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ING Real Estate Enters BrazilING Real Estate Enters BrazilThe role of research and the strategic framework developed

Florencio BeccarMarcela Dutra DrigoMarcela Dutra DrigoMaria Luisa ParadinasShane Taylor

LARES, 9th International ConferenceOctober 2009October 2009

Table of Contents

I. ING Real Estate

II. Research Approach

I. Global Markets:I. Global Market CapitalizationII. Global Market RiskIII. Global Vision

II. Regional Context: South America

III. Country Analysis: Brazil

IV. ING Real Estate in Brazil

III. Appendix

2

ING Real Estate: The Largest Real Estate Manager*

Our people Almost 2,700 real estate professionals and support staff

Our strengths**

Our global footprintOur global footprint Strong teams in 21 countries across the world

Global in-house team of 50 researchersOur research

T t l tf li f EUR 105 billiOur size Total portfolio of EUR 105 billionOur size

Our integrity Our business principles are key to our reputation

Our parent Offers financial strength; co-investor in real estate funds

* A di t P i & I t t d IPE i IPE R l E t t R l E t t I t t M 2008/09 d t 30 J 2008 P i & I t t

3

* According to Pension & Investments and IPE magazines. IPE Real Estate – Real Estate Investment Managers 2008/09; data 30 June 2008. Pensions & Investments, 29 September 2008; data 30 June 2008

** As of June 2009

Please refer to important legal information at the end of the presentation.

ING Real Estate Investment ManagementA Global Network of Local Professionals

PraguePraguePrag ePraguePrag ePraguePraguePrag ePrague

FrankfurtFrankfurtFrankfurtFrankfurtFrankfurtFrankfurtFrankfurtFrankfurtFrankfurtThe HagueThe HagueThe HagueThe HagueThe HagueThe HagueThe HagueThe HagueThe Hague

WarsawWarsawWarsawWarsawWarsawWarsawWarsawWarsawWarsawLondonLondonLondonLondonLondonLondonLondonLondonLondon

BrusselsBrusselsBrusselsBrusselsBrusselsBrusselsBrusselsBrusselsBrussels

StockholmStockholmStockholmStockholmStockholmStockholmStockholmStockholmStockholm

EdmontonEdmontonEdmontonEdmontonEdmontonEdmontonEdmontonEdmontonEdmontonCalgaryCalgaryCalgaryCalgaryCalgaryCalgaryCalgaryCalgaryCalgary OttawaOttawaOttawaOttawaOttawaOttawaOttawaOttawaOttawaWinnipegWinnipegWinnipegWinnipegWinnipegWinnipegWinnipegWinnipegWinnipeg

TaipeiTaipeiTaipeiTaipeiTaipeiTaipeiTaipeiTaipeiTaipei

BucharestBucharestBucharestBucharestBucharestBucharestBucharestBucharestBucharest

PraguePraguePraguePraguePraguePraguePraguePraguePrague

BudapestBudapestBudapestBudapestBudapestBudapestBudapestBudapestBudapestMilanMilanMilanMilanMilanMilanMilanMilanMilanMadridMadridMadridMadridMadridMadridMadridMadridMadrid

ParisParisParisParisParisParisParisParisParisLondonLondonLondonLondonLondonLondonLondonLondonLondon

TokyoTokyoTokyoTokyoTokyoTokyoTokyoTokyoTokyoShanghaiShanghaiShanghaiShanghaiShanghaiShanghaiShanghaiShanghaiShanghai

SeattleSeattleSeattleSeattleSeattleSeattleSeattleSeattleSeattle

DenverDenverDenverDenverDenverDenverDenverDenverDenverSacramentoSacramentoSacramentoSacramentoSacramentoSacramentoSacramentoSacramentoSacramento ChicagoChicagoChicagoChicagoChicagoChicagoChicagoChicagoChicagoWashington, D.C.Washington, D.C.Washington, D.C.Washington, D.C.Washington, D.C.Washington, D.C.Washington, D.C.Washington, D.C.Washington, D.C.

