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EUROPEAN LEADERS PRESENTATION
September 2008 Agenda
1. European Banking Relationships : Peter Hurley
2. Valad European Platform : Martyn McCarthy
3. Region Overview - UK : Didier Tandy
4. Region Overview - France : Gilles Vaissié
5. Region Overview - Germany : Klaus Kortebein
6. Region Overview - Nordics : Michael Bruhn
7. Open and Upcoming Offers : Paul Oliver/Nicki Garrett
8. Questions
9. Appendices
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EUROPEAN BANKING RELATIONSHIPS : Peter Hurley European Banking Relationships
Loans from HBOS represent approximately 50% of balance sheet debt (total debt drawn as at 30 June 08 was A$1.3bn)
Approximately 50% of debt in funds are loans from HBOS No cross guarantees No cross collateralisations No cross indemnities between Valad and its managed funds or joint ventures
Debt obligations are contractual; no HBOS change of control issues
Valad views the proposed transaction between Lloyds and HBOS positively Conservative balance sheet Substantial capacity Broadens quality client base
Valad would be considered a good corporate customer because: Only 33% on balance sheet gearing and 39% gearing on a look through basis – below peer average No near term debt refinancing risk (only $45m of debt expiring in FY09 with $30m of that already rolled to FY10) A$120m cash on balance sheet at 30 June 08 - balance now >A$200m following receipt of proceeds from asset sales Strong interest cover (debt serviceability a key focus for banks - Valad covers interest cost nearly 3 times over)
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VALAD EUROPEAN PLATFORM: Martyn McCarthy European Offices
– London – Leeds – Birmingham – Edinburgh – Paris – Amsterdam – Stockholm – Gothenburg – Linkoping – Malmo – Copenhagen – Oslo – Prague – Helsinki – Warsaw – Budapest – Berlin – Hamburg – Munich – Frankfurt – Bucharest – Luxembourg
6 Valad Office Valad Management Structure - Europe
EUROPE Martyn McCarthy: Chief Executive Officer
ESTABLISHEDFUND MANAGEMENT FUNDS VALAD EQUITY PARTNERS PROPERTY VALAD CAPITAL SERVICES
David Kirkby Paul Oliver Didier Tandy Stephen McBride Head of Funds Management Head of Valad Equity Partners Head of Property Head of Valad Capital Services
Mainland Europe & UK funds Fund launch Development Preferred loans (JVs) Investor relations Investment Equity raising Asset management Development management
REGIONAL OFFICE HEADS
UNITED KINGDOM FRANCE GERMANY NORDIC BENELUX CENTRAL & EASTERN Didier Tandy Gilles Vaissié Klaus Kortebein Michael Bruhn Mark McLaughlin EUROPE Head of Property Head of France Head of Germany Head of Nordics Head of Benelux Matthew Bann Rob Howe Head of Central and Head of Asset Eastern Europe Management
Acquisitions and disposals Asset and property management
7 European Leaders
Didier Tandy – Head of Property, Europe As Head of Property, Didier is responsible for the management of Valad’s European property portfolio and oversees acquisitions for Valad in Europe. With over 25 years' real estate experience, Didier has in the last 5 years successfully bought and sold £2.5bn of real estate transactions generating trading profits in excess of £200m. At that time Didier was Managing Director of the Scarborough Group of companies which was acquired by Valad in June 2007. Prior to joining Scarborough in 2000, Didier was a Director at Hemingway Properties PLC. Didier holds a degree in Mathematics and Statistics from London University.
Gilles Vaissié – Head of Property, France Gilles is the Head of Property of Valad’s French operations. Gilles is a specialist in the light industrial sector with extensive expertise in acquisitions and asset management, Gilles founded GViO in 1999. Prior to establishing GViO, Gilles was General Manager and on the Board of Auguste Thouard (now Atis Real). With 30 years’ experience in the French commercial markets, Gilles has an established reputation in the French investment market. Gilles is a Graduate of Institut d’Etudes Politiques in Paris and has a Masters degree in Economics (Paris), and MRICS.
Klaus Kortebein – Head of Property, Germany Klaus is the Head of Property of Valad’s German operations and has overall responsibility for the management and acquisition strategy of the Group’s German offices. Klaus has over 10 years’ senior fund and asset management experience at leading German institutions, MEAG and DEKA. Prior to joining Valad, Klaus was the Chief Investment Officer at Morgan Stanley Real Estate GmbH based in Frankfurt.
Michael Bruhn – Head of Property, Nordic Michael is the Head of Property of Valad’s Nordic operations. Michael is based in Copenhagen and is responsible for managing and growing the Group’s business in the Nordic Region. Michael has more than 20 years’ experience in the Nordic property markets as a developer, agent, special projects adviser and asset manager. Prior to this role, Michael was a Senior Partner at DTZ after merging his previous company with the agency business. Michael is a Chartered Accountant and Chartered Surveyor and holds an MSc in Economics.
8 European Leaders
Mark McLaughlin – Head of Property, Benelux Mark is responsible for managing and growing the Group’s asset management and development business in the Benelux Region, headquartered in Amsterdam, which includes Belgium, Netherlands and Luxembourg. He joined the Group in 2001, bringing his extensive experience in property and construction gained through roles across Europe, Singapore and his native Republic of Ireland. Mark has an Honours Degree in Civil Engineering from the University of Dundee and has been a member of RICS since 2007.
