by NAREIT The Investor’s Guide to REITs NAREIT’s Guide to the Real Estate Investment Trust Industry Contents: p2. REIT Basics p2. REITs in the S&P Indexes p3. Fundamentals of REITs p4.

Returns Delivered by REITs p4. Characteristics of REIT Investment p6. REIT Valuation p6.

Benefits of Real Estate in Portfolios p7. REIT Sectors p8. The REIT Story in Brief © Copyright 2012 National Association of Real Estate Investment Trusts® REITs: Building Dividends and Diversification® 1875 I Street, NW, Suite 600, Washington, D.C.

20006-5413 • 202-739-9400, 800-3NAREIT • 202-739-9401 fax • REIT.com . The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry REIT Basics Real estate investment trusts (REITs) are companies that own and most often actively manage income-producing commercial real estate. Some REITs make or invest in loans and other obligations that are secured by real estate collateral. The shares of most large REITs are publicly traded. NAREIT’s Monthly Newsletter Investors can choose to benefit from the opportunities in the REIT market by purchasing the stocks of individual REITs or investing in REIT mutual funds or ETFs. Actively managed mutual funds are run by portfolio managers with a high degree of expertise in the real estate industry. REITs in the S&P Indexes The U.S.

Congress created the legislative framework for REITs in 1960 to enable the investing public to benefit from investments in large-scale, commercial real estate enterprises. Commercial real estate equity investment through REITs has much to offer institutional and retail investors. REIT stocks provide superior dividend income along with the potential for long-term capital gains through share price appreciation, and can also serve as a powerful tool for portfolio diversification. Research by Ibbotson Associates, an investment research unit of Morningstar, Inc., demonstrates the multi-faceted benefits of investing in REITs: • The ownership of REIT shares over time has historically increased investors’ total return and/or lowered the overall risk in both equity and fixed-income portfolios over time. The inclusion of REITs in 2001 in the Standard & Poor’s Indexes, the most widely followed investment performance benchmarks for the U.S. equity markets, underscored the importance of REITs in public capital markets and acknowledged the integral role they play in the economy and in diversified investment portfolios. The ongoing success of the REIT model is a reflection of many things, from its income generating and growth potential, to the proven portfolio diversification benefits of owning REIT shares; and from the benefits of active and professional management of real estate properties, to the transparency and management accountability that are essential components of REIT corporate governance. • Dividend growth rates for REIT shares have outpaced inflation over the last decade. Page Two The Investor’s Guide to REITs . The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry Fundamentals of REITs Publicly traded REITs are vital companies that offer investors the benefits of commercial real estate investment along with the advantages of investing in a publicly traded stock. Liquidity Investors can purchase or sell shares in REITs as easily as they purchase or sell shares in any other publicly traded company. REIT shares are traded on all of the major stock exchanges in the U.S., including the New York Stock Exchange (NYSE), Nasdaq, American Stock Exchange (AMEX), as well as various after-hours markets. Shareholder Value Just like investors in other public companies, REIT shareholders can receive value in the form of both dividend income and share value appreciation. Active Management/Corporate Governance Publicly traded REITs generally are actively and professionally managed corporations. They adhere to the same corporate governance principles that apply to all major public companies. They have a senior management team that is headed by a chief executive officer (CEO) who actively manages the overall strategic vision and equity of the enterprise. The board of directors appoints the CEO, which in turn is elected by and accountable to the shareholders of the REIT. The Investor’s Guide to REITs NAREIT’s Monthly Newsletter Disclosure Obligation Publicly traded REITs, like other public companies in the U.S., are required to make regular financial disclosures to the investment community, including quarterly and yearly audited financial results with concomitant filings with the Securities and Exchange Commission. No Shareholder Liability As is the case with equity investments in other publicly traded companies, shareholders have no personal liability for the debts of the REITs in which they invest. Low Leverage Like most other publicly traded companies, REITs tend to use moderate levels of debt in their capital structures.

