investment case for tpgi

Thomas Properties Group(Nasdaq: TPGI)

The Manual of Ideaswww.manualofideas.comDecember 1, 2011

Table of Contents• Overview• Business Model• Ownership and Management• Market Valuation• Intrinsic Value• Risk• Catalysts• Appendix I — Valuation Detail• Appendix II — Selected Property Data

2

Overview

What is TPGI?

• A real estate operating company that owns interests in property assets, as well as operates a fee-based business providing investment advisory, property management, leasing and development services.

• Headquartered in Los Angeles, TPGI owns interests in operating and development properties located in Austin, Houston, Los Angeles, Philadelphia, and the D.C. metro area.

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Brief History• 1996: Jim Thomas forms Thomas Properties as a

successor to Maguire Thomas Partners.

At the time, Thomas Properties owns interests in and manages nearly 2.0 million sq ft of commercial office space at Commerce Square in the Philadelphia Central Business District (CBD).

• 1999: Thomas adds investment advisory services for institutional investors as a core business strategy.

CalSTRS* relationship begins with Thomas Properties managing the 800 South Hope Street building in Los Angeles on behalf of CalSTRS.

* California State Teachers’ Retirement System.

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Brief History (continued)• 2002: Establishes the CalSTRS joint venture.

The JV buys 7.5+ million sq ft of wholly-owned office properties in 2003-07, including the City National Plaza in Los Angeles CBD.

• 2004: IPO — sells 14 million shares at $12.00/share.

Additional share sales follow in 2007 (9M shares @ $16), 2009 (5M shares @ $2.55), and in 2010 (4M shares @ $3.67-5.03).

• 2007: CalSTRS JV acquires a 25% interest in the Austin Portfolio JV.

The Portfolio comprises ten office properties with ~3.5 million sq ft in Austin, TX.

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TPGI Today• Operating Portfolio:

Owns interests in 23 operating properties with nearly 13 million sq ft, most of which is Class A* office space.

• Development Pipeline: Owns interests in five mixed-use developments as well as a completed, for-sale residential condo project in Philadelphia.

• Fee-Based Business: Provides asset/property management to the CalSTRS JV including the Austin Portfolio (19 properties), as well as property management and other services to third parties (five operating properties; three entitlement projects).

* Most prestigious buildings competing for premier office users with rents above average for the area (http://www.boma.org/Resources/classifications/Pages/default.aspx).

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Holding Company Structure

Operating Partnership(TPG L.P.)

Thomas Properties Group, Inc. (TPGI)

CEO Jim Thomas(and other L.P.’s)

Owns ~75%(TPGI consolidates TPG L.P)

Owns ~25%(reported under non-controlling

interests by TPGI)

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ConsolidatedOperations

- 3 operating properties- 3 development properties- For-sale condo project- Fee-based business

JV Operations*- CalSTRS JV (9 op. and 2

development properties)- Austin JV (10 op. properties)- 1 operating property

(separate JV)

* Reported as “investments in unconsolidated real estate entities” on TPGI’s balance sheet with related “equity in net income/(loss) of unconsolidated real estate entities” reported on TPGI’s income statement.

Business Model

Business Model

“Full-service” real estate company with four integrated areas of business focus:

1) Property operations2) Property acquisitions3) Property development4) Investment management

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Property Operations

Properties in which TPGI owns an interest in or manages the property. Revenue derives from:

• Rental income, parking income, and tenant reimbursements – Leases generally contain provisions that require tenants to reimburse TPGI for a portion of

property operating expenses and real estate related taxes associated with the property.

• Property management fees – For the CalSTRS JV properties, based on 2-3% of property gross revenue plus

reimbursement of personnel costs for certain of TPGI’s employees; paid monthly based on one-year agreements.

• Asset management fees – For the CalSTRS JV properties, based on net operating income for “stabilized” properties

and percentage of appraised value for other properties; paid monthly.

• Leasing commissions– Generally market-based leasing commission rates.

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Property Acquisitions

TPGI has historically acquired properties both for its own account and for third parties,* targeted at three categories of properties:

• “Core” — properties that are stabilized (occupancy at ~95%) at the time of purchase;

• “Core plus” — under-performing properties that can be brought to market potential through improved management;

• “Value-add” — properties, requiring redevelopment, repositioning and investment to achieve desired returns.

* Mainly on behalf of the CalSTRS joint venture (including a separate account relationship). When acting for third parties, TPGI typically earns acquisition fees ( paid at the time the property is acquired, as a percentage of the acquisition price, and/or for a period depending on property operating performance).

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Property Development

TPGI has experience in developing/redeveloping land for its own account and for third parties*:

• Own account — TPGI owns interests in development projects in Austin, Houston, Los Angeles, and Philadelphia totalling 300+ acres of land and nearly six million square feet of entitled space. Past developments include the Murano, a luxury residential condo tower in Philadelphia (completed in 2008; TPGI still owns interests in 70 units out of a total of 302 units)

• On behalf of third parties — TPGI is entitling third-party-owned land in Los Angeles for NBC Universal and Korean Air. Past developments include the headquarters building for the California Environmental Protection Agency in Sacramento (completed in 2000; TPGI continues to property-manage the building).

13* When acting for third parties, TPGI typically earns development fees (dependent, for example, on the progress of entitlements).

Investment management

TPGI advises institutional investors on property portfolios:

• TPGI is an SEC-registered investment advisor since 2000.

• CalSTRS — TPGI’s biggest mandate dates back to 1999. TPGI asset-manages two properties under a separate account relationship with CalSTRS in addition to asset-management services for properties within the CalSTRS joint venture (including the Austin Portfolio). TPG L.P. is the general partner and owns 25% of the limited partnership interests in the CalSTRS JV.

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New Strategy Announced in Mid-2011

Key parts of the updated strategy include:*

• Sell land and reduce development assets to ~10% of NAV.

• Sell non-core operating assets that have achieved their maximum value, are underperforming, or do not fit into the long-term plan.

• Redeploy sales proceeds in “high barrier to entry” markets with a focus on western U.S. cities and wholly-owned or controlled assets.

• Reduce leverage on the portfolio to a target of 50% loan-to-value.

• Convert to REIT status “at the appropriate time.”• Continue to focus on maximizing the portfolio’s recurring cash flow and NOI

growth, creating value by repositioning value-add properties, and continue capital relationships with institutional investors to acquire trophy quality office properties, with a goal of increasing ownership interests in ventures.

