Office Locations & Services

Valuation & CounselingDue DiligenceTransactional & Litigation SupportSpecialty Property ExpertisePortfolio ValuationDevelopment Incentives

Introduction

Real estate markets in the United States continued to improve throughout 2011.  Notable news for 2011 includes:

– Continued bifurcation of many sectors• “Trophy” assets vs. Class B and C properties

– Positive Economic News• Strong performance in the Multifamily sector• Early signs of stabilization in home values• Even lower interest rates• Continued decline in cap rates• Improving Consumer Confidence & Spending although consumer 

borrowing is up– Negative Economic News

• Persistent high unemployment and underemployment• European debt issues create uncertainty

A Look Into 2012 and Beyond

Values are likely to increase slowly due to a combination of improved fundamentals and a slight decrease in cap rates

High construction costs combined with sluggish demand will result in Constrained New Supply‐ Multi‐family likely to see the majority of new construction‐ Continued strong commodity prices and energy costs keep construction 

costs high

Properties that are do not become functionally obsolete generally rebound to their depreciated replacement cost at some point in the cycle

New CompletionsPercentage of Existing Stock

25‐Year Average:  2.1%

Supply growth this low barely exceeds

obsolescence

Outline

• Office Market Update• Retail Market Update• Multi‐Family Market Update• Industrial Market Update

Office Market Update•Mitch Simonson, MAI – Moderator

– Steve Chirhart, TaTonka Real Estate Advisors– Scott Pollock, Cushman & Wakefield/NorthMarq– Mike Salmen, Transwestern

Office Cap Rates Decrease Slightly in 2010 and 2011

Office – CBD The Best, The Worst and The Local Markets

Top Three Markets By Vacancy…Charlotte, NC – 7.60%Boise, ID – 8.41%Philadelphia, PA – 9.20%

Local Markets…Minneapolis, MN – 15.9%St. Paul, MN – 21.3%Combined CBDs – 17.0% ‐ (Source: NAIOP)

…and the Bottom Three MarketsDallas, TX – 25.7%Syracuse, NY – 29.0%Dayton, OH – 29.0%

Office – Suburban The Best, The Worst and The Local Market

Top Three Markets By Vacancy…Nashville, TN – 8.94%Pittsburgh, PA – 9.35%Greenville, SC – 10.50%

Local Market…Minneapolis/St. Paul, MN – 19.85%

…and the Bottom Three MarketsSacramento, CA – 24.37%Las Vegas, NV– 25.93%Chicago, IL – 26.23%

Office Absorption

Submarket Name

Avg. Annual Net

Absorption (SF)

(2008-2011)

Forecast Avg. Annual

Net Absorption

(SF)(2012-2014)

Annual Net Absorption

as % of Office

UniverseDowntown (Mpls CBD) -150,000 418,000 1.5%Suburban Totals -291,000 828,333 1.7%

REIS forecasts 2012 Absorption at 985,000 square feet, or 1.3% of Office Universe of 75,583,000 square feet

Minneapolis CBD Office Market Cycle

Suburban Office Market Cycle

December 2011 Class A Office Sales

West End Towers, St. Louis ParkTwo Buildings, 484,104 SF, $147/SF

Two Marketpointe, Bloomington236,000 SF Building and 5.75 acre vacant land parcel, About $240/SF building area plus vacant land

December 2011 Class A Office Sales

Cargill Building, Hopkins254,915 SF, $273/SF

The Colonnade, Golden Valley359,655 SF, $140/SF

Retail Market Update•Michelle D. M. Koeller, MAI, MRICS – Moderator

– Jen Helm, Cushman & Wakefield/NorthMarq– James McComb, McComb Group Ltd.– Herb Tousley IV, Exeter Realty

Retail Cap Rates Decrease Slightly in 2010 and 2011

Retail The Best, The Worst and The Local Markets

Top Three Markets By Vacancy…San Francisco/Oakland, CA – 3.83%Los Angeles, CA – 4.78%Washington, D.C. – 4.88%

