This document summarizes economic projections from the Federal Reserve Board members and Bank presidents from December 2015. It projects modest GDP growth between 2.0-2.5% annually through 2018 and a gradual decline in the unemployment rate to around 4.7-5.0% through the longer run. Inflation is projected to be around 2.0% each year. The median projection shows the federal funds rate rising gradually to around 3.3-3.5% by 2018. Several charts show historical interest rates and inflation remaining low. The summary concludes that there is no guarantee long-term interest rates will rise significantly and that inflation is a more important indicator to watch than the federal funds rate.

1. 1

2. 2Source: Federal Reserve Bank Presidents, Federal Open Market Committee
*The central tendency excludes the three highest and three lowest projections for each variable in each year.
Economic Projections
Of the Federal Reserve Board members and Bank
presidents, December 2015
MEDIAN CENTRAL TENDENCY*
2015 2016 2017 2018
Longer-
Run
2015 2016 2017 2018
Longer-
Run
Change in Real
GDP
2.1 2.4 2.2 2.0 2.0 2.0 2.3-2.5 2.0-2.3 1.8-2.2 1.8-2.2
Un-employment
Rate
5.0 4.7 4.7 4.7 4.9 5.0 4.6-4.8 4.6-4.8 4.6-5.0 4.8-5.0
PCE inflation
0.4 1.6 1.9 2.0 2.0 0.4 1.2-1.7 1.8-2.0 1.9-2.0 2.0
Core PCE
inflation
1.3 1.6 1.9 2.0 1.3 1.5-1.7 1.7-2.0 1.9-2.0
Memo: Projected appropriate policy path
Federal funds
rate
0.4 1.4 2.4 3.3 3.5 0.4 0.9-1.4 1.9-3.0 2.9-3.5 3.3-3.5
September
projection
0.4 1.4 2.6 3.4 3.5 0.1-0.6 1.1-2.1 2.1-3.4 3.0-3.6 3.3-3.8

3. 3Source: Federal Reserve
0
1
2
3
4
5
6
7
Dec2000
Aug2002
Apr2004
Dec2005
Aug2007
Apr2009
Dec2010
Aug2012
Apr2014
Dec2015
Federal Funds Rate, % 10-Year Treasury Yield, %
Worth remembering, the Fed does not control long-term rates

4. Source: Federal Reserve
0
2
4
6
8
10
12
14
16
Dec1981
Oct1984
Aug1987
Jun1990
Apr1993
Feb1996
Dec1998
Oct2001
Aug2004
Jun2007
Apr2010
Feb2013
Dec2015
10 Yr. Treasury Yield, %
4
And let’s not forget, people who have been predicting long-term rates
would rise have generally been wrong for the past 30+ years!

5. 0.5
1
1.5
2
2.5
3
3.5
Jun2006
Aug2007
Oct2008
Dec2009
Feb2011
Apr2012
Jun2013
Aug2014
Oct2015
Core CPI Core PCE
Source: U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis
Fed’s 2% Target
5
There has been very little inflation year-over-year.

6. 1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Expected Inflation
Source: Federal Reserve Bank of Cleveland
The market expects inflation to be
less than 2% for the next 10 years!
The market expects inflation to be
less than 2% for the next 10 years!
6
And little change is expected the next 10 years

7. Global 10-year government bond rates remain historically low,
placing little upward pressure on U.S. bond yields
0.31%
0.47%
0.78%
1.00%
1.41%
1.49%
1.75%
2.22% 2.26%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Japan Germany France Ireland Italy Spain U.K. U.S. Portugal
Source: Bloomberg 7

8. 1.30%
2.22%
3.80% 3.82%
5.34%
5.82%
6.64%
7.04%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Global 10-
Year Gov't
Bond Yields
U.S. Treasury
Bond Yield
Global Prime
Cap Rates
U.S.
Corporate
Bond (7-year,
Baa)
U.S. Office
CBD
U.S.
Apartment
Highrise
U.S. Industrial U.S. Office
Suburban
8
Global Bond Yields: Average of Germany, Japan, France, U.K., Spain, Italy, Hong Kong
Global cap rates: Average of Beijing, Frankfurt, Paris, London, Tokyo, Hong Kong
(Global values thru September 2015; U.S. values thru November 2015)
Source: Federal Reserve Board, Real Capital Analytics, Cushman & Wakefield Research
154 bps
U.S. Real Estate
And U.S. Cap rates could go lower

9. 9
What does rising rates mean
for CRE values?
9

10. 10Source: Federal Reserve, Moody’s Analytics/Real Capital Analytics
0
1
2
3
4
5
6
90
100
110
120
130
140
150
160
170
180
190
Aug2001
May2003
Feb2005
Nov2006
Aug2008
May2010
Moody's/RCA Commercial Property Price Index Federal Funds Rate, %
Federal funds rate starts
rising in July 2004
CRE values rise by 50%
over next 3 years
History shows that the last time the Fed raised rates,
CRE values increased by 50%