Matthew Bann – Head of Property, Central & Eastern Europe Matthew joined the Group in August 2006 and is responsible for managing and growing the Group’s Central and Eastern European business, currently covering Czech Republic, Hungary, Romania, Poland and surrounding territories. Matthew has 18 years of property experience including Aerium Ltd where he was the Director of Asset Management for a Pan European Portfolio worth in excess of €2billion. Matthew has a Master’s Degree in Real Estate Investment from Cass Business School at City University London.
9 European Overview – Key Metrics
AUM by Geography AUM by Business Segment Valad European Data AUM (A$’m) 11,483 Number of Valad Offices 22 UK Crownstone Valad on the ground people 308 33% 10% Number of Funds 12 Development Number of Properties incl. on balance sheet 803 7% Number of Tenants 9,262 Property Ownership Total Property Floor Area* (sqm) 6,702,052 6% Space leased H1 2008 (sqm) 612,626 VCS *excl. UCT 2%
Funds Management Mainland Europe 75% 67%
AUM at 26 August 2008 for each Business Segment is defined as follows: • Property Ownership: Long term investment assets and trading assets held on balance sheet and in joint ventures • Development: the Group’s share of the estimated value on completion for projects sufficiently advanced to enable reliable estimation, otherwise, the current valuation is adopted. Excludes Trading assets which are included in property ownership • Valad Capital Services Estimated value on completion • Funds Management: The AUM of Group managed funds
10 European Overview – FY08 Achievements
Valad’s track record of performance and local active management expertise has enabled a number of new funds to be launched across Europe in FY08 Raised A$996.6m equity and A$1,438.4m debt within Valad’s European funds In addition, Valad has refinanced/raised new debt for its existing funds including a new €225m facility for CEIF and £30m for UCT to assist in the acquisition of Therese House Osprey was successfully rolled over for another 10 years in September 2007
Date Launched/ Capital Raised Equity Debt Fund Comment Closed A$m A$m A$m
4 Dec 07 1312.3 465.3 847.0 German focused Aktiv fund with target IRR of 11%+ well positioned to take German Aktiv advantage of resurgent German economy 7 Jan 08 489.1 177.3 311.8 Second fund in the Nordic region capitalising on the continued outperformance of Nordic Aktiv II the economy, target IRR of 12%+
VOF UK I 29 Jan 08 311.2 196.1 115.1 Targeted towards counter-cyclical property opportunities in the UK market
14 Jul 08 322.4 157.9 164.5 Investing in multi-occupied industrial parks in France – target IRR of 11.5%+. Parc d’Activités Capitalises on proven track record of French team
Total 2,435.0 996.6 1,438.4 Note: Conversion rates at time of raising
11 European Overview
Investment Property Market – Size/ Investment Universe
EUR (Bn)
450 400 350
300 250
200 150
100 50 0 UK Italy Spain France Nordics Europe Eastern Benelux Australia Central + Central Germany
Source: IPD
Valad Europe Regions Valad Asia Pacific Region Non Valad Regions
12 European Overview
JLL RE Transparency Score/ 2008 Transparency Index
3.0 Opaque 2.8
2.6
2.4
2.2
2.0
1.8
1.6
1.4
1.2 Transparent 1.0 UK Italy Spain France Nordics Europe Benelux Eastern Australia Germany Central + Central
Source: Jones Lang LaSalle
Valad Europe Regions Valad Asia Pacific Region Non Valad Regions
13 European Overview
Base Rates/ Change in Base Rate
8 AUS Australia UK US Euro Sweden 7 Rate cut 6
5 UK SWEDEN 4 EURO
3
2 US
1
0
2 3 3 4 4 5 6 8 8 -0 -0 -0 -04 -0 -0 -0 n-02 t l n-05 r-07 a pr c an-0 u a pr ul-06 p an-08 J A Jul-02Oct-02Jan-03Apr-03Jul-0O J Apr J Oct-04J A Jul-05Oct-05Jan-06Apr J Oct-06Jan-07A Jul-07Oct-07J Apr Jul-0
Source: Datastream
14 European Overview
Micro, Small & Medium Sized Enterprises per Capita (1,000)
100
80
60
40
20
0 UK Italy Spain France Nordics Europe Benelux Eastern Australia Central + Central Source: World Bank Germany
Valad Europe Regions Valad Asia Pacific Region Non Valad Regions
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REGION OVERVIEW: UNITED KINGDOM
Presented by Didier Tandy, Head of Property - Europe UK
Valad Office Market Data Population1 60,943,9122 GDP Growth 1.6%3 Unemployment 5.2%3
3 3 Edinburgh Inflation (CPI) 3.8% Currency (AUD/GBP)4 0.4817
Leeds Base Interest Rate5 90 day LIBOR = 5.80% (proxy for variable rate) (excl margins) Average Yield for Office6 Prime 5.00– 6.00% B-Grade 7.75% Average Yield for Industrial6 Prime 6.00– 6.50% Birmingham B-Grade 8.00%
Valad Data Local Presence
London AUM (A$m) 3,826 Valad Offices: 4
