REIT Industry Outlook

Oppenheimer & Co. Inc. does and seeks to do business with companies covered in its research reports. Asa result, investors should be aware that the firm may have a conflict of interest that could affect theobjectivity of this report. Investors should consider this report as only a single factor in making theirinvestment decision. See "Important Disclosures and Certifications" section at the end of this report forimportant disclosures, including potential conflicts of interest. See "Price Target Calculation" and "Key Risksto Price Target" sections at the end of this report, where applicable.

January 13, 2010

REITs/REAL ESTATE

Mark Biffert212 [email protected]

Samit Parikh212 [email protected]

2010 REITs/Real EstateIndustry OutlookOutlook for Slow Recovery and Higher Rates CauseREITs to Underperform in 2010

SUMMARY

With a challenging year for commercial real estate (CRE) and the global marketsnow behind us, we look to 2010 as a year of stabilization and recovery. In recentmonths, we have seen signs of improvement in consumer spending/sentiment,manufacturing output, and stabilization in unemployment; however, the economicrecovery still appears fragile as it tries to come off government life support in 2010.We expect the recovery for CRE fundamentals to take time, with trough NOI in theshorter lease-term sectors anticipated in the 2H10 (apartments, self-storage), whilelonger lease-term assets (office, retail, industrial) are projected to bottom in2011/2012. We believe the level of transaction activity in '10 will depend largely onlender willingness to sell non-performing assets and/or a greater reduction in thebid/ask spread (~100bps currently). We expect a rise in interest rates combinedwith declining cash flows to offset tightening credit spreads on asset pricing. Webelieve a disappointing NOI growth outlook by REITs in '10 could cause REIT riskyield premiums to widen, leading to a 25-50bps back-up in implied cap rates to7.25-7.5%. We expect REITs to underperform the broader markets in '10,delivering a total return in a range of -5.0% to +5.0% through a mix of animproving dividend yield (~4.5%) and a modest back-up in cap rates due torising interest rates. We expect volatility to remain, but at a lower beta than in '09.

KEY POINTS

■ Bull Case. If the economy recovered quicker than expected and the creditmarkets/transaction activity improved dramatically, we could see additional caprate compression (~75-100bps), partially offset by a rise in interest rates(25-50bps). In this scenario, we believe REITs could outperform the S&P 500,with a total return of 12.0-18.0%.

■ Bear Case. In this scenario we assume the economy dips back into negativegrowth, unemployment rises to ~11.0% and risk premiums rise by ~75-100bpsas fundamentals deteriorate reflecting reduced demand. Transaction activityimproves as lenders take back assets due to a lack of coverage. In this scenarioREITs underperform the S&P 500, with a total return of -8.0% to -12.0%.

■ Sector Calls and Top Ideas . We favor the Self-storage, Industrial, Health Care,Senior Housing Operators, and Brokers. The sectors less favored by us are theOffice and Regional Malls. Our top Outperform-rated ideas include AIV, CPT,HCN, PSA, SKT, BKD, ESC and FCE.A. Our top Underperform-rated ideas areAVB, CBL, MAC, and TCO.

■ Upgrades. As part of our outlook, we are upgrading Tanger Factory Outlets(SKT) and Public Storage (PSA) to Outperform from Perform. We are alsoupgrading Washington REIT (WRE), Weingarten Realty (WRI) and SovranSelf-Storage (SSS) to Perform from Underperform.

EQUITY RESEARCH

INDUSTRY UPDATE WITHCHANGES

Oppenheimer & Co Inc. 300 Madison Avenue 4th Floor New York, NY 10017 Tel: 800-221-5588 Fax: 212-667-8229

2

2010 OPCO REIT/Real Estate Outlook:

Economic Outlook

With a challenging year for commercial real estate and the global markets now behind us,

we look to 2010 as a year of stabilization and recovery. In recent months, we have seen

signs of improvement in consumer spending, consumer sentiment, manufacturing output

and stabilization in unemployment; however, the economic recovery still appears fragile as

it tries to come off government life support in 2010.

Unemployment remained flat at 10.0% in December, with 85,000 job losses after a revised

4,000 job losses in November. Despite the recent decline, signs of stabilization in the

economy, rising part-time hires and hours worked suggest hiring could turn postive in

1H10. However, there appears to be a wide disparity among economists on where

unemployment will be by YE10 from a low of 8.5% to a high of 11.2%.

The residential housing market appears to be stabilizing, but it is still uncertain if pricing

will hold following the expiration of government tax credits in April 2010. In addition, the

government’s Home Affordable Modification Program (HAMP) has yet to prove it can stem

the rise in delinquencies.

With $525B in CRE (commercial real estate) loans maturing in 2010 and credit still

constrained, we anticipate that the “extend and pretend” theme of 2009 will likely continue

through 2010. However, banks with construction and other secured loans may need to

take back non-cash flowing properties, which could create distress opportunities. Also,

Fed funds futures are building in a ~90bps rise in interest rates by YE10 as increased

levels of government and business spending are expected to drive yields higher.

Inflation has become a point of greater concern given the amount of government stimulus

spending put into the market over the last 15 months. While initial estimates of 1.5-3.0%

are not threatening, any acceleration in inflation could push interest rates higher.

Despite some of these negative headwinds, we expect the economy to post positive GDP

growth in 2010 as the effects of government stimulus translate into increased investment

and growth.

2010 REIT Outlook

While a trough appears to be in sight for some CRE groups (apartments, hotels, self-

storage), we are maintaining a cautious view on the overall sector driven by our outlook

for declining property cash flows into 2011 and the risk of higher interest rates offsetting

any additional positive impact from compressing risk premiums on cap rates. We believe

that 2010 earnings guidance relative to what is being implied in current valuations could

disappoint investor expectations, causing REIT risk yield premiums to widen. As a result,

we expect REITs to underperform the broader markets, delivering a total return in a

range of -5.0% to 5.0% in 2010. We expect volatility to continue, but at a lower beta than

we witnessed in 2009.

In terms of stock selection, we favor companies with an improving outlook for cash flow

growth, an attractive yield, and manageable leverage. As such, we suggest investors

increase their exposure to Healthcare REIT (HCN: O, $49 price target); Camden Property

Trust (CPT: O, $48 price target); Public Storage (PSA: O - $85); Tanger Factory Outlets

(SKT: O, $43 price target); Brookdale Senior Living (BKD: O, $24 price target); and

Emeritus Corp. (ESC: O, $27 price target). Additionally, we believe there are several

REITs/REAL ESTATE

3

opportunistic investments that, while having greater risk profiles (debt refinancing or

interest coverage concerns), have aggressively moved to address investors’ concerns and

now offer substantial upside, in our view. These companies include: Forest City

Enterprises (FCE.A: O, $17 price target), Apartment Investment and Management Co.

(AIV: O, $19.50 price target). Alternatively, we suggest investors reduce their exposure to

companies with a deteriorating growth outlook into 2011 based on tenant quality, asset

location or oversupply, as well as those that trade at above average premium valuations

relative to their growth outlook. As such, we suggest investors reduce their exposure to

AvalonBay Communities (AVB: U, $65 price target); Macerich (MAC: U, $28 price target),

CBL Properties (CBL: U, $9 price target), EastGroup Properties, Inc. (EGP: U, $29 price

target) and Taubman Centers (TCO: U, $30 price target).

In terms of sectors, we suggest investors favor the self-storage, senior housing operators,

health care, industrial and commercial real estate brokers based on a mix of

stable/improving cash flow growth, increased transaction activity in their respective

sectors, and/or limited new supply. Alternatively, we expect the office and regional malls

sectors to be negatively impacted by falling asset values due to rising interest rates,

declining property cash flows and/or increased shadow supply.

Exhibit 1: Summary of Companies with Ratings, Earnings or Price Target Updates

Ticker Company Previous Rating Current rating FYE

2009E

FFO

Prev

2009E

FFO

Revised

2010E

FFO

Prev

2010E

FFO

Revised

2011E

FFO

Prev

2011E

FFO

Revised

Target

Price

Previous

Target

Price

Current

SKT Tanger Factory Outlet Perform Outperform Dec NC $2.67 NC $2.68 NC $2.71 NA $43.00

WRI Weingarten Realty Underperform Perform Dec NC $1.98 NC $1.64 NC $1.65 $16.00 NA

PSA Public Storage, Inc. Perform Outperform Dec NC $5.55 NC $4.92 NC $5.10 NA $85.00

SSS Sovran Self Storage Underperform Perform Dec NC $2.34 NC $2.45 NC $2.51 $25.00 NA

MAC Macerich Company NC Underperform Dec NC $3.68 NC $3.15 NC $3.06 $24.00 $28.00

CBL CBL & Associates NC Underperform Dec NC $2.39 NC $1.90 NC $1.85 $7.00 $9.00

BMR BioMed Realty Trust Inc. NC Perform Dec $1.67 $1.68 $1.34 $1.32 $1.44 $1.38 NC NA

VTR Ventas NC Perform Dec NC $2.65 $2.67 $2.69 $2.85 $2.87 NC NA

HCP HCP, Inc. NC Perform Dec $1.67 $1.48 NC $2.18 NC $2.37 NC NA

WRE Washington REIT Underperform Perform Dec NC $2.12 NC $1.86 NC $1.84 $22.00 NA

Source: Bloomberg, company data, Oppenheimer & Co. Inc. estimates Note: Please see Appendix for updated balance sheet and income statements for companies with estimates changes.

Basis for our Cautious View

Taking a Look at Yield Spreads

Considering that owning real estate for many is an income-based investment, we find it

pertinent to look at implied yields on REITs compared to alternative fixed income

investments. Historically, REIT implied cap rates have traded at a 68bp spread over the

Moody’s Baa bond rate, and at a 323bp spread over the 10-year US Treasury. At current

implied cap rate levels of 7.0%, REITs are trading in line with historicals at a 68bp spread

to the Moody’s Baa yield, and at a 315bp spread to the 10-year Treasury. We note yields

on both the 10-year US treasury and Moody’s Baa have risen considerably over the past

few weeks.

There are several scenarios that could play out, which would impact REITs assuming they

trade relative to alternative fixed income investments. We note that changes in the spread

between REIT implied cap rates and fixed income yields should be primarily a result of

same-store NOI growth projections.

REITs/REAL ESTATE

4

Scenario 1: Yields on the 10-year and corporate bonds continue to rise as demand

diminishes, but implied cap rates remain the same as real estate fundamentals appear

more positive, causing spreads to compress.

Scenario 2: Yields on the 10-year and corporate bonds decline, as a flight to safety

causes increased demand for US government bonds. The current implied cap rate spread

to both investments remains the same, as investors continue to feel the same about real

estate fundamentals, causing impled cap rates to decline further, pushing the rally in

REITs.

Scenario 3: Yields on the 10-year and corporate bonds increase, and disappointing

economic data causes investors to believe real estate fundamentals will suffer longer than

expected, causing spreads to widen. As a result, REIT implied cap rates rise, causing a

pullback in share prices.

While it is difficult to predict the direction of treasury yields and corporate bond

rates, we are certain that same-store NOI growth has not bottomed. Exhibits 3-6

below show that in the most recent downturn, spreads between implied cap rates and the

10-year US Treasury/Moody’s Baa yields did not compress to historical levels until same-

store NOI growth hit trough levels. We believe that spreads should be at above-average

levels for now, and that same-store NOI growth will not bottom until late 2010 at the

earliest.

In our view, a decline in corporate bond rates and Treasury yields could fuel a modest

REIT rally if investors continue to believe that the current implied cap rate spread is

appropriate; however, dissapointing 2010 earnings outlook could reverse this thought. The

risk premium on real estate yields could widen if earnings outlooks call for same-store NOI

to decline at a steeper rate, and as such REITs would appear to be overvalued at current

levels.

In our view, the REIT rally was largely fueled by a decline in bond yields combined with

some optimistic economic data. That said, real estate fundamentals are largely dependent

upon job creation, and the absence of job growth would translate into NOI growth

remaining at depressed levels for now. We believe investors should remain cautious on

REIT valuations, which appear to be pricing in a faster recovery in fundamentals than we

are projecting. Additionally, the possibility of rising interest rates absent job growth should

be a heavy concern, as such a scenario would mean a higher cost of capital, and

continued weak growth.

We note that at 7.32%, 10-year REIT unsecured debt spreads have narrowed dramatically

in the past year, currently at ~367 bps over Treasuries as of 1/11/2010 (see Exhibit 2),

further suggesting that REIT debt is pricing in greater risk than was seen in the 2002-2006

period.

REITs/REAL ESTATE

5

Exhibit 2: 10-yr REIT Bond Spreads vs US Treasury Bonds

0%

2%

4%

6%

8%

10%

12%

14%

Dec-0

2

Apr-

03

Aug-0

3

Dec-0

3

Apr-

04

Aug-0

4

Dec-0

4

Apr-

05

Aug-0

5

Dec-0

5

Apr-

06

Aug-0

6

Dec-0

6

Apr-

07

Aug-0

7

Dec-0

7

Apr-

08

Aug-0

8

Dec-0

8

Apr-

09

Aug-0

9

Dec-0

9

BBB 10- Yr REIT Spread to

Treasuries is currently 367bps, vs

the long term average of 269 bps

Source: Bloomberg index of BBB-, BBB and BBB+ rated REIT bonds, Federal Reserve.

Exhibit 3: Implied Nominal Cap Rates vs. Corporate Bond Yields (1998-Current)

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

11.0%

02/19

98

10/19

98

06/19

99

02/20

00

10/2

000

06/20

01

02/2

002

10/20

02

06/20

03

02/2

004

10/20

04

06/2

005

02/20

06

10/20

06

06/2

007

02/20

08

10/2

008

06/20

09

Implied Nominal Cap Rate

Moody's Baa Corp Bond Yield

Source: Bloomberg, company data, Oppenheimer & Co.

REITs/REAL ESTATE

6

Exhibit 4: Implied Cap Rate Spread to Corporate Bonds (1998-Current)

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

02/1

998

10/19

98

06/19

99

02/20

00

10/20

00

06/20

01

02/20

02

10/2

002

06/2

003

02/2

004

10/2

004

06/2

005

02/20

06

10/20

06

06/20

07

02/20

08

10/20

08

06/20

09

Implied Cap Spread over Baa

Historical Avg. SpreadSpreads did not

compress until trough NOI

achieved


Exhibit 5:. Implied Cap Rate Spread to Corporate Bonds (1998-Current)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

02/1

998

10/1

998

06/1

999

02/2

000

10/2

000

06/20

01

02/20

02

10/20

02

06/20

03

02/2

004

10/2

004

06/2

005

02/20

06

10/20

06

06/20

07

02/20

08

10/20

08

06/20

09

Implied Cap Spread over 10YY

Historical Avg. SpreadSpreads did not

compress until trough NOI

achieved


REITs/REAL ESTATE

7

Exhibit 6: Same-Store NOI Growth (1998-Current)

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

3Q98

2Q99

1Q00

4Q00

3Q01

2Q02

1Q03

4Q03

3Q04

2Q05

1Q06

4Q06

3Q07

2Q08

1Q09

Trough NOI at

1Q03

Source: Company data, Oppenheimer & Co.

Lender Allocation to CRE Expected to Grow in 2010

Lender allocations to commercial real estate are expected to grow in 2010 over 2009 given improved liquidity and underwriting accounting for the expected decline in fundamentals. However, a large portion of the allocations will likely be targeted toward refinancing/extending existing performing loans. The GSE’s (government sponsored enterprises) increased their lending to the multi-family and senior housing sectors in 2009, making up almost 85% of all lending to the multi-family sector. This is expected to continue in 2010. Life insurance companies, which have been the largest source of lending to industrial, office and retail sectors, are expected to allocate ~$30B in capital in 2010. CMBS (commercial mortgage-backed securities) issuance in 2009 totaled $850M through two agency-backed deals (Fortress, Developers Diversified). While we expect CMBS issuance to improve in 2010 over 2009, several impediments remain from issuance returning to more substantial volumes including: 1) lack of infrastructure; 2) poor pricing given conservative ratings; and 3) unattractive returns on capital for banks given required

accounting treatment.

Exhibit 7: Life Insurer Mortgage Commitments likely declined to ~$15B in 2009 ($ in

billions)

14

.1

6.3

9.4

10

.7 13

.6

21

.4

19

.0

20

.7

24

.8

22

.3

21

.5

26

.9

28

.1

32

.7

39

.2 43

.2

44

.1

42

.7

26

.7

15

.6

7.3

$0

$10

$20

$30

$40

$50

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

1H

2008

1H

2009

1998-2008 ~$350B

S&L

Collapse

Mortgage

Meltdow n

Long Term

Credit Capital

9/11& Corporate

Credit Squeeze

Source: American Council of Life Insurers, HFF

REITs/REAL ESTATE

8

Exhibit 8: Fannie Mae and Freddie Mac remain active lenders to the multi-family and

senior housing sectors ($ in billions)

$15.5 $12.4 $13.5

$22.8 $22.0

$36.0

$21.2$25.6

$34.3

$60.0

$35.5$6.6 $7.8 $7.1

$12.3 $14.3

$22.6

$23.8$26.2

$28.8

$44.7

$9.5

$10.1$7.8$7.9

$24.3

$2.7$2.3

$0

$25

$50

$75

$100

$125

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Fannie Mae Freddie Mac

9/11& Corporate

Credit Squeeze

1998-2008 >$500B

Source: Fannie Mae, Freddie Mac, HFF

Exhibit 9: U.S. CMBS Issuance still constrained – Annual volumes in billions

0

50

100

150

200

250

300

350

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

CM

BS

Issu

an

ce (

$B

)

0%

1%

2%

3%

4%

5%

6%

7%

Global US 10-yr Yield

Source: Commercial Mortgage Alert; Oppenheimer & Co. Inc.

REIT Dividend Yields Need to Grow

The average REIT dividend yield is now 3.64% 21bps below the 10-year U.S. Treasury at

3.85%. We believe this negative spread will need to become positive and widen in order

for the group to become more attractive to investors, given the outlook for declining NOI

growth. While REITs have the ability to continue paying out up to 90% of their dividends in

stock, we believe many will shift back to an all-cash dividend now that access to capital

has improved. In addition, we note that a number of REITs cut their dividend to conserve

capital in 2009, and as a result, now have a median FAD (funds available for distribution)

payout ratio of 84%, implying room to raise the dividend in 2010. See Exhibit 10 for a list

of potential REITs to raise their dividend. The following chart includes stock dividends

from companies like SPG, VNO and MAC; some companies which pay partial stock

dividends are more likely to increase the portion of cash paid (as Kimco recently did),

rather than make a cut.

