$70 $60 $50. Billions of USD $40 $30 $20 $10 20,0 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0

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1 Billions of USD Billions of USD Economic Overview The Colombian economy grew by 1.1% in the first half of the year, falling short of government forecasts. Still, Colombia continues to outpace most of its neighbors in a broader sense. Among the best performing sectors recently are agriculture, which has expanded by nearly 8% since a year ago, and manufacturing. Both have benefitted from a slight recovery in the peso. The areas that have seen the biggest slump are extractives, particularly mining, and construction these two have shrunk by 9.4% and 14%, respectively, from a year ago. Retail spending and the service economy continue to grow in parallel with the general growth of the middle class. Consumer confidence has had a dampening effect on the economy as of late, mainly due to the tax reform passed at the beginning of the year. Among the changes made were a hike in Value Added Tax from 16% to 19%, income tax adjustments for people and businesses, and the formalization of many small and medium enterprises into the taxable economy. The high cost of credit has also weighed on consumers, as Banco de la República has raised interest rates several points over the past few years. However recent interest rate cuts and future expected cuts should provide a spark. Inflation, after reaching a peak in 2016 due to droughts that affected the agriculture sector and caused food prices to spike, seems to have settled back down into the Central Bank s target range. Analysts expect inflation for the year to remain within 45%. Foreign Direct Investment reached USD $13.6 billion in 2016, representing a 17% jump over Notably, FDI has picked up most outside of the petroleum and mining industries, a positive sign for a country looking to diversify its economy. Sectors that have gained most in FDI are electronics and consumer goods, among others. So far in 2017 the data show a slight dropoff from 2016 levels, which could be due to a stronger peso than a year ago. $70 $60 $50 $40 $30 $20 $10 $ Others Agriculture Manufactures Oil & gas, extractive Source: Oxford Economics (2017) Colombia Mix of Exports, * Forecast * Source: DANE (2017) Colombia remains a country to watch on the political front. The process of political integration of the FARC until recently the country s main insurgent group began earlier this year as the group formally surrendered thousands of guns. In exchange members were given bank accounts with a minimal stipend and job training programs. The tax reform also made provisions to allow for corporate tax benefits to companies investing in areas previously under FARC control, as a way to boost job creation in underdeveloped regions of the country. Most controversially, the FARC will formally register as a political party for Colombia s upcoming elections in President Juan Manuel Santos political opponents, led by former president Alvaro Uribe, have continued attempting to undermine and challenge the process. However, assuming no major surprises in next year s election, it seems that the peace process is here to stay. 20,0 18,0 16,0 14,0 12,0 10,0 8,0 6,0 4,0 2,0 0,0 Colombia Foreign Direct Investment, * Forecast

2 Rentable Area (m 2 ) Vacancy Rate Market Overview Market Location Map Bogotá is currently in the second year of Enrique Peñalosa s second stint as mayor. Peñalosa, a prominent technocrat, is most remembered for implementing several largescale projects between , most notably Transmilenio. Staying true to his focus on infrastructure, his administration has moved several projects forward, including the concession for the first line of the Bogotá Metro, an updated land use plan, the widening of the Autopista Norte, and the Lagos de Torca macrodevelopment in the far north of the city. These projects will have a significant impact on the city's mobility and real estate markets. Peñalosa s vision of the city differs in many ways from his predecessor, Gustavo Petro, though perhaps most notably in Peñalosa s seeming acceptance and facilitation of lower density development on the periphery. Bogotá s real estate market continues to prosper and stand out from its neighbors in Latin America. With over 2,400,000 m 2 of prime office space, it is the 4 th largest market in the region behind México City, São Paulo and Santiago. The market is dominated by El Norte, the central business district that consists of five prominent submarkets (Avenida Chile, Andino/Nogal Chicó, Calle 100, y Santa Bárbara), and