Number of Funds 6 Valad Team: 137 (incl. Funds and Finance) Key Executives: Didier Tandy – Head of Property, Europe Number of Properties 335 Andrew Richardson – Head of Scotland Number of Tenants 3,776 David Lawrence – Total Property Area exc 1.609m Head of Project Management UCT (sqm) Space leased H1 2008 Rob Howe – Head of Asset Management 1. Source: www.cia.gov (July 2008 est) 144,900 2. Source: Office of National Statistics ( sqm) Andrew Slipper – 3. Source: RBA as at 30 June 2008 4. Source: JC Rathbone Associates Ltd 7.10% (BS Assets) Head of Development Southern England Average Cap Rate 5. Source: CBRE Monthly Index June 2008 7.30% (Funds) David Wells – Head of Northern England
17 Local Market Report UK
Real GDP Growth – UK Local Market 3.5 %pa Euro Zone UK 3.0 UK economy in downturn/possible recession: 2.5 • Dependent on financial services 2.0 • Highest personal debt of G7 countries 1.5
1.0 • Doubtful rental growth prospects and capital value risk
0.5 0.0 Nevertheless there are positives: -0.5 2003 2004 2005 2006 2007 2008 2009 2010 2011 • Largest investment market – liquidity / transparency Source: EIU • Quality of leases – length, triple net and covenants • Limited oversupply – but consolidation inevitable £bn 100,000 Transaction Volumes – UK 90,000 • Values have already fallen significantly 80,000 70,000 • Significant equity raised in opportunity funds 60,000 50,000 • Possible bottoming with transactions starting to happen
40,000 H2 2008 30,000 Forecast 20,000 Our focus: 10,000 0 • Existing holdings – income, sales, tenants 2003 2004 2005 2006 2007 2008 H1 • Launch new opportunity fund VOF UK II Source: Jones Lang LaSalle, July 2008 18 Case Study 1: Dorland House, London UK
Dorland House, Westbourne Terrace, London W2 Purchase Date October 2002
Sale Date June 2007
Sale Price c.£61.5m (A$127.7m)
Yield 5.5%
Net Profit c.£20m+ (A$41.5m+)
IRR Geared 38%
Buyer Prudential
Income Yield over period 6.4%
Overview
Surrendered 28 yr headlease to Unisys with simultaneous restructuring and re-grant to sub-tenant, Cordiant Planning consent secured for additional floor (700 sqm) £3.0m (A$6.2m) refurbishment for additional floor and £1.0m (A$2.1m) conversion of basement to car parking Covenant enhanced with 2.5% pa uplifts every 5 years to create an annuity lease Sold to Prudential fixed income fund
19 Case Study 2: 15/17 Eldon Street UK
15/17 Eldon Street, London EC2 Location City of London
Usage Office/Retail
Tenant/Lease Term Multi (6) - Various
Size 2,903 sqm
Purchase Date January 2008
Purchase Price £6.2 million (A$12.9m)
Net Yield on Purchase c.7.5%
Current Net Passing Yield c.8.5%+
Fund VOF UK I
Overview
Repositioned vacant top floor suite at a cost of £48k (A$100k). Let within 6 months at £56k (A$116k) per annum (£430 (A$893) per sqm against a previous rent of £270 (A$561) per sqm) Shop rent reviewed generating increase of £25k (A$52k) per annum Business plan implemented and property being marketed for sale
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REGION OVERVIEW: FRANCE
Presented by Gilles Vaissié , Head of France France
Market Data1 Population (as at 2006) 61,300,000 Lille GDP Growth (forecast y/e 2008) 1.7% Unemployment (as at 2007) 7.9% PARIS Inflation (CPI June 2008) 3.4% Nantes Strasbourg Currency (AUD/EUR) 0.6084 Base Interest Rate 5.03% (3 month Euribor) Average Yield for Office Prime 4.5% Paris, 5.5% Regions
Bordeaux Lyon B-Grade 6.0% Average Yield for Industrial Prime 7.5% Toulouse B-Grade 8.0%
Marseille Toulon Valad Data Local Presence
AUM (A$m) 1,854 Valad Offices: 1 Number of Funds 3 Valad Team: 31 Number of Properties 46 Key Executives: Gilles Vassié – Head of Property, France Valad Office Number of Tenants 945 Lionel Lacroix – Head of Acquisitions Total Property Area 765,979 (sqm) Laurent Roussel – Space leased H1 2008 78,319 Head of Asset Management (sqm) 7.00% (BS Assets) Pierre Durance – 1. Source: Consensus Economics July 07 & CBRE Average Cap Rate 2. Source: RBA as at 30 June 2008 7.46% (Funds) Head of Finance & Accounting
22 Local Market Report FRANCE
Real GDP Growth – France Local Market
%pa 4.5 Euro Zone France • Significant investment market but transaction volumes 4.0 reverting to pre 2005 levels 3.5
3.0 • The credit crunch has meant fewer larger deals are being 2.5 done: 2.0 • Debt is difficult to obtain – more expensive and tighter 1.5 covenants (Note: however we successfully obtained a 1.0 €100m debt facility for Parc) 0.5
0.0 • More equity led deals at the smaller end of the market 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 • Few portfolios for sale Source: EIU • Yield increase of 75 to 100 bps Transaction Volumes – France • Investment stock is ageing €bn 35 • Real estate occupier market needs new stock 30 • Good time to invest in either new product or older 25 product suitable for refurbishment (adding value) 20 • Significant rental uplift can be achieved 15 12 bn euros • All leases are indexed against a national measure 10 H2 2008 Forecast • This has typically resulted in rental increases c.2% higher 5 than inflation over past 7 years 0 2003 2004 2005 2006 2007 H1 2008
