HAPPY 10TH ANIVERSARY UK REITS! Read the Interview with David Sleath

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EUROPEAN PUBLIC REAL ESTATE ASSOCIATION

ISSUE 57 Industry Newsletter DECEMBER 2016

HAPPY 10TH ANIVERSARY UK REITS! Read the interview with David Sleath

Dutch REIT pioneers ready 13 for promotion A new REIT legislation for Poland? 17 Discover Europe’s burgeoning 20 student housing sector WORKING WITH AND FOR OUR MEMBERS Real estate plays a critical role in all EPRA, the European Public Real Estate EPRA’s mission is to promote, develop aspects of our everyday lives. Property Association, is the voice of the publicly and represent the European public real companies serve businesses and traded European real estate sector. With estate sector. We achieve this through the society by actively developing, more than 220 members, covering the the provision of better information managing, maintaining and improving whole spectrum of the listed real estate to investors and stakeholders, active the built environment; where we industry (companies, investors and their involvement in the public and political all live, work, shop and relax. They suppliers), EPRA represents over EUR 365 debate, improvement of the general also play a crucial part in providing billion of real estate assets and 93% of operating environment, promotion of retirement security to millions of people, the market capitalisation of the FTSE best practices and the cohesion and by offering pension funds stable and EPRA/NAREIT Europe Index. strengthening of the industry. highly competitive assets to invest in. 2 Find out more about our activities on www.epra.com MEMBERS LIST AS OF DECEMBER 2016 AUSTRALIA GERMANY NETHERLANDS SWITZERLAND • LondonMetric Property • Univ. of Western Sydney, • Adler Real Estate • ABN AMRO • HIAG Immobilien • Medicx Fund Property Research Centre • Allianz Real Estate • Amsterdam School of RE • Mobimo Holdings • Moody’s Investors Service • Resolution Capital • alstria Office REIT • APG Asset Management • PSP Swiss Property • Morgan Stanley • Westfield Group • AroundTown Property • ASR • Swiss Prime Site • Nabarro AUSTRIA • DEMIRE • Atrium European Real • Univ. of Geneva • NewRiver Retail • BUWOG • Deutsche EuroShop Estate UAE • Nottingham Trent Univ. • CA Immobilien Anlagen • Deutsche Wohnen • Barings • Abu Dhabi Investment • Picton Property Income Ltd • Conwert Immobilien Invest • DIC Asset • Bouwinvest Authority • Primary Health Properties • Immofinanz • DO Deutsche Office • CB Richard Ellis • Emirates REIT • Principal Global Investors • S IMMO • Hamborner • CBRE Global Investors • Redefine International • Heitman Europe UNITED KINGDOM • Safestore BELGIUM • IREBS International RE • Deloitte Financial Advisory • AEW Europe • Schroders • Aedifica Business School Services • AMP Capital • SEGRO • AG Real Estate • LEG Immobilien • EuroCommercial Properties • Assura • Shaftesbury • Antwerp Management • MEAG Real Estate • ING Bank Real Estate • Aviva Investors • Standard Life Investment School Management Finance • Bank of America Merrill • Stenprop • Befimmo • PricewaterhouseCoopers • Kempen & Co Lynch • St. Modwen Properties • Care Property Invest* • Real Estate Management • LaSalle Investment • Barclays Bank • Target Healthcare REIT • Cofinimmo Institute Management • Barclays Capital • Tritax Big Box REIT • DeGroof Petercam • Savills Fund Management • Loyens & Loeff • BDO • UBS • Intervest Offices & • TAG Immobilien • MN Services • Big Yellow Group • Unite Group Warehouses* • TLG Immobilien • NSI • Blackrock Asset • Univ. of Aberdeen • Leasinvest Real Estate • VIB • PGGM Management • Univ. of Cambridge • Retail Estates • Victoria Partners GmbH • Redevco Europe Services • BMO Global Asset • Univ. of Reading, CRER • Solvay Business School • Vonovia • Tilburg Univ. Management (EMEA) • Urban & Civic (Brussels Univ.) • WCM • Univ. of Maastricht • British Land • Workspace Group • WDP • Capital & Counties • Westgrund • Vastned Retail USA • Xior* • Wereldhave Properties GREECE • CBRE Clarion Securities • CenterSquare BRITISH VIRGIN ISLANDS • Grivalia Properties REIC • Yardi • Cohen & Steers Capital • Eastern Property Holdings • Citigroup Global Markets • LAMDA Development NORWAY Limited Management CANADA • NBG Pangaea • Entra • Credit Suisse Securities • Dickinson College • Presima HONG KONG • Norwegian Property • Derwent London • Duff & Phelps FINLAND • Univ. of Hong Kong SINGAPORE • Deutsche Alternative Asset • EII Capital Management • Aalto Univ. • Global Logistic Properties Management (UK) • Fidelity Management & IRELAND Research • Citycon • Davy Group • National Univ. of Singapore • Deutsche Bank • KTI Finland • Ediston Property • Forum Partners • Green REIT SOUTH AFRICA • Neuberger Berman • RAKLI • Hibernia REIT • Growthpoint Properties Investments • Sponda • Empiric Student Property • Northstar Realty Europe • Irish Residential Properties SPAIN • Real Foundations • UB Real Asset Management REIT • EP&T Global* • Axiare Patrimonio • EY • Russell Investment Group FRANCE ISRAEL • Gmp Property • Simon Property • Affine • GIC Real Estate • Azrieli Group • Hispania Activos • Goldman Sachs • SNL Financial • ANF Immobilier • Gazit-Globe Inmobiliarios, S.A • Univ. of Cincinnati • BNP Paribas International ITALY • Inmobiliaria Colonial • Grainger • Ventas • CeGeREAL • Lar España • Virginia Tech Univ. • Foncière des Régions • Aedes • Great Portland Estates • Beni Stabili • Merlin Properties • Green Street Advisors • Zell—Lurie RE Center at • Frey • URO Holdings Wharton • Gecina • Chiomenti • Hammerson • Icade • Coima Res SWEDEN • Hansteen Holding • IEIF • Immobiliare Grande • Atrium Ljungberg • Helical Bar • Ivanhoé Cambridge Europe Distribuzione • Castellum • Henderson Global Investors • Klépierre JAPAN • Dios Fastigheter • intu • Mazars Group • NN Investment Partners • Kungsleden • Invesco • Mercialys • Pandox • Jefferies LUXEMBOURG • SEB* • JLL • Société de la Tour Eiffel • ADO Properties • Société Foncière Lyonnaise • Wihlborgs • J.P. Morgan • Dream Global • Kennedy Wilson Europe • Société Générale • Grand City Properties • Unibail—Rodamco Real Estate • Université de Paris— • KPMG Dauphine • Land Securities *Welcome to our newest members

NEWS | 57 | 2016 CONTENTS ...... 5 | Happy 10th anniversary UK REITs UPDATE FROM 10 | Listed property stocks looking 3 attractive PHILIP CHARLS 13 | Dutch REIT pioneers ready for promotion 17 | A new REIT legislation for I was fortunate enough, with EPRA Research and Indices Director Poland? Ali Zaidi, to be at NAREIT’s REITWorld in Phoenix, Arizona in 20 | Europe’s burgeoning student mid-November and so to directly experience the aftermath of the housing sector U.S. presidential election result earthquake. Whatever you think about Donald Trump’s victory, it’s likely that the existing global 26 | Brexit “pre-negotiations” political and economic order is going to see some profound 30 | EPRA’s mentoring programme shake-ups next year. 33 | Dear Santa Europe’s own political tremor with the Brexit vote in June has clearly had a strong impact on the relative performance of UK 35 | Index focus and Continental European listed real estate. The UK’s total investment returns are down about -25.4% year-to-date in euros, although the currency effect also plays a large part here, while Continental Europe was up 0.35% over the same period...... But we shouldn’t forget that REITs are structured to appeal to income investors and here the picture is very similar. The UK’s Editor & Production Manager average dividend yield at about 3.73% is close to other Eurozone Katarzyna Jasik companies at 3.81%. This is what counts to investors in the long- Article Credits term and will support the attraction of UK REITs regardless of Bart Gysens Stephen Hays Brexit. Simon Packard Tobias Steinmann While all eyes have been on the presidential election, another quieter shift in the market is gaining momentum in the U.S. Please send your comments and suggestions to: [email protected] and has extremely positive implications for listed real estate investment worldwide. Design & Layout Fuse Consulting Limited, London Blackrock, the world’s largest investment manager by assets, [email protected] recently introduced real estate as its fourth core product mix offering to U.S. retail equity investors alongside bonds, general equities and commodities. This follows listed real estate’s debut on September 1st as a stand-alone investment sector in the Global Industry Classification Standard (GICS) used as benchmark for EPRA major equity indices worldwide and its separation from previous Square de Meeus 23, B—1000 Brussels +32 (0) 2739 1010 inclusion in the “Financials” stocks basket. www.epra.com Although the Blackrock move is for now only focused on the @EPRA_realestate giant U.S. REITs sector, EPRA’s recent trip over the Atlantic also revealed that other U.S. investment houses are busy setting up dedicated real estate teams that focus on both listed and non- listed forms of property together as an investment asset class in its own right. >

