Capital Markets Overview & Forecast

December 2013

Agenda

Executive Summary
Economy & Jobs U.S. Sales/Pricing Trends Debt/Equity Markets Outlook

Executive Summary
2013 will go down as another subpar recovery year for economic growth; but there is an upward bias in the outlook for 2014 & 2015. Job creation has been steady. At the current rate of hiring, the U.S. will return to peak employment by June of 2014. Lawmakers were beaten down in the polls by the recent government shutdown creating a strong incentive for budget compromises by the January 15th deadline. The Feds monetary policy is likely to remain loose for a long time, but the data is beginning to support the first tapering in early 2014. Interest rates will resume a controlled climb upwards, but tame inflationary pressures will keep rates well below the historical average

Executive Summary
Unlevered annual returns are exceeding 10% in nearly two-thirds of the country in 2013 Demand for CRE loans is at all time high and lending standards will continue to loosen. With the jobs recovery spreading to numerous geographies, sales and pricing are accelerating in secondary/tertiary markets Investors will see less upside with core assets, but healthier debt markets will keep pricing in this segment of the market elevated

The need for yield in combination with stronger economic growth will increasingly push capital into suburban and value-add opportunities

Economy & Jobs

Feds Economic Outlook

Real GDP & Forecast
4 3 2 1
2.5 2.2 1.9

3.3 3.2 3.0

3.4 3.3 3.3

0
-1 -2
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

-3
-4

Actual June 2013 FOMC Forecast September 2013 FOMC Forecast CT Forecast

The Fed revised its GDP estimate down from 2.5% to 2.2% in 2013 and revised 2014 down from 3.3% to 3.0%. CTs Forecast is below the Feds outlook for 2013 but slightly more optimistic for 2014 & 2015.

Source: Investment Strategy Group, Goldman Sachs

Govt Shutdown Hits Q4 Growth

1995-96 Shutdown
4.5 4 3.5 3 2.5 2
25 20 15 10 5 0 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0

Recent Shutdown
25 20 15 10 5

Real GDP, Year-ago % chg.

Net Absorption, Office Space msf

Real GDP, Year-ago % chg.

Net Absorption, Office Space msf

The 1995-96 shutdown (21 days), shaved 50 bps off of 1995Q4 GDP and U.S. net absorption of office space was reduced by 7 msf in that same quarter; it bounced back in the following period. The recent shutdown lasted 16 days. S&P estimates it shaved 60 bps off 2013Q4 GDP. CT estimates the recent shutdown will reduce U.S. net absorption of office space by 5 msf, but demand will bounce back in 2014Q1.

Source: Cassidy Turley Research

Financial Markets Shrug It Off

CBOE Volatility Index SP500 VIX
90 80 70 60 50 40 30 20 10
13-Oct 15-Oct 17-Oct 19-Oct 21-Oct 23-Oct 25-Oct 27-Oct 29-Oct 31-Oct 10-Nov 12-Nov 14-Nov 8

Lehman collapse

14.5

14
2011 debt ceiling debate 13.5 Recent govt shutdown

13

12.5

CBOE VIX

4-Nov

2-Nov

6-Nov

2008

2009

2010

2011

2012

The CBOE VIX stayed relatively calm during the recent govt shutdown, staying below 14 compared to the last debt ceiling debate when it jumped to over 40. The long-run average of the VIX is 20; it was 12.7 on November 21 st a near recovery low.

Source: SIX Financial Information, Moodys

2013

8-Nov

12

10-Year Treasury Update

Historical
7

Past 3 Months
3.1 3 4.79 2.9 2.8 2.79 2.71 2.98

6
5 4 3 2

6.03

2.7 2.79

2.6
2.5 2.53

1
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

1.80

2.4 2.3
10/10/13 10/17/13 10/24/13 10/31/13 11/14/13 11/21/13 11/21/13
9

9/12/13

9/19/13

9/26/13

10/3/13

The 10-Year Treasury rose 60 bps to 2.98% following Chairman Bernankees tapering comment in June, but it has fallen over 40 bps since the government shutdown and debt ceiling debate. The 10-Year remains well below its historical average of 5.2% since 1990, but is expected to trend upwards gradually over the next few years.

