Hedge fund in todays changing market

June 2011

Sublease Space - Discount to Direct Space As of mid-year 2011, nearly 21% of all office space in Manhattan is available on a sublease basis. This percentage has been declining since its most recent peak of nearly 30% in 2009. As market conditions continue to improve, rental rates have shown steady increases with most submarkets having corresponding decreases in vacancy rates. In Midtown, the overall vacancy rate is 11.9%, down from a five-year peak of 15% in 2009. In Midtown and Midtown South, the discount of sublease pricing to direct space pricing has increased steadily over the past four years. We attribute the consistent rise in the discount to a combination of (1) increase in direct rents, as well as (2) many of the higher quality sublease spaces have already been subleased or absorbed. The discount of sublease space pricing in Midtown to direct space has increased to just over 25%. In Midtown South, a much tighter submarket with vacancy rates hovering at 6.5%, the sublease space discount is even greater - trading at an average of nearly 31% of direct space pricing. Similar to the direct market, there has been a flight to quality in sublease space. Subleases on tower floors (floors 25 or higher), average 3 fewer months on the market than base floors (floors 10 and below), at 8.5 months in comparison to 11.5 months. The average time on the market for a Midtown Class A sublease is 10.25 months. While the Midtown Class A sublease vacancy rate has been declining since the second quarter of 2009, prices have been trending downward as well. This suggests there is a lack of quality sublease space on the market compared with direct space.
60% 50%

Sublease to Direct Discount by Market 2007 2Q 2011

51.3%

Average Time on the Market by Floors Midtown Class A Sublease

40% 30%
22.5% 19.4% 19.9% 20.1% 13.8% 12.7% 15.2% 30.2% 30.9% 25.6% 24.7% 24.1% 23.1% 17.4%

Tower

8.50

Middle

10.75

20% 10%

Base

11.50

0%

07

08

09
Midtown

10

11

07

08

09

10

11

07

08

09

10

11
0.00 3.00 6.00
Months on the Market

Midtown South

Downtown

9.00

12.00

Key Hedge Fund Buildings On the maps attached, we track 26 of the key hedge fund buildings in Midtown and the major funds and advisory firms located in each. As highlighted in green, there has been recent activity - relocations, expansions and renewals - in many of these signature properties. While buildings in Midtown South account for a much smaller percentage of funds locations, the rental levels are typically 50% of Midtown's trophy buildings.

623 Fifth Avenue - $58-$75

Dune Capital Mount Kellet Capital Prentice Capital

Midtown Manhattan
Key Hedge Fund Locations
13 12 5 4 25 23 22 26 2 1 3 11 10 8 24 9 7 19 18 17 15 16 14 20 6 21

20

280 Park Avenue - $100-$130

Ares Capital Corporation Blue Mountain Capital Cohen & Steers GSO Capital Rohatyn Group Trian Fund Management Unicom Capital Management

640 Fifth Avenue - $52

Clovis Capital Management Epoch Owl Creek Asset Management Roc Capital Management Realm Partners Scout Capital

21

601 Lexington Avenue-$85

BTG Investments Citadel Corinthian Capital Orbimed

712 Fifth Avenue - $85 - $130

Corvex Capital Merchants Gate Capital LLC Premium Point Rudman Capital Vector Group

22

152 West 57th Street-$60-$110

Broadway Gate Canyon Capital Covepoint Capital CQS Management Healthcor Management Kingdon Capital Management Sancus Capital Stone Tower Capital

745 Fifth Avenue $88-$120

Fundamental Advisors Royce & Associates Searchlight Capital van Biema Value Partners

23

40 West 57th Street - $85-$115

Cantillon Asset Management Duquesne Capital Mgmt Elliot Associates Highbridge Capital Management, LLC Sandell Asset Management Tocqueville Asset Management

767 Fifth Avenue - $125

Baron Capital Forstmann Little & Co. Glenview Capital Management Icahn Associates JANA Partners Maverick Capital Ocean Road Advisors Perella Weinberg Perry Capital York Capital

540 Madison Avenue - $86-$115

Enso Capital Management Grosvenor Capital Management SAC Capital Sonterra Capital Tudor Pickering & Holt Vedanta Capital

11

650 Madison Avenue- N/S

Reservoir Capital Steinhardt Management Co.

14

320 Park Avenue N/S

EOS Partners George Weiss Associates Kelso & Company Ospraie Management Welsh Carson Anderson & Stowe Zephyr Management

17

390 Park Avenue $140

GLG Sanders Capital Third Point Management Thomas Weisel Partners Wellspring Capital

24

65 East 55th Street N/S

Avista Capital Davidson Kempner Capital Mgt. Eminence Capital Stephens, Inc Oak Hill Capital Management

510 Madison Avenue - $105-$145

Chieftain Capital SAC Capital Senator Investment Group Thiam & Company Valinor Management

520 Madison Avenue - $125-$140

Carlyle Group Cramer Rosenthal McGlynn Matlin Patterson Asset Management Resource Holdings Tiedemann Investment Group

12

660 Madison Avenue - $90-$135

Blue Ridge Colony Capital Lexington Partners Scoggin LLC

15

350 Park Avenue $90-$120

Edgewood Management Company Tweedy Browne Veronis Suhler Stevenson Ziff Brothers

18

399 Park Avenue - $125

Avenue Capital Brigade Capital CV Starr Eton Park Capital Management Moelis & Company Pinebridge

25

9 West 57th Street - $120-$220

Apollo Investment Corporation Clinton Group Coatue Och Ziff Capital Management Group KKR Providence Equity Partners Silver Lake Partners