NEWS | 57 | 2016 U.S. investment trends have a tendency to be imported across the pond and while some large European institutional investors already treat property as a single investment sector, there is huge scope for this to be extended, also into the retail market. 4 Our main barrier to benefitting from the higher capital flows potentially flowing to Europe is simply one of scale and we need those markets that haven’t yet adopted REIT regimes to move towards them at a snappier pace. To this end, EPRA was in Warsaw in late-November with a strong team of REIT experts to brief the Polish market on the best approaches to take in getting their own listed industry established on a solid base. I’d like to warmly thank Unibail- Rodamco, PGGM, PwC, the French property association FSIF and law firm De Gaulle Fleurance & Associés, for their assistance in Warsaw.

DUO, MIPIM AWARDS FINALIST IN THE BEST FUTURA MEGA PROJECT CATEGORY

DUO is developing 80,000 m2 of ofﬁ ce space A mixed-use, multi-sensory location, DUO embodies the future of the Paris tertiary sector. Conceived by the architect Jean Nouvel to revolutionise modes of creation and to accommodate new collaborative processes, DUO will combine within the same universe: workspaces, a hotel, businesses and restaurants,

DUO aims to attain the highest standards of environmental performance as guaranteed by the Effi nergie+ accreditation, the HQE certifi cation (exceptional passport rating), and the LEED® Platinum standard. DUO will be the fi rst tower registered with TAKING URBAN SENSATIONS TO NEW HEIGHTS the WELL BUILDING STANDARD® in France.

NEWS | 57 | 2016www.duo.paris

EXE_IvanoeCambridge-DUO-EPRA_213x138mm_PP_FondPerdu3mm.indd 1 29/09/2016 18:18 CEO INTERVIEW HAPPY 10TH ANNIVERSARY UK REITs! 5

o wrap-up the momentous Tyear we travelled to London to interview David Sleath, Presi- dent of the British Property Fed- eration and CEO of SEGRO. We discuss the evolution of UK REITs on the eve of their 10th anniversary and how they get to maturity.

The UK celebrates the 10th ONE anniversary of real estate investment trusts (REITs) next year. How has the UK property market changed? “REITs were a catalyst to the broadening of DUO, MIPIM AWARDS FINALIST the UK’s listed real estate sector and the We know that the property industry makes IN THE BEST FUTURA MEGA professionalisation of the way that compa- PROJECT CATEGORY nies organise themselves. Previously, many a fantastic contribution to the UK economy property companies were focused on creat- and we need to get that message across to DUO is developing ing capital growth and generating develop- 2 politicians, businesses, government, the 80,000 m of ofﬁ ce space ment gains - REITs encouraged management A mixed-use, multi-sensory location, DUO embodies the future of the Paris tertiary sector. teams to focus more on income generation. public at large and key influencers, like the Conceived by the architect Jean Nouvel Today we have a whole spectrum of REITs, to revolutionise modes of creation and to media and the civil service. accommodate new collaborative processes, ranging from those who focus on crystallis- DUO will combine within the same universe: ing capital gains through building, develop- workspaces, a hotel, businesses and restaurants, ing and selling, to those which are much

© L’Autre Image© L’Autre all designed as unique locations in Paris. more income-oriented than before in their total return business model. In the current DUO aims to attain the highest standards of environmental performance as guaranteed by the Effi nergie+ accreditation, low interest rate environment, REITs which the HQE certifi cation (exceptional passport rating), can deliver a relatively low-risk, income-fo- and the LEED® Platinum standard. cused total return have been popular with Finally, shareholder registers have become DUO will be the fi rst tower registered with investors. TAKING URBAN SENSATIONS TO NEW HEIGHTS the WELL BUILDING STANDARD® in France. much more international. REITs are a well Companies are certainly more thought- understood phenomenon globally, particu- ful about the construction of their bal- larly in the USA, and the introduction of ance sheets than they were 10 years ago, REITs suddenly put UK listed property com- although perhaps this is more due to the panies on the radar screen of international repercussions of the Global Financial Crisis investors. Some companies were off limits than the introduction of REITs. because investors are restricted to only >

www.duo.paris NEWS | 57 | 2016

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NEWS | 57 | 2016

axiare_epra_horses_outlines_FA.indd 1 17/11/16 10:30 owning shares of REITs, like they are in Japan. burgeoning sector This has been very beneficial for the sector. but no residential REITs at all, bar- In general, I think UK REITs are in much better ring one private- shape now to cope with volatility in the direct ly owned insti- real estate market, such as from Brexit, than 7 tutional REIT. they were in 2007.” This is because UK REITs were launched the REIT regime TWOjust before the crash in is not well suited the Global Financial Crisis. What are the to residential in- lessons? vestment because of the very fine “The benefits of leverage in a rising market and uncertain divid- can be wiped out and dwarfed by the pain ing line between what and losses when the cycle turns. Virtually ev- constitutes a trading trans- ery company operates now with much lower action for tax purposes and leverage than in the mid-Noughties. There is what constitutes an investment. also a greater focus on the quality of assets, Clearly trading is a bad activity for the which are considerably better today than a REIT Balance of Business conditions and so decade ago after a big clean up of portfolios. is taxable, whereas an investment is not. This We all understand that you must have high uncertainty in tax treatment militates against quality, liquid assets when you need them. REITs being set up to attract capital into There’s also been a noticeable increase in the residential property, especially institutional number of sector-focused REITs and most of capital. Action in this area could help to grow the newcomers are sector specialists.” the sector. One idea is for the introduction How do you see the of seeding relief from Stamp Duty Land Tax THREE REIT sector developing (SDLT – a tax paid on purchases) for REITs. in the UK? This would allow REITs to acquire a property with shares, exempting them from SDLT in or- “Investors like the UK REIT model and see the The first priority for the BPF der to facilitate the construction of a portfolio sector as a good location to place capital, pro- is to maintain confidence of residential properties. vided there’s a wide enough choice in terms in the UK as a place where of companies on offer. While market condi- At EPRA we would love to see the mutual tions will distort how many IPOs there are, we recognition of the REIT status across Europe, you can invest. need more companies to come through. I do although it is possible to operate reasonably expect this to happen. Let’s not forget that 10 efficiently as legislation stands today. Most in- years isn’t a very long time in terms of REITs; ternational jurisdictions have bilateral tax trea- in the US it took 30 years before the market ties with other countries. Generally these are matured. In 2017 I expect the BPF will take unrelated to the European Union so we don’t stock of how well REITs are functioning and to expect the recent referendum vote to leave the identify where the opportunities lie for us to European Union to cause major issues.” lobby government to make the changes need- What is the BPF’s position ed to help the sector develop more rapidly.” FIVE on Brexit? What needs fixing? “Brexit is at the top of the BPF’s agenda and our FOUR engagement is focused on coordinating with “The one area where we would certainly like the Prime Minister’s office, the Treasury and the to see more progress is with the development Department for Exiting the European Union on of residential REITs. Ten years after the launch how they are approaching Brexit. They aren’t of the REIT regime in the UK, we have a giving much away at the moment! >

NEWS | 57 | 2016 try is taken seriously and gives us a seat at the table when it comes to making important decisions.”

