REAL ESTATE

While it’s too early to tell what the long-term impacts from COVID-19 are to the office sector, tenant preferences are shifting over the short term to include work-from-home flexibility, increased social distancing and new safety protocols. The remote-work phenomenon does not signal that the end of office work is on the horizon.

The office sector is supported by limited new supply (in most markets) and the fact that most people do not want to work from home full time (see the survey results to the right). In fact, many employers who previously transitioned to fully remote work earlier in the last decade have brought employees back to the office in recent years, after realizing that in-person collaboration is key to business culture and innovation. As such, remote work is likely to be complementary to the office, with more people having the option to work from home part of the time.

Over the last few decades we have seen significant compression in the amount of office space per employee. This trend of office densification is likely to reverse in the near term, as tenants space out their workforces, reconfigure floor plans and optimize people

flow. Tenants may require that office owners enhance air filtration and HVAC systems, and expand the number of restrooms and cleaning protocols. It is possible that the additional square footage per employee will offset any reduction in office demand due to more employees working from home. – Manish Desai, Oaktree

Shifting Spaces: Real Estate Sectors Amid COVID-19

COVID-19 has significantly shifted how we use real estate, with potential short- and long-term implications for many sectors of the asset class and for investors. Two leading real estate experts—Manish Desai, Managing Director for Oaktree's Real Estate Team, and Bernhard Krieg, Managing Director for Brookfield's Global Listed Real Estate Team—recently shared their similar, yet distinct views on these evolving real estate trends. Here are key takeaways from their discussion.

A N O F F I C E S E C T O R A P O C A LY P S E I S U N L I K E LY

As of May 2020. Source: Gensler U.S. Work From Home Survey 2020. The survey was conducted online through an anonymous, panel-based survey of over 2,300 U.S.-based workers who were full-time employees of a company of 100+ people. Each respondent routinely worked within an office environment prior to COVID-19 and was currently working from home at the time when the survey was released between April 16 and May 4, 2020. Responses were evenly distributed across 10 industries and represent a wide range of seniority levels, roles, ages and geographies.

ONLY 12% OF U.S. WORKERS WANT TO WORK FROM HOME FULL TIME, ACCORDING TO A RECENT SURVEY.Do you prefer to go back to the office or continue to work remotely?

NO DAYS AT HOME44%

1 OR 2 DAYS AT HOME26%

3 OR 4 DAYS AT HOME18%

5 DAYS AT HOME12%

70% OF PEOPLE WANT TO WORK IN THE OFFICE THE MAJORITY OF THEIR WEEK

30% OF PEOPLE WANT A FLEXIBLE WORK ARRANGEMENT

1

Increased adoption of e-commerce—including the increased adoption of online grocery shopping during the pandemic—has fueled significant demand for industrial properties, particularly for large, newer, state-of-the-art spaces. Strong fundamentals support such modern industrial assets, where a significant portion of the leasing has been in recent years.

However, only 14% of U.S. industrial inventory was built in the past 10 years, and most buildings are too small to fit the needs of those industrial tenants that are growing their footprint today. As a result, it is important to differentiate between industrial properties: particularly between those obsolete, older buildings that house small to medium-size enterprise businesses that are tied to economic cycles, and those buildings found in attractive infill locations in mostly built-out markets that currently meet the needs of, or at least have the potential to meet the needs of, distribution tenants through value-add initiatives. – Manish Desai, Oaktree

In addition to pulling forward demand for industrial spaces, the pandemic has also slowed the construction of new industrial supply. And there may be a medium- to long-term increase in demand for smaller, older warehouses in markets where supply is shrinking or constrained. – Bernhard Krieg, Brookfield

Demand for data centers has grown exponentially in recent years, driven by increased usage of the Internet and cloud computing (see the chart to the right). COVID-19 has only accelerated this trend, as corporations reconfigure information-technology infrastructure to facilitate remote working. Public data-center companies posted record leasing figures in the first quarter of 2020.

