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INDUSTRIAL & LOGISTICS MARKET OVERVIEW Germany Düsseldorf, 26.06.2015 Prepared for SEGRO plc

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  • INDUSTRIAL & LOGISTICSMARKET OVERVIEWGermany

    Dsseldorf, 26.06.2015

    Prepared for SEGRO plc

  • ECONOMIC OVERVIEW

  • 3 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    ECONOMIC OVERVIEWGDP

    -8.0

    -6.0

    -4.0

    -2.0

    0.0

    2.0

    4.0

    6.0

    2000

    2001

    2002

    2003

    2004

    2005

    2006

    2007

    2008

    2009

    2010

    2011

    2012

    2013

    2014

    2015

    2016

    2017

    2018

    2019

    Forecast

    Real GDP, Y/Y in %

    Source: Destatis, Consenus Economics

  • 4 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    LOGISTICS INDICATOR

    20

    40

    60

    80

    100

    120

    140

    160

    180

    Q1

    2007

    Q3

    2007

    Q1

    2008

    Q3

    2008

    Q1

    2009

    Q3

    2009

    Q1

    2010

    Q3

    2010

    Q1

    2011

    Q3

    2011

    Q1

    2012

    Q3

    2012

    Q1

    2013

    Q3

    2013

    Q1

    2014

    Q3

    2014

    Q1

    2015

    Business confidence Situation Forecast

    Confidence is rising in the Logistics sector

    Indicator (Index)

    Source: BVL, ifw

  • INDUSTRIAL & LOGISTICS MARKET IN GENERAL

  • 6 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    GERMAN TOP 20 LOGISTICS REGIONSLogistics attractiveness and intensity by regions (ZIP codes)

    Source: Fraunhofer SCS

  • 7 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    TYPICAL LEASING CONDITIONSTypical lease length: 3 - 5 years for logistics companies

    5 - 7 years for production companies7 - 10 years for built-to-suit production and logistics If the lease is for a limited period, then a tenancy cannot be terminated before that time unless tenancy law provides otherwise.

    Average prime rents: EUR 5.70 / sq m / mth for Top 5 (Berlin, Dsseldorf, Frankfurt, Hamburg, Munich)EUR 4.75 / sq m / mth for Germany othersin EUR (5,000 sq m unit)

    Tenants incentives: 1 months rent free for each year of occupancy (typically)

    Indexation: CPI Germany

    Landlord's liabilities for premises: Internal repairs are tenants responsibility, while external, structural and/or common areas are landlords responsibilities

    Service charges: Service charges are paid above the rent (on average EUR 0.80 - 1.50/ sq m / mth) and include: Building insurance, property taxes, 24h security, landscaping, property management, maintenance of the common parts of the property (including snow removal), maintenance and inspections of buildings and equipment

    Minimum size for built-to-suit: 5,000 sq m

    Guarantee: Landlord requires a cash deposit, bank guarantee or parent company guaranteeSource: CBRE Research

  • 8 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INDUSTRIAL & LOGISTICS MARKET FIGURES

    Total GER Top 5 Germany other

    Total stock (sq m)* 58,387,900 28,135,500 30,252,400

    New supply (in 2008 - 2013) (sq m)* 12,650,100 4,721,500 7,928,600

    Take-up 2014 (excl. renegotiations) (sq m) 5,280,800 1,828,100 3,452,700

    Market Rents (EUR/sq m/month) 2.50-6.50 3.50-6.50 2.50-6.20

    Average Prime Rent (EUR/sq m/month) 5.10 5.70 4.75

    Key indicators for Germany and Top 5 markets

    Indicator (Index)

    *Investable stock for institutional investors and tenants; units 8,000 sq m and year of construction from 1988 onwardsBased on data from Fraunhofer SCS 2013 Source: CBRE Research, RIWIS

  • 9 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    Investable logistics stock ~58.4 million sq m Top 5 account for 48% of total stock

    INDUSTRIAL & LOGISTICS MARKET OVERVIEW

    6,697

    6,685

    6,347

    5,501

    2,9063,4492,862

    23,941

    Hamburg Berlin/BrandenburgFrankfurt / Rhine-Main Duisburg/Dsseldorf (Lower Rhine area)Munich Cologne BightCentral Ruhr area Rest of Germany