What is the outlook 8 SEVEN for the UK market in 2017? “For the property industry as a whole there are The first priority for the BPF is to maintain con- a wide range of views on how the UK occupier fidence in the UK as a place where you can in- and investment markets will fare over the next vest. This is important for the property indus- few years. We saw the market slow down in try and the health of our occupiers. Secondly, terms of investment in the UK in the second we need to make sure that the government and third quarters. There were immediate delivers on infrastructure and developments signs of panic after the June 23rd referendum such as Crossrail (the high speed rail link because the result was a surprise for most of crossing London), a next generation nuclear us. We saw this in the rush of redemptions for power station at Hinkley Point and a new run- open-ended funds as investors took their mon- way at Heathrow. These are critical because ey out on talk of Britain facing a downward they unlock opportunities for investment in death spiral. Today, those retail property funds real estate and other assets. Thirdly, the UK are enjoying net inflows as investors have re- is a magnet for global talent and skills, which alised that real estate looks pretty attractive in is important for the construction and property the context of a low interest rate environment. development industries. As a nation, we aren’t The spread between UK government bond and developing the necessary skills for our own property yields is at an all-time high and pric- work force so we have to import them from ing is holding up pretty well for better quality abroad. We want the UK to be place where assets. we can develop home grown talent as well as attracting talent from across the world. The government will be distracted and receiv- There were immediate ing lots of solicitations. We recognise that we signs of panic after the will have limited opportunities to get its ear, so rd it’s important to make sure that as an industry June 23 referendum body we are very focused on our goals.” because the result was a David Sleath What are the challenges for the surprise for most of us. Segro/BPF SIX BPF in this context? David Sleath joined SEGRO “We represent an industry that is often re- For SEGRO, we’ve seen good occupational as Finance Director in 2006 garded with suspicion and not as the force for demand this summer and into the last quar- and was promoted to CEO five good that it is. The BPF has got to think about ter of the year, which I expect to continue in years ago. A chartered accoun- its engagement on day-to-day issues, particu- 2017. The logistics sector is benefiting from tant, he was previously finance director of Wagon plc and a larly in the context of Brexit. We know that the structural changes brought by online retailing partner at Arthur Anderson, property industry makes a fantastic contribu- and the fact that there isn’t much space avail- where he worked for 17 years. tion to the UK economy and we need to get able in the main urban locations necessary for Sleath is the British Property that message across to politicians, businesses, “last mile delivery” of goods direct to people’s Federation’s Current President, government, the public at large and key influ- front doors. From an investment standpoint, a board member of EPRA and encers, like the media and the civil service. demand for good quality logistics assets re- an independent director of This means getting out there to promote what mains very strong and pricing has remained Bunzl Plc. we do, raising our profile and improving our relatively firm post Brexit. I’m positive about image. It will ensure that the property indus- the outlook for our sector.”

NEWS | 57 | 2016 EPRA ADV 213x276-hr.pdf 1 03/11/16 13:28

9 January London Make sure to kick-o 2017 with the best Insight! Join us for Europe’s rst networking event of the year in listed British Museum, real estate. Great Russell Street, London > connect > share 12 January > discover Amsterdam

Loyens & Loe , Fred. Roeskestraat 100, #EPRAInsight Amsterdam APG’S KANTERS SAYS LISTED 10 PROPERTY STOCKS LOOK ATTRACTIVE AFTER SLIDE IN PRICES ON ECB POLICY OUTLOOK

urope’s listed property sector is The FTSE EPRA/NAREIT Index for Developed Eu- Eattractively priced following a rope declined 8.3% in the first 10 month of 2016, sell-off in October and as operating in contrast with gains for the Asia-Pacific region fundamentals remain healthy, said and the US. Sparking the declines in Europe Patrick Kanters, Global Head of Real were concerns that the European Central Bank Estate & Infrastructure at APG might start to taper its “quantitative easing” bond-buying activities in the first step towards Asset Management, the eventual interest rate increases. investment manager for giant Dutch “Pricing, with sometimes quite steep discounts pension funds. to net asset value, makes the listed market fairly attractive again compared with the private markets,’’ he said in an interview in early November at APG’s headquarters building in Amsterdam. Kanters, who is a board member of EPRA, will be a panellist at its Insight event in the Dutch capital on January 12th. “We were already far more prudent or reluctant to invest on the private side of the sector in what we call prime or super-core assets, because we thought that pricing was already getting a bit too high with enormous competition for assets. Now with the recent share price falls in Europe, we’ve become more interested in quite a few of the listed companies,” he said. APG is a frontrunner among institutional investors in using the listed sector and private markets to invest in real estate, which represents approximately 10% of APG’s EUR 444 billion of assets under management as of the end of the third quarter of 2016. The real estate portfolio’s current mix is 60% in the listed sector and 40% non-listed – a mixture of club funds, co-investment and joint ventures with leading operators. That might shift more in fa- vour of stocks, depending on the investment opportunities, although it cannot exceed the

NEWS | 57 | 2016 ceiling of 70% imposed by APG’s portfolio These parameters make offices less attrac- construction rules. tive to APG as a pure long-term investment as market timing is of importance due to the Kanters, who is Europe currently makes up about 36% of APG’s higher cyclicality of this sector. “When we real estate portfolio with investments focused a board member expose money to private investment on the mainly in the northwest and south of the re- 11 office side, its very important for us that we of EPRA, will be gion, while the US is 39% and the Asia-Pacific structure our strategy to be able to time our a panellist at its region makes up the balance. APG has set a entry and exit.” zero allocation to Japan from a long-term per- Insight event in the spective, although that does not prevent it from Property stocks and real estate investment Dutch capital on investing there in the shorter term, he said. trusts (REITs) provide APG with the ability to January 12th. deploy money in sectors like regional shopping “Around three or four years ago the majority centres, German residential and global logistics of the investments were in Europe and we operators, where the companies dominate and changed that balance by gaining more expo- have the best assets, he said. As market lead- sure to the US, which has a lot to do with the ing operators, this has opened up co-invest- long-term, higher economic and demographic ment opportunities alongside listed companies growth that drives real estate returns,’’ he such as its investment in the Westfield Stratford said in the interview conducted before the US shopping centre in London. Other attractions presidential election. are the cost-effective way of deploying capi- “How we actually build up these portfolios tal since large-scale private investments carry is very much opportunity-driven,” he said, higher transaction costs. Because of their size pointing to its decision in October to take a APG’s interests in some listed companies are 75% stake in the 1.7 million square foot Ed- as illiquid as the private sector, he noted. “But inburgh St James shopping and leisure cen- bear in mind the private sector has caught up tre, residential and hotel development in the and can, subject to market conditions, far more Scottish city alongside TH Real Estate. That’s easily traded nowadays.” as concerns about the UK’s exit from the Euro- Patrick Kanters Europe’s listed sector needs a broader choice pean Union deterred other investors, he said. APG Asset Management in subsectors like hotels, student housing, This real estate strategy has generated a long- data centres, healthcare and senior living. Kanters joined APG Asset term average return of just north of 9%, which While this will take time and is subject to Management when it was ABP clearly contributed to the 5 to 7% return that market conditions, “I’m very positive that the in 2005 following an 11-year needs to be generated to meet the liabilities investible universe will further increase as spell at ING Real Estate. He is of APG’s defined benefit pension fund clients, strong and innovative operators are being es- an executive board member of which include the savings plan for the Dutch tablished on the private side,” he said. EPRA, served as Chairman of Inrev’s Management Board and civil servants, ABP. It is an approach that is Kanters still expects European interest rates to is a non-executive member finally starting to interest other investors, remain low “for a long time” to support eco- of GRESB’s board. He has a Kanters said. nomic growth. post doctorate degree in Real “We don’t really differentiate between the Estate from the University of “Overall the property markets are in healthy listed or private real estate. It really is the Amsterdam. shape: showing rental growth, a balance same asset class and this has been tested of supply and demand, but also barriers to and backed by lots of academic evidence,” new development that is pushing up rental he said. “In the medium term it does provide prices,” he observed. “There are enormous us with some sort of diversification because differences, however, between cities with the two do not fully move in sync and are healthy demographic and economic growth not fully correlated. In real estate we’re look- and those where the picture is entirely dif- ing to have exposure to the demand-supply ferent. Germany as a whole is not a pretty dynamics driven by key market trends and picture, for example, so it’s all about invest- economic cycles.” ing in the right cities.”

NEWS | 57 | 2016 Successful M&CSaatchi Little Stories brands, inspired shopper s

The Retail Only® spirit means extending a warm welcome to the brands of tomorrow and the customers of today by anticipating their needs and desires. That’s why Klépierre is always looking for the brands that visitors will adore!

