EXECUTIVE SUMMARY 10 November 2016

@ 2016 Deloite Financial Advisory 1 of 11 Key Investment ► Commercial Density in Spain is at 334 sqm/1000 inhab. and Financing (2016YTD) with 8 recent openings in 2015-16. The Shopping Centre Handbook Drivers 2 ► 10 out of the 32 new projects until 2019 4 Spain 2016 are expected to be feasible. ► Average S.C. Yields trend in Spain Supply & shows a higher volatility ► Most shopping centres nowadays aim to become a compared to other European Demand Macro-Project, through: countries. EXECUTIVE SUMMARY i. Impressive building design. ii. Connection to target public and deep ► Current yields compression understanding of the millennial mind-set. context turns into “Core” investor iii. Becoming a category killer within the profile as the main player during catchment area. 2016YTD in Spain.

► Average Rents, Sales and Effort rates are ► Increasing financing experiencing a positive trend thanks to appetite for yielding assets: favourable macro-economic context. more competitive conditions and 1 return of the traditional lenders for Market development loans. Overview Shopping Centres Consolidation of the recovery in most Key macro-economic fundamentals Investment 2014 vs 2015-16 3 Market 5 Factors ► GDP growth: +3.2% 2015 ► EMEA region concentrates 29% of the total Retail Full Due Diligence necessary to ► Unemployment rate decreasing by -5.5% Investment volume (shopping centres + high street). Spain perform the optimum deal analysis: (CAGR) since 2013. represents 8% of this amount. ► Financial Factors: NOI reconciliation ► Exports growth: +4.5% 2015 ► In Spain, Shopping Centres Investment volume (€3,028m ► Business Performance: Income sustainability 2016YTD) represents 34% of total non-residential analysis ► Household expenditure: +1.4% 2015 investment. ► Legal Factors: All intervenient contracts analysis. Urban and legal risks analysis. ► Slight decrease in Consumer Confidence ► Tax Factors: Tax impact on results analysis Index due to political uncertainty: 107.4 ► Deloitte took part in 50% of total S.C. transactions ► Technical Factors: Structural or technical Dec-15 vs 96.3 Jun-16 in Spain during 2015, and 50% during 2016YTD. defects identifying and compliance with regulations analysis. (*) IMPORTANCE OF BREEAM ► Footfall Index: +1.4% y-o-y average ► Shopping Centres Transaction Pipeline for next years CERTIFICATION. growth 2015-16 @ 2016 Deloite Financial Advisory amounts to more than €4.000m 22 ofof 1111 Retail Market: Capital Values analysis The Shopping Centre Handbook Source: Deloitte, Bloomberg

Spain 2016 10 Year Bond Nov 2015 – Nov 2016 (8tt November 2016)

1.20% 0.47% 0.16% 0.16% 0.16% 0.16% 0.66% 0.28% 1.27% 0.41% 1.71% 3.24% ▼83 bps ▼55 bps ▼53 bps ▼53 bps ▼53 bps ▼53 bps ▼61 bps ▼58 bps ▼65 bps ▼57 bps ▼7 bps ▲55 bps EXECUTIVE SUMMARY Dif. 10 years bond

– Yield 2016 2Q 80 bps 253 bps 314 bps 334 bps 354 bps 344 bps 284 bps 322 bps 253 bps 319 bps 209 bps. 106 bps rent

5.0% 1 of Drivers of the cross-border investment €

4,800 each increase: Capital Valueper 424,300€ Accessibility to credit and more attractive financing 373,800€ conditions 1 16.7% 32€ 9.1% 3,300 27€ Yielding Assets are more 20162Q 8.6% 8.3% 14.3% 2.9% 5.6% – 8.1% 2,800 attractive than 15.8% 5.3% 22€ Investment Grade (4.4%) 2 2,300

