Ben Loughry Forecast 2010

Economic & Commercial Real Estate Outlook
1
Integra Realty Resources DFW
Peace is that brief,
glorious moment in history
when everybody stands around,
and the smart people are reloading.
2
Economic Conditions
and the
Capital Markets
3
GDP Declines Appear to Have Ended
REAL GDP OVER THE PAST DECADE
14,000
13,500
Billions in 2005 Dollars
13,000
12,500
12,000
11,500
11,000
10,500
10,000
Q 0
Q 0
Q 1
Q 1
Q 2
Q 2
Q 3
Q 3
Q 4
Q 4
Q 5
Q 5
Q 6
Q 6
Q 7
Q 7
Q 8
Q 8
Q 9
9
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
1
3
3
1
3
1
3
1
3
Q
4
Future of US Dollar is Uncertain
US Dollar vs. Major Currencies
JPY/$ AUD/$ CHF/$ EUR/$ GBP/$
40%
30% Japanese Yen British Pound
20%
10%
Change
0%
Australian
-10% Dollar
-20%
-30%
-40%
Euro
0
9
'0
'0
'0
'0
'0
'0
'0
'0
'0
'0
Swiss
franc
5
National Employment Losses Increased
6
Local Employment Rates
66,800 66,400
1%
VS. 9% Decline
Decline
Dallas- Plano-Irving
2008 2009
Fort Worth- Arlington
7
Consumer Confidence is Up Slightly in December
Consumer Confidence Board
Dec. 52.9
Seasonally adjusted
1985=100
Source: The Conference Board

2008 2009
8
9
Integra Realty Resources
Integra Realty Resources DFW 9
Biggest Worry:
Home Foreclosures
10
U.S. Home Prices Ended Free Fall
S&P/Case-Shiller Home Price Index
20-City Composite
220
200
180
160
140
120
100
0
9
0
0
n-
n-
n-
n-
n-
n-
n-
n-
n-
n-
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
Ja
11
Ja
n-
10
15
20
25
30
0
5
0
M 4
ay
-0
Se 4
p-
0
Ja 4
n-
0
M 5
ay
-0

Se 5
p-
0
Ja 5
n-
0
M 6
ay
-0
Se 6
p-
0
Ja 6
n-
0
M 7
ay
-0
Se 7
p-
07
Ja
n-
0
FDIC Bank Failures by Month
M 8
ay
-0
Se 8
p-
08
Ja
n-
0
M 9
ay
-0
Se 9
p-
09
12
Bank Failures Reached Historic Levels
Commercial Real Estate Markets
13
Aggressive Use of Leverage
Has Been the Primary Catalyst
of the Downturn
14
1st Lien 80/85%
Mezzanine 10/15%
True Equity 0/5/10%
15
No Room for Error
The Bertelsmann Building
1540 Broadway New York, NY
February 2007 Sale

Property Size - 906,287 SF
Sale Price - $967.5 Million
Price/SF - $1,067.60 per square foot
Buyer - Macklowe Properties
February 2009 Sale

Property Size - 906,287 SF
Sale Price - $355 Million
Price/SF - $391.71 per square foot
Buyer - CBRE Investors
Decrease in Value – 63.0%!

16
CMBS Market Is Yet to Return
$300
230
$225
203
Billions
169
$150
93
74 74 78
$75 57
49 52
37
26
16 12
2
$0
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
17
Maturities Loom –
Approx. $300 million Annually
COMMERCIAL MORTGAGE MATURITIES
$350
Banks CMBS Life Companies Other
$300
$250
Billions
$200
$150
$100
$50
$0
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
14
16
18
20
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
Source: Foresight Analytics, LLC
18
Cap Rates Needed for
Aggressive Buying
Property Type Top-Tier Mid-Tier Low-Tier
Apartment 8.2% 9.3% 11.0%
Industrial 9.0% 10.2% 12.2%
Office- Downtown 9.0% 10.0% 11.6%
Retail- grocery/drug center 9.1% 10.2% 11.7%
19
20
Industrial
Top Markets By Vacancy
1. Los Angeles, CA 4.92%
2. Orange County, CA 6.58%
3. Seattle, WA 6.70%
4. Long Island, NY 4.3%
Local Market
Fort Worth, TX 10.72%
Bottom Three Markets