* Based on the company presentation from June 2011 (slide 20): http://ir.tpgre.com/phoenix.zhtml?c=178549&p=irol-irhome15

Ownership and

Management

Equity Structure

TPG L.P. — Ownership as of September 30, 2011:

1 Excludes ~0.4 million incentive partnership units.2 Each operating partnership unit issued in connection with the formation of the partnership at the time of TPGI's IPO in 2004 was paired with one share of limited voting stock. These shares of limited voting stock are not transferable separate from the limited partnership units they are paired with, and each operating partnership unit is redeemable together with one share of limited voting stock for cash, or, at TPGI's election, one share of common stock on a one-for-one basis. A unit and a share of common stock have essentially the same economic characteristics as they share equally in the total net income or loss and distributions of the operating partnership. Each share of limited voting stock entitles its holder to one vote on the election of directors, certain extraordinary transactions, including a merger or sale of TPGI, and amendments to the certificate of incorporation. However, shares of limited voting stock are not entitled to any regular or special dividend payments or other distributions.

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(in millions) Outstanding% of

TPG L.P.Votes per Share/Unit

Common stock (TPGI) 37.1 74.7% 1TPG L.P. operating partnership units (not listed) 1 12.3 25.3% 1 (limited) 2

Shares/Units Outstanding in TPG L.P. 49.4 100.0%

TPGI shareholders own ~75% of the operating partnership through which TPGI carries out all operations.

TPGI is the sole general partner in TPG L.P.

Units in TPG L.P. are redeemable for

common stock on a one-for-one basis.

Incentivized Management…TPGI / TPG L.P. — Major Holders (excludes dilutive securities) 1

1 Dilutive securities include restricted stock, phantom shares, stock options, and incentive partnership units. Based on the number of dilutive securities and TPGI’s share price performance, we estimate the dilution to be not material to the investment case.

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CEO Thomas owns 31% of the economics and has been buying shares recently.

Common % of % of

(in millions)Common

StockPartnership

Units&

UnitsCommon

StockPartnership

Units% of

TPG L.P.Chairman and CEO Jim Thomas 3.1 12.3 15.4 8% 100% 31%Other insiders 1.7 0.0 1.7 5% 0% 3%Total insiders 4.8 12.3 17.1 13% 100% 35%

Third Avenue Management 7.7 0.0 7.7 21% 0% 16%Teachers Advisors / TIAA-CREF 5.2 0.0 5.2 14% 0% 11%Lyle Weisman (filing group) 3.4 0.0 3.4 9% 0% 7%Jennison Associates 2.2 0.0 2.2 6% 0% 4%

…with Experience…• James Thomas (Chairman, President and CEO)

– 74 years old; founded TPGI’s predecessor in 1996 and led TPGI through its IPO in 2004. Prior to TPGI, Thomas was co-managing partner of Maguire Thomas Partners from 1983 until 1996. Thomas was also CEO and owner of the Sacramento Kings and the ARCO Arena from 1992 until 1999.

• John Sischo (Co-COO)– 54 years old; joined TPGI’s predecessor in 1998 as CFO after spending eight

years leading Bankers Trust's real estate practice in Los Angeles.

• Paul Rutter (Co-COO and General Counsel)– 57 years old; joined TPGI in 2008; previously at Maguire Properties since 2006

and a managing shareholder of law firm Gilchrist & Rutter from 1983 until 2006.

• Diana Laing (CFO)– 56 years old; joined TPGI in 2004; previously CFO at Triple Net Properties, New

Pacific Realty, Firstsource, Arden Realty, and Southwest Property Trust.

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…and Concern for Equity Value• New strategy announced in mid-2011 focuses on closing gap

between market value and NAV.

• $120,000 base salary of CEO Thomas.Thomas’ total compensation, including stock awards, was ~$2 million cumulative for the three years ended 2010.

• Less than $1 million of bonuses for top executives during 2008-10.

• Downsized equity offering in late 2009 due to a low share price of $2-3 at the time.

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Market Valuation

Share Price Since IPO…

22* ~25% more shares/units versus yearend 2007.

TPGI remains near 2009 lows despite only modest dilution*, a largely intact property base and fee business, recovery in credit markets, as well as operational progress (year-to-date NOI growth, 2010 property debt refinancings, asset sales).

…Belies A More Stable NAV

• Net asset value per share/unit is down ~10% since yearend 2005.

• While TPGI trades at a nearly 30% discount to NAV, the latter understates intrinsic value (see next slide), which implies even greater undervaluation.

231 Latest figure is based on TPGI’s balance sheet as of September 30, 2011.

(at period-end) 2005 2006 2007 2008 2009 2010 18-Nov-11TPGI share price $12.50 $16.01 $10.78 $2.59 $2.96 $4.22 $2.78Tangible book value per share/unit 1 $4.43 $4.34 $6.06 $5.55 $4.40 $4.02 $3.89Premium/(discount) to tangible book 182% 269% 78% -53% -33% 5% -29%

Market Valuation

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1 Includes ~0.4 million incentive partnership units.2 Pro-rata reflects consolidated financials plus TPG L.P.'s share of unconsolidated investments. Pro-rata debt excludes non-recourse debt controlled by a receiver.3 Including share of TPG L.P. unitholders.4 After-tax cash flow (Non-GAAP measure reported by the company). 5 Based on net operating income represented by the sum of i) NOI for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases. The ratio is based on an adjusted enterprise value to reflect TPG L.P.'s pro-rata share of currently committed leasing capital costs.

Shortcomings of TraditionalValuation Ratios Include:

- Properties generally stated at depreciated cost;- JV’s carried at only ~$10M;- Ignores value of fee business

- Ignores development properties- Ignores value of fee business

- Ignores development properties

- Ignores development properties- Ignores value of fee business

Traditional approaches do not properly reflect intrinsic value.

Property-level, sum-of-the-parts valuation is required !

Stock price (18-Nov-11) $2.78Common stock/TPG L.P. units (millions) 1 49.8 Market value (100% of TPG L.P.) $138 millionPlus: Pro-rata debt (30-Sep-11)2 $526 millionMinus: Pro-rata unrestricted cash (30-Sep-11) $52 million Implied Enterprise Value $612 million

Tangible book (30-Sep-11) 3 $194 millionImplied MV/TB 0.71x

Pro-rata sq ft of operating property 3.7 million sq ftImplied EV / sq ft ($) $164

TTM pro-rata ATCF 4 $12 millionImplied MV / ATCF (ann.) 11x

Oct-2011 annualized, pro-rata NOI 5 $53 millionImplied EV / NOI (ann.) 12x

Perception and RealityThe “Market” Is Focused On:

• High Debt – ~$475 million of pro-rata net debt

(nearly 4x market value).

• GAAP Losses– Consolidated net loss of $14 million

for the TTM to Sep-2011 (due to D&A).

• Capital Intensive and Commodity-Like Business

– TPGI lacks a competitive edge versus larger property companies.

• Exposed to U.S. Real Estate– Entire industry remains “out-of-

favor.”

What the “Market” Is Missing:

• Most Debt is Non-recourse– No corporate debt, little exposure to

recourse debts/other commitments.

• Cash Flow Positive– TTM pro-rata, after-tax cash flow of

$12 million (~10% yield).

