Commercial real estate can potentially address a number of investment objectives:

• Generate cash flow
• Hedge inflation
• Generate capital gains
• Diversify a traditional stock and bond portfolio

Property Types

Typical property types for real estate investment include:

• Office buildings
• Shopping centers
• Industrial buildings
• Apartments
• Specialty: hotels, medical offices, self-storage and farmland, among others

Personal property, such as a principal residence or vacation home, is generally not considered a real estate investment for asset allocation purposes.  Real estate investment trusts (REITs) are stocks backed by property portfolios and are considered part of an equity allocation.

Strategies

There are four main commercial real estate investment strategies: Core, Core Plus, Value Added, and OpportunisticReturn potential—and risk-generally increase from the Core strategy through Opportunistic.

The Case for Real Estate

• Rents provide owners with current income and a potential inflation hedge because lease agreements usually contain increases tied to the Consumer Price Index, an inflation barometer
• Transactions offer the potential to generate long-term capital gains, which are taxed more favorably than income¹
• Commercial property has historically low-to-negative correlation with stocks and bonds²

¹ Neither UBS Financial Services Inc. nor its Financial Advisors provide tax or legal advice. Clients are encouraged to consult with their attorney or tax advisor regarding their personal circumstances.

² Correlation based on monthly index returns from Dec. 1996 - Dec. 2006; Indices used: JP Morgan Government Bond Index Global, MSCI World, HFRI Weighted Composite Index, GPR 250 Global, DJ AIG Commodity Index.

Past performance is not indicative of future results.

There are risks specifically associated with investing in real estate products and real estate investment trusts.  They involve risks associated with debt, illiquidity, adverse changes in general economic or local market conditions, changes in governmental tax, real estate and zoning laws or regulations, and for some real estate products the risks associated with the ability to qualify for favorable treatment under the federal tax laws.