COVERNEWS

ISSUE 41MARCH/APRIL 2012

FEATURES REFERENCE- Defined Contributions & REITs

- Debt availability- Asset exposure Europe- Bonded to real estate

- Member offers- Analyst tables- FTSE EPRA/NAREIT Global Real Estate Indices

GUEST EDITORIan Shepherdson

Asset quality, diversification and yield are irresistible for investors

2. _ EPRA NEWS / 29 / 20082. EPRA NEWS / 41 / 2012

AUSTRALIA•Univ. of Western Sydney, Property Research Centre

•Valad Property Group

AUSTRIA•CA Immobilien Anlagen•Conwert Immobilien Invest•Sparkassen Immobilien

BELGIUM•Antwerp Management School •Banque De Groof•Befimmo•Cofinimmo•Leasinvest Real Estate•Solvay Business School (Brussels Univ.)

BRITISH VIRGIN ISLANDS•Eastern Property Holdings

CANADA•Ivanhoe Cambridge •OPTrust•Presima

FINLAND •Citycon•CREF Center for Real Estate Investment & Finance

•KTI Finland•Sponda

FRANCE•Acanthe Developpement•Affine•Altarea•ANF Immobilier•Baker & McKenzie•BNP Paribas•Cegereal•EUROSIC•Foncière des Regions•Foncière Paris France•Gecina•ICADE•IEIF•Klépierre•Mazars•Mercialys•Predica•Silic•Société de la Tour Eiffel•Société Foncière Lyonnaise•Université de Paris-Dauphine•Unibail-Rodamco

GERMANY•Allianz Real Estate•Alstria Office REIT•Deutsche EuroShop•Deutsche Wohnen•DIC Asset•Fair Value REIT AG•GAGFAH•GSW

•Hamborner•Heitman•IREBS International RE Business School

•IVG Immobilien•MEAG Real Estate Management•PATRIZIA Immobilien•POLIS Immobilien•PricewaterhouseCoopers•Prime Office REIT•Real Estate Management Institute

•RREEF Investment•SEB Asset Management•TAG Tegernsee•VIB

GREECE•Eurobank Properties REIC•Lamda Development•National Bank of Greece Property Services

•Trastor REIC

HONG KONG•Univ. of Hong Kong, Dept. of RE & Construction

ISREAL•Azrieli Group•Gazit Globe

ITALY•Beni Stabili•Immobiliare Grande Distribuzione

•Prelios

LUXEMBOURG•Orco Property Group

NETHERLANDS•Amsterdam School of RE•APG Asset Management•ASR•Atrium European Real Estate•BPF Bouwinvest•CB Richard Ellis•Clifford Chance•Corio•Deloitte Real Estate•Ernst & Young European Real Estate Group

•Eurocommercial Properties•Houthoff Buruma•ING REIM Europe•Kempen & Co•KPMG Accountants•LaSalle Investment Management•Loyens & Loeff•MN Services•Nieuwe Steen Investments•PGGM•Prologis•Royal Bank of Scotland Group•Redevco Europe Services•Univ. of Maastricht

•VastNed•Wereldhave•Yardi Systems

NORWAY•Norwegian Property

RUSSIA•Renaissance Capital

SINGAPORE•Keppel Land Limited•National Univ. of Singapore

SOUTH-AFRICA•Growthpoint Properties

SPAIN•Fundación ESADE•Inmobiliaria Colonial•Neinver•REALIA Group•TESTA Inmuebles & Renta

SWEDEN•Aberdeen Asset Management•Balder•Castellum

SWITZERLAND•Center for Urban & RE Management

•Euro Institute of RE Management•Mobimo Holdings•PSP Swiss Property•Swiss Capital Alternative Investments

•Swiss Prime Site•Strategic Capital Management•University of Geneva•Züblin Immobilien Holding

TURKEY•Emlak Konut•Torunlar REIT

UAE•Abu Dhabi Investment Authority

UNITED KINGDOM•Aberdeen University Business School

•Alvarez & Marsal•AMP Capital Brookfield•Aviva Investors•Bank of America•Barclays Capital•Big Yellow Group•British Land•Cass Business School•Capital & Counties Properties•Capital Shopping Centres•CLS Holdings•Credit Suisse Securities•Derwent London plc•Deutsche Bank•GIC Real Estate

•Goldman Sachs International•Grainger•Green Street Advisors•Grosvenor Group•Great Portland Estates•Hammerson•Hansteen•Henderson Global Investors•Ignis Asset Management•Invesco•Invista Real Estate Investment Management

•Jefferies International•JPMorgan Cazenove•Land Securities•Linklaters•Macquarie Real Estate•M&G Investment Management•Morgan Stanley•Nabarro•Nottingham University•Principal Global Investors•Quintain Estates & Development•Redefine International PLC•Safestore•SEGRO•Shaftesbury•Standard Life Investments•Thames River Capital•Tristan Capital•UBS•Univ. of Cambridge, Dept. of Land Economy

•Univ. of Reading, Centre for RE Research

•Workspace Group

USA•AEW Capital Management•CBRE Clarion Securities•Cohen & Steers Capital Management

•Cornerstone Real Estate Advisers•Duff & Phelps•European Investors Incorporated•Fidelity Management & Research.

•Forum Partners Investment Management

•FPL Advisory Group•ING Clarion (US)•MIT Center for Real Estate•Real Capital Analytics•Real Foundations•Russell Investment Group•Simon Property Group•SNL Financial•The Tuckerman Group•Univ. of Cincinnati•Westfield Group•WP Carey•Zell-Lurie RE Center at Wharton

EPRA MEMBERSAS OF MARCH 2012

EPRA NEWS / 41 / 2012 3.

CONTENTS

CREDITS

Editor & Production ManagerDominic Turnbull

Guest EditorIan Shepherdson

Article Credits

Please send your comments and suggestions to:

info@epra.com

Design & LayOutFuse Consulting Limited

18 Greek Street

London

W1D 4DS

jules@fuseconsulting.co.uk

PrintersPCM Ltd

EPRASquare de Meeus 23,

B-1000 Brussels

+32 (0) 2739 1010

GUEST EDITORFixing Europe 4

NEWS 8

FEATURESDefined contributions potential for REITs 12

Inflated or justified? 16

Availability of debt for real estate 18

EPRA Insight into 2012 21

Why Europe must open access to equity markets 25

IASB/FASB consultation programme under way 29

A favourable climate – German IPOs 31

EPRA Europe - Asset exposure map 34

Bonded to listed real estate 38

First EPRA sustainability awards 42

Sustainability strategies of European property companies 43

Real estate or equities? 48

Members offers 52

Tapping a wealth of data 53

REFERENCE PAGES

Analyst round-up 55

FTSE EPRA/NAREIT Global Real Estate Indices 60

NEWSISSUE 41 | MARCH/APRIL 2012

Gregor Bamert

Peter Barkow

Laurens te Beek

Dr. Thomas Beyerle

Barney Coleman

Jesse Freitag-Akselrod

Fraser Hughes

Brendan Jarvis

Gareth Lewis

Joe Valente

Rogier Quirijns

Mohamed Abdel Rahim

Steffen Sebastian

Ali Zaidi

4. EPRA NEWS / 41 / 2012

FIXING - OR NOT FIXING -

EUROPE

GUEST EDITOR

Greece remains hugely over-

indebted, the economy is shrinking

rapidly and the targets set by the

troika look extraordinarily testing.

The chance of Greece reaching a

sustainable public debt position

over the timeframe envisaged by the

new deal is extremely slim.

The good news for everyone else,

however, is that the recent actions

of the European Central Bank mean

that Greece’s problems now pose a

much smaller threat to European fi-

nancial stability than seemed likely

just a few months ago. By flooding

the banking system with hundreds

of billions of euros of cheap three-

year loans, the European Central

Bank has effectively ensured that

no major European bank will be

allowed to go bust anytime soon.

This is a very welcome shift in

stance on the part of the ECB, which

seemed unwilling or unable to grasp

the severity of the banks’ situation

under its previous president, Jean-

Claude Trichet. His successor, Mario

Draghi, is a macroeconomist rather

than a bureaucrat, and it shows.

Unfortunately, while prevention

of major bank failures is absolutely

necessary if the European economy

is to return to sustained robust

growth, it is not enough. Banks need

to lend, not just merely exist. The

failure to appreciate the distinction

is the key reason why Japan has still

failed to recover properly after its

crash back in 1988.

Europe’s banks are short of capi-

tal. Private money is understandably

disinclined to flow to banks which

require ECB lifelines. Most govern-

ments are in no position to raise

money to recapitalise their banks,

and the new bailout fund, the EFSF,

has raised little money. That could

change if the EFSF taps some of

the money the ECB has lent to the

banks but, so far, it has shown little

inclination to do so.

The immediate risk of unmitigated disaster in

the European economy has been averted by

Greece’s recent deal with the troika — the

European Central Bank, the European Commission

and the IMF. The second Greek bailout should

keep the wolf from the door for a while but, make

no mistake, the country’s troubles are not over.

EPRA NEWS / 41 / 2012 5.

GUEST EDITORIan Shepherdson

In the medium-term this problem can only be fixed by a

sustained reflation of the German economy or sustained

deflation of the indebted economies.

What this means, therefore, is

that you should expect European

banks generally to be much more

of a hindrance than a help to the

economy for the foreseeable future.

Balance sheets have to shrink. Bank

finance for real estate development

will be hard to find in most mar-

kets. Among the large economies

the German banking system is in

the best shape, but even there the

European Banking Authority thinks

capital could fall short of their mid-

year minimum requirements, if the

economy fails to perform.

Banking bottleneckLack of development finance is not

the only problem. Banks are the key

source of working capital for small

and medium-sized businesses, which

typically account for about half of the

economy. When they are in trouble

and unable to raise finance it’s very

hard for the whole economy to grow

properly even if larger firms are doing

well. European bank lending to

businesses have slowed mark-

edly in recent months and is likely to

fall outright over the course of

this year.

Even if the banks were prop-

erly capitalised, however, the core

economic problem of the eurozone

would remain. The underlying dif-

ficulties run very deep. Compared to

Germany, the biggest economy of the

eurozone, all the major economies

have suffered a substantial loss of

labour cost competitiveness in recent

years. Wages adjusted for productiv-

ity growth have risen much faster

than in Germany, so non-German

companies have suffered large

market share losses both inside and

outside the eurozone.

In the days before the single cur-

rency, countries finding themselves

in this position would see their cur-

rencies sink, thereby improving their

competitive position, though at the

price of higher inflation. That can’t

happen anymore. Instead, trade

deficits are rising rapidly as coun-

tries lose market share to Germany.

The trade squeeze weakens growth,

which depresses tax revenues and

drives up unemployment. Sustained

high joblessness puts further strain

on the public finances.

Eventually, investors — the peo-

ple who buy the bonds to finance

the deficits — start to believe that

rising public debts are intractable,

and they flee. In the medium-term

this problem can only be fixed by

a sustained reflation of the German

economy or sustained deflation of

the indebted economies.

Alternatively a complete fiscal

union with automatic transfers from

the best-performing countries to the

weaker regions, as happens in the

US, would help sustain the single

currency. But that’s a very hard sell

to the German electorate and, when

politics and economics collide, bad

decisions are often taken in the

interest of short-term expediency.

The outlook for Europe, then,

is sustained weak growth at best

in most countries, with Germany

outperforming; but deep and long

recessions in the most heavily

indebted, like Portugal, Greece, Italy

and probably Spain. We might see

some growth in France but let’s be

clear: France has deep labour cost

problems too, and if those issues

are not addressed it will eventually

end up in the same position as the

current group of supplicants.

Meanwhile, the US, which took

quicker and more aggressive action

both to fix its banks and support the

economy via fiscal policy, is gather-

ing real momentum. It is probably

no accident that the recent pop-up

in some of the European business

surveys has followed a clear revival

in the US numbers. Strong growth

in America is helpful to Europe at

the margins, but it is not enough on

its own.

Europe’s economic mess is

mostly home-grown, and the solu-

tions are to be found at home too.

Unfortunately, all the solutions are

expensive; there are no quick fixes

or magic wands to be waved, just a

long, hard slog. And that, remember,

is the good scenario.

Dr. Ian Shepherdson is a foremost global economist who has been described by the London Times as one of “the best economists in the City”. His publication, Daily Notes in is widely read by investors, policymakers and dealers in 20 countries.

6. EPRA NEWS / 41 / 2012

Asset quality,

diversification and

yield are irresistible for

investors.

Outreach to the global investment

community highlighting the key

benefits of listed property remains a

top priority for EPRA – after all, we

represent an extremely attractive but

often misunderstood asset class. At

a fundamental level, we continue

to communicate the type of assets

EPRA’s members own and locations

in which they operate.

As an Industry, we should not

forget that the real estate our mem-

bers manage provides the environ-

ment in which organisations carry

out their day-to-day business and

communities live and function. In

addition, we need to properly com-

municate the specific benefits that

the listed property sector brings to

the economy – transparency, liquid-

ity, quality management, top quality

buildings, green/sustainable leaders

and robust business models. These

are clear attractions to achieving a

larger listed sector.

It is critical for real estate inves-

tors to understand which vehicle

provides exposure to the buildings

and locations that fits their invest-

ment profile. The over-riding theme

is quality and location of assets.

Looking at the asset mix of the listed

companies in Europe, they offer

investors exposure to some of the

best property on the market.

The analysis by EPRA’s Maikel

Speelman, later in this edition,

indicates the asset locations of the

properties owned by the listed com-

panies in the FTSE EPRA/NAREIT

Europe Index. The UK, France and

Germany are the three largest coun-

tries on an assets basis – they own

and manage approximately EUR 170

billion of direct real estate. In total,

the 83 constituents control approxi-

mately EUR 270 billion of property

– a clear example of the breadth and

depth of the listed sector. The map

also highlights the market capitalisa-

tion of each country. PIIGS exposure

is extremely limited.

While European listed real estate

as a whole tends to out-perform the

major investment asset classes over

the long term, REITs are the over-

achievers in the market, because the

prime quality property assets they

generally own are those most likely

to offer long-term reliable income,

which leads to healthy cash flows.

An uncertain economic environ-

ment and a back-drop of low interest

rates means investors will continue

to be attracted to ‘real’ assets offer-

ing attractive yields – “cash is king”.

High investor demand for dividend

yield, against a background of jit-

tery equity markets and ultra-low

interest rates, can be met by income

flows from European REITs or many

listed property companies.

REIT dividend yields have

strongly out-performed general equi-

ties and bonds – as well as inflation

– over the past five years, as recent

EPRA research has shown. Between

2007 and 2011, European REITs gen-

erated an average dividend of 5.1%,

compared with general equities at

4.1%, government bonds at 3.4%,

and average annual inflation in the

eurozone of 1.9%.

At a time when pension funds

are struggling to cover their li-

abilities due to low interest rates

and all investors are seeing weak

returns from investment markets,

the attractiveness of the dividend

yield on European property stocks

in general, and REITs in particular,

has rarely been higher. Current

discounts to NAV offer an attractive

entry point.

Even during the depths of the

Credit Crisis, the vast majority of

European listed property firms

were able to pay out dividends. The

year-on-year drop in the dividend

yield paid out by listed property

companies in the period 2009 to

2010 bottomed out at -20%, whereas

REITs hit a floor at -11.8% and general

UPDATE FROM PHILIP CHARLS Philip Charls, EPRA CEO

CEO UPDATE

EXPERTISE ASSETS AMBITIONPRIME OFFICE PROPERTY HIGH-QUALITY PORTFOLIO

SELECTIVE LEASING MANAGEMENT POLICYSTRICT GOVERNANCE

SOUND SHAREHOLDER BASE

ENSURING A SUSTAINABLE YIELD OVER THE LONG TERM

Cegereal is a REIT specialising in core office properties in the Paris region. Concentrating its investments on recently-built, large-scale assets in the inner Paris ring, Cegereal attracts first-class tenants with its high value-added offering that combines top quality with an impressive provision of services.

Cegereal : 21-25, rue de Balzac, 75008 Paris – Franceinfo@cegereal.com, www.cegereal.com

EPRA NEWS / 41 / 2012 7.

REITs are the over-achievers in the market,

because the prime quality property assets they

generally own are those most likely to offer

long-term reliable income, which leads to

healthy cash flows.

equities showed a maximum decline

of -25%. Over the long-term, since

1999, the annual compound dividend

growth of European listed property

companies as a group has been 3.7%,

well above annual compound infla-

tion of 2.1%.

REITs tend to pay out higher

dividends than non-REITs because

of their legislative obligations in

national markets to distribute the

vast majority (up to 100%) of earn-

ings to shareholders. This is in line

with most REITs’ income-orientated

strategy of offering stable income

growth through active property asset

management and rotation of their

portfolios.

On a parting note, we understand

that we live in tough and uncertain

times. However, we believe opportu-

nities to expand the European listed

market may lie ahead. History tells

us that the introduction and effective

use of REITs in the US and Australia

for example, can offer governments

a way to galvanise stagnant property

markets.

Countries such as Spain, Italy,

Ireland and Greece may view REITs

as an effective route to breathe life

into their markets. Countries with

REIT structures currently in play

may see tweaks going forward – for

example, residential REITs are on

the agenda in the UK. In Germany,

approximately 30% of open-ended

funds remain closed – how will the

position unwind, and will the listed

market provide a potential exit route?

Get a front-row view later in the

year and mark off September 06 &

07 in your diaries. The EPRA Annual

Conference in Berlin is the place to

be – a must-attend for the real estate

sector.

EXPERTISE ASSETS AMBITIONPRIME OFFICE PROPERTY HIGH-QUALITY PORTFOLIO

SELECTIVE LEASING MANAGEMENT POLICYSTRICT GOVERNANCE

SOUND SHAREHOLDER BASE

ENSURING A SUSTAINABLE YIELD OVER THE LONG TERM

Cegereal is a REIT specialising in core office properties in the Paris region. Concentrating its investments on recently-built, large-scale assets in the inner Paris ring, Cegereal attracts first-class tenants with its high value-added offering that combines top quality with an impressive provision of services.

Cegereal : 21-25, rue de Balzac, 75008 Paris – Franceinfo@cegereal.com, www.cegereal.com

8. EPRA NEWS / 41 / 20128. EPRA NEWS / 41 / 2012

IN THE NEWS

High investor demand for dividend

yield, against a background of

weak equity markets and ultra-low

interest rates, can be met by income

flows from European listed property

companies and particularly REITs,

new research from EPRA shows.

Dividend yields from the sector

have remained consistently above

equities and bond yields – as well as

inflation – over the past five years.

Between 2007 and 2011, European

REITs generated an average dividend

of 5.1%, compared with general eq-

uities at 4.1%, government bonds at

3.3%, and average annual inflation

in the eurozone of 2.0%.

Maikel Speelman, EPRA analyst

and author of the report said:

“While European listed real estate

as a whole tends to outperform

the major investment asset classes,

REITs are the over-achievers in the

market, because the prime quality

property assets they generally own

are those most likely to offer long-

term reliable income, which leads to

healthy cash flows and sustainable

dividends.”

BUILDING ON QUALITY AND PREDICTABLE PERFORMANCEA research update will shortly be released, which strongly supports our

fundamental performance understanding of listed real estate stock. The

Regensburg study generally found a stronger linkage to underlying real

estate assets compared against equity stock markets.

In the majority of cases, listed real estate markets are predominantly

driven by the performance of the underlying buildings, which can be

interpreted as the key driver of listed real estate in the medium to long

run. This suggests a deep flaw in the perception that allocating funds

into listed real estate stocks carries the same risk profile as wider equi-

ties. The building blocks of the listed investment are solid, transparent

and attract consistent yield.

ESMA LAUNCHES CONSULTATION ON DERIVATIVES LEGISLATIONThe European Securities and Markets

Authorities (ESMA) has launched

a consultation (accessible here) on

the draft technical standards for

the regulation of OTC Derivatives

(EMIR). This is a topic that has been

a concern for the property sector for

some time as the regulation imposes

an obligation on any business de-

fined as a ‘financial counterparty’

to post cash collateral with a central

counterparty (CCP) on any derivative

transaction (including interest rate

swaps on property loans).

Unfortunately, a ‘financial coun-

terparty’ includes any business that

falls within the AIFM Directive and it

therefore remains uncertain whether

this obligation will apply to listed

property companies because of the

uncertainty associated with the scope

of the AIFMD. Our investigations and

lobbying efforts are ongoing.

SECTOR BONDING TO NEW FINANCE SOURCE

Bonds are taking on a new significants as commercial property lenders

take fright and draw down their funding from the listed sector. European

listed real estate companies/REITs have successfully tapped the bonds and

convertibles market. In total, FTSE EPRA/NAREIT Europe Index constituents

raised EUR 7.4 billion in the past two years through bonds issuance.

“With the 155 tradable issues, we see the development of a long-term pat-

tern of finance which carries more favourable and liquid characteristics for

the listed sector,” explains EPRA’s Ali Zaidi. Valued at EUR 32 billion with an

average duration more than 20 years, deeper analysis of bond transactions

is ongoing. See page 38 for more information.

INDEX REVIEWAt the end of February 2012,

the FTSE EPRA/NAREIT

Developed Index counted a

total of 284 constituents, rep-

resenting a freefloat market

capitalisation of over EUR 638

billion. March’s quarterly in-

dex review takes into account

the nationality rule change.

See page 36 for more

information.

EUROPEAN REITS FILL INVESTORS’ THIRST FOR DIVIDEND YIELDS

NEWS

ADDRESSING THE ACADEMICS

First EPRA Sustainability awards. The first EPRA Sustainability Reporting BPR accreditations will be announced at the Annual Conference in September.

Assessment will be carried out by Jones Lang LaSalle based on the criteria laid out by the EPRA Sustainability Reporting committee. This is comprised of leading European listed property companies, investors and advisors.

In keeping with our green goals, links to the Sustainability Reports or Annual Reports should be submitted electronically to JLL’s Matthew Tippett on: EPRA-SustainabilityBPR@eu.jll.com

Hammersonis proud to supportEPRA

www.hammerson.com

Hammerson EPRA Ad Feb 2012:Layout 1 28/2/12 16:30 Page 1

EPRA NEWS / 38 / 2011 1.

EPRA produces a mass of invaluable monthly data for members. It consists of over 1,000 pages of research,

graphs and statistics that can affect your market understanding and support your decisions. This sector round-up with its

rich indices data is used widely and globally - can you afford not to receive these?

Stay in touch: info@epra.com

Patrick Sumner, Head of Property Equities,

Henderson Global Investors.

www.epra.comSquare de Meeus 23, B-1000 Brussels • Belgium

T +32 (0)2739 1010 • F +32 (0)2739 1020

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EPRA NEWS / 41 / 2012 11. EPRA NEWS / 41 / 2012 11.

