Europe Is Not Dead Guest Editor — Dr Ian Shepherdson

COVER NEWS ISSUE 45 AUGUST 2013

FEATURES REFERENCE - EPRA Annual Conference - Member offers - The French REIT is not a - FTSE EPRA/NAREIT Global tax loophole Real Estate Indices - Making the data count

Europe is not dead Guest Editor — Dr Ian Shepherdson

Tracking EU regulatory activity

Crossrail & Grand Paris – two of Europe’s largest infrastructure projects EPRA members As of August 2013

Australia • Fair Value REIT Norway • JPMorgan • Univ. of Western Sydney, • GSW • Norwegian Property • Jefferies Property Research Centre • Hamborner • JLL • Heitman Singapore • KPMG Austria • IREBS International RE Business • Keppel Land Limited • Land Securities • CA Immobilien Anlagen School • National Univ. of Singapore • Linklaters • Conwert Immobilien Invest • IVG Immobilien • London Metric • Immofinanz AG • LEG South-Africa • Macquarie Real Estate • Sparkassen Immobilien • MEAG Real Estate Management • Growthpoint Properties • M&G Investment Management • PATRIZIA Immobilien • Morgan Stanley Belgium • POLIS Immobilien Spain • Nabarro • Aedifica • PricewaterhouseCoopers • Fundación ESADE • Nottingham Trent Univ. • Antwerp Management School • Prime Office REIT • Inmobiliaria Colonial • Principal Global Investors • Banque De Groof • Real Estate Management • Neinver • Quintain Estates & Development • Befimmo Institute • TESTA Inmuebles & Renta • Redefine International • Cofinimmo • RREEF Investment • Safestore • Leasinvest Real Estate • SEB Asset Management Sweden • SEGRO • Retail Estates • TAG Immobilien • Aberdeen Property Investors • Shaftesbury • Solvay Business School • VIB Holding • Standard Life Investments (Brussels Univ.) • Castellum • Thames River Capital Greece • Fastighets AB Balder • Tristan Capital British Virgin Islands • Eurobank Properties REIC • UBS • Eastern Property Holdings • Lamda Development Switzerland • Unite Group • National Bank of Greece • Center for Urban & RE • Univ. of Aberdeen Canada Property Services Management • Univ. of Cambridge • Presima • Trastor REIC • Euro Institute of RE Management • Univ. of Reading, Centre for • Mobimo Holdings RE Research Cyprus Hong Kong • PSP Swiss Property • Workspace Group • 01 Properties • Univ. of Hong Kong • Strategic Capital Management • Swiss Prime Site USA Czech Rep Isreal • University of Geneva • Cohen & Steers Capital • PointPark Properties • Azrieli Group Management • Gazit Globe TURKEY • Duff & Phelps Finland • Emlak Konut • European Investors Incorporated • Aalto Univ. Italy • Torunlar REIT • Fidelity Management & • Citycon • Beni Stabili Research. • KTI Finland • Immobiliare Grande UAE • Forum Partners Investment • Sponda Distribuzione • Abu Dhabi Investment Authority Management • Host Hotels France Luxembourg United Kingdom • MIT Center for Real Estate • Affine • Atrium European Real Estate • AEW • Real Capital Analytics • Altarea • GAGFAH • AMP Capital Brookfield • Real Foundations • ANF Immobilier • Assura • Russell Investment Group • BNP Paribas Netherlands • Aviva Investors • Simon Property • Cegereal • ABN Amro • Bank of America • SNL Financial • EUROSIC • Amsterdam School of RE • Barclays Capital • The Tuckerman Group • Foncière des Regions • APG Asset Management • BDO • Univ. of Cincinnati • Gecina • ASR • Big Yellow Group • Urdang • ICADE • BPF Bouwinvest • Blackrock Asset Management • Ventas • IEIF • CB Richard Ellis • British Land • Westfield Group • Ivanhoe Cambridge Europe • CBRE Global Investors • Cass Business School • Zell-Lurie RE Center at Wharton • Klépierre • Clifford Chance • Capital & Counties Properties • Mazars • Corio • CBRE Clarion Securities • Mercialys • Cornerstone Real Estate Advisors • Cerberus European • Orco Property Group • Deloitte Real Estate Capital Advisors • Predica • Eurocommercial Properties • Credit Suisse Securities • Silic SA • Houthoff Buruma • Derwent London plc • Société de la Tour Eiffel • Kempen & Co • Deutsche Bank • Société Foncière Lyonnaise • LaSalle Investment Management • Ernst & Young • Société Générale • Loyens & Loeff • GIC Real Estate • Unibail-Rodamco • MN Services • Goldman Sachs International • Université de Paris-Dauphine • Nieuwe Steen Investments • Grainger • Zueblin • PGGM • Great Portland Estates • Redevco Europe Services • Green Street Advisors Germany • Tilburg Univ. • Grosvenor Group • Allianz Real Estate • Univ. of Maastricht • Hammerson • Alstria Office REIT • VastNed • Hansteen Holding • Deutsche Annington • Warehouse de Pauw • Henderson Global Investors • Deutsche EuroShop • Wereldhave • Ignis Asset Management • Deutsche Wohnen • Yardi • intu • DIC Asset • Invesco

2.2. _ EPRA EPRA NEWS NEWS / /29 45 / /2008 2013 CONtents

NEWS

ISSUE 45 | JULY 2013

GUEST EDITOR Dr Ian Shepherdson 4

CEO UPDATE 6 Features CREDITS A gathering of minds 10 From East to West — attracting capital 12 CEO Conference 17 IPE Awards 18 Outreach update 20 Editor & Production Manager Dominic Turnbull More appetite at the table 24 Guest Editor Judi Seebus EPRA Annual Conference 28

Article Credits EPRA Annual Conference Programme 32 Barney Coleman Colin Lizieri Reporting back — EPRA CFO Summit 34 Christophe Kullmann David Ling The French REIT is not a tax loophole 38 Estienne de Klerk Fraser Hughes Graeme Newell New South African REIT creates tax certainty Dr Ian Shepherdson for further growth 40 Maikel Speelman Matt Fletcher EPRA Annual Report Awards 2012/13 44

Please send your comments and suggestions to: International leadership in corporate responsibiliy [email protected] by European property companies 47 Design & LayOut Making the data count 52 Fuse Consulting Limited London [email protected] REFERENCE PAGES Printers Members offers. 56 PCM Ltd FTSE EPRA/NAREIT global Real Estate indices. 58

EPRA Square de Meeus 23, B-1000 Brussels +32 (0) 2739 1010

EPRA NEWS / 45 / 2013 3. GUEST EDITOR

Europe is not dead – but you still have to be very careful

A casual observer, taking a bird’s-eye On the face of it, then, there are few the bond markets of the most fragile view of the global economy over the grounds for optimism. Below the countries — who would want to be surface, however, the story is a bit caught short on the day the ECB past year, might be tempted to think that different. Progress has been made goes long? — so their borrowing costs nothing much has changed, or even that in fixing some of the key underlying began to fall sharply. things have deteriorated. After all, the problems in the global economy, though some countries in Europe, Thus far, the mere threat of being economy of the Eurozone shrank by 1.1% notably Italy and France, have not devoured by the ECB has kept the in the year to the first quarter of this year, even begun to get to grips with their markets at bay. Behind this firewall, compared to a 0.1% contraction over the dreadful lack of competitiveness Spain has made great strides in and face very difficult times ahead. correcting the labour cost overshoot previous year. Growth in the US slowed which, along with its massive hous- to 1.8% from 2.4%, and China’s pace of Still, the risk of a catastrophic ing market bust, lies at the heart of expansion dipped to 7.7% from 8.1%. near-term break-up of the euro its problems. When countries in a has gone, buying time for the most single currency zone can’t keep pace troubled economies in the Zone with the cost control of the anchor to address their structural issues. country — Germany — they become Everything changed in August last less competitive, so their trade bal- year, when the European Central ances deteriorate. Bank offered to buy the bonds of Eurozone economies in trouble, in Lost exports depress growth and return for countries agreeing to a cost jobs, which means lower tax programme of fiscal adjustment. revenues and higher government At a stroke, the ECB made it much spending to ameliorate the effects of more risky for hedge funds to attack unemployment, so the budget deficit

4. EPRA NEWS / 45 / 2013 GUEST EDITOR Dr Ian Shepherdson

Ian will give a fuller view at the EPRA Annual Conference

rises. Eventually, markets decide the see the end of that constraint, more situation is becoming intractable, or less. so they demand ever-higher interest rates on government bonds. Once American businesses are no rates reach levels which are patently longer suffering under the same impossible to afford, the market credit environment as their Euro- seizes up and the textbooks say the pean counterparts. Bank lending to only option is a bail-out or departure businesses has now recovered all from the currency zone. But by the ground lost in the wake of the threatening the markets with the financial crash, and small compa- power of their infinitely-expandable nies have cheered up a bit in recent balance sheet, the ECB has effec- months. The US still accounts for a Europe is about to enjoy some sort tively created a third option, time fifth of global GDP, so a robust re- of great renaissance. That seems still to adjust. covery there next year, which would some way off. But as the bifurcation likely strengthen the dollar as well of economies continues, demand for This will not be an easy road. as increase demand for imports, prime sites, both retail and commer- Europe’s banks’ balance sheets are would be a clear positive for Europe. cial, in prime cities, remains strong. still contracting, squeezing the small Even outside those cities, opportuni- and medium-sized business sectors The weakness of European ties to take advantage of gaps in the very hard. As they account for about banks is not mirrored in the capital market or weak competition arise in half of GDP, it is difficult for the markets, where long-term rates re- all but the weakest economies, and overall economies to grow under main close to all-time lows, despite developers need to be able to seize this constraint. And while there is the recent increase triggered by fears those openings when they see them. much talk of an easing back in the that the US Federal Reserve will austerity measures, fiscal policy is soon slow its purchases of govern- Europe is not dead, and neither still a drag on growth. ment bonds and mortgage-backed is the ideal of a permanent currency securities. The spike in rates now union. No-one should underestimate Despite these fundamental looks a bit overdone but the key the difficulties which lie ahead, but problems, recent months have point here is that public real estate no-one ever made money in real seen a modest pick-up in business companies can no longer assume estate by avoiding all the risks. sentiment, perhaps because import rates will remain broadly static for demand from China has rebounded, the foreseeable future. Europe is not if you believe the official surveys immune to rising rates in the US, of purchasing managers. At the and borrowers might want now to same time, the fundamental outlook consider taking advantage of still- Dr Ian Shepherdson founded his consulting for the US is improving too. The cheap market issuance while they company, Pantheon Macroeconomic Advisors, to economy is being constrained right can. offer a unique perspective on the world economy. He now, and probably through the end believes that an understanding of the macroeconomic of the summer, by the tightening of This is not to suggest that de- environment is an essential element of business fiscal policy, but next year should mand for commercial real estate in planning, and he seeks to explain complex issues to senior executives, entrepreneurs and profes- Clarification sional advisors in a relaxed, jargon-free manner. His Since publishing the last Guest Editor article in the March edition of EPRA presentations leave audiences with clear, actionable News by PropertyEU’s editor Judi Seebus, we can report that ING has messages on the key issues of the day. rejoined the Savills list of those financing loans of EUR 100 million and over. [email protected] For more information, contact: [email protected]. Twitter @IanShepherdson

EPRA NEWS / 45 / 2013 5. CEO UPDATE

update from PHILIP CHARLS Philip Charls, EPRA CEO

There’s much to report EPRA’s investor outreach program accompanied us on the trip, stayed in an extremely is also gathering quite some mo- in the US and toured a number of mentum. Matt Fletcher, who writes the major investments managers busy few months on page 20 of this magazine, is and plan sponsors, kindly organised making good progress in the UK and by NAREIT, in the three weeks the Nordic region. Matt is focused following the conference. In total, on the pension funds, investment Ali visited managers with com- managers, consultants and retail bined total assets of over USD 5 networks in the region. Our UK trillion of capital on 34 meetings. private client broker outreach is Maikel Speelman embarks upon well under way at this point. We a similar US outreach trip again held another well-attended event co-organised by NAREIT, scheduled in London, hosted by our partners for November. in the series - Broker Profile - in March. The next event is scheduled On the theme of broader out- for September 26 in London. We are reach, Fraser and I have also held investigating the options to replicate one-on-one meetings with the major in other European capital cities in players in the Middle East and Asia The EPRA Annual Conference in the future (see page 22) (excluding Japan and Australia) in Paris is approaching at a rapid rate of recent months. We have spoken to knots. The programme (see page 32) Interestingly, on EPRA’s last trip a vast amount of capital in those is full and we believe we have a fan- to Liverpool we organised a roundta- meetings. Fraser’s article later in this tastic line-up. Alice Baxter of the BBC ble session at the offices of Investec issue looks at the numbers involved will be moderating the sessions on Wealth & Investment, one of the there. FTSE, our index partner, has Day One of the conference, including UK’s leading private client invest- been active in setting up meetings, the global economy, interviews with ment managers announced a target seminars and webcasts to help us the leading real estate CEOs and allocation increase in UK property preach the listed real estate mes- CIOs, and the CEO of Printemps. from 2.5% to 5.5%. Matt is currently sage to the broader range of equity We’ll get together the EPRA member- mapping out the French, German investors focused on higher-yielding ship again for an interactive session and Swiss market for scoping out assets. Assets under management on where we and the industry must a busy schedule in the second half on FTSE EPRA/NAREIT ETFs reached focus resource. Day Two will kick off of 2013. We will speak at a family over USD 10 billion in April — a mas- with a French-focused hour which offices real estate event in Zurich sive indication of the attraction of leads into the concurrent sessions, in November. the sector. which in turn is rounded off by a new innovations panel of CEOs. Fraser Hughes and I were in Dominic Turnbull, Head of This newsletter contains the full Chicago in June at the NAREIT Communications & Media has programme. Annual Conference. Ali Zaidi, who done a fantastic job of planning

6. EPRA NEWS / 45 / 2013 EPRA’s annual media campaign websites and refer to it in their Index. The index can be viewed as 2013 in the Financial Times Fund own materials. a specialist benchmark which trades Management (FTfm) supplement (x7 off diversification in less tradable adverts), IPE Real Estate (every print The joint EPRA/IPF report on stocks versus exposure to the most edition), IPE Pensions (x2), Property the growth of Defined Contribution traded members of the index. We Investor Europe (PIE) magazine (x8), schemes in the UK will provide a are working closely with FTSE to bolstered by daily mail-blasts and background to the importance of fully understand any upcoming EU news content. Keep our eyes peeled including listed real estate in the real index regulation following the Libor for the EPRA adverts in the above estate allocation of DC schemes. The fixing scandal. The scope of the new publications, and we appreciate your National Employment Savings Trust regulation is still under discussion, feedback and ideas — we are always (NEST) is an excellent case in point, so there is little to report at this looking to improve. We will review as at March 31, 2013 the fund had stage. the impact in 2013’s campaign in just over 9% allocated to property. the third quarter of the year, with The results of this research will be Growth in Europe continues to a view to extending out into 2014 presented in London later this year, play on my mind. We have seen the and beyond. and will offer an insight how DC LEG IPO earlier this year in Germany, schemes can blend a variety of real and Deutsche Annington recently The EPRA research initiative is estate investment vehicles. coming to the market. Let’s not coming to another round of results. forget that the German market capi- Deadline for this year’s research We launched a ‘Super Liquid’ talisation excluded price changes, projects was July. The aim of the set of FTSE EPRA/NAREIT Global has growth over 40% in the last research is to continue to amass Indices in May this year to focus 18 months — increasing Germany’s independent academic research and on the optimal allocation to the weight to just under 10% currently. analysis to back the key messages most liquid members of the FTSE On the surface, there seems little to to the global investment community EPRA/NAREIT Global Real Estate report from Italy and Spain, but > and regulators alike. The findings of the latest round of research are scheduled to be presented on Day Two of the EPRA conference in Paris. Reports like ‘Building a Stronger Europe’ help EPRA get a foot into the door at EU and national regulator level, clearly showcasing the scale, size and importance of the real estate sector to the European economy. I believe it is important that EPRA members also display this report on their own corporate

EPRA NEWS / 45 / 2013 7. CEO UPDATE

EPRA has visited officials in Milan on three separate occasions since the last Newsletter, and I am optimistic that the government views the stimulation of the Italian REIT market as a way to generate capital going forward.

