MARKET REPORT - RED PROPERTY ADVISERS

Transkript

1 MARKET REPORT - RED PROPERTY ADVISERS RED Property Advisers facilitated the sale of CBY8 - a selection of retail stores in Carlsberg City District

2 EXECUTIVE SUMMARY TRANSACTION VOLUME REACHED A NEW POST-CRISIS HIGH We are settling in after a fantastic 2016 for commercial real estate, as the investment market reached a new post-crisis high with DKK 64 bn, surpassing last year s transaction volume by approx. DKK 10 bn. In Q4 alone, we registered transactions of approx. DKK 25.6 bn, providing an extremely strong finish to last year s volume. Especially the residential and office segment have received a lot of interest from both Danish and foreign investors. Together these two segments comprised 66% of the entire investment volume of 2016, with Heimstaden and Castellum being the two largest investors and DADES with an extremely active year coming in third. The increased interest from investors have contributed to a further yield compression across all segments. Consequently, prime yields have reached a level of 3.60% within the residential segment, 3.00% within the retail segment and 4.00% within the office segment with a few office transactions even breaking the 4%-band. 2 / 27 Looking into 2017, we expect that many of the underlying trends that have driven the investment volume in 2016 will continue to do so in As a result, we expect to see a continuously high activity of sale & leaseback transactions, an increasing amount of investments in suburban cities and high activity among the foreign investors. However, due to an anticipated lack of willing sellers, prime yields are likely to be pushed even lower and activity might be tempered given the shortage of alternative opportunities available. Enjoy the report! INVESTMENT MARKET OFFICE Prime yield (Copenhagen City) Investment volume in million Vacancy (Copenhagen City) 2016 Q Q4 CHANGE 4.25% % 4.00% 1, % -25 bp bp RETAIL 2016 Q Q4 CHANGE Prime yield (Copenhagen High Streets) 3.50% Secondary yield (Copenhagen Side Streets) 4.75% Investment volume in million % 4.50% 451 TRANSACTION VOLUME (BN DKK) Q Q DKK 64.1 BN ~ EUR 8.5 BN Nicholas Thurø Managing Partner Residential Office Retail Industrial Other -50 bp -25 bp +197

3 CONTENT ISSUE I FOCUS... 5 MACROECONOMICS... 9 INVESTMENT MARKET OFFICE RESIDENTIAL RETAIL TRANSACTIONS OCCUPIER MARKET OFFICE RETAIL RETAIL - FOOTFALL ANALYSIS APPENDIX - DANISH TRANSLATION DANSK VERSION AF FOKUS ARTIKEL / 27

4 EUROMONEY WINNER OF 4 AWARDS Best Advisors and Consultants Overall in Denmark Best Advisors and Consultants for Agency & Letting in Denmark Best Advisors and Consultants for Valuation in Denmark Best Advisors and Consultants for Research in Denmark 4 / 27

5 ISSUE I FOCUS 5 / 27

6 DANSK VERSION PÅ SIDE 26 ISSUE I FOCUS THE MAIN TRENDS OF 2016 AND OUTLOOK FOR 2017 The Danish transaction volume reached a new post-crisis high in 2016, surpassing last year s transaction volume by approx. DKK 10 bn. This increase was especially driven by foreign investors, investments in the Copenhagen area and second-tier cities as well as sale & leaseback transactions. With expectations of increasing demand alongside a shortage of willingly sellers, 2017 might be a year of slightly less transaction activity combined with a continued compression of yields for prime properties. TRENDS OF 2016 During the last couple of years, the Danish transaction volume has increased significantly, and this year s volume of approx. DKK 64.1 bn almost reached the same level as we observed in 2006 of approx. DKK 67 bn an all-time high. In a market where the European transaction volume faced a significant decline, especially driven by lower investments in London, the Danish transaction volume within commercial real estate actually rose by a total of 18%. But which factors actually drove this increase in the Danish transaction volume? FOREIGN INVESTORS GAINING MARKET SHARE With several uncertainties in the macroeconomic environment, including the consequences of Brexit and the impact of the new U.S. administration led by Donald Trump, more and more investors are turning to the stable cash flow and inflation hedging merits of real estate. Consequently, it is not only the Danish investors who are active on the Danish commercial real estate market. During 2016, cross border capital gained further market share, and now comprise 41% of the total transaction volume. Compared to 2015, DKK BN 70 BN 60 BN 50 BN 40 BN 30 BN 20 BN 10 BN 0 BN Source: RED Property Advisers 20.1 BN 20% 80% 32.9 BN 31% 69% this equals an increase of 5%-point. Looking closer at the top foreign investors of the past year, Heimstaden, Standard Life and Castellum are by far the largest investors - constituting approximately 40% of the foreign investment volume. Over the last five years, foreign investors have dominated the retail segment, and 2016 was no exception. However, during 2016, the residential and office segment also experienced increasing interest from foreign investors, and all together, these three segments accounted for approx. 85% of the entire foreign investment volume in Indeed, the foreign investors have contributed to an even further yield compression than what we experienced in This is particularly evident within the above-mentioned segments, where prime yields...more investors are also likely to be asking themselves whether the time is right to take on more risk in the strongest core cities or, whether they should expand their horizons to other markets in search of higher returns. DANISH INVESTMENT VOLUME 35.1 BN 30% 70% 54.1 BN 36% 64% have reached a level of 4.00% within the office segment, 3.60% within the residential segment and 3.00% within the retail segment. In the year-end a few sub- 4.00% transactions were regi- stered in the office segment. AALBORG A GROWING MARKET 64.1 BN 41% 59% Domestic investors Foreign investors In line with previous years, Greater Copenhagen area was by far the location that attracted the largest part of the investment volume in 2016 accounting for approx. 74% of the total investment volume. As a matter of fact, the Copenhagen area has more or less cemented its dominance, taking the top spot in all five of the main segments. However, the city that probably has experienced the highest volume growth during the last couple of years is Aalborg. From 2015 until 2016 the city experienced a growth of 96%, reaching a total investment volume of approx. DKK 1.5 bn. This increase was essentially driven by foreign investors, where NIAM s residential transactions accounts for an estimated amount of approx. DKK 750 M. This was by far the largest investment in Aalborg in / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