DallasDallasDallasDallasDallasDallasDallasDallasDallas

BostonBostonBostonBostonBostonBostonBostonBostonBostonNew YorkNew YorkNew YorkNew YorkNew YorkNew YorkNew YorkNew YorkNew York

PhiladelphiaPhiladelphiaPhiladelphiaPhiladelphiaPhiladelphiaPhiladelphiaPhiladelphiaPhiladelphiaPhiladelphiaAtlantaAtlantaAtlantaAtlantaAtlantaAtlantaAtlantaAtlantaAtlanta

Los AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos AngelesLos Angeles

Hong KongHong KongHong KongHong KongHong KongHong KongHong KongHong KongHong Kong

g yg yg yMontréalMontréalMontréalMontréalMontréalMontréalMontréalMontréalMontréal

LondonLondonLondonLondonLondonLondonLondonLondonLondonTorontoTorontoTorontoTorontoTorontoTorontoTorontoTorontoToronto

HalifaxHalifaxHalifaxHalifaxHalifaxHalifaxHalifaxHalifaxHalifax

SeoulSeoulSeoulSeoulSeoulSeoulSeoulSeoulSeoul

SingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingaporeSingapore

Sao PauloSao PauloSao PauloSao PauloSao PauloSao PauloSao PauloSao PauloSao PauloBrisbaneBrisbaneBrisbaneBrisbaneBrisbaneBrisbaneBrisbaneBrisbaneBrisbane

SydneySydneySydneySydneySydneySydneySydneySydneySydney

MelbourneMelbourneMelbourneMelbourneMelbourneMelbourneMelbourneMelbourneMelbourne

PerthPerthPerthPerthPerthPerthPerthPerthPerth

Countries with local officeCountries in which we operate

Local officeTotal Employees: 1,571 Europe *: 607 Employees North America *: 507 Employees Asia/Pacific *: 317 Employees Select: 34 EmployeesCRES: 71 Employees

4

Source: ING REIM Marketing as of 30 June 2009

p yGlobal: 36 Employees* Including property managers


Table of Contents

I. ING Real Estate


I. Global Markets:I Global Market CapitalizationI. Global Market CapitalizationII. Global Market RiskIII. Global Vision

II. Regional Context: South AmericaII. Regional Context: South America



III. Appendix

5

Constructing a Real Estate Portfolio: Our Research Approach

I tInvestorObjectives and Constraints

Investment UniverseLong-term Economicen

Strategic Allocation

Economic and

Real Estate Market Characteristics

and Trends Current and Expected

Marketsear

ch D

rive

Tactical Allocation

Market ConditionsR

es

Portfolio Construction

Source: ING Real Estate Research & Strategy, as of 31st August 2009

6

gy g


Global Market Capitalization

• In-house model

• Top-Down model:○ Major macroeconomic variables (Urban GDP, Population…)

Total and Investment grade stock in the reference country (the US)○ Total and Investment grade stock in the reference country (the US) ○ Four adjustments:

– Gross Fixed Investment, – Population Density, p y,– Urbanization, – Size of the Financial markets

• Bottom-up adjustments case by case, based on the local office expertise

• Projections to 2010, 2020

7Please refer to important legal information at the end of the presentation.

Investment Grade Universe Estimates

• We estimate that the top 20 markets comprise consistently about 90% of the global total universe

• Brazil was the only South American market within the top 20

5,000

y p

Top 20 investment grade markets by size

ING RE presence

3,000

4,000

SD b

illio

n

Europe

Americas

Asia Pacific

ING RE presence

1,000

2,000US

0

US

JAPA

N

GER

MAN

Y

UK

FRA

NC

E

CAN

ADA

SPA

IN

AU

STR

ALIA

ITAL

Y

S. K

ORE

A

NET

HER

LAN

DS

CH

INA

BELG

IUM

SW

ITZE

RLAN

D

HO

NG

KO

NG

RU

SSI

A

BRAZ

IL

SWED

EN

NO

RWAY

SIN

GAP

ORE

8

Source: ING Real Estate Research & Strategy, as of August 2009. Note: Original sources: EIU, United Nations Database, ULI Emerging Trends, Bureau of Economic Analysis, Provisional estimates for 2008.