EC LAUNCHES FINANCIAL SUPPORT FOR ENERGY EFFICIENCY IN BUILDINGS CONSULTATION

The EC has launched a public con-

sultation on the ‘Financial Support

for Energy Efficiency in Buildings’

(consultation closes May 18).

To view the consultation, go

to http://ec.europa.eu/energy/ef-

ficiency/consultations.

The consultation aims to

identify market failures in the

uptake of energy-efficiency

measures as well as the actions

needed at national and European

level to improve the financial sup-

port for energy efficiency in

buildings.

Listed in German SDAX

ISIN DE0005098404

Good letting results. Strong Asset Management. Portfolio on growth path.

www.dic-asset.de

DAZ_Ad_quer_2011-eng._213_160_Layout 1 31.05.11 16:51 Seite 1

SECTOR PERFORMANCE

The FTSE EPRA/NAREIT Developed (Global)

Index gained 1.3% during February 2012. Glo-

bal equities increased 5.2% while the Global

Bonds market increased 0.1%. Real estate

markets in North America lost 2.6%. Europe

increased 0.6%, while Asia was up 7.7% over

the month.

Over a one-year period, global real estate

gained 4.0% compared to a drop of 0.5% for

global equities and a gain of 7.6% for global

bonds. Annualised ten-year rolling returns

for real estate investments stands at 6.1%.

Equities gained 4.4% while bonds markets

achieved a 4.4% return per annum as well.

NEWS

12. EPRA NEWS / 41 / 2012

DEFINED CONTRIBUTIONS

POTENTIAL FOR REITsAs the pensions landscape

is being transformed,

listed real estate/REITs

have an opportunity to

gain market share in

Defined Contribution

pension plans.

The percentage of pension funds

invested in real estate in 2009 was

approximately 75% at a global level

according to Eichholtz, Kok and An-

donov (2012). In Europe that figure

was much higher at 95%.

They concluded in their research

that larger pension funds are also

more likely to invest in REITs,

whereas smaller funds allocate more

assets to fund-of-funds in direct real

estate – which results in substantial

under-performance compared to

other investment approaches. They

stated that this is at least partly

due to multiple layers of fees, but

neither do the fund-of-funds seem

to have good skills in selecting

investment managers since their

gross benchmark-adjusted returns

are significantly negative.

It seems that smaller pension

funds do not seem to recognise

that REITs provide exposure to

property returns comparable to

external managers that invest in

direct real estate, and much better

than fund-of funds managers – but

with much lower investment costs.

Ciochetti, Craft and Shilling (2002)

found that a U-shaped relationship

exists between REIT holdings and

pension plan size. Smaller pension

funds invest in REITs, but as pension

plan size increases investors choose

direct real estate, at the expense of

REITs. At a certain point, this trend

reverses with the larger investors

choosing to invest in REITs.

Real estate’s relatively low

volatility and low correlation with

other asset classes make it an im-

portant source of diversification in

any portfolio, reducing overall risk

without sacrificing returns. Regula-

tory frameworks for retirement

provision and practices developed

in other major global economies –

particularly in the US and Australia,

have reflected this conclusion and

specifically included real estate as

an asset class within default invest-

ment options.

In addition, there is strong evi-

dence, reflected in the asset alloca-

tion decisions taken by the largest

global pension funds and through

regulation developed in other major

world economies, that REITs and

real estate equities offer a proxy for

FEATURES

EPRA NEWS / 41 / 2012 13.

Listed property companies including REITs could

be in a fantastic position to attract capital as a

result of these default investment allocations for

passive investors – provided that real estate is

rightly viewed as a separate asset class.

direct real estate investment that is

importantly accessible to all insti-

tutional investors, whether large or

small.

The futureThe growth of Defined Contribution

(DC) schemes and the disappearance

of Defined Benefits (DB) schemes

are widely viewed as a certainty. For

example, Italy, Portugal and Greece,

three of the countries at the heart

of the eurozone debt crisis, as well

as France, Austria and Poland, each

spent more than 11% of their gross

domestic product on state pensions

in 2010, according to Allianz Global

Investors. In contrast countries such

as Australia, the US, Switzerland,

the Netherlands and the UK spent

between 3.5% and 6.5% of GDP on

public pensions. But while the most

generous state schemes are seen

by many as unsustainable, there

are signs in some countries, such

as France, that employees are fun-

nelling money into work-based DC

schemes to cover a likely pullback

in state provision, according to

Cerulli Associates research.

This could represent an excel-

lent opportunity for the European

listed property sector to deliver

its potential – a defining moment

for the growth of the sector and

its emergence as a mature market

and a core asset class? Conversely,

it could also give rise to a huge

missed opportunity for the sector

and more importantly, the ability

for a European pension fund frame-

work to efficiently meet the needs of

Europe’s aging population.

The optimistic view first. We can

expect that DC pension schemes

with strategies including default

investment options for major asset

classes to be a major growth area

in Europe. Listed property compa-

nies including REITs could be in

a fantastic position to attract

capital as a result of these default

investment allocations for passive

investors – provided that real estate

is rightly viewed as a separate

asset class. The growth of compul-

sory automatic enrolment pension

schemes will only increase the

importance of default allocation

models.

A different perceptionA look at developments that have

occurred in the US show that real

estate is generally viewed as a

distinct asset class within these

plans and, importantly, REITs are

viewed as part of that real estate

allocation (see Fig 1 above). Because

the DC framework allocates more

control with regard to investment

decisions to the fund manager

and the individual pension plan

holders, liquidity is an important

factor when considering allocations

compared to DB schemes. This puts

REITs in a potentially strong position

as a preferred investment vehicle

compared to less liquid forms of

direct and indirect investment in

property.

Another way of looking at the

subject is much less positive, and

raises an important point related to

the European listed property sector

and its ability to contribute to a

successful European pension frame-

work. This concern stems from the

fragmented nature of the European

listed property sector. Given this

state of affairs, it is hard to see how

a coherent approach to pension fund

investment into real estate, which

aligns with the specific requirements

of the DC schemes (including target

date funds etc) can be achieved >

5.2 4.8 5.1 4.86.3

8.6

11.8 11.8

15.6

19.1

24.8

33.4

23.7

18.8

0

5

10

15

20

25

30

35

40Percent

Prop

ortion

of

pla

n y

ear

exper

ience

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Figure 1: 401(k) Plans Offering a Real Estate Option

Source: Profit Sharing/401(k) Council of America

14. EPRA NEWS / 41 / 201214. EPRA NEWS / 41 / 2012

in the same way that it has in coun-

tries like the US and Australia.

REITs in the US (after 50 years of

history) are a significant and widely

understood investment product and

it is clear that REITs, as a liquid

form of real estate, are well suited

to the requirements of DC schemes.

In contrast, the European listed

property sector is fragmented, hard

to understand and relatively under-

developed compared to the US and

Australia.

This is of course understandable

given that the EU is made up of 27

member states, each with their own

tax legislation – and is clearly one of

the reasons why the European listed

sector is under-represented com-

pared to other major regions. Many

European countries don’t even have

REIT legislation, and when they do

they tend to be structured differently

and called different names (REITs,

G-REITs, SICAFIS, FBIs, SIICs to name

a few!).

As this point in time, the exist-

ence of REIT legislation in Europe

has not been sufficient to achieve

the public policy objective of match-

ing the mainstream investing public

with the long-duration, contractually

protected and inflation-linked cash

flows derived from commercial

real estate. A number of regula-

tory obstacles have prevented this

from happening and are subject

to EPRA’s attention. It is preferable

that institutional investors, acting on

behalf of their beneficiaries and the

mainstream public, have an asset

allocation to REITs compared against

direct real estate holdings for all the

usual reasons:

• Attractive income/cash-flow

• Good quality assets/locations

• Superior diversification/exposure

opportunities

• Liquidity when needed

• Good transparency

• Cost/efficiency/scale

A focus on the ECAt a regulatory level, we believe

that the European Commission (EC)

urgently needs to provide leadership

by both prioritising the development

of a coherent European listed sector,

and at the same time by promoting

the ‘best practice’ examples from

the more developed DC markets

– like the US and Australia, when

developing the European pension

fund framework.

We believe that any European

code of good practice should pro-

vide pension fund holders with

the means to properly access the

diversification benefits of real

estate as a fundamental asset class

that should be included in any

properly diversified portfolio. Such

a framework should therefore follow

the best practices adopted in other

developed markets like Australia

and the US to recognise listed prop-

erty companies (including REITs) as

a liquid and accessible form of real

estate investment.

We believe that any European code of

good practice should provide pension fund

holders with the means to properly access

the diversification benefits of real estate as a

fundamental asset class that should be included

in any properly diversified portfolio.

EPRA NEWS / 41 / 2012 15. EPRA NEWS / 41 / 2012 15.

Gareth Lewis is EPRA’s Director of Finance, based in Brussels. He is responsible

for leading EPRA’s initiatives and policy positions with respect to REITs, taxation, finan-cial reporting and accounting issues. He worked closely with the industry and government to improve the REITs legislation, regulations and guidance. Lewis is a Chartered Accountant who, prior to joining the BPF, was a tax adviser within the real estate group of Ernst & Young both within their London and New York offices.

g.lewis@epra.com

For the European REIT sector,

even a small improvement in this

regard could have a very positive

influence on capital flows into the

sector. It would represent a major

step in creating a genuinely relevant

European listed property sector,

prone to attract institutional and

other global investors, advancing

the stability and transparency of

the property investment markets,

and improving the efficiency of the

European built environment.

In this respect, we would high-

light the clear evidence apparent

from developments within the US

defined contribution plans towards

the inclusion of real estate options

within default pension plan options:

• In the US 401(k) plans offering a

real estate option have grown from

4.8% in 1997 to 33.4% in 2009.1

• A 2009 Survey by PIMCO in the US,

showed that 66% of firms believed

REITs would bring the most value

as an added asset class within

defined contribution plans.2

EPRA believes that the European

Commission could and should play

a very influential role in developing

a code of practice, particularly for

DC schemes and the area of default

investment options for employees in

workplace DC schemes that decide

PIMCO 15.0% Domestic

UBS 15.0% Global

JPMorgan 12.0% Global

Alliance Bernstein 10.0% Global

Dow Jones Indexes Real Return 10.0% Domestic

Source: NAREIT®

ORGANISATION MAXIMUM REAL ALLOCATION TYPE

ESTATE ALLOCATION

Fraser Hughes is Research Director at EPRA. He held a number of investment-

related positions in the City of London before relocating to the Netherlands. He holds an MSc in Investment Management and a BA in Finance. He is a regular speaker at real estate-related conferences and writes for a broad range of publications.

f.hughes@epra.com

not to actively make investment

choices.

Such a European level code of

best practice should be relatively

simple and recognise the four dis-

tinct asset classes of Stocks, Bonds,

Cash and Real Estate and the need

to include a minimum, or a range of

allocations to these asset classes in

any properly diversified portfolio.

Fig 2 below shows the maximum

real estate allocations from a product

manufacturer perspective, used by

selected organisations for lifecycle

and target-risk funds.

One of the key reasons why REITs

and listed real estate equities are fa-

voured in existing lifecycle funds and

DC schemes in general, as a means to

manage real estate exposure in life-

cycle funds, is because the liquidity

they provide (to an otherwise illiquid

asset class) enables fund providers to

ensure that the change in asset mix

happens efficiently. EPRA strongly

believes that any default allocation

guidelines developed at an EU or

national level should include the

ability for a pension fund provider

to responsibly manage its real estate

exposure using allocations to REITs

and listed real estate equities.

1 Source: Profit Sharing/401(k) Council of America 2 Source: PIMCO’s 2009 Defined Contribution Consulting Support and Trends Survey of 32 investment consultants and managed-account-focused firms. Participating firms include seven of the top ten investments consulting firms in the US.

Figure 2

16. EPRA NEWS / 41 / 2012

FEATURES

INFLATED OR JUSTIFIED?

The inflation hedging

quality of real estate is

one of its most attractive

and enduring investment

characteristics. Indeed, it

is the reason often given

to invest in real estate,

particularly by those

investors who need to

match long-term assets to

liabilities.

A number of major institutional

investors have increased their al-

location to real estate recently as

a result of their respective house

views that assume a significantly

higher rate of inflation in the future.

It is not just institutions. The con-

tinuing attraction of the asset class

to an increasing number of high net-

worth individuals with a strategy

underpinned by wealth preservation

also implies a belief that property

can and does act as a suitable hedge

against rising inflation.

Many practitioners have long

asserted that property can be used

as a hedge. Most investors tend

to be of the view that property

is, or can be, an inflation hedge,

particularly over the long term. In

the same way, most will recognise

that, in the short term, local market

fluctuations will tend to prevail and

confuse the debate somewhat. It is

clear, however, that the debate over

the merits of real estate as a hedging

tool has long been raging but that

the evidence remains inconclusive.

This debate will undoubtedly

gather further momentum given the

growing concerns over a higher in-

flationary environment in the years

ahead across Europe. No doubt this

will trigger a wave of new research

papers on the subject which, if any-

thing like recent ones, will shed next

to no light on the issue, and succeed

only in adding to the general level of

confusion surrounding the subject,

or at least glossing over some of

the most important characteristics

of the asset class and its ability to

perform successfully as an inflation

hedge.

When is a hedge... to short?The definition of what exactly

constitutes a hedge is the first, and

possibly the most important, source

of confusion. An inflation hedge is

EPRA NEWS / 41 / 2012 17.

often taken to mean an investment

whose value is directly related to

the level of inflation. In other words

that there is a direct relationship

between property values and some

measure of inflation. So if over, say,

a five or ten-year period, property

values keep pace with inflation, or

even outperform a particular bench-

mark, this is not in itself viewed as

sufficient evidence that real estate

is capable of performing a hedging

function. For this to be the case, so

the argument goes, property values

have to move with, and react, to a

changing inflationary environment.

Far from semantics, the use of

such a definition will inevitably

lead to the conclusion that com-

modities, or even equities, offers a

much better hedging mechanism

than that provided by real estate.

After all, real estate is lumpy, there

is a lack of frequent real-time

pricing – quarterly data in a few

markets, annual indexes in most –

and that’s not to say anything of the

constraints imposed upon it by the

landlord/tenant relationship which

will vary not just between markets

but over the course of the real estate

cycle as well.

Issues that make real estate

different and which will inevitably

mean that values won’t be able

to ‘react’ sufficiently quickly to

changes in inflation. But this ignores

the fact that growth in property val-

ues may well exceed inflation over

a set period. In essence, the conclu-

sion that real estate is a poor hedge

against inflation is often solely the

result of applying a definition that

is ill-suited to the sector or doing so

with little understanding of how the

property market actually works in

the real world.

Tick the boxesThe key point is that real estate

provides a long-term hedge against

inflation but, in order for it to do so,

certain other criteria have to be met.

• While the real asset nature of

property underpins its inflation

hedging quality over the long

term, buying tangible assets as

a protection against inflation is

sensible only if done at the right

price. It’s an obvious point but one

that is overlooked a little too often.

• Properties with inflation-linked

leases are increasingly attractive to

a broad range of investors as they

are often seen as defensive in na-

ture. However, while such leases

can offer many attractive qualities

to the investor, rent indexation

does not equal inflation protection

– it is not a guarantee even if some

investors tend to regard them as

such. The reality is somewhat

different – rent indexation in the

absence of pro-active management

results only in over-rented assets.

Such leases should not be viewed

as a guarantee of an outcome but

rather as a starting point in the

quest for inflation protection.

• Income growth is the key to solv-

ing the inflationary puzzle. The

ability to retain a tenant in the

building, maintain and grow cash

flow lies at the very centre of an

inflation-hedging strategy. And that

applies across all markets and

points in the cycle.

• The importance of income growth

brings us to the missing link in

much of this debate, which is

simply the ability and expertise of

the asset management team. This

is the case for all asset managers,

whether they are listed property

companies or private equity funds.

Investors’ prime concern should

be whether their asset manager

has the ability and expertise to

deliver income growth all through

the real estate cycle.

The bottom line is very straight-

forward: a bad asset manager will

underperform inflation no matter

what the inflationary environment

might be, the point in the eco-

nomic cycle, the holding period or

the relationship between landlord

and tenant.

Part 2 of this analysis into inflation

& the listed real estate sector will

appear in the next EPRA newsletter.

The conclusion that real estate is a poor hedge against inflation

is often solely the result of applying a definition that is ill-suited to

the sector or doing so with little understanding of how the property

market actually works in the real world.

Joe Valente, managing director, is the head of research and strategy for the European Real Estate Group. Valente and his team forecast local economic and prop-erty market performance, identify

strategic investment opportunities for institutional and high net worth investors. Since 2007, he was responsible for the investment strategy at Allianz Real estate. Prior to this he was a director and head of research at DTZ. He was responsible for the house view on global markets as well as advising a large number of investment clients on global real estate investment markets.

jose.a.valente@jpmorgan.com

18. EPRA NEWS / 41 / 201218. EPRA NEWS / 41 / 2012

FEATURES

AVAILABILITY OF DEBT FOR REAL ESTATE

Availability of debt for the

real estate sector has been

a key topic of concern

for management teams

in recent years and is

likely to continue to be so.

While the listed sector is

generally well capitalised

and retains a number of

financing options,

a proactive approach

is required.

In the very distant days of abundant

liquidity, owners of real estate were

able to access a plentiful supply

of low-cost debt for real estate.

Banks were increasing their lending

to the sector at a tremendous rate.

In the UK alone the value of gross

lending rose more than five-fold

between 1999 and 2007. Furthermore

the introduction of loans distribution

through securitisation and other capi-

tal market sources added liquidity.

Less than five years later the

landscape appears to have changed

fundamentally with little prospect

for a short-term improvement. As

the bank market in Europe remains

the predominant source of debt

capital for the real estate sector, here

we focus principally on changes in

this area while also touching on

alternative sources of real estate

finance.

Why do banks lend so much on real estate?In the current climate this seems an

unusual question, but real estate still

accounts for one of the largest sec-

tor exposures of many mainstream

banks. Generally, the explanation

for this has been that real estate

lending was anticipated to provide

a good return on equity for banks.

During the ‘good’ times this was

largely the case as outlined below.

With bank capital now more scarce

banks will be even more focused on

lending in sectors where they can

achieve an appropriate return on the

equity they are committing.

How it was when times were good?A bank provides a customer with a

typical commercial property invest-

ment loan and charges an upfront

fee and margin over the relevant

reference rate (e.g. Libor or Euribor).

The bank prices the loan based on

achieving an acceptable return for

the risk it is taking. (Figure 1)

Typically this would be meas-

ured by a return over Risk Weighted

Assets (RWAs). A reasonable as-

sumption in say 2002-2005 would

have been that a major bank would

fund itself at approximately the

reference rate so any margin earned

above this contributed to the returns.

The bank would allocate capital

to the loan based on the apparent

riskiness and take into account the

tenor of the loan.

EPRA NEWS / 41 / 2012 19. EPRA NEWS / 41 / 2012 19.

Simplified ROE Calculation

Adjusted Income

Average YTD RWAs x Capital Ratio

Numerator

Denominator

- Impairment - Costs - Tax

Calculating ROE Figure 1: Simplified ROE Calculation

During the life of the loan,

the underlying assets might be

re-valued - typically on an an-

nual basis - which in the good

times would have seen asset values

rise and the riskiness of the loan

decline further. Therefore the bank

might have been able to reduce the

capital allocated to the loan further

during the life of the loan. In many

instances the loans were repaying

(or being refinanced) well before

the loans’ maturity which helped

persuade banks that the amount of

capital being held was appropriate.

Impairments were at a low level and

on a seemingly declining trend.

The picture nowFast forward several years. At each

point of the above example things

have got worse for the bank and, by

extension, for the real estate owner

seeking to borrow funds.

To start off, banks’ cost of

funding has leapt dramatically.

The five years credit default swap

(CDS) spread for many large banks

is now over 150bps, meaning that

a good portion of the margin that

banks are charging no longer goes

to contribute to the return the bank

is making but simply helps it source

the relevant funding for the transac-

tion. Furthermore, due to a variety

of regulatory pressures, banks are

increasing the average tenor of their

funding profile, meaning that aver-

age funding costs are not just rising

because spreads as a whole are

higher but that additional duration

is also being paid for.

Secondly, the amount of capital in

the form of RWAs that a bank holds

against any one real estate loan has

been increasing due to regulatory

pressures, the increased loss experi-

ence of banks in the sector and a

broader credit deterioration across

loan books (with valuations under

pressure and the prospects of repay-

ment / refinancing dwindling, banks

are reassessing existing positions).

Thirdly, the relationship between

the amount of risk assets a bank

holds and the amount of equity

capital it has, demonstrates the lev-

erage of a bank. Broadly speaking,

the leverage for many banks has

reduced by as much as half in

recent years.

Finally, distribution of bilateral

loans remains severely limited (with

one or two CMBS whole loan deals

only, plus a few bank club deals).

In summary the return on equity

that banks have typically used as

a justification to lend to real estate

has been undermined by a sig-

nificant increase in the cost (to the

bank) of providing that lending, by

an increase in the number of RWAs

that this reduced return is allocated

to and an increase in the amount

of equity that this return on RWAs

is spread over. However this is just

the beginning, and a number of key

regulators believe that the change

has not yet gone far enough and that

the amount of capital that banks

hold against real estate should in-

crease much further than its current

level. Not surprisingly, banks are

being much more restrictive about

the amount and type of real estate

lending that they engage in.

It’s not all bad newsFortunately for the sector there are a

number of areas where new financ-

ing for real estate is being provided.

These areas are still dwarfed by

the banks but are growing rapidly,

and they seem likely to find a per-

manent place in the financing tools

available for real estate companies.

Largely these sources can be divided

into public and private instruments.

Public capital marketsFollowing a tumultuous end to

2011, the European corporate bond

market has opened with gusto in

2012 with EUR 64 billion of issuance

since the start of 2012. A growing

number of real estate companies

in Europe have the requisite invest-

ment grade rating able to access this

market, however, real estate in both

Europe and the US still accounts

for a relatively small share of the

overall corporate bond market. As

the sector reaches a critical mass,

improved investor understanding,

comparability of companies and

performance may encourage further

issuance.

The flexibility of convertible

bond issuance for real estate com-

panies has proven very attractive

in recent years, with some 14 com-

panies across Europe accessing the

market since 2010. The ability rap-

idly to access the market often >

20. EPRA NEWS / 41 / 2012

FEATURES

where the conversion price is above

current net asset value (NAV) and

coupons are low provide a strong

incentive to issue such instruments.

While the traditional CMBS

market remains relatively moribund

with only two issues in the last four

years, some investor interest in what

can be broadly termed structured

real estate finance is emerging.

Private capital marketsOne of the most significant areas

of support for real estate debt in

recent years has come both from the

traditional private placement market

and from bilateral institutional plac-

ings. In the former since 2010, we

have seen 11 real estate companies

across Europe access the US Private

Placement (USPP) market for tenors

ranging up to 30 years.

