National Labor and Management Conference 2016 Intercontinental Real

National Labor and Management Conference 2016 Intercontinental Real Estate Corporation 1270 Soldiers Field Road Boston, MA 02135 -1003 Tel: 617. 782. 2600 Fax: 617. 782. 9442 www. intercontinental. net 1

Paul Nasser, CFO & COO 1. Current Market Conditions & What Lies Ahead 2. Why and How to Invest in Real Estate

Private Real Estate “Current Market Conditions & What Lies Ahead”

Commercial Real Estate Fundamentals n Occupancies have improved substantially and rents have stabilized or are increasing in most markets. n Limited construction of new buildings over the last several years has supported the recovery and will continue to do so in the next few years. n Office and industrial markets have improved significantly. n Retail recovery is further behind. n Multifamily is starting to cool in some markets after historic renter demand over the last few years as the housing market restructured.

Commercial Real Estate Vacancy Rates 2015 Q 4 Peak of Great Recession Equilibrium Rate Office 13. 1% 16. 8% 13 to 15% Industrial 9. 4% 14. 6% 9 to 10% Retail 11. 2% 13. 0% 9 to 10% Multifamily 4. 5% 7. 4% 5 to 6% *Equilibrium Rate is the rate which approximates a balanced leasing market in which neither landlords nor tenants hold more negotiating power. Vacancy below this rate generally implies a “landlord’s market” and vacancy above this rate implies a “tenant’s market”. Source: CBRE-EA

The Outlook for Rent Growth Average Annual Rate of Growth Last 5 years Next 5 years Previous peak Peak year Office 3. 6% 3. 8% 11. 2% 2000 Industrial 2. 5% 3. 7% 7. 4% 1999 Retail -0. 1% 4. 5% 5. 1% 1999 Multifamily 4. 4% 1. 8% 6. 7% 2000 Source: CBRE-EA

Rent Growth Market Forecast PROPERTY TYPE FAVORED MARKETS Office St Louis, Columbus, Las Vegas, San Jose, Philadelphia, Chicago, Indianapolis, Dallas, Kansas City, Phoenix Industrial San Jose, Cincinnati, Riverside, Boston, San Francisco, Los Angeles, Fort Worth, Atlanta, Chicago, Tucson Multifamily Retail Source: CBRE-EA Las Vegas, Phoenix, Fort Worth, Atlanta, Richmond, San Jose, Cincinnati, Los Angeles, Charlotte, Orange County Denver, Las Vegas, Atlanta, San Francisco, Phoenix, Indianapolis, Dallas, Oakland, Salt Lake City, Riverside

Today’s Property Type Outlook Property Type Office Recommendation Strong Buy Industrial Buy Multifamily Buy Retail Neutral

History of Capitalization Rates Sources: NCREIF, Real Capital Analytics, Intercontinental

Recent Cap Rate Movement Property Type Low Cap Rate Avg. Pre. Recession Cap Rate Avg. at Peak of Recession (Q 4 2009) Q 4 2015 Cap Rate Average BPS Increase from Low to Peak (Q 4 2009) BPS Reduction from Peak to Q 4 2015 Office 6. 5% (Q 2 ’ 07) 8. 9% 6. 7% +240 bps (220 bps) Industrial 6. 8% (Q 1 ’ 07) 8. 7% 6. 7% +190 bps (200 bps) Apartments 6. 1% (Q 4 ’ 06) 7. 0% 5. 8% +90 bps (120 bps) Retail 6. 5% (Q 2 ’ 07) 8. 2% 6. 4% +170 bps (180 bps) Total (All Property Types) 6. 6% (Q 4 ’ 07) 7. 9% 6. 3% +130 bps (160 bps) Source: Real Capital Analytics

Quarterly Volume of Property Sales Source: Real Capital Analytics

Loan Refinancing Demand ■ Wave of loan maturities peaking now ■ Distressed property sales will abate over the next few years, but opportunities remain due to: § Sheer volume of refinancing demand relative to likely future origination volume § Property values lower than at origination § Tighter future underwriting standards vs. origination, e. g. , lower loan to value, higher debt Source: Foresight Analytics service coverage, greater amortization, etc.