Local Market…Minneapolis/St. Paul, MN – 8.29%

…and the Bottom Three MarketsHouston, TX – 16.23%Dayton, OH – 18.31%Providence, RI – 20.00%

Retail Absorption

Minneapolis/St. Paul Market

Avg. Annual Net

Absorption (SF)

(2008-2011)

Forecast Avg. Annual

Net Absorption

(SF)(2012-2014)

Annual NetAbsorption

as % of Retail

UniverseMetro Area

Totals -351,000 435,667 0.66%

REIS forecasts 2012 Absorption at 332,000 square feet, or 0.5% of Retail Universe of 66,184,664 square feet

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

CURRENT RETAIL TRENDS

INAUGURAL ST. THOMAS-INTEGRA VIEWPOINT EVENT

McComb Group, Ltd.

January 2012

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

1990 2000 2011 2016Characteristic Census Census Estimated EstimatedPopulation 2,542,631 2,968,806 3,314,929 3,455,173 Households 961,627 1,136,615 1,285,939 1,338,939 Families 649,907 744,303 827,409 853,514

Growth RatePopulation 1.56 % 1.01 % 0.83 %Households 1.69 1.13 0.81Families 1.37 0.97 0.62

Source: U.S. Census, Scan/US, Inc. and McComb Group, Ltd.

POPULATION AND HOUSEHOLDSMINNEAPOLIS-ST. PAUL MSA

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Source: U.S. Census Current Population Survey.

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Income Number Percent

<$10,000 63,588 4.9 %$10,000 to $14,999 48,074 3.7$15,000 to $19,999 48,460 3.8$20,000 to $24,999 51,548 4.0$25,000 to $29,999 55,621 4.3$30,000 to $34,999 58,021 4.5$35,000 to $39,999 58,059 4.5$40,000 to $49,999 115,976 9.0$50,000 to $59,999 112,570 8.8$60,000 to $74,999 152,431 11.9$75,000 to $99,999 194,892 15.2$100,000 to $124,999 126,863 9.9$125,000 to $149,999 71,356 5.5$150,000 to $199,999 67,382 5.2$200,000 to $249,999 20,756 1.6$250,000 Plus 40,342 3.1 Total 1,285,939 100.0 %

Median Household Income $62,514Average Household Income $78,944

Source: Scan/US and McComb Group, Ltd.

MINNEAPOLIS-ST. PAUL MSA HOUSEHOLD INCOME DISTRIBUTION: 2011 ESTIMATE

74.7%

25.3%

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Store November December

Nordstrom +5.6 % +8.7 %Saks +9.3 +5.8Macys/Bloomingdales +4.8 +6.2Kohl's -6.2 -0.1JCPenney -2.0 +0.3Target +1.8 +1.6Costco +9.0 +7.0TJX +4.0 +8.0Gap -5.0 -4.0Limited Brands +7.0 +7.0

Retail Index +3.1 +3.4

Source: Company reports and Thompson-Reuters.

SAME STORE SALESNOVEMBER AND DECEMBER, 2011

Website Total Shoppers1 Amazon.com 67,265,934 2 Walmart.com 31,776,242 3 Target.com 28,929,813 4 Netflix.com 19,896,476 5 Bestbuy.com 16,686,433 6 Sears.com 14,788,791 7 Dell.com 14,252,185 8 JCPenney.com 13,905,718 9 Homedepot.com 13,679,305

10 HP.com 12,585,559

Source: Retail Info Systems.

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

TOP 10 ONLINE RETAILERS IN 2009

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Retail Market Cycle

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

TWIN CITY FOOD FIGHT

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Store 2002 2007 Dollars Percent

Grocery Stores 4,793.1$ 4,240.5$ -$552.6 -11.53 %Supermarkets 4,699.9 4,155.2 -544.7 -11.59

Specialty Food Stores 113.3 150.1 36.8 32.48

Discount Stores 2,836.9$ 2,486.1$ -$350.8 -12.37 %Department Stores 1,130.1 858.9 -271.2 -24.00Warehouse Clubs & Supercenters 1,029.9 2,791.9 1,762.0 171.08Dollar Stores 52.9 112.6 59.7 112.85

Source: U.S. Department of Commerce.

