Operating in a Market

1. Operating in a Market Global CoreNet Global Mid-Atlantic Chapter January 25, 2012

2. Introductions Moderator: • Eric Thorpe, Managing Partner, Terra Novo LLC Panelists: • Barry Beswick, Regional Director, Capital One • Pierce DeGross, Vice President, Global Workplace Services, Hilton Worldwide • Thierry Delvaux, Managing Director – International Desk, Jones Lang LaSalle • Jo Ann Lane, Global Real Estate Leader, Genworth • Pete Stanford, Managing Director, Principal, Cassidy Turley

3. Global Trends Impacting CRE • Demographic Drivers • China, Europe, Japan, Russia • Africa, Brazil, India, Indonesia, US • Cultural and political evolution • India, Middle East, Latin America • Economic Challenges • Business continuity, debt, education, natural resources, trade • Service provider industry • Present structure is a North American and West European model

4. Global Demographic and Debt Data Sources: CIA World Fact Book, 2011 Estimates; The Economist, Global Debt Clock, 2011 Estimates. 1Note: Debt figures are derived from national definitions and therefore may vary from country to country.

5. Overview • Operating in a Global Market – A General Perspective • Case Studies – CRE projects from around the globe • Shanghai, China • Tokyo, Japan • Glasgow, Scotland • Shannon, Ireland • Mexico City, Mexico • Bangalore, India • Key Lessons Learned • Question and Answer Session

6. Key International Markets Americas EMEA Asia Pacific

7. Offices – Net Absorption, Year to Q3 2011 • AmericasEMEAAsia Pacific % of occupied stock Source: Jones Lang LaSalle, October 2011. Covers all office sub-markets in each city. Tokyo - CBD-3 kus

8. Office Supply Pipeline - Major Markets, 2012 - 2013 • 2012 • 2013 Completions as % of existing stock Source: Jones Lang LaSalle, October 2011. Covers all office sub-markets in each city. Tokyo - CBD-3 kus

9. Global Office Index – Prime Rents Global Top 10 Performers in Q3 2011 AmericasEMEAAsia Pacific % change q-o-q Based on rents for Grade A space. In local currency. Source: Jones Lang LaSalle, October 2011.

10. Global Office Index – Prime Rents Global Top 10 Performers in Q3 2011 Americas EMEA Asia Pacific % change q-o-q Based on rents for Grade A space. In local currency. Source: Jones Lang LaSalle, October 2011.

11. Prime Offices – Rental Clock, Q3 ‘10 vs Q3 ‘11 Americas EMEA AsiaPacific Q3 2011 Q3 2010 Hong Kong Singapore Shanghai Rental Value growth slowing Rental Values falling Rental Values falling Moscow Rental Value growth slowing London Mexico City Sao PauloParis Beijing Detroit Rental Value growth accelerating Rental Values bottoming out Los Angeles Rental Value growth accelerating Rental Values bottoming out Chicago Madrid, Seoul San Francisco Hong Kong Beijing Stockholm Dubai Sao Paulo Detroit Dubai, Seoul Atlanta, Dallas, Toronto, Rome New York London, Shanghai New York, Brussels, Frankfurt Mexico City Singapore Berlin, Sydney Madrid Moscow Washington DC, Toronto Milan Amsterdam Los Angeles Amsterdam Brussels Washington DC Milan, Johannesburg San Francisco Berlin Dallas, Mumbai Paris, Stockholm Mumbai, Sydney, Tokyo ChicagoRome Tokyo Atlanta, Frankfurt Johannesburg Based on rents for Grade A space in CBD or equivalent. In local currency. As of Q3 2011

12. Case Study – Shanghai, CHINA • Project Objective • Determine if existing 12,500 RSF office should be expanded or relocated to accommodate a rapidly growing China business • Challenges • Market dynamics: high vacancy moving to low in 1 year • Speed of decision making required balancing business risks • New internal role for CRE in location where decisions were localized • Instituting new workplace design • Value Delivered • Negotiated a smart expansion in adjacent space on floor with growth capability • Leveraged internal Hotel Design/Const. team along with JLL PM to design new workplace • Engaged Regional leaders to assist in socializing new workplace design with leaders in Shanghai • Leveraged regional outside legal counsel to help manage through interesting market led legal discussions • Key Lessons Learned • Seek pre-approval for any Asia project given market dynamics (multiple country experience) • Over communicate with key stakeholders in China given distance and lack of face time • Increase accountability/ownership of decisions

13. Case Study – Tokyo, JAPAN • Project Objective • Relocate existing 15K RSF Tokyo office to larger space in newer building • Challenges • Occupy space in 5 suites on 4 floors in 1950’s building • Rapidly growing business with no good expansion capability • Earthquake concerns paramount given March 2011 quake • Old IT infrastructure supporting multiple locations • Value Delivered • Relocated to new larger 16K RSF space at same rental cost • Ability to get entire operation on one floor with expansion capability • Instituted new workplace design and enhanced IT infrastructure to better support the business • Located two blocks away from our current hotel property • Achieved sustainability goals given very advanced building systems (HVAC, lighting, etc.) • Key Lessons Learned • Spend time gaining trust of local decision makers while aligning with regional leaders to ensure success • Go to market as one-team with clear goals/objectives and understanding of who is leading transaction • Take the time to understand the local business custom

