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Executive Corner.....................................2 `

OC Top 5 Producers for 2009..............3 `

Broker Column.........................................3 `

Top OC Transactions...............................4 `

Colliers Market Watch ` ............................4

(See South Coast Transportation Expands on page 3)

Colliers International

OCPERSPECTIVE

South Coast Transportation and Distribution, a Los Angeles-based provider of transportation and logistical services throughout the United States, has acquired a 198,020-square-foot industrial property in Fullerton for $12.25 million. Located at 1424 S. Raymond Ave., the property consists of three industrial buildings situated on 14.9 acres of land.

The buyer obtained Green Financing for this transaction, provided by the Small Business Administration, which requires users to improve the property to maintain lower utility costs. This loan marks one of the first and largest loans for a user in Southern California utilizing Green Financing. Community Bank, a provider of financial services to small and mid-sized businesses in Southern California, funded the first loan.

51424 S. Raymond Ave., Fullerton

(See Third Largest CRE Firm on page 2) (See Corporate Services Group Expands on page 4)

Orange County Quarterly Newsletter

Colliers International kicked off 2010 with a major shift in its operational structure. Some say the company is reinventing the business model of commercial real estate.

“This is an exciting time in the history of Colliers International and a significant turning point in our business and the industry. Colliers International has made the operational decision not to be a network and will combine the operations of Colliers International and FirstService Real Estate Advisors, operating under the Colliers International brand,” said Doug Frye, president and CEO of Colliers International.

Colliers International has tapped Nick Foussianes as executive managing director, Southern California for the Client Solution Design division of Corporate Solutions, the firm’s global corporate services operation. This new strategic hire continues Colliers International’s global expansion.

Based in San Diego, Foussianes is actively engaged with corporate clients throughout Southern California to develop an in-depth understanding of key business strategies, create customized real estate solutions that meet their objectives and then oversee execution

Strategic Moves Propel Colliers to the World’s Third Largest CRE Firm

Global Corporate Services Group Expands in Southern California

Inside This Issue

South Coast Transportation and Distribution Expands Operations, Secures Green Financing

Colliers Market Watch

This statement, from a press release issued in January, marked the dawn of a new era for Colliers International, elevating the company to the rank of the world’s third largest commercial real estate services firm. According to Frye, the common vision and strategy among Colliers International partners had been in the works for the past several years.

The combined organization is different from other global firms because of our partnership model,” said Frye. “As we complete the transition from a network to a centrally owned and operated firm, FirstService Real Estate Advisors will control approximately 70 percent of Colliers International globally. The remaining 30 percent equity is retained in the local markets, providing the strength and consistency of a global firm with the accountability and intimate knowledge of local markets.”

The fully integrated Colliers International business employs more than 15,000 people in 480 offices in 61 countries. The company generates in excess of $1.9 billion in revenues

annually and $64 billion in transaction value.

Elevating Client ServiceBranded Colliers International throughout the world, the integrated firm ensures the delivery of uniform services. This is another step forward in providing clients with a broad range of highly-specialized real estate services in the United States and around the globe through one seamless organization.

“Our clients and professionals will immediately benefit from this integration as our business continues to expand,” said Martin Pupil, senior managing director of Colliers International’s Greater Los Angeles operations. “Combining our business with the pairing of Colliers International and FirstService Real Estate Advisors enables us to more effectively service our clients on a local, regional, national and global basis.”

Greater Los Angeles Area ExpansionThis strategic integration has led to the addition of key professionals across multiple service lines within the Greater

Los Angeles region, which consists of more than 100 real estate professionals working from seven offices.

Supporting an integrated approach to client service, the company has added key talent in the areas of Client Solution Design and Asset and Property Management. The firm has also recruited top producers within the Private Capital group to elevate its industrial, office, retail and multifamily platforms.

“When others in the industry were scaling back due to the global economic recession, we were setting the stage for an aggressive global expansion,” said Pupil. “We’ve reached a milestone in our company’s history and we intend to build upon this momentum within the Greater Los Angeles region, as well as on a national and global level.”

In the Greater Los Angeles region, the firm will celebrate the opening of a West Los Angeles office next quarter. Colliers International looks forward to continued growth throughout 2010 and the years beyond.