REITs/REAL ESTATE

9

Exhibit 10: Potential for Dividend Increases Based on Projected Payout Ratios

REIT Ticker

Current

Dividend

Payout Ratio

(2010E FAD)

Annual

Dividend

(Cash &

Stock)

Potential Increase/

Decrease to Achieve

Optimal 85% Payout

Ratio

Implied % Change

in Dividend

First Ind. Realty FR 0% $0.00 $0.47 NA

Forest City Enterprises FCEA 0% $0.00 $1.01 NA

Maguire Properties MPG 0% $0.00 ($0.61) NA

Developers Diversified DDR 8% $0.08 $0.74 931%

CBL & Associates CBL 15% $0.20 $0.92 458%

SL Green SLG 15% $0.40 $1.80 450%

U-Store-It Trust YSI 22% $0.10 $0.28 281%

Apartment Investment & Mgmt. AIV 39% $0.40 $0.48 119%

Pennsylvania REIT PEI 42% $0.60 $0.62 104%

BioMed Realty Trust Inc. BMR 45% $0.44 $0.40 91%

Alexandria Real Estate ARE 45% $1.40 $1.23 88%

Douglas Emmett DEI 45% $0.40 $0.35 87%

Brandywine Realty Trust BDN 45% $0.40 $0.35 87%

Public Storage PSA 48% $2.20 $1.69 77%

Simon Property Group SPG 49% $2.40 $1.78 74%

PS Business Parks PSB 61% $1.76 $0.70 40%

Brookfield Properties BPO 67% $0.56 $0.15 27%

Kite Realty Group KRG 69% $0.24 $0.06 24%

Glimcher Realty Trust GRT 69% $0.40 $0.09 23%

Saul Centers Inc. BFS 71% $1.44 $0.29 20%

Tanger Factory Outlet Centers SKT 72% $1.53 $0.27 18% Greater Likelihood of a

HRPT Properties Trust HRP 72% $0.48 $0.08 17% Dividend Increase in 2010

Kimco Realty Corp. KIM 75% $0.64 $0.08 13%

Entertainment Properties EPR 76% $2.60 $0.32 12%

Taubman Centers, Inc. TCO 76% $1.66 $0.21 12%

Nationwide Health Prop. NHP 76% $1.76 $0.20 11%

Equity Residential EQR 77% $1.35 $0.14 10%

Extra Space Storage Inc. EXR 78% $0.52 $0.05 9%

Ventas VTR 80% $2.05 $0.13 6%

LTC Properties LTC 82% $1.56 $0.06 4%

Mack Cali Corporation CLI 82% $1.80 $0.06 3%

Senior Housing Properties Trust SNH 83% $1.44 $0.04 3%

Sovran Self Storage SSS 83% $1.80 $0.05 3%

Federal Realty Investment Group FRT 84% $2.64 $0.04 1%

BRE Properties BRE 84% $1.50 $0.01 1%

Weingarten Realty WRI 85% $1.00 $0.00 0%

Boston Properties BXP 85% $2.00 ($0.00) 0%

Mid-America Apt. MAA 87% $2.46 ($0.05) -2%

Corporate Office Properties OFC 88% $1.57 ($0.05) -3%

Duke Realty DRE 88% $0.68 ($0.03) -4%

Camden Properties CPT 88% $1.80 ($0.07) -4%

Health Care REIT Inc. HCN 89% $2.72 ($0.13) -5%

Kilroy Properties KRC 89% $1.40 ($0.07) -5%

DCT Industrial DCT 90% $0.28 ($0.02) -6%

UDR, Inc. UDR 91% $0.72 ($0.05) -7%

Highwoods Properties HIW 91% $1.70 ($0.12) -7%

Realty Income Corp. O 92% $1.71 ($0.13) -8%

Commercial Net Lease NNN 92% $1.50 ($0.11) -8%

Healthcare Realty Trust HR 93% $1.20 ($0.10) -9%

HCP, Inc. HCP 93% $1.84 ($0.16) -9%

Parkway Properties PKY 94% $1.30 ($0.12) -9%

Vornado Realty VNO 94% $2.60 ($0.25) -9%

EastGroup Properties, Inc. EGP 95% $2.08 ($0.22) -11%

Colonial Properties Trust CLP 95% $0.60 ($0.06) -11%

Getty Realty Corp. GTY 95% $1.90 ($0.21) -11%

Liberty Property LRY 96% $1.90 ($0.23) -12%

Urstadt Biddle Properties UBA 101% $0.96 ($0.15) -16%

Post Properties PPS 105% $0.80 ($0.15) -19%

Essex Property Trust ESS 106% $4.12 ($0.83) -20%

The Macerich Co. MAC 109% $2.40 ($0.52) -22%

Home Properties of NY HME 109% $2.68 ($0.60) -22%

Regency Centers REG 110% $1.85 ($0.42) -22%

Prologis PLD 112% $0.60 ($0.14) -24% Greater Potential for a

Washington REIT WRE 112% $1.73 ($0.41) -24% Dividend Cut in 2010

Mission West Properties MSW 113% $0.60 ($0.15) -25%

AMB Property AMB 115% $1.12 ($0.30) -26%

AvalonBay Communities AVB 124% $3.57 ($1.13) -32%

Equity One Inc EQY 129% $1.20 ($0.41) -34%

Cousins Properties Inc. CUZ 154% $0.20 ($0.09) -45%

Median 84%

Note: Cash and stock dividends included where applicable. Source: Factset, Bloomberg, SNL, Oppenheimer, Inc. estimates

REITs/REAL ESTATE

10

Exhibit 11: Equity REIT yields vs. 10-year U.S. Treasury yields

0

2

4

6

8

10

12

Sep

-92

Sep

-93

Sep

-94

Sep

-95

Sep

-96

Sep

-97

Sep

-98

Sep

-99

Sep

-00

Sep

-01

Sep

-02

Sep

-03

Sep

-04

Sep

-05

Sep

-06

Sep

-07

Sep

-08

Sep

-09

yie

ld (

%)

The 3.74% REIT Dividend Yield is 11

bps below the 10 year Treasury Yield

of 3.85% .

Source: SNL, U.S. Federal Reserve

Delinquencies Will Continue to Rise as Cash Flows Deteriorate

We expect deliquencies to rise further in 2010 as property cash flows continue to deteriorate below required coverage levels. While the “Extend and Pretend” trend works for cash-flowing properties, we believe lenders will start to take back assets or owners will start to send back the keys should the properties cost more money than they make to maintain. In addition, we expect to see greater IPO and joint venture activity between lenders and opportunistic investors as banks look for ways to raise capital without booking

losses.

We note in Exhibit 12, that CMBS delinquency rates have risen signficantly over the last

year to 6.5% from less than 1.0% a year ago. Hotels and multi-family showed the greatest

increase reflecting their short leases, which reset to market rents more quickly, and we

would expect them to be among the first sectors to offer acquisition opportunities for

REITs. Rating agency Fitch expects delinquency rates for the 2005-2007 vintages of

CMBS to rise close to 12% in 2010 as overleveraged private buyers have difficulty

refinancing debt maturities and/or property cash flows decline below required interest

coverage levels.

REITs/REAL ESTATE

11

Exhibit 12: CMBS Delinquency Rates

0%

2%

4%

6%

8%

10%

12%

14%

16%

Sep-9

8

Sep-9

9

Sep-0

0

Sep-0

1

Sep-0

2

Sep- 0

3

Sep- 0

4

Sep-0

5

Sep-0

6

Sep-0

7

Sep-0

8

Sep-0

9

Jan- 1

0

Deli

nq

uen

cy R

ate

(%

)

Industrial Lodging Multi-Family Office Retail All

Source: Trepp, Bloomberg, Oppenheimer & Co.

Lack of New Supply Positive for CRE, but Shadow Market Remains a Threat

While new supply as a percentage of stock remains at historically low levels across the

major property types, the shadow market continues to be a threat given weak demand for

space. Sectors with the greatest threat of shadow supply include: office, industrial, and

apartments. Tenants continue to have leverage over landlords in markets where shadow

supply inventory is high, resulting in landlords offering greater concessions and reduced

rents. In addition, existing tenants coming up for renewal are now trying to lock-in long-

term leases at today’s lower rates based on the expectations that market rents are at or

near trough levels. We continue to believe that location and the quality of the asset is very

important as landlords with strong producing assets should be able to push back on

tenants seeking concessions with greater success than those with assets in fringe or

secondary markets that may have a lot of competitive stock. For apartments, operators

are already reducing concessions in some of the stronger rental markets, such as New

York, the DC metro, and Boston.

Exhibit 13: Vacant home levels have begun to tick down Exhibit 14: Limited new Industrial development should

increase pricing power for landlords as absorption grows

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

19

65

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

0

500

1,000

1,500

2,000

2,500

Renter Occupied Homes (000s) For Sale Vacant Homes (000s)

0

25

50

75

100

125

150

2001 2002 2003 2004 2005 2006 2007 2008 2009

Mil

lio

n S

F

Build-to-Suit Speculative

Source: US Census Bureau Source: Grubb & Ellis Co

REITs/REAL ESTATE

12

Exhibit 15: Office space available for sublease rising sharply as job losses continue

0

20

40

60

80

100

120

140

160

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Mil

lio

n S

F

CBD Suburban

Source: Grubb & Ellis Co.

Valuation

REITs currently trade at an average premium to NAV of ~18% and at an implied cap rate

of ~7.0%. On an FAD basis, REITs trade at 18.0x 2010 estimates of $2.33/sh. We note

that on a FW FFO basis, the group trades at 14.2x 2010 estimates of $2.94/sh., a 16.4%

premium to their long-term average of 12.2x NTM FFO, which we feel is fair given the

outlook for a diminishing rate of decline in cash flows that REITs are experiencing.

Exhibit 16: REIT sector average LTM FFO multiple, 1997-2009

0.0x

5.0x

10.0x

15.0x

20.0x

25.0x

Jan-9

1

Jan-9

2

Jan-9

3

Jan-9

4

Jan-9

5

Jan-9

6

Jan-9

7

Jan-9

8

Jan-9

9

Jan-0

0

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Forward FFO M ult ip le

N TM Hist o r ical A verage

C urrent NTM FFO M ult ip le o f

14 .2 x compares wit h 12 .2 X

N TM average

Source: Factset, company data, Oppenheimer & Co.

REITs/REAL ESTATE

13

Exhibit 17: REIT Valuation Metrics by Sector

Implied Premium Implied OPCO Est. Implied

Dividend Price/FAD Price per (Disc) to Return to Nominal Nominal

Property Type Yield 10E 10E Unit/SF NAV NAV Cap Rate Cap Rate

Shopping Centers - Retail 4.4% 13.9x 17.88x $93 16.6% -13.8% 8.0% 7.2%

Regional Malls 1.19% 12.4x 14.91x $186 28.5% -21.8% 8.0% 7.1%

Factory Outlet Centers 3.88% 14.7x 18.61x $256 13.3% -11.7% 8.0% 7.3%

Apartments 4.35% 16.8x 21.08x $122,274 18.2% -14.3% 6.6% 6.1%

Industrial Properties 4.30% 16.1x 23.57x $27 19.0% -15.3% 8.3% 7.5%

Office Properties 3.64% 13.2x 19.93x $269 15.1% -12.6% 7.7% 7.0%

Diversified Properties 3.83% 13.2x 22.38x $267 17.3% -7.2% 8.0% 8.4%

Self-Storage 2.94% 15.9x 17.26x $109 14.0% -11.8% 8.0% 7.2%

Net Lease 6.84% 12.2x 13.12x $289 27.3% -20.6% 0.0% 0.0%

Health Care 5.62% 14.5x 15.41x $9,733 14.5% -12.1% 8.2% 7.3%

Weighted Average / Total 3.81% 14.2x 18.78x NA 18.4% -13.8% 7.6% 7.0%

Price/FFO

Source: Factset, company data, Oppenheimer & Co.

Earnings Expectations by Sector

We expect another year of earnings decline in most sectors for 2010, with the exception of

the healthcare REITs (where we project 18.5% blended internal/external growth) and

senior housing operators (4-6% internal growth), which will likely benefit from improving

market fundamentals and/or based on their use of long-term leases with built-in rent

escalators. We expect earnings in the other major property types to be negatively

impacted by declining NOI and asset sales (see Exhibit 18). As in 2009, we expect REITs

to continue to solve for occupancy (targeting 95%) by reducing rents until the market

clearing prices are met. We expect demand for space to remain weak in most sectors as

sub-let/shadow space remains a threat. We expect operating fundamentals to begin

stabilizing throughout the year as market conditions continue to improve. That said, we

would expect any kind of economic shock related to unemployment, housing, the credit

markets or interest rates to have a negative impact on the pace of the recovery.

Exhibit 18: Sector and sub-sector FFO growth expectations for 2009, 2010 & 2011

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Shopping

Centers

Self-Storage Regional

Malls

Office Industrial Health Care Diversified

Properties

Apartments

08A-09E 09E - 10E 10E-11E

Source: SNL, First Call, Oppenheimer & Co. estimates

REITs/REAL ESTATE

14

2010 Sector Outlook and Stock Recommendations: Grow exposure to Self-Storage, Industrial, Healthcare, Brokers & Senior Housing and reduce exposure to Office and Regional Malls.

Top Buys: FCEA, HCN, CPT, AIV, BKD, ESC, YSI

Top Sell: CBL, EGP, AVB, MAC

Healthcare Sector (Favored Sector)

We recommend investors favor healthcare real estate based on the sector’s stable cash

flows and outlook for greater transaction activity following the finalization of healthcare

reform. The long lease structures of the companies’ assets with built-in rent escalators

should provide stable internal growth (2.0-3.0%). While the sector’s premium valuation

largely reflects this stable internal growth profile, we believe the outlook for improved

transaction volumes could provide for additional upside. We believe that healthcare reform

will have neutral impact on the group, resulting in improved utilization for some of

companies’ tenants partially offset by RUG reimbursement reductions for its skilled

nursing facility operators. We also favor healthcare REITs for their strong balance sheets,

improved liquidity and attractive dividend yields (5.6%) relative to the REIT sector.

Our top idea in the Healthcare sector is Outperform-rated Health Care REIT (HCN:

PT$49) given its solid internal growth profile (estimated 3.0-4.0% NOI growth),

incremental growth from expected development deliveries ($469M in 2010), the

potential for greater transaction activity given the company’s strong balance sheet

and its high-quality list of tenants.

Valuation: The Healthcare sector trades at 15.4x 2010 FW FAD estimates, a 14.4%

discount to the REIT sector average of 18.0x. In addition, the sector trades at an average

14.5% premium to our average forward NAV estimates vs. the REIT sector average of

17.9%.

REITs/REAL ESTATE

15

Exhibit 19: Medical Office Building Construction

350

375

400

425

450

475

500

525

550

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

New SF Constructed (millions) Existing SF (millions)

% Construction of Total Inventory

Source: Costar

Senior Housing Sector (Favored Sector)

We suggest investors favor the senior housing sector given its discounted

valuation relative to our outlook for improving operating fundamentals and greater

transaction activity. We note several positive trends, which should support improved

demand for services including: 1) limited new supply (~7,500 private pay units in 2010); 2)

positive long-term demographics (200,000 seniors turning 80 years old every year with a

5.0-6.0% penetration rate); 3) stabilizing housing/employment markets; 4) greater need

for healthcare services (Alzheimer’s and other dementia care) with the potential of

increasing the penetration rate by ~15.0+% per year over the next ten years; and 5) the

greater use of long-term care insurance to fund future retirement services is growing in

popularity. Risks to the sector include greater regulations on a state and local level, rising

labor costs, a challenged residential market and caps on Medicare reimbursements for

therapy services.

Our favored ideas in the sector are Brookdale Senior Living (BKD: PT $24) and

Emeritus Corp. (ESC: PT $27) given their growing exposure to need-driven Assisted

Living, Alzheimer Care and Skilled Nursing segments of senior housing, the outlook

for greater transactions and discounted valuations.

Valuation. The senior housing sector currently trades at 13.3x 2010 estimated CFFO

estimates vs. the historical average of 11.5x and at 4.5x 2010 estimated EBITDAR.

REITs/REAL ESTATE

16

Exhibit 20: Net Growth in Private-Pay Senior Housing Units (in thousands, excluding Senior Apartments)

0

10

20

30

40

50

60

70

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

E

Th

ou

san

ds o

f U

nit

s

Source: National Investment Center, American Seniors Housing Association

Self-Storage Sector (Favored Sector)

We favor the self-storage space as an early recovery cycle play, and believe that space

should experience above-average same-store NOI growth in the near-to-mid term as the

economic landscape improves. Given the sector is defined by monthly leases, and space

demand is mostly impacted by population movement, life events, and the labor markets,

self-storage operators should be able to regain pricing power in late 2010 as the economy

recovers. In addition, operators aggressively discounted asking rents and increased

incentives in 2009, causing above-average same-store NOI declines. The result of this

was a decline in net-move-outs, which should allow operators to push rates in mid-2010,

giving the possibility for same-store NOI growth late next year. The space has also been

plagued by the weak Florida market, which has shown signs of stabilization. While we

don’t expect Florida to be a growth driver in 2010, we believe the state’s drag effect on

revenue growth will mitigate.

We believe the sector’s valuation is attractive, and given our expectations for above-

average same-store NOI growth, lower cap rates for storage properties can still produce

required unlevered IRR’s for real estate investors. As such, we’ve reduced our assumed

nominal cap rate on PSA and EXR to 8%, and to 8.5% for YSI and SSS. Our best ideas

in the space are Outperform-rated Public Storage (PSA – O: PT $85) and U-Store-It

(YSI – O: PT $8.50). We favor PSA as a premier operator of self-storage properties, with

enough purchasing power to be the main consolidator in a space that is prime for

consolidation. In addition, we prefer YSI in the small cap storage REITs, as we believe its

lower occupancy base could result in above average same-store NOI growth in later 2010-

2011 versus its storage peers.

Valuation: The self-storage sector trades at 15.9X 12-month forward FFO, 17.3X 12-

month forward FAD, and at a 14% premium to our 12-month forward NAV, or a 7.2%

implied nominal cap rate.

REITs/REAL ESTATE

17

Exhibit 21: Self-Storage Same-Store NOI Declines are Nearing Bottoms

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

Self Storage Tot/Wtd. Avg.

Source: Company Reports, Oppenheimer & Co.

Exhibit 22: Rental Declines Have Stabilized, Paving the Way for NOI Growth In Late

2010

-6%

-4%

-2%

0%

2%

4%

6%

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

Self Storage Average


Industrial Sector (Favored Sector)

We are maintaining our positive view of the industrial sector as fundamentals for the

sector tend to benefit earlier from a recovery in the broader economy. Manufacturing and

inventory levels started to show signs of improvement beginning mid-2009, which is

typically followed by positive absorption within 6-12 months and ultimately rent growth (12-

18 months). Thus, we expect vacancies to trough in 2010, followed by a trough in NOI in

1H11. Limited new supply should allow the industrial REITs to push rents as economic

growth and absorption levels improve quicker than in previous cycles. We expect the

industrial REITs to outperform market peers based on the companies’ high-quality assets

in core markets, management and tenant relationships.

REITs/REAL ESTATE

18

Our favored stock within industrials is Perform-rated ProLogis (PLD), as the

company continues to execute on stabilizing it development pipeline, building out its $2.7B

land bank, and using its improved liquidity position to pay down debt and target

opportunistic acquisitions.

Valuation: The industrial sector trades at 23.6x 2010 FAD estimates, a 31.1% premium to

the REIT sector average of 18.0x. Based on NAV, we note that industrial REITs now trade

at an average 19.0% premium and at an implied 7.5% cap rate. The industrial REIT sector

offers an avg. dividend yield of 4.3x%, which is currently above the REIT average of 3.6%.

Exhibit 23:. Industrial REIT NOI Growth Relative to Market NOI Growth Estimates

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

PPR 54 REITS

Source: PPR, SNL

Exhibit 24: Industrial Completion, Absorption, Vacancy Exhibit 25: Industrial Effective Rent and % change

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

Un

its

0%

2%

4%

6%

8%

10%

12%

14%

Net Absorption Net Completions Vacancy

$2

$3

$4

$5

$6

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

Asking Rent (Left Axis) Rent Growth

Source: PPR, Oppenheimer & Co. Inc. estimates Source: PPR, Oppenheimer & Co. Inc. estimates

REITs/REAL ESTATE

19

Exhibit 26: Industrial Market Rankings, 2010

City

Capital

Value

Index NOI Index

Top Markets

Long Island -8.7% -4.0%

New York -9.7% -6.3%

Pittsburgh -11.3% -6.6%

Philadelphia -11.8% -8.0%

Denver -11.8% -5.2%Bottom Markets

San Jose -22.7% -12.0%

Austin -23.0% -16.0%

Miami -24.1% -13.3%

Orlando -26.7% -17.3%Inland Empire -27.6% -11.9%

Source: PPR, Oppenheimer & Co. Inc.