Source: Federal Reserve

11/7/13

9/5/13

2011

2012

CMBS Spreads Tightening

New-Issue Spread Over Swaps
250 200 150 New Issue Fixed Rate (Conduit) AAA 10.0 50 0 12/23/11 10/12/12 11/30/12 11/4/11 11/8/13 10-Yr AAA AA A 10.0 10.0 10.0 S+99 S+159 S+227 S+335 S+98 S+158 S+222 S+329 93 166 218 333

Spread (bp)
Avg. Life 5.0 11/20 S+72 Week Earlier S+71 52-wk Avg. 55

100

5/18/12

4/26/13

9/16/11

2/10/12

3/30/12

8/24/12

1/18/13

6/14/13

9/20/13

7/6/12

3/8/13

8/2/13

BBB

Spreads continue to tighten. The 10-Year AAA swap spread fell to 99 bps on November 8th, down 28 bps from midJuly.

Source: Commercial Mortgage Alert

10

Monetary Stimulus
3500 3000 2500 2000 1500 1000 500 0 Jan 1970 May 1974 Sep 1978 Jan 1983 May 1987 Sep 1991 Jan 1996 May 2000 Sep 2004 Jan 2009 May 2013
QE1 QE2 QE3

Monetary Base, U.S. $Bil.

The target for the federal funds rate is likely to remain near zero for a considerable time after the asset purchases end, perhaps well after the jobless rate breaches the Feds 6.5 percent threshold. Ben Bernanke, November 20, 2013

Source: U.S. Board of Governors of the Federal Reserve System

11

U.S. Employment (Non-Farm) U.S. Employment Tracker

Total Nonfarm Employment, 000s
138,000
137,000 136,000 135,000 134,000 133,000 132,000 131,000 130,000

At the current rate, we will reach prerecession peak by June 2014

8.7m jobs lost 6.7m jobs gained

129,000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bureau of Labor Statistics

12

U.S. Job Growth By Sector

Oct 13/Oct 12, % chg.
Natural resources and mining Professional and business services Construction Leisure and hospitality Retail trade Total nonfarm Education and health services Wholesale trade Financial activities Transportation and Utilities Other services Information Manufacturing Government

-1%

0%

1%

2%

3%

4%

5%

6%

Source: Bureau of Labor Statistics

13

But Still Very Uneven

Jobs Regained In Recovery, Select Markets
Market
Washington, DC Metro Houston Dallas New York, NY Baltimore San Francisco Minneapolis Seattle Atlanta Philadelphia Miami Chicago Santa Ana Phoenix Los Angeles Newark
Source: Bureau of Labor Statistics, Cassidy Turley Research

Jobs Regained (%)

376% 335% 229% 190% 163% 138% 130% 101% 90% 79% 71% 70% 60% 59% 53% 29%

Jobs Lost During Recession (000's)

-25 -75 -81 -158 -41 -61 -90 -101 -156 -59 -63 -237 -128 -181 -296 -61

Jobs Added During Recovery (000's)

93 249 184 278 66 84 117 103 141 47 44 165 77 106 156 18

14

Momentum Tracker
Job Growth:
Oct 2013 vs. Oct 2012, % Change Momentum Tracker
Tampa Charlotte Dallas Houston Austin Nashville Orlando Atlanta Denver Salt Lake City Seattle San Jose Minneapolis San Francisco Raleigh Phoenix Louisville Santa Ana Boston San Diego 3.4% 3.3% 3.0% 2.9% 2.9% 2.8% 2.8% 2.7% 2.6% 2.5% 2.5% 2.5% 2.4% 2.3% 2.1% 2.0% 2.0% 2.0% 1.9% 1.8% New York Portland Newark Indianapolis Baltimore Chicago Los Angeles Charleston Edison San Antonio New Orleans Columbus Kansas City Cincinnati Sacramento Oakland St. Louis DC Metro Milwaukee Dayton 1.7% 1.7% 1.6% 1.4% 1.4% 1.4% 1.4% 1.2% 1.1% 1.0% 1.0% 0.9% 0.9% 0.9% 0.9% 0.6% 0.4% 0.3% 0.2% -0.8%

Tampa Charlotte Dallas Houston Orlando Denver San Jose

Represent the change in ranking since 2013Q1.

