A PRESENTATION OF

MARKET OVERVIEW PREPARED FOR

JULY 2015

THE HOXTON CUSHMAN & WAKEFIELD / INTER ISRAEL 1

MARKET OVERVIEW

METRO TEL AVIV COMMERCIAL REAL ESTATE SUBMARKETS Tel Aviv CBD + Suburbs

KEY SUBMARKETS: PROMINENT TECH TENANTS + SHELL RENTS

REGIONS # SUBMARKET PROMINENT COMPANIES CLASS A SHELL RENTS (ILS/M2)

North Suburban in Tel Aviv

1 Netanya Cisco, eBay, Elbit 40.00

2 Yakum Broadcom, Intel, Samsung 57.00

3 Ra’anana Apple, Broadcom, HP, NCR, SAP, TI 53.00

4 Kfar Saba Alcatel-Lucent, SanDisk, Teva 52.00

5 Herzliya 3M, Apple, Broadcom, EMC, GM, Microsoft, Oracle 75.00

6 Ramat Ha’hayal 3M, Estee Lauder, IBM, P&G 63.00

7 Hod Ha’sharon Abbott, Nokia Siemens, Qualcomm 52.00

East Suburban in Tel Aviv

8 Petah Tikva Agilent, Cisco, IBM, Intel, Oracle, Teva 52.00

9 Rosh Ha’ayin Siemens, Sony Ericsson 39.00

10 Airport City AT&T, Broadcom, Motorola 50.00

Tel Aviv CBD 11 Ramat Gan AMD, Broadcom, Samsung 83.00

12 Tel Aviv AVG, Facebook, IBM, Google 85.00

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MARKET OVERVIEW

TEL AVIV CBD Market Overview

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IN A NUTSHELL Tel Aviv, the core of the 3.5 M person metro area, is Israel’s business capital • Class A shell rent = mid ILS 80s / M2 to low ILS 90s / M2 • Overall Class A rents of the largest submarkets are in the ILS 100 - 120 / M2 range • Purchase Values • Most new construction of office buildings is in the 3 largest submarkets all located along the Ayalon Highway that bisects the city:

– Menahem Begin Rd. corridor (W side of Ayalon and thus slightly more prestigious than the east) – Igal Alon St. corridor (E side of Ayalon) – Ramat Gan “Bursa” (NE side of Ayalon)

• Ayalon Highway and commuter rail (in the middle) access is most important location factor • HQ location of most banks, insurance companies, law firms, CPA firms, TA area govt. offices

TRENDS Changing tenant base, no longer just “downtown” tenants • Amenities and transportation access are preserving attractiveness of Tel Aviv (vs. suburbs) • Tech companies have become an increasingly important tenant component

– AVG, Autdoesk, Facebook, Google, IBM, PayPal, Samsung are all in central Tel Aviv • Developers of office condos are a very large component of new construction • Corporate and other large tenants (foreign and Israeli) tend not to occupy condo buildings

SUPPLY Tenant friendly market anticipated over next 5 years • An unprecedented amount of new supply (5,000,000+ M2) is expected over the next 5 years • 10 + towers are currently under construction, from 15,000 to 125,000 M2

• At least half of new construction will be office condos; developers with no long-term stake • Tenants are likely to enjoy favorable terms over the next 5 years, particularly those of high quality

THE HOXTON CUSHMAN & WAKEFIELD / INTER ISRAEL 3

MARKET OVERVIEW

TEL AVIV Hotel Market Overview

IN A NUTSHELL Tel Aviv, is Israel’s cultural and business capital, a major hi-tech hub, and rising as a destination for sophisticated traveler from Europe and the West, fueled in party by rising flight connections with low cost airlines and so on. • Traditionally luxury hotels are located solely along the city’s

beachfront strip and have traditionally been considered the best in the city (Dan, Intercontinental, Hilton). These were mostly constructed in the 1960’s and 1970’s with only one recently opening (Isrotel Royal Beach)

• New wave of boutique hotels have changed the city’s market in recent years, mostly opening in the ‘Financial Center’ around Rothschild Boulevard a UNESCO World Heritage Site for its Bauhaus architecture which is protected and being renovated. Among the most iconic hotels are the Brown TLV, Montefiore, and recently opened, The Norman. The first large hotel in the area is opening in Q3 2015 by Fattal Hotels (Rothschild 22). Many of the smaller hotels have opened in recent years as hobby projects for wealthy Israelis.

