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National Power Center Market <br />A UECIINE IN CONSUMER SPENDING <br />AND TIGHTER LENDING REQUIREMENTS <br />FOR MANY MERCHANTS HAVE COMBINED <br />i0 DEIAY STORE OPENINGS, POSTPONE <br />HIRING PLANS, AND FORCE CERTAIN <br />BIG-BOX RETAILERS INTO BANKRUPTCY. <br />"The retail sector is struggling under <br />the weight of a consumer-led down- <br />turn," remarks a participant. As a <br />result, investment demand continues <br />to sour in the national power center <br />market. "We are in a wait-and-see <br />mode right now and have no immedi- <br />ate plans to acquire any new assets," <br />shares another participant. In fad, in <br />Emerging Trends in Rea! Estate•2009, <br />published recently by Pricewater- <br />houseCoopers LLP and ULI -the <br />Urban Land Institute, power centers <br />ranked as one of the least favored core <br />P"oP~Y types, placing 10th (out of 11) <br />and scoring a 4.06 on a scale of 1 <br />(abysmal) to 9 (excellent) with respect <br />to investment prospects in 2009. <br />Even though investors remain cau- <br />tious about acquiring power centers, a <br />few assets have sold recently. In Atlanta, <br />Ta-la NPC-t <br />OVERALL CJ1P RATF TRENDS <br />National Power Center Market <br />Change <br />QEHrta/ Average (Basis POfnts) <br />1Q08 7.57% + 40 <br />3Q08 <br />2Q08 <br />IQ08 <br />~ 4Q07 <br />3Q07 <br />I 2Q07 <br />IQ07 <br />~ aQ06 <br />i 4Q05 <br />~ 4Q04 <br />7,17% <br />7.17% <br />7.1)% <br />7, 13 % <br />7.00% <br />7.06% <br />7.28% <br />7.149'e <br />7.36°~ <br />8.17%s <br />0 <br />+4 <br />0 <br />+I3 <br />-6 <br />- 22 <br />r 14 <br />-22 <br />-81 <br />Source' Rorpacz Real hql! Imesror Survey' <br />P RICE WAIERMOUSF000-ERS LLP <br />Rreef purchased Perimeter Square, an <br />186,058-square-foot center located in <br />the dominant Central Perimeter sub- <br />marketand anchored by Bed Bath & <br />Beyond, T.J. Maxx, and PetSmart. <br />According to Real Capital Analytic:, <br />Inc. (RU), it sold for 642.2 million, <br />well above the 632.7-million price tag <br />it received when it previously sold in <br />October 2004. to another deal, Terramar <br />Retail Centers acquired EI Paseo de <br />Saratoga, a 341,000-square-foot <br />retaiVentertainment center in San )ose, <br />for :337.00 per square foot. <br />Despite these and other retail <br />property trades, sales of retail assets <br />totaled only f3.4 billion in the third <br />quarter of 2008, well below the levels <br />realized in both the first and second <br />quarters of this year, according to <br />RU. Unfortunately, the remainder of <br />2(108 is not expected to bring an <br />upswing in deal flow. In fact, RU is <br />expecting retail property sales in all of <br />2008 to be the lowest annual total of <br />the last seven years. "There is no debt <br />available for deals, and a disjointed <br />market is making pricing very diffi- <br />cult," notes a participant, who believes <br />that trades will pick up once overall <br />cap rates (OARS) trend upward. This <br />quarter, this market's average OAR <br />increased 40 basis points, one of its <br />largest quarterly shifts in quite some <br />time (see Table NPC-1). <br />Ta61a 2 <br />NATIONAL POWER CENTER MARKET <br />Fourth Quarter 2008 <br />DISCOUNT RATE (IRR)• <br />Range <br />Average <br />Change (Basis Ibints) <br />OVERALL CAP RATE IOAR)• <br />Range <br />Average <br />Change t8asb Points) <br />RESIDUAL CM RATE <br />Range <br />Average <br />Change (Basis Points) <br />MARKET REM CHANGE RATE <br />Range <br />Avenge <br />Change tBasa Pbintsl <br />EXPENSE CHANGE RATE- <br />Range <br />Average <br />Change (Basis Points) <br />AVERAGE MARKETING TIME• <br />Range <br />Average <br />Change twe! <br />7'~° - 12.0096 7.0090 - 11.5096 6, 75X - 11.509. <br />8.95% 8.39%i 8.23% <br /> +56 +72 <br />6.00% - I O.Opyo 5.7596 - 9.00% 5.50% - 9.0096 <br />7.579E 7.17% 7.13% <br /> + 40 + 44 <br />6.75% - 12.0096 6.50°Y - 9.509'0 6.40X - 9.5096 <br />8.20% 7,73% 7,45% <br /> + 47 + 75 <br />t 10.00%) - 3.00% 0.009's - 4.00°.6 O.OOYe - 4.00% <br />1.36% 2.31 % 2.88% <br /> - 95 - 152 <br />3.00% - 3.00% 3.00% - 3.00% 3.00% - 3.OOYe <br />3 ~0 3,00% <br />3.00% <br /> 0 0 <br />300-6.00 3.00-6.00 <br />5.00 5.00 <br />__ 0 <br />~ Role un unkYeea ---~•~ <br />RM. al4caah mmxrwm h Initial race d change c In ma~vha <br />3.00 - 9.00 <br />5.56 <br />- 10.07 <br />WW W.P Wtr lvil.[oT ( 11 <br />