INDUSTRIAL & LOGISTICSMARKET OVERVIEWGermany
Düsseldorf, 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, Düsseldorf, Frankfurt, Hamburg, Munich)EUR 4.75 / sq m / mth for Germany othersin EUR (5,000 sq m unit)
Tenant’s 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/Düsseldorf (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 Ø-Take-up 2008 - 2014
Take-up Germany in sq m
Source: CBRE Research
11 SEGRO PLC | GERMAN I&L MARKET OVERVIEW
825 1,164 1,256 1,464 1,216 1,335 1,2431,768 2,192 1,728 1,683 1,828
1,0631,229 1,388
1,727 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
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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 Düsseldorf Frankfurt/Rhine-Main Hamburg Munich Ø-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
Düsseldorf
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
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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
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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
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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 GERMANY…especially by foreign investors
Investment Turnover Logistics by Investor’s Nationality 2012 to Q1 2015 (in %)
Source: CBRE Research
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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
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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.
Foncière des Régions
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 Investors
Union Investment Real Estate GmbH
2014 diverse 3 CBRE Raiffeisen 74,360 62 7.2 CBRE Global Investors
Raiffeisen 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 Investors
Deka 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
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For more information regarding this presentation please contact:Rainer Koepke
Managing Director
Head of Industrial & Logistics Germany
+49 69 170 077 671
Dr. Jan Linsin
Senior Director
Head of Research Germany
+49 69 170 077 663
Kai F. Oulds
Managing Director
Head of Logistics Investment
+49 69 170 077 33
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