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PATRIZIA Immobilien AG PATRIZIA Bürohaus | Fuggerstraße 26 | 86150 Augsburg | Germany | T +49 821 50910-000 | F +49 821 50910-999 | [email protected] | www.patrizia.ag The Nordics Four countries, four currencies Dr. Marcus Cieleback 27th March 2013

PATRIZIA Immobilien AG PATRIZIA Bürohaus | Fuggerstraße 26 | 86150 Augsburg | Germany | T +49 821 50910-000 | F +49 821 50910-999 | [email protected]

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PATRIZIA Immobilien AGPATRIZIA Bürohaus | Fuggerstraße 26 | 86150 Augsburg | Germany | T +49 821 50910-000 | F +49 821 50910-999 | [email protected] | www.patrizia.ag

The Nordics

Four countries, four

currencies

Dr. Marcus Cieleback

27th March 2013

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2PATRIZIA Immobilien AG| © 2013

Central bank rates: Mirror image of the situation in the financial sector

Source: Federal Researve, ECB, Norges Bank, Riksbank, Bank of England

0 %

1 %

2 %

3 %

4 %

5 %

6 %

01/ 2007 01/ 2008 01/ 2009 01/ 2010 01/ 2011 01/ 2012

Fed ECB Norges Bank Sveriges Riksbank BoE

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Jan. 00 Jan. 03 Jan. 06 Jan. 09 Jan. 120%

1%

2%

3%

4%

5%

6%

7%

8%

Long term rates

DE GVB 10Y DK GVB 10Y SE GVB 10Y

NO GVB 10Y

Low interest rates, but turning at the long end and access to credit is challenging

Source: EZB, Riksbank, Norges Bank,

Jan. 00 Jan. 03 Jan. 06 Jan. 09 Jan. 120%

1%

2%

3%

4%

5%

6%

7%

8%

Short term rates

EURIBOR 3M CIBOR 3M STIBOR 3M

NIBOR 3M

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Nordics: Much more than the capital cities

DATA USED IN THE DEMAND SIDE ANALYSIS ON NUTS 3 LEVEL: Economic growth (history and forecast)

Population and population forecast

Population density

Employment and employment forecast

Source: PATRIZIA

wel

l ab

ove

ave.

..

abov

e av

erag

e

aver

age

bel

ow a

vera

ge

wel

l bel

ow a

ve..

.

0

6

12

18

24

30

0%

20%

40%

60%

80%

100%Distribution of NUTS 3 Regions in the

Nordics

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The Nordics: A Eurozone perspective

THE NORDICS ARE OFTEN SEEN AS ONE INVESTMENT REGION, BUT IN FACT THE INVESTOR INVESTS IN 4 CURRENCIES

The ERM II means, that de facto an investors from the Euro Zone has no currency risks when investing in Denmark

Investment returns in Norway and in Sweden are more volatile due to currency movements

Monitoring developments in the currency markets and a hedging strategy is a core component of investments in the Nordic countries

Jan.

99

Jan.

01

Jan.

03

Jan.

05

Jan.

07

Jan.

09

Jan.

11

Jan.

13

7.0 Krona/EUR

7.5 Krona/EUR

8.0 Krona/EUR

8.5 Krona/EUR

9.0 Krona/EUR

9.5 Krona/EUR

10.0 Krona/EUR

10.5 Krona/EUR

11.0 Krona/EUR

11.5 Krona/EUR

12.0 Krona/EUR

Exchange rates

SEK/EUR NoK/EUR DKK/EUR

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Data: PATRIZIA, IPD

What exactly does “Currency Risk“ mean?