• Other hotels can be found in the business area of the north and east of the city, however, there are no real clusters here, and because of the small size of Tel Aviv, the journey by cab from the beach area or financial center is no more than 10 minutes.

THE HOXTON CUSHMAN & WAKEFIELD / INTER ISRAEL 4

MARKET OVERVIEW

TEL AVIV Main hotel players

Hotel groups: • Dan Hotels (Dan Panorama, Dan Tel Aviv) • Isrotel (Royal Beach, and a second U/C) • Africa Israel (IHG group in Israel – David

Intercontinental, Crowne Plaza, Crowne Plaza City Center, Indigo, Sharona Azrieli)

• Fattal Group (Leonardo Basel, Leonardo Boutique, Leonardo Tower, Leonardo Midtown, Leonardo Art, Herods, Rothschild 22)

• Atlas - smaller hotels (Market House, Shalom and Relax, Cinema, City, Center, ArtPlus)

• Brown - boutique design hotels (Brown TLV, Brown Beach House)

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MARKET OVERVIEW

TEL AVIV Gallery

THE ROTSCHILD THE ALMA

HOTEL MONTEFIORE THE ATLAS

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MARKET OVERVIEW

TEL AVIV CBD Key Submarkets of Commercial Real Estate

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MARKET DATA

# SUBMARKET PRICE / M2

COMMENTS

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Ramat Gan (“Bursa“)

Large dense submarket along E side of Ayalon Highway with 2 exits, 1 train station

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Igal Alon St. Corridor Large submarket along W side of Ayalon Highway with 3 exits, 2 train stations

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Menahem Begin Rd. Corridor

Large submarket along E side of Ayalon Highway with 3 exits, 2 train stations

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Courthouse

Small submarket, expensive

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Financial District (“City“)

HQs of most banks and insurance companies, Tel Aviv Stock Exchange (TASE) historic old Tel Aviv

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Manshiya / Seafront Small office submarket on seafront in southern part. Centre and northern segment dominated by large hotels on seafront and smaller hotels in streets behind

7 Jaffa Historic area south of city. Little to no office market, but a growing number of boutique hotels open/under construction 2

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MARKET OVERVIEW

TEL AVIV HOTEL MARKET - DISTRIBUTION OF PROPERTIES Key Submarkets of Boutique Hotels

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MARKET DATA # SUBMARKET COMMENTS

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Ramat Gan (“Bursa“) Hotel Indigo (4*boutique 91 rooms), Leonardo Tower (4* 167 rooms), Hotel Optima (3* 98 rooms)

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Igal Alon St. Corridor None

3 Menahem Begin Rd.

Corridor

Crowne Plaza City Centre in Azrieli Office Tower (273 rooms), Sharona Azrieli Hotel (U/C 160 rooms) ,Leonardo Midtown (U/C 4* 170 rooms)

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Courthouse Vital Hotel *4(63 rooms)

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Financial District (“City”“)

Brown TLV (design boutique 30 rooms 4*), The Norman (design boutique 50 rooms 5*), Hotel Montefiore (design boutique 12 rooms 5*), The Rothschild (design boutique 29 rooms 5*), Hotel B TLV (boutique 4* 23 rooms), Shenkin Hotel (design boutique 4* 30 rooms) , Diaghilev Hotel (boutique 4* 54 rooms) ,

Rothschild 22 (u/c Fattal Hotel Group Boutique in tower 156 rooms )

6a Manshiya / Seafront

(first line to sea)

Hilton, Carlton, Renaissance, Herods, Intercontinental, Isrotel Royal Beach, Dan, Dan Panorama, Sheraton, Prima, Marina/Leonardo Arts Hotel, Kempinski (u/c)

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Manshiya / Seafront (second line to sea). ie no sea view

Brown Beach House (new 4* design boutique), Atlas Shalom & Relax (4*boutique), Port Hotel, Olympia Hotel, Leonardo Basel, Best Western Suites, Gordon (boutique) - predominantly older 3* hotels + starting to open boutique hotels

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Jaffa

Historic area south of city. Little to no office market, but a growing number of boutique hotels open/under construction HOTEL PRESENCE - Atlas Market House, The Clock Boutique, Orchid Boutique (u/c).

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MARKET OVERVIEW

CENTRAL TEL AVIV International Office Occupiers

ALEXANDER GOLDBERGER T +972 3 751 6060 15 Abba Hillel Street Ramat Gan 5252208, Israel alexander@inter-israel.co.il