Pan  European    Real  Estate    

Investment  Opportunity  on  Income-­‐genera8ng  Commercial  Real  Estate  in  Europe  

Jamison  Group  Real  Estate  

Market  Opportunity  Real  Estate  market  in  Europe  comprises  40%  of  the  world  total.  Currently,  prices  in  certain  areas  are  at  a  historic  record  low.  For  Investors,  some  countries  represent  a  safe  heaven  while  others  mean  a  big  opportunity,  but  for  those  specialized  buyers  with  strong  local  knowledge.  

Why  Real  Estate?  Real  Estate  financing   is  shi/ing,  with  the  majority  of  European  Real  Estate   investors  predic<ng  a  shi/  from  tradi<onal  bank  lending  to  other  sources  of  capital.  “There  is  a  change  in  percep<on  that  is  likely  to  boost  sen<ment.    

Why  Europe?  The  Eurozone  sovereign  debt  crisis,  which  was  previously  seen  as  undermining  real  estate  investment,  is  now  viewed  as  a  poten<al  s<mulus  for  ac<vity.”*  The  absence  of  an  Euro  breakup,  a  historically  low  prices  and  recent  changes   in  regula<ons   is  making  Europe  a  prime  investment  op8on  in  Real  Estate.  

Why  now?    The  Real  Estate  yield  gap  between  European  Core  markets  and  Peripherals  is  now  at  PRE-­‐EURO  levels.  Core   Markets   are   facing   a   steady   price   recovery,   mainly   in   the   Commercial   Real   Estate   market.  Interna<onal   Investors   are   increasingly   ac<ve   in   core   ci<es   but   with   an   increasing   appe<te   for   the  peripherals,  mainly  due  to  the  combina<on  of  high  yield  (currently  at  EM  levels)  and  lower  risk.    

2013-­‐2014  forecast.    The  European  office  market   is  seeing  a  recovery   in  confidence,  with  aLrac<ve  yields  during  the   laLer  half  of  2013.  Also,   there  are   incen<ves   for   the  best   space  gradually  being  scaled  back,  an   increase   in  demand  during   2014   for   primary  markets,   and   a   stabiliza<on   in   those  markets  most   affected   by   the  euro  zone  crisis.  (Source:  Cushman  &  Wakefield)  

Few  Facts.  ü  European  countries  are  aLrac<ve  investment  des<na<ons.  Offering  investors  surety  of  ownership,  

transparency  and  enforceability  of  contracts.    

ü  UK,  is  one  of  the  hoLest  markets  today  as  a  safe  heaven  while  Spain  and  Ireland  are  countries  with  records  low  prices  and  high  yields.  

ü  Markets  like  London  and  Paris  also  offer  good  liquidity  

ü  PorZolios’  offering  is  increasing  which  means  an  opportunity  to  acquire  assets  at  low  rates.  

ü  The  market  has  started  to  stabilizes,  with  significant  growth  poten<al  in  the  near  future.*  

ü  Foreign  investors  represent  more  than  40%  of  RE  investments  only  in  2013  

ü  Main  Interna<onal  Investors  has  started  Funds  specifically  for  European  Real  Estate  

 *  Source:  Ernst  &  Young  Real  Estate  

Rental  Growth  Slowing  

Rents  Falling  

Rents  BoQoming  Out  

Rental  Growth  

Accelera8ng  

Amsterdam,  Paris  CBD,  Warsaw    

Helsinki,  Lyon    

Oslo,  Stockholm,  StuLgart    

Berlin,  Cologne,  Düsseldorf    

Copenhagen,  Hamburg,  Moscow    

Munich  

London  City  ,    London  West  End    

Istanbul,  Luxembourg,  St.Petersburg  

Manchester  

Bucharest,  Brussels,  Edinburgh,  Frankfurt,  Kiev,  Prague    

Barcelona,  Dublin    Budapest,  Madrid,  Rome    

Athens,  Lisbon    

Milan,  Zürich    Geneva  

Key  Markets  In  order  to  achieve  a  risk-­‐return  balanced  porZolio,    

investments  will  be  spread  between    London,  Dublin,  Paris,  Madrid,  Barcelona,  Brussels  and  Lisbon  

European    Real  Estate  Market  

Current  Situa8on  The  general  business  environment  has  changed  posi<vely  for  Europe.  For  some  of  the  Big  Four  advisors,  Europe  has  started  the  path  of  recovery.  Besides  there  is  a  way  to  go,  Europe  is  “at  the  start  of  the  second  act”*.    

