U.S. Capital Markets Glide Path to Clearer Skies

Quantifying one layer of distress: increasing obsolescence …and drilling specifically into office…

Distress Linked Directly to Obsolescence

…Overlayed Against Historic Office Distress

$0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0

10% 12% 14%

Total

330 MSF

Obsolete SF at Risk

0% 2% 4% 6% 8%

Value Prior to Reset (average P/SF since 2014, Bottom Tier)

$130 P/SF

$42 Billion

Total Asset Value Facing Risk of Distress

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

Historic Distressed Office Volume (Billions) Obsolete Distress (Billions) Distress % of Total Volume (RHS)

Average Per Year $6.0B / year

• One approach to quantifying distress is to utilize excess vacancy (330 MSF) and apply average psf value estimates prior to the pricing reset to arrive at estimated total value figures, which can be extended across a distress transaction cycle (last distress cycle unfolded over seven years during/after GFC) – See chart on the right.

• Overlaying the $42 billion estimated annual distressed volume across a seven-year forecast horizon shows that distressed volume will reach and exceed GFC-peak levels. • On a share (%) of total volume basis, obsolescence-related distress is expected to average 7.3%, and trend below the GFC prior peak of 11% recorded in 2009.

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Source: MSCI Real Capital Analytics, Cushman & Wakefield Research