Q3 2009 Korpacz Investment Market Survey - Results

Observations in this quarter's report include:

· The latest survey shows investors are frustrated that more opportunities have not presented themselves.

· “Despite a still-struggling U.S. economy, ill credit markets, deteriorating property fundamentals, and precipitous declines in commercial real estate values, only a handful of quality distressed assets and forced sales have occurred thus far in 2009”.

· Some survey participants speculate that this situation will change as the for-sale market is swamped with properties underperforming and unable to be refinanced.

· Opportunities are expected to come from both securitized debt (primarily CMBS) and traditional lenders.

· Many investors believe banks are playing the “pretend and extend” game with the hope that capital reserves will be replenished and a recovering economy provides a floor for real estate values.

· Asset management and value preservation remain a focus for many believing the opportunity to purchase distressed real estate will be here for a while.

This quarter’s Korpacz survey reflects a high degree of frustration by investors that more deeply discounted real estate has not hit the market. Lenders appear to be very reluctant to dispose of non-performing loans and instead are playing for time. Abundant cash is poised and ready to be deployed but very few opportunities have so far materialized. Efforts by the Federal Reserve, Treasury and regulators are all providing a degree of stability and pushing back the growing wave of defaults and foreclosures. This is forcing buyers to be patient but could also signal a change in the way events unfold in the coming months.