GDP growth continues to post moderate gains U.S. real gross domestic product
Sources: Bureau of Economic Analysis, IHS Global Insight.
12100806040200989694
10
5
0
-5
-10
Compound annual growth rate
121110090807060504030201
4.0
2.0
0.0
-2.0
-4.0
-6.0
6004002000-200-400-600-800-1000
Percent change, year ago Difference from previous month, thousands
Labor market showing improvement Non-farm employment, United States
Sources: Bureau of Labor Statistics, IHS Global Insight.
% change, (left)
Absolute change, (right)
Oil prices remain at high levels West Texas Intermediate Crude
Sources: Wall Street Journal, IHS Global Insight.
20122011201020092008200720062005200420032002
160
140
120
100
80
60
40
20
0
US$ per barrel
U.S. stock market is doing well S&P 500 composite, price index
Sources: S&P, IHS Global Insight.
20122011201020092008200720062005200420032002
1600
1400
1200
1000
800
600
S&P 500 Index
Consumers continue to spend despite weak sentiment U.S. real personal consumption expenditures
Sources: Bureau of Economic Analysis, IHS Global Insight.
20122011201020092008200720062005200420032002
6
4
2
0
-2
-4
Percent change, year ago
20122011201020092008200720062005200420032002
6.0
4.0
2.0
0.0
-2.0
-4.0
Percent change, year ago
Headline CPI inflation eases despite rising energy prices Overall vs. core Consumer Price Index
Sources: Bureau of Labor Statistics, IHS Global Insight.
Overall
Less food and energy
Real estate prices remain low United States
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Index
Moody’s/REAL Commercial Property Price Index
S&P/Case-Shiller National U.S. Home Price Index Q1 2000=100
Q4 2000=100
Sources: Moody's Investors Service, Standard & Poor's and Fiserv, Inc., Moody’s Analytics.
Commercial real estate valuation and delinquency trends
Source: Moody's Investors Service, Moody’s Analytics.
012345678910
0
50
100
150
200
250
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Index December 2000=100
Delinquency rate (right)
Percent
Price Index (left)
NCREIF Property Index returns Recent returns by property sector, United States
-12
-9
-6
-3
0
3
6
9
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Percent Apartments Industrial Office Retail Hotel
Sources: National Council of Real Estate Investment Fiduciaries, Moody’s Analytics.
Moody’s/REAL Commercial Property Price Index By property sector, United States
0
50
100
150
200
250
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Index Q4 2000=100
ApartmentsIndustrialOfficeRetail
Sources: Moody's Investors Service, Moody’s Analytics.
Capitalization rates By property sector, United States
Source: American Council of Life Insurances, Moody’s Analytics.
4
6
8
10
12
14
16
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Percent
ApartmentsOfficeIndustrialRetailHotel
Vacancy rates By property type
4
6
8
10
12
14
16
18
20
2003 2004 2005 2006 2007 2008 2009 2010 2011
Percent
Office
Retail
Apartment
Source: REIS, Mortgage Bankers Association.
Average asking rents By property type
Source: REIS, Mortgage Bankers Association.
$850
$900
$950
$1,000
$1,050
$1,100
10
15
20
25
30
35
2003 2004 2005 2006 2007 2008 2009 2010 2011
$/sq. ft.
Office (L)
Retail (L)
Apartment (R)
$/month
Office space supply and demand United States projections
Source: National Association of Realtors, REIS.
15.8%
15.9%
16.0%
16.1%
16.2%
16.3%
16.4%
16.5%
-
2
4
6
8
10
12
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Millions, sq. ft. Net absorption (L) Completions (L) Vacancy rate (R)
Industrial space supply and demand United States projections
Source: National Association of Realtors, REIS.
10.4%
10.6%
10.8%
11.0%
11.2%
11.4%
11.6%
11.8%
-
4
8
12
16
20
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Millions, sq. ft. Net absorption (L) Completions (L) Vacancy rate (R)
Retail space supply and demand United States projections
Source: National Association of Realtors, REIS.
10.4%
10.6%
10.8%
11.0%
11.2%
11.4%
11.6%
11.8%
12.0%
-
1
2
3
4
5
6
7
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Millions, sq. ft. Net absorption (L) Completions (L) Vacancy rate (R)
Multi-family space supply and demand United States projections
Source: National Association of Realtors, REIS.
4.1%
4.2%
4.3%
4.4%
4.5%
4.6%
4.7%
4.8%
-
10
20
30
40
50
60
70
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013
Millions, sq. ft. Net absorption (L) Completions (L) Vacancy rate (R)
Private equity trends Number of deals closed and total capital invested by quarter
Capital investment continues to shift towards IT, Health care and energy Percentage of deal volume (capital) by industry
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Business Products and Services (B2B)
Consumer Products and Services (B2C)
Energy
Financial Services
Healthcare
Information Technology
Materials & Resources
Source:PitchBook
Fundraising remains fairly flat since financial crisis Number of funds closed and total capital raised by quarter
$101 $96 $74 $42 $75 $35 $12 $30 $30 $22 $28 $10 $30 $27 $17 $19
123
61
47 42
62
31
12
31
53
3227 26
46
3528 32
0
20
40
60
80
100
120
140
$0
$20
$40
$60
$80
$100
$120
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2008 2009 2010 2011
Capital Raised ($B) # of Funds ClosedSource:PitchBook
Despite REIT’s success in raising capital, IPOs are still rare
Source: National Association of Real Estate Investment Trusts.