The new year has brought new and exciting change for Colliers International. Driven by a common vision and strategy, Colliers International partners around

the globe have decided to combine operations forming one integrated company. Operating as Colliers International throughout the world, we are now the third largest commercial real estate services firm globally.

This move is significant in supporting our commitment to providing an integrated approach to client service. We have been focused on expanding our service platforms to better meet the needs of our clients and, as a result, we have added

a number of top industry professionals within the Greater Los Angeles region.

Mike Kent and Mark Zehner were brought onboard last fall to lead the development of our Property and Asset Management platform. We also expanded our Private Capital group last year, adding industry leaders such as Mehran Foroughi, Jereme Snyder, Maurice Nieman, Ian Schroeder and Patrick Swanson in our Orange County office. Together their sales volume totaled more than $90 million in 2009. Most recently, David Atkinson has added to our office leasing capabilities in Orange County.

We have also expanded in other parts of Greater Los Angeles. Kitty Wallace has added new strengths and expertise to our multifamily and institutional groups. Industry veteran Scott Heaton has joined our growing industrial platform.

Shawn Bakke and Morgan McEvoy have extended the reach of our retail services.

Colliers International is positioned for continued growth around the globe and locally in Orange County. This year will bring a focus on expansion within our core businesses – our industrial and office service offerrings.

On a final note, I’d like to congratulate our top Orange County producers of 2009. Clyde Stauff was ranked the number one producer for all of Greater Los Angeles and the number five producer nationwide. Patrick Remolacio, Steve Schloemer, Jereme Snyder and Mehran Foroughi also had a tremendous year and I wish them the best in 2010.

Colliers OCPerspective, Winter 2010

Corner

Exec

utiv

e A New Year, A New Business Model

(continued from page 1)

Third Largest CRE Firm

Martin PupilSenior Managing Director

Colliers OCPerspective, Winter 2010

Broker Column The Year 2011: The Pending Rise of Long-Term Capital Gains Tax Rates & the Impact on Real Estate PricesOver twenty years ago, the U.S. experienced a capital gains scenario similar to the one anticipated to occur a year from now, in 2011. In 1986, the long-term capital gains tax rate was increased from 20% to 28%, an increase of 40%. Investors, anticipating this occurrence, reacted in 1985 by selling off properties. The result was an approximate 80% increase in capital gains tax revenue that year. Due to the abundance of supply over demand, prices for commercial real estate were driven lower. It is our opinion that if capital gains tax rates increase in 2011, history may once again repeat itself in 2010. As a result, NOW is the time that real estate investors may want to consider potential options.

Potential Impact of a Capital Gains Tax Rate IncreaseTo begin with, it is certain that sales of commercial properties, absent legitimate tax deferral strategies, will result in lower actual after-tax proceeds, which will significantly reduce the overall internal rate of return (IRR). This news may encourage investors to react in ways not necessarily beneficial to maintaining real estate values. Possible reactions may be:

A major sell-off of properties, › as realized in the year prior to the 1986 tax increase, thereby impacting values to all, including those not selling. Remember, in 1986 the tax increase was 40%; in 2011, especially given the historically low interest rate environment, the sell-off could be larger, and thus the impact may be more extreme.

A stagnant period in which › transactions are limited due to

tax consequences.An increase in 1031 exchanges. ›

The exchange buyer is an eager seller’s dream. In an effort to avoid taxes and often faced with pending timing constraints, the exchange buyer often overpays for properties. Loss of sound real estate judgment may ultimately result in a larger loss than if the buyer had paid taxes on the original gain.

A search for other tax deferral › techniques such as: UPREIT Contribution, Deferred Sales Trust (a highly controversial approach), Structured Sale Annuity (Insured Installment Sale), Charitable Trust, Installment Sale or Self- Directed Installment Sale. Although we will examine each of these in later articles,obviously none replace lower capital gains tax rates.

In SummaryHistory indicates that prices fall in response to the increased supply when an unusual number of owners put their properties on the market in response to an expected tax increase. The effect on prices after the tax rate increase is unclear, but the costs of selling are certainly higher. Investors may want to consider their options before prices are further eroded or the long-term capital gains tax rate is significantly increased.

