Capital Markets: From All Perspectives

Moderator:Kenneth F. Bernstein

ICSC Open Air Centers Committee Co-ChairICSC Trustee

President & CEOAcadia Realty Trust

White Plains, NYRockville, MD

Michael A. CarrollChief Executive Officer

Brixmor Property GroupNew York, NY

Martin A. MayerICSC Trustee President

Stirling PropertiesCovington, LA

Sheridan SchechnerManaging Director

Barclays CapitalNew York, NY

Donald C. WoodICSC Trustee

President & CEOFederal Realty

Investment TrustRockville, MD

Cap rates are at all-time lows, but spreads are wider

Historical Cap Rates

0%

2%

4%

6%

8%

10%

12%

2/2002 10/2003 6/2005 2/2007 10/2008 6/2010 2/2012

Major Sector Average Cap Rate BBB- Index Treasuries

Cap Rates vs. BBB- Index and US Treasuries

UST: 2.0%

BBB-: 4.3%

Cap Rate: 6.4%

10-Yr Avg Cap Rate: 7.2%

___________________________Source: Barclays Capital research and Green Street Advisors.

1-Yr 5-Yr 10-YrCurrent Avg Avg Avg

Cap Rates 6.4% 6.4% 6.9% 7.2%BBB- 4.3% 4.7% 6.2% 6.1%

Treasuries 2.0% 2.6% 3.4% 3.9%

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Private debt markets are somewhat stronger year-over-year

Debt Markets: 1 Year Ago vs. Today

Bank Terms

2011 2012

Term: 3-5 years Term: 3-5 years (possibly 7 years)

Max LTV: 65% Max LTV: 70%

Spreads: 250 – 300 bps Spreads: 200 – 250 bps

Recourse: Prevalent Recourse: Rare

Availability: Major markets Availability: Primary and secondary markets

Depth of Market: Tenuous Depth of Market: Below average

Insurance Company Terms

2011 2012

Term: 3-12 years Term: 3-12 years

Max LTV: 65% Max LTV: 70%

Spreads: 250 bps area Spreads: 200 – 250 bps

Floors: � 5 year: 3.25%� 10 year: 4.50%

Floors: � 5 year: 3.00%� 10 year: 4.25%

Recourse: None Recourse: None

Availability: Prime assets only Availability: Prime assets only

Depth of Market: Binary Depth of Market: Binary

2

CMBS yields are at two-year lows

CMBS Yields

Historical CMBS Yield Environment

2%

4%

6%

8%

10%

12%

14%

16%

2/24/10 6/25/10 10/25/10 2/24/11 6/25/11 10/25/11 2/24/12

%

U.S. Corporate IG CMBS AAA SD CMBS BBB IG REITS HY REITS

IG REITs: 3.6%Corp IG: 3.4%CMBS AAA: 2.7%

HY REITs: 6.1%

CMBS BBB: 6.2%

___________________________Source: Barclays Capital research.

1-Yr 2-YrCurrent Avg Avg

Corp IG 3.4% 3.8% 3.9%

CMBS AAA 2.7% 3.4% 3.8%

CMBS BBB 6.2% 7.0% 8.5%

IG REITs 3.6% 4.1% 4.4%

HY REITs 6.1% 6.4% 7.1%

3

Market tone is excellent – it was last year as well

CMBS Markets: 1 Year Ago vs. Today

CMBS Terms

2011 2012

Term: 5 or 10 years Term: 5 or 10 years

Spreads: � 5-yr: 450 bps area

� 10-yr: 350 bps area

Spreads: � 5-yr: 400 bps area

� 10-yr: 300 bps area

Max Proceeds: � $150 in a pool

� Minimum $300 in a stand-

alone

Max Proceeds: � $150 in a pool

� Minimum $300 in a stand-

alone

Min Debt Yield: 10% Min Debt Yield: 9.5%

Max LTV: 70% Max LTV: 75%

Mezzanine: Available for larger loans Mezzanine: Available for larger loans

Interest Only

Period:

2 / 3 years; sporadic Interest Only

Period:

2 / 3 years; typical

Availability: Regional disparities Availability: All but southeast

Depth of Market: Many participants Depth of Market: Many participants

4

Maturing CRE debt will likely need an equity infusion to refinance

CMBS Refinancing

� First major wave of maturities from CMBS originated in

2007 come due this year

� Two-thirds of the loans do not meet one or more of the

current refinancing thresholds for conduit lending

� Debt yield (NOI / mortgage amount): 11.0%

� Debt service coverage ratio: 1.40x

� Mark-to-market LTV: 65% - 70%Not Likely

$21

48%

Potentially

$4

9%

Likely

$3

7%

Very Likely

$16

36%

___________________________Source: Urban Land Institute.

2007 Vintage Loans CMBS Refinancing Prospects

Key

Very Likely – Meets all 3 sizing thresholds

Likely – Meets 2 of 3 sizing thresholds

Potentially – Meets 1 sizing threshold

Not Likely – Meets none of the sizing thresholds

5

$1.4 trillion in CRE debt is scheduled to mature by 2015

Commercial Real Estate Debt Maturities

$214 $211$183

$153

$121$93

$75$47 $35

$53 $63

$67$101

$114

$134

$41

$26$23

$23 $24

$23

$23$22

$19

$16$14

$72$74

$72 $65

$59$51

$43

$34

$25

$363$372

$345 $342

$316$300

$123

$98

$23

$179

$0

$50

$100

$150

$200

$250

$300

$350

$400

2012 2013 2014 2015 2016 2017 2018 2019 2020

($ billions)

Banks CMBS Life Cos. Other

Commercial Real Estate Debt Maturity Schedule

___________________________Source: Urban Land Institute.

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