Mid-Year 2023 Investor Survey

Investors Concerned with a Recession Impacting CRE

Rising Rates Impacting Real Estate Valuations is still the #1 Concern

61% OF INVESTORS ARE SOMEWHAT CONCERNED THAT A RECESSION WILL ULTIMATELY AFFECT THE CRE MARKET.

Concern with Liquidity available to finance new deals

Concerned

DESPITE THIS, INVESTORS ARE INCREASINGLY LOOKING FOR CASH FLOW OPPORTUNITIES.

Sectors investors see thriving during this time

Very Concerned There won’t be a Recession Somewhat Concerned Not Concerned Unsure

■ H1 2023 ■ H2 2023 0% 10% 20% 30% 40% 50% 60% 70%

■ H1 2023 ■ H2 2023 0% 10% 20% 30% 40% 50% Impact on Real Estate Valuations Having Less Buying Power None Maximizing Cash Flow Opportunities Availability of Financing

11.9% Unsure 1.4%

31.9%

Somewhat

54.8% Not Concerned

Very Concerned

Multifamily 38.6% Net Lease 12.6% Industrial 30.7% Hospitality 4.7% Self-Storage 13.4% MATTHEW S™

H2 23 Market Forecasts In response to rising rates

Real estate capital commitments remain unchanged

Investment approaches on par with H1 23 Predictions

In Q2 23, most investors experienced deals being priced down proportionate to Q4 22 experiences.

IN H2 2023, 63% OF INVESTORS ARE EITHER HOLDING ONTO ASSETS/ WAITING ON THE SIDELINES, A 25% INCREASE FROM INVESTMENT APPROACHES AT THE BEGINNING OF THE YEAR.

Is Commercial REal Estate reaching the end of the storm?

Expectations for CRE sales/leasing activity will worsen or remain the same. This is a dramatic change from the beginning of the year when 65% of investors said sales would worsen and 51% said leasing would worsen.

Remain Unchanged 45.5% Frozen 12.7% Increase 15.7% Reduced 26.1%

0% 10% 20% 30% 40% 50%

■ H1 2023 ■ H2 2023 0% 10% 20% 30% 40% 50% 60% 70% Holding Onto Assets - Fix Capitalization Liquidating Capital/Selling Properties Expanding Portfolio

Priced Down 58.2% No 28.4% Priced Up 13.4%

IN H2

Worsen

IN H2 OF 2023, CRE SALES ACTIVITY WILL... Unsure 13.4% Remain The Same 31.9% Improve 16.3% Worsen 38.5% Unsure 12.7% Remain The Same 40.3% MATTHEW S™

OF 2023, CRE LEASING ACTIVITY WILL... Improve 10.4%

36.6%

How have rising interest rates affected your investment strategy?

#1 Increased caution, thorough analysis, and risk assessment

#2 Delayed certain investment plans, seeking favorable financing terms

#3 No significant impact

#4 Diversified portfolio to explore alternative markets or asset classes

What regions are you currently targeting?

What challenges have you faced in commercial real estate in h1 2023?

32.7% Uncertainty in market dynamics and fluctuations in property values

29.1% Limited inventory and increased competition for desirable properties

27.3% Difficulty in securing financing terms due to changing market conditions

7.3% Challenges in finding suitable tenants or maintaining high occupancy rates

3.6% Rising construction costs impacting project feasibility

SOUTHWEST 21.8% WEST 21% NORTHEAST 9% MIDWEST 16.5% SOUTHEAST 31.6%

MATTHEW S™

Top concerns for H2 2023

Availability & cost of capital

Interest rate increases

Recession

Tenant instability – defaults on rents & decrease in lease renewals

Inflation increasing

Top Predictions for H2 2023

Debt markets worsen

Property value decreases

Transaction volume decreases

CRE fundamentals will decline

Top Trends for H2 2023

Rise of Remote Work & its impact on office space requirements

Increased investment in industrial & logistics properties

Shift towards experiential retail & mixed-use developments

Accelerated adoption of technology & digital solutions

Growing emphasis on sustainable & environmentally friendly buildings

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