Global Market Risk

• In-house developed model to assess real estate systemic risk ○ Captures economic, financial and specific real estate dimensions of risk

M j i t○ Major input– IMF’s Country Economic Classification (economic system proxy).– ING Country Risk Ratings (internal only - financial system proxy).– JLL’s Real Estate Transparency Index (real estate market system proxy).p y ( y p y)

• Output• Market Rankingg• Four broad categories: Low Risk / Medium Risk/ High Risk/ Very High Risk

• Any market at a category boundary is individually reviewed○ Historic analysis ○ Supplementary sources (Transparency International, World Bank, EIU…)○ Complementary local office assessment


Global Market Risk Map

Low Risk

Medium Risk

High Risk

Low Risk

Medium Risk

High Risk

Low Risk

Medium Risk

High Riskg s

Very High Risk

g s

Very High Risk

g s

Very High Risk

Source: ING Real Estate Research & Strategy Market Risk Model, as of August 2008


Global Vision:Core/Core Plus Strategy Recommendations*

Mild OverweightW b li th t l ill lik l

30%-35%20%-40%32%Americas

Tactical Emphasis Within Regions

Regional Tactical RecommendationsTactical Regional Limit

StrategicRegional

Limit

Investment Grade Real

EstateRegion

Focus on Brazil as one of the morerobust emerging markets, and withinNorth America focus especially on theUS, on the metro areas expected tooutperform.

We believe that pressure on values will likely continue as yields (cap rates) increase, and that this pressure should provide opportunities to acquire mispriced assets in the US with attractive return prospects in the recovery phase

Focus on Japan and Australia to take advantage of weak pricing and attractive return prospects when the recovery takes place

Market WeightWe believe that the region has attractive long term potential and short-to-medium term prospects have improved . A faster and stronger than expected rebound in many economies of the region is underway although caution is still

27.5%-32.5%20%-40%27%Asia Pacific

Focus increasingly on the UK to takeadvantage of weak pricing and

Mild Underweight We believe there are very weak short-term prospects as trade-oriented economies, and especially central

35%-40%30%-50%39%Europe

when the recovery takes place. Modern retail throughout much of the region also looks defensive

region is underway although caution is still advised, especially in China where there are fears of an asset bubble

advantage of weak pricing andattractive return prospects, and onretail and industrial in WesternEurope and very selectively on highquality properties on parts of CEE.

and eastern Europe, falters. We believe there will likely be pressure on values as yields (cap rates) increase and market fundamentals weaken. We also believe there will be potential to acquire mispriced assets in the UK which has corrected first and furthest, as compared to the other regions.

Source: ING Real Estate Research & Strategy as of September 2009. * Generic market recommendations for a hypothetical global investor placing new money. This table does not constitute specific investment advice.

Table of contents

I. ING Real Estate






III. Appendix

12

Economics: Deceleration in 2009, Strong Recovery

GDP growth rates by major region

• We believe that South America’s growth rates will likely fall in 2009 but will likely rebound quickly

GDP growth rates by major region

6

8

owth

2

4

ar o

n ye

ar %

gro

4

-2

0

GD

P, y

ea

-6

-4

Asia Pacific (ex Japan)

Midd. East/ N. Africa

Sub-Saharan Africa

North America

South America

World Eurozone Former Soviet Block

2008 2009f 2010f 2011f LT. Average

Source: EIU, ING Real Estate Research & Strategy as of 26th August 2009. Note: LT. Average stands for “Long Term Average”, which is the geometrical average of GDP growth rates for the period 1998-2013f, with the exception of Sub-Saharan Africa, which only has data up to and including 2010.

Please refer to important legal information at the end of the presentation. 13

Demographics: A Large, Young and Growing Population

• South America is a region of 380 million people• Median age of 27.6 as of 2008 (US Census Bureau)

Population size as of 2008 and historic and forecast growth rates by region

2.5

3.0

3,500

4,000

(% p

.a.)

(Mil

lion)

1.0

1.5

2.0

1 500

2,000

2,500

3,000

ati

on g

row

th (

Po

pu

lati

on (

0 5

0.0

0.5

0

500

1,000

1,500

Po

pu

la

-0.50Asia

Pacific (ex Japan)

Sub-Saharan Africa

Mid.East/ North Africa

South America

Former Soviet Block

North America

Eurozone World

China + India 2008 Population Avg. 1990-2008 Forecast 2009-2013

Source: EIU, ING Real Estate Research & Strategy as of 17th February 2009Note: Unless otherwise specified, South America comprises Argentina, Brazil, Chile, Peru, Colombia, Venezuela, Uruguay, Paraguay, Ecuador, and Bolivia.


