weak sentiment U.S. real personal consumption expenditures

Sources: Bureau of Economic Analysis, IHS Global Insight.

20122011201020092008200720062005200420032002

6

4

2

0

-2

-4

Percent change, year ago

20122011201020092008200720062005200420032002

6.0

4.0

2.0

0.0

-2.0

-4.0


Headline CPI inflation eases despite rising energy prices Overall vs. core Consumer Price Index

Sources: Bureau of Labor Statistics, IHS Global Insight.

Overall

Less food and energy

Real estate prices remain low United States

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Index

Moody’s/REAL Commercial Property Price Index

S&P/Case-Shiller National U.S. Home Price Index Q1 2000=100

Q4 2000=100

Sources: Moody's Investors Service, Standard & Poor's and Fiserv, Inc., Moody’s Analytics.

Commercial real estate valuation and delinquency trends

Source: Moody's Investors Service, Moody’s Analytics.

012345678910

0

50

100

150

200

250

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Index December 2000=100

Delinquency rate (right)

Percent

Price Index (left)

NCREIF Property Index returns Recent returns by property sector, United States

-12

-9

-6

-3

0

3

6

9

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Percent Apartments Industrial Office Retail Hotel

Sources: National Council of Real Estate Investment Fiduciaries, Moody’s Analytics.

Moody’s/REAL Commercial Property Price Index By property sector, United States

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Index Q4 2000=100

ApartmentsIndustrialOfficeRetail

Sources: Moody's Investors Service, Moody’s Analytics.

Capitalization rates By property sector, United States

Source: American Council of Life Insurances, Moody’s Analytics.

4

6

8

10

12

14

16

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Percent

ApartmentsOfficeIndustrialRetailHotel

Vacancy rates By property type

4

6

8

10

12

14

16

18

20

2003 2004 2005 2006 2007 2008 2009 2010 2011

Percent

Office

Retail

Apartment

Source: REIS, Mortgage Bankers Association.

Average asking rents By property type

Source: REIS, Mortgage Bankers Association.

$850

$900

$950

$1,000

$1,050

$1,100

10

15

20

25

30

35

2003 2004 2005 2006 2007 2008 2009 2010 2011

$/sq. ft.

Office (L)

Retail (L)

Apartment (R)

$/month

Office space supply and demand United States projections

Source: National Association of Realtors, REIS.

15.8%

15.9%

16.0%

16.1%

16.2%

16.3%

16.4%

16.5%

-

2

4

6

8

10

12

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013

Millions, sq. ft. Net absorption (L) Completions (L) Vacancy rate (R)

Industrial space supply and demand United States projections


10.4%

10.6%

10.8%

11.0%

11.2%

11.4%

11.6%

11.8%

-

4

8

12

16

20

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013


Retail space supply and demand United States projections


10.4%

10.6%

10.8%

11.0%

11.2%

11.4%

11.6%

11.8%

12.0%

-

1

2

3

4

5

6

7

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013


Multi-family space supply and demand United States projections


4.1%

4.2%

4.3%

4.4%

4.5%

4.6%

4.7%

4.8%

-

10

20

30

40

50

60

70

Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013


Private equity trends Number of deals closed and total capital invested by quarter

Capital investment continues to shift towards IT, Health care and energy Percentage of deal volume (capital) by industry

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Business Products and Services (B2B)

Consumer Products and Services (B2C)

Energy

Financial Services

Healthcare

Information Technology

Materials & Resources

Source:PitchBook

Fundraising remains fairly flat since financial crisis Number of funds closed and total capital raised by quarter

$101 $96 $74 $42 $75 $35 $12 $30 $30 $22 $28 $10 $30 $27 $17 $19

123

61

47 42

62

31

12

31

53

3227 26

46

3528 32

0

20

40

60

80

100

120

140

$0

$20

$40

$60

$80

$100

$120

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

2008 2009 2010 2011

Capital Raised ($B) # of Funds ClosedSource:PitchBook

Despite REIT’s success in raising capital, IPOs are still rare

Source: National Association of Real Estate Investment Trusts.

0

10,000

20,000

30,000

40,000

50,000

60,000

2004 2005 2006 2007 2008 2009 2010 2011

US$ millions

Total value of capital raisedValue of IPOs

Dow Jones REIT Index of mortgage returns

Sources: Dow Jones & Company, Inc., Moody’s Analytics.

0

50

100

150

200

250

300

350

2005 2006 2007 2008 2009 2010 2011 2012

Index Feb 1990=100

Total return

Commercial mortgage return

CMBS issuances United States

Source: Bloomberg.

0

50

100

150

200

250

300

1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

US$ billions

CMBS issuances By type, United States

Source: Bloomberg.