    Source: CBRE Research, Fraunhofer SCS 2013

  • 10 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    Germany 2012: 4.555m sq m, 2013: 4.715m sq m, 2014: 5.280m sq mINDUSTRIAL & LOGISTICS TOTAL TAKE-UP

    0

    1,000,000

    2,000,000

    3,000,000

    4,000,000

    5,000,000

    6,000,000

    2008 2009 2010 2011 2012 2013 2014 Q12014

    Q12015

    Germany -Take-up 2008 - 2014

    Take-up Germany in sq m

    Source: CBRE Research

  • 11 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    825 1,164 1,2561,464 1,216 1,335 1,243

    1,768 2,192 1,728 1,683 1,8281,063

    1,229 1,3881,727 2,617 2,209 1,933

    2,520

    3,603

    2,827 3,0323,453

    4,927

    4,850

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

    Top 5 Germany other 5Y AVG. 2010-14 (Total): 4,927 3Y AVG. 2012-14 (Total): 4,850

    MAJOR LOGISTICS REGION IN GERMANY 2014Take-up (incl. owner-occupiers) in Top 5 and other German major markets

    x1,000 sq m

    Source: CBRE Research

  • RENTAL LEVELS

  • 13 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    PRIME RENTS

    4.60 4.60

    5.205.40

    6.20 6.20

    5.70 5.70

    6.50 6.50

    5.64 5.68

    4.00

    4.50

    5.00

    5.50

    6.00

    6.50

    7.00

    2009

    2010

    2011

    2012

    2013

    2014

    Q1

    2014

    Q1

    2015

    Berlin Dsseldorf Frankfurt/Rhine-Main Hamburg Munich -Prime rent 2009 - 2014

    Prime rents in the Top 5 markets (/sq m/month)

    Prime rents to remain stable

    Source: CBRE Research

  • 14 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    RENT LEVELS

    0.00 2.00 4.00 6.00 8.00

    Leipzig

    Kassel**

    Bremen

    Hanover

    Berlin

    Ruhrgebiet

    Mannheim*

    Nuremberg

    Cologne

    Dsseldorf

    Hamburg

    Rhein-Main

    Stuttgart

    Munich

    Germany: Slow recovery of the global economy

    has affected rental price trends in Europe as a whole

    Prime rent in Top-5 went up to 5.70/sq m/month

    Rental band in selected markets and the Top 5 markets (/sq m/month)

    As of March 31st 2015

    *Kassel/Bad Hersfeld; **Mannheim/Rhein-NeckarSource: CBRE Research

  • INVESTMENT MARKET OVERVIEW

  • 16 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET LOGISTICS GERMANYProperty investment market turned over 9.6bn in Q1 2015 (-3% Y/Y) Logistics shares at ca. 5% of total investment volume

    50% 51% 44%

    29% 23% 39%

    7%8%

    4%6% 8%

    7%4% 3%4%5% 7%3%

    0%

    20%

    40%

    60%

    80%

    100%

    2013 2014 Q1 2015

    Office Retail Logistics/ Industrial Hotel Development Site Other

    Total Commercial Real Estate Investment Turnover in Germany 2013 to Q1 2015

    Source: CBRE Research

  • 17 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET LOGISTICS GERMANYIndustrial investment volumes have surged in the past three years, driven by a search for yield and the high income returnsInvestment Volume Logistics 2009 to Q1 2015 (in million)

    0%

    1%

    2%

    3%

    4%

    5%

    6%

    7%

    8%

    9%

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    2009 2010 2011 2012 2013 2014 Q1 2015

    Industrial Investment Volume Share of Industrial on Total German Investment VolumeSource: CBRE Research

  • 18 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET LOGISTICS GERMANYHight interest across all investor types

    40% 20% 0% 20% 40%

    Public Sector

    Property Company

    Others

    Closed-ended Fund

    Insurance Company/ Pension

    Developer

    Corporates

    Private Investor

    Asset Manager / Fund Manager

    Open-ended Fund/Special Fund

    Listed Property Company/REIT

    % Vendor % Purchaser2014

    40% 20% 0% 20% 40%

    Public Sector

    Others

    Property Company

    Developer

    Corporates

    Private Investor

    Closed-ended Fund

    Insurance Company/ Pension

    Listed Property Company/REIT

    Open-ended Fund/Special Fund

    Asset Manager/Fund Manager

    % Vendor % PurchaserQ1 2015

    Logistics Transaction Volume by Type of Investor 2014 and Q1 2015 (in %)