I am confident that the right condi- Germany recognised that Ger- tions for growth in the future are man REITs should be treated on a being put in place in both countries. case-by-case basis as opposed to Ian Shepherdson, our economist the original recommendation that speaker at the EPRA CEO Confer- all German REITs be treated as ence in May, was rather upbeat on investment funds. The landscape in Spain’s prospects over the course Europe looks a little more promis- of the next two years; he stated ing, but it has proven a hard slog that the Spanish government had educating regulators in this case, made the right moves in a number Gareth Lewis has done a wonderful of key areas, most noticeably under job in this respect, and we continue employment law. to do so with our new Director of Policy & Regulation, Patrick Laureys, EPRA has visited officials in who joins us in September. Milan on three separate occasions since the last Newsletter, and I am We responded to the long-term optimistic that the government investment directive stating the views the stimulation of the Italian potential uses of listed real estate REIT market as a way to generate and REITs in long-term investment capital going forward. Aldo Maz- allocations. Again, EPRA research zocco has proved a very solid ally in came into play on the medium to Italy. Finally, Ireland announced its long-term benefits of listed real first REIT issue in June – Green REIT estate as a proxy for direct real managed by long-time EPRA friend estate investment. The Reporting, Steven Vernon and Pat Gunne. I wish Tax and Investor Relations commit- the Green team all the best setting tees have all met since the last issue. the pace in Ireland. All committees will meet again before the official programme of the We made good progress with re- EPRA Annual Conference on the gard to the AIFMD in recent months. September 04. The key news is that BaFIN in

8. EPRA NEWS / 45 / 2013 EPRA NEWS / 45 / 2013 9. FEATUREFEATURESS

A gathering of minds EPRA organised its first The EPRA academic ‘symposium’ investors seek liquidity and lower research symposium on brought together the leading re- management costs. searchers of the performance and ••Assets under Management for May 07 with Cambridge fundamentals of listed real estate dedicated funds rose by 68% to University’s Land in Europe and the US, presenting USD 250 billion over last five Economy Department fundamental sector research. years; AUM of ETFs pegged to FTSE/EPRA/NAREIT Indices up in London. The event The programme was introduced nearly 100% to over USD 10 billion attracted approximately 50 by Professor Colin Lizieri, University 12 months to April 2013. attendees and was kindly of Cambridge who walked the audi- ••Listed combined with unlisted ence through the academic research provide solutions for Defined Con- hosted by Nabarro, agenda for EPRA in the coming tribution funds in the UK, and this one of EPRA’s longest- 12 months. Colin handed over to may boom going forward. serving members. Professor Andrew Baum, University ••Incorporation of listed real estate of Cambridge & Alex Moss, Consilia with infrastructure and commodi- Capital who both focused their talk ties in new real assets funds. on the use of listed real estate secu- ••Organisational and research chal- rities in asset management. lenges remain.

They examined how major Special guest, Professor David institutions construct their real Ling, University of Florida, asked estate allocation blending indirect the question: “Do REIT managers vehicles with direct property expo- out-perform in the US?” During his sure in order to reach their target presentation Ling stated that the real estate allocation. Conclusions ongoing debate whether REITs are from the Moss/Baum research were: real estate has become boring! He ••There is evidence of the increased stated that of course REITs are real use of listed real estate in imple- estate, but a number of factors may menting investment strategies as cause REIT stock prices to move dif- ferently than the market value of the underlying properties, especially in the short run: ••Leverage (amplifies returns). ••Changes in probability of financial distress (short-term vs. long-term debt). ••Changes in investors opinion of ability of management teams to grow dividends. ••Changes in market value of liquidity. ••Changes in general stock market and real estate sentiment (non- rational expectations).

The results of Ling’s work, after making several adjustments to

10.10. EPRA NEWS / 4445 / 2013 FEATUREFEATURESS

The results of Ling’s work, showed that unlevered core REITs achieved a 9.2% annualised return vs. 9% for the US Core Properties Transactions-based Index. compare public and private returns about corporate real estate manage- The three presentations were directly, showed that unlevered ment from reading these public rounded off with a lively panel core REITs achieved a 9.2% an- reports. This, however, will soon discussion led by Colin Lizieri and nualised return vs. 9% for the US change under IFRS. Fraser Hughes. The presentations Core Properties Transactions-based and views of the panel generated Index. Ling is currently working on The views on corporate real es- quite some body of comment and similar research for the European tate management, both from profes- debate from the audience. They are market as part of an EPRA-funded sionals and within academia, have on epra.com. We will be looking to research grant. evolved only gradually over time. organise similar events to showcase This evolution of prevailing views EPRA sponsored research going The final presentation of the on how to deal with corporate real forward. afternoon was by Professor Dirk estate needs exhibits strong resem- Brounen of Tilburg University in blance with the Kübler-Ross (1969) the Netherlands. Brounen focused model, which describes in five on the 1,000 largest global Corpora- discrete stages a process by which tions and their real estate holdings. people deal with personal grief: He stated that in 1983, real estate I. denial, comprised 22% of the total assets II. anger, of the large corporates — that figure III. bargaining, is currently closer to 14%. In any IV. depression, and case, 14% is still a significant V. acceptance. number, and judging by the word- Brounen will present at the EPRA ing in corporate annual reports, conference in Paris on September 06. Colin Lizieri David Ling he claims that not enough is communicated by firm management Cumulative Returns: Unlevered TBI Core vs. REIT Core about this significant portion of firm value. 450.0%

400.0% In fact, using a simple symantec tool when analysing a set of 100 350.0% different 2011 annual reports, he 300.0% encountered the word ‘real estate’ turn % 250.0% 1.4 times on average, and mostly Re ve in technical footnotes at the end of 200.0% the report. Which compares bleakly 150.0% umulati

to the fact that ‘sustainability’ was C 100.0% raised 7.2 times, on average. He understood that counting words is 50.0% hardly an adequate measure of ac- 0.0% ceptance or importance, but it does 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 1994 indicate that stakeholders learn little

EPRA NEWS / 4445 / 2013 11. FEATURES

From East to West — attracting capital

In recent years, the State SAFE’s recent UK investments companies and REITs. We see this Administration of Foreign perhaps signal a new willingness work as long-term strategic outreach to take significant direct ownership to get the EPRA members firmly on Exchange (SAFE), which stakes, following in the footsteps of the map of Asian capital allocators, has responsibility for China Investment Corp (CIC) — the given their increased appetite to managing the majority of better-known investor of China’s look at cross-border opportunities. Beijing-based sovereign wealth. China’s USD 3.3 trillion SAFE has been actively but dis- Gingko Tree Investment, a wholly sea of foreign-exchange creetly investing in UK property and owned unit of SAFE, has invested reserves, has broadened infrastructure, marking a clear shift more than USD 1.6 billion in at in how the manager of the world’s least four deals, including a water its traditional role of largest foreign-currency reserves utility, student/university housing, investing in low-risk uses its funds. SAFE stepped up plus office buildings in London government bonds, and the diversification of its huge and the North West of England, foreign-exchange holdings into according to data providers that has allocated a small higher-yielding assets last year, track property deals and disclosures portion of its assets to when it committed USD 500 million by the companies that received the listed blue-chip stocks to a Blackstone Group real-estate investments. EPRA member, Real private-equity fund. Capital Analytics, a transaction and private equity. It data provider and research house, has mainly kept a low EPRA organised a ten-day inves- recorded that Gingko Tree took a profile, taking very small tor outreach/education tour of the 49% stake in Manchester office Asian region based around the building One Angel Square for about positions in, or allocating APREA conference in Singapore in USD 110 million in December, and funds to, third-party asset April. Part of the tour saw us in Bei- paid USD 438.2 million for Drapers managers to invest on jing visiting the large government- Gardens, a 16-story office building backed organisations, enabling us in London, in May. The table taken its behalf. to share our experience and ideas from the Wall Street Journal high- for investing in listed real estate lights the deals.

12.12. EPRA NEWS / 4445 / 2013 FEATURES

According to the Wall Street In November 2012, CIC with an types of offshore funds — securities Journal, one of the people familiar estimated USD 480 billion under funds, equity funds and real estate with Gingko Tree commented that management, according to the investment trusts (REITs). It is great while the Chinese company has Sovereign Wealth Institute, bought timing that we have Isabel Chung so far invested only in the UK, its Winchester House for its London Deputy General Manager of China investment scope isn’t limited by headquarters, for about USD 400.6 Taiping, on the programme of the geography and it has been looking million as reported by Real Capital EPRA Annual Conference in Paris on at real estate and infrastructure Analytics. CIC has also invested in September 05 to share her views. opportunities in other countries in UK infrastructure, including small Europe as well. The person said that stakes in Heathrow Airport Holdings Ping An, the Hong Kong-listed Gingko Tree hasn’t been allocated and water utility Thames Water. insurance giant recently announced a fixed amount of money to invest, its first European investment in the but gets funds from SAFE on a deal- While the EPRA team was in UK capital. The company, China’s by-deal basis. Beijing we visited the China Insur- second largest insurer, which man- ance Regulatory Commission (CIRC) ages over USD 400 billion in assets At this point in time, it is clear as part of an ongoing relationship. agreed to buy the iconic Lloyds that Chinese purchases are still In a major recent development, of London building for an esti- heavily concentrated in a handful CIRC is changing the rules to open mated GBP 260 million on a yield of markets — Hong Kong, Singapore, up the domestic insurance sector of around 6.25%. We expect Chinese London, New York, San Francisco to invest overseas. In October 2012 insurers will take full advantage of and Sydney. In addition, Asian de- they released an article ruling that opportunities to invest in foreign velopers are increasingly interested expanded asset categories and real estate markets and especially in in Europe, but the continent’s dense- jurisdictions beyond Hong Kong. prime assets in major global cities. ly-built cities and tight planning These specify 45 countries and rules make it hard for them to find regions where Chinese insurance EPRA visited the newly formed suitable sites. groups may now invest. The insur- and Beijing-based Asset Manage- ers will be allowed to invest in three ment Association of China, >

EPRA NEWS / 4445 / 2013 13. FEATURES

which represents all major invest- In a similar move to the Chinese the regulatory body move again to en- ment management companies in insurers, the Taiwanese regulator courage further overseas investment. the region, laying the ground for a changed the rules so insurers can valuable future relationship. This also invest abroad. Taiwan an- In a CBNC interview, Chris Lude- relationship will provide access to nounced its own liberalisation for man, Global President of Capital many of the Chinese investment insurance companies to invest some Markets at CBRE, estimated that management companies looking to of their USD 450 billion in assets Taiwanese insurance groups own extend their reach. The programme abroad. Even if strict controls will about one-third of the nation’s was completed by a series of limit the flood of investment in the Grade A offices and are the most other one-on-one meetings with short term, the insurers will have a active purchasers of commercial insurers and investment manage- broader and more diversified range real estate. Their property investment companies, in addition to for investments to choose from, ment has grown to USD 19.8 FTSE-organised seminars in Seoul relieving some pressure in the home billion, more than double since and Shanghai that were extremely market. Time will tell, but should 2006. He said that, “Domestic well attended. these initial movements prove suc- insurance firms will launch forays cessful then we may of course see into the global investment market as insurers look to geographi- Country SWF Assets Inception Origin Transparency cally diversify real estate portfolios US$ Bn Index *** and seek improved returns on Norway GPF 737 1990 Oil 10 investments. The maturity, liquidity and availability of assets in London, UAE ADIA 627 1976 Oil 5 Frankfurt, New York and Toronto China SAFE 568** 1997 Non-Commodity 4 should draw investment activity.” Saudi Arabia SAMA 533 -NA- Oil 4 China CIC 482 2007 Non-Commodity 7 In a much larger context, we cannot forget the Sovereign Wealth Kuwait KIA 342 1953 Oil 6 Funds from Norway to Malaysia to Hong Kong HKAI 326 1993 Non-Commodity 8 Qatar have invested in office and Singapore GIC 248 1981 Non-Commodity 6 commercial real estate in central Russia NWF 176* 2008 Oil 5 London and Paris in recent years, seeing it as an attractive alternative China NSSF 161 2000 Non-Commodity 5 to general equities and low-yielding Singapore Tamasek 158 1974 Non-Commodity 10 bonds. In the first quarter of 2013, Qatar QIA 115 2005 Oil 5 European real estate investments Australia Future Fund 89 2006 Non-Commodity 10 accounted for 43% (USD 3.6 billion) of SWF’s total international direct in- Algeria RRF 77 2000 Oil & Gas 1 vestments according to the Sovereign UAE ICD 70 2006 Oil 4 Wealth Center. UAE IPIC 65 1984 Oil 9 Libya LIA 65 2006 Oil 1 The table left highlights the top 20 SWFs by assets under management. Kazakhstan KNF 62 2000 Oil 8 According to the Sovereign Wealth South Korea KIC 57 2005 Non-Commodity 9 Institute, SWF assets are currently UAE Mubadala 53 2002 Oil 10 valued at USD 5.5 trillion, and have

*includes the oil stabilization fund of Russia **Best guess estimate ***The Linaburg-Maduell Transparency Index Source: The Sovereign Wealth Institute, June 2013 growth constantly, quarter-on-quarter

14.14. EPRA NEWS / 4445 / 2013 FEATURES

Africa China Insurance Regulatroy 3% Commission (CIRC)

Mid-East Asia 35% 40%

Europe Other 17% 2%

Americas 3% Source: Sovereign Wealth Center, 2013. since the Q3 2007 figure of USD 3.3 on the scope of the European listed In a major recent trillion. EPRA has built relationships real estate sector and the opportuni- with the majority of these funds ties that may arise by remaining development, China over this period — our latest trips up-to-speed on developments in the to Asia and the Middle East sharing sector at large and the individual Insurance Regulatory research and information with many companies. in the table left. Commission is changing Victoria Barbary, director of Sov- With 75% of the SWF’s wealth ereign Wealth Center at Institutional the rules to open up the originating from the Middle East and Investor, a publisher specialising on Asia, it is clear where we need to SWFs, pointed out that it difficult domestic insurance sector focus a portion of EPRA’s outreach to walk through the City of London programme to ensure these potential without passing a building at to invest overseas. major investors are well informed. least part-owned by a foreign gov- It is paramount that we update them ernment pension or sovereign > Main SWF investment points in London

Source: Sovereign Wealth Center, 2013.