7 SALE & LEASEBACK TRANSACTION VOLUME ALMOST DOUBLED IN 2016 The positive development in the Danish real estate market - with increasing prices and further yield compression across all segments - has led to even more sale & leaseback transactions in For the majority of owner-occupiers the predominate motive behind engaging in a sale & leaseback agreement is to unlock value. This gives them the ability to invest the raised proceeds into their core businesses, generating a potentially higher return on capital. From the investor s point of view, the benefits obtained by letting to high credit worthy tenants with long lease commitments are often one of the main motivational drivers. In the past year, corporations have been executing more and more sale & leaseback transactions, and these transactions accounted for approx. DKK 7.2 bn of the total investment volume in Compared to 2015 this is almost double the amount. Especially Top-Toy, Danske Bank, and Nykredit s sale & leaseback agreements are some of the most remarkable and largest sale & leaseback transactions of Standard Life s acquisition of the Top-Toy-portfolio was mainly driven by their strategy to target prime commercial properties in core European markets, which includes building on their presence across the Nordic region. Similarly, the mixed-use portfolio that H.I.G. Capital & M7 Real Estate acquired from Danske Bank was driven by the motive to secure a portfolio with high quality income, where it is possible to add value through various asset management initiatives. Taking into consideration that the attractive pricing and low cap rates of quality real estate assets located in prime locations are In a market where the European transaction volume faced a significant decline, especially driven by lower investments in London, the Danish transaction volume within commercial real estate actually rose by a total of 18%. expected to continue in 2017, the terms are favorable for further sale & leaseback activity in the coming year. OUTLOOK FOR 2017 Looking forward, global uncertainty will continue to affect investors, and with changes to society and business only accelerating, real estate will stand out as the traditional and tangible asset class compared to other more volatile asset classes. The role of real estate in portfolio diversification is underpinned by sustained low interest rates, expectations of higher inflation, and volatility in all asset classes. With expectations of rising liquidity and demand alongside a lack of willing sellers, prime yields are likely to be pushed even lower and activity might be tempered given the shortage of alternative opportunities available. Across all asset classes the premium compared to bonds is still high and leaves room for another yield shift in the market in the short term. For 2017, we expect sale & leaseback activity to continue, both in terms of regular sales processes and off market transactions. Additionally, we expect the high activity among the foreign investors to follow the same trajectory as last year, in which we also anticipate to see new entrants capture a part of the transactions volume. Likewise, we expect to see even more transactions between foreign investors, as some of the foreign value-add funds will exit and therefore most likely sell to other funds that focus on a more core profile. Finally, yet importantly, we expect to see a continuous increase in investments in suburban cities like Køge, Kolding, Roskilde etc. - cities that are currently experiencing a high construction activity. However, as mentioned previously there are several uncertainties that will affect the investment market in Especially considering the current market, which is extremely sensitive towards any increase in interest rates. In those segments, where we observe low prime yields, small increases in the interest rates will have high impact on the investment activity. As a result, while investors will remain focused on the threats around them, more investors are also likely to be asking themselves whether the time is right to take on more risk in the strongest core cities or, whether they should expand their horizons to other markets in search of higher returns. FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 7 / 27

8 RED Property Advisers facilitated the sale of this retail condominium at Fiolstræde 3-5 on behalf of NIAM. The buyer is the norwegian hotel owner - Peter Stordalen, who owns First Hotel Skt. Petri on top of the condominium. 8 / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

9 MACROECONOMICS 9 / 27

10 MACROECONOMIC OVERVIEW THE OVERALL ECONOMIC UPTURN IS EXPECTED TO CONTINUE The Danish economy is currently experiencing an upturn. Even though some of the underlying drivers in the economy have somewhat weakened lately, the upturn is expected to continue. The outlook on our export markets has worsened slightly and the effective value of the Krone has increased, resulting in a weaker competitive position. According to the Danish National Bank, clear signs of lack of workers exist in the economy, and consequently slightly lower demand forecast is considered healthy at this point in the economy s cycle. MACROECONOMIC VARIABLES KEY VARIABLE A YEAR AGO MOST RECENT TREND GDP Growth Rate y/y 1.2% 1.2% Inflation Rate y/y 0.5% 0.1% Unemployment Rate - Denmark 6.3% 6.5% Unemployment Rate - Copenhagen Region 7.1% 6.5% 10 year Government Bond -0.71% -0.34% Short Term Mortgage Rate - 1 and 2 year bonds -0.10% -0.40% Long Term Mortgage Rate - 30 year bonds 2.95% 2.26% Source: Statistics Denmark, Association of Danish Mortgage Banks and The Danish National Bank During the fourth quarter of 2016, Statistics Denmark made a significant backward revision to its GDP growth figures, which shows that the Danish Economy in recent years has grown much more than earlier anticipated (see graph to the right). The revision was met with satisfaction among economists, as many, at least retrospectively, had found it difficult to explain the low GDP-growth numbers while at the same time observing evidence in other key figures showing an improving Danish economy. The revision also means that Denmark s GDP already in 2014 topped the previous top from before the financial crisis. Before the revision, this was not expected to happen until 2017, which highlights the significance of the revision. The Danish National Bank estimates GDP growth in 2016 to be 1.0%, due to the slightly lower demand in the underlying components of the economy. GDP-growth is expected to grow 1.4% and 1.5% in 2017 and 2018, respectively. Especially private consumption is expected to drive GDP in the near future, while export is also expected to contribute positively. 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% % The annual growth rate in the private real estate market has also slowed marginally, but is still considered to be high, and according to the Danish National Bank the price level of condominiums in Copenhagen is currently relatively high compared to income and interest levels. The bank also estimates that the real estate market in Copenhagen is more vulnerable to interest rate increases than the rest of the country. REVISED GDP - GROWTH IN REAL TERMS % 0.2% % % Outdated GDP - real growth % Revised GDP - real growth % 1.6% / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

