ChainLinks Retail Advisors

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1 ChainLinks Advisors U.S. National Report 2012 Forecast 2012 Forecast Welcome to ChainLinks 2012 Forecast Report. This report not only contains our forecast for the national retail real estate market in 2012, but also includes a statistical summary of the activity that we witnessed during the third quarter of 2011 and detailed expansion plans of just a few of the retailers that we are tracking throughout our 60+ offices across nearly every major market in the United States. retailers significantly upped their growth plans. ers had already been increasing expansion plans over the virtually non-existent levels of 2009, but this had primarily been driven by discounters and other concepts that had benefited from the newfound frugality of the American consumer. Following Christmas 2010, we saw middle-of-the-road and luxury concepts getting back in the game. We also saw discounters adding extra units to their growth plans. Prior to the 2010 holiday sales season, retail requirements had been up about 20% over 2009 levels. By February 2011, requirements were up over 40% above the past year s levels Holiday Sales Season Forecast Before we focus on this year s coming holiday sales season, let s recap what happened last year. Heading into the 2010 holiday sales season, analysts were generally skeptical about retail sales. Luxury retailers had only seen a return to positive monthly same-store comparables in September. Prior to that, many had endured as many as 18 consecutive months of double digit monthly declines. Consumer confidence was in the 50 s well below the historical average of 95 and the most recent ranking (October 2011) of Last year, groups as diverse as the International Council of Shopping Centers (ICSC) and the National Federation (NRF) were predicting that holiday sales would only increase by about 2.5%. Then, the unexpected happened. Consumers showed up. By early December, most think-tanks were upwardly revising their forecasts. By mid-december it was clear that nearly everyone had underestimated just how much the American consumer would spend. Depending upon the data source, we closed the 2010 holiday sales season with sales increases in the 5% to 6% range. As important as this was in terms of the general economy, what occurred next was even more critical to retail real estate; The surprising success of the 2010 holiday sales season was one of the driving forces behind keeping occupancy growth in the black this year. er sentiment remained high through the annual ICSC ReCon event in Las Vegas this past May, when many retailers further bolstered growth plans in the face of an economic outlook that looked to be improving. This, unfortunately, only lasted until the debt ceiling/credit downgrade debacle of August. As the economic outlook darkened with uncertainty and fears of a double-dip recession, retailers began to pull back on planned expansion. At the very least, those who did not trim their number of planned new units, were suddenly taking much longer to get deals done. While we are now past the worst of this late summer swoon, the economic outlook remains extremely cloudy at best. Most economists have downgraded job growth and GDP forecasts for the coming year; the Eurozone sovereign debt crisis will likely morph into a European recession and retailers continue to trim growth plans. That being said, the impact of last year s holiday shopping season cannot be understated. It was a catalyst behind a Brought to you by: Garrick H. Brown ChainLinks Research Director gbrown@terranomics.com Matt Kircher ChainLinks President mkircher@terranomics.com SullivanHayes B R O K E R A G E

2 Chainlinks Advisors U.S. National Report significant amount of retail growth throughout the United States over the past year. Now, it may be true that most of this growth was mitigated by just a few major retailer bankruptcies (as we will discuss later in this report), however, we are firm in our conviction that the impact of last year s holiday season is what sent us on a positive trajectory for Despite the fact that economic uncertainty dominated the landscape throughout the majority of the third quarter of this year, it was only in the third quarter that we finally saw vacancy levels moving downward. Growth over the first half of the year was largely cancelled out by just the Borders and Blockbuster vacancies. Other, smaller retail failures thrown into the mix certainly didn t help. But overall, what we saw was minor increases in demand from most of the marketplace, swallowed up by a few big failures. So where does this leave us heading into the 2011 holiday shopping season? The Death of Black Friday First, retail real estate statistics aside, the impact of Black Friday is slowly slipping away. As this report went to press, Black Friday 2011 numbers were not yet available. However, we were seeing trends that seem to suggest that Black Friday s days may be numbered as more and more retailers are pushing up their opening times. This year, Target, Best Buy, Kohl s and Macy s all opened their stores at midnight to accommodate early holiday shoppers. Abercrombie & Fitch, Justice, Hollister, Ann Taylor, The Gap, Old Navy, Banana Republic, GameStop and dozens of other chains also followed suit with many of their locations. But a number of retailers have taken things even farther. Both Toys R Us and Walmart opened stores as early as 9 PM on Thanksgiving night. While this has created some backlash (a Target employee started an online petition to urge the Minneapolis-based retailer to return to opening stores no earlier than 5 AM on Black Friday so that employees could still enjoy their Thanksgiving holiday it garnered over 190,000 signatures in less than a week), the reality is that consumers have continued to show up in record numbers at ungodly hours to get an early jump on their holiday shopping. It may take a year or two, but we expect the majority of retailers and shopping centers to eventually be open on Thanksgiving Day. It already is one of the busiest days of the year for movie theaters and many restaurant chains (an estimated 14 million Americans ate out this Thanksgiving). With retailers facing ever more intense competition from both online retailers and one another and consumers continuing to demonstrate that they are willing to show up earlier to cash in on deals, we see it as only a matter of time before Thanksgiving Day becomes the new Black Friday. But even as the importance of Black Friday seems to be fading into the past, the question remains how will the market perform this year? The predictions from ICSC and the NRF have, so far, been in the 2.5% to 3.0% increase range. Of course, the problem in this negative media cycle has been that many media outlets have run with stories that headline reduced growth ahead. The problem with this is that even these projections are looking towards sales growth. They just don t see sales growth matching the level of increase we saw last year. Yet, to the uneducated reader, many of these articles would seem to paint a picture of declining sales revenues not increasing sales revenues that are simply not living up to last year s surprising results. Yet, we think these numbers are low to begin with. First off, the projections of the major think-tanks are right back to where they were last year. That being said, this year we have concerns over the Eurozone, political dysfunction and a whole