Historical NCREIF Total Returns Annualized Rate of Return (%) NCREIF PROPERTY INDEX – TOTAL RETURN As of 12/31/15 20. 5 18. 1 16. 6 20. 1 16. 3 13. 9 13. 8 13. 1 11. 2 9. 6 9. 4 8. 0 8. 3 7. 8 10. 3 7. 5 6. 4 11. 4 16. 6 14. 5 12. 3 15. 9 13. 1 9. 0 7. 36. 8 14. 3 11. 8 11. 0 13. 3 10. 5 2. 3 1. 4 -4. 3 -5. 6 -6. 5 -16. 9 '79'80'81'82'83'84'85'86'87'88'89'90'91'92'93'94'95'96'97'98'99'00'01'02'03'04'05'06'07'08'09'10'11'12'13'14'15 Source: NCREIF

Annualized Rate of Return (%) U. S. Stocks vs. U. S. Bonds vs. Private Real Estate 17. 3 13. 0 12. 7 11. 6 11. 8 7. 9 7. 4 9. 3 8. 2 7. 8 4. 4 3. 5 1. 7 1. 8 1 Year 3 Years U. S. Stocks (S&P 500) Source: NCREIF 5 Years U. S. Bonds (Barclays US Govt/Credit) 10 Years Inception Private Real Estate (NCREIF NPI) Through 6/30/15 Inception date represents the start of the NCREIF Property Index (1978)

Core Real Estate Has Led the Way Out of the Recession, but…. What is most attractive today? § “Flight to Quality” post recession (past 5+ years) § Core real estate has enjoyed above average return over the past 3+ years (see below) § As is typical out of a recession, Core-Plus has been slower to recover, but is now positioned to outperform for the near to mid-term § Core-Plus funds positioned to invest new client commitments within one to two quarters providing exposure to today’s attractive market characteristics Core-Only Total Return 18 16 14 12 10 Total Return 8 6 4 2 0 2011 2012 2013 2014 2015

Biography Paul Nasser, Chief Financial Officer & Chief Operating Officer, is responsible for managing the firm's resources across investment and operating disciplines. As Chief Financial Officer and Chief Operating Officer of Intercontinental, he is a member of the Executive Committee, Investment Committee, Valuation Committee, and oversees Performance Reporting, Investor Relations, Accounting, Finance, Marketing, Human Resources, Technology and Administration. Prior to joining Intercontinental in 2000, Paul Nasser was Senior Vice President and Team Leader in Fleet's Real Estate Finance Group handling a real estate portfolio of over $1 billion. In this capacity, Mr. Nasser managed construction and acquisition loans, private placements, mezzanine debt, retail real estate, REITs and residential real estate development. Before joining Fleet in 1991, he held various senior management positions in the banking industry. Active in many civic and charitable organizations, Mr. Nasser is on the Board of Directors of the Massachusetts Chapter of the National Association of Industrial and Office Properties (NAIOP); is the President Elect for 2017 for the Greater Boston Board of Real Estate Finance Association; and Mr. Nasser serves as a trustee for St. John’s Preparatory School, Danvers, MA and serves as a member of the Facilities Committee for Bishop Fenwick High School, Peabody, MA. Mr. Nasser holds memberships with the Treasurer's Club of Boston, National Council of Real Estate Investment Fiduciaries (NCREIF), National Association of Real Estate Investment Managers (NAREIM); and the Pension Real Estate Advisory (PREA). Mr. Nasser was the former Chairman of the Advisory Board for St. John the Evangelist School, former Chairman and President of the National Association of Industrial and Office Properties Massachusetts Chapter, former member of the National Board of Directors of the National Association of Industrial and Office Properties (NAIOP), and former member of the Board of Directors of Junior Achievement of Eastern Massachusetts. In 2015, Mr. Nasser was named the CFO of the Year for Midsize Private Companies by the Boston Business Journal. Mr. Nasser received his BA in Urban Planning from the University of Rhode Island in 1983 and his MBA from Suffolk University in 1998