11. Growth Rate from 2004-2007
MARKET GROWTH RATE MARKET GROWTH RATE
New York 142% Baltimore 37%
Long Island 120% Kansas City 37%
Denver 82% Dallas 26%
Charlotte 73% Sacramento 25%
DC – VA 69% Cincinnati 24%
Los Angeles 61% Atlanta 21%
Phoenix 57% Minneapolis 20%
Orange County 54% St. Louis 19%
San Francisco 53% Boston 18%
East-Bay 53% Chicago 14%
San Diego 50% Houston 10%
Raleigh/Durham 46% Nashville 7%
San Jose 42% DC – MD 4%
Columbus 41% Indianapolis 1%
DC 37%
U.S. Average = 51% 11
Office values soared the last time the Fed raised rates
Source: Real Capital Analytics

12. MARKET GROWTH RATE MARKET GROWTH RATE
Kansas City 154% San Jose 29%
Columbus 116% St. Louis 25%
Phoenix 111% Denver 24%
Sacramento 90% Indianapolis 23%
Charlotte 62% Nashville 21%
Inland Empire 32% Northern NJ 20%
East Bay 61% Baltimore 12%
Raleigh/Durham 59% San Francisco 11%
Cincinnati 55% DC 11%
Minneapolis 40% DC – VA 2%
Chicago 32% DC – MD 0%
U.S. Average = 38%
12
Growth Rate from 2004-2007
Industrial values also soared the last time the Fed raised rates
Source: Real Capital Analytics

13. 74%
76%
78%
80%
82%
84%
86%
88%
90%
92%
94%
0
1
2
3
4
5
6
7
8
9
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Federal Funds Rate, % U.S. Office Occupancy
Source: Federal Reserve, Cushman & Wakefield Research
When rates rise, so does occupancy…

14. 0%
2%
4%
6%
8%
10%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
1986
1990
1994
1998
2002
2006
2010
2014
NCREIF - All Property Types 10-Year Yield Treasury Yield
Correlation = -0.18 (weak)
Source: NCREIF, Federal Reserve 14
There’s virtually no relationship between rising interest rates and
CRE returns
Yr/Yr % Change in the 10-Year Treasury rate vs Unlevered NCREIF Returns

15. -4%
-2%
0%
2%
4%
6%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
1986
1990
1994
1998
2002
2006
2010
2014
NCREIF - All Property Types GDP
Yr/Yr % Change in Real GDP vs Unlevered NCREIF Returns
Correlation = 0.66 (solid)
Source: NCREIF, U.S. Bureau of Economic Analysis 15
Economic growth matters more

16. 0
1
2
3
4
5
6
2007Q1
2008Q3
2010Q1
2011Q3
2013Q1
2014Q3
2016Q1
2017Q3
2019Q1
Federal Funds Rate, % 10-Year Treasury Yield, %
Forecast 2014 2015 2016 2017 2018
Oxford 2.5 2.2 2.6 3.1 3.5
Moody’s 2.5 2.2 3.1 4.1 4.2
NABE 2.5 2.5 3.1 * *
C&W 2.5 2.1 2.6 2.9 3.5
Avg. 2.5 2.3 2.9 3.4 3.7
10-YR RATE BELOW 3% THRU 2016
10-YR RATE FORECAST COMPARISON
Source: Federal Reserve, Oxford Economics, Moody’s Analytics, NABE, Cushman & Wakefield Research 16
U.S. Interest Rate Forecast

17. 17
Tighter monetary policy does typically signal steps towards
the next recession

18. 18
ECB launched QE in March 2015, bond-
buying $66B per month; also dropped short-
term rates to effectively 0%
EUROZONE
Then again, global monetary policy still simulative
BOJ launched new QE in October of 2014,
swelling monetary base by $650 billion
per year
JAPAN
PBOC cut interest rates from 4.85% to 4.6%
in August 2015– has continued to inject
yuan into the economy via liquidity facilities
and decreased the required reserve ratio
(RRR) at banks. PBOC is currently
considering an additional 1.2-1.5 trillion
yuan stimulus.
CHINA
Cut interest rates in May to record low of 2%
AUSTRALIA
Central bank reduced its main rate by half a
percentage point in October 2015 - citing
economy is “far from robust”
INDIA

19. No guarantee long-term interest rates are going to rise. Inflation is the key metric to watch, not the Fed Funds Rate
If they do rise, that typically means CRE values will also rise (in general) as stronger economic growth drives NOI higher
The bottom line on interest rates & CRE values
If they do rise, value-add is the hot play as it has more upside from improving leasing fundamentals
If they do rise, core assets with long-term leases in place are the most exposed, but then again, no shortage of demand
for these assets

20. 20