    Source: CBRE Research

  • 19 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    100% 80% 60% 40% 20% 0% 20% 40% 60% 80% 100%

    2012

    2013

    2014

    Q1 2015

    Share in %

    Cross-border Purchasers Local Purchasers

    Sales Acquisition

    INVESTMENT MARKET LOGISTICS GERMANYespecially by foreign investors

    Investment Turnover Logistics by Investors Nationality 2012 to Q1 2015 (in %)

    Source: CBRE Research

  • 20 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    Distribution halls most sought-after type of use

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    2012 2013 2014 Q1 2015

    Distribution & Logistics Production (Industrial) Warehouse

    Logistic Transaction Volume by Type of Use 2012 to Q1 2015 (in million)

    INVESTMENT MARKET LOGISTICS GERMANY

    Source: CBRE Research

  • 21 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET LOGISTICS GERMANYIncreasing purchases of large-volume single assets

    Portfolios Portfolios

    Portfolios

    Portfolios

    Single-Assets

    Single-Assets

    Single-Assets

    Single-Assets

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    2012 2013 2014 Q1 2015

    Portfolios Single Assets

    71 % 68 %

    29 % 50 %32 %

    50 % 80 %

    20 %

    Investment Turnover Logistics by Share (in %)

    Source: CBRE Research

  • 22 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET LOGISTICS GERMANYFurther decline in prime yields (NIY, Top 5)

    4%

    5%

    6%

    7%

    8%

    9%

    Q1

    2005

    Q3

    2005

    Q1

    2006

    Q3

    2006

    Q1

    2007

    Q3

    2007

    Q1

    2008

    Q3

    2008

    Q1

    2009

    Q3

    2009

    Q1

    2010

    Q3

    2010

    Q1

    2011

    Q3

    2011

    Q1

    2012

    Q3

    2012

    Q1

    2013

    Q3

    2013

    Q1

    2014

    Q3

    2014

    Q1

    2015

    Shopping Center High Street Logistics Office

    4.50%4.44%

    5.80%

    4.00%

    Prime Yield 2004 to Q1 2015 (in %)

    Source: CBRE Research

  • 23 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    Summary, Y/YINVESTMENT MARKET LOGISTICS GERMANY

    Q1 2014 Q1 2015 Change y-o-y, % points

    Investment volume ( M) 1,296 430 -66.8%

    Share of portfolio deals (in %) 69.6 20.4 -49.1

    Share of foreign investors (in %) 79.3 56.1 -23.2

    Share of type of usage (in %)

    Production shed 14.2 4.8 -9.3

    Distribution hall / Logistic shed 82.0 62.1 -19.9

    Warehouse 3.8 33.1 +29.3

    Source: CBRE Research

  • 24 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    Summary, Q/QINVESTMENT MARKET LOGISTICS GERMANY

    Q4 2014 Q1 2015 Change y-o-y, % points

    Investment volume ( M) 953 430 -54.9 %

    Share of portfolio deals (in %) 57.3 20.4 -36.8

    Share of foreign investors (in %) 53.7 56.1 +2.5

    Share of type of usage (in %)

    Production shed 14.2 4.8 -9.4

    Distribution hall / Logistic shed 48.4 62.1 +13.7

    Warehouse 37.4 33.1 -4.3

    Source: CBRE Research

  • 25 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET LOGISTICS GERMANYSelected I&L investment transactions in 2014 and Q1 2015YEAR LOCATION # of properties NAME

    SIZE(ca. sq m)

    PRICE(ca. million)

    YIELD(ca. %) PURCHASER VENDOR

    2014 diverse 10 Navis (aka Project Mouse) 397,000 303 ConfidentialSegro European Logistics Partnership (SELP)

    Tristan Capital Partners

    2014 diverse 4 Goodman n/a 108 ConfidentialEPF (Employees Provident Fund, Malaysia)

    Goodman Property Investors

    2014 diverse 8 Alpha Industrial 277,000 130 UndisclosedAlpha Industrial GmbH & Co. KG n/a

    2014 diverse 7 Loren 203,640 Confidential Confidential Blackstone Group International Ltd.Foncire des Rgions

    2014 Kassel 2 Industrieparks Mittelfeld & Rothenditmold 213,100 90 UndisclosedGrand City Properties (GCP)

    Deutsche Asset & Wealth Management AG

    2014 diverse 3 CS Euroreal 73,750 86 UndisclosedBlackstone Group International Ltd.