This product has established

itself as a firm favourite with bor-

rowers as no rating is required, long

tenors can be accessed and total

borrowing costs have been relatively

low compared to European capital

market pricing. Investors in USPPs

have a fondness for companies

which are governed by a REIT status

and subject to the restrictions this

tends to place on companies, how-

ever, they are looking beyond these

to alternative real estate assets such

as student accommodation as well.

Institutional debt investorsOf particular interest to real estate

companies at the moment is the

growing appetite for real estate

finance demonstrated by institu-

tional investors such as insurance

companies and pension funds.

Many of these institutions have

a long history of investing in real

estate both directly and indirectly

(through listed companies or real

estate funds) and therefore have an

appreciation of the sector. As these

investors are typically looking for

relatively long-term, stable and low

risk returns, the real estate debt

asset class has become attractive

particularly given the elevated pric-

ing level currently achievable and

certain regulatory treatments.

While a small number of players

such as AXA REIM and Aviva Com-

mercial Finance have been active in

this field for a while, the current field

of parties either actively lending or

establishing capabilities to do so is

in excess of 20. This investor base

provides a great opportunity for

real estate owners to partner with

long-term capital providers who

can act as a complementary source

of finance alongside banks and the

capital markets.

Quo vadisThe current challenging market

conditions around bank finance for

real estate will likely continue for

some time as legacy loan books,

regulatory uncertainty and challeng-

ing occupier markets all take their

toll. Against this backdrop however,

listed real estate companies have

demonstrated their resilience as an

asset class. A combination of proac-

tive early engagement, a willingness

to approach funding solutions in

a flexible way and a diversified

funding base will allow a number

of players the opportunity to further

differentiate themselves from the

broader market.

Gregor Bamert, head of real estate at Barclays Real Estate has responsibility for the national real estate coverage teams. Previously he was responsible for investment banking coverage of real estate

clients across western Europe with a particular focus on cross-border clients, strategic acquisitions, structured financings and capital markets. Gregor has worked on large portfolio acquisitions, equity and debt capital markets issues and structured risk management. Gregor joined Barclays in 2001 follow-ing several years in strategy consultancy for financial institutions in London and New York.

gregor.bamert@barclays.com

Brendan Jarvis is Managing Direc-tor and head of real estate, EMEA for Barclays Real Estate. Brendan has worked with the UK’s principal real estate clients for a number of years and has originated many

high profile deals, including UK and cross-border public to private acquisition and M&A transactions, together with numerous bank and capital market corporate financings. His depth of experience in banking across almost four decades has seen turbulent property cycles, as a credit officer, lending banker and industry sector head. Brendan joined Barclays in 1972.

brendan.jarvis@barclays.com

While the traditional CMBS market remains relatively

moribund with only two issues in the last four years,

some investor interest in what can be broadly

termed structured real estate finance is emerging.

EPRA NEWS / 41 / 2012 21.

FEATURES

EPRA INSIGHT INTO 2012

EPRA’s annual Insight

events held in January

in London, Paris and

Amsterdam, are becoming

must-attend features of

the European listed real

estate calendar for those

wishing to get a New

Year feel for the major

industry issues in the 12

months ahead. This year’s

gatherings saw as strong

attendance as ever, with

the London Insight in

particular full-to-capacity

at the Lloyds Building

in the City.

UK Property firms urged to use share buy-backs and cut leverage In an opening presentation at the

London Insight hosted by legal firm

Nabarro, John Lutzius, Managing

Director at Green Street Advisors

said that in general gearing levels

at major UK listed property firms

remain far too high following exces-

sive development at the peak of

the market. He urged managements

to launch low risk share buyback

programmes, which are “leverage

neutral” and trump both acquisi-

tions and development in terms

of shareholder returns, while most

stocks are trading at steep discounts

to NAV.

BBC journalist Sarah Montague

moderated the panel of three UK

real estate CEOs and an equities

investor manager. David Atkins of

Hammerson; Chris Grigg of British

Land, Andrew Cunningham of

Grainger and Patrick Sumner, Head

of Property Equities at Henderson

Global Investors were generally

united in their oppositions to share

buy-backs in current market condi-

tions.

“We looked at share buybacks,

but determined that we could pro-

duce a better return by investing in

our own portfolio than buying back

our own shares,” David Atkins said,

while pointing out that his company

has leverage in the low 30s and

believes that finding a “sustainable

level of debt” is the most important

objective.

LONDON

>

22. EPRA NEWS / 41 / 2012

He was supported by Patrick

Sumner who said that in practice

share buy-backs don’t usually shift

NAV.

Chris Grigg added that when

markets don’t have liquidity,

companies have to think carefully

about shrinking their equity base

in a capital-consumptive sector. He

said he was comfortable with British

Land’s leverage of around 45% at this

stage in the cycle, but would move

towards lower gearing because of

the reduced availability of bank debt

that was looming.

The speakers generally concluded

that the UK housing market would

remain flat in 2012 along with

commercial property market yields,

although central London may outper-

form other markets.

Dutch Retail investors see opportunities in EuropeDespite the economic uncertainties

now facing Europe, leading Dutch

shopping centre investors Corio and

Wereldhave continue to see op-

portunities in their markets, although

they foresee stiff challenges over

the next five years from e-retailing

and demographic change from aging

populations.

Speaking at the Amsterdam EPRA

Insight event, hosted by lawyers

Loyens & Loeff, CEOs Hans Pars of

Wereldhave and Gerard Groener of

Corio emphasised that the sovereign

debt crises in a number of European

countries are having only limited

impact on their companies’ retail

markets. They remain optimistic

about the future performance of their

investments.

“Retail sales are under pressure,

but there are still opportunities de-

pending on the quality of the retailer.

Rent levels can still be increased,”

according to Pars.

For Corio, Italy in particular

remains strong. “Italians are fash-

ionable spenders. Household debt

is low in comparison with many

northern European countries, giving

the average Italian consumer a high

spendable income,” Corio’s Groener

said. He added that, unlike the more

conservative Germans, Italians make

it a priority to buy luxury goods,

which should translate into higher

rental income.

Both CEOs see traditional shop-

ping centres coming under threat

in the coming five years from a

combination of increasing online

shopping and aging populations.

AMSTERDAM

FEATURES

EPRA NEWS / 41 / 2012 23.

To counter these challenges, Corio is

emphasising its focus on centrally-

located shopping High Streets

rather than large out-of-town centres.

Wereldhave generally favours mar-

kets such as the UK, Belgium and the

Netherlands, where strict planning

laws restrict the supply of new retail

properties.

There was less optimism from

Pars on Wereldhave’s office invest-

ments: “Office markets everywhere

are under pressure. Rents are

declining, with the exception of a

few bright spots such as Paris where

rents are still rising,” he said.

Speaking on the same discussion

panel, Dutch pension fund PGGM’s

Head of Listed Real Estate, Hans

Op ’t Veld sounded a cautionary

note: “At the beginning of 2011 the

situation was clear. Things would go

badly, but we could prepare for that.

The situation in 2012 is murky. The

worst may not be over in Europe and

a hard landing in China could make

that country just as much a concern

as the EU.”

Op t’ Veld said PGGM will remain

invested in European listed real

estate, but would need to look very

carefully at the underlying asset

quality and structure of the compa-

nies it invests in.

24. EPRA NEWS / 41 / 201224. EPRA NEWS / 41 / 2012

Strength in French MarketFrench SIIC’s (listed real estate

investment companies) have dem-

onstrated their success on so many

levels to international investors. An

assessment made by John Lutzius,

managing director of Green Street

Advisors, at the EPRA Insight event

in Paris, organised by Business

Immo, with the collaboration of

Allen & Overy and the FSIF (Fédéra-

tion des Socíetés Immobillères et

Foncières).

Over the last decade, from 2001

to 2011, French SIIC’s have outper-

formed European bonds and the

CAC 40, working their way to the

top podium (+14%). They have also

managed to demonstrate a certain

resilience (-8%) in 2011, admittedly

not as good as European bonds

(+5%), but better than the CAC 40

(-13%). “They also offer a better

return on investment than listed UK

or US property companies, with a

return of 8.2%, against 7.5% for the

UK and 7.3% for the US,” Lutzius

pointed out.

A more ‘risky’ Europe For all that, the model is not without

its disadvantages, particularly in

times of crisis. The sovereign debt

crisis has turned international

investors into ‘euro-sceptics’, quite

happy to believe that the risks are

higher in continental Europe. “Listed

European property companies offer

higher IRR than in the UK or the

US, but the risks are also higher, par-

ticularly in terms of indebtedness

and developments”, emphasised

Lutzius. In Europe, the pipeline of

projects committed to by European

property companies (EUR 8.9 bil-

lion) thus represents 12% of the

value of their assets, whereas this

proportion falls to 7% in the UK

(EUR 3.6 billion) and to 3% in the

US (EUR 12.4 billion).

“But it’s important to consider

this risk in the light of the average

vacancy rate, which in Paris is

around 6%,” put in Serge Grzy-

bowski, CEO of Icade in reply. “We

have a large number of projects in

the pipeline, but these enterprises

have been fully pre-let, which was

true in the case of our group, with

the leases signed by Veolia or the

Ministry of Justice.”

Retail premises are the preferred investment of international investorsIf forced to choose, in France John

Lutzius prefers retail premises to

office space. An opinion shared by

Patrick Kanters, Head of Real Estate

at APG Asset Investment, “half”

of whose exposure in terms of its

allocation of real estate assets in

Europe and France is in shopping

centres, town centre shops and

commercial premises in the lower-

floors of building developments.

“The appetite of international

investors continues to hold up well,

with demand still riding high. But

there is still a big question mark

over the European crisis,” concluded

Lutzius.

PARIS

EPRA NEWS / 41 / 2012 25. EPRA NEWS / 41 / 2012 25.

FEATURES

WHY EUROPE MUST OPEN ACCESS TO EQUITY MARKETS: PHASE II

In March 2011, Cohen &

Steers published Why

Europe must open access

to equity markets.1 They

received a significant

amount of supportive

feedback from this paper.

To further explain their

views, Cohen & Steers

wrote this update to

show there are practical

solutions to increase the

flexibility of companies

to raise equity.

Reality sets inBased on the responses to our first

white paper and on further market

evidence, we are resolved to help

improve the methods by which

European companies raise equity.

We believe this the right moment in

time to demand for greater flexibility

to raise equity. Why?

• The recognition that capital mar-

kets and investor allocations are

becoming more global every day.

Without harmonisation of regula-

tory and capital market practices,

Europe seems destined to lose

ground in the global marketplace.

• The recognition that without re-

capitalisation with true equity, the

combination of high leverage, low

labour productivity and an aging

population represents a perilous

set of economic conditions in

Europe. The sovereign crisis has

continued to spread and threatens

the eurozone. We believe that de-

leveraging in Europe requires eq-

uity recapitalisation of the banks

as well as of other capital-

intensive sectors, such as

real estate. Debt markets

continue to narrow for

real estate, increasing

the reliance by REITs on

public equity – and debt

markets.

• The recognition that the

merit-based, open archi-

tecture of the US capital

market is powerful. That

companies can raise eq-

uity in real time through

ATMs (at-the-market

offerings), or through

one-day marketing of-

ferings, is a meaningful

competitive advantage by way of

efficient access to low-cost equity.

We believe that a more open ar-

chitecture would help reduce the

cost of raising equity in Europe.

One criticism of rights offerings

has been that underwriters earn

fees that are too high. To us, the

simple solution to this criticism is to

promote competition among banks

and institutional shareholders.

Discounts do matter, a point

borne out by the fact this is a mate-

rial negotiating point during the

rights offer process. The rights offer

process provides outside investors,

or the underwriter, a call option to

invest dilutively. We find that, when

considering the value of this option,

rights offerings are as at least as

expensive as other forms of equity

issuance.

• The recognition of the facts: Pre-

emptive rights is one of several

factors that have caused long-

1 http://www.cohenand-steers.com/downloads/Europe_Open_Access_Eq-uity_Markets.pdf

>

26. EPRA NEWS / 41 / 2012

term under-performance of UK

listed property companies relative

to private real estate and relative

to companies in markets without

pre-emptive rights. Performance

through the crisis is summarised

above.

• The recognition that real estate

companies are missing an op-

portunity to consolidate real estate

ownership in Europe and capital-

ise on the de-leveraging of private

real estate ownership.

• The recognition that real estate

companies deserve special

dispensation because their busi-

nesses are highly capital intensive

and the REIT rules require the

majority of earnings be distributed

as dividends.

A flexible approach to raising capital We respect corporate law and

pre-emptive rights, and we sup-

port strong corporate governance

and shareholder-friendly market

practices. As such, we endorse an

approach of flexibility whereby

companies can improve upon a

foundation of raising capital through

pre-emptive rights by:

• pursuing accelerated rights

offerings compressed to as little as

three days;

• pursuing rights issues priced at the

market and without sub-under-

writing (the backstop) along with

an open offer for unsubscribed

shares and

• allowing shareholders to vote

for waivers of pre-emptive rights

under certain conditions designed

to protect shareholders.

First, we endorse the improve-

ments made in Belgium and under

consideration in the UK, to execute

accelerated rights offerings in a

three-day timeframe. This will allow

better price execution, as less market

risk would result in a narrower dis-

count, and this would foster broader

access to non-shareholder investors.

These offerings would preserve the

important right of pre-emption and

facilitate more efficient access to

capital - certainly a ‘win-win’ for

both companies and shareholders.

Second, we advocate the use,

in non-distressed situations, of

at-the-market rights offerings

without a backstop in conjunction

with an open offer. An example of

companies becoming more aware of

the cost of discounted rights issues

and the related cost of capital is the

recent equity offering by Deutsche

Wohnen.

Deutsche Wohnen executed

a capital increase of 20% of its

existing share capital via an at-the-

market rights offering, which was

not backstopped and was executed

in two weeks. We believe this struc-

ture is an improvement as it:

• reduces the discount to market

pricing;

• mitigates downward pressure on

the share price;

• speeds time to market;

• provides the opportunity to bring

in new shareholders and

• reduces underwriting (backstop)

fees.

This form of offering has a more

open architecture and enables the

market to set the price. Importantly,

the company specified the short-

term and long-term uses of proceeds.

Finally, we offer a roadmap of

conditions under which Cohen &

Steers would waive its pre-emptive

rights. These conditions are meant

to address the primary concerns that

have given rise to the strong culture

of pre-emptive rights in Europe.

The real cost of rights issues The defence of the rights issue

process that “the discount doesn’t

matter” has always baffled us. We

and other investors know through

experience that the deeper the dis-

count, the larger the negative impact

on the share price. Said simply, if

the discount doesn’t matter, why

have one?

The discount exists to compen-

sate the underwriter for taking the

risk of backstopping the placement.

More risky issuers need to accept

a larger discount. The discount

has value because it gives the

underwriter the option to acquire a

significant stake in the company at

Bear market (2007-2008) -47.5% -74.8% +2,730bps

Recovery (2009-2011) +77.5% +22.0% +5,750bps

As of December 31, 2011. Past performance is no guarantee of future results. You cannot invest directly in an index.

Source: FTSE EPRA NAREIT Indexes.

US CUMULATIVE RETURN USD UK CUMULATIVE RETURN USD US vs. UK

Exhibit 1. Listed real estate returns: US and UK

The rights offer process provides outside investors, or

the underwriter, a call option to invest dilutively. When

considering the value of this option, rights offerings are as

at least as expensive as other forms of equity issuance.

EPRA NEWS / 41 / 2012 27.

Exhibit 2. Evaluating real cost of rights offering

a discounted price in case investors

do not take up their rights.

This option has value and,

as post announcement the shares

and rights are traded by investors

other than existing shareholders,

there is a value transfer between

existing and new shareholders. This

is part of the reason a company’s

share price tends to underperform

the market after the rights issue

process has been announced and

unfolds. In practice, this arbitrage is

normally borne out by hedge funds

taking advantage of this opportunity.

While taking up the rights

themselves is not value-destructive,

the real impact is on the value

of the investor’s initial investment

– due to the value transfer from the

option inherent in the rights issue

underwriting process and the fall in

company value that almost always

occurs in a rights issue process. As

such, we believe the discount does

matter; the higher the discount, the

more value will be lost.

For a company whose objective

is to raise 20% of its value through

a -30% discounted rights issue (with

an 85% take up probability), the net

option value is equivalent to 5% of

the amount of capital raised. On top

of the underwriter’s fee of 3%, this

equates to an all-in cost of 8%. The

example below serves to illustrate

this point.

If the discount is less, such as

the usual 2% to 4% discount in a

normal placement, the option value

is minimal. Hence there is no free

lunch - the cost of a rights issue at

8% is the same or more than the

all-in cost of a placement of 7% (-3%

price discount plus 4% underwriting

spread).

Unfortunately, there are other

Create a more flexible approach to raising capital that benefits companies

and investors:

- Reduce time for execution.

- Reduce the discount to market for pricing.

- Reduce sub-underwriting (backstop) fees and other cost/expenses.

Approve the waiver of pre-emptive rights for up to a reasonable percentage of capital

stock (20-60%) if:

- Upon request of the waiver, management provides a statement on the

general use of proceeds and why the company believes the waiver is

beneficial to shareholders.

- At the time of share issuance, management provides a specific

statement on the use of proceeds and benefit to shareholders.

- The discount to buyers of up to 5-10% is limited to the last price or

ten-day VWAP (exclusive of banker underwriting spread).

- Management has a history of disciplined and accretive capital

allocation.

- There are no insider shareholders with more than 25% ownership.

- The opportunity allows shareholders to remove the waiver at each AGM.

COHEN & STEERS PRE-EMPTIVE RIGHTS WAIVER VOTING ROADMAP

Option values are derived using the p option formula using a 40% volatility and 1.5% risk-free rate and assuming a time of three months.

Company initial market capitalisation USD 10,000

Shares 10,000

Share price USD 1.00

Capital raise price USD 2,000

Rights issue price USD 0.70

Discount -30%

TERP USD 0.93

Probability of take-up 85%

Exposure to underwriter USD 300

Underwriter’s call option value (USD 102.01)

Company’s put option value USD 2.31

Net option cost as a % of capital raised -5%

costs involved in rights issues, in-

cluding the time and energy for the

management and its shareholders. If

investors are unable to come up with

the capital required to exercise their

rights, the need to tail swallow (sell

your rights) means giving up the dis-

count to intrinsic value, another form

of dilution. Furthermore, the process

limits the ability to issue equity at

a premium to intrinsic value, and

hence create value. Instead, having

to protect against potential dilution

makes rights issues a coercive proc-

ess; the choice is taken away from

the shareholder, and that value is

transferred to the underwriter.

Next stepsAs for next steps, we are pursuing

the following and encourage share-

holders and companies to join us:

• Lobby real estate companies to

speak up and tell their sharehold-

ers and proxy voting firms why the

value of their company would be

enhanced by improved access to

the equity markets.

• Discuss capital-raising options

and the Cohen & Steers >

28. EPRA NEWS / 41 / 2012

Having to protect against potential

dilution makes rights issues a coercive

process; the choice is taken away from

the shareholder, and that value is

transferred to the underwriter.

Rogier Quirijns, senior vice president, is an associate portfolio manager and a senior analyst overseeing the European real estate securities research effort. He also covers listed real estate companies in the United Kingdom

and France. He has 12 years of investment experi-ence. Prior to joining the firm in 2008, Quirijns was a senior real estate equity analyst with ABN AMRO in Amsterdam, where his coverage included France, Scandinavia and the Benelux region. Previously, he was a direct real estate portfolio manager with Equity Estate and an analyst within the real estate corporate finance team at Arthur Andersen. Quirijns has a degree in business economics from the University of Amsterdam. He is based in London.

rquirijns@cohenandsteers.com

pre-emptive rights waiver voting

roadmap with market participants

in the Press, at industry confer-

ences, at shareholder meetings.

Shareholders, companies, EPRA,

proxy voting firms and pre-emptive

rights advocates should all get

involved.

• Work with companies that have

strong corporate governance prac-

tices in place, as well as a need

for capital, to place proposals to

waive pre-emptive rights under the

aforementioned conditions on the

agenda for shareholder meetings.

We call upon all market par-

ticipants to focus on this initiative

to help increase the value of your

real estate holdings in Europe, and

allow these companies to grow in

a rational, value-added fashion.

Only with this foundation can

the public market for real estate

companies grow and prosper in

the new- normal environment

of lower leverage and less credit

availability.

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EPRA NEWS / 41 / 2012 29.

FEATURES

INTENSIVE IASB/FASB CONSULTATION PROGRAMME UNDER WAY

The rapid pace of the

IASB/FASB‘s workplan

continues as the IASB/

FASB consult on agenda

consultation, Investment

Entities, and Revenue

Recognition

Agenda consultationStarting in December 2011, REESA

submitted its formal response to

the IASB’s agenda consultation. The

purpose of this was to gather views

on the ‘strategic direction’ and

overall work balance of the IASB’s

current and future workplan. In our

joint submission, REESA argued that

priority should be given to finalising

the revenue, leasing, and financial

statement projects. Thereafter, we

believe it is critical that the IASB

“slow the rate of change” to allow

a period of calm. This is consist-

ent with the general feedback as

the IASB confirmed “widespread

requests for a period of calm”.

As part of the response to the

consultation, REESA conducted a

survey of members on which of the

five ‘strategic areas’ identified by the

IASB should be given priority. The

overwhelming majority of respond-

ents (to both the REESA survey

and IASB consultation) identified

the need to “perform timely post

implementation reviews” as the

top priority. This reflects concerns

among property companies that

the rapid introduction of so many

accounting changes including

Financial Instruments, Fair Value

Measurement, Consolidation, Rev-

enue Recognition, Leases, etc. could

result in implementation issues.

Investment entitiesIn January 2012, EPRA submitted

on behalf of REESA, a response to

the IASB/FASB Investment Entities/

Companies Exposure Draft (ED).

This ED proposes criteria to iden-

tify ‘Investment Entities’ that would

no longer be permitted to consoli-

date the results of their controlled

entities.

While our strong view is that

European corporate property groups

will not be subject this standard,

we have some concerns about the

vague criteria being proposed. This

is of particular concern to US Equity

REITs since the criteria included in

the Investment Entities ED are

virtually identical to those proposed

in the FASB’s Investment Property

Entities ED, which raises the risk of

property companies being scoped

in (if they are not considered Invest-

ment Property Entities).

In response to the FASB’s

Investment Property Entities ED, in

February 2012 EPRA re-submitted a

letter to the IASB/FASB on FASB’s

Investment Property Entities Stand-

ard. In the joint REESA letter we

highlighted our concerns that the

FASB’s Investment Property Entities

standard is significantly different

to the well established asset-based

approach adopted in IAS 40 (FASB

are proposing an entity-based

classification whereas IAS 40 is

an asset-based approach) and >

30. EPRA NEWS / 41 / 2012

could result in some property which

would be classified as Investment

Property under IAS 40 being scoped

out of the equivalent US standard.