• Large Fee Business and Experienced, “Owner”-CEO

– CalSTRS relationship and strong management are advantages.

• Focus on Class A Office– Key assets include “trophy” buildings

in Philadelphia and L.A. CBD’s.

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Intrinsic Value

Valuation Approach

• Sum-of-the-Parts:

– Operating properties (by property)– Development properties (by property)– Fee business– Net current assets

• Above structure based on TPGI’s net asset value workbook as of September 30, 2011http://ir.tpgre.com/phoenix.zhtml?c=178549&p=irol-NavWorkBook

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NAV Workbook: Base CaseBase case assumptions/outputs using management’s NAV Workbook:

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Up to 3x upside using

reasonable inputs in

management’s NAV workbook

structure

1 Stabilized net operating income assumes occupancy at 95%. For properties less than 95% leased, this represents the sum of i) current annualized net operating income, and ii) an upward adjustment to net operating income based on current market rent to achieve 95% occupancy. For properties that are more than 95% leased, this represents the sum of i) current annualized net operating income, and ii) a downward adjustment to net operating income based on average in place rent to achieve 95% occupancy.

Net Asset Value NAV per Share/UnitAsset Base Case Base Case Base Case

Operating Properties:Consolidated operating properties 8% $113 million $2.27TPG/CalSTRS JV operating properties 8% $93 million 1.872121 Market Street, Philadelphia, JV 8% $6 million 0.12Austin Portfolio JV operating properties 8% $4 million 0.08Subtotal - Operating Properties $216 million $4.34

Development Properties:Murano condominium project 100% $27 million $0.53

Pre-development projects 100% $90 million $1.80Subtotal - Development Properties $116 million $2.33

Fee Business:TTM net fee income: $21M 8x $169 million $3.39Subtotal - Fee Business $169 million $3.39

Consolidated Net Current Assets:Net current assets (9/30/11): $48M 100% $48 million $0.96Subtotal - Net Current Assets $48 million $0.96

Total Net Asset Value $549 million $11.02

TTM Net Fee Income

% of Book Carrying Value

Outputs

Applied to "Stabilized NOI" 1


% of Costs Incurred to Date

Multiple Applied to

Assumptions

Capitalization Rate

NAV Workbook: SensitivitiesScenario analysis using management’s NAV Workbook:

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Wide range of values, but still 100%+ upside

in a “bear case”

Asset Bear Base Bull Bear Base Bull Bear Base Bull

Operating Properties:Consolidated operating properties 10% 8% 6% $45 $113 $217 $0.90 $2.27 $4.35TPG/CalSTRS JV operating properties 10% 8% 6% 41 93 188 0.82 1.87 3.772121 Market Street, Philadelphia, JV 10% 8% 6% 3 6 11 0.06 0.12 0.21Austin Portfolio JV operating properties 10% 8% 6% 3 4 9 0.06 0.08 0.19Subtotal - Operating Properties $91 $216 $425 $1.84 $4.34 $8.52

Development Properties:Murano condominium project 50% 100% 150% $6 $27 $48 $0.12 $0.53 $0.97

Pre-development projects 50% 100% 150% $36 $90 $143 $0.73 $1.80 $2.87Subtotal - Development Properties $42 $116 $191 $0.85 $2.33 $3.84

Fee Business:TTM net fee income: $21M 6x 8x 10x $126 $169 $211 $2.54 $3.39 $4.23Subtotal - Fee Business $126 $169 $211 $2.54 $3.39 $4.23

Consolidated Net Current Assets:Net current assets (9/30/11): $48M 75% 100% 100% $36 $48 $48 $0.72 $0.96 $0.96Subtotal - Net Current Assets $36 $48 $48 $0.72 $0.96 $0.96

Total Net Asset Value $296 $549 $874 $5.95 $11.02 $17.55


Outputs

TTM Net Fee IncomeMultiple Applied to

% of Costs Incurred to Date

Assumptions Net Asset Value ($mn)


Capitalization RateApplied to "Stabilized NOI" 1

NAV Per Share/Unit

1 Stabilized net operating income assumes occupancy at 95%. For properties less than 95% leased, this represents the sum of i) current annualized net operating income, and ii) an upward adjustment to net operating income based on current market rent to achieve 95% occupancy. For properties that are more than 95% leased, this represents the sum of i) current annualized net operating income, and ii) a downward adjustment to net operating income based on average in place rent to achieve 95% occupancy.

NAV Workbook: Conclusions• Up to 3x upside from recent share price in a base case, using reasonable

inputs in management’s NAV workbook structure.• NAV is highly sensitive to small changes in inputs (especially capitalization

rates)…• …but still 100%+ upside even in a bear case.• Management’s NAV workbook is the right valuation approach, as it is based

on a property-level build-up of net asset value.• Includes value for high-margin, capital-light fee business.• Shortcomings include: no consideration for corporate G&A costs; only partial

adjustment to reflect Brandywine’s preferred equity investment in Commerce Square; and no explicit adjustments for corporate and other taxes.

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Management’s NAV workbook highlights the favorable, asymmetric return-to-risk profile of TPGI

Refining the Valuation

• Include G&A costs– Due to the assumption that TPGI continues under present leadership and

corporate structure (assumes no potential sale to a trade buyer).

• Reduce common equity value for Commerce Square property

– Due to a preferred equity investment by Brandywine Realty Trust (BDN) in 2010.

• Cross-check values versus comparable transactions and implied property “FCF yields”

• Other adjustments to reflect more conservative assumptions

• Tax considerations31

Refining the Valuation: G&A Costs

• G&A costs are corporate costs of TPGI and include, among others, compensation for executive management, other employees and directors; costs of being a public company; and rental expenses for leasing the corporate office space.

• We reduce the base case valuation by $1.67 to account for this “value drag.”

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* Includes employees involved in property management whose costs are reimbursed under relevant agreements with CalSTRS. Thesereimbursable property personnel costs are excluded from G&A.

2006-10 TTM to2006 2007 2008 2009 2010 Average Sep-2011

Corporate G&A ($mn) $17 $18 $17 $17 $14 $17 $16Assumed multiple 5xEstimated value drag from corporate G&A ($mn) -$83Estimated value drag from corporate G&A - $ per TPGI share -$1.67

Employ ees (y earend) * 127 180 176 159 158 160 n/a

Refining the Valuation: Commerce Square

• Single most valuable property, based on estimated value to TPGI

• Fully consolidated within TPGI’s financials

• Accounted within “consolidated operating properties” in the NAV calculation on slide 28*

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One and Two Commerce Square(Philadelphia CBD)

* Represents $119 million ($2.39 per share/unit) of the base case value of $113 million ($2.27 per share/unit). The value is greater than the total as the only other consolidated operating property -Four Points Centre - is assumed to have a negative value to TPGI.