54. Austin, TX 18.40%
55. Boston, MA 24.76%
56. Louisville, KY 26.01%
21
U.S. Industrial Market Pricing
Moodys/REAL Commercial Property Price Index - Industrial
2.0
1.8
Index
1.5
1.3
1.0
Q4 '00
Q2 '01
Q4 '01
Q2 '02
Q4 '02
Q2 '03
Q4 '03
Q2 '04
Q4 '04
Q2 '05
Q4 '05
Q2 '06
Q4 '06
Q2 '07
Q4 '07
Q2 '08
Q4 '08
Q2 '09
22
Despite increases, Industrial cap rates are
not yet back to the levels of ten years ago
12
Manufacturing
10
Bulk
Percentage
6 Office/Warehouse
4
R&D
2
0 10 Year Treasury
(September Avg.)
93
95
97
99
01
03
05
07
09
1
-9
19
19
19
19
20
20
20
20
20
10-Year Treasury
90
(Annual Avg.)
Year
23
24
Biggest Rent Declines in 2009
San Jose, CA -6.7%
Seattle -6.3
San Francisco -5.9
Las Vegas -5.7
New York -5.6
Los Angeles -5.0
Orange County, CA -4.9
Oakland –East Bay -4.9
25
Apartment
Top Three Markets By Vacancy
1. San Francisco, CA 3.59%%
2. Syracuse 3.94%
3. New York City 4.80%
Local Market
Fort Worth, TX 10.42%
54. Phoenix 12.97%
55. Naples/Ft. Myers 13.37%
56. Providence 14.11%
26
U.S. Apartment Market Pricing
Moodys/REAL Commercial Property Price Index - Apartments
2.0
1.8
Index
1.5
1.3
1.0
Q4 '00
Q2 '01
Q4 '01
Q2 '02
Q4 '02
Q2 '03
Q4 '03
Q2 '04
Q4 '04
Q2 '05
Q4 '05
Q2 '06
Q4 '06
Q2 '07
Q4 '07
Q2 '08
Q4 '08
Q2 '09
27
Apartment Cap Rates Up
Almost 150 bps From Lows,
But Still Below Historical Averages
12
10
Urban Multi-Family
8
Suburban Multi-Family
Percentage
6
10 Year Treasury
(September Avg.)
4
10-Year Treasury
(Annual Avg.)
2
0
93
95
97
99
01
03
05
07
09
1
-9
19
19
19
19
20
20
20
20
20
90
Year 28
Office Market Cycle
29
Office – CBD
1. Charlotte, NC 6.43%
2. Boise, ID 8.10%
3. Memphis, TN 8.70%
Local Market
Fort Worth, TX 10.70%*

54. San Jose, CA 23.90%
55. Detroit, MI 25.00%
56. Dayton, OH 26.00%
30
Office Rents
Average effective
rent for the 4th
quarter 2009:
vs. Fort Worth $24-25

Source: Reis.com
31
U.S. Office Market Pricing
Moodys/REAL Commercial Property Price Index - Office
2.0
1.8
Index
1.5
1.3
1.0
Q4 '00
Q2 '01
Q4 '01
Q2 '02
Q4 '02
Q2 '03
Q4 '03
Q2 '04
Q4 '04
Q2 '05
Q4 '05
Q2 '06
Q4 '06
Q2 '07
Q4 '07
Q2 '08
Q4 '08
Q2 '09
32
Office Cap Rates On the Rise, But
Still Below 2003 Levels
12
10 Office CBD
Percentage
8
6 Office SUB
4
10 Year Treasury
2 (September Avg.)
0 10-Year Treasury
(Annual Avg.)
93
95
97
99
01
03
05
07
09
1
-9
19
19
19
19
20
20
20
20
20
90
Year
33
Retail Market Cycle
34
Retail
1. San Francisco, CA 3.08%
2. Los Angeles, CA 4.87%
3. San Jose, CA 5.03%
Local Market…
Fort Worth, TX 8.61 %
54. Providence, RI 17.00%
55. Dayton, OH 17.30%
56. Detroit, MI 17.35%
35
U.S. Retail Market Pricing
Moodys/REAL Commercial Property Price Index - Retail
2.0
1.8
Index
1.5
1.3
1.0
Q4 '00
Q2 '01
Q4 '01
Q2 '02
Q4 '02
Q2 '03
Q4 '03
Q2 '04
Q4 '04
Q2 '05
Q4 '05
Q2 '06
Q4 '06
Q2 '07
Q4 '07
Q2 '08
Q4 '08
Q2 '09
36
Despite Upward Movement, Retail Cap
Rates Not to Levels Prior to 2004
12
Regional Mall
10
Percentage
8 Community Mall
6
4 Neighborhood Strip
2
10 Year Treasury
0 (September Avg.)
10-Year Treasury
1
93
95
97
99
01
03
05
07
-9
19
19
19
19
20
20
20
20
90
(Annual Avg.)
Year
37
Retail Rally
38
Decent Christmas for Most Retailers
December Sales:
9.9% 8.6%
7.4% 4.5%
1.8% 0.7%
9.2% 3.8%
39
Secondary Property Types
• Medical Office
• Lodging
• Senior Housing
• Gaming
• Self-Storage
40
Good News!
41
Texas Growth Rate Remains
Highest in U.S.
42
DFW Area Unemployment Rate
43
OIL,
Black Gold
44
Integra
Integra Realty
Realty Resources DFW
Resources 44
2008-2009 Fort Worth Highlights
45
1. Q-Edge
- Leased 365,000 sq.ft. at the Alliance Global Logistics Hub