EPRA NEWS / 4445 / 2013 15. FEATURES

SWF Name Property Name Coutry Deal Size Stake Size Deal ($m) Year BIA Embankment Place Brunei Unknown 100% -NA- BIA Dorchester Brunei Unknown 100% 1986 AIA Lanesborough Hotel UAE Unknown 100% 1990 GIC Bluewater Singapore 594 17.50% 2005 GIC North Lodge Singapore $93m JV 70% 2005 GIC Gresham Street Singapore 522 100% 2005 GIC King Edward Street Singapore 951 100% 2007 AIA Cutler's Gardens UAE 232 25% 2007 Reserve Fd Heron Tower Oman 125 Minority stake 2007 fund. To a certain extent, that in turn QIA Chelsea Barrakcs Qatar 1,907 100% 2008 has helped support London’s prop- QIA The Shard of Glass Qatar 1,532 100% 2008 erty market, even in the aftermath of LIA Metropole Building Libya 85 33% 2008 the financial crisis. The map of the London buildings with SWF capital KIA Fenchurch Avenue Kuwait 787 100% 2008 invested is complemented here with KIA Willis Building Kuwait 787 100% 2008 a table of the assets owned by the LIA Cornhill Lybia 180 100% 2008 various players – clearly a focus on AIA Ludgate West UAE 224 100% 2008 the West End and the City.

QIA Chancery Building Qatar 491 100% 2009 EPRA will continue to carry out a LIA Portman House Libya 255 100% 2009 part of its investor outreach function Oman Fd Bishop's Square Oman 735 75% 2009 in non-European markets. It is huge CIC Canary Wharf China 154 14.76% 2009 benefit to the EPRA membership to stay updated on potential sources QIA Harrods Qatar 2,219 100% 2010 of capital flows from outside of LIA Upper Brook Street Libya 9 100% 2010 European boundaries. We fully un- CIC & QIA The Walkie Talkie China & Qatar 92 11.67% 2010 derstand that these relationships are QIA Olympic Village Qatar 527 50% 2011 not built overnight, and it takes time, years even, to build longing trust and KIA Threadneedle Street Kuwait 272 100% 2011 respect. Of course, it goes without QIA Canary Wharf Qatar 197 28% 2011 saying that we continue our efforts KIC Bartholomew Lane South Korea 116 75% 2011 in our home markets too — reaching HKAI Aldermanbury Square Hong Kong 390 100% 2011 out to the broader investment community, as reported by Matt Fletcher GIC Angel Lane Singapore Unknown 70%* 2012 in this issue. QIA Shell Centre Qatar 245 50% in a JV 2012 Oil Fund St James's Street Azerbaijan 287 100% 2012 QIA Cabot Square Qatar 518 100% 2012 Fraser Hughes GPF Jaeger House Norway 39 25% 2012 is Research GIC Woburn Place Singapore Unknown 70%* 2012 Director at SAFE Drapers Gardens China 445 100% 2012 EPRA. He held CIC Winchester House China 393 100% 2012 a number of investment- KIA Bunhill Row Kuwait 287 100% 2012 related positions in the City of AIA Marriott (Regent's Park) UAE Part $1 bn 100% 2013 London before relocating to deal the Netherlands. He holds an AIA Marriott (County Hall) UAE Part $1 bn 100% 2013 MSc in Investment Manage- deal ment and a BA in Finance. He AIA Marriott (Heathrow) UAE Part $1 bn 100% 2013 is a regular speaker at real deal estate-related conferences and QIA Intercontinental Hotel Qatar $610 100% 2013 writes for a broad range of publications. KIA Canada Square Kuweit 606 100% 2013 [email protected] ADIC Grosvenor Square UAE 191 50% 2013

* JV with Unite Group

16.16. EPRA NEWS / 4445 / 2013 FEATURES

CEO Conference EPRA held its sixth We held a dinner on the Thursday Their opinions ranged from Annual CEO Conference evening, enabling everyone to re- capital structure, alignment and acquaint themselves. The real work remuneration, to company strategy on May 23-34 at the was carried out on the Friday morn- and size. A quote from Terry Smith Amigo Hotel in Brussels ing with a one-hour Q&A session of Fundsmith, was used as a back- in order to have better based around an economic outlook drop to the debate: for Europe by Ian Shepherdson of “As an investor you should only insight into the thinking Pantheon Macroeconomic Advisors. be truly interested in companies and challenges faced at He presented a warts-and-all view whose returns are so high that they the top of Europe’s listed on the global, and the European, exceed any feasible cost of capital.” economy which stimulated a raft of property companies. comments and questions from the More specifically, some of the CEOs keen to understand how questions presented to the CEOs: The event was attended by 20 CEOs ••Is the listed sector reaching out from the major listed real estate com- Shepherdson’s view might play to the disgruntled private equity panies in Europe, representing well into their day-to-day business. investor? over EUR 50 billion of gross assets. Shepherdson was followed by two ••Is the new world a reality for pub- This has always been a closed-door investors – Hugo Machin of AMP lic equity markets too? ‘Chatman House’ rules event, ena- Capital and Ben Saunderson of ••Can investors get the transparency, bling the property company CEOs to Hermes, and Bart Gysens, analyst focus and alignment they are seek- share their views and experiences at Morgan Stanley who presented ing from their real estate invest- openly with their peers in the sector. their views on what the European ments from public real estate? companies must improve to fight for ••Can European real estate CEOs international capital in the future. deliver demonstrable alpha in a low beta world?

EPRA NEWS / 4445 / 2013 17. FEATURES

Supporters and sceptics discuss European REITs — IPE awards

The European listed For its fans, the listed sector offers deterred from investing in European property sector has a cost-effective way of gaining a listed properties because trading diversified exposure to real estate, volumes in some listed companies a polarising effect on Paul Jayasingha, a senior consultant are too low, causing share-price investors so that they at risk advisory consultancy Towers volatility. Europe’s fragmented “either love it, or hate it,” Watson said during a seminar on structure, such as its disparate rules Europe’s listed property sector. and currencies, means international heard pension and fund investors struggle to get a handle of managers attending the EPRA’s Head of Research Fraser a pan-European companies. Unibail- annual IP Real Estate’s Hughes noted that Europe “punches Rodamco cannot be viewed in the well below its weight” compared same way as Simon Property Group, awards in London with the REIT markets in the US and she added. on May 16. Asia in spite of the region accounting for 40% of the global stock of In response Rogier Quirijns, a real estate investment. Hughes said senior vice president and portfolio the problem is particularly glaring manager at Cohen & Steers, sug- in Germany, where listed property gested that a consolidation of REITs companies account for just 1% of the in France, Europe’s largest REIT stock market, chiefly concentrated market, would boost liquidity. He on multi-family housing. noted that European companies are listening to shareholders, pointing Fellow panelist, Meka Brunel to management changes at Ham- of Ivanhoe Cambridge Europe, merson and Land Securities in the the real estate investment arm of UK. REITs in Europe differ from Canadian pension fund Caisse de their peers elsewhere in the world Dépôt et de Placement du Québec, because of their higher levels of said international investors are leverage and development expo-

18.18. EPRA NEWS / 4445 / 2013 FEATURES

REITs in Europe have a critical competitive advantage because of their lower cost of capital. sure, and here too changes are afoot, Concerns about the scale of investment, whereas direct invest- he added. the share-price discount relative ment is better for investors with a to net asset value were not neces- long-term horizon. EPRA’s Hughes Quirijns concluded that REITs in sarily a deterrent to investment, said studies in the US show that Europe have a critical competitive Jayasingha said. He highlighted listed property companies delivered advantage because of their lower how investors used REITs in comparable returns as opportunity cost of capital. During the next five Hong Kong and Singapore to gain funds over ten years, outperforming years this will allow European REITs exposure from a strategic point core and value-added funds. to play a more prominent role in of view to the Asia-Pacific region European property markets, catch- in 2011. Brunel ended the discussion ing up their Asian and US peers. remarking that the quality of the One member of the audience managers in the investment and remarked that perhaps listed real asset management teams are key for estate is more suited to short-term non-listed real estate returns.

EPRA NEWS / 4445 / 2013 19. FEATURES

EPRA outreach programme the UK & Nordics

The EPRA UK and propositions. Alongside the office- was desk-based research to ensure Nordic investor outreach based meeting, we have also em- we had correct contact informa- ployed the services of an external tion for all the investment teams programme started investor relations consultancy to we wished to approach. EPRA in March 2013 and organise formal presentation events subscribes to one of the most has already gained (see Maikel Speelman’s article on respected, and possibly the largest, page 24). We have also organised databases for institutional contacts considerable traction. The roundtable events, where selected in the market – this supplements the programme was initiated investment managers meet a listed information held in-house on listed to contact the largest real estate company in an informal real estate investors. The resulting setting. We have received positive data was screened and reviewed in investment managers, feedback on the range of events and detail before we began the process pension schemes and will be looking to continue this ap- of contacting the largest investors investment consultants in proach in the coming months. in each of the institutional target markets. the UK and the Nordics. It is important to recognise that as an association, our presentation We have based the programme The aim of the outreach programme to investors is significantly different in London for its proximity to many is to explain the benefits of listed to the one our members undertake. of the major investors in the sector real estate and ensure investment In our meetings and discussions and the ability to easily reach those teams have access to the latest we consider the value of listed real in other regions and countries. The research and reports on the sector. estate in a diversified portfolio and majority of meetings are organised There are varying degrees of sector the returns that have historically at investors’ offices and usually on knowledge within the organisations been achieved by investment in a one-to-one basis. It is clear this we contact so the programme has the sector rather than a focus on is the preferred approach for most been designed to consider each detailed discussion of a company’s institutional investment managers market participant. At the same results and prospects. The difference irrespective of geography. In total to time, we have sought a balance in perspective, combined with the June 30, there have been some 29 between the desire to meet as many fact that we offer ‘education’ and meetings of this type. investors as possible and the need research on the sector, enables to ensure meetings of sufficient EPRA to access institutions and In April we held the second quality and depth dependent on the develop relationships on behalf of private client broker event of the degree of sector knowledge. its members. year organised by Broker Profile, the foremost investor relations con- We have structured the pro- The process sultancy focused on private wealth gramme to deliver several distinct The initial phase of the programme managers in London. The format of

20.20. EPRA NEWS / 4445 / 2013 FEATURES

the event included an introduction While in Helsinki, we met with ing this type of hour-long event. It by Nick Webb of BNP Exane who a large pension scheme that has a was considered particularly suc- gave a macro-economic overview in short and medium-term strategy to cessful as an opportunity for the which to position the real estate in- diversify its real estate allocation company to demonstrate industry vestment opportunity. This was fol- globally and will invest through expertise in an informal surround- lowed by a brief EPRA outline of the listed real estate companies rather ing and in one that offers a short listed real estate sector, its benefits than unlisted fund investments. We and meaningful insight into listed and latest research conclusions. We provided support in several areas real estate. We are keen to replicate then heard three short company and identified effective methods of the format in major cities through- presentations by Sally Jones and investing in the sector. This type of out the UK and the Nordics, and we Simon Carter of British Land, Paul participation enables us to build would like to hear from listed real Douay of Unibail-Rodamco and Ian a better relationship with the as- estate companies willing to support Watson of Hansteen. sociation member, helps us develop this new venture. a clearer understanding of their In May we gratefully accepted particular market and the underly- EPRA has consciously scheduled the opportunity to speak at the ing investor sentiment. We welcome meetings throughout the UK and the Sponda Capital Markets Day. While more such opportunities. Nordics to understand the dynamics such an opportunity raises EPRA’s of each region, judge investor senti- profile locally, we believe our We organised a roundtable event ment and gather valuable insights

Vertical fashion show at Sponda’s Citycenter opening in 2013 LIverpool’s Liver Building presence is also valuable to the in Liverpool for private wealth man- from a diverse population of profes- company and benefits the sector agers, building on work already un- sional investors in real estate. A as a whole. Member companies dertaken by the EPRA team earlier notable visit to Edinburgh took in should all be able to incorporate the in the year. The event was hosted four major investment managers. association into such an event and at the Investec Wealth & Invest- We now have the opportunity to offer its investors the opportunity ment offices and invitations were visit the city again in the coming to understand the role and work accepted by a selected group of the months to discuss listed real estate the association undertakes on its largest private wealth managers in with different investment managers behalf. Liverpool and the surrounding area. in these organisations looking to We were pleased to have Alex Moss improve their knowledge. The sector as a whole benefits from Consilia Capital who opened from the association presence, as the discussion about the different The recent visits to Liverpool and this offers a different context in ways of investing in listed real Edinburgh have uncovered invest- which to outline the benefits of estate referring to the work he has ment managers looking for research listed real estate and discuss the recently published on the sector. to understand and increase their research insight that exists. EPRA We were fortunate to have Edward allocations to real estate using listed reached investors that were not Thacker from Land Securities at the real estate companies. We will work previously aware of our activities event to provide an update on the closely with these teams, and we – and they have subsequently been company. have a pipeline of important opin contact with us for wider sector portunities to develop relationships information. Feedback from all parties has with new organisations that are con- suggested there is value in continu- sidering listed real estate and >

EPRA NEWS / 4445 / 2013 21. Africa 3%

FEATURES

Strong long -term performance

110.0% 20 -year annualised 9.0% total return in 8.8% 8.0% Strong long-term local currency 8.1% 7.0% performance 7.1% 6.0% 6.1% Sources: Eurostat, JP Morgan, 5.0% 5.3% FTSE, IPD, Bloomberg, EPRA, NAREIT 4.0%

Data as os 28 June 2013 3.0%

2.0% 2.0% 1.0%

0.0% Europe Inflation Global bonds Gold Global equities Global real Global listed real estate estate

Author: EPRA 2013 Sources: Eurostat, JP Morgan, FTSE, IPD, Bloomberg, EPRA, NAREIT Data as of: 28 June 2013 looking for supporting information. should be greatest. We will continue not recently been in touch with and to address this knowledge gap in the we have introduced new investors We have also been meeting listed coming months. we have not previously contacted. real estate companies that are EPRA Offering support to teams that are members and companies that are There are certain topics we interested in developing their sector FTSE EPRA/NAREIT Index members. regularly encounter and, while com- knowledge is rewarding. The target- We have found it useful to: panies are mainly well informed, ed approach we have in place will ••gather feedback on our output, some may come as a surprise. We help to develop these relationships ••learn more about the problems believe it is valuable for companies and we would be glad to increase and issues they face, to be suitably prepared in advance EPRA members’ participation. ••get their views on the listed real of such discussion. In terms of sector more generally, concerns, we see and hear regular EPRA will continue to develop ••collect suggestions for improve- discussion about listed real estate the library of information and re- ments we can make to better company operational costs, and search to present a consistent and represent the sector. listed real estate company leverage relevant message. We will look to and costs of leverage. While we extend EPRA’s reach beyond the Teams contacted to June 30 2013: 164 should consider such comment present set of investors and travel Total AUM of relevant teams con- positively as informed discussion beyond the capital cities in the UK tacted: EUR 3.7 trillion that is concentrated on performance, and the Nordics. Indeed, we can Split by geography of meetings at- members should be prepared to look to develop the investor out- tended: 39 respond factually. reach programme beyond the UK and the Nordics based on the recent Observations for EPRA members There is continued discussion exercise. In the longer term, there is It is clear EPRA has an ability to about the volatility and liquidity a tangible opportunity for EPRA to engage with investors and potential trade-off in relation to the ownership increase the visibility of listed real investors where association members of listed real estate equity, however estate to the retail investor. may not. In all instances investors there is an increasing acceptance have been welcoming and the meet- that listed real estate is real estate ings have been positive. It has been long-term. It can never hurt the sec- Matt Fletcher gratifying to see investors are so eager tor to remind investors that 20-year is responsible to receive our sector updates. annualised total returns are over for investor 8%. outreach at In broad terms, both investment EPRA. He managers and pension schemes Towards the year’s end focuses on are the knowledgeable real estate Now we have entered the second the management and develop- investors we would expect given the half of 2013, EPRA has a clearer and ment of relationships in the UK amount of time and resource they more complete picture of the inves- and the Nordics. A qualified commit. However, it appears there tors in listed real estate throughout accountant, his experience in is a gap in relation to the listed real the UK and the Nordics and, impor- investor relations is comple- estate knowledge of certain pension tantly, those considering investing in mented by a background in schemes in the UK and the Nordics, the sector. We are able to offer the investment analysis. and generally towards the medium support, the research and the educa- [email protected] and smaller size scheme. The same tion to these teams in an effective can be said of some smaller invest- and structured way. ment institutions. One could argue this is precisely where the knowl- We have reached many investors edge and use of listed real estate in the UK and the Nordics we have