11 INVESTMENT MARKET 11 / 27

12 INVESTMENT MARKET - OFFICE THE INVESTMENT ACTIVITY IN Q4 WAS IMMENSE Investment activity in the office segment in Q4 was immense, reaching approx. DKK 7.7 bn in transaction volume and dominated by Danish investors with a share of 67%. Real estate companies were the most active buyers in Q4 constituting 54% of the transaction volume with their focus being on prime office properties. However, the high demand for prime office properties, coupled with the low supply, have also led some investors to seek towards more peripheral areas around Copenhagen. In Q4, the office investment activity was propped by several investors acquisition of Tryg s properties located in CBD and Ballerup, which comprised of a 90,000 sqm office-portfolio with an estimated price of approx. DKK 1.8 bn. The second most notable office transaction in Q4 was DADES acquisition of Nykredit s headquarter located at Kalvebod Brygge with a total size of 42,400 sqm and a price of DKK 1.5 bn. The location is considered an absolute prime office location. In 2016, the total transaction volume in the office segment reached approx. DKK 19.3 bn, which is the highest volume recorded since Danish investors were the most active investors in 2016 with 56% of the office investment volume with real estate companies being most active. This is the closest we have seen to a 50/50 allocation of Danish and foreign investors in this segment. Over the last quarter, we have observed transactions at prime locations with a yield of 4.00%, and a few office transactions have even broken the 4%-band. This will have a spillover effect on the areas surrounding Copenhagen as we expect a downward pressure in these areas. INVESTOR BREAKDOWN Q1-Q Public institutions 7% Real Estate Companies 42% Source: RED Property Advisers PRIME YIELDS Others 15% 19.3 BN DKK Institutional Investors SUBAREA Q Q Q Copenhagen City (CBD) 5.00% 4.25% 4.00% Copenhagen E & W 5.75% 5.50% 5.25% Frederiksberg 5.75% 5.50% 5.25% Harbour areas 5.00% 4.25% 4.00% South Harbour 6.00% 6.00% 5.50% Ørestad 5.75% 5.50% 5.50% Copenhagen N & NW 6.50% 6.50% 6.25% South and West of Copenhagen 7.25% 7.25% 7.00% North of Copenhagen 5.25% 5.25% 5.00% 11% DANISH INVESTORS - 56 % FOREIGN INVESTORS - 44 % Property Funds 25% 0% 20% 40% 60% 80% 100% FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 12 / 27

13 INVESTMENT MARKET - RESIDENTIAL SEGMENT WITH THE HIGHEST INVESTMENT VOLUME THROUGHOUT THE YEAR Residential continues to be the main investor segment with high activity throughout the year and a strong finish in Q4. All together, the residential volume reached a total of DKK 24.8 bn for the year, in which the Q4 volume amounted to DKK 7.8 bn. Real estate companies were the most active during Q4 constituting approx. 45% of the investment volume. Especially the Swedish real estate companies, Heimstaden and Akelius, were highly active with Heimstaden acquiring two residential portfolios in Copenhagen for an estimated total price of DKK 800 M and Akelius buying the residential complex Domus Vista in Frederiksberg for DKK 640 M. PKA and Pensam co-held the property prior to the transaction. Similar to Q4, real estate companies were the most active in the year as a whole closely followed by institutional investors and property funds. Copenhagen (including Greater Copenhagen) continues to be the main attention area for the residential investors with 76% of the past year s transaction volume located here. The same pattern was observed in 2015 with Copenhagen s volume constituting 75% of the total residential investment volume. However, going forward we expect to see more activity outside the Copenhagen area as a result of foreign investors, who currently constitute a significant share of the volume, getting more comfortable with investing in other areas than Copenhagen. INVESTOR BREAKDOWN Q1-Q Real Estate Companies 34% Source: RED Property Advisers Private Investors 8% PRIME MARKET RENT DKK/SQM Others 6% SUBAREA Q Copenhagen City 2,000-2,200 Copenhagen E, W & N 1,700-1,900 Frederiksberg 2,000-2,200 North Harbour 2,000-2,200 South Harbour 1,600-1,800 Copenhagen S 1,500-1,700 North of Copenhagen 1,700-1, BN DKK PRIME YIELDS Institutional Investors 26% Property Funds 26% DANISH INVESTORS - 59 % FOREIGN INVESTORS - 41 % 0% 20% 40% 60% 80% 100% SUBAREA Q Copenhagen Area - rent control % Copenhagen Suburb - rent control % Copenhagen Area - market rent 3.60% Copenhagen Suburb - market rent 4.50% FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 13 / 27

14 INVESTMENT MARKET - RETAIL Q4 CONSTITUTED ALMOST HALF OF THE RETAIL TRANSACTION VOLUME IN 2016 In total, DKK 3.4 bn was invested into the Danish retail sector in Q4, constituting almost half of the total retail transaction volume of 2016 and marking the most active quarter since Q Thus, we experienced a strong finish to the year that followed the same trajectory as 2015 with a strong appetite for high street assets from especially foreign investors. In Q4, as well as for the year as a whole, foreign investors constituted approx. 64% of the transaction volume in this segment. Once again, investments in high street assets boosted the volume. Among others, AEW Europe acquired Østergade 15, Axa acquired Frederiksberggade 1 and Standard Life bought Frederiksberggade 16 for DKK 275 M. However, Q4 activity was widespread and not limited to the Copenhagen high streets. The Danish real estate company, PDV Ejendomme, sold off a selection of local shopping centres in Greater Copenhagen, while Standard Life acquired a portfolio of Top-Toy s properties in a sale & leaseback agreement. In addition, we have also seen investment activity in the continuously developing area, Carlsberg Byen, where Aberdeen property fund acquired a selection of retail stores for DKK 383 M. Prime yield level in Copenhagen is at an all-time low at 3.00%. This all-time low level is expected to remain stable in the short term, while we expect to see a steady investment activity. INVESTOR BREAKDOWN Q1-Q Property Funds 67% Source: RED Property Advisers PRIME YIELDS Private Investors 17% Others Institutional Investors STREET/SUBMARKET Q Q Q Strøget (incl. Vimmelskaftet) 4.00% 3.50% 3.00% Strøget area 5.00% 4.75% 4.50% Østerbrogade 5.50% 5.50% 5.25% Nørrebrogade 6.00% 5.75% 5.50% Købmagergade 4.00% 3.50% 3.00% Lyngby 5.75% 5.50% 5.00% 1% 7.5 BN DKK 5% Real Estate Companies 10% DANISH INVESTORS % % FOREIGN INVESTORS - 64 % 0% 20% 40% 60% 80% 100% SHOPPING CENTRES Copenhagen 5.00% 4.75% 4.25% FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 14 / 27