- 17€ 20152Q Dollar strength (For Values Growth (%) Capital 0 121,800€

American investors) and Paris

Euro weakness Milan

Berlin

Dublin

Lisbon Madrid

3 Munich

London

Brusels Hamburg 8% Frankfurt

Political and financial Amsterdam uncertainly in certain regions 4 6%

4% Between 2014 and 2015 Europe has suffered a 20162Q global yield – , which has compression 2% produced important increases in

Capital Values, apart from the effect 20152Q that could have had other market factors YieldsEvolution (%) @ 2016 Deloite Financial Advisory 0% such as the rent evolution. Min. 2007 Max. 2009 2015 2Q 2016 2Q 3 of 11 European Investment Market The Shopping Centre Handbook Diagonal Mar (Spain) with €495m of Investment Spain 2016 Volume was the main transaction of 2016 in Europe.

EXECUTIVE SUMMARY

8% of the Total Retail Investment of the analysed countries €459m €495m Switzerland Russia €320m Germany 18% Poland €208m France United Kingdom €159m Ireland 10% 33% Norway Belgium France Italy Germany United Kingdom Spain 9% Diagonal Mar Sweden VILLEBON DA VINCI SAVILLS MERRY DIAGONAL Switzerland Shopping Italy Sweden MARKET HILL MAR Netherlands 0% 2 RetailCentre Park Portfolio Spain 4% Italy 7% 6% Central Retail Shopping Shopping 8% Russia Netherlands 1% Park Centre Centre Poland Spain 1% Ireland Norway Belgium 1% Source: Deloitte 1% France Germany BUYERBUYER BUYER BUYER BUYER BUYER Diagonal Mar United KingdomDeutscheCrédit Agricole Bank M&G Real estate Patrizia Immobilien Intu Properties Deutsche Bank Shopping Centre SELERSELER SELER SELER SELER SELER NorthwoodHammerson GWM – Elliot Savills Inv. Man. QIC Real Estate Northwood 130,06087,075 sqm sqm 25,1000 sqm 183,000 sqm 130,060 sqm 87,075 sqm

@ 2016 Deloite Financial Advisory Source: Deloitte 4 of 11 European Investment Market The Shopping Centre Handbook Spain with €2,704m of retail investment volume Spain 2016 (Shopping Centre + High Street) is one of the most important players in the European Market. EXECUTIVE SUMMARY

# Country Asset GLA (sqm) Price (€m) Vendor Buyer

European Yiedls (2016YTD): 1 Spain Diagonal Mar 87,085 495 Northwood Deutsche Bank 2 United Kingdom Merry Hill 130,060 459 QIC Real Estate Intu Properties Plc Minimum Prime Yield 3 United Kingdom Grand Central 40,412 377 Birmingham City Council Hammerson Plc Country last - 2016 YTD 4 Spain Gonuri Portfolio 135,000 358 Gonuri Harizartean Invesco Cor Fund 10 years 5 United Kingdom Liverpool One 167,220 337 Hermes REIM Abu Dhabi Investment France (*) 4.00% 4.00% 6 Germany Savills Portfolio 183,000 320 Savills Investment Management Patrizia Immobilien Germany 3.90% 3.90% 7 Italy Da Vinci Market 25.100 208 GWM - Elliot M&G Real estate 8 Spain EroskiCentral PortfolioRetail Park 234,785 205 Eroski Carmila UK 5.25% 4.45% 9 United Kingdom Intu Bromley 43,013 200 Intu Properties Plc Alaska Permanent Fund Belgium 4.25% 4.25% 10 Germany Forum Hanau n.a. 200 HBB Hamburg Trust 11 United Kingdom Grand Central 40,412 188 Hammerson Plc CPPIB Spain 4.50% 4.25% 12 Germany HFS 18 n.a. 160 WealthCap RE Management Revcap Sweden 4.25% 4.25% 13 France Villebon 2 47,500 159 Hammerson France Crédit Agricole Assurances 14 Germany Gisele Portfolio n.a. 150 Family Office U.K. A&M Captiva Italy (*) 5.25% 4.50% 15 Germany Designer Outlets Wolfsburg n.a. 150 Europa Capital Invesco Source: Deloitte 16 Spain Gran Vía de Vigo 41,000 145 Oaktree LAR - SOCIMI 17 France Portefeuille d’actifs commerciaux 77,000 144 n.a. Frey For more information see CHAPTER 4 (Key 18 Spain Luz del Tajo (sin cines) 39,000 107 Sonae Sierra CBRE Global Investors Investment and Financing Drivers) 19 Italy Meraville Retail Park 35.975 100 Orion European RE Fund TH European Cities Fund in the full report. 20 Italy Centro Commerciale i Gigli 24.800 82 Gruppo Pam Euriconmmercial Properties 21 Italy Centro Commerciale Collestrada 26.500 82 Fondo Etrusco - Fabrica SGR Eurocommercial Properties NV 22 France Les Sentiers de Claye-Souilly 18,000 56 n.a. Frey Top 5 deals per country (UK, 23 France So Green 18,023 49 n.a. Imocompartners Germany, France, Italy and Spain) 24 Italy Buonvento Shopping centre 20.000 30 HIG capital via savills IM SGr European Value Added Fund amount to €4,786m (2016YTD). 25 France Cap Liévin 17,360 25 n.a. Imocompartners Source: Deloitte Top 5 Spanish Deals represents 27% of this investment @ 2016 Deloite Financial Advisory volume. 5 of 11 Spanish Investment Market The Shopping Centre Handbook In 2016 it is not expected to reach the transactional Spain 2016 volume achieved in 2015, but investment volume is likely to reach 10 billions by the end of the year. EXECUTIVE SUMMARY