Commerce Square: Key Stats

• “Trophy” property in Philadelphia’s Central Business District.• Tenants include PwC (~20% of sq ft at Two Commerce), E&Y, Grant

Thornton, Delaware Investments, Reliance Standard, IBM, Fiserv, Stevens & Young, Wolters Kluwer, McCormick Taylor and others.

• No material near-term lease expiries (PwC lease expires in 2014).

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Pro-forma Currently EstimatedOccupancy 2006-10 Oct-2011 NOI at 95% Committed Add'l Capital

Property Rentable as of Average Annualized Occupancy Leasing to Achieve(Year Built / Renovated) Description Square Feet 30-Sep-11 Occupancy NOI 1 ("Stabilized") Capital StabilizationOne Commerce Square(1987)

High-rise office; Philadelphia CBD

942,866 88% 93% $14 million $15 million $1 million $3 million

Tw o Commerce Square(1992)



1,896,142 87% 92% $28 million $31 million $2 million $8 million

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.

Commerce Square - Valuation

351 Defined as (TPG L.P.'s share of October 2011 annualized NOI less estimated annual interest payment) / (estimated value of the property to TPG L.P.). The interest payment includes a charge for a return on Brandywine's preferred equity, even though this is not payable in cash. BDN will contribute a total of $25 million of preferred equity to the partnerships, of which $5 million has been contributed as of September 30, 2011, with the balance to be contributed by December 31, 2012.

Implied Estimated Estimated Estimated Implied ImpliedCap Rate Estimated Asset Total Net TPG L.P. Value Value To "FCF Yield" Implied Years

Applied to Asset Value as of Asset Share To TPG L.P. Per On Oct-2011 Loan-to- To RepayStabilized NOI Value Per Sq Ft 30-Sep-11 Rate / Maturity Value of NAV TPG L.P. Share/Unit Ann. NOI 1 Value Debt

9.0% $169 million $179 $129 millionNon-recourse;5.7% / Jan-16

n/m 75% n/m n/m n/m 77% 23

9.0% $171 million $180 $107 millionNon-recourse;6.3% / May -13

n/m 75% n/m n/m n/m 63% 18

9.0% $340 million $179 $236 million $79 million * 75% $59 million $1.19 15% 69% 20

Outstanding Debt (100%)

Recourse?

Stated after the $25 million preferred equity investment by Brandywine (BDN) in 2010. In addition to a 9.25% accruing return on the preferred, BDN gets a 25% interest in the Commerce Square LP's. The $25 million is to be used for property improvements. As such, we have assumed that the investment is used for committed leasing costs of $1.7 million and incremental costs of $8.3 million, as estimated by management. This leaves

another ~$10 million to improve the competitive position of the property ($5 million has already been funded and spent as of September 30, 2011).

Approximates the purchase price per sq ft, on a stabilized basis, of nearby

Three Logan Square, which Brandywine (BDN) acquired in 2010.(Source: Brandywine CEO Sweeney on BDN’s

4Q'10 earnings call)

After adjustments, still worth nearly half of TPGI’s recent

market value.

Commerce Square: Conclusion

• Estimated contribution of $1.19 to NAV:– Reflects downward adjustment of $1.20 from NAV workbook base case

to account for:• Estimated negative value drag from Brandywine preferred equity investment;• Recent comparable transaction in Philadelphia CBD (implied asset value per square

foot of ~$180 is in-line with Brandywine’s acquisition of Three Logan Square (on a “stabilized” basis).

– Mortgage interest payments are manageable based on current NOI.• Commerce Square is solidly free cash flow positive.

– Implied LTV of our valuation is reasonable at ~70%. • ~20 years to repay debt, even allowing for a return on the preferred equity.

– No significant near-term lease expiries.– $25 million Brandywine investment more than enough to “stabilize” the

property, per management estimates.

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Refining the Valuation: Other Adjustments

• CalSTRS JV operating properties:– Cap rates fine-tuned to reflect 2010 mortgage refinancings at five of the nine

properties (excl. Austin Portfolio); resulting values are cross-checked with implied property “FCF yields” and LTVs.

– Results in an upward adjustment of $25 million ($0.49 per share/unit) relative to the base case valuation.

• Development properties:– Value revised downward by $16 million ($0.33 per share/unit) to reflect zero

value for the MetroStudio development in Los Angeles (only development with no entitlements to date).

• Fee business:– Value revised downward by $52 million ($1.04 per share/unit) to reflect a more

conservative “net contribution” based on the 2008-10 average net contribution.

• Net current assets:– Applied a 10% discount to the base case valuation in the NAV workbook.

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Refining the Valuation: Tax Considerations

• Minimal cash taxes paid in 2008-10. • Retains significant NOL’s.

– $23M of net operating loss carryforwards for federal purposes and $26M for state purposes at yearend 2010 (subject to varying expirations from 2018 through 2031). The net deferred tax asset is $15M as of September 30, 2011.

• NOL’s are not explicitly included in our valuation…• …neither are potential tax liabilities due on any asset

sales.

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Potential future taxes should be mitigated by available NOL’s, high D&A/G&A, and the high cost basis for

some properties (e.g. Austin Portfolio acquired in 2007)

Putting It All TogetherManagement’s NAV workbook revisited:

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Net Asset Value NAV per Share/Unit Net Asset Value NAV per Share/UnitAsset Base Case Base Case Adjusted AdjustedOperating Properties:Consolidated operating properties $113 million $2.27 $49 million $0.99TPG/CalSTRS JV operating properties $93 million 1.87 $118 million 2.362121 Market Street, Philadelphia, JV $6 million 0.12 $6 million 0.12Austin Portfolio JV operating properties $4 million 0.08 $4 million 0.08Subtotal - Operating Properties $216 million $4.34 $176 million $3.55Development Properties:Murano condominium project $27 million $0.53 $27 million $0.53Pre-development projects $90 million $1.80 $73 million $1.47Subtotal - Development Properties $116 million $2.33 $100 million $2.00

Subtotal - Fee Business $169 million $3.39 $117 million $2.35

Subtotal - Net Current Assets $48 million $0.96 $43 million $0.86

Subtotal - Corporate Overheads $0 million $0.00 -$83 million -$1.67

Total Net Asset Value $549 million $11.02 $353 million $7.09

Adjusted ValuationManagement's NAV Workbook

We estimate TPGI’s intrinsic value at $7 per share

(see detailed assumptions in the Appendix)

Thoughts On Intrinsic Value• Deleveraging benefits to the equity contribute to growth in intrinsic

value over time– Most of TPGI’s operating properties are FCF-positive and have sustainable

capital structures. This is reinforced by the refinancings of five CalSTRS JV properties in 2010 at average loan-to-values of ~50%, based on management.