The ISM Is a Leading Indicator of Manufacturing Output

Exhibit 27: Institute of Supply Management Index Vs the Index of Manufacturing

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Jan-

88

Jan-

90

Jan-

92

Jan-

94

Jan-

96

Jan-

98

Jan-

00

Jan-

02

Jan-

04

Jan-

06

Jan-

08

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

ISM PMI Index (left) Total index

Source: ISM, Federal Reserve Board, Oppenheimer, Inc. estimates

REITs/REAL ESTATE

20

Retail: Regional Malls (Less Favored Sector)

We’re revising our neutral stance on the Regional Mall group to less favored. According to

NAREIT data, the Regional mall sector produced a 63% total return in 2009 compared to

a 28% return for the REITs overall, the strongest performing group outside of the Lodging

sector. While we recognize that several of the highly leveraged names were unfairly

discounted early in the year (MAC, CBL), the steep rally has pushed the group to

expensive levels, in our view. The regional mall group currently trades at an implied 7.1%

cap rate, which according to recent comparable sales, tells us that the mall REITs are

trading in line with class A mall valuations. While REITs have been trading at premiums to

private market valuations based on their access to capital and external growth capabilities,

the Regional Mall REITs are now trading at a 28.5% premium to our 12-month forward

NAV estimates, compared to a 17.9% premium for the REITs overall.

In addition, our cautious stance on the Regional Mall group is a result of our preference

toward early cycle recovery sectors. While malls withstood the fundamental downturn in

2009 as a result of long-term leases and healthy tenants, we expect the group’s same-

store NOI growth to lag as the economy recovers. In 2011-2015, regional malls will be

faced with expiring leases signed during more prosperous times, and market rents are not

likely to recover quickly as retail sales growth remains tepid, the consumer savings rate

continues to rise, and retailer expansion plans continue at modest levels. In our view,

investors should pare their exposure to the regional malls until valuation becomes more in

line with modest near-to-mid term same-store NOI growth expectations.

On the other hand, we continue to favor outlet centers as a niche defensive play in an

uncertain consumer environment. The sector continues to outperform the regional malls

on same-store growth, a trend we expect to continue in 2010. Traditional mall tenants

continue to show interest toward creating an outlet concept, as outlets are a low cost,

highly profitable distribution channel for retailers. With the consumer expected to remain

budget-oriented for the near term, we expect outlet centers to remain a bright spot in retail

real estate.

Our best ideas in the sectors are Underperform-rated Macerich (MAC – U: PT $28),

CBL & Associates (CBL – U: PT $9), and Taubman Centers (TCO – UP: PT $30). We

recommend investors accrue shares of our only Outperform- rated stock in the

sector, Tanger Outlet Centers (SKT – O: PT $43).

Lastly, the largest issue surrounding the group is the ultimate fate of General Growth

Properties (GGP, not covered). At this point, it appears that the company will be able to

emerge from bankruptcy in some form, as lenders have agreed on extensions for a

considerable amount of the company’s debt. Only Simon Property (SPG, P), in our view,

can be a major player toward acquiring a significant chunk of the company’s properties,

should an asset sale happen. As such, external growth expectations for the remaining

mall REITs should be low, and premium valuations based on potential growth are not

warranted.

Valuation: The regional mall sector trades at 14.9x our 12-month forward FAD estimates,

at 12.4X FFO and at a 28.5% premium to our 12-month forward NAV, or a 7.1% implied

nominal cap rate.

REITs/REAL ESTATE

21

Exhibit 28: Regional Malls Weighted Avg. Same-Store NOI Growth

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1Q01

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09


Exhibit 29: Regional Mall Last 12 Months Tenant Sales PSF

$350

$370

$390

$410

$430

$450

$470

$490

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

2Q05

3Q05

4Q05

1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09


Exhibit 30: Retail REIT NOI Growth Relative to Market NOI Growth Estimates

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

PPR 54 REITS

Source: PPR, SNL

REITs/REAL ESTATE

22

Exhibit 31: Retail Market Rankings, 2010

City

Capital

Value

Index NOI Index

Top Markets

Cleveland -5.7% -2.7%

Cincinnati -6.2% -2.7%

Wash DC/ NoVA/MD -8.2% -4.0%

Long Island -8.7% -4.6%

Pittsburgh -9.1% -3.4%Bottom Markets

St. Louis -20.1% -9.9%

Inland Empire -20.1% -10.3%

Charlotte -21.4% -11.8%

Fort Lauderdale -23.3% -12.2%Palm Beach County -23.5% -15.3%


Exhibit 32: Retail Completion, Absorption, Vacancy Exhibit 33: Retail Effective Rent and % change

-300,000

-200,000

-100,000

0

100,000

200,000

300,000

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Un

its

0%

5%

10%

15%

20%

25%


$10

$12

$14

$16

$18

$20

$22

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%



Office Sector (Less Favored Sector)

We expect the office sector to relatively underperform in 2010 based on our expectations

for anemic job growth (0.1%) in 2010 and new deliveries (~27.2M SF). As a result,

vacancy rates are expected to rise by ~100bps to ~21.2% in 2010 as net absorption

declines by ~38M SF, not including potential sub-leased space. We also expect asking

rents to decline (~9.2%) and concession packages to grow as tenants maintain leverage

in renegotiating leases. While the economic slowdown appears to be broad-based, we

note that some CBD markets should fare better including: Washington DC; Los Angeles,

CA; San Francisco, CA; Boston, MA; Dallas-Ft. Worth, TX; and Houston, TX. Therefore,

we suggest investors reduce their exposure to companies with large suburban office

market exposure and equal weight companies with large CBD (central business district)

exposures in the previously mentioned markets.

Our top idea in the office sector is Perform-rated Boston Properties (BXP), given the

company’s high-quality, well-located portfolio; long-term leases to investment grade

tenants; clean balance sheet with low effective leverage (41.4% including preferreds) and

a strong liquidity (~$1.3B in cash estimated at YE2009). While we currently rate the

shares as Perform based on BXP’s premium valuation (20.3% premium to our FW NAV

estimate of $56.68), we would look to grow more positive on the shares as we hear of

greater high-quality office assets coming to market in BXP’s core markets.

REITs/REAL ESTATE

23

Valuation: The office sector trades at 19.9x FW FAD, a 10.5% premium to the REIT

industry average of 18.0x. Based on NAV, office REITs trade at an average 14.6%

premium, reflecting investor expectations for slower internal growth and modestly higher

cap rates. We also note that office REITs have a dividend yield of 3.60%, roughly in line

with the REIT industry average of 3.64%.

Exhibit 34: Office REIT NOI Growth Relative to Market NOI Growth Estimates

-15%

-10%

-5%

0%

5%

10%

15%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

PPR 54 REITS

Source: PPR, SNL

Exhibit 35: Office Completion, Absorption, Vacancy Exhibit 36: Office Effective Rent and % change

-200,000

-150,000

-100,000

-50,000

0

50,000

100,000

150,000

200,000

250,000

300,000

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Un

its

0%

5%

10%

15%

20%

25%


$10

$12

$14

$16

$18

$20

$22

$24

$26

$28

$30

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

-15%

-10%

-5%

0%

5%

10%



Exhibit 37: Office Market Rankings, 2010

City

Capital

Value

Index NOI Index

Top Markets

Austin -7.6% -4.4%Kansas City -8.4% -4.6%

Memphis -8.7% -4.8%


Columbus -9.5% -6.1%Bottom Markets

Orange County -22.7% -13.3%

Los Angeles -23.7% -15.9%

Boston -23.9% -13.8%San Francisco -32.1% -19.1%New York -33.5% -18.7%


REITs/REAL ESTATE

24

Retail: Shopping Centers (Neutral Sector)

We’re revising our less favorable stance on the shopping center group to neutral, as the

group had a -2% total return in 2009 compared to a 28% total return for the REITs overall.

Our cautious view on fundamentals remains in tact; however, we believe the sector’s

underperformance in 2009 has brought valuations to levels that more appropriately reflect

internal growth expectations. We remain in favor of companies with demographically

superior assets in high barrier to entry markets that will face less pricing competition and

oversupply issues compared to their peers in low barrier to entry markets. While the third

quarter saw an uptick in leasing velocity, albeit in combination with reduced market rents,

our expectation is that leasing spreads will remain under pressure through at least 2011.

Oversupply remains an issue for the strip center space, which we expect will struggle to

post positive same-store NOI growth until mid to late 2011.

Two themes that we believe will revolve around the sector for the foreseeable future are

credit availability to small business owners and the acquisition market. While the

government extended guarantees for SBA loans until February, credit availability remains

tight and banks continue to be reluctant to provide new loans. Additionally, we have some

concerns on retailer consolidation, and whether some large names in sectors such as

office supplies, electronics, sporting goods and book stores will survive the year. We do

remain bias toward grocery anchored centers in markets less exposed to the housing

bubble. While we have no Outperform-rated names, we would prefer Federal Realty

(FRT- P) should the sector experience a pullback and valuation becomes more

attractive.

While fundamentals are likely to suffer in 2010 for the shopping center space, the

acquisition market should pick up, in our view. The shopping center REITs are well

positioned to grow externally, with both access to the unsecured bond and equity markets

at attractive prices. We see distress emerging from both private real estate managers and

overleveraged joint-venture partners, who should be willing to sell stakes to REITs at

attractive pricing. That said, there is plenty of investment capital on the sidelines, and fire

price sales are unlikely.

Valuation: The shopping center space trades at 13.9X 12-month forward FFO, at 17.9X

12-month forward FAD estimates, and a 16.6% premium to 12-month forward NAV

estimates, or a 7.2% implied cap rate.

Exhibit 38: Strip Center Occupancy Rates Appear to Have Stabilized, Supported by

More Attractive Rents

91.0%

91.5%

92.0%

92.5%

93.0%

93.5%

94.0%

94.5%

95.0%

95.5%

96.0%

1Q

04

2Q

04

3Q

04

4Q

04

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

Occu

pan

cy (

%)

Strip Center Average Occupancy


REITs/REAL ESTATE

25

Apartment Sector (Neutral Sector)

While we are taking a near-term cautious view on the Apartment sector, given our

outlook for anemic job growth, higher borrowing costs (+50-75bps) and premium valuation

relative to our outlook for declining cash flows into 2011 (18.2% average NAV premium),

signs of a recovery lead us to take a Neutral stance as we expect NOI to trough in

2H10. We expect new demand to be driven by a mix of job creation and improved

household formations driven by favorable demographics. We expect graduating “echo-

boomers” to drive demand for rentals as they enter the workforce. Until job growth

improves, we expect these potential renters to take on roommates and/or move-in with

parents, which could limit apartment REIT’s ability to push rents. Lastly, we expect greater

transaction activity in 2010 given the outlook for troughing NOI and compressing debt and

bid/ask spreads. That said, we expect pricing to be highly competitive for institutional

quality assets in the core coastal markets. We expect same-store NOI to decline ~4.0-

6.0% on average driven by a continued roll-down in rents as leases turnover, flat

occupancy and modest expense growth. As a result, we expect apartment earnings to

decline by 6.9% in 2010.

Our top ideas in the apartment sector are Camden Property Trust (CPT, O) and

Apartment Investment & Management Co. (AIV, O). We favor Camden for its improving

market outlook in 2010/2011, strong liquidity, acquisitive nature and discounted valuation.

We favor AIV as we believe the company’s recent asset sales, cost cutting and other

restructuring efforts to translate into improved portfolio quality, operating margins and

earnings growth. Alternatively, we rate the shares of AvalonBay Communities (AVB) as

Underperform as we believe the company’s current implied nominal cap rate (5.2%) is

largely undeserved given our growth outlook for the company markets over the next three

years (-3%/yr), continued development dilution, and the significant competition for assets

in AVB’s markets.

Valuation: The apartment sector trades at 21.1x FW FAD, a 17% premium to the REIT

industry average of 18.0x. We believe the current premium reflects the markets outlook for

a trough in NOI, improving transaction activity and compressing debt yields/risk premiums.

That said, we expect the outlook for rising interest rates and anemic job growth to

negatively impact asset pricing and the ability to push rents. Based on NAV, we note that

apartment REITs currently trade at an average 18.2% premium, and an implied nominal

cap rate of 6.1%. We also note that the Apartment sector dividend yield of 4.3% is at a

modest premium to the REIT industry average of 3.6%.

Exhibit 39: Unemployment

0

2

4

6

8

10

12

1990

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2001

2002

2003

2004

2005

2006

2007

2008

2009

Un

em

plo

ym

en

t R

ate

(%

)

Source: Oppenheimer & Co. Inc., Co-Star, company reports

REITs/REAL ESTATE

26

Exhibit 40: Average Annual Forecast Growth in Households (2010-2014)

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%Atla

nta

Aus

tinBal

timor

eBos

ton

Char

lotte

Chicag

oDalla

s/ F

WDenv

er

Eas

t Bay

For

t Lau

derd

ale

Hous

ton

Inla

nd E

mpi

reLa

s Vega

sLo

ng Is

land

Los

Ange

les

Mia

mi

New Y

ork

N. Cen

tral N

J

Ora

nge

Coun

tyO

rland

o

Phi

lade

lphi

aPho

enix

Rale

igh

Ric

hmon

dSan

Die

go

San

Fra

ncisc

oSan

Jose

Sea

ttle

Sta

mfo

rdTam

paDC

Met

ro

Unite

d S

tate

s

Source: PPR

Exhibit 41: Apartment REIT NOI Growth Relative to Market NOI Growth Estimates

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

PPR 54 REITS

Source: PPR, SNL

REITs/REAL ESTATE

27

Exhibit 42: Apartment Market Rankings, 2010

City

Capital

Value

Index NOI Index

Top Markets

Baltimore -9.3% -7.3%


Wash DC/ NoVA/MD -10.7% -9.0%

Boston -11.9% -11.1%

Honolulu -12.9% -9.6%Bottom Markets

Fort Lauderdale -27.7% -20.6%

Orange County -28.4% -18.7%

Orlando -28.6% -19.7%

San Jose -28.9% -18.5%Miami -31.4% -22.7%


Exhibit 43: Apartment Completion, Absorption, Vacancy Exhibit 44: Apartment Effective Rent and % change

-2,000

48,000

98,000

148,000

198,000

248,000

298,000

348,000

398,000

448,000

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Un

its

0%

2%

4%

6%

8%

10%

12%


$600

$700

$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

-8%

-6%

-4%

-2%

0%

2%

4%

6%



Upgrades/Downgrades

We are making a number of changes based on our revised sector views and our outlook for growth in 2010. See Exhibit 52 for a review of our revised stock calls.

Also, with this report we are transferring coverage of PSA and KIM from Mark Biffert to Samit Parikh.

Public Storage – (PSA: Moving to Outperform from Perform)

We are upgrading the shares of Public Storage to Outperform from Perform, and establishing an $85 price target. While the shares may appear expensive, trading at an implied cap rate of 7%, we feel that PSA’s valuation cannot be judged solely based on the value of its real estate. Given the company’s pristine balance sheet, tested and highly regarded management team, and scale of operations, we believe the shares deserve to be trading at a considerable premium to underlying asset valuation. We also see the next 2-3 years as an unprecedented opportunity for PSA to consolidate the self-storage industry by its own choosing. While we realize that given PSA’s $15B asset base, it would need several sizable acquisitions to move the needle, and believe the company will see several large opportunities both in the private and public arena.

Our upgrade also coincides with moving our opinion on the self-storage space to favored, as we believe the sector will produce above-average internal growth in late 2010-2011, and owning the strongest operator logically makes sense. We also believe that valuation is attractive at current levels on a multiple basis, which appears to be the more proper way

REITs/REAL ESTATE

28

to assess PSA’s shares given its low leverage and strong cash flow growth. Shares of PSA trade at 17X our 12-month-forward FAD and at 15.8X 12-month forward FFO estimates, both in line with the storage sector and modestly below the REITs overall. In our view, PSA deserves a more significant premium. Our $85 price objective is based on our multiple and NAV valuations, placing more emphasis on NAV. We believe PSA should trade at 18.8X 12-month forward FAD, a ~25% premium to our 15X target multiple for the storage sector, and at a 25% premium to our 12-month forward NAV of $68, resulting in a

price target of $85.

Valuation: The shares of PSA currently trade at 17X 12-month-forward FAD estimate, 15.8X 12-month forward FFO projection, and at a 25% premium to our 12-month forward

NAV estimate of $68.

Exhibit 45: Public Storage NAV analysis

(in $ thousands, except per share data) 3Q09A 3Q09A 3Q09A

Total Annualizedl Net Operating Income $973,985 $973,985 $973,985

Cap-ex adjustment ($58,650) ($58,650) ($58,650)

12-Month Forward Economic NOI $915,335 $915,335 $915,335

Assumed Economic Capitalization Rate 7.00% 7.50% 8.00%

Resulting Nominal Cap Rate 7.45% 7.98% 8.51%

Private Market Value of Consolidated Prop $13,076,216 $12,204,468 $11,441,689

NOI from ancillary businesses $100,533 $100,533 $100,533

Assumed Capitalization Rate 10.00% 10.00% 10.00%


NOI from Unconsolidated Partnerships $2,346 $2,346 $2,346

Cap-ex adjustment ($141) ($141) ($141)


Market Value of Unconsolidated Prop $31,507 $29,406 $27,568

NOI from Shurguard Europe $49,172 $49,172 $49,172

Cap-ex Adjustment ($2,950) ($2,950) ($2,950)


Market Value of Shurguard Europe $660,312 $616,291 $577,773

Fair market value of PSB interest 636,867 636,867 636,867

Properties Not Yet Operational 17,735 17,735 17,735

Incremental Value of Completed Development in Lease-up 0 0 0

Total Cash and Equivalents 887,719 887,719 887,719

Notes Receivable 571,783 571,783 571,783

Other Assets 104,892 104,892 104,892

Market Value of Other Assets $1,582,129 $1,582,129 $1,582,129

Private Market Value of Assets $16,992,363 $16,074,494 $15,271,359

Total Liabilities $1,205,135 $1,205,135 $1,205,135

Perpetual Preferred Stock $3,399,777 $3,399,777 $3,399,777

Private Net Market Value of Assets $12,387,451 $11,469,582 $10,666,447

Diluted Shares and OP Units Outstanding 169,293 169,293 169,293

Net Asset Value per Share $73.17 $67.75 $63.01

Share Price (current): 1/8/10 $78.57 $78.57 $78.57

Premium/Discount to NAV 7% 16% 25% Source: Oppenheimer & Co. estimates

Key risks: Risks to our view include rising unemployment and declining migration trends, resulting in reduced demand for self-storage units.

Tanger Outlet Centers – (SKT: Moving to Outperform from Perform)

We are upgrading shares of Tanger Outlet Centers to Outperform from Perform, and establishing a $43 price target. Tanger has been a favored company in the retail sector during the turmoil of the past two years, delivering a 20% total return while the Mall REITs retrenched 18% and SPG grew only 2%. In our view, the company’s relative outperformance will continue in 2010 as concerns over the health of the consumer will persist. We favor the outlet center space as a niche defensive play in retail real estate that will continue to capitalize on retailers’ preference to expand operations into lower cost, higher margin distribution centers with high traffic counts. We’re not expecting the return of the affluent consumer in 2010, and believe frugality among society will continue

to benefit sales and traffic in Tanger’s centers.

REITs/REAL ESTATE

29

We also favor SKT’s superior balance sheet, with nearly all assets unencumbered, and only 32% leverage. SKT has access both to the equity and unsecured markets to fund acquisitions, as well as over $250M of availability on its line of credit. Tanger’s external growth options became more limited following SPG’s acquisition of Prime Outlets;

however, the company has broken ground on its development in Mebane, North Carolina.

In our view, the company deserves a considerable premium valuation, as a result of its stellar balance sheet, ability to raise its dividend (73% payout ratio for 2010), and defensive qualities in a weak consumer environment. Lastly, the company’s modest ~$2B asset base and strong operating platform makes SKT an attractive acquisition target for

companies sitting on large piles of dry powder.

