| Slide Number 1 | 1 |
| Questions Today | 2 |
| C&W’s Baseline Glide Path | 3 |
| Glide Path to Clearer Skies:Key Takeaways | 4 |
| Market positives to keep in mind | 5 |
| Slide Number 6 | 6 |
| Slide Number 7 | 7 |
| Inflation must cool to allow the Fed to pause & pivot | 8 |
| Key measures of inflation are still running too hot | 9 |
| Wage growth must cool to bring inflation down | 10 |
| We probably need a recession to cool wage growth | 11 |
| Odds are high a recession is imminent | 12 |
| And this is what it will look like | 13 |
| This is when it will be over | 14 |
| In case you didn’t get the memo… | 15 |
| Glide path to inflation approaching Fed target | 16 |
| Allowing the Fed to pivot in Q1 2024 | 17 |
| Historically, buy property when Fed starts cutting | 18 |
| Slide Number 19 | 19 |
| Banks are an important lender for CRE | 20 |
| SVB wasn’t the only bank with explosive deposit growth | 21 |
| Many banks loaded up on treasuries and MBS | 22 |
| All banks are on a mission to shore up their balance sheets | 23 |
| Taking a step back…. | 24 |
| Slide Number 25 | 25 |
| CRE exposure is manageable for most banks | 26 |
| Small & community banks have more exposure | 27 |
| Lenders were more disciplined this go around | 28 |
| And better supply fundamentals | 29 |
| Slide Number 30 | 30 |
| Debt markets down but still functioning | 31 |
| CMBS issuance volume also constrained | 32 |
| Conduit spreads still very volatile and elevated | 33 |
| It’s time for debt, distressed & opportunistic capital to step In | 34 |
| Slide Number 35 | 35 |
| Even if you can get a loan, terms are increasingly onerous | 36 |
| Key lending thresholds pressured amid rising rates | 37 |
| Smaller deals more likely to make it to finish line | 38 |
| Higher end office product will still attract debt | 39 |
| Slide Number 40 | 40 |
| Triggers to stress & distress = confluence of factors | 41 |
| Cross-sector loan maturities vary by magnitude | 42 |
| Loan maturities a particular challenge for office | 43 |
| Quantifying one layer of distress: increasing obsolescence | 44 |
| Stress & DistressKey Points | 45 |
| Slide Number 46 | 46 |
| Must pass other macroeconomic milestones first | 47 |
| Impact of tighter lending standards on CRE investment | 48 |
| Slide Number 49 | 49 |
| A lot more than this… | 50 |
| REITs signaling a 20-50% price correction still on the horizon for private CRE market | 51 |
| It’s all about the 10-Year (Treasury) | 52 |
| If 10-Year goes to 3.5%, Baa goes to 5.0% | 53 |
| Which means cap rates go to 6.0% - 7.5% | 54 |
| Anything not trophy faces even greater pressure | 55 |
| Anything not trophy faces even greater pressure | 56 |
| Slide Number 57 | 57 |
| Slide Number 58 | 58 |
| Sell-side: crystallizing strong returns & the go/no-go decision | 59 |
| CRE stacks up well against other assets | 60 |
| Buy-side: strong vintage years follow periods of dislocation | 61 |
| Buy-side: income resilience remains key to next chapter | 62 |
| Buy-side: an income-focused era is upon us…. | 63 |
| Strategic Recommendations | 64 |
| Slide Number 65 | 65 |
| Slide Number 66 | 66 |