new palette of issues plaguing the economy. But, one year ago there was a similar set of issues hanging over the economy in fact, they were issues that were actually more prescient than our current crisis of confidence driven issues. And, despite all of these challenges, we are actually heading into this holiday shopping season with higher levels of consumer confidence than where we were last year. We expect sales gains this year to be in the 3.5% to 4.0% range. The year-over-year increase will not be as high as last year s jump, but these numbers will still translate into a relatively strong holiday shopping season. We are more bullish in our forecast than the NRF or ICSC, although we are not as optimistic (though we hope they are right) as Customer Growth Partners, a research group that recently published a report forecasting 6.5% annual sales growth. But regardless of whether our more positive forecast turns out to be true, this does not necessarily mean that this will translate into a surge of retailer demand this year. In fact, our informal polling of retailers is telling us that they are in a much more conservative state of mind this year. The reality is that most economists and most retailers are expecting 2012 to be a year of slow, grinding growth thanks to the implications of both the likely European recession and the continued ineffectiveness of our government (which will be exacerbated by a gridlocked election year) to create any sort of economic policy relief. Of course, the political issues go deeper than this, to the fear

3 Chainlinks Advisors U.S. National Report that political dysfunction may actually derail the economy. It and ethnic themed grocery chains will be expanding with these certainly threatened to do so this summer, so many see it as a smaller footprints, we will see increasing consolidation from looming potential issue at least through November So unionized, mid-priced regional chains that will be returning while we see a strong holiday sales season ahead, we do not stores (typically in the 50,000 to 80,000 square foot range) to see the same surge in retailer demand occurring that happened the marketplace. While fast food and fast casual chains will last year. continue to expand, we also expect casual dining chains (with a few exceptions) to continue to contract. Meanwhile, retailers So where does this leave us? in the middle will continue to be squeezed. While The Gap and er Demand Survey Christopher & Banks have announced plans to close hundreds of stores between them in the coming year, we suspect there will We recently completed our quarterly retailer demand survey, be more. Meanwhile, mom-and-pop retail will largely continue which asks over 600 top retail brokers in over 50 markets to out of the picture until home prices stabilize (home equity nationally to rank current retailer demand on a scale of one loans remain the primary initial source of funding for small retail (reflecting the lowest levels of demand possible) to ten (reflecting startups). Meanwhile, even as growth continues to be tempered the highest levels of demand possible). by economic headwinds, we will also continue to see retailers While the national average of retailer demand remained stable shrinking their footprints. at a ranking of seven indicating levels of retailer demand that The bad news is that we don t expect retailer demand and are slightly above average, we did see a number of cracks in the leasing activity to increase above this year s levels in the façade that our brokers at the local level reported to us. First year ahead. off, one almost unanimous response was that deals were taking longer to get done. ers have responded to big picture The good news is that we also don t expect retailer bankruptcies economic uncertainty with caution. Secondly, urban levels of and failures to take as severe a toll in 2012 as they did in demand were immensely higher than those that we are seeing in suburban marketplaces. Markets that saw no movement in retailer demand included; Albuquerque, Atlanta, Baltimore, Birmingham, Dallas, Denver, Detroit, Indianapolis, Inland Empire, Las Vegas, Miami, New Orleans, New York, North New Jersey, Oakland/East Bay, Omaha, Orange County (CA), Orlando, Philadelphia, Pittsburgh, Portland (OR), Salt Lake City, San Diego, San Francisco, San Jose/South Bay, St. Louis and Tampa/St. Petersburg. Markets that saw improvement in retailer demand include; Austin, Boston, Charlotte, Chicago, Des Moines, Jacksonville, Kansas City, Los Angeles, Milwaukee, Minneapolis, Nashville, Oklahoma City, Phoenix, Raleigh/Durham, Sacramento, San Antonio, Seattle, Tucson and Washington DC. Markets that saw retailer demand drop included; Charleston (SC), Cincinnati, Cleveland, Houston, Little Rock, Louisville, Memphis, Mobile, Newport News/Norfolk, Hampton Roads, San Jose/South Bay and Tulsa Forecast We expect retail vacancies to continue to fall over the coming year at an extremely slow pace. Though we do expect a strong holiday shopping season, we expect retailers to be in cautious growth mode throughout the majority of er expansion will be dominated once again by discounters and grocery store chains, as well as new fast casual restaurant concepts. But discounter expansion (with the exception of dollar stores) may begin to slow by year-end, if for no other reason than players like TJX or Ross have already been in aggressive growth mode for a couple of years now and prime second-generation sites are becoming harder to find. Meanwhile, grocery growth will come mostly in the form of smaller format stores in the 20,000 to 40,000 square foot range. Even while discount, luxury/organic shopping center vacancy throughout the United States stood at 9.3% as of the close of the third quarter. Vacancy levels over the first half of 2011 had remained firm at 9.4% despite strong leasing activity. The failures of Borders and Blockbuster alone translated into nearly 12 million square feet of space being returned to the marketplace mitigating nearly all of the growth the market recorded over the first half of the year. These, of course, weren t the only bankruptcies impacting the market, but retail closures continued to keep pace with growth over the first six months of It was only in the third quarter that the market finally began to see some movement in overall vacancy rates. While we expect retailer bankruptcies to diminish in 2012, they will remain an issue. Throughout 2011, retail failures largely mitigated what would have been respectable growth levels. As of the close of the third quarter, year-to-date shopping center absorption stood above 12 million square feet. Take just the failure of Borders and Blockbuster out of the mix and this number would have doubled. Looking forward, we continue to have strong concerns over mid-priced retail chains. Consumer shopping patterns have diverged to the extremes; luxury retail is back for the higherend consumer and discount retail is flourishing. Across every segment of the retail industry, it is the mid-priced retailer who is suffering most. Middle-class consumers have downsized and there are no signs that the new frugality will end any time soon. Chains caught in the middle will be where the most contraction occurs and though we don t expect retail closures to approach last year s levels, they will continue to mitigate growth across the board. Vacancy will shrink in 2012, but it will be at a slow pace, measured more by basis points than by percentage points.