Our $43 price target is based on a weighted average of our multiple and NAV valuation, placing more emphasis on NAV. We assign considerable premiums to both valuation metrics for SKT relative to its peers. Our $43 price target assumes SKT trades at ~20X

12-month forward FAD, and at a 25% premium to our 12-month forward NAV.

Valuation: The shares of SKT currently trade at 18.5X 12-month forward FAD estimate, 14.6X 12-month forward FFO forecast, and at a 10% premium to our 12-month forward

NAV projection of $35.

Exhibit 46: Tanger Outlet Centers NAV analysis


Rental revenues 183,230 183,230 183,230

Tenant reimbursements 78,473 78,473 78,473

Operating expenses (89,971) (89,971) (89,971)

Straight-line rent/FAS 141 (3,469) (3,469) (3,469)

Net incremental NOI - - -

Net Operating Income 168,264 168,264 168,264

Cap-ex Adjustment (21,494) (21,494) (21,494)

Net Operating Income $146,770 $146,770 $146,770



Private Market value of Consolidated Properties $2,174,368 $2,096,712 $2,024,412

Joint-Venture NOI 7,385 7,385 7,385

Straight-line/FAS 141 (152) (152) (152)

JV Economic NOI $7,233 $7,233 $7,233


Private Market value of Unconsolidated Properties $107,161 $103,334 $99,771

Other Income 8,224 8,224 8,224


Value of Other Income 82,242 82,242 82,242

Properties Not Yet Operational $74,250 $74,250 $74,250

Cash & Cash Equivalents 7,764 7,764 7,764

Other Assets 77,950 77,950 77,950

Total Market Value of Assets $2,523,736 $2,442,252 $2,366,389

Debt (593,690) (593,690) (593,690)

SKT's share of unconsolidated debt (103,608) (103,608) (103,608)

Accounts payable (63,099) (63,099) (63,099)

Other current liabilities (7,957) (7,957) (7,957)

Preferred Stock (75,000) (75,000) (75,000)

Total Liabilities + Preferred Stock (843,354) (843,354) (843,354)

Private Net Market Value of Assets 1,680,381 1,598,898 1,523,035

Common Shares and OP Units Outstanding 45,937 45,937 45,937

NAV per share $36.58 $34.81 $33.15 Source: Oppenheimer & Co. estimates

Key risks: Risks to our view is a weakening consumer environment and rising retailer bankruptcies.

Weingarten Realty – (WRI: Moving to Perform from Underperform)

We are upgrading shares of Weingarten Realty to Perform from Underperform. The shares have experienced relative underperformance to the REIT universe, with a -6% total return since 9/22/09 compared to a +5% total return for the REITs overall during the same period. Our previous thesis had called for write-offs in the company’s development pipeline and weak same-store performance to cause shares of WRI to underperform, and those scenarios have played out.

REITs/REAL ESTATE

30

We are upgrading shares in conjunction with moving our opinion on the strip center space to neutral from less favored, a move based on relative underperformance and more appropriate valuation. We are reducing our assumed economic cap rate on WRI to 7.5% from 8% as a result of reduced IRR expectations based on more attractive cost of capital. Our new 12-month forward NAV of $19 assumes a 7.5% economic cap rate, or 8.4% nominal cap rate, which provides a 9.5% 10-year unleveraged IRR based on our same-

store NOI growth projections.

We do remain cautious on the company’s operating performance overall in 2010; however, as oversupply in some of the company’s key markets (AZ, TX), and a generally weak consumer could keep leasing spreads and occupancy under pressure. That said, we do favor the company’s grocery anchored portfolio, which in our view will outperform big-box anchored shopping centers in 2010 as big-box anchor store closings accelerate.

Valuation: WRI’s valuation has dropped to more appropriate levels, with the shares now trading at 18.1X 12-month-forward FAD estimate, 13X 12-month forward FFO and a 11% premium to our 12-month forward NAV projection of $19.

Exhibit 47: Weingarten Realty NAV analysis

(in $ thousands except per share data) 2Q08A 3Q09A 3Q09A 3Q09A

Economic NOI $315,287 $315,287 $315,287

Assumed Economic Cap Rate 7.25% 7.50% 7.75%


Private Market value of consolidated props. $4,348,788 $4,203,828 $4,068,221

Fee Income $3,307 $3,307 $3,307

Multiple 10.0x 10.0x 10.0x

Value of Fee Income $33,067 $33,067 $33,067

Other Income $16,341 $16,341 $16,341


Value of Other Income $81,706 $81,706 $81,706

Developmental Properties Not Yet Operational 193,482 193,482 193,482

Land held for development 140,282 140,282 140,282

Cash & cash equivalents 121,167 121,167 121,167

Receivables 218,598 218,598 218,598

Other assets 107,380 107,380 107,380

Private market value of assets $5,674,381 $5,515,091 $5,366,078

Debt outstanding (2,563,813) (2,563,813) (2,563,813)



Perpetual preferred stock (497,500) (497,500) (497,500)

Total liabilities + preferred stock (3,254,948) (3,254,948) (3,254,948)


Common shares + units outstanding 119,384 119,384 119,384

NAV per share $20.27 $18.93 $17.68

WRI common share price (current) $20.09 $20.09 $20.09

Premium/(Discount) to NAV (1%) 6% 14% Source: Oppenheimer & Co. estimates


Sovran Self-Storage – (SSS: Moving to Perform from Underperform)

We are upgrading the shares of Sovran Self Storage to Perform from Underperform as we have adjusted cap rates lower on self-storage properties to reflect a stronger same-store NOI growth outlook and lower required returns in the midst of more attractive cost of capital. We are reducing our assumed economic cap rate on Sovran to 8%, resulting in a nominal cap rate of 8.6%, and a 12-month forward NAV of $32. In addition, the shares appear appropriately valued on a multiple basis, trading at 16.7X 12-

REITs/REAL ESTATE

31

month forward FAD estimate, versus the storage average of 17.3X. Sovran also has the most attractive and well-covered dividend yield in the sector, currently at 5.0%, and our estimates call for an FAD payout ratio of 83% in 2010.

Our more positive rating on Sovran comes in conjunction with our now favorable stance on the self-storage sector in 2010, as we believe the sector will produce above-average same-store NOI growth in late 2010-2011. Operating performance in Sovran’s portfolio has proven to be relatively healthy versus its storage peers through 3Q09, despite our original view that the company’s exposure to secondary markets would pressure unit demand. Additionally, Florida has remained a drag on SSS’s portfolio for over two years now as oversupply and heated pricing competition has produced weak results. Stabilization has been noted by management teams in Florida, and while the state’s performance won’t likely push NOI growth higher, it’s unlikely to have the same negative

impact.

Valuation: The shares of Sovran trade at 16.7X 12-month-forward FAD estimate and at a 13% premium to its 12-month forward NAV projection of $32.

Exhibit 48: Sovran Self Storage NAV analysis

S ens itiv ity An alysis(in $thousands except per share data) 3Q09A 3Q09A 3Q09A

Quarterly Net Operating Income $113,603 $113,603 113,603

Net Incremental NOI ($2,381) ($2,381) (2,381)

Cap-ex adjustment ($7,786) ($7,786) (7,786)

Net Operating Income $103,437 $103,437 $103,437


Resulting Nominal Capitalization Rate 8.33% 8.60% 8.87%


NOI from Ancillary Businesses $7,859 $7,859 7,859


Market Value of Ancillary Income $62,875 $62,875 $62,875

NOI from unconsolidated JV's $2,315 $2,315 2,315

Cap-ex Adjustment ($162) ($162) (162)


Private Market Value of unconsolidated Prop $27,783 $26,915 $26,099

Developmental Properties Not Yet Operational $0 $0 0

Total Cash and Equivalents $41,396 $41,396 41,396

Other Assets $2,473 $2,473 2,473


Total Liabilities $528,407 $528,407 528,407

Share of unconsolidated debt $16,405 $16,405 16,405

Perpetual Preferred Stock $0 $0 0

Private Net Market Value of Assets $924,384 $881,807 $841,811

Diluted Shares and OP Units Outstanding 27,449 27,449 27,449

Net Asset Value per Share $33.68 $32.12 $30.67

Most Recent Share Price $35.00 $35.00 35.00

Premium/(discount) to NAV 4% 9% 14% Source: Oppenheimer & Co. estimates, company reports


Upgrading Washington REIT (WRE) to Perform from Underperform

We are upgrading the shares of Washington REIT to Perform from Underpeform as we see limited operating downside in the company’s DC metro markets in 2010, given the outlook for improved employment growth and limited new supply. We believe this should translate into stabilizing/expanding rents and occupancy growth in the company’s office, apartment and retail portfolios in 2010, while the industrial assets could remain weak into 2011. The company’s largest rollover comes in the office portfolio with

REITs/REAL ESTATE

32

616,723 SF expiring. While we expect some modest rent roll downs, we note the market is expected to post rent growth over 2009, potentially limiting the downside in the roll down of rents for office. Also, the recent compression in debt spreads and the significant amount of capital looking to do acquisitions in the D.C. market has caused cap rates to compress by ~50bps over the last 60-90 days, improving our view on valuation as we now estimate FW NAV of $25, utilizing a 7.7% nominal cap rate (previous FW NAV of $22 at an 8.2% nominal cap). That said, the shares now trade at a more modest premium (11.5%) to our forward NAV estimate, which we believe justifies a Perform rating. Lastly, we believe the shares offer an attractive dividend yield of 6.3%, relative to the REIT average of 3.6%.

Valuation. We are raising our 12-month forward NAV estimate to $25 from $22, based on lower cap rate assumptions (-50bps) for Washington REIT’s portfolio. Our model assumes a blended economic cap rate of 6.9%, and we note the shares trade at an 11.5% premium to NAV. Our cap rate is determined utilizing a 10-year unlevered IRR analysis, where we conclude that investing in WRE at a 6.9% economic cap rate would result in an 8.4% 10- year unlevered IRR, appropriate in our view considering the risk profile and growth expectations of WRE's assets. Alternatively, we note that the shares trade at 14.7x our 2010 FFO estimate of $1.86, an 11.4% premium to the diversified sector’s 13.2x; and on an FAD basis, the shares trade at 17.7x our 2010 FAD/share estimates of $1.55 per

share, a 20.9% discount to its peers.

Exhibit 49: Washington REIT NAV analysis

Sensitivity Analysis

3Q09A 3Q09A 3Q09A

Multifamily NOI 27,283 27,283 27,283

Economic Cap Rate 6.0% 6.3% 6.8%

Office NOI 83,119 83,119 83,119


Medical Office NOI 30,084 30,084 30,084


Retail NOI 29,132 29,132 29,132


Industrial NOI 26,227 26,227 26,227


Net Incremental NOI 361 361 361

Total NOI 196,206 196,206 196,206

Straight Line Adjustment (2,304) (2,304) (2,304)

Recurrig Cap Ex/Re-leasing costs (20,883) (20,883) (20,883)

Total Economic NOI 173,019 173,019 173,019

Blended Economic Cap Rate 6.6% 6.9% 7.4%

Resulting Nominal Cap Rate 7.4% 7.7% 8.2%Annualization factor - -

Market value of owned properties $2,620,932 $2,525,298 $2,353,542

Other Income 1,200 1,200 1,200

Multiple 7.0x 7.0x 7.0x


Property under development 24,611 24,611 24,611

Development return factor 1.00 1.00 1.00

Properties Not Yet Operational $24,611 $24,611 $24,611

Cash & Cash Equivalents 7,119 7,119 7,119

Other Assets 178,432 178,432 178,432

Total market value of assets $2,839,494 $2,743,860 $2,572,104

Debt (1,220,635) (1,220,635) (1,220,635)



Total Liabilities (1,305,022) (1,305,022) (1,305,022)

Private Net Market Value of Assets 1,534,472 1,438,838 1,267,083


NAV per share $26.21 $24.57 $21.64

WRE common share price at most recent close $27.39 $27.39 $27.39

Premium/(Discount) to NAV 5% 11% 27%

Implied economic cap rate 15.95%

Implied nominal cap rate 17.85% Source: Oppenheimer & Co. estimates, company reports

Key risks: Risks to the upside include better than expected operating fundamentals related to an increase in leasing activity and lower interest rates reflected in a lower

REITs/REAL ESTATE

33

implied cap rate. Alternatively, risks to the downside include greater economic contraction in the DC metro resulting in greater tenant bankruptcies, lower market rents and reduced demand. Also, higher interest rates would have converse impact on property cap rates.

Estimates Changes

HCP, Inc. (HCP: Perform)

We are adjusting our 4Q09/FY09 FFOPS estimates to $0.33/$1.48 from $0.52/$1.67 based on the company’s recent announcement that they plan to take $52M of non-cash charges in 4Q09. This is made up of $48M in non-cash impairment charges tied to the company’s three direct financing leases and a $10M participation in a senior construction loan connected with properties operated by Erickson Retirement Communities representing almost all of HCP’s carrying value in the assets. While these charges are disappointing, they are not surprising given the previous bankruptcy announcement by Erickson Retirement. In addition, HCP recorded $4.0M in non-cash impairment charges tied to a senior secured term loan of an affiliate of the Cirrus Group, which had a carrying value of $85M including $3.0M of accrued interest. Like the Erickson DFL’s, the company established its relationship with The Cirrus Group, a medical office building developer, through its acquisition of CNL Retirement Properties in 2006. HCP is

currently negotiating to restructure the loan.

BioMed Realty (BMR: Perform)

We are raising our FY09/10/11 FFOPS estimates for BioMed Realty to $1.68/$1.32/$1.38 from $1.67/$1.34/$1.44, reflecting the company’s 4Q09 tender offer for $61.27M of its 4.5% Exchangeable Senior Notes due 2026, leaving $46.15M of notes outstanding, its issuance of $180M in 3.75% Exchangeable Senior Notes due 2030 in 1Q10 generating proceeds of $174M, and our outlook for improved leasing in 2010. We maintain our Perform rating, but are growing more positive on the lab/office space given increased investment in the life science industry, potentially driving demand for greater R&D space. However, the company’s current valuation premium to FW NAV (18.0%) and sizeable overall vacancy (27.5%) remain risks.

Ventas, Inc. (VTR: Perform)

We are raising our 2010/11 FFOPS estimates to $2.69/$2.87 from $2.67/$2.85 based on the company’s recent acquisition activity. In December 2009, the company acquired 3 medical office buildings from NexCore totaling 239,000SF for a total purchase price of $62.5M. The assets are 99% leased and earn an 8.2% yield on in-place operating income. Ventas has an existing partnership with NexCore to develop, lease and manage MOB properties. We view this as an attractive growth area for the company over the next several years as the company seeks to diversify its platform to other property types outside of senior housing and skilled nursing. We maintain our Perform rating as we believe the shares currently premium (17.3%) to our FW NAV estimate of $37.45 is fair given out outlook for stable internal growth in the triple-net portfolio (2.0-3.0% NOI growth) and solid growth in the senior housing operating portfolio (4.0-5.0%), as well incremental transaction activity.

Price Target Changes

Raising Price Target for CBL & Associates (CBL – Underperform) to $9 from $7

CBL – We are increasing our price target on CBL to $9 from $7, and maintaining our Underperform rating. The price target revision was primarily driven by an increase in our estimated 12-month forward to ~$9 from ~$7 previously, as we reduced our assumed nominal cap rate to 8.25% (9.2% nominal), from 8.5% (9.5% nominal) previously. Our cap rate reduction is based on an environment of lower required returns, and according to our 10-year unlevered IRR model, an 8.25% economic cap rate on CBL’s properties would provide a 10.25% 10-year unlevered IRR, appropriate in our view, given CBL’s exposure to middle markets and lower sales productivity than its peers. Our $9 price target is based on a weighted average of our FAD multiple and NAV valuations, placing more emphasis on NAV. We assume shares of CBL trade at 8.3X 12-month forward FAD of $1.32, a 45%

discount to our 15X mall target multiple, and in line with our 12-month forward NAV of ~$9.

REITs/REAL ESTATE

34

Exhibit 50: CBL & Associates NAV analysis

(in $thousands except per share data) 3Q09A 3Q09A 3Q09A

Economic NOI 611,552 611,552 611,552

Assumed Economic Cap Rate 8.50% 8.25% 8.00%

Resulting Nominal NOI 9.47% 9.19% 8.91%

Private Market Value of Consolidated Props $7,194,732 $7,412,754 $7,644,403

Net Management Fees & Other Income 10,747 $10,747 10,747


Value of Management Income & Other Income $71,649 $71,649 $71,649

NOI from Unconsolidated JVs $62,267 $62,267 $62,267


Market value of Unconsolidated Properties $732,549 $754,748 $778,333

Properties Not Yet Operational 154,898 $154,898 154,898

Total Cash & Equivalents 63,502 63,502 63,502

Other Assets 338,250 338,250 338,250


Debt ($5,555,782) ($5,555,782) ($5,555,782)

Pro-rata Share of Unconsol. Debt ($599,308) (599,308) ($599,308)

Accounts Payable ($288,206) (288,206) ($288,206)

Preferred Stock ($711,514) (711,514) ($711,514)

Total Liabilities + Prefered Stock ($7,154,810) ($7,154,810) ($7,154,810)


Common Shares + Units Outstanding 189,848 189,848 189,848

NAV per share $7.38 $8.64 $9.99

Price at last close $10.22 $10.22 $10.22

Premium/(Discount) to NAV 39% 18% 2% Source: Oppenheimer & Co. estimates, company reports

Raising Price Target for Macerich Company (MAC - Underperform) to $28 from $24

MAC – We are increasing our price target on Macerich to $28 from $24, and maintaining our Underperform rating. We’re reducing our assumed economic cap rate on MAC’s 12-month forward NAV to 7.25% (8% nominal) from 7.5% (8.3% nominal) to reflect an environment of reduced required returns. According to our 10-year unlevered IRR model, a 7.25% economic cap rate on MAC’s assets would provide a 10-year unlevered IRR of 10%, appropriate in our view, given MAC’s high quality assets and exposure to the Southwest markets. Our new $28 price target is based on a weighted average of our FAD multiple and NAV analysis. Our $28 price target assumes shares of MAC trade at 15.8X 12-month forward FAD of $2.17, and at a modest premium to our 12-

month forward NAV of ~$23.

REITs/REAL ESTATE

35

Exhibit 51: Macerich Company NAV analysis

Sensitivity Analysis


Rental revenues 479,877 479,877 479,877

Tenant reimbursements 227,269 227,269 227,269

Operating expenses (251,720) (251,720) (251,720)

Mgmt Co. Operating Expenses (34,061) (34,061) (34,061)

FAS 141 Revenue / SL Rent (20,900) (20,900) (20,900)

Net incremental NOI (50,977) (50,977) (50,977)

Cap-ex adjustment (61,190) (61,190) (61,190)

Net Operating Income 288,297 288,297 288,297

Annualization factor 1 1.0 1.0

Economic 'Net Operating Income 288,297 288,297 288,297



Market value of consolidated props. $4,118,524 $3,976,506 $3,843,956

Other income/Management Fee Income 53,732 53,732 53,732

Adjustment factor 1.0 1.0 1.0

Other income/Management Fee Income 53,732 53,732 53,732

Assumed capitalization rate 10.0% 10.0% 10.0%


NOI from unconsolidated Joint Ventures 290,934 290,934 290,934

Cap-ex Adjustment - - -

Adjustment factor 1.0 1.0 1.0

NOI from Joint Ventures 290,934 290,934 290,934


Market value of unconsolidated properties $4,156,205 $4,012,887 $3,879,125

Property under development 549,355 549,355 549,355

Development return factor 1.00 1.00 1.00

Development properties not yet operational $549,355 $549,355 $549,355

Land held for investment - - -

Cash & cash equivalents 217,102 217,102 217,102

Other assets 37,409 37,409 37,409

Total market value of assets $9,615,919 $9,330,583 $9,064,270

Debt outstanding (4,450,726) (4,450,726) (4,450,726)Add-back of convertible debt

Joint venture debt (pro-rata share) (2,256,383) (2,256,383) (2,256,383)

Preferred stock - -


Other current liabilities

Total liabilities+pref ($6,786,872) ($6,786,872) ($6,786,872)

NET ASSET VALUE $2,829,047 $2,543,711 $2,277,398


NAV per share $25.96 $23.35 $20.90

MAC common share price at most recent close $29.99 $29.99 $29.99

Premium/(Discount) to NAV 16% 28% 43% Source: Oppenheimer & Co. estimates, company reports

REITs/REAL ESTATE

36

Exhibit 52: OPCO Coverage Summary by Sector

Ticker Company Current rating

Share

Price

2009E

FFO Prev

2010E

FFO Prev

2011E

FFO Prev

2009E

FFO

Revised

2010E

FFO

Revised

2011E

FFO

Revised

Forward

NAV

Previous

Forward

NAV

Revised

Econ.