Continuous supply added to the marketplace has been able to meet the demand; however, it is likely that some supply-demand imbalances will eventually occur over the longer term. At the same time, not all data-center markets are created equal. Certain core markets have good pricing power and rent growth, while others have seen significant supply added and might have issues with long-term rent growth. – Manish Desai, Oaktree

E - C O M M E R C E I S F U E L I N G D E M A N D F O R I N D U S T R I A L P R O P E R T I E S

D E M A N D F O R D ATA C E N T E R S R E M A I N S S T R O N G , B U T N E W S U P P LY K E E P S C O M I N G

Long-term, industrial is a good sector, but just like any other property type, the right type of building and price matter. – Manish Desai

We think that the supply outlook also looks better over the next 18 months. We’re more positive today than we were pre-COVID-19. – Bernhard Krieg

MOST INDUSTRIAL PROPERTIES ARE OLDER, AND AGE, SIZE AND LOCATION MATTER Industrial inventory by age

INTERNET AND CLOUD USAGE CONTINUES TO GROW Global Internet Traffic

As of March 31, 2020. Source: CoStar.

As of June 30, 2020. Source: Cisco. Data are indexed to 1 in 2007. 2021 figure is a projection of possible future Internet traffic and is based on currently available public information. The projections are hypothetical in nature, do not reflect actual trading or corporate operating results, and are not guarantees of future results. Please see Disclosures for additional information.

86%BUILT PRIOR TO 2010

14%BUILT 2010-2020

0X

10X

20X

30X

40X

50X

2021E201620112007

43x

15x

5x1x

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 2

R E TA I L L A N D L O R D S A R E A D A P T I N G T O E - C O M M E R C E B Y R E I M A G I N I N G T H E M A L LCOVID-19 has accelerated retail-sector trends that were already in place pre-pandemic, including the transition from in-store to online shopping and the challenges facing department stores. For retail landlords, this has increased the urgency of investing in properties and repurposing them to feature a wider variety of uses, such as apartments, hotels and fitness centers.

The landlords who are best positioned in this environment have the capital and operational expertise to move forward with repurposing plans on an accelerated timeline. These companies are methodically deploying capital toward their best assets, those located in areas where population densities and household incomes will support redeveloped spaces. – Bernhard Krieg, Brookfield

REDEVELOPMENT SPOTLIGHT: NORTHGATE MALL (SEATTLE, WASHINGTON) ● The first regional shopping center in the U.S.● Acquired by Simon Property Group in 1987● Undergoing a redevelopment into a mixed- use center that includes:● An NHL Seattle corporate complex● Three skating rinks● 80,000 square feet of Class A office space● 1,200 luxury multifamily residences ● Hotels and green spaces

Migration to Sun Belt markets from gateway markets has been on the rise for several years due to the high-growth area's lower costs, attractive quality of life, better weather, lower taxes and more business-friendly environments. The COVID-19 crisis has heightened the attractiveness of the Sun Belt for corporations and people alike. We expect the migration trend will persist and believe it may accelerate. – Bernhard Krieg, Brookfield

Sun Belt markets such as Phoenix, Dallas, Orlando, Tampa, Atlanta and Charlotte, N.C., have undergone a noticeable “growth spurt,” with significant population growth and increasing numbers of corporations expanding or relocating to these areas (see the chart to the right). This contributes to the Sun Belt markets’ attractive fundamental backdrop—better rent growth combined with less new supply planned or under construction.

Sun Belt markets are poised to be beneficiaries of the urban-to-suburban trend accelerated by COVID-19. In addition, multifamily properties in Sun Belt markets are likely to benefit from continued favorable demographic trends, with relatively stronger demand and rent growth. In contrast, multifamily properties in urban markets are likely to experience varying degrees of near-term challenges and softness, with landlords giving significant concessions and renters having the advantage for a while. – Manish Desai, Oaktree

S T R O N G M I G R AT I O N T O S U N B E LT M A R K E T S C R E AT E S O P P O R T U N I T I E S

PEOPLE MOVING PER DAY

+150SEATTLE

+47SALT LAKE

CITY+132

LASVEGAS

+108DENVER

+264PHOENIX+142

INLANDEMPIRE

-20LOS

ANGELES

+361DALLAS

+251HOUSTON

+145AUSTIN

+135MIAMI

+137WASHINGTON,

D.C.

-60CHICAGO

-53NEW YORK

+207ATLANTA

+165ORLANDO

+141TAMPA

+122CHARLOTTE

Oaktree identified this trend early and has been active in Sun Belt markets, buying and owning real estate with local operating partners on a joint venture basis. – Manish Desai

LOWER COSTS AND BETTER QUALITY OF LIFE DRIVING MIGRATION TO THE SUN BELT Metro areas daily net population gain/loss

As of April 2019. Source: U.S. Census Bureau Estimates of Resident Population Change and Rankings: July 1, 2017 to July 1, 2018. Released April 2019. Reflects Oaktree's views based on current data and trends. There can be no assurance that current trends will continue.