contains 62% of the market. The Salitre and Eldorado submarkets, both located along the Avenida Eldorado / Calle 26 corridor, are two of the fastest growing parts of the city and contain 15% and 10% of the market, respectively. Centro Internacional, the old downtown that is the focus of important urban renovation efforts, contains 4%. Chia, a fastgrowing suburb to the north of Bogotá, contains less than 1% of the stock but will become an important hub in the metropolitan area over the next few years. Finally, the remaining 10% of the stock, which is referred to as other in this report, lies in isolated and nonconsolidate locations throughout the city. Supply and Demand During the first half of 2017 approximately 155,000 m 2 of new supply were added to the market, with another 193,000 m 2 to be completed in the second semester of the year. In total the nearly 348,000 m 2 in production will make 2017 a record year in this respect. An additional 700,000 m 2 remain under construction, to be completed by will see a marked decline in deliveries, which will likely coincide with a slowdown in demand as private sector decision makers await the results of the 2018 elections a common occurrence in election years. Market activity should pick up again in 2019, boosted by two megaprojects: Atrio in the Centro Internacional submarket, and Torre de las Americas in the Calle 100 submarket. These two developments together make up 140,000 m 2 of rentable area, nearly half of the production estimate for It is important to point out that, when counted not in area but in number of new developments, office production appears to be on the decline after 2017, potentially signaling an adjustment in the market. Rising vacancy and high production could lead one to conclude that the market is oversupplied, yet the reality is more nuanced. The growth in supply has created a context that allows end users to be more selective. This is placing a premium on buildings that are focused more on the end user, rather than projects that are built to attract presale financing. Buildings that feature larger floors and the latest safety and design characteristics will be well positioned in this new context. The companies driving this trend on the demand side are those who for years have been obligated to lease small and outdated spaces in multiple buildings because the market never provided opportunities to consolidate. These companies (including public sector agencies) are taking advantage of the current context to consolidate several divisions, leading to record levels of office leasing. So while vacancy is at its highest in several years, this does not necessarily mean that the Production, Absorption, and Vacancy Production Forecast 30% Net Absorption 25% Vacancy % % % % 0% Market Indicators Indicator Current and Projection (m 2 ) net absorption forecast (m 2 ) 255, production forecast (m 2 ) 348,000 Under construction (m 2 ) 713,000 Total vacancy rate 14.2% Total vacant area (m 2 ) 345,000 Asking rent: Class A (USD/m 2 /month) $ Asking rent: Class AB (USD/m 2 /month) $ Average Sale: Class A (USD/m 2 ) $7.5m 12.5m Average Sale: Class AB (USD/m 2 ) $5.5m 10.5m Cap Rates 812% Sample Size 450 buildings

3 Rentable Area (m²) Vacancy Rate Rentable Area (m2) Rentable Area (m2) market is oversupplied. Net absorption in the first half of 2017 reached 90,000 m 2, and considering that the majority of new supply this year will be delivered in the second half of the year, JLL estimates that demand could rise in excess of 250,000 m 2, which would leave the vacancy rate at 15%. Bogotá s most dynamic submarkets continue to be the decentralized ones most notably Salitre, Eldorado, and other nonconsolidated locations. This is because these areas allow developers to purchase larger and more affordable parcels, resulting in buildings with larger floorplates and a lower perm 2 construction cost. This, in turn, allows them to charge cheaper rents. Around 75% of the absorption so far this year has been in one of these three submarkets, with most of the city s biggest new projects like Bog Americas, Elemento, North Point 5, and Connecta also in these areas. The Eldorado submarket in particular is seeing significant speculation. Many industrial users here are sitting on highly valued land but their facilities are old and outdated. Many of these users are selling their land to commercial investors and relocating the industrial operation to the booming and cheaper logistical corridors such as Cota, Mosquera, and Funza, which lie outside the city. The evolving market share of the decentralized areas in