Economic Indicators and Projections

2008 Closing Numbers

2008 World GDP Growth

*Source: IMF

Historical World GDP Growth

China opens IT Crisis

S&L Crisis (90) S&L Crisis

(80)

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

2008 World Stock Markets

Regions

-50.61%-49.17%

-39.78%

-47.41%-50.15%

-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

MiddleEast /Africa

Asia /Pacific

Europe America World

World’s Least and Most

-65.39%

-51.84%

-39.08%

-31.03%

-22.13%

-47.41%

-36.20%

-67.29%

-80.00%

-70.00%

-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

Russia China India USA Canada Britain Chile World

In December 2008, all stock markets regained on average 7%. China was the only market that continued to lose (8%).

*Source: Bloomberg

2008 Mature Stock Markets

-52.3%

-43.0%-42.7%-42.1%-41.2%-40.4%

-39.8%

-36.2%

-31.3%

-42.2%

-48.7%-46.3%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Nethe

rland

s

Italy

Spain

Austra

lia

Franc

e

Japa

nBra

zil

Germ

any

USA

Canad

a

Britain

Avera

ge

*Source: Bloomberg

2008 – 2009 Job Loss

• 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

Jobs LostUnemploymentRate Change

(Jan. 2008 – Mar. 2009)

UE Rate

Canada 295,000 1.50% 7.7%USA 4,100,000 2.80% 8.1%

Trends

Canadian Key Interest Rate

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%

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

1935

1938

1941

1944

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

WW II Ends

IT Crisis

S&L Crisis

S&L Crisis

*Source: Bank of Canada

CAN GDP Growth vs. Key Interest Rate

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.

-5.00

0.00

5.00

10.00

15.00

20.00

19711973

19751977

19791981

19831985

19871989

19911993

19951997

19992001

20032005

2007

Int. Rate

GDP GROWTH

IT CrisisS&L Crisis S&L Crisis

Free Trade with US.

*Source: Bank of Canada: Trading Economics

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.

% Change

*Source: Stats Canada

IT CrisisS&L Crisis

S&L Crisis

-0.2

-0.1

0

0.1

0.2

0.3

0.4

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Exports of goods

Imports of goods

Stock Index

Crisis lasted 2 years.

2008 brought us back to 1998 and 2002 values.

*Source: Bloomberg,: Djindexes: Euroinvestor

0

50

100

150

200

250

300

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

X 1

00

Dow

Nasdaq

DAX

FTSE

TSX

S&L 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%

*Source: US Labor force Organization: Human Resources Development Canada, Canada Stats, Institute de la Stadistique, Quebec.

IT crisisS&L Crisis

S&L Crisis

0

2

4

6

8

10

12

14

Canada

USA

Montreal

Quebec

IT Crisis

*Source: US Labor force Organization: Human Resources Development Canada, Canada Stats, Institut de la Stadistique, Quebec

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

Unemployment Rate by Province

•Currently Quebec is 0.2% over the country average.

•Quebec has had one of the lowest percentage changes in the last year.

*Source: US Labor force Organization: Human Resources Development Canada

UE Rate

15.1

12.3

8.8 8.87.9

8.7

4.8 4.75.4

6.7

0

2

4

6

8

10

12

14

16

Newfo

undla

nd

and

Lab

rado

rP.E

.I.

Nova

Scotia

New B

runs

wick

Quebe

c

Ontar

io

Man

itoba

Saska

tchew

an

Alberta

British

Colu

mbia

1 Year Unemployment Change

2.1

2.4

1.1

0.5

0.9

2.6

0.6 0.6

1.8

2.5

0

0.5

1

1.5

2

2.5

3

*Source: Labor Force Survey.

% C

han

ge

Newfo

undla

nd

and

Lab

rado

rP.E

.I.

Nova

Scotia

New B

runs

wick

Quebe

c

Ontar

io

Man

itoba

Saska

tche

wan

Alberta

British

Colum

bia

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.

