Better insight + Better process = Better results

Beyond just bricks & mortar: global property securities

Stephanie FennesseyClient Portfolio Manager, Property Securities

2

Better insight + Better process = Better results

What do you get with a property security?

Like equity, shares in a company, not “bricks & mortar”

Like property, ownership of actual property assets, but in the form of a share

These shares trade on global stock exchanges

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So is this equity or property?

The answer is YES. Consider….

Long-term exposure = property

Equity-like liquidity and volatility

Think of it as property, but be prepared for more fluctuations due to marketplace fluctuations

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Generally, there are two types of property securities

DividendIncome

Shareholders

Real Estate Investment Trust

(REIT)

DividendIncome

ShareholdersTaxes

Real Estate Operating Company

(REOC)Taxes

Government Taxes

Incomefrom Rent and Sales

Incomefrom Rent and Sales

Properties:

Office, Warehouse, Apartments, Malls, Shopping Centres, etc.

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The growth of property securities is a global phenomenon

0

100

200

300400

500

600

700

800

'89 '91 '93 '95 '97 '99 '01 '03 '05

Americas Europe Asia/Australia

Global Property Research 250 IndexMarket cap ($ billions)

Source: Global Property Research, JPMorgan Investment Management

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Success of U.S. REITs led to the adoption of REITs and REIT-like securities around the world

Sources: NAREIT, JPMorgan Investment Management

1960s 1990s1980s1970s Underconsideration

2000s

U.S.1960

Netherlands1969

Australia1971

Luxembourg1988

Israel2006

Turkey1998

Canada1993

Belgium1990

Brazil1993

South Korea2001

Singapore1999

Hong Kong2003

Taiwan2003

France2003

Mexico2004

Malaysia2005

UK2007

Japan2000

Germany07?

India

Italy07?

Finland

Dubai China

EU

Thailand2005

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Global Growth Potential

£0

£50

£100

£150

£200

£250

£300

£350

£400

U.S. Ex U.S.

Publicly traded property £ billions

The property outside the U.S. is much less securitised, leaving considerable room for growth

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Better insight + Better process = Better results

Property Securities Investment Advantages

Long term property exposure with equity like liquidity

Diversification benefits

Strong historical returns

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Better insight + Better process = Better results

Low historical correlations with other asset classes

0.550.47

0.42

0.320.27

-0.030.01

-0.1

0.0

0.1

0.2

0.3

0.4

0.5

0.6

GlobalEquity

US Equity UKEquities

Europe exUK

Equities

GlobalFixed

Income

UK DirectProperty

UK FixedIncome

Global property securities correlations of returns*(%)

Source: Global Property Research, Morgan Stanley Capital International, Citigroup, JPMorgan Investment Management. Index proxies for each asset class are: Global Real Estate Securities: Global Property Research 250 Index; Global Equity: MSCI World Index; US Equity: S&P 500 Index; UK Equities: FTSE 100 ; Europe ex UK Equities: MSCI Europe ex-UK; Global Fixed Income: JPMorgan Government Bond Index Global; UK Fixed Income: FTSE UK GILTS. Indices do not include fees or operating expenses and are not available for actual investment. Indices presented are representative of various broad-based asset classes. They are unmanaged and shown for illustrative purposes only. * Based on ten years of monthly total returns through 31 December 2006

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Strong historical performance relative to other asset classes

30.9%27.5%

12.7%

18.3%15.2%

13.5%14.1%

8.9%6.5%

2.9%

8.3%5.3%

0%

5%

10%

15%

20%

25%

30%

35%

3-year 5-year 10-year

Global Property Research 250 Index

IPD Index (UK Direct Property)

MSCI World Index

JPMorgan Government Bond Index Global

Annualised returns for periods ending 31 December 2006(%)

Source: FactSet, Global Property Research, Morgan Stanley Capital International, JPMorgan Investment Management, IPD

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Better insight + Better process = Better results

Conclusion: adding global property securities diversifies a portfolio

Index proxies for each asset class are: Global Property Securities: Global Property Research 250 Index; UK Equity: FTSE All Share; UK Bonds: FTSE UK GILTS Index; UK Direct Property: IPD Index. Indices do not include fees or operating expenses and are not available for actual investment. Indices presented are representative of various broad-based asset classes. They are unmanaged and shown for illustrative purposes only. * Based on ten years of monthly total returns through 31 December 2006

Return: 7.71%

Std Dev: 7.09%

Sharpe Ratio: 0.58

Then adding 10% to Global Property

Securities

Return: 8.59%

Std Dev: 6.32%

Sharpe Ratio: 0.79

Then adding 10% to Global Property

Securities

Return: 7.09%

Std Dev: 7.16%

Sharpe Ratio: 0.48

If current portfolio,

UK Equities50%

UK Bonds50%

Return: 8.00%

Std Dev: 6.32%

Sharpe Ratio: 0.69

If current portfolio,

UK Equities45%

UK Bonds45%

UK Direct Property

10%

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Immediate access to the global real estate market

No investor queues

Efficient pricing

Unmatched portfolio diversification20+ countriesThousands of properties worldwide

Source: Global Property Research. *Other Europe includes Austria, Belgium, Denmark, Finland, Germany, Greece, Italy, Netherlands, Poland, Spain, Sweden, Switzerland and Turkey. Other Asia/Australia includes Singapore, New Zealand and the Philippines. South Africa (0.28%) is not represented in the chart above. Each of these countries has a weight less than 2.5% of the benchmark. Indices do not include fees or operating expenses and are not available for actual investment. Indices presented are representative of various broad-based asset classes. They are unmanaged and shown for illustrative purposes only.

Canada2%

Japan15%

Australia11%

Hong Kong6%

Other Asia/ Australia*

2%UK

11%Other Europe*

12%

South Africa0%

US41%

GPR 250 IndexAs of 31 December 2006

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Returns across the global are diversified

Source: Global Property Research*Includes New ZealandNA = North America, Eur = Europe

..adding to consistency of return and supporting global yet local coverage

Trailing 10 year return correlations of regional property security markets

NA Eur Asia Australia* Africa

NA 1.00

Eur 0.41 1.00

Asia 0.29 0.34 1.00

Australia* 0.36 0.27 0.22 1.00

Africa 0.02 0.24 0.20 -0.05 1.00

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Better insight + Better process = Better results

Our global equity and property presence

Europe

Property Securities AUM:£205 million

Equity AUM:£74.0 billion

Asia/Australia

Property Securities AUM:£2.6 billion

Equity AUM:£41.4 billion

…essential for picking the right stocks

North America

Property Securities AUM:£2.6 billion

Equity AUM:£56.1 billion

Global Direct Property AUM: £19 bn

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Better insight + Better process = Better results

Opportunities in GPS markets: Canada

Stable macro outlook: Canadian economy is experiencing low inflation and relatively stable monetary policy

Compelling valuation for Canadian REITs

Bullish on Western Canada due to strong job growth from its exposure to the oil & gas industry

Stock example: Dundee REIT

230 properties total = 19.4 million square feet

Buildings located throughout Canada

Average occupancy rate: 98%

30/12/2005 Price: C$ 24.26

31/12/2006 Price: C$ 38.65

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Better insight + Better process = Better results

Global property securities provide

Improved efficiencyLow correlation to UK direct real estateHigher expected returns

Improved liquidity for your property allocation

Cost-efficient access to growing global real estate markets

Place Vendôme, Paris, FranceIVG Immobilien AG

Umeda Daibiru BuildingOsaka, Japan

Daibiru Corporation

Bondi JunctionNSW, Australia

Westfield Group

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Better insight + Better process = Better results