Chicago Distressed

Real Estate Trends

Prepared for:

GreenPearl Distressed Real

Estate SummitMay 13, 2010

Presented by:

Matthew Anderson

Commercial Real Estate Values Moody’s/REAL CPPI vs. NAREIT Price Index

0

25

50

75

100

125

150

2006 2007 2008 2009 2010

Moody's/REAL NAREIT

Sources: MIT CRE, NAREIT, Foresight Analytics

Index, 12/2005 = 100

Peak to Current:

-42% (CPPI)

-38% (NAREIT)

Commercial Mortgage MaturitiesLoans Maturing By Year

0

50

100

150

200

250

300

350

1990 1995 2000 2005 2010 2015

Commercial Multifamily

Source: Foresight Analytics

$ Billions

Underwater Mortgagesby Maturity Year

0

50

100

150

200

250

300

350

2009 2010 2011 2012 2013 2014

LTV > 100% LTV < 100%

Source: Foresight Analytics

$ Billions

Commercial Real Estate Loan Maturities

In Chicago, $ Billions

Next 3

Years

(2010-2012)

Next 5

Years

(2010-2014)

Commercial Mortgages

Banks $17.1 $30.6

CMBS $5.1 $7.6

Commercial Mtg Total $22.2 $38.2

Construction Loans $10.4 $12.0

CRE Total $32.6 $50.3

Sources: Trepp Loan, Foresight Analytics

Commercial Real Estate Delinquencies Percent of Amount Outstanding

0%

5%

10%

15%

20%

1990 1995 2000 1Q02 2Q03 3Q04 4Q05 1Q07 2Q08 3Q09

Construction Commercial Multifamily

Sources: FDIC, FFIEC, Foresight Analytics

Chicago Commercial Mortgage Delinquency Rates

CMBS, by Property Type

0%

5%

10%

15%

20%

25%

4Q 07 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 3Q 09 4Q 09 1Q 10

Office Retail Lodging Industrial Multifamily

Source: Trepp, LLC

30+ Days Past Due

CRE Distress SummaryDelinquent CRE Loans in Chicago, $ Billions

Source/Type 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10

Banks

Construction & Land 2.1 2.7 3.0 3.2 3.0 2.6

Commercial Mtg 0.9 1.2 1.6 1.6 1.5 1.7

Multifamily Mtg 0.3 0.4 0.5 0.5 0.6 0.7

CMBS

Total 0.4 0.5 0.7 1.0 1.0 1.5

Retail 0.1 0.1 0.2 0.3 0.4 0.5

Office 0.1 0.2 0.3 0.3 0.2 0.4

Lodging 0.1 0.1 0.1 0.2 0.2 0.4

Industrial 0.0 0.0 0.0 0.0 0.0 0.1

Multifamily 0.1 0.1 0.1 0.1 0.1 0.1

Sources: Trepp Loan, Foresight Analytics

Recent Foreclosure ActivityChicago Metro Area

Property Name Property Type City

Loan

Amount,

$ Mill.

Origination

Year

Northern Lights Crossing Retail Gurnee $5.4 2004

4055 West Peterson Avenue Industrial Chicago $3.0 2007

Bank One Ground Lease

Retail (Ground

Lease) Orland Park $1.5 2005

Sheraton Four Points - O'Hare

Airport Lodging Schiller Park $22.5 2006

South Suburban Industrial Portfolio Industrial Various $10.2 2006

Embassy Suites - Chicago Lodging Deerfield $13.9 2000

Rolling Meadows Plaza Retail Rolling Meadows $6.9 1999

Carolina & Hawthorne Buildings Industrial West Chicago $1.3 2001

Lakeview Square Shopping Center Retail Naperville $4.6 2004

Hotel Burnham Lodging Chicago $36.0 2007

Source: Trepp Loan

Bank Distress

FDIC Problem Institutions vs. Foresight Watch List

Source: FDIC, Foresight Analytics

15 13 11 14 13 12 12 19 21 20 30 49

466512

590645

371

276

77141109

0

100

200

300

400

500

600

700

800

1Q

05

2Q

05

3Q

05

4Q

05

1Q

06

2Q

06

3Q

06

4Q

06

1Q

07

2Q

07

3Q

07

4Q

07

1Q

08

2Q

08

3Q

08

4Q

08

1Q

09

2Q

09

3Q

09

4Q

09

1Q

10e

Foresight FDIC

Bank Distress

Closure Hot Spots—Watch List Institution Count by State

Source: FDIC, Foresight Analytics

State 1Q09 2Q09 3Q09 4Q09 1Q10*

Closures –

Current Cycle

Georgia 55 64 63 74 77 38

Florida 55 70 83 85 73 25

Illinois 42 49 51 61 60 31

California 20 29 35 31 27 26

Minnesota 18 25 27 29 26 11

Washington 18 23 27 30 24 9

Michigan 14 21 22 25 21 7

Colorado 4 4 8 13 17 3

Missouri 11 13 17 15 16 8

Kansas 11 12 13 14 14 4

Wisconsin 7 8 16 15 13 1

North

Carolina 2 2 3 11 13 2

South

Carolina 3 8 7 14 12 1* Partial Quarter

Bank Distress

Bank Failures—Current Cycle and Near-term Forecast

Number of Closed Institutions

* Through 04/30/10

Source: FDIC, Foresight Analytics

0

10

20

30

40

50

60

4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q102Q10*3Q10 4Q10 1Q11

Actual Projected