11,845 12,000 Top 10 Spanish deals: Retail Shopping Centre

# ASSET PRICE (€m) GLA (sqm) TYPOLIGY Retail High Street 2,702 1 Diagonal Mar 495 87,085 Prime 10,000 Offices 9,033 2 Gonuri Portfolio 358 135,000 n.a. 8,552 3 Eroski Portfolio 205 234,785 n.a. 674 Logistic 1,145 4 Gran Vía de Vigo 145 41,000 Prime 8,000 897 359 5 Luz del Tajo 107 39,000 Leading Sec. Hotels 596 6 L´Aljub 100 43,800 Prime Remaining non- residential 7 Féstival Park 100 31,933 Leading Sec. 6,000 typologies 2,520 5,313 3,883 8 Bogaris Portfolio 95 84,218 Secondary 4,470 66% 9 Hispania Portfolio 77 29,796 Secondary 10 ABC Serrano 73 14,000 Secondary 4,000 750 150 3,189 3,151 Source: Deloitte 2,242 619 1,460 576 607 2,087 120 1,263 Total Shopping Centre investment volume 279 Shopping in Spain as at 2016YTD: €3,028m 2,000 1,056 519 807 Centres 88 3,028 1,467 544 751 591 2,297 1,894 34% A total pipeline investment volume of €4,067m 571 644 687 867 is expected to be transacted in Spain - 365 2010 2011 2012 2013 2014 2015 2016YTD 15% Source: Deloitte 47% + 60% €4,067m 38% @ 2016 Deloite Financial Advisory 6 of 132 Short Term Medium Term Long Term TOTAL Source: Deloitte Rental Market The Shopping Centre Handbook Recovery on consumption indicators is finally having a Spain 2016 slight impact on rents

EXECUTIVE SUMMARY Average Rents Average Rents Prime S.C. Secondary S.C.