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 3

H O T E L F U N D A M E N TA L S W I L L L I K E LY I M P R O V E , B U T I T W I L L TA K E T I M EHotels have been hit hard by the COVID-19 crisis, experiencing a significant demand decline. The timing of a sector recovery depends on the extent to which corporate travel and air capacity return to normal levels. Yet not all hotels are affected equally. Urban-center hotels and those reliant on convention and significant-group business are likely to be slower to recover to previous levels. Overall, we expect there is going to be a lot of opportunity in the hotel space on the private side. – Manish Desai, Oaktree

In the immediate aftermath of the Sept. 11, 2001 terrorist attacks in New York, hotel revenue per available room (RevPAR) saw a significant drop as people avoided flying. The chart above shows how quickly it bounced back as new safety procedures were put in place and people returned to their old behaviors. This offers a useful historical comparison

for how the sector’s recovery could play out this time around. Once there is a resolution to calm current virus fears—for instance, by way of a vaccine or effective treatment options—people are likely to return to leisure and business travel. – Bernhard Krieg, Brookfield

We think there’s a tremendous opportunity to buy well-located assets in good markets that should see demand come back. ... Depending on the risk and income profile, we’re actively evaluating both debt and equity investments in hospitality names. – Manish Desai

HISTORIAL TRENDS HIGHLIGHT HOTELS' POTENTIAL RECOVERY One-month RevPAR vs. Trailing 12-Month RevPAR

-85

-75

-65

-55

-45

-35

-25

-15

-5

5

15

YTD2020

Dec2019

Dec2018

Dec2017

Dec2016

Dec2015

Dec2014

Dec2013

Dec2012

Dec2011

Dec2010

Dec2009

Dec2008

Dec2007

Dec2006

Dec2005

Dec2004

Dec2003

Dec2002

Dec2001

Dec2000

Dec1999

Perc

enta

ge

9/11 and aftermath (September 2001 – August 2002)

Iraq invasion (March 2003 – April 2003) SARS outbreak (March 2003 – June 2003)

RevPAR print from June 27, 2020: -60.1% YoY

COVID-19 outbreak (February 2020 – Present)

Zika outbreak (February 2016 – December 2016)

Lehman bankruptcy(September 2008 – March 2009)

H1N1 outbreak (April 2009 – November 2009)

ONE-MONTH REVPAR VS. TRAILING 12-MONTH REVPAR1-Month 12-Month Recessions

As of June 27, 2020. Source: STR, Evercore ISI Research, Barclays Capital Research. Recessions are shaded gray. RevPAR stands for hotel revenue per available room. Past performance does not indicate future results.

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 4

D E M A N D F O R A S S I S T E D L I V I N G F A C I L I T I E S A N D S E N I O R H O U S I N G R E M A I N S S T R O N G A S F A M I L I E S S E E K C A R E F O R A G I N G L O V E D O N E SCOVID-19 has created numerous near-term headwinds for assisted living facilities and senior housing. New policies and procedures related to protecting workers and employees from the virus have led to rising expenses and new operational challenges. Occupancy, meanwhile, has fallen due to low move-in activity.

Longer-term, however, there are several tailwinds supporting this sector. These include an aging population (see the chart to the right), increased life expectancy and the increasing need for specialized care, such as memory care for people with dementia. – Bernhard Krieg, Brookfield

The public markets have reacted very swiftly to declines in occupancy and short-term profitability, creating a great opportunity for investment going forward. – Bernhard Krieg

On a global basis, there are interesting publicly listed real estate opportunities outside of the U.S., especially in Asia. These countries have been much more successful in containing their pandemic outbreaks, yet real estate equities in those markets have sold off in similar magnitudes as U.S. peers.

A G L O B A L A P P R O A C H T O L I S T E D R E A L E S TAT E I S W O R T H C O N S I D E R I N G

10M

12M

14M

16M

18M

20M

20302028202620242022202020182016

49% INCREASE

The Hong Kong market entered the current crisis at already-discounted levels due to the U.S.-China trade war and local protests, and has continued to weaken, offering a very attractive deep-discount opportunity. Singapore offers a similar opportunity. – Bernhard Krieg, Brookfield

FORECASTED 80+ POPULATION

As of July 14, 2020. Source: Brookfield Research, U.S. Census Bureau. Forecasts are based on currently available public information. The projections are hypothetical in nature, do not reflect actual trading or corporate operating results, and are not guarantees of future results. Please see Disclosures for additional information.