• Hedge against potential inflation– Most of the property-level debt is at fixed interest rates, and some of it has

recently been refinanced at 5-6% for terms extending up to 2020. Given TPGI’s quality portfolio, including “trophy” properties at Commerce Square in Philadelphia and City National Plaza in Los Angeles, inflation-adjusted rent increases should be achievable.

• Significant fee-based platform relative to market value – TPGI has a remarkable asset and property management platform for a company

of its size. Building on the relationship with CalSTRS, TPGI may be able to secure other partners, including perhaps sovereign wealth funds, in the future. The high-margin, capital-light nature of the business makes it very valuable.

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Key Risks (and Mitigations)to Our Investment Case

• Execution risk tied to the new strategy– Asset sales may be realized at lower net values than estimated and/or may take longer to

close mitigated by quality assets and our already conservative value assumptions.– Capital allocation risk tied to potential acquisitions using existing cash or cash from sales

proceeds mitigated by an incentivized management team intent on increasing NAV.

• Continuation risk tied to CalSTRS relationship– TPGI’s fee income depends largely on the continuation of the CalSTRS JV and separate

account agreements. These may be terminated on short notice and depend on certain factors, including on the role and ownership interest of CEO Thomas this is mitigated by a succession plan developed in discussions with CalSTRS; indications that the relationship remains healthy (e.g. no onerous terms in recent capital structure changes at certain JV properties); and TPGI’s success in attracting third-party fee-based clients (e.g. NBC Universal, Korean Air, Lehman Brothers Holdings, city of Sacramento).

• Illiquidity risk tied to the shares– TPGI’s removal from the Russell 2000 Index in June 2011 exacerbated an already low

trading volume this is mitigated by a favorable, outsized return-to-risk profile of the shares.

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Low Risk of Permanent Capital Loss

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Estimated Valueto TPGI

Asset Per Share/Unit

Unrestricted pro-rata cash (30-Sep-11) $1.05

One/Tw o Commerce Square(Philadelphia CBD)

$1.19

City National Plaza (Los Angeles CBD)

$0.44

$2.68

Corporate net cash plus TPGI’s interest in two “trophy”

properties alone approximate recent market value.

TPGI has no corporate debt and minimal loss exposure to

property-level debts (most are non-recourse) and unfunded

commitments.

Catalysts

Closing the Discount to NAV…• Asset monetizations due to new strategy

– 6 operating properties are currently marketed for sale (2500 City West and Brookhollow in Houston, TX; Research Park Plaza and the retail space portion of Four Points Centre in Austin, TX; Centerpointe in Fairfax, VA; and 2121 Market Street in Philadelphia, PA). 2500 City West is “in escrow” as of November 2011.

– Remaining 70 Murano condos in Philadelphia, PA, are for sale. 12 units have been sold YTD through September 30, 2011.

– TPGI is “in discussions” to sell land parcels at various pre-developments including in Austin, Houston (land at 2500 City West is “in escrow” as of November 2011), Los Angeles (El Segundo; one parcel sold in October 2011) and Philadelphia.

• Conversion to REIT (dividend reintroduction) as part of new strategy– Once non-income producing assets have been sold, TPGI will be able to convert into a REIT,

which is management’s stated strategy. Most office REIT’s in the U.S. have recently traded at a premium to reported NAV. TPGI reintroduced a quarterly dividend of $0.015 per share ($0.06 annualized) in November. The dividend has significant potential to increase over time.

45

We estimate management’s new strategy should yield ~$2.70 per share/unit from cash proceeds of announced asset sales over the next 2-3 years

…in CEO Jim Thomas’ words:*• “Focused on the implementation of our new strategic plan and we’re

making steady progress in that regard.”

• “A priority under that plan is to dispose of operating properties that have reached their maximum value, are underperforming, or do not fit into our long-term plan.”

• “Another priority is to reduce the size of our non-income producing development pipeline to approximately 10% of net asset value.”

– Sold El Segundo parcel in October 2011– In the process of putting a land parcel in Philadelphia on the market – Ongoing discussions regarding land sales in Houston, Austin and El Segundo

46* Based on comments made during the company’s Q3 conference call on November 3, 2011.

Appendix I

Consolidated Operating Properties

- One Commerce Square (75%*)- Two Commerce Square (75%*)

- Four Points Centre (100%)

* Brandywine’s 25% share of Commerce Square is reported under non-controlling interests on TPGI’s balance sheet.

Commerce Square — Snapshot



Property Rentable as of Average Annualized Occupancy Leasing to Achieve(Year Built / Renovated) Description Square Feet 30-Sep-11 Occupancy NOI 1 ("Stabilized") Capital StabilizationOne Commerce Square(1987)



Tw o Commerce Square(1992)




Commerce Square — Valuation

50

1 Defined as (TPG L.P.'s share of October 2011 annualized NOI less estimated annual interest payment) / (estimated value of theproperty to TPG L.P.). The interest payment includes a charge for a return on Brandywine's preferred equity even though it is not in cash.


Applied to Asset Value as of Asset Share To TPG L.P. Per On Oct-2011 Loan-to- To RepayStabilized NOI Value Per Sq Ft 30-Sep-11 Rate / Maturity Value of NAV TPG L.P. Share/Unit Ann. NOI 1 Value Debt

9.0% $169 million $179 $129 millionNon-recourse;5.7% / Jan-16

n/m 75% n/m n/m n/m 77% 23

9.0% $171 million $180 $107 millionNon-recourse;6.3% / May -13

n/m 75% n/m n/m n/m 63% 18

9.0% $340 million $179 $236 million $79 million * 75% $59 million $1.19 15% 69% 20


Recourse?

* Stated after the $25 million preferred equity investment by Brandywine (BDN) in 2010. In addition to a 9.25% accruing return on the preferred, BDN gets a 25% interest in the Commerce Square LP's. The $25 million is to be used for property improvements. As such, we have assumed that the investment is used for committed leasing costs of $1.7 million and incremental costs of $8.3 million, as estimated by management. This leaves another ~$10 million to improve the competitive position of the property ($5 million has already been funded and spent as of September 30, 2011).

Approximates the purchase price per sq ft, on a stabilized basis, of nearby Three Logan Square,

which Brandywine (BDN) acquired in 2010.(Source: Brandywine CEO Sweeney on BDN’s 4Q'10 earnings call)

Worth nearly half of TPGI’s recent

market value.

Four Points Centre — Snapshot

51

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Excludes wholly-owned retail space with 6,600 rentable square feet. The retail project, which has no related debt outstanding, is contracted to sell. Also excluded is entitled, but undeveloped land at the location (see development properties).3 The property was completed only in 2008. Occupancy was 17% in 2009 and 18% in 2010.