ING National Opportunities Matrix

• Brazil, and to a lesser extent, Chile appear to us to be the more attractive markets• Our 2009 results are broadly similar to 2008’s – with a worsened Argentinean Outlook

W b li th t i k t th d id

Difference 2009 Risk rating GDP pc Urban GFI as % GDP

• We believe that risks are to the downside

National Opportunities Matrix

2008 2020f

40% 15% 15% 10% 10% 5% 5%Brazil Y 1 3 2 5 1 8 4Chile Y 4 5 1 1 6 2 1

Weighting

Country ING presence Market Cap Difference 2009 - LT avg

Risk rating 2008

GDP pc (PPP)

Urban population

GFI as % GDP

Argentina Y 2 9 3 2 2 4 3Peru Y 6 2 5 6 5 1 2Colombia Y 5 7 4 7 3 3 5Venezuela N 3 8 10 3 4 6 7Uruguay Y 8 1 9 4 10 10 10g yEcuador N 7 10 8 8 7 5 6Bolivia N 9 4 7 10 8 9 10Paraguay N 10 6 6 9 9 7 10

So urce: EIU, Feriar 2009 data, ING Real Estate Research & Strategy


Industrial: Robust Drivers across Major Countries*

• Supply: Old and outdated stock• Demand Drivers considered:

• Industrial production Remains stable or growing in most countries

Industrial Production Index

• Industrial production. Remains stable or growing in most countries• Increased trade flows / New infrastructure• Growing port movements

South American Ports Movements

125

150

175

200

Industrial Production Index

10%

12%

500

600

700

AG

R 0

0-07

lion

To

ns

25

50

75

100

125

2%

4%

6%

8%

100

200

300

400

500

CA

Mil

Source: ECLAC “Perfil Maritimo de America Latina y el Caribe”, ING Real Estate Research & Strategy as of 11th March 2009

0

25

1994 1996 1998 2000 2002 2004 2006 2008

Argentina Brazil Chile Peru

Source: ECLAC BADEINSO database, derived from national sources. National Statistical Institute of Argentina. Yearly data as the average of the monthly data. Note: Different base years for each country 2008: January for Brazil Chile Peru Year

0%0

100

Argentina Chile Brazil Peru

2007 LT trend CAGR 00-07

gyDifferent base years for each country. 2008: January for Brazil, Chile, Peru. Year average for Argentina. * “Major Countries” include Argentina, Chile, Brazil and Peru, as highlighted in ING’s national opportunities matrix.


Retail: Likely Hit Hard by the Crisis

• Look at the short term shock to discriminate by country. We believe that:• Private consumption will likely weaken in the short term (esp. Chile and Argentina)• Retail sales will likely be affected (with the exception of Peru) in 2009

Private Consumption Growth

• Our Medium term outlook: 2010 will likely show positive retail sales growth in real terms

Retail Sales growth15 17 f t

10e 2008 2009f 2010f 2011f LT A

5

10

s G

row

th, %

p.a

. Argentina

Brazil

Chile

Peru

17 forecast

4

6

8

real

% c

hang

e 2008 2009f 2010f 2011f LT. Average

-5

0

Rea

l Ret

ail S

ales

-18 6-4

-2

0

2

Yea

r on

yea

r,

-10

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

f

2010

f

2011

f

2012

f

2013

f

18.64Peru Brazil South

AmericaArgentina Chile

Y

Source: Economist Intelligence Unit, ING Real Estate Research & Strategy as of 31st August 2009

Source: Economist Intelligence Unit, ING Real Estate Research & Strategy as of 31st

August 2009. Note: Countries are ranked, left to right, by the difference between their forecast private consumption growth rate for 2009 and their long term rate (a blended geometrical average of ten year historic and the five year forecast, 1999-2013f).


