Presented by: James D. Zupancic, Esq., CRE with special thanks to:

HOW CAN CRE’S ADD VALUE?OPPORTUNITIES & PITFALLS WITH

DISTRESSED ASSETS 2010

CRE MID-YEAR CONFERENCESEATTLE, WAMAY 25, 2010

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Presented by:James D. Zupancic, Esq.,

CREwith special thanks to:Brian A. Glanville, CRE,

FRICS, MAIIntegra Realty Resources

BORROWER/OWNER ISSUES

No MarketNo Financing/Difficult Financing

Seriously Depressed Values

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BORROWER SOLUTIONS

Negotiate with Lender• Extend & Pretend

Chapter 11 StallBank Borrower Partnerships

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RESIDENTIAL TSUNAMI

Warning Signs

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FORCE LOCATIONPhoenixLas VegasFloridaSan DiegoBend

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RECESSIONS SINCE WWII

Percent Job Losses and Number of Months after Peak

HOUSING PRICES SINCE WW II

Housing prices spiked between 2000 and 2007.

COMMERCIAL/INDUSTRIAL TSUNAMI

Warning Signs

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MULTI-FAMILY Condos Apartments Inventory First Time Homebuyer Exodus (Incentives) Consolidation of Households Concessions Cap Rates

LAND Underdeveloped or Unsold Lots Huge Discounts

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REAL CAPITAL ANALYTICS

REAL CAPITAL ANALYTICS

REAL CAPITAL ANALYTICS

COMMERCIAL PROPERTIES IN THE RECESSION

Commercial properties have also been profoundly impacted by the recession, as shown by Moody’s REAL Commercial Property Index and NCREIF’s Property Index.

MOODY’S REAL PROPERTY INDEX

NCREIF PROPERTY INDEX

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WARNING SIGNSBusiness Closures + Job Losses = Less

SpaceFree Rent/ConcessionsVacancy Rates Values ≤ DebtMaturities ApproachingWatch for Property Tax Appeal

Opportunities

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3 Kinds Of People:Watch Things HappenMake Things HappenSay “What Happened?”

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Investors:Know Your Market (Broker)Extreme Due Diligence

(Legal/Accounting)

Latent DefectsStructuralTitle/LiensLitigation/Bankruptcy

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Lenders:Title/LiensAdvertisement & Sale

vsJudicial Foreclosure

EvictionsBecome Developers State

Registration?

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NEW WORLD OF FINANCING

Lenders:Greater Regulatory OversightLower LTV’sReal Cash-In/EquityUnderwriting Scrutiny

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THINK “AS IF” YOU ARE THE LENDER

REO Portfolios Swelling Foreclosures/Deeds-In-Lieu/Developers Regulators Classifying Assets/Impairs

Balance Sheet Federal Reserve Projects 500+ Bank Failures

in 2010 How to Stay Off the Front Page?

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Borrowers/Tenants:Some LeverageWhat Do They Bring?Banks/Owners Do Not Want

PropertyAct Professionally/Act PromptlyDeals Can Be Made

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TOMORROW….

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