22.22. EPRA NEWS / 4445 / 2013 AIFMD, EMIR & Derivatives, Long Term, UCITS Eligible Assets, Financial Transaction Tax, EC Proposal Enhanced Cooperation, Shadow banking assessment & recommendations, Securitisation Market Reform, Transparency Directive, Credit Rating Agencies Regulation, Indices & Benchmark Review,Keeping Corporate track: Governance, Non-financial Reporting, Solvency II, IORP, Long-term Investments, En- ergy EfficiencyEU Directive, regulatory Energy Performanceactivities of Buildings Directive, Intelligent energy - Europe III in horizon 2020, Strategy for sustainable competitiveness of construction, Eco-design Directive, Eco-label Directive, EU-wide measures on water efficiency in buildings, Waste Policy, En- vironment & Climate Action. AIFMD, EMIR & Derivatives, UCITS Eligible Assets, Financial Transaction Tax, EC Pro- posal Enhanced Cooperation, Shadow banking assessment & recommendations, Securitisation Market Reform, Transparency Directive, Credit Rating Agencies Regulation, Indices & Benchmark Review, Corporate Governance, Non- financial Reporting, Solvency II, IORP, Long-term Invest- ments, Energy Efficiency Directive, Energy Performance of Buildings Directive, Intelligent energy - Europe III in horizon 2020,EPRA has S introducedtrategy a new forinformation sustaina of regulatoryble activities competitiveness in which EPRA is of construction,service for members.Eco-design Directive,actively engaged Eco-label or just monitoring. Directive, EU-wide measuresA detailed file is on now livewater on our website efficiency It includes the inpotential buildings, impacts on the Waste Policy, Environmentoutlining the on-going & EUClimate regulatory is - Action.sector, regulatory timelines, responsible AIFMD, EMsuesIR relevant & Derivatives, to the real estate sector. UCITIt’s partiesS andEligible a summary ofAssets, EPRA’s advo -Finan- in an easy-to-follow grid layout and can cacy efforts. We encourage members to cial Transactionbe accessed Tax, on our ECwebsite. Proposal This page regularly Enhanced refer to it and provide Cooperation, feedback Shadow bankingwill be updated assessment on a monthly basis and & torecommendations, the EPRA team. Secu- ritisation Mprovidesarket an overviewReform, of the broad Transparency range Directive, Credit Rating Agencies Regulation, Indices & Benchmark Review, Corporate Governance, Non-financialwww.epra.com Reporting,/regulation S olvency II, IORP, Long-term Investments, Energy Efficiency Direc- tive, Energy Performance of Buildings Directive, Intelligent energy - Europe III in horizon 2020, Strategy for sustaina- FEATURES

More appetite at the table

As part of EPRA’s Besides an increased focus on several events with participants increasing efforts to unconverted medium-sized pension from the PCB industry. funds in Europe, another area of par- expands and develop ticular focus over the past 12 months These events featured industry its investor outreach has been the ‘Private Client Broker’ introduction by a leading analysts, initiatives, an ever (PCB) market in the UK specifically. followed by three presentations by This group represents over GBP 480 EPRA member companies from a widening group of billion in assets under managements diverse geographical as well as investors is targeted from predominantly high net worth sector specialisation background, in in order to explain the individuals (HNWI) and small to order to provide the attendees with medium-size pension funds in the an interesting and informative look characteristics of listed UK. The reason for picking the UK as at our industry. These meetings were real estate investments the starting point of this outreach ini- followed up by individual meetings and attract new tiative, before expanding into other at a later stage in order the foster the European countries, is the fact that relationship going forward. investments into our this specific market is the largest of industry. Let’s start with a its kind in Europe, highly developed Next to these events, a series of possible GBP 480 billion and reasonably centralised. ‘Sector Guides’ have been prepared and distributed to approx. 1,000 addition to the table. EPRA has teamed up with contacts within Broker Profile’s Broker Profile, a consultancy that network. Feedback so far has been specialises in investor relationships encouraging from both the investors between the UK PCB market and as well as EPRA-member companies corporate clients, including sev- who welcome EPRA’s involvement eral UK-listed real estate companies. in this under-exposed part of the UK In partnership, EPRA has organised investment community.

24.24. EPRA NEWS / 4445 / 2013 FEATURES

Income attractions from listed real estate ‘Sector Guides’ have been Listed real estate has many advantages for investors looking to gain sector exposure. They typically own high quality, prime assets that are prepared and distributed to well let with high security of rental income. They are in good financial health with strong balance sheets and low LTV’s. They are backed by approx. 1,000 contacts within experienced management teams, have economies of scale and provide for better liquidity in accessing sector exposure. One of key attractions Broker Profile’s network. for investors though remains the REIT structure within which many listed property companies operate. This allows for a highly tax-efficient distribution of dividends, giving one of the best income returns currently on offer, averaging 5%+ over five years.

The next step for EPRA is to con- Long-term benefits from property ownership tinue the progress made in the UK Economies and stock markets often behave in a cyclical nature. and establish and develop similar Commercial property is also cyclical, with both capital values and platforms in other European coun- rental movements reflecting several factors including supply/demand of tries which feature similar character- stock and tenants, investor confidence, availability of financing and the istics and reach out to this specific underlying economy. Investing for the longterm overrides the short-term target group within in the investor volatility that cyclical markets often present. Indeed, it can be demon- community. strated that long-term ownership of listed property equities outperforms general equities and government bonds, with a total return of 8.7% over 20 years. The two Sector Guides can be downloaded here: www.epra.com/PCB1 www.epra.com/PCB2 Attractive dividend income In our last research piece we covered the long-term attractions for income investors of listed property companies. They own mainly prime asset that generate sustainable rental income, which if created within a REIT structure, can be paid out to investors in a highly tax-efficient manner. Listed property equities offer significantly greater income opportunities for investors. Companies in the EPRA Developed Europe Index provided a dividend yield of 4.9% while those in the EPRA Developed Europe REIT Index yielded 5.4% — attractive returns considering the ECB refinancing rate is 1.8% and UK base rates are just 0.5%. We expect listed prime property companies to sustain premium dividend yields moving forward, maintaining their attraction over bonds.

EPRA NEWS / 4445 / 2013 25. FEATURESFEATURES

Andrea economist Boltho

Educated in Italy and at the Universi- Institute, Munich, as well as Visiting ties of London (LSE), Paris and Oxford. Professor in various European uni- From 1966 to 1977 at the OECD’s De- versities. Has been a member of the partment of Economics and Statistics. Board of Finmeccanica, is a Director In 1973-74 Japan Foundation Fellow at of Oxford Economics and has lectured the Research Institute of the Economic on world and European economic de- Planning Agency, Tokyo. From 1977 to velopments to various private sector 2007, Fellow and Tutor in Economics corporations, including ABB, Anglo at Magdalen College, University of American, Arthur Andersen, FIAT, Oxford. Since 2008 Emeritus Fellow. Ericsson, Generali, IBM, KPMG, Pirelli, Siemens, Stora Enso, etc. At various stages, consultant to the World Bank, the OECD and member of the Academic Council of the IFO

DR IAN SHEPHERDSON economist

Dr Ian C. Shepherdson, a Briton who jargon-free manner. His presentations has been described by the London leave audiences with clear, actionable Times as one of ´the best economists messages on the key issues of the day. in the Cityâ, is a hugely experienced, provocative and entertaining analyst Dr. Shepherdson is a frequently of the economic scene. quoted in the U.S. and international press, and has made many television Having lived in both the U.S. and and radio appearances. He is a past the U.K., where he founded his con- winner of the Wall Street Journal’s sulting company, Pantheon Macroeco- Forecaster of the Year competition, nomic Advisors Ltd, Dr. Shepherdson and was one of the first economists offers a unique perspective on the to argue — as early as the autumn of world economy. He believes that an 2005 — that the U.S. housing market understanding of the macroeconomic was facing a major collapse that environment is an essential element would trigger a very deep recession. of business planning, and he seeks to explain complex issues to senior executives, entrepreneurs and professional advisors in a relaxed,

26.26. EPRA NEWS / 4445 / 2013 FEATURES

alice baxter BBC

Alice Baxter is a British journalist History and Drama undergraduate, and television presenter grilling Alice holds an MPhil in Modern His- politicians, CEOs and CFOs from tory from Cambridge University and all around the world on BBC One, a diploma in Broadcast Journalism the News Channel and BBC World from Cardiff University. Alice began News. Prior to joining the BBC, Alice her career at ITN’s London Tonight worked in Russia for six and a half and Channel 5 News. years as a senior presenter and cor- respondent for RT, the Moscow-based international rolling news channel. A

paolo printemps, CEO de cesare

Paolo de Cesare started his profes- turnover in excess of EUR 1.5 billion. sional career in 1983 at Procter & It employs about 4,000 staff and Gamble where he held various grouips together 17 company-owned management positions during his stores. Printemps was bought up 24 years tenure in Italy, Belgium, from PPR by RREEF (Deutsche Bank) England, Japan and Switzerland. In and the Borletti Group in 2006. 2002, he was named President of Global Prestige Beauty and Skincare De Cesare is an independent based in Switzerland. Board member of Indesit Company in Italy and of Vistaprint Inc. in the Since September 2007, de Cesare US. He graduated in Business & Eco- has been the CEO & Chairman of nomics cum laude at the University Printemps. Printemps is a luxury de- of Rome in 1983. partment store chain in France with

EPRA NEWS / 4445 / 2013 27. FEATURESFEATURES

INVESTING UNDERGROUND Crossrail is Europe’s biggest East, with 21km of new 6.2 metre A total of 275,000 square metres construction project and is among the diameter twin-bore tunnels running of high-quality office, retail and up to 40 metres under London and residential space is planned above most ambitious infrastructure projects providing the UK’s first ‘RER’ type new Crossrail stations and sites. ever undertaken in the UK. suburban service. There will be 37 These developments will provide Crossrail stations including six new more than GBP 500 million to the state of the art underground stations core funding of Crossrail and will Crossrail will transform rail journeys in central London on a truly signifi- also help create new business in London, increasing rail passenger cant scale. space, new jobs and new homes for capacity by 10%, putting London’s Londoners on top of the world-class major financial centres within 40 When Crossrail opens in 2018, new transport links Crossrail is minutes of Heathrow Airport. The up to 24 trains per hour will operate delivering. new train line will also bring an in each direction through central additional 1.5 million people within London. Each train will have the Every station will also benefit 45 minutes commuting distance of capacity for 1,500 passengers. from Crossrail’s ambitious public London’s key business and leisure Crossrail will be constructed so that realm improvement programme districts. trains up to 240 metres long can be which will deliver improved public accommodated as passenger de- areas, better interchange outside Crossrail will run 118km, from mand increases. Up to 200 million stations and an improved interface Maidenhead and Heathrow in passengers a year are expected to with the local community along the west to Abbey Wood in the travel on Crossrail. the Crossrail route. The scheme

IAN CROSSRAIL, Director LINDSAY

As Crossrail’s Land & Property a background in delivering mixed-use Director, Ian Lindsay is responsible property development solutions in the for acquiring all the land and rights public and commercial sectors. Prior necessary to build the Europe’s to joining Crossrail, he spent five years largest infrastructure project, creat- at Network Rail taking forward the ing commercial value from over re-development of the main London station developments to help fund and regional stations in partnership the project, designing public realm with developers - e.g. Cannon Street, improvements that will improve the the Shard at London Bridge and the setting of Crossrail stations, as well re-development of Birmingham New as safeguarding the existing line of Street station. Lindsay also helped route potential to deliver extensions establish Solum Regeneration Ltd – to Crossrail/Crossrail 2. Network Rail’s station development joint venture with Kier Property, act- Lindsay is a Chartered Surveyor ing as a Board Director. and urban regeneration specialist with

28.28. EPRA NEWS / 4445 / 2013 FEATURES

will deliver 92,000 square metres of improved public space; wider pave- ments and new pedestrian areas.

High quality development partners have already been secured for five Crossrail sites which represents over 175,000 square metres of gross development space. Planning permission has been secured for over 90,000 square metres of development space so far, with further over-site development planning in the areas 500-1,000 metres around applications due to be determined or our stations. still to be submitted later this year. Crossrail will be seeking partners for “This is why we commissioned the remaining sites during 2014. GVA to study our impact on the property market and their conclusion was By integrating major property that Crossrail will increase values by developments above and around its an average of 18%, thereby accelerat- station sites, Crossrail is aiming to ing or unlocking development in the re-vitalise the link between stations areas around our stations with a and place-making, creating places value of some GBP 5.5 billion,” says that people want to spend time in Ian Lindsey. rather than places to pass through as quickly as possible. But the company “We want to work with the prop- says it is conscious that as well as erty industry to realise this market creating some fantastic new build- potential, and on that basis we ings for employers, residents and aim to have a major role in moving visitors to enjoy for generations to London forward.” he concludes. come, it will have a major impact on the property market more generally www.crossrail.co.uk

EPRA NEWS / 4445 / 2013 29. FEATURESFEATURES

Société du Grand Paris, CEO etienne guyot

Graduated from the Institute of Political 2005 and 2009 Etienne Guyot is Prefect of Sciences of Paris and National School of departments of successively Gers, Landes and Administration (ENA), Etienne Guyot started Meurthe-et-Moselle. In June, 2009, Etienne his career in 1988 as a civil servant for the Guyot is nominated Director of the office of city of Paris. In 1992 he became sub-prefect the Minister in charge of rural and territorial of the district of Lyon and Deputy Secretary strategy, and in November 2010, Etienne Guyot General of the Rhône Prefecture. In 1995 he becomes Director of the Office of the Minister was nominated as Technical Advisor and Di- of local communities. rector of the Office of the Transport Minister. He then joined the Delegation for territorial In September 2011, Etienne Guyot is ap- development and local policies (DATAR) from pointed Chief Executive Officer of the “Société 1997 to 2000. du Grand Paris”, the public-owned company in charge of the Greater Paris new transport In 2002-2005, he became Technical network. Adviser for the Ministry of Interior. Between

30.30. EPRA NEWS / 4445 / 2013 FEATURESFEATURES

An investment in the future Etienne Guyot, President, to be acquired for the transport environment, the improvement of Prefect, in charge of plan, Grand Paris is an ambitious public transport and the preserva- investment for a future which has tion of natural, agricultural and directing the Société been decided today. And beyond forested areas. Grand Paris aims du Grand Paris and investment figures, Grand Paris sta- to provide the Paris metropolis an implementing the project’s tions represent new opportunities essential framework for its future to enhance and improve the urban economic growth. It will guaran- global planning. layout. With its stations and new tee better connections between routes, the future metro will pro- residential and work areas, better Société du Grand Paris is the body mote mobility for the Ile-de-France circulation of both people and in charge of implementing a govern- population and all its visitors. knowhow. It will open up the region ment and local authority project both nationally and internationally, which will enable the dynamic Paris Stations that line the new route connecting clusters to the network region, home to 12 million people, to will be more than mere stops on while launching new business and grow and enjoy a better quality-of- the underground, they will be housing projects. life. Central to this transformation open to the city and help shape the is a new automatic metro network metropolis’ development towards a www.societedugrandparis.fr which will open new areas and more connected town, more sustain- encourage business. Grand Paris able, more intense but also more hu- KEY FIGURES will underpin the capital region’s man. These new centres will spread ••200km of new lines. position as one of the world’s lead- the scope of grand Paris, will give ••EUR 20.5 billion in investments by 2025. ing urban areas. it more breathing space and new ••60kph average speed of the new metro, twice as living areas. fast as today. With over EUR 30 billion in ••72 new station. investments, nearly a million new Greater Paris will become an ••13,000 hectares of natural farmland and forest jobs by 2030, 70,000 new homes exceptional example of develop- saved by 2035 due to urban densification. built every year, 5,500 plots of land ment through the regeneration of its ••15% of people will no longer travel by car.