Source: Jones Lang LaSalle, July 2008 23 Case Study : GViO PARC LE PÉRIPOLE FRANCE
GViO Parc Le Péripole, Val de Fontenay, (Ile de France) Asset Overview 57,000 sqm in four warehouse blocks
Purchase Date August 2001
Purchase Price €32.25m (A$53.0m)
Valuation 12/2007 €75.8m (A$12.46m) (including Block D value of €12.8m (A$21.0m)) Block D Income 12/2007 €4.5m (up 36% from acquisition)
Sale Date – Block D March 2008
Price – Block D €41.5m (A$ 68.2m)
Capital Gain – Block D €28.7m (A$ 47.2m)
Purchaser – Block D SocGen Bank (office redevelopment of 80,000 sqm)
Value of Residual Asset €50.2m (A$ 82.5m)
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REGION OVERVIEW: GERMANY
Presented by Klaus Kortebein, Head of Germany Germany
Market Data1 Population 82,258,000 GDP Growth (2008) 1.80% Hamburg Unemployment 7.70% Inflation 3.40% Berlin Currency (AUD/EUR) 0.6084 Dusseldorf Base Interest Rate (excl. margins) 5.03% (Euribor 3 month) Cologne Average Yield for Office Prime 5.00%
Frankfurt B-Grade 6.50% - 7.50% Average Yield for Industrial Prime 6.50% B-Grade 7.50% – 8.50% Stuttgart
Valad Data Local Presence Munich AUM (A$m in Funds) 1,707 Valad Offices 4 Number of Funds 3 Valad Team 30 Number of Properties 96 Klaus Kortebein – Head of Property, Key Executives Valad Office Germany Number of Tenants 652 Marcus Piepenschneider – Total Property Area 1,302,872 Executive Director, Finance (sqm) Space leased H1 2008 Uwe Schoessow – 115,697 1. Source: Eurostat, German Government, JLL, Valad (sqm) Executive Director, Asset Management 6.71% (BS Assets) Average Cap Rate 6.35% (Funds)
26 Local Market Report GERMANY
Local Market Real%pa GDP Growth – Germany %pa • Manufacturing/engineering powerhouse 4.5 Euro Zone Germany 4.0 • World #3 economy, world #1 exporter 3.5 3.0 • Robust economic fundamentals and business climate 2.5 • Strong GDP growth in 2006 and 2007 after coming out of a 2.0 1.5 recession in the early 2000’s 1.0 • German real estate less volatile than US, UK or Spain 0.5 markets – no sharp correction 0.0 -0.5 • Demand in all sectors still increasing, rents slightly increasing 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Source: EIU (up to 20%) and vacancy rates in decline
Transaction Volumes – Germany • Yields have softened by 25 to 75 bps depending on sector and location €bn 60 • GAF portfolio experienced 30 bps softening but still 50 showed a valuation uplift from €790mm to €800m 40 • Transaction volumes in 2006 and 2007 driven by financial 30 leverage players
20 H2 2008 • Leverage buyers are gone, core money (German open Forecast ended funds) back in the market 10 • Big deals are limited 0 2003 2004 2005 2006 2007 2008 H1 • Window of opportunity to expand selectively (buyers
Source: Jones Lang LaSalle, July 2008 market) 27 Case Study 1 – 2: Restructuring GERMANY
Billbrook Park Location Hamburg region, 5 miles from harbour
Usage Logistic
Tenant Hygrapha and Gerdts Spedition
Size 6,800 sqm
Lease Term 5 and 7 years plus option
Rent €540k ($A888k) per annum, increased from €339k (A$557k) per annum Case Initially let to 4 tenants and 26% vacancy Canceled short term leases, connected two units, invested €210k (A$345k), reduced void to 5% and increased value by €2m (A$3.3m)
Logistic Park Hanau 2 Location Frankfurt region, 15.5 miles from airport
Usage Logistic/Warehouse/Office
Tenant Anker Spedition
Size 12,874sqm
Lease Term 5 years
Rent €644k (A$1,059k) per annum
Case When acquired, asset had been empty for 1 year Granted 4.5 months rent free and invested €315k (A$518k) €100k (A$164k) below budget) Tenant pays 3% property mgt fee to fund
28 Case Study 3 – 4: Renewals GERMANY
Airport Business Park Location Dusseldorf
Usage Office/Commercial
Tenant Nokia Siemens Network
Size 17,024 sqm
Lease Term Until 09/2013
Rent Secured €2.55m (A$4.19m) per annum, 15% above ERV Case Renewal of existing contract Gave back 2,000 sqm and extended above ERV in return
Daimler Facility Location Berlin
Usage Industrial/Warehouse/Office
Tenant Daimler AG
Size 27,600 sqm
Lease Term Until 03/2023
Rent Secured €1.15m (A$1.89m) per annum, at ERV
Case Granted right to Daimler to build a Kindergarten on empty but unusable land parcel Extended the lease by 10 years in return
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REGION OVERVIEW: NORDICS
Presented by Michael Bruhn, Head of Nordics Nordic Region