A GLOBAL APPROACH CAN HELP DIVERSIFY PORTFOLIO RISKS RELATED TO COVID-19COVID-19 Cases By Country (7-Day Average of New Cases Per 100,000 People)

0

5

10

15

20

Jul 4,2020

Jun2020

May2020

Apr2020

Mar2020

UNITED STATES

HONG KONGJAPAN

GERMANY SINGAPOREUNITED KINGDOMFRANCEAUSTRALIA

As of June 30, 2020. COVID case count data from The New York Times, European Centre for Disease Prevention and Control, Public Health Agency of Canada and The World Bank.

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 5

T H E R E A R E O P P O R T U N I T I E S T O W AT C H F O R I N R E A L E S TAT E D E B TOpportunities in real estate debt were the most profound during the early days of the U.S. pandemic in March and April. Market uncertainty, lack of liquidity, and forced selling caused significant volatility and spread widening in real estate debt securities, as evident in the chart below. Once the Federal Reserve stepped in to support high-yield debt markets, the deepest fears of investors were quelled, and prices generally retraced close to pre-crisis levels. The swaths of deeply discounted prices of real estate traded securities that were seen in March have largely receded. Yet real estate debt fundamentals are challenged, creating potential opportunities for investors, particularly in the hospitality sector.

While commercial mortgage-backed securities (CMBS) loan delinquencies spiked in April and May, the biggest risk to the debt market lies with corporate debt. Real estate debt outstanding has remained modest compared with that of prior peaks, yet the amount of corporate debt outstanding today is at historically high levels. Lower-rated global corporate debt has ballooned, as companies with significant leverage have been able to issue new debt.

The impacts vary across real estate asset types, with higher default rates in the hospitality and retail sectors. As a result, there will be opportunities to buy the attractively priced debt at a discount to the underlying asset value in good locations. In addition, private real estate should also offer attractive buying opportunities as the economic picture and the extent of consumer behavior shifts become clearer. – Manish Desai, Oaktree

While we may need to be patient, there’s still opportunity on the debt side; income-oriented private real estate opportunities in the U.S. are also likely to be attractive, given historically low interest rates. – Manish Desai

HIGH YIELDS IN THE MARKET FOR REAL ESTATE DEBT SECURITIES

Mar2015

Sep2015

Mar2016

Sep2016

Mar2017

Sep2017

Mar2018

Sep2018

Mar2019

Sep2019

Mar2020

Basis

Poi

nts

Recently, BBB CMBS experiencedspread widening at levels similar

to high-yield corporates

BBB CMBS spreads typically widen less relative to high-yield corporates

High Yield BBB CMBS

0

200

400

600

800

1,000

1,200

As of March 30, 2020. Source: Bloomberg Barclays, BAML ICE. Reflects Oaktree’s views based on current data and trends in the commercial mortgage-backed securities (CMBS) markets. There can be no assurance that current trends will continue.

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 6

N A V I G AT I N G R E A L E S TAT E M A R K E T S T O D AY R E Q U I R E S E X P E R T I S E I N U N L O C K I N G V A L U E We believe now is an opportune time to consider allocating to real estate assets—both public and private. Exposure to real estate assets can help provide portfolios with diversification benefits, insulation from inflation and a stable income stream. And as the COVID-19 pandemic continues to exert a tremendous amount of immediate and near-term stress on economies around the world, we believe certain real estate sectors and regions have been oversold, creating long-term value opportunities in these income-producing assets.

While nobody knows exactly how the recovery will develop and what the ultimate ramifications will be for the various real estate sectors, Brookfield and Oaktree are well-positioned to not only weather the uncertainty but also capitalize on it. Both teams have a long history of thriving during crises like today’s, seeing them as moments to profit on temporary market inefficiencies and dislocations, utilizing active management, as well as leveraging local market expertise and relationships, to uncover the right opportunities.

Brookfield’s Global Listed Real Estate team seeks to identify mispriced investments within a broad universe of real estate securities across global and U.S. geographies, providing investors exposure to a large and diversified universe of high-quality real estate assets. Oaktree’s Real Estate Team seeks to invest opportunistically across a diverse range of investments in nearly all areas of real estate, strategically deploying capital in what it believes are the best risk-adjusted real estate opportunities in both equity and debt investments.