EPRA NEWS / 4445 / 2013 31. FEATUREFEATURESS

conference programme

DAY ONE Chairman & CEO opening – EPRA work-in-progress Economic Keynote Debate Ian Shepherdson & Andrea Boltho Moderated by Alice Baxter, (BBC) Leading economists Dr Shepherdson & Professor Boltho from Oxford University offer their perspective on the state of the wider world economy and its impact on Europe’s real estate sector. Panel with Global Investors Moderated by Alice Baxter & Amin Rajan (Create) • Pascal Duhamel – ADIA • Paul Richards – Mercer • Meka Brunel – Ivanhoe Cambridge • Isabel Chung – China Taiping Coffee break DAY two Issues faced by leading CEOs Moderated by Alice Baxter French focus • Christophe Cuvillier - Unibail-Rodamco Thierry Repentin, French Minister for European Affairs, • Gerard Groener – CORIO MEDEF representative • Debra Caffaro – Ventas French roundtable Concurrent 1: Research Panel Moderated by Karen Sieracki Lunch Leading academics share their work on listed real estate & EPRA Awards (BPR & SBPR) explain its practical implications for the industry. • Martin Hoesli Awards presented by EPRA BPR Committee Chairmen & • Dirk Brounen Deloitte. Patrick Kanters to award the sustainability • Alex Moss award for GRESB. • Colin Lizieri Monumental infrastructure ...... Two of Europe’s largest projects changing urban, and national, planning. Concurrent 2: Specialist RE session Moderated by Alice Baxter & Harm Meijer Moderated by Nick Webb • Grand Paris – Etienne Guyot Real estate specialists pitch their story. • Crossrail – Ian Lindsay • Unite Group • Cofinimmo • Beni Stabli • Societe de la Tour Eiffel EPRA Members platform • Safestore UK Facilitator, Robert Ciemniak Interactive discussion on day-to-day business factor of the sector. Coffee break Global leader retail Innovations for growth Moderated by Alice Baxter Introduced and moderated by Bart Gysens Pablo de Cesare (Printemps CEO) explains strategy and the • Ron Havner – Public Storage future of business • Edward Walter – Host Hotels • William Stein – Digital Realty REIT Meet up with transport to Cocktails & Dinner Lunch Gala Dinner Conference ends

32.32. EPRA NEWS / 4445 / 2013 regi nows! ter

Main sponsor Standard sponsors Lanyard sponsor FEATURES

Reporting back the vast majority held in cash (74% into Asia. Some noted, for example, EPRA CFO summit in China) the report predicts that the expected US equity surpluses considers the global investor demand for equities could and whether there were lessons to fall short of corporate needs by be learned in terms of REIT struc- capital shift to emerging USD 12 trillion as corporate equity tures. Others suggested exploring markets, governance, capital requirements outpace inves- joint investor outreach activities in BPR, lease accounting tor demand. This ‘equity gap’ is not Asia and EPRA’s plans to expand limited to emerging markets, as the via an Asia contact. The MGI report and regulations. report anticipates that in Europe the was undertaken in late 2011, and gap would be as much as EUR 3.1 some questioned whether it ought EPRA’s main forum for discussing trillion. to consider the role of central banks, all aspects of EPRA policy around companies listing on different reporting, regulation and finance The report initiated a lively exchanges, and possible European- was held in April. The annual discussion on ways we could make Asian M&A activity. ‘Reporting & Accounting Summit’ at European REITs and listed prop- the Amigo Hotel in Brussel was, as erty a more investable asset class, The virtuous cycle, management always, very well attended with 37 particularly in light of conservative incentives and governance CFOs, investors, and advisors dis- Asian investment appetite which Hugo Machin of AMP Capital Re- cussing a range of important agenda values safety over returns, reputa- search presented on the ‘virtuous items relevant to the European listed tion and where investment spreads circle’; whereby management is property sector.

The keynote speaker, Alice Woodwark from McKinsey Global Institute (MGI) in the US, led a discussion on an MGI report titled the ‘Emerging Equity Gap and the Asian investor’ and how this could impact global capital flows in Europe. This report looks at the trends in global equity capital needs and predicts a global equity shortfall by 2020 as emerging markets’ share of global capital nearly doubles to 36%.

Since emerging market investors have a very low % allocation to equity (e.g. only 12% in China) with

34.34. EPRA NEWS / 4445 / 2013 FEATURES

ance updates circulated prior to the meeting, but given the level of detail and time required it was agreed that a new permanent BPR committee should review all of these and provide final recommendations to the Committee in their next meeting on September 04, 2013. The new permanent BPR Committee, which is chaired by Simon Carlyon, Group Financial Controller at Segro, had its first meeting in July 2013, and will serve as a platform to debate new BPR guidance updates, other BPR developments, and provide recommendations to the Reporting and Accounting committee. incentivised to achieve total returns, 90 companies including 89% of the New lease accounting — all is which leads to positive results, share market cap of FTSE EPRA Europe good for now, but still one to price increases, and performance Index constituents. The BPR are now watch out for related remuneration. Committee firmly established as the dominant On the IASB/FASB side, the main members discussed whether incen- benchmark figures and have effec- priority is the revised lease expo- tives based on total returns were ef- tively reached full adoption by EPRA sure draft which was published in fective and while most agreed with members with the outliers being June 2013. As previously reported to this, they emphasised the need to mainly a few non-EPRA members members, EPRA is broadly satisfied consider other aspects to ensure that (primarily in Scandinavia) and with the new proposals which iden- managers were not taking excessive listed investment funds. With this tify two types of leases (‘Type > risk, e.g. through excessive lever- increased prominence, the focus is age, or setting unrealistic targets now primarily on maintaining the relative to peers. A critical element quality of the BPR through expand- that almost all agreed with was the ing the Additional Guidance and need for share ownership by senior addressing non-compliance through management through personal targeted letters and the annual BPR investments and options. awards review process.

BPR developments, adoption, The increased adoption and Guidance updates and a new prominence of the BPR has meant BPR Committee that EPRA receives more, and EPRA is pleased to report the con- increasingly complex, questions tinued increase in adoption of the from members. The Committee BPR, which are now used by over considered a long list of new guid-

EPRA NEWS / 4445 / 2013 35. FEATURES

A’ and ‘Type B’) and effectively a position paper in January 2013 egy and priorities including a series maintain current operating lease with the aim to encourage consist- of Q&A’s to members on issues such accounting for the vast majority of ent interpretation and disclosures as whether the REIT brand was too property lessors (Type B). Our main around ‘level 3’ (unobservable) confusing (58% said yes) and EPRA concern is that the Boards would inputs. The Big Four representatives policy on regulation such as the revert back to a single model as there on the committee were urged to use AIFMD, Solvency II. Further back- is significant pressure against the these to work towards consistent ground and responses are provided dual model – particularly for tenants interpretation among the big four above. – and aggressive lobbying against accounting firms, and EPRA will the new requirements by the equip- continue to monitor developments For further information, please ment leasing industry in particular. in market practice. contact Mohamed Abdel Rahim, EPRA will be responding to the ED Financial Reporting Manager, on: via the REESA group (September 13 EU regulation and EPRA strategy [email protected] or deadline). Gareth Lewis, EPRA Finance Direc- Gareth Lewis, Finance Director on: tor, led a discussion on EPRA strat- [email protected] Other topics on the reporting side include the new IFRS 13 Fair Value QUESTION Committee Survey Measurement disclosures which are Response (total 26) effective this year. EPRA published 1 Is the REIT Brand too confusing? Yes – 58% No – 42% The BPR are now firmly 2 Should REITS distinguish themselves as Yes – 96% ‘operating’ businesses? No – 4% established as the dominant 3 Will REITs/listed RE in your country Yes – 23% be within scope of AIFMD? No – 62% benchmark figures and Uncertain/NA – 15% 4 Should we push for ‘look-through’ status Yes – 85% have effectively reached under Solvency II? No – 12% Uncertain/NA – 4% full adoption by 5 Should we promote the role of commercial Yes – 35% RE as ‘infrastructure’? No – 62% EPRA members. Uncertain/NA – 15% 6 Should we advocate a broader class Yes – 54% of ‘REIT eligible’ asset? No – 38% Uncertain/NA – 8% 7 Should the EPRA Europe index remain as a Yes – 73% traditional ‘Bricks & Mortar’ index? No – 19% Uncertain/NA – 8%

36.36. EPRA NEWS / 4445 / 2013

FEATURES

The French REIT is not a tax loophole

This is an English version Former Minister and current Member are operating under the SIIC status of the column that of Parliament, Jean-Jacques Queyr- do not have any advantages, they anne, has just published a report to are just operating in the most popu- Christophe Kullmann address an issue that France cannot lar and efficient way for investing in wrote in the main anymore overlook: the debate on real estate — ‘tax transparency’. French business paper the efficiency of tax policies and public assistance for the corporate Reliable tax revenue Les Echos, in reaction sector. During the current economic Real estate is certainly generating to the publication of slowdown and strained public tax, but under tax transparency the Queyranne Report purse, the government-ordered the taxes are being paid not by the Queyranne report was intended to company itself but by the share- summary. identify the tax exemptions and/or holders of the company. Under tax breaks enjoyed by corporations French tax rules, SIIC shareholders which could be clawed back with are taxed as of the first euro on minimum impact on economic dividends received, at a 15% rate activity and maximum impact on for the mutual funds, yet without the budget. the 40% tax allowance that other equity investors can enjoy. Also Regarding REITs (or ‘SIICs’ in without the possibility of including France: Sociétés d’Investissement these shares in the tax-friendly PEA Immobilier Cotées), the summary of (an equity savings plan designed to the report wrongly considered the favour equity investments among SIIC status as a tax loophole. Saying private investors). The SIIC sector is that operating under the SIIC status absolutely not a tax loophole. is a means of avoiding tax, and using this as a reason to challenge or According to Pricewaterhouse- amend the SIIC status, is clearly a Coopers research, SIICs are generat- false perception of our industry and ing EUR 340 million in tax every © A. Da Silva © our business model. year. If they all were operating as normal corporates, i.e without the Firstly, the SIIC status is not a sin- SIIC status, these real estate com- gular legislation or an exception; this panies would have generated only is the common way of structuring a EUR 220 million in tax. How is this real estate investment vehicle. Some possible? 35 countries globally operate real estate investments through REITs, The SIIC have mandatory pay- including around ten EU countries. out ratios and are distributing most Chart 1 The listed property companies that of their earnings as dividends in

€1M 1 15 6 22 invested by = direct + indirect + induced = jobs the SIIC job jobs job created

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Challenging the equilibrium of the SIIC status would have a negative impact 140 €17BN million on the tax revenues of France. in investments planned work-hours in the in 2011 for the 2012-2016 construction sector for the period 2012-2016 period order to transfer the maximum tax of our SIICs on the European stage burden to their shareholders. As they and we should be encouraging these also operate outside France, all the successes. Before the SIIC status profits realised abroad are growing was introduced in France, investors 945,000sqm 375,000 the distributable income, so the tax that used to dominate the French tertiary spaces planned to total jobs created during base is higher than for other ordinary commercial property market were be delivered during the the 2012-2016 period 2012-2016 period corporates. This is what tax special- by-and-large foreign investors, es- ists called ‘Impatriation’. SIICs actu- sentially opportunistic funds based ally import tax to France! in tax havens. A very different story. Chart 2 Challenging the equilibrium of Given the current economic the SIIC status would have a nega- slowdown and with a decreasing tive impact on the tax revenues construction pipeline from the State of France. and the local authorities, SIICs today are creating half of the construction Finally, it is worth mentioning activity in the private sector. The that the SIIC status has enabled the numbers speak for themselves: SIICs creation of several French companies have planned EUR 17 billion worth leading the way in Europe. I could of investments throughout France Chairman of the FSIF (Fédération des name Unibail-Rodamco, Klépierre, over the next five years. These Sociétés Immobilières et Foncières) & Gécina or Icade among the great suc- investments represent 375,000 new CEO of Foncière des Régions Christo- cesses which are the envy of many jobs which cannot be relocated, phe Kullmann — has a postgraduate of our European neighbours. As and this alone could offset an entire degree (DEA) in management — is Airbus is for planes and Ariane is for year’s unemployment growth in CEO of Foncière des Regions. He was aerospace, we French can be collec- France. the force behind the development of tively proud of the great performance Foncière des Regions, a key player in the commercial real estate sector with a portfolio dedicated to offices. It’s the leading office real estate developer in Europe in A few days after, the full report was published and the main discussions terms of the size of its assets. Christophe Kullmann has expected in Parliament are now about the mandatory distribution rate spent his whole career in the real estate industry. He for SIICs in next November’s Finance Law. Today it stands at 85% of joined Foncière des Regions in 2001 and, until January earnings and 100% of the capital gains (50% in year one and 50% in 31, 2011, was Chairman of the Management Board. year two). The main features of the SIIC status have not been challenged He is now the Chief Executive Officer and member of in the full version of the report. Foncière des Régions’ Board of Director since 2012. He’s the Chairman of the FSIF since November 2012.

[email protected]

EPRA NEWS / 4445 / 2013 39. FEATURES

New South African REIT creates tax certainty for further growth

South Africa’s new REIT The South African National Treasury firmly on the radar of international tax dispensation is a formally published the REIT tax leg- investors. islation for South Africa on October significant development 25, 2012 under the new Taxation Legis- The South African listed for the country’s publicly lation Amendment Bill Section 25BB property sector has been the most traded real estate sector of Income Tax Act. Bringing South active sector on the Johannesburg Africa’s listed property sector in line Stock Exchange (JSE) in the past and has opened up new with international standards, the JSE 12 months. With the advent of the potential for its listed published new Listing Requirements SA REIT, this level of activity is property sector. on March 28, 2013 facilitating the expected to continue. Over the past SA REIT. ten years it has outperformed local and international equities, bonds The SA REIT is a listed property and cash. It has also outperformed investment vehicle that is similar REITs in the developed world. to internationally-recognised REIT structures from around the world. Because the SA REIT tax dispen- Good governance and best practice sation provides many benefits, the is ingrained in the SA REIT, which foremost of which is tax certainty, will allow the sector to grow with it is likely that all qualifying South tax certainty. African listed property entities will make application to the JSE to This is attracting new listings to become a REIT. In 2014 South Africa the sector, which is set grow its ZAR is likely to become the eighth largest 250 billion (EUR 20 billion) market REIT market globally with around 26 capitalisation even further. South REIT entities and potentially more Africa’s new REIT structure has also to come. put the listed property sector more

40.40. EPRA NEWS / 4445 / 2013 FEATURES

“The key to the success to the REITs in the US has to been to treat them as though they were regular corporations, and focusing on accountable, predictable results and high levels of transparency and good governance.”