In fact, the average REIT debt ratio has been below 55 percent for much of the last decade. Investors can purchase shares in REITs as easily as they purchase shares in any other publicly traded company. REIT shares are traded on all major stock exchanges. Page Three . The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry Returns Delivered by REITs REITs Deliver Income & Long-term Growth The special investment characteristics of income-producing real estate provide REIT investors with competitive long-term rates of return that complement the returns from other stocks and from bonds. High Dividend Yield REITs are required to distribute at least 90 percent of their taxable income to shareholders annually in the form of dividends. Significantly higher on average than other equities, the industry's dividend yields historically have produced a steady stream of income through a variety of market conditions. Share Price Appreciation Approximately one-third of the total return from REIT stocks since 1972 came from moderate, long-term growth in share prices. NAREIT’s Monthly Newsletter Characteristics of REIT Investment In addition to the investment performance and portfolio diversification benefits available from investing in REITs, REITs offer several advantages not found in companies across other industries. These benefits are part of the reason that REITs have become increasingly popular with investors over the past two decades: Predictable Revenue Stream REITs’ reliable income is derived from rents paid to the owners of commercial properties whose tenants often sign leases for long periods of time, or from interest payments from the financing of those properties. Earnings Transparency Most REITs operate along a straightforward and easily understandable business model: By increasing property occupancy rates and rents over time, higher levels of income may be produced. When reporting financial results, REITs, like other public companies, must report earnings per share based on net income as defined by generally accepted accounting principles (GAAP). FTSE NAREIT Equity Return Components Dividend Yields: (Percent change, as of Dec. 31, 2011) FTSE NAREIT All REIT Index vs.

S&P 500 (Year-end dividend yields, 1990-2011) 50 40 FTSE NAREIT All REIT Index 30 S&P 500 20 10 0 -10 -20 -30 -40 -50 Source: NAREIT® and Standard and Poor’s. Page Four 1972 1976 1980 1984 1988 1992 1996 2000 2004 Source: NAREIT® The Investor’s Guide to REITs 2008 . The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry NAREIT’s Monthly Newsletter Another way year-to-year financial progress can be gauged is by comparing levels of Funds From Operations (FFO). FFO, the industry’s supplemental performance measure, differs mainly from net income by excluding depreciation and amortization of real estate assets and gains and losses from most property sales. REITs Outperform Leading U.S. Benchmarks 9. 01 9. 81 9. 19 6 4 2 In du st Ru ria ss l N el as l2 da 00 q 0 C om po si te 0 w Jo ne s S& P In short, REITs over time have demonstrated a historical track record providing a high level of current income combined with long-term share price appreciation, inflation protection, and prudent diversification for investors across the age and investment style spectrums. 8 50 0 Total Return The combination of income returns from dividends and capital gains from share price appreciation can result in healthy overall returns for REIT investors. Analysis by Ibbotson Associates demonstrates that the combination of dividends and share price appreciation has made REIT returns competitive with other major investments, including a broad range of large-cap stocks, small-cap stocks and fixed-income securities. 10 Al FT l E SE qu N ity AR RE EI IT T D s o Given the broad range of real estate property sectors and business lines, there also are a number of additional earnings metrics, which are used by REITs in order to provide investors with a greater level of insight into their performance. 10 .9 8 12 11 .9 5 30-Year Compound Annual Total Returns Data as of December 31, 2011 Source: NAREIT® Past performance is no guarantee of future results. The Investor’s Guide to REITs Page Five .

The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry NAREIT’s Monthly Newsletter REIT Valuation Benefits of Real Estate in Portfolios Many factors affect the value of a REIT’s share price Given the investment strengths and historical beginning with the earnings tied to generally predictable and growing streams of rental revenue performance of REITs, it is no surprise that REIT shares are commonly viewed as a good investment and a price-earnings multiple assigned by the marketplace. for all long-term, diversified investors. Clearly, the inclusion of REIT shares in any investment The level and growth of rents are largely determined by economic fundamentals of supply and demand in portfolio is a prudent investment decision: real estate markets. These fundamentals include demographic factors such as population size, population growth, employment growth, Market Variability Balance First, the variability of market returns over time and across all economic sectors makes it clear that construction and the level of overall economic activity. While differing from region to region, all of diversification is the key to long-term investment success. Integral to diversification is the inclusion of equities representing all sectors of the economy, including real estate. these factors typically have a direct impact on rents and occupancy rates, which affect projected earnings and property values. Attractive Risk/Reward Balance Other factors include: Net Asset Value Calculation Many REIT analysts look at net asset value (NAV) as a reference point for the valuation of a company. NAV equals the estimated market value of a REIT’s total assets (mostly real property) minus the value of all liabilities.

When divided by the number of common shares outstanding, the net asset value per share is viewed by some as a useful guideline for determining the appropriate level of share price. Property Portfolio Enhancements The value of a REIT’s property portfolio can be maintained or enhanced through consistent capital expenditures. This is significant because strategic property portfolio enhancements help to maintain or increase NAVs and can provide the basis for price appreciation of a REIT’s shares. Page Six Second, REIT shares have proven to offer an attractive risk/reward balance in investment portfolios. Asset allocation analysis from Ibbotson Associates has found that adding REIT shares to a diversified portfolio historically has increased total portfolio returns or lowered overall portfolio risk. In fact, Ibbotson’s research shows that, when REIT shares are added to an already diversified portfolio, the efficient frontier of the portfolio is raised.