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 7

I M P O R T A N T D I S C L O S U R E SBrookfield Public Securities Group LLC (“PSG” or “the Firm”) is an SEC registered investment adviser and is registered as a portfolio manager in each of the provinces and territories of Canada and represents the Public Securities Group of Brookfield Asset Management Inc., providing global listed real assets strategies including real estate equities, infrastructure equities, multi-strategy real asset solutions and real asset debt. PSG manages separate accounts, registered funds and opportunistic strategies for institutional and individual clients, including financial institutions, public and private pension plans, insurance companies, endowments and foundations, sovereign wealth funds and high net worth investors. PSG is an indirect, wholly owned subsidiary of Brookfield Asset Management Inc., a leading global alternative asset manager.The information in this presentation is not and is not intended as investment advice, an indication of trading intent or holdings, or prediction of investment performance. Views and information expressed herein are subject to change at any time. Brookfield disclaims any responsibility to update such views and/or information. This information is deemed to be from reliable sources; however, Brookfield does not warrant its completeness or accuracy. This publication is not intended to and does not constitute an offer or solicitation to sell or a solicitation of an offer to buy any security, product or service (nor shall any security, product or service be offered or sold) in any jurisdiction in which Brookfield is not licensed to conduct business and/or an offer, solicitation, purchase or sale would be unavailable or unlawful.Opinions expressed herein are current opinions of Brookfield Public Securities LLC and Oaktree Capital Management and are subject to change without notice. Brookfield Public Securities Group LLC, including its subsidiaries and affiliates, assumes no responsibility to update such information or to notify clients of any changes. Any outlooks, forecasts or portfolio weightings presented herein are as of the date appearing on this material only and are also subject to change without notice. This document and the information contained herein are for educational and informational purposes only and do not constitute, and should not be construed as, an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. Responses to any inquiry that may involve the rendering of personalized investment advice or effecting or attempting to effect transactions in securities will not be made absent compliance with applicable laws or regulations (including broker dealer, investment adviser or applicable agent or representative registration requirements), or applicable exemptions or exclusions therefrom. This document, including the information contained herein may not be copied, reproduced, republished, posted, transmitted, distributed, disseminated or disclosed, in whole or in part, to any other person in any way without the prior written consent of Oaktree Capital Management, L.P. (together with its affiliates, "Oaktree"). By accepting this document, you agree that you will comply with these restrictions and acknowledge that your compliance is a material inducement to Oaktree providing this document to you. This document contains information and views as of the date indicated and such information and views are subject to change without notice. Oaktree has no duty or obligation to update the information contained herein. Further, Oaktree makes no representation, and it should not be assumed, that past investment performance is an indication of future results. Moreover, wherever there is the potential for profit there is also the possibility of loss. Certain information contained herein concerning economic trends and performance is based on or derived from information provided by independent third-party sources. Oaktree believes that such information is accurate and that the sources from which it has been obtained are reliable; however, it cannot guarantee the accuracy of such information and has not independently verified the accuracy or completeness of such information or the assumptions on which such information is based. Moreover, independent third-party sources cited in these materials are not making any representations or warranties regarding any information attributed to them and shall have no liability in connection with the use of such information in these materials. Past performance is not indicative of future performance, and the value of investments and the income derived from those investments can fluctuate. Future returns are not guaranteed and a loss of principal may occur.

F O R W A R D-L O O K I N G S T A T E M E N T SInformation herein contains, includes or is based upon forward-looking statements within the meaning of the federal securities laws, specifically Section 21E of the Securities Exchange Act of 1934, as amended, and Canadian securities laws. Forward-looking statements include all statements, other than statements of historical fact, that address future activities, events or developments, including, without limitation, business or investment strategy or measures to implement strategy, competitive strengths, goals, expansion and growth of our business, plans, prospects and references to our future success. You can identify these statements by the fact that they do not relate strictly to historical or current facts. Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other similar words are intended to identify these forward-looking statements. Forward-looking statements can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Many such factors will be important in determining our actual future results or outcomes. Consequently, no forward-looking statement can be guaranteed. Our actual results or outcomes may vary materially.

C O N T A C T U Sbrookfield.com | publicsecurities.enquiries@brookfield.com© 2020 Brookfield Public Securities Group LLC and Oaktree Capital Management, L.P.

SHIFTING SPACES: REAL ESTATE SECTORS AMID COVID-19 8