Smart Capital Center: Joining Smart Capital Center today is Paul Fiorilla, director of research at Yardi Matrix. Paul will share his outlook on current market conditions and the trends shaping investment opportunities.

From Smart Capital Center, I'm joined by Nicole Ramagnoli, our client success advisor, and Hannah Kidd, our senior financial associate.

Nicole will introduce Smart Capital Center and share results our clients have achieved. Hannah will walk us through our connected platform, including how our specialized AI agents support investment analysis across the CRE investment lifecycle.

Paul will then share his market outlook, and we'll bring the discussion together with a client case study and practical applications of agentic AI in underwriting.

Throughout the session, please submit questions through the Q&A panel. We'll answer as many as we can toward the end.

Introducing Smart Capital Center

Smart Capital Center: Thanks, Masoom. Smart Capital Center is an agentic AI platform built for commercial real estate investors, lenders, and asset managers. We've been in the market for almost 10 years.

We work with firms across commercial real estate, including JLL, KeyBank, The RMR Group, Centers Dynamic Partners, and Rose Community Capital.

These firms work across different parts of the investment lifecycle, from originating and underwriting new deals to managing properties and loan portfolios.

We've seen meaningful results from how they're using Smart Capital Center.

At JLL, the asset management team has achieved a 30-times productivity gain. At KeyBank, the team reported a 40% reduction in the time required to prepare a financial model for a loan, even while implementation was underway.

For Rose Community Capital, Smart Capital Center has helped the team review significantly more applications with greater depth and consistency.

Across these examples, we're seeing teams increase their capacity while improving the depth and quality of analysis.

Smart Capital Center: Let me share a little more about what we do.

We help automate, digitize, and bring insights to the entire investment lifecycle, from acquisition to disposition.

That starts with the initial stages of a deal, including screening, market research, and evaluating new investment opportunities.

As a deal moves forward, the platform supports underwriting, financial modeling, investment memos, and acquisition workflows.

After transactions close, it supports asset management, portfolio performance monitoring, debt management, and insights across the portfolio.

What's important is that the information remains connected throughout the process. Information gathered during underwriting doesn't just sit in a separate model or disappear once the deal closes. It can continue to inform asset management and investment decisions.

Smart Capital Center is one connected, composable AI platform supporting deal analysis, investment memos, asset and portfolio management, and investor reporting.

The advantage is that your data, workflows, and AI agents work together.

For example, when underwriting a deal, our AI agents can bring together information from financial statements, rent rolls, deal assumptions, and market research from prior transactions to provide a more complete view of an investment.

Because the platform is composable, you don't have to implement everything at once. You can start with underwriting and add portfolio monitoring, investor reporting, and other capabilities as your needs grow.

Another important part of the platform is our specialized AI agents.

You can think of them as AI team members supporting different parts of the investment process, including underwriting, research, asset management, and capital markets.

They're not just answering individual questions. They can carry out multiple steps of a workflow using documents, financial information, market research, and other data already connected within the platform.

Instead of analysts spending hours gathering and preparing information manually, they can focus on reviewing findings, testing scenarios, and making investment decisions.

Your team stays in control throughout the process.

Everything starts with the data.

When an investment opportunity comes in, you're typically dealing with offering memorandums, financial statements, lease agreements, and other supporting documents.

We extract and structure information from those materials so it can be used across underwriting, due diligence, research, and reporting.

We're not just extracting numbers. We're creating connected information that our AI agents can use throughout the investment process.

Everything remains traceable to the original source, so your team can verify the information and understand where the numbers come from.

Once information is connected, the platform can turn it into analytics and visualizations.

Instead of manually building reports or pulling information from different spreadsheets, your team can see how a property is performing, compare key metrics, and identify areas that deserve a closer look.

This is where the depth of our data becomes particularly important.

Smart Capital Center brings together more than one billion market signals across over 120 million properties, alongside your own deal documents, historical transactions, and internal information.

That gives our AI agents access to more information than an analyst could realistically gather, review, and compare manually for every deal.

You're not simply preparing an underwriting model faster. You're building a deeper, more comprehensive analysis to support investment decisions.

Smart Capital Center: Thank you, Hannah. That brings us to the importance of understanding the market itself.

We've talked about how Smart Capital Center brings together property-level information, market intelligence, and AI agents to support detailed investment analysis.

Paul Fiorilla from Yardi Matrix will now take us through the current market outlook. I'll pass it over to you, Paul.