MSA RETAIL SALES TRENDS 2002 AND 2007(In Millions of Dollars)

Change

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Store 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Walmart Supercenter 9 13 16 21 26 38 42 43 48 51 SuperTarget 7 10 11 15 18 21 24 25 25 26 Costco 2 2 3 3 4 4 5 5 6 6 Sam's Club 12 13 13 13 13 13 13 13 13 13 Cub Foods 31 35 35 39 41 42 44 45 45 46 Trader Joe - - - - - 2 3 5 6 6 Aldi - 5 9 13 16 22 23 27 28 29

Source: Retailer Websites.

NUMBER OF STORESMINNESOTA2002 TO 2011

McCOMB GROUP, Ltd.R E A L E S T A T E A N D

R E T A I L C O N S U L T A N T S

Dollar Dollar FamilyYear General Tree Dollar

2006 8,260 3,219 6,300 2007 8,222 3,411 6,400 2008 8,362 3,591 6,571 2009 8,828 3,806 6,655 2010 9,372 4,055 6,785

Increase 1,112 836 485 Supercenter Equivalent 50 46 19

Source: NRF Stores.org and store websites.

DOLLAR STORE GROWTH; 2006-2010

Retail Market Cycle

Apartment Market Update•Dan Mueller, MAI – Moderator

– Abe Appert, CBRE– Gina Dingman, Everest Real Estate Advisors – Steve Schachtman, Steven Scott Management

Apartment Cap Rates Decrease in 2010 and 2011

ApartmentsThe Best, The Worst and The Local Market

Top Three Markets By Vacancy…Minneapolis/St. Paul, MN – 2.46%San Jose, CA – 3.09%New York, NY – 3.10%

Local Market…Minneapolis/St. Paul, MN – 2.46%Mpls./St. Paul has the lowest vacancy of surveyed markets22 of 59 markets have vacancy at or below 5.0%

…and the Bottom Three MarketsSarasota, FL – 9.50%Columbia, SC – 11.00%Houston, TX – 11.88%

Apartment Absorption

Minneapolis/St. Paul Market

Avg. Annual Net

Absorption (Units)

(2008-2011)

Forecast Avg. Annual Net Absorption

(Units)(2012-2014)

Annual NetAbsorption

as % of Multi-family

UniverseMetro Area

Totals 1,559 1,122 0.72%

REIS forecasts 2012 Absorption at 1,057 units, or 0.68% of Apartment Universe of 155,270 units

Apartment Market Cycle

Industrial Market Update•Jeffrey A. Johnson, MAI – Moderator

– Ben Applebaum, WelshInvest– Dave Jellison, Liberty Property Trust– Greg Miller, Interstate Partners– Arvid Povilaitis, Meritex 

Industrial Cap Rates Decrease in 2010 and 2011

IndustrialThe Best, The Worst and The Local Markets

Top Three Markets By Vacancy…Los Angeles, CA – 5.04%Houston, TX – 5.77%Orange County, CA – 5.91%

Local Market…Minneapolis/St. Paul, MN – 12.23%

…and the Bottom Three MarketsLouisville, KY – 18.47%Raleigh/Greensboro, NC – 20.03%Boston, MA – 20.77%

Industrial Absorption

Minneapolis/St. Paul Market

Avg. Annual Net

Absorption (SF)

(2008-2011)

Forecast Avg. Annual

Net Absorption

(SF)(2012-2014)

Annual NetAbsorption

as % of Industrial Universe

Metro AreaTotals 548,000 2,115,000 1.88%

REIS forecasts 2012 Absorption at 1,528,000 square feet, or 1.3% of Industrial Universe of 112,256,490 square feet

Industrial Market Cycle

61 Offices in 33 StatesOver 900 Consultants & Advisors

160+ MAIs Company‐Wide42 FRICS & 44 MRICS

Integra Realty Resources

Nation’s Largest Valuation and Counseling Firm