This report does not constitute a rating action. The resurgence in interest rates could threaten the recovery in valuations after the severe correction over 2022-2023. Since then, the recovery has been uneven. As of June 30, 2026, non-prime office and German residential REITs were reporting asset values which were still 16% and 15% below their peak in mid-2022. At the same time, the valuations of hotel and retail REITs had exceeded their mid-2022 level by 6% and 3%, respectively. Chart 1 Valuations of rated European REITs could decline by up to 10% by 2027. This outlook follows our Sept. 23, 2026, upward revision of European government long-term rate expectations to 20-50 basis points (bps) over 2026-2027. Even though many European
