March 2007

General

The Orlando economy continues to be one of the strongest in the United States and is driving rapid growth in the retail sector. Despite soaring insurance and construction costs, and concerns about a consumer-spending slowdown, developers expect more retail growth statewide, particularly in Central Florida. Strong population and median household income growth was anticipated to drive a 7.5% increase in retail sales in 2006. The metro area's population is expected to grow by 250,000 in the next five years, to more than 2 million.

As Central Florida's population continues to soar, the region's bigger retail projects are targeted for growing or planned residential developments, and community centers. Those projects have helped make Orlando the top market in the state for investment in retail development, according to a report prepared by Staubach and Orlando-based Crossman & Co. Reportedly, investors poured nearly $690 million into the Orlando retail market in 2006 and may invest as much or more in 2007. (Orlando Sentinel - January 11, 2007)

In the first half of 2006, 17 shopping centers totaling 3.1 million square feet sold for at least $15 million apiece in the state's six major markets, according to an analysis by Boca Raton-based Woolbright Development Inc. (a major retail investor). The sales totaled $520 million and the average sale price per square foot was $184. Average occupancy was 95 percent. The report noted that private companies were involved in 65 percent of the sales. Private companies, also, were, reportedly, the most active buyers with more than 50 percent of the deals. (Orlando Sentinel - November 6, 2006)

According to the CB Richard Ellis Orlando Retail MarketView, 2Q 2006 (as referenced below), the weighted average retail lease rate for the Orlando MSA was $16 per SF, with retail vacancy rates nearly-stabilized at 6.5%. Strong fundamentals should have allowed owners to raise asking rents 4% to $18.12 per square foot in 2006. There was 56,052,075 SF of base retail space in the Orlando MSA and another 2,091,425 SF under construction.

CB Richard Ellis Orlando Retail MarketView, 2Q 2006

Highlighting Central Florida's strong demand, the International Council of Shopping Centers report noted that Orlando's retail rental rates were $20.94 per square foot and its rental occupancy rate was 93% going into the third quarter 2006. However, at the end of the fourth quarter of 2006, renal rates were reportedly at $21.26 per square foot. The climbing rental rates can be attributed to a healthy local economy and anticipated growth in the high-end retail market over the next several years.

However, as of February 2007, rental rates of $30 per square foot were reported in the Millenia market area, according to a recent report by Staubach Capital Markets and Crossman & Co. Their rates are well above the Orlando market's average rental rate, which reveal the Millenia market's desirability.

Also, retail rental rates have increased by 15% in the past six months in the Uptown Altamonte development, which is another example of merchants following residential growth rather than tourists.

Developers at a conference, sponsored by the International Council of Shopping Centers, expected Florida's booming population and strong economy to be the twin engines that continue to fuel retail development for the foreseeable future, particularly in Central Florida. The area's rapid increase in residents (over the next five years) and the tourism market are anticipated to make the region one of the hottest for retail development. Retailers, who are expected to take advantage of the area's growth, include Wal-Mart Stores, Publix, J.C. Penney and many specialty shops.

For metro Orlando, about 1.5 million square feet of retail space was planned for 2006 moving into 2007. Hot spots included the downtown area and southeast Orlando (including Lake Nona).

The outlook is very strong due to:

• Tourism, which bolsters the local and state economies and protects them from national economic trends.
• Enviable quality of life.
• Absence of a state income tax.
• Strong pro-business environment consisting of a wide diversity of businesses and industries.

According to Marcus & Millichap, in their 2007 Annual Report, retail sales will strengthen in the year ahead due to higher household incomes based on steady population and employment growth. Retail property fundamentals will remain strong in the Orlando metro area in 2007 despite forecasted slower job growth.

The 2007 Market Outlook for Orlando:

• Construction of approximately 2 million square feet of retail space, an increase of 18%, is expected to be completed.
• Vacancy expected to increase to 8.4% due to slowdown in housing market causing areduction in job growth and decline in retailer demand.
• Asking and effective rents projected to be $19.53 and $17.66 per square foot, respectively, due to strong tenant demand to support the rent growth.
• Increased insurance costs may adversely affect occupancy either in lease pricing or tenant expectations. (Marcus & Millichap - 2007 Annual Report)

New Development

The Loop Power Center in Kissimmee, at 440,000 square feet, was one of the largest retail transactions in 2006. The center, completed in 2005, is one of the largest in the Orlando MSA. Wilder Companies, the owner and developer, sold the property to AEW Capital Management for $104.9 million, or $238.41 per square foot. Major anchor stores include Kohls, Regal Cinema, Ross, Michaels, Old Navy, Sports Authority and Petco.

