DERIVING VALUE

Standard & Poor's launched its long-awaited commercial real estate indexes — the S&P/GRA Commercial Real Estate Indices — in August and later that month provided the first results looking at month-over-month and year-over-year changes as of May 2007. The index is maintained along with data provided by GRA/Charles Schwab Investment Management.

INDEX MOVES
Index May 07 May/April Change April/March Change Year-over-Year Change
Apartments 137.19 0.5% -0.4% -2.2%
Offices 144.84 -1.0 2.5 13.9
Retail 160.41 1.4 1.4 14.6
Warehouse 156.46 1.0 1.5 11.3
Desert Mountain West 154.52 0.8 0.6 14.0
Mid Atlantic South 151.13 2.4 -0.3 4.9
Midwest 127.50 -0.4 0.6 6.8
Northeast 142.73 -0.7 2.1 5.4
Pacific West 152.45 -0.6 0.5 7.7
National 145.09 0.2 1.0 6.6
Source: Standard & Poor's

REIT INSIDERS STOP SELLING

Lehman Brothers has been tracking REIT insider trading activity for several years. During the second quarter — the one where REIT stocks started to plummet — REIT insiders backed off selling and starting buying stocks. In the two quarters prior, insiders sold a whopping $732 million in stock while buying $5.6 million. In fact, REIT insiders (primarily executives at General Growth Properties) bought more stock in the second quarter than they did in all of 2006.

BUYING & SELLING TOTALS
OPTIONS INCLUDED OPTIONS STRIPPED OUT
Buying Selling Selling-to-Buying Ratio Buying Selling Selling-to-Buying Ratio
Q2 2007 $36,562,925 $47,503,573 1.3 $36,562,925 $37,169,455 1.0
Q1 2007 5,355,325 405,148,824 75.7 5,355,325 122,742,562 22.9
Q4 2006 242,769 327,149,362 1,347.6 242,769 52,016,815 214.3
Q3 2006 6,722,985 162,690,438 22.8 6,722,985 68,541,490 10.1
Q2 2006 4,947,220 147,756,336 29.9 4,947,220 35,347,109 7.1
Q1 2006 3,603,025 298,665,525 82.9 3,603,025 123,685,926 34.3
Q4 2005 2,302,136 131,773,128 57.2 2,302,136 35,445,297 15.4
Source: Lehman Brothers, Reuters/Dow Jones Corporate Filings Alert

STACKING UP

U.S. REIT RATINGS
REIT Senior Debt Subordinate Preferred Stock Outlook
Developers Diversified Realty Baa2 Baa3 Stable
Equity One Baa3 (P)Ba1 Stable
Federal Realty Investment Trust Baa1 Baa2 Baa2 Stable
Kimco Realty Corp. Baa2 Baa2 Stable
Regency Centers Corp. (P)Baa3 Positive
Weingarten Realty Investors Baa1 Baa2 Baa2 Stable
Source: Moody's Investor Service