Revenue recognitionThe IASB currently has a re-exposure

draft out on Revenue from contracts

with customers - March 13 con-

sultation deadline. This is broadly

the same as the ED that REESA

responded to in October 2010 and is

most relevant to construction compa-

nies as it replaces IAS 11 Construction

Contracts and IAS 18 Revenue.

There is not much of relevance

to investment property companies

as lease income is outside of the

scope and a number of the relevant

issues raised in our previous letter

(e.g. aligning the guidance around

sale and lease back in the proposed

Lease standard, additional guidance

on accounting for sales involving

seller financing) seem to have been

addressed.

What else?Following a letter EPRA submitted

In addition to being represented in the

IVSC working group, EPRA plans to

setup up a separate working group to

assist the IVSC working group.

Mohamed Abdel Rahim is EPRA’s Financial Reporting Manager. He studied at the Manchester Business School before joining Deloitte where he worked in audit for three years. After earning his Chartered Accountant (ACA), Mohamed

worked at Orco Property Group, an EPRA member based in Luxembourg. Mohamed’s main responsi-bilities will be to develop the EPRA best practices and to assist in financial reporting lobbying to the IASB/FASB.

mohamed.abdelrahim@epra.com

in November, the IVSC has now for-

mally launched a project to develop

a Valuation Standard for Investment

Property, including Project Brief,

and is in the process of setting up

a working group. The purpose the

proposed Standard would be to pro-

vide guidance on the valuation of

investment property line with new

IFRS 13 requirements which were

finalised in August 2011 (effective in

2013) and address issues where there

might be differences in practice. In

addition to being represented in the

IVSC working group, EPRA plans to

setup up a separate working group

to assist the IVSC working group.

What lies ahead?The IASB will be publishing the

results of its “feedback statement”

on the agenda consultation in Q2

2012. The re-exposure of the Leases

standard is expected in late Q2 2012.

A series of board meetings will take

place before then which will focus

primarily on lessee accounting but

also include consequential amend-

ments to IAS 40 (definition of Invest-

ment Property for the purposes of

the exclusion from the scope of the

proposed accounting).

The reporting and accounting

committee will meet in April to

discuss all relevant reporting and

regulatory issues including the IVSC

project.

For further informationOn any of the topics discussed or to

get involved please visit the EPRA

website (‘IASB/FASB representation’

page) and/or contact Gareth Lewis –

EPRA Finance Director or Mohamed

Abdel Rahim – EPRA Financial

Reporting Manager.

EPRA NEWS / 41 / 2012 31.

FEATURES

The IPO window for

German real estate

companies is about to

reopen. Market volatility

has declined significantly

since the beginning of

the year with the German

VDAX now close to levels

at which the last two

German real estate IPOs

were executed. The first

successful transactions

of 2012 underpin the

continued demand for

German equities.

London-based Akselrod Consulting

and Düsseldorf-based Barkow Con-

sulting have analysed a comprehen-

sive list of German real estate ECM

transactions comprising IPOs, rights

issues, capital increases and private

placements. This article contains the

main findings of the study.

Approx. EUR 3.7bn of German real estate equity placed since 2009Since 2009 – the beginning of the

end of the financial crisis – approx.

EUR 3.7 billion of German real

estate equity has been placed in

the market. The majority, or 56%

of the placed equity, came from

residential companies, whereas the

office sector only represented 29%.

Surprisingly, less than 10% of equity

originated from the retail sector, de-

spite strong investor demand for the

asset class.

Doubling of placements to EUR 2bn in 2011Difficult market conditions during

the second half of 2011 notwith-

standing, the volume of placed

equity more than doubled to EUR

2 billion in 2012. The first quarter

witnessed the highest ECM volumes

of 2011, with close to EUR 1 billion of

equity placed during March alone,

including the successful IPO of GSW.

Elevated market volatility during the

third quarter of 2011 – the highest

levels since the Lehman crisis –

effectively closed ECM win-

A FAVOURABLE CLIMATE

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

14/0

3/09

14/0

5/09

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7/09

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9/0

9

14/1

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approx EUR3.6bn placed!Chart 1: Cumulated Volume of German RE ECM Transactions (placed capital, EURm, since 01/09)

Source: Bloomberg, Company Publications, Akselrod Consulting, Barkow Consulting

>

32. EPRA NEWS / 41 / 2012

dows with only one smaller transac-

tion being executed. Following the

extended second-half lull, the last

quarter of 2011 saw re-accelerated

ECM activity, as six deals with total

placement volume of approx. EUR

800 million came to market.

Residential real estate continued to be the most active asset classResidential real estate continued to

be the most active subsector, more

than doubling to EUR 1.1 billion

(55% of all real estate equity placed

in 2011). By contrast retail real estate

transactions were essentially absent

throughout the year.

1/3 of equity placed via IPOs in 2011, substantial increase in average transaction size2011 was also a good year for

German IPOs, with three new

companies joining the listed space.

Chart 2: Capital Placements by Sector 2009 to date

Source: Bloomberg, Reuters, Company Publications, Akselrod Consulting, Barkow Consulting

Retail Office Residential Mixed

5.5% 9.1%

29.9%

55.5%

Retail Office Residential Mixed

5.5% 9.1%

29.9%

55.5%

Retail Office Residential Mixed

5.5% 9.1%

29.9%

55.5%

IPO Rights Issue

Capital Increase Placement

EURm 364; 19%

EURm 712; 36%

EURm 363; 18%

EURm 529; 27%

Chart 3: Capital Placements 2011 by instrument

0

20

40

60

80

100

120

140

160

180

200

Retail Office Residential Mixed Total

Ave Sixe 2009 Ave Size 2010 Ave Size 2011 Ave Size 2012

Source: Bloomberg, Reuters, Company Publications, Akselrod Consulting, Barkow Consulting

Chart 4: Av size per transaction by sector (in EURm)

In addition to GSW and Prime Of-

fice, Youniq is included in the IPO

category, although initially only a

minimal free float was placed before

the company’s subsequent ‘relisting.’

In total, almost 50% of placed equity

came to market via these three IPOs.

27% of equity came from capital-

increases-without-rights and 18% via

rights issues.

Notably, average transaction size

increased to more than EUR 100

million in 2011 - up 68% from 2010

levels.

Reduced volatility and strong German macro pave the way for successful IPOs in 2012Against a backdrop of improving

forward indicators and firming

private consumption, the German

IPO window appears poised to

reopen. Ongoing uncertainty in the

troubled Eurozone and continued

tensions in the Middle-East seem

Peter BarkowIn 2009 Peter founded Barkow Consulting, an independent advisory firm

with core focus on capital mar-kets strategy and communication services for the listed real estate sector. Peter brings more than two decades of global financial

institutions and real estate experience to the table. He has amassed project experience with leading global strategy consulting firms and financial institutions. In his most recent roles in equity research, Peter has headed the Continental European real estate team at Lehman Brothers and the German Financial Institutions & Real Estate team at HSBC.

EPRA NEWS / 41 / 2012 33.

VDAX

IPO Hurdle

03/0

1/10

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03/1

2/11

03/0

1/12

03/0

2/12

50

45

40

35

30

25

20

15

10

5

0

May 2010: GSW'sIPO postponeddue to sovereigndebt concerns

April 2011: GSW's2nd IPO approachsuccessfullyexecuted

June 2011: Prime Office IPO

Source: Bloomberg, Company Publications,, Deutsche Börse, Akselrod Consulting, Barkow Consulting

Chart 5: Av size per transaction by sector (in EURm)

Jesse Freitag-AkselrodBorn in 1976, Jesse has over ten years of diverse financial

and investment experience, having worked in mergers & acquisitions, equity research, and asset management. Since

2005, Jesse has been active in the European listed real estate space, most recently working as a buyside investor for Cohen & Steers Europe. In 2010, Jesse founded Akselrod Consulting, a stand-alone consultancy firm specialised in IPO-advisory and corporate strategy.

only to be reinforcing appetite for

German safe-haven investments.

Recent outperformance of defensive

German property stocks over the

EPRA-Europe benchmark and

first signs of successful 2012 ECM

transactions – particularly by GSW

and Alstria – underscore investor

demand for German exposure.

Importantly, volatility has

dropped significantly in the year-to-

date period with the German VDAX

currently trading around 21 - very

close to levels concurrent with suc-

cessful 2011 real estate IPOs. In-line,

a near-term upturn in IPO activity

doesn’t appear unlikely. Investor de-

mand for new residential and retail

companies will likely remain high-

est. Nevertheless, conservatively

financed, high quality office plays

may also pique investor demand

during 2012.

Improving market conditions

notwithstanding, the myriad

geo-political issues and macro

challenges ahead suggest that the

process of eurozone and global

recovery will not be straightforward.

Periodic resurgence of market

volatility and choppy open-and-shut

cycles for IPO windows therefore

likely remain a medium-term reality.

Whatever shape the economy and

equity markets take, 2012 promises

yet another exciting year for German

listed real estate.

Against a backdrop of improving forward

indicators and firming private consumption, the

German IPO window appears poised to reopen.

34. EPRA NEWS / 41 / 201234. EPRA NEWS / 41 / 2012

FEATURES0.

3

9.8

0.5

63.6

30.9

15.9

8.9

8.8

3.5

67.4

32.7

.003

.003

.08

.08

7.2

6.4

1.7

36.0

6.4

4.0

1.4

1.8

0.3

1.0

0.1

0.6

0.2

13.1

0.9

0.5

0.2

0.7

0.1

0.1

2.8

3.5

0.5

22.2

7.4

7.2

1.7

EPRA EUROPE - ASSET EXPOSURE MAP

Real estate assets

Full market Capitalisation

At the end of 2011,

the EPRA Europe

Index consisted of

83 European listed

property companies,

had a combined full

market capitalisation

of EUR 101.5 billion

and were trading

at an average 24.7%

discount to NAV.

FTSE EPRA/NAREIT Developed Europe IndexEUR billions as at December 31, 2011

EPRA NEWS / 41 / 2012 35. EPRA NEWS / 38 / 2011 35.

How things have changedBased on data collected from the

latest available individual company

reports, the combined underlying

real estate portfolio (bricks and

mortar) was valued at over EUR

271.7 billion, comprising of real

estate assets spread out across 31

European countries and the US. As

such, the EPRA Europe Index tracks

and measures one of the largest

pools of high quality, professionally

managed, transparent real estate

assets available in Europe.

The map on the left displays the

geographical allocation of the EPRA

Europe Index per country. As can

be observed, the major economies

make up the largest part, with the

UK, France and Germany represent-

ing 61.4% of total real estate assets

included in the index.

Due to the relatively small size of

individual European countries, the

need for cross-border investments

to achieve economies of scale is

evident, with 77.8% of the total

assets owned domestically. A full

geographical portfolio breakdown

of all 83 constituents can be down-

loaded in Excel format from www.

epra.com.

• 83 listed companies

• 32 countries

• EUR 271.7 billion real estate

portfolio valuation

*** CALL FOR ACTION *** CALL FOR ACTION *** CALL FOR ACTION ***

EPRA NAV ESTIMATES, WHAT’S THE CONSENSUS?Although income-related metrics are

gaining popularity, NAVs are still

the leading metric used by inves-

tors to valuate European listed

real estate company. As a result of

this, Consensus NAV Estimates are

widely used by the market as an

indicator of future performance as

well as current sentiment. EPRA has

often received feedback from inves-

tors and analysts, as well as from

property companies, regarding the

lack of consistent and accurate NAV

Consensus data.

With this in mind, EPRA is

aiming to launch a new initiative

by providing Consensus EPRA-NAV

Estimates for as wide a possible

selection of EPRA Europe Index

Constituents, based on as many as

possible analysts’ NAV Estimates.

Over 80% of the EPRA Europe

Index is reporting EPRA NAVs

at the moment and analysts are

increasingly using EPRA NAVs in

their models and communicate

this industry-standard when com-

paring the KPIs of the companies

they cover.

Based on the ‘Annual EPRA

Analyst Coverage Table’ (featured

at the back of this newsletter)

the well-known analysts, most of

whom are EPRA members, have

been contacted and responded very

positively to this initiative.

Ultimately, high-quality Consen-

sus Data can increase transparency

in the market and help to decrease

the volatility and uncertainty with

regards to the direction of the

market caused by incomplete NAV

Estimates Data.

Please contact Maikel Speelman if you have not yet been contacted and want to contribute your NAV Estimates to this project or have any questions regarding this initiative.

m.speelman@epra.com

36. EPRA NEWS / 41 / 201236. EPRA NEWS / 41 / 2012

On a near daily basis, EPRA distributes index-related corporate ac-

tions to its members globally covering hundreds of indices. These

include index constituent inclusions/exclusions, free float changes,

share offerings, index ground rule changes... and much more.

To ensure you or your team are on this essential mail-out, please

contact: info@epra.com.

FTSE EPRA/NAREIT Global Real Estate Index Series -Ground rule changesFurther to the notice released on October 03, 2011, the FTSE EPRA/NAREIT Global Index Series Supervisory Committee (the Global

Group) re-affirms that the rules concerning eligibility for the FTSE EPRA/NAREIT Global Real Estate Index Developed and Emerging

Series and the nationality assignments of companies will be revised. The new rules will come into effect in March 2012. An updated

version of the FTSE EPRA/NAREIT Global Real Estate Index Series Ground Rules is now available and the relevant excerpt from the

revised rules is included below:

4.8 The FTSE EPRA/NAREIT Global Real Estate Index Series is divided into Developed and Emerging sub-series. Assignment of

companies to the sub-series is made according to the following criteria:

a) New constituents will be classified as Developed if greater than 75 percent of their total annual EBITDA is derived from

Developed Markets as classified by the FTSE Country Classification Committee. Otherwise the constituent will be classified

as Emerging.

b) 1. Existing Developed series constituents will move to the Emerging series if their total annual EBITDA from Developed

markets has decreased to less than 50 percent for two consecutive years as evidenced by the company’s annual reports.

2. Existing Emerging series constituents will move to the Developed series if their total annual EBITDA from Developed

markets has increased to greater than 75 percent for two consecutive years as evidenced by the company’s annual

reports.

4.9 For the purposes of creating local and regional indices the following criteria are used to determine the nationality and regional

allocation of a company:

a) The Nationality of a company will generally be the same as that allocated by FTSE in the construction of the FTSE Global

Equity Index Series except where this would be inconsistent with the allocation of the company to the Developed and

Emerging sub-series as provided for in the above rule.

b) In this eventuality, the Nationality of a company in the Developed sub-series will be determined by the Developed country,

and in the case of an Emerging sub-series constituent the Emerging country, that contributed most to the company EBITDA

as evidenced by the company’s most recent financial report. In the event of a company moving between the Developed

and Emerging sub-series, its Nationality will be re-evaluated according to this rule.

c) The Nationality of a company so assigned may also be re-assessed if for a constituent of the Developed sub-series a

different Developed country, and for a constituent of the Emerging sub-series a different Emerging country, has contributed

most to the company’s total annual EBITDA over two consecutive years as evidenced by the company’s annual reports.

Company Nationality assignments are subject to the approval of the EPRA/NAREIT regional committees. The regional allocation of a

company will be determined by its Nationality. Please note:

1. Existing constituents: EBITDA will be tested prospectively over a two-year period for developed/emerging status, starting in March

2012. Therefore, companies could be re-classified from March 2014 at the earliest.

2. Non-constituents, which may become eligible from March 2012, upon introduction of the revised rules, will be included in the

Global Index Series in March 2012. The past two years EBITDA for these companies has already been tested.

3. Red Chips: As per the notice released on March 17, 2011, the ‘Red Chips’ in the FTSE EPRA/NAREIT Global Real Estate Index Series,

which have remained in Hong Kong (Developed) since September 2009, will move to China (Emerging) in March 2012.

The three ‘Red Chip’ stocks which are expected to be reclassified as China as part of the March 2012 Annual review, are:

China Overseas Land & Inv (6192150)

China Resources Land (6193766)

Shenzhen Investment (6535261)

EPRA NEWS / 41 / 2012 37. EPRA NEWS / 41 / 2012 37.

The EPRA Annual Conference The road to Berlin.

September 06-07, 2012.Save the date.

· Real estate analysis

· Current affairs &

sustainability

· Forecasts & networking

· Investment insight

· Economic commentary

The event of the year for European listed real estate. EPRA’s Annual Conference brings together the world’s

largest property companies, analysts, consultants and

global financiers. It’s the primary networking opportunity.

Main

sponsors

Standard sponsors

Lanyard sponsor

38. EPRA NEWS / 41 / 201238. EPRA NEWS / 41 / 2012

FEATURES

BONDED TO LISTED REAL ESTATE

The retreat of commercial

property lenders is a

concern for the real

estate sector as a whole,

under the cloud of global

economic uncertainty. A

number of reports over

the past few months have

stated that lenders will

step back from the ‘extend

and pretend’ strategy of

the last three years and

start calling in loans.

Arguably the listed real

estate sector in Europe is

in relatively good shape

– certainly compared

against many other real

estate vehicles.

As at end January 2012 the listed

sector displays a loan-to-value of

44%, many of the companies/REITs

own and manage prime assets in top

locations. Nevertheless, operating

and delivering returns in the current

climate continues to be challenging.

Property stocks started the year on a

positive note but remain at attractive

(for the investors) discounts to NAV.

Banks already indicated back in

2009 that high level of exposure to

commercial property was a burden,

however at peak of the financial

turmoil loans were extended and

covenant breaches ignored to avoid

write-downs. Subsequently, prop-

erty lenders disposed of property

loans worth EUR 20 billion in 2011,

and this is expected to continue

for the foreseeable future - ahead

of regulatory changes. They have

chosen to off-load large portfolios

as opposed to negotiating against

individual assets to clear prop-

erty exposure from balance sheets.

For example, in the last three

months Eurohypo, Societe Generale

and Clydesdale stated that they have

halted property lending completely.

Despite the pool of bank debt

becoming more shallow, European

listed real estate companies/REITs

have successfully tapped the bonds

and convertibles market. A great

example, is Unibail-Rodamco’s

December 2012 EUR 500 million

3.875% bond issue maturing in 2017

which was thrice oversubscribed.

The bond was issued only three

months after the REIT raised EUR

500 million in September through a

3.5%, five-year bond that was four

times oversubscribed as the order

book hit EUR 2 billion. Foncière des

Régions made headlines earlier in

2011 when its EUR 480 million con-

vertible was increased to EUR 550

million following increased investor

appetite. Derwent London followed

by raising GBP 175 million through a

convertible in the week after.

In total, FTSE EPRA/NAREIT

Europe Index constituents raised

EUR 7.4 billion in the past two years

through bonds issuance. Currently

there are 155 tradable issues valued

at EUR 32 billion1 with an average

duration >20 years. This compares to

EUR 127 billion of outstanding debt

that sits on the balance sheets of the

FTSE EPRA/NAREIT Europe Index

constituents – perhaps this indicates

that there is room for the continued

growth of the bond market. France

and UK listed companies/REITs ac-

count for 75% of the market. (Fig 1)

Rather frustratingly for the

sector, listed real estate company 1 As of February 15, 2012

EPRA NEWS / 41 / 2012 39. EPRA NEWS / 41 / 2012 39.

shares currently trade on average at

20% discounts to NAV. The weighted

average LTV of the FTSE EPRA/

NAREIT Europe Index constituents

is just over 40% with 13% (EUR 11

billion) of total debt set to mature in

the coming 12 months.

The real estate four-quadrants

offer exposure to the asset class

through a variety of investment

vehicles - depending on the specific

requirements, appetite, and man-

date of the investor. (Fig 2) As an

increasing number of long-term real

estate investors incorporate all four

sections under one umbrella, they

are identifying real estate clearly as

a separate investment asset class.

A growing number of institutional

investors have taken up stakes or

formed joint ventures with listed real

estate companies/REITs in recent

years. The ability to ‘look through’

the wrapper and understand the

type of investment exposure at

the asset/building/location level is

becoming more widespread – the

Dutch pension funds having been

doing this for years!

As direct real estate lending will

continue to challenge the market, it

is extremely important that listed

real estate companies/REITs equip

themselves with a range of options

to balance the capital structure of

their firms. Issuing non-dilutive

equity or tapping the corporate

bond market depending on market

conditions, seem obvious choices.

However, it is no surprise that

equity issuance was identified as

the lesser preferred option2 by real

estate companies/REIT given the

resulting dilution especially when

the sector is trading at a discount

to NAV.

Corporate bonds may offer an

attractive alternative source of asset

financing under these conditions.

FTSE EPRA/NAREIT Europe Index

constituents have raised over EUR

60 billion in equal shares of cor-

porate bonds and equities over the

past 11 year (Fig 3). The disposal of

non-core assets is a strategy that a

number of real estate companies/

REITs have adopted.

Regulatory wisdomFinancial regulation is a matter of

concern for the sector where prop-

erty lending and equity investments

are expected to affect in an adverse

manner. Basel III, which regulates

banks lending and capital reserve

requirements is one of the reasons

why new lenders have already

started reducing exposure in the

property sector. The Solvency II

SwissBelgiumSpainItalyNetherlandsGermanySwedenNorwayFinlandAustriaFranceUK

€ 959m € 786m € 2m € 728m € 1,546m € 795m € 181m € 164m € 438m € 820m € 7,322m € 15,936m

Fig 1: France and UK listed companies/REITs account for 75% of the market.

PRIVATE PUBLIC

DEB

TEQ

UIT

Y

Direct Real Estate OwnershipGreater controlLabour intensiveCapital intensiveOwnership of maintenance operationsHigh incomeLiquid

Indirect Real Estate (Private Funds)Direct property characteristicsDiversificationExternal managementLiquidLess direct controlHigher costs

Listed Property CompaniesTransparencyLiquidityDiversification at low costLower management costsHigh income - particularly REITsMed/long proxy for directEasy to benchmarkLack of controlShort term volatility correlation to equities

Listed Debt SecuritiesDiversified exposure easy to achieveLiquidityReasonable transparency (credit agencies)Strong correlation to movements in interest rates

Corporate BondsWide range of credit quality, based on issuers, sector, region, etcUnsecured obligation

CMBSAbility to tailor credit exposure by class/trancheDetailed understanding of securitisation documents req.Market remains closed

Direct & Indirect LendingSecured loansFavourable market conditions (attractive spreads)Ability to tailor credit profile through mix of senior and mezzanine

Direct Lending (Senior & Mezzanine)Greater control than indirectDifficult to achieve diversificationLending platform expensive

Debt Fund InvestingMore cost effective at smaller scaleDiversification easier to achieveLess ability to target and control investments

Fig 2: The real estate Four Quadrants

Source: EPRA, Morgan Stanley

>

2 The EPRA/Cambridge Capital Structure Survey 2010

40. EPRA NEWS / 41 / 201240. EPRA NEWS / 41 / 2012

Directive scheduled to become effec-

tive in 2014, will require insurance

companies to meet more stringent

capital adequacy requirements. On

the one hand it could stimulate di-

rect property lending at the expense

of direct property ownership, which

is positive.

