EXECUTIVE SUMMARY

• The nascent signs of a new economic pattern marked by higher interest rates and increased inflation has begun to show. This
“reflation” environment will have direct implication for U.S. property markets and the economy as a whole.

• Commercial property has long been considered to be an asset class that provides some degree of protection from the pernicious
effects of inflation, and historically, in rising interest rate environments, investors have been willing to allow the yield spread to
compress for some period of time.

• Property sector performance is likely to reflect underlying property market fundamentals more than capital market changes as long as
the economic and property market fundamentals do not change significantly.