Source: Bureau of Labor Statistics

15

Sales & Pricing Trends

16

U.S. Sales Volume

$600 $500 Billions $400 $272

$300
$200 $100 $0 120% 02 03 04 05 06 07 08 09 10 11 12

YTD 13

Yr-Over-Yr % Chg

80% 40% 0% 02 -40% 03 04 05 06 07 08 09 10 11 12 YTD 13

-80%
Sales volume for 2013 on pace for $319B the highest level in the recovery, but still 55% below the peak in 2007.

Source: Real Capital Analytics

17

Sales Volume Across Property Types

$74.3 $80.7

Sales Volume Jan Oct 13

(Billions)

$37.2 $12.0 Land

$46.8

$21.0

Hotel 34%

Industrial

Retail

Office 31%

Multifamily

29%

29%
17%

23%

Yr/Yr % Change

Land
Source: Real Capital Analytics

Hotel

Industrial

Retail

Office

Multifamily

18

Sales Volume by Metro All Property Types

Rankings Q1-Q3 2011
1 2 7 4 3 9 8 6 13 10 16 5 11 15 18 12 14 17 19 20

2012
1 2 6 4 5 9 11 8 7 12 13 3 10 14 17 15 19 18 20 16

2013
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Market
Manhattan Los Angeles Houston Dallas Chicago Atlanta Suburban VA Boston Seattle Washington, DC San Jose San Francisco Phoenix Denver NYC Boroughs San Diego Northern NJ Miami Las Vegas Orange County

Q1 Q3 13 Sales Volume ($B)

$23.6 $18.1 $9.7 $9.6 $8.0 $8.0 $7.3 $6.5 $6.0 $5.4 $5.3 $5.3 $4.9 $4.8 $4.5 $4.1 $4.1 $3.4 $3.1 $2.9

YOY % Change
35% 34% 31% 34% 14% 19% 21% 10% 18% 12% 14% 15% 10% 9% 19% 10% 13% 3% 123%

-2%

Source: Real Capital Analytics

19

Buyer/Seller Trends
Foreign Inst'l/Eq Fund Listed/REITs Private User/other
33%

Buyers

49% 10% 46% 9% 24% 8% 16% 55%

38% 17% 27%

34% 18%

41% 15% 29%

42%

21% 23%

32%

07

08

09

10

11

12

YTD 13

Public REITs are gaining market share, accounting for 21% of properties purchased 2013YTD, compared to 15% in 2012.

41% 52%

41%
16% 22%
7%

43% 9% 34%
7%

43% 12% 28%

10%

45% 8% 28%
12%

41% 11% 33%

7%

Sellers

25% 13% 24%

4%

19%
5%

07

08

09

10

11

12

YTD 13

Institutional/Equity Funds have accounted for 33% of property dispositions 2013YTD, compared to 28% in 2012.

Source: Real Capital Analytics

20

Top 25 Buyers/Sellers in the U.S

Total Investment Volume, Past 12 Months ($ Billions)
$0 Blackstone Equity Residential Spirit Realty Capital Blackstone AvalonBay Communities American Realty Capital Starwood Capital Group JP Morgan Caisse de Depot GIC (Govt of Singapore) Invesco RE Brookfield Asset Mgmt Realty Income Corp CalPERS Cole RE Investments Vornado Realty Trust Lone Star Greystar RE Partners TIAA-CREF MetLife ARCP Goldman Sachs DDR MAA REIT Norges Bank Invt Mgmt Related Companies $10 $20 Lehman Bros Holdings Cole RE Investments Blackstone Equity Residential Fortress GE Capital Inland Real Estate Group Goldman Sachs Hines Carlyle Group JP Morgan Invesco RE Colonial Properties Trust AR Capital Trust Forest City CBRE Westfield Group CapLease Rockpoint Group Beacon Capital Partners CalPERS Morgan Stanley TIAA-CREF CBRE Global Investors Prudential RE Investors $0 $20 $40

Buyers

Sellers

Source: Real Capital Analytics

21

U.S. Treasury Rate vs. Cap Rate

Office
10% 8% 6% 4% 2% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Oct-13
Average = 384 bps
414 bps