0

10

20

30

40

50

60

70

80

2012(Q1) 2011(Q4) 2011(Q3) 2011(Q2) 2011(Q1)

US$ billions

AgencyConduitOthers

Sovereign risks heightened after 2009 Credit default swap spreads, five-year government bonds

Source: DataStream.

0

100

200

300

400

500

600

2008 2009 2010 2011 2012

Basis points

Italy

France

Germany0

1,000

2,000

3,000

4,000

5,000

6,000

2008 2009 2010 2011 2012

Basis points

Greece

PortugalIrelandSpain

Recent rating changes for selected European countries

Sources: Bloomberg, Milken Institute.

AAA AA

A BBB

BB B

CCC CC

C D

SD 2006 2007 2008 2009 2010 2011 2012

Spain

Italy

Ireland

Portugal

Greece

S&P's foreign currency long-term debt ratings

BRICs: Real GDP growth

Source: IMF, Oxford Economics.

Brazil

China

Russia

India

-15

-10

-5

0

5

10

15

20

2005 2006 2007 2008 2009 2010 2011


-5-4-3-2-10123456

1996 2001 2006 2011 2016

United States

Euro zone

Real GDP growth, percent

Real GDP growth United States vs. Euro Zone, projections after 2011

Source: International Monetary Fund.

Residential prices increase in some markets Residential price index, Q1 2006-Q4 2011

Sources: Australian Bureau of Statistics, Statistics Sweden, Teranet- National Bank of Canada, eHomeday, Hong Kong Rating and Valuation Department, Nationwide, Milken Institute.

60

80

100

120

140

160

180

200

Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011

Index Q1 06=100

London Stockholm Shanghai

Toronto Hong Kong

Recovery still weak in countries suffering most from housing crisis Annual change in house prices, 2002-2011

Source: Scotiabank Group.

-20

-15

-10

-5

0

5

10

15

20

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Q1 11Q2

Percent

U.K.

United States

Spain

Ireland

Office market performance varied worldwide Office rent change in major cities, 2009-2010

Source: CB Richard Ellis.

31.828.5

25

8.7

-8.5 -7.6-12.5

-16.7-20

-10

0

10

20

30

40

Sao Paulo Hong Kong London New Delhi Madrid New York Dubai Tokyo

Percent

Asia led the worldwide recovery in the retail property market Annual change in retail space rent, 2010-2011

Source: CB Richard Ellis.

11.1

6.9

0.5

3.8

0

2

4

6

8

10

12

Asia Pacific Americas EMEA Global

Percent74.2

13.5 10.15.6

-1.0-100

1020304050607080

Hong Kong

Tokyo New York London Paris

Percent

*

* Europe, Middle East, Africa

20122011201020092008200720062005200420032002

2.0

1.5

1.0

0.5

0.0

Millions of units

Housing starts remain flat United States

Sources: U.S. Census Bureau, IHS Global Insight.

Single-family

Multi-family

20122011201020092008200720062005200420032002

60

40

20

0

-20

-40

-60


U.S. home sales picking up Single-family home sales

Sources: National Association of Realtors, Moody’s Analytics.

Existing

New

U.S. home prices begin to stabilize Median existing single-family home price

Sources: National Association of Realtors, Moody’s Analytics.

20122011201020092008200720062005200420032002

20

10

0

-10

-20


Foreclosure rates As percent of all loans, California vs. U.S., as of Q4 2011

Sources: Mortgage Bankers Association, Moody’s Analytics.

20102006200219981994

2.5

2.0

1.5

1.0

0.5

0.0

Percent

California

United States

U.S. household debt-to-income ratio is still high

Source: Federal Reserve.

0

20

40

60

80

100

120

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Percent

Long-term trend line

U.S. homeowners’ equity as a percent of their real estate assets 1950 to 2011

Source: Federal Reserve, Flow of Funds.

30

40

50

60

70

80

90

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010

Percent

Average, 1950 to Q2 2011: 64.8%

Long-term trendline

Q4 2011: 38.4%

GSEs suffered significant losses from 2008 to 2011

Sources: Fannie Mae, Freddie Mac, FHFA, Inside the GSEs.

4.4 5.9 3.9 8.1 5.0 6.3 4.1

-2.1

-58.7

-72.0

-14.0 -16.9

3.7 3.210.1

4.8 2.6 2.1 2.3 3.1

-50.1

-21.6 -14.0

-5.3

-80-70-60-50-40-30-20-10

01020

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Net income, US$ billions Fannie MaeFreddie Mac

Investment in UK commercial property

Source: Property Data, Savills

gdp growth continues to post moderate...

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