The Residential Markets: Supply-Demand Imbalance

• Supply side: Housing shortage across the continent• Demand Drivers considered: Household Formation and Disposable Income Growth. We

believe that:

H h ld b d b l ti Di bl i th l ti

• Demographic transition still under way in the region• Disposable income growth will likely slow down in the short and medium term with

the exception of PeruHousehold number and members evolution Disposable income growth evolution

4 00

4.25

120,000

130,000

useh

old

seh

old

s

Number of households

Members per household

4

5

6

Inco

me

f-20

13f

Peru

3.50

3.75

4.00

70 000

80,000

90,000

100,000

110,000

Mem

bers

per

ho

u

Nu

mb

er

of

ho

us

1

2

3

4

ecas

t Dis

posa

ble

Iw

th, %

p.a

. 200

9f

Chile

Brazil

Source: Economist Intelligence Unit, ING Real Estate Research & Strategy as of 17th Febr ar 2009

Source: Economist Intelligence Unit, ING Real Estate Research & Strategy as of 17th February 2009 Note: geometric average of the actual or forecast rate for each year of the

3.2560,000

70,000

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009f

2010f

2011f

2012f

2013f

0

0.0 1.0 2.0 3.0 4.0

Fore

grow

Recent Disposable Income growth, % p.a. 2004-2008

Argentina

February 2009 February 2009. Note: geometric average of the actual or forecast rate for each year of the period


Office Markets: Scarce Grade-A Supply

• Supply Side:• Sizeable office markets in the region but with relatively scarce grade-A stock• São Paulo is the largest market but we believe that timing is not optimalg g p

• Demand Drivers:• Labour force is expanding faster than in any other region and we believe it

will likely support office demand in the long term

8

10

ion

Sq

m

Class A Class B

Labour force size and growth in major regions Office Stock in the Major Markets

2.0%

1600

2000

te p

.a.

e

Labour Force 2008

% growth 2009

LT Avg

4

6

Mil

li0.5%

1.0%

1.5%

400

800

1200

1600

forc

e g

row

th r

at

al Lab

ou

r Fo

rce

(th

ou

san

ds)

LT Avg.

0

2

São Paulo Santiago Buenos Aires Lima

Source: CW Latin America Marketbeat 2008, stock as of the beginning of 2008 for

0.0%0

400

South

A

meri

ca

Asi

a

Paci

fic

Ex

Japan

Nort

h

Am

eri

ca

Euro

zone

Sovie

t B

lock L

ab

ou

r f

To

ta (

Source: EIU, ING Real Estate Research & Strategy as of 12th March 2009

Source: CW Latin America Marketbeat 2008, stock as of the beginning of 2008 for Brazil and Argentina. CBRE reports as of Q4 2008 for Chile and Peru. ING Real Estate Research & Strategy as of 3rd March 2009


Hotels: Likely Robust Demand after the Crisis

• Supply: Hotel supply in South America is growing fast• Demand Drivers. We believe that:

• Tourism expenditure will likely slow down in the short/medium term but

International tourism expenditure Hotel Construction pipeline

Tourism expenditure will likely slow down in the short/medium term but remain at or over the long term trend through the crisis

• Governments’ expenditure will likely continue to grow at fast rates (>5% in 2009)

International tourism expenditure Hotel Construction pipeline

2008 (Q4f)

2009 Forecast

2010 Forecast

Total Rooms

Total Pipeline (as of Q3 08)

New Openings by yearTotal Projects (as of Q3 08)

10,000

12,0002008 2009f

2010 LT. Avg.

Canada 231 29,517 8,630 8,746 8,629

Caribbean 113 22,365 3,657 5,887 6,495

Mexico 145 26,568 5,884 7,907 8,622Central America 50 9,838 820 1,985 2,529South

( Q )

4,000

6,000

8,000

USD

Million

Source: Economist Intelligence Unit, ING Real Estate Research & Strategy, as of 31st

August 2009. Long term average as the geometrical average for the years 1999-2013f.Source: Lodging Econometrics, the Americas Lodging Investment Summit 2009, World travel & tourism Council

South America 332 54,734 9,204 12,397 14,646

US 5,652 740,272 135,070 158,851 158,899Total 6,523 883,294 163,265 195,773 199,8100

2,000

Brazil Argentina Chile Peru

g g g g g y


Real Estate Transactions & Investors’ Interest

•Transactions in South America grew by 35% in 2008• The only region (in addition to the Middle East) with annual growth in 2008• Brazil dominates the South American market

10Real estate transactions in South America

• Markets dried up in early 2009•International players already present in the market

8

10

n

2007

2008

2009H1

4

6

USD

bill

ion 2009H1

0

2

B il Chil A ti Oth S th A iBrazil Chile Argentina Other South AmericaSource: RCA Global Capital Trends, December 2008 and August 2009 reports. ING Real Estate Research & Strategy


South American Research

• Constant monitoring

• Annual in-house report○ Macroeconomics

– GDP growth– External exposure– Risk perception

D hi○ Demographics

○ Strengths and Weaknesses– Priority markets selection and analysisPriority markets selection and analysis

○ Real estate drivers and market conditions for our priority countries / metropolitan areas / submarkets


Table of Contents

I. ING Real Estate






III. Appendix

23

Brazil in the Global Context

• Main economic and demographic variables compared

• We believe that below-trend growth will likely characterise all markets in 2009.

