Investment Market, Capital Values and Yields Office investment activity slowed dramatically in 2023 as cash rates22 continued to expand. Total office sales volumes in the Sydney CBD totalled A$2.3 billion comprising 23 transactions in 2023. This marked a YoY volume decrease of 43.0%. Rising interest rates, coupled with increased swap rates and bond yields across all maturities, drove all-in cost of debt for office investment to between 6.0-6.5%. Debt costs have now risen by over 400 bps since the interest rate hike cycle began in 2022. The increased cost of debt has caused a large gap to develop between purchaser and vendor pricing expectations which, in turn, has led to the transaction slowdown observed over the course of the year. While investment activity remained slow in 2023, several larger transactions did close over the second half of the year. The most notable transactions included the purchase of 60 Margaret Street by AsheMorgan and Mitsubishi for A$777.2 million, 44 Market Street by PAG for A$393.1 million, and 1 Margaret Street by Quintessential Equity for A$293.1 million. The gap between buyer and seller pricing expectation has caused cap rates to expand significantly over the course of 2023. Prime and secondary office yields ended the year at 5.9% and 7.1%, respectively. These figures marked YoY expansion of 125 bps and 225 bps. These yield increases also led to capital value declines across the CBD. The average capital value for prime and secondary CBD office assets ended the year at A$24,690 per sq mand A$13,990 per sq m respectively. These figures represented significant value depreciation of 15.0% and 30.9% YoY. While 2023 saw significant headwinds across the capital markets landscape, there are now signs that 2024 may bring better investment conditions. Inflation is slowing entering the new year and forecasts now suggest that cash rate cuts may begin over the second half of 2024. Should this occur, investment volumes in the office sector will likely reach 2023 levels and may have opportunity to outperform last year’s results marginally in 2024. Source: CBRE Australia Research, 4Q 2023 SYDNEY CBD OFFICE RENT AND INCENTIVES 1,000 900 800 700 600 500 400 300 200 100 0 Net Effective Rent (A$/sq m/annum) 1Q 2019 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 2024F 2025F 2026F Prime Net Effective Rent Secondary Net Effective Rent Prime Incentives Secondary Incentives 40 35 30 25 20 15 10 5 0 Incentives (%) 22 The cash rate is the interest rate on unsecured overnight loans between banks. 116 CAPITALAND INTEGRATED COMMERCIAL TRUST INDEPENDENT MARKET REVIEW

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