Underpinning the sector’s bright Structured to be corporate in foreign investors who want exposure future is the dynamic and structure nature, SA REITs have the flexibility to the South African market.” of the SA REIT, which is able to adapt required to develop and sustain a to various models while encouraging business. The corporate structure Prior to SA REIT legislation there best-of-breed practices. The SA REIT of SA REITs also creates shareholder were two forms of listed property is one of the most flexible REIT participation and investor protec- investment entities in South Africa: regimes internationally. It allows tion. This means shareholder value, property loan stocks companies (PLSs) SA REITs to be managed internally transparency and accountability. and property unit trusts (PUTs). Both or externally, and caters for different were able to adopt the REIT regulatory equity structures that may exist, Sam Zell, American entrepreneur, framework set out by the JSE. such as A- and B- linked units that US REIT-era pioneer, and founder of have different rights. Equity Group Investments, encour- New regulations aged the South African listed prop- The new REIT tax dispensation Most SA REITs own several kind erty sector on its six-year journey provides that a SA REIT can deduct of commercial properties like shop- along the road to REITs. all distributions paid to shareholders ping centres, office buildings, facto- or linked unit holders as an expense ries, warehouses, hotels, hospitals At the launch of the new SA REIT ensuring the SA REIT is tax neutral. and even, to a lesser extent, residen- Association, tasked with represent- So, if a REIT pays all its distributable tial properties, in cities and towns ing the SA REIT sector, in May 2013, earnings to shareholders, it shouldn’t across the country. Some even invest he sent a congratulatory message have to pay any tax. It becomes in properties in other countries. The saying: “The key to the success a conduit for net property rental REIT dispensation is not prescriptive to the REITs in the US has to been income and provides investors an at as it relates to types of property to treat them as though they were investment alike to direct ownership that REITs can invest in. regular corporations, and focusing of the underlying property. on accountable, predictable results One REIT one company and high levels of transparency and When a SA REIT sells a property, SA REITs qualify for the REIT tax good governance. it also doesn’t have to pay Capital dispensation once they are publicly Gains Tax (CGT) on any profit from traded on the JSE REIT board. They “If applied correctly and if the sale. Also, shareholders of an SA are regulated by the JSE and impor- learned from the lessons that have REIT won’t pay Securities Transfer tantly, treated as companies. This occurred as this structure has prolif- Tax (STT) on buying or selling SA means regulation is straightforward, erated around the world, you have REIT shares. easy and unrestrictive. This is evi- the opportunity to create a truly at- dent in the simple requirements to tractive and exciting market not only South African investors will qualify to list on the JSE REIT board. for domestic investors but also for receive gross distributions from a SA REIT without the 15% dividends tax being levied against the distribution. A JSE-listed SA REIT must: But investors will have to pay tax on ••Own at least R300 million of property. the distributions at their applicable ••Keep its debt below 60% of its gross asset value. marginal income tax rate when they ••Earn 75% of its income from rental or from property owned or include it in their taxable income. investment income from indirect property ownership. This also provides investors the ••Have a committee to monitor risk. opportunity to use debt effectively ••Not enter into derivative instruments that are not in the ordinary to fund the acquisition of their REIT course of business. investment on a pre-tax basis. ••Pay at least 75% of its taxable earnings available for distribution to its If invested in SA REITs as part investors each year. of a retirement annuity (RA) or >

EPRA NEWS / 4445 / 2013 41. FEATURES

US and EPRA in Europe. Its goal is The association shares informa- to advance and protect the interests tion and issues around new and of this substantial sector, compris- changing legislation, promoting a ing both Company REITs (formerly competitive sector and avoiding property loans stocks) and Trust restrictive business practices. It will REITs (formerly property unit trusts). also share its extensive experience pension, provident and preservation in founding the local listed REIT fund, investors effectively pay no tax The new representative body’s dispensation with the South African on dividends within these products. objectives include advocacy in areas Property Owners Association (SA- Foreign shareholders of SA REITs will of common concern, preparing opin- POA), which hopes to help extend be levied a dividend withholding ion and policy for interacting with the REIT dispensation to unlisted post January 01, 2014 — the current stakeholders, representing the in- commercial property investment rate is 15% or the applicable double dustry in meeting challenges within entities. Of course, one of the asso- tax agreement rate could apply. the sector and creating awareness of ciation’s top tasks is to promote the REITs as a separate asset class that SA REIT asset class in both domestic Closely associated creates and preserves wealth. and international investment mar- The new SA REIT Association will kets. SA’s new REIT dispensation build on the foundation of positive To achieve these aims the SA creates a more appealing investment partnerships and development, REIT Association intends to deliver proposition for investors locally and created by its predecessors the value to its members in several fo- abroad. Property Loan Stock Association and cus areas, with South African listed Association of Property Unit Trust, so property’s leading lights volunteer- The South African listed property the sector remains at the forefront of ing their knowledge and time to sector has grown significantly over good governance and international advance the sector. the past ten years and offers high best practice. forward yields. According to lo- The association will engage mem- cal analysts, the sector’s average The SA REIT Association is a rep- bers on best practice for accounting forward yield is presently just over resentative umbrella body comprised and reporting. This includes an 7.4% as at June 2013. The new SA of voluntary members of all SA initiative that will provide investors REIT dispensation should drive REITs. This association is modeled with improved reporting quality continued growth of the listed prop- on NAREIT (National Association of which will assist them in compar- erty sector, with several new listings Real Estate Investment Trusts) in the ing and understanding the different expected. REITs. The purpose of compiling this best practice accounting disclosure The SA REIT Association offers infor- Estienne de Klerk is Executive and reporting standards is to mation on its www.sareit.co.za or Director of Growthpoint Properties, improve consistency in accounting www.sareit.com website, and sends South Africa’s largest JSE listed policies and disclosure in the sec- regular news updates directly to sub- property company. He is also a tor, and make it easier for accurate scribers on email and via its popular director of Growthpoint Properties comparison of different local REITs. twitter account @SA_REIT. Australia, V&A Waterfront, Chair- man of the Legal and Taxation committee of the SA REIT Association and President of the South African Property Owners Association (SAPOA). De Klerk holds For more information on Global a BCom Honours in Accounting and Marketing and is REIT Regimes, go to a qualified Chartered Accountant CA(SA). www.epra.com/reitsurvey. [email protected]

42.42. EPRA NEWS / 4445 / 2013

FEATURES

EPRA Annual Report Awards 2012/13 — wider adoption of the BPR?

Recognition will be available through The EPRA Annual Report sur- the following Award categories: vey performed by Deloitte will shortly get underway. Gold Award The survey includes a ••For outstanding annual reports review of the annual re- including exceptional compliance ports of approximately with the BPR 80 listed real estate Silver Award companies across Eu- ••For annual reports scoring highly rope, all of which are based on compliance with the BPR members of the FTSE EPRA/NAREIT Europe Bronze Award Developed Index. ••For annual reports scoring well based on compliance with the BPR The purpose of the survey is to promote awareness of the EPRA Best Practices Recommendations (the BPR). The BPR consistency and transparency in In addition to recognising the top aims to raise the stand- the reporting of KPIs across the annual reports by award category, a ard and consistency European listed real estate sector. ‘Most Improved’ award will again of financial report- be made for the annual report of ing for the benefit Survey approach the company showing the greatest of investors. The The 2013 awards will con- improvement in compliance with focus of the BPR tinue to recognise the significant the BPR and a real move towards is the EPRA Perfor- effort and contribution many embracing transparency and clarity mance Measures, companies make in their an- in reporting. which are at the nual reporting and in applying heart of EPRA’s the BPR. drive to achieve

Recent efforts to engage with listed property companies to “develop and promote the BPR have clearly paid off, with around 89% of the sector following the recommendations. Our members’ hard work in the area of reporting and disclosure is helping to improve the transparency of the European listed property sector and is clearly appreciated by investors and analysts. Gareth Lewis, Director of Finance, EPRA”

44.44. EPRA NEWS / 4445 / 2013 FEATURES EPRA Sustainability awards

The EPRA Sustainability Reporting BPR accreditations will be announced at the Annual Conference in September.

The assessment is being carried out by Jones Lang LaSalle based on the criteria laid out by the EPRA Sustainability Reporting committee. This is comprised of leading European listed property companies, investors ADDRESSandING advisors. THE ACADEMIn keepingICS with our green goals, links to the Sustainability Reports or Annual Reports should be submitted electronically to JLL’s Matthew Tippett on: [email protected]

If you have any Every year, we see increasing adop- questions or queries tion of the financial BPR, and I anticipate about the survey “ please contact: that this year will be no different. There are a number of countries where no company has yet achieved an award, and I hope the continuing work by EPRA to broaden its reach throughout Europe will result in Gareth Lewis some new entries to the leader [email protected] board. Jennifer” Chase, Deloitte

Award presentation Claire Faulkner The results of the review will be cfaulkner@deloitte. presented by Deloitte at the Annual co.uk EPRA Conference in September 2013, together with the key findings of the survey.

Jennifer Chase [email protected]

EPRA NEWS / 4445 / 2013 45. FEATURES

Investments built on dividend foundations

Listed real estate and REITs – the smart way to invest in top quality property that offers stable income growth.

Liquidity transparency diversification dividends

www.epra.com/returns

4 sector ads 335 x 245.indd 1 02/05/2013 12:44 FEATURES

Investments built on dividend foundations INTERNATIONAL LEADERSHIP IN CORPORATE RESPONSIBILITY BY EUROPEAN PROPERTY COMPANIES

Listed real estate and REITs – the smart way to invest in In 2007 and 2008, I Sustainability has taken on increased rents, values and occupancy rates. presented reviews of importance in recent years. This has My 2011 study on “Building Better top quality property that offers stable income growth. seen the sustainability agenda ex- Returns” clearly highlighted these sustainability best practice pand from a focus on environmental green premium issues in an Austral- by European property issues to also include the social and ian office building context. companies in EPRA governance dimensions of corporate social responsibility (CSR). CSR has Many property companies have Liquidity transparency diversification dividends News. Often the European become part of the “language of become world-leaders in this area of property companies were property”, including socially respon- CSR, using international best practice world-leaders in this area. sible property investment. to deliver their CSR mandate. This has seen many property companies A lot has happened in this While this has been driven included in the global benchmarks, area over the subsequent to some degree by government including the FTSE4Good index, five years. This article looks regulation through mandatory Dow Jones Sustainability index, disclosure and energy certificates, Global 100 and Carbon Disclosure at best practice in corporate there has also been strong demand Project. Importantly, the Global Real responsibility by property by investors and tenants. This has Estate Sustainability Benchmark companies globally. How seen a positive climate at all levels (GRESB) and EPRA Best Practice of stakeholders. Numerous studies Recommendations on Sustainabil- do the European property in the UK, Australia and US have ity Reporting have seen a specific companies fare compared also shown the business case for property focus given to CSR in the to their US and Asia-Pacific green office buildings, with green property space. This has seen CSR premiums evident across various “champions” emerge amongst both colleagues? www.epra.com/returns performance parametres including the listed and unlisted European >

EPRA NEWS / 4445 / 2013 47. 4 sector ads 335 x 245.indd 1 02/05/2013 12:44 FEATURES

Figure 1: Corporate responsibility strategy: Sonae Sierra

property companies, across the vari- I have included elements from ous countries in Europe. The recent some of these Corporate Responsi- EPRA Sustainability Awards clearly bility Reports by European property acknowledged these leaders in CSR, companies in this article to give an with seven gold award winners insight into the level, detail and (British Land, Citycon, Cofinimmo, format of CSR reporting now be- Hammerson, Klepierre, Shaftesbury ing done. They are often simple, and Unibail-Rodamco) and a further informative and very clever in con- eight silver/bronze award winners. veying a powerful corporate mes- Unlisted property groups such as sage about effective CSR delivery. Figure 3: Strategic alignment of sustainability: Prupim and Sonae Sierra are also This includes: SEGRO “champions” in CSR. 1: articulating the Corporate Respon- Best practice in CSR by European sibility strategy at all levels and for property companies all stakeholders; see Figures 1 and 2. What is now required for best 2: showing the strategic alignment practice in CSR? I reviewed the of sustainability within the organi- websites for many European prop- sation of the property company; see erty companies and the evidence Figures 3 and 4. of CSR leadership is clearly there. 3: reporting performance against The leading websites now have a targets, with the level of progress dedicated Corporate Responsibility achieved; see Figures 5, 6 and 7. section, at which their CSR reports 4: KPIs assessed; often using the are available. This has seen the EPRA sustainability reporting for- previous Sustainability Reports now mat; see Figure 8. being fuller Corporate Responsibility 5: articulating their carbon footprint; Reports; often being 40 page reports, see Figure 9. including the CEO’s message on CSR, evidence of CSR implementation Other examples include easy- and informative case-studies show- to-read consumer-level reports on ing best practice in action. Corporate Responsibility. A wonderful example is “Creating Green” by Figure 4: Sustainability organisational structure: Sections in these CR reports on Citycon; an innovative format by one Klepierre “Managing buildings effectively”, of the EPRA Gold Award winners. “Developing sustainable buildings”, “Supporting communities”, “Engag- I encourage you to check their ing staff” and “Customer satisfac- websites and read their Corporate tion” are typical formats. These are Responsibility reports to get a fuller supported by fuller Performance understanding of what the European Data Reports, fully detailing energy property company “champions” are use and ratings, targets, KPIs and doing in this area; you will be very independent assurance reports impressed. Also check the EPRA Best (using ISAE3000 format). This sees Practice Recommendations on Sus- much more breadth and depth in tainability Reporting to see the level CSR reporting today by European now expected for effective reporting property companies; well beyond of sustainability best practice. just a section in their annual report.

48.48. EPRA NEWS / 4445 / 2013 FEATURES

Figure 2: Corporate responsibility strategy: Europe vs. Asia-Pacific vs. US? Malaysia: YTL. 5: Land Securities European property companies are 6: Philippines: Ayala Land; among the world-leaders in Corpo- Check their websites for excellent rate Responsibility; this is clearly Corporate Responsibility reports. evident across many countries in Europe; eg: UK, France, Belgium, The clear “champion” in the US Finland and Sweden. I was very is Prologis; an outstanding example impressed with the level and style of leadership and innovation in of reporting of their Corporate the Corporate Responsibility space. Responsibility activities. However, many of the other US players are well below interna- Other international property tional best practice and will need companies also deserve the Corpo- to significantly enhance their CSR rate Responsibility “champion” tag. activities to be competitive with the This includes: European and Asia-Pacific property companies in this area of Corporate 1: Australia: GPT, Stockland, CFS, Responsibility. Dexus, Lend Lease, Mirvac. 2: Singapore: City Developments, Moving forward Keppel, CapitaLand. This article has only been a quick 3: Japan: Mitsubishi Estate, Mitsui snapshot of some of the major CSR Fudosan. initiatives being implemented by 4: Hong Kong: Swire Properties. European property companies; >

Figure 5: Achievement of targets: SEGRO The leading websites now have a dedicated Corporate Responsibility section, at which their CSR reports are available.