4 Chainlinks Advisors U.S. National Report er Demand Survey 2Q Q Q Q Q Q 2011 Albuquerque NM Atlanta GA Austin TX Baltimore MD Birmingham AL Boston MA Charlotte NC Charleston SC Chicago IL Cincinnati OH Cleveland OH Dallas TX Denver CO Des Moines IA Detroit MI Houston TX Indianapolis IN Inland Empire CA Jacksonville FL Kansas City MO Las Vegas NV Little Rock AR Los Angeles CA Louisville KY Memphis TN Miami/Dade County FL Milwaukee WI Minneapolis MN Mobile, AL Nashville TN New Orleans LA New York City NY Newport News/Norfolk/Hampton Roads VA North New Jersey Oakland/East Bay CA Oklahoma City OK Omaha NE Orange County CA Orlando FL Philadelphia PA Phoenix AZ Pittsburgh PA Portland, OR Raleigh/Durham NC Sacramento CA Salt Lake City UT San Antonio TX San Diego CA San Francisco CA San Jose/South Bay CA Santa Barbara CA Seattle CA St. Louis MO Tampa/St. Petersburg FL Tucson AZ Tulsa OK Washington, DC NATIONAL AVERAGE * 1 = Lowest retail demand, 10 = Highest retail demand

5 Chainlinks Advisors U.S. National Report Inventory Vacancy 3Q 2011 Net Const Date Total GLA Direct SF Total SF Vac % Absorption SF q 5,069,201, ,504, ,335, % 5,851,061 3,954,187 11,895,901 $ q 5,065,247, ,617, ,232, % 3,332,889 3,150,238 13,532,383 $ q 5,062,097, ,033, ,415, % 3,399,428 4,702,934 13,201,909 $ q 5,057,394, ,989, ,111, % 10,817,591 4,772,447 15,160,219 $ q 5,052,622, ,013, ,156, % 8,340,028 3,410,161 17,102,928 $ q 5,049,211, ,558, ,086, % 7,727,757 5,616,181 17,563,750 $ q 5,043,595, ,297, ,198, % 719,155 5,635,231 19,385,680 $ q 5,037,960, ,073, ,282, % 5,167,457 11,426,531 19,860,548 $ q 5,026,815, ,893, ,027, % 1,480,502 15,680,085 27,399,864 $ q 5,011,135, ,695, ,828, % (8,464,517) 12,055,286 38,185,547 $ q 4,999,079, ,019, ,308, % (15,375,068) 21,387,453 44,145,750 $ q 4,977,692, ,794, ,545, % 7,371,705 32,290,097 56,323,050 $ q 4,945,402, ,724, ,627, % 19,747,481 28,636,091 77,450,844 $ q 4,916,766, ,312, ,738, % 9,118,006 23,801,827 92,177,317 $ q 4,892,964, ,802, ,055, % 30,424,157 47,613,010 95,163,914 $ ,831,698, ,880, ,691, % 112,547, ,514, ,924,341 $ ,695,183, ,270, ,723, % 59,871, ,879, ,737,666 $20.01 Third Quarter 2011 Statistical Recap problem is that we cannot discount the possibility of some more large-scale retailer bankruptcies. The fact is that retailer closures As of the close of the third quarter of 2011, national retail shopping continue. While we don t expect anything at the level of Borders center vacancy stood at 9.3%, down slightly from the 9.4% mark or Blockbuster in the months ahead, there will be additional where it had held steady since the fourth quarter of The bankruptcies and there will be more chains in contraction mode market absorbed over 5.8 million square feet of space during returning space to the market. In fact, Christopher & Banks the third quarter its best performance year-to-date, but well recently announced plans to close 100 stores (nearly half a below pre-recession quarterly averages which typically ranged million square feet) during the first quarter of The Gap, in the 15 to 20 million square foot mark. For example, at the meanwhile, has plans to close 189 U.S. stores roughly 21% of peak of the last real estate cycle in 2007, the market absorbed an its domestic store count over the next couple of years. average of 28 million square feet of space per quarter. While positive occupancy growth from expanding retailers has So far this year the market has recorded total occupancy growth largely been cancelled out by space being returned from a few in excess of 12.5 million square feet, or an average of nearly 4.2 large bankruptcies, there is one other factor that has significantly million square feet. By comparison, last year the market netted helped to keep vacancy levels from increasing. New development total positive absorption in excess of 27.5 million square feet, remains at record lows. So far this year only 11.7 million square or an average of nearly 6.9 million square feet per quarter. But feet of new shopping center product has been delivered to the while occupancy growth numbers are down, retailer demand marketplace. We are currently on place to close 2011 with and leasing activity are actually up. In fact, demand has been roughly 13 million square feet of new deliveries nationally. Keep up substantially over last year. So why are the numbers down? in mind that at the peak of the last real estate cycle (2004 to er bankruptcies continue to mitigate growth in the 2007) deliveries averaged over ten times this total, or 135 million marketplace. The Borders bankruptcy and liquidation alone square feet per year. We are tracking just under 12 million square translated into nearly 12 million square feet of space being feet of shopping center space currently under construction returned to the marketplace. Blockbuster, meanwhile, has throughout the United States, the lowest amount that we have closed over 1,000 locations this year. Between just these two ever tracked. That being said, we are likely at the low-water mark retailers over 17 million square feet of occupancy loss was for retail development. The number of proposed retail projects recorded this year. Take these out of the mix and the market in the development pipeline has increased considerably over the would be approaching 30 million square feet of growth on the course of the past year and many of these will begin to move dirt year already. But the loss of just these two retailers was enough in However, new construction levels will remain modest to counter improving growth trends over the first half of the year and projects will be dominated by the expansion/renovation of and keep vacancy levels flat. It wasn t until this quarter that existing centers as well as urban redevelopment and mixeduse projects. New suburban shopping center construction market vacancy levels finally began to show signs of traction. The good news is that the positive vacancy trends that we saw will be scarce. during the third quarter should continue over the final three Specialty Center Update months of the year. In fact, barring any unforeseen large-scale retailer bankruptcies following the holiday shopping season, this Specialty retail center vacancy now stands at 7.2%. This category trend should continue at least into the first quarter of The of shopping centers includes lifestyle centers, as well as theme