Market Data Population 24,744,184 GDP Growth N=4.7% FI=4.0% DK=1.5% SE=2.5% Unemployment N=2.8% FI=6.8% DK=1.6% SE=8.1% Inflation N=3.4% FI=4.4% DK= 3.8% SE=4.3% Currency N=NOK FI=EUR DK=DKK SE=SEK Base Interest Rate N=6.97% FI=5.03% DK=5.44% SE=5.36% (proxy for variable rate) (Nibor) (Euribor) (Cibor) (Sibor)
Average Yield for Office Prime 4.75-6.00% 1 B-Grade +50-150 bps Helsinki Average Yield for Industrial Prime 6.00-7.00%1 Oslo Stockholm B-Grade +50-150 bps Linkoping
Gothenburg Valad Data Local Presence AUM (A$m in Funds) 2,700 Valad Offices 7 Copenhagen Malmo Number of Funds 4 Valad Team 71 Number of Properties 224 Key Executives:Michael Bruhn – Head of Nordics Valad Office Number of Tenants 2,386 Jeppe Bo – Finance Total Property Area 1,722,801 Arne Christian Landsvink – (sqm) Asset Management -Denmark & Norway Space leased H1 2008 89,335 Kim Allan – Acquisitions & Development (sqm) Leif Eriksson – Country Manager, Sweden N = Norway 5.32% (BS Assets) Average Cap Rate FI = Finland 6.53% (Funds) Risto Linnankoski – Country Manager, Finland DK = Denmark SE = Sweden 1) Newsec Nordic Report, Autumn 2008
31 Local Market Report NORDIC
Real GDP Growth – Nordics Local Market
%pa • Norway, Denmark and Finland immature by international 6 Euro Zone Denmark Finland Norway Sweden standards - offering great opportunities 5 • Growth above EU average – expected to continue in range 4 of 2 – 3% over next 3 years
3 • Transaction volumes remain high relative to other EU regions 2 • Few foreign investors – domestic investors and institutions 1 are the most active 0 • Low gearing investors moving back into market in the 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: EIU absence of more opportunistic leveraged players Transaction Volumes – Nordics • Yields have moved up in most sectors, especially in
€bn secondary products
14 • Expected to continue througout the rest of 2008 and Denmark Finland Norway Sweden
12 into 2009
10 • Rental growth has been high over the past six months but H2 2008 8 is expected to slow Forecast 6 • Business moving from prime to secondary assets
4
2
0 2003 2004 2005 2006 2007 H1 2008 Source: Jones Lang LaSalle, July 2008 32 Case Study 1 : Office NORDIC
CPH Business Park, Copenhagen, Denmark Purchase Date October 2006
Purchase Price €66 million (A$108.5m)
Valuation 31 March 2008, €71 million (A$116.7m) (+9%)
Overview
Largest asset in entire portfolio, 7.99% by value and 66,606 sqm 21 new tenants since October 2006, average size 790 sqm for new leases Vacancy reduced from 51% to 30% Diversified tenant portfolio with reduced risk, let on 5.5 years lease contracts with 3.0% rent regulation p.a. and market leverage after 4 years New municipality zoning plan in 2008 with extended building right New constructed Petrol filling station for Q8, let on a 12 years lease contract Securing largest tenant “If Insurance” (13.671sqm) with expansion of existing lease and extending length of lease contract with 4 years and right to leverage to market rent for tenants specific refurbishment requirements
33 Case study 2 : Mixed commercial NORDIC
Sporren 4, Malmö, Sweden Purchase Date January 2007
Purchase Price €7.8 million (A$112.8m)
Valuation Uplift of 18.3% in six months to 31 March 2008
Overview
Constructed in 1934 and 1967 Located about 4km east of the city centre of Malmö in Kirseberg Tenants: Grontmij, Öresundskyrkan United, Netto Renegotiation with Netto regarding 1,200sqm for an 8 year lease
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OPEN OFFERS AND FUND OF FUNDS: Paul Oliver/Nicki Garrett Open and Upcoming Offers - Europe
Fund Return Profile Sector Region
CURRENTLY UK Opportunity Fund Opportunistic Diversified UK MARKETING
Core Plus/Value Parc d’Activités Industrial France Add
OPEN FOR Denmark, Sweden, SECOND Nordic Aktiv II Value Add Mixed commercial Finland and CLOSE Norway
German Aktiv Value Add Mixed commercial Germany
IN Value Add/ European Fund of Funds Diversified Europe DEVELOPMENT Opportunistic
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APPENDICES Appendix 1: Benelux
Market Data Population (Benelux) 27,581,412 GDP Growth (2008) NL=2.25% L=2.80% B=1.30%
Amsterdam Unemployment (2008) NL=4.00% L=4.70% B=7.00% Inflation (2008) NL=2.75% L=4.00% B=4.20% Currency NL=EURO L=EURO B=EURO Base Interest Rate (proxy for variable rate) 3 month Euribor = 5.03% Average Yield for Office Benelux Prime 5.5% - 6.5% B Grade +50 – 150 Bps Average Yield for Industrial Benelux Prime 6.5% - 7.5% B Grade +50 – 150 Bps
Valad Data Local Presence
