Atlanta Office Market 3Q2011

1. Investment

2. “Commercial real estate performance generally lags in
economic growth by about 4 to 6 quarters.”
“U.S. commercial real estate fundamentals continue their
recovery path.”
“Demand for commercial space and net absorption has
increased, although general leasing activity slowed moderately
during the 3rd quarter of 2011.”
“In almost all property sectors, occupancy rates are improving,
Concessions are declining and effective rents are rising in
many markets.”
“With vacancy rates high, financing limited and rents below
levels necessary to justify new construction – supply pipelines
are well below long-term averages.”
…from National Real Estate Investor

3. “…the U.S. economy remains sluggish and continues to perform
well below the desired pace of economic expansion….at the
current rate of growth, about 3 to 4 million jobs will be generated
over the next 2 years.”
…from Lawrence Yun, Chief Economist NAR

4. The office sector has experienced a faster than expected
recovery with 2011 year-to-date rent growth of 2 percent. The
top seven CBDs dominate with 36 percent of the total stock,
but 77 percent of total absorption. In addition, 82 percent of
CBD and 30 percent of suburban markets are showing
positive rent growth, while state and local government
markets remain weak in general. With muted supply, a strong
office recovery is expected in 2013-2015. Major CBDs, which
have benefited disproportionally from the government
bailouts and the rebound of the high-tech and energy
industries, are expected to recover more quickly than most
suburban office markets.
…from National Real Estate Investor

5. 3Q 2011 Office Investment Summary

6. Historical GDP

7. National Unemployment
Rate

8. National Employment
Figures

9. National Office Vacancy Rate
3Q - 2011

10. Historical Rental Rates
National Market

11. Historical Rental Rates
Atlanta Market

12. 10-yr, 5-yr & Bank Prime Rates

13. Stock Market Performance

14. Recession Comparison
Percent of Job Losses

15. 3Q 2011 Office Investment Summary

16. Net Absorption Summary
Atlanta Office Market
Net Absorption OVERALL CBD SUBURBAN
3Q2011 406,063 (9,667) 415,730
2Q2011 (13,302) (91,087) 77,785
1Q2011 (470,597) (234,559) (236,038)
4Q2010 623,365 167,284 456,081
Class “A” Class “B” Class “C”
3Q2011 116,750 SF 208,720 80,593
2Q2011 49,697 SF (147,913) 84,914
1Q2011 870,969 SF (1,206,174) (135,392)
4Q2010 155,230 SF 184,089 284,046
2011 MOVE OUT: AT&T 376k1 BofA 328k2 BofA 250k3
2011 MOVE IN: SunTrust 254k3 Coke 148k1 Arch Chem 69k1
1 – N Fulton 2 – Midtown 3- Downtown

17. Atlanta Vacancy Rates
3Q2011

18. “Top 5” SUBMARKETS
*min. 500,000sf submarket [market size]
1. Decatur [1.0M] 8.6%
2. Chamblee/Dville/N D Hills [1.4M] 11.1%
3. Kennesaw/Town Center [1.4M] 14.5%
4. Cumberland/Galleria [16.0M] 15.7%
5. N Fulton/Forsyth [16.4M] 16.5%
Last – N Clayton/Airport [1.1M] 23.7%
CLASS “A”
CLASS “B”
1. Decatur [4.3M] 5.9%
2. Downtown [14.1M] 8.0%
3. Stone Mountain [564k] 9.5%
4. Chamblee/Dville/N D Hills [7.4M] 9.9%
5. Douglasville/Lithia Springs [1.4M] 11.7%
Last – Central Perimeter [9.3M] 28.1%
AVG
18.3%
AVG
16.7%

19. “Top 5” SUBMARKETS
*min. 500,000sf submarket [market size]
1. Lower Buckhead [549k] 3.0%
2. Decatur [2.0M] 5.2%
3. Stone Mountain [825k] 5.3%
4. Duluth/Suwanee/Buford [2.0M] 6.2%
5. Newton County [534k] 7.2%
Last – West Atlanta [1.3M] 43.6%
CLASS “C”
OVERALL
1. Decatur [7.4M] 6.1%
2. Stone Mountain [1.4M] 7.0%
3. Chamblee/Dville/N D Hills [11.8M] 10.3%
4. Newton County [888k] 10.9%
5. Spalding County [512k] 11.1%
Last – West Atlanta [1.7M] 36.7%
AVG
13.9%
AVG
16.9%

20. Largest Lease Deals - YTD
3Q20111. GE Consumer Finance (203,245 SF)
Windward Plaza in Alpharetta
2. SunTrust Robinson Humphrey (135,075 SF)
Atlanta Financial Center in Buckhead
3. Alston & Bird, LLP (132,856 SF)
One Atlantic Center in Buckhead
4. FBI (119,178 SF)
2635 Century Center in Chamblee
5. ATSDR – Gov’t (100,800 SF)
1825 Century Center in Chamblee
6. Morris, Manning & Martin LLP (99,089 SF)
Atlanta Financial Center in Buckhead
7. SunTrust Bank (72,232 SF)
Campanile Plaza in Midtown
8. I.R.S. (72,088 SF)
6655 Peachtree Dunwoody Rd in Central Perimeter

21. Sales Activity Summary
*office buildings over 15,000sf
1Q 2011
14 Transactions
$207,353,000
1,182,991 sq. ft.
$175/sf average
2Q 2011
32 Transactions
$315,985,000
4,324,338 sq. ft.
$73/sf average
YTD 2011 (2Q)
46 Transactions
$523,338,000
$95/sf average
2011 Cap Rates Avg 8.65%
2010 Cap Rates Avg 9.82%
CAP RATE SUMMARY
LARGEST SALE
• 01/21/11
3344 Peachtree Road
483,726 RSF
$167M or $345/sf
6.80% Cap Rate
• Seller: Farallon Capital Mnagement
• Buyer: Parkway Properties
PEAK
2006 @ $4.2B
LOW
2009 @ $157M