6 Chainlinks Advisors U.S. National Report Date Specialty Centers Inventory Vacancy 3Q 2011 Net Total GLA Direct SF Total SF Vac % Absorption Const SF q 87,764,617 6,412,525 6,469, % 147, ,334 $ q 87,764,617 6,562,495 6,617, % 606,974 7, ,889 $ q 87,756,837 7,162,106 7,216, % 123, , ,669 $ q 87,614,772 6,998,929 7,197, % 186, , ,840 $ q 86,965,782 6,523,359 6,735, % 55,064 9, ,055 $ q 86,956,323 6,565,344 6,781, % 191,440 54, ,514 $ q 86,901,449 6,701,910 6,917, % (257,772) 148, ,388 $ q 86,753,089 6,406,020 6,511, % (213,188) 84, ,234 $ q 86,668,804 6,112,951 6,214, % 1,556 8, ,519 $ q 86,660,404 6,048,762 6,207, % (133,483) 140,274 98,764 $ q 86,520,130 5,761,382 5,933, % (298,452) 148, ,753 $ q 86,371,719 5,338,266 5,486, % 1,264,252 1,492, ,764 $ q 84,879,434 5,167,803 5,258, % 209, ,105 1,862,049 $ q 84,722,329 5,210,941 5,311, % 671, ,490 1,968,711 $ q 83,804,839 4,983,784 5,065, % (256,151) 430,158 2,074,423 $ ,933,086 4,000,106 4,114, % 3,768,129 4,292,567 2,027,336 $ ,640,519 3,540,868 3,590, % 2,160,781 3,470,922 4,368,537 $19.58 and entertainment centers, and outlet centers. Thanks in large part to the performance of outlet centers; it is one of the stronger segments of the retail market. That being said, lifestyle centers are also performing well and are making a bit of a comeback after having been overdeveloped at the peak of the last real estate cycle. This quarter marks the second consecutive quarter in which vacancy levels have declined. Last quarter vacancy stood at 7.5%. Vacancy had peaked during the first quarter of this year at 8.2%. Specialty centers absorbed nearly 148,000 square feet of space during the third quarter. Year-to-date absorption now stands at 878,000 square feet. These are modest totals compared to pre-recession averages. The market recorded nearly 3.8 million square feet of occupancy growth in 2007 at the peak of the last cycle. Like every other shopping center type, performance has been bifurcated by class. Class A centers in every market, even those with the highest overall vacancy levels, have performed strongly this year and are typically averaging vacancy levels of 5% or less. Class B centers have performed well in all but the weakest markets and are typically averaging vacancy levels in core markets of 10% or less. Class C centers continue to struggle everywhere. Specialty centers overall have performed well because the national inventory of specialty centers overwhelmingly consists of Class A and B product. Power Centers Update Community, Neighborhood & Strip Update Vacancy levels for community, neighborhood and strip centers fell from 11.0% to 10.9% during the third quarter. This is the largest segment of the shopping center market that we track, accounting for over 3.3 billion square feet of the over five billion square feet of space that we track. This is also where we see the greatest variances in terms of individual shopping center performance. Bifurcation by class is the overriding trend in the marketplace. Strip centers almost universally fall into the Class C category and continue to struggle because their bread-andbutter tenant base, mom-and-pop retailers, remain missing in action. Mom-and-pop retailers will not be back in any significant numbers until the nation s housing market begins to recover home equity loans are usually the initial line of funding for startups and family-owned businesses. That being said, Class A neighborhood and community centers are doing well in nearly every major U.S. market. Though the bankruptcy of Blockbuster largely impacted drug and grocery-store anchored shopping centers, much of this space was situated in Class A and B centers and has been generating significant touring and leasing activity. Neighborhood and community centers, meanwhile, were largely spared the impact of Borders liquidation. Borders typically utilized space at power/regional centers. Community, neighborhood and strip centers accounted for over 5.1 million square feet of occupancy growth during the third quarter. Year-to-date net absorption now stands above 7.9 million square feet. These numbers should improve over the final quarter of Leasing activity continues to be driven by strong activity from fast casual dining concepts; meanwhile, most of the pending closures that we are aware of will inordinately impact malls and power/regional centers. That being said, the improvement will continue to be limited to the strongest centers. Vacancy for power/regional centers crept up slightly during the third quarter from 6.9% to 7.0%. Though deliveries accounted for only 1.2 million square feet of space this quarter, this number outpaced occupancy growth. Roughly 369,000 square feet of space was absorbed this quarter. This product type took the biggest hit with Border s liquidation. We estimate that over nine million square feet of the 12 million that Borders returned to the marketplace was at power/ regional centers. Despite this, this product type has continued to record modest occupancy growth this year. Year-todate net absorption now stands at just under two million square feet.