terms of supply is abundantly clear: in 2011 decentralized submarkets contained only 10% of the total stock, while today they contain close to 30%. By 2019 these submarkets will contain over one third of the market, and this is likely to grow over time. A look at the composition of Bogotá s office submarkets explains why: in the El Norte submarkets, Class A stock makes up only 40% of the overall stock while Class AB and B+ make up 60%. In Centro, Eldorado, Salitre, Chia, and Other, it is the opposite 60% of the stock in these submarkets is considered Class A while 40% is AB or B Other Salitre / Eldorado El Norte Centro Intl 2011 Evolution, Inventario y Vacancia por Submercado 2019 Rentable Area: Class B+ Rentable Area: Class AB Rentable Area: Class A High supply in the decentralized submarkets has pushed vacancy up to 25% in Salitre, 23% in Other, and 18% in Eldorado; even though these areas have seen significant absorption, it has not kept up with supply. In the El Norte submarkets Andino/Nogal, Avenida Chile, Chicó, Calle 100, and Santa Barbara vacancy is below the city average across the board. This makes it clear that demand remains very high in El Norte the issue in this part of the city is that high land prices, high density, real estate fragmentation, and stronger zoning restrictions are keeping developers from building the Class A product that the demand wants. The second half of the year will likely see vacancy increase sharply in El Norte, where 17 projects will be completed. Only 4 of these Torre Allianz, 1497 Park, Torre 97, and 100x11B are considered Class A. Other notable projects that will be completed elsewhere in the city are Central Point and Buro Andino Nogal Production and Net Absorption by Submarket, YoY Production YoY Net Absorption YoY Vacancy Rate Ave. Chile Calle 100 Tasa Vacancia de Ciudad: 14.2% Chico Santa Barbara Centro Intl Eldorado Salitre Chia Other 30% 25% 20% 15% 10% 5% 0%

4 Avg. Rents (COP) Avg. Rents (USD) Rents As of 2017 an important trend has taken hold: Class A rents in Bogotá seem to have reached bottom and are recovering. This is due to several factors: 1) the oversupply primarily observed in lower quality buildings with a fragmented or condominium style ownership structure, 2) the relatively low level of new office production in the El Norte submarkets, allowing landlords in these areas to charge higher rents, and 3) the willingness of end users to pay higher rents if it allows them to consolidate their operations in one building. All of these factors are placing a premium on buildings that are well located, well constructed, and that offer the characteristics that the demand is looking for. Not surprisingly, Class AB and B+ rents continue to stagnate, underscoring the abundance of competition for cheaper and less quality buildings. With the impending delivery of high quality projects such as Atrio and Torre de las Américas both trophy assets that have begun preleasing in excess of COP $90.000/m 2 /month JLL believes that Class A rents will continue to climb. The highest rents in the city continue to be found in the El Norte submarkets, where tenants may pay between COP $70,000 80,000/m 2 /month for Class A space and between COP $50,000 70,000/m 2 /month for Class AB. Companies looking to relocate to decentralized submarkets may pay between $55,00073,000/m 2 /month for Class A space and between COP $40,00063,000/m 2 /month for Class AB areas. Office cap rates remain in the range of 812%, however they have been compressed recently as higher vacancy and low rents have hurt investor returns. Office yields will likely decline in the medium term, but as the market recovers from oversupply beyond 2019, JLL expects cap rates to be more attractive and entice new investors. $ $ $ $ $ $ Change in Rents, Class AB (USD) Rents by Submarket Class A (COP) Class AB (COP) Class A (USD) $34 $32 $30 $28 $26 $24 $22 $20 $18 Market Outlook The decentralization of the market is not only a reflection of market trends but also demographic trends. Suburban municipalities like Soacha, Mosquera, Cota, and Chia are set up to receive a significant increase in population and real estate activity by virtue of lying within the city s nature growth paths. While Mosquera and Cota are becoming consolidated hubs of industrial activity, Chia is receiving significant investment in the office and retail sectors. Currently Chia has 77,000 m 2 under construction in 11 different projects, all to be completed by This city will also benefit from the expected widening of the Northern Highway as well as the expected development of Lagos de Torca, a