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KLEPIERRE_ANNONCES_PRESSE_AF_213X138_UK.indd 1 24/06/2016 15:11

2015 total share return We offer real estate solutions that embrace change.

Located in the heart of the Greater Paris area, our buildings are on the cutting edge of innovation and sustainability.

We want our buildings to create value for Portfolio value our tenants, while driving performance. (excluding transfer duties) Our ambition is to develop a new type of connected property company, offering agility with a human touch.

Recognized names such as Northwood, GIC and AXA have recently joined us. Ranked by the Global Real Estate Sustainability Benchmark (GRESB) How about you?

Tenants rated 1 or 2 by Dun & Bradstreet Cegereal is a real estate company that invests in prime ofﬁ ce properties. Listed in Compartment B of Euronext Paris – FR0010309096 – CGR For more ﬁ nancial information, visit: www.cegereal.com

Cegereal_Pub_Fi_EPRA_MAG_L213xH138mm_GB-PROD.indd 1 17/06/2016 11:19 Successful M&CSaatchi Little Stories brands, inspired 13 shopper s

The Retail Only® spirit means DUTCH REIT PIONEERS READY extending a warm welcome to the brands of tomorrow and the customers of today by anticipating their needs and desires. That’s why FOR PROMOTION IN EU LISTED Klépierre is always looking for the brands that visitors will adore! PROPERTY LEAGUE

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KLEPIERRE_ANNONCES_PRESSE_AF_213X138_UK.indd 1 24/06/2016 15:11

2015 total share return We offer real estate solutions that he Netherlands was the pioneer of embrace change. TEuropean REITs with its Fiscal Invest- Located in the heart of the Greater Paris ment Institution regime (FBI) the first creat- area, our buildings are on the cutting ed in 1969, but it has not sustained its place edge of innovation and sustainability. in the European league of listed real estate We want our buildings to create value for markets. The four domestically quoted Portfolio value our tenants, while driving performance. companies that are constituents of the EPRA (excluding transfer duties) Our ambition is to develop a new type Developed Europe Index have a combined of connected property company, offering free float market capitalization of about agility with a human touch. EUR 4.8 billion, meaning the Dutch are now Recognized names such as Northwood, ranked eighth behind neighbouring Bel- GIC and AXA have recently joined us. gium, and slightly above Austria, if French Ranked by the Global Real Estate Sustainability behemoth Unibail-Rodamco’s Amsterdam Benchmark (GRESB) How about you? listing is excluded from the picture. >

Cegereal_Pub_Fi_EPRA_MAG_L213xH138mm_GB-PROD.indd 1 17/06/2016 11:19 A country which has the second ply since the financial crisis and is bottom- largest private occupational ing out with the main Amsterdam market, pensions sector in Europe, notably the South Axis business district, and some of the biggest cross- leading the upswing into the next cycle. border institutional real estate 14 Retail property is similarly perking up on investors in the world, includ- the back of growing consumer confidence ing APG and PGGM, appears not and economic growth, but structural prob- to be punching its weight in the lems remain. listed market to the extent suggest- ed by the scale of its domestic capital “Would we consider investing in Dutch re- base, size of economy and underlying tail now? It’s a very difficult call as there’s property investment stock. still a lot of oversupply and you need to be very selective in the choice of locations and “We have a lot of institutional capital in tenants as we’ve seen with a number of the Netherlands, but the regulatory regime high profile bankruptcies such as the V&D means it’s more attractive for investors department store chain,” Evert Jan van Gar- to own direct real estate here than invest deren, Finance Director of retail REIT Euro- in the shares of domestic REITs,” Daniel commercial Properties and Chairman of the van Dongen, Treasurer of the Dutch Stock Dutch REITs association, said. Listed REITs Association and CFO of Dutch office REIT NSI said. “Another issue we have is somewhat ar- chaic Dutch retail market practices, as the He pointed to the FBI restrictions on limit- legal system makes it difficult for landlords ing a single shareholder stake in a Dutch to impose turnover rents and that means REIT to 45% and the heavy capital weight- there’s a lack of flexibility on what the ing attributed to the equities portfolios of appropriate rental level should be for the insurers through the Solvency II regulation, tenant, or information on how their busi- despite the many research papers that nesses are doing,” he added. show listed real estate performs more like the underlying property holdings in the The Dutch REITs association was set-up in long-term, with less volatility and so risk, the summer of 2008 to lobby on common than stocks generally. issues for members, such as taxation, with the financial authorities. It now comprises We were solidly backed “We can’t tackle all these regulatory issues five companies: Eurocommercial Proper- at a Dutch level and we believe that the by EPRA over the AIFMD ties, NSI, Unibail-Rodamco, Vastned and lobbying element of EPRA in signalling the Wereldhave, after former founding member and could draw upon their industry’s concerns to the European au- Corio was taken over by France’s Klépierre. research resources and thorities is one of the most important parts lobbying efforts in Brussels. of its role,” Van Dongen added. In the eight years of its existence the association has successfully worked on a number But regulation has not been the only of issues of concern to its members with hurdle holding back the growth of REITs the Dutch finance ministry and financial in the Netherlands. Structural issues in markets authority (AFM). These included the key office and retail markets in recent facilitating parent company guarantees for years have depressed values, meaning borrowing by subsidiary vehicles and also REITs focused on domestic investments the handling of developments and redevel- traded at a discount to NAV, so discourag- opments within the FBI structure. ing new listings. “It was previously difficult to redevelop Van Dongen said the Dutch office sector our own properties within the FBI, but had probably completed most of the value then the law was changed, so we can now impact of its shake-out of overhanging sup- develop or redevelop for our own portfo-

NEWS | 57 | 2016 lio through a tax paying subsidiary. We ex- Perhaps star transfers changed paying some tax for taking back from Belgium might also flexibility in development possibilities. offer future hope for the Previously we were forced to sell the prop- promotion of the Dutch erty, have it redeveloped, and then buy it listed league. Belgian 15 back again, which was not very logical,” logistics REIT WDP and Van Dongen said. healthcare and office REIT Cofinimmo, which both Another step forward was persuading the have substantial invest- authorities to treat certain ancillary ser- ments in the Netherlands, are vices, such as catering, that are beyond currently in talks to become pure property investment, but nevertheless members of the Dutch REITs asso- intrinsic to modern asset management, as ciation. The new entrants are more being allowed by an FBI if rendered by a than welcome. Joint action and a single subsidiary subject to corporate tax. voice are key founding principles of the Like listed real estate bodies in Belgium association and the strength of that voice and Germany, the Dutch association cut grows proportionally with the size of the its teeth at an international level with its capital base backing it up. national petitioning against the EU threat to treat REITs as investment funds, rather than property companies within the Alter- native Investment Fund Managers Directive (AIFMD). “We were solidly backed by EPRA over the AIFMD and could draw upon their research resources and lobbying efforts in Brussels. The whole lobbying campaign was a great success for the industry as we achieved our aims of not being sucked into the AIFMD and REITs being treated the same whether they are in France or the Netherlands,” Van Evert Jan van Garderen Daniel van Dongen Eurocommercial Properties NSI Garderen concluded. So how is the listed industry to grow in the Evert Jan van Garderen (54), a Daniel van Dongen (45) gradu- Netherlands? The Dutch REITs confessed to graduate of Erasmus University ated in Business Economics at being slightly envious of the market’s evo- Rotterdam, joined Eurocom- the Groningen University (1995) mercial Properties N.V. in 1994 as and is a chartered management lution in Germany, which grew from only CFO after working for five years accountant with a post-grad about 9% of the market cap of the EPRA as a solicitor with a major Dutch from the Amsterdam University Developed Europe index in 2012 to closer to law firm and subsequently as (2000). Daniel worked in several 21% in 2016 on the back of the explosive ex- legal counsel for Robeco Group, international corporate finance pansion of the listed residential sector. The the international investment and business control positions Dutch housing market has also experienced group based in Rotterdam. He is in logistics and telecommunica- fast rising prices in the main cities over the both a Chartered Accountant and tions before he started working in past two years and residential property a qualified lawyer. Real Estate in 2005 as the group isn’t excluded from the REIT regime in the controller for Wereldhave. Daniel Netherlands as is the case in Germany, but joined NSI as a CFO in 2009. it remains to be seen whether domestic and international private equity investors will opt for the IPO route to exit their residential investments in the country.