7 Chainlinks Advisors U.S. National Report Date Shopping Centers (includes Community, Neighborhood & Strip) Inventory Vacancy 3Q 2011 Net Total GLA Direct SF Total SF Vac % Absorption Const SF q 3,363,644, ,756, ,000, % 5,120,213 1,823,512 5,013,856 $ q 3,361,820, ,915, ,297, % 1,469,071 1,846,848 5,845,647 $ q 3,359,973, ,423, ,919, % 1,412,628 3,314,709 5,822,283 $ q 3,356,659, ,024, ,017, % 6,027,130 3,246,433 7,380,312 $ q 3,353,412, ,047, ,798, % 4,131,556 1,952,330 9,384,297 $ q 3,351,460, ,351, ,977, % 3,657,120 2,468,001 9,398,868 $ q 3,348,992, ,647, ,166, % (1,311,327) 3,114,267 8,676,141 $ q 3,345,877, ,406, ,740, % 961,778 5,341,234 8,408,358 $ q 3,340,817, ,267, ,366, % (3,992,052) 6,678,180 11,719,805 $ q 3,334,139, ,025, ,695, % (7,166,269) 8,290,753 15,870,038 $ q 3,325,849, ,758, ,238, % (8,533,004) 11,989,733 20,232,749 $ q 3,313,859, ,189, ,716, % 2,591,187 15,799,957 26,985,023 $ q 3,298,059, ,273, ,507, % 8,129,957 15,340,200 36,838,021 $ q 3,282,719, ,416, ,297, % 3,195,660 12,712,514 42,431,561 $ q 3,270,006, ,081, ,780, % 14,784,959 26,718,629 43,532,881 $ ,260,690, ,173, ,102, % 53,679,374 76,775,499 57,581,800 $ ,183,915, ,552, ,006, % 28,601,389 79,841,937 65,730,770 $15.84 Power/regional centers are continuing to show strong leasing activity for junior box space, however, also are seeing challenges from continued closures. We expect continued slow growth ahead. Though we expect vacancy to continue to trend downward, these decreases will be measured in basis not percentage points. Geographic Updates Of the five markets that we track in the Northeast United States, only one Boston recorded declining vacancy levels. Vacancy for Philadelphia remained flat, while New York, Northern New Jersey and Pittsburgh saw slight increases. Despite this, retail demand in all of these markets remains high. Urban retail demand remains particularly high in Boston, New York, Philadelphia and Pittsburgh. Mall Update Mall vacancy currently stands at 5.8%, up slightly from the 5.7% mark recorded at the mid-year mark. Vacancy had stayed firm Within the South Atlantic region, eight of the 12 markets that we at 5.7% since the fourth quarter of last year. Despite the fact track Charlotte, Hampton Roads, Jacksonville, Miami, Orlando, that vacancy crept upward during the third quarter, occupancy Richmond, Tampa and Washington DC recorded declining growth remained modestly positive. The market netted nearly vacancy levels. Demand and leasing activity remain strong in 214,000 square feet of occupancy growth over the past three the greater Washington DC/Virginia/Maryland markets despite months. The problem is that during this same time, the market the fact that Baltimore was one of the markets where we saw also experienced roughly 901,000 square feet of deliveries. vacancy tick up during the third quarter. Activity also appears Supply (new construction) outpaced demand (occupancy to be on the rise for most of Florida s retail markets. Atlanta, growth) and so vacancy levels crept up slightly. This is despite Baltimore, Charleston and Raleigh all recorded increased the fact that both new construction and occupancy growth totals vacancy in the third quarter, but in most cases these increases were miniscule compared to historical averages. were nominal. Though malls have been one of the strongest performing We track five markets in the East South Central region. Three of segments of the market in terms of retailer demand and leasing these markets Birmingham, Mobile and Nashville registered activity, they are also the segment of the market that we expect vacancy declines. Only Louisville saw an increase in vacancy, to be most impacted by the next round of retail closures. For while occupancy remained flat in Memphis. example, both the planned closure of 100 Christopher & Banks We track eight markets in the West South Central region. Five and 189 Gap stores will almost exclusively impact malls. While markets Austin, Houston, Little Rock, New Orleans and Tulsa luxury and discount retailers are doing well, mid-price retailers are recorded vacancy declines this quarter. Houston led the way facing the greatest challenges. The middle-class consumer they with over 860,000 square feet of occupancy growth. Occupancy used to cater to has largely downscaled. Meanwhile, a number levels remained flat in the Oklahoma City metro. Both the Dallas of the retailers on our watch list are primarily mall users. While and San Antonio metros recorded modest increases in vacancy. we expect a strong holiday sales season, there will be more retail failures in And many of these will include concepts that are We track six markets in the East North Central region. All but mall-based. Looking forward, we expect vacancy levels to stay two recorded decreased vacancy in the third quarter. Chicago, at or near current levels, but any movement will be up. The good Cleveland, Indianapolis and Milwaukee all saw vacancy levels news for mall landlords is that they remain at the top of the list for most expanding concepts. creep downward. Chicago leads all other markets in terms of occupancy growth with over 1.2 million square feet. Cincinnati and Detroit both saw vacancy levels creep up slightly.