Cap

Rate

Previous

Econ.

Cap

Rate

Revised

Nom.

Cap

Rate

Previous

Shopping Centers

UBA Urstadt Biddle Properties Perform $14.93 NC NC NC $1.22 $1.15 $1.22 NC $15.27 NC 8.5% 9.6%

SKT Tanger Factory Outlet Outperform $39.42 NC NC NC $2.67 $2.68 $2.71 $31.61 $34.81 7.5% 7.0% 8.5%

REG Regency Centers Perform $35.81 NC NC NC $1.05 $2.24 $2.36 $29.49 $30.91 7.7% 7.5% 8.3%

KIM Kimco Realty Perform $14.13 NC NC NC $0.80 $1.15 $1.16 $11.58 $11.81 7.5% 7.4% 8.5%

FRT Federal Realty Perform $67.16 NC NC NC $3.43 $3.81 $3.93 $49.75 $52.66 6.8% 6.5% 7.4%

WRI Weingarten Realty Perform $21.34 NC NC NC $1.98 $1.64 $1.65 $16.07 $18.93 8.0% 7.5% 8.9%

Self-Storage

YSI U-Store-It Trust Outperform $7.30 NC NC NC $0.74 $0.54 $0.60 NC $8.38 NC 8.0% 8.6%

PSA Public Storage, Inc. Outperform $79.27 NC NC NC $5.55 $4.92 $5.10 $63.01 $67.75 8.0% 7.5% 8.5%

EXR Extra Space Storage Inc. Perform $11.59 NC NC NC $0.97 $0.77 $0.83 $11.57 $12.17 8.0% 7.5% 8.5%

SSS Sovran Self Storage Perform $36.34 NC NC NC $2.34 $2.45 $2.51 $27.96 $32.12 8.5% 8.0% 9.1%

Regional Malls

SPG Simon Property Group Perform $76.70 NC NC NC $5.47 $5.79 $6.01 NC $59.52 NC 7.5% 8.0%

TCO Taubman Centers Underperform $34.28 NC NC NC $0.88 $2.67 $2.71 NC $27.20 NC 7.2% 7.7%

MAC Macerich Company Underperform $32.93 NC NC NC $3.68 $3.15 $3.06 $20.90 $23.35 7.5% 7.3% 8.3%

CBL CBL & Associates Underperform $10.44 NC NC NC $2.39 $1.90 $1.85 $7.38 $8.64 8.5% 8.3% 9.5%

Office Properties

HRP HRPT Properties Trust Perform $6.53 NC NC NC $1.09 $1.11 $1.11 $5.78 $6.79 9.4% 8.8% 11.0%

BXP Boston Properties Perform $68.17 NC NC NC $4.61 $4.13 $4.09 NC $56.68 NC 6.3% 7.1%

Biotech Properties

BMR BioMed Realty Trust Inc. Perform $15.43 $1.67 $1.34 $1.44 $1.68 $1.32 $1.38 $13.68 $13.08 8.5% 8.3% 9.1%

ARE Alexandria Real Estate Perform $63.25 NC NC NC $5.52 $4.28 $4.46 NC $53.69 NC 8.0% 8.1%

Industrial Properties

PLD ProLogis Perform $14.09 NC NC NC $1.34 $0.86 $1.06 $9.71 $11.54 8.0% 7.3% 8.8%

EGP EastGroup Properties, Inc. Underperform $37.45 NC NC NC $3.14 $2.99 $3.02 NC $26.53 NC 8.0% 9.4%

Health Care Properties

HCN Health Care REIT Inc. Outperform $44.17 NC NC NC $3.12 $3.22 $3.41 NC $43.47 NC 8.0% 8.2%

VTR Ventas Perform $43.94 $2.65 $2.67 $2.85 $2.65 $2.69 $2.87 $32.55 $37.45 NC 8.0% 8.0%

SNH Senior Housing Properties TrustPerform $21.90 NC NC NC $1.73 $1.76 $1.85 NC $21.91 NC 9.3% 9.3%

NHP Nationwide Health Prop. Perform $35.03 NC NC NC $2.23 $2.34 $2.43 NC $28.60 NC 8.0% 8.1%

HR Healthcare Realty Trust Perform $21.35 NC NC NC $1.66 $1.42 $1.50 NC $18.82 NC 8.3% 8.3%

HCP HCP, Inc. Perform $30.76 $1.67 $2.18 $2.37 $1.48 $2.18 $2.37 $25.59 $25.65 NC 7.5% 7.9%

Diversified Properties

FCEA Forest City Enterprises Outperform $11.73 NC NC NC $2.15 $2.43 $2.13 NC $16.72 NC 7.9% 8.4%

WRE Washington REIT Perform $27.39 NC NC NC $2.12 $1.86 $1.84 $21.78 $24.57 7.3% 6.9% 8.2%

Apartments

CPT Camden Property Trust Outperform $40.32 NC NC NC $2.97 $2.65 $2.60 NC $42.54 NC 6.1% 6.8%

AIV Apartment Inv & Mgmt Outperform $16.99 NC NC NC $1.34 $1.39 $1.46 NC $17.63 NC 6.3% 7.3%

UDR UDR, Inc. Perform $15.99 NC NC NC $1.15 $1.07 $1.03 NC $13.59 NC 6.3% 6.8%

ESS Essex Property Trust Perform $83.76 NC NC NC $6.81 $4.61 $4.55 NC $73.84 NC 6.0% 6.5%

EQR Equity Residential Perform $33.25 NC NC NC $2.14 $2.07 $2.07 NC $27.78 NC 6.2% 6.5%

AVB AvalonBay Communities Underperform $80.48 NC NC NC $3.89 $3.75 $3.71 NC $58.14 NC 6.2% 6.4%

Senior Housing

Ticker Company Current Rating

Share

Price

2009E

CFFO

Prev

2010E

CFFO

Prev

2011E

CFFO

Prev

2009E

CFFO

Curr

2010E

CFFO

Curr

2011E

CFFO

Curr

Implied

Share

Price

Previous

Implied

Share

Price

Revised

CFFO

Target

Multiple

Previous

CFFO

Target

Multiple

Revised

ESC Emeritus Corp. Outperform $19.44 NC NC NC 1.05$ 2.01$ 2.83$ NC 24.85$ NC 19.66x

BKD Brookdale Senior Living Inc. Outperform $18.58 NC NC NC 1.28$ 2.11$ 2.91$ NC 23.79$ NC 11.30x

Ticker Company Current Rating

Share

Price

2009E

EPS Prev

2010E

EPS Prev

2011E

EPS Prev

2009E

EPS Cur

2010E

EPS Cur

2011E

EPS Cur

DCF

Previous

DCF

Revised

WACC%

Previous WACC%

JLL Jones Lang LaSalle Perform $62.85 NC NC NC $ (0.03) $ 3.12 $ 4.09 NC $46.03 NC 9% Source: SNL, First Call, Oppenheimer & Co. estimates, company reports

REITs/REAL ESTATE

37

Appendix

Exhibit 53: Ventas Income Statement 2007A – 2011E ($ in thousands, except per share data)

2008A $2.74 2009E $2.65 2010E $2.69

(in $ thousands, except per share data) 2007A 2008A 2009E 2010E 2011E 1Q08A 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A 3Q09A 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

FFO: $2.69 $2.74 $2.65 $2.69 $2.87 $0.68 $0.71 $0.69 $0.66 $0.67 $0.68 $0.66 $0.64 $0.65 $0.67 $0.68 $0.69

Operating Income & Expenses

Rental revenues 486,610 495,354 501,497 510,981 523,213 122,707 123,889 124,581 124,177 124,345 125,148 126,002 126,002 126,317 127,264 128,219 129,181

Resident fees & services 282,226 429,257 417,748 430,846 450,846 107,726 107,312 108,610 105,609 102,939 103,399 106,515 104,895 105,779 107,021 108,545 109,501

Operating expenses (198,127) (306,944) (302,875) (310,166) (316,569) (76,957) (71,842) (81,698) (76,447) (75,468) (72,564) (76,338) (78,505) (78,332) (77,314) (76,948) (77,572)

New acq & dev NOI - - 164 6,789 6,857 164 1,691 1,695 1,699 1,704

Net Operating Income $570,709 $617,667 $616,534 $638,450 $664,348 $153,476 $159,359 $151,493 $153,339 $151,816 $155,983 $156,179 $152,556 $155,455 $158,666 $161,515 $162,814

Non-operating Income & Expenses - - - -

General & administrative expense (36,427) (40,651) (40,653) (43,278) (48,710) (8,257) (9,610) (11,626) (11,158) (10,598) (10,355) (9,657) (10,043) (10,345) (10,655) (10,975) (11,304)

Interest income from loans receivable 2,587 8,847 13,343 14,774 16,090 467 1,480 3,426 3,474 3,281 3,333 3,214 3,515 3,599 3,655 3,725 3,795

Professional fees - - - -

EBITDA 536,869 585,863 589,224 609,946 631,728 145,686 151,229 143,293 145,655 144,499 148,961 149,736 146,028 148,709 151,666 154,266 155,305

Interest and other income 2,994 4,330 596 455 532 864 832 1,937 697 286 108 99 103 107 111 116 120

Interest expense (205,256) (206,905) (178,681) (180,396) (180,292) (52,864) (52,444) (51,344) (50,253) (46,613) (44,171) (43,660) (44,237) (45,050) (44,876) (45,185) (45,284)

Depreciation and amortization (total) (234,688) (234,813) (199,559) (202,959) (202,959) (71,660) (57,975) (50,969) (54,209) (49,885) (48,847) (50,349) (50,478) (50,740) (50,740) (50,740) (50,740)

Minority Interest (1,693) (2,684) (2,793) (2,500) (2,500) (478) (545) (1,040) (621) (741) (802) (625) (625) (625) (625) (625) (625)

Preferred stock dividends (5,199) - - - - - - - - - - - - - - -

Income tax benefit, net or minority interest - 1,720 1,762 - - - - 1,720 547 395 410 410 - - - -

Net Income From Continuing Operations 93,027 147,511 210,548 224,546 246,508 21,548 41,097 41,877 42,989 48,093 55,644 55,611 51,200 52,401 55,537 57,831 58,776

Discontinued operations 5,183 17,315 3,616 (480) (480) 954 1,790 622 13,949 417 3,199 120 (120) (120) (120) (120) (120)

Extraordinary Items/Non-recurring 49,343 35,709 (17,529) - - 9,471 2,505 22,196 1,537 (2,153) (9,482) (5,894) - - - -

Gain (loss) on sale 129,566 25,753 66,859 - - 79 25,674 - - 27,871 39,020 (32) - - - -

Net Income to Common Shareholders $277,119 $226,288 $263,494 $224,066 $246,028 $32,052 $71,066 $64,695 $58,475 $74,228 $88,381 $49,805 $51,080 $52,281 $55,417 $57,711 $58,656

Common Shares Outstanding (basic) 122,492 139,559 152,508 156,250 156,250 136,381 138,133 140,759 142,963 143,091 154,441 156,250 156,250 156,250 156,250 156,250 156,250

Common Shares Outstanding (diluted) 122,947 139,900 152,672 156,516 156,516 136,673 138,737 141,141 143,047 143,145 154,510 156,516 156,516 156,516 156,516 156,516 156,516

EPS cont. ops. (basic) $0.76 $1.06 $1.38 $1.44 $1.58 $0.16 $0.30 $0.30 $0.30 $0.34 $0.36 $0.36 $0.33 $0.34 $0.36 $0.37 $0.38

EPS cont. ops. (diluted) $0.76 $1.05 $1.38 $1.43 $1.57 $0.16 $0.30 $0.30 $0.30 $0.34 $0.36 $0.36 $0.33 $0.33 $0.35 $0.37 $0.38

EPS (basic) $2.26 $1.62 $1.73 $1.43 $1.57 $0.24 $0.51 $0.46 $0.41 $0.52 $0.57 $0.32 $0.33 $0.33 $0.35 $0.37 $0.38

EPS (diluted) $2.25 $1.62 $1.73 $1.43 $1.57 $0.23 $0.51 $0.46 $0.41 $0.52 $0.57 $0.32 $0.33 $0.33 $0.35 $0.37 $0.37

Derivation of Funds From Operations (FFO)

Net Income to Common Shareholders 277,119 226,288 263,494 224,066 246,028 32,052 71,066 64,695 58,475 74,228 88,381 49,805 51,080 52,281 55,417 57,711 58,656

Real estate depreciation and amortization 230,015 230,362 199,138 202,959 202,959 70,155 56,213 49,193 54,801 49,738 48,738 50,184 50,478 50,740 50,740 50,740 50,740

Extraordinary Items/Non-recurring (46,994) (33,348) 15,657 - - (9,758) (2,937) (17,068) (3,585) 1,222 8,541 5,894 - - - - -

Minority Interest/OP/Convertible Unit Adjustment - (1,582) (6,276) (6,320) (1,582) (1,620) (1,496) (1,580) (1,580) (1,580) (1,580) (1,580) (1,580)

Gain on sale/Other (129,566) (38,566) (67,808) - - (79) (25,674) 344 (13,157) (27,871) (39,020) (917) - - - - -

Normalized Funds From Operations $330,574 $383,154 $404,205 $420,705 $448,987 92,370 98,668 97,164 94,952 95,697 105,144 103,386 99,978 101,441 104,577 106,871 107,816

Recurring capital expenditures/Tis/LCs (6,371) (8,000) (6,000) (5,000) (4,500) (823) (1,133) (2,512) (3,660) (1,144) (632) (4,000) (5,000) (1,250) (1,250) (1,250) (1,250)

Straight-line rent adjustment (17,311) (14,652) (13,490) (14,000) (10,800) (3,759) (3,670) (3,786) (3,437) (2,938) (3,052) (3,500) (4,000) (3,800) (3,600) (3,400) (3,200)

Capitalized Interest - -

Other items (including FAS 141/142) - - - - - - - - - - - - - - - - -

Funds Available For Distribution (FAD) $306,892 $360,502 $384,715 $401,705 $433,687 $87,788 $93,865 $90,866 $87,855 $91,615 $101,460 $95,886 $90,978 $96,391 $99,727 $102,221 $103,366

Diluted avg shares outstanding (FFO) 122,947 139,900 152,672 156,516 156,516 136,673 138,737 141,141 143,047 143,145 154,510 156,516 156,516 156,516 156,516 156,516 156,516

FFO/share $2.69 $2.74 $2.65 $2.69 $2.87 $0.68 $0.71 $0.69 $0.66 $0.67 $0.68 $0.66 $0.64 $0.65 $0.67 $0.68 $0.69

FAD/share $2.50 $2.58 $2.52 $2.57 $2.77 $0.64 $0.68 $0.64 $0.61 $0.64 $0.66 $0.61 $0.58 $0.62 $0.64 $0.65 $0.66

Dividend/Share $1.90 $2.05 $2.05 $2.15 $2.24 $0.51 $0.51 $0.51 $0.51 $0.51 $0.51 $0.51 $0.51 $0.54 $0.54 $0.54 $0.54

FFO Growth (Y/Y) 0.0% 2.1% 3.6% 1.2% -1.1% -4.3% -4.0% -3.8% -3.1% -1.8% 3.4% 7.8%

FAD Growth (Y/Y) 1.1% 4.1% 4.7% 2.1% -0.4% -2.9% -4.8% -5.4% -3.8% -3.0% 6.6% 13.6%

Dividend Growth (Y/Y) 7.9% 7.9% 7.9% 7.9% 0.0% 0.0% 0.0% 0.0% 5.0% 5.0% 5.0% 5.0%

Payout Ratio (Dividend/FFO) 70.7% 74.9% 77.4% 80.1% 78.0% 75.8% 72.1% 74.4% 77.2% 76.7% 75.3% 77.6% 80.2% 83.0% 80.5% 78.8% 78.1%

Payout Ratio (Dividend/FAD) 76.1% 79.6% 81.4% 83.9% 80.8% 79.8% 75.7% 79.6% 83.4% 80.1% 78.0% 83.7% 88.2% 87.4% 84.5% 82.4% 81.5%

Payout Ratio (Dividend/Net Income) 84.3% 126.7% 118.8% 150.4% 142.4% 218.5% 100.1% 111.8% 125.4% 98.8% 89.6% 161.1% 157.0% 161.1% 152.0% 145.9% 143.6% Source: Oppenheimer & Co. Inc., Company Reports

REITs/REAL ESTATE

38

Exhibit 54: Ventas Balance Sheet 2008A – 2010E ($ in thousands, except per share data)

2008A 2009E 2010E

(in $ thousands) 1Q08A 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A 3Q09A 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

ASSETS:

Real estate:

Land 567,523 569,711 567,474 555,015 554,286 552,712 557,123 558,979 562,735 562,735 562,735 562,735

Buildings and improvements 5,668,239 5,700,555 5,694,198 5,593,024 5,592,051 5,603,042 5,641,309 5,665,120 5,704,447 5,705,697 5,706,947 5,708,197

Depreciation & Amortization (855,148) (905,608) (951,523) (987,691) (1,036,617) (1,075,293) (1,126,516) (1,176,994) (1,227,734) (1,278,473) (1,329,213) (1,379,953)

Construction in Process 998 1,642 9,533 12,591 21,176 18,319 8,611 8,611 8,611 8,611 8,611 8,611

Loans receivables, net 19,945 118,565 113,606 123,289 130,076 125,106 125,410 125,410 125,410 125,410 125,410 125,410

Net Real Estate Investments $5,401,557 $5,484,865 $5,433,288 $5,296,228 $5,260,972 $5,223,886 $5,205,937 $5,181,126 $5,173,469 $5,123,980 $5,074,490 $5,025,000

Cash and cash equivalents 51,347 29,268 115,923 176,812 95,806 46,523 70,889 115,865 115,865 115,865 118,175 138,272

Escrow deposits and restricted cash 52,621 40,038 43,841 55,866 38,275 94,470 96,477 96,477 96,477 96,477 96,477 96,477

Deferred financing costs, net 21,978 20,742 19,292 20,598 29,935 29,569 27,804 27,804 27,804 27,804 27,804 27,804

Subscriptions receivable 2,109 1,752 1,769 - - - - - - - - -

Other assets $122,176 $140,396 $200,735 $220,480 $168,858 $176,413 $186,203 $196,610 $212,490 $214,956 $235,621 $239,445

TOTAL ASSETS $5,651,788 $5,717,061 $5,814,848 $5,769,984 $5,593,846 $5,570,861 $5,587,310 $5,617,882 $5,626,105 $5,579,081 $5,552,567 $5,526,998

LIABILITIES AND SHAREHOLDERS' EQUITY:

Senior notes payable and other debt 3,157,111 3,251,418 3,135,350 2,847,487 2,729,991 2,605,902 2,605,429 2,638,399 2,696,799 2,696,799 2,696,799 2,696,799

