Chart 82: How do you view fundamentals for multifamily lending in 2017? 70% 60% 60% 50% 40% 30% 23% 20% 9 10% — 0% |] - vm 0% Softening Softening Softening | Someconcern, but No concern fundamentals fundamentals fundamentals only in certain should leadto § shouldleadto = shouldleadto _—srregions and at slower financing worsening credit slower financing certain rental price activity next year metrics activing and points worsening credit metrics Source: BofA Merrill Lynch Global Research = Future demand in multifamily promising: Looking forward, the panelists see healthy demand for multifamily housing given a preference among millennials to live in urban areas versus the suburbs. Moreover, the panelists noted that increasing debt burden tied to student loans is likely to make home ownership out of reach for several first time home buyers. Furthermore, it was noted that the US needs 1.5mn new housing units each year and the present level of construction activity was not keeping pace with this when looking at it on a national level. = Foreign capital part of the equation: Some of the panelists are seeing a significant flow of foreign capital into the multifamily market with Mr. Brickman surmising that data around inflow of foreign capital into the commercial real estate market was likely understated given that significant amount of inflows have come indirectly through investment vehicles like private equity. = Risk retention rules modest impact: Our multifamily panelists viewed the risk retention rule for CMBS as having a modest impact given the large role played by the GSEs in lending to the multifamily space. It was also noted that while the rule may dampen private securitization activity, less competition from the CMBS markets would be a positive for balance sheet lenders. = Impact from rising rates may not be all news: While the panel acknowledged that the rise in interest rates will likely push cap rates higher, an increase driven by a more favorable growth outlook