15 TRANSACTIONS 15 / 27

16 TRANSACTIONS OFFICE STREET STREET NAME NAME LOCATION LOCATION DATE DATE SIZE SIZE (SQM) (SQM) PRICE PRICE VENDOR VENDOR TYPE TYPE VENDOR VENDOR NAME NAME BUYER BUYER TYPE TYPE BUYER BUYER NAME NAME (M (M DKK) DKK) Real estate companies Tryg Portfolio Copenhagen Q4 90,053 Est. 1,800 Institutional investor Tryg Forsikring Jeudan & property fund Hedeager 1-5 & Kystvejen 29 Århus 2016/Q2 23, Real Estate Company C.W. Obel & property Institutional fund Investor PensionDanmark Kalvebod Holmens Brygge Kanal & Under Krystallen 1 CPH Copenhagen City 2016/Q1 Q4 42,439 49,065 1, ,500 User User Nykredit Danske Bank Real Property estate company Fund DADES Standard Life Investments Albanigade 30 Danske Bank Portfolio Odense Denmark 2016/Q1 Q4 4, , Institutional Investor Danica Pension Est. 860 User Danske Bank Private Investor Property fund Karsten Bill Rasmussen M7 Real Estate & H.I.G. Rytterkasernen 11 Unipension Portfolio Odense Copenhagen 2016/Q1 Q4 8, , Institutional Investor Danica Pension 690 Institutional investor Unipension Private Investor Real estate company Karsten Bill Rasmussen Wihlborgs A/S Dag Hammarskjolds Allé 28 Office Portfolio in Valby CPH E Copenhagen 2015/Q4 Q4 1,596 23, Private Investor Fritz Henrik Schur 440 Real estate company Real estate company Public Institution Property fund The Turkish Embassy Property fund Overgaden Oven Vandet 60A CPH City 2015/Q4 8, Public Institution The Danish Armed Forces Private Investor Lennart Lajboschitz Strandboulevarden (Søkvæsthuset) 130 Copenhagen Q4 7, User Bonnier Publications A/S Real estate company C.W. Obel Ejendomme Åboulevarden Store Kongensgade CPH Aarhus City 2015/Q4 5,579 1, Private Real Estate investor Company Private JL Ejendom investor Institutional Other Fund investor PensionDanmark Erik & Susanna Olesens Almenvelgørende Finsensvej 86 Copenhagen Q4 5, Property fund CapMan Other KFI Erhvervsdrivende Fond fond Stationsvej Store Kongensgade CPH Sønderborg City 2015/Q4 Q4 6,135 1, Property Private fund Investor SF Private Management Investor Institutional Real Estate investor Company PensionDanmark Jeudan H.C. Stormgade Andersens 10 Boulevard 9-11 CPH Copenhagen City 2015/Q4 Q4 3,346 2, Real Public estate Institution company Jyske Freja bank Ejendomme Real Property estate company Fund M. Artha Goldschmidt Kapitalforvaltning Holding Strømmen 6 Nørresundby 2015/Q4 11, User Marylebone RTX A/S Asset Private Investor K/S Strømmen Rahbeks Allé 21 Copenhagen Q4 3, Property fund Real estate company M. Goldschmidt Holding Management Borgervænget 3-7 Copenhagen Q3 16, Developer Property Partners Property fund NIAM La Cours Vej 7 Copenhagen Q3 5, User Ase Institutional investor JØP RETAIL STREET NAME LOCATION DATE SIZE (SQM) PRICE (M DKK) VENDOR TYPE VENDOR NAME BUYER TYPE BUYER NAME High street Portfolio Copenhagen Q , Property fund Avignon Capital Property fund Hines Carlsberg Byen, Byggefelt 8 Copenhagen Q4 7, Developer Carlsberg Byen Ejendomme Property fund Aberdeen Property Investors Top-Toy Portfolio Jutland & Copenhagen Q4 24,760 Est. 346 User Top-Toy Property fund Standard Life Frederiksberggade 1 Copenhagen Q4 3, Property fund Standard Life Institutional investor Axa Fiolstræde 3-5 Copenhagen Q4 3, Property fund NIAM Private investor Strawberry Properties Østergade 15 Copenhagen Q Private investor Private Investor Property fund AEW Europe Humlebækcentret Humlebæk Q4 9, Real estate company PDV Ejendomme Real estate company TT Partners Skovlundecentret Skovlunde Q4 12, Real estate company PDV Ejendomme Private investor Private Investor Diget Glostrup Q4 6, Real estate company PDV Ejendomme Real estate company TT Partners Østergade 15, st. Copenhagen Q Private investor Private Investor Private investor Private investor Vesterbrogade 2D, st. Copenhagen Q User McDonalds Institutional investor Ejendomsselskabet Norden Skt. Knuds Torv 3, st. Aarhus Q4 1, Real estate company Essex Private investor Private investor Frederiksberggade 16 Copenhagen Q3 4, Institutional investor Unipension Property fund Standard Life LAND STREET NAME PURPOSE LOCATION DATE SIZE (SQM. OF BUILDING RIGHT) PRICE PER SQM. OF BUILDING RIGHT Ørestad Syd Portfolio Residential Copenhagen Q4 152,600 Est. 5,200 Est. 794 By & Havn Frederiksberggade Residential Copenhagen Q4 N/A N/A 260 PRICE VENDOR NAME BUYER NAME (M DKK) Københavns Investeringsejendomme A/S Real estate company's, developer's & institutional investors Standard Life Hummeltoftevej 14 Residential Virum Q4 16,900 5, Statens Ejendomssalg A/S PensionDanmark Facebook Datacenter Industrial Odense Q4 184, Odense Kommune Facebook 16 / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