Line of Credit 300,207 212,410 10,402 9,713 36,449 18,216 - - -

Deferred revenue 8,700 8,050 7,564 7,057 6,307 5,305 4,628 4,628 4,628 4,628 4,628 4,628

Interest rate swap agreements - - - - - - - - - - - -

Accrued dividend - - - - - - - - - - - -

Accrued interest 46,748 20,261 46,255 21,931 42,121 16,952 35,481 35,481 35,481 35,481 35,481 35,481

Accounts payable and other accrued liabilities 142,386 142,399 152,666 168,198 161,775 164,659 175,125 175,125 175,125 175,125 175,125 175,125

Deferred income taxes 286,153 282,080 256,525 257,499 255,570 255,175 254,622 254,622 254,622 254,622 254,622 254,622

Other liabilities - - - - - - - - - - - -

Total Liabilities $3,641,098 $3,704,208 $3,598,360 $3,602,379 $3,408,174 $3,058,395 $3,084,998 $3,144,704 $3,184,871 $3,166,655 $3,166,655 $3,166,655

Minority interest 32,316 30,957 28,901 19,137 17,864 17,823 17,409 17,409 17,409 17,409 17,409 17,409

Preferred stock - - - - - - - - - - - -

Common stock 34,592 34,619 35,823 35,825 35,867 39,138 39,155 39,155 39,155 39,155 39,155 39,155

Capital in excess of par value 2,015,661 2,021,074 2,242,345 2,244,596 2,267,440 2,565,933 2,570,146 2,570,146 2,570,146 2,570,146 2,570,146 2,570,146

Unearned compensation on restricted stock - - - - - - - - - - - -

Accumulated other comprehensive income (loss) 14,819 12,831 4,835 (21,089) (18,322) (1,411) 15,080 15,080 15,080 15,080 15,080 15,080

Retained earnings (deficit) (86,698) (86,610) (95,414) (110,407) (117,124) (109,012) (139,478) (168,612) (200,556) (229,364) (255,878) (281,447)

Treasury stock - (18) (2) (457) (53) (5) - - - - - -

Total Stockholder's Equity 1,978,374 1,981,896 2,187,587 2,148,468 $2,185,672 $2,512,466 $2,502,312 $2,473,178 $2,441,234 $2,412,426 $2,385,912 $2,360,343

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $5,651,788 $5,717,061 $5,814,848 $5,769,984 $5,593,846 $5,570,861 $5,587,310 $5,617,882 $5,626,105 $5,579,081 $5,552,567 $5,526,998 Source: Oppenheimer & Co. Inc., Company Reports

REITs/REAL ESTATE

39

Exhibit 55: HCP Income Statement 2007A – 2011E ($ in thousands, except per share data)

2008A $2.25 2009E $1.48 2010E $2.18

(in $ thousands, except per share data) 2007A 2008E 2009E 2010E 2011E 1Q08A 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A 3Q09A 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

FFO: $2.14 $2.25 $1.48 $2.18 $2.37 $0.56 $0.51 $0.71 $0.48 $0.50 $0.55 $0.11 $0.34 $0.52 $0.54 $0.55 $0.57

Operating Income & Expenses

Rental revenues 916,634 972,681 973,727 1,005,392 1,052,593 235,736 235,786 253,872 247,287 237,252 252,763 240,830 242,882 245,131 250,358 253,265 256,638

Operating expenses (186,895) (197,354) (185,978) (192,107) (199,872) (51,428) (47,580) (49,846) (48,500) (47,676) (45,205) (46,173) (46,924) (47,320) (47,788) (48,261) (48,738)

New acq & dev NOI 0 0 375 8,630 14,486 375 1,133 1,814 2,498 3,185


Non-operating Income & Expenses

Income from direct financing leases 63,852 58,149 52,779 53,910 53,910 14,974 14,129 14,543 14,503 12,925 13,204 13,173 13,477 13,477 13,477 13,477 13,477

Investment management fee income 13,669 5,922 5,474 5,363 5,363 1,467 1,457 1,523 1,475 1,438 1,369 1,326 1,341 1,341 1,341 1,341 1,341

Equity income (loss) from unconsolidated JVs 5,645 3,326 3,370 6,399 8,102 1,288 1,221 1,227 (410) (462) 1,127 1,328 1,377 1,468 1,555 1,644 1,732

General & administrative expense (72,906) (75,961) (80,943) (72,640) (74,939) (20,538) (18,840) (17,541) (19,042) (18,991) (20,932) (22,860) (18,160) (18,160) (18,160) (18,160) (18,160)

EBITDA 739,999 766,763 768,804 814,947 859,643 181,499 186,173 203,778 195,313 184,486 202,326 187,624 194,368 197,070 202,598 205,804 209,475

Interest Expense (356,883) (349,030) (303,471) (318,322) (329,287) (96,370) (85,509) (83,249) (83,902) (76,674) (75,340) (74,039) (77,418) (78,673) (78,973) (79,932) (80,744)

Interest and other income 77,331 156,750 130,975 159,325 178,798 35,326 30,739 62,312 28,373 24,333 28,732 39,962 37,948 39,023 39,023 40,098 41,180

Perpetual preferred dividends (21,130) (21,130) (21,131) (21,131) (21,131) (5,283) (5,283) (5,282) (5,282) (5,283) (5,283) (5,282) (5,283) (5,283) (5,283) (5,283) (5,283)

Depreciation and amortization (277,952) (316,535) (325,462) (338,098) (347,737) (79,276) (78,308) (77,659) (81,292) (80,537) (79,606) (82,301) (83,018) (83,621) (84,223) (84,826) (85,428)

Discontinued operations 17,151 15,170 1,628 (608) (608) 7,056 5,469 3,198 (553) 659 1,273 (152) (152) (152) (152) (152) (152)

Income taxes 0 (3,873) (1,434) 0 0 (2,245) (1,274) (866) 512 (915) (841) 322 0 0 0 0 0

One time charges 0 (27,451) (73,029) 0 0 0 (9,715) (3,710) (14,026) 0 (5,906) (15,123) (52,000) 0 0 0 0

Net Income Before Minority Interest $178,516 $220,664 $176,880 $296,113 $339,679 $40,707 $42,292 $98,522 $39,143 $46,069 $65,355 $51,011 $14,445 $68,365 $72,990 $75,710 $79,048

Minority interest (24,356) (21,903) (16,042) (15,580) (15,580) (5,716) (5,536) (5,803) (4,848) (4,141) (4,111) (3,895) (3,895) (3,895) (3,895) (3,895) (3,895)

Net Income Before Asset Sales $154,160 $198,761 $160,838 $280,533 $324,099 $34,991 $36,756 $92,719 $34,295 $41,928 $61,244 $47,116 $10,550 $64,470 $69,095 $71,815 $75,153

Extraordinary Items 0 0 (101,973) 0 0 0 0 0 0 0 0 (101,973) 0 0 0 0 0

Gain on sale 413,725 228,604 34,357 0 0 10,138 190,256 27,416 794 1,357 30,540 2,460 0 0 0 0 0

Net Income $567,885 $427,365 $93,222 $280,533 $324,099 $45,129 $227,012 $120,135 $35,089 $43,285 $91,784 ($52,397) $10,550 $64,470 $69,095 $71,815 $75,153

EPS $2.71 $1.79 $0.34 $0.96 $1.11 $0.21 $0.96 $0.49 $0.14 $0.17 $0.35 ($0.18) $0.04 $0.22 $0.24 $0.25 $0.26

Real estate depreciation and amortization 281,112 321,236 325,579 338,098 347,737 82,358 79,688 77,706 81,484 80,598 79,606 82,357 83,018 83,621 84,223 84,826 85,428

Gain on sale (413,658) (228,604) (34,357) 0 0 (10,138) (190,256) (27,416) (794) (1,357) (30,540) (2,460) 0 0 0 0 0

Joint venture FFO adjustments 13,752 18,279 20,052 18,676 18,676 4,684 3,243 4,638 5,714 5,493 5,221 4,669 4,669 4,669 4,669 4,669 4,669

Extraordinary Items 0 0 23 0 0 0 0 0 0 0 23 0 0 0 0 0

Dividends on convertible partnership units 14,933 12,974 4,561 0 0 4,767 2,396 3,992 1,819 1,620 2,941 0 0 0 0 0

Funds From Operations $464,024 $551,250 $409,081 $637,307 $690,512 $126,800 $122,083 $179,055 $123,312 $129,639 $149,035 $32,169 $98,238 $152,760 $157,987 $161,310 $165,250

Recurring capital expenditures, TI/LCs (26,000) (62,232) (38,480) (36,148) (36,148) (18,395) (14,766) (12,876) (16,195) (10,203) (10,203) (9,037) (9,037) (9,037) (9,037) (9,037) (9,037)

Straight-line rent adjustment (56,397) (35,000) (30,000) (25,000) (20,000) (10,968) (10,904) (10,440) (12,100) (12,461) (12,500) (14,321) (12,500) (12,500) (12,500) (12,500) (12,500)

Capitalized Interest (9,362) (7,538) (5,579) 0 (6,020) (6,327) (6,600) (6,500) (6,300) (6,000) (5,700) (5,500)

Other (incl. FAS 141/142) 19,226 29,051 123,449 0 0 1,200 9,715 3,710 14,426 0 5,906 117,543 0 0 0 0 0

Funds Available For Distribution (FAD) $400,853 $483,069 $464,050 $576,159 $634,364 $89,275 $98,590 $153,870 $109,443 $100,955 $125,911 $119,754 $70,201 $124,923 $130,450 $134,073 $138,213

Diluted avg shares outstanding (EPS) 209,509 238,235 273,816 291,486 291,486 217,663 236,467 245,906 252,904 253,423 265,542 284,812 291,486 291,486 291,486 291,486 291,486

Diluted avg shares outstanding (FFO) 217,210 244,917 276,387 291,908 291,908 227,183 241,682 253,956 256,847 256,949 271,457 285,234 291,908 291,908 291,908 291,908 291,908

FFO per share $2.14 $2.25 $1.48 $2.18 $2.37 $0.56 $0.51 $0.71 $0.48 $0.50 $0.55 $0.11 $0.34 $0.52 $0.54 $0.55 $0.57

FAD per share $1.85 $1.97 $1.68 $1.97 $2.17 $0.39 $0.41 $0.61 $0.43 $0.39 $0.46 $0.42 $0.24 $0.43 $0.45 $0.46 $0.47

Dividend $1.78 $1.78 $1.84 $1.91 $1.97 $0.45 $0.45 $0.45 $0.45 $0.46 $0.46 $0.46 $0.46 $0.48 $0.48 $0.48 $0.48

FFO growth (YOY) 17.1% 5.4% -34.2% 47.5% 8.3% 12.5% -12.4% 34.5% -10.7% -9.6% 8.7% -84.0% -29.9% 3.7% -1.4% 390.0% 68.2%

FAD growth (YOY) 15.7% 6.9% -14.9% 17.6% 10.1% -11.6% -16.7% 52.1% 10.8% 0.0% 13.7% -30.7% -43.6% 8.9% -3.7% 9.4% 96.9%

Dividend growth (YOY) 4.7% 0.0% 3.4% 4.0% 3.0% 0.0% 0.0% 0.0% 0.0% 3.4% 3.4% 3.4% 3.4% 4.0% 4.0% 4.0% 4.0%



Payout Ratio (Dividend/Net Income) 65.7% 99.2% 540.5% 198.8% 177.3% 214.6% 46.4% 91.1% 320.7% 269.3% 133.1% -250.0% 1270.9% 216.3% 201.8% 194.2% 185.6% Source: Oppenheimer & Co. Inc., Company Reports

REITs/REAL ESTATE

40

Exhibit 56: HCP Balance Sheet 2008A – 2010E ($ in thousands, except per share data)

2007A 2008A 2009E 2010E

(in $ thousands) 1Q07A 2Q07A 3Q07A 4Q07A 1Q08A 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A 3Q09A 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

ASSETS:

Real estate:

Land $868,486 $770,010 $1,601,529 $1,620,721 $1,593,350 $1,560,756 $1,563,167 $1,551,168 $1,550,286 $1,550,490 $1,548,845 $1,556,201 $1,562,056 $1,567,912 $1,573,767 $1,579,623

Buildings and improvements 6,992,649 6,205,698 8,017,019 7,984,935 7,738,776 7,626,209 7,733,690 7,762,217 7,758,432 $7,796,873 $7,804,118 $7,845,799 $7,878,981 $7,912,162 $7,945,344 $7,978,525

Developments in process 31,008 29,056 266,903 372,947 330,730 308,169 249,837 224,361 240,690 255,565 273,567 271,067 261,067 251,067 236,067 221,067

Depreciation & Amortization (628,977) (618,321) (672,401) (728,804) (722,224) (725,751) (781,903) (827,655) (880,881) (940,544) (1,003,177) (1,086,195) (1,169,816) (1,254,039) (1,338,865) (1,424,293)

Net Property & Equipment $7,263,166 $6,386,443 $9,213,050 $9,249,799 $8,940,632 $8,769,383 $8,764,791 $8,710,091 $8,668,527 $8,662,384 $8,623,353 $8,586,872 $8,532,288 $8,477,102 $8,416,313 $8,354,922

Investments in direct financing leases $679,956 $682,176 $637,742 $640,052 $642,572 $645,079 $647,429 $648,234 $648,411 $648,864 $634,233 $634,233 $634,233 $634,233 $634,233 $634,233

Loans receivable, net $199,303 $203,147 $159,879 $1,065,485 $1,068,093 $1,072,811 $1,068,240 $1,076,392 $1,074,874 $1,078,418 $1,674,329 $1,674,329 $1,674,329 $1,674,329 $1,674,329 $1,674,329

Investments in unconsolidated JVs 173,689 214,904 248,676 248,894 281,102 278,479 275,593 272,929 267,350 $264,346 $261,364 $261,364 $261,364 $261,364 $261,364 $261,364

Accounts receivable, net 33,960 33,652 34,403 44,892 32,849 31,920 30,011 34,211 29,046 29,535 36,824 36,824 36,824 36,824 36,824 36,824

Cash and cash equivalents 102,923 351,217 568,853 132,696 154,000 216,789 117,052 57,562 66,376 49,484 144,366 108,787 87,768 71,890 64,245 60,452

Other assets 938,089 1,007,787 1,233,530 1,139,954 1,380,816 1,209,269 1,128,288 1,050,407 1,046,705 1,052,819 963,741 963,741 963,741 963,741 963,741 963,741

TOTAL ASSETS $9,391,086 $8,879,326 $12,096,133 $12,521,772 $12,500,064 $12,223,730 $12,031,404 $11,849,826 $11,801,289 $11,785,850 $12,338,210 $12,266,150 $12,190,547 $12,119,482 $12,051,049 $11,985,865


Bank line of credit $190,000 $0 $0 $951,700 $1,018,600 $0 $0 $150,000 $235,000 $100,000 $0 $0 $0 $0 $0 $0

Unsecured debt $3,232,630 $3,223,422 $3,224,215 $5,169,950 $5,170,868 $4,971,786 $4,042,689 $4,043,513 $4,044,338 $3,718,147 $3,720,577 $3,720,577 $3,720,577 $3,720,577 $3,720,577 $3,720,577

Mortgage debt $1,650,184 $1,369,382 $4,143,502 $1,389,257 $1,381,472 $1,621,644 $1,907,649 $1,743,943 $1,704,885 $1,691,696 $1,863,404 $1,863,404 $1,863,404 $1,863,404 $1,863,404 $1,863,404

Accounts payable and accrued expenses 166,661 166,648 214,809 233,342 249,714 223,389 224,680 211,691 190,100 197,295 310,493 310,493 310,493 310,493 310,493 310,493

Deferred revenue & Intangible Liabilities 189,492 174,685 330,724 334,543 338,025 326,221 314,806 292,839 296,054 287,287 394,259 394,259 394,259 394,259 394,259 394,259

Total Liabilities $5,428,967 $4,934,137 $7,913,250 $8,078,792 $8,158,679 $7,143,040 $6,489,824 $6,441,986 $6,470,377 $5,994,425 $6,288,733 $6,288,733 $6,288,733 $6,288,733 $6,288,733 $6,288,733

Minority Interest 341,731 340,802 339,027 339,271 313,738 273,036 248,241 206,569 201,650 180,029 179,673 179,673 179,673 179,673 179,673 179,673

Preferred stock 285,173 285,173 285,173 285,173 285,173 285,173 285,173 285,173 285,173 285,173 285,173 295,500 295,500 295,500 295,500 295,500

Common stock 205,987 206,379 207,277 216,819 217,816 236,512 251,926 253,601 253,975 275,253 293,145 293,145 293,145 293,145 293,145 293,145

Additional paid-in capital 3,378,858 3,392,612 3,413,124 3,724,739 3,755,433 4,349,399 4,835,014 4,873,727 4,870,942 5,298,213 5,708,534 5,708,534 5,708,534 5,708,534 5,708,534 5,708,534

Acccumulated other comprehensive income 18,512 14,318 7,718 (2,102) (55,897) (8,198) (28,881) (81,162) (77,469) (18,819) (9,838) 41,858 105,702 174,084 245,097 319,360

Cumulative dividends (2,352,123) (2,449,360) (69,436) (120,920) (174,878) (55,232) (49,893) (130,068) (203,359) (228,424) (407,210) (541,293) (680,740) (820,187) (959,634) (1,099,080)

Other equity 2,083,981 2,155,265 - - - - - - - - - - - - - -

Total Stockholder's Equity $3,620,388 $3,604,387 $3,843,856 $4,103,709 $4,027,647 $4,807,654 $5,293,339 $5,201,271 $5,129,262 $5,611,396 $5,869,804 $5,797,744 $5,722,141 $5,651,076 $5,582,643 $5,517,459

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $9,391,086 $8,879,326 $12,096,133 $12,521,772 $12,500,064 $12,223,730 $12,031,404 $11,849,826 $11,801,289 $11,785,850 $12,338,210 $12,266,150 $12,190,547 $12,119,482 $12,051,049 $11,985,865 Source: Oppenheimer & Co. Inc., Company Reports

REITs/REAL ESTATE

41

Exhibit 57: BioMed Properties, Inc. Income Statement 2007A – 2011E ($ in thousands, except per share data)

2008A $1.82 2009E $1.68 2010E $1.32

(in $ thousands except per share data) 2007A 2008E 2009E 2010E 2011E 1Q08A 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A 3Q09A 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

FFO per share: $1.91 $1.82 $1.68 $1.32 $1.38 $0.46 $0.47 $0.48 $0.42 $0.56 $0.48 $0.35 $0.32 $0.33 $0.33 $0.33 $0.34

Operating Income and Expenses

Base Rent 195,995 227,464 270,539 279,545 290,736 $50,342 $54,223 $59,381 $63,518 $68,419 65,716 68,472 67,932 68,705 69,487 70,277 71,077

Recoveries from Tenants 61,735 72,166 77,270 76,496 79,294 $16,582 $15,804 $20,911 $18,869 21,081 17,189 19,240 19,760 19,160 18,891 19,111 19,334

Other Income 8,379 2,343 13,575 2,792 2,792 $434 $744 $519 $646 $4,451 $3,175 $5,251 $698 $698 $698 $698 $698

Total Revenue $266,109 $301,973 $361,383 $358,833 $372,821 $67,358 $70,771 $80,811 $83,033 $93,951 $86,080 $92,963 $88,389 $88,563 $89,075 $90,086 $91,109

Property Expenses (50,790) (61,601) (75,035) (73,369) (75,591) ($13,865) ($13,454) ($17,027) ($17,255) ($22,152) ($14,661) ($18,726) ($19,496) ($18,550) ($18,067) ($18,272) ($18,480)

Real Estate Taxes (20,354) (23,128) (31,413) (34,372) (36,090) ($5,269) ($4,915) ($6,763) ($6,181) (7,233) ($7,613) ($8,233) ($8,334) ($8,436) ($8,540) ($8,645) ($8,751)

