Economic Indicators and Projections

1. Economic Indicators and Projections

2. 2008 Closing Numbers

3. 2008 World GDP Growth *Source: IMF

4. Historical World GDP Growth S&L Crisis (90) S&L Crisis (80) China opens IT Crisis End of USSR According to the IMF, GDP growth, for advanced economies, will be the lower than in the last 20 years (1%), but will pick up at the beginning of 2010. *Source: IMF

5. 2008 World Stock Markets World’s Least and Most 0.00% Russia China India USA Canada Britain Chile World -10.00% -20.00% -22.13% -30.00% -31.03% -36.20% -40.00% -39.08% -50.00% -47.41% -51.84% -60.00% -65.39% -70.00% -67.29% -80.00% In December 2008, all stock markets regained on average 7%. China was the only market that continued to lose (8%). *Source: Bloomberg

6. 2008 Mature Stock Markets 0.0% USA Brazil Spain Japan Britain Netherlands France Italy Average Canada Australia Germany -10.0% -20.0% -30.0% -31.3% -36.2% -40.0% -39.8% -40.4% -41.2% -42.1% -42.2% -42.7% -43.0% -50.0% -46.3% -48.7% -52.3% -60.0% *Source: Bloomberg

7. 2008 – 2009 Job Loss UnemploymentRate Change (Jan. 2008 – Mar. 2009) UE Rate Jobs Lost Canada 295,000 1.50% 7.7% USA 4,100,000 2.80% 8.1% • For both Canada and US, the largest job losses have occurred since September 2008. • Canada’s biggest loss was duirng the period of December 2008 to January 2009: 129,000 jobs. • December 2008 saw a big loss of full-time jobs but was offset with a gain in part-time jobs. • In December 2008, Alberta and Quebec had the biggest losses of full-time jobs. • The US had increasing unemployment throughout the period. *Source: US Labor force Organization & Human Resources Development Canada

8. Trends

9. Canadian Key Interest Rate S&L Crisis The average duration of a crisis is 2.5 years. IT crisis did not greatly affect consumer spending. In January 2008, interest rate was 4.5%. Since then, there have been 6 drops to the interest rate. Current key interest rate: 0.5% S&L Crisis IT Crisis WW II Ends *Source: Bank of Canada

10. CAN GDP Growth vs. Key Interest Rate S&L Crisis S&L Crisis IT Crisis In the ’80s and ’90s interest rates reacted late to the change in GDP growth. Negative GDP growth lasted 1 year in major crisis. Slowing of growth was seen 2 years before reaching negative numbers, but improved within 1 year. Free Trade with US. *Source: Bank of Canada: Trading Economics

11. S&L Crisis S&L Crisis IT Crisis % Change *Source: Stats Canada Canadian Trade Both imports and exports behave similary. They diminish during a crisis, obtaining negative changes just for 1 year and picking up normal growth after the 2nd year.

12. Stock Index S&L Crisis IT Crisis Crisis lasted 2 years. 2008 brought us back to 1998 and 2002 values. *Source: Bloomberg,: Djindexes: Euroinvestor

13. 14 12 10 8 6 4 2 1982 1976 1978 1980 1984 2004 2006 1998 1996 1992 1986 1988 1994 2000 2002 2008 1990 0 S&L Crisis S&L Crisis IT Crisis IT crisis Unemployment Rate Crisis lasted 2 years. During the S&L crisis, unemployment in Canada took 1 year longer than the US to recover. IT crisis was harder for US. Canada: 7.7% USA: 8.1% Montreal: 7.5% Quebec: 7.9% Canada USA Montreal Quebec *Source: US Labor force Organization: Human Resources Development Canada, Canada Stats, Institute de la Stadistique, Quebec. *Source: US Labor force Organization: Human Resources Development Canada, Canada Stats, Institut de la Stadistique, Quebec

14. UE Rate 16 15.1 Unemployment Rate by Province 14 12.3 12 10 8.8 8.8 8.7 7.9 8 6.7 5.4 6 4.8 4.7 4 2 1 Year Unemployment Change 0 3 P.E.I. Ontario Alberta Quebec Manitoba Newfoundland and Labrador Nova Scotia 2.6 Saskatchewan New Brunswick 2.5 British Columbia 2.4 2.5 2.1 1.8 2 1.5 % Change 1.1 • Currently Quebec is 0.2% over the country average. • Quebec has had one of the lowest percentage changes in • the last year. 0.9 1 0.6 0.6 0.5 0.5 0 BritishColumbia P.E.I. Quebec Newfoundland and Labrador Ontario Alberta Manitoba Nova Scotia Saskatchewan New Brunswick *Source: US Labor force Organization: Human Resources Development Canada *Source: Labor Force Survey.