• We expect Brazil to bounce back rather strongly in 2010• We expect Brazil to bounce back rather strongly in 2010Real GDP Growth Rates

10

12

2008 2009f 2010f 2011f LT. Average

2

4

6

8

year

% g

row

th

-4

-2

0

2

GD

P, y

ear o

n y

Sources: EIU, ING Real Estate Research & Strategy as of 10th September2009. Note: Geographies ranked, left to right, by the difference between their forecast GDP growth rate of

-8

-6

China Australia Brazil US Canada World Eurozone UK Japan Mexico

24

gy p g p g y g2010 and their long term average GDP growth rate (simple average of ten year historic data and five year forecast: 1999-2013f).


Stability of Brazil’s GDP Growth in Regional Context

• GDP growth has been rather stable in most major countries in the last few years• In terms of GDP, Brazil is the largest market and one of the most stable countries

in the region

8Long term average GDP growth rate, historical volatility and size of economy

• Argentina appears as the most volatile among the major markets we prioritized

6

grow

th ra

te

1999

-201

3f)

Peru

Brazil

2

4

ong

term

GD

P (G

eom

. Avg

. 1

Uruguay

ArgentinaEcuadorColombia

Chile

Paraguay

Bolivia

00 2 4 6 8

Growth volatility 1995-2008 (Stdev. GDP growth rate %)

Lo

U uguay

Venezuela

Source: Economist Intelligence Unit, ING Real Estate Research & Strategy as of 20th February 2009. Note: Size of the bubble denotes 2008 GDP size in USD. Bolivia falls under BrazilSource: Economist Intelligence Unit, ING Real Estate Research & Strategy as of 20th February 2009. Note: Size of the bubble denotes 2008 GDP size in USD. Bolivia falls under Brazil therefore it cannot be seen. Colour represents real estate systematic risk, by ING Real Estate Research & Strategy, being light blue medium risk, orange high risk and brown very high risk.


Favorable Demographic Profile

● Brazil has got 191.5 million people , and the World’s 4th largest urban population (IBGE, 1st July 2009 estimates, and EIU urban population data).

● Median age in Brazil is 29 yearsg y● Middle class is more than 50% of the population, is growing and getting wealthier→ Retail and Residential pent-up demand

Brazil Demographic Profile: P l ti Di t ib ti i B il b I ClBrazil Demographic Profile:% by Age Cohort in 2009f and 2020f

Population Distribution in Brazil by Income Class

60- 64

70- 74

80+ Female 09fMale 09fFemale 2020f 80%

100%12 15

atio

n

Class AB ( > R$4,800)

Class C (R$ 1,100- 4,800)

20- 24

30- 34

40- 44

50- 54

60 64 Male 2020f

40%

60%

1713

4653

hare

of t

otal

pop

ula

Class D (R$ 800- 1,100)

Class E (< R$ 800)

10 5 0 5 10

S F d G t li V FGV Ch i l f th C i i R t U d t d R ili

0- 4

10- 14

0%

20%

2005 Post-crisis Feb 09

24 18

13sh

Sources: US Census Bureau, ING Real Estate Research & Strategy as of June 2009.


Source: Fundaçao Getulio Vargas, FGV, Chronicle of the Crisis: Recent Undertow and Resilience in Brazil. Note: Monthly household income from work of active population. ING Real Estate Research & Strategy as of 10th July 2008.