Luxembourg AUM ($’m in Funds) 642 Valad Offices: 2 Valad Team: 22 Number of Funds 3 Mark McLaughlin – Head of Property, Key Executives: Valad Office Number of Properties 60 Benelux Number of Tenants 881 Vincent Spruijt – Investments Total Property Area Jeroen Gerritsen – Project Manager 754,628 (sqm) Edwin Kanters – NL = Netherlands Space leased H1 2008 Head of Property Management B = Belgium 87,448 L = Luxembourg (sqm) William Smit – Average Cap Rate 9.17% (BS Assets) Head of Asset Management (ERV) 9.10% (Funds) Franck De Bruycker – Finance Director
39 Assets Under Management BENELUX
Fund Ownership – AUM split by Fund Sector – AUM split by Sector
EHI 48%
EIP 52%
Industrial 100%
Region - AUM split by region Type – AUM split by activity Property Crow nstone 7% Ow nership 9%
Funds Management 84%
40 Netherlands 100% Asset Metrics BENELUX
No of assets purchased over last 36 months: 18 Fund Overview
GAV $m Floor Area m2 Vacant Area m2 EHI 256.4 194,040 10.7% EIP 281.1 243,368 9.6%* Percentage of Acquisitions VCP 115.1 152,918 20.0% Rockspring** 16.4 11,552 10.0%
* Excluding Nijmegen as sale to be concluded Sept 2008 ** Asset Management mandate Via Agent 50%
Rental rates comparison
Industrial CBD Offices No Agent 50% A$ psm/pa Q3 08 Q3 07 Q3 08 Q3 07 Amsterdam 99 – 132 99 – 132 411 – 633 411 – 616
Rotterdam 82 – 107 82 – 107 247 -312 247 – 312 Brussels 82 – 99 71 – 107 411 – 468 452 – 493 Luxembourg 123 – 132 123 – 132 740 – 789 658 – 690
41 Case Study 1 : Industrial / Office BENELUX
Veemarkt Purchase Date July 2004
Purchase Price €23.5 million (A$38.6m)
Floor Area 21,500 sqm
Average Unit Size 140 sqm
Occupancy Rate 98.5%
Overview/Strategy
Repositioning program combined with marketing campaign and upgrade of units resulted in attracting creative industries instead of traditional handcrafts companies Re-zoning property from a 100% industrial into combined office / industrial meeting the wishes of the target groups Splitting up larger units into smaller ones herewith being able to increase ERV/sqm Negotiating with Municipality for acquisition of additional land for parking purposes Rental income increased with 15% since June 2005 Property level Total Return since inception to June 2008 of 13%
42 Case Study 2 : Industrial / Retail BENELUX
Fotograaf/Nieuwgraaf - Duiven Purchase Date December 2001
Purchase Price €6.5 million (A$10.7m)
Floor Area 20,700 sqm
Overview/Strategy
Repositioning estate from traditional industrial to retail/wholesalers units Upgrading property by replacing roller shutter doors by glass line facades creating a retail feel and increase in rental values Negotiating rezoning from industrial into retail combined with possible development of current parking place Property level Total Return since 12 months to June 2008 of 13.1%
43 Appendix 2: Central and Eastern Europe
Market Data
Population 80,400,000 GDP Growth P=5.3% CR=4.7% H=1.9% R=6.2% Unemployment P=13% CR=7% H=7.2% R=5%
Warsaw Inflation P=4% CR=5.4% H=7.4% R=6.6% Currency P=PLN CR=CZK H=HUF R=ROL Base Interest Rate 3 month Euribor = 5.03% Prague (proxy for variable rate) Average Yield for Office Prime 6.0% B-Grade 8.0% Budapest Average Yield for Industrial Prime 7.0% B-Grade 9.0%
Bucharest Valad Data Valad Team
AUM (A$m) 485 Valad Offices: 4 Ground people: 17 Number of Funds 1 Matthew Bann – Head of Property – Central Key Executives: Valad Office Number of Properties 21 and Eastern Europe Number of Tenants 422 Alan Knapp – Acquisitions/ Asset Mgmt Total Property Area Tom Barony – Manager, Hungary 546,772 (sqm) Maja Biesiekerska – Manager, Poland P = Poland Space leased H1 2008 CR = Czech Republic 96,927 Harry Bunbury – Manager, Czech Republic H = Hungary (sqm) R = Romania Average Cap Rate 7.25% Silviana Badea – Manager, Romania
44 Assets Under Management CENTRAL & EASTERN EUROPE
Fund Ownership – AUM split by Fund Sector – AUM split by Sector
CEIF 100% Industrial 100% Region - AUM split by region Type – AUM split by activity Hungary 19%
Poland 48%
Czech Republic 24% Funds Management 100%
Romania 9% 45 Asset Metrics CENTRAL & EASTERN EUROPE
No of assets purchased over last 36 months - 16 Fund Overview
GAV $m Floor Area m2 Vacant Area m2 CEIF 485.3 546,772 44,647
Percentage of Acquisitions
Via Agent 50% No Agent 50% Rental rates comparison
CBD Office Warehouse A$ psm/pa Q2 08 Q2 07 Q2 08 Q2 07 Bucharest 493 434 89 89 Budapest 434 434 128 118 Prague 424 395 79 79 Warsaw 650 533 113 104
46 Case Study 1 : UTC CENTRAL & EASTERN EUROPE
UTC - Prague Purchase Date August 2005
Purchase Price €18.1 million (A$29.8m)
Initial Rent €1.228m (A$2.02m) equivalent to €5.40 (A$8.88to A$10.60 sqm/mnth) to €6.45 sqm/mnth Strategy To increase rents through the active management of lease renewals. During 2007 leases were renewed and signed at €6.50 psm/month. In 2008 a further lease has been signed at €7.00 psm/ month. Rent €1.607m (A$2.641m) (Q2 2008)
Valuation €21.6m (A$35.5m) (Q2 2008)