As  a  consequence  of  the  current  crisis,  the  market  has  changed.  Nowadays,  capital  con<nues  being  global  but  returns  required  local  specializa<on  and  exper<se.  “…AccepAng  more  risk  requires  more  rigour  –  and  this  is  where  those  who  are  specialized,  who  have  detailed  local  knowledge,  and  who  can  create  networks  in  regional  markets  will  prosper.”*    

Core  markets  in  Europe,  such  as  London,  Paris,  Nordics  and  Germany,  are  in  the  spotlight  this  year.  However,  Southern  Europe  (Dublin,  Madrid,  Barcelona,  Lisbon,  and  Milano)  have  also  captured  aLen<on.  Investors  are  taking  posi<ons  and  preparing  their  structures  to  be  ready,  expec<ng  for  a  2H  2013  &  2014  with  an  vigorous  deal  flow.  “Banks  were  holding  on  to  in  the  hope  of  a  value  recovery,  but  now  assets  are  being  more  aMracAvely  priced  “*  

Facts  ü  Banks  and  lenders  have  started  to  sell  ü Business  environment  is  at  it  best  since  2008  

ü New  regula8ons  to  aLract  foreign  investment  

ü  Prices  are  at  historical  low  ü Rents  are  steady    ü Vacancy  has  started  to  cease    

 

*  Source:  PwC  RE  

Best  Targets  

Prime  Office  Buildings  

Luxury  Shopping  Centers  

e-­‐commerce  stores  

Recyclable  Commercial  Buildings  

News  &  Press  

The  following  press  releases  and  news  refer  to  the  period  of  2013  

Savills:  Cross-­‐border  investors  dominate  ac8vity  in  Europe’s  peripheral  markets.  InternaAonal  players  have  dominated  Europe’s  peripheral  investment  markets  in  H1  2013  accounAng  for  almost  60%  of  transacAonal  acAvity  in  Italy,  Spain  and  Ireland  compared  to  40%  in  2012  

UK  Commercial  Property  Values  Increase  -­‐  WORLD  PROPERTY  CHANNEL  Global  News  Center.  Capital  values  for  commercial  property  increased  by  0.2  percent,  represenAng  three  consecuAve  months  of  growth,  according  to  the  latest  report  from  Investment  Property  Databank  

Blackstone  has  targeted  a  $5  billion  European  real-­‐estate  investment  fund.  Blackstone,  one  of  the  biggest  investors  in  Real  Estate  is  selling  its  50  percent  stake  in  Broadgate  office  complex  in  London  to  GIC,  Singapore's  sovereign  wealth  fund,  among  other  assets,  to  build  its  European  Real  Estate  Fund.  

€140  million  Ulysses  Por_olio  up  for  sale  in  Dublin.  Ulysses  Poreolio  is  a  high  yielding  mixed-­‐use  poreolio  within  Dublin  city  with  the  majority  of  income  aMributable  to  Government  /  Semi-­‐State  tenants.  The  properAes  comprise  a  mix  of  single  and  mulA-­‐let  offices,  a  variety  of  retail  units  and  apartments  (let  on  full  repairing  and  insuring  leases)  and  is  being  offered  either  as  a  single  lot,  or  as  three  individual  lots.  

Kennedy  Wilson  and  Varde  purchase  por_olio  of  eight  UK  shopping  centers  for  £250  million  (UK)  Seven  of  the  eight  centers  have  transferred,  with  the  final  center  due  to  close  subject  to  customary  closing  condiAons.  The  total  equity  contribuAon  was  £110  million  (approx.  €130.75  million),  including  £34  million  (approx.  €40.41  million)  from  Kennedy  Wilson,  and  £163  million  (approx.  €193.75  million)  of  financing  was  provided.  

Forecasts  for  the  commercial  real  estate  market  in  Spain  improve  |  Europe  |  News.  Although  Spain  conAnues  to  be  affected  by  the  uncertainty  that  has  impacted  the  country  over  the  past  five  years,  an  economic  recovery  does  now  appear  to  be  closer  and  forecasts  for  the  real  estate  market  have  improved.  According  to    the  latest  Spanish  Commercial  Property  Market  Review  from  real  estate  analysts  Knight  Frank  covering  the  first  half  2013  it  is  possible  that  some  form  of  recovery  in  the  sector  will  be  seen  by  the  end  of  2013.  GDP  forecasts  for  2014  indicate  that  growth  will  be  close  to  0.5%,  boosted  by  an  expected  improvement  in  the  global  economy.  The  outlook  will  also  be  aided  by  the  measures  taken  by  the  European  Central  Bank  (ECB)  to  stabilize  and  ensure  the  survival  of  the  Euro.    