17 RED Property Advisers assisted Hines in the acquisition of five high street properties. HOTEL HOTEL NAME LOCATION DATE PRICE PER ROOM (DKK) PRICE (M DKK) VENDOR NAME BUYER NAME Kalvebod Brygge 5 - Hotel Marriot Copenhagen Q4 Est. 2,460,000 Est. 1,000 Solstra ATP & PensionDanmark Bernstorffsgade 36 - Nordic Choice Hotel Copenhagen Q4 Est. 1,240,000 Est. 550 Danica Strawberry Properties RESIDENTIAL STREET STREET NAME NAME LOCATION LOCATION DATE DATE SIZE SIZE (SQM) (SQM) PRICE PRICE VENDOR VENDOR TYPE TYPE VENDOR VENDOR NAME NAME BUYER BUYER TYPE TYPE BUYER BUYER NAME NAME (M (M DKK) DKK) Nørre Søgade 29 Copenhagen Q , Private investor Private Investor Institutional investor Institutional Investment Partner Hedeager 1-5 & Kystvejen 29 Residential Portfolio Århus Copenhagen 2016/Q2 Q4 23,600 32, Real Estate Company C.W. Obel Est. 900 Property fund Thylander Institutional Investor PensionDanmark Institutional investor JØP & JIP Holmens Kanal 2 Nordens Plads 4 CPH City Copenhagen 2016/Q1 Q4 49,065 36,853 1,400.0 User Danske Bank 640 Institutional investor PKA & Pensam Property Fund Real estate company Standard Life Investments Akelius Residential Property AB Albanigade 30 Strandlodsvej 15 Odense Copenhagen 2016/Q1 Q4 4,300 19, Institutional Investor Danica Pension 632 Property fund Capman Private Investor Developer Karsten Bill Rasmussen Casa Rytterkasernen 11 Residential Portfolio Odense Copenhagen 2016/Q1 Q4 8,385 20, Institutional Investor Danica Pension Est. 455 Institutional investor LB Forsikring Private Investor Real estate company Karsten Bill Rasmussen Heimstaden Dag Hammarskjolds Allé 28 Ungbo Portfolio CPH E Copenhagen 2015/Q4 Q4 1,596 23, Private Investor 450 Private investor Fritz Henrik Schur Ungbo Public Institution Institutional investor The Turkish Embassy Sampension Overgaden Oven Vandet 60A CPH City 2015/Q4 8, Public Institution The Danish Armed Forces Private Investor Lennart Lajboschitz Residential Portfolio Copenhagen Q4 9, Property fund NREP Real estate company Heimstaden (Søkvæsthuset) Overgaden oven vandet/herman Store Kongensgade 22 CPH Copenhagen City 2015/Q4 15,151 1, Property Real Estate fund Company CapMan JL Ejendom Real Other estate Fund company Akelius Erik & Residential Susanna Olesens Property Almenvelgørende Fond AB Triers plads Irma-byen Store Kongensgade 62 Rødovre CPH City Q4 2015/Q4 8,120 1, Developer 52.2 Private Investor ELF Development Private Investor Property fund Bouwfond Investment Management Real Estate Company Jeudan Peder Lykkes Vej 57C Stormgade 10 Copenhagen CPH City Q4 2015/Q4 7,221 2, Private investor 72.0 Public Institution Private Investor Freja Ejendomme Private investor Property Fund A/B Pederlykkesgaard Artha Kapitalforvaltning Nørre Farimagsgade Strømmen 6 Copenhagen Nørresundby Q4 2015/Q4 5,869 11, User 73.5 User Business Danmark RTX A/S Developer Private Investor Gefion Group K/S Strømmen Åbrinken 2 Odense Q4 4, Private investor Private investor Private investor Private Investor Gefionsbakken 5A Espergærde Q4 4, Real estate company Nørrebrogade 122 Copenhagen Q4 3, Real estate company North Property Asset Management North Property Asset Management Private investor Private investor Private Investor Private Investor Østeråparken Aalborg Q3 15, Public institution DSB Institutional investor Lærernes Pension Nørrebrogade 34 Copenhagen Q3 3, Private investor Private Investor Developer Vision Properties Australiensvej 6 Copenhagen Q3 2, Private investor Private investor Property fund Core Bolig Sillebroen Frederikssund Q3 2, Developer HME Bolig Property fund Core Bolig Ærøvej 1 m.fl. Copenhagen Q3 2, Private investor Private Investor Property fund Core Bolig Rosenlunds Allé 11 Copenhagen Q3 1, Private investor Private investor Property fund Core Bolig FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 17 / 27

18 11,657 sqm office space in a exclusive property are currently in the market for letting at Osvald Helmuths Vej 4 18 / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