EPRA NEWS / 4445 / 2013 49. FEATURES

Figure 6: Target achievement: Sonae Sierra

Figure 7: Target achievement: Citycon Figure 8: KPIs: British Land

Figure 9: Carbon footprint: both listed and unlisted. Many clear- Graeme British Land ly deserve the title of “champion” in Newell is this increasingly important area; both professor in a European and global context. of property EPRA should also be commended for investment at their proactive leadership role in this the University area, and increasing the awareness of Western of this key strategic issue among the Sydney. He is actively involved European property companies. in property research and was strong links to the property I look forward to the European industry, both in Australia and property companies continuing to internationally. Professor show commitment, leadership and Newell is a member of the innovation in implementing and EPRA Academic Circle and has developing international best prac- previously prepared research tice in Corporate Responsibility. This reports for EPRA on a range will hopefully see more European of areas relating to European “champions” property.

50.50. EPRA NEWS / 4445 / 2013 FEATURES

LINKEDStrength inIN numbers, AD or strength in networks? Join the EPRA Group, the largest professional network for listed real estate.

Annual BPR survey now underway.

Now in its twelth year, make sure your organisation is considered for the EPRA BPR Awards by submitting your Annual Report to the assessment team at Deloitte.

Send to: Clare Faulkner, Deloitte, Hill House, 1 Little New Street, London EC4A 3TR, UK www.epra.com/BPR

EPRA NEWS / 4445 / 2013 51. references

Making the data count The much-anticipated The vast archive of EPRA data is your offices in order to get you set up update to the EPRA online currently unlocked and open to and assist you in using the new data members and non-members alike - tools. Call: +32 2739 1026 to discuss. data archive went live at least for a short period of time. during the summer and The Charts and Raw Data page grid, We will be building similar pages is now accessible: in essence, provides daily data for the indices so that, at-a-glance, for indices and the constituents. members can see an indices history, www.epra.com/index This includes daily, monthly, three- performance and make-up. monthly returns all the way up to 15-year returns, for price and total As part of this coding update, returns — of course in all the main the daily discount to NAV data has currencies. The data is available for also been released providing user every trading day back to 1989. the ability to see daily discounts or premiums for any constituent, index Members who log in can save or sector. This means that users their favourite indices and con- no longer need to wait for the month stituents so that every time they end reports — but can compile NAV come back to the website the same data for any trading day dating back datasets are available updated for to 1989 for all the relevant EPRA in- the latest trading day. dices. Few people have such insight!

Each index constituent has its Calendar your results own ‘profile page’ detailing the As EPRA sits in a pivotal position trading history; but also copies of within the industry, it makes sense annual and sustainability reports, for us to use technology as much as NAV history, EPRA KPI’s, analyst possible to help connect and trans- coverage, sector analysis, transac- mit information between investors, tional and bond issue history. The property companies and analysts. pages can be downloaded as .pdf One of the best examples of this is documents providing a one-stop the role we can play in co-ordinating information facility. results calls and end-of-FY presentations, so property companies are not EPRA tech staff are happy to pro- competing for attention by acciden- vide training, webinars and or visit tally arranging results at the same

52. EPRA NEWS / 4443 / 20122013 references

LIVE NOW Company fact-sheet for every index constituent, detailing share price, market cap, NAV data, performance data for up to 20 years, analyst coverage, transaction history, EPRA key performance indicators and much more.

LIVE NOW Daily discount/premium to NAV for all European stocks, indices and sectors is updated daily on www.epra.com rather than once a month. This means users do not need to wait for the monthly report, but track changes live from the website. time and date. Equally, analysts can better plan their time.

In light of this, we have started a project to host an industry-wide calendar that will allow members to update their own ‘events’ in real-time onto the calendar. (Non-members will be able to load events but will be subject to restrictions and vetting before items appear).

This will allow members and non- Member’s data members access to reporting data Part of running a large membership for all European index constituents. organisation inevitably means keep- In addition, we will be adding coming tabs on tens of thousands of pany road-shows, conferences and contacts — ie, tracking employment other sector-wide items of interest movements, promotions and new in colour-coded bands. Drop-down staff. This requires much time and filters will let users switch views observation. Unsurprisingly we are between, for example, Europe-wide rarely the first to be informed of your reporting dates to France-only com- new role so people do slip below pany seminars. the radar.

The calendar has an ‘Outlook’ We have therefore created the style and feel to make it familiar to ability for users to update their own CALENDAR - in testing Analyst call clashes become everyone (apologies to Apple users); profiles via the EPRA website - tell- a thing of the past! EPRA launches a Europe-wide and users will have the ability to ing us what you are ‘interested’ in. property industry calendar, open to members and save the events back to their Out- This could be certain financial non-members alike, detailing all company reporting look, Google or IOS calendars. measures, regions, companies or in- dates and results calls, conferences and road-shows. dices, REIT Survey chapter updates, The calendar is in beta testing press or event mailings, EPRA Brief and will be launched at the EPRA mail-blasts or other output. You conference in September 2013. will be able to supply a photo, >

EPRA NEWS / 4443 / 20122013 53. FEATURESreferences

Barney Coleman started his career as a general Unsurprisingly we are rarely practice Surveyor training and practising in the Central London commercial property market in the the first to be informed of 1990’s. More recently his career has been property data related working on projects including the roll your new role, so people do out of energy performance certificates in the UK and as Chief Operating Officer in a Joint Venture Company with HomeTrack. slip below the radar. [email protected]

a business card and your current Monthly Bulletin of 300-plus pages, mous range of material they can contact information. you can elect to receive the sections tailor to their needs. The calendar that are relevant to you; and rather should allow companies to better When you tell us what you than just receive the data monthly, integrate their reporting with analyst interests are, we will use this data you could choose to get it weekly or availability, and our system’s ability not only to refine our research and even daily. to ‘know’ users more effectively, in publications, but also to tailor our real-time, will help it channel the monthly reports to your needs. So, Re-coding the data archive and correct information your way when for example, if you are interested building the new platforms has you want it. in UK NAV’s and tick that box on been a lengthy endeavour, and we your profile, we will ensure that you appreciate the support given by receive all our reports, news and many member companies. We’re research related to this topic. This confident that our regular users will means that rather than receiving the soon become familiar with the enor-

54.54. EPRA NEWS / 4445 / 2013

references

Members Offers EPRA association membership not only offers anyone in the member organisation full access to the EPRA website/archive, regular research, economic, regulatory and index statistics updates; but much more.

IPE Magazine 4,000-5,000 top-level targeted subscribers in Discount of 20% on subscription. The full an- print (7,000-9,000 during MIPIM and Expo Real). nual rate is EUR 355. For more details, contact: PIE is written for investing institutions, capital [email protected] allocators and managers, banks, global REITs and other listed vehicles, IPE Real Estate is positioned at the interface funds, corporate treasur- of institutional investment and the real ers, academics and private estate industry. Drawing on its international investors – to help understand network of correspondents and supply-side reward, opportunity and risk research, the magazine and website’s mission in Europe’s diverse markets. is to bring to light the views and activities of European pension funds and other capital 12-month subscription owners (insurance companies and other plan rates are EUR 749, GBP 639 sponsors) investing in real estate and keep or USD 995, depending them up-to-date with the rapid evolution on delivery location, with of real estate as a sophisticated, global multiple subs available for asset class. institutions. Subscribers gain free entry to PIE events. Tel: + 44 20 7261 0666 EPRA and RICS mem- Fax: +44 20 7928 3332 bers receive a 10% discount on individual Email: [email protected] subscriptions. Register for a free 60-day trial now!

Go to: www.pfeurope.eu to register, PropertyEU is the pan-European information or email: [email protected]. source for real estate professionals. A full subscription package to PropertyEU includes the PropertyEU Daily Newslet- ter, PropertyEU newsflashes, PropertyEU magazine and special annual publications Who’s Who and City Leaders as well as access to the subscriber-only The Institutional Real Estate Letter — Europe content on PropertyEU website. An an- is a monthly publication covering the $3.9 nual package normally costs EUR 495. trillion European institutional property EPRA members can enjoy a 20% discount, market. Written for the European pension paying only EUR 395 per year. Mail your fund community, The Letter - Europe gives contact details to: [email protected] pension funds, investment advisers, con- indicating your EPRA membership number. sultants and others serving this industry unique perspective on investment patterns, trends and strategies.

The Property Investor Europe mission is to bring transparency to Mainland Europe real For a FREE estate for US & global investment professionals. two-month Via a magazine, Online Weekly, HTML Letter, trial subscription, daily intelligence, podcast and events, its hard go to: news-analysis-commentary fosters investment www.irei.com/ capital flows in and around the continent. A publications/ subscription-based service founded in 2005, PIE the-institutional-real- is uniquely published in English from Frankfurt, estate-letter-europe, or Germany, with editors around Europe. Weekly, e-mail your request to PIE reaches over 50,000 institutional profes- [email protected]. sionals via the PIE Letter, and goes monthly to

56. EPRA NEWS / 4443 / 20122013 NOW LIVE!

Go to: www.epra.com/charts references

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES GLOBAL

400 GLOBAL EPRA/NAREIT Global TR (USD) 174.1% 350 EPRA/NAREIT North America TR (USD) 170.7% EPRA/NAREIT Asia TR (USD) 220.9%

300 EPRA/NAREIT Europe TR (EUR) 99.6% d to 100) e 250 eba s r

alue ( 200 V Ind ex 150

100

50 Jul 03 Oct 03Jan 04Apr 04 Jul 04 Oct 04Jan 05Apr 05 Jul 05 Oct 05 Jan 06Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08Apr 08 Jul 08 Oct 08Jan 09Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12April 12 Jul 12 Oct 12 Jan 13 Apr 13

Top 5 and Bottom 5 Performers Investment Price Return Total Return Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (%) (Jun-28) YTD -1Y -3Y Jun-13 Q Hulic Japan Rental Diversified 23.01 23.01 82.50 143.48 -NA- 0.00% Q Commonwealth REIT * USA Rental office 13.11 13.11 49.12 27.46 3.44 0.04% Q Nippon Building Fund * Japan Rental office 9.86 11.39 30.35 52.98 1.05 0.01% Q Japan Real Estate * Japan Rental office 10.37 10.37 32.02 55.66 2.31 0.03% Q Strategic Hotels & Resorts USA Rental Lodging/Resorts 10.20 10.20 38.44 37.15 26.37 0% q Prime Office REIT-AG * Germany Rental office -15.40 -15.40 10.19 9.85 -NA- 0.06% q Conwert Immobilien Austria Non-Rental Residential -15.46 -15.46 -20.72 -10.61 -2.15 0.02% q Shui On Land Hong Kong Non-Rental Diversified -17.52 -16.24 -33.60 -19.83 -12.65 0.03% q Nomura Real Estate Office Fund * USA Rental Residential -10.71 -10.71 -5.39 -4.00 45.38 0.05% q Ivg Immobilien Germany Non-Rental office -40.51 -40.51 -87.89 -85.19 -NA- 0%

Top 10 on Market Cap Investment Market Cap Regional Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (EUR m) (%) Weight YTD -1Y -3Y Jun-13 1 Simon Property Group * USA Rental Retail 37,307.99 8.95 1.35 4.31 28.04 0.03% 2 Mitsubishi Estate Japan Non-Rental Diversified 25,879.35 9.41 1.73 87.09 2.12 0.00% 3 Mitsui Fudosan Japan Non-Rental Diversified 19,116.03 6.95 10.53 92.09 5.85 0.01% 4 Unibail-Rodamco * France Rental Retail 16,985.66 16.50 1.28 10.56 18.65 0.05% 5 Public Storage * USA Rental Self Storage 16,861.94 4.05 7.50 9.43 23.47 0.03% 6 Westfield Group * Australia Rental Retail 16,695.38 6.07 5.44 25.63 3.90 0.04% 7 Equity Residential Props * USA Rental Residential 15,918.71 3.82 3.86 -3.84 14.81 0.03% 8 HCP * USA Rental Health Care 15,831.78 3.80 2.90 7.57 16.76 0.05% 9 Ventas * USA Rental Health Care 15,722.70 3.77 9.39 14.13 17.75 0.04% 10 Sumitomo Realty & Dev Japan Non-Rental Diversified 14,582.66 5.30 10.01 104.79 13.90 0.01%

Indices Market Cap Close Value Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Index Description (EUR m) Jun-13 YTD -1Y -3Y Jun-13 EPRA/NAREIT Europe TR (EUR) 89,413 2120.06 15.45 17.70 -11.24 4.18% EPRA/NAREIT Asia TR (USD) 306,179 2352.2 13.95 14.66 -11.67 3.41% EPRA/NAREIT North America TR (USD) 337,107 3476.5 25.49 43.36 -5.34 3.69% EPRA/NAREIT Global TR (USD) 768,453 2851.93 18.18 24.74 -9.25 3.65%

Regional Breakdown by Market Cap Investment Focus Market Cap Breakdown SectorInvestment Breakdown Focus Market Cap Breakdown

Asia 34.6% Global Non-Rental 19% Global Industrial 5.6% Europe 12.9% Global Rental 81% Global Residential 10.4% Global Speciality 0.0% North America 52.4% Self Storage 3.1% Middle East 0.1% Global Retail 24.6% Global Office 13.0% Global Lodging/Resorts 2.9% Global Industrial/Office 1.2% Global Healthcare 7.8% Global Diversified 31.2%

58.58. _ EPRAEPRA NEWSNEWS // 4538 // 20132011 FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES ASIA

500 GLOBAL EPRA/NAREIT Hong Kong TR (HKD) 319.2% EPRA/NAREIT Japan TR (JPY) 227.6% 400 EPRA/NAREIT Singapore TR (SGD) 202.4% EPRA/NAREIT Australia TR (AUD) 28.9%

300 d to 100) e eba s r

200 alue ( V Ind ex

100

Jul 03 Oct 03Jan 04Apr 04 Jul 04 Oct 04Jan 05Apr 05 Jul 05 Oct 05 Jan 06Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08Apr 08 Jul 08 Oct 08Jan 09Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul11 Oct 11 Jan 12 Apr 12 Jul 12 Oct 12 Jan 13 Apr 13

Top 5 and Bottom 5 Performers Investment Price Return Total Return Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (%) (Jun-13) YTD -1Y -3Y Jun-13 Q Hulic Japan Rental Diversified 23.01 23.01 82.50 143.48 -NA- 0.47% Q Nippon Building Fund * Japan Rental office 9.86 11.39 30.35 52.98 1.05 1.37% Q Japan Real Estate * Japan Rental office 10.37 10.37 32.02 55.66 2.31 2.79% Q Mori Trust Sogo REIT * Japan Rental office 10.19 10.19 24.62 32.39 1.26 4.44% Q Japan Retail Fund * Japan Rental Retail 7.92 7.92 33.07 69.79 13.49 3.72% q Agile Property Holdings Hong Kong Non-Rental Diversified -11.49 -11.49 -21.48 -12.35 7.69 4.62% q New World Development Hong Kong Non-Rental Diversified -13.39 -13.39 -9.65 23.64 -2.85 0.04% q Yanlord Land Group Singapore Non-Rental Diversified -13.68 -13.68 -19.08 0.41 -NA- 1.51% q Shui On Land Hong Kong Non-Rental Diversified -17.52 -16.24 -33.60 -19.83 -12.65 2.57% q Nomura Real Estate Office Fund Japan Rental office -24.61 -24.61 -10.00 2.25 -6.10 5.80%