Industrial
10%
6.93%

Cap Rate 10-yr Treasury Rate

7.65%
Average = 416 bps

8% 6% 4%
486 bps

2.79%

2% 0%

2.79%

Multifamily
10% 8%
6.15%

Retail
10%
8%
Average = 301 bps 336 bps

6% 4% 2% 0%

6%

4%
2.79%

2% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Oct-13

Source; Real Capital Analytics

Oct-13

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Oct-13
6.96%
Average = 370 bps 417 bps

2.79%

22

Commercial Property Index

Moodys/RCA CPPI Indices
220 200 180 160 140 120 100 80 Dec-00 Dec-02 Dec-04 Dec-06 Dec-08 Dec-10 Aug-01 Aug-03 Aug-05 Aug-07 Aug-09 Aug-11 Dec-12 Apr-02 Apr-04 Apr-06 Apr-08 Apr-10 Apr-12 Aug-13
23

National Major Markets Non- Major Markets

Source: Real Capital Analytics

NCREIF Returns vs. 10-Year

No clear pattern between interest rates & returns
8% 6% 4% 2% 0% 8% 6% 4% 2% 0%

1998Q2

1999Q1

1995Q2

1996Q1

1996Q4

1997Q3

1999Q4

2000Q3

2001Q2

2002Q1

2002Q4

2003Q3

2004Q2

2005Q1

2005Q4

2006Q3

2007Q2

2008Q1

2008Q4

2009Q3

2010Q2

2011Q1

2011Q4

2012Q3

-2% -4% -6% -8% -10% -12%

2013Q2

-2% -4% -6% -8% -10% -12%

NCREIF NPI Office, Rate of Return, %

10-Year Treasury Yield, %

Source: NCREIF, Federal Reserve

24

Source: NCREIF

12%

16%

0%

4%

8%

12%
Northern NJ Sacramento Central NJ Minneapolis DC Metro Boston Tampa Atlanta Oakland Raleigh San Diego Los Angeles U.S. New York San Francisco Nashville Baltimore Phoenix Dallas Denver San Jose Charlotte Houston

16%

20%

24%

Office

Multifamily

Northern NJ DC Metro Baltimore San Diego Orange County Boston U.S. Minneapolis Phoenix Atlanta Tampa Charlotte Dallas Los Angeles Denver Kansas City Raleigh San Francisco San Jose Houston New York Oakland Nashville

Select Metros, unlevered returns

NCREIF Returns Index 2013YTD

Los Angeles Minneapolis DC Metro New York Oakland Nashville Baltimore Dallas Phoenix Central NJ San Diego Sacramento U.S Raleigh Indianapolis Houston San Francisco Boston Denver Northern NJ Cincinnati Charlotte San Jose

4% 10% 15% 20% 0% 5% 12% 16% 20% 24%

8%

Retail

Industrial

4%

8%

Tampa Milwaukee San Diego Baltimore Kansas City Minneapolis Atlanta Columbus Los Angeles Charlotte San Francisco U.S. Louisville Denver Dallas Nashville San Jose Indianapolis Cincinnati Phoenix Central NJ Houston Saint Louis

25

Source: NCREIF

12%

15%

3%

6%

9%

10%

12%

14%

Office

Multifamily

New York Dallas Charlotte Boston Atlanta Houston Kansas City Oakland Raleigh San Jose U.S. Phoenix Tampa DC Metro Northern NJ Los Angeles Nashville Minneapolis Denver San Diego Baltimore San Francisco Orange County

Select Metros, Average 1985-2013Q3

Historic NCREIF Returns Index

Indianapolis Nashville Dallas Raleigh Boston Minneapolis Baltimore Charlotte Denver Oakland U.S DC Metro Houston San Diego Los Angeles San Jose Central NJ Phoenix Sacramento Cincinnati San Francisco Northern NJ New York

4%
Minneapolis Dallas Houston Atlanta Denver Saint Louis Central NJ Sacramento U.S. Los Angeles Tampa Boston San Diego Baltimore Northern NJ San Francisco Raleigh Phoenix Charlotte DC Metro New York Nashville San Jose

8% 12% 15% 3% 6% 9%

6%

Retail
14% 12% 10% 8% 6% 4% 2%

Industrial

Columbus Milwaukee Cincinnati Houston Indianapolis Tampa Dallas Minneapolis Phoenix Kansas City Saint Louis Central NJ Atlanta Nashville U.S. Louisville Charlotte San Diego San Jose Baltimore Los Angeles Denver San Francisco