The  Team  

Mariano  Marc  More  than  15  years  in  the  Asset  Management  field.  Specialized  in  Distressed  Asset   Management.   Have   co   founded   Asset   Management   Companies   in  Europe  and  La<n  America.  He  has  directly  managed  more  than  US$600M  in  RE  backed   loans   and   acquired   +US$1,5bn   in   distressed   assets.   In   2010,   he  designed  and  structured  the  Consumer  Finance  arm  for  a  leading  Insurance  Co  in  La<n  America.  

Bertrand  François  Guillot  25yrs  investment  banking  in  UK,  US,  France  and  Spain  with  Ci<group,  AIG,  ANZ  Investment  Bank.    Bertrand  was  responsible  for  AIG-­‐GE  Capital,  U$1bn  private  equity   fund   as   well   as   AIG’s   direct   investments   (U$150m)   in   La<n   America.  Bertrand  was  board  member  of   several   companies   including  Axtel,  Mexico’s  2nd   largest   telecom   operator   and   Cablemas,   Mexico   leading   cable   TV  operator   ,   genera<ng  3.4   and  1.6   cashflow  mul<ple   return   and  addi<onal  U$46m  in  fees.  As  founder  and  head  of  Ci<bank’s  CEMEA  project  finance  team  for  media  and   telecom  he   structured  over  U$2bn   in  numerous   transac<ons.  He   has   been   directly   responsible   for   the   origina<on   and   due   diligence   of  distressed  assets  (including  real  estate)  in  Spain  and  Portugal  for  over  €1bn  in  face  value  

Ali  Fakhri  Ali  Fakhri  has  worked  in  London  and  the  GCC  including  Saudi  Arabia  property  market  for  more  than  20  years.  His  experience  has  been  gained  from  working  at  various   large  corporate  establishments  among  them,  CB  Hillier  Parker  and  Dubai  Proper<es.  20  years  real  estate  expert,  10  years  presence  in  the  Middle  East.    Ali   has   substan<al   experience   in   asset   acquisi<on   ($480m)   and   disposal  ($430m)  together  with  asset  management  experience  gained  while  working  in  a  number  of  asset  owner  organisa<ons  total  assets  under  management  (  Over  $1b).  

Partners  

Ci8es  

London  Paris  Dublin  Madrid  

Barcelona  

London,  UK  London  Momentum.    The  Total  Commercial  Development  Ac<vity  Index  –  a  net  balance  monitoring  the  overall  performance  of  the  UK  commercial  property  sector  –  recorded  +26.7%  in  August,  up  from  July’s  +20.1%.  The  latest  reading  pointed  to  the  strongest  growth  rate  since  March  2007.    Grade  A  office  rents,  rates  and  service  charges  showed  the  biggest  increase  in  Swindon,  Wiltshire,  with  a  12%  rise  to  £23  per  sq  /,  followed  by  WaZord,  HerZordshire,  which  recorded  a  9%  increase  to  £37  per  sq  /.    Dynamics  of  the  supply  side.  Technology,  media  and  telecoms  sectors  will  con<nue  to  fill  a  propor<on  of  the  demand  gap  created  by  the  banking/financial  services  sector.  Prime  office  rents  for  well  located  refurbished  and  new  Grade  A  space  in  Central  London  will  rise  by  an  average  of  5-­‐10%  by  2015.    It  is  likely  that  during  the  second  half  of  2013  rent  free  periods  throughout  most  of  the  prime  and  good  secondary  office  loca<ons  in  Central  London  will  narrow  by  1  -­‐  2  months,  based  on  5  –  10  year  leases.    

Key  Data  Popula<on:  63,2  Million  GDP*:  €1.800bn  (+0,6%)  Debt  to  GDP:  90%    Consumer  Indicators    Infla<on:  +2.8%  (Steady)  CSI  (2012-­‐2013)  -­‐1,5%  Unemployment:  7.8%  (-­‐0.1%yoy)    CRE  Market  Yield:  5%  Prime  city  rents:  +22%**  £  by  sqm:  £95-­‐110  Improved  demand:  +25%**      *  2013  yoy                        Source:  Moodys’  **since  2009    

Take-­‐up  reached  238,000  sq  /,  bringing  the  year-­‐to-­‐date  total  to  403,000  sq  /,  this  is  63%  down  on  average  for  the  first  two  months  of  the  year.    