47 Case Study 2 : Metropole Industrial Estate CENTRAL & EASTERN EUROPE
Metropole Industrial Estate - Warsaw Purchase Date June 2006
Purchase Price €12.8 million (A$21.0m)
Strategy To rationalise the estate and carry out a light rolling refurbishment. In addition to improve the non-recoverability through the introduction of service charge provisions. Surplus land identified and sold in 2007 for €789,345. (A$1,297,411) Valuation €13.0m (A$21.4m) (June 2008)
48 Appendix 3: Property Clocks, All Markets
Office Industrial
Finland, France Oslo Sweden Paris Copenhagen, Stockholm, Gothenburg, Malmö Norway Düsseldorf Germany Rental Rental Rents Rents Lyon, Frankfurt growth growth falling falling Hamburg, slowing slowing Munich
Berlin Rental Rents Rental Rents growth bottoming growth bottoming accelerating out accelerating out
Source: Jones Lang LaSalle, July 2008
49 Assets Under Management UK
Fund Ownership – AUM split by Fund Sector – AUM split by Sector UCT 8% Mixed 2% Leisure 2% VOF UK I 9% Retail 14%
Offices 31%
TIT 37%
Osprey 25%
TAP 21% Industrial 51% Region - AUM split by region Type – AUM split by activity Channel Islands Property VCS 2% Scotland 5% 1% Ow nership 12% Wales 6%
Devleopment Projects 21%
Funds Management 50 65% England 88% Asset Metrics UK
No of assets purchased over last 36 months: 100 Fund Overview
GAV $m Floor Area m2 Vacant Area m2 Percentage of above acquisitions via agent / non-agent IIP 206.7 219,130 53,966 Osprey 587.1 202,149 11,227 TAP 484.9 181,914 14,756 Percentage of Acquisitions TIT 850.5 827,916 148,962 UCT 181.6 N/A N/A No Agent 75% Valad Op Fund UK 192.5 31,023 1,001
Rental rates comparison
Industrial CBD Offices A$ psm/pa Q2 08 Q2 07 Q2 08 Q2 07 London 3011 2791 13402 1508 2 Birmingham 128 133 737 726 Manchester 133 128 636 636 Bristol 167 167 614 603 Via Agent - No25% Fee 25% Edinburgh 156 144 648 636 1. London Heathrow 2. London City
51 Assets Under Management FRANCE
Fund Ownership – AUM split by Fund Sector – AUM split by Sector
Parc 15%
EHI 47%
EIP 38%
Industrial 100%
Region - AUM split by region Type – AUM split by activity Property Ow nership 1%
Other Regions 30% Crow nstone 39%
Funds Management Paris - Ile de 60% France 70%
52 Asset Metrics FRANCE
No of assets purchased over last 36 months – 20 Fund Overview
GAV $m Floor Area m2 Vacant Area m2 EHI 529.3 308,000 51,000 EIP 425.7 302,000 35,000 Parc + VCP 210.4 143,000 18,000 Percentage of Acquisitions
Via Agent - No Fee 10%
Rental rates comparison
Industrial CBD Offices A$ psm/pa Q3 08 Q3 07 Q3 08 Q3 07 Paris 184 181 1101 1085 Lyons 107 99 436 427 Lille 107 99 321 312 Marseille 118 115 353 345 No Agent 90% Bordeaux 82 82 279 271
53 Assets Under Management GERMANY
Fund Ownership – AUM split by Fund Sector – AUM split by Sector
EHI 17%
EIP 5% Mixed 40%
Industrial 56%
GAF 78% Office 4%
Region - AUM split by region Type – AUM split by activity Property Munich 18% Ow nership 2% Berlin 22%
Hamburg 20%
Düsseldorf 20% Funds Management 98%
54 Frankfurt 20% Asset Metrics GERMANY
No of assets purchased over last 36 months: 71 Fund Overview
GAV $m Floor Area m2 Vacant Area m2 EHI 271.9 267,032 22,965 EIP 83.3 90,751 7,442 Percentage of Acquisitions GA 1,314.3 903,341 65,370 Via Agent - Fee No Agent 2% 4%
Rental rates comparison
Industrial Non CBD Offices A$ psm/pa Q3 08 Q3 07 Q3 08 Q3 07 Berlin 70-108 70-108 128-178 128-187 Via Agent - No Fee 94% Dusseldorf 89-119 89-114 178-246 178-236 Frankfurt 70-138 70-119 178-276 178-266 Hamburg 70-119 70-113 138-227 138-217 Munich 89-128 89-128 178-296 178-296
55 Assets Under Management NORDIC
Fund Ownership – AUM split by Fund Sector – AUM split by Sector Retail 1% Residential 2% Other 0% NA2 19% EHI 19% Mixed Commercial 27% Secondary Office 35%
NA1 62% Industrial 35% Region - AUM split by region Type – AUM split by activity Property Norw ay 3% VCS 6% Ow nership 2% Finland 8% Crow nstone 5%
Funds Management 87%
Denmark 28%
Sw eden 61%
56 Asset Metrics NORDIC
No of assets purchased over last 36 months 197 (VCP Fund Overview
GAV $m Floor Area m2 Vacant Area m2 3, NA1 140, NA2 27, EHI 27) EHI 444.0 440,382 31,228 NA1 1,438.5 957,677 213,3001 NA2 447.7 273,561 41,0002
1) Treating rent guaranteed space as let: 152,500 sqm Percentage of Acquisitions 2) Treating rent guaranteed space as let: 30,000 sqm Via Agent - No Fee 17%
Rental rates comparison
Industrial Non CBD Offices A$ psm/pa Q3 08 Q3 07 Q3 08 Q3 07 Copenhagen 104 92 164 155 Stockholm 140 140 206 186 Helsinki 184 181 304 296
No Agent 83% Oslo 210 174 276 173
57 Disclaimer