8.8

7.87.5

8.1

10.3

11.211.4

10.4

9.5 9.69.1

8.3

7.6

6.87.2

7.7 7.67.2

6.86.3

6

7.27.5

9.4

88.6

10.1

13.4

15.415.916 16.116.3

15.5

14.2

13.1

12

11.1

12.05

13.513.8

12.6

11.5

9.1

6.4

8.28.1

9.6

0

2

4

6

8

10

12

14

16

18

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

-600,000

-100,000

400,000

900,000

1,400,000

1,900,000

2,400,000

UE CAN

Vacancy Rate

New Supply

IT Crisis2. S&L Crisis Projection

*Source: HR D Canada: Colliers Research

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.

Year New Supply (sq. ft.)

Project

2008 -

2009 - 2010 - 2011 - 2012 - 2013 600,000 Magil Laurentienne2014 375,000 Hines - SITQ2015 500,000 WestCliff - Cite Int. II

Expected Construction Year

Vacancy Rate

1999 40,000 547,000 13.1%2000 345,000 1,002,000 12.0%2001 223,546 635,061 11.1%2002 (212,522) (649,606) 12.1%2003 1,174,249 312,591 13.5%2004 359,792 361,246 13.4%2005 (133,568) 266,271 12.6%2006 - 848,948 10.9%2007 (234,500) 1,107,831 8.3%2008 - 1,672,423 4.9%

Average 156,200 610,377

MONTREAL DOWNTOWN New Supply(sq. ft.)

Absorption(sq. ft.)

Year Absorption (sq. ft.) Vacancy Rate

2009 (640,000) to (1,100,000) 6.3% to 7.3%

DOWNTOWN 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.

9.4%

7.9%

8.6%

13.4%

16.3%

15.5%

14.1%

13.1%

12.0%

11.1%

13.4%

12.6%

9.1%

6.4%

8.1%

10.1%

16.1%

16.0%15.7%15.4%

10.9%

13.5%

12.1%

9.6%

$13.50

$15.50

$18.00

$15.00

$12.00

$7.87

$4.04$5.00

$5.75$6.80

$8.50

$11.50

$14.00 $14.00

$12.00$12.70

$4.38

$16.00$16.00

$14.00

$12.00

$13.55$14.15

$15.75

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

-$5.00

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

Vacancy Rate

NER A class

Projection

*Source: Colliers Research

•Only Toronto and L.A. are mostly Suburban markets.

•Smallest markets: Calgary and Montreal.

32

442

129

49

85

34

362

105

23

95

21

205

804

234

180

54

173

72

0

100

200

300

400

500

600

700

L.A. CHICAGO MONTREAL TORONTO CALGARY

CBD INVENTORY

SU INVENTORY

T INVENTORY

Major N.A. Office MarketsMarket Size in M. SF

* Source: Colliers N.A Research

NY /

NEW JERSEY

•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.

* Source: Colliers N.A. Research

$40.00

$30.70 $29.80

$58.00

$36.50

$74.00

$52.20

$29.50 $28.00

$21.70

$38.00$38.50

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

L.A. N Y / NEW JERSEY CHICAGO MONTREAL TORONTO CALGARY

CBD Gross Rental Rate

Suburban Gross Rental Rate

Major N.A. Office MarketsRental Rates

•CBD: Average gross rental rate for Class A buildings excluding tenant improvements.

•Rates for US cities in US $. Rates for Canadian cities in CAD $.

•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.

* Source: Colliers N.A. Research

7.69

1.66

0.32

3.21

4.7

13

14 14.2

15.8

16.717

15

13.913.8

11.5

9.1

6.4

10

8.5

7.6

5.9

16.49

17.5

12.6

4.6

0

2

4

6

8

10

12

14

16

2004 2005 2006 2007 2008

CALGARYL.A.CHICAGOMONTREALTORONTO

Major N.A. Office MarketsHistoric Vacancy Rates

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.