Real Estate Investment Strategies

Outstanding debt to European CRE European CRE experiencing structural dislocation Non-core exposure ((€bn) 300 250 200 150 100 50 European Bank Exposure to Non-Core Real Estate Gross Net Total Gross: €531bn Total Net: €333bn 0 AMA Deleveraging plan/ Other Internal non-core units Traditional credit sources constrained 100% 75% 50% 25% Capital value (€/sqm) 28000 24000 20000 16000 12000 8000 4000 0 Dislocation between Primary and Secondary Markets (Office sector) H Paris London-City Lack of new supply 110 Milan Frankfurt - Historic High Madrid Barcelona Copenhagen I ± ± Brussels Dublin Lisbon Historic Low Q3 2016 Prague Warsaw Budapest 2006 = 100 105 100 95 90 90 85 0% '04 '05 Banks '06 '07 '08 Bad Banks '09 '10 '11 '12 Non-Banks '13 '14 Bonds CMBS 60 80 '06 '07 '08 '09 Housebuilding '10 '11 '12 Non-residential '13 '14 '15 Total construction As of 30 September 2016. SOURCE: C&W Corporate Finance (top left), CBRE ERIX (top right), DTZ Research (bottom left), FIEC (European Construction Industry Federation) (bottom right). AMA: Asset Management Agencies Refer to Appendix for additional outlook and risk information. PIMCO 14

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