A glimpse of this effect was

observed when insurers competed

with each other to finance a GBP

120 million loan to Unite Group. On

the other hand, Solvency II Capital

Requirements (SCR) on property

stocks under the ‘standard model’

could have an adverse effect – but

this will depend on how the wide

range of indirect property vehicles

are eventually classified under SII

when implemented at a national

level.

Under the SII standard model,

real estate shares require the same

levels of capital reserves as gen-

eral equities, and this may cause

insurance companies to reduce their

investments. Bond investments in

the same companies would require

a lower reserve ratio. Opportunistic

debt funds have naturally been

formed which are looking to acquire

loans.

For example Allianz RE is plan-

ning to lend up to EUR 1 billion to

eurozone property. Olivier Piani,

chief executive officer at Allianz Real

Estate, was quoted: “There are now

more opportunities to lend against

real estate than buy, but we are

not coming to replace the banks.”3

The amount of debt secured against

commercial property in UK alone

is approximately GBP 280 billion4,

with only a small proportion linked

to prime assets.

Long-term bondThe continued development of the

real estate bonds market in Europe

is not only a favourable develop-

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Billion

s

Equity & Rights Issue

Debt Issue

Fig 3: Capital raised by Europe companies

The ability to ‘look through’

the wrapper and understand

the type of investment

exposure at the asset/

building/location level is

becoming more widespread.

0

2.00

4.00

6.00

8.00

10.00

12.00

01-

Jan-0

2

01-

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-02

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3

01-

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01-

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-03

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5

01-

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01-

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-05

01-

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6

01-

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06

01-

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-06

01-

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7

01-

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07

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-07

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8

01-

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9

01-

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0

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-10

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11

01-

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-11

01-

Jan-1

2

WTD AVG BONDs YTM FTSE EPRA NAREIT Dividend Yield

Fig 4: FTSE EPRA/NAREIT

Developed Europe

Dividend and Bond Yield

3 Property Investor Europe – October 06, 2011

4 CBRE Property service Research

EPRA NEWS / 41 / 2012 41. EPRA NEWS / 41 / 2012 41.

475794 Land Securities 2004 5.391%(F/R)03/27 A5 03/11/2004 613,918 4.8598 5.391 0

5608U7 Klepierre 2010 4% 13/04/17 Reg.S 13/04/2010 750,000 4.0112 4 0

6113D6 Unibail-Rodamco 2010 3 7/8%05/11/20 Reg.S 05/11/2010 700,000 3.8611 3.875 0

85109C Land Securities 2007 5.125%(F/R)02/36 S-5 07/02/2007 500,000 4.8338 5.125 0

475792 Land Securities 2004 5.391%(F/R)03/27 S-1 03/11/2004 608,876 4.7136 5.391 0

63901H Klepierre 2006 4 1/4% 16/03/16 Reg.S 16/03/2006 689,100 4.2234 4.25 0

72620U Hammerson 2006 4 7/8% 19/06/15 Reg.S 19/06/2006 700,000 4.6916 4.875 0

3932XL Unibail-Rodamco 2009 4 5/8% 23/09/16 Reg.S 23/09/2009 600,000 4.2884 4.625 0

5575W9 Unibail-Rodamco 2010 3 3/8% 11/03/15 Reg.S 11/03/2010 635,000 3.277 3.375 0

6450JT Fonciere Des Region Cv 3.34% 01/01/17 S 24/05/2011 550,000 3.6722 3.34 0

3812KU Unibail-Rodamco Cv 3 1/2% 01/01/15 29/04/2009 574,996 2.7001 3.5 0

TYPE NAME ISSUE DATE AMOUNT OUTSTANDING INTEREST COUPON S&P CURRENT RATING &

(LOCAL CURRENCY) YIELD OVERLOOK (BOND)

Top ten European corporate bond issues

ment in the short term - going some

way to addressing the banks’ credit

challenge, but also offers long-term

benefits. Comparative analysis

between dividend yields and bond

yields of the FTSE EPRA/NAREIT

Europe index constituents shows a

convergence over the past 12 months

– in the 4-5% range. (Fig 4)

As the bond market develops

further, investors may choose to

add bonds to existing portfolios

to enhance risk/return profiles. In

a recently published5 outlook by

rating agency Fitch, the corporate

bonds market is expected to be the

preferred option for European REITs

in particular.

According to Fitch, European

REITs are well suited to raise capital

in the bonds market on favorable

terms due to the limited leverage

and healthy cash ratios. In addition,

the trend towards a ‘US-Style’ bond

funding is expected to continue as

diversifying debt channels becomes

beneficial.

Ali Zaidi, joined EPRA’s research team in October 2007 as an analyst. His initial projects

were working on the emerging market indices for the FTSE EPRA/ NAREIT Global Real Estate Index and the European corporate governance report. Ali holds a BA in Economics and Business and completed his MSc in International Finance at the University of Amsterdam.

a.zaidi@epra.com

5 2012 Outlook: European REIT- Riders of the Storm

42. EPRA NEWS / 41 / 201242. EPRA NEWS / 41 / 2012

FEATURES

FIRST EPRA SUSTAINABILITY AWARDS

– DON’T MISS THE BOAT!

As with the EPRA Financial BPR

awards, companies will be awarded

Gold, Silver, and Bronze accredita-

tions based on their compliance

with the EPRA sBPR, and the results

will be announced at this year’s

EPRA Annual Conference in Berlin

(September 06-07). The review of

company disclosures will be under-

taken by Jones Lang LaSalle over the

June-August period.

What are the EPRA sBPR?The EPRA sBPR are consistent with

the GRI Construction and Real

Estate Supplement (GRI CRESS)

recommendations and focus on the

key reporting measures on Energy,

Greenhouse Gas Emissions, Water,

and Waste that are relevant to

investment property. They consist

of eight ‘absolute’ performance

measures which measure the total

footprint and three ‘intensity’ meas-

ures which divide the total footprint

by relevant surface area or persons.

Recognition of EPRA’s efforts, and

a further boost for the prospects of

improving the transparency of sus-

tainability reporting for the European

property sector, was given when

INREV (the organisation representing

the European non-listed property

sector) recently published their Sus-

tainability Reporting Recommenda-

tions, based on the EPRA sBPR.

How many companies do we expect to adopt in 2012?Some 25 companies were involved

in the consultation including mem-

bers of the sustainability committee.

Since the launch we have held a

number of individual meetings with

EPRA member companies who have

indicated that they will be adopting.

Based on our consultations and

meetings with companies we expect

anywhere between 35% and 50% of

the EPRA Europe Index companies

to be adopting in 2012. This would

compare favorably with the level of

adoption of the EPRA Financial BPR

in 2008 (41%).

CALL TO ACTION!To facilitate our review please

submit links to your 2011/2012

Sustainability reports and/or

Annual reports to Jones Lang

LaSalle. Please note that only

companies in the EPRA index

Europe (on March 31, 2012) are

eligible for an award.

Email: EPRA-SustainabilityB-PR@eu.jll.com

Following the launch of the EPRA

Sustainability BPR (sBPR) in September

2011, EPRA will be launching the first

EPRA Sustainability reporting awards

in 2012. Based on EPRA’s extensive

consultation with companies both during

the development of the sBPR and after

publication, we are confident that a high

number of companies will be

adopting the EPRA sBPR.

35% Confirmed 13% Expected28% Not known13% Non-EPRA Members

% of EPRA Europe Index

companies expected to adopt sBPR

in 2012

Sponsored by

EPRA NEWS / 41 / 2012 43. EPRA NEWS / 41 / 2012 43.

FEATURES

SUSTAINABILITY STRATEGIES OF EUROPEAN PROPERTY COMPANIES

Let’s be honest, who

doesn’t like investing in

a convincing investment

story? Especially when

it does not provide only

strong economic, but

also strong ecological

and moral arguments.

‘Green’ is now quite

clearly a major trend for

this decade – but with this

style comes substance.

Scarcely a day goes by without the

managers of real estate companies

being confronted with this new phe-

nomenon. And this is something to

be welcomed – especially as there is

a growing awareness that, whatever

happens, we just cannot continue

using raw materials as we have in

the past. But awareness and hope

alone won’t turn you a profit.

The simple question is what

comes after the hope phase has

passed: profit and cash earnings?

Who, if not investors and their

funds managers, can give us mean-

ingful information on this? A lot of

reasonable academic papers have

appeared – and surprise surprise:

green pays. But how much of this

stands up to scrutiny?1 What we

need is a strong dose of realism – in

the context of the overall market

and listed real estate it is solid black

and red numbers that count.

To shed light on this issue, last

autumn IVG Research began a

pan-European survey of 85 listed

property companies that are mem-

bers of EPRA.

European listed property

companies are giving ever greater

consideration to aspects of sustain-

ability. The number of corpora-

tions that employ sustainability

strategies has risen steadily over

recent years. Between 2006 and the

middle of 2011 alone, the number of

property companies that claimed

to have added a sustainability

strategy within their corporate poli-

cies quadrupled. This growth will

continue in future, as will the

significance of sustainability within

that strategy. Afterall, sustainability

means long-term, economic stability

and responsibility – and companies

without a sustainability concept

will increasingly find themselves at

a competitive disadvantage moving

forwards.

Some result of the survey: • This gap between Scandinavian

property companies and Polish

and Southern European coun-

terparts will probably shrink in

coming years as the benefits of

sustainability become evident

across the regions. Furthermore,

market and public require- >

1 IVG Research (2011) The Sustainability Strategies of European Property Companies – An Analysis.Cajias M./Bienert, S. (2011): Does Sustainability Pay Off for European Listed Real Estate Companies? In: Journal of Sustainable Real Estate JoSRE, Vol. 3, Page 45-49.

44. EPRA NEWS / 41 / 201244. EPRA NEWS / 41 / 2012

ments will increase, heightening

the pressure on these companies.

• Companies mainly cited reduc-

tion of economic risk as the goal

of their sustainability efforts.

Improving their image and rais-

ing productivity were mentioned

relatively frequently.

• All companies asked stated that

they had noticed an increased

interest in sustainability by their

stakeholders. Some 90% of

companies investors are interested

in a sustainability concept. Almost

65% of companies surveyed

noticed demand on the part of

tenants.

• In order to better react to this

upsurge in awareness, more com-

panies are creating sustainability

departments. In around 22% of

companies asked, a separate

corporate sustainability (CS) de-

partment has already been set up.

However, there are also substantial

regional differences in this respect.

• The number of certified proper-

ties is also continuing to rise. In

particular, the companies asked

regularly use the UK BREEAM

certificate. We anticipate better

comparability of the various green

accreditations.

• More than half of the companies

asked either publish a separate

CS report to communicate their

sustainability activities or cover

the subject in their Annual Report.

Western European and Scandina-

vian property companies are most

likely to publish such information.

• In addition to their print materi-

als, 60% of European property

companies publish sustainability

data on their website. Here, Cen-

tral European and Scandinavian

companies lead the field.

• To date, around a third of the

companies asked have set up a

CS fund. Most that have not yet

established such a fund do not

intend to as this is not part of their

business model.

• 53% of companies asked indicated

that they aim for green leases in

the next 24 months.

Sharp increase in green property investmentBased on the survey and website

assessment, there have been four

phases to date in the development

of the introduction of sustainable

business activities in the property

industry.

The analysis begins with the

initial phase, which saw a more

pronounced increase around

2001/2002. Among other things, this

was based on the great political

and social interest in the subject of

sustainability. The repercussions of

global warming and climate change

were well known to the public at

large. Political reactions included the

Kyoto Protocol to reduce greenhouse

gas emissions and an EU Green Pa-

per2. Certification became possible

in the property sector for the first

time, but generally, sustainability

remained relatively unpopular in

the property industry.

There then followed a coordina-

tion phase between 2003 and 2006.

Only a handful of companies intro-

duced new CS strategies during this

period. These years were dominated

by different regional economic trends

in Europe. The property boom in the

south of Europe side-stepped sus-

tainability, meanwhile the German

economy was in crisis. Companies

focused on survival economics and

therefore most did not implement a

green thinking.

There has been steady growth in

interest in CS activities since 2007.

The Lisbon Treaty of 2007 brought

climate change and energy solidar-

ity under the purview of the EU. The

considerable emissions attributed

2 http://europa.eu/documentation/official-

docs/green-papers/

“Green buildings affect the performance of the

property company that owns them.

They perform better, they have lower risk and

a higher net cash flow.” (www.fsinsight.org)

Piet Eichholtz, Professor of Real Estate Finance, Maastricht University.

EPRA NEWS / 41 / 2012 45. EPRA NEWS / 41 / 2012 45.

to buildings drew tighter regulation

and requirements from the property

industry. These regulations formed

the basis for building construction

and renovation. The ordinances

were therefore one reason for the

re-emergence of the sustainabil-

ity concept in 2007. In addition, the

2008 economic crisis triggered a

rethink within the property sector as

companies sought to overhaul their

processes and structures.

Sustainability was seen as a

possible solution that could bring

long-term gain, and of course add

a shine to the corporate image. So

ironically, the economic crisis was

therefore a key push factor for the

uptake in corporate sustainability

activities within the industry. The

momentum of recent years should

see CS measures becoming common

practice for most companies.

Almost 70% of property companies have a sustainability strategyThe trend towards sustainability has

taken root in the property industry.

70% of the companies asked already

reported CS activities. However,

there are significant regional differ-

ences that have been highlighted by

our research. Scandinavia is a clear

front-runner in sustainability mat-

ters. There, some 90% of companies

have already integrated a sustain-

ability strategy into their processes.

Western European companies are

also well above the European aver-

age at 79%. Central Europe and the

UK are slightly below average. Last

comes Southern Europe, where only

40% of companies have integrated

sustainability into their company

processes. From the two companies

covered in Poland, one has imple-

mented a sustainability strategy.

Notable investor interest in sustainable ROIIn our survey, all companies indi-

cated that they had seen increased

demand for sustainability from their

stakeholders – particularly investors

and tenants. More than 90% of

companies noted strong demand

from their investors. They expect

that investments in buildings will

generate profits for their interest in

sustainable business.

Energy-efficient buildings and/

or certified properties also tend to

command higher prices on the mar-

ket in our experience (based on a

two years analysis of transactions in

Germany.) Redevelopment and retro-

fitting costs are factors weighing on

valuations as emission regulations

evolve. According to the survey

last autumn showed that most

investors expect that the value of

conventional buildings will decline

in future. Investors’ reinvigorated

interest in sustainable buildings is

therefore understandable.

CO2 reduction and certification in particular planned for next 24 monthsMost companies surveyed are

anticipating more standardisation

e.g. in the appraisal systems or

certification process for refurbished

buildings over the next two years.

Many companies currently operat-

ing without a sustainability plan

claim they would adapt sustainable

development to keep market share.

Here we notice a key trend. Some

70% of those asked stated that they

would attempt to obtain certification

for their properties. In future, green

buildings could become the market

standard for internationally investi-

ble properties over the next 24

months. There is the possibility that

the value of conventional, uncerti-

fied properties will diminish. This

development is prompting many

companies to have their properties

certified in order to stabilise their

value.

Energy saving, portfolio-screening or wait-and-see60% of the companies are planning

to carry out portfolio-screening over

the next five years; ie, assessing

their properties for sustainability

aspects. Building on this, they can

derive specific measures to enhance

the sustainability of their property

portfolios. Such screenings allow

for targeted sustainability planning

on the one hand while increasing

a portfolio’s transparency on the

other. At the same time, the rise in

portfolio-screening reinforces the

trend towards sustainable build-

ings. This important measurement

is the base to identify the leverage

to decrease of CO2 emission in

the portfolio – in other words: to

identify the “good” (no investment

needed) from the “bad” properties

(more or less heavy costs expected

in the case to transfer it into

Sustainability means long-term, economic

stability and responsibility – and companies

without a sustainability concept will increasingly

find themselves at a competitive disadvantage

moving forwards.

>

46. EPRA NEWS / 41 / 201246. EPRA NEWS / 41 / 2012

a green property). Indeed many of

the property companies questioned

indicated an objective to specifically

acquire buildings that are already

certified over the next five years.

Again, this would reinforce the

value differential of sustainable

properties.

Perhaps unsurprisingly, one

green strategy was no strategy. There

was a ‘wait and see’ approach taken

by 35% of those surveyed. Some

objected to the opaqueness of sus-

tainability reporting and preferred to

wait for more reliable trends. These

companies are concerned that the

sustainability measures to date are

not yet fully mature.

So watch out for the rise of

the ‘Green officer’ or the ‘Head of

sustainability’ among international

companies. Green is now very much

in vogue and I strongly believe that

the idea of sustainability will be

one of the mega-trends for the listed

sector globally. Soon an indispensa-

ble component to any investment

decision.

Enhancing propErty assEts through partnErship, innovation and ExpErtisE Key player in the office real estate market, Foncière des Régions now owns and manages an €8.6 billion portfolio. Foncière des Régions works alongside leading companies and stakeholders to design innovative, sustainable real-estate solutions with a dual objective: to enhance the quality of its portfolio and conceive tomorrow’s real estate. Through its established expertise and human resources, Foncière des Régions has succeeded in cultivating partnerships with major companies from France and around the world, including France Télécom, Thalès, EDF, Accor, Dassault Systèmes, Suez Environnement, IBM and Eiffage.

www.foncieredesregions.fr

Eiffage Construction head office

Siège Cisco

vision partnErship

ExpErtisE

Rouget de l’Isle

Cisco head office

Fonciere PArTenAire

Fonciere des regions

des

ign

– pr

oduc

tion

. 1

0649

– P

hoto

cre

dits

: o

. oua

dah,

c. d

ubre

uil.

10649_FDR_AP_A5.indd 2 19/07/11 17:48

“The rise in portfolio-

screening reinforces

the trend towards

sustainable buildings.”

Dr. Thomas BeyerleBeyerle is managing director and head of CS &

Research at IVG Immobilien AG, Bonn. From 2002 he was director and head of the Allianz Global Investors Division Research & Consulting and Press Management at the DEGI Deutsche Gesellschaft für Immobilienfonds mbH, Frankfurt, and from 2008 he was working as head of global research at Aberdeen Property Investors.

thomas.beyerle@ivg.de

€8.6billion portfolio

Each REIT regime is unique. The latest survey updates all the regulatory changes which have occurred this year - across 34 countries.

This, the eleventh REIT Survey, covers 34 countries. It is a hugely collaborative effort - with major contributions from Deloitte, PWC, Ernst & Young, KPMG, Baker & McKenzie, Loyens & Loeff, together with data from Macquarie Global Property Security Analytics. Global REITs are still developing despite recent market turmoil. We’ve seen the major REIT regimes withstand these recent traumas and remain popular with investors and governments around the globe. This is evident from the ability of many REIT regimes to raise capital and the attention paid by the authorities to the continued development of existing regimes.

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About EPRA

EPRA’s mission is to promote, develop and represent the European public real estate

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48. EPRA NEWS / 41 / 201248. EPRA NEWS / 41 / 2012

FEATURES

REAL ESTATE OR EQUITIES - AN INTERNATIONAL ANALYSIS

We commissioned the

University of Regensburg

to update its study on the

behaviour of listed real

estate companies versus

the underlying property

market back in 2009.

The original research

was well received and

added to the growing

library of research and

analysis to bolster the

case that a medium to

long-term listed real estate

investment provides direct

real estate returns. This

updated study strengthens

the case further.

The updated study builds on the

previous analysis and examines

whether listed real estate indices in

a broader sample of 13 economies

are predominantly driven by the

underlying property markets or

by performance of general stock

markets. The economies covered

by the research were: Australia,

Belgium, Denmark, Finland, France,

Hong Kong, Norway, Spain, Sweden,

Switzerland, The Netherlands, UK

and US.

Using advanced statistical tech-

niques, Regensburg generally found

a stronger linkage to underlying real

estate assets compared against eq-

uity stock markets. In the majority

of cases, the listed real estate mar-

kets are predominantly driven by

the performance of the underlying

buildings, which can be interpreted

as the key driver of listed real estate

in the medium to long run.

Investors are faced with a wide

range of products and vehicles to

gain real estate exposure. In addi-

tion to conventional investment in

direct commercial and residential

real estate, investors have options

to invest in a number of alternative

real estate vehicles such as closed

and open-end funds, listed real

estate companies and REITs, or

real estate private equity. Given the

fundamental relationship between

listed real estate and the underlying

real estate market coupled with

the vehicles trading ‘wrapper’ on

the stock market, in this project,

Regensburg examined the true per-

formance nature of listed real estate.

A consequence of a stock

exchange listing is the fact that

additional drivers – over and above

the performance of the underlying

property markets – can affect the

performance and the risk/return

structure of listed real estate to a

significant extent. Subsequently,

listed real estate performance is also

influenced by current economic and

market news, analyst expectations

and valuations which results in

short-term share prices being influ-

enced by general stock market risk.

With this in mind, as share prices

are a function of market supply and

demand, they may suffer from ir-

rational trading behaviour on stock

markets; for example, over and

under-shooting in phases of boom

and bust; or “herding behaviour”

from investors. As a result, listed

real estate companies face the risk

that market values are driven by

developments on general stock mar-

kets in the short-term, despite the

EPRA NEWS / 41 / 2012 49. EPRA NEWS / 41 / 2012 49.

fact that the fundamental business

of listed real estate companies is the

trading and management of income

producing real estate.

For this reason, it is valuable to

analyse whether listed real estate

securities can be characterised as

underlying real estate investments

and whether their distinctive

features, as an alternative invest-

ment, remain intact despite stock

market ‘noise’. For the purposes

of this research, Regensburg used

a co-integration framework and

the Johansen (1988) procedure. In

order to achieve convincing results

Regensburg conducted further

analyses.

The regulation affectWith respect to regulation, disclo-

sure and accounting standards,

we still find significant differences

across international real estate

markets. As these country-specific

distinctions can impact results,

reduce comparability and ultimately

affect our conclusions, the use of

a reliable and consistent data set

is of primary importance for the

purposes of the examination.

Our dataset includes 13 of the

most important developed econo-

mies listed earlier. On average,

real estate markets in those regions

and countries are relatively more

transparent compared against others

in the world. Furthermore, they are

also more actively traded, are more

mature, and offer higher levels of

liquidity. For the purpose of this

research, those real estate markets

offer reliable data and indices that

are representative of both direct

and indirect real estate investment

markets. This is a pre-requisite

when using our approach to analyse

the characteristics of real estate

securities.

Data & General Process • FTSE EPRA/NAREIT Global Real

Estate Index

• Bank of International settlement

property price index

• Individual country equity blue

chip indices

For the purposes of this examina-

tion, Regensburg analysed the real

estate markets in the 13 developed

economies from the beginning of

1990. At the end of 2011, the market

capitalisation for listed real estate in

the 13 economies covered approxi-

mately 90% of global real estate

investment.