26

Renewed Risk Perceptions Discriminate by Country

• Perception of risk heightened since mid 2007, especially since September 2008

• Different situations by country:• Brazil Colombia and Peru exhibit rather low spreads and have showed

35

ts Argentina Brazil Chile

Global Emerging Market Sovereign Bond Index (ESBI) Yield Spreads

Brazil, Colombia and Peru exhibit rather low spreads and have showed decreasing spreads for the last few months

20

25

30

% P

oin

t ge t a a C e

Peru Colombia Venezuela

Latin America

5

10

15

0

Dec-

00

Mar-

01

Jun-0

1S

ep-0

1D

ec-

01

Mar-

02

Jun-0

2S

ep-0

2D

ec-

02

Mar-

03

Jun-0

3S

ep-0

3D

ec-

03

Mar-

04

Jun-0

4S

ep-0

4D

ec-

04

Mar-

05

Jun-0

5S

ep-0

5D

ec-

05

Mar-

06

Jun-0

6S

ep-0

6D

ec-

06

Mar-

07

Jun-0

7S

ep-0

7D

ec-

07

Mar-

08

Jun-0

8S

ep-0

8D

ec-

08

Mar-

09

Jun-0

9

Source: Citigroup, ING Real Estate Research & Strategy as of 23rd July 2009. Yield spread between bid yield for each market and the bid yield for the US government bond index


FDI likely to Remain Robust

• We believe that FDI will likely decelerate in 2009 (from high levels) but in the next five-year period it will likely remain similar – or even higher than it has been in the recent past.

30,000

35,000

mln

.)

3f India Brazil

Foreign Direct Investment (FDI) net inflows: recent and forecast evolution

p

15,000

20,000

25,000

nfl

ow

s (

US

D m

ge 2

00

9f-

20

13

TurkeyRussia

P

(5,000)

-

5,000

10,000

DI

net

dir

ect

inA

nn

ual

avera

g

Chile

Colombia

Peru

Argentina

Ecuador

(10,000)

(5,000)

(5,000) - 5,000 10,000 15,000 20,000

FDI net direct inflows (USD mln.) Annual average 2004-2008

FDA

Venezuela

Source: EIU, ING Real Estate Research & Strategy as of 20th March 2009


Brazil Research

• Constant monitoring

• Reports and Analysis by ING Economicsp y y

• Quarterly in-house report

○ Macro VariablesEconomic growth– Economic growth

– Demographics– Outlook from a global perspective– Risks

○ Investment Markets○ Real Estate Markets and Drivers in the Major Cities

(State and metropolitan investment rankings for relevant sectors)○ Special Focus: Timely Relevant Section

• Articles for internal and external distribution (i.e. IREI Newsletter)

• Ad-hoc Requests by Investors

29

• Ad-hoc Requests by Investors


Table of Contents

I. ING Real Estate






III. Appendix

30

ING’s Research Conclusions Structure

1. Assess the investment potential of South America as a region (We believe that It is a large, growing region that might offer multiple investment opportunities)

2 Identify priority markets for the short and long term2. Identify priority markets for the short and long term (We like Brazil for the short term, Chile, Peru and Argentina potentially for medium or long term)

3. Assess Brazil‘s potential from a global perspective and identify strengths and risks (We believe it shows strong economics and demographics, and certain decoupling from developed markets, but we b li d bt iti h ld b it d)believe debt positions should be monitored)

4. Analyze real estate markets and fundamentals (We believe that there is a large mis-match between real estate supply and demand)

1. Identify priority regions (We like the South /South East, exclusively São Paulo and Rio de Janeiro for some1. Identify priority regions (We like the South /South East, exclusively São Paulo and Rio de Janeiro for some asset types)

2. Identify preferable conditions (i.e. Cities > 500,000 people)

3. Identify sector priorities. We believe that:1. There are opportunities across sectors2. Industrial and residential will likely be stronger in the short term3. Retail depends heavily on the asset-specificsp y p


ING Brazil Platform

• ING Bank

The ING Brazil Platform plans to leverage ING’s presence in Brazil

• ING Bank ○ Wholesale operation○ 25 year history

200+ t li t○ 200+ corporate clients (as of June 2009)

• ING Investment Management○ Investment manager to large Brazilian corporations and pension funds○ Investment manager to large Brazilian corporations and pension funds

• We believe that we have competitive advantages○ Local presence○ Local presence○ ING “Lion” – strong brand recognition○ Off market deal origination capacity


ING Brazil Platform

LION BRAZIL FUND

Marcela Drigo: Assistant Portfolio Manager

Florencio BeccarPortfolio Manager

Patrick Tully: CFOING Clarion Partners in New YorkPortfolio Manager yING Clarion Partners in New YorkING Bank in São Paulo

