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January 13, 2009

TARP Legislation Authorizes Treasury to Support Availability of Commercial Real Estate Loans On January 9, House Financial Services Committee Chairman Barney Frank (D-Mass.) introduced the TARP Reform and Accountability Act (H.R. 384). Included in Title IV of the bill is language clearly stating that the Secretary of the Treasury has authority under the Emergency Economic Stabilization Act of 2008 (EESA), which created TARP (Troubled Assets Relief Program) to "establish or support the availability of commercial real estate loans, including the purchase of asset-backed securities, directly or through the Board of Governors of the Federal Reserve System... The inclusion of the language is an important positive development for the commercial real estate industry, which has been working since passage of the EESA to bring attention to the growing concerns regarding the availability of credit for the industry. Approximately $400 billion in commercial mortgage debt is expected to mature in 2009, with much of it needing to be refinanced. However, the commercial mortgage-backed securities (CMBS) market, which accounts for a large portion of the financing in commercial real estate, has come to a standstill. In addition, banks and other lending sources are under increasing pressure from regulators to reduce their exposure to real estate. NAIOP and other major real estate trade groups have advocated the creation of a facility to purchase commercial real estate debt, similar to the Term Asset-Backed Securities Loan Facility (TALF) created to address concerns in the credit card and auto-loan debt market, and have sent a letter to Treasury Secretary Hank Paulsen calling for the creation of a facility. Because such an effort if pursued would be implemented under the incoming Obama administration and Treasury Secretary-designate Tim Geithner, the language of H.R 384 empowers the Treasury Department to address the credit crisis in the commercial real estate markets without fear that they are at odds with Congressional intent. House Speaker Nancy Pelosi has signaled that a vote on the Frank bill could occur as early as January 14. For more information, contact Aquiles Suarez (703) 904-7100, ext. 115. Public Policy Expert Peter Hart to Speak at 2009 Chapter Leadership and Legislative Retreat NAIOP's 2009 Chapter Leadership and Legislative Retreat will take place February 8 - 11 at the Renaissance Mayflower Hotel in Washington, D.C. Leading pollster and public policy expert Peter Hart will keynote at the annual retreat and will explore the political landscape after the 2008 elections along with the changes associated with President-elect Obama's new administration. Hart is regarded as one of the top analysts of public opinion in the United States and is also recognized as a leading shaper of national trends and political messages. He serves as chairman of Peter D. Hart Research Associates and has been a pollster for NBC News and The Wall Street Journal, in addition to representing more than 40 United States senators and 30 governors. Hart appears frequently on Meet the Press, The Today Show and The News Hour with Jim Lehrer. For more information, contact Aquiles Suarez (703) 904-7100, ext. 115. Focus on Capitol Hill Day during 2009 Chapter Leadership and Legislative Retreat With a new Presidential administration in the White House and many new faces in both congressional houses, it is even more essential that NAIOP members meet face-to-face with their representatives to voice their concerns on the legislative issues. NAIOP members are encouraged to take advantage of the opportunity to meet with their legislators during Capitol Hill Day, which takes place on Wednesday, February 11, during the 2009 Chapter Leadership & Legislative Retreat. NAIOP will provide materials and education on the issues most pressing to our association and industry during CL&LR - but first attendees need to schedule their appointments. Participants who want to meet with their respective legislators during Capitol Hill Day should refer to the following checklist to schedule meetings with their Congressional representatives: Beginning of January: Send a letter requesting an appointment. Follow-up with a phone call to the representative's scheduler within one week. If the elected official is not available, ask to meet with the staff that is responsible for covering our priority issues: Capital and Credit Markets Taxes Leasehold Improvements Brownfields Remediation Expensing Carried Interest Energy Transportation/Infrastructure The first week of February: Confirm any outstanding appointments. Notify NAIOP of your scheduled meetings. If you need assistance in scheduling your appointments, contact government affairs and PAC manager Melissa Glenn at (703) 904-7100.

States Targeted to Play Key Role in "Card Check" Legislation As the 111th Congress convened last week, representatives of organized labor unions outlined an aggressive agenda to implement their legislative priorities on Capitol Hill and at the state house. The recent election of President-elect Obama, along with a shift towards Democratic majorities in many state legislatures, has created a political atmosphere more favorable for organized labor to move certain legislative initiatives after many years of declining membership. Among organized labor's goals is to allow for the unionization of workers through a petition process for certification, rather than a secret ballot. The Employee Free Choice Act (EFCA, also known as "Card Check") would accomplish this goal and is a top priority for organized labor, who are expected to implement a targeted grassroots strategy at the state and local level designed to convince their congressional delegation to support Card Check legislation. This grassroots strategy will include coalition building, local advertising and op-ed pieces authored by governors, state legislators and mayors and include the passage of supporting legislation or resolutions by the city council and state legislatures. "Right-to-work" states and their federal delegation may receive a particularly high level of lobbying in support of Card Check. At the state level, nearly twenty states considered Card Check legislation or resolutions supported by organized labor in 2007 and 2008. These states included Alabama, Alaska, Arizona, Delaware, Florida, Illinois, Kentucky, Michigan, Minnesota, New Jersey, New Mexico, Ohio, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Washington, West Virginia and Wisconsin. Please visit State Legislative Monitoring on NAIOP's Government Affairs Web site for additional information on this and other legislative issues. For more information, please contact Toby Burke at (703) 904-7100, ext. 116.