NEWS | 57 | 2016 Quality ﬁ rst – for tenants and investors. PSP Swiss Property – Swiss commercial properties.

PSP Swiss Property is one of Switzerland’s leading real estate companies. The location and quality of its office and commercial properties, market-oriented tenant service as well as a sustainable corporate strategy make PSP Swiss Property an attractive partner for share- holders and tenants. The shares of PSP Swiss Property Ltd are listed on Switzerland’s SIX Swiss Exchange (symbol PSPN, security number 1829415).

PSP Swiss Property Ltd · Kolinplatz 2 · CH-6300 Zug · Switzerland · www.psp.info A NEW REIT LEGISLATION FOR POLAND? 17 by Tobias Steinmann, EPRA Public Affairs Director

oland ticks most of the boxes Pfor a successful introduction of a REIT regime. It is the most developed financial market across Central and Eastern Europe with the largest stock exchange in the region. It has a healthy provision of assets with prime properties accounting for around 5-7%. There is also an unde- rutilised potential of financial assets from Polish households amount- ing to more than EUR 400 billion.

In this context, a Polish REIT regime is long overdue. It would give a considerable boost to the market, activating local capital and draw- ing in foreign investors. In addition, Polish RE- ITs could be an attractive tool for commercial real estate projects in the country. Hence, we were pleased to hear, roughly a year ago, that the government started to work on REIT legislation. EPRA has been ad- vocating for a Polish REIT regime from the very beginning. Earlier this year in Warsaw, we gave a presentation at the first ever REIT event in Poland. The event gathered more than 200 representatives of the real estate sector and provided a great opportunity for sharing mutual expertise, networking and alignment on further actions in promoting a REIT regime in the country. We had several meetings with local experts and key market players. Recently, a national industry association has been formed. To capitalise on this, in late November we organised another panel with EPRA members, experts and fellow representations from national associations at a second REIT conference in Warsaw in November. >

NEWS | 57 | 2016 Philip Charls (EPRA Certain statutory requirements must be met, CEO) gave the in- such as1: troduction and 1. The share capital shall be at least PLN 60 outlined why million (around EUR 15 million); 18 REITs in Europe 2. The company shall be formed for an in- have been such a definite period of time; success and what 3. Real estate or shares in qualified subsid- the crucial frame- iaries or other REIT-status public com- work was to make it panies shall amount to 70% of the total happen. Dorian Kelberg, value of assets; Executive President of the 4. At least 70% of net profit from sales shall French real estate association come from lease or sale of real estate; FSIF, and Blaise-Philippe Chaumont, 5. The total balance sheet value of the lia- partner in the De Gaulle Fleurance & Associés bilities of a REIT-status company shall not law firm in Paris who handled the creation of exceed 70% of the balance sheet value of the French SIIC regime in the Ministry, pre- its assets; sented the benchmark example for develop- 6. At least 90% of a REIT-status company’s ing a successful regime. Hans Op’t Veld from profits […] shall be distributed in the PGGM presented the view from one of Eu- form of dividends in each fiscal year (to rope’s largest pension funds. Ruud Vogelaar the extent such profits are not reinvested and Sandrine Berbel from Unibail-Rodamco in real estate or in a shareholding of at laid out the tax efficiency requirements from least 95% in companies that hold real the perspective of Europe’s largest REIT. Fi- estate the value of which forms at least nally, Bruno Lunghi, partner of PwC in France, 70% of the balance sheet value of their summarised his experience within Europe’s assets); oldest and – along with the UK – most mature 7. The company’s profits from the lease of REIT regime. A lively discussion provided an real estate are generated from at least interactive and fruitful experience for every- three real properties. body. Philip Charls also gave a full-page in- The status of a REIT would allow for exemp- terview to Parkiet, the leading business and tion from tax on income derived from inter financial newspaper in Poland, outlining the alia lease of real estate, sale of real estate as EU listed sector’s perspective. well as from dividends received from qualified This all comes as the Ministry of Finance has subsidiaries. It should be noted that the term been presenting its draft proposal for a REIT ‘real estate’ shall exclude residential buildings bill in October 2016. They have also launched a and dwellings. consultation to which registered stakeholders While some of the requirements seem to pro- were allowed to comment. Responsibility for vide a solid framework for a Polish REIT re- drafting the REIT regime falls to Deputy Prime gime, other points would need improvement. Minister Mateusz Morawiecki, who continues his former portfolios from the Ministry of Fi- The new regulation has an ambitious schedule nance and Ministry for Economic Development. of coming into force on 1 January 2017. We will According to the draft, a public company with continue the dialogue with our Polish counter- a registered office in Poland, whose business parts and contacts and monitor all the devel- activity includes mainly the lease of commer- opments closely. The chance of having a REIT cial real estate shall be granted a REIT status. regime in Poland is close and what we have seen so far could be a first step towards a truly successful regime.

1 ‘Greenberg Traurig – REITs in Poland’, pages 2-3

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A unique exposu re to Spanish Real Estate Delivering Alpha across the cycle LISTED PROPERTY COMPANIES 20 SEIZE GROWTH OPPORTUNITIES IN EUROPE’S BURGEONING STUDENT HOUSING SECTOR

hristian Teunissen says at- more than 50,000 students in more than Ctending a conference in Lon- 140 properties across the UK. don four years ago switched on Europe’s opportunities stem from a struc- the light bulb for him by high- tural shortage of purpose-built and mod- lighting the growth potential ern accommodation for a growing and for the student housing busi- increasingly international body of students. ness that he started in 2007. Surveys show that students, particularly those paying for their studies, regard good “It was a revelation because it was so accommodation as a cornerstone to their professional and the companies were all enjoyment of university life and are willing managing properties in the US way,’’ to pay more to live in close proximity to recalls Teunissen, describing what led their peers, the campus and city centre at- him to grow a “hobby” investment tractions. into Xior Student Housing, the Bel- gian REIT he heads. In the UK, higher education establish- ments accepted a record 532,000 students Using some of the proceeds from the in 2015-16, or more than five times the in- sale of a business, Teunissen started take of thirty years ago, and the projections out with a single property in Leuven, are for this number to keep rising. Since the university town east of Brussels. The universities are focusing on teaching and company now has a portfolio in Belgium research, they work with private specialists Christian Teunissen and the Netherlands valued at EUR 214 that operate properties on their behalf or Xior Student Housing million, as of June 30th. Xior sold shares in lease their own properties directly to stu- an IPO a year ago to fund an acquisitions Christian Teunissen has dents. It is a pattern replicated elsewhere programme that he predicts will double headed Xior Student Housing in Europe. Many local planning authori- the portfolio to more than 3,000 units by for the last nine years. Since ties encourage this approach because they the end of 2017. 2005, he has built up a real want control over how “studentification” estate portfolio as a developer, Fast-growing newcomers like Xior are grab- affects residential neighbourhoods. investor and manager after a bing the opportunities arising as student “The housing markets of British univer- career in insurance. In 2000 he housing transforms from a fragmented left Fortis AG to establish his sity cities are already under pressure even market of small, local operators into a own insurance company which before you take on board the impact of in- sector dominated by larger platforms he sold five years later to Van creasing student numbers,” said Paul Ha- with national footprints. As Teunissen Dessel Verzekeringen. daway, CEO of the UK’s Empiric Student found, the UK is Europe’s most mature Property. “This creates a lot of pressure market and serves as its model. Britain’s that is supporting the sector’s fundamen- largest operator is Unite Group, which tals and shows why student housing has celebrates its 25th anniversary this year. such good prospects,” he said, adding that It has been listed since 1999 and houses