8 Chainlinks Advisors U.S. National Report Date Power Center Inventory Vacancy 3Q 2011 Net Total GLA Direct SF Total SF Vac % Absorption Const SF q 607,588,728 40,219,833 42,676, % 368,995 1,230,066 1,749,358 $ q 606,358,662 39,268,341 41,815, % 466,026 99,069 2,396,424 $ q 606,259,593 39,745,698 42,182, % 1,150,718 1,026,894 2,081,001 $ q 605,232,699 39,802,055 42,306, % 1,974, ,144 2,666,505 $ q 604,705,555 40,909,227 43,754, % 2,781, ,333 2,055,893 $ q 603,941,222 42,682,726 45,771, % 2,458, ,159 2,200,177 $ q 602,996,063 43,800,226 47,284, % 1,505, ,830 2,771,823 $ q 602,066,233 43,970,755 47,860, % 1,802,969 2,534,658 2,981,972 $ q 599,531,575 43,108,787 47,129, % 3,125,217 3,588,005 4,989,995 $ q 595,943,570 42,178,628 46,666, % (276,669) 2,127,700 7,523,400 $ q 593,815,870 38,808,866 44,261, % (1,612,958) 5,441,879 8,748,090 $ q 588,373,991 32,742,146 37,207, % 2,294,937 7,955,799 12,534,470 $ q 580,418,192 30,220,658 31,546, % 6,904,281 7,538,670 17,751,789 $ q 572,879,522 29,528,204 30,911, % 3,528,834 4,863,233 22,875,947 $ q 568,016,289 28,257,703 29,577, % 9,389,509 11,583,802 23,824,569 $ ,836,359 25,743,435 26,625, % 28,110,915 27,482,450 28,090,981 $ ,353,909 26,143,520 27,254, % 17,760,484 24,853,935 27,424,184 $19.38 Malls Date Inventory Vacancy 3Q 2011 Net Const Total GLA Direct SF Total SF Vac % Absorption SF q 1,010,204,462 56,115,625 58,189, % 213, ,609 4,269,353 $ q 1,009,303,853 54,871,501 57,502, % 790,818 1,196,541 5,077,423 $ q 1,008,107,312 54,701,754 57,096, % 712, ,266 5,077,956 $ q 1,007,888,046 55,164,011 57,590, % 2,628, ,880 4,956,562 $ q 1,007,538,166 57,532,913 59,868, % 1,371, ,039 4,871,683 $ q 1,006,854,127 57,959,196 60,556, % 1,420,826 2,148,147 5,164,191 $ q 1,004,705,980 57,147,183 59,829, % 782,540 1,442,774 7,082,328 $ q 1,003,263,206 56,290,632 59,168, % 2,615,898 3,466,354 7,936,984 $ q 999,796,852 55,404,329 58,318, % 2,345,781 5,405,500 10,072,545 $ q 994,391,352 52,442,713 55,258, % (888,096) 1,496,559 14,693,345 $ q 992,894,793 48,690,544 52,874, % (4,930,654) 3,807,430 14,935,158 $ q 989,087,363 41,524,972 44,135, % 1,221,329 7,042,056 16,433,793 $ q 982,045,307 37,062,163 38,315, % 4,503,254 5,600,116 20,998,985 $ q 976,445,191 36,156,812 37,218, % 1,722,065 5,308,590 24,901,098 $ q 971,136,601 32,479,485 33,631, % 6,505,840 8,880,421 25,732,041 $ ,237,854 28,963,387 29,847, % 26,988,704 27,964,329 28,224,224 $ ,273,525 28,033,592 28,872, % 11,348,473 22,713,048 28,214,175 $25.21 In the West North Central region we track five markets. St. Albuquerque, Phoenix and Tucson markets all saw increased Louis and Kansas City both saw vacancy retreat during the third vacancy levels. quarter. Omaha s occupancy levels remained flat this quarter. We track 12 markets in the Pacific region. Seven of these markets Both the Des Moines and Minneapolis markets saw vacancy recorded increased vacancy levels this quarter. Vacancy improved levels creep up by a basis point. in the Inland Empire, Oakland/East Bay, San Diego, San Jose/ We track seven markets in the Mountain region. Performance here was evenly mixed; three markets improved, three markets declined and one remained flat. Vacancy decreased in the Denver, Reno South Bay and Seattle markets. Vacancy increased in Hawaii, Los Angeles, Orange County, Portland, Sacramento, San Francisco and Santa Barbara and Salt Lake City markets. Denver led the way for occupancy growth and has recorded over 1.2 million square feet of absorption so far this year. Las Vegas remained flat at 13.4% vacancy. The

9 Chainlinks Advisors U.S. National Report Northeast Northeast U.S. - New England Boston MA Northeast U.S. - Middle Atlantic New York City NY Specialty Centers 6 1,619,941 15,794 15, % 0.5% 4.6% 2, $21.40 Shopping Centers 1,619 85,582,567 5,770,826 6,054, % 7.0% 7.6% 444, ,145 50,900 $15.30 Power Centers 37 15,741, , , % 4.9% 4.4% 733, , ,000 $11.62 Malls 36 27,359, , , % 3.4% 2.9% (180,467) 0 0 $ , ,303,933 7,438,541 7,731, % 6.0% 6.2% 1,000, , ,900 Specialty Centers 2 331, % 0.0% 0.0% N/A Shopping Centers 7 949,808 33,443 33, % 0.9% 0.7% (21,446) 0 0 N/A Power Centers 2 833,680 16,135 16, % 1.9% 0.8% 4, N/A Malls 1 493,000 36,866 36, % 6.9% 0.0% (2,674) 0 0 N/A 12 2,607,488 86,444 86, % 2.3% 1.9% (19,924) 0 0 Northern New Jersey Vacancy Net Specialty Centers 13 3,070, , , % 4.3% 2.6% (14,929) 0 0 $23.78 Shopping Centers 1,792 90,773,327 