as its new strategic assembly and distribution center.
- Bringing in 1,400 direct or indirect jobs
- Economic impact expected to be $700 million for the
region over the next decade
46
2. Vetoquinol
-Leased 31,000 sq.ft. at the CentrePort Business

Park as its newest call center
-Bringing 250 jobs with a $7 million capital
investment & $7.5 million in annual payroll
3. DT Credit Corporation
- Chose Fort Worth as New Headquarters
- Bringing 100 jobs to our community
47
4. Coaire Corporation
• Selected Fort Worth to serve as its central and
Midwest distribution center and leased 64,000
sq.ft. at the Northern Crossing Business Park
• Coaire will have over 75 jobs in 2010
48
New Cowboys Stadium Opens
49
Home Construction Rising
Dallas- Fort Worth annual total of
Single-family home starts:
50
Berkshire Hathaway acquires BNSF
51
Record Season For Horned Frogs
52
Recognition!
53
National Recognition
• Forbes Magazine name Fort Worth/Arlington as the
most cost-efficient region in which to live
• The Milken Institute Best Performing Cities Index

named Fort Worth/Arlington area sub-market as the
12th best*
• Newgeography named us 4th best place for job

growth
54
• Relocation.com recognized FW as one of the
best cites for a fresh start
• Builder Magazine names the city as the 3rd

healthiest metropolitan area for housing
• The Kosmont-Rose Institute 2009 Cost of

Doing Business Survey listed FW as one of the
top 10 least expensive U.S. cites in which to live
55
Summary of the Commercial
Real Estate Markets
• Credit and liquidity concerns take center-stage
• Depressed job markets have hurt all commercial
real estate sectors
– Full effects not yet completely realized
• Development is rare; market prices dropped below
replacement cost in many markets
• Safe havens remain, though due diligence is key
• Lenders shifting from “pretend and extend” to
“equity infusion, stonewall and workout”
56
A Look Into 2010 and Beyond
• Cash is King…Again
• Maturities Mount
• Focus on Asset Management
• Look for infill opportunities
• Economy deals with current problems and faces new

challenges
• Upwards of 300 banks will likely fail over the next 24-
36 months
57
CONCLUSION
- Commercial real estate market
remains volatile; the
opportunities for
advantageous acquisitions
are present
- Today’s discounted prices will likely represent the

best window for investing in commercial real
estate that will occur in our careers
58
Times are tough,
But there ain’t no place that I’d rather be...
59
Integra Realty Resources DFW 59
Integra Realty Resources
Nation’s Largest Valuation
& Counseling Firm
- 59 Offices in 33 states, plus DC and Mexico

- Over 800 Consultants & Advisors
- 150+ MAIs company-wide
60

Ben Loughry Forecast 2010

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Economic & Commercial Real Estate Outlook

Fort Worth- Arlington

Source: The Conference Board

Integra Realty Resources DFW

February 2007 Sale

February 2009 Sale

Decrease in Value – 63.0%!

Apartment 8.2% 9.3% 11.0%

Industrial 9.0% 10.2% 12.2%

Office- Downtown 9.0% 10.0% 11.6%

Retail- grocery/drug center 9.1% 10.2% 11.7%

Bottom Three Markets

Bottom Three Markets

vs. Fort Worth $24-25

- Leased 365,000 sq.ft. at the Alliance Global Logistics Hub

-Leased 31,000 sq.ft. at the CentrePort Business

• The Milken Institute Best Performing Cities Index

• Newgeography named us 4th best place for job

• Builder Magazine names the city as the 3rd

• The Kosmont-Rose Institute 2009 Cost of

• Focus on Asset Management

• Look for infill opportunities

• Economy deals with current problems and faces new

- Today’s discounted prices will likely represent the

- 59 Offices in 33 states, plus DC and Mexico

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