U.S. and Southern California

1
2007
U.S. and Southern California
Economic and Real Estate Outlook November 7, 2007

2
Housing Slow Down Impacting Overall Economy -
Existing Home Sales
Y-O-Y Change
Year-Over-Year Percent Change
-15
-20
Through September 2007

Sources
Marcus Millichap Research Services,
Economy.com, National Association of Realtors
3
U.S. Housing Market Has Not Bottomed Months
Supply of Inventory Rising
46.5
Y-o-Y Change
43.6
Number of Months
Through September 2007 Sources Marcus
Millichap Research Services, National Association
of Realtors
4
Housing Market Downturn More Severe In Parts of
Southern California
Sources Marcus Millichap Research Services,
California Association of Realtors
5
Home Prices To Follow Sales Decline Recent
Appreciation Somewhat of a Cushion
Data points growth from 2002-2007
55
47
89
95
Median Home Price
21
Through September 2007
Sources Marcus Millichap Research Services,
California Association of Realtors, Economy.com
6
Cash From Home Refinancing No Longer Shielding
Retail Sales From High Energy Prices
Y-o-Y Percent Change in Retail Sales
Crude Oil (price per barrel)
Retail Sales Forecast, Oil Prices as of November
Sources MMCR, Economy.com
7
Inflation Moving in the Right Direction, Giving
the Fed More Flexibility
10-Year Treasury and Fed Funds Rate
Core Inflation Y-O-Y Change
Through November - Estimate
Sources Marcus Millichap Research Services,
BLS, Economy.com, Federal Reserve
8
Subprime Home Mortgages Impact Significant
2001 11

2006 34
Share of Total Volume
Sources MMCR, Joint Center for Housing Studies
(Harvard)
9
Subprime Spillover Affecting Commercial CMBS
Spreads Have Risen DramaticallyDespite Healthy
Fundamentals
THEN CRE Supply/Demand Imbalance Credit Crunch
Due to Rising Delinquencies
NOW Credit Concerns Rooted in Subprime
Residential CRE Market Fundamentals
Healthy Commercial Delinquencies Sources MMCR, Wachovia, ACLI
10
U.S. Economic Momentum Continues to Exceed
Expectation A Slow Down, Not Recession is Likely
in 2008
Annualized change from previous quarter
Forecast Sources Marcus Millichap Research
Services, BEA, BLS
11
Southern California Employment Will Remain in
Transition Through 2008
Annual Change in Jobs (thousands)
Forecast Non-farm employment
Sources Marcus Millichap Research Services,
Economy.com
12
Apartment Price Trends Beginning To Vary By
Quality, Sub-Market
U.S. Median Price
Median Price per Unit (000s)
Sales 1 million and above 12 month trailing
period from August 2007
Sources Marcus Millichap Research Services,
CoStar Group, Inc.
13
So. Cal Apartment Vacancies Among the Lowest
Nationally
2007 U.S. Vacancy
2007 5.4 2008 5.4
2007 3.5 2008 3.7
2007 3.5 2008 4.5
2007 4.0 2008 4.3
Preliminary Estimate Forecast
Source Marcus Millichap Research Services, Reis
14
So. Cal Multi-Tenant Retail Properties Still
Attracting Buyers Due to Scarcity of Product
U.S. Median Price
Median Price per Square Foot
Sales 1 million and above 12 month trailing
period from August 2007
Sources Marcus Millichap Research Services,
CoStar Group, Inc.
15
Shopping Center Vacancies Remain Low Due to High
Retail Tenant Demand
2007 U.S. Vacancy
2007 5.6 2008 5.9
2007 3.3 2008 3.6
2007 3.4 2008 3.6
2007 3.0 2008 3.3
Preliminary estimate Forecast
Source Marcus Millichap Research Services, Reis
16
Southern California Office Prices Remain Firm Due
to Favorable Long-Term Outlook
U.S. Median Price
Median Price per Square Foot
Sales 1 million and above 12 month trailing
period from August 2007
Sources Marcus Millichap Research Services,
CoStar Group, Inc.
17
Office Vacancies Softening Moderately Still
Remain Below U.S. Average
2007 U.S. Vacancy
2007 9.2 2008 9.7
2007 9.2 2008 10.5
2007 11.6 2008 11
2007 12.2 2008 12.5
Preliminary estimate Forecast
Source Marcus Millichap Research Services, Reis
18
2007
U.S. and Southern California
Economic and Real Estate Outlook November 7, 2007