GENERAL No information contained in this presentation should be construed as advice, a recommendation, an offer for the sale of or a solicitation to hold, acquire, apply for, purchase or sell shares, financial products or other instruments in the Valad Property Group (VPG) or any other entity. None of the information contained in this presentation should be relied on or construed as financial product advice. This information has been prepared without taking account of your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness, having regard to your objectives, financial situation and needs and seek appropriate independent advice. VPG and its related entities do not make any representations or give any warranties that the information set out in this presentation is or will remain accurate or complete at all times and they disclaim all liability for harm, loss, costs, or damage which arises in connection with any use or reliance on the information. The forecasts set out above are predictive in character. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable, the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. Actual outcomes may differ substantially from those which are forecast to occur. Past performance is not a reliable indicator of future performance. IMPORTANT NOTICE TO STAPLED SECURITY HOLDERS THAT ARE IN THE UNITED STATES FOR US PERSONS Stapled security holders should note that Valad has not been, and will not be, registered under the US Investment Company Act of 1940, as amended (the “Investment Company Act”), in reliance on the exception from the definition of “investment company” provided by Section 3(c)(7) thereof. Accordingly, if you are a stapled security holder and are resident in the United States or a “US Person” (as defined in Regulation S under the US Securities Act of 1933, as amended) (a “US Person”), then, subject to certain limited exceptions, you must be a “qualified purchaser” as defined in Section 2(a)(51) of the Investment Company Act (a “Qualified Purchaser”), and if you are acting for the account or benefit of a US Person, that US Person must be a Qualified Purchaser. Stapled security holders should also note that, to the maximum extent permitted under its constituent documents, the ASX listing rules and by law, Valad reserves the right to refuse to record any sale or transfer of stapled securities to a person in the United States or a US Person that is not a Qualified Purchaser, or that is otherwise sold or transferred in a manner that would not allow Valad to maintain the exception from registration under Section 3(c)(7) of the Investment Company Act. If Valad receives notice that any stapled securities are owned or held of record or beneficially by any person (including a person in the United States or other US Person that is not a Qualified Purchaser) to whom a transfer of stapled securities or whose ownership or holding of any stapled securities might, in the opinion of Valad, require Valad to become registered under the Investment Company Act, such stapled securities may be compulsorily transferred. This presentation is not an offer or invitation for subscription or purchase of or a recommendation of securities. It contains general information only and does not take into account the investment objectives, financial situation and particular needs of individual investors. Investors should obtain their own independent advice from a qualified financial advisor having regard to their objectives, financial situation and needs. This presentation does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States or to any “US person”. No representation or warranty, express or implied, is made in relation to the accuracy or completeness of the information and opinions expressed in the course of this presentation. To the maximum extent permitted by law, Valad, all of its related bodies corporate and their representatives, officers, employees, agents and advisors do not accept any responsibility or liability for any of the information or for any action taken by you on the basis of the information or opinions expressed in the course of this presentation, including without limitation any liability arising from negligence on the part of any person. No representation or warranty is given as to the accuracy, likelihood of achievement or reasonableness of any forecasts, prospects, returns or statements in relation to future matters contained in the information provided in this presentation. Such forecasts, prospects, returns and statements are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of Valad. You must make your own independent assessment of the information and in respect of any action taken on the basis of the information.
Valad Property Group Level 9, 1 Chifley Square, Sydney, NSW 2000 Phone: +612 8257 6600 Fax: +612 8257 6655
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