CRE Market Outlook — Yardi Matrix

Yardi Matrix: Thanks. I'm director of research at Yardi Matrix, which is the data division of Yardi. Yardi Matrix maintains a database of multifamily and commercial properties.

I've been working in multifamily and commercial real estate research for a couple of decades. One question I hear frequently is: What are market conditions like?

Years ago, you could give an answer that applied to much of the market. Today, the answer is usually, "It depends."

It depends on the property type, sector, and region. Apartments are not in the same cycle as office, industrial, or retail. The Northeast is not experiencing the same conditions as the Sunbelt.

Let's start with a quick macroeconomic update.

The economy has been relatively strong, with GDP growth expected to fall somewhere between 1.5% and 2% for the year. However, tariffs, the conflict in Iran, and immigration policy have created headwinds.

Deregulation and tax cuts are intended to support growth, but inflation and interest rates remain important challenges.

At the beginning of 2026, the market expected the 10-year Treasury yield to decline from approximately 4.5% to 4%.

That was expected to lower the cost of capital and encourage more commercial real estate transactions.

Rates did reach around 4% in February. However, rising oil and energy prices contributed to inflation, and the 10-year Treasury yield subsequently moved into the 5% range.

Commercial real estate is particularly sensitive to interest rates, so higher borrowing costs affect transaction activity across property sectors.

They've also widened the gap between what buyers are willing to pay and what sellers expect to receive. Cap rates are rising, or at least not declining.

Looking at different property sectors, some are performing better than others.

Industrial remains one of the most attractive sectors in investor surveys.

Specialized property types, such as data centers and student housing, are also attracting interest, although these markets tend to be smaller and more volatile.

Retail has regained some investor confidence after a long period of limited new development. Rents are beginning to rise again.

Multifamily remains stable, but growth is relatively slow.

Office is a higher-risk sector, although some investors see opportunities as property prices stabilize.

Multifamily Market Outlook

Yardi Matrix: The multifamily market has remained resilient overall.

Occupancy levels are relatively stable, rent growth has been slow, and supply pressures are beginning to ease.

However, several factors are affecting apartment demand.

Population growth has slowed considerably. Historically, U.S. population growth averaged approximately 1.3% annually after World War II.

Recent estimates have been much lower, with growth potentially near zero in 2026.

Employment growth has also weakened. After years of adding hundreds of thousands of jobs per month, recent employment growth has averaged approximately 25,000 jobs per month.

On the positive side, the weak home sales market and the high cost of homeownership are keeping more people in rental housing for longer periods.

Following the pandemic, apartment rents rose more than 20% over approximately two years. Since early 2023, however, national rent growth has been largely flat.

The national figures also hide significant differences between markets.

Gateway markets have generally experienced positive rent growth, while many Sunbelt markets have experienced negative rent growth for much of the past three years.

One of the main reasons is new supply.

Markets such as Austin, Nashville, Charlotte, Denver, and Phoenix have added substantial numbers of apartment units, in some cases increasing their apartment stock by approximately 6% to 7% annually.

That has created considerable competition among properties trying to lease newly completed apartments.

Nationally, the number of units in lease-up increased from approximately 600,000 to 700,000 in 2020 to around 1.4 million in early 2025.

Those numbers have since declined, which is encouraging, but competition remains significant.

In some markets, including Charlotte, Austin, Phoenix, and Nashville, more than 10% of apartment stock has been in the lease-up phase.

These high-supply markets have generally experienced weaker rent growth and increased concessions.

New lease rent growth has been negative in many of these markets, while renewals from existing tenants have helped support property income.

One of the questions I hear most frequently is when Sunbelt rents will begin growing again.

Our expectation is that some of these markets may not return to more typical rent growth until approximately 2028, once enough of the existing vacant inventory has been absorbed.

There are encouraging signs.

Apartment construction starts have declined as developers respond to supply pressures, higher construction costs, and challenging financing conditions.

However, the speed of recovery will depend on how quickly new deliveries decline and existing units are leased.

Our forecast anticipates approximately 450,000 apartment deliveries annually over the next couple of years.

If deliveries fall closer to 300,000 units, excess inventory could be absorbed more quickly. At higher delivery levels, recovery is likely to take longer.

Investment Strategies and Transaction Activity

Yardi Matrix: Higher interest rates have also affected multifamily transaction volume.

Sales activity increased sharply when financing was inexpensive. As rates rose, property values declined and many sellers became reluctant to transact at lower prices.