Paris,  France  The  Commercial  Real  Estate  Market  in  Paris.  For  several  years  Paris  has  been  the  most  important  real  estate  investment  market  in  con<nental  Europe,  with  overall  investment  volumes  of  €  8-­‐10  Billion  each  year.  Paris  is  the  second  most  popular  des<na<on  in  Europe  for  interna<onal  real  estate  investment.  One  third  of  Fortune  500  companies  have  their  headquarters  in  Paris,  the  second  most  popular  loca<on  for  these  companies  a/er  Tokyo.    

The  largest  office  market  in  Europe.  The  Paris  Region  is  home  to  the  largest  office  market  in  Europe  with  around  52  million  square  metres  (sqm).  It  is  the  second  largest  in  the  world  a/er  New  York.  On  average  over  the  last  10  years,  the  Paris  Region  lezng  market  has  seen  2.2  million  sqm  of  take-­‐up  yearly.  This  places  it  at  the  top  of  all  European  markets  in  terms  of  demand.    

Yields.  In  the  golden  triangle  area  (around  the  Champs  Elysées),  the  best  proper<es  sell  at  yields  of  between  4.50-­‐5.00  %  (as  at  Q3  2012).  Prime  yields  in  La  Défense  are  posi<oned  around  6.00-­‐6.50  %  and  around  5.75-­‐6.25  %  in  the  Western  Crescent  submarkets.    

TOP  Compe88ve  advantages  of  Paris  ●  A  stable  poli<cal,  economic  and  legal  environment.    ●  Diversified  and  interna<onal  occupier  base.    ●  A  large  diversity  in  business  sectors  and  in  the  size  of  occupiers.    ●  A  wide  offer  of  proper<es  with  varying  architecture,  technical  characteris<cs,  energy  performance  and  occupa<onal  costs.    ●  A  stable  stock  of  office  space  limi<ng  any  oversupply  phenomenon  and  overall  vacancy  rates.    ●  2nd  largest  investment  market  in  Europe  with  the  highest  level  of  transparency.    ●  Liquid  investment  market  with  50%  interna<onal  investors.    ●  Index-­‐linked  rental  increases  providing  stable  growth  of  income  returns.    ●  Stable  capital  values  with  less  vola<lity  than  its  main  compe<tor  London.  

Key  Data  Popula<on:  65  Million    GDP:  €  2.028.000  bn  Debt  to  GDP:  90.2%    Consumer  Indicators    Infla<on:  1%  (Steady)  Unemployment:  11%    CRE  Market  Yield:  4.5%  Prime  Prime  city  rents:  xxxx  €  by  sqm:  €795  Prime  Vacancy  rate:  6%  Prime.    Total  supply:  52M  sq  m  

Dublin,  Ireland  The  crea<on  of  NAMA  in  Ireland  three  years  ago  has  clearly  helped  the  credibility  of  the  government  and  property  market  with  investors.  Rental  values  in  the  Irish  office  market  have  grown  by  0.2%  for  the  first  <me  in  five  years,  according  to  IPD/ICSI  Ireland  Quarterly  Property  Index.  This  e  growth  is  the  first  sign  of  recovery  in  the  occupier  market,  which  has  seen  rental  values  wriLen  down  by  over  48%  since  December  2008.    A  number  of  'big  name'  interna<onal  tenants  have  moved  to  Ireland  over  the  last  two  years,  aLracted  by  improved  Irish  compe<veness,  low  corpora<on  tax,  a  well-­‐educated  young  workforce  and  heavily  discounted  rents  –  and  this  has  started  to  be  reflected  in  the  occupier  market.  140  foreign  Co.  expanded  or  launched  opera<on  in  2012,  mainly  in  Dublin.  Investments  in  CRE.  €436M  office  investment  in  2012,  of  which  over  50%  in  Q4  alone.  Total  investment  volume  transacted  €640M  against  €180M  in  2011.  +51,000  sq  m  of  space  was  transacted  in  the  Dublin  office  market  in  the  last  quarter  of  2012.      1Q  2013.  The  momentum  experienced  in  the  commercial  property  sector  during  the  laLer  half  of  2012  has  con<nued  this  year.  More  than  €336  million  of  investment  proper<es  of  more  than  €1  million  in  value  traded  in  the  Irish  market  during  the  1Q  2013.  In  total,  21  investment  transac<ons  of  more  than  €1  million  were  completed  in  the  Irish  market  during  Q1  2013.  This  quarterly  spend  compares  with  €545  million  invested  in  Irish  commercial  real  estate  in  the  en<re  year  last  year  and  is  significantly  higher  than  that  invested  in  each  of  the  previous  three  years.      Notable  investment  transac8ons  completed  in  the  first  quarter  of  2013  the  sale  of  the  Bishop’s  Square  office  building  in  Dublin  2  to  US  investor  for  €65  million,  at  a  9.8%  yield;  the  sale  of  a  porZolio  of  four  office  buildings  in  the  Irish  Airlines  Pension  Fund  and  the  sale  of  two  adjoining  buildings  on  Gra/on  Street.  