535 Madison Avenue - $72 - $110

Aurelius Capital Management Cadian Capital High Rise Capital Management Monarch Alternative Capital Morgan Keegan Tigris Financial

10

590 Madison Avenue - $90-$140

Bain Capital Corbin Capital Seneca Capital Steel Partners Taurus Asset Management Pine River

13

667 Madison Avenue $145

Gruss & Co. Koch Industries Michael Price Sciens Capital Management Tisch Financial Management

16

375 Park Avenue - $140-$145

3i Clayton Dubilier & Rice Centerbridge Partners Lightyear Capital Quadrangle Group

19

450 Park Avenue - $95-$120

Capital Ship Management Harbinger Capital Muzinich & Co Ortelius Capital Square Mile Capital Sterling Stamos Taconic Capital Advisors Tudor Investments Vinci Partners

26

888 Seventh Avenue $65-$110

Consonance Capital Indus Capital Pershing Square Capital Management RR Partners Soros Fund Management TPG-Axon Capital Visium Asset Management

Recent Transaction

Midtown South
Key Hedge Fund Locations

1 2 1 475 Park Avenue South - $43-$48

New Amsterdam Partners

3 4

610 Broadway N/S

Anchorage

470 Park Avenue South - $40

Horizon Asset Management

8 5

380 Lafayette Street N/S

Select Equity

360 Park Avenue South $45

Fred Alger Management

6 11 8

100 Avenue of the Americas - $42-$45

Two Sigma

315 Park Avenue South N/S

Leucadia National

10

632 Broadway - $40-$42

Serengeti

5 6

149 Fifth Avenue $52

Cadogan Asset Management

11 7

55 Fifth Avenue - $47-$58

Riva Ridge Capital

100 Fifth Avenue - $56

Dimension Capital

10 9

Recent Transaction

AprilJune 2011 2011

Newly Available Sublease Spaces Building Photo

Building and Address Ownership Floor / RSF Asking Rent Term Sublandlord Comments

725 Fifth Avenue N/E/C East 56th Street The Trump Organization Part 22 6,147 rsf $95.00/rsf Through November 2015 Braver Sterns Securities Recent installation with 4 offices and large open area with 20 trading positions. Supplemental a/c in IT room, Central Park views. Furniture available.

600 Fifth Avenue N/W/C West 48th Street Tishman Speyer Entire 26 7,852 rsf $75.00/rsf Through November 2017 Traxis Partners High end space with 13 perimeter offices, 1 large conference room off reception and open area for 15.

140 East 45th Street Between Third and Lexington Avenues Boston Properties, Inc. Part 9 4,768 rsf $30.00/rsf Through May 2013 Moodys Built with 20 trading positions, 5 offices, and 1 conference room. Furniture and phones available.

Floorplan

AprilJune 2011 2011

Newly Available Sublease Spaces Building Photo

Building and Address Ownership Floor / RSF Asking Rent Term Sublandlord Comments

655 Third Avenue Between 41st and 42nd Streets The Durst Organization Entire 23 5,719 rsf $52.00/rsf Through September 2013 Brownstone Investment Group High end full floor with 3 perimeter offices, 1 interior office, boardroom, open area with 18 trading positions, gym with private restroom. Furniture available.

277 Park Avenue Between 47th and 48th Streets Stahl Real Estate Co., LLC Entire 27 21,824 rsf $70.00/rsf Through January 2021 JP Morgan Chase Built with 9 perimeter offices, large open area and mailroom. Furniture available.

450 Park Avenue S/W/C East 57th Street Somerset Partners LLC Entire 11 10,285 rsf $110.00/rsf Through March 2016 RAIT Financial Trust High end installation with 16 trading positions, 7 offices, 4 workstations and 3 conference rooms.

Floorplan

AprilJune 2011 2011

Newly Available Sublease Spaces Building Photo

Building and Address Ownership Floor / RSF Asking Rent Term Sublandlord Comments

410 Park Avenue S/W/C East 55th Street Eastgate Realty Part 8 3,500 rsf $65.00/rsf Through March 2016 Edgerock Realty Advisors Recently built installation with 5 offices, conference room and open area for 6 workstations. Furniture available.

7 World Trade Center Between Barclay & Washington Silverstein Properties Part 30 3,643 rsf $65.00/rsf 3-5 years Capstone Holding Group Built trading installation with open area for 26 trading positions, 1 office, conference room and supplemental a/c.

Floorplan

June 2011 April 2011 Recently Completed Transactions Financial Service Firms Type
New New New New Renewal/Expansion New New New Renewal/Expansion New New New New Renewal New New

Tenant
Nomura Oppenheimer & Co Visium Asset Management Pine River Capital Shenkman Capital Indus Capital Augusta Columbia Capital Broad & Wall Deutsche Bundesbank Envestnet Asset Management Balantrove Management Capital Fund Management Rudman Capital Ferghana Partners Aldwych Capital Partners Advisors HSBC Markets

Address
825 Eighth Avenue 85 Broad Street 888 Seventh Avenue 590 Madison Avenue 461 Fifth Avenue 888 Seventh Avenue 130 E 59th Street 17 State Street 499 Park Avenue 489 Fifth Avenue 509 Madison Avenue 405 Lexington Avenue 712 Fifth Avenue 420 Lexington Avenue 950 Third Avenue 405 Lexington Avenue

Square Feet
900,000 270,000 39,600 25,150 20,775 19,800 7,281 5,213 5,000 4,998 4,300 4,100 3,350 2,751 2,645 1,800

For further information, please contact: Cynthia Wasserberger at 212.812.5816 or cynthia.wasserberger@am.jll.com