26

Debt/Equity Markets

27

CRE Debt Outstanding

Total Q2 13 $2.45 Trillion
Billion
Banks Other, 10% Federal Govt, 3% Life Insurance Companies , 13% Banks, 35% CMBS, CDO & other ABS issues Agency & GSE Portfolios and MBS Life Insurance Companies State & Local Government Federal Government Agency & GSE Portfolios and MBS, 16% Finance Companies
$96 $84 $60 $47 $35 $388 $326 $557 $855

CMBS, CDO and other ABS Issues, 23%

Other

REITs

$0

$200

$400

$600

$800 $1,000 Q1 13

Q2 13

Source: Mortgage Bankers Association

28

Lender Composition
All Property Types

Pvt/Other Reg'l/Local Bank Nat'l Bank Int'l Bank Insurance Gov't Agency Financial CMBS

13% 12% 7% 10%

11% 12% 7% 15%

9% 12% 7% 20%

11% 14% 6% 14% 26% 5% 23%

11% 16% 9% 12% 18% 7% 24%

44%

30% 5%

27% 5%

3% 11%

17%

17%

2009

2010

2011

2012

H1'13

Source: Real Capital Analytics

29

CMBS Issuance
$, Billions

$250 $200 $150

$10

$8

$6 $100 $50 Mar-13 Sep-13 Jun-13 Nov-12 Feb-13 Oct-13 May-13 Aug-13 Nov-13
30

Avg. = $79.8 $79.1

$4

Jan-13

Apr-13

CMBS issuance is up 70% from 2012 and is on pace to reach $79B in 2013. Issues remain one-third of the peak level reached in 2007.

Source: Commercial Mortgage Alert

Dec-12

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Jul-13

$0

$2

CRE Loan Supply vs. Demand

Senior Loan Office Opinion Survey on Bank Lending Practices
100% 80% 60% 40% 20% 0% -20% Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3 00 00 01 02 03 03 04 05 06 06 07 08 09 09 10 11 12 12 13 -40%

-60%
-80%
% Tightening Credit Standards % Reporting Stronger Demand for CRE Loans

The latest from the Fed Senior Loan Survey shows that demand for CRE loans is at an all-time high, and lending standards have loosened significantly.

Source: Federal Reserve

31

CMBS Maturity Schedule

Upcoming Loan Maturity Volume
$160 $140 $120 Billions $100 $80 $60 $40 $20 $0
$8 $1 $7 $33 $25 $20 $10 $8 $12 $19 $55 $93 $154 $127 $129

Other Industiral

$125

Multifamily
Hotel Retail Office

$27

Source: Trepp

32

Capital Issuance
REIT Capital Offerings, $ Billions
Q1 - Q3 13 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000
$68.1
$73.3 $51.3 $47.5 $34.7 $18.1 $36.0 $47.5 $31.7 $38.5 $25.6 $19.8 $18.8 $10.4

$0

$10
IPO

$20

$30

$40
Preferred

$50
Unsecured

$60
Secured

$70

$80

Common

Source: NAREIT

33

Public Equity Capital Flows

Capital Raised by REITs
$80 $70 $60 Billions $68.1

$50 $40
$30 $20 $10 $0 00 01 02 03 04 05 06 07 08 09 10 11 12 YTD 13

Source: NAREIT

34

Outlook

35

NABEs Consensus Forecast Annual Forecast Made Sept 2013

2013 Forecast
Median Real GDP, % change, Q4/Q4 CPI, % change, Q4/Q4 Personal Consumption Expenditures Price Index less food energy, % chg, Q4/Q4 Civilian Unemployment Rate, % annual average Federal Funds Target, % year-end 10-Yr Treasury Note Yield, % year-end Housing Starts, millions of units Home Prices, FHFA, % change, Q4/Q4 Oil Prices, $ per barrel, December Average S&P 500 Index, December 31 1.9 1.6 2.0 Five Lowest 1.5 1.1 1.1 Five Highest 2.5 2.2 1.7 Median 3.0 2.1 1.7