NEWS | 57 | 2016 21

Empiric’s rents, which include utility bills and ists have started to play a more significant insurance, are rising by 2-3% a year while re- role in the European sector as Empiric and maining below potential market levels. Xior have joined Unite. They account for 10% of EUR 3.39 billion of investment in The sector’s supply and demand dynamics student housing in the first 10 months of are generating rental growth that outstrips this year, according to RCA. inflation. Savills estimates that property yields for standing assets in the UK range Empiric has raised a total of more from 4% to almost 6.75%, rising even higher than GBP 520 million in equity and for purpose-built residences that the com- GBP 310 million of debt to finance panies develop themselves. Xior’s yields acquisitions of standing assets or to average 6% and rise to as much as 7.5% for forward-fund developments. In the past developments, Teunissen said. eight years it has grown from a single property in Bristol, southwest England, into a company with a portfolio of 75 assets in the UK, including 23 developments, We are looking at how we can valued at GBP 524 million as at June 30th. Paul Hadaway accompany people through Empiric targets buildings in the centres Empiric Student Property their university careers along of prime university cities or within walk- ing distance of the university. The assets Paul Hadaway has been a different price points. property investor since 1997 provide 50-200 beds typically arranged in following a career as an archi- high-end studios or apartments with two to tect in Hong Kong and London. three bedrooms, which it leases directly to In the low interest rate environment such He has worked with Tim Attlee individuals or to groups of mainly interna- returns attract investor interest. A record since 1999 on a variety of real tional students and postgraduates. Other EUR 8.48 billion of student housing trans- estate development projects. operators typically focus on larger blocks In 2009, the pair focused on actions occurred in Europe last year, 76% aimed at first year students. the acquisition, development of which were in the UK, according to data and management of student compiled by Real Capital Analytics. Invest- “We are looking at how we can accompany housing through Empiric. ment volumes only exceeded EUR 1 billion people through their university careers for the first time in Europe in 2011 as private along different price points - whether they equity investors assembled portfolios and are the budget sharers, the premium single- institutional investors backed established tons, or the premium house sharers,” ex- operators. Since 2013, listed sector special- plains Hadaway. >

NEWS | 57 | 2016 His comments highlight how student to increase net operating income through housing is becoming more sophis- economies of scale in procurement and the ticated and offering a variety of development of new services. accommodation to suit bud- “What’s exciting about the future is that we gets, including residences 22 have got over the hurdles of building scale offering gyms and con- and we expect that cash flows will soon fully cierge services. cover the dividend,” Hadaway said. “We have Hadaway expects part become a fixture in the student world and now of the next phase of we are looking at growing our net operating Empiric’s growth will income by diversifying our income streams. come from bringing We think the UK is a big enough market where the day-to-day manage- there’s still plenty of opportunity.” ment of all of its proper- Teunissen echoes his comments: “Xior only ties in-house by 2018 under opened a residence in Brussels this year and its Hello Student operating we aren’t in the rest of the French-speaking brand, since outsourcing costs part of Belgium yet. We’re also absent, for erode approximately 25% of the the moment, from the major Dutch university gross rental income. This will enable it cities of Amsterdam, Leiden and Utrecht.”

Hamburg Bremen Amsterdam Berlin Hannover Rotterdam NRW Halle Leipzig Dresden aroundtownholdings.com grandcityproperties.com Frankfurt

 Aroundtown is a specialist real estate investment Mannheim Nuremberg-  Grand City Properties is a specialist real estate company Furth group with a focus on value-add and income generating Stuttgart focused on investing in and managing value-add oppor- properties primarily in the German real estate markets tunities in the German residential real estate market since 2004 Munich  Market cap Sep 2016 €3 billion  Market cap Sep 2016 €3.2 billion  Investment Grade rating by Moody’s (Baa2)  Investment Grade rating by S&P (BBB) and S&P (BBB) with positive outlook

FFO I PER SHARE (IN €) REGIONAL DISTRIBUTION REGIONAL DISTRIBUTION FFO I PER SHARE (IN €) BY VALUE* BY VALUE

0.27 4% 1. 01 1.03 CAGR 2012-Oct 2016 0.22 Nuremburg- 0.89 0.91 +116% CAGR 2011-Aug 2016 17% Furth/ Munich 15% 0.17 16% Others +65% Others 5% 0.66 NRW 33% 2% Kassel Mannheim/ NRW 0.50 2% Rotterdam KL/Frank- 0.08 furt/Mainz 5% Hannover 17% 0.26 0.04 5% Berlin 20% 0.10 0.01 Bremen/ Dresden/ 6% Amsterdam Hamburg 18% 2012 2013 2014 2015 H1 Oct 16 Leipzig/ Berlin 2011 2012 2013 2014 2015 Aug 16 2016 run rate 10% Halle run rate (H1*2) (12*Oct) 9% Dresden/ Munich (12*Aug) Leipzig/Halle8% FFO I per share Frankfurt 8% * Residential portfolio is accounted NEWSfor at | 57 | 2016 Hamburg FFO I per share after the holding rate of 33% perpetual notes attribution SPOTLIGHT ON EMPIRIC STUDENT ACCOMMODATION PROPERTY IN LEEDS 23

Hamburg Bremen Amsterdam Berlin Hannover Rotterdam NRW Halle Leipzig Dresden aroundtownholdings.com grandcityproperties.com Frankfurt

 Mannheim Nuremberg-  Aroundtown is a specialist real estate investment Furth Grand City Properties is a specialist real estate company group with a focus on value-add and income generating Stuttgart focused on investing in and managing value-add oppor- properties primarily in the German real estate markets tunities in the German residential real estate market since 2004 Munich  Market cap Sep 2016 €3 billion  Market cap Sep 2016 €3.2 billion  Investment Grade rating by Moody’s (Baa2)  Investment Grade rating by S&P (BBB) and S&P (BBB) with positive outlook

FFO I PER SHARE (IN €) REGIONAL DISTRIBUTION REGIONAL DISTRIBUTION FFO I PER SHARE (IN €) BY VALUE* BY VALUE

0.27 4% 1. 01 1.03 CAGR 2012-Oct 2016 0.22 Nuremburg- 0.89 0.91 +116% CAGR 2011-Aug 2016 17% Furth/ Munich 15% 0.17 16% Others +65% Others 5% 0.66 NRW 33% 2% Kassel Mannheim/ NRW 0.50 2% Rotterdam KL/Frank- 0.08 furt/Mainz 5% Hannover 17% 0.26 0.04 5% Berlin 20% 0.10 0.01 Bremen/ Dresden/ 6% Amsterdam Hamburg 18% 2012 2013 2014 2015 H1 Oct 16 Leipzig/ Berlin 2011 2012 2013 2014 2015 Aug 16 2016 run rate 10% Halle run rate (H1*2) (12*Oct) 9% Dresden/ Munich (12*Aug) Leipzig/Halle8% FFO I per share Frankfurt 8% * Residential portfolio is accounted for at Hamburg FFO I per share after NEWS | 57 | 2016 the holding rate of 33% perpetual notes attribution REPORTING

Global REIT Survey 2016

Discover the latest EPRA Global REIT Survey, a comparison of the major REIT regimes around the world.

Visit www.epra.com/reitsurvey today!

REPORTIN

REPORTIN REPORTIN

Global REIT Survey 2016 Global REIT Survey 2016 Global REIT Survey 2016 EUROPE United KingdomASIA – REIT Global REIT AMERICAS Hong Kong USA – US-REIT – HK REIT

Survey 2016 FREE DOWNLOAD A COMPARISON OF THE

A COMPARISON OF THEROUND MAJOR THE WORLD REIT REGIMES A ROUND THE WORLD MAJOR REIT REGIMES A COMPARISON OF THE MAJOR REIT REGIMES A MAJOR REIT REGIMES A A COMPARISON OF THE ROUND THE WORLD AROUND THE WORLD

About EPRA EPRA's mission is to promote, develop and represent the European public real estate sector. We achieve this through the provision of better information to investors and stakeholders, active involvement in the public and political debate, improvement of the general operating environment, promotion of best practices and the cohesion and strengthening of the industry.

Square de Meeus 23B • 1000 Brussels, Belgium Contact T +32 (0) 2739 1010 • F +32 (0) 2739 1010 • E [email protected] • www.epra.com SPOTHLIGHT ON XIOR VOSKENSLAAN 25 RESIDENCE IN GHENT

NEWS | 57 | 2016 BREXIT “PRE- 26 NEGOTIATIONS” – THE INEVITABILITY OF POLITICAL GRANDSTANDING

by Tobias Steinmann, EPRA Public Affairs Director

eople speak about a hard PBrexit or a soft Brexit. Theresa May announced that she is aiming for neither, but a customised relationship between the UK and the EU which could be translated as a clean Brexit. Many outcomes are possible. For now, what we can expect is a dirty Brexit. At least until after the upcoming elections in 2017 in several EU Member States.

