U.S. Capital Markets Glide Path to Clearer Skies

Investment Implications in the Current Environment

• Much of today’s sell-side investment strategy links directly to one’s perspective on the trajectory of macroeconomic growth and interest rates. • All signs point to interest rates holding higher for longer, which implies CRE comparative yields must also adjust higher . • While most sellers will wait to sell unless prompted with a need (maturity, fund life, distress, etc.), this period still offers an opportunity for sellers to crystallize relatively healthy cumulative returns originating from those buyers able to formulate appropriate capital stacks.

o Although the broad capital markets environment remains muted, buyer demand for quality, cash flowing assets remains quite resilient throughout many segments of CRE.

• Values also have further to fall before rebounding thereafter, so the near/immediate-term may offer compelling exit pricing and new-buyer terms (particularly for sectors like office that will face longer-standing uncertainty).

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