Regensburg first tested the

unknown structural break in each

market using the unknown break-

point test based on a dynamic

multi-variate model. The majority

structural breaks appear between

the end of 2007 and the beginning

of 2008.

It combines time series ana-

lytical procedures with the concept

of economic equilibrium, and

facilitates the analysis of long-term

equilibrium relationships between

non-stationary variables. The

co-integration analysis is based

on the observation that economic

variables often display common

trend behaviour. This implies that

linear combinations of these vari-

ables converge towards a common

equilibrium in the long term, even

though individual time series fluctu-

ate over time.

The ResultsPrior to analysing the features

of listed real estate, Regensburg

evaluated the implemented model

framework with respect to econo-

metric requirements and economic

plausibility. Despite some of the

drawbacks of vector error correc-

tion models, namely sensitivity,

both implemented models meet the

econometric requirements which

were defined prior to the estimation.

As a result, the VECM framework,

including the implemented model

specifications, were adopted for ex-

amining and evaluating the features

of listed real estate.

Based on the co-integration test

results, Regensburg found that seven

markets have one co-integration

relationship: Australia, Belgium,

Denmark, France, the Netherlands,

Switzerland and UK. The

Regensburg explored the question whether listed

real estate can be classified as an underlying

real estate investment, or whether international

general stock market trends serve as the

predominant driver of performance.

>

50. EPRA NEWS / 41 / 201250. EPRA NEWS / 41 / 2012

The long-term synchronicity between real estate

securities and direct real estate implies that the primary

characteristics of real estate investment persist despite the

influences of the general stock market movements.

Steffen Sebastian, Chair of Real Estate Finance, IREBS Interna-tional Real Estate Business School - University of Regensburgsteffen.sebastian@irebs.de

Steffen Sebastian is Professor of Real Estate Finance at the IRE|BS International Real Estate Business School and director at the Center for Finance University of Regensburg, Germany. He is also a research associate of the Centre for European Economic Research (ZEW), Mannheim. His research focuses are, among indirect real estate investments, real estate indices, real estate derivatives and asset allocation. He has contributed to a number of academic journals and is a member of the editorial board of European Journal of Real Estate Research and the German Journal of Property Research

cointegation matrix in the other six

markets has a rank of two, indicating

two cointegeration relationships.

In each model with co-integration

matrix, the first vector is normalised

to the listed real estate performance,

and the second is normalised to

general stock market performance.

Using a vector error correc-

tion framework and variance

decompositions, Regensburg found

a significantly stronger relationship

among real estate assets (underlying

and listed real estate) compared

against the relationship with general

equities. In 11 out of the 13 econo-

mies, the listed real estate markets

are predominantly driven by the

performance of the underlying prop-

erties in terms of medium to long-

term equilibrium. In the other two

markets (Australia and Norway), the

corresponding general stock market

and underlying property market

play relatively equal roles.

Additionally, we also identify six

significant long-run relationships

between housing price performance

and general stock market perform-

ance. The results using variance

decomposition substantiate our

conclusions. In nine out of the 13

countries, a larger proportion of the

performance of the listed real estate

securities indices is explained by

underlying property performance.

In order to analyse the dynamic

relationships amongst the selected

macroeconomic variables, the

underlying property, and listed real

estate indices, the study applies

the co-integration concept to vector

autoregressive (VAR) models using

the vector error correction (VEC)

framework according to Johansen

(1988).

The long-term synchronicity be-

tween listed real estate and underly-

ing direct real estate implies that

the primary characteristics of real

estate investment persist despite

the influences of the general stock

market movements in the short

term. Ultimately, the development

of the underlying real estate markets

remained the key driver of the per-

formance of listed real estate for the

examined sample. As a result, com-

bined with the benefits of liquidity,

dividends payout/yield, quality of

assets, transparency and manage-

ment teams, a medium to long-term

investment in listed real estate offer

investors the opportunity to com-

bine the attractions of both direct

and listed real estate. The ability

to blend both direct and listed real

estate provides remarkable potential

for diversify ing the investor´s

portfolio whether national, regional

or global.

Answering this question is of

particular importance with respect

to issues of asset allocation in a

multi-asset portfolio – for a broad

range of institutional investors. If

listed real estate were found to be

predominantly driven by perform-

ance of general stock markets,

the benefits of listed real estate

investment - in terms of portfolio

diversification - would be limited. By

implication, the intended risk/return

structure of an investor´s portfolio

would be significantly distorted

because the inclusion of listed real

estate would involuntarily increase

the proportion of investments that

are subject to general stock market

risk. Consequently, this case would

finally result in a portfolio allocation

which is more risky than desired.

However, these research findings

counteract this scenario.

To sum up, our study provides

strong evidence that medium to

long-term investments in listed real

estate fulfil their function as an

‘alternative investment’. For that

reason, we assume lower correla-

EPRA NEWS / 41 / 2012 51. EPRA NEWS / 41 / 2012 51.

Main

sponsors

Standard sponsors

Lanyard sponsor

tions to conventional assets and a

more defensive risk/return structure

compared to investments in general

stock markets. Subsequently, we

conclude that medium to long-term

investments in listed real estate

not only provide opportunities for

portfolio diversification, but in addi-

tion provide the ability to combine

the attractions of both real estate

assets – direct and indirect, includ-

ing benefits in terms of liquidity,

transparency, dividend income and

management.

The event of the year for European listed real estate. EPRA’s Annual Conference brings together the world’s

largest property companies, analysts, consultants and

global financiers.

The listed property sector - at the forefront of a quality and sustainable built environment.EPRA Annual Conference, September 06-07, 2012.

13 economies =>90% assets coverage

Real Estate or Equities?

Statistical modelling (VECM procedures etc.)

Listed real esate predominantly driven by underlying real estate markets.

52. EPRA NEWS / 41 / 2012

REFERENCES

MEMBERS OFFERSEPRA association membership not only offers anyone in the member organisation full access to the EPRA website/archive, regular research, economic, regulatory and index statistics updates; but much more.

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EPRA members can enjoy a 20% discount,

paying only EUR 395 per year. Mail your

contact details to: subscribe@propertyeu.

info indicating your EPRA membership number.

The Property Investor Europe mission is to

bring transparency to Mainland Europe real

estate for US & global investment professionals.

Via a magazine, Online Weekly, HTML Letter,

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EuroProperty is the leading commercial prop-

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EPRA NEWS / 41 / 2012 53. EPRA NEWS / 41 / 2012 53.

TAPPING A WEALTH OF DATA

Following the launch of

the new EPRA website

in the autumn of 2011,

EPRA has embarked upon

an ambitious project in

2012 to restructure the

underlying database

and datasets to provide

members with a more

flexible and customisable

experience.

Over the years, EPRA has amassed

and developed a vast range of

statistics covering every aspect of

the listed universe. This cavernous

amount of statistics of companies

and performance - much dating

back 20 years - will soon be acces-

sible, blendable and downloadable!

We are calling the project ‘My EPRA’

because the project will deliver an

end user with an experience that

is unique to them, based upon on

their individual data requirements.

The work will involve considerable

background rebuilding of the data

tables and how they interact with

each other and the website; how-

ever, the real benefits will be seen

in the way users can interact and

receive data from the website.

The aim of the project is multi

faceted, though the key benefits for

users will be:

• personalised settings so each user

can create their own custom and

tailored reports

• clearer and simplified user inter-

faces for accessing key information

such as index values or reports

• more varied data sets, company-

asset information and diary events

• broader datasets to include global

reporting

The improvements will be rolled

out in phases during 2012.

Personalised reportsThe central theme of the project is

to give members more control and

flexibility over what, how and when

they receive EPRA reports. So users

will be able to select which reports

they receive, how often they receive

them and in what format. In addi-

tion, users will be able to customise

the reports; so for example if a user

wants a NAV report every week for

a specific sector they will be able to

set their preferences accordingly and

then receive the pdf or excel report

every week.

Users will also be able to update

their own contact details.

We will start the roll-out of the

customisable reports based on the

most popularly downloaded reports

and build future reports based on

user demand.

Clearer user InterfacesWe recognise that the current user

interfaces to obtain stock and index

data can be cumbersome and lacks

a usable search facility. We intend

to alter the interface by displaying

the top 20 indices and stocks by

most frequent downloads (based on

the previous month’s downloads)

with 20 year to YTD total returns

displayed as a default.

There will be one-button clicks

to alter the currency, price type,

data type and one click to compare

these values to other indices

or stocks; comparisons will be

automatically added to the graph

and download data by default. In

addition, we are creating a search

function so that users can search for

an index or stock by name, re- >

54. EPRA NEWS / 41 / 201254. EPRA NEWS / 41 / 2012

gion, and country and then compare

to others and download the charts

and raw data.

Most excitingly, we are creating

the ability for users to save their pre-

ferred indices or stocks so that when

a user returns to the site and logs in,

their favourite indices and stocks

will be displayed to them rather than

the default top 20.

Barney Coleman started his career as a General practice Surveyor training and practising in the Central London commercial property market in the 1990’s. More recently his career has been

property data-related, working on projects including the roll-out of energy performance certificates in the UK and as Chief Operating Officer in a Joint Venture Company with HomeTrack.

barney.coleman@epra.com

The interface will be colour-coded

and intuitive, making it easier to nav-

igate and select the correct feature.

Company and asset information We are rebuilding the members and

company section of the website so

that each company will have its

own page displaying headline data.

These pages will include such in-

formation as company description,

Board membership, headline index

and stock data, headline NAV and

discount data with graphs, analyst

coverage, Annual Reports and

agenda, and corporate actions.

Importantly, some of this data

will be updatable and customisable

by the member companies, and

where possible will link to external

sources for users who want greater

detail, such as the company’s own

website or videos.

The analyst coverage data will

provide, for the first time, an online

and up-to-date list of which analysts

cover what companies. It will be

searchable, and for the first time

clearly demonstrate transparency in

action as listed companies are con-

nected to those who scrutinise their

performance.

We also intend to provide details

of headline assets owned by a com-

pany with links to maps and key

transactional data, again with links

to external sources for more detailed

information.

Finally, this section will link to a

new diary system presenting events

drawn from across the entire web-

site; so dates for company events,

EPRA events and user-generated

events will appear throughout the

diary system. Also company-specific

events will be filtered to appear in

the company’s new page.

Global ReportingMany EPRA reports are provided on

a European or regional level; part of

the ‘My EPRA’ project will enable

us to increase the footprint of these

reports to a global scale where ap-

propriate. Again the reports will be

customisable for individual users so

that one user may wish to download

a full global NAV report whereas

another user may prefer just a

European or even country-specific

NAV report.

Of course some users may not

wish to customise and simply

receive the default reports as they

do now.

In conclusion, we believe the

changes to the website and database

will enhance the members experi-

ence in retrieving the data that is

most apposite to their needs, as well

making simple data requests and

downloads more intuitive. It will

enable users to receive the data they

want, in the format they want and

at the time they want. So bookmark

the site, as you will likely have

plenty more reasons to return in the

near future.

We are rebuilding the members and company

section of the website so that each company will

have its own page displaying headline data.

EPRA NEWS / 32 / 2010 _ 55. EPRA NEWS / 41 / 2012 55.

The following pages

show the analyst

coverage list of the FTSE

EPRA/NAREIT Europe

Index constituents as it

currently stands. Please

note that stocks can

be added or deleted

to coverage lists and

subsequently this table,

in its current form,

has a limited shelf-life.

However, we encourage

banks to update us

directly with their

coverage list, enabling

EPRA publish an

accurate list on:

www.epra.com

OverviewThroughout the year, we obtain

coverage lists from the major

banks and research firms

active in the sector directly and

search on various data vendors

and company websites for

analyst coverage of individual

companies. In addition, we

also contact company investor

relations departments directly –

response tends to be very good

and supportive. The following

pages aim to provide an update

of this survey.

Since last year’s edition, Dutch

bank Kempen & Co retains the

lead among the major investment

banks, in terms of number of

companies covered: 53. Goldman

Sachs, JPMorgan and Bank of

America Merrill Lynch come in

at second place with around 35

property companies under cover-

age. However, it is the independ-

ent research firm EVA Dimensions

that ranks first, with a coverage of

69 companies.

Currently, of the 83 European

real estate companies that are in-

cluded in the FTSE EPRA/NAREIT

Developed Europe Index, three

companies are not being tracked

by an analyst: UK Commercial

Property Trust, Invista Foundation

Property Trust and IRP Property

Investments. All three companies

are UK-based. This is a slight

deterioration over last year, when

only one out of 83 constituents

was not covered. In terms of

market capitalisation, this means

that currently 99.36% of the index

is covered, as compared to 99.82%

last year.

ConclusionWe have seen steady demand

for the analyst coverage data

since the analyst coverage matrix

was published 12 months ago.

Subsequently, we have updated

the list and plan to maintain a

‘live’ service on the new version

of www.epra.com to be rolled

out over the coming months

(see the preceding page for more

information).

We encourage banks and the

companies themselves to update

us on a regular basis to ensure our

overview is accurate – whether or

not they are index constituents or

EPRA members.

Laurens te Beek holds a BA in Business Economics and

a MSc in Economics from University of Amsterdam.

He started his career at Euronext Indices BV where

he gained extensive knowledge of the FTSE EPRA/

NAREIT Global Real Estate Index. He then worked as

an International Analyst at European Investors Inc.

In May 2006 Laurens joined EPRA.

ltb@epra.com

+32 (0)2739 1011

ANALYST ROUND-UPARE YOU COVERED?

Call-to-action: • Companies: who covers you?

• Banks: who do you cover?

Please update us regularly on:

ltb@epra.com

56. _ EPRA NEWS / 32 / 201056. EPRA NEWS / 41 / 2012

REFERENCES

ANALYST COVERAGE TABLE

Company CountryFull Mkt Cap

(EURm) % F

ree

Floa

t W

eigh

t

EVA

Dim

ensi

ons

Kem

pen

Ban

k of

Am

eric

a M

erri

ll L

ynch

Gol

dm

an S

ach

s

JPM

orga

n

UBS

Deu

tsch

e B

ank

AB

N A

MRO

Mor

gan

Sta

nley

Exan

e B

NP

Pari

bas

Roya

l B

ank

of S

cotl

and

Soci

été

Gén

éral

e

Peel

Hu

nt

Gre

en S

tree

t A

dvis

ors

Bar

clay

s C

apit

al

Edge

Cap

ital

Mar

kets

ING

Ori

el S

ecu

riti

es

Cré

dit

Suis

se

HSB

C

Pete

rcam

Ber

enber

g Ban

k

CA

Che

uvre

ux

Alp

haV

alue

Espi

ritu

San

to

Rab

o Se

curi

ties

Silv

ia Q

uan

dt

Baa

der

Ban

k

Jeff

erie

s

Pan

mu

re G

ordo

n

Nor

dea

Equ

ity

Han

dels

ban

ken

Swed

ban

k

Nat

ixis

AB

G S

und

al C

olli

er

Dn

BN

OR

Mar

kets

SEB

En

skil

da

Inve

stec

Lib

eru

m C

apit

al

DZ

Ban

k

Ban

khau

s La

mp

e

Dan

ske

Mar

kets

Car

negi

e

Pare

to S

ecu

riti

es

Trad

itio

n S

ecu

riti

es

Evli

Ban

k

Kepl

er C

apit

al

M.M

. War

bu

rg

Com

mer

zban

k

Clos

e B

roth

ers

Wes

tLB

Eq

uit

y

Day

by

Day

Keij

ser

Secu

riti

es

Ban

k D

egro

of

Seym

our

Pier

ce

Y Y Y Y Y Y Y Y Y YUnibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YLand Securities Group UK 6,342.38 7.15% Y Y Y Y Y Y Y Y Y Y Y Y Y YBritish Land Co UK 5,036.38 5.68% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHammerson UK 3,340.87 3.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCorio Netherlands 3,284.67 3.70% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YPSP Swiss Property Switzerland 2,953.41 3.33% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCapital Shopping Centres Group UK 2,611.74 2.95% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSwiss Prime Site Switzerland 2,393.26 2.70% Y Y Y Y Y Y Y Y Y Y Y YKlepierre France 2,232.16 2.52% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDerwent London UK 2,060.72 2.32% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSegro UK 2,049.45 2.31% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCastellum Sweden 1,700.12 1.92% Y Y Y Y Y Y Y Y Y Y Y Y YCapital & Counties Properties UK 1,568.53 1.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFonciere Des Regions France 1,512.91 1.71% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YShaftesbury UK 1,483.12 1.67% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGecina France 1,399.83 1.58% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIcade France 1,363.33 1.54% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche EuroShop Germany 1,334.16 1.50% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGreat Portland Estates UK 1,299.55 1.47% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHufvudstaden A Sweden 1,292.19 1.46% Y Y Y Y Y Y Y YCofinimmo Belgium 1,263.43 1.42% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YMercialys France 1,234.00 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWereldhave Netherlands 1,232.70 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFabege Sweden 1,151.17 1.30% Y Y Y Y Y Y Y Y YMobimo Switzerland 1,111.19 1.25% Y Y Y Y Y Y YEurocommercial Properties Netherlands 1,098.32 1.24% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche Wohnen AG Germany 1,046.02 1.18% Y Y Y Y Y Y Y Y Y Y Y Y Y YSilic France 1,022.32 1.15% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGSW Immobilien AG Germany 961.66 1.08% Y Y Y Y Y Y Y Y Y YWallenstam AB Sweden 925.76 1.04% Y Y Y Y Y Y Y Y Y YSponda Finland 908.67 1.02% Y Y Y Y Y Y YBefimmo Belgium 853.95 0.96% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWihlborgs Fastigheter Sweden 807.22 0.91% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKungsleden Sweden 802.09 0.90% Y Y Y Y Y YAllreal Hld N Switzerland 797.78 0.90% Y Y Y Y YLondon & Stamford Property UK 737.50 0.83% Y Y Y Y Y Y Y YCa Immobilien Austria 700.12 0.79% Y Y Y Y Y Y Y Y YConwert Immobilien Invest Austria 671.76 0.76% Y Y Y Y Y Y Y Y Y YVastned Retail Netherlands 648.81 0.73% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YAlstria Office Germany 638.53 0.72% Y Y Y Y Y Y Y Y Y Y Y YF&C Commercial Property Trust UK 626.37 0.71% Y Y Y Y Y Y Y Y YNorwegian Property ASA Norway 584.75 0.66% Y Y Y Y Y Y YHansteen Holdings UK 561.89 0.63% Y Y Y Y Y Y YNieuwe Steen Inv Netherlands 559.24 0.63% Y Y Y Y Y Y Y Y Y Y Y Y YCitycon Finland 535.48 0.60% Y Y Y Y Y Y Y Y Y Y Y Y YTAG Immobilien AG Germany 467.78 0.53% Y Y Y YBig Yellow Group UK 451.70 0.51% Y Y Y Y Y Y Y Y Y YBeni Stabili Italy 407.19 0.46% Y Y Y Y Y Y Y Y Y Y Y Y Y YWorkspace Group UK 390.06 0.44% Y Y Y Y Y YGrainger UK 387.87 0.44% Y Y Y Y Y YWarehouses De Pauw Belgium 380.80 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGagfah Germany 377.37 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKlovern AB Sweden 373.00 0.42% Y Y YUnite Group UK 362.02 0.41% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIvg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y YUK Commercial Property Trust UK 316.58 0.36%St.Modwen Properties UK 293.91 0.33% Y Y Y YHelical Bar UK 271.92 0.31% Y Y Y Y Y Y YSafestore Holdings UK 269.42 0.30% Y Y Y Y Y YPrimary Health Prop. UK 266.69 0.30% Y YQuintain Estates and Development UK 265.39 0.30% Y Y Y Y Y Y Y

Technopolis Finland 254.17 0.29% Y YDevelopment Securities UK 240.77 0.27% Y Y Y Y Y Y Y Y Y Y Y YDIC Asset AG Germany 233.89 0.26% Y Y Y Y Y Y YSociete de la Tour Eiffel France 229.45 0.26% Y Y Y YPicton Property Income UK 177.63 0.20% YCLS Holdings UK 169.56 0.19% Y YDaejan Hdg UK 168.31 0.19% Y Y Y YPrime Office REIT-AG Germany 166.73 0.19% YInvista Foundation Property Trust UK 149.63 0.17%Wereldhave Belgium Belgium 147.14 0.17% Y Y Y Y YIntervest Offices & Warehouses Belgium 138.83 0.16% Y Y Y Y Y Y Y YPatrizia Immobilien Germany 109.34 0.12% Y Y Y YLeasinvest Belgium 104.65 0.12% Y YIRP Property Investments UK 101.14 0.11%Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y Y Y Y

Standard Life Inv Prop Inc Trust UK 100.21 0.11%Mucklow (A.& J.)Group UK 99.88 0.11% Y Y YZueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y Y YColonia Real Estate Germany 77.22 0.09%Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y

Inmobiliaria Colonial S.A. Spain 64.36 0.07% YAffine France 61.98 0.07% Y Y Y Y Y Y

Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 16 15 15 15 14 12 12 12 11 10 10 10 10 9 9 9 9 8 8 8 8 8 8 7 7 7 7 6 6 6 5 5 5 5

EPRA NEWS / 32 / 2010 _ 57. EPRA NEWS / 41 / 2012 57.