14. Case Study – Glasgow, SCOTLAND • Project Objective • Determine what to do with existing 37K RSF office with upcoming lease expiration and changing business objectives (multi. Stakeholders) • Challenges • Legacy global back-office space with changing role • Dynamic headcount situation and some business uncertainty • IT challenges with location supporting operations in other countries • Tired facility with non-conventional owner/landlord • Value Delivered • Aided business leaders in understanding headcount dynamics and solidifying “end-state” population • Achieved lease flexibility - able to terminate the new on 35% of space in 2 years with improved lease economics on a 5-year lease • Obtained internal capital to do a much needed upgrade while getting landlord to improve the exterior • Key Lessons Learned • Get to know your Landlord and local business custom up front • Don’t let the past drive the future • Sometimes projects take longer than normal and build that into your plan

15. Case Study – Shannon, IRELAND • Value Delivered • Comprehensive review of current site capital maintenance program • Negotiation leverage of competing options • Due diligence/Structural survey for new 1st gen vacant building • Lease vs. Purchase proforma financial analysis • Key Lessons Learned • Irish government bureaucratic process • GNW business relationships with LL/local government officials • Free Zone tax and business benefits • Project Objective • Upgrade/Modernize EU Ops/AP Center and manage long-term business growth and productivity • Challenges • EU Debt Crisis impact on cost approval / funding by government & LL • Government Incentives • Options: Build-to-Suit vs. new 1st gen vacant building vs. 30Y old facility

16. Case Study – Mexico City, MEXICO • Project Objective • Manage immediate business growth, improve long-term secured office environment /release HQ guaranty • Challenges • Existing premises cannot house immediate growth in contiguous space • Create negotiation leverage with current LL for renewal vs. relocation • Cost implications of upgrading office environment • Value Delivered • New 1st Gen full floor office with improved space efficiency • Lowered the effective occupancy cost vs. renewal turn-key build-out & no dilapidations • Improved office environment - life safety systems, • client service and employee amenities • Safety/security upgrades – adjoining hotel and transportation access to airport • Key Lessons Learned • Importance of safety/security for both local business and visiting HQ leadership • Culture impact on LL negotiations/competitive process • Space efficiency and effective occupancy cost to gain project approval

17. Case Study – Bangalore, INDIA • Project Objective • Relocate employees from 2 existing locations into new 60K SF office • Challenges • International-quality space inside Special Economic Zone • Employees of recently acquired entity had to move on specific date • Significant facility/communications upgrades over previous site • Incredibly dense bureaucratic processes, especially SEZ rules • Value Delivered • New environment to accommodate doubled size of staff in India • Brought many “corporate standards” into design & fit-up • Introduced new employees into culture during move process • New space/location became recruiting tool for further growth • Key Lessons Learned • Remote project management difficult under best circumstances – get used to ‘0-Dark:30’ conf. calls • Value presence/knowledge of local management • Inclusiveness is critical – win over the locals to become part of the solution

18. Key Lessons Learned • Synergy of Corporate HQ & Service Provider is critical to success • Respect the local culture • Precise communication and discipline process is magnified • Landscape of competent service providers is constantly changing – “best-in-class” partners endure regardless of brand or business card • Multiple local service providers may be necessary in certain countries

19. Most Importantly… Expect the Unexpected!

20. Operating in a Global MarketQuestion and Answer Session

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23. Appendix

24. Key Business Term Differences

25. Process Challenges • Independent Client Business Units, weak ties to Corporate alignment • Limited HQ understanding of local customs and practices • Variety of Language, Customs & Culture, Time Zones • Markets with Very Low Vacancy, Non-Transparent processes • Business Development – fluid business requirements in new countries • Role of Local Broker in Process can vary by country • Legal conflicts (outside/local counsel vs. Corporate legal policies) • EHS/Life Safety conflicts (new country security vs. Corporate policies)

26. Global Education Data • Statistically significantly above the OECD average • Not statistically significantly different from the OECD average • Statistically significantly below the OECD average Source: OECD Programme for International Student Assessment (PISA) 2009 Plus Results. 1Note: Data is not consistent with that from other countries. Includes Tami-Nadu and Himachal Pradesh only.

27. Office Vacancy Rates - Major Markets, Q3 2011 Americas 16.9% Europe 10.2% Asia Pacific 10.2% % Regional vacancy rates based on 46 markets in the Americas, 24 markets in Europe and 24 markets in Asia Pacific. Covers all office sub-markets in each city. All grades except Asia and Latin America (Grade A only). Tokyo relates to CBD only. • Source: Jones Lang LaSalle, October 2011

28. Global Office Market Conditions Matrix*, 2011-13 Market Market 2011 2012 2013 Market MARKET 2011 2012 2013 2011 2012 2013 Chicago Brussels Beijing Los Angeles Frankfurt Hong Kong New York London Mumbai San Francisco Madrid Shanghai Toronto Moscow Singapore Washington DC Paris Sydney Mexico City Stockholm Tokyo Sao Paulo Dubai Tenant Favourable Neutral Market Landlord Favourable * Relates to conditions in the overall office market of a city. Conditions for prime CBD space may differ from the above. Source: Jones Lang LaSalle, October 2011

29. Global Office Index – Prime Rents, 2008-2011 Rental Change (% QoQ) Asia Pacific – stock weighted average of 27 markets; Americas – stock weighted average of 30 markets: Europe – stock weighted average of 24 markets Global Index based on GDP weighted average of the three regional indices Source: Jones Lang LaSalle, October 2011

30. Prime Offices – Rental Change, Q3 ‘10 – Q3 ‘11 AmericasEMEAAsia Pacific % change Based on rents for Grade A space in CBD or equivalent. In local currency. Source: Jones Lang LaSalle, October 2011.

31. Demand Drivers – GDP Change, 2012-2013 AmericasEMEAAsia Pacific GDP Change, % pa Source: IHS Global Insight, Experian, Jones Lang LaSalle, Conference Board of Canada, Deloitte Access Economics, October 2011.