Efforts By Europe, U.S., Japan to Shore Up Ailing Financial Institutions Is Having Mixed Success, Says Too Big To Fail, A New Report From ULI Europe

Global Overview Compares Different Approaches, Impact on Real Estate

LONDON, March 10, 2010 - Government intervention in different countries to shore up ailing
financial institutions is having mixed success in reviving their respective
economies and real estate markets, according to Too Big to Fail, a new report
from the Urban Land Institute's (ULI) Europe office. A common sentiment is
that an industry recovery will hinge on the extent to which any immediate
boost from the aid ultimately results in steady, predictable flows of private
capital to real estate.

The report, released today, assesses different forms of government
intervention implemented since the fall of 2008 in the United Kingdom,
Ireland, Germany, Italy, The Netherlands, France, Spain, the United States
and Japan, including the impact on the real estate market in those countries.

The need for such massive, near-simultaneous aid by so many governments
to stave off financial industry collapse shows how globalized and
interconnected capital markets have become over the past two decades, said
ULI Europe President William P. Kistler. "The global financial crisis
demonstrated that not only is no financial firm too big or too resilient to
fail, but that financial firms have become so big that failure would be
catastrophic for the world economy. Banks are not too big to fail, but they
are too big to be allowed to fail," Kistler said.

ULI is a global research and education institute devoted to responsible
land use; ULI Europe, based in London, serves the Institute's 2,300-plus
members in Europe. Too Big to Fail was commissioned by the ULI Europe Policy
and Practice Committee and is the result of a series of interviews with 50
ULI members and their contacts around the globe.

The intervention schemes examined by the report generally fall into three
categories:

    -- Recapitalizations -- government injections of cash into banks in
       return for common shares, preferred shares, warrants, subordinated
       debt, mandatory convertible notes or silent participations.
    -- Debt guarantees - formal guarantees provided by governments against
       default on bank debt.
    -- Asset purchase/insurance -- governments assume part or all the risk of
       a portfolio of illiquid assets. Transferring the risk from the banks
       improves liquidity, and can in some cases provide capital relief.

Key findings from the comparisons by country: The cumulative government
support provided to financial institutions as a percentage of the 2008 gross
domestic product (GDP) ranged from 3.3 percent for Italy to 81.0 percent for
the United States and 81.6 percent for the United Kingdom. The total
government debt as a percentage of 2008 GDP ranged from 39.4 percent in Spain
to 196.3 percent in Japan, with the UK at 51.9 percent and the U.S. at 70.5
percent. (The report notes that the UK statistics for both financial support
and total debt likely will be lowered due to a better-than-expected
forthcoming report on the Royal Bank of Scotland's insured assets).

A few country highlights, including amount of government investment since
September 2008 (some of which is stretched over years ahead) and impact: (See
page 7 in the report for the summary table.)

    -- United Kingdom -- 50 billion pounds for recapitalizations; 250 billion
       pounds for debt guarantees and 282 billion pounds for asset
       purchase/insurance. "While government support has ensured the
       short-term stabilization of banks, the fear among investors and
       developers is that we will witness a 'double dip' rather than a steady
       recovery; the concern is over a secondary bubble relating to the price
       of assets, rather than a sign of long term recovery and economic
       growth."
    -- United States -- US$700 billion for recapitalizations and US$1.45
       trillion for asset purchase/insurance. "From a microeconomic level,
       banks will certainly impose more restrictive commercial real estate
       lending standards on new loan originations. These will include lower
       leverage ratios, more simple debt structures with fewer multi-tiered
       financings, and smaller lending syndicates. However, before confidence
       is fully restored to the real estate market, the greater uncertainties
       at the macroeconomic level (impact of reduction of federal aid, a
       possible increase in interest rates) still need to be addressed."
    -- Ireland - 77 billion euros provided through an asset purchase scheme,
       the National Asset Management Agency (NAMA). "Some investors are
       skeptical about the ability of NAMA to manage the (high volume) of
       assets. Overall, however, the scheme has received positive feedback.
       General opinion is that Ireland will start to recover when the
       government intervention is reduced and there is a return of the credit
       markets."
    -- Germany - 80 billion euros for recapitalizations and 400 billion euros
       for debt guarantees and asset purchase/insurance. "Banks' business
       models are now under long-term scrutiny by the German government and
       the European Commission. Many German investors believe this is what
       the industry needs; they predict that the banking industry will need
       to prepare for further restructuring."
    -- Italy - 10 to 12 billion euros for recapitalizations, plus a tax
       amnesty scheme. "With its low private debt and implementation of
       schemes that do not impact greatly on the public debt, Italy's
       relative economic situation should remain similar to what it was
       before the crisis."
    -- The Netherlands - 20 billion euros for recapitalizations; 200 billion
       euros for debt guarantees and 27.7 billion euros to ING for asset
       purchase/insurance. The European Commission's action forcing ING to
       split its banking and insurance businesses and sell the insurance
       portion reflects a plan to "break down large conglomerates so if
       another crisis occurs, it will be easier to manage. Investors in The
       Netherlands believe the next few years are crucial for witnessing this
       type of action."
    -- France - 10.5 billion euros for recapitalizations and 265 billion
       euros for debt guarantees. "It is clear from the interventions
       employed by the French government that the property industry is not a
       high priority. The government has agreed to support the refinancing of
       banks on the condition that banks lend to the corporate sector to
       ensure the prevention of a financial crisis there, rather than the
       real estate sector. While many agree there is no imminent real estate
       crisis in France, they suggest that there is the possibility of one
       between 2010 and 2014 and their concern is that the government will
       not be prepared."
    -- Spain - 200 billion euros for debt guarantees and 50 billion euros for
       asset purchase/insurance, plus 9 billion euros for a bank
       restructuring scheme. "The feeling shared by developers, investors and
       a majority of the public is that private consumption will support
       long-term economic recovery, not political measures. The fear is that
       extremely high public debt due to government intervention will
       negatively affect private consumption, stunting Spain's economic
       recovery."
    -- Japan - 13 trillion yen for recapitalizations, plus 2 trillion yen for
       commercial paper purchases and assets backed by commercial paper.
       "While funds and new real estate firms have suffered,
       Japanese-established companies with longer investment horizons are
       playing the group card in an attempt to hold on until times get
       better. Japan will muddle its way through the downturn, waiting for
       the U.S. to turn around."

Too Big to Fail (
www.uli.org/~/media/Documents/LearnAboutULI/WhereWeAre/Europe/TooBig%20report.ashx
) was published with support from Shearman & Sterling LLP, a leading
international law firm with over 900 lawyers providing a wide range of legal
services through a network of 20 offices in the world's major financial
centers.

About the Urban Land Institute

The Urban Land Institute (www.uli.org) is a nonprofit education
and research institute supported by its members. Its mission is to provide
leadership in the responsible use of land and in creating and sustaining
thriving communities worldwide. Established in 1936, the Institute has nearly
33,000 members representing all aspects of land use and development
disciplines. The ULI Europe office was opened in 2004 in London and is
committed to bringing timely and informative programs to all segments of the
property community in Europe.

Trisha Riggs, +1-202-624-7086, priggs at uli.org, or Alexandra Notay, +44-20-7487-9571, alexandra.notay at uli.org. NOTE TO EDITORS AND REPORTERS: Interview requests related to the report should be directed to Trish Riggs at +1-202-624-7086, priggs at uli.org; or Alexandra Notay at +44-20-7487-9571.