ANALYST COVERAGE TABLE

Company CountryFull Mkt Cap

(EURm) % F

ree

Floa

t W

eigh

t

EVA

Dim

ensi

ons

Kem

pen

Ban

k of

Am

eric

a M

erri

ll L

ynch

Gol

dm

an S

ach

s

JPM

orga

n

UBS

Deu

tsch

e B

ank

AB

N A

MRO

Mor

gan

Sta

nley

Exan

e B

NP

Pari

bas

Roya

l B

ank

of S

cotl

and

Soci

été

Gén

éral

e

Peel

Hu

nt

Gre

en S

tree

t A

dvis

ors

Bar

clay

s C

apit

al

Edge

Cap

ital

Mar

kets

ING

Ori

el S

ecu

riti

es

Cré

dit

Suis

se

HSB

C

Pete

rcam

Ber

enber

g Ban

k

CA

Che

uvre

ux

Alp

haV

alue

Espi

ritu

San

to

Rab

o Se

curi

ties

Silv

ia Q

uan

dt

Baa

der

Ban

k

Jeff

erie

s

Pan

mu

re G

ordo

n

Nor

dea

Equ

ity

Han

dels

ban

ken

Swed

ban

k

Nat

ixis

AB

G S

und

al C

olli

er

Dn

BN

OR

Mar

kets

SEB

En

skil

da

Inve

stec

Lib

eru

m C

apit

al

DZ

Ban

k

Ban

khau

s La

mp

e

Dan

ske

Mar

kets

Car

negi

e

Pare

to S

ecu

riti

es

Trad

itio

n S

ecu

riti

es

Evli

Ban

k

Kepl

er C

apit

al

M.M

. War

bu

rg

Com

mer

zban

k

Clos

e B

roth

ers

Wes

tLB

Eq

uit

y

Day

by

Day

Keij

ser

Secu

riti

es

Ban

k D

egro

of

Seym

our

Pier

ce

Y Y Y Y Y Y Y Y Y YUnibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YLand Securities Group UK 6,342.38 7.15% Y Y Y Y Y Y Y Y Y Y Y Y Y YBritish Land Co UK 5,036.38 5.68% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHammerson UK 3,340.87 3.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCorio Netherlands 3,284.67 3.70% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YPSP Swiss Property Switzerland 2,953.41 3.33% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCapital Shopping Centres Group UK 2,611.74 2.95% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSwiss Prime Site Switzerland 2,393.26 2.70% Y Y Y Y Y Y Y Y Y Y Y YKlepierre France 2,232.16 2.52% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDerwent London UK 2,060.72 2.32% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YSegro UK 2,049.45 2.31% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YCastellum Sweden 1,700.12 1.92% Y Y Y Y Y Y Y Y Y Y Y Y YCapital & Counties Properties UK 1,568.53 1.77% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFonciere Des Regions France 1,512.91 1.71% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YShaftesbury UK 1,483.12 1.67% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGecina France 1,399.83 1.58% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIcade France 1,363.33 1.54% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche EuroShop Germany 1,334.16 1.50% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGreat Portland Estates UK 1,299.55 1.47% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YHufvudstaden A Sweden 1,292.19 1.46% Y Y Y Y Y Y Y YCofinimmo Belgium 1,263.43 1.42% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YMercialys France 1,234.00 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWereldhave Netherlands 1,232.70 1.39% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YFabege Sweden 1,151.17 1.30% Y Y Y Y Y Y Y Y YMobimo Switzerland 1,111.19 1.25% Y Y Y Y Y Y YEurocommercial Properties Netherlands 1,098.32 1.24% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YDeutsche Wohnen AG Germany 1,046.02 1.18% Y Y Y Y Y Y Y Y Y Y Y Y Y YSilic France 1,022.32 1.15% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGSW Immobilien AG Germany 961.66 1.08% Y Y Y Y Y Y Y Y Y YWallenstam AB Sweden 925.76 1.04% Y Y Y Y Y Y Y Y Y YSponda Finland 908.67 1.02% Y Y Y Y Y Y YBefimmo Belgium 853.95 0.96% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YWihlborgs Fastigheter Sweden 807.22 0.91% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKungsleden Sweden 802.09 0.90% Y Y Y Y Y YAllreal Hld N Switzerland 797.78 0.90% Y Y Y Y YLondon & Stamford Property UK 737.50 0.83% Y Y Y Y Y Y Y YCa Immobilien Austria 700.12 0.79% Y Y Y Y Y Y Y Y YConwert Immobilien Invest Austria 671.76 0.76% Y Y Y Y Y Y Y Y Y YVastned Retail Netherlands 648.81 0.73% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YAlstria Office Germany 638.53 0.72% Y Y Y Y Y Y Y Y Y Y Y YF&C Commercial Property Trust UK 626.37 0.71% Y Y Y Y Y Y Y Y YNorwegian Property ASA Norway 584.75 0.66% Y Y Y Y Y Y YHansteen Holdings UK 561.89 0.63% Y Y Y Y Y Y YNieuwe Steen Inv Netherlands 559.24 0.63% Y Y Y Y Y Y Y Y Y Y Y Y YCitycon Finland 535.48 0.60% Y Y Y Y Y Y Y Y Y Y Y Y YTAG Immobilien AG Germany 467.78 0.53% Y Y Y YBig Yellow Group UK 451.70 0.51% Y Y Y Y Y Y Y Y Y YBeni Stabili Italy 407.19 0.46% Y Y Y Y Y Y Y Y Y Y Y Y Y YWorkspace Group UK 390.06 0.44% Y Y Y Y Y YGrainger UK 387.87 0.44% Y Y Y Y Y YWarehouses De Pauw Belgium 380.80 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y YGagfah Germany 377.37 0.43% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YKlovern AB Sweden 373.00 0.42% Y Y YUnite Group UK 362.02 0.41% Y Y Y Y Y Y Y Y Y Y Y Y Y Y Y YIvg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y YUK Commercial Property Trust UK 316.58 0.36%St.Modwen Properties UK 293.91 0.33% Y Y Y YHelical Bar UK 271.92 0.31% Y Y Y Y Y Y YSafestore Holdings UK 269.42 0.30% Y Y Y Y Y YPrimary Health Prop. UK 266.69 0.30% Y YQuintain Estates and Development UK 265.39 0.30% Y Y Y Y Y Y Y

Technopolis Finland 254.17 0.29% Y YDevelopment Securities UK 240.77 0.27% Y Y Y Y Y Y Y Y Y Y Y YDIC Asset AG Germany 233.89 0.26% Y Y Y Y Y Y YSociete de la Tour Eiffel France 229.45 0.26% Y Y Y YPicton Property Income UK 177.63 0.20% YCLS Holdings UK 169.56 0.19% Y YDaejan Hdg UK 168.31 0.19% Y Y Y YPrime Office REIT-AG Germany 166.73 0.19% YInvista Foundation Property Trust UK 149.63 0.17%Wereldhave Belgium Belgium 147.14 0.17% Y Y Y Y YIntervest Offices & Warehouses Belgium 138.83 0.16% Y Y Y Y Y Y Y YPatrizia Immobilien Germany 109.34 0.12% Y Y Y YLeasinvest Belgium 104.65 0.12% Y YIRP Property Investments UK 101.14 0.11%Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y Y Y Y

Standard Life Inv Prop Inc Trust UK 100.21 0.11%Mucklow (A.& J.)Group UK 99.88 0.11% Y Y YZueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y Y YColonia Real Estate Germany 77.22 0.09%Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y

Inmobiliaria Colonial S.A. Spain 64.36 0.07% YAffine France 61.98 0.07% Y Y Y Y Y Y

Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 16 15 15 15 14 12 12 12 11 10 10 10 10 9 9 9 9 8 8 8 8 8 8 7 7 7 7 6 6 6 5 5 5 5

58. _ EPRA NEWS / 32 / 201058. EPRA NEWS / 41 / 2012

REFERENCES

ANALYST COVERAGE TABLE

Company CountryFull Mkt Cap

(EURm) % F

ree

Floa

t W

eigh

t

Ban

khau

s M

etzl

er

Vont

obel

Sec

uri

ties

Zuer

cher

Kan

ton

alb

ank

Cen

kos

Secu

riti

es

Citi

Nu

mis

Sec

uri

ties

FIM

Pohj

ola

Ban

k

Solv

enti

s

GSC

Res

earc

h

Stan

dar

d &

Poo

r's

Evol

utio

n S

ecu

riti

es

Fair

fax

Ban

ca A

kros

Ban

co S

abad

ell

Erst

e B

ank

Gil

ber

t D

up

ont

Med

iob

anca

SRC

Res

earc

h

Bre

win

Dol

phin

Equ

inet

In

stit

utio

nal

Se

rvic

es

Rai

ffei

senban

k

Land

esb

ank

Bad

en-

Wue

rtte

mb

erg

Nor

d/L

B

Cent

rob

anca

Mat

rix

Mac

qu

arie

KB

C S

ecu

riti

es

Oeh

man

Fo

ndko

mm

issi

on

Arb

uth

not

Secu

riti

es

Equ

ita

SIM

AEK

Aho

rro

Corp

orat

ion

Alp

ha

Fin

ance

Arc

tic

Secu

riti

es

Ard

en P

artn

ers

Avi

or R

esea

rch

Ban

ca L

eon

ardo

BBV

A

CS

Cap

ital

Inde

pen

dent

Res

earc

h

Woo

d &

Com

pan

y

Odd

o &

Cie

Nat

ion

al B

ank

Terr

a M

arke

ts

Shor

e C

apit

al

Stoc

kbro

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Unibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y 35Land Securities Group UK 6,342.38 7.15% 11British Land Co UK 5,036.38 5.68% Y Y 23Hammerson UK 3,340.87 3.77% Y 23Corio Netherlands 3,284.67 3.70% 24PSP Swiss Property Switzerland 2,953.41 3.33% Y Y 12Capital Shopping Centres Group UK 2,611.74 2.95% Y Y 23Swiss Prime Site Switzerland 2,393.26 2.70% Y Y 6Klepierre France 2,232.16 2.52% 27Derwent London UK 2,060.72 2.32% 21Segro UK 2,049.45 2.31% 21Castellum Sweden 1,700.12 1.92% 20Capital & Counties Properties UK 1,568.53 1.77% 17Fonciere Des Regions France 1,512.91 1.71% 19Shaftesbury UK 1,483.12 1.67% 16Gecina France 1,399.83 1.58% 20Icade France 1,363.33 1.54% 20Deutsche EuroShop Germany 1,334.16 1.50% Y Y Y 28Great Portland Estates UK 1,299.55 1.47% Y 21Hufvudstaden A Sweden 1,292.19 1.46% 18Cofinimmo Belgium 1,263.43 1.42% 14Mercialys France 1,234.00 1.39% Y 20Wereldhave Netherlands 1,232.70 1.39% Y 17Fabege Sweden 1,151.17 1.30% 19Mobimo Switzerland 1,111.19 1.25% Y Y 6Eurocommercial Properties Netherlands 1,098.32 1.24% Y 18Deutsche Wohnen AG Germany 1,046.02 1.18% Y 20Silic France 1,022.32 1.15% 17GSW Immobilien AG Germany 961.66 1.08% 12Wallenstam AB Sweden 925.76 1.04% 6Sponda Finland 908.67 1.02% Y Y 16Befimmo Belgium 853.95 0.96% Y 11Wihlborgs Fastigheter Sweden 807.22 0.91% 14Kungsleden Sweden 802.09 0.90% 17Allreal Hld N Switzerland 797.78 0.90% Y Y 4London & Stamford Property UK 737.50 0.83% Y 10Ca Immobilien Austria 700.12 0.79% Y Y Y Y 11Conwert Immobilien Invest Austria 671.76 0.76% Y Y Y 15Vastned Retail Netherlands 648.81 0.73% Y 13Alstria Office Germany 638.53 0.72% Y 21F&C Commercial Property Trust UK 626.37 0.71% 1Norwegian Property ASA Norway 584.75 0.66% Y Y 14Hansteen Holdings UK 561.89 0.63% 9Nieuwe Steen Inv Netherlands 559.24 0.63% 7Citycon Finland 535.48 0.60% Y Y 15TAG Immobilien AG Germany 467.78 0.53% 10Big Yellow Group UK 451.70 0.51% Y Y 11Beni Stabili Italy 407.19 0.46% Y Y Y Y 15Workspace Group UK 390.06 0.44% 10Grainger UK 387.87 0.44% Y Y 8Warehouses De Pauw Belgium 380.80 0.43% 8Gagfah Germany 377.37 0.43% Y 17Klovern AB Sweden 373.00 0.42% 12Unite Group UK 362.02 0.41% Y Y 10Ivg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y Y 25UK Commercial Property Trust UK 316.58 0.36% 0St.Modwen Properties UK 293.91 0.33% Y 5Helical Bar UK 271.92 0.31% Y 7Safestore Holdings UK 269.42 0.30% Y Y 9Primary Health Prop. UK 266.69 0.30% Y 3Quintain Estates and Development UK 265.39 0.30% 5

Technopolis Finland 254.17 0.29% Y Y 6Development Securities UK 240.77 0.27% Y 6DIC Asset AG Germany 233.89 0.26% Y Y Y 16Societe de la Tour Eiffel France 229.45 0.26% 5Picton Property Income UK 177.63 0.20% 1CLS Holdings UK 169.56 0.19% Y Y 4Daejan Hdg UK 168.31 0.19% 1Prime Office REIT-AG Germany 166.73 0.19% 4Invista Foundation Property Trust UK 149.63 0.17% 0Wereldhave Belgium Belgium 147.14 0.17% 4Intervest Offices & Warehouses Belgium 138.83 0.16% 2Patrizia Immobilien Germany 109.34 0.12% 10Leasinvest Belgium 104.65 0.12% 3IRP Property Investments UK 101.14 0.11% 0Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y 7

Standard Life Inv Prop Inc Trust UK 100.21 0.11% Y 1Mucklow (A.& J.)Group UK 99.88 0.11% Y 4Zueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y 3Colonia Real Estate Germany 77.22 0.09% 3Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y 3

Inmobiliaria Colonial S.A. Spain 64.36 0.07% Y Y Y Y 6Affine France 61.98 0.07% Y 3

Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

EPRA NEWS / 32 / 2010 _ 59. EPRA NEWS / 41 / 2012 59.

ANALYST COVERAGE TABLE

Company CountryFull Mkt Cap

(EURm) % F

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Unibail - Rodamco France 13,239.51 14.93% Y Y Y Y Y Y 35Land Securities Group UK 6,342.38 7.15% 11British Land Co UK 5,036.38 5.68% Y Y 23Hammerson UK 3,340.87 3.77% Y 23Corio Netherlands 3,284.67 3.70% 24PSP Swiss Property Switzerland 2,953.41 3.33% Y Y 12Capital Shopping Centres Group UK 2,611.74 2.95% Y Y 23Swiss Prime Site Switzerland 2,393.26 2.70% Y Y 6Klepierre France 2,232.16 2.52% 27Derwent London UK 2,060.72 2.32% 21Segro UK 2,049.45 2.31% 21Castellum Sweden 1,700.12 1.92% 20Capital & Counties Properties UK 1,568.53 1.77% 17Fonciere Des Regions France 1,512.91 1.71% 19Shaftesbury UK 1,483.12 1.67% 16Gecina France 1,399.83 1.58% 20Icade France 1,363.33 1.54% 20Deutsche EuroShop Germany 1,334.16 1.50% Y Y Y 28Great Portland Estates UK 1,299.55 1.47% Y 21Hufvudstaden A Sweden 1,292.19 1.46% 18Cofinimmo Belgium 1,263.43 1.42% 14Mercialys France 1,234.00 1.39% Y 20Wereldhave Netherlands 1,232.70 1.39% Y 17Fabege Sweden 1,151.17 1.30% 19Mobimo Switzerland 1,111.19 1.25% Y Y 6Eurocommercial Properties Netherlands 1,098.32 1.24% Y 18Deutsche Wohnen AG Germany 1,046.02 1.18% Y 20Silic France 1,022.32 1.15% 17GSW Immobilien AG Germany 961.66 1.08% 12Wallenstam AB Sweden 925.76 1.04% 6Sponda Finland 908.67 1.02% Y Y 16Befimmo Belgium 853.95 0.96% Y 11Wihlborgs Fastigheter Sweden 807.22 0.91% 14Kungsleden Sweden 802.09 0.90% 17Allreal Hld N Switzerland 797.78 0.90% Y Y 4London & Stamford Property UK 737.50 0.83% Y 10Ca Immobilien Austria 700.12 0.79% Y Y Y Y 11Conwert Immobilien Invest Austria 671.76 0.76% Y Y Y 15Vastned Retail Netherlands 648.81 0.73% Y 13Alstria Office Germany 638.53 0.72% Y 21F&C Commercial Property Trust UK 626.37 0.71% 1Norwegian Property ASA Norway 584.75 0.66% Y Y 14Hansteen Holdings UK 561.89 0.63% 9Nieuwe Steen Inv Netherlands 559.24 0.63% 7Citycon Finland 535.48 0.60% Y Y 15TAG Immobilien AG Germany 467.78 0.53% 10Big Yellow Group UK 451.70 0.51% Y Y 11Beni Stabili Italy 407.19 0.46% Y Y Y Y 15Workspace Group UK 390.06 0.44% 10Grainger UK 387.87 0.44% Y Y 8Warehouses De Pauw Belgium 380.80 0.43% 8Gagfah Germany 377.37 0.43% Y 17Klovern AB Sweden 373.00 0.42% 12Unite Group UK 362.02 0.41% Y Y 10Ivg Immobilien Germany 361.59 0.41% Y Y Y Y Y Y Y Y 25UK Commercial Property Trust UK 316.58 0.36% 0St.Modwen Properties UK 293.91 0.33% Y 5Helical Bar UK 271.92 0.31% Y 7Safestore Holdings UK 269.42 0.30% Y Y 9Primary Health Prop. UK 266.69 0.30% Y 3Quintain Estates and Development UK 265.39 0.30% 5

Technopolis Finland 254.17 0.29% Y Y 6Development Securities UK 240.77 0.27% Y 6DIC Asset AG Germany 233.89 0.26% Y Y Y 16Societe de la Tour Eiffel France 229.45 0.26% 5Picton Property Income UK 177.63 0.20% 1CLS Holdings UK 169.56 0.19% Y Y 4Daejan Hdg UK 168.31 0.19% 1Prime Office REIT-AG Germany 166.73 0.19% 4Invista Foundation Property Trust UK 149.63 0.17% 0Wereldhave Belgium Belgium 147.14 0.17% 4Intervest Offices & Warehouses Belgium 138.83 0.16% 2Patrizia Immobilien Germany 109.34 0.12% 10Leasinvest Belgium 104.65 0.12% 3IRP Property Investments UK 101.14 0.11% 0Igd - Immobiliare Grande Distribuzione Italy 100.28 0.11% Y Y 7

Standard Life Inv Prop Inc Trust UK 100.21 0.11% Y 1Mucklow (A.& J.)Group UK 99.88 0.11% Y 4Zueblin Immobilien Holding AG Switzerland 86.77 0.10% Y Y 3Colonia Real Estate Germany 77.22 0.09% 3Eurobank Properties Real Estate Investment Co Greece 73.02 0.08% Y Y 3

Inmobiliaria Colonial S.A. Spain 64.36 0.07% Y Y Y Y 6Affine France 61.98 0.07% Y 3

Total 88,677.25 100.00% 69 53 37 35 33 32 26 25 24 23 22 22 22 22 22 22 20 18 17 17 17 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

60. _ EPRA NEWS / 38 / 201160. EPRA NEWS / 41 / 2012

GLOBAL

REFERENCES

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

GLOBAL

50

100

150

200

250

300

350

400

Jan 12Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03

EPRA/NAREIT Global TR (USD) 123.8%

Inde

x Va

lue

(reb

ased

to 1

00)

EPRA/NAREIT North America TR (USD) 108.5%

EPRA/NAREIT Asia TR (USD) 172.8%

EPRA/NAREIT Europe TR (EUR) 61.4%

Investment Focus Market Cap Breakdown

Asia 35.6%

Europe 13.8%

North America 50.5%

Middle East 0.1%

Regional Breakdown by Market Cap Investment Focus Market Cap Breakdown

Global Non-Rental 21%

Global Rental 79%

Global Industrial 4.5%

Global Residential 11.3%

Global Speciality 0.0%

Self Storage 2.7%

Global Retail 23.2%

Global Office 13.7%

Global Lodging/Resorts 3.2%

Global Industrial/Office 1.0%

Global Healthcare 6.6%

Global Diversified 33.9%

Sector Breakdown

Q Hopson Development Hong Kong Non-Rental Residential 31.59 -0.67 -14.34 -26.09 -12.40 0.025

Q St Modwen Properties UK Rental Diversified 31.33 31.33 44.69 0.69 26.13 0.02

Q Sumitomo Realty & Dev Japan Non-Rental Diversified 30.94 3.59 -6.19 18.47 -7.92 0.01

Q Shimao Property Hong Kong Non-Rental Residential 26.66 -7.34 -12.86 -18.43 -NA- 0.04

Q New World Development Hong Kong Non-Rental Diversified 25.65 -11.31 -16.16 -5.01 1.04 0.03

q Medical Properties Trust * USA Rental Health Care -9.33 -9.33 -1.52 -10.32 48.03 0.08

q First Potomac Realty Trust * USA Rental Industrial -11.09 -9.74 2.92 -13.02 28.95 0.06

q DuPont Fabros Technology * USA Rental Specialty -10.20 -10.20 -5.45 -4.26 64.36 0.021

q Associated Estates Realty * USA Rental Residential -10.71 -10.71 -5.39 -4.00 45.38 0.05

q FKP Property Group Australia Non-Rental Diversified -13.39 -1.24 -13.45 7.35 -17.08 0.04

1 Simon Property Group * USA Rental Retail 29,663.73 9.19 5.81 26.65 63.78 0.028

2 Sun Hung Kai Props Hong Kong Non-Rental Diversified 22,133.97 9.17 -5.76 8.10 9.69 0.0247

3 Westfield Group * Australia Rental Retail 16,384.25 7.00 -7.28 -1.43 1.04 0.0912

4 Mitsubishi Estate Japan Non-Rental Diversified 14,157.76 5.95 0.35 13.71 -9.60 0.0085

5 Unibail-Rodamco * France Rental Diversified 13,239.51 15.02 4.39 -1.95 22.14 0.0552

6 Public Storage * USA Rental Self Storage 12,791.67 3.96 -0.29 22.69 36.99 0.0283

7 Mitsui Fudosan Japan Non-Rental Diversified 12,552.97 4.93 1.17 11.91 -10.08 0.016

8 Equity Residential Props * USA Rental Residential 12,502.46 3.87 -0.25 6.10 52.29 0.0399

9 HCP * USA Rental Health Care 11,989.26 3.71 -3.45 9.05 34.74 0.0506

10 Sumitomo Realty & Dev Japan Non-Rental Diversified 8,336.83 3.45 8.11 18.47 -7.92 0.0112

Top 5 and Bottom 5 Performers

Company Country investment Focus Sector

Price Return Total Return (%) (Feb-29)

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Indices

Index DescriptionMarket Cap

(EUR m) Close Value

Feb-29Total Rtn (%)

YTD Total Rtn (%)

-1Y Total Rtn (%)

-3Y Div Yld (%)

Feb-29

EPRA/NAREIT Europe TR (EUR) 89,413.34 2,120.06 15.45 17.70 -11.24 4.18

EPRA/NAREIT Asia TR (USD) 306,179.92 2,352.20 13.95 14.66 -11.67 3.41

EPRA/NAREIT North America TR (USD) 337,107.80 3,476.50 25.49 43.36 -5.34 3.69

EPRA/NAREIT Global TR (USD) 768,453.88 2,851.93 18.18 24.74 -9.25 3.65

Top 10 on Market Cap

Company Country investment Focus Sector

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Market Cap (EUR m) (%) Weight

EPRA NEWS / 38 / 2011 _ 61. EPRA NEWS / 41 / 2012 61.