19 OCCUPIER MARKET 19 / 27

20 OCCUPIER MARKET - OFFICE HIGH ACTIVITY IN THE HARBOUR AREAS Individual offices are no longer a requirement for an increasing number of companies. Instead open plan office properties with common facilities are becoming more popular as the concept offers flexible leases in attractive surroundings. Property owners need to be aware of this tendency when refurbishing and re-letting their properties as we see this as a continued trend in Several noteworthy leases took place during the end of In Q3, the Danish accounting firm Beierholm let MT Højgaard s former office domicile in Søborg of 12,000 sqm. The property is owned by PFA Ejendomme. There was also activity in the harbour areas; At Frederikskaj 4 the former office domicile of Mercedes Benz and Nykredit - in the south harbor, the union ASE let the property s total area of 7,360 sqm. SIGNIFICANT LEASES STREET NAME LOCATION DATE SIZE (SQM) LANDLORD TENANT Portland Towers Harbour Area 2017/Q1 1,628 ATP Ejendomme Den Tyske Ambassade Frederikskaj 4 CPH SW 2016/Q4 7,360 DADES ASE Fagforening Hovedvejen 2 CPH Area 2016/Q4 4,585 Nordea Ejendomme Dansikring Ørestads Boulevard 114 CPH S 2016/Q4 3,300 Solstra Capital Partners Novo Nordisk Helgeshøj Allé 34 CPH W 2016/Q4 3,245 Nordea Ejendomme ALD Vandtårnsvej 62 CPH Area 2016/Q4 900 BOKA Merck Rådhuspladsen 59 CPH City 2016/Q4 714 Foreningen Soc. Boligbyggeri Fahmy, Lindegaard & Sjö ApS Amager Strandvej 390 CPH S 2016/Q4 644 PFA Ejendomme ST. Aerospace Solutions A/S Vesterbrogade 1 CPH City 2016/Q4 588 Dansk Industri WiseGroup Knud Højgaards Vej 9 CPH NW 2016/Q3 12,000 PFA Ejendomme Beierholm Slet Parkvej 1-7 Aarhus 2016/Q3 7,500 AP Pension Stofa Hejrevej 30 CPH NW 2016/Q3 1,464 Nordicom Ejendom A/S N/A Kanonbådsvej 12A CPH City 2016/Q3 1,131 Commercial Real Estate Denmark Glyn Peter Machin Tuborg Havnevej 15 CPH Area 2016/Q3 1,099 PKA Formuepleje A/S Strandgade 4 CPH City 2016/Q3 915 C.W. Obel Ejendomme A/S Weoffice Humletorvet 25 CPH W 2016/Q3 544 Carlsberg Byen Mikkeller Amaliegade 12 CPH City 2016/Q3 526 Amaliegade 12 Aps Storage4You The unemployment rate in the Copenhagen Area has slightly decreased over the course of 2016, and is expected to decrease even further in The decreased unemployment rate together with the decreased vacancy rate in the fourth quarter of 2016 will likely lead to an increasing demand for office space. VACANCY RATES AND UNEMPLOYMENT Office vacancy rates compared to unemployment in Copenhagen PRIME RENT DKK/SQM 12.00% SUBAREA Q % Copenhagen City (CBD) 1, % Copenhagen E & W 1,250 Frederiksberg 1, % Harbour areas 1, % South Harbour 1,300 Ørestad 1, % Copenhagen N & NW 1, % South and west of Copenhagen 950 North of Copenhagen 1,300 Q Q Q Q Q Q Q Q Q Q Q Q Vacancy rate Copenhagen City Vacancy rate Copenhagen Area Unemployment Copenhagen Area Q Q *Base rents ex. service charges Source: Statistics Denmark & Oline.dk FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 20 / 27

21 OCCUPIER MARKET - RETAIL THE TABLE HAVE TURNED FOR THE AREA AROUND CITY HALL SQUARE From Kgs. Nytorv pinpointing the start of Strøget and walking towards City Hall Square encasing the southern part of the street one can experience quite a rapid change in regards to the external settings. An ordinary occupier s usual center of attention is the square, Amagertorv, which is the junction of Købmagergade and Strøget, housing luxury retailers such as Hermès, Louis Vuitton and Prada. The high monetary value of Amagertorv has had a positive spil over effect on the adjacent streets, which has led to noticeable development in a close radius hereby. SIGNIFICANT LEASES STREET NAME LOCATION DATE SIZE (SQM) NEW TENANT Sværtegade 5 CPH City 2016/Q4 45 Hvisk Kronprinsensgade 16 CPH City 2016/Q4 N/A Ca Shot Gammel Mønt 5 CPH City 2016/Q4 196 Zadig & Voltaire Sankt Annæ Plads 13 CPH City 2016/Q4 N/A Joe & the Juice St. Strandstræde 8-14 CPH City 2016/Q4 218 Caravane Højbro Plads 4 CPH City 2016/Q3 865 Hèrmes Vesterbrogade 4C CPH City 2016/Q3 296 Peter Beier Vesterbrogade 4B CPH City 2016/Q3 230 Klarlund Købmagergade 37 CPH City 2016/Q3 726 Sephora St. Strandstræde 8-14 CPH City 2016/Q2 159 Royal Republiq St. Strandstræde 8-14 CPH City 2016/Q2 95 Aiayu St. Strandstræde 8-14 CPH City 2016/Q2 57 Aesop The last part of Strøget from Amagertorv to City Hall Square has not seen much of the mentioned effect, which in recent history has led the area to stand alone as relatively disharmonic. The area has suffered from consistent developments in City Hall Square for several decades, but with a forthcoming completion of the site the tables seem to have turned. Late 2016, the British retail-chain, JD Sport, opened up the doors to their third store in Denmark located in this more challenged area, which consequently can lead to the final turnaround of Strøget. In the year of 2017, RED Property Advisers will follow up on the increasing trend and continue the development of the area. PRIME RENT DKK/SQM - ZONE A SUBAREA Q Q CHANGE Strøget (incl. Vimmelskaftet) 23,500 23, % Strøget area - side streets 10,000 10, % Østerbrogade 4,000 4, % Nørrebrogade 2,000 2, % Købmagergade 22,000 22, % VACANCY RATES AND CONSUMER CONFIDENCE Retail vacancy rates compared to consumer confidence in Copenhagen 5.00% % 4.00% % 3.00% % 2.00% % 1.00% % 0.00% -10 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Vacancy rate Copenhagen City Vacancy rate Copenhagen area Source: Statistics Denmark & Oline.dk FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 21 / 27