0
10,000
20,000
30,000
40,000
50,000
60,000
2004 2005 2006 2007 2008 2009 2010 2011
US$ millions
Total value of capital raisedValue of IPOs
Dow Jones REIT Index of mortgage returns
Sources: Dow Jones & Company, Inc., Moody’s Analytics.
0
50
100
150
200
250
300
350
2005 2006 2007 2008 2009 2010 2011 2012
Index Feb 1990=100
Total return
Commercial mortgage return
CMBS issuances United States
Source: Bloomberg.
0
50
100
150
200
250
300
1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011
US$ billions
CMBS issuances By type, United States
Source: Bloomberg.
0
10
20
30
40
50
60
70
80
2012(Q1) 2011(Q4) 2011(Q3) 2011(Q2) 2011(Q1)
US$ billions
AgencyConduitOthers
Sovereign risks heightened after 2009 Credit default swap spreads, five-year government bonds
Source: DataStream.
0
100
200
300
400
500
600
2008 2009 2010 2011 2012
Basis points
Italy
France
Germany0
1,000
2,000
3,000
4,000
5,000
6,000
2008 2009 2010 2011 2012
Basis points
Greece
PortugalIrelandSpain
Recent rating changes for selected European countries
Sources: Bloomberg, Milken Institute.
AAA AA
A BBB
BB B
CCC CC
C D
SD 2006 2007 2008 2009 2010 2011 2012
Spain
Italy
Ireland
Portugal
Greece
S&P's foreign currency long-term debt ratings
BRICs: Real GDP growth
Source: IMF, Oxford Economics.
Brazil
China
Russia
India
-15
-10
-5
0
5
10
15
20
2005 2006 2007 2008 2009 2010 2011
Percent change, year ago
-5-4-3-2-10123456
1996 2001 2006 2011 2016
United States
Euro zone
Real GDP growth, percent
Real GDP growth United States vs. Euro Zone, projections after 2011
Source: International Monetary Fund.
Residential prices increase in some markets Residential price index, Q1 2006-Q4 2011
Sources: Australian Bureau of Statistics, Statistics Sweden, Teranet- National Bank of Canada, eHomeday, Hong Kong Rating and Valuation Department, Nationwide, Milken Institute.
60
80
100
120
140
160
180
200
Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011
Index Q1 06=100
London Stockholm Shanghai
Toronto Hong Kong
Recovery still weak in countries suffering most from housing crisis Annual change in house prices, 2002-2011
Source: Scotiabank Group.
-20
-15
-10
-5
0
5
10
15
20
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Q1 11Q2
Percent
U.K.
United States
Spain
Ireland
Office market performance varied worldwide Office rent change in major cities, 2009-2010
Source: CB Richard Ellis.
31.828.5
25
8.7
-8.5 -7.6-12.5
-16.7-20
-10
0
10
20
30
40
Sao Paulo Hong Kong London New Delhi Madrid New York Dubai Tokyo
Percent
Asia led the worldwide recovery in the retail property market Annual change in retail space rent, 2010-2011
Source: CB Richard Ellis.
11.1
6.9
0.5
3.8
0
2
4
6
8
10
12
Asia Pacific Americas EMEA Global
Percent74.2
13.5 10.15.6
-1.0-100
1020304050607080
Hong Kong
Tokyo New York London Paris
Percent
*
* Europe, Middle East, Africa
20122011201020092008200720062005200420032002
2.0
1.5
1.0
0.5
0.0
Millions of units
Housing starts remain flat United States
Sources: U.S. Census Bureau, IHS Global Insight.
Single-family
Multi-family
20122011201020092008200720062005200420032002
60
40
20
0
-20
-40
-60
Percent change, year ago
U.S. home sales picking up Single-family home sales
Sources: National Association of Realtors, Moody’s Analytics.
Existing
New
U.S. home prices begin to stabilize Median existing single-family home price
Sources: National Association of Realtors, Moody’s Analytics.
20122011201020092008200720062005200420032002
20
10
0
-10
-20
Percent change, year ago
Foreclosure rates As percent of all loans, California vs. U.S., as of Q4 2011
Sources: Mortgage Bankers Association, Moody’s Analytics.
20102006200219981994
2.5
2.0
1.5
1.0
0.5
0.0
Percent
California
United States
U.S. household debt-to-income ratio is still high
Source: Federal Reserve.
0
20
40
60
80
100
120
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Percent
Long-term trend line
U.S. homeowners’ equity as a percent of their real estate assets 1950 to 2011
Source: Federal Reserve, Flow of Funds.
30
40
50
60
70
80
90
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
Percent
Average, 1950 to Q2 2011: 64.8%
Long-term trendline
Q4 2011: 38.4%
GSEs suffered significant losses from 2008 to 2011
Sources: Fannie Mae, Freddie Mac, FHFA, Inside the GSEs.
4.4 5.9 3.9 8.1 5.0 6.3 4.1
-2.1
-58.7
-72.0
-14.0 -16.9
3.7 3.210.1
4.8 2.6 2.1 2.3 3.1
-50.1
-21.6 -14.0
-5.3
-80-70-60-50-40-30-20-10
01020
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Net income, US$ billions Fannie MaeFreddie Mac
Investment in UK commercial property
Source: Property Data, Savills