2014 Forecast
Five Lowest 2.2 1.0 1.2 Five Highest 4.0 2.9 2.4

7.5 0.125 2.76 0.95 6.0 100 1700

7.4 0.125 2.43 0.90 2.7 93 1500

7.6 0.147 3.12 1.01 9.7 107 1754

7.0 0.125 3.29 1.16 4.8 100 1764

6.7 0.125 2.50 0.95 2.0 89 1590

7.3 0.750 3.80 1.41 7.5 112 1912

36

CTs Baseline Forecast

2012 Q3 US Economy Real GDP, % Nonfarm Employment, ths. Office-using Employment, ths. Unemployment Rate, % Retail Sales & Food Services, % CPI Inflation, % CCI Fed Funds Rate 10-year Gov't Bond ISM Manufacturing Index West Texas Intermediate Office Sector Net Absorption, msf Vacancy Rate Asking Rents Industrial Sector Net Absorption, msf Vacancy Rate Asking Rents Retail Sector Net Absorption, msf Vacancy Asking Rents Apartment Sector Net Absorption, ths. Vacancy Asking Rents 2.8 409 129 8.0 4.4 2.1 65 0.1 1.6 51 92 7.7 15.8% $21.72 24.8 9.0% $5.07 1.7 11.0% $18.27 25.2 4.7% $1,009 Q4 0.1 545 147 7.8 5.3 2.2 70 0.1 1.7 51 88 22.7 15.5% $21.67 40.3 8.7% $5.01 2.8 10.9% $18.30 42.9 4.6% $1,014 Q1 1.1 645 212 7.7 3.3 1.4 63 0.1 1.9 53 94 6.1 15.5% $21.73 28.7 8.6% $5.05 2.9 10.8% $18.34 39.5 4.4% $1,018 Q2 2.5 584 238 7.6 1.2 -0.03 75 0.1 2.0 50 94 14.9 15.3% $21.75 26.7 8.5% $5.06 2.5 10.8% $18.39 32.2 4.3% $1,025 2013 Q3 1.8 478 109 7.6 4.3 2.2 80 0.1 2.7 54 97 14.1 15.1% $21.97 24.4 8.3% $5.09 2.6 10.8% $18.44 41.3 4.3% $1,032 Q4 2.6 519 118 7.4 5.8 2.4 82 0.1 3.1 54 99 15.2 14.9% $22.05 23.2 8.2% $5.11 3.0 10.8% $18.49 51.4 4.3% $1,039 Q1 2.9 536 122 7.3 4.1 2.9 83 0.1 3.3 54 101 14.1 14.7% $22.16 26.7 8.1% $5.12 3.4 10.7% $18.54 41.9 4.1% $1,044 2014 Q2 3.2 586 134 7.2 4.2 3.2 85 0.1 3.5 54 101 15.2 14.5% $22.27 22.1 8.0% $5.12 3.3 10.6% $18.59 39.8 4.0% $1,049 2012 2.8 2,237 696 8.1 4.8 2.1 67 0.1 1.8 51.7 94 51.1 15.8% $21.75 104.0 9.0% $5.05 10.3 11.0% $18.29 137.5 4.8% $1,004 Annual 2013 1.9 2,227 677 7.6 3.7 1.5 75 0.1 2.5 53 96 45.3 15.2% $21.88 103.0 8.4% $5.08 11.1 10.8% $18.41 164.5 4.3% $1,029 2014 3.2 2,286 622 7.0 4.5 3.2 87 0.1 3.6 55 101 56.6 14.4% $22.34 103.2 7.9% $5.12 13.4 10.6% $18.60 162.8 4.1% $1,051

37

10-yr Govt Bond Forecast

2013
Cassidy Turley NABE* Moody's Analytics Federal Reserve CBO *year-end
The consensus forecast is that 10-Yr Treasuries will generally trend upwards from this point forward. The 10-year averaged since 1980 = 6.71%; since 1990 = 5.17%

2014
3.6%

2015
4.5% 4.3% 3.4% 3.5%

2016
5.0% 4.8% 4.3% 4.3%

2017
5.0% 4.6% 4.8% 5.0%

2.5%

1.8% - 2.8% 1.9% - 3.5% 2.2% 1.9% 2.1% 3.2% 2.7% 2.7%

Source: Cassidy Turley

38

Capital Markets Overview & Forecast

December 2013