Top 10 on Market Cap Investment Market Cap Regional Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (EUR m) (%) Weight YTD -1Y -3Y Jun-13 1 Mitsubishi Estate Japan Non-Rental Diversified 25,879.35 9.41 1.73 87.09 2.12 0.45% 2 Mitsui Fudosan Japan Non-Rental Diversified 19,116.03 6.95 10.53 92.09 5.85 0.75% 3 Westfield Group * Australia Rental Retail 16,695.38 6.07 5.44 25.63 3.90 4.28% 4 Sun Hung Kai Props Hong Kong Non-Rental Diversified 15,299.97 5.57 -4.30 13.49 1.62 3.35% 5 Sumitomo Realty & Dev Japan Non-Rental Diversified 14,582.66 5.30 10.01 104.79 13.90 0.51% 6 Wharf Holdings Hong Kong Non-Rental Diversified 9,788.46 3.56 -5.78 53.23 -NA- 2.53% 7 Link REIT * Hong Kong Rental Retail 8,644.04 3.14 -8.03 25.16 19.80 3.84% 8 Hongkong Land Hldgs Hong Kong Rental office 6,203.97 2.26 -7.29 23.29 12.53 2.47% 9 Westfield Retail Trust Australia Rental Retail 6,200.56 2.26 2.65 -NA- -NA- 6.05% 10 Hang Lung Properties Hong Kong Rental Diversified 5,988.92 2.18 -4.76 6.07 4.12 2.74%

Indices Market Cap Close Value Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Index Description (EUR m) Jun-13 YTD -1Y -3Y Jun-13 EPRA/NAREIT Australia TR (AUD) 79,243 1,796.10 8.53 23.02 13.09 5.3% EPRA/NAREIT Hong Kong TR (HKD) 730,761 2,725.18 -7.00 18.32 7.05 3.19% EPRA/NAREIT Japan TR (JPY) 14,374,098 3,481.41 33.02 76.74 28.06 1.5% EPRA/NAREIT Singapore TR (SGD) 57,137 1,746.48 -6.99 15.55 5.49 3.39%

Country Breakdown by Market Cap Investment Focus Market Cap Breakdown SectorInvestment Breakdown Focus Market Cap Breakdown

New Zealand 0.2% Asia Non-Rental 53% Retail 18% Australia 20.3% Asia Rental 47% Residential 2% Office 13% Japan 40.5% Industrial 7% Hong Kong 26.4% Diversified 60% Singapore 12.6%

EPRA NEWS / 3845 / 20132011 _ 59. 59. references

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES EUROPE

500 EPRA/NAREIT Sweden TR (SEK) 339.1% EPRA/NAREIT France TR (EUR) 310.6% 400 EPRA/NAREIT Netherlands TR (EUR) 86.2% EPRA/NAREIT UK TR (GBP) 64.1% d to 100) e 300 eba s r alue ( V 200 Ind ex

100

0 Jul 03 Oct 03Jan 04Apr 04 Jul 04 Oct 04Jan 05Apr 05 Jul 05 Oct 05 Jan 06Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08Apr 08 Jul 08 Oct 08Jan 09Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 July 12 Oct 12 Jan 13 Apr 13

Top 5 and Bottom 5 Performers Investment Price Return Total Return Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (%) (Jun-13) YTD -1Y -3Y Jun-13 Q Standard Life Inv Prop UK Rental Diversified 7.08 7.08 7.75 2.82 5.06 7.49% Q UK Commercial Property Trust UK Rental Diversified 4.45 4.45 19.87 15.44 5.05 6.89% Q Quintain Estates UK Non-Rental Diversified 4.00 4.00 46.48 105.26 22.19 0.00% Q F&C Commercial Prop UK Rental Diversified 3.40 3.86 11.38 13.72 12.60 5.33% Q Eurobank Properties * Greece Rental Diversified 2.59 2.59 45.51 87.63 13.37 0.00% q Leasinvest Real Estate * Belgium Rental office -12.92 -12.92 7.96 11.68 11.35 6.48% q CA Immobilien Anlage Austria Rental Diversified -15.19 -15.19 -11.77 17.28 2.57 4.29% q Prime Office REIT-AG * Germany Rental office -15.40 -15.40 10.19 9.85 -NA- 6.44% q Conwert Immobilien Austria Non-Rental Residential -15.46 -15.46 -20.72 -10.61 -2.15 1.97% q Ivg Immobilien Germany Non-Rental office -40.51 -40.51 -87.89 -85.19 -NA- 0.00%

Top 10 on Market Cap Investment Market Cap Regional Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (EUR m) (%) Weight YTD -1Y -3Y Jun-13 1 Unibail-Rodamco * France Rental Retail 16,985.66 16.50 1.28 10.56 18.65 4.69% 2 Land Securities * UK Rental Diversified 8,031.31 7.80 10.51 -1.15 19.98 3.37% 3 British Land * UK Rental Diversified 6,520.31 6.33 3.15 3.94 14.10 4.66% 4 Hammerson * UK Rental Retail 4,023.22 3.91 1.84 -0.81 16.13 3.63% 5 Swiss Prime Site Switzerland Rental office 3,109.12 3.02 -9.04 7.93 6.08 5.18% 6 Klepierre * France Rental Retail 2,954.15 2.87 5.86 3.56 14.95 4.95% 7 PSP Swiss Property Switzerland Rental office 2,646.88 2.57 -5.49 7.46 8.16 3.91% 8 Capital & Counties Properties UK Rental Retail 2,500.00 2.43 35.58 -NA- 45.18 0.46% 9 Derwent London * UK Rental office 2,454.95 2.39 10.46 19.44 24.27 1.47% 10 INTU Properties UK Rental Retail 2,441.61 2.37 -7.88 -6.13 4.42 4.80%

Indices Market Cap Close Value Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Index Description (EUR m) Jun-13 YTD -1Y -3Y Jun-13 EPRA/NAREIT UK TR (GBP) 34,682 2,149.70 9.45 24.51 16.58 3.48% EPRA/NAREIT Netherlands TR (EUR) 21,911 2,752.29 1.70 4.49 0.88 5.49% EPRA/NAREIT France TR (EUR) 9,498 5,626.98 -1.90 18.61 13.52 6.1% EPRA/NAREIT Sweden TR (SEK) 59,870 6,822.99 6.70 20.54 14.06 3.3%

Country Breakdown by Market Cap Investment Focus Market Cap Breakdown SectorInvestment Breakdown Focus Market Cap Breakdown

United Kingdom 39% Europe Non-Rental 5% Speciality 0.0% Nederlands 21% Europe Rental 95% Self Storage 0.8% Retail 34.4% France 9% Residential 6.4% Austria 1% Office 16.9% Sweden 7% Lodgings/Resorts 0% Other countries 23% Industrial 3.4% Healthcare 0.6% Diversified 37.5%

60.60. _ EPRAEPRA NEWSNEWS // 4538 // 20132011 FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES NORTH AMERICA

350

GLOBALEPRA/NAREIT United States TR (USD) 163.5% GLOBALEPRA/NAREIT Canada TR (CAD) 189.5% 300

250 d to 100) e eba s 200 r alue ( V

150 Ind ex

100

50 Jul 03 Oct 03 Jan 04 Apr 04 Jul 04 Oct 04 Jan 05 Apr 05 Jul 05 Oct 05 Jan 06Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08Apr 08 Jul 08 Oct 08Jan 09Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 July 12 Oct 12 Jan 13 Apr 13

Top 5 and Bottom 5 Performers Investment Price Return Total Return Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (%) (Jun-13) YTD -1Y -3Y Jun-13 Q Commonwealth REIT * USA Rental office 13.11 13.11 49.12 27.46 3.44 4.33% Q Strategic Hotels & Resorts USA Rental Lodging/Resorts 10.20 10.20 38.44 37.15 26.37 0.00% Q Colonial Properties * USA Rental Residential 9.09 9.09 14.83 12.47 21.65 3.48% Q Home Props of New York * USA Rental Residential 7.57 7.57 8.91 10.97 17.47 4.28% Q UDR Inc. * USA Rental Residential 4.60 4.60 9.10 2.11 13.48 3.69% q Crombie Real Estate Investment Trust * Canada Rental Retail -11.27 -10.79 -4.17 -0.75 12.29 6.50% q Killam Properties Canada Rental Residential -11.72 -11.32 -12.01 -14.46 13.59 5.42% q Spirit Realty Capital * USA Rental Diversified -11.71 -11.71 -0.34 -NA- -NA- 5.41% q Morguard REIT * Canada Rental Diversified -12.79 -12.36 -8.21 1.53 13.07 5.89% q Ashford Hospitality * USA Rental Lodging/Resorts -13.32 -12.41 11.23 41.28 19.57 4.19%

Top 10 on Market Cap Investment Market Cap Regional Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (EUR m) (%) Weight YTD -1Y -3Y Jun-13 1 Simon Property Group * USA Rental Retail 37,307.99 8.95 1.35 4.31 28.04 2.91% 2 Vornado Realty Trust * USA Rental Diversified 10,677.98 2.56 5.28 4.60 8.57 3.52% 3 Equity Residential Props * USA Rental Residential 15,918.71 3.82 3.86 -3.84 14.81 2.76% 4 Public Storage * USA Rental Self Storage 16,861.94 4.05 7.50 9.43 23.47 3.26% 5 Boston Properties * USA Rental office 12,304.04 2.95 0.91 -0.37 16.27 2.47% 6 Host Hotels & Resorts * USA Rental Lodging/Resorts 9,665.36 2.32 9.00 9.04 9.17 2.61% 7 HCP * USA Rental Health Care 15,831.78 3.80 2.90 7.57 16.76 4.62% 8 Avalonbay Communities * USA Rental Residential 13,427.33 3.22 1.08 -1.76 16.14 3.17% 9 Ventas * USA Rental Health Care 15,722.70 3.77 9.39 14.13 17.75 3.86% 10 Kimco Realty * USA Rental Retail 6,690.78 1.61 12.01 16.82 20.56 3.92%

Indices Market Cap Close Value Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Index Description (EUR m) Jun-13 YTD -1Y -3Y Jun-13 EPRA/NAREIT Canada TR (CAD) 48,144 5,142.27 -4.71 -0.96 14.56 5.51% EPRA/NAREIT United States TR (USD) 496,117 4,644.64 6.39 9.25 18.18 3.61%

North America

Country Breakdown by Market Cap Investment Focus Market Cap Breakdown SectorInvestment Breakdown Focus Market Cap Breakdown

United States 92% North America Rental 100% Speciality 0% Canada 8% North America Non-Rental 0% Self Storage 5.6% Retail 26.5% Residential 17.3% Office 12.1% Lodgings/Resorts 5.4% Industrial 5.0% Industrial/Office 2.3% Healthcare 14.7% Diversified 10.7%

EPRA NEWS / 3845 / 20132011 _ 61. 61. references

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES EMERGING MARKETS

250

EPRA/NAREIT AIM TR (USD) -60.7% EPRA/NAREIT Emerging 200 Market TR (USD) 103.5% d to 100) e 150 eba s r alue ( V 100 Ind ex

0 Jul 05 Oct 05 Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11 Jan 12 Apr 12 July 12 Oct 12 Jan 13 Apr 13

Top 5 and Bottom 5 Performers Investment Price Return Total Return Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (%) (Jun-13) YTD -1Y -3Y Jun-13 Q Hyprop Investments Ltd South Africa Rental Retail 14.54 14.54 6.85 25.58 14.95 5.24% Q YTL Land & Development BHD Malaysia Non-rental Diversified -9.32 -9.32 16.94 8.08 -NA- 0.00% Q Consorcio Ara Mexico Non-rental Residential 8.84 8.84 13.32 4.93 -14.80 0.00% Q Resilient Prop Inc Fd South Africa Rental Diversified 6.84 6.84 6.19 24.98 26.03 4.76% Q Redefine Income Find South Africa Rental Diversified 6.61 6.61 14.95 22.40 19.53 6.31% q Gafisa Brazil Non-rental Residential -24.41 -24.41 -38.85 9.51 -33.97 0.00% q Six Of October Dev. & Investment Egypt Non-rental Diversified -24.60 -24.60 -28.45 -13.95 -17.02 0.00% q SC Asset Thailand Non-rental Diversified -25.41 -25.41 -81.26 -67.43 7.22 0.70% q Alam Sutera Realty Indonesia Non-rental Diversified -29.25 -29.25 25.00 53.06 60.39 1.95% q Viver Incorporadora e Construtora S.A. Brazil Non-rental Residential -50.00 -50.00 -57.81 -81.36 -53.33 0.00%

Top 10 on Market Cap Investment Market Cap Regional Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Company Country Focus Sector (EUR m) (%) Weight YTD -1Y -3Y Jun-13 1 China Overseas Land & Inv (Red Chip) China Non-rental Residential 8,239.97 13.68 -11.90 13.30 11.54 1.92% 2 China Resources Land (Red Chip) China Non-rental Residential 3,920.29 6.51 0.47 34.18 12.73 1.58% 3 Growthpoint Prop Ltd South Africa Rental Diversified 3,558.99 21.88 10.48 14.74 23.17 5.45% 4 Emaar Properties UAE Non-rental Diversified 3,253.52 20.00 41.33 85.71 20.37 1.92% 5 Ayala Land Philippines Non-rental Diversified 3,050.96 5.07 15.35 40.74 31.51 0.83% 6 BR Malls Participacoes S/A Ord Brazil Rental Retail 2,989.48 21.45 -25.50 -13.13 19.98 2.38% 7 Redefine Income Find South Africa Rental Diversified 2,338.71 14.37 14.95 22.40 19.53 6.31% 8 Lippo Karawaci Indonesia Non-rental Diversified 2,256.79 3.75 52.00 90.00 47.43 0.28% 9 SM Prime Hldgs Philippines Rental Retail 2,017.26 3.35 0.55 25.19 24.20 1.66% 10 Shenzhen Vanke (B) China Non-rental Residential 1,812.96 3.01 11.20 36.81 19.62 1.60%

Indices Market Cap Close Value Total Rtn (%) Total Rtn (%) Total Rtn (%) Div Yld (%) Index Description (EUR m) Jun-13 YTD -1Y -3Y Jun-13 EPRA/NAREIT Emerging Market TR (USD) 96,512 2,206.75 -6.04 10.52 3.64 2.78% EPRA/NAREIT AIM TR (USD) 60,763 2,731.32 0.04 22.03 12.23 2.17%

Country Breakdown by Market Cap Global Breakdown by Country Brazil 14% Asia Pacific 63% Chile 0% Europe 6% China 33% Middle East/Africa 17% Czech 0.9% Americas 14% Egypt 0.1% lndia 2.1% Indonesia 9% Malaysia 5.4% Mexico 0.6% Philippines 6.3% Poland 0.5% Russia 3.3% South Africa 12.6% South Korea 0% Thailand 5.8% Turkey 1.1% Taiwan 0.2% UAE 4.3%

62.62. _ EPRAEPRA NEWSNEWS // 4538 // 20132011 FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES NAV & LTV

Discounts to latest published NAVs in Europe 20%

-20%

-40%

-60%

-80%

-100% Jul-09 Jan-09 Jun-11 Oct-09 Oct-11 Jun-10 Jun-12 Jun-13 Oct-10 Oct-12 Apr-10 Apr-12 Apr-11 Apr-13 Feb-10 Feb-12 Feb-11 Feb-13 Dec-09 Dec-11 Dec-10 Dec-12 Aug-11 Aug-10 Aug-12 Mar-09 May-09

Europe France Netherlands Italy Greece

Belgium Switzerland Norway Germany

Sweden UK Finland Austria

Historical LTV - European Market

75.00%

65.00%

55.00%

45.00%

35.00%

25.00% Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-12 Mar-13 Apr-13 May-13 Jun-13

Europe France United Kingdom Netherlands Germany Belgium Finland Sweden Switzerland

EPRA NEWS / 3845 / 20132011 _ 63. 63. COVER

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