Incremental NOI from Acq/Dis/Dev - - 1,655 9,740 14,285 - 1,655 2,233 2,268 2,438 2,802


NOI Growth Q/Q 22% 11% 18% 2% 6% 0% 9% 9% 5% 8% -1% 3% -6% 3% 1% 1% 2%

Equity in Earnings of Unconsolidated Entities (892) (1,199) (2,480) (2,325) (2,229) ($172) $43 ($208) ($862) (301) ($465) ($1,118) ($596) ($590) ($584) ($578) ($572)

G&A expense (21,870) (22,834) (22,503) (26,379) (29,545) ($6,194) ($5,645) ($4,589) ($6,406) (5,280) (5,126) (5,956) (6,141) (6,317) (6,499) (6,686) (6,878)

EBITDA $172,203 $193,211 $231,607 $232,129 $243,651 $41,858 $46,800 $52,224 $52,329 $58,985 $58,215 $58,930 $55,477 $56,902 $57,653 $58,343 $59,230

Depreciation and Amortization (72,201) (84,227) (108,972) (105,687) (107,027) ($17,687) ($19,331) ($21,506) ($25,703) (27,313) (24,501) (30,953) (26,205) (26,366) (26,366) (26,422) (26,533)

Interest Income and other non-rental income 990 486 288 248 248 $155 $106 $110 $115 63 101 62 62 62 62 62 62

Interest expense (inc. capitalized int. & amort of loan cost) (27,653) (39,613) (64,614) (84,241) (90,358) ($6,937) ($8,629) ($12,309) ($11,738) (12,080) (12,875) (19,614) (20,045) (20,054) (21,159) (21,405) (21,623)

Discontinued Operations 639 - - - - - - - - -

Net Income -- before Gains & Extr. Items $73,978 $69,857 $58,310 $42,449 $46,514 $17,389 $18,946 $18,519 $15,003 $19,655 $20,940 $8,425 $9,290 $10,544 $10,190 $10,579 $11,135

Extraordinary items 1,087 (2,882) 6,442 - - ($726) ($2,156) 4,315 2,141 (14)

Net Income before Minority Interest/Preferreds $75,065 $66,975 $64,752 $42,449 $46,514 $17,389 $18,946 $17,793 $12,847 $23,970 $23,081 $8,411 $9,290 $10,544 $10,190 $10,579 $11,135

Noncontrolling interests (2,530) (2,077) (1,566) (432) (432) ($581) ($620) ($570) ($306) (705) (645) (108) (108) (108) (108) (108) (108)

Preferred Dividend (16,870) (16,964) (16,911) (16,750) (16,750) ($4,241) ($4,241) ($4,241) ($4,241) (4,241) (4,241) (4,241) (4,188) (4,188) (4,188) (4,188) (4,188)

Net Income to Common $55,665 $47,934 $46,275 $25,266 $29,331 $12,567 $14,085 $12,982 $8,300 $19,024 $18,195 $4,062 $4,994 $6,249 $5,895 $6,283 $6,840

Earnings per share $0.85 $0.67 $0.50 $0.26 $0.30 $0.19 $0.20 $0.18 $0.10 $0.23 $0.20 $0.04 $0.05 $0.06 $0.06 $0.06 $0.07

Minority Interest 2,485 2,086 1,610 432 432 $589 $619 $559 $319 722 658 122 108 108 108 108 108

Total Depr & Amortization 73,054 86,274 111,543 108,264 109,604 18,130 19,773 22,022 26,349 27,955 25,144 31,595 26,849 27,010 27,010 27,066 27,178

Other (1,087) - - - -

Funds From Operations (Diluted) 130,117 136,294 159,429 133,962 139,368 31,286 34,477 35,563 34,968 47,701 43,997 35,779 31,952 33,367 33,013 33,457 34,126

Master lease receipts 928 103 - - - $103 $0

Second generation cap ex (1,518) (3,308) (3,058) (6,521) (6,886) ($702) ($464) ($1,037) ($1,105) ($1,285) ($256) ($273) ($1,244) ($1,595) ($1,618) ($1,640) ($1,667)

Tenant Improvement/Leasing Commissions - - (1,552) (5,299) (3,588) $0 $0 ($1,552) ($1,027) ($1,424) ($1,424) ($1,424)

Capitalized Interest - (27,257) (10,745) (800) (800) ($11,844) ($8,574) ($6,839) ($4,130) ($3,472) ($2,943) ($200) ($200) ($200) ($200) ($200)

Non cash equity compensation 5,528 6,105 5,539 5,504 5,504 $1,382 $1,456 $1,496 $1,771 1,404 $1,383 $1,376 $1,376 $1,376 $1,376 $1,376 $1,376

Straight line rents (FAS 142) (16,392) (21,759) (23,352) (24,888) (24,888) ($4,296) ($6,315) ($5,892) ($5,256) (4,061) ($6,847) ($6,222) ($6,222) ($6,222) ($6,222) ($6,222) ($6,222)

Fair value lease revenue (FAS 141) (3,408) (5,007) (6,205) (3,464) (3,464) ($1,139) ($1,140) ($1,134) ($1,594) (3,581) ($892) ($866) ($866) ($866) ($866) ($866) ($866)

Funds Available for Distribution $117,735 $91,765 $114,194 $100,008 $106,780 27,095 16,926 21,971 25,773 33,620 32,805 25,743 22,026 25,209 24,404 24,857 25,538 - - - - -

Diluted avg shares/units outstanding (FFO) 68,271 74,805 94,923 101,289 101,289 68,430 73,248 74,715 82,827 84,499 92,616 101,289 101,289 101,289 101,289 101,289 101,289

Diluted average common shares (EPS) 65,354 71,688 91,673 98,137 98,137 65,364 70,127 71,554 79,707 81,084 89,335 98,137 98,137 98,137 98,137 98,137 98,137

Diluted FFOPS $1.91 $1.82 $1.68 $1.32 $1.38 $0.46 $0.47 $0.48 $0.42 $0.56 $0.48 $0.35 $0.32 $0.33 $0.33 $0.33 $0.34

Funds Available for Distribution (FAD) per share $1.72 $1.23 $1.20 $0.99 $1.05 $0.40 $0.23 $0.29 $0.31 $0.40 $0.35 $0.25 $0.22 $0.25 $0.24 $0.25 $0.25

Dividends Per Share $1.24 $1.34 $0.70 $0.56 $0.57 $0.34 $0.34 $0.34 $0.34 $0.34 $0.11 $0.11 $0.14 $0.14 $0.14 $0.14 $0.14

FFO Growth (Y/Y) -8.7% -4.9% 5.5% -8.7% 23.5% 0.9% -25.8% -25.3% -41.6% -31.4% -6.5% 6.8%

FAD Growth (Y/Y) -12.8% -48.9% -27.9% -24.9% 0.5% 53.3% -13.6% -30.1% -37.4% -32.0% -3.4% 15.9%

Dividend Growth (Y/Y) 8.1% 8.1% 8.1% 8.1% 0.0% -67.2% -67.2% -58.2% -58.0% 28.1% 28.1% 0.6%



Payout Ratio (Dividend/Net Income) 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Source: Oppenheimer & Co. Inc., Company Reports

REITs/REAL ESTATE

42

Exhibit 58: BioMed Properties, Inc Balance Sheet 2008A – 2010E ($ in thousands, except per share data)

2008A 2009E 2010E

(in thousands) 1Q08A 2Q08A 3Q08A 4Q08A 1Q09A 2Q09A 3Q09A 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

ASSETS:

Land 313,694 334,306 390,685 347,878 365,154 368,754 370,642 370,972 371,272 371,272 371,272 371,272

Ground Lease

Land under development 103,810 83,259 29,054 69,529 52,247 52,247 52,247 52,247 52,247 52,247 52,247 52,247

Buildings and improvements 1,680,143 1,892,296 2,137,926 2,104,072 2,193,415 2,207,311 2,221,005 2,224,119 2,227,414 2,229,033 2,230,673 2,232,340

Construction in progress 812,880 619,507 357,437 439,221 405,764 405,764 405,764 405,764 405,764 405,764 405,764 405,764

Tenant Improvements 73,888 85,557 145,095 161,839 164,700 164,700 164,700 164,700 164,700 164,700 164,700 164,700

Accumulated Depreciation (115,983) (129,221) (144,522) (162,110) (180,203) (204,704) (235,657) (261,862) (288,228) (314,594) (341,015) (367,549)

Investments in real estate, net 2,868,432 2,885,704 2,915,675 2,960,429 3,001,077 2,994,072 2,978,701 2,955,940 2,933,170 2,908,422 2,883,641 2,858,774

Investment in unconsolidated partnership $21,356 $21,158 $20,296 $18,173 49,756 49,243 47,747 47,747 47,747 47,747 47,747 47,747

Total Real Estate Held for Investment, net $2,889,788 $2,906,862 $2,935,971 $2,978,602 $3,050,833 $3,043,315 $3,026,448 $3,003,687 $2,980,917 $2,956,169 $2,931,388 $2,906,521

Cash and cash equivalents $19,383 $21,357 $23,451 $21,422 32,318 34,101 30,279 30,279 30,279 30,279 30,279 30,279

Restricted cash $8,351 $7,991 $8,291 $7,877 4,951 15,638 15,974 15,974 15,974 15,974 15,974 15,974

Accounts receivable, net $4,716 $3,377 $7,284 $9,417 14,749 10,178 5,482 5,482 5,482 5,482 5,482 5,482

Accrued straight line rents, net $40,682 $46,997 $52,721 $58,138 62,040 69,046 75,489 75,489 75,489 75,489 75,489 75,489

Acquired above market leases, net $5,374 $5,017 $4,661 $4,329 4,009 3,688 3,368 3,368 3,368 3,368 3,368 3,368

Deferred leasing costs, net $112,334 $109,380 $107,145 $101,519 95,204 90,472 85,926 85,926 85,926 85,926 85,926 85,926

Deferred loan costs, net $14,554 $13,230 $12,057 $9,933 8,451 8,535 7,794 7,794 7,794 7,794 7,794 7,794

Prepaid expenses and other assets

Other assets $30,767 $68,323 $70,837 $38,256 37,607 36,939 43,051 43,051 43,051 43,051 43,051 43,051

TOTAL ASSETS $3,125,949 $3,182,534 $3,222,418 $3,229,493 $3,310,162 $3,311,912 $3,293,811 $3,271,050 $3,248,280 $3,223,532 $3,198,751 $3,173,884


Mortgage notes payable $377,675 $373,571 $354,828 $353,161 $351,469 717,764 671,693 671,693 671,693 671,693 671,693 671,693

Secured term loan $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000 $250,000

Exchangeable senior notes $175,000 $175,000 $175,000 $128,250 $111,068 $103,077 $103,524 $257,091 $216,224 $216,224 $216,224 $216,224

Secured Construction Loan $457,628 $483,997 $500,998 $507,128 $507,128 0 0 0 0 0 0 0

Total Long Term Debt $1,260,303 $1,282,568 $1,280,826 $1,238,539 $1,219,665 $1,070,841 $1,025,217 $1,178,784 $1,137,917 $1,137,917 $1,137,917 $1,137,917

Unsecured line of credit $310,747 $213,210 $266,660 $108,767 $204,334 292,404 321,124 325,667 349,441 330,727 311,589 291,810

Security deposits $7,326 $7,611 $7,469 $7,623 $7,641 7,660 7,187 7,187 7,187 7,187 7,187 7,187

Dividends and distributions payable $27,385 $29,441 $29,441 $32,445 $32,563 15,383 15,383 15,383 15,383 15,383 15,383 15,383

Accounts payable and accrued expenses $80,893 $73,362 $74,878 $66,821 $87,359 66,406 71,389 71,364 71,364 71,364 71,364 71,364

Derivative Instruments $53,858 $23,264 $31,676 $126,091 $100,840 17,910 15,948 -9,052 -9,052 -9,052 -9,052 -9,052

Acquired below market leases, net $22,199 $20,702 $19,212 $17,286 $14,762 13,550 12,344 12,344 12,344 12,344 12,344 12,344

TOTAL LIABILITIES $1,762,711 $1,650,158 $1,710,162 $1,597,572 $1,667,164 $1,484,154 $1,468,592 $1,601,676 $1,584,584 $1,565,870 $1,546,732 $1,526,953

Noncontrolling Interest $16,690 $15,572 $14,968 $12,381 13,139 $10,169 $10,865 $10,865 $10,865 $10,865 $10,865 $10,865

Preferred Stock $222,413 $222,413 $222,413 $222,413 $222,413 $222,413 $222,413 $230,000 $230,000 $230,000 $230,000 $230,000

Common stock $656 $717 $717 $808 $812 $981 $982 $982 $982 $982 $982 $982

Addiitonal paid-in capital $1,279,852 $1,430,942 $1,432,350 $1,647,039 $1,661,656 1,833,026 1,833,898 1,833,898 1,833,898 1,833,898 1,833,898 1,833,898

Accumulated other comprehensive income/(loss) ($101,549) ($111,490) ($122,534) ($141,288) ($100,314) (91,525) (88,894) (72,964) (80,643) (86,675) (92,320) (97,407)

Dividends in Excess of Earnings ($54,824) ($25,778) ($35,657) ($112,126) ($154,708) (147,306) (154,045) (333,407) (331,407) (331,407) (331,407) (331,407)

Total Shareholders' Equity $1,346,548 $1,516,804 $1,497,289 $1,616,846 $1,629,859 $1,817,589 $1,814,354 $1,658,509 $1,652,830 $1,646,798 $1,641,153 $1,636,066

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $3,125,949 $3,182,534 $3,222,419 $3,226,799 $3,310,162 $3,311,912 $3,293,811 $3,271,050 $3,248,280 $3,223,532 $3,198,751 $3,173,884

Source: Oppenheimer & Co. Inc., Company Reports

REITs/REAL ESTATE

43

Exhibit 59: Oppenheimer & Co. REIT/Real Coverage Universe

Real Estate sector coverage view is CautiousInvestment horizon for all price targets is 12-18 months

Ticker Company Current rating Sector

Share

Price

Div.

yield

2009

FFO

2010E

FFO

2009

P/FFO

2010E

P/FFO

2009

P/FAD

2010E

P/FAD

08-09E

FFO

growth

09-10E

FFO

growth

Forward

NAV

OPCO

Econ.

Cap

Rate

OPCO

Nom.

Cap

Rate

Implied

Nominal

Cap Rate

Current

Return to

NAV

Target

price

Total

return

potential Key Risk factors (1)

FCEA Forest City Enterprises Outperform Diversified Properties $11.73 0.0% $2.15 $2.43 5.5x 4.8x 10.8x 0.0x 5.6% 12.9% $16.72 7.9% 8.4% 9.4% 42.5% $17.00 44.9% Development risk, restrictive lending environment, weak home sales

CPT Camden Property Trust Outperform Apartments $40.32 4.5% $2.97 $2.65 13.6x 15.2x 16.8x 0.0x 4.7% -10.7% $42.54 6.1% 6.8% 7.0% 5.5% $48.00 23.5% Acquisition risks, job losses, development risks

YSI U-Store-It Trust Outperform Self-Storage $7.30 1.4% $0.74 $0.54 9.9x 13.6x 11.5x 0.0x -24.0% -27.7% $8.38 8.0% 8.6% 9.2% 14.7% $8.50 17.8% Development risks, reduced pricing power, weak consumer

AIV Apartment Inv & Mgmt Outperform Apartments $16.99 2.4% $1.34 $1.39 12.7x 12.2x 14.7x 0.0x -26.9% 4.2% $17.63 6.3% 7.3% 7.2% 3.8% $19.50 17.1% Acquisition risks, job losses, development risks

HCN Health Care REIT Inc. Outperform Health Care $44.17 6.2% $3.12 $3.22 14.2x 13.7x 16.7x 0.0x -6.6% 3.3% $43.47 8.0% 8.2% 8.1% -1.6% $49.00 17.1% Tenant bankruptcies, development risk, financing costs, reimbursement risk.

SKT Tanger Factory Outlet Outperform Shopping Centers $39.42 3.9% $2.67 $2.68 14.8x 14.7x 18.0x 0.0x 9.2% 0.3% $34.81 7.0% 8.0% 7.3% -11.7% $43.00 13.0% Tenant bankruptcies, slowing leasing velocity

PSA Public Storage, Inc. Outperform Self-Storage $79.27 2.8% $5.55 $4.92 14.3x 16.1x 17.3x 0.0x 9.5% -11.3% $67.75 7.5% 8.0% 6.9% -14.5% $85.00 10.0% Weak pricing power, lack of investment opportunities

VTR Ventas Perform Health Care $43.94 4.7% $2.65 $2.69 16.6x 16.3x 17.4x 0.0x -3.3% 1.5% $37.45 8.0% 8.0% 6.6% -14.8% NA NA Possible Sunrise bankruptcy, reimbursement risks, access to capital.

UDR UDR, Inc. Perform Apartments $15.99 4.50% $1.15 $1.07 13.9x 14.9x 18.9x 0.0x -21.8% -6.9% $13.59 6.3% 6.8% 6.7% -15.0% NA NA Acquisition risks, job losses, development risks

UBA Urstadt Biddle Properties Perform Shopping Centers $14.93 6.4% $1.22 $1.15 12.2x 13.0x 15.8x 0.0x 0.9% -6.0% $15.27 8.5% 9.6% 8.5% 2.3% NA NA Acquisition risks, tenant bankruptcies, slowing consumer spending

SPG Simon Property Group Perform Regional Malls $76.70 0.6% $5.47 $5.79 14.0x 13.3x 15.4x 0.0x -14.7% 5.8% $59.52 7.5% 8.0% 7.0% -22.4% NA NA Tenant bankruptcies, Lack of acquisition opportunities

SNH Senior Housing Properties Trust Perform Health Care $21.90 6.6% $1.73 $1.76 12.7x 12.5x 12.7x 0.0x 3.6% 1.6% $21.91 9.3% 9.3% 9.3% 0.1% NA NA Acquisition risks, tenant bankruptcies, slowing consumer spending

REG Regency Centers Perform Shopping Centers $35.81 5.2% $1.05 $2.24 34.1x 16.0x 19.6x 0.0x -72.0% 113.8% $30.91 7.5% 8.1% 7.5% -13.7% NA NA Development risks, tenant bankruptcies, financing risks

PLD ProLogis Perform Industrial Properties $14.09 4.26% $1.34 $0.86 10.5x 16.5x 18.7x 0.0x 97.5% -36.3% $11.54 7.3% 8.2% 7.5% -18.1% NA NA Development risk, job losses, acquisition risks

NHP Nationwide Health Prop. Perform Health Care $35.03 5.0% $2.23 $2.34 15.7x 15.0x 15.9x 0.0x -0.7% 4.9% $28.60 8.0% 8.1% 7.0% -18.4% NA NA Tenant bankruptcies, reimbursement risks, acquisition spreads.

KIM Kimco Realty Perform Shopping Centers $14.13 4.5% $0.80 $1.15 17.6x 12.3x 14.5x 0.0x -60.1% 43.3% $11.81 7.4% 8.3% 7.6% -16.4% NA NA Development risks, tenant bankruptcies, financing risks

HRP HRPT Properties Trust Perform Office Properties $6.53 7.4% $1.09 $1.11 6.0x 5.9x 7.9x 0.0x 1.0% 1.4% $6.79 8.8% 10.4% 10.5% 4.1% NA NA Development risk, job losses, acquisition risks

HR Healthcare Realty Trust Perform Health Care $21.35 5.6% $1.66 $1.42 12.9x 15.0x 14.5x 0.0x 2.0% -14.2% $18.82 8.3% 8.3% 7.7% -11.9% NA NA Tenant bankruptcies, reimbursement risk, master lease roll.