Information TechnologyInvestment Strategy & Research

Financial Management Legal/Compliance Marketing & Client Service

Human Resources

Julio Cesar Marques (SP)

John Wanamaker (NY)

ResearchShane Taylor (NY)

Maria Luisa Paradinas (NY)Marcelo Sellan (SP) Nathaniel Kiernan (NY)

Patricia Flaquer (SP)Larry Teitelbaum (NY) Tara Sweeney (NY)

Cristina Aiach (SP)* Note: Interim Chief Financial Officer


ING Real Estate Enters Brazil

• For more information please contact:

Global Research & Strategy

○ Maria Luisa Paradinas

ING REIM South America

○ Florencio BeccarResearch [email protected]

S

Managing [email protected]

○ Shane TaylorSenior [email protected]

○ Marcela Dutra DrigoAssistant Portfolio [email protected]

ING Real Estate Investment Management31st August 200931 August 2009

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Disclaimer

•Important InformationThis publication has been prepared on behalf of ING Real Estate (“ING”) solely for informational purposes. It is not investment advice or an offer or solicitation for thepurchase or sale of any financial instrument. While reasonable care has been taken to ensure that the information contained herein is not untrue or misleading at the timeof publication, ING makes no representation that it is accurate or complete. The assumptions used in making forecasts rely on a number of economic and financialvariables These variables are subject to change and may affect the likely outcome of the forecasts The information contained herein is subject to change without noticevariables. These variables are subject to change and may affect the likely outcome of the forecasts. The information contained herein is subject to change without notice.ING and any of its officers or employees may, to the extent permitted by law, have a position or otherwise be interested in any transactions, in any investments (includingderivatives) referred to in this publication. ING may provide banking or other services (including acting as adviser, manager, lender or liquidity provider) for, or solicitbanking or other business from, any company referred to in this publication. Neither ING nor any of its officers or employees accepts any liability for any direct orconsequential loss arising from any use of this publication or its contents. Copyright and database rights protection exists in this publication and it may not be reproduced,distributed or published by any person for any purpose without the prior express consent of ING. All rights are reserved. Any investments referred to herein may involvesignificant risk, are not necessarily available in all jurisdictions, may be illiquid and may not be suitable for all investors. The value of, or income from, any investmentsreferred to herein may fluctuate and/or be affected by changes in exchange rates. Past performance is not indicative of future results. Investors should make their ownreferred to herein may fluctuate and/or be affected by changes in exchange rates. Past performance is not indicative of future results. Investors should make their owninvestment decisions without relying on this publication. Only investors with sufficient knowledge and experience in financial matters to evaluate the merits and risksshould consider an investment in any issuer or market discussed herein and other persons should not take any action on the basis of this publication. Additionalinformation is available on request. At the date hereof, the author, and/or the ING Group may be buying, selling, or holding significant long or short positions; acting asinvestment and/or commercial bankers; be represented on the board of the issuer; and/or engaging in market making in securities mentioned herein.

In the United Kingdom, this report is approved and distributed by ING Real Estate Investment Management (UK Funds) Limited which is Authorised and Regulated by theFinancial Services Authority. Interested parties are advised to contact the ING entity they currently deal with, or the ING entity that has distributed this report to them.y p y y y , y pTransactions should be executed through an ING entity in the client’s home jurisdiction unless otherwise permitted by law. This publication is intended to provideinformation to assist investors in making their own investment decisions, not to provide investment advice to any specific investor. Investments discussed andrecommendations made herein may not be suitable for all investors: readers must exercise their own independent judgment as to the suitability of such investments andrecommendations in light of their own investment objectives, experience, taxation status and financial position. Past performance is not necessarily indicative of futureperformance: the value, price or income from investments may fall as well as rise. It is not intended for use by Retail Clients as defined by The Financial Services andMarkets Act 2000. You should not deal in derivatives unless you understand the nature of the contract that you are entering into and the extent of your exposure risk.

ING Real Estate Investment Management is an umbrella organisation which included the worldwide real estate research, advisory and investment management affiliatesof the ING Group. All products and services are not offered or available from all entities that use this global brand and some entities are regulated by separate regulatoryauthorities.

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