A nearly 1.2 million-square-foot lifestyle center is under construction at the Winter Garden Village at Fowler Groves, which is being developed by Sembler Co. of St. Petersburg, one of the nation's leading shopping center developers. Sembler Vice President of Development David Murphy said the project will feature local history in recognition of the families and farmers who settled the region. A distinctive "clock tower" is planned that resembles one in the heart of old downtown Winter Garden, and a "history walk" will feature Winter Garden families and "the front porch of the Fowler family home". The open-air shopping center will be located at the northeast quadrant of C.R. 535 (which is being extended and widened to six lanes through the project) and the new Western Beltway (Toll Road 429) in the City of Winter Garden. The center will be anchored by Super Target, Lowes, Barnes & Noble and Beall's Department Store; and situated in the center of the booming West Orange County market approximately 1.75 miles south of Florida's Turnpike and S.R. 50. The project is slated to open in October 2007, with some tenants arriving in early 2008. (Orlando Sentinel - August 25, 2006)

Architect's Rendering of Winter Garden Village at Fowler's Grove

The 1,800-acre project in Veranda Park (MetroWest) will continue to grow during the next five years with about $600 million in new development underway or planned, according to Ken Simback, vice president for development and chief operating officer with Veranda Partners LLC. A new "town center" with cafes and shops "nestled between Italian-garden landscaping and hand-carved stone fountains" provides a fresh focal point for the 20-year-old development. Gondola rides are being planned for Lake Debra. (Orlando Sentinel - August 25, 2006)

Other shopping centers planned are:an open-air shopping center in the Lake Nona area; and Crossman & Co. is working on a 1.3 million-square-foot shopping center in The Villages that will be anchored by a Wal-Mart Supercenter.

Swedish furniture retailer IKEA began construction in February 2007 for an Orlando store slated to open in fall 2007. The 309,000-square-foot store will be located on a 22-acre site on the southeast side of the Mall at Millenia, at Conroy Road and Eastgate Drive. It will be the second Ikea store to open in Florida and will employ about 350 workers. Ikea also has a store under construction in Sunrise in South Florida scheduled to open summer 2007. (Orlando Sentinel - February 21, 2007)

An 18,000-square-foot Old Navy store is also under construction near the Mall at Millenia's entrance off Conroy Road and is expected to open by summer 2007. In addition, an 18,000-square-foot West Elm upscale furniture store is planned adjacent to the Old Navy store, according to John Rife, a development partner in the project. West Elm, which is owned by Williams-Sonoma, would be the first location in the Orlando market.

Cypress Plaza, a $15 million shopping center, is planned for 16 acres fronting Cypress Parkway in Poinciana Towne Center. Development of the 100,149 square foot, nine-building, Mediterranean-style center was expected to get underway in early 2007, with completion by year's end. Cypress Plaza is a joint venture of Gadinsky Real Estate LLC of Miami Beach and Echion USA Inc. of Sunrise.

Large condo tower developments like Premiere Trade Plaza, 55 West, The VUE, Star Tower and The Paramount on Lake Eola, under construction in downtown Orlando, plan to include retail space. Premier Trade Plaza will contain a 12 screen movie theater. The Paramount project will bring a full-service grocery store into the city core.

In December 2006, Weingarten Realty Investors, a Houston-based real estate investment trust, began construction on Phillips Crossing, a shopping center in southwest Orlando that will feature the area's second Whole Foods Market. The center, at Sand Lake Road and Turkey Lake Road, just west of Interstate 4, will include a 52,000-square-foot Whole Foods. Phillips Crossing, to be finished in early 2008, will have a mix of specialty shops and restaurants to complement Whole Foods. Pre-construction leasing is reported strong with 40 percent of the space already committed. (Orlando Sentinel - November 29, 2006)

Heinkel, Griffin and Rufrano Construction, Inc. broke ground on an $8 million shopping center at Stoneybrook West in Winter Garden. The Publix Supermarket-anchored center will encompass more than 74,000 square feet developed over more than 10 acres. Barclay Group of Dunedin is the developer. Barry Wilemon is HGR's project superintendent and Jim Rufrano is the principal in charge. (Orlando Business Journal - November 17, 2006)

Real-estate developer Southeast Centers LLC plans to develop a $20 million upscale shopping center near Bellalago, the lakeside residential community near Poinciana. A Mediterranean-style retail center is planned with possible tenants to include a major grocery chain, bank and national restaurant chain, according to Marc Boucher, president of SEC Commercial Realty Group, leasing agent and subsidiary of Southeast Centers. Development of the 75,000-square-foot center is expected to begin in June 2007. (Orlando Sentinel - February 16, 2007)

Adler Group, of Miami, has started construction on the Howell Branch Corners, a 15,000-square-foot, $5.5 million retail center, at State Road 436 and Howell Branch Road in Casselberry. The center's tenants will include a Starbucks, according to the developer. (Central Florida Business - September 4, 2006)

Sales

The 16,825-square-foot Kings Ridge Village retail center at 4279 S. U.S. Highway 27 in Clermont sold for $4.85 million, or $288.26 per square foot. The center, built in 2005, was bought by David Curry, a New York investor. The seller was Steve Kelly. Ricardo Bovero of Marcus & Millichap was the broker. (Central Florida Business - March 5, 2007)