Toronto and Calgary Office Markets to See Rise in Vacancies in 2009: New Canadian Study Released According to a Colliers International report released in the final weeks of 2008, office vacancy rates in Toronto and Calgary are expected to jump in 2009 as new buildings open in the midst of an economic downturn. The study notes that "Calgary and Toronto will feel the fallout of the global economic slowdown as these 2 markets share the same short-term oversupply issues, with several million feet of new office space completed in 2009 and 2010." Colliers forecasts Toronto's vacancy rate to rise from 5 percent to 7 percent in 2009, due to a struggling economy combined with several million feet of new space entering the marketplace. The report indicates that Vancouver, with a current vacancy rate of 4 percent, should benefit in anticipation of the 2010 Olympics. Likewise, vacancy rates for Edmonton and Ottawa are forecasted to hold steady due to continued government demand. Montreal, which has a 6 percent vacancy rate, is not expected to see any new office complexes slated for opening in 2009. While the report did not provide a long-term forecast for the city of Calgary, indications are that falling oil prices will most likely keep demand for new office space flat, despite the current vacancy rate of approximately 3.5 percent. Even though vacancies are slated to rise, Toronto and Calgary are still faring much better than most urban locations in the United States. Only Charlotte, N.C., at 2 percent, has a rental market as strong as Calgary's. The report also noted that many business markets in both Canada and the United States will continue to see vacancies rise as many companies stockpiled office space when the economy was flourishing only to give up or sublet the space as the economic slump continues. Port of Montreal Aims for Growth after Record-Breaking Year According to a recent article in the Montreal Gazette, the Montreal Port Authority is seeking partners to help build and operate a $500 million (U.S.) container facility after experiencing record-breaking growth in 2008. Patrice Pelletier, CEO of the port authority, reports that the new facility will help the Port expand into U.S. markets. In a historical transaction, the port recently opened an office in Chicago, in an effort to promote its advantages to shipping lines, freight-forwarders and importers serving the U.S. Midwest. "You can call us the Port of Montreal, but we are as much the port for Chicago, the gateway to an interprovincial, transnational corridor," said Pelletier during recent ceremonies marking the arrival of the first ocean-going vessel of the year. The Port has launched a 12-year strategic development plan, dubbed "Vision 2020", aiming to triple its annual container handling capacity and is seeking $2.5 billion in investments to fund the projected growth. Pelletier emphasized the importance of Montreal, aided by federal infrastructure funds, building on its geographic location. "We have 135 million consumers within 26 hours by rail from Montreal. The most powerful consumer base in North America is centered around the Montreal-Chicago corridor." The Port anticipates that Ottawa will move forward on its pledge to invest $2.1 billion in trade gateways and they will seek expressions of interest to build a new container facility on authority-owned land later this year. The Port of Montreal achieved the highest growth among North America's ten main container ports in 2007. Looking forward, the port expects containerized cargo tonnage handled this year to drop by 3.7 percent from 2008 due to the economic slowdown. That figure will still be 2.7 percent higher than that of 2007. Number of New Construction Permits across Canada Continues to Drop The Globe and Mail recently reported that the drop in the number of building permits being taken out by contractors supports the view that construction activity, both residential and non-residential, is forecast to slow markedly in 2009. In November, the value of building permits fell by almost 12 percent from the previous month to $4.8 billion, according to data released Friday by Statistics Canada. The value of non-residential permits fell by 15 percent to $2.1 billion. The employment market took a direct hit as a result of the construction slowdown last month. In December the unemployment rate rose to 6.6 percent, the highest level in two years. This was largely driven by a plunge in full-time employment in the building sector, which experienced one of its largest drops in more than thirty years, the national statistics agency said.

NAIOP Expands Brand to Better Define Membership NAIOP redefined itself in 2009 with a new name and brand identity that clearly represents its membership's expansion into a broader scope of commercial real estate development and a vision of advancing responsible commercial real estate development. Formerly known as the National Association of Industrial and Office Properties, the association will now be known solely as NAIOP. A definer, the Commercial Real Estate Development Association, complements the name and signifies the association's strategic shift of encompassing all professionals within the industry. "NAIOP is the leading association for the development industry, extending its reach beyond office and industrial product types into mixed-use, medical office, retail and more," said Thomas J. Bisacquino, NAIOP president. "We recognize that our members engage in diverse development opportunities, and our brand expansion supports our vision of advancing responsible commercial real estate development." To read the full press release and learn more about the new NAIOP, visit NAIOP's Web site.

Past Issues NAIOP Legislative News Staff President, Thomas J. Bisacquino (Ext. 104) Vice President for Government Affairs, Aquiles Suarez (Ext. 115) Vice President for Marketing, Kathryn Hamilton (Ext. 165)

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