108 103 CONSUMER 107.2 102.3 102.3 EXPENDITURE 106.2 CONFIDENCE Recovery of most 102 INDEX 94.2 points consumption groups 106 (base 100) during 2013-2015 101.7 101.7 101 FOOTFALL EFFORT 104 103.3 Recovery with 99.9 RATES positive yearly 104.2 100 Household E.R. variations 102.3 being reduced 99.0 102 103.0 vs GROWTH 99 99.5 98.8 PUBLIC 98 GDP DEBT 100 Growth of 100.0 2015 Drops 6.8% 99.7 3.2% in 2015 compared 97 with its max. in 2009 98 96 UNEMPLOYMENT EXPORTS RATE Growth of 4.5% Decreasing by 5.5% (2014 – 2015) 96 95 (CAGR) since 2013 95.0 95.7 95.0

95.0 94 Average Rents trend Rents Average

94 (2014) 100INDEX BASIS Average Rents trend Rents Average INDEX BASIS 100 (2014) 100INDEX BASIS 2014 2015 2016YTD 2014 2015 2016YTD

As sales experiment FASHION & SERVICES RESTAURANTS SUPERMARKET HYPERMARKET significant increases, retailers ACCESSORIES improve their business Source: Deloitte performance, with the subsequent decrease on For more information see CHAPTER 2 (Supply & Demand) with the full rental market analysis based on Deloitte Database. Analysis sample size: 4,123 units (only 2015-2016YTD information) @ 2016 Deloite Financial Advisory effort rates 7 of 11 Financing Market The Shopping Centre Handbook Yielding assets: Improvement of the financing terms Spain 2016

EXECUTIVE SUMMARY 2013 2014 2015 2016 Credit Access Financing MAIN DRIVERS FOR THE INCREASING Framework LENDING APPETITE Constraints Upturn

MACROECONOMIC ENVIRONMENT Main Players Institutional Investors Banking / Assurance . Fundamentals improvement / Debt Funds Companies . Monetary Policy: QE, low funding costs, etc.

Upfront Fee 250-300pbs 150-200pbs 50-150pbs 50-150pbs FINANCIAL SECTOR . Restructure of the Financial Sector . P&L reconstruction Spread 400-600pbs 225-350pbs 150-275pbs 120-225pbs

REAL ESTATE INVESTMENT MARKET

. Excess of Liquidity: Increase of the transactional activity . Arrival of new sponsors

. Alternative to the fixed income / bond yields LTV <50%(1) 50%-60% 55%-60% 55%-65% Main Main Conditions

Development loans: Balloon 70%(2) 60% 65%-100% 65%-100% Traditional lenders are coming (1) Balloon need to cover the high funding costs during the loan´s life. (an smaller balloon will mean a bigger annual debt service) back (2) Sustainable LTV to face the debt service with high funding costs (A bigger LTV will mean a bigger debt service)

Senior Debt Source: Deloitte Yielding assets: 2016 more and @ 2016 Deloite Financial Advisory more competitive 8 of 11 The Shopping Centre Handbook Main Players: Spain 2016 Equity EXECUTIVE SUMMARY

INVESTOR PROFILE IS CHANGING: 2015 2016YTD

Opportunistic Opportunistic 1.4% 1.6%

Value Added Value Added 21.9% 17.5% Core 38.3%

Core+ Core 20.5% 60.3% Core+ 38.3% (€m) (€m) Core 599 Core 1,225 Debt Core+ 599 Core+ 416 Value Added 343 Value Added 356 Opportunistic 22 Opportunistic 33

Source: Deloitte

Most active players during 2016YTD that are expected to keep active: Source: Deloitte @ 2016 Deloite Financial Advisory 9 of 11 WHITE The Shopping Centre Handbook Spain 2016 ELEPHANT EXECUTIVE SUMMARY

THE KEY FOR SUCCESS

CONNECTION BUILDING TO TARGET DESIGN PUBLIC VS BECOME A CATEGORY KILLER

Source: Deloitte

The shopping center is not just a PLACE, but also a PRODUCT, which must be SUCCESFULL adapted to a changeable market. Shopping Centres have a cycle. Malls can die or survive depending on the ability Source: Deloitte @ 2016 Deloite Financial Advisory to adapt. PROJECT 1010 ofof 1111 The Shopping Centre Javier García-Mateo, Handbook MRICS Spain 2016 Partner Financial Advisory ‖ Real Estate [email protected] To obtain the full report please contact: Tel: +34 91 443 26 74 Esther Sanchez Martinez Mob: +34 659 90 02 15 [email protected]

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