REITs in Europe Industry Overview

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1 REITs in Europe Industry Overview Tobias Steinmann & Laurent Ternisien Lisbon, December 6th, 2016

2 EPRA: European Public Real Estate Association Member No. % Property Companies & REITs Investors* Academics Consultants & others 18 8 Total Representing Gross Value > 365 billion *Investment Companies, Insurance Companies/Funds, Banks & Stockbrokers All areas support & promote the sector Accessing deep industry research and data Advocating & developing a performing industry Shaping together the agenda & promoting best practices Attending exclusive events & creating opportunities to connect 2

Commercial Real Estate in Europe Significant role in Europe s economic, industrial and social structure Approx 50% of European companies rent their business premises Value of all commerical real

3 Commercial Real Estate in Europe Significant role in Europe s economic, industrial and social structure Approx 50% of European companies rent their business premises Value of all commerical real estate is EUR 5.8 trillion >20% of Europe s economic activity Employs ca. 3,8 million workers EU Commercial real estate value Billion Euro, Real estate Stock Market Bonds 3

4 Example of France b Source IEIF, MSCI, ASPIM, FSIF, CNCC, INREV, CBRE, DTZ, BNP) Total asset value Offices Retail shopp ing center Industria l & logistics Others Average LTV Total debt REITs and listed real estates % 31 Insurances and other institutionals (Direct) % 5 Fund managers for institutionals % 31 Fund managers Retail (SCPI, OPCI) % 8 Autres (private, family office ) % 24 TOTAL Weight of REITs and Listed RE 24% 17% 49% 58% 18% 32%.

Market Capitalisation Evolution Real estate: the 11 th sector in GICS Ireland UK Germany Italy Four-fold increase since 2008 NL Belgium France Spain Further potential compared with: - US REITs market

5 Market Capitalisation Evolution Real estate: the 11 th sector in GICS Ireland UK Germany Italy Four-fold increase since 2008 NL Belgium France Spain Further potential compared with: - US REITs market free float market cap(x5.1) size - Overall size of European RE market (only 3.2%) - Size of overall listed market (only 4.9%) FTSE EPRA/NAREIT Developed Europe Index total market capitalisation The dates indicate when the REIT status was established in each country The split between REITs and Non REITS in the index started in

6 Size matters US versus Europe x2 x3 Free float Equity Non free float Equity Debt The median US Equity REIT: 31% leverage Total market cap of 2.9b Free float of 2.8b The median Europe developed Listed Real Estate Company: 38% leverage Total market cap of 1.2b Free float of 1b 6

7 Real Assets across Europe 101 Companies with over 10,000 assets and portfolio s in 20 countries across 9 sectors Source: EPRA, SNL Financial Data as of: July 31,

8 Europe listed real estate - strong investment case Diversification & liquidity Quality assets & management Strong total returns & dividend yield Governance & transparency

9 Strong Long Term Performance 9,0% 15-year annualised total return in local currency 8,0% 7,0% 6,0% 6,5% 8,3% 5,0% 5,2% 5,3% 4,0% 3,0% 2,0% 1,0% 1,7% 0,0% EPRA 2013 Sources: EPRA, FTSE, JP Morgan Data as of: October 31, 2016 Europe Inflation Europe equities Europe bonds Europe real estate Europe listed real estate.

Attractive Dividend Yield 4,5% 5-year Average Yield 4,0% 3,5% 3,7% 3,7% 4,3% 3,0% 2,5% 2,0% 2,5% 2,9% 1,5% 1,0% 0,5% 0,0% 0,4% ECB Refinancing rate FTSE Government Bonds >10 year Europe FTSE

10 Attractive Dividend Yield 4,5% 5-year Average Yield 4,0% 3,5% 3,7% 3,7% 4,3% 3,0% 2,5% 2,0% 2,5% 2,9% 1,5% 1,0% 0,5% 0,0% 0,4% ECB Refinancing rate FTSE Government Bonds >10 year Europe FTSE Corporate Bonds >10 year Europe FTSE All World Europe FTSE EPRA/NAREIT Developed Europe Index FTSE EPRA/NAREIT Developed Europe REITS Index Sources: ECB, FTSE, EPRA, NAREIT Data as of: October 31, 2016.

11 European REIT evolution Country Year Netherlands 1990 Belgium 1995 France 2003 UK 2007 Germany 2007 Italy 2007 Spain 2009 Ireland 2013 Introduction does not necessarily equal success! Regulation must ensure: Simple to use & transparent Competitive Flexible to meet market conditions.

12 REITs converge state of play Country Tax Exempt (Ownership) Distribution Requirements (Yield) Operational Restrictions (Develop?) Leverage Restrictions (Mkt forces) Shareholder Requirements (Liquidity) Withholding Tax (Govt) Germany France UK Italy (++) + (0) (++) + (0) + ++ Spain + (0) (++) Ireland indicates the requirement or restriction is strong + indicates the requirement is moderate 0 indicates that there are almost no requirements or restrictions Green indicates similar legislation or convergence 12

13 Capital raised since introduction of REIT regimes Countries REIT Regime Mln EUR Spain* 2009 (updated in 2013) 10,051 Ireland ,127 Total 12,178 *includes MAB listings Success factors: Stability & economic recovery Improved REIT regulation Increased allocations to real estate

14 GICS new sector - New sector status will reduce volatility closer to direct property - Enormous potential capital inflow of 75 bn. EUR

15 Global Pension Asset Study 2016

Real Estate Investments Investors with Real Estate allocation Average allocation to Real

allocation for investors In the US, among institutional investors 1,7 37% 80% 6,1 33% In

1% actual, 1.0% higher target 21% (by no.

16 Real Estate Investments Investors with Real Estate allocation Average allocation to Real Estate (%) Investors with Listed Real Estate allocation Average Listed Real Estate allocation for investors In the US, among institutional investors 1,7 37% 80% 6,1 33% In Europe, among institutional investors % 80% 4,1 32% 80% have exposure to Real Estate 4.1% actual, 1.0% higher target 21% (by no.) have exposure to listed, (28% for >$5bn, 18% for smaller) 32% of Real Estate exposure is listed. 28% for the smaller investors. Source: Preqin, EPRA & NAREIT 16

17 Peer Real Estate Allocations Pension fund APG / Netherlands Target %RE %Listed RE 10% 30% Sovereign Wealth fund GPF / Norway Target %RE %Listed RE 7% 23% Top 20 investors in RE Investor Country RE AUM ( b) Total AUM ( b) Abu Dhabi Investment Authority UAE Stiching Pensionfonds ABP NL Caisse de depot et Placement du Quebec CA Allianz GE CalPERS US Generali IT CalSTRS US Ontario Teachers' Pension Plan CA Norway Governement Pension Fund Global NO Canada Pension Plan Investment Board CA Swiss Life SW Pensioenfonds Zorg en Welzijn NL AXA FR GIC Private SI Caisse des Depots et Consignations FR Source: EPRA & IPE May/June

18 Contact: General enquiries: Switchboard: Addresses: Square de Meeûs 23 Berkeley Square House Suite , Lippo Centre B-1000 Brussels Berkeley Square 89 Queensway, Admiralty Belgium London, W1J 6BD Hong Kong, PRC Please visit:

EPRA European Listed RE market

EPRA European Listed RE market April 4th, 2016 Tel Aviv Ali Zaidi What are REITs? REITs smell like real estate, look like bonds and walk like equity Greg Whyte, Analyst, Morgan Stanley REAL ESTATE INVESTMENT