Private real estate prices usually take a year, plus or minus, to catch up to the capital markets reality reflected in REIT market pricing on a real-time basis.

This time appears no different. REIT prices peaked during year-end 2021 as the Federal Reserve signaled it would increase interest rates to bring down inflation, even as private real estate valuation marks continued to trend upward until fourth quarter 2022. We are witnessing the standard one-year delay in private real estate values, indicating on average, these prices will persistently decrease through 2024. The Fed’s job of applying the brakes may be done, but the private real estate pricing mechanism will require another year to reflect the structurally higher rates that persist.

This is an attractive opportunity as such significant declines in private real estate occur once every 10 to 20 years and have historically resulted in subsequent strong return vintages. We believe the current repricing, which we