GLOBAL

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

ASIA

0

100

200

300

400

500

Jan 12Oct 11Jul11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03

EPRA/NAREIT Hong Kong TR (HKD) 298.0%

Inde

x Va

lue

(reb

ased

to 1

00)

EPRA/NAREIT Japan TR (JPY) 86.5%

EPRA/NAREIT Singapore TR (SGD) 159.5%

EPRA/NAREIT Australia TR (AUD) -2.9%

Investment Focus Market Cap Breakdown

New Zealand 0.3%

Australia 23.6%

Japan 26.1%

Hong Kong 37.8%

Singapore 12.2%

Country Breakdown by Market Cap Investment Focus Market Cap Breakdown

Asia Non-Rental 58%

Asia Rental 42%

Retail 18%

Residential 5%

Office 12%

Industrial 5%

Diversified 60%

Sector Breakdown

Q Hopson Development Hong Kong Non-Rental Residential 31.59 -0.67 -14.34 -26.09 -12.40 2.45%

Q Sumitomo Realty & Dev Japan Non-Rental Diversified 30.94 3.59 -6.19 18.47 -7.92 1.12%

Q Shimao Property Hong Kong Non-Rental Residential 26.66 -7.34 -12.86 -18.43 -NA- 4.17%

Q New World Development Hong Kong Non-Rental Diversified 25.65 -11.31 -16.16 -5.01 1.04 3.23%

Q Kenedix Realty Investment * Japan Rental Diversified 25.00 -7.19 -10.69 33.17 -5.86 6.70%

q Kiwi Income Property Trust * New Zealand Rental Diversified -2.87 0.00 16.21 24.31 2.30 6.73%

q CDL Hospitality Trusts Singapore Rental Lodging/Resorts -3.38 -0.96 -0.96 17.71 -NA- 4.95%

q Charter Hall Retail REIT * Australia Rental Retail -3.38 -4.19 8.84 16.36 -17.46 7.75%

q Stockland Trust Group * Australia Non-Rental Diversified -5.65 -0.03 4.25 -2.02 -6.49 6.95%

q FKP Property Group Australia Non-Rental Diversified -13.39 -1.24 -13.45 7.35 -17.08 4.29%

1 Sun Hung Kai Props Hong Kong Non-Rental Diversified 22,133.97 9.17 -5.76 8.10 9.69 2.47%

2 Westfield Group * Australia Rental Retail 16,384.25 7.01 -7.28 -1.43 1.04 9.12%

3 Mitsubishi Estate Japan Non-Rental Diversified 14,157.76 5.95 0.36 13.71 -9.60 0.85%

4 Mitsui Fudosan Japan Non-Rental Diversified 12,552.97 4.93 1.17 11.91 -10.08 1.60%

5 Sumitomo Realty & Dev Japan Non-Rental Diversified 8,336.83 3.45 8.11 18.47 -7.92 1.12%

6 Hongkong Land Hldgs Hong Kong Rental Office 7,201.62 4.06 3.14 46.18 16.34 2.25%

7 Wharf Holdings Hong Kong Non-Rental Diversified 7,083.13 3.44 0.75 46.11 -NA- 1.83%

8 China Overseas Land Hong Kong Non-Rental Residential 6,398.11 2.87 6.51 15.46 29.94 1.62%

9 Hang Lung Properties Hong Kong Non-Rental Diversified 6,314.79 3.00 -4.23 -NA- 20.21 2.23%

10 Link REIT * Hong Kong Rental Retail 6,309.66 2.48 13.57 42.55 14.87 4.16%

Top 5 and Bottom 5 Performers

Company Country investment Focus Sector

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Indices

Index DescriptionMarket Cap

(EUR m) Close Value

Feb-29 Total Rtn (%)

YTD Total Rtn (%)

-1Y Total Rtn (%)

-3Y Div Yld (%) Feb-29

EPRA/NAREIT Australia TR (AUD) 66,348.89 1,314.37 2.87 5.86 -11.80 6.26

EPRA/NAREIT Hong Kong TR (HKD) 892,087.08 2,615.79 -4.41 17.75 8.29 2.54

EPRA/NAREIT Japan TR (JPY) 6,436,158.75 1,903.61 -9.61 14.84 -11.72 2.55

EPRA/NAREIT Singapore TR (SGD) 46,176.31 1,475.43 -10.47 -0.84 -3.97 3.22

Top 10 on Market Cap

Company Country investment Focus Sector

Market Cap (EUR m) (%) Weight

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Price Return Total Return (%) (Feb-29)

62. _ EPRA NEWS / 38 / 201162. EPRA NEWS / 41 / 2012

REFERENCES

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

EUROPE

Investment Focus Market Cap Breakdown

United Kingdom 36%

Nederlands 8%

France 25%

Austria 2%

Sweden 8%

Other countries 21%

Country Breakdown by Market Cap Investment Focus Market Cap Breakdown

Europe Non-Rental 4%

Europe Rental 96%

Speciality 0.0%

Self Storage 0.8%

Retail 20.6%

Residential 4.1%

Office 19.3%

Lodgings/Resorts 0%

Industrial 3.4%

Healthcare 0.3%

Diversified 51.4%

Sector Breakdown

0

100

200

300

400

500

Jan 12Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03

EPRA/NAREIT Sweden TR (SEK) 272.4%

Inde

x Va

lue

(reb

ased

to 1

00)

EPRA/NAREIT France TR (EUR) 224.2%

EPRA/NAREIT Netherlands TR (EUR) 78.0%

EPRA/NAREIT UK TR (GBP) 23.3%

Q St Modwen Properties UK Rental Diversified 31.33 31.33 44.69 0.69 26.13 1.90%

Q Ivg Immobilien Germany Non-Rental Office 21.11 21.11 3.81 -NA- -NA- 0.00%

Q Patrizia Immobilien Germany Rental Residential 18.47 18.47 31.37 -23.44 42.07 0.00%

Q Development Securities UK Non-Rental Retail 14.46 14.46 12.17 -15.74 -8.18 2.85%

Q DIC Asset Germany Rental Diversified 13.51 13.51 24.46 -32.16 35.70 5.25%

q Klovern AB Sweden Rental Diversified -4.58 -4.58 9.32 -9.05 24.19 6.00%

q Nieuwe Steen Inv * Netherlands Rental Diversified -5.63 -5.63 -6.13 -31.94 2.46 13.53%

q Befimmo * Belgium Rental Office -6.81 -6.81 -4.24 -20.45 -5.33 8.18%

q Colonia Real Estate Germany Rental Residential -7.43 -7.43 8.04 -42.99 1.05 0.00%

q Alstria Office * Germany Rental Office -7.81 -7.81 -8.44 -20.18 28.56 5.23%

1 Unibail-Rodamco * France Rental Diversified 13,239.51 15.02 4.39 -1.95 22.14 5.52%

2 Land Securities * UK Rental Diversified 6,276.24 7.12 6.22 -13.50 15.47 4.24%

3 British Land * UK Rental Diversified 4,968.97 5.64 3.09 -12.84 12.87 5.53%

4 Corio * Netherlands Rental Retail 3,328.97 3.78 7.34 -5.92 12.07 7.46%

5 Hammerson * UK Rental Retail 3,310.57 3.76 8.83 -13.56 21.08 4.11%

6 PSP Swiss Property Switzerland Rental Office 3,014.35 3.42 -0.13 5.08 21.38 3.57%

7 Capital Shopping Centres Group * UK Rental Retail 2,559.74 2.90 6.53 -10.55 15.75 4.51%

8 Swiss Prime Site Switzerland Rental Office 2,390.62 2.71 0.14 5.97 25.91 4.95%

9 Klepierre * France Rental Retail 2,260.61 2.56 8.17 -7.83 19.56 5.66%

10 SEGRO * UK Rental Industrial 2,081.35 2.36 12.71 -24.78 14.36 6.17%

EPRA/NAREIT UK TR (GBP) 26,784.11 1,615.25 6.82 -8.28 18.96 3.97

EPRA/NAREIT Netherlands TR (EUR) 6,801.53 2,631.72 5.88 -20.42 11.38 8.34

EPRA/NAREIT France TR (EUR) 22,201.02 4,443.3 5.36 -5.06 20.66 5.8

EPRA/NAREIT Sweden TR (SEK) 60,966.99 5,785.83 5.14 -3.86 22.53 3.83

Top 5 and Bottom 5 Performers

Company Country investment Focus Sector

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Index DescriptionMarket Cap

(EUR m) Close Value

Feb-29

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Company Country investment Focus Sector

Market Cap (EUR m) (%) Weight

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Indices

Top 10 on Market Cap

Price Return Total Return (%) (Feb-29)

EPRA NEWS / 38 / 2011 _ 63. EPRA NEWS / 41 / 2012 63.

GLOBAL GLOBAL

50

100

150

200

250

300

Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06 Jan 06Oct 05Jul 05Apr 05Jan 05Oct 04Jul 04Apr 04Jan 04Oct 03Jul 03

Inde

x Va

lue

(reb

ased

to 1

00)

EPRA/NAREIT United States TR (USD) 121.3%

EPRA/NAREIT Canada TR (CAD) 176.9%

Investment Focus Market Cap Breakdown

United States 89%

Canada 11%

Country Breakdown by Market Cap Investment Focus Market Cap Breakdown

North America Non-Rental 100%

North America Rental 0%

Speciality 0%

Self Storage 5.2%

Retail 27.4%

Residential 17.5%

Office 13.3%

Lodgings/Resorts 6.1%

Industrial 4.6%

Industrial/Office 2.0%

Healthcare 12.9%

Diversified 11.1%

Sector Breakdown

Q Forest City Enterprises USA Rental Diversified 11.35 11.35 23.69 -22.65 42.90 0.00%

Q Innvest REIT * Canada Rental Lodging/Resorts 10.30 10.98 33.82 -14.97 32.82 7.32%

Q Pennsylvania Real Estate * USA Rental Retail 9.28 10.50 29.98 -2.91 70.32 4.47%

Q TransGlobe Apartment REIT * Canada Rental Residential 6.81 7.35 7.06 16.18 -NA- 6.05%

Q Northern Property REIT* Canada Rental Residential 6.14 6.55 12.57 24.04 33.65 4.61%

q Hersha Hospitality Trust USA Rental Lodging/Resorts -7.37 -7.37 3.07 -19.94 47.62 4.77%

q Medical Properties Trust * USA Rental Health Care -9.33 -9.33 -1.52 -10.32 48.03 8.23%

q First Potomac Realty Trust * USA Rental Industrial -11.09 -9.74 2.91 -13.02 28.95 6.05%

q DuPont Fabros Technology * USA Rental Specialty -10.20 -10.20 -5.45 -4.26 64.36 2.10%

q Associated Estates Realty USA Rental Residential -10.71 -10.71 -5.39 -4.00 45.38 4.56%

1 Simon Property Group * USA Rental Retail 29,663.73 9.19 5.81 26.65 63.78 2.80%

2 Vornado Realty Trust * USA Rental Diversified 11,256.54 3.49 7.23 -9.47 39.97 3.38%

3 Equity Residential Props * USA Rental Residential 12,502.46 3.87 -0.25 6.10 52.29 3.99%

4 Public Storage * USA Rental Self Storage 12,791.67 3.96 -0.29 22.69 36.99 2.83%

5 Boston Properties * USA Rental Office 11,207.09 3.47 1.96 8.01 42.86 2.17%

6 Host Hotels & Resorts * USA Rental Lodging/Resorts 8,329.90 2.58 6.84 -13.48 63.90 1.27%

7 HCP * USA Rental Health Care 11,989.26 3.71 -3.45 9.05 34.74 5.06%

8 Avalonbay Communities * USA Rental Residential 9,216.74 2.86 -0.71 10.09 49.02 2.75%

9 Ventas * USA Rental Health Care 12,026.95 3.73 1.43 5.05 42.46 4.11%

10 Kimco Realty * USA Rental Retail 5,576.14 1.73 13.18 -1.39 33.27 4.13%

Company Country investment Focus Sector

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Company Country investment Focus Sector

Market Cap (EUR m) (%) Weight

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Top 5 and Bottom 5 Performers

Top 10 on Market Cap

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

NORTH AMERICA

EPRA/NAREIT Canada TR (CAD) 45,197.67 4,919.37 6.49 15.39 38.75 4.98

EPRA/NAREIT United States TR (USD) 385,888.80 3,901.28 5.43 5.23 42.48 3.65

Index DescriptionMarket Cap

(EUR m) Close Value

Feb-29Total Rtn (%)

YTD Total Rtn (%)

-1Y Total Rtn (%)

-3Y Div Yld (%)

Feb-29

Indices

Price Return Total Return (%) (Feb-29)

64. _ EPRA NEWS / 38 / 201164. EPRA NEWS / 41 / 2012

REFERENCES

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

EMERGING MARKETS

0

50

100

150

200

250

Jan 12Oct 11Jul 11Apr 11Jan 11Oct 10Jul 10Apr 10Jan 10Oct 09Jul 09Apr 09Jan 09Oct 08Jul 08Apr 08Jan 08Oct 07Jul 07Apr 07Jan 07Oct 06Jul 06Apr 06Jan 06Oct 05Jul 05

Inde

x Va

lue

(reb

ased

to 1

00)

EPRA/NAREIT AIM TR (USD) -66.5%

EPRA/NAREIT Emerging Market TR (USD) 92.3%

Asia Pacific 40%

Europe 3%

Middle East/Africa 17%

Americas 40%

Country Breakdown by Market Cap Global Breakdown by CountryBrazil 36%

Chile 1.2%

China 7.7%

Egypt 0.3%

India 5.5%

Indonesia 7.0%

Malaysia 6.8%

Mexico 2.7%

Philippines 6.7%

Poland 0.6%

South Africa 13.6%

Thailand 5.9%

Turkey 2.3%

Taiwan 0.2%

UAE 3.5%

Q Six Of October Develoment & Inv. Egypt Non-rental Diversified 56.48 56.48 111.25 -38.52 28.37 9.47%

Q Prestige Estates Projects Ltd India Non-rental Diversified 38.58 38.58 46.84 -10.14 -NA- 1.15%

Q Guangzhou R&F Properties (H) China Non-rental Diversified 34.74 34.74 66.78 3.83 25.20 7.22%

Q Poly (Hong Kong) Inv. (Red Chip) China Non-rental Diversified 28.24 28.24 46.88 -20.29 45.24 3.13%

Q Aldar Properties PJSC UAE Non-rental Diversified 28.13 28.13 33.70 -10.87 -19.52 0.00%q Geo B Mexico Non-rental Residential -10.40 -10.40 7.02 -45.91 9.75 0.00%

q Desarrolladora Homex SA de CV Mexico Non-rental Residential -12.07 -12.07 -1.18 -29.67 6.39 0.00%

q Camargo Correa Desenvolvimento Brazil Non-rental Residential -15.29 -15.29 -16.13 -48.80 15.94 8.31% Imobiliario S/A Ord

q Globe Trade Centre Poland Non-rental Diversified -17.20 -17.20 -5.81 -58.56 -12.95 0.00%

q Urbi Desarrollos Urbanos Mexico Non-rental Residential -19.58 -19.58 -5.86 -44.01 5.73 0.00%

Top 5 and Bottom 5 Performers

Company Country investment Focus Sector

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

1 BR Malls Participacoes S/A Ord Brazil Rental Retail 4,307.69 16.87 21.47 39.91 55.18 0.75%

2 PDG Realty S/A Empreendimentos Brazil Non-rental Diversified 3,589.51 14.06 24.41 -17.39 41.96 2.30% e Participacoes Ord

3 Growthpoint Prop Ltd South Africa Rental Diversified 3,488.81 31.49 10.78 28.82 20.66 6.37%

4 Cyrela Brazil Realty S/A Brazil Non-rental Diversified 2,388.87 9.36 16.71 6.69 37.53 1.95% Empreendimentose e Participacoes Or

5 MRV Engenharia e Participacoes SA Brazil Non-rental Residential 2,177.27 8.53 29.44 6.21 61.31 2.43%

6 Redefine Income Find South Africa Rental Diversified 2,118.96 19.13 6.08 18.67 13.51 8.66%

7 Emaar Properties UAE Non-rental Diversified 1,921.19 17.34 22.96 19.72 15.77 3.16%

8 Ayala Land Philippines Non-rental Diversified 1,854.29 7.26 35.22 44.38 54.87 0.95%

9 DLF India Non-rental Diversified 1,766.96 6.92 23.70 8.24 15.58 0.88%

Company Country investment Focus Sector

Market Cap (EUR m) (%) Weight

Total Rtn (%) YTD

Total Rtn (%) -1Y

Total Rtn (%) -3Y

Div Yld (%) Feb-29

Index DescriptionMarket Cap

(EUR m) Close Value

Jun-30Total Rtn (%)

YTD Total Rtn (%)

-1Y Total Rtn (%)

-3Y Div Yld (%)

Feb-29

EPRA/NAREIT Emerging Market TR (USD) 63,925.15 2,025.94 20.96 6.16 29.10 2.72

EPRA/NAREIT AIM TR (USD) 25,546.33 2,046.92 20.66 19.43 25.47 1.98

Indices

Top 10 on Market Cap

Price Return Total Return (%) (Feb-29)

10 BR Properties S/A Ord Brazil Rental Retail 1,728.17 6.77 19.19 25.19 -NA- 0.49%

EPRA NEWS / 38 / 2011 _ 65. EPRA NEWS / 41 / 2012 65.

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

TOTAL MARKET

Countries2010 GDP

($ Bn) 2010 GDP

per capita ($) 2010 Real Estate

($ Bn) 29 Feb 12

Total Listed ($ Bn)29 Feb 12

No. of Companies29 Feb 12

Index Mkt Cap ($ Bn) 29 Feb 12

Total RE v Listed RE (%)

Australia 1,142 53,713 514 101 162 71.7 19.73%

Hong Kong 2,164 306,692 974 283 198 115.0 29.12%

Japan 5,107 40,200 2,298 160 272 79.5 6.95%

New Zealand 75 17,899 34 5 18 0.8 15.16%

Singapore 192 41,341 866 116 115 37.0 13.45%

South Korea 947 19,527 426 0 27 - 0.06%

Total Asia-Pacific 9,628 5,112 666.4 792 304 13.04%

Austria 386 47,078 174 9 13 1.8 4.97%

Belgium 477 45,802 215 8 30 3.8 3.81%

Denmark 316 57,460 142 1 40 - 0.87%

Finland 247 46,994 111 3 8 2.2 2.32%

France 2,636 40,923 1,186 78 122 29.7 6.56%

Germany 3,359 41,040 1,512 57 169 7.6 3.80%Greece 316 29,405 142 2 24 0.1 1.48%

Ireland 230 50,284 103 1 3 - 1.19%

Italy 2,125 35,168 956 2 20 0.7 0.22%

Luxembourg 54 108,947 24 - 7 - 0.00%

Netherlands 802 47,995 361 11 15 9.1 3.16%

Norway 404 86,730 182 3 17 0.7 1.77%

Portugal 235 21,984 106 0 9 - 0.03%

Spain 1,465 31,718 659 6 33 0.1 0.88%

Sweden 448 49,487 202 18 41 9.3 8.89%

Switzerland 503 66,151 226 15 32 9.9 6.60%

United Kingdom 2,364 38,135 1,064 67 138 42.8 6.28%

Total Europe 16,367 7,365 281.6 721 118 3.82%

Israel 405 56,545 182 14 153 0.8 0.75%

Total EMEA 16,773 7,548 295.3 874 119 3.91%

Canada 1,475 44,049 664 78 129 45.9 11.82%

United States 14,308 46,571 6,439 857 858 385.9 13.32%

Total North America 15,783 7,102 936.0 987 432 13.18%

Total Developed Markets 42,183 19,762 1,898 2,653 855 9.60%

China 5,122 3,870 1,232 122 192 6.6 0.99%

India 1,471 1,272 244 27 188 4.7 1.10%

Indonesia 590 2,455 122 16 64 6.0 1.35%

Malaysia 216 7,773 66 46 131 5.8 7.04%

Pakistan 166 969 25 - 6 - 0.00%

Philippines 180 1,837 34 24 59 5.8 7.07%

Taiwan 340 14,820 128 17 87 0.2 1.31%

Thailand 286 4,333 71 29 113 5.0 4.00%

Total Asia-Pacific 8,372 1,923 280.5 840 34 14.59%

Czech Republic 195 19,048 80 - 3 - 0.00%

Egypt 190 2,287 38 6 48 0.3 1.69%

Hungary 134 13,382 49 - 7 - 0.00%

Morocco 89 2,778 19 - 5 - 0.00%

Poland 465 12,093 164 3 50 0.4 0.21%

Russia 1,421 10,144 471 - 37 - 0.00%

South Africa 314 6,269 89 29 51 11.6 3.26%

Turkey 689 8,970 219 8 39 2.0 0.38%

United Arab Emirates 276 5,787 76 9 12 3.0 1.23%

Total EMEA 3,772 1,205 56.6 252 17 4.69%

Brazil 1,781 9,548 579 61 52 30.8 1.05%

Chile 184 11,615 64 5 42 1.0 0.72%

Colombia 256 6,248 72 - 1 - 0.00%

Mexico 1,000 9,531 325 7 17 2.3 0.22%

Peru 137 5,049 36 - 13 - 0.00%

Total Americas 3,358 1,076 72.3 125 34 6.72%

Total Emerging Markets 15,502 4,204 409 1,217 86 9.74%

World 57,685 23,966 2,307 3,870 940 9.63%

Source: World Bank, IMF, Prudential Real Estate Investors, EPRA * Base on Prudential Real Estate Investors Formula

66. _ EPRA NEWS / 38 / 201166. EPRA NEWS / 41 / 2012

REFERENCES

FTSE EPRA/NAREIT GLOBAL REAL ESTATE INDICES

TOTAL MARKET

Global real estate vs equities & bonds

Underlying Real Estate

Asia Pacific 24%

Europe 35%

Middle East/Africa 1%

Latin America 5%

North America 34%

Listed Real Estate

Asia Pacific 37%

Europe 24%

Middle East/Africa 3%

Latin America 0%

North America 36%

5% 10% 15% 20% 25% 30% 35% 40%

-15%

-10%

-5%

0%

5%

10%

15%

Global Bonds

Belgium

Canada

US

Netherlands

Sweden

Finland

France

Nth Am RE

UK

Europe RE Global RE

Switzerland

Italy

Asia RE

Australia

Risk (St Deviation)

Global Equities

Japan

Germany

Hong Kong

Singapore

45% 50%

Norway

Feb-

09

Apr

-09

Jun-

09

Aug

-09

Oct

-09

Dec

-09

Feb-

10

Apr

-10

Jun-

10

Aug

-10

Oct

-10

Dec

-10

Feb-

11

Apr

-11

Jun-

11

Aug

-11

Oct

-11

Dec

-11

Feb-

12

FTSE EPRA/NAREIT Developed RE 1.28%

FTSE World 0.83%

40

60

80

100

120

140

160

180

200

220

240

JP Morgan Global Bonds 0.15%

Rolling 10-years risk/return local currencies - countries

EPRA NEWS / 38 / 2011 _ 67. EPRA NEWS / 41 / 2012 67.

Annual BPR survey gets underway soon. Now in its tenth year, make sure your organisation

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Send to: Clare Faulkner, Deloitte, Hill House, 1 Little New Street, London EC4A 3TR, UK

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