“Our client is expanding from their current operation in Carson. They were attracted to this property because it offers nearly double the building square footage of their current facility, plus an additional five acres of land and a central location for their operations,” said Clint McMorris, senior vice president in Colliers International’s Torrance office, who

represented South Coast Transportation and Distribution in the transaction, along with Lary Carlton, also senior vice president in Colliers International’s Torrance office. The property will be used by South Coast Transportation and Distribution for the warehousing of customer products and as a logistics and transportation center, according to McMorris.

(continued from page 1)

Southcoast Transportation Expands

Pat Remolacio is Managing Director Corporate Finance in Colliers’ Irvine Office.

Recognizing Our Top 5 Orange County Producers of 2009!

A special congratulations to Clyde Stauff on being the #1 producer in Greater Los Angeles and the #5 producer in the United States.

Clyde StauffExecutive Vice President

Patrick RemolacioManaging Director Corporate Finance

Steve SchloemerSenior Vice President

Jereme SnyderVice President

Mehran ForoughiSenior Vice President

Colliers OCPerspective, Winter 2010

Colliers International - Orange County3 Park Plaza, Suite 1200Irvine, CA 92614(P) 949.474.0707 (F) 949.724.5600www.colliers.com/orangecounty

on an on-going basis. He will coordinate with Scott Nelson, president of the Client Solution Design division of Corporate Solutions in the U.S.

“Southern California is a critical market,” said Dylan Taylor, president, FirstService Real Estate Advisors. Taylor will become president and CEO of

Colliers International USA this spring. “We wanted someone with industry and local market expertise, as well as nuanced understanding of what corporate clients require on both a functional and development basis. Nick brings the solutions-focused approach that Colliers International is built on.”

(continued from page 1)

Corporate Services Group Expands

Industrial Sale Garden Grove

50,625 sq. ft. `$4.05 million `Clyde Stauff `

Industrial Sale Irvine

12,340 sq. ft. `$1.85 million `

Chuck Wilson, Blake Garr ` ett

Industrial Sale Garden Grove

44,500 sq. ft. `$3.5 million `

Brad Christian `

Office SaleNewport Beach

7,780 sq. ft. `$1.6 million `Casey Immel `

Top

This document has been prepared by Colliers International for advertising and general information only. Colliers International makes no guarantees, representations or warranties of any kind, expressed or implied, regarding the information including, but not limited to, warranties of content, accuracy and reliability. Any interested party should undertake their own inquiries as to the accuracy of the information. Colliers International excludes unequivocally all inferred or implied terms, conditions and warranties arising out of this document and excludes all liability for loss and damages arising there from. Colliers International is a worldwide affiliation of independently owned and operated companies.

Colliers Market Watch

OFFICENet absorption during Q4 was -653,400 SF as the office market `

encountered space givebacks from tenants at a higher rate than the previous quarter which reported an amount of -277,600 SF. With the office market experiencing further loss in net absorption, Orange County had a year-to-date net absorption amount of -2,663,700 SF.

This negative absorption caused an increase of 90 basis points ` in the total vacancy rate from 20.6% in Q3 to 21.5% in Q4. Direct weighted average asking lease rates dropped for the eighth consecutive quarter to $2.21 per square foot, per month Full Service Gross (FSG), a decline of $0.10 PSF from Q3.

Leasing activity for Q4 totaled 1.31 million SF, down 33% ` from the 1.96 million SF of leasing activity reported last quarter and down 34% from 1.98 million SF of leasing activity reported one year ago.

INDUSTRIALSales and leasing activity during Q4 totaled 2.55 million SF, `

down 1.6% from the 2.59 million SF reported in Q3. However, that figure is up from 2.36 million SF from Q4 2008.

The total vacancy rate, including sublet space, increased 20 ` basis points from 5.8% reported in Q3 to 6.0% in Q4.

The weighted average asking rental rate decreased to $0.65 ` PSF per month, Triple Net (NNN) from $0.68 PSF reported in Q3. Since last year, the average rental rate has decreased 13.3% from $0.75 PSF. Weighted average asking rental rates are the highest in the South submarket ($0.89 PSF) and lowest in the North submarket ($0.57 PSF).

ECONOMYThe unemployment rate in December 2009 was 9.1%, up from `

6.6% 12 months ago.The general economy is taking steps towards a recovery; `

however commercial real estate is a lagging indicator. Most of the drastic changes have already occurred in Orange County which is a market in the process of being corrected.