Market Commentary September 2023

The fund benchmark, the FTSE EPRA/NAREIT Developed Rental Net Total Return Index,
recorded a net total USD return of -7.61% for the month of September. The best
performing listed real estate market was Japan which recorded a total USD return of
-3.56% for the month. Europe (ex UK) recorded the lowest total USD return of -8.98%.
Year to date, the fund benchmark has returned -5.32% in USD, and the best performing
market has been the US (-2.28%), whilst Hong Kong (-26.76%) has been the worst
performing market.

Year to date, the best performing sectors globally in USD were Data Centres (16.4%),
Single Family Housing (9.6%), and Student Housing (2.8%). The worst performing sectors
were Lab Space (-29%), Net Lease (-18%), and Strip Retail (-16.8%).

According to data from FactSet, S&P 500 companies reported a year-over-year earnings
decline of -4.1% in 2Q23, whereas for the Real Estate sub-sector of the S&P 500 the
earnings growth was 10.7%. The current dividend yield for the S&P 500 is c. 1.50%,
compared to c. 4.60% for the global listed real estate market (based on the FTSE EPRA
NAREIT Developed Rental Index weights). Looking forward, the consensus earnings
growth expectation for the listed real estate sector is above 4% for 2023, compared to
projected earnings growth of 1.2% for the S&P 500 according to FactSet.

The estimated forward FAD (Funds Available for Distribution) yield for the sector is 5.74%.
Based on our earnings estimates and market break-even inflation expectations, the real
estate sector screens fairly valued. Within the real estate universe, more attractively priced
opportunities exist in specific real estate sectors and stocks, providing opportunities for
astute active managers.

The fund benchmark, the FTSE EPRA/ NAREIT Developed Rental Net Total Return Index, recorded a net total USD return of -2.96% for the month of December. The best performing listed real estate market was Hong Kong, which recorded a total USD return of 15.14% for the month. The United States recorded the lowest total USD return of -5.10% for the month. Year-to-date (YTD), the fund benchmark has recorded a net total USD return of -26.51%. The best performing listed real estate market has been Hong Kong, with a YTD return of -5.03%, while Europe (ex UK) has the lowest YTD return of -42.06%.

The best performing sectors globally for the month in USD were Diversified (2.72%), Malls (1.62%), Student Housing (1.13%), Net Lease (-0.31%), and Office (-1.39%). The worst performing sectors were Single Family Housing (-8.66%), Hotels (-7.61%), Data Centers (-6.64%), Lab Space (-5.61%), and Health Care (-5.06%). The US November CPI rose less than expected as it registered a year-on-year growth of 7.1% (vs. forecast estimate of 7.3%, 7.7% in October 2022). This print marked the second consecutive month where the US CPI rose less than expected and marked the smallest CPI growth since December 2021. During the month, the US Central Bank officials gathered for their final two-day policy meeting of 2022, where they raised the benchmark interest rate to the highest level in 15 years. The Fed raised the benchmark interest rate by 50bps, taking it to a targeted range of 4.25%-4.5% from near zero in 2021. The December 50bps increase broke the four consecutive string of 75bps hikes that we have seen over the last few months.

The estimated forward FAD (Funds Available for Distribution) yield for the sector is 5.40%. Based on our earnings estimates and market break-even inflation expectations, the real estate sector screens fairly valued. Within the real estate universe, more attractively priced opportunities exist in specific real estate sectors and stocks, providing opportunities for astute active managers.