HCP HCP, Inc. Perform Health Care $30.76 6.0% $1.48 $2.18 20.8x 14.1x 18.3x 0.0x -34.2% 47.5% $25.65 7.5% 7.9% 6.9% -16.6% NA NA Development risk, job losses, acquisition risks

FRT Federal Realty Perform Shopping Centers $67.16 3.9% $3.43 $3.81 19.6x 17.6x 21.3x 0.0x -11.3% 11.0% $52.66 6.5% 7.1% 6.0% -21.6% NA NA Tenant bankruptcies, slowing consumer spending

EXR Extra Space Storage Inc. Perform Self-Storage $11.59 4.5% $0.97 $0.77 12.0x 15.1x 14.0x 0.0x -17.9% -20.6% $12.17 7.5% 8.0% 8.2% 5.0% NA NA Development risks, reduced pricing power, weak consumer

ESS Essex Property Trust Perform Apartments $83.76 4.9% $6.81 $4.61 12.3x 18.2x 18.3x 0.0x 10.3% -32.4% $73.84 6.0% 6.5% 6.0% -11.8% NA NA Acquisition risks, job losses, development risks

EQR Equity Residential Perform Apartments $33.25 4.1% $2.14 $2.07 15.5x 16.0x 18.0x 0.0x -0.8% -3.3% $27.78 6.2% 6.5% 6.0% -16.5% NA NA Acquisition risks, job losses, development risks

BXP Boston Properties Perform Office Properties $68.17 2.9% $4.61 $4.13 14.8x 16.5x 28.0x 0.0x 31.2% -10.4% $56.68 6.3% 7.1% 6.3% -16.9% NA NA Development risk, job losses, acquisition risks

BMR BioMed Realty Trust Inc. Perform Office Properties $15.43 2.9% $1.68 $1.32 9.2x 11.7x 12.8x 0.0x -7.8% -21.3% $13.08 8.3% 8.7% 8.4% -15.2% NA NA Development risk, job losses, acquisition risks

ARE Alexandria Real Estate Perform Office Properties $63.25 2.2% $5.52 $4.28 11.5x 14.8x 17.3x 0.0x -5.9% -22.4% $53.69 8.0% 8.1% 7.3% -15.1% NA NA Development risk, job losses, acquisition risks

WRE Washington REIT Perform Diversified Properties $27.39 6.3% $2.12 $1.86 12.9x 14.7x 16.6x 0.0x 0.0% -12.1% $24.57 6.9% 7.7% 7.2% -10.3% NA NA Development risk, job losses, acquisition risks

WRI Weingarten Realty Perform Shopping Centers $21.34 4.7% $1.98 $1.64 10.8x 13.0x 14.1x 0.0x -18.6% -17.3% $18.93 7.5% 8.3% 7.8% -11.3% NA NA Development risks, tenant bankruptcies, financing risks, ratings downgrade

SSS Sovran Self Storage Perform Self-Storage $36.34 5.0% $2.34 $2.45 15.5x 14.8x 15.4x 0.0x -27.9% 4.7% $32.12 8.0% 8.6% 7.9% -11.6% NA NA Weak pricing power, reduced unit demand, covenant risk

TCO Taubman Centers Underperform Regional Malls $34.28 4.8% $0.88 $2.67 39.0x 12.8x 13.2x 0.0x -41.9% 203.8% $27.20 7.2% 7.7% 6.9% -20.6% $30.00 -7.6% Impairments to international development, tenant bankruptcies

AVB AvalonBay Communities Underperform Apartments $80.48 4.4% $3.89 $3.75 20.7x 21.5x 24.5x 0.0x -4.6% -3.6% $58.14 6.2% 6.4% 5.2% -27.8% $65.00 -14.8% Development risk, yield compression risk, job losses

EGP EastGroup Properties, Inc. Underperform Industrial Properties $37.45 5.6% $3.14 $2.99 11.9x 12.5x 15.8x 0.0x -4.8% -4.8% $26.53 8.0% 9.4% 7.7% -29.2% $29.00 -17.0% Acquisition risks, development risk, economic weakness

MAC Macerich Company Underperform Regional Malls $32.93 0.7% $3.68 $3.15 8.9x 10.5x 13.6x 0.0x -32.9% -14.4% $23.35 7.3% 8.0% 7.1% -29.1% $28.00 -14.2% Development risks, tenant bankruptcies, financing risks

CBL CBL & Associates Underperform Regional Malls $10.44 1.9% $2.39 $1.90 4.4x 5.5x 5.9x 0.0x -25.8% -20.4% $8.64 8.3% 9.2% 8.8% -17.2% $9.00 -11.9% Development risks, tenant bankruptcies, financing risks

7.3% 7.8% 7.0% -14.86%

Ticker Company Current Rating Sector

Share

Price

Div.

yield

2009E

CFFO

2010E

CFFO

2009E

P/CFFO

2010E

P/CFFO

2009E

Implied

CFFO

growth

2010E

Implied

CFFO

growth

Implied

Share

Price

CFFO

Target

Multiple

Implied

Equity

Value/Sh

Current

Return to

Implied Sh

Price

Target

price (2)

Total

return

potential Risk factors to price targets

ESC Emeritus Corp. Outperform Senior Housing $19.44 0.0% 1.05$ 2.01$ 18.5x 9.7x 14.2% 90.9% 24.85 19.66x 24.85$ 27.8% $27.00 38.9% Oversupply in the market and operational, acquisition and integration risks

BKD Brookdale Senior Living Inc. Outperform Senior Housing $18.58 0.0% 1.28$ 2.11$ 14.5x 8.8x 0.0% 64.5% 23.79$ 11.30x 23.53$ 28.0% $24.00 29.2% Oversupply in the market and operational, acquisition and integration risks

Ticker Company Current Rating Sector

Share

Price

Div.

yield

2009E

EPS

2010E

EPS 2009E P/E 2010E P/E

2009E EPS

Growth

2010E EPS

Growth DCF WACC%

Perpetual

FCF

Growth

Current

Return to

DCF

Target

price (2)

Total

return

potential Risk factors to price targets

JLL Jones Lang LaSalle Perform Brokers $62.85 0.32% $ (0.03) $ 3.12 -2171.1x 20.2x -101% NA $46.03 9% 4.00% -26.76% NA NA Acquisition risks

Ratings distribution

OUTPERFORM 9

PERFORM 23

UNDERPERFORM 5

TOTAL 37

Note

(1) A higher than expected rise in interest rates generally pose a risk to real estate valuation across all REITs. Similarly higher than expected construction and operating costs are a risk across the entire REIT sector.

(2) Price targets are derived using a premium/discount to our forward net asset value (NAV) estimate

* 2009 FFO Growth estimates are generated using normalized numbers

**Return calculations exclude applicable costs, including interest and commission.

1/11/2010

Source: Company Data, Oppenheimer & Co. estimates, SNL, Factset

REITs/REAL ESTATE

44

Exhibit 60: Stocks Mentioned Which Opco Does Not Cover:

Company Name Ticker Price DateGeneral Growth Properties GGP Not Trading 1/12/2010

Source: Oppenheimer & Co. estimates, company reports

REITs/REAL ESTATE

45

Price Target Calculation

Our price targets are based on a premium/discount to our 12-month forward net asset value (NAV) calculations. The premium/discount

allotted is determined by our view of the quality of the company's assets, management and markets, as well as our outlook for growth in

the portfolio. Our 12-month forward NAV estimates are $8.50 for YSI, $43 for HCN, $17 for FCEA, $58 for AVB, $9 for CBL, $23 for

MAC, $27 for EGP, $35 for SKT, $43 for CPT, $18 for AIV, $68 for PSA and $27 for TCO. We believe PSA should trade at 18.7X

12-month forward FAD, a 25% premium to our 15X target multiple for the storage sector, and at a 25% premium to our 12-month forward

NAV of $68, resulting in a price target of $85. Our $43 price target for SKT assumes it trades at ~20X 12-month forward FAD, and at a

25% premium to our 12-month forward NAV. We believe HCN should trade at a premium to its NAV in line with HCP (19% premium) and

VTR (17% premium), which justifies a $49 price target. Our $65 price target for AVB is based on a 12% premium to our forward NAV

estimate of $58 (versus where the shares trade at a 19% premium to NAV). Our $19.50 price target for AIV and $48 PT for CPT are

based on our belief that a 10.6% premium to our forward NAV estimate of $18 for AIV and 15% premium to forward NAV of $42.50 for

CPT are justified because apartment peers trade at a 17.6% premium to NAV. Our $28 price target assumes shares of MAC trade at

15.8X 12-month forward FAD of $2.17, and at a modest premium to our 12-month forward NAV of ~$23. Our $29 price target assumes

that EGP trades at 13x 12MF FAD of $2.19 and at a slight premium our 12MF NAV of $27. Given TCO's strong portfolio, and solid

balance sheet, we believe a 10% premium to 12MF NAV is reasonable. Our price target for YSI assumes that it trades in line with our

calculated 12-month forward NAV of $8.50, and at 16x estimated 12-month forward FAD. The implied nominal cap rate range for our

companies under coverage is 5.2-10.5%.

For BKD and ESC, our price targets are based on implied cash flow from facility operations target multiples of 11.3X and 12.3X,

respectively, which are based on a premium to their long-term average of ~11.5X 12-month forward-looking cash flows. We believe a

premium is justified given our expectations for solid internal growth and additional acquisitions/lease agreements over the next 6-12

months. Our 12-month forward implied price per share is $24 for BKD and $27 for ESC.

Key Risks to Price Target

Risks to our price targets for our Outperform-rated names include greater declines in demand for CRE driven by greater job losses,

reduced business formation, negative consumer sentiment and decreased discretionary spending. We would expect these factors to

result in reduced rent and occupancy levels and higher borrowing costs, driving up property-level cap rates. Risks to our price targets for

our Underperform-rated names include improved growth in CRE demand, stabilizing operating fundamentals and flattening of the yield

curve reflecting a stabilizing of borrowing costs and implied property cap rates.

Companies with Updates:OUTPERFORMPublic Storage(PSA,$77.98)Tanger Factory Outlet Centers(SKT,$38.33)

PERFORMWashington REIT(WRE,$27.14)HCP, Inc.(HCP,$30.24)Sovran Self Storage, Inc.(SSS,$35.36)BioMed Realty Trust, Inc.(BMR,$15.49)Weingarten Realty(WRI,$20.84)Ventas, Inc.(VTR,$43.66)

UNDERPERFORMCBL & Associates Properties(CBL,$10.15)Macerich Company(MAC,$32.23)

Important Disclosures and CertificationsAnalyst Certification - The author certifies that this research report accurately states his/her personal views about the

subject securities, which are reflected in the ratings as well as in the substance of this report.The author certifies that no

part of his/her compensation was, is, or will be directly or indirectly related to the specific recommendations or views

contained in this research report.

Potential Conflicts of Interest:

Equity research analysts employed by Oppenheimer & Co. Inc. are compensated from revenues generated by the firm

REITs/REAL ESTATE

46

including the Oppenheimer & Co. Inc. Investment Banking Department. Research analysts do not receive compensation

based upon revenues from specific investment banking transactions. Oppenheimer & Co. Inc. generally prohibits any

research analyst and any member of his or her household from executing trades in the securities of a company that such

research analyst covers. Additionally, Oppenheimer & Co. Inc. generally prohibits any research analyst from serving as an

officer, director or advisory board member of a company that such analyst covers. In addition to 1% ownership positions in

covered companies that are required to be specifically disclosed in this report, Oppenheimer & Co. Inc. may have a long

position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in

options, futures or other derivative instruments based thereon. Recipients of this report are advised that any or all of the

foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of

interest.

Important Disclosure Footnotes for Companies Mentioned in this Report that Are Covered byOppenheimer & Co. Inc:

Stock Prices as of January 13, 2010

Apartment Investment & Management Co. (AIV - NYSE, 16.55, OUTPERFORM)Camden Property Trust (CPT - NYSE, 39.77, OUTPERFORM)Emeritus Corp. (ESC - NYSE, 18.78, OUTPERFORM)U-Store-It (YSI - NYSE, 7.15, OUTPERFORM)Forest City Enterprises, Inc. (FCE.A - NYSE, 11.20, OUTPERFORM)Brookdale Senior Living Inc. (BKD - NYSE, 18.03, OUTPERFORM)Tanger Factory Outlet Centers (SKT - NYSE, 38.33, OUTPERFORM)Health Care REIT (HCN - NYSE, 43.77, OUTPERFORM)HRPT Properties (HRP - NYSE, 6.35, PERFORM)Senior Housing Properties Trust (SNH - NYSE, 21.52, PERFORM)UDR, Inc. (UDR - NYSE, 15.60, PERFORM)ProLogis (PLD - NYSE, 13.59, PERFORM)Kimco Realty Corp. (KIM - NYSE, 13.74, PERFORM)Public Storage (PSA - NYSE, 77.98, OUTPERFORM)Urstadt Biddle Properties, Inc. (UBA - NYSE, 14.54, PERFORM)HCP, Inc. (HCP - NYSE, 30.24, PERFORM)Boston Properties Inc. (BXP - NYSE, 67.49, PERFORM)Sovran Self Storage, Inc. (SSS - NYSE, 35.36, PERFORM)Simon Property Group, Inc. (SPG - NYSE, 75.19, PERFORM)Jones Lang LaSalle Inc. (JLL - NYSE, 60.46, PERFORM)BioMed Realty Trust, Inc. (BMR - NYSE, 15.49, PERFORM)Alexandria Real Estate Equities (ARE - NYSE, 63.34, PERFORM)Extra Space Storage (EXR - NYSE, 11.18, PERFORM)Federal Realty Investment Trust (FRT - NYSE, 66.01, PERFORM)Regency Centers (REG - NYSE, 35.15, PERFORM)Weingarten Realty (WRI - NYSE, 20.84, PERFORM)Ventas, Inc. (VTR - NYSE, 43.66, PERFORM)Nationwide Health Properties (NHP - NYSE, 34.53, PERFORM)Healthcare Realty Trust (HR - NYSE, 21.07, PERFORM)Taubman Centers (TCO - NYSE, 33.67, UNDERPERFORM)AvalonBay Communities, Inc. (AVB - NYSE, 78.59, UNDERPERFORM)Washington REIT (WRE - NYSE, 27.14, PERFORM)EastGroup Properties Inc. (EGP - NYSE, 36.93, UNDERPERFORM)CBL & Associates Properties (CBL - NYSE, 10.15, UNDERPERFORM)Macerich Company (MAC - NYSE, 32.23, UNDERPERFORM)

All price targets displayed in the chart above are for a 12- to- 18-month period. Prior to March 30, 2004, Oppenheimer &

REITs/REAL ESTATE

47

Co. Inc. used 6-, 12-, 12- to 18-, and 12- to 24-month price targets and ranges. For more information about target price

histories, please write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017, Attention: Equity Research

Department, Business Manager.

Oppenheimer & Co. Inc. Rating System as of January 14th, 2008:

Outperform(O) - Stock expected to outperform the S&P 500 within the next 12-18 months.

Perform (P) - Stock expected to perform in line with the S&P 500 within the next 12-18 months.

Underperform (U) - Stock expected to underperform the S&P 500 within the next 12-18 months.

Not Rated (NR) - Oppenheimer & Co. Inc. does not maintain coverage of the stock or is restricted from doing so due to a potential

conflict of interest.

Oppenheimer & Co. Inc. Rating System prior to January 14th, 2008:

Buy - anticipates appreciation of 10% or more within the next 12 months, and/or a total return of 10% including dividend payments,

and/or the ability of the shares to perform better than the leading stock market averages or stocks within its particular industry sector.

Neutral - anticipates that the shares will trade at or near their current price and generally in line with the leading market averages due to

a perceived absence of strong dynamics that would cause volatility either to the upside or downside, and/or will perform less well than

higher rated companies within its peer group. Our readers should be aware that when a rating change occurs to Neutral from Buy,

aggressive trading accounts might decide to liquidate their positions to employ the funds elsewhere.

Sell - anticipates that the shares will depreciate 10% or more in price within the next 12 months, due to fundamental weakness

perceived in the company or for valuation reasons, or are expected to perform significantly worse than equities within the peer group.

Distribution of Ratings/IB Services Firmwide

IB Serv/Past 12 Mos.

Rating Count Percent Count Percent

OUTPERFORM [O] 385 45.70 136 35.32

PERFORM [P] 411 48.80 108 26.28

UNDERPERFORM [U] 47 5.60 6 12.77

Although the investment recommendations within the three-tiered, relative stock rating system utilized by Oppenheimer & Co. Inc. do not

correlate to buy, hold and sell recommendations, for the purposes of complying with FINRA rules, Oppenheimer & Co. Inc. has assigned

buy ratings to securities rated Outperform, hold ratings to securities rated Perform, and sell ratings to securities rated Underperform.

Company Specific DisclosuresIn the past 12 months Oppenheimer & Co. Inc. has provided investment banking services for HRP, SNH, HCP, and BMR.

REITs/REAL ESTATE

48

Oppenheimer & Co. Inc. expects to receive or intends to seek compensation for investment banking services in the next 3

months from HRP, SNH, HCP, and BMR.

In the past 12 months Oppenheimer & Co. Inc. has managed or co-managed a public offering of securities for HRP, SNH,

HCP, and BMR.

In the past 12 months Oppenheimer & Co. Inc. has received compensation for investment banking services from HRP,

SNH, HCP, and BMR.

Additional Information Available

Please log on to http://www.opco.com or write to Oppenheimer & Co. Inc., 300 Madison Avenue, New York, NY 10017,

Attention: Equity Research Department, Business Manager.

Other DisclosuresThis report is issued and approved for distribution by Oppenheimer & Co. Inc., a member of all Principal Exchanges and SIPC. This

report is provided, for informational purposes only, to institutional and retail investor clients of Oppenheimer & Co. Inc. and does not

constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be

prohibited. The securities mentioned in this report may not be suitable for all types of investors. This report does not take into account

the investment objectives, financial situation or specific needs of any particular client of Oppenheimer & Co. Inc. Recipients should

consider this report as only a single factor in making an investment decision and should not rely solely on investment recommendations

contained herein, if any, as a substitution for the exercise of independent judgment of the merits and risks of investments. The analyst

writing the report is not a person or company with actual, implied or apparent authority to act on behalf of any issuer mentioned in the

report. Before making an investment decision with respect to any security recommended in this report, the recipient should consider

whether such recommendation is appropriate given the recipient's particular investment needs, objectives and financial circumstances.

We recommend that investors independently evaluate particular investments and strategies, and encourage investors to seek the advice

of a financial advisor.Oppenheimer & Co. Inc. will not treat non-client recipients as its clients solely by virtue of their receiving this

report.Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding

future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they

produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such

securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of

information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to

Oppenheimer & Co. Inc.All information, opinions and statistical data contained in this report were obtained or derived from public

sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such information, opinion or statistical data is

accurate or complete (with the exception of information contained in the Important Disclosures section of this report provided by

Oppenheimer & Co. Inc. or individual research analysts), and they should not be relied upon as such. All estimates, opinions and

recommendations expressed herein constitute judgments as of the date of this report and are subject to change without notice.Nothing

in this report constitutes legal, accounting or tax advice. Since the levels and bases of taxation can change, any reference in this report

to the impact of taxation should not be construed as offering tax advice on the tax consequences of investments. As with any investment

having potential tax implications, clients should consult with their own independent tax adviser.This report may provide addresses of, or

contain hyperlinks to, Internet web sites. Oppenheimer & Co. Inc. has not reviewed the linked Internet web site of any third party and

takes no responsibility for the contents thereof. Each such address or hyperlink is provided solely for the recipient's convenience and

information, and the content of linked third party web sites is not in any way incorporated into this document. Recipients who choose to

access such third-party web sites or follow such hyperlinks do so at their own risk.

This report or any portion hereof may not be reprinted, sold, or redistributed without the written consent of Oppenheimer & Co. Inc.

REITs/REAL ESTATE

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Copyright © Oppenheimer & Co. Inc. 2010.

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