Uncertainty around interest rates, pricing, and geopolitical conditions has also caused some deals to be delayed, renegotiated, or canceled.

We expect transaction volume in 2026 to be slightly below the previous year's level.

There are several possible investment strategies in this environment.

One is to invest in Sunbelt markets ahead of an anticipated recovery in 2028, 2029, or 2030.

Another is to focus on markets with more restrictive development environments, where limited new construction can help support existing apartment properties.

Investors may also look toward smaller emerging markets near major metropolitan areas, particularly as some traditional Sunbelt destinations become less affordable.

Each strategy carries different risks and depends on the investor's capital, investment horizon, and ability to execute.

Office Market Outlook

Yardi Matrix: Office vacancy rates are no longer rising in the same way they were following the pandemic.

Demand remains relatively weak, but new office supply has declined sharply compared with previous years.

Office rent growth has also begun recovering from its low point.

Some investors are considering whether declining property prices have created opportunities.

However, transaction liquidity remains limited, and local market selection is especially important.

For example, I recently spoke with an office investor who described very different conditions in Raleigh and Durham, despite the two cities being geographically close.

This illustrates why investors need to understand the local environment rather than relying on broad regional trends.

Industrial Market Outlook

Yardi Matrix: Industrial real estate has been a favored investment sector for much of the past decade, supported by e-commerce and logistics demand.

The sector experienced a substantial increase in new supply, followed by rising vacancy rates.

More recently, development has begun returning toward more typical levels, and vacancy has stabilized.

However, overall vacancy figures do not tell the entire story.

Some older industrial buildings are becoming functionally obsolete, while modern facilities with higher ceilings and updated infrastructure continue to attract strong demand.

Industrial rents increased significantly between 2018 and 2024, although growth has since moderated.

Despite this slowdown, industrial continues to rank highly in investor surveys.

That's the overview of the major sectors. I'm happy to address additional questions during the Q&A.

Connecting Market Intelligence to Underwriting

Smart Capital Center: Thank you for that detailed CRE market outlook, Paul.

Now let's look at how this type of market research can support the underwriting process.

Building on what Paul covered, we've heard how market conditions are affecting commercial real estate.

But how do you take that research and apply it to the specific deal you're evaluating?

That's where our AI agents come in.

Instead of having analysts manually review dozens of market reports, comparable properties, and other sources, our agents can bring that information into the underwriting process.

For example, when preparing a DCF, our agents can research market rents, occupancy trends, expense growth, and other factors that help support the assumptions used throughout the projections.

The same research can support an investment memo, providing market context and supporting analysis behind the investment strategy.

Your team doesn't have to keep switching between research tools, spreadsheets, and documents to piece everything together.

The market intelligence becomes part of the analysis, with supporting information available for review.

Centers Dynamic Partners Case Study

Smart Capital Center: One of our clients, Centers Dynamic Partners, is a retail real estate investment firm with almost 30 years of experience, focused on value-add opportunities across the western United States.

Using Smart Capital Center, the firm has increased its underwriting speed by four times.

What's particularly interesting is how it has been able to handle a much larger volume of deals while still evaluating each opportunity in considerable detail.

Centers Dynamic Partners operates with a lean team of principals and no dedicated analysts.

Its deal flow can vary significantly. The team might have one or two opportunities to evaluate and then receive 10 additional deals at once.

Hiring a full-time analyst doesn't always make sense when deal flow is unpredictable. However, there is only so much underwriting the principals can handle themselves.

The firm also evaluates complex value-add retail investments.

These opportunities involve many assumptions, including construction draws, capital expenditure reserves, tenant improvement costs, leasing commissions, financing structures, and exit scenarios.

With Smart Capital Center, the team can evaluate these different assumptions and scenarios within a connected underwriting model.

For example, the principals can assess what happens when construction takes longer, leasing is slower than expected, or financing conditions change.

They can explore different ways to structure a deal and determine what makes financial sense before committing capital.

The impact has been significant.

Centers Dynamic Partners can underwrite four times faster and evaluate 20 times more deals than it could previously handle.

The team can test assumptions, compare financing scenarios, and prepare detailed underwriting packages without adding a dedicated analyst team.

That additional capacity also helps the principals develop a clearer view of opportunities sooner and move quickly when an attractive deal comes along.

Throughout the process, the principals review the analysis, adjust assumptions, and make every final investment decision.

Key Takeaways and Q&A

Smart Capital Center: Before we move into questions, I'd like to leave you with three key takeaways from today's session.