22 FOOTFALL ANALYSIS ØSTERGADE EXPERIENCED THE LARGEST INCREASE IN FOOTFALL COUNTS Overall, Copenhagen high streets experienced a marginal increase in terms of footfall counts in Q compared to Q4 in Especially noticeable is Østergade, where the number of counts have increased by roughly 500 counts. The area around Amagertorv is still the busiest crossing point in Copenhagen, even though it has experienced a slight drop compared to last year. e gad CHRISTMAS SHOPPING In terms of the Christmas shopping effect, the month of December have experienced an even further increase in footfall compared to the previous years. Last year, the footfall count for December on average reached approx. 6,100 per hour, which equals an increase of 12% compared to the same period in This is the highest footfall count on average that we have observed for the month of December since we started registering the footfall in the Copenhagen high streets. Kultorvet ager Købm BLACK FRIDAY The concept of Black Friday has really gotten a hold of the Danish shoppers as well as the retailers. On Black Friday 2016, we experienced an even higher footfall around the Copenhagen high streets than last year, supporting the fact that the day topped all records of shopping transaction volume in Denmark with a turnover of DKK 2 bn. Furthermore, we observed 54% more people on Strøget and 63% more on Købmagergade on Black Friday compared to an average Friday in ,400 COUNTING METHODOLOGY RED carries out the counts on Fridays at 4 pm with the purpose of registrering a development and conclude a level of footfall at different locations on Strøget and Købmagergade. The footfall is counted manually from both directions. Vimme e ad Nyg Gammeltorv 3. 5,400 e ad F 22 / 27 FOCUS sb rik e red MACROECONOMICS INVESTMENT MARKET Rådhuspladsen g erg OCCUPIER MARKET APPENDIX

23 FOOTFALL COUNTS IN Q AND Q THE MAP The map shows the counting points and the average footfall per hour the last 12 months. 5. 5, NO. STREET NAME Q Q CHANGE 1 2 Østergade 4,379 4, Amagertorv/Østergade 6,833 6, Frederiksberggade 5,340 5, Frederiksborggade/Købmagergade 5,659 5, Rundetårn 5,907 5, Købmagergade/Silkegade 6,356 6, Vimmelskaftet/Amagertorv 7,024 6, Købmagergade/Valkendorfsgade - 5,072-9 Købmagergade/Løvstræde - 6, Pilestræde/Kronprinsensgade - 2,612-2, , Kgs. Nytorv 4,300 ade 1. sterg Ø 3, ,400 Købm ager gade e gad Øster 2. ertorv Amag 7. 6,500 6,100 elskaftet BLACK FRIDAY FOOTFALL 10,000 6,000 8,545 8,381 8,000 5,434 5,247 4,000 2,000 0 FOCUS MACROECONOMICS INVESTMENT MARKET Strøget Købmagergade Average Friday in 2016 Black Friday OCCUPIER MARKET APPENDIX 23 / 27

24 THE LETTING OF ST. STRANDSTRÆDE RED Property Advisers has been adviser in the letting process of the newly refurbished retail stores at St. Strandstræde 8-14 on behalf of PFA Ejendomme og Thylander Gruppen. This spring new retail concepts will open at St. Strandstræde and it has been imperative to create a new marketplace with five new stores complimenting each other, resulting in a highly appreciated contribution to the well-known vibrant atmosphere in the street. RED has successfully finalized lease agreements with retail concepts, that will attract even more people to St. Strandstræde; the new concepts consist of the Australian skincare concept AESOP, ROYAL REPUBLIQ with high quality Danish leather goods, the Danish sustainable fashion and home wear brand AIAYU and the French interior concept CARAVANE. Negotiations on the fifth lease are still ongoing. As part of the letting strategy, RED Property Advisers has attached importance to give the customers a distinctive shopping experience. 24 / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

25 APPENDIX - DANISH TRANSLATION 25 / 27

26 ENGLISH VERSION AT PAGE 6 UDGIVELSE I FOKUS HOVEDTENDENSER FRA 2016 OG FORVENTNINGER TIL 2017 Den danske transaktionsvolumen for 2016 endte på det højeste niveau siden finanskrisen, og aktiviteten overgik 2015 med ca. 10 mia. Stigningen var især drevet af udenlandske investorer, investeringer i Københavnsområdet, investeringer i de større provinsbyer samt sale & leaseback transaktioner. Med forventning om øget efterspørgsel kombineret med en mangel på villige sælgere kan 2017 blive et år, hvor vi oplever en lavere transaktionsvolumen og et fortsat nedadgående pres på investorenes afkastkrav for prime ejendomme. DKK mia 70 mia 60 mia 50 mia 40 mia 30 mia 20 mia 10 mia 0 mia 20.1 mia 20% 80% DANSKE INVESTERINGS VOLUMEN 32.9 mia 31% 69% 35.1 mia 30% 70% 54.1 mia 36% 64% 64.1 mia 41% 59% TRENDS 2016 I løbet af de senere år er den danske transaktionsvolumen vokset signifikant, og dette års volumen på ca. 64,1 mia. nåede næsten samme niveau, som vi observerede i 2006 på ca. 67 mia. det højeste niveau nogensinde. I et år, hvor den europæiske transaktionsvolumen rent faktisk oplevede et markant fald, især drevet af lavere investeringsaktivitet i London, steg den danske transaktionsvolumen hele 18%. Men hvilke faktorer har rent faktisk drevet denne markante stigning? UDENLANDSKE INVESTORER ØGER DERES MARKEDSANDEL Som følge af adskillige usikkerheder omkring de makroøkonomiske forhold, herunder konsekvenserne af Brexit og præsidentskiftet i USA med indsættelsen af Donald Trump, vender flere og flere investorer sig mod de mere stabile og inflationssikrede cash flows forbundet med ejendomsinvesteringer. Således er det ikke blot er de danske investorer, der er aktive på det danske marked. I løbet af 2016 har de udenlandske investorer taget en endnu større markedsandel og udgør nu 41% af den totale transaktionsvolumen. Kilde: RED Property Advisers Danske Dette svarer til en stigning på 5%-point sammenlignet med Ses der nærmere på de største udenlandske investorer i 2016, så var Heimstaden, Standard Life og Castellum i særklasse de mest aktive investorer og udgjorde samlet ca. 40% af den udenlandske transaktionsvolumen. De seneste fem år har de udenlandske investorer især domineret retail-segmentet, og 2016 var ingen undtagelse. Dog var 2016 også et år, hvor de udenlandske investorer viste en øget interesse for bolig- og kontorsegmentet, og tilsammen ud- gjorde disse to segmenter sammen med retail-segmentet ca. 85% af udenlandske investorers samlede investeringsaktivitet i Derudover har de udenlandske investorer i særdeleshed medvirket til et yderligere pres på afkastkravet set i forhold til... vil flere og flere investorer stille spørgsmålstegn ved, om 2017 mon er det rette tidspunkt at øge deres risikoeksponering i de større byer, eller om de skal udvide deres horisont mod andre markeder i håb om et højere afkast. Udenlandske Dette gælder især for ovennævnte segmenter, hvor prime afkastkravene har nået niveauet 4,00% inden for kontor-segmentet, 3,60% inden for boligsegmentet og 3,00% inden for retailsegmentet. I slutningen af året blev der registreret enkelte transaktioner inden for kontorsegmentet til lige under 4% i afkast. AALBORG ET MARKED I VÆKST I lighed med tidligere år foregår langt størstedelen af aktiviteten i Københavnsområdet, der i 2016 tegnede sig for ca. 74% af den total investeringsvolumen. Københavns dominans cementeres yderligere af, at byen tager topplaceringen i samtlige af de fem største segmenter. Imidlertid er Aalborg rent faktisk den by, der har oplevet den største vækst sidste år. Fra 2015 til 2016 har byen haft en vækst på hele 96%, og den samlede transaktionsvolumen i 2016 nåede 1,5 mia. kr. Stigningen var primært drevet af udenlandske investorer, hvor bl.a. NIAM s køb af en større boligportefølje udgjorde ca. 670 mio. kr. Dette var klart den største ejendomsinvestering i Aalborg i / 27 FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX

27 SALE & LEASEBACK TRANSAKTIONSVOLUMEN BLEV FORDOBLET I 2016 Den positive udvikling på det danske erhvervsejendomsmarked karakteriseret ved stigende priser og yderligere pres på afkastkravet på tværs af alle segmenter førte til endnu flere sale & leaseback transaktioner i For de fleste brugere er hovedmotivet ved at gennemføre en sale & leaseback aftale, at man får frigjort kapital. Dette giver brugerne mulighed for at investere den frigjorte kapital i deres kerneaktiviteter, hvor der potentielt kan genereres en højere forrentning. Investoren kan derimod opnå en lang lejekontrakt med en som oftest bonitær lejer. I løbet af 2016 har virksomheder gennemført flere og flere sale & leaseback transaktioner, og disse transaktioner udgjorde i alt 7,2 mia. kr. Dette er næsten en fordobling i forhold til Især Top-Toy, Danske Bank og Nykredit s sale & leaseback aftaler er nogle af de mest nævneværdige og største sale & leaseback transaktioner i Standard Life s køb af Top-Toy porteføljen var hovedsageligt drevet af deres strategi om at erhverve prime erhvervsejendomme i centrale europæiske markeder, hvilket inkluderer en øget tilstedeværelse på de nordiske markeder. Ligeledes var H.I.G. Capital og M7 Real Estate s erhvervelse af Danske Bank porteføljen drevet af motivet om at anskaffe sig en portefølje med stor lejesikkerhed med mulighed for værdiskabelse igennem forskellige optimeringstiltag. I betragtning af, det lave renteniveau forventes at forsætte i 2017, er betingelserne favorable for flere sale & leaseback transaktioner i det kommende år. I et år hvor den europæiske transaktionsvolumen rent faktisk oplevede et markant fald, især drevet af lavere investeringsaktivitet i London, steg den danske transaktionsvolumen hele 18%. FORVENTNINGER TIL 2017 Fremadrettet forventes den globale usikkerhed forsat at påvirkeinvestorerne, og med henblik på stadig flere forandringer i samfundet og erhvervslivet, vil ejendomme adskille sig som værende en mere traditionel og forudsigelig aktivklasse sammenlignet med eksempelvis det mere volatile aktiemarkedet. Ejendomsinvesteringers betydning i forhold til porteføljediversifikation understøttes af et fortsat lavt renteniveau, forventninger om højere inflation og volatilitet i alle aktivklasser. På baggrund af en forventning om stigende likviditet og efterspørgsel samt mangel på villige sælgere, vil prime afkastkravet sandsynligvis blive presset længere ned, mens aktiviteten på markedet muligvis vil blive mere afdæmpet som følge af mangel på investeringsmuligheder. I 2017 forventer vi en stadig høj sale & leaseback aktivitet; både via regulære udbud, men også ved off market -transaktioner. Derudover forventer vi, at den høje aktivitet fra udenlandske investorer fortsætter i samme stil som sidste år, hvor vi herunder også forventer, at nye udenlandske spillere vil tage del i aktiviteten. Ligeledes forventer vi at se flere transaktioner mellem udenlandske investorer, idet nogle af de udenlandske value-add fonde vil sælge nogle af deres aktiver, og derfor mest sandsynligt vil sælge til andre fonde, som fokuserer mere på en core profil. Til sidst er det vigtigt at pointere, at vi forventer at se en fortsat stigende aktivitet i større provinsbyer som Køge, Kolding, Roskilde osv. byer der lige nu oplever en høj aktivitet inden for nybyggeri. Dog er der som tidligere nævnt flere usikkerheder, som vil have en effekt på investeringsmarkedet i Dette særligt henset til det nuværende marked, der er ekstremt følsomt over for en stigende rente. I de segmenter, hvor vi har observeret lave afkast på prime beliggenheder, vil små stigninger i renten have en stor indflydelse på investeringsaktiviteten. Eftersom investorerne fortsat har fokus på potentielle trusler omkring dem, vil flere og flere investorer stille spørgsmålstegn ved, om 2017 mon er det rette tidspunkt at øge deres risikoeksponering i de større byer, eller om de skal udvide deres horisont mod andre markeder i håb om et højere afkast. FOCUS MACROECONOMICS INVESTMENT MARKET OCCUPIER MARKET APPENDIX 27 / 27

28 THE CUSHMAN & WAKEFIELD AND RED ALLIANCE RED Property Advisers has been a part of Cushman & Wakefield since Cushman & Wakefield are strengthened on a worldwide basis, and are the world s second largest adviser within commercial real estate with 43,000 employees in more than 250 cities. RED Property Advisers P/S Amaliegade 3, 5 th floor DK-1256 Copenhagen K red@red.dk red.dk MDE, Chartered Surveyors MRICS