Key  Data  Popula<on:  4.7  Million  GDP:  €163bn  Debt:  €192bn  (117%  vs  GDP)    Consumer  Indicators    Infla<on:  +0.5%  (Steady)  CSI  (2012-­‐2013)  0.5%  Unemployment:  0%  yoy    14.1%  overall    CRE  Market  Yield:  +9%  €  by  sq.m:  €32.3  Vacancy/occupa<on:  20.2%  

Madrid,  Spain  The  market  has  started  to  move  forward.  The  first  quarter  of  2013  closed  with  the  highest  quarterly  Madrid  office  take-­‐up  recorded  since  2008  at  approximately  160,000  sq  m,  represen<ng  a  179%  year-­‐on-­‐year  rise,  from  58,000  sq  m  in  Q1  2012.  European  players,  par<cularly  German  investors,  are  showing  renewed  interest  in  the  Madrid  office  market  whilst  La<n  American,  US  and  Asian  buyers  returned  to  the  market  at  the  close  of  2012.    Country’s  posi<ve  results  are  coming  from  the  trade  balance,  which  has  dropped  by  70%  since  the  top  of  the  market  in  2007,  which  helps  boos<ng  the  compe<<veness  of  the  Spanish  economy.  The  falling  inter  annual  deficit  figure,  which  was  at  6.98%  in  2012,  coupled  with  the  aliena<on  of  the  need  for  a  bailout,  mean  that  the  forecast  for  the  upcoming  quarters  could  poten<ally  suggest  tenta<ve  and  yet  sustained  economic  improvement.  This  is  then  expected  to  stabilize  in  2014  and  show  clear  signs  of  growth  from  2015  onwards.    

Key  Data  Popula<on:  47  Million  (2012)  GDP:  €260bn  (-­‐1.8%)    Consumer  Indicators    Infla<on:  +2.4%  (Steady)  CSI  (2012-­‐2013)  +1.5%    Unemployment:  -­‐1.9%  Q42012  26%  overall    CRE  Market  Yield:  6%  Prime  7,5%  Key  Hubs  Prime  city  rents:  Stable  €  by  sqm:  €14avge-­‐  €24Prime  Vacancy  rate:  13%global,  6,3%  Prime.  Total  supply:  1,7M  sq  m  

Strong  1Q  2013  

sq m

Nº o

f dea

ls

Q1

00

Q1

01

Q1

02

Q1

03

Q1

04

Q1

05

Q1

06

Q1

07

Q1

08

Q1

09

Q1

10

Q1

12

Q1

13

Q1

11

Historic CRE trend in demand  350,000

 300,000

 250,000

 200,000

 150,000

 100,000

   50,000

     -

Take-up Nº of deals  300

 250

 200

 150

 100

 50

 0

Barcelona,  Spain  The  average  vacancy  rate  in  Barcelona  remained  almost  stable  at  13.8%.  There  are  already  very  few  built  op<ons  in  the  market  for  the  substan<al  exis<ng  demand.  Developers  are  not  currently  planning  specula<ve  construc<on,  so  this  situa<on  could  intensify  in  the  coming  years.  In  2012,  a  total  of  199,000m²  of  office  space  was  taken  up,  down  26%  on  the  figure  for  2011.  In  fact,  2012  saw  the  lowest  take-­‐up  figure  for  the  last  15  years  (since  1997).  

Key  Data    CRE  Market  Yield:  6.75%  Prime  Prime  city  rents:  €18  p  sq.  m  Vacancy  rate:  13.8%global        

Source:  JJL  

2011

2002

2003

2004

2005

2006

2007

2008

2009

2010

2012

10yr Average Supply  and  Vacancy  Rates  

 VacancyRate %    16    14    12    10    8    6    4    2    0    Vacancy Rate

 000s sqm  1,000    800    600    400    200      0            Vacancy Total

Market  Areas  

Q4  2012  was  the  most  ac<ve  quarter  of  the  year,  with  4  deals  for  €143  million.  This  takes  the  total  volume  for  the  Barcelona  office  investment  market  in  2012  to  €265  million.  This  represents  a  38%  increase  on  the  €192  million  registered  in  2011