8,651,593 8,860, % 9.4% 8.5% (590,243) 266, ,000 $20.02 Power Centers 58 20,997,279 1,380,076 1,510, % 6.0% 5.4% 57, ,689 0 $22.00 Malls 44 40,033, , , % 2.4% 2.1% 52, $ , ,874,051 11,080,971 11,431, % 7.1% 6.7% (495,667) 606, ,000 Philadelphia PA Specialty Centers 21 4,379, , , % 1.9% 2.6% (9,340) 0 0 $13.04 Shopping Centers 2, ,028,235 14,030,171 14,522, % 9.8% 10.1% 128, , ,544 $14.45 Power Centers 85 36,476,257 2,042,862 2,045, % 5.3% 6.5% 506, ,970 74,492 $15.02 Malls 64 51,657,997 1,766,879 2,178, % 4.7% 5.1% 71, ,583 1,370,861 $ , ,542,046 18,023,569 18,930, % 7.9% 8.0% 696,802 1,098,488 1,811,897 Pittsburgh PA Specialty Centers 1 190, % 0.0% 2.5% N/A Shopping Centers ,940,767 2,067,611 2,171, % 7.0% 8.0% 398,755 6, ,000 $11.29 Power Centers 29 11,889, , , % 5.5% 5.9% (17,914) 0 0 $15.46 Malls 21 18,513,563 1,233,214 1,265, % 6.5% 6.5% (27,488) 124,829 8,500 $ ,533,943 3,998,339 4,134, % 6.5% 6.9% 353, , ,500

10 Chainlinks Advisors U.S. National Report South U.S. - South Atlantic Atlanta GA Baltimore MD Specialty Centers 17 2,537, , , % 9.8% 4.3% 120, $11.59 Shopping Centers 3, ,458,781 20,424,458 21,025, % 14.8% 15.0% (287,836) 11, ,075 $13.21 Power Centers 65 27,287,943 2,627,737 2,683, % 8.5% 8.7% (534,957) 0 0 $14.58 Malls 41 35,838,707 2,049,837 2,066, % 6.2% 6.0% (172,594) 0 0 $ , ,122,635 25,466,158 26,139, % 12.6% 12.5% (874,479) 11, ,075 Specialty Centers 2 261,838 3,030 3, % 0.0% 8.3% N/A Shopping Centers ,662,037 3,594,639 3,753, % 7.6% 8.6% (155,625) 36,459 13,610 $18.55 Power Centers 22 9,015, , , % 6.7% 7.5% 13,117 63,000 0 $19.03 Malls 24 18,743,645 1,642,604 1,647, % 7.5% 7.7% 72,391 19, ,000 $ ,682,708 5,721,093 5,945, % 7.4% 8.1% (70,117) 118, ,610 Charleston SC Vacancy Net Absorption 2Q 3Q Specialty Centers 2 576, % 0.0% 0.0% $23.70 Shopping Centers ,220,211 1,356,787 1,396, % 9.9% 10.8% 146,608 46,560 5,400 $13.79 Power Centers 4 1,376, , , % 6.3% 5.6% (32,733) 0 0 $13.68 Malls 3 2,499,265 27,765 29, % 1.5% 6.7% 51, $ ,672,088 1,534,941 1,576, % 8.1% 8.1% 165,365 46,560 5,400 Charlotte NC Specialty Centers 3 1,257,180 82,123 84, % 8.1% 3.9% 5, $22.46 Shopping Centers 1,081 50,884,651 5,707,741 5,857, % 11.8% 12.1% 256,864 73,652 79,102 $12.95 Power Centers 20 8,327, , , % 5.2% 5.6% 40, $20.93 Malls 32 19,572,713 1,878,041 1,898, % 9.0% 11.7% 81, $ ,136 80,041,645 7,956,947 8,158, % 10.5% 11.2% 384,226 73,652 79,102 Hampton Roads VA Specialty Centers 4 1,101,386 80,034 80, % 7.3% 1.2% $33.48 Shopping Centers ,248,269 4,352,106 4,362, % 10.7% 10.8% 202, , ,000 $12.91 Power Centers 16 5,946, , , % 3.0% 3.0% (12,826) 12,192 0 $17.51 Malls 14 10,861, , , % 3.8% 5.1% 27, $ ,158,400 5,012,725 5,024, % 8.6% 8.8% 217, , ,000

11 Chainlinks Advisors U.S. National Report South U.S. - South Atlantic cont. Jacksonville FL Miami FL Specialty Centers 3 647,973 5,585 5, % 0.9% 0.7% 1, $15.50 Shopping Centers ,274,102 4,456,841 4,507, % 12.4% 13.5% 262,132 61,752 5,000 $13.44 Power Centers 6 2,364, , , % 19.2% 16.7% (45,245) 0 0 $11.42 Malls 10 7,574, , , % 5.6% 5.2% (20,590) 0 0 $ ,861,231 5,258,354 5,352, % 11.5% 11.7% 197,347 61,752 5,000 Specialty Centers 7 943,056 87,631 87, % 9.5% 10.6% 2, $30.97 Shopping Centers 1,328 44,880,994 2,640,721 2,666, % 6.2% 6.6% 302,339 55,561 58,780 $22.46 Power Centers 8 3,118,113 47,707 47, % 2.4% 4.8% 55, $39.71 Malls 19 16,162, , , % 3.2% 3.0% (6,473) 0 0 $ ,362 65,104,799 3,304,125 3,340, % 5.3% 5.8% 353,858 55,561 58,780 Orlando FL Vacancy Net Absorption 2Q 3Q Specialty Centers 18 5,302, , , % 6.3% 6.3% 23, $18.50 Shopping Centers 1,309 62,234,506 7,175,373 7,230, % 12.0% 11.7% 105,985 99,583 52,703 $15.20 Power Centers 23 9,507, , , % 7.8% 8.7% 162,313 27,255 0 $16.31 Malls 25 17,801, , , % 4.5% 4.3% 22,312 4,034 0 $ ,375 94,846,128 9,124,502 9,191, % 9.9% 9.9% 314, ,872 52,703 Raleigh NC Specialty Centers 6 1,211,123 35,000 35, % 2.9% 3.0% $18.00 Shopping Centers ,456,505 3,474,421 3,510, % 8.8% 9.2% 462, ,360 40,800 $15.56 Power Centers 21 8,324, , , % 6.4% 5.7% 89,980 15, ,300 $15.64 Malls 15 10,474, , , % 3.1% 3.2% 41, $ ,466,960 4,305,126 4,371, % 7.3% 7.5% 594, , ,100 Richmond VA Specialty Centers 1 54, % 0.0% 9.6% $25.00 Shopping Centers ,306,736 3,186,965 3,229, % 10.9% 11.8% 153,700 97,372 38,222 $13.75 Power Centers 9 3,184,551 84,465 94, % 1.5% 3.7% 45,728 1,430 0 $14.55 Malls 13 9,221, , , % 4.3% 7.1% 97,520 9, ,365 $ ,767,181 3,575,044 3,630, % 8.8% 9.3% 296, , ,587