Major retail sales for 2006 included the 524,000 square foot Winter Park Village purchased by JP Morgan Chase for $141.5 million and the 309,000 square foot Marketplace at Seminole Towne Center purchased by Weingarten Realty for $50.9 million. (Central Florida Business - February 19, 2007)

The 119,168 square foot Casselberry Exchange Shopping Center sold for $25.25 million. Casselberry Associates LLC, a private equity group based in Canada and Puerto Rico, sold the property to MSKP Casselberry Exchange LLC. It is located at the northeast corner of the intersection of State Road 436 and U.S. Highway 17-92. The center's tenants include: Bed Bath & Beyond; Staples; Sally Beauty; Quizno's; EB Games; Mattress Farm; State Farm; T-Mobile; and Amscot, who pay lease rates ranging from $22 to $28 per square foot. Out parcel tenants include: Starbucks; Floors Today; 7-Eleven; and Donato's Pizzeria. Tampa-based Plaza Advisors Managing Partner Jim Michalak represented the seller. MSKP Casselberry Exchange was not represented by a broker in its purchase of the center. (Orlando Business Journal - February 9, 2007)

Boardwalk Plaza LLC, a California investor from Gardena, bought the 8,112-square-foot Boardwalk Plaza retail center at 3100 Alafaya Trail in Oviedo for $2.7 million, or $332.84 per square foot. The seller was BW Plaza LLC of Winter Park. Kevin O'Connor and Matt Cichocki, of NAI Realvest, represented the seller. (Orlando Sentinel - February 26, 2007)

Michigan investors, Ramco-Gershenson Properties Trust, paid $22.4 million for 115,585 SF of retail space, or $193.80 per square foot, at Kissimmee West on US Highway 192 in Kissimmee. The purchase included space occupied by Marshalls, JoAnn Fabrics and Shoe Carnival. A SuperTarget store and a free-standing A&W restaurant were not included in the sale. The seller was Sembler Co., represented by Blackrock Retail Property Advisors, of Miami. (Orlando Sentinel - January 10, 2006)

The highest priced, per square foot, retail transaction, at $449.76 per square foot, was recorded mid-year 2006. The 15,942 square foot Walgreen's Pharmacy on International Drive was sold for $7.17 million to California-based Rubin Pachulski Properties.

The 69,306-square-foot Casselberry Plaza, at 345 E. Semoran Blvd. in Casselberry, sold by Global Resorts, Inc. of Orlando for $6.6 million, or $95.23 per square foot. The buyer was a private New Jersey-based investment group. Martin Forster and Michael Pocklington, both of the Pocklington, Pocklington and Forster Retail Investment Group of Advantis Real Estate Services Co. in Orlando, handled the sale. (Orlando Sentinel - August 21, 2006)

The 35,496-square-foot, Whisper Lakes Village, at 2100-2180 Whisper Lakes Blvd. in south Orlando, sold for $7.08 million, or $199.32 per square foot. The buyer was Greenway Partners LLC and the seller was Real Property Enterprises Inc. The Pocklington, Pocklington and Forster Retail Investment Group of Advantis Real Estate Services Co. in Orlando and Bill Smith of Real Property Specialists handled the transaction. (Orlando Sentinel - September 18, 2006)

Unicorp National Developments Inc. completed its $20.2 million purchase of about 105,000 square feet of retail space, or $192.38 per square foot, at Premiere Trade Plaza in Downtown Orlando. The company expects to open the space by spring 2007, according to co-founder Chuck Whittall. The space includes a 12-screen theater which is expected to open April 2007. Tom Cook, of Tom Cook Commercial, represented the seller, The Plaza LLC, while Whittall and Lee J. Maher, also co-founder of Unicorp, represented the buyer. (Orlando Sentinel - October 24, 2006)

Leasing

Crossman & Co., Orlando, is handling the lease of nearly 2 million square feet of retail space at The Villages. The Tampa-based Sweetbay Supermarket is expected to open a store at Sumter Landing Town Center. (Orlando Sentinel - November 27, 2006)

Buffalo Wild Wings Grill & Bar leased 6,419 square feet for 10 years in the Towers of Waterford Shopping Center. Jeff Tanner of Coldwell Banker Commercial NRT negotiated the deal. (Orlando Business Journal - October 13, 2006)

Aaron's Country Store leased 50,000 square feet of space for five (5) years at Greater Marketplace at 1024 State Road 436 in Casselberry. Jim Coppersmith and Jeff Tanner of Coldwell Banker Commercial NRT negotiated the deal. (Orlando Business Journal- January 19, 2007)

Jared's Jewelers leased 5,800 square feet at Altamonte Town Center in Altamonte Springs. Jim Coppersmith of Coldwell Banker Commercial NRT negotiated the 20-year deal. (Central Florida Business - November 20, 2006)

Creative Floors took 6,880 SF in the Shoppes at Southland in south Orlando. Mindy Boehm and Lisa Bailey, both of Advantis Real Estate Services Co., negotiated the lease. (Central Florida Business - December 4, 2006)