20002001

20022003

20042005

20062007

20082009

20102011

20002001

20022003

20042005

20062007

20082009

20102011

20002001

20022003

20042005

20062007

20082009

20102011

-12 %

-6 %

0 %

6 %

12 %

18 %

24 %

30 %

36 %

42 %USD GBP

Office Residential Retail

Denmark

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8PATRIZIA Immobilien AG| © 2013

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9PATRIZIA Immobilien AG| © 2013

Source: PATRIZIA

Office Denmark

Office Finland

Office Norway

Office Sweden

Residential Denmark

Residential FinlandResidential Sweden

Retail Denmark

Retail Finland

Retail Norway

Retail Sweden

5%

15%

Mean Total Returns by Asset Class, Currency and CountryEuro

Pound

Local

US-Dollar

Historical Mean Total Returns

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10PATRIZIA Immobilien AG| © 2013

Source: PATRIZIA

Total Return Volatility

Office Denmark

Office Finland

Office Norway

Office Sweden

Residential Denmark

Residential FinlandResidential Sweden

Retail Denmark

Retail Finland

Retail Norway

Retail Sweden

1%3%5%7%9%11%13%15%17%19%

Total Returns Volatility by Asset Class, Currency and Country

Euro

Pound

Local

US-Dollar

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11PATRIZIA Immobilien AG| © 2013

Source: PATRIZIA

Reward-to-Variability Ratio (Sharpe ratio)

RETURN / VOLATILITY = UNITS OF RETURN FOR A UNIT OF RISK IN %

SHARPE RATIOOFFICE RESIDENTIAL RETAIL

Denmark Finland Norway Sweden Denmark Finland Sweden Denmark Finland Norway Sweden

EUR 2,10% 2,42% 0,74% 0,63% 0,82% 3,86% 1,05% 3,09% 2,15% 0,98% 0,88%

Local 2,07% 2,42% 1,27% 0,86% 0,82% 3,86% 2,03% 3,09% 2,15% 1,97% 1,36%

GBP 1,06% 0,82% 1,29% 1,10% 1,03% 1,01% 2,31% 1,02% 1,06% 1,55% 1,57%

USD 0,90% 0,77% 0,72% 0,66% 0,78% 1,00% 0,83% 0,91% 0,86% 0,83% 0,75%

DenmarkFinland

NorwaySweden

0%

1%

2%

3%

4%

EUR

Loca

l

GBP

USD

Office

0%

1%

2%

3%

4%

Residential

DenmarkFinland

NorwaySweden

0%

1%

2%

3%

4%

EUR

Loca

l

GBP

USD

Retail

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12PATRIZIA Immobilien AG| © 2013

Source: PATRIZIA

Clusteranalysis

OFFICE

RESIDENTIAL

RETAIL

DENMARK FINLAND SWEDEN NORWAY

Cluster Group Independent Market

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Investors‘ Comparison: Efficient Frontier for international Investors

Source: PATRIZIA Research / IPD

1 % 3 % 5 % 7 % 9 % 11 % 13 % 15 % 17 % 19 %7.5 %

8.5 %

9.5 %

10.5 %

11.5 %

12.5 %

13.5 %

14.5 %

15.5 %

Expected Volatility [%]

Expect

erd

Tota

l R

etu

rn [

%]

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14PATRIZIA Immobilien AG| © 2013

Source: PATRIZIA

Summary

RETURNS BUT SPECIALLY VOLATILITIES HAVE DIFFERENT PATTERNS WHEN CONSIDERING CURRENCY RISKS. IT IS NOT ENOUGH FOR INVESTORS IN UNHEDGED INVESTMENTS TO LOOK ONLY AT THE RESPECTIVE NATIONAL

MARKETS WHEN DETERMINING THEIR OPTIMUM INVESTMENT STRATEGY. A PORTFOLIO INVESTMENT STRATEGY SHOULD EVALUATE CURRENCY VOLATILITIES IN ORDER MAXIMIZE THE

SHARPE-RATIO AND GENERATE THE OPTIMUM ALLOCATION.

RISK AVERSE PORTFOLIO ALLOCATION

COUNTRY

ASSET CLASS EURLOCA

LGBP USD

FI Office 11% 13% 0% 0%

NO Office 0% 0% 21% 0%

DK Residential 0% 0% 9% 0%

FI Residential61% 61% 15%

100%

SE Residential 0% 0% 55% 0%

DK Retail 27% 26% 0% 0%

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DR. MARCUS CIELEBACKHEAD OF RESEARCH

PATRIZIA Immobilien AGPATRIZIA BürohausFuggerstraße 2686150 AugsburgGermany

T +49 821 50910-669F +49 821 50910-679M +49 151 [email protected]

Contact

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Disclaimer

This publication is purely for general information and not a prospectus. The information contained in this report is based on publicly available sources that we

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