NEWS | 57 | 2016 Mrs May has already experienced a nice in- What are the perspectives for the troduction at her first EU Council meeting in UK finance sector? October where EU heads of state welcomed FTI Consulting carried out a survey about her in a quite unpleasant atmosphere. the post-Brexit hopes and fears of 154 large Council President Donald Tusk let the UK pension funds with over USD 10 trillion as- 27 prime minister wait for five hours, before sets under management. Eight out of ten giving her the floor at 1 a.m., five hours -af believe there will be a cut-back on immi- ter everybody sat down for dinner. The dip- gration, but less than half are concerned lomatic reaction was cold and clear. They about it. Interestingly, nearly 50% of the listened in silence and did not respond. same investors believe passport- “The basic principles and rules, namely the ing rights will remain, which single market and the indivisibility of the is quite an optimistic view four freedoms, will remain our firm stance”, compared to the prevail- Tusk was later quoted. ing concern in the City of The Brexit “pre-negotiations” are going to be London. a strong show of political grandstanding, es- The amount of lost pecially with key elections next year in Ger- income from pass- many and France. porting rights Angela Merkel, who confirmed recently would be consid- to run for a fourth term as German Chan- erable, as table 1 cellor, has shown little willingness so far demonstrates. to negotiate on the EU four freedoms. And The UK financial even if François Fillon, who was described sector employs by The Guardian as a “a tea-drinking Anglo- more than one phile”, should enter the Elysee Palace and million people and wanted to show some cordialité to the UK, pays as much as GBP he would have to do so against the opposi- 67 billion in tax each year. tion of Berlin. With the triggering of Article The Financial Times reports 50 not expected until March 2017 at the ear- that if London secures similar liest, and Merkel facing a tough re-election access to the current arrangement campaign in the months to follow, London within the single market, the UK should not expect too many concessions, at could lose GBP 500 million a year in tax least not until after the September elections. revenues and 4,000 jobs. The data was >

Table 1: EU passports

Total Inbound1 Outbound2

Number of passports 359,953 23,532 336,421 in total

Number of firms 13,484 8,008 5,476 using passporting

1Inbound: EU27 passports into the UK 2Outbound: UK passports into the EU27

NEWS | 57 | 2016 Table 2: EU relationship options

28 2

gathered by the Oliver Wyman consultancy for TheCityUK, a lobby group that argued for remaining in the EU. They further argue, in With restrictions on Britain’s ability to trade their worst-case scenario, with restrictions on Britain’s ability to trade with the rest of the with the rest of the EU, 35,000 financial EU, 35,000 financial services jobs could be at services jobs could be at risk, along with as risk, along with as much as GBP 5 billion in much as GBP 5 billion in tax revenue. tax revenue. These figures are not particularly shocking bearing in mind the impressive number of one million people employed by the financial sector. However, the authors describe this scenario as “conservative” because it does not consider the effects of job losses and lower spending on the wider economy. The findings have been presented to the UK Treasury and other government departments.

NEWS | 57 | 2016 Brussels outlook of benefits available to EU citizens who exer- cise their right of free movement. From our vantage point here in Brussels, we can say that Michel Barnier, who has been Realistically, we cannot expect any details appointed as head of the European Com- soon. But we can expect the tonality to mission’s Brexit task force is biding his time. change the longer the negotiations proceed 29 He has started touring EU capitals to under- – from dirty to clear. In the end, we may see stand their positions, together with his depu- a new pillar in the EU relationship options ty Sabine Weyand, a senior official from the outlined in table 2, somewhere between department of trade, with reportedly close Switzerland, Turkey and Australia. connections to Chancellor Merkel. The exit negotiations will be conducted by the Com- mission but under a close supervision of the Council. The latest of potential deals between the UK and the EU being whispered by politicians is a Free Trade Agreement like CETA - with one addendum: a bilateral agreement on financial services market access that would go beyond the FTA. A deal that allows London-based firms to secure a form of access to the EU single market would help preserve London’s position as the financial centre. For the EU side, Britain could not just offer to align its rules with the EU’s but also to transfer some of the oversight to EU authorities. For example, the European Banking Authority could retain its pow- ers over British banks, as would the Euro- pean Securities and Markets Authority with the exchanges and so on. Those pushing for “Canada Plus” hope it could be a solution once the Brexit negotiations reach a level of detail. It is certainly possible to envisage an agreement that could be sold as a win-win for both sides. The EU has a history of reaching a compro- mise even if it is made at the eleventh hour. The catch is the freedom of movement. But it would not be the first time if, after enough grandstanding, the EU side finally found its way to an adjustment (or improvement) of It is certainly possible to envisage an the rules. Frau Merkel has already given agreement that could be sold as a some food for thought in a recent interview, win-win for both sides. confirming once again that the EU would not divide its four freedoms but also indicating that there is room for discussion on the level

NEWS | 57 | 2016 30 EPRA’S MENTORING PROGRAMME FOSTERS NEW GENERATION OF TALENTED WOMEN FOR TOP JOBS AND BOARDS OF LISTED PROPERTY COMPANIES

uring Hélène de Clisson’s recent Dmaternity leave she received an e- mail from Citycon CEO Marcel Kokkeel, her mentor under a EPRA programme, forwarding a media report about a take- over involving her employer, Gecina. “Marcel said that if it came off, this was the kind of opportunity that I should explore in order to advance my career,” said the director of asset management at the French REIT, who returns to work in early December following the birth of her second child. “I really appreciated it. His practical advice, the support and time that he has devoted to me have given me more confidence about fulfilling my ambitions.”

NEWS | 57 | 2016 Proposed by Gecina’s Human Resources de- their role in the family,” said partment, she is one of 15 young female ex- Rachel Lavine, CEO of Gazit- ecutives drawn from EPRA’s membership Globe and Vice-Chairman of who have joined the association’s mentoring Atrium European Real Estate. programme with senior industry executives. “Family life has been a support 31 EPRA aims to expand the programme further not a hindrance to my career, Hélène de Clisson in 2017 because of a growing waiting list of which is how employers should Gecina applications. look at it.“ EPRA established the programme last year to She mentors Irina Lenchuk, a consultant at address the gender diversity gap in the top the global property advisory firm RealFoun- management and boardrooms of Europe’s dations, whose past experience in managing listed property companies. The programme development projects in her native Russia “My ambition is to be CEO” is designed to help companies promote and and her current work have impressed Lavine hire women by developing a pool of talent so much that she is an avid supporter of the that will form the next generation of senior programme. executives and board members. RealFoundations were very early adopters in Women occupy 21% of the board seats of the diversity programme, recognising from the 91 companies in the FTSE EPRA/NAREIT the outset the use of the scheme in promoting successful women. Andrew Carey, Man- aging Director Europe commented “This is part of our global programme to support Women occupy 21% of diversity in the workplace and RealFounda- tions are extremely appreciative of the high the board seats of the 91 quality mentoring provided by the EPRA companies in the EPRA mentors to our staff.” Developed Europe Index , For Clisson, the tips and feed-back from Kok- up one percentage point keel have helped her find focus in her career from the same period a progression, which she hopes might lead to Marcel Kokkeel year earlier, EPRA’s a CEO role one day. Citycon CEO “My ambition is to become a CEO,” she said. research shows. “It’s hard to advance as a woman in the property industry and in the French corporate culture, but I don’t see motherhood as Developed Europe Index as of June 30th, up 1 a barrier to my ambitions. Marcel’s counsel percentage point from the same period a year and our candid conversations have been earlier, EPRA’s research shows. This headline very beneficial for my personal develop- figure masks, however, considerable differ- ment.” ences between countries and the impact of Kokkeel himself says the mentoring pro- large companies. Management consultancy gramme helps him in his approach to man- McKinsey highlights in its Women Matter re- agement, since he too gets valuable insights search that listed companies with a top quar- from his French protégé. tile representation of females in their executive committees are more profitable and have “The competition for talent means corpo- Irina Lenchuk higher standards of governance than those rate loyalty isn’t as prevalent as it was in RealFoundations with none. the past, so the challenge for all of us in the industry is to build the loyalty of the next “Getting to the top is tough for anybody but generation of managers by working to fulfill women are held back by perceptions about their ambitions,” he said.

