Germany

Stefan Wundrak Director of Research, Property

Q3 2012

This document is solely for the use of professionals and is not for general public distribution

2

Agenda

1 Economic context

2 Investment market

3 Office

4 Retail

6 Logistics

3

Agenda

1 Economic context

2 Investment market

3 Office

4 Retail

6 Logistics

4

GDP growth

Source: Oxford Economics, Q3 2012

Economy

European recession, German slowdown

5

Agenda

1 Economic context

2 Investment market

3 Office

4 Retail

6 Logistics

6

Source: RCA, Q2 2012

Regional investment volumes

Investment volumes in € bn in the 12 months to Q2 2012

Allocation in perceived “safe havens”

7

Investment shares by region

Source: RCA, 2012

Global capital almost exclusively in shopping centres

London office Paris office German retail

% of total sector investment

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Prime pricing in context

Pricing peaks and troughs (yields, last cycle)

Source: CBRE, C&W, Henderson Global Investors Research, Q3 2012

Prime is fully priced in all “safe haven” markets

Cyclical maximum

Cyclical minimum

Current

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Financing costs and inflation

Max Volume

(million €)

Max LTV

%

Typical Margin

(bps)

France 50 60 275

Sweden 60 60 200

Germany 75 70 150

Italy 40 50 400

Netherlands 50 50 275

Spain 35 50 400

UK 50 60 275

Source: Henderson Global Investors Research, Q3 2012

Low financing costs can lead to overheating

Source: M.M Warburg & CO Investment Research, 2012

Expected deviation from average Euro-inflation rate

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Risk premiums

Source: CBRE, Henderson Global Investors Research, Q2 12

Attractive premium for offices and logistics?

Yield spread prime and good secondary (bps)

office 170

logistics 125

retail 55

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Initial yields by sector (net, in %)

Source: Henderson Global Investors Research, Q3 2012

Pricing pattern

4.25 4.50 4.75 5.75 6.00 6.25 6.50 7.00 7.50

Secondary offices look „cheap“

12

Agenda

1 Economic context

2 Investment market

3 Office

4 Retail

6 Logistics

13

Big-7 prime rents (Index)

Source: Henderson Global Investors Research, Q3 2012

Office occupier market

Rents pause in 2012

14

Agenda

1 Economic context

2 Investment market

3 Office

4 Retail

6 Logistics

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Consumers remains buoyant

GfK consumer sentiment index

Source: Datastream, GfK, October 2012

German consumer not (yet) affected by Euro crisis

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Source: OECD, Consensus, 2012

German spending is „picking up“

Consumer economy

Real retail sales (Index: 1995=100)

Sweden

UK

Spain France NL

Germany Italy

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Expanding retailers in Germany

Selected retailers (country of origin) Sector Existing stores

New stores planned

Butlers (Germany) Homeware >90 ~100 (EU)

Hunkemöller (Netherlands) Lingerie >115 ~100

Palmers (AT) Lingerie 34 60

Gerry Weber (DE) Fashion 208 70-80

WE Fashion (Netherlands) Fashion 35 65

Karstadt Sport (DE) Sport 26 10

Staples (US) Stationary 59 ~60

Camp David/Clinton (DE) Fashion 50 ~50

Dm-Drogeriemarkt (DE) Drugstore 1256 ~110

Primark (IE) Discount Fashion 4 150

Levis‘s (US) Jeans Fashion 60 ~90

Calzedonia /Tezenis (IT) Lingerie 2 ~50

Baci Lingerie (US) Lingerie 1 ~300

Das Depot (Germany) Furniture/Home >150 ~80

Woolworth (Germany) Discount >160 ~50

Retailer market is more vibrant than before the crisis

Source: Henderson Global Investors, PMA – quoting Texitlwirtschaft and public announcements, 2012

135 new retailer arrivals since 2007

Country of origin

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Agenda

1 Economic context

2 Investment market

3 Office

4 Retail

6 Logistics

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G8+China: Volume of trade in bn. US$

Source: WTO, Worldbank, 2011

Logistics sector in Germany

Top 10 countries rank scoring % (best country=100)

Germany 1 4,11 100 Singapore 2 4,09 99,2 Sweden 3 4,08 98,8 Netherlands 4 4,07 98,5 Luxembourg 5 3,98 95,7 Switzerland 6 3,97 95,5 Japan 7 3,97 95,2 UK 8 3,95 94,9 Belgium 9 3,94 94,5 Norway 10 3,93 94,2

European “Hot Banana*”

Strength of logistics service sector

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Top 20 international logistics firms in Europe (turnover* €m)

Source: Fraunhofer 2011 *represents only contract logistics, which approximately accounts for one third of total logistics

Logistics in Germany

Exports to China (bn. US$)

Source: National Bureau of Statistics China, 2012

Industry, population density, trade and location

21 Investment market leaves large potential to mature

Logistics sector punches below its weight

Source: JLL, CBRE, Henderson, 2012

Logistics take-up m. m2 in 2011

Source: Real Capital Analytics (RCA), 2012

Transaction volumes logistics and industrial € bn. in 2011

Source: IPD, 2011

Development of institutional held stock € bn.

22 Low construction levels keep occupier markets in balance

Logistics investments

Source: Fraunhofer, 2012

Key logistics locations

Source: JLL, Q2 2012

Transaction volumes 2007 - 2012

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Market summary: Germany H1 2012

  Economy   Economy is still growing, but has slowed down considerably   Stagnation for the second half of 2012 expected   Domestic investment and European exports are main reason for slowdown   Consumer sector delivered very limited growth

  Occupier market   After some growth in 2011, 2012 has brought largely flat rental values   Vacancy levels have remained stable   Retail stronger than business space

  Investment   Secondary pricing has weakened again, whereas prime pricing still shows small price

increases   Investment market as slowed down, H1 2012 had lower volumes than in 2011   More domestic and local investors, international investors sit on the fence

Top-down views

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