    Credit Suisse Real Estate Asset Management GmbH

    2014 diverse 2 LogIn 111,430 Confidential Confidential Goodman Property InvestorsUnion Investment Real Estate GmbH

    2014 diverse 3 CBRE Raiffeisen 74,360 62 7.2 CBRE Global InvestorsRaiffeisen Capital Management GmbH

    2014 Forchheim 1 Hines - Harder & Partner 54,600 Confidential Confidential Hines Immobilien GmbH Harder & Partner

    2015 diverse 3 Fox 69,890 Confidential Confidential CBRE Global InvestorsDeka Immobilien Investment GmbH

    2015 Oberhausen 1 36,844 37 7.5Segro European Logistics Partnership (SELP)

    n/a

    Source: CBRE Research

  • 26 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    INVESTMENT MARKET OUTLOOK

    Macroeconomic framework:

    low prices for crude oil,

    decreasing exchange rate Euro to Dollar,

    low interest rates and

    possibly record-breaking consumer sentiment

    will positively affect leasing and logistics investment markets.

    It is to be expected that a very good take-up is generated on the rental market which is well above the longtime average, despite a limited offer of available spaces. This high demand for modern logistics property is especially driven by the e-commerce-sector and its associated logistics services.

    It gives reasons to expect that the macroeconomic framework and increasing demand of foreign investors cause a dynamic activity on the logistics investment market. A sufficient supply is a requirement for reaching the record-breaking achievement of 2014.

    Quo vadis?

    Source: CBRE Research

  • 27 SEGRO PLC | GERMAN I&L MARKET OVERVIEW

    DISCLAIMERDisclaimer 2015 CBREInformation herein has been obtained from sources believed to be reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE. Copyright 2015 CBRE

    About CBRECBRE is the market leading commercial real estate adviser worldwide - an adviser strategically dedicated to providing cross-border advice to corporate and investment clients immediately and at the highest level. We have 440 offices in 60 countries across the globe, and employ 48,000 people worldwide. Our network of local expertise, combined with our international perspective, ensures that we are able to offer a consistently high standard of service across the world. For full list of CBRE offices and details of services, visit www.cbre.de.

  • For more information regarding this presentation please contact:Rainer Koepke

    Managing Director

    Head of Industrial & Logistics Germany

    +49 69 170 077 671

    [email protected]

    Dr. Jan Linsin

    Senior Director

    Head of Research Germany

    +49 69 170 077 663

    [email protected]

    Kai F. Oulds

    Managing Director

    Head of Logistics Investment

    +49 69 170 077 33

    [email protected]

    Industrial & LOGISTICS market overviewEconomic OverviewEconomic OverviewLogistics indicatorINDUSTRIAL & logistics MARKET IN GENERALGerman Top 20 Logistics RegionsTYPICAL LEASING CONDITIONSIndustrial & Logistics market FIGURESIndustrial & LOGISTICS market overviewINDUSTRIAL & LOGISTICS Total Take-upMajor Logistics Region in Germany 2014RENTAL LEVELSPrime rentsRENT LEVELSINVESTMENT MARKET OVERVIEWInvestment market LOGISTICS GERMANYInvestment market LOGISTICS GERMANYINVESTMENT MARKET LOGISTICS GERMANYInvestment market LOGISTICS GERMANYInvestment market LOGISTICS GERMANYInvestment market LOGISTICS GERMANYInvestment market LOGISTICS GERMANYInvestment Market Logistics GermanyInvestment Market Logistics GermanyINVESTMENT MARKET LOGISTICS GERMANYInvestment market outlookDisclaimerSlide Number 28