First, agentic AI allows investors to conduct deeper underwriting by working with more comprehensive data, conducting detailed research, and validating assumptions against market information.

Second, it gives investment teams greater capacity to evaluate more opportunities and act faster. As we saw with Centers Dynamic Partners, this is possible with agentic AI.

Third, investment decisions always remain in your hands. Your team maintains control over every final decision.

With that, we've come to the end of our presentations, and we'd be happy to answer your questions.

Our first question is: How is Smart Capital Center different from Claude or ChatGPT?

Smart Capital Center: Claude and ChatGPT are general-purpose AI tools that are useful for research and answering questions.

Smart Capital Center is built specifically for commercial real estate and supports the investment process from beginning to end.

Our agents can access the context of a deal, including documents, financial statements, underwriting models, and property market data, without requiring the team to provide that information again for every question.

We can also help validate assumptions, prepare underwriting models, and generate investment memos, with accuracy checks and links back to source documents.

That allows your team to review the work and make the final decision.

Smart Capital Center: Thank you.

Another question is: How can analysts verify the findings or answers generated by AI?

Smart Capital Center: Smart Capital Center provides traceability back to source materials for extracted figures and supported findings.

That allows analysts to check where the numbers are coming from and review the supporting information.

For findings supported by external information, the team can also access the relevant source.

This gives analysts the ability to investigate flagged items and verify the analysis before making decisions.

Smart Capital Center: Thank you, Hannah.

You also mentioned that our platform is composable. What does composable mean?

Smart Capital Center: Many clients already have established workflows, and they don't necessarily want to replace everything they're using.

Being composable allows firms to introduce AI into the parts of their workflows where it can provide value.

For example, a team might start with underwriting, investment memos, or portfolio monitoring, then expand into other capabilities over time.

The important part is that the information and workflows stay connected rather than being split across separate products.

Smart Capital Center: That's a great point.

Teams can start with the capabilities they need, then expand as they identify additional opportunities to connect their processes within the same platform.

We also have a question for Paul.

Do you have any predictions or insights about the best markets or areas for commercial real estate investment in 2027?

Yardi Matrix: I'm not a big fan of questions about which markets are the best.

I recently attended a meeting of the National Council of Real Estate Investment Fiduciaries, where a researcher presented an analysis covering almost 50 years of NCREIF data.

One of the findings was that market selection accounted for a relatively small portion of total returns.

Market conditions matter, but what's particularly important is having a clear investment strategy and executing it well.

For example, you might invest in anticipation of a Sunbelt recovery. You might focus on markets with limited new supply or look at emerging markets.

You can also choose between traditional property sectors and specialized sectors.

What's important is understanding your strategy and what you're trying to achieve.

If I say the Sunbelt is going to recover in a couple of years, whether that's good or bad for a particular investor depends on their capital and investment horizon.

Are you investing over three to five years or eight to 10 years?

Those considerations matter.

Ultimately, I think having a strategy that you execute well is more important than simply choosing a market.

Smart Capital Center: Thank you, Paul. We appreciate those insights.

We have one more question for you.

You've shared extensive market data today. Where does Yardi Matrix get its information?

Yardi Matrix: Yardi Matrix has been developing its property database for more than 20 years.

Over that time, we've built a substantial research operation, with teams collecting information from properties and numerous other sources.

That includes researching property information, contacting properties, and collecting data through different methods.

Our multifamily database is particularly extensive, and we've also expanded our coverage of other commercial property types.

Yardi also has its own AI technology, including Virtuoso, which operates within the Yardi system.

We have a connector to Claude that supports more general research queries as well.

We're continuing to develop these technologies and research capabilities.

Closing Remarks

Smart Capital Center: Thank you so much, Paul, for answering those questions, and thank you to Hannah as well.

We appreciate everyone who submitted questions and joined us today.

Before we wrap up, I'd like to thank Paul once again for sharing the market outlook, and thank all our attendees for spending part of their day with us.

If you're exploring how to use AI in your investment or underwriting workflows, or you're just trying to figure out where to get started, please feel free to reach out.

We're happy to share insights from our work with other commercial real estate firms, discuss practical AI use cases, and explore how these capabilities could fit into your existing processes.

You can reach out to Hannah directly at hkidd@smartcapitalcenter.com, Masoom at mdesai@smartcapitalcenter.com, or our team at demo@smartcapitalcenter.com.

All our contact details are available on the screen. Thank you again for joining us. We look forward to staying in touch.

Smart Capital Center: Thank you, everyone.