Material Exposure Standard

A market benchmark and an asset-level score for institutional capital, measured at the source.

I Material Exposure Financial and physical layers

Material exposure is the cost, supply, origin, and substitution risk carried in a building's physical fabric.

Capital underwrites the financial life of an asset — credit, rate, value, tenancy, insurance — against established benchmarks, and its physical substance, the material itself, against an estimate.

Exhibit 1 Independent benchmarks, by exposure
Financial layer · priced
CreditAgency ratings · credit spreads
Interest rateTreasury curve · swaps
Market valueCap-rate series · transaction comps
TenancyLeasing comps · market rents
InsuranceActuarial tables · premium markets
Physical layer · unpriced
Material— no independent benchmark
Benchmarks named are those prevailing in institutional underwriting.
II Index Market level

The benchmark for material exposure.

The DAC Index reads the material composition of the built environment at its source — production, procurement, logistics, customs, specification — and prices the exposure carried in it across four dimensions: cost, supply-pathway, origin-and-tariff, and substitution. It indexes the informational friction in the supply chain, not the material itself, and is expressed as a level against a verified baseline of 100.

Exhibit 2 DAC Index · as of Apr 2026
160 140 120 100 144 2018 2022 2026

A reading of 144 places the public drivers of material exposure 44 points above their 2018 baseline — tracing the 2022 supply shock (near 151) and a 2026 re-acceleration. It composites four public proxies, equally weighted: construction-materials cost, freight, import prices, and substitute-material prices. The Index itself reads exposure against a source-grounded reality; this is its public stand-in.

Source: U.S. Bureau of Labor Statistics — PPI construction materials, long-distance trucking, iron & steel, and lumber, with the import price index (via FRED); composited and rebased to 100 (Jan 2018) by DAC, equal weights. A public proxy for the drivers of material exposure, not the source-grounded DAC Index itself. Series through Apr 2026.
III Score Asset level

The same exposure, decomposed for a single asset.

The Score reads the carried material commitment of a single asset against a verified baseline of 100, with a confidence rating on the pathway behind the estimate.

Exhibit 3 Carried commitment · baseline 100 · reading 139
Verified baseline 100Reading 139
Verified baselineSource-grounded cost of the commitment, indexed to 100.100
CostThe opacity premium — at-source pricing against the carried estimate.17
Supply-pathwayProduction output, capacity, lead time, continuity.8
Origin-and-tariffProvenance, tariff exposure, concentration.9
SubstitutionCost and risk of the replacement.5
Confidence · Documented The record behind this estimate is documented, not source-verified.
Illustrative model of a single asset's material commitment — verified baseline indexed to 100, exposure carried above it to a reading of 139; not a measured result.
IV Methodology Inputs, reconciliation, and confidence

Every reading is reconciled across independent sources.

One method spans cost, supply-pathway, origin-and-tariff, and substitution, generalizing across material systems — structure, envelope, finishes, building systems. Each reading begins with observable sources: at-source pricing, production output, customs and logistics records, and the procurement trail. Independent reads of the same exposure are reconciled; where they agree, confidence is earned, and where one diverges, it is flagged for review.

At-source pricing originates at the producing facility — factory, mill, plant, or quarry — and is collected there, not aggregated.

Every reading bears a confidence rating reflecting the strength of its sources. The method is governed and versioned; automation carries the volume, and where the data thins, judgment is bounded by the method.

Exhibit 4 Four reads of one exposure, resolved to a single reading
90110130
Independent reads
At-source pricing107
Production output108
Logistics & customs110
Procurement recordFlagged123
Resolution
Reconciled readingAverage · 112109

A simple average of the four reads would land at 112. The reconciled reading is 109 — the divergent source is flagged for review, not averaged into the answer; the reading settles nearest the reads taken at the source.

Illustrative. Independent reads of one line item on a relative price index.
V Capital Stack Underwriting to portfolio

The same reading, across the capital stack.

A single reading of material exposure is the reference for underwriting, reserves, draw conditions, bonding, and portfolio weighting. Two positions can look identical on every priced measure and differ entirely in the exposure each carries.

Exhibit 5 Points of reference
  1. The readingA single governed measure of material exposure, carried through each level below.
  2. UnderwritingSizing the commitment against verified material exposure.
  3. ReservesSetting contingency to measured exposure.
  4. Draw conditionsConditioning each disbursement on the current reading.
  5. Bonding & suretyPricing completion risk on source-grounded exposure.
  6. Portfolio weightingComparing and weighting positions on a common measure.
A single governed reading, with a point of reference at each level of the capital stack.
VI Governance Independence and boundary

A verification authority.

DAC is the conversion layer between source data and capital. It converts that data into a source-grounded, asset-specific, position-independent reading. Its authority is methodological: every reading is reproducible from a documented record.

DAC scores, verifies, benchmarks, and advises — the entirety of its activity. It takes no part in the supply of the material it reads — brokerage, distribution, fulfillment, installation, warranty, or financing — and holds no position in any outcome it reports. The boundary is structural and permanent.