EFTA01388943

I6 October 2016 REITs US REIT 3016 Earnings Preview ORE fundamental slowing, but still growing Fundamentals in 3Q demonstrated relatively steady vacancy rates with some moderation in rent growth, particularly in the Apartment space, which should come as no surprise. More volatile and generally slowing job growth trends have combined with still elevated supply to drive rent growth at the national level lower by 70bps versus 2Q as landlords collectively pushed occupancy over rate with vacancy falling 10bps q/q. Rents in the Office markets also moderated from last O, but remained healthy at +2.8% nationally, according to data from Reis, while vacancy held steady. In NYC, office net absorption showed a nice pick up from recent quarters according to JLL data, although market rents decelerated in 4 of the 5 major CBD office markets in 3Q, with DC the lone exception. Shopping center trends also demonstrated some moderation with rent growth off by 10bps from 2Q's level and vacancy up 10bps, likely due to Sports Authority related vacancy, though vacancy has been hovering near 10% since early 2015. Malls have found some equilibrium as well with the national vacancy rate at 7.8% in 3 of the past 4 quarters, while rent growth has been in the +2.0-2.2% range for the past year and a half. Healthcare, and more specifically, Sr. Housing trends were positive in 3Q, with rent growth improving by 60bps to +3.8%, while vacancy fell by 10bps q/q. Notably, construction as a percent of inventory fell, albeit modestly in the Q. [Figure 9: Vacancy rates 160% • 4644 160% 40% 30% 14.0% 25%1 120% 3.0% 100% 100% I 2.6% 1 sox 7 8% 2.0% 05% Figure 10: Rent growth I I 20% 20% 26% 21% 34% 01741•00 SP044149 Center 1Mils •Vecontersle Aoanrrimt Ceeue CIICC mmirkel St Hewing • RIM, C4O417% AI 3Q16 Vacancy rate Q/Q Trend 3Q16 Rent Growth y/y Q/Q Trend Apartment 4.4% -10bp Apartment 3.8% -0.7% Shopping Center 10.0% 10bp Shopping Center 2.0% -0.1% Malls 7.8% -10bp Malls 2.0% 0.0% Office 16.0% 0bp Office 2.8% -0.3% Industrial 10.5% 0bp Industrial 2.3% -0.2% Sr Housing 10.2% -10bp Sr Housing 3.8% 0.6% Scar« Detest/. Sn. Sirs NC Page 8 Source Detesclv Sint /loll MC Deutsche Bank Securities Inc. CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0092935 CONFIDENTIAL SDNY_GM_00239119 EFTA01388943