Property Rentable as of Average Annualized Occupancy Leasing to Achieve(Year Built / Renovated) Description Square Feet 30-Sep-11 Occupancy NOI 1 ("Stabilized") Capital Stabilization

Four Points Centre 2

(2008)Suburban office;

Austin, TX192,062 29% n/m 3 $0 million $2 million $0 million $6 million

Four Points Centre — Valuation

52

1 Stated after currently committed and estimated incremental leasing capital costs to achieve stabilization (per management estimates).2 Defined as (TPG L.P.'s share of October 2011 annualized NOI less estimated annual interest payment) / (estimated value of theproperty to TPG L.P.).


Applied to Asset Value as of Asset Share To TPG L.P. Per on Current Loan-to- To RepayStabilized NOI Value 1 Per Sq Ft 30-Sep-11 Rate / Maturity Value of NAV TPG L.P. Share/Unit NOI 2 Value Debt

9.0% $13 million $70 $23 million

Recourse ov er 47% of debt

(~$11M);L+3.5% / Jul-12

-$10 million 100% -$10 million -$0.20 n/m 174% n/m


Recourse?

Negative NAV due to debt exceeding estimated asset value. TPGI has liability as the lender has recourse on

~47% of the debt. Maximum liability is $11 million.

Operating PropertiesHeld in

Joint Ventures(2121 Market Street JV)

2121 Market Street — Snapshot

54

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 The occupancy figures represent the retail/office tenants only, and excludes the 168 residential units at the property. The property includes 133k sq ft of residential and 21k sq ft of retail space in total.



2121 Market Street(2001)

Residential/retail;Philadelphia

154,959 100% 2 100% 2 $2 million $2 million $0 million $0 million

2121 Market Street — Valuation

55




8.0% $29 million $190 $18 millionRecourse $3M

max imum;6.1% / Jan-33

$11 million 50% $6 million $0.12 12% 61% 13


Recourse?

Property is activelymarketed for sale based on management’s new strategy


CalSTRS JV*(9 properties**)

* TPG L.P. is the general partner and owns 25% of the limited partnership interests in TPG/CalSTRS, LLC, a joint venture with the California State Teachers’ Retirement System. This gives TPG an indirect 25% interest in the common equity of properties owned by TPG/CalSTRS, except for City National Plaza of which TPG owns 8%. TPG/CalSTRS was formed in December 2002, with most of the properties acquired in 2004/05 (City National Plaza was acquired in 2003). TPG acts as the managing member of TPG/CalSTRS.

** Excludes three Pennsylvania-based properties with defaulted loans. As the loans are non-recourse to both TPGI/TPG L.P. and the TPG/CalSTRS JV, and the entities do not anticipate making any further payments or equity contributions, these properties are excluded here.

City National Plaza — Snapshot

57




City National Plaza(1973)

High-rise office; Los Angeles CBD


City National Plaza — Valuation

58




7.0% $715 million $286 $370 million

$350M mortgage: non-rec.; 5.9% / Jul-20

$20M note: non-rec.; 5.8% / Jul-12

$345 million 8% $27 million $0.55 7% 52% 14


Recourse?

LBA Realty bought nearby 550 South Hope at ~$280/sq ft in a distressed deal

in May 2011.

KBS Realty bought nearby 445 Figueroa St. at ~$330/sq ft in

September 2010.

Mortgage refinanced in 2010, extending the maturity to 2020 at a

5.9% fixed interest rate

City West Place — Snapshot

59

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Excludes entitled, but undeveloped land at the location (see development properties).



City West Place 2

(1993/1998/2001)

Suburban office; Westchase,

Houston1,473,020 99% 98% $25 million $24 million $0 million $0 million



7.0% $344 million $234 $216M

Buildings I & II ($121M): non-rec.; 6.2% / Jul-16;Buildings III & IV ($95M): non-rec.; 5.0% / Mar-20

$129 million 25% $32 million $0.65 10% 63% 17


Recourse?

City West Place — Valuation

60


Refinanced buildings III & IV in October 2010 at a "50% loan to

value," which implies a ~$260/sq ft asset value.

2nd most valuable operating property to TPGI, based on

our estimates

San Felipe Plaza — Snapshot

61




San Felipe Plaza(1984)

High-rise office; San Felipe/Voss,

Houston980,472 88% 91% $14 million $16 million $2 million $3 million



7.0% $222 million $226 $110MNon-recourse;4.8% / Dec-18

$112 million 25% $28 million $0.56 8% 50% 12


Recourse?

San Felipe Plaza — Valuation

62


Refinanced in July 2010 at an "average loan to value of

50%" (including concurrent refinancings at 2500 City

West / Brookhollow)

2500 City West — Snapshot

63



2500 City West 2

(1982)

Suburban office; Westchase,

Houston578,284 94% 94% $9 million $10 million $2 million $1 million

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Excludes entitled, but undeveloped land at the location (see development properties).



7.0% $134 million $231 $65MNon-recourse;5.5% / Dec-19

$69 million 25% $17 million $0.35 8% 49% 11


Recourse?

2500 City West — Valuation

64


Refinanced in July 2010 at an "average loan to value of

50%" (including concurrent refinancings at San Felipe /

Brookhollow)


Brookhollow I-III — Snapshot

65

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 The low occupancy is due to a lack of tenants at building #I, which needs to be redeveloped.



Brookhollow I-III(I:'72/ II:'79 / III:'81)

Suburban office; Northw est,

Houston806,004 66.6% 2 64% 2 $5 million $9 million $0 million $20 million



9.0% $77 million $95 $38MNon-recourse;

L+2.6% / Jul-13$39 million 25% $10 million $0.19 11% 50% 9


Recourse?

Brookhollow I-III — Valuation

66


Low value per square foot relative to other Houston properties is warranted due to need to redevelop building I (no

tenants currently)

Refinanced in July 2010 at an "average loan to value of 50%" (including concurrent refinancings at San Felipe / 2500 City

West )


Centerpointe I&II — Snapshot

67

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Occupancy is an average for 2007-10 as the building was acquired in 2007.



Centerpointe I&II(I:1987 / II:1989)

Suburban office; Fairfax (w ithin

D.C. metro area)421,859 92% 71% 2 $9 million $9 million $1 million $1 million



9.0% $102 million $241 $66M

$55M mortgage: non-rec.; L+0.6% / Feb-12$11M mezz loan: non-rec.; L+3.3% / Feb-12

$0 million

common:25%

preferred: 5%

$2 million $0.04 n/m 65% 16


Recourse?

Centerpointe I&II — Valuation

68


The NAV estimate is stated after allocations to preferred equity.

The $2 million ($0.04 per share/unit) of estimated value reflects a 5% preferred

equity interest.


Fair Oaks Plaza — Snapshot

69



Fair Oaks Plaza(1986)

Suburban office; Fairfax (w ithin

D.C. metro area)179,688 89% 85% 2 $3 million $3 million $1 million $0 million

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Occupancy is an average for 2007-10 as the building was acquired in 2007.



9.0% $37 million $208 $44MNon-recourse;5.5% / Feb-17

-$7 million 25% $0 million $0.00 n/m 118% 57


Recourse?