megaproject located between Bogotá and Chia that will add 125,000 m 2 of residential area. Chia is well positioned to become a core suburban submarket in the years to come. Despite a reduced growth rate and political uncertainty, there is much room for optimism in Colombia. The monetary and fiscal policy remain prudent, as evidenced by this year s tax reform. The continued development of the 4G infrastructure program is improving competitiveness and reducing the cost of doing business. The country will be tested in the coming years as the FARC are integrated into civil society and become a formal political movement, and next year s elections will provide a gauge on how accepting the public is of this. At any rate, the government is committed to supporting economic growth and social inclusion, and the private sector is responding to the opportunities this is creating. Latin America Office Rental Clock,

5 Colombia at a Glance Caribbean Region : 266,000 m 2 Vacancy: 34.4% 2017 Expected Absorption: 20,000 m Expected Production: 47,000 m 2 Avg. Rent, Class A: COP 44,000/m 2 /mo. Avg. Rent, Class AB: COP 36,000/m 2 /mo. Production Pipeline, : 59,000 m 2 Medellin : 716,000 m 2 Vacancy: 11% 2017 Expected Absorption: 35,000 m Expected Production: 42,000 m 2 Avg. Rent, Class A: COP 59,500/m 2 /mo. Avg. Rent, Class AB: COP 46,300/m 2 /mo. Production Pipeline, : 100,000 m 2 Santa Marta Barranquilla Cartagena Bucaramanga : 111,000 m 2 Vacancy: 9% * 2017 Expected Absorption: 12,000 m Expected Production: 11,000 m 2 Avg. Rent, Class A: COP 42,000/m 2 /mo. * Avg. Rent, Class AB: COP 32,000/m 2 /mo. * Production Pipeline, : 28,000 m 2 Cali : 226,000 m 2 Vacancy: 5.3% * 2017 Expected Absorption: 13,000 m Expected Production: 0 m 2 Avg. Rent, Class A: COP 60,000/m 2 /mo.* Avg. Rent, Class AB: COP 33,000/m 2 /mo.* Production Pipeline, : 13,500 m 2 Bogotá Bogotá : 2,400,000 m 2 Vacancy: 14.20% 2017 Expected Absorption: 255,000 m Expected Production: 347,000 m 2 Avg. Rent, Class A: COP 65,000/m 2 /mo. Avg. Rent, Class AB: COP 58,000/m 2 /mo. Production Pipeline, : 713,000 m 2 Exchange Rate (July 2017): 1 USD = 3,000 COP * Data as of Q4 2016

6 Typical Market Practices Rent Typical Lease Term Frequency of Rent Payment Lease Contracts Quoted in COP /m² /month 5 years Monthly Deposit / Lease Guarantee Typically an insurance policy is requested in case of failed payment. Security of Tenure Only for the duration of the tenancy. No guarantee beyond the original lease term, unless negotiated. Statutory Right to Renew Yes (unless an option to renew is agreed at the outset and specified in the lease) Basis of Rent Increases or Rent CPI + 1 3% Review Frequency of Rent Increases or Rent Review Agency Fees Agency Fees (payable by Landlord / Tenant) Legal Fees (payable by Landlord / Tenant) Rent Free Period Annual Transaction Fees 2 month s rent for 5 year contract. Landlord Incentives Each part responsible for its own legal costs 13 months The rent free period is not standardized in the local market, however typically occurs. The length of this period is negotiated between the parties. Local Property Taxes VAT on Rent & Service Charge (Payable by Tenant) Taxes Landlord, annually 19% Standard Unit of Measurement Unit of Measurement Square Meters (m 2 ) Service Charges, Repairs and Insurance Service Charges/Managements Fees Utilities (Sometimes separately metered, sometimes paid as a percentage of occupation) Car Parking Internal (Tenant Space) Common Areas (reception, lift, stairs, etc.) External / Structural Building Insurance SubLetting & Assignment Early Termination Tenant's Building Reinstatement Responsibilities at Lease End Foreign Ownership Strata Title (Partial ownership of the building) Security Deposit Agency Fees Legal Fees Other Transaction Costs Additional to the rental charge and payable monthly in advance Electricity, telephone, AC, etc. paid by tenant according to consumption 1 space per 50 m 2 included in the lease contract. Tenant Tenant Landlord Landlord Disposal of Leases Normally yes (subject to landlord approval) Unless otherwise stipulated in the rental contract, tenant is responsible for paying the entirety of the contractual obligation Original condition, allowing for normal wear and tear. Purchasing Properties No restrictions Strata title ownership is typical Casebycase 3% paid by the Seller. Each part responsible for its own legal costs Typically paid by Buyer JLL Colombia Jean Wettling Director Transactions Jean.Wettling@am.jll.com Scott Figler Associate Director Scott.Figler@am.jll.com Santiago Quintana Research Analyst Santiago.Quintana@am.jll.com