12 Chainlinks Advisors U.S. National Report South U.S. - South Atlantic cont. Tampa FL Washington DC Specialty Centers 4 684, , , % 7.9% 8.2% (8,875) 0 0 $14.40 Shopping Centers 2,017 86,780,375 9,229,966 9,576, % 11.1% 11.2% 263, ,181 50,932 $13.33 Power Centers 28 9,759, , , % 7.4% 7.7% 19, $17.23 Malls 21 16,910, , , % 4.1% 4.0% 32, $ , ,134,429 10,633,154 10,988, % 9.7% 9.4% 306, ,181 50,932 Specialty Centers 10 1,523,520 37,659 38, % 1.4% 2.2% (15,525) 0 0 N/A Shopping Centers 1,262 82,172,293 5,795,863 6,081, % 7.4% 7.8% 208, ,308 68,373 $22.36 Power Centers 33 16,101, , , % 3.8% 3.5% (57,170) 0 40,670 $24.65 Malls 53 41,672,269 1,113,909 1,157, % 2.6% 4.0% 645, ,553 0 $ , ,469,543 7,413,012 7,756, % 5.6% 6.2% 781,284 1,009, ,043 South U.S. - East South Central Birmingham AL Vacancy Net Specialty Centers 6 1,740, , , % 23.3% 15.9% 20, $13.11 Shopping Centers ,595,014 3,726,545 3,811, % 14.0% 13.4% 14,511 75,500 0 $9.21 Power Centers 14 5,998, , , % 6.0% 6.2% 109, ,000 $15.77 Malls 12 6,950,615 1,273,800 1,292, % 20.6% 17.6% 2, $ ,285,265 5,604,333 5,794, % 14.2% 13.8% 146,739 75,500 35,000 Louisville KY Specialty Centers 3 1,245, , , % 22.5% 30.5% (16,112) 0 0 $7.75 Shopping Centers ,956,364 3,191,686 3,274, % 11.5% 11.8% 301,509 28,905 10,400 $10.95 Power Centers 5 2,438, , , % 6.8% 10.4% 30, $19.55 Malls 6 6,590,433 79, , % 2.4% 3.1% 13, $ ,230,684 3,695,152 3,885, % 10.0% 10.5% 329,063 28,905 10,400 Memphis TN Specialty Centers 6 1,179, , , % 26.6% 24.2% (6,548) 0 0 $12.53 Shopping Centers ,634,050 3,817,890 3,904, % 12.8% 12.7% 33, ,786 $10.78 Power Centers 16 6,741, , , % 12.3% 15.3% 159, ,164 0 $8.95 Malls 7 5,803, , , % 14.4% 8.8% (44,646) 0 0 $ ,359,295 5,680,446 5,887, % 13.3% 13.5% 141, ,477 8,786

13 Chainlinks Advisors U.S. National Report South U.S. - East South Central cont. Mobile AL Nashville TN Specialty Centers 2 559,860 1,600 1, % 0.3% 0.7% $24.00 Shopping Centers 239 9,237, ,605 1,054, % 11.9% 12.1% 114,845 21,548 0 $12.07 Power Centers 3 1,474,274 48,930 48, % 9.3% 10.9% 8, $18.22 Malls 5 3,805, , , % 9.8% 10.4% 84, $ ,076,808 1,318,930 1,453, % 10.7% 11.1% 207,721 21,548 0 Specialty Centers 6 827,996 82,400 82, % 10.5% 9.9% 1, $5.14 Shopping Centers ,140,620 3,075,987 3,208, % 10.8% 10.9% 106,083 5,724 0 $13.67 Power Centers 16 6,218, , , % 4.8% 3.2% (75,109) 0 0 $18.42 Malls 13 10,880, , , % 8.6% 11.5% 208, ,000 0 $ ,067,579 4,365,526 4,500, % 9.5% 9.7% 241, ,724 0 South U.S. - West South Central Vacancy Net Absorption Austin TX 2Q 3Q Dallas TX Houston TX Specialty Centers 5 1,500, , , % 6.9% 8.0% 13, ,889 $24.78 Shopping Centers ,392,190 2,825,723 2,883, % 11.4% 10.7% (41,073) 30,468 66,050 $17.88 Power Centers 21 10,103, , , % 4.5% 5.4% (4,171) 5,700 0 $18.50 Malls 11 7,867, , , % 1.9% 3.5% 75, $ ,863,736 3,462,247 3,560, % 8.3% 7.9% 43,936 36, ,939 Specialty Centers 19 2,521, , , % 1.1% 5.6% 35, ,000 $12.13 Shopping Centers 3, ,109,638 20,735,593 21,264, % 13.9% 13.3% 164, , ,918 $13.13 Power Centers 69 26,517,330 2,236,237 2,298, % 7.0% 7.7% 228, , ,452 $18.17 Malls 43 38,107,100 2,305,351 2,309, % 6.9% 7.1% 114, ,714 3,530 $ , ,255,097 25,466,876 26,062, % 11.8% 11.2% 542, , ,900 Specialty Centers 12 1,712, , , % 10.9% 11.1% (16,077) 0 0 $7.49 Shopping Centers 3, ,570,140 14,275,970 14,584, % 10.1% 10.9% 749, , ,238 $14.16 Power Centers 46 18,677,841 1,044,351 1,138, % 5.7% 5.6% 67,710 9,600 16,912 $15.79 Malls 45 35,990,638 2,642,780 2,721, % 6.8% 7.0% 59, $ , ,950,656 18,075,409 18,557, % 9.1% 9.4% 860, , ,150

14 Chainlinks Advisors U.S. National Report South U.S. - West South Central cont. Little Rock AR New Orleans LA Specialty Centers % 0.0% 0.0% N/A Shopping Centers ,952,262 1,223,510 1,225, % 8.6% 8.3% 8, $9.65 Power Centers 6 2,782, , , % 7.5% 12.3% 261, ,000 0 $14.70 Malls 8 2,841,392 86,011 86, % 2.3% 2.4% (6,050) 0 0 $ ,576,342 1,504,179 1,506, % 7.6% 7.4% 263, ,000 0 Specialty Centers 3 377,761 75,074 80, % 15.7% 15.5% (20,611) 0 0 $20.00 Shopping Centers ,911,987 1,875,490 1,908, % 11.3% 11.0% 16,383 21,219 9,315 $13.02 Power Centers 3 1,469,160 40,498 40, % 5.0% 4.6% 29, $22.00 Malls 11 7,872, , , % 6.6% 5.9% 96,668 17,542 0 $ ,631,134 2,355,391 2,398, % 9.7% 9.8% 122,330 38,761 9,315 Vacancy Oklahoma City Net OK San Antonio TX Tulsa OK Specialty Centers 5 889,801 79,579 79, % 24.6% 52.8% (10,779) 0 0 $10.89 Shopping Centers ,522,179 2,817,024 2,889, % 11.7% 9.7% 112,463 56,320 12,736 $9.53 Power Centers 10 4,083, , , % 4.6% 2.4% (57,065) 0 0 $14.45 Malls 10 5,927, ,018 1,190, % 15.8% 17.8% (12,753) 0 8,000 $ ,423,637 4,045,462 4,350, % 11.6% 11.3% 31,866 56,320 20,736 Specialty Centers 4 150,826 20,378 20, % 8.4% 3.5% (10,838) 0 0 $11.00 Shopping Centers 1,205 42,935,067 4,283,505 4,487, % 10.6% 10.7% 284, , ,248 $14.01 Power Centers 13 6,155, , , % 10.8% 8.0% (115,950) 50,056 0 $22.86 Malls 16 14,665, , , % 3.5% 3.0% (76,605) 0 0 $ ,238 63,907,181 5,619,776 5,884, % 9.0% 8.9% 81, , ,248 Specialty Centers 6 477,068 62,755 62, % 18.0% 15.2% (9,127) 0 0 $5.82 Shopping Centers ,780,616 2,427,278 2,473, % 10.6% 10.4% 202,844 6,525 0 $9.83 Power Centers 4 2,024, , , % 7.0% 6.7% 9, $6.93 Malls 10 6,478, , , % 5.0% 6.0% (2,090) 0 0 $ ,761,313 2,887,376 2,968, % 9.4% 9.2% 201,030 6,525 0