Our research process has two major components. First, we use top-down market research techniques to target specific cities in which we have an interest in acquiring property. We then fine tune this research by comparing and adding third party research information. The combination of the proprietary and public information becomes the basis for our macro-economic strategy. Second, we use a bottom-up process that acknowledges the importance of developing our own primary market research within the local real estate community. As described below, it is the successful blending of these two processes that distinguishes us from many of our competitors.

Macro-economic Research (Top-Down Approach)
The primary source of our macro-economic research is Property & Portfolio Research founded and run by Susan Hudson Wilson. In addition, macro-economic research is continually conducted by our staff as we gather data and information from a variety of sources. We analyze certain macro-economic variables that relate to the supply and demand for real estate and rank cities in order of their economic activity. Each is ranked in terms of its relative attractiveness.

This information is used to develop broad-based investment strategies to:

1. identify attractive cities in which to target acquisitions
2. develop holding period strategies (long vs. short-term) for specific markets
3. determine the opportune time to sell individual properties.

To a large extent, our strategy is predicated on the premise that the cities in which you choose to invest have a significant impact on investment performance. Having the knowledge of which cities are likely to expand and which are likely to contract, and when they are likely to do so, is very valuable in the decision making process. Put another way, if one's objective is to build portfolios that are "efficiently" diversified in the context of risk and return, it is essential to know the expected risk-and-return characteristics of specific cities.

Micro-economic Research (Bottom-Up Approach)
Micro-economic research is conducted within the specific target market and sub-market by our in-house asset management team to verify and detail the macro information. The micro research is utilized in property specific decision making, acquisition, asset management, property management and disposition strategies.

The bottom-up or micro-economic method involves the analysis of supply and demand at the local market level. The supply side factors analyzed include building permits, occupancy levels, availability of zoned land and rent levels. These factors are reviewed on both a long-term and short-term basis and are continuously updated. The demand side factors include vacancy rates, absorption, employment, job growth, and household formations. Based on this information, projections regarding current and future market conditions are evaluated. This assessment is utilized for new acquisitions, ongoing management (rental rate adjustments), and the disposition decision. It is the bottom-up process which provides the information to make sub-market and property specific decisions.