15. 2. S&L Crisis Projection IT Crisis Greater Montreal Office Vacancy Projection Vacancy rate is strongly influenced by construction. Correlation between unemployment and vacancy rate is: Every 1% change in unemployment represents 2% in vacancy. So for Government forecast of 2009 with unemployment at 7.5% vacancy at end of year would be 8.6%. At the end of a 2 year crisis, vacancy rate would be 9.6%, with a spread of 2% depending on UE rate. *Source: HR D Canada: Colliers Research

16. MONTREAL DOWNTOWN Expected Construction Year New Supply(sq. ft.) Year New Supply Project Absorption(sq. ft.) Vacancy Rate (sq. ft.) - 2008 1999 40,000 547,000 13.1% 2009 - 2010 - 2000 345,000 1,002,000 12.0% 2011 - 2001 223,546 635,061 11.1% 2012 - 2002 (212,522) (649,606) 12.1% 2013 600,000 Magil Laurentienne 2014 375,000 Hines - SITQ 2003 1,174,249 312,591 13.5% 2015 500,000 WestCliff - Cite Int. II 2004 359,792 361,246 13.4% 2005 (133,568) 266,271 12.6% DOWNTOWN PROJECTION 2006 - 848,948 10.9% Year Absorption (sq. ft.) Vacancy Rate 2007 (234,500) 1,107,831 8.3% 2009 (640,000) to (1,100,000) 6.3% to 7.3% 2008 - 1,672,423 4.9% 156,200 610,377 Average Downtown Values • As Montreal is mainly a Downtown office market same correlation was used, • assuming no new supply until 2013. • Negative values in new supply are due to office buildings that have been converted • into Hotels or Residential.

17. Projection Montreal Office Rate Projection The historical average correlation between vacancy rate and NER is: Every 1% change in vacancy represents $ 0.80/SF in NER. For 2009 NER should range from $13.00 to $15.00. *Source: Colliers Research

18. NY / NEW JERSEY Major N.A. Office Markets Market Size in M. SF 804 700 CBD INVENTORY SU INVENTORY 600 T INVENTORY 500 442 • Only Toronto and L.A. are • mostly Suburban markets. • Smallest markets: Calgary and • Montreal. 400 362 300 234 205 180 200 173 129 105 95 85 100 72 54 49 34 32 23 21 0 L.A. CHICAGO MONTREAL TORONTO CALGARY * Source: Colliers N.A Research

19. Major N.A. Office Markets Rental Rates $90.0 • Downtown with highest rental rates: New York, Calgary, Toronto. • Suburbs with highest rental rates: Calgary, Los Angeles, Toronto. • Montreal is in a good position because it has a healthy vacancy rate. CBD Gross Rental Rate $80.0 $74.00 Suburban Gross Rental Rate $70.0 $58.00 $60.0 $52.20 $50.0 $38.00 $40.00 $38.50 $40.0 $36.50 • CBD: Average gross rental rate for Class A buildings excluding tenant improvements. • Rates for US cities in US $. Rates for Canadian cities in CAD $. $30.70 $29.80 $29.50 $28.00 $30.0 $21.70 $20.0 $10.0 $0.0 L.A. N Y / NEW JERSEY CHICAGO MONTREAL TORONTO CALGARY * Source: Colliers N.A. Research

20. Major N.A. Office Markets Historic Vacancy Rates 17 16.7 17.5 • Vacancy rates have gone • down in cities coming from • high vacancy rates and • diminishing construction. • All cities have experienced a • decrease in absorption. • US cities have experienced a • decrease in absorption since • 2007 whereas Canadian • cities just in the last 2 • quarters. 16 15.8 16.49 15 14.2 14 14 13.9 13.8 12.6 13 CALGARY 12 L.A. 11.5 CHICAGO MONTREAL 10 10 TORONTO 9.1 8.5 8 7.69 7.6 6.4 6 5.9 4.7 4.6 4 3.21 2 1.66 0.32 0 2004 2005 2006 2007 2008 * Source: Colliers N.A. Research

21. Summary • There are correlations between GDP growth, stock prices, unemployment rate and • RE. • Previous crisises had an average duration of 2 years. • Bottom should be hit at end of 2009 or into mid-2010 with a slow recovery. • Montreal and Canada are in a better position than the US, so fall should not be as • hard. • Change in absorption is felt immediately. • Vacancy rate for 2009 should be between 7.6% to 8.6%. • NER for Class A Building: $13.00 to $15.00.