Fair Oaks Plaza — Valuation

70


Negative NAV due to debt exceeding estimated asset value. TPGI has no liability, however, as the mortgage is

non-recourse to TPGI, TPG L.P. and the TPG/CalSTRS JV.

Reflections I —Snapshot & Valuation

71

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Long-time tenant Raytheon Company left in 2010.



Reflections I(2000)

Suburban office; Reston (w ithin

D.C. metro area)123,546 0% 2 80% 2 $0 million $3 million $0 million $8 million



9.0% $21 million $173 $21MNon-recourse;5.2% / Apr-15

$0 million 25% $0 million $0.00 n/m 99% n/m


Recourse?


Zero NAV due to debt approximating estimated asset value. The mortgage is non-recourse.

Reflections II —Snapshot & Valuation

72

1 Represents the sum of i) net operating income for October 2011, annualized; and ii) the annual straight-line rent adjustment for existing leases.2 Solely occupied by the Bureau of Indian Affairs, who rents on a month-to-month basis after the lease expired in 2010.




Reflections II(1984/2001)

Suburban office; Reston (w ithin

D.C. metro area)64,253 100% 2 100% 2 $1 million $1 million $0 million $0 million



9.0% $14 million $216 $9MNon-recourse;5.2% / Apr-15

$5 million 25% $1 million $0.03 17% 63% 10


Recourse?


Austin Portfolio JV*(10 properties)

* The CalSTRS JV is the general partner and holds a 25% interest in the Austin Portfolio, which includes ten properties in Austin, Texas. TPG's indirect interest in the ten Austin properties is 6.25%. The Austin Portfolio is a joint venture among the CalSTRS JV, an affiliate of Lehman Brothers (which owns 50%), and another institutional investor (which owns 25%). The Austin Portfolio was acquired from Blackstone in 2007.

Austin Portfolio — Snapshot

74

Sq Ft % Leased TPG L.P.Property Type Location (in 000s) 30-Sep-11 EquityFrost Bank Tower High-rise office Austin CBD* 535 95% 6.25%One Congress Plaza High-rise office Austin CBD 518 89% 6.25%One American Center High-rise office Austin CBD 504 65% 6.25%300 West 6th Street High-rise office Austin CBD 454 81% 6.25%San Jacinto Center High-rise office Austin CBD 410 80% 6.25%

Research Park Plaza I & II Suburban office Austin 272 96% 6.25%Park Centre Suburban office Austin 203 83% 6.25%Stonebridge Plaza II Suburban office Austin 193 90% 6.25%Westech 360 I-IV Suburban office Austin 176 63% 6.25%Great Hills Plaza Suburban office Austin 139 79% 6.25%Total (10 properties) 3,405 83% 6.25%

marketed for sale

Austin Portfolio — Valuation• Attribute only $4 million of value to TPGI ($0.08 per share/unit) in

our valuation.– This only reflects TPG L.P.’s share of the priority financing, with zero value attributed to TPG

L.P.’s 6.25% equity stake.– The CalSTRS JV owns 25% of the Austin Portfolio JV, giving TPG L.P. a 6.25% stake in each

of the 10 properties. – The Portfolio owners have committed to fund $60 million of priority financing (~$52 million

funded as of 30-Sep-11), which is senior to the $122 million Austin Portfolio bank term loan. TPG L.P.'s share of the funded amount is ~$4 million including interest.

– As no economic benefit accrues to the equity unless the cap rate applied to the properties' current NOI is <6%, our valuation only reflects TPG L.P.'s share of the priority financing, which should be recoverable, even in a bear case.

• Austin Portfolio mortgages and bank term loan are non-recourse.

75

Our valuation of the Austin Portfolio leaves little downside, and some potential upside, to TPGI in case the Austin Portfolio does have equity value.

DevelopmentProperties

Murano — Valuation

77

Estimated EstimatedAsset Total Net TPG

Property Value as of Asset Value L.P. in per(Year Built) (100%) 9/30/11 Rate / Maturity (100%) Share $ Millions Share/Unit

Murano(2008)

$46M $17MRecourse under certain

ev ents; L+3.8% / Dec-13(refinanced in Jun-11)

$29M 73% $26M $0.53

For-sale residential condos in Philadelphia; as of 30-Sep-11,

232 units hav e been sold out of a total of 302 units

Outstanding Debt (100%) Estimated NAV

Recourse?to TPG L.P.

Description

Our asset value reflects carrying value and implies $507 per sq ft of the remaining 70 units to be sold.

This approximates the average price of 232 units sold to date and is a ~40% discount to the average list price of remaining units ($859 per sq ft, 66 of the

units are on high-rise floors with superior views).

Estimated net value to TPG L.P. reflects contractual JV distribution priorities, which result in more value

to TPG L.P than its 73% ownership implies.

For-Sale Luxury Residential Condos in Center City, Philadelphia, PA

Pre-Developments — Valuation

781 Excludes MetroStudio, a 14 acre parcel targeted for entitlements covering 1.5 million square feet for the needs of NBC Universal. As entitlements are still pending (and the L.A. MTA owns the land), we have not included this development in our valuation table.

Estimated EstimatedAsset Total Net TPG

Property Value as of Asset Value L.P. in per(Year Built) (100%) 9/30/11 Rate / Maturity (100%) Share $ Millions Share/UnitPre-development Assets: 1

Campus El Segundo $60M $17MFull recourse;

L+3.8% / Jul-12$43M 100% $43M $0.86

Four Points Centre $18M $0 n/m $18M 100% $18M $0.36

2100 JFK Blv d $5M $0 n/m $5M 100% $5M $0.10

City West Place $21M $0 n/m $21M 25% $5M $0.11

2500 City West $7M $0 n/m $7M 25% $2M $0.04

Outstanding Debt (100%) Estimated NAV

Recourse?to TPG L.P.

Description

26 acres located half a mile south of L.A. Int'l Airport; 1.8M

sq ft of the mix ed-use dev elopment is entitled

252 acres in suburban Austin; 1.7M sq ft of the mix ed-use

dev elopment is entitled

0.7 acres in Philadelphia CBD; 0.4M sq ft is entitled25 acres in Houston; 1.5M sq ft is entitled 6 acres in Houston; 0.5M sq ft is entitled

Based on estimated asset values reflecting

costs to date.