23. CASE STUDY – Gwinnett Center
*REO SALE* Buyer: Global Growth Trust, Inc.
Sale Date: 10/17/11
Total RSF: 263,742 RSF
Occupancy At Sale: 40.0%
Sales Price: $14,100,000
Sales Price PSF: $53 PSF
3-YR AVG NOI: $1,207,000
Yr 1-3 (TI/C/CapX): $5,588,706
ADJUSTED BASIS: $19,688,706
Going In CAP Rate* 6.13%
*based on 3-yr Avg NOI
YR 4 Estimated NOI: $2,611,000
Exit CAP Rate: 9.5%
Sales Price: $27,500,000
Closing Costs 3%: ($824,000)
GROSS PROCEEDS: $26,676,000
ORIGINAL ADJ BASIS: ($19,688,706)
3-YR INCOME: $3,600,000
NET PROCEEDS: $10,588,000
I.R.R. on Adj Basis: 17.9% SEC FILING
Prior Sale
$32,500,000
May 2006
TERMS OF DEBT
WITH RBC
TS ANALYSIS

24. CASE STUDY –160 Clairemont
*DIRECT SALE* Buyer: Parmenter Realty Partners
Sale Date: 09/27/11
Total RSF: 122,000 RSF
Occupancy At Sale: 76%
Sales Price: $13,400,000
Sales Price PSF: $106 PSF
3-YR AVG NOI: $1,225,000
Yr 1-3 (TI/C/CapX): $1,080,000
ADJUSTED BASIS: $14,480,000
Going In CAP Rate* 8.45%
*based on 3-yr Avg NOI
YR 4 Estimated NOI: $1,546,445
Exit CAP Rate: 9.00%
Sales Price: $17,182,000
Closing Costs 3%: ($515,000)
GROSS PROCEEDS: $16,667,000
ORIGINAL ADJ BASIS: ($14,480,000)
3-YR INCOME: $3,675,000
NET PROCEEDS: $5,862,000
I.R.R. on Adj Basis: 13.49% (unleveraged)
Prior Sale
$9,770,000
May 2001
ARTICLE

25. CASE STUDY –8800 Roswell Road
*LENDER SALE* Buyer: Resource Partners
Sale Date:
Total RSF: 73,727 RSF
Occupancy At Sale: 34%
Sales Price: $2,100,000
Sales Price PSF: $28 PSF
3-YR AVG NOI: $382,000
Yr 1-3 (TI/C/CapX): $1,268,000
ADJUSTED BASIS: $3,368,000
Going In CAP Rate* 11.3%
*based on 3-yr Avg NOI
YR 4 Estimated NOI: $599,231 (yr 5 - $726k)
Exit CAP Rate: 9.00%
Sales Price: $6,658,000 ($90 PSF)
Closing Costs 3%: ($199,000)
GROSS PROCEEDS: $6,459,000
ORIGINAL ADJ BASIS: ($3,368,000)
3-YR INCOME: $1,146,000
NET PROCEEDS: $4,237,000
I.R.R. on Adj Basis: 41.9%
Prior Sale
$6,200,000
March 1999

26. CASE STUDY – Suwanee Gateway
*LENDER SALE* Buyer: SDM, Greenstone, Colliers Int’l
Sale Date: 09/28/10
Total RSF: 142,427 RSF
Occupancy At Sale: 0%
Sales Price: $7,700,000
Sales Price PSF: $54 PSF
3-YR AVG NOI: $0
Yr 1-3 (TI/C/CapX): $40/sf (TI) $10/sf (Comm)
ADJUSTED BASIS: $14,821,000 (excld carry cost)
Going In CAP Rate* N/A
*based on 3-yr Avg NOI
YR 4 Estimated NOI: $1,851,551 ($13/sf NET)
Exit CAP Rate: 8.00%
Sales Price: $23,144,000 ($162/sf)
Closing Costs 3%: ($694,000)
GROSS PROCEEDS: $22,449,000
ORIGINAL ADJ BASIS: ($14,821,000)
3-YR INCOME: $0
NET PROCEEDS: $7,628,000
I.R.R. on Adj Basis: 17.2% (3-yr) 25.7% (2-yr) PACKAGEGreenstoneSDM

27. Current and Future Opportunities
244 PERIMETER CENTER
Type: Redevelopment
RSF: 262,000 s.f. on 15.1 acres
Percent Leased: 0%
Submarket: Central Perimeter
Est. Sales Price: $19.75M, $75/sf, $1.3M/ac
CRESTWOOD
Type: REO
RSF: 100,345 s.f.
Percent Leased: 57%
Submarket: Duluth/Suwanee/Buford
Est. Sales Price: $4.2M, $41/sf
ATLANTIC STATION
Type: Note Sale
RSF: 349,402 s.f.
Percent Leased: 47%
Submarket: Midtown/Pershing Point
Est. Sales Price: $130-$140/sf
DECATUR PLAZA
Type: Direct Offering
RSF: 112,440 s.f.
Percent Leased: 100% (Emory)
Submarket: Decatur
Est. Sales Price: ?
FALLS POINTE
Type: Direct Offering
RSF: 106,700 s.f.
Percent Leased: 100%
Submarket: Central Perimeter
Est. Sales Price: ?
SECURITIES CENTRE
Type: Foreclosure
RSF: 551,720 s.f.
Percent Leased: 83%
Submarket: Upper Buckhead
Est. Sales Price: ?