NEWS | 57 | 2016 What does oversight look like when you’re looking at the entire globe? Our Real Estate, Hospitality & Construction practice can mobilize a world-class team to navigate complex challenges on a global basis. ey.com/rhc #BetterQuestions © 2016 EYGM Limited. All Rights Reserved. 1606-1966504_EC. SCORE no. DF0225. ED None no. SCORE 1606-1966504_EC. Reserved. All Rights Limited. © 2016 EYGM

New perspectives in corporate finance. This is The Edge

From mergers and acquisitions, to debt and equity capital raising, we have the capabilities, credibility and connections to give you the Edge.

theedge.jll.com

Half page ad_EPRA_213x138mm_Final.indd 1 14/04/2016 12:10 Dear Santa What does oversight What we would like for Christmas from the property industry 33 look like when The dreaded question you’re looking at Almost every time we meet an investor new to the quoted property sector, the dreaded question is asked. The one we cannot answer de- the entire globe? spite having covered this sector for years – we have nearly thirty years Our Real Estate, Hospitality & Construction practice can of combined property research experience between the four of us in the mobilize a world-class team to navigate complex challenges on team. The one we cannot answer despite this being such an important topic. a global basis. ey.com/rhc #BetterQuestions “So how much maintenance capex do these companies spend?” Yes, that is the dreaded question. Maintenance capex is a critical measure. And yet for most companies we cover we do not have the answer to this question. We’re not asking for much We would like company disclosures to address two very simple issues:

© 2016 EYGM Limited. All Rights Reserved. 1606-1966504_EC. SCORE no. DF0225. ED None no. SCORE 1606-1966504_EC. Reserved. All Rights Limited. © 2016 EYGM (1) How much maintenance expenditure has the company spent in the reporting period? (2) How was that expenditure treated from an accounting perspective; was it expensed or capitalised?

Potential justifications and on the like-for-like portfolio and other explanations why companies do capex. But that does not necessarily help us not disclose this to address the two issues we raised above. Other than for German residential compa- Why we think this matters more nies and a few others, disclosure and trans- than ever parency on capital expenditure remains Improved disclosure should lead the equity limited to non-existent. Yes, we appreciate Bart Gysens market to reward those companies that spend Morgan Stanley that differentiating between types of capex an appropriate amount of maintenance capex New perspectives in can be challenging; maintenance capex for by providing insights on the sustainability of Bart Gysens serves as a Manag- office and industrial assets tends to be rolled rental growth and to what extent the divi- ing Director in charge of Morgan up into redevelopment at the end of a lease. corporate finance. dend is covered. We think this matters more Stanley’s pan-European property But even so, we think there should be a so than ever given current investor concerns research team. He has been nr1 better and more transparent way to disclose ranked individually by Extel for the about ageing portfolios, and the perceived on this. Also, we argue that retail property, last three years, and his team is rising cost of maintaining like for like rental This is The Edge which is a large part of the aggregate port- also currently nr1 ranked in both growth while facing eCommerce headwinds. folios of the listed sector, requires a regular the Extel survey and the Institu- maintenance spend. New Year’s resolution tional Investor survey. He has been a property analyst since 2002 when EPRA best practice We also think owners of businesses are en- he first joined Morgan Stanley. Bart recommendations titled to receive this meaningful piece of the has an MA in Applied Economics From mergers and acquisitions, financial analysis jigsaw. Those companies from K.U.Leuven, Belgium and he is Some companies comply with EPRA’s best to debt and equity capital that screen well on this have an opportunity a CFA charter holder. He is fluent in practice recommendations on capital ex- raising, we have the capabilities, to differentiate themselves. Dutch, French and English, and also credibility and connections to penditure providing a breakdown between speaks Spanish and German. give you the Edge. capex spent on acquisitions, development, theedge.jll.com

Half page ad_EPRA_213x138mm_Final.indd 1 14/04/2016 12:10 EPRA ¤ PP ¤ 213 x 138 mm ¤ Visuel:RESULTATS ¤ Parution= ¤ Remise le=24/nov./2016 PAC • BAT

o N 1 Listed commercial property company in Europe

€39.3 billion Property portfolio €5.81 Recurring earnings per share 34% Loan-To-Value

€7.9 billion Development pipeline 2016 HALF-YEAR RESULTS 71 Shopping centres of which 97% host more than 6 Mn visits per annum* The fi rst half of 2016 has seen Unibail-Rodamco’s business perform strongly. In spite of the impact of the terrorist attacks *In terms of Gross Market Value “ in Paris in 2015 and Brussels in 2016 and the subdued economic environment, our retail activity in France has proven very resilient, with like-for-like NRI growth of +5.0% over the period. Our exceptional portfolio of shopping centres across Europe continues to attract the best retailers worldwide. The strong performance in most of the Group’s regions Member of the CAC 40, AEX 25, Euro STOXX 50 indices and in the Offi ces division, as well as the successful projects delivered in 2015, drove robust net rental income growth Member of Dow Jones Sustainability Index of +10.6% in Shopping Centres and +7.7% for the Group as a whole. (World and Europe) The buoyant investment market in Paris enabled the Group to dispose of the 2-8 Ancelle and So Ouest offi ce buildings at compelling prices. Member of NYSE Euronext Vigeo France 20, Finally, the Group lowered its average cost of debt to an unprecedented level of 1.7%. Europe 120, World 120 and Eurozone 120 The recurring EPS of €5.81 represents growth of +13.5% from H1-2015 rebased for the disposals in 2015, on track to Member d’Ethibel Pioneer & Excellence reach around €11.20 for 2016, the top end of our guidance of €11.00 – €11.20 announced in February 2016. Member de STOXX ESG leader ” Christophe Cuvillier, CEO and Chairman of the Management Board Member de FTSE4Good Listed in Paris since 1972 and Amsterdam since 1983

Contact: [email protected] - Tel: + 33 1 53 43 73 13 - www.unibail-rodamco.com

COFI_1611271_213x138_EPRA.indd 1 25/11/2016 12:31

AP-213x138.indd 1 22/06/2016 20:30 EUROPEAN PUBLIC REAL ESTATE ASSOCIATION INDEX FOCUS

!"#$%&'(%)* 1Comparison0 of Asset Classes

160 10 35 120

100

0 1 1 1 1 1 1 7 7 2 5 7 2 5 7 2 5 2 5 7 7 6 6 0 2 5 2 5 6 6 6 6 6 0 0 0 6 6 0 6 6 0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 t r t t t t r r t r r t r r t n n n n n r t t t r r r n n n e e u n n n u e u e u e u e e u e e e e e u u u u e u u u e e e e u u e O A u e e e u u u D O O O O A u u u A A O A A O A A A D A A D D A D O D A A A O O O A D A A A D D D A A A EPRA Eure TSE Eure P Mrn Bnds

Index Snapshot 2016 year-to-date lGloball Dee Sectorled I Breakdownnde Setr Bredwn

Europe (EUR) Year to 1 year 5 year (Long-run) Total rtn % date 10 year 26 Dersed 7 7 Developed Europe -9.15% -12.29% 14.04% 0.64% 60 27 Retl Resdentl 7 Dev. Europe Ex-UK 0.35% -0.79% 14.35% 3.67% Oe

UK -25.43% -30.82% 12.44% -4.62% eltre 11 Industrl Germany 5.74% 5.03% 19.33% -0.05% Sel Stre 2 LdnResrts France -0.61% -4.46% 13.15% 5.33% 11 IndustrlOe

Top 10 European Performers 2016 year-to-date

FTSE EPRA/NAREIT Global Index REIT Investment Total return year- Total return 5 Stock name Country Status Sector Focus to-date Total return 1 year year Entra ASA NOR Non REIT Office Rental 30.11% 27.42% - Castellum AB SWED Non REIT Diversified Rental 24.85% 22.81% 14.31% ADO Properties SA GER Non REIT Residential Rental 22.08% 32.04% - Hufvudstaden SWED Non REIT Diversified Rental 19.68% 18.89% 17.83% Conwert Immobilien Invest SE OEST Non REIT Diversified Non-Rental 17.66% 24.21% 15.13% Deutsche Wohnen AG GER Non REIT Residential Rental 15.56% 12.98% 25.24% Allreal Holding AG SWIT Non REIT Office Non-Rental 15.16% 19.82% 7.94% Medicx Fund Limited UK Non REIT Healthcare Rental 15.00% 15.34% -56.47% Gecina FRA REIT Diversified Rental 14.99% 12.77% 18.06% Norwegian Property NOR Non REIT Office Rental 14.41% 18.86% 6.72%

NEWS | 57 | 2016 EUROPEAN PUBLIC REAL ESTATE ASSOCIATION

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