All land is marketed for sale

El Segundo —Recent Parcel Sale a Positive

• 26 acres located half a mile south of Los Angeles Int'l Airport.• 1.8 million sq ft of the mixed-use development is entitled.• TPGI sold 2.15 acres of land (~90k of entitled sq ft) in October

2011.• October sale implies a valuation of $48 per sq ft.• Our valuation, which only reflects costs incurred, implies a

~30% discount to the October transaction price.• The buyer of the 2.15 acres, OTO Development, LLC, intends

to begin construction immediately on a Hyatt Place hotel with approximately 143 rooms this should make the rest of the land incrementally more attractive

79

FeeBusiness

Fee Business — SnapshotTPGI earns high-margin fees from investment advisory, property management, leasing and development services provided to:

1) CalSTRS and Austin Portfolio JVs (~80% of total fee revenue in 1H'11);

2) Two CalSTRS operating properties outside of the CalSTRS JV (separate account relationship);

3) Three third-party operating properties (including two properties signed in 2011);

4) Two third-party development projects (Universal Village and Wilshire Grand projects in L.A.)

811 The reimbursement of property personnel costs is excluded.

2006-10 TTM to($ in millions) 2006 2007 2008 2009 2010 Average Sep-2011Rev enue from inv estment adv isory , management, leasing and dev elopment serv ices 1

$20 $31 $25 $24 $24 $25 $29

Less: Ex penses from inv estment adv isory , management, leasing and dev elopment serv ices 1

-$7 -$13 -$15 -$12 -$12 -$12 -$14

Net contribution ($mn) $12 $18 $11 $12 $12 $13 $15

Fee Business — Valuation

82

2008-10($ in millions) AverageAdjusted net contribution (2008-10 average only) $12Assumed multiple 10xEstimated value of fee business ($mn) $117Estimated value of fee business - $ per TPGI share/unit $2.35

TPGI’s investment advisory and property management platform is highly valuable, but may be ignored by the market.

The business is high-margin, capital-light, and scalable.

Appendix II

Occupancy

84

Percent Leasedas of Period-end 2006 2007 2008 2009 2010

2006-10 Average 9/30/11 Comments 1

Consolidated Operating Properties:One Commerce Square 94% 95% 93% 93% 89% 93% 88% Considered stabilized as of yearend 2010Tw o Commerce Square 99% 99% 86% 87% 85% 91% 86% Projected to stabilize in 2012, in-line w ith the projection as of yearend 2008Four Points Centre (completed in 2008) n/m n/m n/m 17% 18% n/m 29% Projected to stabilize in 2012, tw o years behind yearend 2008 projection

Joint Venture Operating Properties:2121 Market Street 2 100% 100% 100% 100% 100% 100% 100% Considered stabilized as of yearend 2010

TPG/CalSTRS JV (formed in 2002):2500 City West 93% 96% 99% 92% 90% 94% 94% Considered stabilized as of yearend 2010City West Place 96% 98% 99% 99% 99% 98% 99% Considered stabilized as of yearend 2010San Felipe Plaza 87% 98% 96% 88% 87% 91% 88% Considered stabilized as of yearend 2010Centerpointe I&II (acquired in 2007) n/a 87% 53% 54% 92% 71% 92% Projected to stabilize in 2011, in-line w ith the projection as of yearend 2008City National Plaza 72% 81% 82% 83% 84% 81% 88% Projected to stabilize in 2012, one year behind yearend 2008 projectionFair Oaks Plaza (acquired in 2007) n/a 86% 84% 84% 87% 85% 89% Projected to stabilize in 2012Reflections I 100% 100% 100% 100% 0% 80% 0% 3 Projected to stabilize in 2012Reflections II 4 100% 100% 100% 100% 100% 100% 100% Projected to stabilize in 2012Brookhollow I-III 5 56% 67% 64% 68% 66% 64% 67% Projected to stabilize in 2013, tw o years behind yearend 2008 projection

Austin Portfolio JV (TPG/CalSTRS acquired a 25% interest in 2007):Research Park Plaza I&II n/a 89% 100% 97% 91% 94% 96% Considered stabilized as of yearend 2010Stonebridge Plaza II n/a 98% 98% 96% 96% 97% 90% Considered stabilized as of yearend 2010300 West 6th Street n/a 85% 89% 88% 87% 87% 81% Projected to stabilize in 2012, tw o years behind yearend 2008 projectionFrost Bank Tow er n/a 85% 89% 88% 88% 87% 95% Projected to stabilize in 2012, tw o years behind yearend 2008 projectionGreat Hills Plaza n/a 55% 74% 65% 69% 66% 79% Projected to stabilize in 2012, in-line w ith the projection as of yearend 2008One Congress Plaza n/a 85% 89% 87% 89% 88% 89% Projected to stabilize in 2012, one year behind yearend 2008 projectionSan Jacinto Center n/a 92% 99% 76% 87% 88% 80% Projected to stabilize in 2012Westech 360 I-IV n/a 80% 57% 50% 48% 59% 63% Projected to stabilize in 2012, one year behind yearend 2008 projectionOne American Center n/a 80% 85% 78% 77% 80% 65% Projected to stabilize in 2013, tw o years behind yearend 2008 projectionPark Centre n/a 90% 88% 83% 84% 86% 83% Projected to stabilize in 2013, tw o years behind yearend 2008 projection

1 Based on the yearend 2010 supplemental report. Occupancy at stabilization is expected to be 95%. Certain properties that have occupancy greater than 95% as of December 31, 2010, are not considered stabilized due to upcoming tenant vacancies not yet reflected. Certain properties that have occupancy less than 95% as of December 31, 2010, are considered stabilized as they were previously stabilized, and their return to stabilization is expected in the near term and/or management does not expect to incur significant capital expenditures to re-stabilize.2 The occupancy figures represent the retail/office tenants only, and excludes the 168 residential units at the property.3 Long-time tenant Raytheon Company left in 2010.4 Solely occupied by the Department of the Interior (National Business Center), Bureau of Indian Affairs. The lease expired in 2010, but the tenant continues to occupy the space on a month-to-month basis.5 The low occupancy is due to a lack of tenants at building #I, which needs to be redeveloped.

Lease ExpirationsTPGI share of consolidated and unconsolidated properties' lease expirations as of September 30, 2011: 1

85

1 Excludes properties sold subject to mortgage foreclosure subsequent to quarter-end. The table presents a summary of lease expirations for leases in place at September 30, 2011, plus available space. This table assumes that none of the tenants exercise renewal options or early termination rights, if any, at or prior to the scheduled expirations. TPGI does not disclose expiring leases by individual property.

Rentable Square Percentage ofFeet of Expiring Aggregate

Year Leases Square FeetVacant 606,833 16%2011 118,908 3%2012 119,225 3%2013 424,434 11%2014 320,437 9%2015 509,238 14%2016 179,941 5%2017 362,310 10%2018 160,058 4%2019 79,232 2%2020 399,317 11%Thereafter 460,049 12%Total 3,739,982 100%

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All information provided in this presentation is for informational purposes only and should not be deemed as investment advice or a recommendation to purchase or sell any specific security. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any data presented. In addition, there can be no guarantee that any projection, forecast or opinion in this presentation will be realized. This presentation is confidential and may not be reproduced without prior written permission from BeyondProxy LLC.

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investment case for tpgi

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