When portfolio investments are efficient, risk-averse investors can expect to realize higher portfolio returns with the low level of portfolio risk they prefer, while risk-tolerant investors can expect to realize lower risk along with the high level of returns they seek. Ultimately, a more efficient portfolio is something that all investors – from those looking for value or income, to those who are more growth-oriented – will find attractive. The Investor’s Guide to REITs . The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry NAREIT’s Monthly Newsletter REIT Sectors With a very diverse profile, the REIT industry offers REITs regularly explore new opportunities investors many alternatives across a broad range of specific real estate property sectors, including: for income growth, from new acquisitions or development to providing income-producing • Apartment communities • Office properties leasing or tenant services. Regardless of specific business lines, REITs acquire and develop their • Shopping centers properties primarily to actively manage and operate • Regional malls • Storage centers them as income-producing, ongoing businesses. • Industrial parks and warehouses • Lodging facilities, including hotels and resorts • Health care facilities • Natural resources. Listed REITs Invest In All Property Types Listed REITs as of July 31, 2012 Source: NAREIT® The Investor’s Guide to REITs Page Seven . The Investor’s Guide to REITs NAREIT NewsBrief NAREIT’s Guide to the Real Estate Investment Trust Industry NAREIT’s Monthly Newsletter The REIT Story in Brief NAREIT Officers Donald C. Wood, Chair REIT shares clearly can benefit most investors, whether value-driven or growth-oriented, individual or institutional. Federal Realty Investment Trust W. Edward Walter, First Vice Chair Host Hotels & Resorts, Inc. They offer the benefits of ongoing current income, with the potential for long-term capital appreciation that historically has met or exceeded inflation. Ronald L. Havner, Jr., Second Vice Chair Public Storage They are equities that derive a large part of their value from tangible, hard assets and the effective management of those assets. Michael D.

Fascitelli, Treasurer Vornado Realty Trust NAREIT Executive Staff And they have been proven to bring the benefits of balance, diversification and greater risk/reward efficiency to a broad range of investment portfolios. We invite you to further explore what the REIT sector can offer you. Steven A. Wechsler, President & CEO Tony M. Edwards, Exec.

VP & General Counsel Sheldon M. Groner, Exec. VP, Finance & Operations Michael R.

Grupe, Exec. VP, Research & Investment Affairs Tom Bickford, Exec. VP, Communications NAREIT® is the worldwide representative voice for REITs and publicly traded real estate companies with an interest in U.S.

real estate and capital markets. Members are REITs and other businesses that own, operate and manage income-producing real estate, as well as those firms and individuals who advise, study and service those businesses. NAREIT is the exclusive registered trademark of the National Association of Real Estate Investment Trusts, Inc.®, 1875 I St., NW, Suite 600, Washington, DC 20006-5413. Follow us on REIT.com. Copyright© 2012 by the National Association of Real Estate Investment Trusts, Inc.® All rights reserved. This information is solely educational in nature and is not intended by NAREIT to serve as the primary basis for any investment decision.

NAREIT is not acting as an investment adviser, investment fiduciary, broker, dealer or other market participant, and no offer or solicitation to buy or sell any security or real estate investment is being made. Investments and solicitations for investment must be made directly through an agent, employee or representative of a particular investment or fund and cannot be made through NAREIT. NAREIT does not allow any agent, employee or representative to personally solicit any investment or accept any monies to be invested in a particular security or real estate investment. All REIT data are derived from, and apply only to, publicly traded securities.

While such data are believed to be reliable when prepared or provided, such data are subject to change or restatement. NAREIT does not warrant or guarantee such data for accuracy or completeness, and shall not be liable under any legal theory for such data or any errors or omissions therein. See http://reit.com/TermsofUse.aspx for important information regarding this data, the underlying assumptions and the limitations of NAREIT's liability therefor, all of which are incorporated by reference herein. Performance results are provided only as a barometer or measure of past performance, and future values will fluctuate from those used in the underlying data. Any investment returns or performance data (past, hypothetical or otherwise) shown herein or in such data are not necessarily indicative of future returns or performance. Before an investment is made in any security, fund or investment, investors are strongly advised to request a copy of the prospectus or other disclosure or investment documentation and read it carefully.

Such prospectus or other information contains important information about a security's, fund's or other investment's objectives and strategies, risks and expenses. Investors should read all such information carefully before making an investment decision or investing any funds. Investors should consult with their investment fiduciary or other market professional before making any investment in any security, fund or other investment. Page Eight The Investor’s Guide to REITs .

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